As filed with the Securities and Exchange File No. 2-53038
Commission on April 25, 2000 File No. 811-2565
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
- --------------------------------------------------------------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 45
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 36
AETNA VARIABLE ENCORE FUND
--------------------------
d/b/a Aetna Money Market VP
---------------------------
151 Farmington Avenue TS31, Hartford, Connecticut 06156
-------------------------------------------------------
(860) 275-2032
Amy R. Doberman, Counsel
10 State House Square SH11, Hartford, Connecticut 06103-3602
------------------------------------------------------------
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
|X| on May 1, 2000, pursuant to paragraph (b) of Rule 485
<PAGE>
PART B
------
The Statement of Additional Information is incorporated into Part B of this
Post-Effective Amendment No. 45 by reference to Post-Effective Amendment No. 12
to the Registration Statement on Form N-1A (File No. 333-05173), as filed
electronically on April 25, 2000.
<PAGE>
Aetna Variable Encore Fund d/b/a
AETNA MONEY MARKET VP
Prospectus
May 1, 2000
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Anyone
who represents to the contrary has committed a criminal offense.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
THE FUND'S INVESTMENTS ............................... 1
FUND EXPENSES ........................................ 3
MANAGEMENT OF THE FUND ............................... 4
INVESTMENTS IN AND REDEMPTIONS FROM THE FUND ......... 4
TAX INFORMATION ...................................... 5
FINANCIAL HIGHLIGHTS ................................. 6
ADDITIONAL INFORMATION ............................... 7
</TABLE>
<PAGE>
THE FUND'S INVESTMENTS
Investment Objective, Principal Investment Strategies and Risks, Investment
Performance
Investment Objective. Aetna Money Market VP (Fund) seeks to provide high current
return, consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments.
Principal Investment Strategies. The Fund invests in a diversified portfolio of
high-quality fixed income securities denominated in U.S. dollars, with short
remaining maturities. These securities include U.S. Government securities (such
as U.S. Treasury bills and securities issued or sponsored by U.S. government
agencies), corporate debt securities, commercial paper, asset-backed securities
and certain obligations of U.S. and foreign banks, each of which must be highly
rated by independent rating agencies or, if unrated, considered by the Fund's
investment adviser, Aeltus Investment Management, Inc. (Aeltus), to be of
comparable quality. The Fund maintains a dollar-weighted average portfolio
maturity of 90 days or less.
Principal Risks. It is possible to lose money by investing in the Fund. There is
no guaranty the Fund will achieve its investment objective. Investments in the
Fund are not bank deposits and are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency.
A weak economy, strong equity markets and changes by the Federal Reserve in its
monetary policies all could affect short-term interest rates and, therefore, the
value and yield of the Fund's shares. Risks also include adverse changes in the
actual or perceived creditworthiness of issuers and adverse changes in the
economic or political environment.
Shares of the Fund are offered to insurance company separate accounts that fund
both annuity and life insurance contracts and to certain tax-qualified
retirement plans. Due to differences in tax treatment or other considerations,
the interests of various contract owners participating in the Fund and the
interests of qualified plans investing in the Fund might at some time be in
conflict. The Fund's Board of Trustees (Board) will monitor the Fund for any
material conflicts and determine what action, if any, should be taken to resolve
these conflicts.
Aetna Money Market VP 1
<PAGE>
Investment Performance
Year-by-Year Total Return
[TABULAR REPRESENTATION OF BAR CHART]
Years Ended December 31,
1990 8.44%
1991 6.53%
1992 3.68%
1993 3.19%
1994 4.09%
1995 6.05%
1996 5.37%
1997 5.47%
1998 5.46%
1999 5.08%
[up arrow] Best Quarter:
second quarter 1990, up 2.06%
[down arrow] Worst Quarter:
first quarter 1994, up 0.73%
This performance bar chart shows changes in the Fund's performance from year to
year. The fluctuation in returns illustrates the Fund's performance volatility.
The chart is accompanied by the Fund's best and worst quarterly returns
throughout the years noted in the bar chart.
