As filed with the Securities and Exchange File No. 33-12723
Commission on September 30, 1998 File No. 811-5062
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 13
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940
Amendment No. 16
AETNA GET FUND
--------------
151 Farmington Avenue ALT5, Hartford, Connecticut 06156
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(860) 275-2032
Amy R. Doberman, Counsel
Aeltus Investment Management, Inc.
242 Trumbull Street ALT5, Hartford, Connecticut 06103
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(Name and Address of Agent for Service)
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It is proposed that this filing will become effective:
X on October 1, 1998 pursuant to paragraph (b)
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<PAGE>
Aetna GET Fund
Cross-Reference Sheet
<TABLE>
<CAPTION>
Form N-1A
Item No. Part A Caption in Prospectus
-------- ------ ---------------------
<S> <C> <C>
1. Cover Page..................................... Cover Page
2. Synopsis....................................... Summary
3. Condensed Financial Information................ Not Applicable
4. General Description of Registrant.............. Description of Series D
Investment Techniques, Risk Factors
and Other Considerations
General Information
5. Management of the Fund ........................ Management of the Fund
5A. Management's Discussion of Fund Performance.... Not Applicable
6. Capital Stock and Other Securities............. General Information
Distributions and Tax Status
Sale and Redemption of Shares
Net Asset Value
7. Purchase of Securities Being Offered........... Sale and Redemption of Shares
Net Asset Value
8. Redemption or Repurchase ...................... Sale and Redemption of Shares
Net Asset Value
9. Legal Proceedings.............................. Not Applicable
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Form N-1A Caption in Statement of
Item No. Part B Additional Information
-------- ------ ----------------------
<S> <C> <C>
10. Cover Page..................................... Cover Page
11. Table of Contents.............................. Table of Contents
12. General Information and History................ General Information and History
13. Investment Objectives and Policies............. Investment Objective and Restrictions
Description of Various Securities and
Investment Techniques
The Asset Allocation Process
14. Management of the Fund ........................ Trustees and Officers of the Trust
15. Control Persons and Principal
Holders of Securities ......................... Control Persons and Principal
Shareholders
16. Investment Advisory and Other Services ........ The Investment Advisory Agreement
The Administrative Services
Agreement
Custodian
Independent Auditors
17. Brokerage Allocation .......................... Brokerage Allocation and Trading
Policies
18. Capital Stock and Other Securities............. Description of Shares
19. Purchase, Redemption and Pricing of
Securities Being Offered ...................... Sale and Redemption of Shares
Net Asset Value
20. Tax Status .................................... Tax Status
21. Underwriters................................... Principal Underwriter
22. Calculation of Performance Data................ Not Applicable
23. Financial Statements .......................... Not Applicable
</TABLE>
<PAGE>
PART C
Information required to be included in Part C is set forth under the appropriate
Item, so numbered, in Part C of the Registration Statement.
<PAGE>
AETNA GET FUND
Series D Shares
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-525-4225
Prospectus dated: October 1, 1998
Aetna GET Fund (Fund) is an open-end management investment company organized as
a Massachusetts Business Trust and authorized to issue multiple series of
shares, each of which is diversified. Series D shares will be offered from
October 15, 1998 through January 15, 1999, the Offering Period. Series D will
be offered as a funding option under certain variable annuity contracts
(Contracts) issued by Aetna Life Insurance and Annuity Company (Aetna). Aetna,
not contract owners or retirement plan participants (Participants), are
shareholders of the Fund.
This Prospectus sets forth concisely the information about the Fund and Series
D that you ought to know before investing. Additional information about the
Fund and Series D is contained in a Statement of Additional Information
(Statement) dated October 1, 1998, which has been filed with the Securities and
Exchange Commission (Commission) and is incorporated herein by reference. The
Statement is available, without charge, by writing to the Fund at the address
listed above or by calling 1-800-525-4225.
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, Series D shares in any jurisdiction in which such sale, offer to
sell, or solicitation may not be lawfully made.
INVESTMENTS IN THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK. SHARES OF THE FUND ARE NOT FEDERALLY INSURED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER
GOVERNMENTAL AGENCY. AN INVESTMENT IN SERIES D IS SUBJECT TO RISK THAT MAY
CAUSE THE VALUE OF THE INVESTMENT TO FLUCTUATE.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Please read this Prospectus carefully before
investing and retain it for future reference.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
DESCRIPTION OF SERIES D .............................................. 3
Investment Objective ................................................ 3
Investment Policy ................................................... 3
Other Considerations ................................................ 3
Equity Component .................................................... 4
Fixed Component ..................................................... 4
INVESTMENT TECHNIQUES, RISK FACTORS AND OTHER CONSIDERATIONS ......... 5
General Considerations .............................................. 5
Derivative Instruments .............................................. 5
Variable Rate Instruments ........................................... 5
Borrowing ........................................................... 6
Illiquid and Restricted Securities .................................. 6
Industry Concentration .............................................. 6
Portfolio Turnover .................................................. 6
MANAGEMENT OF THE FUND ............................................... 6
Trustees ............................................................ 6
Investment Adviser .................................................. 6
Portfolio Management ................................................ 7
Administrator ....................................................... 7
GENERAL INFORMATION .................................................. 7
Declaration of Trust ................................................ 7
Capital Stock ....................................................... 7
Shareholder Inquiry ................................................. 7
Shareholder Meetings ................................................ 7
Voting Rights ....................................................... 8
Principal Underwriter ............................................... 8
Custodian ........................................................... 8
Sale and Redemption of Shares ....................................... 8
Net Asset Value ..................................................... 8
Distributions and Tax Status ........................................ 8
Year 2000 ........................................................... 8
</TABLE>
2 Aetna GET Fund
<PAGE>
DESCRIPTION OF SERIES D
Investment Objective
Series D seeks to achieve maximum total return without compromising a minimum
targeted rate of return (Targeted Return) by participating in favorable equity
market performance during the Guaranteed Period from January 16, 1999 through
January 15, 2004 (Maturity Date).
The Targeted Return is 2.5% per year over the Guaranteed Period. There is no
assurance that the Targeted Return will be achieved. Aetna has issued a
guarantee in connection with the Contracts. Please refer to your Contract
prospectus for additional information on Aetna and the Aetna Guarantee.
Series D has adopted an investment objective which is a fundamental policy and,
therefore, may not be changed without the approval by holders of a majority of
outstanding shares. There can be no assurance that Series D will meet its
investment objective. Series D is subject to additional investment restrictions
described in the Statement. Those restrictions that are fundamental policies
cannot be changed without the vote of a majority of outstanding shares.
Investment Policy
The Series D assets (Assets) will be invested entirely in money market
instruments prior to January 16, 1999. After that date, the Assets will be
allocated between equities and fixed income securities (Equity Component and
Fixed Component, respectively) in proportions that are intended to help the
Fund attain its investment objective. The Equity Component will consist
primarily of common stocks. The Fixed Component will consist primarily of
short- to intermediate-term government securities. Series D may also invest in
other types of securities. (See Description of Series D--Investment Policy.)
Aeltus Investment Management, Inc. (Aeltus) is the investment adviser for the
Fund. Aeltus uses proprietary computer programs on a daily basis to determine
the percentage of Assets which will be allocated between the Equity Component
and the Fixed Component. Generally, as the value of the Equity Component rises,
more Assets are allocated to the Equity Component. As the value of the Equity
Component declines, more Assets are allocated to the Fixed Component. The
proprietary software programs will consider factors such as current interest
rates, estimated transaction costs, time to Maturity Date and market volatility
based on experience and historical market performance to determine the asset
mix between the Equity and Fixed Components. This software is not used to
select particular securities or to predict market performance.
If during the Guaranteed Period of Series D the equity markets rise, the Assets
may become largely invested in the Equity Component, as the likelihood of not
realizing the minimum targeted rate of return would be low. Conversely, if
during this same period the equity markets experienced a general decline, the
Assets may become largely invested in the Fixed Component in order to increase
the likelihood of achieving the minimum targeted rate of return at the Maturity
Date.
A major decline in the equity markets, particularly a decline well before the
Maturity Date, could cause the Assets to be fully invested in the Fixed
Component. Were this to happen, it is unlikely that there would be a meaningful
reallocation of the Assets into the Equity Component, even if there were
significant upward movement in the equity markets. If the value of the Equity
Component were to decline by 30% in a single day, a complete reallocation to
the Fixed Component might occur to ensure that the minimum targeted rate of
return would be achieved at the end of the Guaranteed Period. No major stock
market index, such as the Standard and Poor's (S&P) 500 Stock Index, has
declined as much as 30% in a single day since 1929. However, there can be no
assurance that a decline of 30% or more will not occur during the Guaranteed
Period. Use of the Fixed Component reduces Series D's ability to participate as
fully in upward equity market movements, and therefore represents some loss of
opportunity, or opportunity cost, compared to a fund which is fully invested in
equities. (For a further description of the asset allocation process, please
see The Asset Allocation Process in the Statement.)
Other Considerations
If the Assets do not reach $100 million at the end of the Offering Period, the
Board of Trustees (Trustees) reserves the right not to operate Series D in
accordance with its Investment Objectives and Policies. In that event, Aeltus
will continue to invest assets in money market instruments and Aetna will
notify contract owners or Participants, as applicable, within 15 days after the
end of the Offering Period that Series D is being discontinued. Contract owners
or Participants will have 45 days following the end of the Offering Period to
transfer their money from Series D. If at the end of the 45-day period, a
contract owner or Participant does not make an election, its investment in
Series D will be transferred to Aetna Money Market VP.
In addition, Aetna reserves the right to continue to accept additional
deposits, including both new annuity monies and internal variable annuity
transfers, during the Guaranteed Period and to discontinue these deposits at
its discretion at any time. In the event of any extraordinary or unusual market
condition such as a sudden, abrupt drop in the equity market and/or abrupt rise
in the bond market that, in Aeltus' opinion, could jeopardize the attainment of
the Targeted Return, Aetna could
Aetna GET Fund 3
<PAGE>
immediately cease to accept additional deposits into the Fund and would notify
distributors and existing variable annuity customers of this decision
immediately. If the decision to cease accepting additional deposits is made,
Aetna would accept into the Fund only those deposits which had been received in
good order and deposited into the separate account prior to the decision to
disallow additional deposits.
During normal market conditions so determined by Aeltus, Aetna will notify its
distributors and existing variable annuity customers of its decision to close
the Fund to new deposits and will allow additional deposits received no more
than 10 days from the date of notification into the Fund provided market
conditions remain normal during these 10 days. Once the decision to close the
Fund to new deposits has been made, it is possible that the Fund will not
reopen to new deposits.
Equity Component
With the Equity Component, Aeltus seeks to outperform the total return
performance of publicly traded common stocks included in the S&P 500 while
maintaining a market level of risk.
The Equity Component will attempt to be fully invested in common stocks. Under
normal circumstances, the Equity Component will invest at least 90% of its
assets in certain common stocks represented in the S&P 500. Inclusion of a
stock in the S&P 500 in no way implies an opinion by S&P as to the stock's
attractiveness as an investment. The Equity Component is subject to market
risk, i.e., the possibility that common stock prices will decline over short or
even extended periods. The U.S. stock market tends to be cyclical, with periods
when stock prices generally rise and periods when prices generally decline.
The Equity Component will generally include approximately 400 stocks included
in the S&P 500. The Equity Component will exclude Aetna Inc. common stock.
The weightings of stocks in the S&P 500 are based on each stock's relative
total market capitalization, that is, its market price per share multiplied by
the number of common shares outstanding. Aeltus will attempt to outperform the
investment results of the S&P 500 by creating a portfolio that has similar
market risk characteristics to the S&P 500, but will use a disciplined analysis
to identify those stocks having the greatest likelihood of either outperforming
or underperforming the market.
The Equity Component may also invest in high-grade, short-term debt instruments
and in options and futures (including options on futures), as more fully
described below.
Fixed Component
The Fixed Component seeks to provide values which, together with the value of
the Equity Component at any given time, will enable Series D to achieve the
Targeted Return. The Fixed Component will be managed so that its financial
characteristics will, at any point in time, closely resemble those of a
portfolio of zero coupon bonds, all of which mature on the Maturity Date.
Because the Fixed Component can be invested in a variety of debt securities, as
described below, the Fixed Component may provide somewhat greater opportunities
and risks than if invested solely in United States Government securities.
The Fixed Component of Series D will primarily consist of short- to
intermediate-term government securities of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities, with the average weighted length
to maturity decreasing as Series D nears its Maturity Date.
The Fixed Component may also consist of:
(1) Corporate obligations which are rated at the time of purchase within one of
the four highest grades assigned by Moody's Investors Service, Inc. (Moody's)
(Aaa, Aa, A or Baa) or S&P (AAA, AA, A or BBB), or, if not so rated, are
considered by Aeltus to be of comparable investment quality;
(2) Obligations of, or guaranteed by, national or state banks or bank holding
companies, which either are rated in one of the four highest grades assigned by
Fitch Investors Services, Inc. (AAA, AA, A or BBB), or, if not so rated, are
considered by Aeltus to be of comparable investment quality;
(3) Domestic bank certificates of deposit of banks having assets (as most
recently reported) in excess of one billion dollars;
(4) Domestic bankers' acceptances eligible for discounting at the Federal
Reserve System;
(5) Commercial paper rated A-1 by S&P and P-1 by Moody's. Where in Aeltus'
judgment yield disparities in the market warrant it, Series D may acquire
commercial paper rated A-2 or P-2 so long as such investments do not exceed 10%
of the total assets of the Fixed Component; and
(6) Repurchase agreements with domestic banks and broker-dealers meeting
creditworthiness standards approved by the Trustees.
4 Aetna GET Fund
<PAGE>
The relative size of the Fixed Component's investments in any grade or type of
securities will vary from time to time depending on a number of factors,
including yields for such securities, their market supply and general economic
outlook. There can be no assurance that the Fixed Component will show a
positive return.
INVESTMENT TECHNIQUES, RISK FACTORS AND OTHER CONSIDERATIONS
General Considerations
The different types of securities purchased and investment techniques used by
Series D involve varying amounts of risk. For example, equity securities are
subject to a decline in the stock market or in the value of the issuer. The
value of debt securities may be affected by changes in general interest rates
and in the creditworthiness of the issuer. Debt securities with longer
maturities (for example, over ten years) are generally more affected by changes
in interest rates and provide less price stability than securities with
short-term maturities (for example, one to ten years). Also, on each debt
security, the risk of principal and interest default is greater with
higher-yielding, lower-grade securities. Some of the risks involved in the
securities acquired by Series D, as well as investment policies followed by
Series D, are discussed in this section. Additional discussion is contained in
the Statement.
Derivative Instruments
Derivatives In order to manage exposure to changing interest rates and
securities prices, to increase investment return, to hedge or to follow other
investment strategies, Series D may use various types of derivatives. A
derivative is a financial instrument the value of which depends on (or derives
from) the value of an underlying asset, such as a security, interest rate or
index. Derivatives that may be used by Series D include futures and options
(see "Futures Contracts" and "Options" below). See the Statement for additional
information on the use of and risks associated with derivatives.
Some of these strategies, such as selling futures contracts, buying puts and
writing calls, hedge against price fluctuations. Other strategies, such as
buying futures contracts, calls and interest rate swaps, tend to increase
market exposure. In some cases, Series D may buy a futures contract for the
purpose of increasing its exposure in a particular market segment, which may be
considered speculative, rather than for hedging.
Derivatives can be volatile investments and involve certain risks. Series D may
be unable to limit its losses by closing a position due to lack of a liquid
market or similar factors. Losses may also occur if there is not a perfect
correlation between the value of a derivative and the underlying financial
instrument. The use of derivatives also may involve a high degree of leverage
because of low margin requirements. As a result, small price movements in
derivatives may result in immediate and potentially unlimited gains or losses
to Series D. The amount of gains or losses on investments in derivatives
depends on Aeltus' ability to predict correctly the direction of stock prices,
interest rates and other economic factors.
For purposes other than hedging, Series D will invest no more than 5% of its
assets in derivatives which at the time of purchase are considered by
management to involve high risk to the Series. Series D may invest up to 30% of
its assets in lower risk derivatives for hedging or to gain additional exposure
to certain markets for investment purposes while maintaining liquidity to meet
shareholder redemptions and minimizing trading costs.
Futures Contracts Futures contracts are agreements that obligate the buyer to
buy and the seller to sell a specific quantity of securities at a specific
price on a specific date. Investments in futures contracts or options on
futures may be made, subject to the limits discussed in the Statement.
Certain risks are involved in futures contracts including but not limited to:
transactions to close out futures contracts may not be able to be effected at
favorable prices; possible reduction in value of the futures instrument; the
inability of Series D to limit losses by closing its position due to lack of a
liquid secondary market or due to daily limits or price fluctuation; imperfect
correlation between the value of the futures contracts and the related
securities; and potential losses in excess of the amount invested in the
futures contracts themselves.
Options Series D may purchase and write call options and put options, including
options on securities, indices and futures. Call options on securities may be
written only if covered. Options are agreements that for a fee or premium, give
the holder the right, but not the obligation, to pay or settle for cash a
certain amount of securities during a specified period or on a specified date.
Options are used to minimize principal fluctuation or to generate additional
premium income but they do involve risks.
Variable Rate Instruments
A variable rate instrument is an instrument which provides for the adjustment
of its interest rate on set dates and which can reasonably be expected to have
a market value close to par value.
Aetna GET Fund 5
<PAGE>
Borrowing
Series D may borrow money from banks, but only for temporary or emergency
purposes in an amount up to 15% of the value of Series D's total assets
(including the amount borrowed), valued at the lesser of cost or market, less
liabilities (not including the amount borrowed), at the time the borrowing is
made. When borrowings exceed 15% of Series D's total assets, Series D will not
make additional investments.
Series D does not intend to borrow for leveraging purposes. It has the
authority to do so, but only if, after the borrowing, the value of Series D's
net assets, including proceeds from the borrowings, is equal to at least 300%
of all outstanding borrowings. Leveraging can increase the volatility of Series
D since it exaggerates the effects of changes in the value of the securities
purchased with the borrowed funds.
Illiquid and Restricted Securities
Series D may invest up to 15% of its net assets in illiquid securities.
Illiquid securities are securities that are not readily marketable or cannot be
disposed of promptly within seven days and in the ordinary course of business
without taking a materially reduced price. In addition, Series D may invest in
securities that are subject to legal or contractual restrictions on resale,
including securities purchased in accordance with Rule 144A under, and Section
4(2) of, the Securities Act of 1933.
Because of the absence of a trading market for illiquid and certain restricted
securities, it may take longer to liquidate these securities than it would
unrestricted, liquid securities. Series D may realize less than the amount
originally paid by Series D for the security. The Trustees have established a
policy to monitor the liquidity of such securities.
Industry Concentration
Series D generally will not concentrate investments in any one industry. Series
D may, however, invest up to 25% of its total assets in securities issued by
companies principally engaged in any one industry. For purposes of this
restriction, finance companies will be classified as separate industries
according to the end users of their services, such as automobile finance,
computer finance and consumer finance. The 25% limitation does not apply to
securities issued or guaranteed as to principal and/or interest by the U.S.
Government, its agencies or instrumentalities.
Series D will not invest more than 5% of its total assets in the securities of
any one issuer or purchase more than 10% of the outstanding voting securities
of any one issuer. These restrictions apply only to 75% of Series D's total
assets. These restrictions do not apply to securities issued or guaranteed as
to principal and/or interest by the U.S. Government, its agencies or
instrumentalities. See the Statement for additional restrictions.
Portfolio Turnover
Portfolio turnover refers to the frequency of portfolio transactions and the
percentage of portfolio assets being bought and sold in the aggregate during
the year. Although Series D does not purchase securities with the intention of
profiting from short-term trading, it may buy and sell securities when Aeltus
believes such action is advisable. It is anticipated that the average annual
turnover rate of Series D may exceed 125%. Turnover rates in excess of 125% may
result in higher transaction costs (which are borne directly by Series D). See
Tax Status in the Statement.
MANAGEMENT OF THE FUND
Trustees
The operations of Series D are managed under the direction of the Trustees. The
Trustees set broad policies for Series D. Information about the Trustees is
found in the Statement.
Investment Adviser
Aeltus has entered into an investment advisory agreement with the Fund to
manage the assets of Series D. Aeltus is a Connecticut corporation with its
principal offices located at 242 Trumbull Street, Hartford, Connecticut
06103-1205. Aeltus is an indirect wholly-owned subsidiary of Aetna Inc. Aeltus
is registered as an investment adviser with the Commission.
The investment advisory agreement provides that Aeltus is entitled to receive
an annual fee, payable monthly, from Series D at a rate of 0.60% of the average
daily net assets of Series D during the Guaranteed Period and 0.25% of the
average daily net assets of Series D during the Offering Period.
Under the terms of the investment advisory agreement, Aeltus, subject to the
supervision of the Trustees, is obligated to manage the investments of Series D
in accordance with Series D's investment objective and policies. Aeltus
determines what securities and other instruments are purchased and sold by
Series D. Aeltus is responsible for all of its own costs, including costs of
Aeltus personnel required to carry out its investment advisory fees.
