SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.__ )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C> <C> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
AETNA VARIABLE PORTFOLIOS, INC.
AETNA GENERATION PORTFOLIOS, INC.
AETNA BALANCED VP, INC.
AETNA GET FUND
AETNA VARIABLE ENCORE FUND
AETNA INCOME SHARES
AETNA VARIABLE FUND
(Name of Registrant as Specified in Its Charter/Declaration of Trust)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
[LOGO] AETNA J. Scott Fox
FUNDS President
October 12, 2000
Dear Contract Holder/Participant:
Aetna Inc. ("Aetna"), the indirect parent company of Aeltus Investment
Management, Inc. ("Aeltus"), the investment adviser to certain variable funds
(each a "Fund") offered through variable annuity or variable life contracts, has
entered into an agreement to sell its financial services and international
businesses, including Aeltus, to ING Groep N.V. ("ING"). Headquartered in
Amsterdam, ING is a significant global financial institution active in the
fields of insurance, banking, and asset management. As of June 30, 2000, ING had
total assets of approximately $531.8 billion and assets under management of
approximately $344.5 billion. A more thorough description of ING's businesses is
contained in the enclosed proxy statement.
At a shareholder meeting on November 22, 2000, you will be asked to approve
a new advisory agreement for your Fund (and, if you are a shareholder of Aetna
Technology VP, a new subadvisory agreement) to take effect after the closing of
the transaction. Your approval is necessary because, in light of applicable
regulatory requirements, the current advisory and subadvisory agreements may end
automatically as a result of the transaction. With the exception of the
effective dates of the agreements and the extension of expense limitation
provisions through December 31, 2001 for certain Funds, these new agreements are
the same in all material respects as those currently in effect. If the
agreements are approved, Aeltus will continue to manage the Funds following the
transaction. Approval of the new advisory and subadvisory agreements is sought
so that management of each Fund can continue uninterrupted after the
transaction. At the shareholder meeting, you also will be asked to ratify the
selection of the independent auditors, to elect Directors or Trustees, as
applicable, for your Fund and, in certain cases, to approve an amendment to your
Fund's Declaration of Trust. IT IS IMPORTANT TO REMEMBER THAT YOUR FUND AND ITS
INVESTMENT OBJECTIVES WILL NOT CHANGE AS A RESULT OF THIS PROXY SOLICITATION OR
THE TRANSACTION. YOU WILL STILL OWN THE SAME SHARES IN THE SAME FUND.
AFTER CAREFUL CONSIDERATION, THE BOARD OF YOUR FUND UNANIMOUSLY APPROVED
EACH OF THE PROPOSALS AND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH PROPOSAL.
Your vote is important regardless of the number of shares you own. Please
take a few minutes to read the proxy statement and cast your vote. IT IS
IMPORTANT THAT YOUR VOTE BE RECEIVED NO LATER THAN THE TIME OF THE SHAREHOLDER
MEETING ON NOVEMBER 22, 2000.
If you are a shareholder of more than one Fund, or have more than one
account registered in your name, you will receive one proxy card or
authorization card, as applicable, for each account. PLEASE VOTE AND RETURN EACH
PROXY OR AUTHORIZATION CARD THAT YOU RECEIVE.
We understand that the transaction may cause you some concern. Once again,
neither this proxy solicitation nor the transaction will change your Fund or its
investment objectives. YOU WILL STILL OWN THE SAME SHARES IN THE SAME FUND. IF
YOU HAVE ANY QUESTIONS BEFORE YOU VOTE, PLEASE REVIEW THE ATTACHED "QUESTIONS
AND ANSWERS" OR CALL 1-800-646-7628. We'll help you get the answers you need
promptly. We appreciate your participation and prompt response in this matter
and thank you for your continued support.
Sincerely,
/s/ J. Scott Fox
J. Scott Fox
(enclosures)
-----
AVP
-----
<PAGE>
Intentionally Left Blank
<PAGE>
NOTICE OF SPECIAL MEETINGS
OF THE SHAREHOLDERS OF
AETNA GET FUND
AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP
AETNA INCOME SHARES D/B/A
AETNA BOND VP
AETNA VARIABLE FUND D/B/A
AETNA GROWTH AND INCOME VP
AETNA VARIABLE PORTFOLIOS, INC.
AETNA GENERATION PORTFOLIOS, INC.
AETNA BALANCED VP, INC.
(each a "Company" and collectively, the "Companies")
Notice is hereby given that a Special Meeting of the Shareholders (the
"Special Meeting") of each Company listed above, or, if applicable, each of its
portfolios that is listed on Appendix 1 to the Proxy Statement (each such
portfolio is referred to herein as a "Fund" and, collectively, where applicable,
with those Companies that do not have any portfolios, the "Funds"), will be held
on November 22, 2000, at 10:00 a.m., Eastern time, at 10 State House Square,
Hartford, Connecticut 06103-3602 for the following purposes:
1. For shareholders of all the Funds, to consider the election of 8 Directors
or Trustees, as applicable, to serve until their successors are elected and
qualified;
2. For shareholders of all the Funds, to approve or disapprove new Investment
Advisory Agreements between the applicable Company, on behalf of the Funds
(where applicable), and Aeltus Investment Management, Inc. ("Aeltus") to
reflect the pending acquisition of the financial services and international
businesses of Aetna Inc. ("Aetna"), of which Aeltus is an indirect wholly
owned subsidiary, by ING Groep N.V. ("ING"), with no change in the advisory
fees payable to Aeltus;
3. For shareholders of Aetna Technology VP, to approve or disapprove a new
Subadvisory Agreement among Aetna Variable Portfolios, Inc., on behalf of
the Fund, Aeltus and Elijah Asset Management, LLC ("EAM") to reflect the
pending acquisition of the financial services and international businesses
of Aetna by ING, with no change in the subadvisory fee payable to EAM;
4. For shareholders of Aetna Variable Encore Fund d/b/a Aetna Money Market VP,
Aetna Income Shares d/b/a Aetna Bond VP, Aetna Variable Fund d/b/a Aetna
Growth and Income VP and the Series of Aetna GET Fund, to approve or
disapprove an amendment to the applicable Company's Declaration of Trust;
5. For shareholders of all the Funds, to ratify or reject the selection of
KPMG LLP as independent auditors for the Funds for the fiscal year ending
December 31, 2001; and
6. To transact such other business as may properly come before the Special
Meeting and any adjournments thereof.
Please read the enclosed proxy statement carefully for information
concerning the proposals to be placed before the Special Meeting.
Shareholders of record at the close of business on September 27, 2000 are
entitled to notice of and to vote at the Special Meeting. You are invited to
attend the Special Meeting. If you cannot do so, however, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD OR AUTHORIZATION CARD, AS APPLICABLE, AND
RETURN IT IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. Any shareholder
attending the Special Meeting may vote in person even though a proxy card or an
authorization card has already been returned.
By Order of the Boards,
/s/ Daniel E. Burton
Daniel E. Burton
Secretary
October 12, 2000
<PAGE>
Intentionally Left Blank
<PAGE>
AETNA GET FUND
AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP
AETNA INCOME SHARES D/B/A
AETNA BOND VP
AETNA VARIABLE FUND D/B/A
AETNA GROWTH AND INCOME VP
AETNA VARIABLE PORTFOLIOS, INC.
AETNA GENERATION PORTFOLIOS, INC.
AETNA BALANCED VP, INC.
IMPORTANT NEWS FOR SHAREHOLDERS, CONTRACT HOLDERS AND PARTICIPANTS
While we encourage you to read the full text of the enclosed Proxy
Statement, here's a brief overview of some matters affecting your Fund that will
be the subject of a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Aetna Inc. ("Aetna"), the indirect parent company of Aeltus Investment
Management, Inc. ("Aeltus"), the investment adviser to certain variable
funds (each a "Fund") offered through variable annuity or variable life
contracts, has agreed to sell its financial services and international
businesses, including Aeltus, to ING Groep N.V. ("ING"). Headquartered
in Amsterdam, ING is a global financial institution active in the
fields of insurance, banking, and asset management. After completion of
the transaction, Aetna's financial services and international
businesses will be owned 100% by ING.
To ensure that there is no interruption in the services Aeltus provides
to your Fund, we are asking the shareholders of each Fund to approve a
new investment advisory agreement. The most important matters to be
voted upon by you are approval of the new investment advisory agreement
and the election of Board members. Shareholders of Aetna Technology VP
are also being asked to approve a new subadvisory agreement with Elijah
Asset Management, LLC ("EAM"), the subadviser to that Fund. The
following pages give you additional information about ING, the new
investment advisory and subadvisory agreements and certain other
matters. THE BOARD MEMBERS OF YOUR FUND, INCLUDING THOSE WHO ARE NOT
AFFILIATED WITH THE FUND, AELTUS, ING, EAM OR ANY OF THEIR AFFILIATES,
RECOMMEND THAT YOU VOTE FOR THESE PROPOSALS.
Q. WHY DID YOU SEND ME THIS BOOKLET?
A. You are receiving these proxy materials--a booklet that includes the
Proxy Statement and one proxy or authorization card for each Fund you
own--because you have the right to vote on important proposals
concerning your investment in the Fund. Although various Aetna entities
are, in most cases, the true "shareholders" of the Funds, variable
annuity and variable life contract holders (or participants under group
contracts, as applicable) generally have the right to instruct those
Aetna entities how to vote their interests regarding the proposals set
forth in the proxy statement, including the consideration of new
investment advisory and subadvisory agreements. Therefore, references
to shareholders throughout the proxy materials usually can be read to
include contract holders and participants.
Q. WHY ARE MULTIPLE CARDS ENCLOSED?
A. If you own shares of more than one Fund, you will receive a proxy card
or authorization card, as applicable, for each Fund that you own.
Q. WHY AM I BEING ASKED TO VOTE ON THE NEW INVESTMENT ADVISORY AND
SUBADVISORY AGREEMENTS?
A. The Aetna-ING transaction will result in a change in ownership of
Aetna's financial services and international businesses, which may be
deemed to cause a "change in control" of Aeltus, even though the
services provided by Aeltus to the Funds are not expected to be
materially affected as a result. A "change in control" may cause each
Fund's investment advisory agreement with Aeltus and the subadvisory
agreement with EAM for Aetna Technology VP, to which Aeltus is a party,
to terminate.
To ensure continuity of service, we are seeking shareholder approval of
a new investment advisory agreement with your Fund and, for Aetna
Technology VP, a new subadvisory agreement with EAM.
i
<PAGE>
Q. HOW WILL THE AETNA-ING TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A. We do not expect the transaction to affect you as a Fund shareholder.
Your Fund and its investment objectives will not change as a result of
the transaction. You will still own the same shares in the same Fund.
The new investment advisory and subadvisory agreements are the same in
all material respects as the current agreements, with the exception of
the effective dates of the agreements and, in certain cases, the
extension of expense limitation provisions through December 31, 2001.
If shareholders do not approve the new investment advisory or
subadvisory agreements, the current agreements may terminate upon the
close of the transaction (Aetna's goal is to complete the transaction
during the fourth quarter of 2000) and the Board members of your Fund
will take such action as they deem to be in the best interests of your
Fund and its shareholders.
Q. WILL THE INVESTMENT ADVISORY AND SUBADVISORY FEES INCREASE AS A RESULT
OF THE TRANSACTION?
A. No, the proposals to approve the new agreements seek no increase in the
investment advisory and subadvisory fee rates.
Q. WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A. As noted above, you are being asked to reelect the current members of
the Board, except for one individual who is not standing for reelection
as a Director. You are also being asked to vote for the ratification of
the Board's selection of the Fund's independent auditors. In addition,
shareholders of Funds established as Massachusetts business trusts are
being asked to approve an amendment to their Declarations of Trust.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board members of your Fund, including
those who are not affiliated with the Fund, Aeltus, ING, EAM or their
affiliates, recommend that you vote FOR the Proposals.
Q. WILL THE FUND PAY FOR THIS PROXY SOLICITATION?
A. No, Aeltus, ING and/or their affiliates will bear these costs.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Aetna's proxy representative at 1-800-646-7628.
ii
<PAGE>
AETNA GET FUND
AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP
AETNA INCOME SHARES D/B/A
AETNA BOND VP
AETNA VARIABLE FUND D/B/A
AETNA GROWTH AND INCOME VP
AETNA VARIABLE PORTFOLIOS, INC.
AETNA GENERATION PORTFOLIOS, INC.
AETNA BALANCED VP, INC.
151 FARMINGTON AVENUE
HARTFORD, CONNECTICUT 06156
(each a "Company" and collectively, the "Companies")
PROXY STATEMENT
OCTOBER 12, 2000
This Proxy Statement provides you with information you should review before
voting on the matters listed in the Notice of Special Meetings (each a
"Proposal") for each Company listed above, or, if applicable, each of its
portfolios that is listed on Appendix 1 to the Proxy Statement (each such
portfolio is referred to herein as a "Fund" and, collectively, where applicable,
with those Companies that do not have any portfolios, the "Funds"). Each
Company's Board of Directors or Trustees, as applicable (collectively, the
"Board"), is soliciting your vote for a Special Meeting of Shareholders of each
Fund (the "Special Meeting") to be held at 10 State House Square, Hartford,
Connecticut 06103-3602, on November 22, 2000, at 10:00 a.m., Eastern time, and,
if the Special Meeting is adjourned, at any adjournment of that Meeting.
SOLICITATION OF PROXIES
The Board is soliciting votes from shareholders of a Fund only with respect
to the particular Proposals that affect that Fund. The solicitation of votes is
made by the mailing of this Proxy Statement and the accompanying proxy card or
authorization card, as applicable, on or about October 16, 2000. The following
table identifies the Funds entitled to vote on each Proposal.
<PAGE>
<TABLE>
--------------------------------------- --------------------------------------------------------------------------------------------
PROPOSAL
----------------- ------------------ ----------------- ------------------ ------------------
<CAPTION>
1. 2. 3. 4. 5.
APPROVAL OF APPROVAL OF
ELECTION OF INVESTMENT APPROVAL OF AMENDMENT TO RATIFICATION OF
DIRECTORS OR ADVISORY SUBADVISORY DECLARATION OF SELECTION OF
FUND TRUSTEES AGREEMENT AGREEMENT TRUST AUDITORS
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
AETNA GET FUND
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna GET Fund, Series C |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna GET Fund, Series D |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna GET Fund, Series E |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna GET Fund, Series G |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna GET Fund, Series H |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna GET Fund, Series I |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna GET Fund, Series J |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna GET Fund, Series K |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
AETNA INCOME SHARES D/B/A
AETNA BOND VP |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
AETNA VARIABLE FUND D/B/A AETNA
GROWTH AND INCOME VP |X| |X| |X| |X|
------------------------------------------------------------------------------------------------------------------------------------
AETNA VARIABLE
PORTFOLIOS, INC.
------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna International VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna Small Company VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna Value Opportunity VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna Technology VP |X| |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna Index Plus Large Cap VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna Index Plus Mid Cap VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna Index Plus Small Cap VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
AETNA GENERATION
PORTFOLIOS, INC.
------------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna Crossroads VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
Aetna Legacy VP |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
AETNA BALANCED VP, INC. |X| |X| |X|
--------------------------------------- ----------------- ------------------ ----------------- ------------------ ------------------
</TABLE>
The appointed proxies will vote in their discretion on any other business
as may properly come before the Special Meeting or any adjournments or
postponements thereof. Additional matters would only include matters that were
not anticipated as of the date of this Proxy Statement.
2
<PAGE>
SHAREHOLDER REPORTS
Copies of each Company's Annual Report for the fiscal year ended December
31, 1999, and its Semi-Annual Report for the period ended June 30, 2000, have
previously been mailed to shareholders. This Proxy Statement should be read in
conjunction with the Annual and Semi-Annual Reports. YOU CAN OBTAIN COPIES OF
THOSE REPORTS, WITHOUT CHARGE, BY WRITING TO AETNA FINANCIAL SERVICES, 151
FARMINGTON AVENUE, HARTFORD, CONNECTICUT, 06156, ATTENTION: SHARON MCGARRY,
TS41, OR BY CALLING 1-800-262-3862.
GENERAL OVERVIEW
On July 19, 2000, Aetna Inc. ("Aetna") entered into an agreement to sell
certain of its businesses, including Aeltus Investment Management, Inc.
("Aeltus"), to ING Groep N.V. ("ING") (the "Transaction"). ING is a global
financial institution active in the fields of insurance, banking and asset
management. Headquartered in Amsterdam, it conducts business in more than 60
countries, and has almost 90,000 employees. ING seeks to provide a full range of
integrated financial services to private, corporate, and institutional clients
through a variety of distribution channels. As of June 30, 2000, ING had total
assets of approximately $531.8 billion and assets under management of
approximately $344.5 billion. ING includes, among its numerous direct and
indirect subsidiaries, Baring Asset Management, Inc., ING Investment Management
Advisors B.V., ReliaStar Financial Corp., Furman Selz Capital Management LLC and
ING Investment Management LLC. Consummation of the Transaction is subject to a
number of contingencies, including regulatory and shareholder approvals and
other closing conditions. Aetna's goal is to close the Transaction during the
fourth quarter of 2000.
The Fund operations of Aeltus are not expected to be materially affected by
the Transaction. Aeltus does not currently anticipate that there will be any
changes in the investment personnel primarily responsible for the management of
the Funds in connection with the Transaction. ING and Aeltus are beginning the
process of evaluating capabilities across the ING companies and, where
appropriate, considering changes designed to maximize investment capabilities
and achieve expense and resource efficiencies to be implemented following the
Transaction.
ING's principal executive offices are located at Strawinskylaan 2631, 1077
zz Amsterdam, P.O. Box 810, 1000 AV Amsterdam, the Netherlands.
MATTERS TO BE ACTED UPON
PROPOSAL NO. 1
ELECTION OF DIRECTORS OR TRUSTEES
The Board of each Company has nominated 8 individuals (the "Nominees") for
election to the Board. Shareholders are being asked to elect the Nominees to
serve as Directors or Trustees, as applicable, each to serve until his or her
successor is duly elected and qualified. (For ease of reference, the term
"Director" shall hereinafter be used to refer to both Directors and Trustees
unless the context requires otherwise.) Pertinent information about each Nominee
is set forth below. Each Nominee is currently a Director of each Company and has
consented to continue to serve as a Director if reelected by shareholders.
INFORMATION REGARDING NOMINEES
Below are the names, ages, business experience during the past five years
and other directorships of the Nominees. An asterisk (*) has been placed next to
the name of each Nominee who would constitute an "interested person," as defined
in the Investment Company Act of 1940 (the "Investment Company Act"), by virtue
of that person's affiliation with any of the Funds, Aeltus, ING or any of their
affiliates. The business address of each Nominee is 10 State House Square,
Hartford, Connecticut 06103-3602.
<TABLE>
------------------------- ----------------------------------- ----------------------------------------------------------------------
<CAPTION>
POSITION(S) HELD WITH
NAME AND AGE EACH COMPANY PRINCIPAL OCCUPATION DURING PAST 5 YEARS
------------------------- ----------------------------------- ----------------------------------------------------------------------
<S> <C> <C>
J. Scott Fox* Director and President Director, Managing Director, Chief Operating Officer and Chief
(Age 45) (Principal Executive Officer) Financial Officer, Aeltus Investment Management, Inc. (investment
(since 1997). adviser), April 1994 to present; Director, Managing Director, Chief
Operating Officer and Chief Financial Officer, Aeltus Capital, Inc.
(broker-dealer), February 1995 to present; Director, Managing
Director, Chief Operating Officer and Chief Financial Officer, Aeltus
Trust Company, May 1996 to present; Senior Vice President--Operations
(Interim Assignment), Aetna Life Insurance and Annuity Company, March
1997 to December 1997; Director and President, December 1997 to
present (Vice President and Treasurer, March 1996 to December 1997),
Aetna Series Fund, Inc.
------------------------- ----------------------------------- ----------------------------------------------------------------------
</TABLE>
3
<PAGE>
<TABLE>
------------------------- ----------------------------------- ----------------------------------------------------------------------
<CAPTION>
POSITION(S) HELD WITH
NAME AND AGE EACH COMPANY PRINCIPAL OCCUPATION DURING PAST 5 YEARS
------------------------- ----------------------------------- ----------------------------------------------------------------------
<S> <C> <C>
Albert E. DePrince, Jr. Director (since 1998). Director, Business and Economic Research Center, 1999 to present, and
(Age 59) Professor of Economics and Finance, 1991 to present, Middle Tennessee
State University; Director, Aetna Series Fund, Inc. (since 1998).
------------------------- ----------------------------------- ----------------------------------------------------------------------
Maria T. Fighetti Director, Aetna Generation Associate Commissioner for Contract Management (1996 to present),
(Age 57) Portfolios, Inc. (since 1994), Manager/Attorney (1973 to 1996), Health Services, New York City
Aetna Balanced VP, Inc. Department of Mental Health, Mental Retardation and Alcohol Services;
(since 1994) and Aetna Variable Director, Aetna Series Fund, Inc. (since 1994).