<TABLE>
<CAPTION>
As of December 31, 1999
Average Annual Total Return 1 Year 5 Years 10 Years
<S> <C> <C> <C>
Aetna Money Market VP 5.08% 5.49% 5.33%
IBC Index* 4.54% 4.92% 4.74%
</TABLE>
This table shows the Fund's average annual total return. The table also compares
the Fund's performance to the performance of a broad-based securities market
index. The Fund's past performance is not necessarily an indication of how it
will perform in the future.
To obtain current yield information, please contact 1-800-262-3862.
The performance table and bar chart provide an indication of the historical risk
of an investment in the Fund. All figures assume reinvestment of dividends and
distributions. The performance numbers do not reflect the deduction of any
insurance fees or charges. If such charges were deducted, performance would be
lower.
* IBC's Money Funds Report Average/All Taxable Index is an average of the
returns of over 250 money market mutual funds surveyed each month by IBC.
2 Aetna Money Market VP
<PAGE>
FUND EXPENSES
The following table describes Fund expenses. Shareholder Fees are paid directly
by shareholders. Annual Fund Operating Expenses are deducted from Fund assets
every year, and are thus paid indirectly by all Fund shareholders. Shareholders
who acquire Fund shares through an insurance company separate account should
refer to the applicable contract prospectus, prospectus summary or disclosure
statement for a description of insurance charges that may apply.
Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Charge (Load) on Purchases None
Maximum Deferred Sales Charge (Load) None
Annual Fund Operating Expenses
(expenses that are deducted from Fund assets)
Management Fee 0.25%
Other Expenses 0.09%
Total Operating Expenses 0.34%
Example
The following example is designed to help you compare the costs of investing in
the Fund with the costs of investing in other mutual funds. Using the annual
fund operating expenses percentages above, you would pay the following expenses
on a $10,000 investment, assuming a 5% annual return and redemption at the end
of each of the periods shown:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C>
$35 $109 $191 $431
</TABLE>
This example should not be considered an indication of prior or future expenses.
Actual expenses for the current year may vary from those shown.
Aetna Money Market VP 3
<PAGE>
MANAGEMENT OF THE FUND
Aeltus Investment Management, Inc., 10 State House Square, Hartford, Connecticut
06103-3602, serves as investment adviser to the Fund. Aeltus is responsible for
managing the assets of the Fund in accordance with the Fund's investment
objective and policies, subject to oversight by the Board. Aeltus has acted as
adviser or subadviser to mutual funds since 1994 and has managed institutional
accounts since 1972.
Advisory Fees
For its most recent fiscal year, the Fund paid Aeltus aggregate advisory fees
equal to an annual rate of 0.25% of the average daily net assets of the Fund.
Portfolio Management
The Fund is managed by a team of Aeltus fixed-income specialists.
INVESTMENTS IN AND REDEMPTIONS FROM THE FUND
Investors purchasing shares in connection with an insurance company contract or
policy should refer to the documents pertaining to the contract or policy for
information on how to direct investments in or redemptions from (including
making exchanges into or out of) the Fund, and any fees that may apply.
Orders for the purchase or redemption of Fund shares that are received before
the close of regular trading on the New York Stock Exchange (normally 4:00 p.m.
eastern time) are effected at the net asset value (NAV) per share determined
that day, as described below. The insurance company has been designated an agent
of the Fund for receipt of purchase and redemption orders. Therefore, receipt of
an order by the insurance company constitutes receipt by the Fund, provided that
the Fund receives notice of the order by 9:30 a.m. eastern time the next day on
which the New York Stock Exchange is open for trading.
Net Asset Value. The NAV of the Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. eastern time).
In calculating the NAV, securities are valued primarily by independent pricing
services using market quotations. Short-term debt securities maturing in 60 days
or less are valued using amortized cost, which when combined with accrued
interest, approximates market value. Securities for which market quotations are
not readily available are valued at their fair value, subject to procedures
adopted by the Board.
Business Hours. The Fund is open on the same days as the New York Stock Exchange
(generally, Monday through Friday). Representatives are available from 8:00 a.m.
to 8:00 p.m. eastern time Monday through Friday.
The Fund reserves the right to suspend the offering of shares, or to reject any
specific purchase order. The Fund may suspend redemptions or postpone payments
when the New York Stock Exchange is closed or when trading is restricted for any
reason or under emergency circumstances as determined by the Securities and
Exchange Commission.