6 Aetna GET Fund
<PAGE>
The investment advisory agreement allows Aeltus to place trades through brokers
of its choosing and to take into consideration the quality of the brokers'
services and execution, as well as services such as research in setting the
amount of commissions paid to a broker. The use of research and expense
reimbursements in determining and paying commissions is referred to as soft
dollar practices. Aeltus will use soft dollars for services and expenses only
to the extent authorized under the investment advisory agreement and applicable
law. Aeltus may also consider the sale of shares of the Fund and of other
investment companies advised by Aeltus as a factor in the selection of
brokerage firms to execute the Series' portfolio transactions, subject to
Aeltus' duty to obtain best execution.
Portfolio Management
The following individuals are primarily responsible for the day-to-day
management of Series D.
Geoffrey A. Brod, Vice President, Aeltus will be responsible for managing the
Equity Component of Series D. He has over 30 years of experience in
quantitative applications and has over 10 years of experience in equity
investments. Mr. Brod has been with the Aetna organization since 1966.
Hugh T. M. Whelan, Vice President, Aeltus, will be responsible for managing the
Fixed Income Component of Series D. Mr. Whelan joined Aeltus in 1989 and
manages fixed income portfolios employing various strategies.
Administrator
The Fund has appointed Aeltus as administrator for Series D pursuant to an
Administrative Services Agreement. Under the terms of that Administrative
Services Agreement, Aeltus has responsibility for certain administrative and
internal accounting and reporting services, maintenance of relationships with
third party service providers such as transfer agents and custodians,
shareholder communications, calculation of the Net Asset Value (NAV) and other
financial reports prepared for Series D (collectively referred to as
Administrative Services). As administrator, Aeltus may contract with other
entities to perform certain Administrative Services.
For the services provided under the Administrative Services Agreement, Aeltus
receives an annual fee, payable monthly, at a rate of 0.075% of the average
daily net assets of Series D.
GENERAL INFORMATION
Declaration of Trust
The Fund is an open-end management investment company organized as a
series-type business trust under Massachusetts law on March 9, 1987. The
Declaration of Trust (Declaration) provides for the issuance of multiple series
of shares, each representing a portfolio of investments with different
investment objectives, policies and restrictions. Series D is a diversified
series of the Fund.
The Declaration contains an express disclaimer for shareholder liability for
acts or obligations of the Fund under Massachusetts law, and requires that
notification of such be given in each agreement, obligation or instrument
entered into by the Fund or the Trustees.
Capital Stock
The Declaration permits the Fund to issue an unlimited number of full and
fractional shares of beneficial interest in each series of the Fund. All shares
are nonassessable, transferable and redeemable. There are no preemptive rights.
Shareholder Inquiry
Any questions about the Fund can be addressed to the Fund at the address listed
on the cover of this Prospectus or by calling 1-800-525-4225.
Shareholder Meetings
The Fund is not required to hold annual shareholder meetings. The Declaration
provides for meetings of shareholders to elect Trustees at such times as may be
determined by the Trustees or as required by the Investment Company Act of
1940. If requested by the holders of at least 10% of a series' outstanding
shares, the series will hold a shareholder meeting for the purpose of voting on
the removal of one or more Trustees and will assist with communication
concerning that shareholder meeting.
Aetna GET Fund 7
<PAGE>
Voting Rights
Shareholders are entitled to one vote for each full share held and fractional
votes for fractional shares held on matters submitted to the shareholders of a
series. Voting rights are not cumulative. Aetna's separate accounts, not the
contract owners or Participants, are the shareholders of Series D. Aetna does,
however, provide contract owners, or in some cases Participants, the right to
direct the voting of shares at shareholder meetings to the extent required by
law.
Principal Underwriter
Aetna is the principal underwriter for the Fund. Aetna is a Connecticut
corporation, and is an indirect wholly-owned subsidiary of Aetna Inc.
Custodian
Mellon Bank, N.A., is the custodian for Series D.
Sale and Redemption of Shares
Purchases and redemptions of shares may be made only by insurance companies for
their separate accounts at the direction of Participants. Please refer to the
documents pertaining to your contract or policy for information on how to
direct investments in or redemptions from Series D. Orders for the purchase or
redemption of shares of Series D that are received before the close of regular
trading on the New York Stock Exchange (NYSE) (normally 4 p.m. eastern time)
are effected at the NAV per share determined that day, as described below (see
Net Asset Value). The insurance company shall be the designee 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 orders by 9:30 a.m. the next day on which the NYSE is
open for trading. 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 NYSE is closed or when trading is
restricted for any reason or under emergency circumstances as determined by the
Commission.
Net Asset Value
The NAV per share of Series D is determined as of the earlier of 15 minutes
after the close of regular trading on the NYSE or 4:15 p.m. eastern time on
each day that NYSE is open for trading (Business Day). The NAV is computed by
dividing the total value of Series D's portfolio securities, plus any cash or
other assets (including dividends and interest accrued but not collected) less
all liabilities (including accrued expenses), and dividing the total by the
number of shares outstanding. Securities are valued primarily by independent
pricing services, based on market quotations. Short-term debt instruments
maturing in less than 60 days are valued at amortized cost. Securities for
which market quotations are not readily available or for which superseding
events have made market quotations unreliable are valued at their fair value in
such manner as may be determined, from time to time, in good faith, by or under
the authority of, the Trustees.
Distributions and Tax Status
Dividends and distributions made by Series D to Aetna are taxable, if at all,
to Aetna; they are not taxable to contract holders. Series D intends to make
such distributions, which will be automatically reinvested in additional Series
D shares at the NAV thereof.
Series D intends to qualify as a regulated investment company (RIC) under the
Internal Revenue Code of 1986, as amended (Code). As a RIC, Series D will not
be liable for federal income taxes on that part of its net investment income
and net capital gains, if any, distributed to shareholders. Series D intends to
maintain diversification of investments as required by the Code in order to
qualify as a RIC.
Series D also intends to comply with the diversification requirements of
Section 817(h) of the Code for variable annuity contracts so that contract
holders should not be subject to federal tax on distributions of dividends and
income from Series D to the insurance company separate accounts. Contract
holders should review the Contract prospectus for information regarding the tax
consequences to them of purchasing a Contract.
Year 2000
Aetna Inc. (referred to collectively with its subsidiaries and affiliates as
Aetna Inc.) has developed and is currently executing a plan to make its
computer systems and applications accommodate date-sensitive information
relating to the Year 2000. The plan covers four stages including (i) inventory,
(ii) assessment, (iii) remediation and (iv) testing and certification. Aetna
Inc. is currently in the assessment or remediation stages of its plan for the
systems and applications related to the Fund, including those relating to
Aeltus. Testing and certification of these systems is targeted for completion
by mid-1999. The costs of these efforts will not affect the Fund.
8 Aetna GET Fund
<PAGE>
Aeltus and the Fund also have relationships with broker dealers, transfer
agents, custodians and other securities industry participants and service
providers that are not affiliated with Aetna Inc. Aetna Inc. is currently
examining its relationships with third parties as part of its Year 2000 plan.
While Aeltus believes that United States securities industry participants
generally are preparing their computer systems and applications to accommodate
Year 2000 date-sensitive information, preparation by third parties is outside
the control of Aetna Inc., Aeltus and the Fund. There can be no assurance that
failure of third parties to complete adequate preparations in a timely manner,
and any resulting systems interruptions or other consequences, would not have
an adverse effect, directly or indirectly, on the Fund, including, without
limitation, its operation or the valuation of its assets.
Aetna GET Fund 9
<PAGE>
PROS.GETD-98 October 1998
<PAGE>
AETNA GET FUND
Series D
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-238-6263
Statement of Additional Information dated: October 1, 1998
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Aetna GET Fund, Series D Shares,
dated October 1, 1998. A free prospectus is available upon request by writing
to the Fund at the address listed above or by calling 1-800-525-4225.
Read the prospectus before you invest.
<TABLE>
<S> <C>
TABLE OF CONTENTS
Page
----
General Information and History ..................................... 2
Investment Objective and Restrictions ............................... 2
Description of Various Securities and Investment Techniques ......... 3
The Asset Allocation Process ........................................ 8
Trustees and Officers of the Fund ................................... 8
Control Persons and Principal Shareholders .......................... 11
The Investment Advisory Agreement ................................... 11
The Administrative Services Agreement ............................... 11
Custodian ........................................................... 11
Independent Auditors ................................................ 11
Principal Underwriter ............................................... 11
Brokerage Allocation and Trading Policies ........................... 12
Description of Shares ............................................... 13
Sale and Redemption of Shares ....................................... 13
Net Asset Value ..................................................... 13
Tax Status .......................................................... 13
Voting Rights ....................................................... 17
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
Series D is a diversified series of Aetna GET Fund (Fund), an open-end,
diversified management investment company which sells its shares of beneficial
interest to Aetna Life Insurance and Annuity Company (Aetna) for allocation to
certain of its separate accounts established to fund variable annuity contracts
issued by Aetna. The Board of Trustees of the Fund (Trustees) may authorize the
division of shares of the Fund into two or more series, each series relating to
a separate portfolio of investments, with different rights as determined by the
Trustees.
INVESTMENT OBJECTIVE AND RESTRICTIONS
The investment objective for Series D is to achieve maximum total return by
participating in favorable equity market performance without compromising a
minimum targeted rate of return during a specified five year period, the
"Guaranteed Period," from January 16, 1999 through January 15, 2004, the
maturity date. The Series D investment objective and policies are described in
detail in the prospectus under the caption "Description of Series D." In
seeking to achieve this investment objective, Series D has adopted the
following restrictions which are matters of fundamental policy and cannot be
changed without approval by the holders of the lesser of: (i) 67% of the shares
of Series D present or represented at a shareholders' meeting at which the
holders of more than 50% of such shares are present or represented; or (ii)
more than 50% of the outstanding shares of Series D.
As a matter of fundamental policy, Series D will not:
(1) Borrow money, except that (a) the Series may enter into certain futures
contracts and options related thereto; (b) the Series may enter into
commitments to purchase securities in accordance with the Series'
investment program, including delayed delivery and when-issued securities
and reverse repurchase agreements; (c) the Series may borrow money for
temporary or emergency purposes in amounts not exceeding 15% of the value
of its total assets at the time when the loan is made; and (d) for
purposes of leveraging, the Series may borrow money from banks (including
its custodian bank) only if, immediately after such borrowing, the value
of the Series' assets, including the amount borrowed, less its
liabilities, is equal to at least 300% of the amount borrowed, plus all
outstanding borrowings. If at any time the value of the Series' assets
fails to meet the 300% coverage requirement relative only to leveraging,
the Series shall, within three days (not including Sundays and holidays),
reduce its borrowings to the extent necessary to meet the 300% test.
(2) Invest more than 15% of its net assets in illiquid securities. Illiquid
securities are securities that are not readily marketable or cannot be
disposed of promptly within seven days and in the usual course of business
without taking a materially reduced price. Such securities include, but
are not limited to, time deposits and repurchase agreements with
maturities in excess of seven days. Securities that may be resold under
Rule 144A under the Securities Act of 1933, as amended (1933 Act) or
securities offered pursuant to Section 4(2) of the 1933 Act shall not be
deemed illiquid solely by reason of being unregistered. Aeltus Investment
Management, Inc. (Aeltus), the investment adviser, shall determine whether
a particular security is deemed to be illiquid based on the trading
markets for the specific security and other factors.
(3) Act as an underwriter of securities except to the extent that, in
connection with the disposition of securities by Series D for its
portfolio, Series D or the Fund may be deemed to be an underwriter under
the provisions of the 1933 Act.
(4) Purchase real estate, interests in real estate or real estate limited
partnership interests except that, to the extent appropriate under its
investment program, Series D may invest in securities secured by real
estate or interests therein or issued by companies, including real estate
investment trusts, which deal in real estate or interests therein.
(5) Make loans, except that, to the extent appropriate under its investment
program, Series D may (a) purchase bonds, debentures or other debt
securities, including short-term obligations; (b) enter into repurchase
transactions and (c) lend portfolio securities provided that the value of
such loaned securities does not exceed one-third of Series D's total
assets.
(6) Invest in commodity contracts, except that Series D may, to the extent
appropriate under its investment program, purchase securities of companies
engaged in such activities; may enter into futures contracts and related
options, may engage in transactions on a when-issued or forward commitment
basis, and may enter into forward currency contracts in accordance with
its overall investment program.
Whenever any of the foregoing provisions states a maximum percentage of the
assets of Series D which may be invested in any securities or other property,
any excess of the actual percentage limitation shall be considered a violation
of such restriction only if such excess exists immediately after the
acquisition of such security or property and resulted in whole or in part from
such acquisition.
Series D also has adopted certain other investment policies and restrictions
reflecting the current investment practices of Series D, which may be changed
by the Trustees and without shareholder vote. Under such policies and
restrictions, Series D will not:
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(1) Invest more than 5% of its total assets in the securities of any issuer
excluding securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities, or purchase more than 10% of the
outstanding voting securities of any issuer.
(2) Mortgage, pledge or hypothecate its assets except in connection with loans
of securities as described in (6) above, borrowings as described in (2)
above, and permitted transactions involving options, futures contracts and
options on such contracts.
(3) Invest in companies for the purpose of exercising control or management.
(4) Purchase interests in oil, gas or other mineral exploration programs;
however, this limitation will not prohibit the acquisition of securities
of companies engaged in the production or transmission of oil, gas, or
other minerals.
(5) Make short sales of securities, other than short sales "against the box,"
or purchase securities on margin except for short-term credits necessary
for clearance of portfolio transactions, provided that this restriction
will not be applied to limit the use of options, futures contracts and
related options in the manner otherwise permitted by the investment
restrictions, policies and investment programs of Series D.
(6) Concentrate its investments in any one industry except Series D may invest
up to 25% of its total assets in securities issued by companies
principally engaged in any one industry. For purposes of this restriction,
finance companies will be classified as separate industries according to
the end users of their services, such as automobile finance, computer
finance and consumer finance. This limitation will not apply to securities
issued or guaranteed as to principal and/or interest by the U.S.
Government, its agencies or instrumentalities.
DESCRIPTION OF VARIOUS SECURITIES AND INVESTMENT TECHNIQUES
Options, Futures and Other Derivative Instruments
Series D may use derivative instruments as described below and in the
prospectus.
Futures Contracts--Series D may enter into futures contracts as described in
the prospectus but subject to restrictions described below under "Restrictions
on the Use of Futures and Option Contracts." Series D may enter into futures
contracts or options thereon, which are traded on national futures exchanges
and are standardized as to maturity date and underlying financial instrument.
The futures exchanges and trading in the United States are regulated under the
Commodity Exchange Act by the Commodities Futures Trading Commission (the
"CFTC").
A futures contract provides for the future sale by one party and purchase by
another party of a specified amount of a specific commodity, financial
instrument(s) or a specific stock market index for a specified price at a
designated date, time, and place. Brokerage fees are incurred when a futures
contract is bought or sold and at expiration, and margin deposits must be
maintained.
Although interest rate futures contracts typically require actual future
delivery of and payment for the underlying instruments or commodities, those
contracts are usually closed out before the delivery date. Stock index futures
contracts do not contemplate actual future delivery and will be settled in cash
at expiration or closed out prior to expiration. Closing out an open futures
contract sale or purchase is effected by entering into an offsetting futures
contract purchase or sale, respectively, for the same aggregate amount of the
identical type of underlying instrument and the same delivery date. There can
be no assurance, however, that Series D will be able to enter into an
offsetting transaction with respect to a particular contract at a particular
time. If Series D is not able to enter into an offsetting transaction, it will
continue to be required to maintain the margin deposits on the contract.
The prices of futures contracts are volatile and are influenced, among other
things, by actual and anticipated changes in interest rates and equities
prices, which in turn are affected by fiscal and monetary policies and national
and international political and economic events.
When using futures contracts as a hedging technique, at best, the correlation
between changes in prices of futures contracts and of the securities being
hedged can be only approximate. The degree of imperfection of correlation
depends upon circumstances such as: variations in speculative market demand for
futures and for securities, including technical influences in futures trading,
and differences between the financial instruments being hedged and the
instruments underlying the standard futures contracts available for trading.
Even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior or stock market or interest rate trends.
Sales of futures contracts which are intended to hedge against a change in the
value of securities held by Series D may affect the holding period of such
securities and, consequently, the nature of the gain or loss on such securities
upon disposition.
"Margin" is the amount of funds that must be deposited by Series D with a
commodities broker in a custodian account in order to initiate futures trading
and to maintain open positions in Series D's futures contracts. A margin
deposit is intended to assure
3
<PAGE>
Series D's performance of the futures contract. The margin required for a
particular futures contract is set by the exchange on which the contract is
traded and may be significantly modified from time to time by the exchange
during the term of the contract.
If the price of an open futures contract changes (by increase in the case of a
sale or by decrease in the case of a purchase) so that the loss on the futures
contract reaches a point at which the margin on deposit does not satisfy margin
requirements, the broker will require an increase in the margin. However, if
the value of a position increases because of favorable price changes in the
futures contract so that the margin deposit exceeds the required margin, the
broker will promptly pay the excess to Series D. These daily payments to and
from Series D are called variation margin. At times of extreme price volatility
intra-day variation margin payments may be required. In computing daily net
asset values (NAVs), Series D will mark-to-market the current value of its open
futures contracts. Series D expects to earn interest income on its initial
margin deposits.
When Series D buys or sells a futures contract, unless it already owns an
offsetting position, it will designate cash and/or liquid securities having an
aggregate value at least equal to the full "notional" value of the futures
contract, thereby insuring that the leveraging effect of such futures contract
is minimized, in accordance with regulatory requirements.
Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. As a result, small price movements in
futures contracts may result in immediate and potentially unlimited loss or
gain to Series D relative to the size of the margin commitment. For example, if
at the time of purchase 10% of the value of the futures contract is deposited
as margin, a subsequent 10% decrease in the value of the futures contract would
result in a total loss of the margin deposit before any deduction for the
transaction costs, if the contract were then closed out. A 15% decrease in the
value of the futures contract would result in a loss equal to 150% of the
original margin deposit, if the contract were closed out. Thus, a purchase or
sale of a futures contract may result in losses in excess of the amount
initially invested in the futures contract.
Series D can buy and write (sell) options on futures contracts. See "Call and
Put Options" below. The risk involved in writing call options on futures
contracts or market indices is that Series D would not benefit from any
increase in value above the exercise price. Usually, this risk can be
eliminated by entering into an offsetting transaction. However, the cost to do
an offsetting transaction and terminate Series D's obligation might be more or
less than the premium received when it originally wrote the option. Further,
Series D might occasionally not be able to close the option because of
insufficient activity in the options market.
Call and Put Options--Series D may purchase and write (sell) call options and
put options on securities, indices and futures as discussed in the prospectus,
subject to the restrictions described in this section and under "Restrictions
on the Use of Futures and Option Contracts."
A call option gives the holder (buyer) the right to buy and to obligate the
writer (seller) to sell a security or financial instrument at a stated price
(strike price) at any time until a designated future date when the option
expires (expiration date). A put option gives the holder (buyer) the right to
sell and to obligate the writer (seller) to purchase a security or financial
instrument at a stated price at any time until the expiration date. An option
on an index (or a particular security) is a contract that gives the purchaser
of the option, in return for the premium paid, the right to receive from the
writer of the option cash equal to the difference between the closing price of
the index (or security) and the exercise price of the option, expressed in
dollars, times a specified multiple (the "multiplier").
Series D may write or purchase put or call options listed on national
securities exchanges in standard contracts or may write or purchase put or call
options with or directly from investment dealers meeting the creditworthiness
criteria set by Aeltus.
Series D may not have written call options outstanding at any one time on more
than 30% of its total assets. Series D may not buy put options if more than 3%
of its assets immediately following such purchase would consist of put options.
Series D may purchase call and sell put options on equity securities only to
close out positions previously opened. Series D will not write a call option on
a security unless the call is "covered," i.e. it already owns the underlying
security. Securities it "already owns" include any stock which it has the right
to acquire without any additional payment. This restriction does not apply to
the writing of calls on securities indices or futures contracts (see below).
Series D will not write call options on when-issued securities. Series D
purchases call options on indices primarily as a temporary substitute for
taking positions in the securities that comprise a relevant index, particularly
if Aeltus considers these instruments to be undervalued relative to the prices
of the securities underlying that index. Series D may also purchase call
options on an index to protect against increases in the price of securities
underlying that index that the Series intends to purchase pending its ability
to invest in such securities in an orderly manner.
So long as the obligation of the writer of a call option continues, the writer
may be assigned an exercise notice by the broker-dealer through which such
option was settled, requiring the writer to deliver the underlying security
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, by the exercise of the call option, or by
entering into an offsetting transaction. To secure the writer's obligation to
deliver the underlying security, a writer of a call option is
4
<PAGE>
required to deposit in escrow the underlying security or other assets in
accordance with the rules of the clearing corporations and of the exchanges.
When writing a call option, in return for the premium, the writer gives up the
opportunity to profit from the price increase in the underlying security above
the exercise price, but conversely retains the risk of loss should the price of
the security decline. If a call option expires unexercised, the writer will
realize a gain in the amount of the premium; however, such gain may be offset
by a decline in the market value of the underlying security during the option
period. If the call option is exercised, the writer would realize a gain or
loss from the transaction depending on what it received from the call and what
it paid for the underlying security.