Portfolios, Inc. (since 1996);
Trustee, Aetna Variable Fund
(since 1994), Aetna Income Shares
(since 1994), Aetna Variable
Encore Fund (since 1994) and
Aetna GET Fund (since 1994).
------------------------- ----------------------------------- ----------------------------------------------------------------------
David L. Grove Director, Aetna Generation Private Investor; Economic/Financial Consultant, 1985 to present;
(Age 82) Portfolios, Inc. (since 1994), Director, Aetna Series Fund, Inc. (since 1991).
Aetna Balanced VP, Inc.
(since 1988) and Aetna Variable
Portfolios, Inc. (since 1996);
Trustee, Aetna Variable Fund
(since 1984), Aetna Income Shares
(since 1984), Aetna Variable
Encore Fund (since 1984) and
Aetna GET Fund (since 1987).
------------------------- ----------------------------------- ----------------------------------------------------------------------
John Y. Kim* Director (since 1997). Director, President, Chief Executive Officer and Chief Investment
(Age 40) Officer, Aeltus Investment Management, Inc., December 1995 to
present; Director and President, Aeltus Capital, Inc., March 1996 to
present; President, Aetna Life Insurance and Annuity Company, May 2000
to September 2000; Chief Investment Officer, Aetna Life Insurance and
Annuity Company, May 2000 to present; Director, Aetna Life Insurance
and Annuity Company, February 1995 to September 2000; Senior Vice
President, Aetna Life Insurance and Annuity Company, September 1994 to
May 2000 and September 2000 to present; Director, President, Chief
Executive Officer and Chief Investment Officer, Aeltus Trust Company,
May 1996 to present; Director and President, Aetna Investment Adviser
Holding Company, Inc., May 2000 to present; Director, Aetna Retirement
Services, Inc., May 2000 to present; Vice President, Aetna Life
Insurance Company, September 1992 to present; Director, Aetna Series
Fund, Inc. (since 1997).
------------------------- ----------------------------------- ----------------------------------------------------------------------
Sidney Koch Director, Aetna Generation Financial Adviser, self-employed, January 1993 to present; Director,
(Age 65) Portfolios, Inc. (since 1994), Aetna Series Fund, Inc. (since 1994).
Aetna Balanced VP, Inc.
(since 1994) and Aetna Variable
Portfolios, Inc. (since 1996);
Trustee, Aetna Variable Fund
(since 1994), Aetna Income Shares
(since 1994), Aetna Variable
Encore Fund (since 1994) and
Aetna GET Fund (since 1994).
------------------------- ----------------------------------- ----------------------------------------------------------------------
</TABLE>
4
<PAGE>
<TABLE>
------------------------- ----------------------------------- ----------------------------------------------------------------------
<CAPTION>
POSITION(S) HELD WITH
NAME AND AGE EACH COMPANY PRINCIPAL OCCUPATION DURING PAST 5 YEARS
------------------------- ----------------------------------- ----------------------------------------------------------------------
<S> <C> <C>
Corine T. Norgaard Director, Aetna Generation Dean of the Barney School of Business, University of Hartford (West
(Age 63) Portfolios, Inc. (since 1994), Hartford, CT), August 1996 to present; Professor, Accounting and Dean
Aetna Balanced VP, Inc. of the School of Management, SUNY Binghamton (Binghamton, NY), August
(since 1988) and Aetna Variable 1993 to August 1996; Director, Advest Bank & Trust, April 1997 to
Portfolios, Inc. (since 1996); present; Director, MassMutual Participation Investors and MassMutual
Trustee, Aetna Variable Fund Corporate Investors (closed-end investment companies), April 1998 to
(since 1984), Aetna Income Shares present; Director, Aetna Series Fund, Inc. (since 1991).
(since 1984), Aetna Variable
Encore Fund (since 1984) and
Aetna GET Fund (since 1987).
------------------------- ----------------------------------- ----------------------------------------------------------------------
Richard G. Scheide Director, Aetna Generation Principal, LoBue Associates Inc. (wealth management industry
(Age 71) Portfolios, Inc. (since 1994), consultants), October 1999 to present; Trust and Private Banking
Aetna Balanced VP, Inc. Consultant, David Ross Palmer Consultants, July 1991 to October 1999;
(since 1994) and Aetna Variable Director, Aetna Series Fund, Inc. (since 1993).
Portfolios, Inc. (since 1996);
Trustee, Aetna Variable Fund
(since 1994), Aetna Income Shares
(since 1994), Aetna Variable
Encore Fund (since 1994) and
Aetna GET Fund (since 1994).
------------------------- ----------------------------------- ----------------------------------------------------------------------
</TABLE>
DIRECTOR NOT STANDING FOR REELECTION
Shaun P. Mathews, a former Director of each Company and an officer of
several affiliates of Aeltus, resigned as a Board member effective August 30,
2000 to permit the Company to comply with a regulatory requirement that during
the three year period immediately following the change in control of a fund's
investment adviser at least 75% of the fund's board must not be "interested
persons" of the investment adviser or the predecessor investment adviser within
the meaning of the Investment Company Act (see "General Information: Section
15(f) of the Investment Company Act" below).
OWNERSHIP OF FUND SHARES
In response to recommendations made by the Investment Company Institute's
Advisory Group on Best Practices for Fund Directors, the Board recently adopted
a policy requiring the Directors to invest, either directly or indirectly (e.g.,
through a variable annuity contract or through a deferred compensation plan), in
one or more funds within the fund complex on whose boards they serve. Each
Director holds a direct or indirect interest in the Funds or in other funds
advised by Aeltus for which he or she serves as a board member. Appendix 4
hereto sets forth the number of shares of each Fund held directly or indirectly
by the Directors. To the best of each Company's knowledge, as of September 30,
2000, no Director owned 1% or more of the outstanding shares of any Fund, and
the Directors of the Funds owned, as a group, less than 1% of the shares of each
Fund.
COMMITTEES
AUDIT COMMITTEE. The Board has an Audit Committee whose function is to
assist the Board in fulfilling its responsibilities to shareholders of the Funds
relating to accounting and reporting, internal controls and the adequacy of
auditing relative thereto. The Committee currently consists of Albert E.
DePrince, Jr., Maria T. Fighetti, David L. Grove, Sidney Koch, Corine T.
Norgaard, and Richard G. Scheide. Mr. Scheide and Ms. Fighetti serve as
Chairperson and Vice Chairperson, respectively, of the Committee. During the
fiscal year ended December 31, 1999, the Audit Committee met twice.
CONTRACTS COMMITTEE. The Board has a Contracts Committee whose function is
to review the Funds' contractual arrangements, including investment advisory,
subadvisory, distribution and administrative contracts, at least annually in
connection with considering the continuation of those contracts. The Committee
also may meet any time there is a proposal to materially amend any of those
contracts. The Contracts Committee currently consists of Albert E. DePrince,
Jr., Maria T. Fighetti, David L. Grove, Sidney Koch, Corine T. Norgaard, and
Richard G. Scheide. Dr. DePrince and Dr. Grove serve as Chairperson and Vice
Chairperson, respectively, of the Committee. The Contracts Committee met twice
during the fiscal year ended December 31, 1999.
NOMINATING COMMITTEE. The Board has a Nominating Committee for the purpose
of considering and presenting to the Board candidates it proposes for nomination
to fill independent Director vacancies on the Board. The Nominating Committee
currently consists of Albert E. DePrince, Jr., Maria T. Fighetti, David L.
Grove, Sidney Koch, Corine T. Norgaard, and Richard G. Scheide. Mr. Koch serves
as Chairperson of the Committee. The Companies do not currently have a policy
regarding whether the Nominating Committee will consider nominees recommended by
shareholders of the applicable Company. During the fiscal year ended December
31, 1999, the Nominating Committee did not meet.
5
<PAGE>
During the fiscal year ended December 31, 1999, the Board of each Company
held five meetings, except Aetna GET Fund and Aetna Variable Encore Fund d/b/a
Aetna Money Market VP which held six meetings and four meetings, respectively.
Each Director attended 100% of the aggregate of the total number of Board
meetings and meetings held by all committees of the Board on which he or she
served.
EXECUTIVE OFFICERS OF EACH COMPANY
Each Company's officers are elected by the Board and hold office until they
resign, are removed or are otherwise disqualified to serve. The executive
officers of each Company, together with such person's position with the Company
and principal occupation for the last five years, are listed in Appendix 5
attached hereto.
REMUNERATION OF DIRECTORS AND OFFICERS
For service on each Company's Board and the boards of other investment
companies in the Aetna fund complex, each Director who is not an "interested
person" of Aeltus is entitled to receive (i) an annual retainer of $48,000,
payable in equal quarterly installments; (ii) $5,000 per meeting for each Board
meeting in which the Director participates; (iii) $5,000 per meeting for each
Contracts Committee meeting in which the Director participates; (iv) $3,000 per
meeting, other than for a Contracts Committee meeting and the two regular Audit
Committee meetings, for each committee meeting in which the Director
participates; (v) $500 per meeting for each telephone conference meeting in
which the Director participates; (vi) $10,000 per annum for serving as
Chairperson of the Contracts Committee, payable in equal quarterly installments;
(vii) $5,000 per annum for serving as Chairperson of the Audit Committee,
payable in equal quarterly installments; (viii) $5,000 per annum for serving as
Chairperson of the Nominating Committee (in periods in which the Committee has
operated), payable in equal quarterly installments; (ix) $5,000 and $2,500 per
annum for serving as Committee Vice Chairperson of the Contracts and Audit
Committees, respectively, payable in equal quarterly installments; and (x)
reimbursement for out-of-pocket expenses. The pro rata share paid by each Fund
is based on the Fund's average net assets as a percentage of the average net
assets of all the funds managed by Aeltus for which the Directors serve in
common as directors as of the date the payment is due. None of the Directors is
entitled to receive pension or retirement benefits.
The following table sets forth the compensation paid to each of the
Directors for the fiscal year ended December 31, 1999. Figures in brackets
reflect that portion of the total compensation from a Company, or the Companies
and the fund complex, that was deferred by the Director. Directors and officers
of each Company who are also directors, officers or employees of Aetna and its
affiliates were not entitled to receive any compensation from the Company. In
the row titled "Total Compensation from Companies and Fund Complex Paid to
Directors," the number in parentheses indicates the total number of investment
company boards of directors in the Aetna fund complex on which the Director
served during the year.
<TABLE>
NAME OF PERSON, POSITION
<CAPTION>
Albert E. Richard G.
DePrince, Jr.,* Sidney Koch, Scheide,
Director, Director, Director,
Chairperson, Maria T. David L. Chairperson, Corine T. Chairperson,
Contracts Fighetti, Grove, Nominating Norgaard, Audit
Committee Director Director Committee Director Committee
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggregate Compensation from Aetna $37,044 $37,044 $38,232 $35,857 $35,857 $38,232
Variable Fund d/b/a Aetna [$11,873] [$38,232]
Growth and Income VP
Aggregate Compensation from Aetna $2,650 $2,650 $2,735 $2,565 $2,565 $2,735
Income Shares d/b/a Aetna Bond VP [$ 849] [$2,735]
Aggregate Compensation from Aetna $4,281 $4,281 $4,418 $4,144 $4,144 $4,418
Variable Encore Fund d/b/a Aetna [$1,372] [$4,418]
Money Market VP
Aggregate Compensation from Aetna $7,347 $7,347 $7,583 $7,112 $7,112 $7,583
Balanced VP, Inc. [$2,355] [$7,583]
Aggregate Compensation from Aetna $6,475 $6,475 $6,682 $6,267 $6,267 $6,682
GET Fund [$2,075] [$6,682]
Aggregate Compensation from Aetna $2,010 $2,010 $2,075 $1,945 $1,945 $2,074
Generation Portfolios, Inc. [$ 644] [$2,075]
Aggregate Compensation from Aetna $6,904 $6,904 $7,125 $6,683 $6,683 $7,125
Variable Portfolios, Inc. [$2,214] [$7,125]
</TABLE>
6
<PAGE>
<TABLE>
NAME OF PERSON, POSITION
<CAPTION>
Albert E. Richard G.
DePrince, Jr.,* Sidney Koch, Scheide,
Director, Director, Director,
Chairperson, Maria T. David L. Chairperson, Corine T. Chairperson,
Contracts Fighetti, Grove, Nominating Norgaard, Audit
Committee Director Director Committee Director Committee
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
TOTAL COMPENSATION FROM COMPANIES $78,000 $78,000 $80,500 $75,500 $75,500 $80,500
AND FUND COMPLEX (8 companies) [$25,000] [$80,500] (8 companies) (8 companies) (8 companies)
PAID TO DIRECTORS# (8 companies) (8 companies)
</TABLE>
---------------------------------
# Directors and officers hold the same positions with Aetna Series Fund, Inc.,
another investment company in the same fund complex.
* Dr. DePrince replaced Dr. Grove as Chairperson of the Contracts Committee as
of April 2000.
VOTE REQUIRED
The affirmative vote of a plurality of the shares of each Company voting at
the Special Meeting is required to approve the election of each Nominee to that
Company's Board.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE NOMINEES
UNDER PROPOSAL NO. 1.
7
<PAGE>
PROPOSAL NO. 2
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
Shareholders of each of the Funds are being asked to approve a new
Investment Advisory Agreement (the "New Agreement") between the applicable
Company, on behalf of their Fund (where applicable), and Aeltus. APPROVAL OF THE
NEW AGREEMENTS IS SOUGHT SO THAT THE MANAGEMENT OF EACH FUND CAN CONTINUE
UNINTERRUPTED AFTER THE TRANSACTION, BECAUSE THE CURRENT INVESTMENT ADVISORY
AGREEMENTS (THE "CURRENT AGREEMENTS") MAY TERMINATE AUTOMATICALLY AS A RESULT OF
THE TRANSACTION.
Aetna's goal is to complete the Transaction during the fourth quarter of
2000. As a result of the Transaction, Aetna will become a wholly owned
subsidiary of ING America Insurance Holdings, Inc., a subsidiary of ING. Aeltus
will remain an indirect wholly owned subsidiary of Aetna, although Aetna will be
renamed in connection with the Transaction. The change in ownership of Aeltus
resulting from the Transaction may be deemed under the Investment Company Act to
be an assignment of the Current Agreements. The Current Agreements provide for
their automatic termination upon an assignment. Accordingly, the New Agreements
between Aeltus and the Funds are proposed for approval by shareholders of each
Fund. Forms of the New Agreements are attached as Exhibits A and B to this Proxy
Statement and the description of their terms in this section is qualified in its
entirety by reference to Exhibits A and B.
Appendix 6 shows the date when each Fund commenced operations, the date of
each Current Agreement, and the dates when each Fund's Current Agreement was
last approved by the Board and the applicable Fund's shareholders (or, in some
cases, a Fund's sole initial shareholder). In December 1999, the Board approved
the revision of certain Funds' Investment Advisory Agreements in order to
continue specific expense limitation provisions and to make immaterial changes
to clarify certain provisions and to promote uniformity among all the
Agreements.
Aeltus does not anticipate that the Transaction will cause any reduction in
the quality of services now provided to the Funds or have any adverse effect on
Aeltus' ability to fulfill its obligations to the Funds.
At the September 27, 2000 meeting of the Board, each New Agreement was
approved unanimously by the Board, including all of the Directors who are not
interested parties to the New Agreements or interested persons of such parties.
Each New Agreement as approved by the Board is submitted for approval by the
shareholders of the Fund to which the New Agreement applies. Each New Agreement
must be voted upon separately by the shareholders of the Fund to which it
pertains.
If the New Agreements are approved by shareholders, they will take effect
immediately after the closing of the Transaction. The New Agreements will remain
in effect through December 31, 2001, and, unless earlier terminated, will
continue from year to year thereafter, provided that each such continuance is
approved annually with respect to each Fund (i) by the Board or by the vote of a
majority of the outstanding voting securities of the particular Fund, and, in
either case, (ii) by a majority of the Directors who are not parties to the New
Agreement or "interested persons" of any such party (other than as Directors of
the Company).
THE TERMS OF THE NEW AGREEMENTS
The terms of each New Agreement will be the same in all material respects
as those of its respective Current Agreement, except for the effective dates and
the extension of expense limitation provisions through December 31, 2001 for
certain Funds. In addition, certain other nonmaterial, clarifying modifications
have been made to each New Agreement in order to promote consistency among all
of the funds currently advised by Aeltus and to permit ease of administration,
and, in the case of those Companies established as Massachusetts business
trusts, a provision has been added to clarify that Fund assets alone are
available to satisfy claims against or obligations assumed by the Fund pursuant
to the Agreement. Each New Agreement requires Aeltus, subject to the policies
and control of the Board, to (i) supervise all aspects of the operations of the
applicable Fund, (ii) select the securities to be purchased, sold or exchanged
by the Fund or otherwise represented in the Fund's investment portfolio, place
trades for all such securities and regularly report thereon to the Board, (iii)
formulate and implement continuing programs for the purchase and sale of
securities and regularly report thereon to the Board, (iv) obtain and evaluate
pertinent information about significant developments and economic, statistical
and financial data, domestic, foreign or otherwise, whether affecting the
economy generally, the Fund, securities held by or under consideration for the
Fund, or the issuers of those securities, (v) provide economic research and
securities analyses as Aeltus considers necessary or advisable in connection
with Aeltus' performance of its duties thereunder, (vi) obtain the services of,
contract with, and provide instructions to custodians and/or subcustodians of
the Fund's securities, transfer agents, dividend paying agents, pricing services
and other service providers as are necessary to carry out the terms of the
Agreement, and (vii) take any other actions which appear to Aeltus and the Board
necessary to carry into effect the purposes of the Agreement. Any investment
program undertaken by Aeltus pursuant to each New Agreement, as well as any
other activities undertaken by Aeltus on behalf of the applicable Fund pursuant
thereto, shall at all times be subject to any directives of the Board. Under the
New Agreements, subject to the approval of the Board and the shareholders of a
Fund, Aeltus may enter into a subadvisory agreement to engage a subadviser to
Aeltus with respect to the Fund.
This Proposal to approve the New Agreements seeks no increase in advisory
fees for any of the Funds. The annual advisory fees under the New Agreements for
each Fund are listed in Appendix 7 to this Proxy Statement.
Each New Agreement provides that Aeltus shall place all orders for the
purchase and sale of portfolio securities for the applicable Fund with brokers
or dealers selected by Aeltus, which may include brokers or dealers affiliated
with Aeltus. Aeltus is obligated to use its best
8
<PAGE>
efforts to seek to execute portfolio transactions at prices that are
advantageous to the Fund and at commission rates that are reasonable in relation
to the benefits received. Under each New Agreement, in selecting broker-dealers
qualified to execute a particular transaction, brokers or dealers may be
selected who also provide brokerage or research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934 (the "Exchange
Act")) to Aeltus and/or the other accounts over which Aeltus or its affiliates
exercise investment discretion. Aeltus is authorized to pay a broker or dealer
who provides such brokerage or research services a commission for executing a
portfolio transaction for the Fund that is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
Aeltus determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage or research services provided by such
broker or dealer and is paid in compliance with Section 28(e).
Under each New Agreement, upon the request of the Board, Aeltus may perform
certain accounting, shareholder servicing or other administrative services on
behalf of the applicable Fund that are not required by the New Agreement. Such
services will be performed on behalf of the Fund and Aeltus may receive from the
Fund such reimbursement for costs or reasonable compensation for such services
as may be agreed upon between Aeltus and the Board on a finding by the Board
that the provision of such services by Aeltus is in the best interests of the
Fund and its shareholders. Payment or assumption by Aeltus of any Fund expense
that Aeltus is not otherwise required to pay or assume under the New Agreement
shall not relieve Aeltus of any of its obligations to the Fund nor obligate
Aeltus to pay or assume any similar Fund expense on any subsequent occasions.
Each New Agreement provides that the services of Aeltus to a Fund are not
to be deemed to be exclusive, and Aeltus 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 the New Agreement
are not impaired thereby.
Like the Current Agreements, each New Agreement provides that Aeltus 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 Aeltus or its officers, directors or employees, that is found to
involve willful misfeasance, bad faith or negligence, or reckless disregard by
Aeltus of its duties under the New Agreement, in connection with the services
rendered by Aeltus thereunder.