The Fund is not designed for professional market timing organizations or other
entities using programmed or frequent exchanges. The Fund reserve the right to
reject any specific purchase or exchange request, including a request made by a
market timer.
4 Aetna Money Market VP
<PAGE>
TAX INFORMATION
The Fund intends to qualify as a regulated investment company by satisfying the
requirements under Subchapter M of the Internal Revenue Code of 1986, as amended
(Code), including requirements with respect to diversification of assets,
distribution of income and sources of income. As a regulated investment company,
the Fund generally will not be subject to tax on its ordinary income and net
realized capital gains.
The Fund also intends to comply with the diversification requirements of Section
817(h) of the Code for those investors who acquire shares through variable
annuity contracts and variable life insurance policies so that those contract
owners and policy owners should not be subject to federal tax on distributions
from the Fund to the insurance company separate accounts. Contract owners and
policy owners should review the applicable contract prospectus, prospectus
summary or disclosure statement for information regarding the personal tax
consequences of purchasing a contract or policy.
Dividends and Distributions. Dividends and capital gains distributions, if any,
are paid on an annual basis. To comply with federal tax regulations, the Fund
may also pay an additional capital gains distribution, usually in June.
Both income dividends and capital gains distributions are paid by the Fund on a
per share basis. As a result, at the time of payment, the share price of the
Fund will be reduced by the amount of the payment.
Aetna Money Market VP 5
<PAGE>
FINANCIAL HIGHLIGHTS
These financial highlights are intended to help you understand the Fund's
performance for the past five years. Certain information reflects financial
results for a single Fund share. The total returns in the table represent the
rate an investor would have earned (or lost) on an investment in the Fund
(assuming reinvestment of all dividends and distributions). The information in
this table has been audited by KPMG LLP, independent auditors, whose report,
along with the Fund's financial statements, is included in the Fund's current
Annual Report, which is available upon request.
(for one share outstanding throughout each year)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------------------------------
1999 1998 1997 1996 1995
---------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ......... $ 13.39 $ 13.36 $ 13.19 $ 13.29 $ 12.54
---------- -------- -------- -------- --------
Income from investment
operations:
Net investment income ....................... 0.59 0.63 0.67+ 0.70+ 0.75+
Net realized and change in
unrealized gain or loss on
investments ................................ 0.06 0.07 0.03 -- 0.01
---------- -------- -------- -------- --------
Total from investment
operations .............................. 0.65 0.70 0.70 0.70 0.76
---------- -------- -------- -------- --------
Less distributions:
From net investment income .................. (0.62) (0.67) (0.53) (0.80) (0.01)
---------- -------- -------- -------- --------
Total distributions ....................... (0.62) (0.67) (0.53) (0.80) (0.01)
---------- -------- -------- -------- --------
Net asset value, end of period ............... $ 13.42 $ 13.39 $ 13.36 $ 13.19 $ 13.29
========== ======== ======== ======== ========
Total return* ................................ 5.08% 5.46% 5.47% 5.37% 6.05%
Net assets, end of period (000's) ............ $1,157,818 $875,169 $688,756 $613,505 $514,037
Ratio of net expenses to
average net assets .......................... 0.34% 0.34% 0.35% 0.34% 0.30%
Ratio of net investment income
to average net assets........................ 5.04% 5.28% 5.34% 5.24% 5.82%
</TABLE>
* The total return percentage does not reflect any separate account charges
under variable annuity contracts and life policies.
+ Per share data calculated using weighted average number of shares outstanding
throughout the period.
6 Aetna Money Market VP
<PAGE>
ADDITIONAL INFORMATION
The Statement of Additional Information (SAI), which is incorporated by
reference into this Prospectus, contains additional information about the Fund.
You may request free of charge the current SAI or the most recent annual and
semiannual reports, or other information about the Fund, by calling
1-800-262-3862 or writing to:
Aetna Money Market VP
151 Farmington Avenue
Hartford, Connecticut 06156-8962
The SEC also makes available to the public reports and information about the
Fund. Certain reports and information, including the SAI, are available on the
EDGAR Database on the SEC's website (http://www.sec.gov) or at the SEC's public
reference room in Washington, D.C. You may call 1-202-942-8090 to get
information about the operations of the public reference room. You may obtain
copies of reports and other information about the Fund, after paying a
duplicating fee, by sending an e-mail request to: [email protected], or by
writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
Investment Company Act File No. 811-2565.
