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:
_X__ Preliminary Proxy Statement ____ Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
____ Definitive Proxy Statement
____ Definitive additional materials
____ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
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>
J. Scott Fox
President
October [ ], 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 global financial institution active in the fields of
insurance, banking, and asset management. A more thorough description of ING's
businesses is contained in the proxy statement.
At the 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. 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, because the current agreements
may terminate automatically as a result of 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.
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 by 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.
If you have any questions before you vote, please 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)
<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 an authorization
card has already been returned.
By Order of the Boards,
Daniel E. Burton
Secretary
October [ ], 2000
<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.
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 will 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 accountants. 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.
<PAGE>
PRELIMINARY COPIES
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")
151 Farmington Avenue
Hartford, Connecticut 06156
(800) 262-3862
PROXY STATEMENT
October [ ], 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") on the previous page 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>
<CAPTION>
Proposal
<S> <C> <C> <C> <C> <C>
1. 2. 3. 4. 5.
Approval of Approval of Ratification
Election of Investment Approval of Amendment to of Selection
Directors or Advisory Subadvisory Declaration of
Fund Trustees Agreement Agreement of Trust Auditors
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 |X| |X| |X| |X|
d/b/a AETNA MONEY MARKET VP
Aetna Income Shares d/b/a |X| |X| |X| |X|
AETNA BOND VP
Aetna Variable Fund d/b/a |X| |X| |X| |X|
AETNA GROWTH AND INCOME VP
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.
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. Following the
Transaction, ING anticipates that it will evaluate capabilities across the ING
companies and, where appropriate, will consider changes designed to maximize
investment capabilities and achieve expense and resource efficiencies.
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, 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>
<S> <C> <C>
Name and Age Position(s) Held With Principal Occupation During Past 5 Years
each Company
J. Scott Fox* Director and President Director, Managing Director, Chief Operating Officer and Chief
(Age 45) (Principal Executive Financial Officer, Aeltus Investment Management, Inc. (investment
Officer (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. (since 1997).
Albert E. DePrince, Jr. Director (since 1998). Director, Business and Economic Research Center, and Professor of
(Age 59) Economics and Finance, Middle Tennessee State University, 1991 to
present; Director, Aetna Series Fund, Inc. (since 1998).
Maria T. Fighetti Director, Aetna Associate Commissioner for Contract Management (1996 to present),
(Age 56) Generation Portfolios, Manager/Attorney (1973 to 1996), Health Services, New York City
Inc. (since 1994), Department of Mental Health, Mental Retardation and Alcohol Services;
Aetna Balanced VP, Director, Aetna Series Fund, Inc. (since 1994).
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), Aetna GET
Fund (since 1994).
David L. Grove Director, Aetna Private Investor; Economic/Financial Consultant, 1985 to present;
(Age 82) Generation Portfolios, Director, Aetna Series Fund, Inc. (since 1991).
Inc. (since 1994),
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), 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 Financial Adviser, self-employed, January 1993 to present; Director,
(Age 65) Generation Portfolios, Aetna Series Fund, Inc. (since 1994).
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), Aetna GET Fund
(since 1994).
Corine T. Norgaard Director, Aetna Dean of the Barney School of Business, University of Hartford (West
(Age 63) Generation Portfolios, Hartford, CT), August 1996 to present; Professor, Accounting and Dean
Inc. (since 1994), of the School of Management, SUNY Binghamton (Binghamton, NY), August
Aetna Balanced VP, 1993 to August 1996; Director, Advest Bank & Trust, April 1997 to
Inc. (since 1988) and present; Director, MassMutual Participation Investors and MassMutual
Aetna Variable Corporate Investors (closed-end investment companies), April 1998 to
Portfolios, Inc. present; Director, Aetna Series Fund, Inc. (since 1991).
(since 1996); Trustee,
Aetna Variable Fund
(since 1984), Aetna
Income Shares (since
1984), Aetna Variable
Encore Fund (since
1984), Aetna GET Fund
(since 1987).
Richard G. Scheide Director, Aetna Principal, LoBue Associates Inc. (wealth management industry
(Age 71) Generation Portfolios, consultants), October 1999 to present; Trust and Private Banking
Inc. (since 1994), Consultant, David Ross Palmer Consultants, July 1991 to October 1999;
Aetna Balanced VP, Director, Aetna Series Fund, Inc. (since 1993).
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), 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 of 1940 (the "Investment Company Act")
(see "General Information: Section 15(f) of the Investment Company Act" below).
Ownership of Fund Shares
To the best of each Company's knowledge, as of August 31, 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.
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 4
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 Chairman 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. 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>
<CAPTION>
Name of Person, Position
<S> <C> <C> <C> <C> <C> <C>
Albert E. Sidney Richard G.