Each New Agreement applicable to Aetna GET Fund, Aetna Variable Encore Fund
d/b/a Aetna Money Market VP, Aetna Income Shares d/b/a Aetna Bond VP, and Aetna
Variable Fund d/b/a Aetna Growth and Income VP, each established as a
Massachusetts business trust, contains a new section which provides that the
applicable Company's Declaration of Trust ("Declaration"), a copy of which,
together with all amendments thereto, is on file in the Office of the Secretary
of the Commonwealth of Massachusetts, that the name of the Company refers to the
Trustees under the Declaration collectively as Trustees and not as individuals
or personally, and that no shareholder of the Company or the relevant Fund,
where applicable, or Trustee, officer, employee or agent of the Company, shall
be subject to claims against or obligations of the Company or the Fund, where
applicable, to any extent whatsoever, but that the trust estate only shall be
liable. Each New Agreement expressly puts Aeltus on notice of the limitation of
liability as set forth in the Declaration and that the obligations assumed by
the Company, on behalf of the Fund (where applicable), pursuant to the Agreement
shall be limited in all cases to the Company, or, where applicable, the Fund,
and its assets, and Aeltus shall not seek satisfaction of any such obligation
from the shareholders or any shareholder of the Company, or, where applicable,
the Fund, or any other portfolio of the Company, or from any Trustee, officer,
employee or agent of the Company. Under each New Agreement applicable to a
Company with multiple portfolios, Aeltus represents that it understands that the
rights and obligations of each Fund, or portfolio, under the Declaration are
separate and distinct from those of any and all other portfolios.
Each New 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 applicable
Fund's outstanding voting securities (as defined in Section 2(a)(42) of the
Investment Company Act), or by Aeltus, on sixty (60) days' written notice to the
other party. Notice provided for in the Agreement may be waived by the party
required to be notified. Each New Agreement will automatically terminate in the
event of its "assignment" as defined in Section 2(a)(4) of the Investment
Company Act.
EXPENSE LIMITATIONS
Under each New Agreement, the applicable Fund generally pays all fees and
expenses incurred in connection with its management, except that Aeltus is
specifically responsible for the salaries, employment benefits and other related
costs and expenses of those of its personnel engaged in providing investment
advice to the Fund, including without limitation, office space, office
equipment, telephone and postage costs, and all fees and expenses of all
Directors, officers and employees, if any, of the applicable Company who are
employees of Aeltus, including any salaries and employment benefits payable to
those persons. The Current Agreements applicable to certain Funds contain a
provision obligating Aeltus to limit the expenses of those Funds until December
31, 2000, or, in the case of Series D, Series E, Series G, Series H, Series I,
Series J and Series K of Aetna GET Fund, indefinitely. The expense limits for
the Funds that have such arrangements are shown in Appendix 8. The terms of the
expense limitation provisions set forth in the New Agreements are the same as
those currently in effect, except that Aeltus has agreed to extend the expense
limitations through December 31, 2001 for those Funds whose expense limitations
would otherwise expire at the end of 2000.
9
<PAGE>
INFORMATION ABOUT AELTUS
Aeltus Investment Management, Inc. is a Connecticut corporation organized
in 1972. It currently has its principal offices at 10 State House Square,
Hartford, Connecticut 06103-3602. Aeltus is an indirect wholly owned subsidiary
of Aetna, a financial services company with stock listed for trading on the New
York Stock Exchange. Please refer to Appendix 9 to this Proxy Statement for the
name of Aeltus' parent company and the names of its immediate parents. Appendix
9 also contains a list of the principal executive officer and directors of
Aeltus and identifies those individuals serving as officers and/or Directors of
each Company that are also officers and/or directors of Aeltus. Aeltus is
registered with the Securities and Exchange Commission ("SEC") as an investment
adviser.
Appendix 10 sets forth the amount of investment advisory fees that have
been paid by the Funds to Aeltus during each Fund's most recent fiscal year.
Please refer to Appendix 11 for a list of other investment companies with
investment objectives similar to those of the Funds for which Aeltus acts as
investment adviser, including the rates of Aeltus' compensation from such
investment companies.
In addition to providing investment advisory services, Aeltus serves as
each Fund's administrator pursuant to an Administrative Services Agreement and
provides certain administrative and shareholder services necessary for Fund
operations. These services include: (a) internal accounting services; (b)
monitoring regulatory compliance, such as reports and filings with the SEC and
state securities commissions; (c) preparing financial information for proxy
statements; (d) preparing semi-annual and annual reports to shareholders; (e)
calculating the net asset value; (f) preparation of certain shareholder
communications; (g) supervising the custodian and transfer agent; and (h)
reporting to the Board. For its services, Aeltus is entitled to receive from
each Fund a fee at an annual rate of 0.075% of the Fund's average daily net
assets on the first $5 billion and 0.050% on all assets over $5 billion.
Appendix 12 to this Proxy Statement identifies fees that have been paid by the
Funds to Aeltus for administrative services during each Fund's most recent
fiscal year.
Each Company's principal underwriter is Aetna Investment Services, Inc.
("AISI"), 151 Farmington Avenue, Hartford, Connecticut 06156, a Connecticut
corporation and an indirect wholly owned subsidiary of Aetna.
It is anticipated that Aeltus and AISI will continue to provide
administrative and distribution services, respectively, to the Funds after the
approval of the New Agreements.
From time to time, Aeltus receives brokerage and research services from
brokers that execute securities transactions for certain of the Funds. The
commission paid by a Fund to a broker that provides such services to Aeltus may
be greater than the commission would be if the Fund used a broker that does not
provide the same level of brokerage and research services. Additionally, Aeltus
may use such services for clients other than the specific Fund or Funds from
which the related commissions are derived. The Funds have not effected any
brokerage transactions in portfolio securities with Aeltus or any other
affiliated person of the applicable Company.
INTERESTS OF EXECUTIVE OFFICERS AND DIRECTORS IN THE TRANSACTION
The Funds' executive officers and its Directors who are affiliated with
Aetna are, in certain cases, shareholders of Aetna. If the Transaction is
completed, Aetna shareholders will receive one share of common stock of the
health care company to be formed in connection with the Transaction and
approximately $35 in cash for each share of Aetna common stock that they own.
The exact amount of cash Aetna shareholders will receive for each share of Aetna
common stock that they own will depend on a number of factors, including the
number of shares of Aetna common stock that are outstanding as of completion of
the Transaction, the amount of unpaid interest that has accrued as of the
closing on certain Aetna debt to be assumed by ING and certain other matters.
The Funds' executive officers and its Directors who are affiliated with
Aetna may have interests in the Transaction that are different from, or in
addition to, their interests as shareholders of Aetna generally. Aetna's Board
of Directors previously approved provisions to protect certain benefits of Aetna
employees upon a change in control of Aetna, which includes the Transaction. The
provisions provide that the Aetna severance plan (described below) will become
noncancellable for a period of two years following a change in control. Also,
all previously granted stock options that have not yet vested will become vested
and immediately exercisable. In addition, long-term incentive awards granted
under Aetna's 1996 Stock Incentive Plan and Aeltus' Equity Share Plan will vest
and be paid out as a result of the Transaction. Awards granted under Aeltus'
Performance Unit Incentive Compensation Plan, to the extent already vested, will
be paid out as of the closing of the Transaction. In connection with the closing
of the Transaction, Aetna also may pay other bonuses.
Aetna administers a severance plan under which employees terminated by
Aetna without cause may receive up to two weeks of continuing salary for every
credited full year of employment to a maximum of one year's salary. In addition,
when an employee's job is eliminated due to reengineering, reorganization or
staff reduction efforts, an employee, including Aetna's executive officers, are
eligible for an additional 13 weeks of salary continuation and outplacement
assistance. Under certain circumstances, determined on a case-by-case basis,
additional severance pay benefits will be granted for the purposes of inducing
employment of senior officers or rewarding past service. Certain benefits
continue during the severance pay and salary continuation periods.
John Kim, President and Chief Executive Officer of Aeltus, has been
informed that following the completion of the Transaction, he will assume a
senior management position within the ING organization.
10
<PAGE>
EVALUATION BY THE BOARD
In determining whether to approve the New Agreements and to recommend their
approval to shareholders, the Board, including the Directors who are not
interested persons of Aeltus (the "Independent Directors"), considered various
materials and representations provided by Aeltus and ING and met with senior
representatives of Aeltus and a senior representative of ING. The Independent
Directors were advised by independent legal counsel throughout this process.
Each Company's Contracts Committee, consisting of the Independent Directors, met
on September 7, 2000 and September 26, 2000, and the full Board met on September
27, 2000, to review and consider, among other things, information relating to
the New Agreements.
In preparing for the meetings, the Directors were provided with a variety
of information about ING, the Transaction and Aeltus. The Directors received
copies of the agreement governing the Transaction, ING's most recent financial
statements and the New and Current Advisory and Subadvisory Agreements. The
Directors also reviewed information concerning (1) ING's organizational
structure and senior personnel; (2) ING's operations and, in particular, its
mutual fund advisory and distribution activities; (3) ING's recent acquisition
of ReliaStar Financial Corp.; (4) the personnel, operations and financial
condition, and investment management capabilities, methodologies, and
performance of Aeltus as investment adviser to the Funds; and (5) the services
provided by AISI as principal underwriter to the Funds and Aeltus as
administrator to the Funds, including the fees received by Aeltus for such
administrative services. At the meetings, the Directors were informed that (1)
Aeltus and ING do not expect Fund operations to be materially affected by the
Transaction and that neither entity expects there to be changes in the
investment personnel primarily responsible for the management of the Funds in
connection with the Transaction; (2) the senior management personnel responsible
for the management of Aeltus are expected to continue to be responsible for the
management of Aeltus; (3) the compensation to be received by Aeltus under the
New Agreements is the same as the compensation paid under the Current
Agreements; (4) Aetna and ING will each use its reasonable best efforts to
ensure that an "unfair burden" (as defined in the Investment Company Act) is not
imposed on the Funds as a result of the Transaction; and (5) Aeltus intends to
maintain any expense limitations currently in effect for the period contemplated
by the applicable provision. The Directors were also informed of measures taken
by Aeltus to ensure continuity of key personnel involved in Fund operations. In
the course of their deliberations, the Directors considered, in addition to the
above information and representations, (1) the commonality of the terms and
provisions of the New Agreements and the Current Agreements; (2) that the terms
of the New Agreements will permit the Directors to review the New Agreements
again in 2001; (3) ING's general reputation and its commitment to the advisory
business; (4) the potential for economies of scale to be achieved in light of
existing ING businesses; (5) the nature and quality of the services rendered by
Aeltus under the Current Agreements; and (6) the advantages to each Fund of
maintaining Aeltus as the Fund's adviser, which would provide continued access
to the demonstrated skills and capability of Aeltus' staff. In addition, the
Directors reviewed the fairness of the compensation payable to Aeltus under the
New Agreements.
Based upon the foregoing information and considerations, the Board
determined that each Fund's New Agreement is in the Fund's and its shareholders'
best interests. Accordingly, the Directors, including the Independent Directors,
unanimously voted to approve the New Agreement for each Fund and to submit the
Agreement to shareholders for approval.
The effectiveness of this Proposal No. 2 is conditioned on the consummation
of the Transaction. Accordingly, in the event that the Transaction is not
consummated, Aeltus will continue to manage the Funds pursuant to the Current
Agreements. If the shareholders of a Fund should fail to approve the New
Agreement pertaining to that Fund, the Board shall meet to consider appropriate
action for that Fund.
VOTE REQUIRED
Shareholders of each Fund must separately approve the applicable New
Agreement with respect to that Fund. Approval of this Proposal No. 2 by a Fund
requires an affirmative vote of the lesser of (i) 67% or more of the Fund's
shares present at the Special Meeting if more than 50% of the outstanding shares
of the Fund are present or represented by proxy, or (ii) more than 50% of the
outstanding shares of the Fund.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL NO. 2.
11
<PAGE>
PROPOSAL NO. 3
APPROVAL OF SUBADVISORY AGREEMENT
(AETNA TECHNOLOGY VP ONLY)
Shareholders of Aetna Technology VP ("Technology") are being asked to
approve a new Subadvisory Agreement with Elijah Asset Management, LLC ("EAM"),
for that Fund. SHAREHOLDER APPROVAL OF A NEW SUBADVISORY AGREEMENT (THE "NEW
SUBADVISORY AGREEMENT") IS BEING SOUGHT SO THAT THE MANAGEMENT OF TECHNOLOGY CAN
CONTINUE UNINTERRUPTED AFTER THE TRANSACTION, BECAUSE THE CURRENT SUBADVISORY
AGREEMENT (THE "CURRENT SUBADVISORY AGREEMENT") FOR TECHNOLOGY MAY TERMINATE
AUTOMATICALLY AS A RESULT OF THE TRANSACTION. The form of New Subadvisory
Agreement is attached to this Proxy Statement as Exhibit C and the description
of its terms in this section is qualified in its entirety by reference to
Exhibit C.
While the Board of Aetna Variable Portfolios, Inc. ("AVPI") is seeking
shareholder approval of the New Subadvisory Agreement, this Agreement does not
restrict the ability of AVPI's Board to terminate or replace the subadviser for
Technology at any time in the future, subject to any shareholder approval that
may be required.
The New Subadvisory Agreement must be voted upon separately by shareholders
of Technology. If the New Subadvisory Agreement is approved by shareholders of
Technology, it will take effect immediately after the closing of the
Transaction. It will remain in effect through December 31, 2001, and, unless
earlier terminated, will continue in effect from year to year thereafter,
provided that each such continuance is approved at least annually (i) by the
Board of AVPI or by the vote of a majority of the outstanding voting securities
of Technology, and, in either case, (ii) by a majority of AVPI's Directors who
are not parties to the New Subadvisory Agreement or "interested persons" of any
such party (other than as Directors of AVPI).
At the September 27, 2000 meeting of the Board of AVPI, the New Subadvisory
Agreement was approved unanimously by the Board of AVPI, including all of the
Directors who are not interested parties to the New Subadvisory Agreement or
interested persons of such parties.
TERMS OF THE NEW SUBADVISORY AGREEMENT
The terms of the New Subadvisory Agreement will be the same in all material
respects as those of the Current Subadvisory Agreement, except for the effective
dates. In addition, the New Subadvisory Agreement incorporates immaterial
changes to clarify certain provisions. The New Subadvisory Agreement, like the
Current Subadvisory Agreement, requires EAM, under the supervision of Aeltus and
subject to the approval and direction of the Board of AVPI, to manage
Technology's assets.
The New Subadvisory Agreement states that EAM shall regularly provide
investment advice with respect to the assets held by Technology and shall
continuously supervise the investment and reinvestment of securities,
instruments or other property (excluding cash and cash instruments) comprising
the assets of Technology. In carrying out these duties, EAM is required to: (i)
select the securities (other than cash instruments) to be purchased, sold or
exchanged by Technology or otherwise represented in Technology's investment
portfolio and regularly report thereon to Aeltus and, at the request of Aeltus,
to the Board of AVPI; (ii) place trade orders with broker-dealers (which may
include brokers or dealers affiliated with Aeltus or EAM), subject to EAM's
obligation to use its best efforts to seek to execute portfolio transactions at
prices that are advantageous to Technology giving consideration to the services
and research provided and at commission rates that are reasonable in relation to
the benefits received; (iii) formulate and implement continuing programs for the
purchase and sale of securities (other than cash instruments) and regularly
report thereon to Aeltus and, at the request of Aeltus or Technology, to the
Board of AVPI; (iv) inform Aeltus on a daily basis of the amount of Fund assets
that will need to be invested or reinvested in cash and cash instruments; and
(v) establish and maintain appropriate policies and procedures including, but
not limited to, a code of ethics, which are designed to ensure that the
management of Technology is implemented in compliance with the Investment
Company Act, the Investment Advisers Act of 1940 ("Advisers Act"), and the rules
thereunder. Any investment program undertaken by EAM pursuant to the Agreement,
as well as any other activities undertaken by EAM at the direction of Aeltus, on
behalf of Technology, shall at all times be subject to any directives of the
Board of AVPI.
Under the New Subadvisory Agreement, Aeltus retains responsibility for
oversight of all activities of EAM and for monitoring its activities on behalf
of Technology. Aeltus also is responsible for the investment and reinvestment of
cash and cash instruments maintained by Technology. In carrying out its
obligations under the New Subadvisory Agreement and the new Investment Advisory
Agreement applicable to Technology, Aeltus will: (i) monitor the investment
program maintained by EAM for Technology and EAM's compliance program to ensure
that Technology's assets are invested in compliance with the New Subadvisory
Agreement and Technology's investment objectives and policies as adopted by the
Board of AVPI and described in the most current effective amendment of the
registration statement for Technology, as filed with the SEC under the
Securities Act of 1933 and the Investment Company Act; (ii) formulate and
implement continuing programs for the purchase and sale of cash and cash
instruments; (iii) file all periodic reports pertaining to Technology required
to be filed with the applicable regulatory authorities; (iv) review and deliver
to the Board of AVPI all financial, performance and other reports prepared by
EAM and/or Aeltus under the provisions of the New Subadvisory Agreement or as
requested by the Board of AVPI; (v) maintain contact with and enter into
arrangements with the custodian, transfer agent, auditors, outside counsel, and
other third parties providing services to Technology; and (vi) give instructions
to the custodian and/or sub-custodian of Technology concerning deliveries of
securities and payments of cash for Technology, as required to carry out the
investment activities of Technology as
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contemplated by the New Subadvisory Agreement. Under the New Subadvisory
Agreement, to the extent that Technology incurs a loss as a result of Aeltus'
failure to adequately fulfill its duties thereunder, and not as a result of
EAM's negligence, Aeltus agrees that it shall be solely responsible to make
Technology whole.
Under the New Subadvisory Agreement, EAM represents that it has in place
compliance systems and procedures designed to meet the requirements of the
Advisers Act and the Investment Company Act and it shall at all times assure
that its activities in connection with managing Technology follow these
procedures.
The New Subadvisory Agreement provides that in selecting broker-dealers
qualified to execute a particular equity transaction, brokers or dealers may be
selected who also provide brokerage or research services (as those terms are
defined in Section 28(e) of the Exchange Act) to EAM and/or the other accounts
over which EAM or its affiliates exercise investment discretion. EAM is
authorized to pay a broker or dealer that provides such brokerage or research
services a commission for executing a portfolio transaction for Technology that
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if EAM determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage or
research services provided by such broker or dealer and is paid in compliance
with Section 28(e).
EAM is obligated under the New Subadvisory Agreement to pay the salaries,
employment benefits and other related costs of those of its personnel engaged in
providing investment advice to Technology, but is not responsible for any other
expenses related to the operation of Technology.
EAM's services with respect to Technology are not to be deemed to be
exclusive, and EAM shall be free to render investment advisory and
administrative or other services to others (including other investment
companies) and to engage in other activities.
The fees payable to EAM, which are paid by Aeltus and not by Technology,
will remain the same under the New Subadvisory Agreement. The New Subadvisory
Agreement provides for the payment of an annual fee equal to 0.50% of the
average daily net assets in Technology.
Like the Current Subadvisory Agreement, the New Subadvisory Agreement
provides that EAM shall be liable to Technology and Aeltus and shall indemnify
Technology and Aeltus for any losses incurred by Technology or Aeltus 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 EAM or its officers,
directors or employees, that is found to involve willful misfeasance, bad faith
or negligence, or reckless disregard by EAM of its duties under the New
Subadvisory Agreement, in connection with the services rendered by EAM
thereunder. Aeltus shall be liable to Technology and EAM and shall indemnify
Technology and EAM for any losses incurred by Technology or EAM 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 Aeltus or its officers,
directors or employees, that is found to involve willful misfeasance, bad faith
or negligence, or reckless disregard by Aeltus of its duties under the New
Subadvisory Agreement, in connection with the services rendered by Aeltus
thereunder. Nothing in the New Subadvisory Agreement shall relieve Aeltus of its
responsibilities to Technology, as set forth in the new Investment Advisory
Agreement.
The New Subadvisory Agreement may be terminated (i) at any time, without
the payment of any penalty, by vote of the Board of AVPI or by vote of a
majority of the outstanding voting securities of Technology; or (ii) by EAM on
sixty (60) days' written notice to both Aeltus and Technology, unless written
notice is waived by the party(ies) required to be notified; or (iii)
automatically in the event there is an "assignment" of this Agreement, as
defined in Section 2(a)(4) of the Investment Company Act.
INFORMATION ABOUT EAM
Elijah Asset Management, LLC, 100 Pine Street, Suite 420, San Francisco,
California 94111, a Delaware limited liability company formed in January 1999,
currently manages over $1.5 billion. Aeltus owns 25% of the outstanding voting
interests of EAM. Ronald E. Elijah owns 75% of the outstanding voting interests
of EAM. Please refer to Appendix 13 for information concerning EAM's officers.
EAM is registered with the SEC as an investment adviser.
EAM provides investment advisory services for public and private investment
funds, institutions, offshore funds, high net worth individuals and others. EAM
also serves as subadviser to RS Information Age Fund, a registered investment
company not part of the Aetna fund complex with assets of $375,021,878 as of
July 31, 2000 that has an investment objective similar to that of Technology.