Series D may write calls on securities indices and futures contracts provided
that it enters into an appropriate offsetting position or designates liquid
assets in an amount sufficient to cover the underlying obligation, in
accordance with regulatory requirements. A call option is considered offset,
and thus held in accordance with regulatory requirements, if Series D holds a
call on the same security and in the same principal amount as the call sold
when the exercise price of the call held (a) is equal to or less than the
exercise price of the call sold or (b) is greater than the exercise price of
the call sold if the difference is designated by the Series in liquid
securities. Series D may also write a call on an index if the Series holds in
its portfolio equity securities that perform with a high degree of correlation
to the performance of the index.
In the case of a put option, as long as the obligation of the put writer
continues, it may be assigned an exercise notice by the broker-dealer through
which such option was sold, requiring the writer to take delivery of the
underlying security against payment of the exercise price. A writer has no
control over when it may be required to purchase the underlying security, since
it may be assigned an exercise notice at any time prior to the expiration date.
This obligation terminates earlier if the writer effects a closing purchase
transaction by purchasing a put of the same series as that previously sold.
If a put option on a futures contract or securities index is sold by Series D,
the Series will designate liquid securities with a value equal to the exercise
price, or else will hold a put on the same security and in the same principal
amount as the put sold, or where the exercise price of the put held is less
than the exercise price of the put sold if the Series designates liquid
securities with an aggregate value equal to the difference. The writer of a put
therefore foregoes the opportunity of investing the designated assets or
writing calls against those assets. Series D may write put options on debt
securities or futures, only if the Series designates liquid securities in an
amount equal to the strike price of the put. Series D will not write a put if
it will require more than 50% of the Series' net assets to be designated to
cover the put obligation.
In writing puts, there is the risk that a writer may be required to buy the
underlying instrument at a disadvantageous price. The premium the writer
receives from writing a put option represents a profit, as long as the price of
the underlying instrument remains above the exercise price; however, if the put
is exercised, the writer is obligated during the option period to buy the
underlying instrument from the buyer of the put at the exercise price, even
though the value of the investment may have fallen below the exercise price. If
the put lapses unexercised, the writer realizes a gain in the amount of the
premium. If the put is exercised, the writer may incur a loss, equal to the
difference between the exercise price and the current market value of the
underlying instrument.
Series D may purchase put options when Aeltus believes that a temporary
defensive position is desirable in light of market conditions, but does not
desire to sell a portfolio security. The purchase of put options may be used to
protect the Series' holdings in an underlying security against a substantial
decline in market value. Such protection is, of course, only provided during
the life of the put option when Series D, as the holder of the put option, is
able to sell the underlying security at the put exercise price regardless of
any decline in the underlying security's market price.
Closing transactions will be effected in order to realize a profit on an
outstanding call or put option, to prevent an underlying security from being
called or put, or to permit the exchange or tender of the underlying security.
Furthermore, effecting a closing transaction will permit Series D to write
another call option, or purchase another put option, on the underlying security
with either a different exercise price or expiration date or both. If Series D
desires to sell a particular security from its portfolio on which it has
written a call option, or purchased a put option, it will seek to effect a
closing transaction prior to, or concurrently with, the sale of the security.
There is, of course, no assurance that Series D will be able to effect a
closing transaction at a favorable price. If Series D cannot enter into such a
transaction, it may be required to hold a security that it might otherwise have
sold, in which case it would continue to be at market risk on the security.
Series D will pay brokerage commissions in connection with the sale or purchase
of options to close out previously established option positions. Such brokerage
commissions are normally higher as a percentage of underlying asset values than
those applicable to purchases and sales of portfolio securities.
The exercise price of an option may be below, equal to, or above the current
market value of the underlying security at the time the option is written. From
time to time, Series D may purchase an underlying security for delivery in
accordance with an exercise notice of a call option assignment, rather than
delivering such security from its portfolio. In such cases additional brokerage
commissions will be incurred.
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Restrictions on the Use of Futures and Related Option Contracts--Series D may
purchase and sell futures contracts and related options under the following
conditions: (a) the then-current aggregate futures market prices of financial
instruments required to be delivered and purchased under open futures contracts
shall not exceed 30% of the Series total assets at market value; and (b) no
more than 5% of the assets shall be committed to margin deposits in relation to
futures contracts. CFTC regulations require that to prevent the Series from
being a commodity pool Series D enter into all short futures for the purpose of
hedging the value of securities held, and that all long futures positions
either constitute bona fide hedging transactions, as defined in such
regulations, or have a total value not in excess of an amount determined by
reference to certain cash and securities positions maintained, and accrued
profits on such positions. With respect to futures contracts or related options
that are entered into for purposes that may be considered speculative, the
aggregate initial margin for future contracts and premiums for options will not
exceed 5% of Series D's net assets, after taking into account realized profits
and unrealized losses on such futures contracts.
Interest Rate Swap Transactions--Swap agreements entail both interest rate risk
and credit risk. There is a risk that, based on movements of interest rates in
the future, the payments made by Series D under a swap agreement will have been
greater than those received by it. Credit risk arises from the possibility that
the counterparty will default. If the counterparty to an interest rate swap
defaults, the Series' loss will consist of the net amount of contractual
interest payments that Series D has not yet received. Aeltus will monitor the
creditworthiness of counterparties to the Series' interest rate swap
transactions on an ongoing basis. Series D will enter into swap transactions
with appropriate counterparties pursuant to master netting agreements. A master
netting agreement provides that all swaps done between Series D and that
counterparty under that master agreement shall be regarded as parts of an
integral agreement. If on any date amounts are payable in the same currency in
respect of one or more swap transactions, the net amount payable on that date
in that currency shall be paid. In addition, the master netting agreement may
provide that if one party defaults generally or on one swap, the counterparty
may terminate the swaps with that party. Under such agreements, if there is a
default resulting in a loss to one party, the measure of that party's damages
is calculated by reference to the average cost of a replacement swap with
respect to each swap (i.e., the mark-to-market value at the time of the
termination of each swap). The gains and losses on all swaps are then netted,
and the result is the counterparty's gain or loss on termination. The
termination of all swaps and the netting of gains and losses on termination is
generally referred to as "aggregation."
Additional Risk Factors in Using Derivatives--In addition to any risk factors
which may be described elsewhere in this section, or in the prospectus, the
following sets forth certain information regarding the potential risks
associated with the Series' transactions in derivatives.
Risk of Imperfect Correlation--The ability of Series D to hedge effectively all
or a portion of its portfolio through transactions in futures, options on
futures or options on securities and indexes depends on the degree to which
movements in the value of the securities or index underlying such hedging
instrument correlate with movements in the value of the assets being hedged. If
the values of the assets being hedged do not move in the same amount or
direction as the underlying security or index, the hedging strategy for Series
D might not be successful and the Series could sustain losses on its hedging
transactions which would not be offset by gains on its portfolio. It is also
possible that there may be a negative correlation between the security or index
underlying a futures or option contract and the portfolio securities being
hedged, which could result in losses both on the hedging transaction and the
portfolio securities. In such instances, the Series' overall return could be
less than if the hedging transactions had not been undertaken. Stock index
futures or options based on a narrower index of securities may present greater
risk than options or futures based on a broad market index, as a narrower index
is more susceptible to rapid and extreme fluctuations resulting from changes in
the value of a small number of securities. Series D would, however, effect
transactions in such futures or options only for hedging purposes (or to close
out open positions).
The trading of futures and options on indices involves the additional risk of
imperfect correlation between movements in the futures or option price and the
value of the underlying index. The anticipated spread between the prices may be
distorted due to differences in the nature of the markets, such as differences
in margin requirements, the liquidity of such markets and the participation of
speculators in the futures and options market. The purchase of an option on a
futures contract also involves the risk that changes in the value of the
underlying futures contract will not be fully reflected in the value of the
option purchased. The risk of imperfect correlation, however, generally tends
to diminish as the maturity date of the futures contract or termination date of
the option approaches. The risk incurred in purchasing an option on a futures
contract is limited to the amount of the premium plus related transaction
costs, although it may be necessary under certain circumstances to exercise the
option and enter into the underlying futures contract in order to realize a
profit. Under certain extreme market conditions, it is possible that Series D
will not be able to establish hedging positions, or that any hedging strategy
adopted will be insufficient to completely protect the Series.
Potential Lack of a Liquid Secondary Market--The ordinary spreads between
prices in the cash and futures markets, due to differences in the natures of
those markets, are subject to distortions. First, all participants in the
futures market are subject to initial deposit and variation margin
requirements. This could require Series D to post additional cash or cash
equivalents as the
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<PAGE>
value of the position fluctuates. Rather than meeting additional variation
margin requirements, investors may close futures contracts through offsetting
transactions which could distort the normal relationship between the cash and
futures markets. Second, the liquidity of the futures or options market may be
lacking. Prior to exercise or expiration, a futures or option position may be
terminated only by entering into a closing purchase or sale transaction, which
requires a secondary market on the exchange on which the position was
originally established. While Series D will establish a futures or option
position only if there appears to be a liquid secondary market therefor, there
can be no assurance that such a market will exist for any particular futures or
option contract at any specific time. In such event, it may not be possible to
close out a position held by Series D, which could require the Series to
purchase or sell the instrument underlying the position, make or receive a cash
settlement, or meet ongoing variation margin requirements. The inability to
close out futures or option positions also could have an adverse impact on the
Series' ability effectively to hedge its portfolio, or the relevant portion
thereof.
The liquidity of a secondary market in a futures contract or an option on a
futures contract may be adversely affected by "daily price fluctuation limits"
established by the exchanges, which limit the amount of fluctuation in the
price of a contract during a single trading day and prohibit trading beyond
such limits once they have been reached. The trading of futures and options
contracts also is subject to the risk of trading halts, suspensions, exchange
or clearing house equipment failures, government intervention, insolvency of
the brokerage firm or clearing house or other disruptions of normal trading
activity, which could at times make it difficult or impossible to liquidate
existing positions or to recover excess variation margin payments.
Risk of Predicting Interest Rate Movements--Investments in futures contracts on
fixed income securities and related indices involve the risk that if Aeltus'
judgment concerning the general direction of interest rates is incorrect, the
overall performance of Series D may be poorer than if it had not entered into
any such contract. For example, if Series D has been hedged against the
possibility of an increase in interest rates which would adversely affect the
price of bonds held in its portfolio and interest rates decrease instead, the
Series will lose part or all of the benefit of the increased value of its bonds
which have been hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if Series D has insufficient cash,
it may have to sell bonds from its portfolio to meet daily variation margin
requirements, possibly at a time when it may be disadvantageous to do so. Such
sale of bonds may be, but will not necessarily be, at increased prices which
reflect the rising market.
Trading and Position Limits--Each contract market on which futures and option
contracts are traded has established a number of limitations governing the
maximum number of positions which may be held by a trader, whether acting alone
or in concert with others. The Fund does not believe that these trading and
position limits will have an adverse impact on the hedging strategies regarding
Series D.
Repurchase Agreements
Series D may enter into repurchase agreements with domestic banks and
broker-dealers meeting certain size and creditworthiness standards established
by the Trustees. Under a repurchase agreement, Series D may acquire a debt
instrument for a relatively short period (usually not more than one week)
subject to an obligation of the seller to repurchase and the Series to resell
the instrument at a fixed price and time, thereby determining the yield during
the Series' holding period. This results in a fixed rate of return insulated
from market fluctuations during such period. Such underlying debt instruments
serving as collateral will meet the quality standards of the Series. The market
value of the underlying debt instruments will, at all times, be equal to the
dollar amount invested. Repurchase agreements, although fully collateralized,
involve the risk that the seller of the securities may fail to repurchase them
from the Series. In that event, Series D may incur (a) disposition costs in
connection with liquidating the collateral, or (b) a loss if the collateral
declines in value. Also, if the default on the part of the seller is due to
insolvency and the seller initiates bankruptcy proceedings, Series D's ability
to liquidate the collateral may be delayed or limited. Under the 1940 Act,
repurchase agreements are considered loans by the Series. Repurchase agreements
maturing in more than seven days will not exceed 10 percent of the total assets
of the Series.
Variable Rate Demand Instruments
Variable rate demand instruments (including floating rate instruments) held by
Series D may have maturities of more than one year, provided: (i) Series D is
entitled to the payment of principal at any time, or during specified intervals
not exceeding one year, upon giving the prescribed notice (which may not exceed
30 days), and (ii) the rate of interest on such instruments is adjusted at
periodic intervals not to exceed one year. In determining whether a variable
rate demand instrument has a remaining maturity of one year or less, each
instrument will be deemed to have a maturity equal to the longer of the period
remaining until its next interest rate adjustment or the period remaining until
the principal amount can be recovered through demand. Series D will be able (at
any time or during specified periods not exceeding one year, depending upon the
note involved) to demand payment of the principal of a note. If an issuer of a
variable rate demand note defaulted on its payment obligation, Series D might
be unable to dispose of the note and a loss would be incurred to the extent of
the default. Series D may invest in variable rate demand notes only when the
investment is deemed to involve minimal credit risk. The continuing
creditworthiness of issuers of variable rate demand notes held by Series D will
also be monitored to determine whether such notes should continue to be
7
<PAGE>
held. Variable and floating rate instruments with demand periods in excess of
seven days and which cannot be disposed of promptly within seven business days
and in the usual course of business without taking a reduced price will be
treated as illiquid securities that are subject to the Series' policies and
restrictions on illiquid securities.
Zero Coupon and Pay-in-Kind Securities
Series D may invest in zero coupon securities. In addition, Series D may invest
in STRIPS (Separate Trading of Registered Interest and Principal of
Securities). Zero coupon or deferred interest securities are debt obligations
that do not entitle the holder to any periodic payment of interest prior to
maturity or a specified date when the securities begin paying current interest
(the "cash payment date") and therefore are issued and traded at a discount
from their face amounts or par value. The discount varies, depending on the
time remaining until maturity or cash payment date, prevailing interest rates,
liquidity of the security and the perceived credit quality of the issuer. The
discount, in the absence of financial difficulties of the issuer, decreases as
the final maturity or cash payment date of the security approaches. STRIPS are
created by the Federal Reserve Bank by separating the interest and principal
components of an outstanding U.S. Treasury bond and selling them as individual
securities. The market prices of zero coupon, STRIPS and deferred interest
securities generally are more volatile than the market prices of securities
with similar maturities that pay interest periodically and are likely to
respond to changes in interest rates to a greater degree than do non-zero
coupon securities having similar maturities and credit quality.
The risks associated with lower-rated debt securities apply to these
securities. Zero coupon securities are also subject to the risk that in the
event of a default, Series D may realize no return on its investment, because
these securities do not pay cash interest.
When-Issued or Delayed-Delivery Securities
During any period that Series D has outstanding a commitment to purchase
securities on a when-issued or delayed-delivery basis, Series D will designate
cash, U.S. Government securities or other liquid securities with its custodian
bank. To the extent that the market value of such securities falls below the
amount that Series D will be required to pay on settlement, additional assets
may be required to be designated. When Series D engages in when-issued or
delayed-delivery transactions, it is effectively relying on the seller of such
securities to consummate the trade; failure of the seller to do so may result
in Series D's incurring a loss or missing an opportunity to invest the
designated securities more advantageously. Series D will not pay for securities
purchased on a when-issued or delayed-delivery basis, or start earning interest
on such securities, until the securities are actually received. However, any
security so purchased will be recorded as an asset of Series D at the time the
commitment is made. Because the market value of securities purchased on a
when-issued or delayed-delivery basis may increase or decrease prior to
settlement as a result of changes in interest rates or other factors, such
securities will be subject to changes in market value prior to settlement and a
loss may be incurred if the value of the security to be purchased declines
prior to settlement.
THE ASSET ALLOCATION PROCESS
The initial allocation of the Series D Assets between the Equity Component and
the Fixed Component will be determined principally by the prevailing level of
interest rates, and the volatility of the stock market, at the beginning of the
Guaranteed Period. In periods of high interest rates, fewer Assets have to be
allocated to the Fixed Component to provide the necessary assurances for
meeting the minimum targeted rate of return.
The asset allocation process will also be affected by Aeltus' ability to manage
the Fixed Component. If the Fixed Component provides a return better than that
assumed by the proprietary software model, fewer Assets will have to be
allocated to the Fixed Component. On the other hand, if the Fixed Component
performance is poorer than expected (as might happen if there were a default on
one or more securities held in the Fixed Component), more Assets would have to
be allocated to the Fixed Component, and the ability of Series D to participate
in any subsequent upward movement in the equity market would be more limited.
The process of asset reallocation results in additional transaction costs such
as brokerage commissions. To moderate such costs, Aeltus has built into the
proprietary software program a factor which will require reallocations only
when Equity Component and Fixed Component values have deviated by more than
certain minimal amounts since the last reallocation.
TRUSTEES AND OFFICERS OF THE FUND
The investments and administration of the Fund are under the direction of the
Trustees. The Trustees and executive officers of the Fund and their principal
occupations for the past five years are listed below. Those Trustees who are
"interested persons," as defined in the 1940 Act, are indicated by an asterisk
(*). Trustees and officers hold similar positions with other investment
companies in the same Fund Complex (except for Portfolio Partners, Inc.). The
Fund Complex presently consists of Aetna Series Fund, Inc., Aetna Variable
Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna Balanced VP, Inc.,
Aetna GET Fund (Series B, Series C and Series D), Aetna Generation Portfolios,
Inc., Aetna Variable Portfolios, Inc. and Portfolio Partners, Inc.
8
<PAGE>
<TABLE>
<CAPTION>
Position(s) Principal Occupation During Past Five Years (and
Held with Positions held with Affiliated Persons or Principal
Name, Address and Age the Fund Underwriters of the Fund)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
J. Scott Fox* Trustee and President Director, Managing Director, Chief Operating
242 Trumbull Street Officer, Chief Financial Officer, Aeltus Investment
Hartford, Connecticut Management, Inc., October 1997 to present; Vice
Age 43 President, Aetna Retirement Services, Inc., April
1997 to present; Director and Senior Vice President,
Aetna Life Insurance and Annuity Company, March
1997 to February 1998; Director, Managing
Director, Chief Operating Officer, Chief Financial
Officer and Treasurer, Aeltus, April 1994 to March
1997; Managing Director and Treasurer, Equitable
Capital Management Corp., March 1987 to
September 1993.
Wayne F. Baltzer Vice President Assistant Vice President, Aetna Life Insurance and
242 Trumbull Street Annuity Company, May 1991 to present; Vice
Hartford, Connecticut President, Aetna Investment Services, Inc., July
Age 55 1993 to present.
Albert E. DePrince, Jr. Trustee Professor, Middle Tennessee State University, 1991
3029 St. Johns Drive to present.
Murfreesboro, Tennessee
Age 57
Amy R. Doberman Secretary Vice President, Law, Aeltus Investment
242 Trumbull Street Management, Inc., April 1998 to present; Counsel,
Hartford, Connecticut Aetna Life Insurance and Annuity Company,
Age 36 December 1996 to present; Attorney, Securities and
Exchange Commission, March 1990 to November
1996.
Maria T. Fighetti Trustee Manager/Attorney, Health Services, New York City
325 Piermont Road Department of Mental Health, Mental Retardation
Closter, New Jersey and Alcohol Services, 1973 to present.
Age 55
David L. Grove Trustee, Chairperson Private Investor; Economic/Financial Consultant,
5 The Knoll Contract Committee, December 1985 to present.
Armonk, New York Nominating Committee
Age 80
John Y. Kim* Trustee Director, President, Chief Executive Officer, Chief
242 Trumbull Street Investment Officer, Aeltus Investment Management,
Hartford, Connecticut Inc., December 1995 to present; Director, Aetna
Age 38 Life Insurance and Annuity Company, February
1995 to present; Senior Vice President, Aetna Life
Insurance and Annuity Company, September 1994
to present.
Sidney Koch Trustee Financial Adviser, self-employed, January 1993 to
455 East 86th Street present.
New York, New York
Age 63
Frank Litwin Vice President Managing Director, Aeltus Investment Management,
242 Trumbull Street Inc., August 1997 to present; Vice President,
Hartford, Connecticut Fidelity Investments Institutional Services Company,
Age 49 April 1992 to August 1997.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Position(s) Principal Occupation During Past Five Years (and
Held with Positions held with Affiliated Persons or Principal
Name, Address and Age the Fund Underwriters of the Fund)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shaun P. Mathews* Trustee Vice President/Senior Vice President, Aetna Life
151 Farmington Avenue Insurance and Annuity Company, March 1991 to
Hartford, Connecticut present; Vice President, Aetna Life Insurance
Age 43 Company, 1991 to present; Director and Senior Vice
President, Aetna Investment Services, Inc., July
1993 to present; Director and Senior Vice President,
Aetna Insurance Company of America, September
1992 to present.
Corine T. Norgaard Trustee Dean of the Barney School of Business, University
556 Wormwood Hill of Hartford (West Hartford, CT), August 1996 to
Mansfield Center, present; Professor, Accounting and Dean of the
Connecticut School of Management, Binghamton University
Age 61 (Binghamton, NY), August 1993 to August 1996;
Professor, Accounting, University of Connecticut
(Storrs, CT), September 1969 to June 1993;
Director, The Advest Group (holding company for
brokerage firm) through September 1996.