DePrince, Jr.,* 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
--------- -------- -------- -------- -------- -----------
Aggregate Compensation from Aetna $37,044 $37,044 $38,232 $35,857 $35,857 $38,232
Variable Fund d/b/a Aetna 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
Aggregate Compensation from Aetna $4,281 $4,281 $4,418 $4,144 $4,144 $4,418
Variable Encore Fund d/b/a Aetna
Money Market VP
Aggregate Compensation from Aetna $7,347 $7,347 $7,583 $7,112 $7,112 $7,583
Balanced VP, Inc.
Aggregate Compensation from Aetna GET $6,475 $6,475 $6,682 $6,267 $6,267 $6,682
Fund
Aggregate Compensation from Aetna $2,010 $2,010 $2,074 $1,945 $1,945 $2,074
Generation Portfolios, Inc.
Aggregate Compensation from Aetna $6,904 $6,904 $7,125 $6,683 $6,683 $7,125
Variable Portfolios, Inc.
Total Compensation from Companies and $78,000 $78,000 $80,500 $75,500 $75,500 $80,500
Fund Complex Paid to Directors# (8 companies) (8 companies) (8 companies) (8 companies) (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.
** During the year ended December 31, 1999, Ms. Fighetti deferred
$11,873, $849, $1,372, $2,355, $2,075, $644 and $2,214, respectively,
of her compensation from Aetna Variable Fund, Aetna Income Shares,
Aetna Variable Encore Fund, Aetna Balanced VP, Inc., Aetna GET Fund,
Aetna Generation Portfolios, Inc. and Aetna Variable Portfolios, Inc.
During the year ended December 31, 1999, Dr. Grove deferred $38,232,
$2,735, $4,418, $7,583, $6,682, $2,075 and $7,125, respectively, of
his compensation from Aetna Variable Fund, Aetna Income Shares, Aetna
Variable Encore Fund, Aetna Balanced VP, Inc., Aetna GET Fund, Aetna
Generation Portfolios, Inc. and Aetna Variable Portfolios, Inc. For
the same period, Ms. Fighetti and Dr. Grove deferred $25,000 and
$80,500, respectively, of their compensation from the fund complex.
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.
PROPOSAL NO. 2
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
Shareholders of each of the Funds are being asked to approve new
Investment Advisory Agreements (the "New Agreements") 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 5 shows the date when each Fund commenced operations, the date
of each Current Agreement, and the dates when each Fund's Current Agreement was
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 6 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 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, provides 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 agrees 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 7. 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.
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 8 to this Proxy
Statement for the name of Aeltus' parent company and the names of its immediate
parents. Appendix 8 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 9 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 10 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 11 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.
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
Investment Management 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.
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 (the
"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 contemplated by the New Subadvisory
Agreement. Under the New Subadvisory Agreement, to the extent that the
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, Inc., 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 24.9% of the
outstanding voting interests of EAM. Ronald E. Elijah owns 75.1% of the
outstanding voting interests of EAM. Please refer to Appendix 12 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. 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 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.
PROPOSAL NO. 4
APPROVAL OF AN AMENDMENT TO
THE 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.
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.
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' 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 fail 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, 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,
Daniel E. Burton
Secretary
<PAGE>
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.
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.
VIII. COMPENSATION
[Following paragraph: Aetna Balanced VP, Inc., Aetna Income Shares, and Aetna
Variable Encore Fund only. Please refer to Appendix 6 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;
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.
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.
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.
By:
Attest: Name:
Name: Title:
Title:
Aetna [ ][, Inc.]
Attest: By:
Name: Name:
Title: Title:
<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.
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.
VIII. COMPENSATION
[Following paragraph: Aetna Variable Portfolios, Inc. and Aetna Generation
Portfolios, Inc. only. Please refer to Appendix 6 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;
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 7 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.
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.}
[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.
By:
Attest: Name:
Name: Title:
Title:
Aetna [ ][, Inc.]
[on behalf of its Portfolio
Aetna [ ] VP]
{on behalf of its Series [ ]}
Attest: By:
Name: Name:
Title: Title:
<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 ADVISER
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.
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:
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 it is 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.
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 Subadviser 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
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
<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
Series D
Series E
Series G
Series H
Series I
Series J
Series K
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 Growth VP
Aetna International VP
Aetna Small Company VP
Aetna Value Opportunity VP
Aetna Technology VP
Aetna Index Plus Large Cap VP
Aetna Index Plus Mid Cap VP
Aetna Index Plus Small Cap VP
AETNA GENERATION PORTFOLIOS, INC.:
Aetna Ascent VP
Aetna Crossroads VP
Aetna Legacy VP
AETNA BALANCED VP, INC.