For the services it provides to RS Information Age Fund, EAM receives an annual
subadvisory fee equal to 0.50% of the fund's average daily net assets. EAM has
not waived, reduced or otherwise agreed to reduce its compensation from RS
Information Age Fund.
EAM has managed Technology pursuant to the Current Subadvisory Agreement
dated January 19, 2000. The Current Subadvisory Agreement was last approved by
the Board of AVPI on December 15, 1999 and by the sole initial shareholder of
Technology effective April 28, 2000. At its September 27, 2000 meeting, the
Board of AVPI approved the renewal of the Current Subadvisory Agreement for the
period January 1 through December 31, 2001 in the event that the Transaction is
not consummated. No fees were received by EAM for the fiscal year ended December
31, 1999, since Technology commenced operations on May 1, 2000.
From time to time, EAM receives brokerage and research services from
brokers that execute securities transactions for Technology. The commission paid
by Technology to a broker that provides such services to EAM may be greater than
the commission would be if
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Technology used a broker that does not provide the same level of brokerage and
research services. Additionally, EAM may use such services for clients other
than Technology. Technology has not effected any brokerage transactions in
portfolio securities with Aeltus, EAM or any other affiliated person of AVPI.
EVALUATION BY THE BOARD OF AVPI
In determining whether or not it was appropriate to approve the New
Subadvisory Agreement for Technology and to recommend its approval to
shareholders, the Board of AVPI considered, among other things, the fact that
Technology will continue to be managed by EAM, that the compensation to be
received by EAM under the New Subadvisory Agreement is the same as the
compensation paid under the Current Subadvisory Agreement, that the other terms
of the New Subadvisory Agreement are substantially similar to those of the
Current Subadvisory Agreement and that the Transaction is not otherwise expected
to have any effect on services rendered by EAM. Further, the Board of AVPI
considered (1) the nature and quality of the services rendered by EAM under the
Current Subadvisory Agreement; (2) the fairness of the compensation payable to
EAM under the New Subadvisory Agreement; (3) the results achieved by EAM for
Technology; and (4) the personnel, operations and financial condition, and
investment management capabilities, methodologies, and performance of EAM. The
Board also noted the factors cited in the preceding Proposal with respect to
ING, Aeltus and the approval of a New Agreement for Technology and the
advantages to Technology of maintaining EAM as the Fund's subadviser, which
would provide continued access to the demonstrated skills and capability of
EAM's staff.
Based upon its review, the Board of AVPI has determined that, by approving
the New Subadvisory Agreement, Technology can best be assured that services from
EAM will be provided without interruption. The Board of AVPI believes that
retaining EAM is in the best interests of Technology and its shareholders.
Accordingly, after consideration of the above factors, and such other factors
and information it considered relevant, the Board of AVPI unanimously approved
the New Subadvisory Agreement and voted to recommend its approval by
Technology's shareholders.
The effectiveness of this Proposal No. 3 is conditioned on the consummation
of the Transaction. Accordingly, in the event that the Transaction is not
consummated, EAM will continue to manage Technology pursuant to the Current
Subadvisory Agreement. If the shareholders of Technology should fail to approve
the New Subadvisory Agreement, the Board of AVPI shall meet to consider
appropriate action.
VOTE REQUIRED
Approval of this Proposal No. 3 by Technology requires an affirmative vote
of the lesser of (i) 67% or more of Technology's shares present at the Special
Meeting if more than 50% of the outstanding shares of Technology are present or
represented by proxy, or (ii) more than 50% of the outstanding shares of
Technology.
THE BOARD OF AVPI RECOMMENDS THAT SHAREHOLDERS OF TECHNOLOGY
VOTE "FOR" THIS PROPOSAL NO. 3.
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PROPOSAL NO. 4
APPROVAL OF AMENDMENT TO
DECLARATION OF TRUST
(AETNA VARIABLE ENCORE FUND D/B/A AETNA MONEY MARKET VP, AETNA
INCOME SHARES D/B/A AETNA BOND VP, AETNA VARIABLE FUND D/B/A AETNA
GROWTH AND INCOME VP AND THE SERIES OF
AETNA GET FUND ONLY)
The Trustees of Aetna Variable Encore Fund d/b/a Aetna Money Market VP,
Aetna Income Shares d/b/a Aetna Bond VP, Aetna Variable Fund d/b/a Aetna Growth
and Income VP and Aetna GET Fund (each a "Trust") have approved, and recommend
that shareholders approve, an amendment to each Trust's Declaration of Trust
("Declaration"). Specifically, the amendment would replace the current
requirement in Article X, Section 10.4 of each Trust's Declaration that the
Board set a record date for the determination of shareholders entitled to vote
at a shareholder meeting not more than 60 days prior to the meeting with the
authority to establish a record date not more than 90 days prior to the meeting
date.
Management believes and has advised the Board that extending the period of
time within which the Board may establish a record date would provide additional
administrative flexibility and could prevent otherwise unnecessary expenses for
the Trusts. For instance, in the event that it is necessary to call a
shareholder meeting, the extra 30 days afforded by the proposed amendment would
permit management more time to collect data and print and mail proxy materials.
In addition, this would result in a longer period for the solicitation of
proxies to ensure a quorum at the shareholder meeting and may save the necessity
and expense of having to adjourn the meeting for further solicitations.
Accordingly, if approved by the applicable Trust's shareholders, the relevant
section in the Trust's Declaration would be modified as follows:
10.4. Record Date for Meetings. For the purpose of determining
the Shareholders who are entitled to notice of and to vote at
any meeting, or to participate in any distribution, or for the
purpose of any other action, the Trustees may from time to
time close the transfer books for such period, not exceeding
30 days, as the Trustees may determine; or without closing the
transfer books the Trustees may fix a date not more than [60]
90 days prior to the date of any meeting of Shareholders [or
daily dividends]* or other action as a record date for the
determination of the persons to be treated as Shareholders of
record for such purposes, except for dividend payments, which
shall be governed by Section 9.2.
*Note: Language in brackets appears in Section 10.4 of each
Trust's Declaration except for that of Aetna GET Fund.
If the Proposal is approved, the amendment will take effect December 1,
2000 or, if the Special Meeting is adjourned with respect to a Trust, on the
first day of the month following the date on which the Trust's shareholders
approve the amendment. If a Trust's shareholders do not approve the amendment,
the current Section 10.4 contained in the Trust's Declaration will continue in
effect.
VOTE REQUIRED
Approval of this Proposal No. 4 requires the affirmative vote of a majority
of a Company's outstanding voting securities.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL NO. 4.
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PROPOSAL NO. 5
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Funds are being asked to ratify the selection of the accounting firm of
KPMG LLP ("KPMG") to act as the independent auditors for each Company for the
fiscal year ending December 31, 2001.
At a meeting of the Board held on September 27, 2000, the Board, including
a majority of Independent Directors, selected KPMG to act as the independent
auditors for the fiscal year ending December 31, 2001.
KPMG or its predecessor has served as independent auditors for each Company
with respect to its financial statements since the Company's inception.
KPMG has advised each Company that it is an independent auditing firm and
has no direct financial or material indirect financial interest in the Company.
Representatives of KPMG are not expected to be at the Special Meeting, but have
been given the opportunity to make a statement if they wish, and will be
available telephonically should any matter arise requiring their participation.
VOTE REQUIRED
The affirmative vote of a majority of the shares of each Company voted at
the Special Meeting is required to approve this Proposal No. 5 with respect to
the Company.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS PROPOSAL NO. 5.
GENERAL INFORMATION
OTHER MATTERS TO COME BEFORE THE MEETING
Management of the Funds does not know of any matters to be presented at the
Special Meeting other than those described in this Proxy Statement. If other
business should properly come before the Meeting, the proxy holders will vote
thereon in accordance with their best judgment.
SECTION 15(f) OF THE INVESTMENT COMPANY ACT
ING and Aetna have agreed to use their reasonable best efforts to assure
compliance with the conditions of Section 15(f) of the Investment Company Act.
Section 15(f) provides a non-exclusive safe harbor for an investment adviser or
any affiliated persons thereof to receive any amount or benefit in connection
with a transaction that results in a change in control of or identity of the
investment adviser to an investment company as long as two conditions are met.
First, no "unfair burden" may be imposed on the investment company as a result
of the transaction relating to the change in control, or any express or implied
terms, conditions or understandings applicable thereto. As defined in the
Investment Company Act, the term "unfair burden" includes any arrangement during
the two-year period after the change in control whereby the investment adviser
(or predecessor or successor adviser), or any interested person of any such
adviser, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its security holders (other than fees
for bona fide investment advisory or other services), or from any person in
connection with the purchase or sale of securities or other property to, from,
or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter of the investment company). Second, during
the three year period immediately following the change in control, at least 75%
of an investment company's board of directors must not be "interested persons"
of the investment adviser or the predecessor investment adviser within the
meaning of the Investment Company Act.
VOTING RIGHTS
Shareholders of record on September 27, 2000 (the "record date") are
entitled to be present and to vote at the Special Meeting or any adjourned
meeting. Appendix 2 sets forth the number of shares of each Fund issued and
outstanding as of the record date.
As of August 31, 2000, Aetna Life Insurance and Annuity Company and its
affiliates, Aetna Insurance Company of America and Aetna Life Insurance Company
(collectively referred to herein as "Aetna Insurance") and Aeltus (in connection
with providing seed capital), owned of record all of the shares of the Funds
(100%), except for Aetna Income Shares d/b/a Aetna Bond VP and Aetna Variable
Fund d/b/a Aetna Growth and Income VP, of which Aetna Insurance owned
53,104,595.35 shares (99.39% of the outstanding shares) and 307,290,376.93
shares (99.47% of the outstanding shares), respectively. (The remaining
328,340.28 shares of Aetna Income Shares d/b/a Aetna Bond VP and 1,610,757.24
shares Aetna Variable Fund d/b/a Aetna Growth and Income VP were held directly
by shareholders who are not affiliated with Aetna Insurance.) Of the amounts
owned by Aetna Insurance, shares of each Fund were held by Aetna Insurance on
behalf of the separate accounts that fund variable annuity or variable life
insurance contracts (each a "Contract") issued to individual or group Contract
holders ("Contract Holders") as set forth in Appendix 3. To the best of each
Company's knowledge, as of August 31, 2000, no person owned beneficially more
than 5% of any Fund, except as set forth in Appendix 3.
The separate accounts invest in the Funds. Contract Holders (or
participants under group contracts, as applicable) who select a Fund for
investment through a Contract have a beneficial interest in the Funds, but do
not invest directly in or hold shares of the Funds. Aetna Insurance, on behalf
of the separate accounts, is, in most cases, the true shareholder of the Funds
and, as the legal owner of the Funds'
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shares, has sole voting and investment power with respect to the shares, but
generally will pass through any voting rights to Contract Holders. Contract
Holders therefore have the right to instruct Aetna Insurance how to vote their
interest with respect to the Proposals. Aetna Insurance will vote the shares of
each Fund held in Aetna Insurance's name for the separate accounts as directed
by the Contract Holder. The holders of certain group Contracts have the right to
direct the vote for all shares under the respective Contract, for, against or
abstaining, in the same proportions as shares for which instructions have been
given by participants covered by the Contract. This Proxy Statement is used to
solicit instructions for voting shares of each Fund. All persons entitled to
direct the voting of shares, whether they are Contract Holders, participants or
shareholders, are described as voting for purposes of this Proxy Statement.
In the event that any Contract Holder investing in the Funds through
Variable Annuity Accounts B, C or I or Variable Life Accounts B or C fails to
provide Aetna Insurance with voting instructions, Aetna Insurance will vote the
shares attributable to nonresponsive Contract Holders for, against or
abstaining, in the same proportions as the shares for which instructions have
been received from other Contract Holders investing through those separate
accounts. If an authorization card is returned by a Contract Holder without
indicating a voting instruction, Aetna Insurance will vote those shares "for"
the Proposals. With respect to Fund shares held by Variable Annuity Account D,
Aetna Insurance will only vote those separate account shares for which it
receives instructions. Shares of each Fund owned by Aetna Insurance through the
general account will be voted in the same proportion as shares held by the
separate accounts investing in that Fund. Abstentions will not be counted in
favor of, but will have no other effect on, Proposals 1 and 5, and will have the
effect of a "no" vote on Proposals 2, 3 and 4.
The presence in person or by proxy of a Fund's shareholders entitled to
cast a majority in number of votes (except Aetna Variable Encore Fund d/b/a
Aetna Money Market VP which requires one quarter) is necessary to constitute a
quorum for the transaction of business. Because Aetna Insurance is the legal
owner of nearly all Fund shares and will vote those shares as described above,
there will be a quorum at the Special Meeting with respect to most Funds
regardless of how Contract Holders direct Aetna Insurance to vote on the
Proposals. In the event that a quorum of shareholders is not represented at the
Special Meeting with respect to one or more Funds, however, the Meeting may be
adjourned by a majority of the applicable Fund's shareholders present in person
or by proxy until a quorum exists. If there are insufficient votes to approve a
Proposal, the persons named as proxies may propose one or more adjournments of
the Special Meeting to permit additional time for the solicitation of proxies,
in accordance with applicable law. Adjourned meetings must be held within a
reasonable time after the date originally set for the meeting (but not more than
120 days after the record date). Solicitation of votes may continue to be made
without any obligation to provide any additional notice of the adjournment. The
persons named as proxies will vote in favor of such adjournment those proxies
which they are entitled to vote in favor of the Proposal and will vote against
any such adjournment those proxies to be voted against the Proposal.
The number of shares that you may vote is the total of the number shown on
the proxy card or authorization card, as applicable, accompanying this Proxy
Statement. The number of shares that you are entitled to vote is calculated
according to the formula described in the materials relating to your Contract.
Shareholders are entitled to one vote for each full share and a proportionate
vote for each fractional share held. Any shareholder giving a proxy has the
power to revoke it by mail (addressed to the Secretary at the principal
executive office of the applicable Company at the address shown at the beginning
of this Proxy Statement) or in person at the Special Meeting, by executing a
superseding proxy card or authorization card, as applicable, or by submitting a
notice of revocation to the Company.
EXPENSES
Aeltus, ING, and/or one or more of their affiliates will pay the expenses
of the Funds in connection with this Notice and Proxy Statement and the Special
Meeting, including the printing, mailing, solicitation and vote tabulation
expenses, legal fees, and out-of-pocket expenses. The Funds will not bear the
expenses of the Proxy Statement.
ADDITIONAL PROXY SOLICITATION INFORMATION
In addition to solicitation by mail, certain officers and representatives
of the Company and officers and employees of Aeltus or its affiliates, who will
receive no extra compensation for their services, may solicit proxies by
telephone, telegram or personally.
SHAREHOLDER PROPOSALS
The Funds are not required to hold annual meetings of shareholders and
currently do not intend to hold such meetings unless shareholder action is
required in accordance with the Investment Company Act. A shareholder proposal
to be considered for inclusion in the proxy statement at any subsequent meeting
of shareholders must be submitted a reasonable time before the proxy statement
for that meeting is mailed. Whether a proposal is submitted in the proxy
statement will be determined in accordance with applicable federal and state
laws. The timely submission of a proposal does not guarantee its inclusion.
Please complete the enclosed proxy card(s) or authorization card(s), as
applicable, and return the card(s) promptly in the enclosed self-addressed,
postage-paid envelope.
By Order of the Boards,
/s/ Daniel E. Burton
Daniel E. Burton
Secretary
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EXHIBIT A
FORM OF NEW
INVESTMENT ADVISORY AGREEMENT
(APPLICABLE TO AETNA BALANCED VP, INC., AETNA VARIABLE ENCORE FUND, AETNA INCOME
SHARES, AND AETNA VARIABLE FUND ONLY)
THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT, INC. a
Connecticut corporation (the "Adviser") and [AETNA BALANCED VP, INC., a Maryland
corporation (the "Fund"),] {{AETNA VARIABLE ENCORE FUND}{AETNA INCOME
SHARES}{AETNA VARIABLE FUND}, a Massachusetts business trust (the "Fund"),} as
of the date set forth above the parties' signatures.
W I T N E S S E T H
WHEREAS, the Fund 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 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 Fund and the Adviser desire to enter into an agreement to provide
for investment advisory and management services for the Fund 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 Fund's Board of [Directors]{Trustees} (the "Board"), the Fund
hereby appoints the Adviser to serve as the investment adviser to the Fund, 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 Fund and has no authority to act for or
represent the Fund 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 Fund;
2. select the securities to be purchased, sold or exchanged by the
Fund or otherwise represented in the Fund's investment portfolio,
place trades for all such securities and regularly report thereon
to the Board;
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 Fund, securities held by or under consideration for
the Fund, 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 Fund's securities, transfer
agents, dividend paying agents, pricing services and other service
providers as are necessary to carry out the terms of this
Agreement; and
7. 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
The Adviser hereby represents and warrants to the Fund 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.
A-1
<PAGE>
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 Fund in carrying out its
obligations hereunder.
B. Representations and Warranties of the Fund
The Fund hereby represents and warrants to the Adviser as follows:
1. Due [Incorporation]{Establishment} and Organization. The Fund
has been duly [incorporated]{established} under the laws of
the [State of Maryland]{Commonwealth of Massachusetts} and it
is authorized to enter into this Agreement and carry out its
obligations hereunder.
2. Registration. The Fund is registered as an investment company
with the Commission under the 1940 Act and shares of the Fund
are registered or qualified for offer and sale to the public
under the Securities Act of 1933 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
Subject to the approval of the Board and the shareholders of the Fund, the
Adviser may enter into a Subadvisory Agreement to engage a subadviser to the
Adviser with respect to the Fund.
V. BROKER-DEALER RELATIONSHIPS
A. Portfolio Trades
The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Fund 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 Fund 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 or research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Adviser and/or the
other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage or research services a commission
for executing a portfolio transaction for the Fund 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 is reasonable in relation to the value
of the brokerage or research services provided by such broker or dealer
and is paid in compliance with Section 28(e). 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 Adviser
may consider the sale of shares of the Fund and of other investment
companies advised by the Adviser as a factor in the selection of
brokers or dealers to effect transactions for the Fund, subject to the
Adviser's duty to seek best execution. The Adviser may also select
brokers or dealers to effect transactions for the Fund that provide
payment for expenses of the Fund. The Board shall periodically review
the commissions paid by the Fund to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits received.
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 Fund
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 Fund;
3. the provisions of the Fund's [Articles of
Incorporation]{Declaration of Trust}, as amended;
4. the provisions of the Bylaws of the Fund, as amended; and
5. any other applicable provisions of state and federal law.
A-2
<PAGE>
VIII. COMPENSATION
[FOLLOWING PARAGRAPH: AETNA BALANCED VP, INC., AETNA INCOME SHARES, AND AETNA
VARIABLE ENCORE FUND ONLY. PLEASE REFER TO APPENDIX 7 FOR EACH FUND'S FEE RATE.]
For the services to be rendered, the facilities furnished and the expenses
assumed by the Adviser, the Fund shall pay to the Adviser an annual fee, payable
monthly, equal to [ ]% of the average daily net assets of the Fund. Except as
hereinafter set forth, compensation under this Agreement shall be calculated and
accrued daily at the rate of 1/365 (1/366 in the event of a leap year) of [ ]%
of the daily net assets of the Fund. If this 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.
[FOLLOWING TWO PARAGRAPHS: AETNA VARIABLE FUND ONLY]
For the services to be rendered, the facilities furnished and the expenses
assumed by the Adviser, the Fund shall pay to the Adviser an annual fee, payable
monthly, based upon the following average daily net assets of the Fund:
RATE ASSETS
---- ------
.500% first $10 billion
.450% next $5 billion
.425% over $15 billion
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily at the rate of 1/365 (1/366 in the event of a leap
year) of the annual advisory fee applied to the daily net assets of the Fund. If
this 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.
IX. EXPENSES
The expenses in connection with the management of the Fund shall be allocated
between the Fund 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 Fund, including without limitation,
office space, office equipment, telephone and postage costs;
and
2. all fees and expenses of all [directors]{trustees}, officers
and employees, if any, of the Fund who are employees of the
Adviser, including any salaries and employment benefits
payable to those persons.