Richard G. Scheide Trustee, Chairperson Trust and Private Banking Consultant, David Ross
11 Lily Street Audit Committee Palmer Consultants, July 1991 to present.
Nantucket, Massachusetts
Age 69
Stephanie A. DeSisto Vice President, Vice President Mutual Fund Accounting, Aeltus
242 Trumbull Street Treasurer and Chief Investment Management, Inc., November 1995 to
Hartford, Connecticut Financial Officer present; Director Mutual Fund Accounting, Aetna
Age 45 Life Insurance and Annuity Company, August 1994
to November 1995; Assistant Vice President,
Investors Bank & Trust, January 1993 to August
1994.
</TABLE>
During the period ended October 31, 1997, Trustees who are also directors,
officers or employees of Aetna Inc. and its affiliates were not entitled to any
compensation from the Fund. As of October 31, 1997, the unaffiliated Trustees
received compensation in the amounts included in the following table. None of
these Trustees were entitled to receive pension or retirement benefits.
<TABLE>
<CAPTION>
Aggregate Compensation Total Compensation from the Fund
Name of Person, Position from the Fund and Fund Complex Paid to Trustees
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Corine Norgaard $ 5,550 $ 55,500
Trustee
Sidney Koch $ 3,850 $ 38,500
Trustee
Maria T. Fighetti $ 5,550 $ 55,500
Trustee
Richard G. Scheide $ 6,100 $ 61,000
Trustee, Chairperson
Audit Committee
David L. Grove $ 5,750* $ 57,500*
Trustee, Chairperson
Contract Committee
</TABLE>
*Mr. Grove elected to defer all such compensation under an existing deferred
compensation plan.
The Fund has obtained an order from the Securities and Exchange Commission
(Commission) which allows the Trustees who are not affiliated with Aetna Inc.
or any of its subsidiaries to defer all or a portion of their compensation in
accordance with the terms of a new Deferred Compensation Plan (the "Plan").
Under the Plan, compensation deferred by an unaffiliated Trustee is
periodically adjusted as though an equivalent amount had been invested and
reinvested in shares of one or more series of Aetna Series Fund, Inc.
designated by the Trustee. The amount paid to the unaffiliated Trustee under
the Plan will be based upon the
10
<PAGE>
performance of such investments. Deferral of compensation in accordance with
the Plan will have a negligible effect on the assets, liabilities and net
income per share of any Series and will not obligate the Fund to retain the
services of any Trustee or to pay any particular level of compensation to any
Trustee.
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
Shares of Series D will be owned by Aetna as the depositor of separate accounts
which are used to fund variable annuity contracts (VA Contracts).
Aetna is an indirect wholly-owned subsidiary of Aetna Retirement Services,
Inc., which is in turn an indirect wholly-owned subsidiary of Aetna Inc.
Aetna's principal office is located at 151 Farmington Avenue, Hartford,
Connecticut 06156.
THE INVESTMENT ADVISORY AGREEMENT
The Fund has entered into an investment advisory agreement (Advisory Agreement)
appointing Aeltus as the Investment Adviser of Series D. The Advisory Agreement
was approved by the Trustees on September 24, 1998. The Advisory Agreement will
be effective through December 31, 1999. The Advisory Agreement will remain in
effect thereafter if approved at least annually by a majority of the Trustees,
including a majority of the Trustees who are not "interested persons" of the
Fund, as defined by the 1940 Act (Independent Trustees), at a meeting called
for that purpose, and held in person. The Advisory Agreement may be terminated
without penalty upon sixty (60) days' written notice by the Trustees or by a
majority vote of the outstanding voting securities of Series D, or by Aeltus.
The Advisory Agreement terminates automatically in the event of assignment.
Under the Advisory Agreement and subject to the supervision of the Trustees of
the Fund, Aeltus has responsibility for supervising all aspects of the
operations of Series D including the selection, purchase and sale of
securities. Under the Advisory Agreement, Aeltus is given the right to delegate
any or all of its obligations to a subadviser.
For the services under the Advisory Agreements, Aeltus will receive an annual
fee, payable monthly, as described in the Prospectus.
The service mark of Series D and the name "Aetna" have been adopted by the Fund
with the permission of Aetna Services, Inc. and their continued use is subject
to the right of Aetna Services, Inc. to withdraw this permission in the event
Aeltus or another subsidiary or affiliated corporation of Aetna Inc. should not
be the investment adviser of Series D.
THE ADMINISTRATIVE SERVICES AGREEMENT
Pursuant to the Administrative Services Agreement described below, Aeltus acts
as administrator and provides certain administrative and shareholder services
necessary for Fund operations and is responsible for the supervision of other
service providers. The services provided by Aeltus include: (1) internal
accounting services; (2) monitoring regulatory compliance, such as reports and
filings with the Commission and state securities commissions; (3) preparing
financial information for proxy statements; (4) preparing semiannual and annual
reports to shareholders; (5) calculating NAVs; (6) the preparation of certain
shareholder communications; (7) supervision of the custodians and transfer
agent; and (8) reporting to the Trustees.
For its services, Series D pays Aeltus a fee at an annual rate of .075% of its
average daily net assets.
Unless terminated earlier, the Administrative Services Agreement remains in
effect from year to year if approved annually by a majority of the Trustees,
including a majority of the Independent Trustees. The Agreement may be
terminated by either party upon sixty (60) days' written notice.
CUSTODIAN
Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, PA, 15258 serves as
custodian for the assets of Series D. The custodian does not participate in
determining the investment policies of Series D or in deciding which securities
are purchased or sold by Series D. Series D, however, may invest in obligations
of the custodian and may purchase or sell securities from or to the custodian.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, City Place II, Hartford, Connecticut 06103 will serve as
independent auditors to Series D. KPMG Peat Marwick LLP provides audit
services, assistance and consultation in connection with SEC filings.
PRINCIPAL UNDERWRITER
Aetna has agreed to use its best efforts to distribute the shares as the
principal underwriter of Series D pursuant to an Underwriting Agreement between
it and the Fund. The Agreement was approved on September 24, 1998 to continue
through December 31, 1999. The Underwriting Agreement may be continued from
year to year thereafter if approved annually by the
11
<PAGE>
Trustees or by a vote of holders of a majority of Series D's shares, and by a
vote of a majority of the Trustees who are not "interested persons," as that
term is defined in the 1940 Act, of Aetna, and who are not interested persons
of the Fund, appearing in person at a meeting called for the purpose of
approving such Agreement. This Agreement terminates automatically upon
assignment, and may be terminated at any time on sixty (60) days' written
notice by the Trustees or Aetna or by vote of holders of a majority of Series
D's shares without the payment of any penalty.
BROKERAGE ALLOCATION AND TRADING POLICIES
Subject to the supervision of the Trustees, Aeltus has responsibility for
making investment decisions, for effecting the execution of trades and for
negotiating any brokerage commissions thereon. It is Aeltus' policy to obtain
the best quality of execution available, giving attention to net price
(including commissions where applicable), execution capability (including the
adequacy of a firm's capital position), research and other services related to
execution; the relative priority given to these factors will depend on all of
the circumstances regarding a specific trade. Aeltus may also consider the sale
of shares of Series D and of other investment companies advised by Aeltus as a
factor in the selection of brokerage firms to execute the Series portfolio
transactions, subject to Aeltus' duty to obtain best execution.
Aeltus receives a variety of brokerage and research services from brokerage
firms in return for the execution by such brokerage firms of trades on behalf
of Series D. These brokerage and research services include, but are not limited
to, quantitative and qualitative research information and purchase and sale
recommendations regarding securities and industries, analyses and reports
covering a broad range of economic factors and trends, statistical data
relating to the strategy and performance of the Series and other investment
companies, services related to the execution of trades in the Series portfolio
securities and advice as to the valuation of securities, the providing of
equipment used to communicate research information and specialized
consultations with Aeltus personnel with respect to computerized systems and
data furnished to the Series as a component of other research services. Aeltus
considers the quantity and quality of such brokerage and research services
provided by a brokerage firm along with the nature and difficulty of the
specific transaction in negotiating commissions for trades in a Series'
securities and may pay higher commission rates than the lowest available when
it is reasonable to do so in light of the value of the brokerage and research
services received generally or in connection with a particular transaction.
Aeltus' policy in selecting a broker to effect a particular transaction is to
seek to obtain "best execution," which means prompt and efficient execution of
the transaction at the best obtainable price with payment of commissions which
are reasonable in relation to the value of the services provided by the broker,
taking into consideration research and brokerage services provided. When the
trader believes that more than one broker can provide best execution,
preference may be given to brokers who provide additional services to Aeltus.
Research services furnished by brokers through whom the Fund effects securities
transactions may be used by Aeltus in servicing all of its accounts; not all
such services will be used by Aeltus to benefit Series D.
Consistent with Federal law, Aeltus may obtain such brokerage and research
services regardless of whether they are paid for (1) by means of commissions,
or (2) by means of separate, non-commission payments. Aeltus' judgment as to
whether and how it will obtain the specific brokerage and research services
will be based upon its analysis of the quality of such services and the cost
(depending upon the various methods of payment which may be offered by
brokerage firms) and will reflect Aeltus' opinion as to which services and
which means of payment are in the long-term best interests of the Series.
Series D has not effected and has no present intention of effecting any
brokerage transactions in portfolio securities with Aeltus or any other
affiliated person of the Fund.
Aeltus acts as investment adviser to other investment companies registered
under the 1940 Act. Aeltus has adopted policies designed to prevent
disadvantaging the Series in placing orders for the purchase and sale of
securities.
Series D and another advisory client of Aeltus or Aeltus itself, may desire to
buy or sell the same security at or about the same time. In such a case, the
purchases or sales will normally be aggregated, and then allocated as nearly as
practicable on a pro rata basis in proportion to the amounts to be purchased or
sold by each. In some cases the smaller orders will be filled first. In
determining the amounts to be purchased and sold, the main factors to be
considered are the respective investment objectives of the Series and the other
portfolios, the relative size of portfolio holdings of the same or comparable
securities, availability of cash for investment, and the size of their
respective investment commitments. Prices are averaged for aggregated trades.
The Trustees have adopted a policy allowing trades to be made between
affiliated registered investment companies or series thereof provided they meet
the terms of Rule 17a-7 under the 1940 Act. Pursuant to this policy, Series D
may buy a security from or sell a security to another registered investment
company or series thereof advised by Aeltus.
The Trustees have also adopted a Code of Ethics governing personal trading by
persons who manage, or who have access to trading activity by, the Series. The
Code of Ethics allows trades to be made in securities that may be held by
Series D. However, it prohibits a person from taking advantage of Series D's
trades or from acting on inside information. Aeltus also has adopted a Code of
Ethics, which the Trustees review annually.
12
<PAGE>
DESCRIPTION OF SHARES
Aetna GET Fund was established as a business trust under the laws of
Massachusetts on March 9, 1987.
The Fund's Declaration of Trust (Declaration) permits the Fund to issue an
unlimited number of transferable full and fractional shares of beneficial
interest without par value of a single class, each of which represents a
proportionate interest in Series D equal to each other share (see discussion in
the Prospectus under "Capital Stock"). The Trustees have the power to divide or
combine the shares of a particular series into a greater or lesser number of
shares without thereby changing the proportional beneficial interest in Series
D.
Upon liquidation of Series D, shareholders of Series D are entitled to share
pro rata in the net assets of Series D available for distribution to
shareholders. Series D shares are fully paid and nonassessable when issued.
Nothing in the Declaration protects a Trustee against any liability to which he
or she would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence, or reckless disregard of the duties involved in the conduct
of his or her office.
SALE AND REDEMPTION OF SHARES
Shares of Series D are sold and redeemed at the NAV next determined after
receipt of a purchase or redemption order in acceptable form as described in
the Prospectus under "Sale and Redemption of Shares" and "Net Asset Value."
NET ASSET VALUE
Securities of Series D are generally valued by independent pricing services
which have been approved by the Board. The values for equity securities traded
on registered securities exchanges are based on the last sale price or, if
there has been no sale that day, at the mean of the last bid and asked price on
the exchange where the security is principally traded. Securities traded over
the counter are valued at the mean of the last bid and asked price if current
market quotations are not readily available. Short-term debt securities which
have a maturity date of more than sixty days and long-term debt securities are
valued at the mean of the last bid and asked price of such securities obtained
from a broker who is a market-maker in the securities or a service providing
quotations based upon the assessment of market-makers in those securities.
Short-term debt securities maturing in sixty days or less at the date of
purchase will be valued using the "amortized cost" method of valuation. This
involves valuing an instrument at its cost and thereafter assuming a constant
amortization of premium or increase of discount. Securities for which market
quotations are not readily available or for which superseding events have made
market quotations unreliable are valued at their fair value in such manner as
may be determined, from time to time, in good faith, by or under the authority
of, the Trustees.
Options are valued at the mean of the last bid and asked price on the exchange
where the option is primarily traded. Futures contracts are valued daily at a
settlement price based on rules of the exchange where the futures contract is
primarily traded.
TAX STATUS
The following is only a summary of certain additional tax considerations
generally affecting Series D and its shareholders which are not described in
the prospectus. No attempt is made to present a detailed explanation of the tax
treatment of Series D or its shareholders, and the discussions here and in the
prospectus are not intended as substitutes for careful tax planning.
Qualification as a Regulated Investment Company
Series D has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code of 1986, (Code). As a regulated
investment company, Series D is not subject to federal income tax on the
portion of its net investment income (i.e., taxable interest, dividends and
other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) and at least 90% of
its tax-exempt income (net of expenses allocable thereto) for the taxable year
(Distribution Requirement), and satisfies certain other requirements of the
Code that are described in this section. Distributions by Series D made during
the taxable year or, under specified circumstances, within twelve months after
the close of the taxable year, will be considered distributions of income and
gains of the taxable year and can therefore satisfy the Distribution
Requirement.
In addition to satisfying the Distribution Requirement, a regulated investment
company must derive at least 90% of its gross income from dividends, interest,
certain payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies (to the extent such
currency gains are directly related to the regulated investment company's
principal business of investing in stock or securities) and other income
(including but not limited to gains from options or futures) derived with
respect to its business of investing in such stock, securities or currencies
(Income Requirement).
13
<PAGE>
In general, gain or loss recognized by Series D on the disposition of an asset
will be a capital gain or loss. However, gain recognized on the disposition of
a debt obligation (including municipal obligations) purchased by Series D at a
market discount (generally, at a price less than its principal amount) will be
treated as ordinary income to the extent of the portion of the market discount
which accrued during the period of time the Series held the debt obligation. In
addition, under the rules of Code Section 988, gain or loss recognized on the
disposition of a debt obligation denominated in a foreign currency or an option
with respect thereto (but only to the extent attributable to changes in foreign
currency exchange rates), and gain or loss recognized on the disposition of a
futures contract, option or similar financial instrument, or of foreign
currency itself, except for regulated futures contracts or non-equity options
subject to Code Section 1256 (unless the Series elects otherwise), will
generally be treated as ordinary income or loss.
For purposes of determining whether capital gain or loss recognized by Series D
on the disposition of an asset is long-term, medium-term, or short-term, the
holding period of the asset may be affected if (1) the asset is used to close a
"short sale" (which includes for certain purposes the acquisition of a put
option ) or is substantially identical to another asset so used, (2) the asset
is otherwise held by the Series as part of a "straddle" (which term generally
excludes a situation where the asset is stock and the Series grants a qualified
covered call option (which, among other things, must not be deep-in-the-money)
with respect thereto) or (3) the asset is stock and the Series grants an
in-the-money qualified covered call option with respect thereto. In addition,
Series D may be required to defer the recognition of a loss on the disposition
of an asset held as part of a straddle to the extent of any unrecognized gain
on the offsetting position.
Any gain recognized by Series D on the lapse of, or any gain or loss recognized
by Series D from a closing transaction with respect to, an option written by
the Series will be treated as a short-term capital gain or loss.
Transactions that may be engaged in by Series D (such as regulated futures
contracts, certain foreign currency contracts, and options on stock indexes and
futures contracts) will be subject to special tax treatment as "Section 1256
contracts." Section 1256 contracts are treated as if they are sold for their
fair market value on the last day of the taxable year, even though a taxpayer's
obligations (or rights) under such contracts have not terminated (by delivery,
exercise, entering into a closing transaction or otherwise) as of such date.
Any gain or loss recognized as a consequence of the year-end deemed disposition
of Section 1256 contracts is taken into account for the taxable year together
with any other gain or loss that was previously recognized upon the termination
of Section 1256 contracts during that taxable year. Any capital gain or loss
for the taxable year with respect to Section 1256 contracts (including any
capital gain or loss arising as a consequence of the year-end deemed sale of
such contracts) is generally treated as 60% long-term capital gain or loss and
40% short-term capital gain or loss. Series D, however, may elect not to have
this special tax treatment apply to Section 1256 contracts that are part of a
"mixed straddle" with other investments of the Series that are not Section 1256
contracts.
Because only a few regulations regarding the treatment of swap agreements and
other financial derivatives have been issued, the tax consequences of
transactions in these types of instruments are not always entirely clear.
Series D intends to account for derivatives transactions in a manner deemed by
it to be appropriate, but the Internal Revenue Service might not necessarily
accept such treatment. If it did not, the status of Series D as a regulated
investment company and/or its compliance with the diversification requirement
under Code Section 817(h) might be affected. The Fund intends to monitor
developments in this area. Certain requirements that must be met under the Code
in order for Series D to qualify as a regulated investment company may limit
the extent to which Series D will be able to engage in swap agreements.
A Series may purchase securities of certain foreign investment funds or trusts
which constitute passive foreign investment companies (PFICS) for federal
income tax purposes. If Series D invests in a PFIC, it may elect to treat the
PFIC as a qualifying electing portfolio (QEP) in which event the Series will
each year have ordinary income equal to its pro rata share of the PFIC's
ordinary earnings for the year and long-term capital gain equal to its pro rata
share of the PFIC's net capital gain for the year, regardless of whether the
Series receives distributions of any such ordinary earnings or capital gain
from the PFIC. If Series D does not (because it is unable to, chooses not to or
otherwise) elect to treat the PFIC as a QEP, then in general (1) any gain
recognized by the Series upon sale or other disposition of its interest in the
PFIC or any excess distribution received by the Series from the PFIC will be
allocated ratably over the Series' holding period of its interest in the PFIC,
(2) the portion of such gain or excess distribution so allocated to the year in
which the gain is recognized or the excess distribution is received shall be
included in the Series' gross income for such year as ordinary income (and the
distribution of such portion by the Series to shareholders will be taxable as
an ordinary income dividend, but such portion will not be subject to tax at the
Series level), (3) the Series shall be liable for tax on the portions of such
gain or excess distribution so allocated to prior years in an amount equal to,
for each such prior year, (i) the amount of gain or excess distribution
allocated to such prior year multiplied by the highest tax rate (individual or
corporate) in effect for such prior year plus (ii) interest on the amount
determined under clause (i) for the period from the due date for filing a
return for such prior year until the date for filing a return for the year in
which the gain is recognized or the excess distribution is received at the
rates and methods applicable to underpayments of tax for such period, and (4)
the distribution by the Series to shareholders of the portions of such gain or
excess distribution so allocated to prior years (net of the tax payable by the
Series thereon) will again be taxable to the shareholders as an ordinary income
dividend.
14
<PAGE>
Under recently proposed Treasury Regulations Series D can elect to recognize as
gain the excess, as of the last day of its taxable year, of the fair market
value of each share of PFIC stock over the Series' adjusted tax basis in that
share (mark to market gain). Such mark to market gain will be included by the
Series as ordinary income, and the Series' holding period with respect to such
PFIC stock commences on the first day of the next taxable year. If Series D
makes such election in the first taxable year it holds PFIC stock, the Series
will include ordinary income from any mark to market gain, if any, and will not
incur the tax described in the previous paragraph.
Treasury Regulations permit a regulated investment company, in determining its
investment company taxable income and net capital gain (i.e., the excess of net
long-term capital gain over net short-term capital loss) for any taxable year,
to elect (unless it has made a taxable year election for excise tax purposes as
discussed below) to treat all or any part of any net capital loss, any net
long-term capital loss or any net foreign currency loss incurred after October
31 as if it had been incurred in the succeeding year.
In addition to satisfying the requirements described above, Series D must
satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of the
Series' taxable year, at least 50% of the value of the Series' assets must
consist of cash and cash items, U.S. Government securities, securities of other
regulated investment companies, and securities of other issuers (as to which
the Series has not invested more than 5% of the value of the Series' total
assets in securities of such issuer and as to which the Series does not hold
more than 10% of the outstanding voting securities of such issuer), and no more
than 25% of the value of its total assets may be invested in the securities of
any one issuer (other than U.S. Government securities and securities of other
regulated investment companies), or of two or more issuers which the Series
controls and which are engaged in the same or similar trades or businesses or
related trades or businesses. Generally, an option (call or put) with respect
to a security is treated as issued by the issuer of the security not the issuer
of the option. However, with regard to forward currency contracts, there does
not appear to be any formal or informal authority which identifies the issuer
of such instrument. For purposes of asset diversification testing, obligations
issued or guaranteed by agencies or instrumentalities of the U.S. Government
such as the Federal Agricultural Mortgage Corporation, the Farm Credit System
Financial Assistance Corporation, a Federal Home Loan Bank, the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association, the
Government National Mortgage Corporation, and the Student Loan Marketing
Association are treated as U.S. Government securities.