Aetna Money Market VP 7
<PAGE>
PART C
OTHER INFORMATION
-----------------
Item 23. Exhibits
- -----------------
(a.1) Charter (Declaration of Trust)(1)
(a.2) Amendment to Declaration of Trust of Aetna Variable Encore Fund(2)
(b) Amended and Restated Bylaws (adopted by Board of Directors September
14, 1994)(1)
(c) Instruments Defining Rights of Holders(3)
(d) Investment Advisory Agreement between Aeltus Investment Management,
Inc. ("Aeltus" ) and Aetna Variable Encore Fund
(e) Underwriting Agreement between Aetna Life Insurance and Annuity
Company and Aetna Variable Encore Fund(4)
(f) Directors' Deferred Compensation Plan(2)
(g) Custodian Agreement between Aetna Variable Encore Fund and Mellon
Bank, N.A.(1)
(h) Administrative Services Agreement between Aeltus and Aetna Variable
Encore Fund(2)
(i) Opinion and Consent of Counsel
(j) Consent of Independent Auditors
(k) Not Applicable
(l) Not Applicable
(m) Not Applicable
(n) Not Applicable
(o) Not Applicable
(p.1) Aeltus Code of Ethics(5)
(p.2) Aetna Code of Ethics(5)
(p.3) Aetna Mutual Funds Code of Ethics(5)
(q.1) Power of Attorney (November 6, 1998)(6)
(q.2) Authorization for Signatures(7)
1. Incorporated by reference to Post-Effective Amendment No. 39 to
Registration Statement on Form N-1A (File No. 2-53038), as filed
electronically with the Securities and Exchange Commission on April 25,
1996.
2. Incorporated by reference to Post-Effective Amendment No. 43 to
Registration Statement on Form N-1A (File No. 2-53038), as filed
electronically with the Securities and Exchange Commission on April 27,
1998.
3. Incorporated by reference to Post-Effective Amendment No. 41 to
Registration Statement on Form N-1A (File No. 2-53038), as filed
electronically with the Securities and Exchange Commission on June 7,
1996.
<PAGE>
4. Incorporated by reference to Post-Effective Amendment No. 42 to
Registration Statement on Form N-1A (File No. 2-53038), as filed
electronically with the Securities and Exchange Commission on April 11,
1997.
5. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-1A (File No. 333-05173), as filed
electronically with the Securities and Exchange Commission on April 25,
2000.
6. Incorporated by reference to Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A (File No. 33-12723), as filed
electronically with the Securities and Exchange Commission on March 10,
1999.
7. Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement on form N-1A (File No. 333-05173), as filed
electronically with the Securities and Exchange Commission on September
26, 1997.
<PAGE>
Item 24. Persons Controlled by or Under Common Control
- ------------------------------------------------------
Registrant is a Massachusetts business trust for which separate financial
statements are filed. As of March 31, 2000, Aetna Life Insurance and
Annuity Company (Aetna), and its affiliates, owned 96.51% of the
Registrant's outstanding voting securities, through direct ownership or
through one of Aetna's separate accounts.
Aetna is an indirect wholly owned subsidiary of Aetna Inc.
A list of all persons directly or indirectly under common control with the
Registrant and a list which indicates the principal business of each such
company referenced in the diagram are incorporated herein by reference to
Item 24 of Post Effective Amendment No. 38 to the Registration Statement on
Form N-1A (File No. 33-41694), as filed electronically with the Securities
and Exchange Commission on February 23, 2000.
Item 25. Indemnification
- ------------------------
Article 5.3 of the Registrant's Amendment to Declaration of Trust,
incorporated herein by reference to Exhibit (a.1) of this Post-Effective
Amendment, provides indemnification for Registrant's trustees and officers.