<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:
Aetna Ascent VP
Separate Account Name Number of Shares Percentage
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%
Aetna GET Fund, Series D
Separate Account Name Number of Shares Percentage
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%
Aetna Index Plus Large Cap VP
Separate Account Name Number of Shares Percentage
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%
Aetna Small Company VP
Separate Account Name Number of Shares Percentage
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%
<PAGE>
Appendix 4
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.
Position(s) With Principal Occupation
Name and Age each Company During Past 5 Years
J. Scott Fox Trustee (since Director, Managing Director, Chief
(Age 45) 1997) and President Operating Officer, Chief Financial
(Principal Executive Officer, Aeltus Investment
Officer) 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 or Trustee and President,
December 1997 to present (Vice
President and Treasurer, March 1996
to December 1997), Aetna Series
Fund, Inc., Aetna Variable Fund,
Aetna Income Shares, Aetna Variable
Encore Fund, Aetna Balanced VP,
Inc., Aetna GET Fund, Aetna
Generation Portfolios, Inc. and
Aetna Variable Portfolios, Inc.
Wayne F. Baltzer Vice President Vice President, Aeltus Capital,
(Age 56) (since 1996) Inc., May 1998 to present; Vice
President, Aetna Investment
Services, Inc., July 1993 to May
1998.
Stephanie A. DeSisto Vice President Vice President, Mutual Fund
(Age 46) (since 1998), Accounting, Aeltus Investment
Treasurer and Management, Inc., November 1995 to
Chief Financial present; Director, Mutual Fund
Officer (Principal Accounting, Aetna Life Insurance
Financial and and Annuity Company, August 1994 to
Accounting Officer November 1995.
(since 1997)
Managing Director, Aeltus
Frank J. Litwin Vice President Investment Management, Inc., August
(Age 50) (since 1997) 1997 to 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 and
(Age 33) Assistant Secretary, Aeltus
Investment Management, Inc., July
2000 to present; Assistant General
Counsel and Assistant Secretary,
Aeltus Capital, Inc., July 2000 to
present; Assistant General Counsel
and Assistant Secretary, Aeltus
Trust Company, July 2000 to
present; Counsel, Aetna Financial
Services Company, September 1997 to
present; Attorney, Securities and
Exchange Commission, August 1996 to
August 1997; Associate, Kirkpatrick
& Lockhart, LLP, September 1992 to
August 1996.
<PAGE>
Appendix 5
<TABLE>
<CAPTION>
Dates Relating to Investment Advisory Agreements
<S> <C> <C> <C> <C>
Date Current Date Current
Investment Advisory Investment Advisory
Date of Current Agreement Last Agreement Last
Investment Advisory Approved by the Board Approved by
Fund* Commencement of Agreement Shareholders
Operations
AETNA GET FUND:
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 August 1, 1975 December 30, 1999 December 15, 1999 July 19, 1996
d/b/a
AETNA MONEY MARKET VP
Aetna Income Shares d/b/a May 15, 1973 December 30, 1999 December 15, 1999 June 17, 1996
AETNA BOND VP
Aetna Variable Fund d/b/a May 1, 1975 December 30, 1999 December 15, 1999 June 17, 1996
AETNA GROWTH AND INCOME VP
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
* 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 several 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.
</TABLE>
Appendix 6
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.
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%
Appendix 7
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.
<PAGE>
Appendix 8
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.
<TABLE>
<CAPTION>
Principal Executive Officer and Directors of Aeltus
<S> <C> <C>
Positions and Offices
Name* with Investment Adviser Other Principal Position(s) Held
John Y. Kim Director, President, Chief Executive Officer Senior Vice President and Chief
and Chief Investment Officer Investment 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, Chief Operating Director, Managing Director, Chief
Officer and Chief Financial Officer Operating Officer and Chief Financial
Officer, Aeltus Capital, Inc.
(broker-dealer); 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>
* Except with respect to Mr. McInerney and Ms. Smith, the principal business
address of each person named is 10 State House Square, Hartford, Connecticut
06103-3602. The address of Mr. McInerney and Ms. Smith is 151 Farmington Avenue,
Hartford, Connecticut 06156.
<TABLE>
<CAPTION>
Common Officers and Directors of each Company and Aeltus
<S> <C> <C>
Position(s) with
Name each Company Position(s) with Aeltus
J. Scott Fox Director and President Director, Managing Director, Chief
Operating Officer, Chief Financial Officer
John Y. Kim Director Director, President, Chief Executive
Officer, Chief Investment Officer
Frank J. Litwin Vice President Managing Director, Retail Marketing and
Sales
Wayne F. Baltzer Vice President Vice President, Mutual Fund Administration
and Client Services
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>
<PAGE>
Appendix 9
Advisory Fees Paid to Aeltus Investment Management, Inc.
for the Year Ended December 31, 1999
Total Investment Net Advisory
Fund Advisory Fees Waiver Fees Paid
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 2,534,715 0 2,534,715
AETNA MONEY MARKET VP
Aetna Income Shares d/b/a 3,050,254 0 3,050,254
AETNA BOND VP
Aetna Variable Fund d/b/a 48,426,000 0 48,426,000
AETNA GROWTH AND INCOME VP
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
* 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 10
<TABLE>
<CAPTION>
Advisory Fee Rates
for Funds with Similar Investment Objectives
Advised by Aeltus Investment Management, Inc.