If for any taxable year Series D does not qualify as a regulated investment
company, all of its taxable income (including its net capital gain) will be
subject to tax at regular corporate rates without any deduction for
distributions to shareholders, and such distributions will be taxable to the
shareholders as ordinary dividends to the extent of the Series' current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Qualification of Segregated Asset Accounts
Under Code Section 817(h), a segregated asset account upon which a variable
annuity contract or variable life insurance policy is based must be "adequately
diversified." A segregated asset account will be adequately diversified if it
satisfies one of two alternative tests set forth in the Treasury Regulations.
Specifically, the Treasury Regulations provide, that except as permitted by the
"safe harbor" discussed below, as of the end of each calendar quarter (or
within 30 days thereafter) no more than 55% of the Series' total assets may be
represented by any one investment, no more than 70% by any two investments, no
more than 80% by any three investments and no more than 90% by any four
investments. For this purpose, all securities of the same issuer are considered
a single investment, and while each U.S. Government agency and instrumentality
is considered a separate issuer, a particular foreign government and its
agencies, instrumentalities and political subdivisions may be considered the
same issuer. As a safe harbor, a separate account will be treated as being
adequately diversified if the diversification requirements under Subchapter M
are satisfied and no more than 55% of the value of the account's total assets
are cash and cash items, U.S. Government securities and securities of other
regulated investment companies.
For purposes of these alternative diversification tests, a segregated asset
account investing in shares of a regulated investment company will be entitled
to "look through" the regulated investment company to its pro rata portion of
the regulated investment company's assets, provided the regulated investment
company satisfies certain conditions relating to the Ownership of the shares.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment company
that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net
income for the one-year period ended on October 31 of such calendar year (or,
at the election of a regulated investment company having a taxable year ending
November 30 or December 31, for its taxable year (a "taxable year election")).
Tax-exempt interest on municipal obligations is not subject to the excise tax.
The balance of such income must be distributed during the next calendar year.
For the foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable
year ending in such calendar year.
15
<PAGE>
For purposes of the excise tax, a regulated investment company shall (1) reduce
its capital gain net income (but not below its net capital gain) by the amount
of any net ordinary loss for the calendar year; and (2) exclude foreign
currency gains and losses from Section 998 transactions incurred after October
31 of any year (or after the end of its taxable year if it has made a taxable
year election) in determining the amount of ordinary taxable income for the
current calendar year (and, instead, include such gains and losses in
determining ordinary taxable income for the succeeding calendar year).
Series D intends to make sufficient distributions or deemed distributions of
its ordinary taxable income and capital gain net income prior to the end of
each calendar year to avoid liability for the excise tax. However, investors
should note that Series D may in certain circumstances be required to liquidate
portfolio investments to make sufficient distributions to avoid excise tax
liability.
Series Distributions
Series D anticipates distributing substantially all of its investment company
taxable income for each taxable year. Such distributions will be taxable to the
shareholders as ordinary income and treated as dividends for federal income tax
purposes, but they may qualify for the dividends-received deduction for
corporate shareholders to the extent discussed below.
Series D may either retain or distribute to the shareholders its net capital
gain for each taxable year. Series D currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it will be taxable to the shareholders as long-term capital gain,
regardless of the length of time the shareholders have held shares or whether
such gain was recognized by the Series prior to the date on which the
shareholder acquired the shares.
If Series D elects to retain its net capital gain, the Series will be taxed
thereon (except to the extent of any available capital loss carryovers) at the
35% corporate tax rate. Where Series D elects to retain its net capital gain,
it is expected that the Series also will elect to have shareholders of record
on the last day of its taxable year treated as if each received a distribution
of its pro rata share of such gain, with the result that each shareholder will
be required to report its pro rata share of such gain on its tax return as
long-term capital gain, will receive a refundable tax credit for its pro rata
share of tax paid by the Series on the gain, and will increase the tax basis
for its shares by an amount equal to the deemed distribution less the tax
credit. All distributions paid to Aetna, whether characterized as ordinary
income or capital gain, are not taxable to VA Contract holders.
Ordinary income dividends paid by Series D with respect to a taxable year may
qualify for the dividends-received deduction generally available to
corporations (other than corporations, such as S corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding company tax) to the extent of the amount of qualifying
dividends received by Series D from domestic corporations for the taxable year
and if the shareholder meets eligibility requirements in the Code. A dividend
received by the Series will not be treated as a qualifying dividend (1) if it
has been received with respect to any share of stock that the Series has held
for less than 46 days (91 days in the case of certain preferred stock),
excluding for this purpose under the rules of Code Section 246(c)(3) and (4):
(i) any day more than 45 days (or 90 days in the case of certain preferred
stock) after the date on which the stock becomes ex-dividend and (ii) any
period during which the Series has an option to sell, is under a contractual
obligation to sell, has made and not closed a short sale of, is the grantor of
a deep-in-the-money or otherwise nonqualified option to buy, or has otherwise
diminished its risk of loss by holding other positions with respect to, such
(or substantially identical) stock; (2) to the extent that the Series is under
an obligation (pursuant to a short sale or otherwise) to make related payments
with respect to positions in substantially similar or related property; or (3)
to the extent the stock on which the dividend is paid is treated as
debt-financed under the rules of Code Section 246(a). Moreover, the
dividends-received deduction for a corporate shareholder may be disallowed or
reduced (i) if the corporate shareholder fails to satisfy the foregoing
requirements with respect to its shares of the Series or (ii) by application of
Code Section 246(b) which in general limits the dividends-received deduction.
Alternative Minimum Tax (AMT) is imposed in addition to, but only to the extent
it exceeds, the regular tax and is computed at a maximum marginal rate of 28%
for noncorporate taxpayers and 20% for corporate taxpayers on the excess of the
taxpayer's alternative minimum taxable income (AMTI) over an exemption amount.
In addition, under the Superfund Amendments and Reauthorization Act of 1986, a
tax is imposed for taxable years beginning after 1986 and before 1996 at the
rate of 0.12% on the excess of a corporate taxpayer's AMTI (determined without
regard to the deduction for this tax and the AMT net operating loss deduction)
over $2 million. For purposes of the corporate AMT and the environmental
super-fund tax (which are discussed above), the corporate dividends-received
deduction is not itself an item of tax preference that must be added back to
taxable income or is otherwise disallowed in determining a corporation's AMTI.
However, corporate shareholders will generally be required to take the full
amount of any dividend received from a Series into account (without a
dividends-received deduction) in determining its adjusted current earnings,
which are used in computing an additional corporate preference item (i.e., 75%
of the excess of a corporate taxpayer's adjusted current earnings over its AMTI
(determined without regard to this item and the AMT net operating loss
deduction)) includable in AMTI.
Investment income that may be received by Series D from sources within foreign
countries may be subject to foreign taxes withheld at the source. The United
States has entered into tax treaties with many foreign countries which entitle
Series D to a
16
<PAGE>
reduced rate of, or exemption from, taxes on such income. It is impossible to
determine the effective rate of foreign tax in advance since the amount of a
Series' assets to be invested in various countries is not known.
Distributions by Series D that do not constitute ordinary income dividends or
capital gain dividends will be treated as a return of capital to the extent of
(and in reduction of) the shareholder's tax basis in his shares; any excess
will be treated as gain from the sale of his shares, as discussed below.
Distributions paid to shareholders are generally reinvested in additional
shares. Shareholders receiving a distribution in the form of additional shares
will be treated as receiving a distribution in an amount equal to the fair
market value of the shares received, determined as of the reinvestment date. In
addition, if the NAV at the time a shareholder purchases shares of Series D
reflects undistributed net investment income or recognized capital gain net
income, or unrealized appreciation in the value of the assets of the Series,
distributions of such amounts will be taxable to the shareholder in the manner
described above, although such distributions economically constitute a return
of capital to the shareholder.
Ordinarily, shareholders are required to take distributions by Series D into
account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by the Series) on December 31
of such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
Tax Effect on Contract Owners and Policy Owners
Owners of VA Contracts are taxed through prior ownership of such contracts and
policies, as described in the insurance company's prospectus for the applicable
contract or policy.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and the Treasury Regulations issued thereunder as in effect
on the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends, exempt-interest
dividends and capital gain dividends from regulated investment companies often
differ from the rules for U.S. federal income taxation described above.
Shareholders are urged to consult their tax advisers as to the consequences of
these and other state and local tax rules affecting investment in Series D.
VOTING RIGHTS
Shareholders are entitled to one vote for each full share held (and fractional
votes for fractional shares held) and will vote in the election of Trustees (to
the extent hereinafter provided) and on other matters submitted to the vote of
the shareholders. The shareholder of Series D is Aetna for its separate
accounts using Series D to fund VA Contracts. Aetna passes voting rights
attributable to shares held for the VA Contracts through to Contract owners as
described in the prospectus for the applicable VA Contracts. Voting rights are
not cumulative, so that the holders of more than 50% of the shares voting in
the election of Trustees can, if they choose to do so, elect all the Trustees,
in which event the holders of the remaining shares will be unable to elect any
person as a Trustee.
The Declaration may be amended by an affirmative vote of a majority of the
shares at any meeting of shareholders or by written instrument signed by a
majority of the Trustees and consented to by a majority of the shareholders.
The Trustees may also amend the Declaration without the vote or consent of
shareholders, if they deem it necessary to conform the Declaration to the
requirements of applicable federal laws or regulations or the requirements of
the regulated investment company provisions of the Internal Revenue Code of
1986, as amended, or to establish a new series of shares, but the Trustees
shall not be liable for failing to do so.
Shares have no preemptive or conversion rights.
SAI.GET-98
17
<PAGE>
PART C
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
- -------------------------------------------
(a) Financial Statements:
Not Applicable
(b) Exhibits:
(1)(a) Declaration of Trust
(1)(b) Form of Amendment to Declaration of Trust (October 28, 1993)
(1)(c) Amendment to Declaration of Trust (June 18, 1996)
(1)(d) Amendment to Declaration of Trust (July 19, 1996)
(1)(e) Amendment to Declaration of Trust (September 24, 1998)
(2) Amended and Restated By-laws(1)
(3) Not applicable
(4) Instruments Defining Rights of Holders(2)
(5) Investment Advisory Agreement between Aeltus Investment
Management, Inc. and Aetna GET Fund
(6) Underwriting Agreement between Aetna GET Fund and Aetna Life
Insurance and Annuity Company
(7) Trustees' Deferred Compensation Plan
(8)(a) Custodian Agreement between Mellon Bank, N.A. and Aetna GET
Fund
(8)(b) Amendment to Custodian Agreement (November 24, 1993)
(8)(c) Amendment to Custodian Agreement (August 26, 1996)
(8)(d) Amendment to Custodian Agreement (September 29, 1998)
(9)(a) Administrative Services Agreement between Aeltus and Aetna GET
Fund (March 25, 1998)
(9)(b) Amendment to Administrative Services Agreement between Aeltus
and Aetna GET Fund (September 25, 1998)
(10) Opinion and Consent of Counsel
(11) Not applicable
(12) Not applicable
(13) Agreement Concerning Initial Capital(3)
(14) Not applicable
(15) Not applicable
(16) Not applicable
(17) See Item 27
(18) Not applicable
(19)(a) Power of Attorney (December 10, 1997)(4)
(19)(b) Power of Attorney (June 24, 1998)(5)
<PAGE>
(19)(c) Power of Attorney (September 29, 1998)
(19)(d) Authorization for Signatures(6)
(27) Not applicable
1. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-1A (File No. 33-12723), as filed with the Securities
and Exchange Commission on June 14, 1996 (Accession No.
0000928389-96-000126).
2. Incorporated by reference to Post-Effective Amendment No. 9 to Registration
Statement on Form N-1A (File No. 33-12723), as filed with the Securities
and Exchange Commission on December 31, 1996 (Accession
No.0000950146-96-002407).
3. Incorporated by reference to Post-Effective Amendment No. 11 to
Registration Statement on Form N-1A (File No. 33-12723) as filed with the
Securities and Exchange Commission on March 11, 1997 (Accession No.
0000950146-97-000363).
4. Incorporated by reference to Post-Effective Amendment No. 53 to
Registration Statement on Form N-1A (File No. 2-51739), as filed with the
Securities and Exchange Commission on April 27, 1998 (Accession No.
0000950146-98-000689).
5. Incorporated by reference to Post-Effective Amendment No. 12 to
Registration Statement on Form N-1A (File No. 33-12723), as filed with the
Securities and Exchange Commission on July 15, 1998 (Accession No.
0000950146-98-001215).
6. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-1A (File No. 333-05173), as filed with the Securities
and Exchange Commission on September 26, 1997 (Accession No.
0000950146-97-001480).
<PAGE>
Item 25. Persons Controlled by or Under Common Control
- -------------------------------------------------------
Registrant is a Massachusetts business trust for which separate financial
statements are filed. As of August 31, 1998, all of the Registrant's
outstanding voting securities were held in the name of Aetna Life
Insurance and Annuity Company ("Aetna").
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 26 of the Registration Statement on Form N-4 (File No.
333-01107), as filed electronically with the Securities and Exchange
Commission on September 10, 1998 (Accession No. 0000950146-98-001550).
Item 26. Number of Holders of Securities
- -----------------------------------------
(1) Title of Class (2) Number of Record Holders
-------------- ------------------------
Shares of Beneficial Interest one as of August 31, 1998
$1.00 par value
Item 27. Indemnification
- -------------------------
Article 5.3 of the Registrant's Amendment to Declaration of Trust,
incorporated herein by reference to Exhibit 24(b)(1)(b) of this
Post-Effective Amendment, provides indemnification for the Registrant's
trustees and officers. In addition, the Registrant's trustees and
officers are covered under a directors and officers errors and omissions
liability insurance policy issued by Gulf Insurance Company which expires
on October 1, 1999.
Section XI.B of the Administrative Services Agreement, filed herein as
Exhibit (9)(a), provides for indemnification of the Administrator.
Item 28. 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 investment adviser and
administrator for Aetna Income Shares, Aetna Variable Fund, Aetna
Variable Encore Fund, Aetna Balanced VP, Inc. (formerly Aetna Investment
Advisers Fund, Inc.), Aetna Generation Portfolios, Inc., Aetna Variable
Portfolios, Inc., and Aetna Series Fund, Inc. (all management investment
companies registered under the Investment Company Act of 1940 (the "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 Oct. 31, 1995/Addresses*/**
----------------------- ---------------------------------
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John Y. Kim Director, President, Chief Director (since February 1995) -- Aetna Life Insurance
Executive Officer, Chief and Annuity Company; Senior Vice President (since
Investment Officer September 1994) -- Aetna Life Insurance and Annuity
Company.
J. Scott Fox Director, Managing Director, Vice President (since April 1997) -- Aetna Retirement
Chief Operating Officer, Services, Inc.; Director and Senior Vice President (March
Chief Financial Officer 1997 - February 1998) -- Aetna Life Insurance and Annuity
Company; Managing Director, Chief Operating Officer, Chief
Financial Officer, Treasurer (April 1994 - March 1997) --
Aeltus Investment Management, Inc.
Thomas J. McInerney Director President (since August 1997) -- Aetna Retirement
Services, Inc.; Director and President (since September
1997) -- Aetna Life Insurance and Annuity Company;
Executive Vice President (since August 1997) -- Aetna
Inc.; Vice President, Strategy (March 1997 - August 1997)
-- Aetna Inc.; Vice President, Marketing and Sales
(December 1996 - March 1997) -- Aetna U.S. Healthcare;
Vice President, National Accounts (April 1996 - December
1996) -- Aetna U.S. Healthcare; Vice President, Strategy,
Finance, & Administration (July 1995 - April 1996) --
Aetna Inc.
Catherine H. Smith Director Director, Senior Vice President and Chief Financial
Officer (since February 1998) -- Aetna Life Insurance and
Annuity Company; Chief Financial Officer (since February
1998) -- Aetna Retirement Services, Inc.; Vice President,
Strategy, Finance and Administration, Financial Relations
(September 1996 - February 1998) -- Aetna Inc.; Chief of
Staff, Health/Group Life, Strategy and Communication
(April 1993 - September 1996) -- Aetna U.S. Healthcare.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------
Name Positions and Offices Other Principal Position(s) Held
---- with Investment Adviser Since Oct. 31, 1995/Addresses*/**
----------------------- ---------------------------------
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Lennart A. Carlson Managing Director, Fixed Managing Director (since January 1996) -- Aeltus Trust
Income Investments Company.
Steven C. Huber Managing Director, Fixed Portfolio Manager (August 1991 - August 1996) -- Aetna
Income Investments Life Insurance and Annuity Company; Managing Director
(since August 1996) -- Aeltus Trust Company.
Brian K. Kawakami Vice President, Chief Chief Compliance Officer & Director (since January 1996)
Compliance Officer -- Aeltus Trust Company; Chief Compliance Officer (since
August 1993) -- Aeltus Capital, Inc.
Neil Kochen Managing Director, Product Managing Director (since April 1996) -- Aeltus Trust
Development Company; Managing Director (since August 1996) -- Aeltus
Capital, Inc.; Managing Director (July 1994 - August 1996)
-- Aetna Life Insurance and Annuity Company.
Frank Litwin Managing Director, Retail Vice President, Strategic Marketing (April, 1992 -
Marketing and Sales August, 1997) -- Fidelity Investments Institutional
Services Company.
Kevin M. Means Managing Director, Equity Managing Director (July 1994 - August 1996) -- Aetna Life
Investments Insurance and Annuity Company; Managing Director (since
August 1996) -- Aeltus Trust Company.
L. Charles Meythaler Managing Director, Director (since July 1997) -- Aeltus Trust Company;
Institutional Marketing Managing Director (since June 1997) -- Aeltus Trust
and Sales Company; President (June 1993 - April 1997) -- New
England Investment Association.
Jeanne Wong-Boehm Managing Director, Fixed Income Portfolio Manager (March 1982 - August 1996) -- Aetna
Investments Life Insurance and Annuity Company; Portfolio Manager
(March 1982 - August 1996) -- Aetna Inc.; Managing
Director (since August 1996) -- Aeltus Trust Company.
</TABLE>
<PAGE>
* Except with respect to Mr. McInerney and Ms. Smith, the principal
business address of each person named is 242 Trumbull Street, Hartford,
Connecticut 06103-1205. The address of Mr. McInerney and Ms. Smith is
151 Farmington Avenue, Hartford, Connecticut 06156.
** Certain officers and directors of the investment adviser currently hold
(or have held during the past two years) other positions with affiliates
of the Registrant that are not deemed to be principal positions.
Item 29. Principal Underwriters
- --------------------------------
(a) In addition to serving as the principal underwriter for the Registrant,
Aetna also acts as the principal underwriter for Aetna Income Shares,
Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Balanced VP,
Inc. (formerly Aetna Investment Advisers Fund, Inc.), Aetna Variable
Portfolios, Inc. and Aetna Generation Portfolios, Inc. and as
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 Positions and Offices
Business Address* with Principal Underwriter with Registrant
- ----------------- -------------------------- ---------------------
<S> <C> <C>
Thomas J. McInerney Director and President None
Shaun P. Mathews Director and Senior Vice President Trustee
Catherine H. Smith Director, Senior Vice President and Chief None
Financial Officer
Robert D. Friedhoff Senior Vice President None
Steven A. Haxton Senior Vice President None
Frederick D. Kelsven Vice President and Chief Compliance Officer None
John Y. Kim Senior Vice President Trustee
Deborah Koltenuk Vice President, Treasurer and Corporate None
Controller
Kirk P. Wickman Vice President, General Counsel and None
Corporate Secretary
</TABLE>
<PAGE>
* 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 242 Trumbull Street, Hartford,
Connecticut 06103-1205.
(c) Not applicable
Item 30. Location of Accounts and Records
- ------------------------------------------
As required by Section 31(a) of the 1940 Act and the rules thereunder,
the Registrant and its investment adviser, Aeltus, maintain physical
possession of each account, book or other document, at 151 Farmington
Avenue, Hartford, Connecticut 06156 or 242 Trumbull Street, Hartford,
Connecticut 06103-1205.
Item 31. Management Services
- -----------------------------
Not applicable.
Item 32. Undertakings
- -----------------------------
The Registrant undertakes that if requested by the holders of at least
10% of the Registrant's outstanding shares, the Registrant will hold a
shareholder meeting for the purpose of voting on the removal of one or
more Trustees and will assist with communication concerning that
shareholder meeting as if Section 16(c) of the 1940 Act applied.
The Registrant undertakes to furnish to each person to whom a prospectus
is delivered a copy of its latest annual report to shareholders, upon
request and without charge.
Insofar as indemnification for liability arising under the Securities Act
of 1933 (the "1933 Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the 1933 Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed
in the 1933 Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the Securities Act of 1933 and the Investment Company Act of 1940,
the Registrant certifies that it meets the requirements of Rule 485(b) under the
Securities Act of 1933 for effectiveness of this Post-Effective Amendment to the
Registration Statement on Form N-1A (File No. 33-12723) and has duly caused this
Post-Effective Amendment to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of Hartford, and State of Connecticut, on the 30th
day of September, 1998.