B. Expenses of the Fund
The Fund 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 Fund's investment portfolio or other
investment transactions incurred in managing the Fund's
assets, including portions of commissions that may be paid to
reflect brokerage research services provided to the Adviser;
3. fees and expenses of the Fund's independent accountants and
legal counsel and the independent [directors']{trustees'}
legal counsel;
4. fees and expenses of any administrator, transfer agent,
custodian, dividend, accounting, pricing or disbursing agent
of the Fund;
5. interest and taxes;
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 Fund to maintain membership;
7. insurance premiums on property or personnel (including
officers and [directors]{trustees}) of the Fund;
A-3
<PAGE>
8. all fees and expenses of the Fund's [directors]{trustees}, who
are not "interested persons" (as defined in the 1940 Act) of
the Fund or the Adviser;
9. expenses of preparing, printing and distributing proxies,
proxy statements, prospectuses and reports to shareholders of
the Fund, except for those expenses paid by third parties in
connection with the distribution of Fund 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 Fund or in cash;
11. costs and expenses (other than those detailed in paragraph 9
above) of promoting the sale of shares in the Fund, including
preparing prospectuses and reports to shareholders of the
Fund, provided, nothing in this Agreement shall prevent the
charging of such costs to third parties involved in the
distribution and sale of Fund shares;
12. fees payable by the Fund to the Commission or to any state
securities regulator or other regulatory authority for the
registration of shares of the Fund 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 Fund's assets, and any nonrecurring or
extraordinary expenses, including organizational expenses,
litigation affecting the Fund and any indemnification by the
Fund of its officers, [directors]{trustees} or agents.
X. ADDITIONAL SERVICES
Upon the request of the Board, the Adviser may perform certain accounting,
shareholder servicing or other administrative services on behalf of the Fund
that are not required by this Agreement. Such services will be performed on
behalf of the Fund and the Adviser may receive from the Fund such reimbursement
for costs or reasonable compensation for such services as may be agreed upon
between the Adviser and the Board on a finding by the Board that the provision
of such services by the Adviser is in the best interests of the Fund and its
shareholders. Payment or assumption by the Adviser of any Fund expense that the
Adviser is not otherwise required to pay or assume under this Agreement shall
not relieve the Adviser of any of its obligations to the Fund nor obligate the
Adviser to pay or assume any similar Fund expense on any subsequent occasions.
XI. NONEXCLUSIVITY
The services of the Adviser to the Fund 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]{trustees} of the Fund, and that officers or
[directors]{trustees} of the Fund 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, or from serving as partners,
officers, directors or trustees of any other firm or trust, including other
investment companies.
XII. TERM
This Agreement shall become effective on _____________, 200__, and shall remain
in force and effect through December 31, 2001, unless earlier terminated under
the provisions of Article XIV.
XIII. 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 Fund's 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]{trustees}
who are not parties to this Agreement or interested persons of a
party to this Agreement (other than as a [director]{trustee} of
the Fund), by votes cast in person at a meeting specifically
called for such purpose.
A-4
<PAGE>
XIV. 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 Fund's 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
defined in Section 2(a)(4) of the 1940 Act).
XV. LIABILITY
The Adviser shall be liable to the Fund and shall indemnify the Fund for any
losses incurred by the Fund, 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.
{THE FOLLOWING PARAGRAPH XVI APPEARS ONLY IN THE AGREEMENTS APPLICABLE TO THOSE
FUNDS ESTABLISHED AS MASSACHUSETTS BUSINESS TRUSTS (I.E., AETNA VARIABLE ENCORE
FUND, AETNA INCOME SHARES, AND AETNA VARIABLE FUND).}
{XVI. LIMITATION OF LIABILITY FOR CLAIMS
The Fund's Declaration of Trust ("Declaration"), a copy of which, together with
all amendments thereto, is on file in the Office of the Secretary of the
Commonwealth of Massachusetts, provides that the name of "{Name of Fund}" refers
to the trustees under the Declaration collectively as trustees and not as
individuals or personally, and that no shareholder of the Fund, or trustee,
officer, employee or agent of the Fund, shall be subject to claims against or
obligations of the Fund to any extent whatsoever, but that the trust estate only
shall be liable.
The Adviser is hereby expressly put on notice of the limitation of liability as
set forth in the Declaration and agrees that the obligations assumed by the Fund
pursuant to this Agreement shall be limited in all cases to the Fund and its
assets, and the Adviser shall not seek satisfaction of any such obligation from
the shareholders or any shareholder of the Fund, or from any trustee, officer,
employee or agent of the Fund.}
[XVI.]{XVII.} 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:
if to the Fund:
10 State House Square
Hartford, Connecticut 06103
Fax number 860/275-2158
Attention: President
if to the Adviser:
10 State House Square
Hartford, Connecticut 06103
Fax number 860/275-4440
Attention: President or Chief Compliance Officer
[XVII.]{XVIII.} 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 or orders of the
Commission issued pursuant to the 1940 Act, or contained in no-action and
interpretive positions taken by the Commission staff. In addition, where the
effect of a requirement of the 1940 Act reflected in the provisions of this
Agreement is revised by rule or order of the Commission, such provisions shall
be deemed to incorporate the effect of such rule or order.
[XVIII.]{XIX.} SERVICE MARK
The service mark of the Fund and the name "Aetna" have been adopted by the Fund
with the permission of Aetna Services, Inc. (formerly known as Aetna Life and
Casualty Company) and their continued use is subject to the right of Aetna
Services, Inc. to withdraw this permission in the event the Adviser or another
affiliated corporation of Aetna Services, Inc. should not be the investment
adviser of the Fund.
A-5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the ___ day of ________________,
200__.
Aeltus Investment Management, Inc.
Attest:
By: _________________________ By: _________________________
Name: _________________________ Name: _________________________
Title:_________________________ Title:_________________________
Aetna [ ][, Inc.]
Attest:
By: _________________________ By: _________________________
Name: _________________________ Name: _________________________
Title:_________________________ Title:_________________________
A-6
<PAGE>
EXHIBIT B
FORM OF NEW
INVESTMENT ADVISORY AGREEMENT
(APPLICABLE TO AETNA VARIABLE PORTFOLIOS, INC., AETNA GENERATION PORTFOLIOS,
INC., AND AETNA GET FUND ONLY)
THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT, INC. a
Connecticut corporation (the "Adviser") and [[AETNA VARIABLE PORTFOLIOS,
INC.][AETNA GENERATION PORTFOLIOS, INC.], a Maryland corporation (the "Fund"),
on behalf of its portfolio, Aetna [ ] VP (the "Portfolio"),] {AETNA GET FUND, a
Massachusetts business trust (the "Fund"), on behalf of its Series [ ]
("Series"),} as of the date set forth above the parties' signatures.
W I T N E S S E T H
WHEREAS, the Fund 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 Fund has established the [Portfolio]{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 Fund, on behalf of the [Portfolio]{Series}, and the Adviser desire
to enter into an agreement to provide for investment advisory and management
services for the [Portfolio]{Series} 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 Fund's Board of [Directors]{Trustees} (the "Board"), the Fund, on
behalf of the [Portfolio]{Series}, hereby appoints the Adviser to serve as the
investment adviser to the [Portfolio]{Series}, 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
[Portfolio]{Series} and has no authority to act for or represent the
[Portfolio]{Series} 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
[Portfolio]{Series};
2. select the securities to be purchased, sold or exchanged by the
[Portfolio]{Series} or otherwise represented in the
[Portfolio's]{Series'} investment portfolio, place trades for all
such securities and regularly report thereon to the Board;
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 [Portfolio]{Series}, securities held by or under
consideration for the [Portfolio]{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 [Portfolio's]{Series'}
securities, transfer agents, dividend paying agents, pricing
services and other service providers as are necessary to carry out
the terms of this Agreement; and
7. 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
The Adviser hereby represents and warrants to the Fund 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.
B-1
<PAGE>
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 [Portfolio]{Series} in carrying out
its obligations hereunder.
B. Representations and Warranties of the [Portfolio]{Series} and the
Fund
The Fund, on behalf of the [Portfolio]{Series}, hereby represents and
warrants to the Adviser as follows:
1. Due [Incorporation]{Establishment} and Organization. The Fund
has been duly [incorporated]{established} under the laws of
the [State of Maryland]{Commonwealth of Massachusetts} and it
is authorized to enter into this Agreement and carry out its
obligations hereunder.
2. Registration. The Fund is registered as an investment company
with the Commission under the 1940 Act and shares of the
[Portfolio]{Series} are registered or qualified for offer and
sale to the public under the Securities Act of 1933 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
Subject to the approval of the Board and the shareholders of the
[Portfolio]{Series}, the Adviser may enter into a Subadvisory Agreement to
engage a subadviser to the Adviser with respect to the [Portfolio]{Series}.
V. BROKER-DEALER RELATIONSHIPS
A. [Portfolio]{Series} Trades
The Adviser shall place all orders for the purchase and sale of
portfolio securities for the [Portfolio]{Series} 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 [Portfolio]{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 or research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Adviser and/or the
other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage or research services a commission
for executing a portfolio transaction for the [Portfolio]{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 is reasonable in relation
to the value of the brokerage or research services provided by such
broker or dealer and is paid in compliance with Section 28(e). 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 Adviser may consider the sale of shares of
the [Portfolio]{Series} and of other investment companies advised by
the Adviser as a factor in the selection of brokers or dealers to
effect transactions for the [Portfolio]{Series}, subject to the
Adviser's duty to seek best execution. The Adviser may also select
brokers or dealers to effect transactions for the [Portfolio]{Series}
that provide payment for expenses of the [Portfolio]{Series}. The Board
shall periodically review the commissions paid by the
[Portfolio]{Series} to determine if the commissions paid over
representative periods of time were reasonable in relation to the
benefits received.
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
[Portfolio]{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 Fund;
3. the provisions of the Fund's [Articles of Incorporation]
{Declaration of Trust}, as amended;
4. the provisions of the Bylaws of the Fund, as amended; and
5. any other applicable provisions of state and federal law.
B-2
<PAGE>
VIII. COMPENSATION
[FOLLOWING PARAGRAPH: AETNA VARIABLE PORTFOLIOS, INC. AND AETNA GENERATION
PORTFOLIOS, INC. ONLY. PLEASE REFER TO APPENDIX 7 FOR EACH FUND'S FEE RATE.]
For the services to be rendered, the facilities furnished and the expenses
assumed by the Adviser, the Fund, on behalf of the Portfolio, shall pay to the
Adviser an annual fee, payable monthly, equal to [ ]% of the average daily net
assets of the Portfolio. Except as hereinafter set forth, compensation under
this Agreement shall be calculated and accrued daily at the rate of 1/365 (1/366
in the event of a leap year) of [ ]% of the daily net assets of the Portfolio.
If this 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.
[FOLLOWING PARAGRAPH: AETNA GET FUND ONLY]
For the services to be rendered, the facilities furnished and the expenses
assumed by the Adviser, the Fund, on behalf of the Series, shall pay to the
Adviser an annual fee, payable monthly, equal to 0.25% of the average daily net
assets of the Series during the offering period and equal to 0.60% of the
average daily net assets of the Series during the guarantee period. Except as
hereinafter set forth, compensation under this Agreement shall be calculated and
accrued daily at the rate of 1/365 (1/366 in the event of a leap year) of 0.25%
of the daily net assets of the Series during the offering period and equal to
0.60% of the daily net assets of the Series during the guarantee period. If this
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.
IX. EXPENSES
The expenses in connection with the management of the [Portfolio]{Series} shall
be allocated between the [Portfolio]{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 [Portfolio]{Series}, including
without limitation, office space, office equipment, telephone
and postage costs; and
2. all fees and expenses of all [directors]{trustees}, officers
and employees, if any, of the Fund who are employees of the
Adviser, including any salaries and employment benefits
payable to those persons.
B. Expenses of the [Portfolio]{Series}
The [Portfolio]{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 [Portfolio's]{Series'} investment
portfolio or other investment transactions incurred in
managing the [Portfolio's]{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 [Portfolio's]{Series'} independent
accountants and legal counsel and the independent
[directors']{trustees'} legal counsel;
4. fees and expenses of any administrator, transfer agent,
custodian, dividend, accounting, pricing or disbursing agent
of the [Portfolio]{Series};
5. interest and taxes;
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 Fund to maintain membership;
7. insurance premiums on property or personnel (including
officers and [directors]{trustees}) of the Fund;
8. all fees and expenses of the Fund's [directors]{trustees}, who
are not "interested persons" (as defined in the 1940 Act) of
the Fund or the Adviser;
B-3
<PAGE>
9. expenses of preparing, printing and distributing proxies,
proxy statements, prospectuses and reports to shareholders of
the [Portfolio]{Series}, except for those expenses paid by
third parties in connection with the distribution of
[Portfolio]{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 [Portfolio]{Series} or in cash;
11. costs and expenses (other than those detailed in paragraph 9
above) of promoting the sale of shares in the
[Portfolio]{Series}, including preparing prospectuses and
reports to shareholders of the [Portfolio]{Series}, provided,
nothing in this Agreement shall prevent the charging of such
costs to third parties involved in the distribution and sale
of [Portfolio]{Series} shares;
12. fees payable by the [Portfolio]{Series} to the Commission or
to any state securities regulator or other regulatory
authority for the registration of shares of the
[Portfolio]{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 [Portfolio's]{Series'} assets, and any
nonrecurring or extraordinary expenses, including
organizational expenses, litigation affecting the
[Portfolio]{Series} and any indemnification by the Fund of its
officers, [directors]{trustees} or agents.
[FOLLOWING 3 PARAGRAPHS: AETNA VARIABLE PORTFOLIOS, INC. (EXCEPT AETNA
TECHNOLOGY VP) AND AETNA GENERATION PORTFOLIOS, INC. ONLY. PLEASE REFER TO
APPENDIX 8 FOR INFORMATION CONCERNING EXPENSE LIMITATION LEVELS FOR THE FUNDS.]
Notwithstanding the above, the Adviser may waive a portion or all of the fees it
is entitled to receive.
In addition, the Adviser may reimburse the Fund, on behalf of a Portfolio, for
expenses allocated to a Portfolio.
The Adviser has agreed to waive fees and/or reimburse expenses through December
31, 2001 so that the Portfolio's total annual operating expenses (excluding
distribution fees) do not exceed [ ]% of the average daily net assets.
[FOLLOWING 3 PARAGRAPHS: AETNA TECHNOLOGY VP ONLY.]
Notwithstanding the above, the Adviser may waive a portion or all of the fees it
is entitled to receive.
In addition, the Adviser may reimburse the Fund, on behalf of a Portfolio, for
expenses allocated to a Portfolio.
The Adviser has agreed to waive fees and/or reimburse expenses through December
31, 2001 so that the Portfolio's total annual operating expenses do not exceed
1.15% of the average daily net assets.
[FOLLOWING 3 PARAGRAPHS: EACH SERIES OF AETNA GET FUND, EXCEPT SERIES C, D AND
E.]
Notwithstanding the above, the Adviser may waive a portion or all of the fees it
is entitled to receive.
In addition, the Adviser may reimburse the Fund, on behalf of a Series, for
expenses allocated to a Series.
The Adviser has agreed to waive fees and/or reimburse expenses so that the
Series' total annual operating expenses do not exceed 0.75% of the average daily
net assets.
[FOLLOWING 3 PARAGRAPHS: AETNA GET FUND, SERIES D AND E ONLY.]
Notwithstanding the above, the Adviser may waive a portion or all of the fees it
is entitled to receive.
In addition, the Adviser may reimburse the Fund, on behalf of a Series, for
expenses allocated to a Series.
The Adviser has agreed to waive fees and/or reimburse expenses (excluding
distribution fees) so that the Series' total annual operating expenses do not
exceed 0.75% of the average daily net assets.
X. ADDITIONAL SERVICES
Upon the request of the Board, the Adviser may perform certain accounting,
shareholder servicing or other administrative services on behalf of the
[Portfolio]{Series} that are not required by this Agreement. Such services will
be performed on behalf of the [Portfolio][Series] and the Adviser may receive
from the [Portfolio]{Series} such reimbursement for costs or reasonable
compensation for such services as may be agreed upon between the Adviser and the
Board on a finding by the Board that the provision of such services by the
Adviser is in the best interests of the [Portfolio]{Series} and its
shareholders. Payment or assumption by the Adviser of any [Portfolio]{Series}
expense that the Adviser is not otherwise required to pay or assume under this
Agreement shall not relieve the Adviser of any of its obligations to the
[Portfolio]{Series} nor obligate the Adviser to pay or assume any similar
[Portfolio]{Series} expense on any subsequent occasions.
B-4
<PAGE>
XI. NONEXCLUSIVITY
The services of the Adviser to the [Portfolio]{Series} 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]{trustees} of the Fund, and that officers or
[directors]{trustees} of the Fund 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, or from serving as partners,
officers, directors or trustees of any other firm or trust, including other
investment companies.
XII. TERM
This Agreement shall become effective on _____________, 200__, and shall remain
in force and effect through December 31, 2001, unless earlier terminated under
the provisions of Article XIV.
XIII. 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 [Portfolio's]{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]{trustees}
who are not parties to this Agreement or interested persons of a
party to this Agreement (other than as a [director]{trustee} of
the Fund), by votes cast in person at a meeting specifically
called for such purpose.
XIV. 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
[Portfolio's]{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 defined in Section 2(a)(4) of the 1940 Act).
XV. LIABILITY
The Adviser shall be liable to the Fund and shall indemnify the Fund for any
losses incurred by the Fund, 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.
{THE FOLLOWING PARAGRAPH XVI ONLY APPEARS IN THE AGREEMENTS APPLICABLE TO THE
SERIES OF AETNA GET FUND, WHICH WAS ESTABLISHED AS A MASSACHUSETTS BUSINESS
TRUST.}
{XVI. LIMITATION OF LIABILITY FOR CLAIMS
The Fund's Declaration of Trust ("Declaration"), a copy of which, together with
all amendments thereto, is on file in the Office of the Secretary of the
Commonwealth of Massachusetts, provides that the name "Aetna GET Fund" refers to
the trustees under the Declaration collectively as trustees and not as
individuals or personally, and that no shareholder of the Series, or trustee,
officer, employee or agent of the Fund, shall be subject to claims against or
obligations of the Fund or of the Series to any extent whatsoever, but that the
trust estate only shall be liable.
The Adviser is hereby expressly put on notice of the limitation of liability as
set forth in the Declaration and agrees that the obligations assumed by the Fund
on behalf of the Series pursuant to this Agreement shall be limited in all cases
to the Series and its assets, and the Adviser shall not seek satisfaction of any
such obligation from the shareholders or any shareholder of the Series or any
other series of the Fund, or from any trustee, officer, employee or agent of the
Fund. The Adviser understands that the rights and obligations of each series
under the Declaration are separate and distinct from those of any and all other
series.}
B-5
<PAGE>
[XVI.]{XVII.} 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:
if to the Fund, on behalf of the [Portfolio]{Series}:
10 State House Square
Hartford, Connecticut 06103
Fax number 860/275-2158
Attention: President
if to the Adviser:
10 State House Square
Hartford, Connecticut 06103
Fax number 860/275-4440
Attention: President or Chief Compliance Officer
[XVII.]{XVIII.} 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 or orders of the
Commission issued pursuant to the 1940 Act, or contained in no-action and
interpretive positions taken by the Commission staff. In addition, where the
effect of a requirement of the 1940 Act reflected in the provisions of this
Agreement is revised by rule or order of the Commission, such provisions shall
be deemed to incorporate the effect of such rule or order.
[XVIII.]{XIX.} SERVICE MARK
The service mark of the Fund and the [Portfolio]{Series} and the name "Aetna"
have been adopted by the Fund with the permission of Aetna Services, Inc.
(formerly known as Aetna Life and Casualty Company) and their continued use is
subject to the right of Aetna Services, Inc. to withdraw this permission in the
event the Adviser or another affiliated corporation of Aetna Services, Inc.
should not be the investment adviser of the [Portfolio]{Series}.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the ___ day of ________________,
200__.
Aeltus Investment Management, Inc.
Attest:
By: _________________________ By: _________________________
Name: _________________________ Name: _________________________
Title:_________________________ Title:_________________________
Aetna [ ][, Inc.]
[on behalf of its Portfolio
Aetna [ ] VP]
{on behalf of its Series [ ]}
Attest:
By: _________________________ By: _________________________
Name: _________________________ Name: _________________________
Title:_________________________ Title:_________________________
B-6
<PAGE>
EXHIBIT C
FORM OF NEW
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and among AELTUS INVESTMENT MANAGEMENT, INC., a
Connecticut corporation (the "Adviser"), AETNA VARIABLE PORTFOLIOS, INC., a
Maryland Corporation (the "Fund"), on behalf of its AETNA TECHNOLOGY VP (the
"Series") and Elijah Asset Management, LLC, a Delaware limited liability company
(the "Subadviser"), as of the date set forth below.