In addition, the Registrant's trustees and officers are currently covered
under a directors and officers errors and omissions liability insurance
policy, issued by ICI Mutual Insurance Company, which expires on October 1,
2002.
Section XI.B of the Administrative Services Agreement, incorporated herein
by reference to Exhibit (h) of this Post-Effective Amendment, provides for
indemnification of Aeltus, the Administrator.
Item 26. Business and Other Connections of Investment Adviser
- -------------------------------------------------------------
The investment adviser, Aeltus Investment Management, Inc. (Aeltus), is
registered as an investment adviser with the Securities and Exchange
Commission. In addition to serving as the investment adviser and
administrator for the Registrant, Aeltus acts as the investment adviser and
administrator for Aetna Variable Fund, Aetna Income Shares, Aetna Balanced
VP, Inc., Aetna Generation Portfolios, Inc., Aetna GET Fund, Aetna Variable
Portfolios, Inc., and Aetna Series Fund, Inc. (all management investment
companies registered under the Investment Company Act of 1940 (1940 Act)).
It also acts as investment adviser to certain private accounts.
The following table summarizes the business connections of the directors
and principal officers of the investment adviser.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------
Name Positions and Offices Other Principal Position(s) Held
- ---- with Investment Adviser Since Dec. 31, 1997/Addresses*
----------------------- ------------------------------
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
John Y. Kim Director, President, Director (February 1995 - March 1998) --
Chief Executive Officer, Aetna; Senior Vice President (since
Chief Investment Officer September 1994) -- Aetna.
J. Scott Fox Director, Managing Vice President (since April 1997) -- Aetna
Director, Chief Retirement Services, Inc.; Director and
Operating Officer, Chief Senior Vice President (March 1997 -- February
Financial Officer 1998) -- Aetna.
Thomas J. McInerney Director President (since August 1997) -- Aetna
Retirement Services, Inc.; Director and
President (since September 1997) -- Aetna;
Executive Vice President (since August 1997)
-- Aetna Inc.
Catherine H. Smith Director Chief Financial Officer (since February 1998)
-- Aetna Retirement Services, Inc.; Director,
Senior Vice President and Chief Financial
Officer (since February 1998) -- Aetna; Vice
President, Strategy, Finance and
Administration, Financial Relations
(September 1996 - February 1998) -- Aetna Inc.
Stephanie A. DeSisto Vice President
Amy R. Doberman Vice President, General Counsel (since December 1996) --
Counsel and Secretary Aetna Retirement Services,
Inc.
Brian K. Kawakami Vice President, Chief Chief Compliance Officer & Director (since
Compliance Officer January 1996) -- Aeltus Trust Company; Chief
Compliance Officer (since August 1993) --
Aeltus Capital, Inc.
Neil Kochen Managing Director, Managing Director (since August 1996) --
Chief Investment Aeltus Capital, Inc.
Officer, Equity
Investments
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Name Positions and Offices Other Principal Position(s) Held
- ---- with Investment Adviser Since Dec. 31, 1997/Addresses*
----------------------- ------------------------------
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Frank Litwin Managing Director, Managing Director (since May 1998) --
Retail Marketing and Aeltus Capital, Inc.
Sales
L. Charles Meythaler Managing Director, Director (since July 1997) -- Aeltus Trust
Institutional Marketing Company.
and Sales
James Sweeney Managing Director, Fixed Managing Director (since August 1996) --
Income Investments Aeltus Trust Company.
</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.
Item 27. Principal Underwriters
- -------------------------------
(a) In addition to serving as the principal underwriter for the Registrant,
Aetna also acts as the principal underwriter for Aetna Variable Fund, Aetna
Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund, Aetna Variable
Portfolios, Inc. and Aetna Generation Portfolios, Inc. and as the
investment adviser, principal underwriter and administrator for Portfolio
Partners, Inc. (all management investment companies registered under the
1940 Act). Additionally, Aetna acts as the principal underwriter and
depositor for Variable Annuity Account B of Aetna, Variable Annuity Account
C of Aetna, Variable Annuity Account G of Aetna, and Variable Life Account
B of Aetna (separate accounts of Aetna registered as unit investment trusts
under the 1940 Act). Aetna is also the principal underwriter for Variable
Annuity Account I of Aetna Insurance Company of America (AICA) (a separate
account of AICA registered as a unit investment trust under the 1940 Act).