AETNA GET FUND
--------------
Registrant
By J. Scott Fox*
-------------
J. Scott Fox
President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to the Registration Statement has been signed below by the following
persons on September 30, 1998 in the capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
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 )
)
David L. Grove* ) September
- ----------------------------- Trustee ) 30, 1998
David L. Grove )
)
John Y. Kim* )
- ----------------------------- Trustee )
John Y. Kim )
)
Sidney Koch* )
- ----------------------------- Trustee )
Sidney Koch )
)
Shaun P. Mathews* )
- ----------------------------- Trustee )
Shaun P. Mathews )
<PAGE>
<CAPTION>
)
Corine T. Norgaard* )
- ----------------------------- Trustee )
Corine T. Norgaard )
)
Richard G. Scheide* )
- ----------------------------- Trustee )
Richard G. Scheide )
)
Stephanie A. DeSisto*** Treasurer and Chief Financial Officer )
- ----------------------------- (Principal Financial and )
Stephanie A. DeSisto Accounting Officer) )
</TABLE>
By: /s/ Amy R. Doberman
----------------------
*Amy R. Doberman
Attorney-in-Fact
* Executed pursuant to Power of Attorney dated December 10, 1997 and filed
with the Securities and Exchange Commission on April 27, 1998 (Accession
No. 0000950146-98-000689).
** Executed pursuant to Power of Attorney June 24, 1998 and filed with the
Securities and Exchange Commission on July 15, 1998 (Accession No.
0000950146-98-001215).
*** Executed pursuant to Power of Attorney September 29, 1998 and filed
herein as exhibit 24(b)(19)(c) with the Securities and Exchange
Commission.
<PAGE>
Aetna GET Fund
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
----------- ------- ----
<S> <C> <C>
99-(b)(1)(a) Declaration of Trust
--------------------
99-(b)(1)(b) Form of Amendment to Declaration of Trust (October 28, 1993)
--------------------
99-(b)(1)(c) Amendment to Declaration of Trust (June 18, 1996)
--------------------
99-(b)(1)(d) Amendment to Declaration of Trust (July 19, 1996)
--------------------
99-(b)(1)(e) Amendment to Declaration of Trust (September 24, 1998)
--------------------
99-(b)(2) Amended and Restated Bylaws *
99-(b)(4) Instruments Defining Rights of Holders *
99-(b)(5) Investment Advisory Agreement between Aeltus Investment Management, Inc.
("Aeltus") and Aetna GET Fund
--------------------
99-(b)(6) Underwriting Agreement between Aetna Life Insurance and Annuity Company *
and Aetna GET Fund
99-(b)(7) Trustees' Deferred Compensation Plan
--------------------
99-(b)(8)(a) Custodian Agreement between Mellon Bank, N.A. and Aetna GET Fund
--------------------
99-(b)(8)(b) Amendment to Custodian Agreement (November 24, 1993)
--------------------
99-(b)(8)(c) Amendment to Custodian Agreement (August 26, 1996)
--------------------
99-(b)(8)(d) Amendment to Custodian Agreement (September 29, 1998)
--------------------
99-(b)(9)(a) Administrative Services Agreement between Aeltus and Aetna GET Fund
(March 25, 1998)
--------------------
99-(b)(9)(b) Amendment to Administrative Services Agreement between Aeltus and Aetna
GET Fund (September 25, 1998)
--------------------
</TABLE>
* Incorporated by reference
<PAGE>
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
----------- ------- ----
<S> <C> <C>
99-(b)(10) Opinion and Consent of Counsel
--------------------
99-(b)(13) Agreement Concerning Initial Capital *
99-(b)(19)(a) Power of Attorney (December 10, 1997) *
99-(b)(19)(b) Power of Attorney (June 24, 1998) *
99-(b)(19)(c) Power of Attorney (September 29, 1998)
--------------------
99-(b)(19)(d) Authorization for Signatures *
</TABLE>
* Incorporated by reference
DECLARATION OF TRUST
OF
AETNA GUARANTEED EQUITY TRUST
<PAGE>
TABLE OF CONTENTS
ARTICLE I THE TRUST 1
1.1. Name.......................................................... 1
1.2. Definitions....................................................2
ARTICLE II BOARD OF TRUSTEES............................................. 3
2.1. Number; Service............................................... 3
2.2. Election of Trustees at the First Meeting of Shareholders..... 3
2.3. Term of Office of Trustees.................................... 3
2.4. Termination of Service and Appointment of Trustees............ 3
2 5. BY-Laws....................................................... 4
2.6. Officers...................................................... 4
ARTICLE III POWERS OF TRUSTEES........................................... 4
3.1. General....................................................... 4
3.2. Investments................................................... 4
3.3. Legal Title................................................... 5
3.4. Borrow Money.................................................. 5
3.5 Delegation; Committees........................................ 5
3.6. Collection and Payment........................................ 6
3.7. Expenses...................................................... 6
3.8. Miscellaneous Powers.......................................... 6
3.9. Further Powers................................................ 6
ARTICLE IV ADVISORY, MANAGEMENT AND DISTRIBUTION
ARRANGEMENTS..................................... 7
<PAGE>
4.1. Advisory and Management Arrangements.......................... 7
4.2. Distribution Arrangements..................................... 7
4.3. Parties to Contract........................................... 7
4.4. Provisions for Amendments..................................... 8
ARTICLE V LIMITATIONS OF LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS.............................. 8
5.1. No Personal Liability of Shareholders, Trustees, etc.......... 8
5.2. Non-Liability of Trustees, and Others......................... 9
5.3. Indemnification............................................... 9
5.4. No Bond Required of Trustees................................. 11
5.5. No Duty of Investigation; Notice in Trust Instruments........ 11
5.6. Reliance on Experts.......................................... 11
ARTICLE VI SHARES OF BENEFICIAL Interest................................ 11
6.1. Beneficial Interest.......................................... 11
6.2. Series Designation........................................... 12
6.3. Rights of Shareholders....................................... 13
6.4. Trust Only................................................... 13
6.5. Issuance of Shares........................................... 13
6.6. Reqister of Shares........................................... 14
6.7. Transfer of Shares........................................... 14
ARTICLE VII CUSTODIANS.................................................. 14
7.1. Appointment and Duties....................................... 14
7.2. Central Certificate System................................... 15
ARTICLE VIII REDEMPTION................................................. 15
3
<PAGE>
8.1. Redemptions.................................................. 16
8.2. Involuntary Redemption of Shares; Disclosure of Holding...... 16
ARTICLE IX DETERMINATION OF NET Asset VALUE, NET
INCOME AND DISTRIBUTIONS..................................... 16
9.1. Net Asset Value.............................................. 16
9.2. Distributions to Shareholders................................ 17
9.3. Power to Modify Foregoing Procedures......................... 17
ARTICLE X SHAREHOLDERS 17
10.1. Meetings of Shareholders..................................... 18
10.2. Voting Powers................................................ 18
10.3. Notice of Meetings........................................... 18
10.4. Record Date for Meetings..................................... 19
10.5. Proxies...................................................... 19
10.6. Reports...................................................... 19
10.7. Inspection of Records........................................ 20
10.8. Shareholder Action by Written Consent........................ 20
ARTICLE XI DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC...................................... 20
11.1. Duration..................................................... 20
11.2. Termination.................................................. 20
11.3. Amendment Procedure.......................................... 21
11.4. Merger, Consolidation and Sale of Assets..................... 22
ARTICLE XII MISCELLANEOUS............................................... 22
12.1. Notices...................................................... 22
12.2. Filing....................................................... 22
4
<PAGE>
12.3. Resident Agent............................................... 23
12.4. Governing Law................................................ 23
12.5. Reliance by Third Parties.................................... 23
12.6. Provisions in Conflict With Law or Regulations............... 23
12.7. Trust Name................................................... 24
5
<PAGE>
DECLARATION OF TRUST
OF
AETNA GUARANTEED EQUITY TRUST
THE DECLARATION OF TRUST of Aetna Guaranteed Equity Trust (the "Trust")
is made the 9th day of March, 1987 by the parties signatory hereto, as trustees
(the "Trustees").
W I T N E S S E T H :
WHEREAS, The Trustees desire to form a trust fund, Aetna Guaranteed
Equity Trust, as a Massachusetts Business Trust; and
WHEREAS, the Trustees desire to use the Trust for the investment and
reinvestment of funds contributed thereto; and
WHEREAS, it is proposed that the beneficial interest in the trust
assets be divided into transferable shares of beneficial interest which may, at
the discretion of the Trustees, be divided into separate series as herein
provided;
NOW, THEREFORE, the Trustees hereby declare that all money and property
contributed to the trust fund hereunder shall be held and managed under this
Declaration of Trust IN TRUST for the benefit of the holders from time to time
of the shares of beneficial interest issued hereunder as herein set forth below.
ARTICLE I
The Trust
1.1. Name
The name of the trust created hereby (the "Trust", which term shall be
deemed to include any Series of the Trust when the context requires) shall be
"Aetna Guaranteed Equity Trust", and so far as may be practicable the Trustees
shall conduct the activities of the Trust, execute all documents and sue or be
sued under that name, which name (and the word "Trust" wherever hereinafter
used) shall refer to the Trustees as Trustees, and not individually, and shall
not refer to the officers, agents, employees or Shareholders of the Trust or any
Series thereof. Each Series of the Trust which shall be established and
designated by the Trustees pursuant to Section 6.2 shall conduct its activities
under such name as the Trustees shall determine and set forth in the instrument
establishing such Series. Should the Trustees determine that the use of the name
of the Trust or any Series is not advisable, they may select such other name for
the Trust or such Series as they deem proper and the Trust or Series may conduct
its activities under such other name. Any name change shall be effective upon
the execution by a majority of the then Trustees of an instrument setting forth
the new name. Any such instrument shall have the status of an
6
<PAGE>
amendment to this Declaration of Trust.
1.2. Definitions
As used in this Declaration of Trust, the following terms shall have
the following meanings:
The terms "Affiliated Person", "Assignment", "Commission", "Interested
Person", "Majority Shareholder Vote" (the 67% or 50% requirement of the third
sentence of Section 2(a) (42) of the Investment Company Act of 1940, whichever
may be applicable) and "Principal Underwriter" shall have the meanings given
them in the Investment Company Act of 1940, as amended from time to time.
"Declaration" shall mean this Declaration of Trust as amended from time
to time.
"Fundamental Policies" shall mean the investment restrictions set forth
in the Prospectus and designated as fundamental policies therein.
"Person" shall mean and include individuals, corporations,
partnerships, trusts, associations, joint ventures and other entities, whether
or not legal entities, and governments and agencies and political subdivisions
thereof.
"Prospectus" shall mean the currently effective Prospectus of any
Series of the Trust under the Securities Act of 1933, as amended.
"Series" shall mean the separate series that may be established and
designated pursuant to Section 6.2.
"Shareholders" shall mean all holders of record of outstanding Shares.
"Shares" means the equal proportionate units of interest into which the
beneficial interest in any Series of the Trust shall be divided from time to
time and includes fractions of Shares as well as whole Shares. All reference to
Shares shall be deemed to be Shares of any or all Series as the context may
require.
"Trustees" refer to the individual Trustees in their capacity as
Trustees hereunder of the Trust and their successor or successors for the time
being in office as such Trustees.
"Trust Property" shall mean all property, real or personal, tangible or
intangible, owned or held by or for the account of the Trust.
"The "1940 Act" refers to the Investment Company Act of 1940 and the
regulations promulgated thereunder, as amended from time to time.
ARTICLE II
7
<PAGE>
Board of Trustees
2.1. Number; Service
The Board of Trustees shall consist of not less than three and not more
than fifteen Trustees as determined by vote of the Board, or in the absence
thereof, shall consist of the number of Trustees last elected at a meeting of
Shareholders. The business and affairs of the Trust shall be managed by the
Trustees, and they shall have all powers necessary and desirable to carry out
that responsibility. The Trustees who shall serve until the election of Trustees
at the first Meeting of Shareholders shall be Donald G. Conrad, David L. Grove,
James E. Mulvihill, Corine T. Norgaard and Dean E. Wolcott.
2.2. Election of Trustees at the First Meeting of Shareholders
At the first meeting of Shareholders, on a date fixed by the Trustees,
the Shareholders shall elect Trustees.
2.3. Term of Office of Trustees
The Trustees shall hold office during the lifetime of this Trust, and
until its termination as hereinafter provided; except (a) that any Trustee may
resign his or her trust by written instrument signed by him or her and delivered
to the other Trustees, which shall take effect upon such delivery or upon such
later date as is specified therein; (b) that any Trustee may be removed at any
time by written instrument signed by at least two-thirds of the number of
Trustees prior to such removal, specifying the date when such removal shall
become effective; (c) that any Trustee who requests in writing to be retired or
who has become mentally or physically incapacitated may be retired by written
instrument signed by a majority of the other Trustees, specifying the date of
his or her retirement; and (d) a Trustee may be removed at any special meeting
of Shareholders of the Trust by a vote of two-thirds of the outstanding Shares
or by written instrument signed by the holders of at least two-thirds of the
outstanding shares.
2.4. Termination of Service and Appointment of Trustees
In case of the death, resignation, retirement, removal or mental or
physical incapacity of any of the Trustees, or in case a vacancy shall, by
reason of an increase in number, or for any other reason, exist, the remaining
Trustees shall fill such vacancy by appointing such other person as they in
their discretion shall see fit. Such appointment shall be effected by the
signing of a written instrument by a majority of the Trustees in office. Within
three months of such appointment, the Trustees shall cause notice of such
appointment to be mailed to each Shareholder at his address as recorded on the
books of the Trust. An appointment of a Trustee may be made by the Trustees then
in office and notice thereof mailed to Shareholders as aforesaid in anticipation
of a vacancy to occur by reason of retirement, resignation or increase in number
of Trustees effective at a later date, provided that said appointment shall
become effective only at or after the effective date of said retirement,
resignation or increase in the number of Trustees. As
8
<PAGE>
soon as any Trustee so appointed shall have accepted this Trust, the trust
estate shall vest in the new Trustee or Trustees, together with the continuing
Trustees, without any further act or conveyance. Any appointment authorized by
this Section 2.4 is subject to the provisions of Section 16(a) of the 1940 Act.
2 5. By-Laws
The Trustees may adopt and from time to time or amend or repeal By-Laws
for the conduct of the business of the Trust.
2.6. Officers
The Trustees shall annually elect a President, one or more
Vice-Presidents, a Secretary and a Treasurer and may elect such other officers
as they deem appropriate. The Trustees may authorize the President or any Vice
President to appoint such other officers or agents with such powers as the
Trustees may deem to be advisable. The President shall be a Trustee. The general
powers of the officers shall be set forth in the By-Laws.
ARTICLE III
Powers of Trustees
3.1. General
The Trustees shall have exclusive and absolute control over the Trust
Property and over the business of the Trust or any Series thereof to the same
extent as if the Trustees were the sole owners of the Trust Property and
business in their own right, but with such powers of delegation as may be
permitted by this Declaration. The Trustees may perform such acts as in their
sole discretion are proper for conducting the business of the Trust. The
enumeration of any specific power herein shall not be construed as limiting such
discretion and power. Such powers of the Trustees may be exercised without order
of or resort to any court.
3.2. Investments
The Trustees shall have power, subject to any applicable limitation in
this Declaration of Trust and in the By-Laws of the Trust, to:
(a) conduct, operate and carry on the business of an
investment company;
(b) subscribe for, invest in, reinvest in, purchase or
otherwise acquire, hold, pledge, sell, assign, transfer, exchange,
distribute or otherwise deal in or dispose of negotiable or
non-negotiable instruments, obligations, evidences of indebtedness,
certificates of deposit or indebtedness, commercial paper, repurchase
agreements, reverse repurchase agreements, preferred and common
stocks, futures contracts and options to buy or sell futures
contracts and other securities, including, without limitation,
options to
9
<PAGE>
buy or sell securities, securities issued, guaranteed or sponsored by
any state, territory or possession of the United States and the
District of Columbia and their political subdivisions, agencies and
instrumentalities, or by the United States Government or by any bank,
savings institution, corporation or other business entity organized
under the laws of the United States and, to the extent provided in the
Prospectus and not prohibited by the Fundamental Policies, organized
under foreign laws; and to exercise any and all rights, powers and
privileges of ownership or interest in respect of any and all such
investments of every kind and description, including, without
limitation, the right to consent and otherwise act with respect
thereto, with power to designate one or more persons, firms,
associations or corporations to exercise any of said rights, powers
and privileges in respect of any of said instruments; and the Trustees
shall be deemed to have the foregoing powers with respect to any
additional securities in which any Series of the Trust may invest
should the investment policies set forth in the Prospectuses or the
Fundamental Policies be amended.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust or any Series, nor shall the
Trustees be limited by any law limiting the investments which may be made by
fiduciaries.
3.3. Legal Title
Legal title to all the Trust Property shall be vested in the Trustees
as joint tenants except that the Trustees shall have power to cause legal title
to any Trust Property to be held by or in the name of one or more of the
Trustees, or in the name of any other Person as nominee, on such terms as the
Trustees may determine, provided that the interest of the Trust or any Series
thereof is appropriately protected.
Upon the resignation, removal or death of a Trustee, that Trustee shall
automatically cease to have any right, title or interest in any of the Trust
Property, and the right, title and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered.
3.4. Borrow Money
Subject to the Fundamental Policies and the Trust By-Laws, the Trustees
shall have power to borrow money or otherwise obtain credit and to secure the
same by mortgaging, pledging or otherwise subjecting as security the assets of
the Trust or any Series thereof, including the lending of portfolio securities,
and to endorse, guarantee, or undertake the performance of any obligation,
contract or engagement of any other person, firm, association or corporation.
3.5 Delegation; Committees
The Trustees shall have power, consistent with their continuing
exclusive authority over the management of the Trust and the Trust Property, to
delegate to committees of Trustees or to
10
<PAGE>
officers, employees or agents of the Trust, the doing of such things and the
execution of such instruments as the Trustees may deem expedient, to the same
extent as such delegation is permitted to directors of a Massachusetts business
corporation and is permitted by the 1940 Act.
3.6. Collection and Payment
The Trustees shall have power to collect all property due to the Trust;
to pay all claims, including taxes, against the Trust Property; to prosecute,
defend, compromise or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations, by virtue of which any
property is owed to the Trust or any Series thereof; and to enter into releases,
agreements and other instruments.
3.7. Expenses
The Trustees shall have power to incur and pay any expenses which in
the opinion of the Trustees are necessary to carry out any of the purposes of
this Declaration, and to charge or allocate the same to, between or among such
one or more of the Series that may be established and designated pursuant to
Section 6.2, as the Trustees deem fair, and to pay reasonable compensation from
the funds of the Trust to themselves as Trustees. The Trustees may pay
themselves such compensation for special services, including legal,
underwriting, syndicating and brokerage services, as they in good faith may deem
reasonable, as well as reimbursement for expenses reasonably incurred by
themselves on behalf of the Trust.
3.8. Miscellaneous Powers
The Trustees shall have the power to: (a) employ or contract with such
Persons as the Trustees may deem desirable for the transaction of the business
of the Trust or any Series thereof, provided that the selection and retention of
independent public accountants be done in a manner consistent with the 1940 Act;
(b) enter into joint ventures, partnerships and any other combinations or
associations; (c) purchase, and pay for out of Trust Property, insurance
policies insuring the Shareholders, Trustees, officers, employees, agents,
investment advisers, distributors, selected dealers or independent contractors
of the Trust or any Series thereof against all claims arising by reason of
holding any such position or by reason of any action taken or omitted by any
such Person in such capacity, whether or not constituting negligence, or whether
or not the Trust would have the power to indemnify such Person against such
liability; (d) establish pension, profit-sharing, share purchase, and other
retirement, incentive and benefit plans for any Trustees, officers, employees
and agents of the Trust (e) to the extent permitted by law and the By-Laws
indemnify any Person with whom the Trust or any Series thereof has dealings,
including any adviser, administrator, manager, underwriter, transfer agent,
custodian and selected dealers with respect to any Series, to such extent as the
Trustees shall determine; (f) guarantee indebtedness or contractual obligations
of others; and (g) determine and change the fiscal year of the Trust and the
method in which its accounts shall be kept.
3.9. Further Powers
11
<PAGE>
The Trustees shall have power to conduct the business of the Trust and
carry on its operations in any and all of its branches and maintain offices in
any and all states of the United States of America, in the District of Columbia,
and in any and all commonwealths, territories, dependencies, colonies,
possessions, agencies or instrumentalities of the United States of America and
of foreign governments, and to do all such other things and execute all such
instruments as they deem necessary, proper or desirable in order to promote the
interests of the Trust although such things are not herein specifically
mentioned. Any determination as to what is in the interests of the Trust, made
by the Trustees in good faith shall be conclusive. The Trustees will not be
required to obtain any court order to deal with the Trust Property.
ARTICLE IV
Advisory, Management and Distribution Arrangements
4.1. Advisory and Management Arrangements
Subject to a Majority Shareholder Vote, the Trustees may in their
discretion enter into advisory, administration or management contracts whereby
the other party to such contract shall undertake to furnish the Trustees with
advisory, administrative and management services. Notwithstanding any contrary
provisions of this Declaration, the Trustees may authorize any adviser,
administrator or manager (subject to such instructions as the Trustees may
adopt) to effect purchases, sales, loans or exchanges of portfolio securities of
any Series of the Trust on behalf of the Trustees, or may authorize any officer,
employee or Trustee to effect such purchases, sales, loans or exchanges pursuant
to recommendations of any such adviser, administrator or manager (and all
without further action by the Trustees). Any purchases, sales, loans and
exchanges shall be deemed to have been authorized by all of the Trustees.