W I T N E S S E T H
WHEREAS, the Fund is registered with the Securities and Exchange Commission (the
"Commission") as an open-end, diversified, management investment company
consisting of multiple investment portfolios, under the Investment Company Act
of 1940, as amended (the "1940 Act"); and
WHEREAS, pursuant to authority granted by the Fund's Articles of Incorporation,
the Fund has established the Series as a separate investment portfolio; and
WHEREAS, both the Adviser and the Subadviser are registered with the Commission
as investment advisers under the Investment Advisers Act of 1940, as amended
(the "Advisers Act") and both are in the business of acting as investment
advisers; and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement with the
Fund, on behalf of the Series (the "Investment Advisory Agreement"), which
appoints the Adviser as the investment adviser for the Series; and
WHEREAS, the Investment Advisory Agreement authorizes the Adviser to delegate
all or a portion of its obligations under the Investment Advisory Agreement to a
subadviser;
NOW THEREFORE, the parties agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE SUBADVISER
Subject to the terms and conditions of this Agreement, the Adviser and the Fund,
on behalf of the Series, hereby appoint the Subadviser to manage the assets of
the Series as set forth below in Section II, under the supervision of the
Adviser and subject to the approval and direction of the Fund's Board of
Directors (the "Board"). The Subadviser hereby accepts such appointment and
agrees that it shall, for all purposes herein, undertake such obligations as an
independent contractor and not as an agent of the Adviser. The Subadviser agrees
that except as required to carry out its duties under this Agreement or as
otherwise expressly authorized, it has no authority to act for or represent the
Series, the Fund or the Adviser in any way. The Subadviser agrees that the
Adviser shall have the right at all times upon reasonable notice to inspect the
offices and the records of the Subadviser that relate to the Subadviser's
performance of this Agreement.
II. DUTIES OF THE SUBADVISER AND THE ADVISER
A. Duties of the Subadviser
The Subadviser shall regularly provide investment advice with respect
to the assets held by the Series and shall continuously supervise the
investment and reinvestment of securities, instruments or other
property (excluding cash and cash instruments) comprising the assets of
the Series. In carrying out these duties, the Subadviser shall:
1. select the securities (other than cash instruments) to be
purchased, sold or exchanged by the Series or otherwise
represented in the Series' investment portfolio and regularly
report thereon to the Adviser and, at the request of the
Adviser, to the Board;
2. place trade orders with broker-dealers, which may include
brokers or dealers affiliated with the Subadviser or the
Adviser. The Subadviser shall use its best efforts to seek to
execute portfolio transactions at prices that are advantageous
to the Series giving consideration to the services and
research provided and at commission rates that are reasonable
in relation to the benefits received;
3. formulate and implement continuing programs for the purchase
and sale of securities (other than cash instruments) and
regularly report thereon to the Adviser and, at the request of
the Adviser or the Series, to the Board;
4. inform the Adviser on a daily basis of the amount of Series
assets that will need to be invested or reinvested in cash and
cash instruments; and
5. establish and maintain appropriate policies and procedures
including, but not limited to, a code of ethics, which are
designed to ensure that the management of the Series is
implemented in compliance with the 1940 Act, the Advisers Act,
and the rules thereunder.
C-1
<PAGE>
B. Duties of the Adviser
The Adviser shall retain responsibility for oversight of all activities
of the Subadviser and for monitoring its activities on behalf of the
Series. The Adviser also is responsible for the investment and
reinvestment of cash and cash instruments maintained by the Series. In
carrying out its obligations under this Agreement and the Investment
Advisory Agreement, the Adviser shall:
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 for the Fund, as filed with the Commission under the
Securities Act of 1933, as amended (the "1933 Act"), and the
1940 Act ("Registration Statement");
2. formulate and implement continuing programs for the purchase
and sale of cash and cash instruments;
3. file all periodic reports pertaining to the Series required to
be filed with the applicable regulatory authorities;
4. review and deliver to the Board all financial, performance and
other reports prepared by the Subadviser and/or Adviser under
the provisions of this Agreement or as requested by the Board;
5. maintain contact with and enter into arrangements with the
custodian, transfer agent, auditors, outside counsel, and
other third parties providing services to the Series; and
6. give instructions to the custodian and/or sub-custodian of the
Series, concerning deliveries of securities and payments of
cash for the Series, as required to carry out the investment
activities of the Series as contemplated by this Agreement.
To the extent that the Series incurs a loss as a result of the
Adviser's failure to adequately fulfill its duties hereunder, and not
as a result of the Subadviser's negligence, the Adviser agrees that it
shall be solely responsible to make the Series whole.
III. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of the Subadviser
The Subadviser hereby represents and warrants to the Fund and Adviser
as follows:
1. Due Organization and Authorization. The Subadviser is duly
organized and is in good standing under the laws of the State
of Delaware and is fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder.
2. Registration. The Subadviser is registered as an investment
adviser with the Commission under the Advisers Act. The
Subadviser shall maintain such registration in effect at all
times during the term of this Agreement.
3. Regulatory Orders. The Subadviser is not subject to any stop
orders, injunctions or other orders of any regulatory
authority affecting its ability to carry out the terms of this
Agreement. The Subadviser will notify the Adviser and the
Series immediately if any such order is issued or if any
proceeding is commenced that could result in such an order.
4. Compliance. The Subadviser has in place compliance systems and
procedures designed to meet the requirements of the Advisers
Act and the 1940 Act and it shall at all times assure that its
activities in connection with managing the Series follow these
procedures.
B. Representations and Warranties of the Adviser
The Adviser hereby represents and warrants to the Subadviser as
follows:
1. Due Organization and Authorization. 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 or license in effect
at all times during the term of this Agreement.
3. Regulatory Orders. The Adviser is not subject to any stop
orders, injunctions or other orders of any regulatory
authority affecting its ability to carry out the terms of this
Agreement. The Adviser will notify the Subadviser and the
Series immediately if any such order is issued or if any
proceeding is commenced that could result in such an order.
4. Compliance. The Adviser has in place compliance systems and
procedures designed to meet the requirements of the Advisers
Act and the 1940 Act and it shall at all times assure that its
activities in connection with managing the Series follow these
procedures.
C. Representations and Warranties of the Fund
The Fund hereby represents and warrants to the Adviser and Subadviser
as follows:
C-2
<PAGE>
1. Due Organization and Authorization. The Fund has been duly
incorporated as a Corporation under the laws of the State of
Maryland and it is authorized to enter into this Agreement and
carry out its obligations hereunder.
2. Registration. The Fund is registered as an investment company
with the Commission under the 1940 Act and shares of the Fund
are registered or qualified for offer and sale to the public
under 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. BROKER-DEALER RELATIONSHIPS
In selecting broker-dealers qualified to execute a particular equity
transaction, brokers or dealers may be selected who also provide brokerage or
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Subadviser and/or the other accounts over which the
Subadviser or its affiliates exercise investment discretion. The Subadviser is
authorized to pay a broker or dealer that provides such brokerage or research
services 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 Subadviser determines in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage or research services provided by such broker or dealer and is paid
in compliance with Section 28(e). This determination may be viewed in terms of
either that particular transaction or the overall responsibilities that the
Subadviser and its affiliates have with respect to accounts over which they
exercise investment discretion. The Subadviser may consider the sale of shares
of the Series and of other investment companies advised by the Adviser as a
factor in the selection of brokers or dealers to effect transactions for the
Series, subject to the Subadviser's duty to seek best execution. The Subadviser
may also select brokers or dealers to effect transactions for the Series that
provide payment for expenses of the Series. 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.
V. CONTROL BY THE BOARD OF DIRECTORS
Any investment program undertaken by the Subadviser pursuant to this Agreement,
as well as any other activities undertaken by the Subadviser at the direction of
the Adviser on behalf of the Series, shall at all times be subject to any
directives of the Board.
VI. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Adviser and Subadviser
shall at all times conform to:
1. all applicable provisions of the 1940 Act, the Advisers Act and
any rules and regulations adopted thereunder;
2. all policies and procedures of the Series as adopted by the Board
and as described in the Registration Statement;
3. the provisions of the Articles of Incorporation of the Fund, as
amended from time to time;
4. the provisions of the Bylaws of the Fund, as amended from time to
time; and
5. any other applicable provisions of state or federal law.
VII. COMPENSATION
The Adviser shall pay the Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee equal to 0.50% of the average
daily net assets in the Series. The fee shall be payable monthly. Except as
hereinafter set forth, compensation under this Agreement shall be calculated and
accrued daily at the rate of 1/365 (1/366 in the event of a leap year) of the
annual fee applied to the daily net assets of the Series. If this Agreement
becomes effective subsequent to the first day of a month or shall terminate
prior to 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.
VIII. ALLOCATION OF EXPENSES
The Subadviser shall pay the salaries, employment benefits and other related
costs of those of its personnel engaged in providing investment advice to the
Series hereunder, including, but not limited to, office space, office equipment,
telephone and postage costs. The Subadviser shall not be responsible for any
other expenses related to the operation of the Fund.
C-3
<PAGE>
IX. NONEXCLUSIVITY
The services of the Subadviser with respect to the Series are not to be deemed
to be exclusive, and the Subadviser shall be free to render investment advisory
and administrative or other services to others (including other investment
companies) and to engage in other activities. It is understood that officers or
directors 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 or trustees of any other firm or trust,
including other investment advisory companies.
X. TERM
This Agreement shall become effective at the close of business on the date
hereof and shall remain in force and effect through December 31, 2001, unless
earlier terminated under the provisions of Article XI. 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:
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 Fund), by votes cast in
person at a meeting specifically called for such purpose.
XI. TERMINATION
This Agreement may be terminated:
1. at any time, without the payment of any penalty, by vote of the
Board or by vote of a majority of the outstanding voting
securities of the Series; or
2. by the Subadviser on sixty (60) days' written notice to both the
Adviser and the Fund, unless written notice is waived by the
party(ies) required to be notified; or
3. automatically in the event there is an "assignment" of this
Agreement, as defined in Section 2(a)(4) of the 1940 Act.
XII. LIABILITY
The Subadviser shall be liable to the Series and the Adviser and shall indemnify
the Series and the Adviser for any losses incurred by the Series or the Adviser
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
Subadviser or its officers, directors or employees, that is found to involve
willful misfeasance, bad faith or negligence, or reckless disregard by the
Subadviser of its duties under this Agreement, in connection with the services
rendered by the Subadviser hereunder.
The Adviser shall be liable to the Series and the Subadviser and shall indemnify
the Series and the Subadviser for any losses incurred by the Series or the
Subadviser 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.
Nothing herein shall relieve the Adviser of its responsibilities to the Fund, as
set forth in the Investment Advisory Agreement.
XIII. 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 address shall be:
if to the Fund, on behalf of the Series or the Adviser:
10 State House Square, SH11
Hartford, Connecticut 06103-3602
Fax number: 860/275-2158
Attn: Secretary
C-4
<PAGE>
if to the Subadviser:
100 Pine Street, Suite 420
San Francisco, California 94111
Fax number: 415/274-2461
Attention: Chief Executive Officer
XIV. QUESTIONS OF INTERPRETATION
This Agreement shall be governed by the laws of the State of Connecticut. Either
party shall have the right to require that any dispute arising under the
Agreement be submitted to binding arbitration at the American Arbitration
Association ("AAA") located in New York, New York, in accordance with the AAA's
applicable rules and procedures for dispute resolution.
XV. SALES PROMOTION
The Subadviser may not use any sales literature, advertising material (including
material disseminated through radio, television, or other electronic media) or
other communications concerning Series shares or that include the name of the
Series or the Adviser without obtaining the Adviser's prior written approval.
Notwithstanding the foregoing, nothing herein shall prohibit the Subadviser or
any of its principals from using the name of the Fund, the Series or the Adviser
in a biographical description of the Subadviser or its principals or prohibit
the use of the performance of the Fund or the Series (to the extent permissible
under the U.S. federal and state securities laws) in sales literature,
advertising material or other communications of the Subadviser that describes
the composite performance record of the Subadviser or its principals.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the _____ day of _________________,
200__.
Aeltus Investment Management, Inc.
Attest:
By:_____________________________ By: ____________________________
Name: __________________________ Name: __________________________
Title: _________________________ Title: _________________________
Elijah Asset Management, LLC
Attest:
By:_____________________________ By: ____________________________
Name: __________________________ Name: __________________________
Title: _________________________ Title: _________________________
Aetna Variable Portfolios, Inc.
on behalf of Aetna Technology VP
Attest:
By:_____________________________ By: ____________________________
Name: __________________________ Name: __________________________
Title: _________________________ Title: _________________________
C-5
<PAGE>
APPENDIX 1
COMPANIES and Portfolios
AETNA GET FUND AETNA VARIABLE
Aetna GET Fund, Series C PORTFOLIOS, INC.
Aetna GET Fund, Series D Aetna Growth VP
Aetna GET Fund, Series E Aetna International VP
Aetna GET Fund, Series G Aetna Small Company VP
Aetna GET Fund, Series H Aetna Value Opportunity VP
Aetna GET Fund, Series I Aetna Technology VP
Aetna GET Fund, Series J Aetna Index Plus Large Cap VP
Aetna GET Fund, Series K Aetna Index Plus Mid Cap VP
Aetna Index Plus Small Cap VP
AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP AETNA GENERATION PORTFOLIOS, INC.
Aetna Ascent VP
AETNA INCOME SHARES D/B/A Aetna Crossroads VP
AETNA BOND VP Aetna Legacy VP
AETNA VARIABLE FUND D/B/A AETNA BALANCED VP, INC.
AETNA GROWTH AND
INCOME VP
<PAGE>
APPENDIX 2
NUMBER OF SHARES OUTSTANDING AS OF THE RECORD DATE
----------------------------------------------- ---------------------------
FUND TOTAL SHARES OUTSTANDING
---------------------------------------------------------------------------
AETNA GET FUND:
---------------------------------------------------------------------------
Series C 15,834,284.629
----------------------------------------------- ---------------------------
Series D 52,794,199.980
----------------------------------------------- ---------------------------
Series E 49,236,349.920
----------------------------------------------- ---------------------------
Series G 23,400,950.627
----------------------------------------------- ---------------------------
Series H 17,245,134.225
----------------------------------------------- ---------------------------
Series I 9,585,426.393
----------------------------------------------- ---------------------------
Series J 8,247,660.671
----------------------------------------------- ---------------------------
Series K 88,880.944
----------------------------------------------- ---------------------------
AETNA VARIABLE ENCORE FUND D/B/A 86,376,843.459
AETNA MONEY MARKET VP
----------------------------------------------- ---------------------------
AETNA INCOME SHARES D/B/A 53,246,423.788
AETNA BOND VP
----------------------------------------------- ---------------------------
AETNA VARIABLE FUND D/B/A 306,290,286.986
AETNA GROWTH AND INCOME VP
---------------------------------------------------------------------------
AETNA VARIABLE PORTFOLIOS, INC.:
---------------------------------------------------------------------------
Aetna Growth VP 27,994,926.482
----------------------------------------------- ---------------------------
Aetna International VP 3,371,054.736
----------------------------------------------- ---------------------------
Aetna Small Company VP 15,743,672.791
----------------------------------------------- ---------------------------
Aetna Value Opportunity VP 6,489,346.583
----------------------------------------------- ---------------------------
Aetna Technology VP 4,679,117.250
----------------------------------------------- ---------------------------
Aetna Index Plus Large Cap VP 66,384,740.297
----------------------------------------------- ---------------------------
Aetna Index Plus Mid Cap VP 3,311,686.178
----------------------------------------------- ---------------------------
Aetna Index Plus Small Cap VP 1,459,422.664
---------------------------------------------------------------------------
AETNA GENERATION PORTFOLIOS, INC.:
---------------------------------------------------------------------------
Aetna Ascent VP 14,439,757.942
----------------------------------------------- ---------------------------
Aetna Crossroads VP 13,712,273.466
----------------------------------------------- ---------------------------
Aetna Legacy VP 9,792,441.321
----------------------------------------------- ---------------------------
AETNA BALANCED VP, INC. 120,710,889.800
----------------------------------------------- ---------------------------
<PAGE>
APPENDIX 3
BENEFICIAL OWNERS OF MORE THAN 5% OF A FUND
As of August 31, 2000, shares of each Fund were held, in most cases, by Aetna
Life Insurance and Annuity Company, 151 Farmington Avenue, Hartford, Connecticut
06156-8962, Aetna Insurance Company of America, 5100 West Lemon Street, Suite
213, Tampa, Florida 33609, and Aetna Life Insurance Company, 151 Farmington
Avenue, Hartford, Connecticut 06156-8962, on behalf of the following separate
accounts that fund variable annuity and life insurance contracts issued to
individual or group contract holders:
<TABLE>
<CAPTION>
AETNA ASCENT VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
<S> <C> <C>
Variable Annuity Account I 93,838.34 0.65%
Variable Annuity Account B 1,240,276.07 8.61%
Variable Annuity Account C 5,216,826.16 36.23%
Variable Annuity Account D 7,629,564.38 52.98%
Variable Life Account B 220,365.34 1.53%
AETNA BALANCED VP, INC.
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 555,050.96 0.46%
Variable Annuity Account B 13,284,597.25 10.97%
Variable Annuity Account C 60,019,035.94 49.55%
Variable Annuity Account D 45,575,967.48 37.62%
Variable Life Account B 1,703,379.78 1.41%
Variable Life Account C 2,022.06 0.00%
AETNA INCOME SHARES D/B/A
AETNA BOND VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 553,630.17 1.04%
Variable Annuity Account B 7,353,870.52 13.76%
Variable Annuity Account C 23,260,026.50 43.53%
Variable Annuity Account D 20,559,908.18 38.48%
Variable Life Account B 1,376,635.12 2.58%
Variable Life Account C 524.86 0.00%
AETNA CROSSROADS VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 63,272.98 0.46%
Variable Annuity Account B 1,620,617.23 11.89%
Variable Annuity Account C 4,608,541.66 33.81%
Variable Annuity Account D 7,185,486.37 52.72%
Variable Life Account B 152,137.31 1.12%
Variable Life Account C 2.87 0.00%
AETNA GET FUND, SERIES C
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account B 573,220.16 3.60%
Variable Annuity Account C 13,211,730.57 83.00%
Variable Annuity Account D 2,133,420.95 13.40%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
AETNA GET FUND, SERIES D
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
<S> <C> <C>
Variable Annuity Account B 13,701,462.09 25.57%
Variable Annuity Account C 34,780,632.28 64.90%
Variable Annuity Account D 5,106,113.92 9.53%
AETNA GET FUND, SERIES E
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account B 33,649,295.93 67.61%
Variable Annuity Account C 13,582,630.35 27.29%
Variable Annuity Account D 2,541,456.93 5.11%
AETNA GET FUND, SERIES G
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account B 19,232,306.75 81.39%
Variable Annuity Account C 3,949,338.71 16.71%
Variable Annuity Account D 449,428.98 1.90%
AETNA GET FUND, SERIES H
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account B 13,972,315.49 81.19%
Variable Annuity Account C 2,985,076.71 17.35%
Variable Annuity Account D 251,906.98 1.46%
AETNA GET FUND, SERIES I
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account B 9,612,460.68 98.44%
Variable Annuity Account C 152,291.54 1.56%
AETNA GET FUND, SERIES J
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account B 327,662.99 92.57%
Variable Annuity Account C 26,198.52 7.40%
AETNA VARIABLE FUND D/B/A
AETNA GROWTH AND INCOME VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 972,112.15 0.31%
Variable Annuity Account B 36,547,207.42 11.83%
Variable Annuity Account C 188,397,805.65 60.99%
Variable Annuity Account D 75,811,874.86 24.54%
Variable Life Account B 5,559,635.15 1.80%
Variable Life Account C 1,741.70 0.00%
AETNA GROWTH VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 311,304.46 1.17%
Variable Annuity Account B 4,854,549.36 18.29%
Variable Annuity Account C 10,749,534.64 40.51%
Variable Annuity Account D 10,621,374.59 40.02%
Variable Life Account B 1,064.72 0.00%
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AETNA INDEX PLUS LARGE CAP VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
<S> <C> <C>
Variable Annuity Account I 777,718.77 1.19%
Variable Annuity Account B 13,805,984.49 21.06%
Variable Annuity Account C 26,247,427.71 40.04%
Variable Annuity Account D 23,699,052.51 36.15%
Variable Life Account B 1,023,122.78 1.56%
Variable Life Account C 5,768.49 0.01%
AETNA INDEX PLUS MID CAP VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account B 136,540.97 4.53%
Variable Annuity Account C 1,516,779.03 50.31%
Variable Annuity Account D 1,361,284.42 45.16%
AETNA INDEX PLUS SMALL CAP VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account B 73,947.16 5.21%
Variable Annuity Account C 904,209.83 63.69%
Variable Annuity Account D 441,532.48 31.10%
AETNA INTERNATIONAL VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 53,406.45 1.62%
Variable Annuity Account B 676,101.48 20.45%
Variable Annuity Account C 964,627.62 29.18%
Variable Annuity Account D 1,611,443.04 48.75%
AETNA LEGACY VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 137,198.32 1.41%
Variable Annuity Account B 2,148,189.06 22.03%
Variable Annuity Account C 3,109,294.23 31.89%
Variable Annuity Account D 4,253,306.37 43.62%
Variable Life Account B 102,937.39 1.06%
Variable Life Account C 179.66 0.00%
AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 2,217,186.14 2.60%
Variable Annuity Account B 15,587,782.63 18.25%
Variable Annuity Account C 22,398,204.02 26.23%
Variable Annuity Account D 42,519,404.89 49.79%
Variable Life Account B 2,678,447.41 3.14%
Variable Life Account C 402.05 0.00%
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
AETNA SMALL COMPANY VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
<S> <C> <C>
Variable Annuity Account I 438,396.39 2.92%
Variable Annuity Account B 2,600,254.66 17.34%
Variable Annuity Account C 5,998,400.08 40.00%
Variable Annuity Account D 5,909,017.34 39.40%
Variable Life Account B 49,751.79 0.33%
AETNA TECHNOLOGY VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 24,962.00 0.75%
Variable Annuity Account B 672,854.39 20.21%
Variable Annuity Account C 1,806,704.04 54.26%
Variable Annuity Account D 825,372.38 24.79%
AETNA VALUE OPPORTUNITY VP
SEPARATE ACCOUNT NAME NUMBER OF SHARES PERCENTAGE
--------------------- ---------------- ----------
Variable Annuity Account I 319,204.43 5.06%
Variable Annuity Account B 1,101,114.84 17.46%
Variable Annuity Account C 2,672,061.08 42.36%
Variable Annuity Account D 2,205,654.22 34.97%
Variable Life Account B 9,385.36 0.15%
</TABLE>
4
<PAGE>
APPENDIX 4
DIRECTOR SHAREHOLDINGS
AS OF SEPTEMBER 30, 2000
<TABLE>
<CAPTION>
AMOUNT AND NATURE OF
FUND NAME AND CLASS NAME OF DIRECTOR BENEFICIAL OWNERSHIP*
------------------- ---------------- ---------------------
<S> <C> <C>
Aetna Variable Fund d/b/a Aetna Growth and Income VP Corine T. Norgaard N/A
</TABLE>
* Corine T. Norgaard owns variable annuity contracts through which she directed
$147,258.38 to the above-referenced Fund.