<S> <C> <C> <C>
Advisory Fee
Net Assets As a Percentage of
Fund(1) As of August 31, 2000 Average Daily Net Assets Expense Limitation(2)
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 million
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
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 0.200% on first $1 billion 0.95%
0.190% on next $2 billion
0.180% 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.
<PAGE>
Appendix 11
<TABLE>
<CAPTION>
Administrative Services Fees Paid to Aeltus Investment Management, Inc.
<S> <C> <C> <C>
Total Net Administra-
Administrative Administrator tive Services
Fund Services Fees Waiver Fees Paid
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 760,415 0 760,415
AETNA MONEY MARKET VP
Aetna Income Shares d/b/a 571,923 0 571,923
AETNA BOND VP
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 12
OFFICERS OF ELIJAH ASSET MANAGEMENT, LLC
Positions and Offices Other Principal
Name* with EAM Position(s) Held
Ronald E. Elijah Manager, Chief Executive N/A
Officer, Portfolio 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 N/A
Operating Officer
Roderick R. Berry Manager, President, N/A
Portfolio Manager
Scott Rowe Manager, Director N/A
of Client Services
Andrew C. Morrison Manager, Treasurer, N/A
Analyst
Jay J. Giacco Manager Vice President, Aeltus
Investment Management.
* 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>
PRELIMINARY COPIES
[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]
(the "Fund") [Aetna Index Plus Small Cap VP]
(the "Fund")
[AETNA BALANCED VP, INC.]
(the "Fund") [AETNA GENERATION PORTFOLIOS, INC.]
[Aetna Ascent VP]
[Aetna Variable Encore Fund d/b/a [Aetna Crossroads VP]
AETNA MONEY MARKET VP] [Aetna Legacy VP]
(the "Fund") (the "Fund")
[Aetna Income Shares d/b/a [Aetna Variable Fund d/b/a
AETNA BOND VP] AETNA GROWTH AND
(the "Fund") INCOME VP]
(the "Fund")
THIS PROXY CARD IS SOLICITED ON BEHALF OF
THE BOARD OF THE FUND.
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.
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______________________
X______________________
Signature(s)
Dated: __________________, 2000
Please refer to the Proxy Statement for a discussion of these matters. 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. THIS PROXY CARD, WHEN
PROPERLY EXECUTED, DIRECTS J. SCOTT FOX AND WAYNE F. BALTZER TO VOTE THE SHARES
LISTED ON THE FRONT OF THIS CARD AS DIRECTED AND REVOKES ALL PRIOR PROXY CARDS.
Please vote the shares listed on the front of this card by filling in the
appropriate box below, as shown, using blue or black ink or dark pencil. Do not
use red ink.
[ ] [box is filled in solidly] EXAMPLE
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
Note: If you do not wish your shares voted "For" a particular Nominee, mark the
"For All Except" box and strike a line through the name(s) of the Nominee(s).
Your shares will be voted for the remaining Nominee(s).
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 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
Fund 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>
PRELIMINARY COPIES
[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]
(the "Fund") [Aetna Index Plus Small Cap VP]
(the "Fund")
[AETNA BALANCED VP, INC.]
(the "Fund") [AETNA GENERATION PORTFOLIOS, INC.]
[Aetna Ascent VP]
[Aetna Variable Encore Fund d/b/a [Aetna Crossroads VP]
AETNA MONEY MARKET VP] [Aetna Legacy VP]
(the "Fund") (the "Fund")
[Aetna Income Shares d/b/a [Aetna Variable Fund d/b/a
AETNA BOND VP] AETNA GROWTH AND
(the "Fund") INCOME VP]
(the "Fund")
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 YOUR VOTING
INSTRUCTIONS ON THE REVERSE SIDE, AETNA IS INSTRUCTED TO VOTE THE SEPARATE
ACCOUNT INTEREST "FOR" THE PROPOSALS.
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______________________
X______________________
(Signature of Contract Holder)
Dated: __________________, 2000
Please refer to the Proxy Statement for a discussion of these matters. 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").
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 box below, as shown, using blue or black ink or dark pencil. Do not
use red ink.
[ ] [box is filled in solidly] EXAMPLE
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
Note: If you do not wish your shares voted "For" a particular Nominee, mark the
"For All Except" box and strike a line through the name(s) of the Nominee(s).
Your shares will be voted for the remaining Nominee(s).
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
Fund 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.