4.2. Distribution Arrangements
The Trustees may enter into contracts providing for the sale of the
Shares of the Trust or any Series of the Trust to net the Trust not less than
the net asset value per share. The Trust may either agree to sell the Shares to
the other party to the contract or appoint such other party its sales agent for
such Shares. In either case, the contract shall be on such terms and conditions
as the Trustees may in their discretion determine not inconsistent with the
provisions of this Article IV or the By-Laws. The contract may also provide for
the repurchase or sale of Shares by such other party as principal or as agent of
the Trust.
4.3 Parties to Contract
Any contract of the character described in Section 4.1 and 4.2 of this
Article IV or in Article VII may be entered into with any corporation, firm,
trust or association, although one or more of the Trustees or officers of the
Trust may be an officer, director, Trustee, shareholder, or member of such other
party to the contract, and no such contract shall be invalidated or rendered
voidable by reason of the existence of any such relationship, nor shall any
person holding such relationship be liable merely by reason of such relationship
for any loss or expense to the Trust
12
<PAGE>
under or by reason of said contract or accountable for any profit realized
directly or indirectly therefrom, provided that the contract when entered into
was reasonable and fair and not inconsistent with the provisions of this Article
IV or the By-Laws. The same person (including a firm, corporation, trust, or
associations) may be the other party to contracts entered into pursuant to
Sections 4.1 and 4.2 above or Article VII, and any individual may be financially
interested or otherwise affiliated with persons who are parties to any or all of
the contracts mentioned in this Section 4.3.
4.4. Provisions for Amendments
Any contract entered into pursuant to Section 4.1 and 4.2 of this
Article IV shall be consistent with and subject to the requirements of Section
15 of the 1940 Act with respect to its continuance in effect, its termination,
and the method of authorization and approval of such contract or renewal
thereof, and no amendment to any contract entered into pursuant to Section 4.1
shall be effective unless assented to by a Majority Shareholder Vote of the
Applicable Series.
Article V
Limitations of Liability of Shareholders, Trustees and Others
5.1. No Personal Liability of Shareholders, Trustees, etc
No Shareholder shall be subject to any personal liability to any Person
in connection with Trust Property or the acts, obligations or affairs of the
Trust. No Trustee, officer, employee or agent of the Trust shall be subject to
any personal liability to any Person, other than the Trust or its Shareholders,
in connection with Trust Property or the affairs of the Trust or any Series
thereof, save only that arising from bad faith, willful misfeasance, gross
negligence or reckless disregard of a duty to such Person; and all such Persons
shall look solely to the Trust Property for satisfaction of claims of any nature
arising in connection with the affairs of the Trust or any Series thereof. If
any Shareholder, Trustee, officer, employee, or agent, as such, of the Trust, is
made a party to any suit or proceeding to enforce any such liability, he shall
not on account thereof be held to any personal liability. The Trust shall
indemnify and hold each Shareholder harmless from and against all claims and
liabilities, to which such Shareholder may become subject by reason of his being
or having been a Shareholder, and shall reimburse such Shareholder for all legal
and other expenses reasonably incurred by him. The rights accruing to a
Shareholder under this Section 5.1 shall not exclude any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
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5.2. Non-Liability of Trustees, and Others
No Trustee, officer, employee or agent of the Trust shall be liable to
the Trust, any series, its Shareholders, or to any Shareholder, Trustee,
officer, employee, or agent for any action or failure to act (including the
failure to compel in any way any former or acting Trustee to redress any breach
of trust), except upon a showing of bad faith, willful misfeasance, gross
negligence or reckless disregard of duties.
5.3. Indemnification
(a) Every person who is or was a Trustee, officer or
employee of this Trust or a director, officer or
employee of any corporation which he served at the
request of this Trust (and his firm, executors and
administrators) shall have a right to be indemnified by
this Trust against all liability and reasonable expenses
incurred by him in connection with or resulting from any
claim, action, suit or proceeding in which he may become
involved as a party or otherwise by reason of his being
or having been a Trustee, officer or employee of this
Trust or a director, officer or employee of such
corporation, provided (1) said claim, action, suit or
proceeding shall be prosecuted to a final determination
and he shall be vindicated on the merits, or (2) in the
absence of such final determination vindicating him on
the merits, the Board shall determine that he acted in
good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the Trust,
and, with respect to any criminal action or proceeding,
had no reasonable cause to believe his conduct was
unlawful; said determination to be made (i) by the
Board, by a majority vote of a quorum consisting of
disinterested Trustees; or (ii) if such quorum is not
obtainable or if a quorum of disinterested Trustees so
directs, by independent legal counsel in a written
opinion, or (iii) by the Shareholders.
(b) For purposes of the preceding subsection: (1) "liability
and reasonable expense" shall include, but not be
limited to, reasonable counsel fees and disbursements,
amounts of any judgment, fine or penalty, and reasonable
amounts paid in settlement; (2) "claim, action, suit or
proceeding" shall include every such claim, action, suit
or proceeding, whether civil or criminal, derivative or
otherwise, administrative, judicial or investigative,
any appeal relating thereto, and shall include any
reasonable apprehension or threat of such a claim,
action, suit or proceeding; (3) a settlement, plea of
nolo contendre, consent judgment, adverse civil
judgment, or conviction shall not of itself create a
presumption that the conduct of the person seeking
indemnification did not meet the standard of conduct set
forth in subsection (2) hereof.
(c) Notwithstanding the foregoing, the following additional
limitations shall apply with respect to any action by or
in the right of the Trust: (1) no
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indemnification shall be made in respect of any claim,
issue or matter as to which the person seeking
indemnification shall have been adjudged to be liable
for negligence or misconduct in the performance of his
duty to the Trust unless the court which made such a
finding, or any other court of equity in the county
where the Trust has its principal office determines that
despite the adjudication of liability, such person is
fairly and reasonably entitled to indemnity for some or
all of such expenses; and (2) indemnification shall
extend only to reasonable expenses, including reasonable
counsel's fees and disbursements, and shall not include
judgments, fines and amounts paid in settlement.
(d) The right of indemnification shall extend to any person
otherwise entitled to it under this Article whether or
not that person continues to be a Trustee, officer or
employee of this Trust or a director, officer or
employee of such corporation at the time such liability
or expense shall be incurred. The right of
indemnification shall extend to the legal representative
and heirs of any person otherwise entitled to
indemnification. If a person meets the requirements of
this Article with respect to some matters in a claim,
action, suit or proceeding, but not with respect to
others, he shall be entitled to indemnification as to
the former. Expenses incurred in defending an action,
suit or proceeding may be paid by the Trust in advance
of the final disposition of such action, suit or
proceeding as authorized by the Board in the specific
case: (1) upon receipt of an undertaking for which
security has been provided by or on behalf of the
Trustee, director, officer, employee or agent to repay
such amount unless it shall ultimately be determined
that he is entitled to be indemnified by the Trust as
authorized in this Article, or (2) if the Trust is at
the time of such advance insured against losses arising
by reason of the advance.
(e) This Article shall not exclude any other rights of
indemnification or other rights to which any Trustee,
officer, or employee may be entitled to by contract,
vote of the Shareholders or as a matter of law. If any
clause, provision or application of this Section 5.3
shall be determined to be invalid, the other clauses,
provisions or applications of this section shall not be
affected, but shall remain in full force and effect.
(f) The Trust shall have the power to purchase and maintain
insurance on behalf of any person who is or was a
Trustee, officer, employee or agent of the Trust, or is
or was serving at the request of the Trust as a
director, officer, employee or agent of a corporation,
against any liability asserted against him or her and
incurred by him or her in any such capacity, or arising
out of his status as such, whether or not the Trust
would have the power to indemnify him or her against
such liability under the provisions of this Article.
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5.4. No Bond Required of Trustees
No Trustee shall be obligated to give any bon or other security for the
performance of any of his or her duties.
5.5. No Duty of Investigation; Notice in Trust Instruments
No purchaser, lender, transfer agent or other person dealing with the
Trustees or with any officer, employee or agent of the Trust shall be bound to
make any inquiry concerning the validity of any transaction purporting to be
made by the Trustees or by said officer, employee or agent regarding the
application of money or property paid, loaned, or delivered to or on the order
of the Trustees or of said officer, employee or agent. Every obligation,
contract, undertaking, instrument, certificate, Share, or security of the Trust
or any Series, and every other act in connection with the Trust or any Series
shall be conclusively taken to have been executed or done only by persons acting
in their capacity as Trustees under this Declaration or in their capacity as
officers, employees or agents of the Trust. Every written obligation, contract,
undertaking, instrument, or security of the Trust or any Series made or issued
by the Trustees or by any officers, employees or agents of the Trust, in their
capacity as such, shall contain an appropriate recital to the effect that the
Shareholders, Trustees, officers, employees and agents of the Trust shall not
personally be bound by or liable thereunder, but the omission of such recital
shall not operate to impose personal liability on any of the Trustees,
Shareholders, officers, employees or agents of the Trust. The Trustees may
maintain insurance for the protection of the Trust Property, its Shareholders,
Trustees, officers, employees and agents in such amount as the Trustees shall
deem adequate to cover possible tort liability, and such other insurance as the
Trustees in their sole judgment shall deem advisable.
5.6. Reliance on Experts
Each Trustee and officer or employee of the Trust shall, in the
performance of his or her duties, be fully and completely justified and
protected with regard to any act or any failure to act resulting from reliance
in good faith upon the books of account or other records of the Trust, upon an
opinion of counsel, or upon reports made to the Trust by any of its officers or
employees or by any adviser, administrator, manager, distributor, selected
dealer, accountant, appraiser or other expert or consultant selected with
reasonable care by the Trustees, officers or employees of the Trust, regardless
of whether such counsel or expert may also be a Trustee.
ARTICLE VI
Shares of Beneficial Interest
6.1. Beneficial Interest
The beneficial interest in the Trust shall at all times be divided into
transferable Shares, without par value, each of which shall represent an equal
proportionate interest in the Trust with each other Share outstanding, none
having priority or preference over another. The number of
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Shares which may be issued is unlimited. Contributions to the Trust may be
accepted for, and Shares shall be redeemed as, whole Shares plus any fraction of
a Share. All Shares issued hereunder including, without limitation, Shares
issued in connection with a dividend in Shares or a split of Shares, shall be
fully paid and nonassessable.
6.2. Series Designation
The Trustees, in their discretion from time to time, may authorize the
division of Shares into two or more Series, each Series relating to a separate
portfolio of investments. The different Series shall be established and
designated, and the variations in the relative rights and preferences as between
the different Series shall be fixed and determined by the Trustees; provided,
that there may be variations between different Series as to purchase price,
determination of net asset value, the price, terms and manner of redemption,
special and relative rights as to dividends and on liquidation, conversion
rights, and conditions under which the several Series shall have separate voting
rights. All references to Shares in this Declaration shall be deemed to be
shares of any or all Series as the context may require.
If the Trustees shall divide the Shares into two or more Series, the
following provisions shall be applicable:
(a) The number of Shares of each Series that may be issued shall be
unlimited. The Trustees may classify or reclassify any unissued Shares or any
Shares previously issued and reacquired of any Series into one or more Series
that may be established and designated from time to time. The Trustees may hold
as treasury Shares (of the same or some other Series), reissue for such
consideration and on such terms as they may determine, or cancel any Shares of
any Series required by the Trust at their discretion from time to time.
(b) The power of the Trustees to invest and reinvest the Trust Property
of each Series that may be established shall be governed by Section 3.2 of this
Declaration.
(c) All consideration received by the Trust for the issue or sale of
Shares of a particular Series, together with all assets in which such
consideration is invested or reinvested, all income, earnings, profits and
proceeds thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the rights
of creditors, and shall be so recorded upon the books of account of the Trust.
In the event that there are any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as belonging to
any particular Series, the Trustees shall allocate them among any one or more of
the Series established and designated from time to time in such manner and on
such basis as they, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the Shareholders
of all Series for all purposes.
(d) The assets belonging to each particular Series shall be charged
with the liabilities of the Trust in respect of that Series and all expenses,
costs, charges and reserves attributable to
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that Series, and any general liabilities, expenses, costs, charges or reserves
of the Trust which are not readily identifiable as belonging to any particular
Series shall be allocated and charged by the Trustees to and among any one or
more of the Series established and designated from time to time in such manner
and on such basis as the Trustees in their sole discretion deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges and reserves
by the Trustees shall be conclusive and binding upon the Shareholders of all
Series for all purposes. The Trustees shall have full discretion, to the extent
not inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders.
(e) The establishment and designation of any Series of Shares shall be
effective upon the execution by a majority of the then Trustees of an instrument
setting forth the establishment and designation of such Series. Such instrument
shall also set forth any rights and preferences of such Series which are in
addition to the rights and preferences of Shares set forth in this Declaration.
At any time that there are no Shares outstanding of any particular Series
previously established and designated, the Trustees may by an instrument
executed by a majority of their number abolish that Series and the establishment
and designation thereof. Each instrument referred to in this paragraph shall
have the status of an amendment to this Declaration.
6.3. Rights of Shareholders
The ownership of the Trust Property and the right to conduct any
business described in this declaration are vested exclusively in the Trustees,
and the Shareholders shall have no interest therein other than the beneficial
interest conferred by their Shares, and they shall have no right to call for any
partition or division of any property, profits, rights or interests of the Trust
nor can they be called upon to share or assume any losses of the Trust or suffer
an assessment of any kind by virtue of their ownership of Shares. The Shares
shall not entitle the holder to preference, preemptive, appraisal or conversion
rights (except for rights of appraisal specified in Section 11.4).
6.4. Trust Only
It is the intention of the Trustees to create only the relationship of
Trustee and beneficiary between the Trustees and each Shareholder. It is not the
intention of the Trustees to create a general partnership, limited partnership,
joint stock association, corporation, bailment or any form of legal relationship
other than a trust.
6.5. Issuance of Shares
The Trustees, in their discretion, may from time to time without vote
of the Shareholders issue Shares in addition to the then issued and outstanding
Shares and Shares held in the treasury, to such party or parties and for such
amount not less than par value and type of consideration, including cash or
property, at such time or times and on such terms as the Trustees may deem best,
and may in such manner acquire other assets (including the acquisition of assets
subject to, and in connection with the assumption of, liabilities) and
businesses. In connection with any
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issuance of Shares, the Trustees may issue fractional Shares. The Trustees may
from time to time divide or combine the Shares of any Series into a greater or
lesser number without thereby changing the proportionate beneficial interests in
such Series of the Trust. Contributions to the Trust may be accepted for, and
Shares shall be redeemed as, whole Shares and/or 1/1,000ths of a Share or
multiples thereof.
6.6. Reqister of Shares
A register shall be kept at the principal office of the Trust which
shall contain the names and addresses of the Shareholders, the number of Shares
(with respect to each Series that may have been established) held by them and a
record of all transfers thereof. Separate registers shall be established and
maintained for each Series of the Trust. Each such register shall be conclusive
as to who are the holders of the Shares of the applicable Series and who shall
be entitled to exercise or enjoy the rights of Shareholders. No Shareholder
shall be entitled to receive payment of any dividend or distribution, nor to
have notice given to such Shareholder as herein provided, until such Shareholder
has given his address to an officer or agent of the Trustees as shall keep the
register for entry thereon. Certificates will not be issued for the Shares.
6.7. Transfer of Shares
Shares shall be transferable on the records of the Trust only by the
record holder thereof or by the record holder's agent thereto duly authorized in
writing, upon delivery to the Trustees of a duly executed instrument of
Transfer, together with such evidence of the genuineness of each such execution
and authorization and of other matters as the Trustees may reasonably require.
Upon such delivery the transfer shall be recorded on the applicable register of
the Trust. Until such record is made, the Shareholder of record shall be deemed
to be the holder of such Shares for all purposes hereof and neither the Trustees
nor registrar nor any officer, employee or agent of the Trust shall be affected
by any notice of the proposed transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the applicable register of Shares as the holder of
such Shares upon production of the proper evidence to the Trustees, but until
such record is made, the Shareholder of record shall be deemed to be the holder
of such Shares for all purposes and neither the Trustees nor registrar nor any
officer or agent of the Trust shall be affected by any notice of such death,
bankruptcy or incompetence, or other operation of law.
ARTICLE VII
Custodians
7.1. Appointment and Duties
The Trustees shall at all times employ a custodian or custodians who
shall meet the qualifications for custodians for portfolio securities of
investment companies contained in the
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1940 Act. As custodians with respect to each Series of the Trust, separate
custodians may be employed for the different Series of the Trust. Any custodian,
acting with respect to one or more Series, shall have authority as agent of the
Trust or the Series with respect to which it is acting, but subject to such
restrictions, limitations and other requirements, if any, as may be contained in
the By-Laws of the Trust and the 1940 Act:
(1) to hold the securities owned by the Trust or the Series
and deliver the same upon written order;
(2) to receive any moneys due to the Trust or the Series and
deposit the same in its own banking department (if a bank) or
elsewhere as the Trustees may direct;
(3) to disburse such funds upon orders or vouchers;
(4) if authorized by the Trustees, to keep the books and
accounts of the Trust or the Series and furnish clerical and
accounting services; and
(5) if authorized to do so by the Trustees, to compute the net
income of the Trust or the Series;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian. If so directed by a Majority Shareholder Vote of the Series
for which the Custodian is acting, the custodian shall deliver and pay over all
property.of the Trust held by it as specified in such vote.
The Trustees may also authorize each custodian to employ one or more
sub-custodians to perform such of the acts and services of the custodian, and
upon such terms and conditions, as may be agreed upon between the custodian and
such sub-custodian and approved by the Trustees, provided that in every case
such sub-custodian shall meet the qualifications for custodians contained in the
1940 Act.
7.2. Central Certificate System
Subject to such rules, regulations and orders as the Commission may
adopt, the Trustees may direct the custodian to deposit all or any part of the
securities owned by the Trust or the Series in a system for the central handling
of securities established by a national securities exchange or a national
securities association registered with the Commission under the Securities
Exchange Act of 1934, or such other person as may be permitted by the
Commission, or otherwise in accordance with the 1940 Act, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
custodian at the direction of the Trustees.
ARTICLE VIII
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Redemption
8.1. Redemptions
All outstanding Shares of any Series of the Trust may be redeemed at
the option of the Shareholders thereof, upon and subject to the terms and
conditions provided in this Article VIII. The Trust shall, upon application of
any Shareholder or pursuant to authorization from any Shareholder of a
particular Series, redeem or repurchase from such Shareholder outstanding Shares
of such Series for an amount per share determined by the application of a
formula adopted for such purpose by the Trustees with respect to such Series
(which formula shall be consistent with the 1940 Act); provided that (a) such
amount per share shall not exceed the cash equivalent of the proportionate
interest of each share in the assets of the Series of the Trust at the time of
the purchase or redemption and (b) if so authorized by the Trustees, the Trust,
to the extent permitted under the 1940 Act, may charge fees for effecting such
redemption, at such rates as the Trustees may establish, to the extent permitted
under the 1940 Act, and, from time to time, pursuant to such Act, suspend such
right of-redemption. The procedures for effecting redemption shall be as set
forth in the Prospectus with respect to the applicable Series from time to time.
8.2 Involuntary Redemption of Shares; Disclosure of Holding
The Trustees shall have the power to require the redemption of Shares
of any Shareholder of any Series if at any time the account does not have a
minimum dollar value, determined by the Trustees in their sole discretion, at a
redemption price determined in accordance with Section 8.1 or to impose monthly
service charges on such accounts. If the Trustees shall in good faith be of the
opinion that direct or indirect ownership of Shares or other securities of the
Trust has or may become concentrated in any person to an extent which would
disqualify the Trust as a regulated investment company under the Internal
Revenue Code, then the Trustees shall have the power by lot or other means
deemed equitable by them (i) to call for redemption a number, or principal
amount, of Shares or other securities of the Trust sufficient, in the opinion of
the Trustees, to maintain or bring the direct or indirect ownership of Shares or
other securities of the Trust into conformity with the requirements for such
qualification and (ii) to refuse to transfer or issue Shares or other securities
of the Trust to any Person whose acquisition of the Shares or other securities
of the Trust in question would, in the opinion of the Trustees, result in such
disqualification. The redemption shall be effected at a redemption price
determined in accordance with Section 8.1.
The holders of Shares or other securities of the Trust shall upon
demand, disclose to the Trustees in writing such information with respect to
direct and indirect ownership of Shares or other securities of the Trust as the
Trustees deem necessary to comply with the provisions of the Internal Revenue
Code or with the requirements of any other taxing authority.
ARTICLE IX
Determination of Net Asset Value, Net Income and Distributions
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9.1. Net Asset Value
The net asset value of each outstanding Share of each Series of the
Trust shall be determined at such time or times on such days as the Trustees may
determine, in accordance with the 1940 Act, with respect to each Series. The
method of determination of net asset value shall be determined by the Trustees
and shall be as set forth in the prospectus with respect to the applicable
Series. The power and duty to make the daily calculations for any Series may be
delegated by the Trustees to the adviser, administrator, manager, custodian,
transfer agent or such other persons as the Trustees may determine. The Trustees
may suspend the daily determination of net asset value to the extent permitted
by the 1940 Act.