<PAGE>
APPENDIX 5
EXECUTIVE OFFICERS OF AETNA GET FUND, AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP, AETNA INCOME SHARES D/B/A AETNA BOND VP,
AETNA VARIABLE FUND D/B/A AETNA GROWTH AND INCOME VP,
AETNA VARIABLE PORTFOLIOS, INC., AETNA GENERATION PORTFOLIOS, INC. AND
AETNA BALANCED VP, INC.
<TABLE>
------------------------ ---------------------------------- ------------------------------------------------------------------------
<CAPTION>
POSITION(S) WITH
NAME AND AGE EACH COMPANY PRINCIPAL OCCUPATION DURING PAST 5 YEARS
------------------------ ---------------------------------- ------------------------------------------------------------------------
<S> <C> <C>
J. Scott Fox Trustee and President (Principal Director, Managing Director, Chief Operating Officer, Chief Financial
(Age 45) Executive Officer) (since 1997) Officer, Aeltus Investment Management, Inc. (investment adviser), April
1994 to present; Director, Managing Director, Chief Operating Officer,
Chief Financial Officer, Aeltus Capital, Inc. (broker-dealer),
February 1995 to present; Director, Managing Director, Chief Operating
Officer, Chief Financial Officer, Aeltus Trust Company, May 1996 to
present; Senior Vice President--Operations (Interim Assignment), Aetna
Life Insurance and Annuity Company, March 1997 to December 1997;
Director and President, December 1997 to present (Vice President and
Treasurer, March 1996 to December 1997), Aetna Series Fund, Inc.
------------------------ ---------------------------------- ------------------------------------------------------------------------
Wayne F. Baltzer Vice President Vice President, Aeltus Capital, Inc., May 1998 to present; Vice
(Age 56) (since 1996) President, Aetna Investment Services, Inc., July 1993 to May 1998.
------------------------ ---------------------------------- ------------------------------------------------------------------------
Stephanie A. DeSisto Vice President (since 1998), Vice President, Mutual Fund Accounting, Aeltus Investment Management,
(Age 46) Treasurer and Chief Financial Inc., November 1995 to present; Director, Mutual Fund Accounting, Aetna
Officer (Principal Financial and Life Insurance and Annuity Company, August 1994 to November 1995.
Accounting Officer) (since 1997)
------------------------ ---------------------------------- ------------------------------------------------------------------------
Frank J. Litwin Vice President Managing Director, Aeltus Investment Management, Inc., August 1997 to
(Age 50) (since 1997) present; Managing Director, Aeltus Capital, Inc., May 1998 to present;
Vice President, Fidelity Investments Institutional Services Company,
April 1992 to August 1997.
------------------------ ---------------------------------- ------------------------------------------------------------------------
Daniel E. Burton Secretary Assistant General Counsel, July 2000 to present, and Assistant
(Age 33) (since 2000) Secretary, September 1998 to present, Aeltus Investment Management,
Inc.; Assistant General Counsel, July 2000 to present, and Assistant
Secretary, October 1998 to present, Aeltus Capital, Inc.; Assistant
General Counsel, July 2000 to present, and Assistant Secretary,
October 1998 to present, Aeltus Trust Company; Counsel, Aetna
Financial Services, September 1997 to present; Attorney, Securities
and Exchange Commission, August 1996 to August 1997; Associate,
Kirkpatrick & Lockhart, LLP, September 1992 to August 1996.
------------------------ ---------------------------------- ------------------------------------------------------------------------
</TABLE>
<PAGE>
APPENDIX 6
DATES RELATING TO INVESTMENT ADVISORY AGREEMENTS
<TABLE>
------------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
DATE CURRENT
INVESTMENT ADVISORY
DATE OF CURRENT AGREEMENT LAST DATE CURRENT INVESTMENT
COMMENCEMENT OF INVESTMENT ADVISORY APPROVED BY THE ADVISORY AGREEMENT LAST
FUND* OPERATIONS AGREEMENT BOARD** APPROVED BY SHAREHOLDERS
------------------------------------------------------------------------------------------------------------------------------------
AETNA GET FUND:
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Series C September 16, 1996 December 30, 1999 December 15, 1999 September 13, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Series D October 15, 1998 December 30, 1999 December 15, 1999 October 7, 1998
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Series E June 15, 1999 April 1, 1999 March 31, 1999 June 11, 1999
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Series G September 15, 1999 July 28, 1999 June 23, 1999 September 14, 1999
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Series H December 15, 1999 September 27, 1999 September 22, 1999 December 13, 1999
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Series I March 15, 2000 February 9, 2000 December 15, 1999 March 14, 2000
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Series J June 15, 2000 February 9, 2000 December 15, 1999 June 13, 2000
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Series K September 14, 2000 February 9, 2000 December 15, 1999 September 13, 2000
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP August 1, 1975 December 30, 1999 December 15, 1999 July 19, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
AETNA INCOME SHARES D/B/A
AETNA BOND VP May 15, 1973 December 30, 1999 December 15, 1999 June 17, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
AETNA VARIABLE FUND D/B/A
AETNA GROWTH AND INCOME VP May 1, 1975 December 30, 1999 December 15, 1999 June 17, 1996
------------------------------------------------------------------------------------------------------------------------------------
AETNA VARIABLE PORTFOLIOS, INC.:
------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP December 13, 1996 December 30, 1999 December 15, 1999 September 13, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Aetna International VP December 22, 1997 December 30, 1999 December 15, 1999 December 22, 1997
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Aetna Small Company VP December 27, 1996 December 30, 1999 December 15, 1999 September 13, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Aetna Value Opportunity VP December 13, 1996 December 30, 1999 December 15, 1999 September 13, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Aetna Technology VP May 1, 2000 April 28, 2000 April 12, 2000 April 28, 2000
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Aetna Index Plus Large Cap VP September 16, 1996 December 30, 1999 December 15, 1999 September 13, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Aetna Index Plus Mid Cap VP December 16, 1997 December 30, 1999 December 15, 1999 December 16, 1997
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Aetna Index Plus Small Cap VP December 19, 1997 December 30, 1999 December 15, 1999 December 19, 1997
------------------------------------------------------------------------------------------------------------------------------------
AETNA GENERATION PORTFOLIOS, INC.:
------------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent VP July 5, 1995 December 30, 1999 December 15, 1999 June 17, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Aetna Crossroads VP July 5, 1995 December 30, 1999 December 15, 1999 June 17, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
Aetna Legacy VP July 5, 1995 December 30, 1999 December 15, 1999 June 17, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
AETNA BALANCED VP, INC. May 3, 1989 December 30, 1999 December 15, 1999 June 17, 1996
------------------------------------ ----------------------- ---------------------- ---------------------- -------------------------
</TABLE>
* In December 1999, the Board approved the revision of certain Funds' Investment
Advisory Agreements in order to continue specific expense limitation provisions
and to make immaterial changes to clarify certain provisions and to promote
uniformity among all the Agreements. In those cases, the date of the agreement
may be later than the dates of approval by the Board and shareholders.
** At their September 27, 2000 meeting, the Directors approved the renewal of
each Fund's Current Investment Advisory Agreement for the period January 1
through December 31, 2001 in the event that the Transaction is not consummated.
<PAGE>
APPENDIX 7
INVESTMENT ADVISORY FEE RATES
Listed below are the advisory fees that Aeltus is entitled to receive from each
Fund at an annual rate based on average daily net assets of the Fund:
FUND ADVISORY FEE
---- ------------
AETNA GET FUND:
Series C 0.25% during the Offering Period
(September 16, 1996 through
December 16, 1996)
0.60% during the Guarantee Period
(December 17, 1996 through
December 16, 2001)
Series D 0.25% during the Offering Period
(October 15, 1998 through January
15, 1999)
0.60% during the Guarantee Period
(January 16, 1999 through January
15, 2004)
Series E 0.25% during the Offering Period
(June 15, 1999 through September
14, 1999)
0.60% during the Guarantee Period
(September 15, 1999 through
September 14, 2004)
Series G 0.25% during the Offering Period
(September 15, 1999 through
December 14, 1999)
0.60% during the Guarantee Period
(December 15, 1999 through
December 14, 2004)
Series H 0.25% during the Offering Period
(December 15, 1999 through March
14, 2000)
0.60% during the Guarantee Period
(March 15, 2000 through March 14,
2005)
Series I 0.25% during the Offering Period
(March 15, 2000 through June 14,
2000)
0.60% during the Guarantee Period
(June 15, 2000 through June 14,
2005)
Series J 0.25% during the Offering Period
(June 15, 2000 through September
13, 2000)
0.60% during the Guarantee Period
(September 14, 2000 through
September 13, 2005)
Series K
0.25% during the Offering Period
(September 14, 2000 through
December 13, 2000)
0.60% during the Guarantee Period
(December 14, 2000 through
December 13, 2005)
AETNA VARIABLE ENCORE FUND D/B/A 0.25%
AETNA MONEY MARKET VP
AETNA INCOME SHARES D/B/A 0.40%
AETNA BOND VP
AETNA VARIABLE FUND D/B/A 0.50% on first $10 billion;
AETNA GROWTH AND INCOME VP 0.45% on next $5 billion;
0.425% over $15 billion.
<PAGE>
FUND ADVISORY FEE
---- ------------
AETNA VARIABLE PORTFOLIOS, INC.:
Aetna Growth VP 0.60%
Aetna International VP 0.85%
Aetna Small Company VP 0.75%
Aetna Value Opportunity VP 0.60%
Aetna Technology VP 0.95%
Aetna Index Plus Large Cap VP 0.35%
Aetna Index Plus Mid Cap VP 0.40%
Aetna Index Plus Small Cap VP 0.40%
AETNA GENERATION PORTFOLIOS, INC.:
Aetna Ascent VP 0.60%
Aetna Crossroads VP 0.60%
Aetna Legacy VP 0.60%
AETNA BALANCED VP, INC. 0.50%
2
<PAGE>
APPENDIX 8
FUND EXPENSE LIMITATIONS
Aeltus currently is contractually obligated through December 31, 2000 to waive
all or a portion of its investment advisory fee and/or its administrative
services fee for certain Funds and/or reimburse a portion of those Funds' other
expenses in order to ensure that the applicable Fund's total operating expenses
do not exceed the percentage of the Fund's average daily net assets set forth in
the table below. There are no fee waiver/expense reimbursement provisions
applicable to Aetna GET Fund, Series C, Aetna Variable Encore Fund d/b/a Aetna
Money Market VP, Aetna Income Shares d/b/a Aetna Bond VP, Aetna Variable Fund
d/b/a Aetna Growth and Income VP and Aetna Balanced VP, Inc.
FUND EXPENSE LIMITATION@
---- ------------------
AETNA GET FUND:
Series D 0.75%
Series E 0.75%
Series G* 0.75%
Series H* 0.75%
Series I* 0.75%
Series J* 0.75%
Series K* 0.75%
AETNA VARIABLE PORTFOLIOS, INC.:
Aetna Growth VP 0.80%
Aetna International VP 1.15%
Aetna Small Company VP 0.95%
Aetna Value Opportunity VP 0.80%
Aetna Technology VP* 1.15%
Aetna Index Plus Large Cap VP 0.55%
Aetna Index Plus Mid Cap VP 0.60%
Aetna Index Plus Small Cap VP 0.60%
AETNA GENERATION PORTFOLIOS, INC.:
Aetna Ascent VP 0.75%
Aetna Crossroads VP 0.70%
Aetna Legacy VP 0.65%
* Expense limitations for all Funds other than these Series of Aetna GET Fund
and Aetna Technology VP exclude distribution fees.
@ There is no expiration date for the expense limitation provisions applicable
to Series D, Series E, Series G, Series H, Series I, Series J or Series K of
Aetna GET Fund.
<PAGE>
APPENDIX 9
ADDITIONAL INFORMATION ABOUT
AELTUS INVESTMENT MANAGEMENT, INC.
Aeltus Investment Management, Inc. is a wholly owned subsidiary of Aetna
Investment Adviser Holding Company, Inc.; Aetna Investment Adviser Holding
Company, Inc. is a wholly owned subsidiary of Aetna Life Insurance and Annuity
Company; Aetna Life Insurance and Annuity Company is a wholly owned subsidiary
of Aetna Retirement Holdings, Inc.; Aetna Retirement Holdings, Inc. is a wholly
owned subsidiary of Aetna Retirement Services, Inc.; Aetna Retirement Services,
Inc. is a wholly owned subsidiary of Aetna Services, Inc.; and Aetna Services,
Inc. is a wholly owned subsidiary of Aetna Inc.
Aeltus Investment Management, Inc., is located at 10 State House Square,
Hartford, CT 06103-3602; the address for all other entities listed above is 151
Farmington Ave., Hartford, CT 06156-8962.
PRINCIPAL EXECUTIVE OFFICER AND DIRECTORS OF AELTUS
<TABLE>
------------------------------ ------------------------------------------- --------------------------------------------
<CAPTION>
POSITIONS AND OFFICES
NAME* WITH INVESTMENT ADVISER OTHER PRINCIPAL POSITION(S) HELD
------------------------------ ------------------------------------------- --------------------------------------------
<S> <C> <C>
John Y. Kim Director, President, Chief Executive Senior Vice President and Chief Investment
Officer and Chief Investment Officer Officer, Aetna Life Insurance and Annuity
Company; Director, President, Chief
Executive Officer and Chief Investment
Officer, Aeltus Trust Company; Director
and President, Aeltus Capital, Inc.;
Director and President, Aetna Investment
Adviser Holding Company, Inc.; Director,
Aetna Retirement Services, Inc.; Vice
President, Aetna Life Insurance Company.
------------------------------ ------------------------------------------- --------------------------------------------
J. Scott Fox Director, Managing Director, Director, Managing Director, Chief
Chief Operating Officer and Operating Officer and Chief Financial
Chief Financial Officer Officer, Aeltus Capital, Inc.; Director,
Managing Director, Chief Operating Officer
and Chief Financial Officer, Aeltus Trust
Company.
------------------------------ ------------------------------------------- --------------------------------------------
Thomas J. McInerney Director Director and President, Aetna Life
Insurance and Annuity Company; Director
and President, Aetna Retirement Services,
Inc.; Executive Vice President, Aetna
Inc.; Executive Vice President, Aetna
Services, Inc.; Executive Vice President,
Aetna Life Insurance Company.
------------------------------ ------------------------------------------- --------------------------------------------
Catherine H. Smith Director Director, Senior Vice President and Chief
Financial Officer, Aetna Retirement
Services, Inc.; Director, Senior Vice
President and Chief Financial Officer,
Aetna Life Insurance and Annuity Company;
Director, Aetna Insurance Company of
America; Director, Aetna Investment
Adviser Holding Company, Inc.
------------------------------ ------------------------------------------- --------------------------------------------
</TABLE>
* The principal business address of Mr. Kim and Mr. Fox is 10 State House
Square, Hartford, Connecticut 06103-3602. The address of Mr. McInerney
and Ms. Smith is 151 Farmington Avenue, Hartford, Connecticut 06156.
<PAGE>
COMMON OFFICERS AND DIRECTORS OF EACH COMPANY AND AELTUS
<TABLE>
------------------------------------ ------------------------------------------- --------------------------------------------
<CAPTION>
POSITION(S) WITH
NAME EACH COMPANY POSITION(S) WITH AELTUS
------------------------------------ ------------------------------------------- --------------------------------------------
<S> <C> <C>
J. Scott Fox Director and President Director, Managing Director, Chief
Operating Officer and Chief Financial
Officer
------------------------------------ ------------------------------------------- --------------------------------------------
John Y. Kim Director Director, President, Chief Executive
Officer and Chief Investment Officer
------------------------------------ ------------------------------------------- --------------------------------------------
Frank J. Litwin Vice President Managing Director, Retail Marketing and
Sales
------------------------------------ ------------------------------------------- --------------------------------------------
Mark A. Baral Assistant Treasurer Assistant Treasurer
------------------------------------ ------------------------------------------- --------------------------------------------
Allan Shaer, Jr. Assistant Treasurer Assistant Treasurer
------------------------------------ ------------------------------------------- --------------------------------------------
Michael Gioffre Assistant Secretary Assistant General Counsel and Secretary
------------------------------------ ------------------------------------------- --------------------------------------------
Daniel E. Burton Secretary Assistant General Counsel and Assistant
Secretary
------------------------------------ ------------------------------------------- --------------------------------------------
Stephanie A. DeSisto Vice President, Treasurer and Vice President
Chief Financial Officer
------------------------------------ ------------------------------------------- --------------------------------------------
</TABLE>
2
<PAGE>
APPENDIX 10
ADVISORY FEES PAID TO AELTUS INVESTMENT MANAGEMENT, INC.
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
TOTAL INVESTMENT NET ADVISORY
FUND ADVISORY FEES WAVIER FEES PAID
---- ------------- ------ ---------
<S> <C> <C> <C>
AETNA GET FUND:
Series C $ 1,164,188 $ 0 $ 1,164,188
Series D 4,338,938 4,158 4,334,780
Series E* 1,061,278 5,094 1,056,184
Series G** 98,538 17,356 81,182
Series H*** 229 229 0
Series I# N/A N/A N/A
Series J# N/A N/A N/A
Series K# N/A N/A N/A
AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP 2,534,715 0 2,534,715
AETNA INCOME SHARES D/B/A
AETNA BOND VP 3,050,254 0 3,050,254
AETNA VARIABLE FUND D/B/A
AETNA GROWTH AND INCOME VP 48,426,000 0 48,426,000
AETNA VARIABLE PORTFOLIOS, INC.:
Aetna Growth VP 1,477,828 0 1,477,828
Aetna International VP 216,793 120,367 96,426
Aetna Small Company VP 834,103 0 834,103
Aetna Value Opportunity VP 465,367 0 465,367
Aetna Technology VP# N/A N/A N/A
Aetna Index Plus Large Cap VP 2,955,393 14,859 2,940,534
Aetna Index Plus Mid Cap VP 50,910 25,306 25,604
Aetna Index Plus Small Cap VP 37,659 28,202 9,457
AETNA GENERATION PORTFOLIOS, INC.:
Aetna Ascent VP 1,216,353 0 1,216,353
Aetna Crossroads VP 1,146,645 0 1,146,645
Aetna Legacy VP 809,797 2,427 807,370
AETNA BALANCED VP, INC. 9,564,010 0 9,564,010
</TABLE>
* For the period from June 15, 1999 (commencement of operations) to
December 31, 1999.
** For the period from September 15, 1999 (commencement of operations)
to December 31, 1999.
*** For the period from December 15, 1999 (commencement of operations)
to December 31, 1999.
# Aetna GET Fund, Series I, Series J and Series K and Aetna Technology
VP commenced operations after December 31, 1999.