(b) The following are the directors and principal officers of the Underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Principal Positions and Offices
Business Address* Underwriter with Registrant
----------------- ------------------------------------ ---------------------
<S> <C> <C>
Thomas J. McInerney Director and President None
Shaun P. Mathews Director and Senior Vice President Trustee
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Principal Positions and Offices
Business Address* Underwriter with Registrant
----------------- ------------------------------------ ---------------------
<S> <C> <C>
Catherine H. Smith Director, Senior Vice President and None
Chief Financial Officer
Allan Baker Senior Vice President None
David E. Bushong Senior Vice President None
Paul R. Donovan Senior Vice President None
Steven A. Haxton Senior Vice President None
Gary J. Hegedus Senior Vice President None
Willard I. Hill, Jr. Senior Vice President None
John Y. Kim Senior Vice President and Chief Trustee
Investment Officer
Martin T. Conroy Vice President and Treasurer None
Kathleen A. Murphy Senior Vice President and Deputy None
General Counsel
Therese Squillacote Vice President and Chief Compliance None
Officer
Thomas P. Waldron Senior Vice President None
Kirk P. Wickman Senior Vice President, General None
Counsel and Corporate Secretary
</TABLE>
* Except with respect to Mr. Kim, the principal business address of all
directors and officers listed is 151 Farmington Avenue, Hartford,
Connecticut 06156. Mr. Kim's address is 10 State House Square, Hartford,
Connecticut 06103-3602.
(c) Not applicable.
Item 28. Location of Accounts and Records
- -----------------------------------------
As required by Section 31(a) of the 1940 Act and the rules thereunder, the
Registrant and its investment adviser, Aeltus, maintain physical possession
of each account, book or other document, at 151 Farmington Avenue,
Hartford, Connecticut 06156 and 10 State House Square, Hartford,
Connecticut 06103-3602, respectively.
Item 29. Management Services
- ----------------------------
Not applicable.
<PAGE>
Item 30. Undertakings
- ---------------------
Not applicable
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act and the Investment Company
Act, Aetna Variable Encore Fund certifies that it meets all of the requirements
for effectiveness of this Post-Effective Amendment to the Registration Statement
under Rule 485(b) under the Securities Act and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Hartford, and State of Connecticut, on the 25th day of April 2000.
AETNA VARIABLE ENCORE FUND
--------------------------
(Registrant)
By J. Scott Fox*
--------------------------
J. Scott Fox
President
Pursuant to the requirements of the Securities Act, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons in the capacities and on the date(s) indicated.
Signature Title Date
- --------- ----- ----
J. Scott Fox* President and Trustee )
- ------------------------------ (Principal Executive Officer) )
J. Scott Fox )
)
)
)
Albert E. DePrince, Jr.* Trustee )
- ------------------------------ )
Albert E. DePrince, Jr. )
)
)
Maria T. Fighetti* Trustee )
- ------------------------------ )
Maria T. Fighetti )
)
)
) April
David L. Grove* Trustee ) 25, 2000
- ------------------------------ )
David L. Grove )
)
)
)
John Y. Kim* Trustee )
- ------------------------------ )
John Y. Kim )
)
)
)
Sidney Koch* Trustee )
- ------------------------------ )
Sidney Koch )
)
)
)
Shaun P. Mathews* Trustee )
- ------------------------------ )
Shaun P. Mathews )
<PAGE>
)
Corine T. Norgaard* Trustee )
- ------------------------------ )
Corine T. Norgaard )
)
)
)
Richard G. Scheide* Trustee )
- ------------------------------ )
Richard G. Scheide )
)
)
)
Treasurer and Chief )
Stephanie A. DeSisto* Financial Officer )
- ------------------------------ (Principal Financial and )
Stephanie A. DeSisto Accounting Officer) )
By: /s/ Amy R. Doberman
---------------------------
*Amy R. Doberman
Attorney-in-Fact
Executed pursuant to Power of Attorney Dated November 6, 1998 and filed with the
Securities and Exchange Commission on March 10, 1999.