<PAGE>
APPENDIX 11
ADVISORY FEE RATES
FOR FUNDS WITH SIMILAR INVESTMENT OBJECTIVES
ADVISED BY AELTUS INVESTMENT MANAGEMENT, INC.
<TABLE>
---------------------------------------- ------------------------ -------------------------------- ------------------------------
<CAPTION>
ADVISORY FEE
NET ASSETS AS A PERCENTAGE OF
FUND(1) AS OF AUGUST 31, 2000 AVERAGE DAILY NET ASSETS EXPENSE LIMITATION(2)
---------------------------------------- ------------------------ -------------------------------- ------------------------------
<S> <C> <C> <C>
Aetna Ascent Fund $ 75,328,091.77 0.80% on first $500 million 1.00%
0.775% on next $500 million
0.75% on next $500 million
0.725% on next $500 million
0.70% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Balanced Fund 139,392,910.63 0.80% on first $500 million N/A
0.75% on next $500 million
0.70% on next $1 billion
0.65% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Bond Fund 51,381,575.27 0.50% on first $250 million 0.75%
0.475% on next $250 million
0.45% on next $250 million
0.425% on next $1.25 billion
0.40% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Crossroads Fund 88,042,081.43 0.80% on first $500 million 0.95%
0.775% on next $500 million
0.75% on next $500 million
0.725% on next $500 million
0.70% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Growth and Income Fund 627,369,217.68 0.70% on first $250 million N/A
0.65% on next $250 million
0.625% on next $250 million
0.60% on next $1.25 billion
0.55% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Growth Fund 421,603,266.15 0.70% on first $250 million N/A
0.65% on next $250 million
0.625% on next $250 million
0.60% on next $1.25 billion
0.55% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Index Plus Large Cap Fund 461,574,099.99 0.45% on first $500 million 0.70%
0.425% on next $250 million
0.40% on next $1.25 billion
0.375% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Index Plus Mid Cap Fund 15,549,030.84 0.45% on first $500 million 0.75%
0.425% on next $250 million
0.40% on next $1.25 billion
0.375% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Index Plus Small Cap Fund 9,559,088.74 0.45% on first $500 million 0.75%
0.425% on next $250 million
0.40% on next $1.25 billion
0.375% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
</TABLE>
<PAGE>
<TABLE>
---------------------------------------- ------------------------ -------------------------------- ------------------------------
<CAPTION>
ADVISORY FEE
NET ASSETS AS A PERCENTAGE OF
FUND(1) AS OF AUGUST 31, 2000 AVERAGE DAILY NET ASSETS EXPENSE LIMITATION(2)
---------------------------------------- ------------------------ -------------------------------- ------------------------------
<S> <C> <C> <C>
Aetna International Fund 153,070,853.18 0.85% on first $250 million 1.35%
0.80% on next $250 million
0.775% on next $250 million
0.75% on next $1.25 billion
0.70% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Legacy Fund 45,415,899.78 0.80% on first $500 million 0.90%
0.775% on next $500 million
0.75% on next $500 million
0.725% on next $500 million
0.70% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Money Market Fund 437,253,900.00 0.40% on first $500 million 0.50%
0.35% on next $500 million (through February 29, 2000)
0.34% on next $1 billion
0.33% on next $1 billion
0.30% over $3 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Brokerage Cash Reserves 322,122,360.40 0.20% on first $1 billion 0.95%
0.19% on next $2 billion
0.18% Over $3 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Small Company Fund 272,276,345.92 0.85% on first $250 million 1.25%
0.80% on next $250 million
0.775% on next $250 million
0.75% on next $1.25 billion
0.725% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Technology Fund 16,418,287.51 1.05% on first $500 million 1.50%
1.025% on next $500 million
1.00% over $1 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Value Opportunity Fund 11,439,545.36 0.70% on first $250 million 1.10%
0.65% on next $250 million
0.625% on next $250 million
0.60% on next $1.25 billion
0.55% over $2 billion
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Principal Protection Fund I 164,887,094.16 0.25% - Offering Period 1.25%
0.65% - Guarantee Period
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Principal Protection Fund II 123,517,339.12 0.25% - Offering Period 1.25%
0.65% - Guarantee Period
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Principal Protection Fund III 105,554,735.04 0.25% - Offering Period 1.25%
0.65% - Guarantee Period
---------------------------------------- ------------------------ -------------------------------- ------------------------------
Aetna Principal Protection Fund IV 53,689,306.13 0.25% - Offering Period 1.25%
0.65% - Guarantee Period
---------------------------------------- ------------------------ -------------------------------- ------------------------------
</TABLE>
-----------------------
(1) Each fund is a separate series of Aetna Series Fund, Inc.
(2) Aeltus currently is contractually obligated to waive fees and/or reimburse
expenses (excluding distribution and shareholder service fees, except in the
case of Brokerage Cash Reserves) of the applicable fund through December 31,
2000 (except for Brokerage Cash Reserves and the Aetna Principal Protection
Funds, whose expense limitation provisions have no expiration date) so that the
fund's total operating expenses do not exceed this percentage of average daily
net assets.
2
<PAGE>
APPENDIX 12
ADMINISTRATIVE SERVICES FEES PAID TO AELTUS INVESTMENT MANAGEMENT, INC.
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
TOTAL ADMINISTRATIVE ADMINISTRATOR NET ADMINISTRATIVE
FUND SERVICES FEES WAIVER SERVICES FEES PAID
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
AETNA GET FUND:
---------------------------------------------------------------------------------------------------------------------
Series C $ 145,523 $ 0 $ 145,523
----------------------------------------------------- ----------------------- ----------------- ---------------------
Series D 552,059 0 552,059
----------------------------------------------------- ----------------------- ----------------- ---------------------
Series E* 147,657 0 147,657
----------------------------------------------------- ----------------------- ----------------- ---------------------
Series G** 15,420 0 15,420
----------------------------------------------------- ----------------------- ----------------- ---------------------
Series H*** 69 69 0
----------------------------------------------------- ----------------------- ----------------- ---------------------
Series I# N/A N/A N/A
----------------------------------------------------- ----------------------- ----------------- ---------------------
Series J# N/A N/A N/A
----------------------------------------------------- ----------------------- ----------------- ---------------------
Series K# N/A N/A N/A
----------------------------------------------------- ----------------------- ----------------- ---------------------
AETNA VARIABLE ENCORE FUND D/B/A AETNA
MONEY MARKET VP 760,415 0 760,415
----------------------------------------------------- ----------------------- ----------------- ---------------------
AETNA INCOME SHARES D/B/A
AETNA BOND VP 571,923 0 571,923
----------------------------------------------------- ----------------------- ----------------- ---------------------
AETNA VARIABLE FUND D/B/A 6,089,176 0 6,089,176
AETNA GROWTH AND INCOME VP
---------------------------------------------------------------------------------------------------------------------
AETNA VARIABLE PORTFOLIOS, INC.:
---------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 184,729 0 184,729
----------------------------------------------------- ----------------------- ----------------- ---------------------
Aetna International VP 19,129 0 19,129
----------------------------------------------------- ----------------------- ----------------- ---------------------
Aetna Small Company VP 83,410 0 83,410
----------------------------------------------------- ----------------------- ----------------- ---------------------
Aetna Value Opportunity VP 58,171 0 58,171
----------------------------------------------------- ----------------------- ----------------- ---------------------
Aetna Technology VP# N/A N/A N/A
----------------------------------------------------- ----------------------- ----------------- ---------------------
Aetna Index Plus Large Cap VP 633,299 0 633,299
----------------------------------------------------- ----------------------- ----------------- ---------------------
Aetna Index Plus Mid Cap VP 9,546 0 9,546
----------------------------------------------------- ----------------------- ----------------- ---------------------
Aetna Index Plus Small Cap VP 7,061 0 7,061
---------------------------------------------------------------------------------------------------------------------
AETNA GENERATION PORTFOLIOS, INC.:
---------------------------------------------------------------------------------------------------------------------
Aetna Ascent VP 152,044 0 152,044
----------------------------------------------------- ----------------------- ----------------- ---------------------
Aetna Crossroads VP 143,331 0 143,331
----------------------------------------------------- ----------------------- ----------------- ---------------------
Aetna Legacy VP 101,225 0 101,225
----------------------------------------------------- ----------------------- ----------------- ---------------------
AETNA BALANCED VP, INC. 1,434,602 0 1,434,602
---------------------------------------------------------------------------------------------------------------------
</TABLE>
* For the period from June 15, 1999 (commencement of operations) to December
31, 1999.
** For the period from September 15, 1999 (commencement of operations) to
December 31, 1999.
*** For the period from December 15, 1999 (commencement of operations) to
December 31, 1999.
# Aetna GET Fund, Series I, Series J and Series K and Aetna Technology VP
commenced operations after December 31, 1999.
<PAGE>
APPENDIX 13
OFFICERS OF ELIJAH ASSET MANAGEMENT, LLC
<TABLE>
-------------------------- ----------------------------------------------- -------------------------------------------
<CAPTION>
POSITIONS AND OFFICES
NAME* WITH EAM OTHER PRINCIPAL POSITION(S) HELD
-------------------------- ----------------------------------------------- -------------------------------------------
<S> <C> <C>
Ronald E. Elijah Manager, Chief Executive Officer, Portfolio N/A
Manager
-------------------------- ----------------------------------------------- -------------------------------------------
John P. McNiff Manager, Secretary Managing Director, Longwood Investment
Advisors, Inc., Radnor, PA; Director,
Longwood Offshore Management, Berwyn, PA;
Officer, Trinity Capital Partners,
Radnor, PA.
-------------------------- ----------------------------------------------- -------------------------------------------
Michael S. Dunn Manager, Chief Operating Officer N/A
-------------------------- ----------------------------------------------- -------------------------------------------
Roderick R. Berry Manager, President, Portfolio Manager N/A
-------------------------- ----------------------------------------------- -------------------------------------------
Scott Rowe Manager, Director of Client Services N/A
-------------------------- ----------------------------------------------- -------------------------------------------
Andrew C. Morrison Manager, Treasurer, Analyst N/A
-------------------------- ----------------------------------------------- -------------------------------------------
Jay J. Giacco Manager Vice President, Aeltus Investment
Management.
-------------------------- ----------------------------------------------- -------------------------------------------
</TABLE>
* Except for Mr. Giacco, the principal business address of each person named
is 100 Pine Street, Suite 420, San Francisco, CA 94111. Mr. Giacco's
principal business address is 10 State House Square, Hartford, CT
06103-3602.
<PAGE>
Intentionally Left Blank
<PAGE>
Intentionally Left Blank
<PAGE>
Intentionally Left Blank
<PAGE>
Please fold and detach card at perforation before mailing.
[Insurance Company Name]
<TABLE>
<CAPTION>
<S> <C> <C>
[Aetna GET Fund, Series C] [Aetna Growth VP]
[Aetna GET Fund, Series D] [Aetna International VP]
[Aetna GET Fund, Series E] [Aetna Small Company VP]
[Aetna GET Fund, Series G] [Aetna Value Opportunity VP]
[Aetna GET Fund, Series H] [Aetna Technology VP]
[Aetna GET Fund, Series I] [Aetna Index Plus Large Cap VP]
[Aetna GET Fund, Series J] [Aetna Index Plus Mid Cap VP]
[Aetna GET Fund, Series K] [Aetna Index Plus Small Cap VP]
(the "Fund") (the "Fund")
[AETNA BALANCED VP, INC.] [Aetna Ascent VP]
(the "Fund") [Aetna Crossroads VP]
[Aetna Legacy VP]
[AETNA VARIABLE ENCORE FUND D/B/A (the "Fund")
AETNA MONEY MARKET VP]
(the "Fund") [AETNA VARIABLE FUND D/B/A
AETNA GROWTH AND
[AETNA INCOME SHARES D/B/A INCOME VP]
AETNA BOND VP] (the "Fund")
(the "Fund")
</TABLE>
THIS PROXY CARD IS SOLICITED ON BEHALF OF
THE BOARD OF THE FUND
This proxy card is solicited in connection with the special meeting of the
shareholders of the Fund to be held at 10:00 a.m., Eastern Time, on November 22,
2000, and at any adjournment or postponement thereof (the "Special Meeting").
Please refer to the Proxy Statement for a discussion of the matters to be voted
upon at the Special Meeting. THIS PROXY CARD, WHEN PROPERLY EXECUTED, DIRECTS J.
SCOTT FOX AND WAYNE F. BALTZER TO VOTE THE SHARES LISTED BELOW AS DIRECTED AND
REVOKES ALL PRIOR PROXY CARDS.
IF THIS PROXY CARD IS PROPERLY EXECUTED AND RETURNED, YOUR SHARES WILL BE VOTED
BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION
IS MADE, YOUR SHARES WILL BE VOTED BY THE PROXIES FOR APPROVAL OF THE PROPOSALS.
Dated: __________________, 2000
<PAGE>
Please sign exactly as name appears on this card. When the account is in the
name of joint tenants, all should sign. When signing as administrator, trustee
or guardian, please give title. If a corporation or partnership, sign in
entity's name and by authorized persons.
X______________________
Signature(s)
Please fold and detach card at perforation before mailing.
Please vote the shares listed on the front of this card by filling in the
appropriate boxes below, as shown, using blue or black ink or dark pencil. Do
not use red ink.
EXAMPLE: [ ] [box is filled in solidly]
THE BOARD OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL.
1. To elect 8 Board members to serve until their successors are elected and
qualified;
FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT [ ]
Albert E. DePrince, Jr. John Y. Kim
Maria T. Fighetti Sidney Koch
J. Scott Fox Corine T. Norgaard
David L. Grove Richard G. Scheide
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND WRITE THE NAME(S) OF THE NOMINEE(S) ON THE LINE BELOW.
--------------------------------------------------------------------------------
2. To approve a new Investment Advisory Agreement between the Fund and Aeltus
Investment Management, Inc. ("Aeltus");
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. (FOR SHAREHOLDERS OF AETNA TECHNOLOGY VP ONLY) To approve a new Subadvisory
Agreement among Aetna Technology VP, Aeltus and Elijah Asset Management, LLC;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. (FOR SHAREHOLDERS OF AETNA VARIABLE ENCORE FUND D/B/A AETNA MONEY MARKET VP,
AETNA INCOME SHARES D/B/A AETNA BOND VP, AETNA VARIABLE FUND D/B/A AETNA GROWTH
AND INCOME
<PAGE>
VP AND THE SERIES OF AETNA GET FUND ONLY) To approve an amendment to the Fund's
Declaration of Trust; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To ratify the selection of KPMG LLP as independent auditors for the fiscal
year ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS, INCLUDING ANY ADJOURNMENT OF THE MEETING, AS MAY PROPERLY COME BEFORE
THE MEETING.
<PAGE>
Please fold and detach card at perforation before mailing.
[Insurance Company Name]
<TABLE>
<CAPTION>
<S> <C> <C>
[Aetna GET Fund, Series C] [Aetna Growth VP]
[Aetna GET Fund, Series D] [Aetna International VP]
[Aetna GET Fund, Series E] [Aetna Small Company VP]
[Aetna GET Fund, Series G] [Aetna Value Opportunity VP]
[Aetna GET Fund, Series H] [Aetna Technology VP]
[Aetna GET Fund, Series I] [Aetna Index Plus Large Cap VP]
[Aetna GET Fund, Series J] [Aetna Index Plus Mid Cap VP]
[Aetna GET Fund, Series K] [Aetna Index Plus Small Cap VP]
(the "Fund") (the "Fund")
[AETNA BALANCED VP, INC.] [Aetna Ascent VP]
(the "Fund") [Aetna Crossroads VP]
[Aetna Legacy VP]
[AETNA VARIABLE ENCORE FUND D/B/A (the "Fund")
AETNA MONEY MARKET VP]
(the "Fund") [AETNA VARIABLE FUND D/B/A
AETNA GROWTH AND
[AETNA INCOME SHARES D/B/A INCOME VP]
AETNA BOND VP] (the "Fund")
(the "Fund")
</TABLE>
[Billing Group #]
[Contract #]
THIS AUTHORIZATION CARD IS SOLICITED ON BEHALF OF
THE BOARD OF THE FUND.
VARIABLE ANNUITY ACCOUNTS B, C, D and I
VARIABLE LIFE ACCOUNTS B and C
IF THIS AUTHORIZATION CARD IS PROPERLY EXECUTED AND RETURNED, YOUR INTEREST WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY YOU, THE UNDERSIGNED CONTRACT HOLDER
UNDER A VARIABLE ANNUITY OR VARIABLE LIFE CONTRACT FUNDED BY A SEPARATE ACCOUNT
OF EITHER AETNA LIFE INSURANCE AND ANNUITY COMPANY ("ALIAC") OR AETNA INSURANCE
COMPANY OF AMERICA (COLLECTIVELY, "AETNA"). IF YOU DO NOT RETURN THIS
AUTHORIZATION CARD, AETNA WILL VOTE THE FUND SHARES ATTRIBUTABLE TO YOUR
INTEREST IN EACH SEPARATE ACCOUNT (EXCEPT ACCOUNT D), FOR, AGAINST, OR
ABSTAINING, IN THE SAME PROPORTION AS THE SHARES FOR WHICH VOTING INSTRUCTIONS
HAVE BEEN RECEIVED FROM OTHER CONTRACT HOLDERS. ALIAC WILL ONLY VOTE THOSE
SHARES OF THE FUND ATTRIBUTABLE TO SEPARATE ACCOUNT D FOR WHICH IT RECEIVES
INSTRUCTIONS. IF YOU RETURN THE AUTHORIZATION CARD BUT DO NOT MARK
<PAGE>
YOUR VOTING INSTRUCTIONS ON THE REVERSE SIDE, AETNA IS INSTRUCTED TO VOTE THE
SEPARATE ACCOUNT INTEREST "FOR" THE PROPOSALS.
Dated: __________________, 2000
Please sign exactly as name appears on this card. When the account is in the
name of joint tenants, all should sign. When signing as administrator, trustee,
plan sponsor or guardian, please give title. If a corporation or partnership,
sign in entity's name and by authorized persons.
X______________________
(Signature(s) of Contract Holder)
Please fold and detach card at perforation before mailing.
This authorization card is solicited in connection with the special meeting of
the shareholders of the Fund to be held at 10:00 a.m., Eastern Time, on November
22, 2000, and at any adjournment or postponement thereof (the "Special
Meeting"). Please refer to the Proxy Statement for a discussion of the matters
to be voted upon at the Special Meeting. THIS AUTHORIZATION CARD, WHEN PROPERLY
EXECUTED, DIRECTS AETNA TO VOTE THE INTEREST OF THE CONTRACT HOLDER(S) SIGNING
ON THE REVERSE SIDE IN THE SHARES OF THE FUND HELD IN THE SEPARATE ACCOUNT AT
THE SPECIAL MEETING AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF IN THE MANNER
DIRECTED BELOW WITH RESPECT TO THE MATTERS DESCRIBED IN THE NOTICE AND
ACCOMPANYING PROXY STATEMENT FOR SAID MEETING AND REVOKES ALL PRIOR
AUTHORIZATION CARDS.
Please vote the shares listed on the front of this card by filling in the
appropriate boxes below, as shown, using blue or black ink or dark pencil. Do
not use red ink.
EXAMPLE: [ ] [box is filled in solidly]
THE BOARD OF THE FUND RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL.
1. To elect 8 Board members to serve until their successors are elected and
qualified;
FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT [ ]
Albert E. DePrince, Jr. John Y. Kim
Maria T. Fighetti Sidney Koch
J. Scott Fox Corine T. Norgaard
David L. Grove Richard G. Scheide
<PAGE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK THE
"FOR ALL EXCEPT" BOX AND WRITE THE NAME(S) OF THE NOMINEE(S) ON THE LINE BELOW.
--------------------------------------------------------------------------------
2. To approve a new Investment Advisory Agreement between the Fund and Aeltus
Investment Management, Inc. ("Aeltus");
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. (FOR CONTRACT HOLDERS WITH INTERESTS IN AETNA TECHNOLOGY VP ONLY) To approve
a new Subadvisory Agreement among Aetna Technology VP, Aeltus and Elijah Asset
Management, LLC;
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. (FOR CONTRACT HOLDERS WITH INTERESTS IN AETNA VARIABLE ENCORE FUND D/B/A
AETNA MONEY MARKET VP, AETNA INCOME SHARES D/B/A AETNA BOND VP, AETNA VARIABLE
FUND D/B/A AETNA GROWTH AND INCOME VP AND THE SERIES OF AETNA GET FUND ONLY) To
approve an amendment to the Fund's Declaration of Trust; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To ratify the selection of KPMG LLP as independent auditors for the fiscal
year ending December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS, INCLUDING ANY ADJOURNMENT OF THE MEETING, AS MAY PROPERLY COME BEFORE
THE MEETING.