<PAGE>
Aetna Variable Encore Fund
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
----------- ------- ----
<S> <C> <C>
99-(d) Investment Advisory Agreement between Aeltus Investment
Management, Inc. ("Aeltus") and Aetna Variable Encore Fund
--------------
99-(i) Opinion and Consent of Counsel
--------------
99-(j) Consent of Independent Auditors
--------------
</TABLE>
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT, INC. a
Connecticut corporation (the "Adviser") and AETNA VARIABLE ENCORE 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 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;
<PAGE>
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
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 and Organization. The Fund has been duly
incorporated under the laws of the 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
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<PAGE>
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.
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<PAGE>
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, 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
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 .25% 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 of .25% 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.
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:
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<PAGE>
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 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 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 trustees) of the Fund;
8. all fees and expenses of the Fund's 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;
-5-
<PAGE>
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, 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 trustees of the Fund, and that officers or 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
-6-
<PAGE>
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 January 1, 2000, and shall remain in
force and effect through December 31, 2000 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 trustees who are not
parties to this Agreement or interested persons of a party to this
Agreement (other than as a 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."
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.
-7-
<PAGE>
XVI. 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
if to the Adviser:
10 State House Square
Hartford, Connecticut 06103
Fax number 860/275-4440
XVII. 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. 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.
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the 30th day of December, 1999.
Aeltus Investment Management, Inc.
Attest: /s/ Daniel E. Burton By: /s/ Amy R. Doberman
------------------------ ------------------------
Name: Daniel E. Burton Name: Amy R. Doberman
------------------------ ------------------------
Title: Assistant Secretary Title: Vice President
------------------------ ------------------------
Aetna Variable EncoreFund
Attest: /s/ Michael Gioffre By: /s/ J. Scott Fox
------------------------ ------------------------
Name: Michael Gioffre Name: J. Scott Fox
------------------------ ------------------------
Title: Assistant Secretary Title: President
------------------------ ------------------------
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10 State House Square, SH11
Hartford, CT 06103-3602
Amy R. Doberman
Counsel
Aetna Variable Encore Fund
April 25, 2000 (860) 275-3252
Fax: (860) 275-2158
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attn: Filing Desk
Re: Aetna Variable Encore Fund
Post-Effective Amendment No. 45 to
Registration Statement on Form N-1A
(File No. 2-53038 and 811-2565)
Dear Sir or Madam:
The undersigned serves as counsel to Aetna Variable Encore Fund, a Massachusetts
business trust (the "Fund"). It is my understanding that the Fund has registered
an indefinite number of shares of beneficial interest under the Securities Act
of 1933 (the "1933 Act") pursuant to Rule 24f-2 under the Investment Company Act
of 1940 (the "1940 Act").
Insofar as it relates or pertains to the Fund, I have reviewed the prospectus
and the Fund's Registration Statement on Form N-1A, as amended to the date
hereof, filed with the Securities and Exchange Commission under the 1933 Act and
the 1940 Act, pursuant to which the Shares will be sold (the "Registration
Statement"). I have also examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents and other instruments I have
deemed necessary or appropriate for the purpose of this opinion. For purposes of
such examination, I have assumed the genuineness of all signatures on original
documents and the conformity to the original of all copies.
I am admitted to practice law in Connecticut, Maryland and the District of
Columbia. My opinion herein as to Maryland law is based upon a limited inquiry
thereof that I have deemed appropriate under the circumstances.
Based upon the foregoing, and assuming the securities are issued and sold in
accordance with the provisions of the Fund's Declaration of Trust and the
Registration Statement, I am of the opinion that the securities will when sold
be legally issued, fully paid and nonassessable.
<PAGE>
Page 2
April 25, 2000
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Amy R. Doberman
Amy R. Doberman
Counsel
Consent of Independent Auditors
The Board of Directors and Shareholders
Aetna Money Market VP:
We consent to the use of our report dated February 4, 2000 incorporated by
reference herein on Form N-1A relating to Aetna Money Market VP and to the
references to our firm under the headings "Financial Highlights" in the
prospectus and "Independent Auditors" in the statement of additional
information.
/s/ KPMG LLP
KPMG LLP
Hartford, Connecticut
April 25, 2000