9.2. Distributions to Shareholders
The Trustees shall from time to time distribute ratably among the
Shareholders of any Series such proportion of the net profits, surplus
(including paid-in surplus), capital, or assets with respect to such Series held
by the Trustees as they may deem proper. Such distribution may be made in cash
or property (including without limitation any type of obligations of the Trust
or any assets thereof), and the Trustees may distribute ratably among the
Shareholders of any Series additional Shares of such Series in such manner, at
such times, and on such terms as the Trustees may deem proper. Such
distributions may be among the Shareholders of record at the time of declaring a
distribution or among the Shareholders of record at such later date as the
Trustees shall determine. The Trustees may always retain from the net profits
such amount as they may deem necessary to pay the debts or expenses of the Trust
or to meet obligations of the Trust, or as they may deem desirable to use in the
conduct of its affairs or to retain for future requirements or extensions of the
business. The Trustees may adopt and offer to Shareholders of any Series such
dividend reinvestment plans, cash dividend payout plans or related plans as the
Trustees shall deem appropriate for such Series.
Inasmuch as the computation of net income and gains for Federal income
tax purposes may vary from the computation thereof under generally accepted
accounting principles, the above provisions shall be interpreted to give the
Trustees the power to distribute for any fiscal year as ordinary dividends and
as capital gains distributions, respectively, additional amounts sufficient to
enable the Trust to avoid or reduce liability for taxes.
9.3. Power to Modify Foregoing Procedures
Notwithstanding any of the foregoing provisions of this Article IX, the
Trustees may prescribe such other bases and times for determining the per share
net asset value of the Shares or net income of any Series, or the declaration
and payment of dividends and distributions as they may deem necessary to enable
the Trust to comply with any provision of the 1940 Act, or the requirements of
any securities association registered under the Securities Exchange Act of 1934,
or any order of exemption issued by the Commission, all as in effect now or
hereafter amended or modified.
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ARTICLE X
Shareholders
10.1. Meetings of Shareholders
(a) Meetings. Meetings of the Shareholders shall be held, at
such place within or without the Commonwealth of Massachusetts on such day and
at such time as the Trustees shall designate. Such Meetings of the Shareholders
may be called by the Trustees or the President of the Trust and shall be called
by the Trustees upon written request of Shareholders of any Series owning in the
aggregate at least one-fourth of the outstanding Shares of such Series entitled
to vote.
(b) Quorum. At any Shareholder meeting, unless otherwise
provided by law, this Declaration, or the by-laws, the presence in person or by
proxy of a majority of the votes entitled to be cast constitutes a quorum, and a
majority of the votes so present is sufficient to approve any matter properly
before the meeting.
10.2. Voting Powers
The Shareholders shall have power to vote (i) for the election of
Trustees as provided in Section 2.2; (ii) for the removal of Trustees as
provided in Section 2.3(d); (iii) with respect to any investment adviser or
sub-investment adviser as provided in section 4.1; (iv) with respect to any
termination or reorganization of the Trust as provided in Sections 11.2, 11.3,
and 11.4; (v) with respect to the amendment of this Declaration of Trust as
provided in Section 11.3; (vi) to the same extent as the shareholders of a
Massachusetts business corporation as to whether or not a court action,
proceeding or claim should be brought or maintained derivatively or as a class
action on behalf of the Trust or the Shareholders; and (vii) with respect to
such additional matters relating to the Trust as may be required by law, by this
Declaration of Trust, or the By-Laws of the Trust or any registration of the
Trust or its shares with the Securities and Exchange Commission or any State, or
as the Trustees may consider desirable. Each whole Share shall be entitled to
one vote as to any matter on which it is entitled to vote, and each fractional
Share shall be entitled to a proportionate fractional vote. There shall be no
cumulative voting in the election of Trustees. Shares may be voted in person or
by proxy. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required or permitted by law, this
Declaration of Trust or the BY-Laws of the Trust to be taken by Shareholders.
Any matter affecting a particular Series, including without limitation matters
affecting the investment advisory arrangements or investment policies or
restrictions of a Series, shall not be deemed to have been effectively acted
upon unless approved by the required vote of the Shareholders of such Series.
Notwithstanding the foregoing, to the extent permitted by the 1940 Act, each
Series shall not be required to vote separately on the selection of independent
public accountants, the election of Trustees or any submission with respect to a
contract with a principal underwriter or distributor.
10.3. Notice of Meetings
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Notice of each meeting of the Shareholders, stating the time, place and
purposes of the meeting, shall be given by the Secretary by mail to each
Shareholder at his or her registered address, mailed at least 10 days and not
more than 60 days before the meeting. Only the business stated in the notice of
the meeting shall be considered at such meeting. Any adjourned meeting may be
held as adjourned without further notice.
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 days prior to the date of any meeting of Shareholders 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.
10.5. Proxies
At any meeting of Shareholders, any holder of Shares entitled to vote
may vote by proxy, provided that no proxy shall be voted at any meeting unless
it shall have been placed on file with the Secretary, or with such other officer
or agent of the Trust as the Secretary may direct, for verification prior to the
time at which such vote shall be taken. Pursuant to a resolution of a majority
of the Trustees, proxies may be solicited in the name of one or more Trustees or
one or more of the officers of the Trust. Only Shareholders of record shall be
entitled to vote. Each full Share shall be entitled to one vote and fractional
Shares shall be entitled to a vote of such fraction. When any Share is held
jointly by several persons, any one of them may vote at any meeting in person or
by proxy in respect of such Share, but if more than one of them shall be present
at such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Share. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its exercise,
and the burden of proving invalidity shall rest on the challenger. If the holder
of any such Share is a minor or a person of unsound mind, and subject to
guardianship or to the legal control of any other person as regards the charge
or management of such Share, he may vote by his or her guardian or such other
person appointed or having such control, and such vote may be given in person or
by proxy. Unless a proxy provides otherwise, it is not valid more than 11 months
after its date.
10.6. Reports
The Trustees shall cause to be prepared with respect to each Series at
least annually a report of operations containing a balance sheet and statement
of income and undistributed income of the applicable Series prepared in
conformity with generally accepted accounting principles and an opinion of an
independent public accountant on such financial statements of the applicable
Series. Copies of such reports shall be mailed to all Shareholders of record
within the time required by the 1940 Act. The Trustees shall, in addition,
furnish to the Shareholders at least
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semiannually interim reports containing an unaudited balance sheet of the Series
as of the end of such period and an unaudited statement of income and surplus
for the period from the beginning of the current fiscal year to the end of such
period.
10.7. Inspection of Records
The records of the Trust shall be open to inspection By Shareholders to
the same extent as is permitted shareholders of a Massachusetts business
corporation.
10.8. Shareholder Action by Written Consent
Any action which may be taken by Shareholders may be taken without a
meeting if a majority of Shareholders entitled to vote on the matter (or such
larger proportion thereof as shall be required by any express provision of this
Declaration) consent to the action in writing and the written consents are filed
with the records of the meetings of Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Shareholders.
ARTICLE XI
Duration; Termination of Trust; Amendment; Mergers, Etc.
11.1. Duration
Subject to possible termination in accordance with the provisions of
Section 11.2 hereof, the Trust created hereby shall continue until the
expiration of 20 years after the death of the last survivor of the initial
Trustees named herein and the following named persons:
Name Address Date of Birth
- ---- ------- -------------
Tyler V. Hill 85-Ledyard Rd. 2/25/75
West Hartford, CT 06117
Rebecca D. Ellis 130 Country View Drive 5/19/77
South Windsor, CT 06074
11.2. Termination
(a) The Trust may be terminated by the affirmative vote of the
holders of not less than two-thirds of the Shares of each Series of the Trust at
any meeting of Shareholders or by an instrument in writing, without a meeting,
signed by a majority of the Trustees and consented to by the holders of not less
than two-thirds of such Shares. Any Series may be terminated by vote or written
consent of holders of not less than two-thirds of the shares of such Series or
as provided upon the establishment of the Series. Upon the termination of the
Trust,
25
<PAGE>
(i) The Trust or such Series shall carry on no business except for the
purpose of winding up its affairs.
(ii) The Trustees shall proceed to wind up the affairs of the Trust or
such Series and all of the powers of the Trustees under this Declaration shall
continue until the affairs of the Trust or such Series shall have been wound up,
including the power to fulfill or discharge the contracts of the Trust or such
Series, collect its assets, sell, convey, assign, exchange, transfer or
otherwise dispose of all or any part of the remaining Trust Property to one or
more persons at public or private sale for consideration which may consist in
whole or in part of cash, securities or other property of any kind, discharge or
pay its liabilities, and do all other acts appropriate to liquidate its
business; provided that any sale, conveyance, assignment, exchange, transfer or
other disposition of all or substantially all the Trust Property shall require
approval of the principal terms of the transaction and the nature and amount of
the consideration by vote or consent of the holders of a majority of the Shares
entitled to vote.
(iii) After paying or adequately providing for the payment of all
liabilities, and upon receipt of such releases, indemnities and refunding
agreements, as they deem necessary for their protection, the Trustees may
distribute the remaining Trust Property of any Series, in cash or in kind or
partly in each, among the Shareholders of any Series, according to their
respective rights.
(b) After termination of the Trust or any Series and
distribution to the Shareholders, a majority of the Trustees shall execute and
lodge among the records of the Trust an instrument in writing setting forth the
fact of such termination. Upon termination of any Series of the Trust, the
Trustees shall be discharged from all further liabilities and duties with
respect to such Series, and the rights and interests of all Shareholders shall
cease.
11.3. Amendment Procedure
(a) This Declaration may be amended by the affirmative vote of
the holders of not less than a majority of the Shares at any meeting of
Shareholders or by an instrument in writing, without a meeting, signed by a
majority of the Trustees and consented to by the holders of not less than a
majority of such Shares. The Shareholders of each Series shall have the right to
vote separately on amendments to this Declaration to the extent provided by
Section 10.2. The Trustees may also amend this Declaration without the vote or
consent of Shareholders as provided in Section 6.2(e) or if they deem it
necessary to conform this Declaration to the requirements of applicable federal
laws or regulations, or the requirements of the regulated investment company
provisions of the Internal Revenue Code, but the Trustees shall not be liable
for failing so to do.
(b) No amendment may be made, under Section 11.3 (a) above,
which would change any rights with respect to any Shares of the Trust by
reducing the amount payable thereon upon liquidation of the Trust or by
diminishing or eliminating any voting rights pertaining thereto, except with the
vote or consent of the holders of two-thirds of the Shares of each Series.
Nothing contained in this Declaration shall permit the amendment of this
Declaration to impair the exemption from personal liability of the Shareholders,
Trustees, officers, employees and agents of
26
<PAGE>
the Trust, or to permit assessments upon Shareholders.
(c) A certification in recordable form signed by a majority of
the Trustees setting forth an amendment and reciting that it was duly adopted by
the Shareholders or by the Trustees as aforesaid, or a copy of the Declaration,
as amended, in recordable form, and executed by a majority of the Trustees,
shall be conclusive evidence of such amendment when lodged among the records of
the Trust.
Notwithstanding any other provision hereof, until the first meeting of
the shareholder or shareholders of the Trust, this Declaration may be terminated
or amended in any respect by the affirmative vote of a majority of the Trustees
or by an instrument signed by a majority of the Trustees.
11.4. Merger, Consolidation and Sale of Assets
The Trust may merge or consolidate with any other corporation,
association, trust or other organization or may sell, lease or exchange all or
substantially all of the Trust Property, including its good will, upon such
terms and conditions and for such consideration when and as authorized at any
meeting of Shareholders called for that purpose, by the affirmative vote of the
holders of not less than two-thirds of the Shares of each Series, or by an
instrument in writing without a meeting, consented to by the holders of not less
than two-thirds of the Shares of each Series. Any Series may so merge,
consolidate or effect a sale or exchange of assets by the vote or written
consent of not less than two-thirds of the Shares of such Series. Any such
merger, consolidation, sale, lease or exchange shall be deemed for all purposes
to have been accomplished under and pursuant to the statutes of the Commonwealth
of Massachusetts. In respect of any such merger, consolidation, sale or exchange
of assets, any Shareholder shall be entitled to rights of appraisal of his
Shares to the same extent as a shareholder of a Massachusetts business
corporation in respect of a merger, consolidation, sale or exchange of assets of
a Massachusetts business corporation, and such rights shall be his exclusive
remedy in respect of his or her dissent from any such action.
ARTICLE XII
Miscellaneous
12.1. Notices
Whenever under applicable law, this Declaration or the By-Laws, notice
is required to be given to any Trustee, committee member, officer or
Shareholder, such notice may be given, in the case of Shareholders, by mail by
depositing the same in a United States post office or letter box, in a postpaid,
sealed wrapper, addressed to such Shareholder, at such address as appears on the
books of the Trust, and, in the case of Trustees, committee members and
officers, by telephone, or by mail or by telegram to the last business or home
address known to the Secretary. Such notice shall be deemed given when mailed,
telegraphed or telephoned.
27
<PAGE>
12.2. Filing
This Declaration and any amendment hereto shall be filed in the office
of the Secretary of the Commonwealth of Massachusetts and in such other places
as may be required under the laws of Massachusetts and may also be filed or
recorded in such other places as the Trustees deem appropriate. Each amendment
so filed shall be accompanied by a certificate signed and acknowledged by a
Trustee stating that such action was duly taken in a manner provided herein, and
unless such amendment or such certificate sets forth some later time for the
effectiveness of such amendment, such amendment shall be effective upon its
filing. A restated Declaration, containing the original Declaration and all
amendments made, may be executed by a majority of the Trustees and shall, upon
filing with the State Secretary of the Commonwealth of Massachusetts be
conclusive evidence of all amendments contained therein and may thereafter be
referred to in lieu of the original Declaration and the various amendments
thereto.
12.3. Resident Agent
The Trust shall maintain a resident agent in the Commonwealth of
Massachusetts, which agent shall initially be CT Corporation System, 2 Oliver
Street, Boston, Mass. 02109. The Trustees may designate a successor resident
agent, provided, however, that such appointment shall not become effective until
written notice thereof is delivered to the office of the Secretary of the
Commonwealth.
12.4. Governing Law
This Declaration is executed by the Trustees and delivered in the
Commonwealth of Massachusetts. The rights of all parties and the validity and
construction of every provision shall be subject to and construed according to
the laws of said State, and reference shall be specifically made to the business
corporation law of the Commonwealth of Massachusetts as to the construction of
matters not specifically covered herein or as to which an ambiguity exists.
12.5. Reliance by Third Parties
Any certificate executed by an individual who, according to the records
of the Trust, or of any recording office in which this Declaration may be
recorded, appears to be a Trustee hereunder, certifying to: (a) the number or
identity of Trustees or Shareholders, (b) the name of the Trust or any Series
thereof, (c) the establishment of any Series, (d) the due authorization of the
execution of any instrument or writing, (e) the form of any vote passed at a
meeting of Trustees or Shareholders, (f) the fact that the number of Trustees or
Shareholders present at any meeting or executing any written instrument
satisfies the requirements of this Declaration, (g) the form of any By-Laws
adopted by or the identity of any officers elected by the Trustees, or (h) the
existence of any fact or facts which in any manner relate to the affairs of the
Trust or any Series, shall be conclusive evidence as to the matters so certified
in favor of any person dealing with the Trustees and their successors.
12.6. Provisions in Conflict With Law or Regulations
28
<PAGE>
(a) The provisions of this Declaration are severable, and if
the Trustees shall determine, with the advice of counsel, that any of such
provisions is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code or with other applicable laws and
regulations, the conflicting provisions shall be deemed never to have
constituted a part of this Declaration; provided, however, that such
determination shall not affect any of the remaining provisions of this
Declaration or render invalid or improper any action taken or omitted prior to
such determination.
(b) If any provision of this Declaration shall be held invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction, and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
12.7. Trust Name
The Trust is adopting its name by permission of Aetna Life and Casualty
Company, and the Trust's right to use the name "Aetna" is subject to the right
of Aetna Life and Casualty Company or its assigns to elect that the Trust stop
using the name "Aetna" in any literature or reference whatsoever, in the event
that the securities portfolio of any Series of the Trust shall cease to be
managed by Aetna Life and Casualty Company or some other corporation controlled
by, or affiliated with it. The use by this Trust of the name "Aetna" shall in no
way prevent Aetna Life and Casualty Company, or any corporation or other entity
controlled by or affiliated with said company or its respective successors or
assigns, from using or permitting the use of the name "Aetna" for, by or in
connection with any other entity or business, whether or not the same directly
or indirectly competes or conflicts with this Trust or its business in any
manner.
29
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this instrument the
day and year first above written.
/s/ Donald G. Conrad /s/ James E. Mulvihill
- ------------------------------------ ------------------------------------
Donald G. Conrad James E. Mulvihill
/s/ David L. Grove /s/ Corine T. Norgaard
- ------------------------------------ ------------------------------------
David L. Grove Corine T. Norgaard
/s/Dean E. Wolcott
-----------------------------------
Dean E. Wolcott
State of Connecticut )
ss
County of Hartford )
I hereby certify that on March 9, 1987 before me, the subscriber, a
Notary Public of the State of Connecticut, in and for the County of Hartford,
appeared Donald G. Conrad, James E. Mulvihill, David L. Grove, Corine T.
Norgaard and Dean E. Wolcott who acknowledged the foregoing Declaration of Trust
to be their voluntary act and deed.
/s/Jane C. Verona
-----------------------------------------------------
Notary Public
30
<PAGE>
TRUSTEES
NAME ADDRESS
- ---- -------
Donald G. Conrad 151 Famington Avenue
Hartford, Connecticut 06156
David L. Grove 5 The Knoll
Armonk, New York
James E. Mulvihill Vice President for Health Affairs
University of Conn. Health Center
Farmington, Connecticut 06032
Corine T. Norgaard School of Business Administration
University of Connecticut
Storrs, Connecticut 06268
Dean E. Wolcott 151 Famington Avenue
Hartford, Connecticut 06156
31
FORM OF
AMENDMENT TO DECLARATION OF TRUST OF
AETNA GUARANTEED EQUITY TRUST
Changing Name of Trust and Establishing and
Designating a New Series of Beneficial Interests
The undersigned, being a majority of the duly elected and qualified
Trustees of Aetna Guaranteed Equity Trust, a Massachusetts business trust (the
"Trust"), acting pursuant to Sections 1.1, 6.2 and 11.3 of the Declaration of
Trust dated March 9, 1987, as amended (the "Declaration of Trust"), hereby
change the name of the Fund to "Aetna GET Fund" and divide the shares of
beneficial interest of the Trust into and establish a separate series (the
"Fund") distinct from shares of the Trust previously issued but no longer
outstanding, with the Fund to have the following special and relative rights:
1. The Fund shall be designated as follows:
Series B
2. The Fund shall be authorized to hold cash and invest in securities and
instruments and use investment techniques as described in the Trust's
registration statement under the Securities Act of 1933, as amended from time to
time. Each share of beneficial interest of the Fund ("share") shall be
redeemable as provided in the Declaration of Trust, shall be entitled to one
vote (or fraction thereof in respect of a fractional share) on matters on which
shares of the Fund shall be entitled to vote and shall represent a pro rata
beneficial interest in the assets allocated to the Fund. The proceeds of sales
of shares of the Fund, together with any income and gain thereon, less any
diminution or expenses thereof, shall irrevocably belong to the Fund, unless
otherwise required by law. Each share of the Fund shall be entitled to receive
its pro rata share of net assets of the Fund upon its liquidation.
3. Shareholders of the Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to the Fund as provided in, Rule 18f-2 under
the Investment Company Act of 1940, as amended, as from time to time in effect,
or any successor rule and in the Declaration of Trust.
4. The Trustees (including any successor Trustees) shall have the right
at any time and from time to time to reallocate assets and expenses or to change
the designation of any Fund now or hereafter created, or to otherwise change the
special and relative rights of any such Fund provided that such change shall not
adversely affect the rights of shareholders of a Fund.
<PAGE>
The foregoing shall be effective upon execution.
___________________________________________________
Shaun P. Mathews, as Trustee and not individually
___________________________________________________
David L. Grove, as Trustee and not individually
___________________________________________________
Morton Ehrlich, as Trustee and not individually
___________________________________________________
Corine T. Norgaard, as Trustee and not individually
Dated: October _____, 1993
AMENDMENT TO DECLARATION OF TRUST OF
AETNA GET FUND
Designating a New Series of Beneficial Interests
The undersigned, being a majority of the duly elected and qualified
Trustees of Aetna GET Fund, a Massachusetts business trust (the "Trust"), acting
pursuant to Sections 1.1, 6.2 and 11.3 of the Declaration of Trust dated March
9, 1987, as amended (the "Declaration of Trust"), hereby divide the shares of
beneficial interest of the Trust into and establish a separate series (the
"Fund") distinct from shares of the Trust previously issued but no longer
outstanding, with the Fund to have the following special and relative rights:
1. The Fund shall be designated as follows:
Series C
2. The Fund shall be authorized to hold cash and invest in securities and
instruments and use investment techniques as described in the Trust's
registration statement under the Securities Act of 1933, as amended from time to
time. Each share of beneficial interest of the Fund ("share") shall be
redeemable as provided in the Declaration of Trust, shall be entitled to one
vote (or fraction thereof in respect of a fractional share) on matters on which
shares of the Fund shall be entitled to vote and shall represent a pro rata
beneficial interest in the assets allocated to the Fund. The proceeds of sales
of shares of the Fund, together with any income and gain thereon, less any
diminution or expenses thereof, shall irrevocably belong to the Fund, unless
otherwise required by law. Each share of the Fund shall be entitled to receive
its pro rata share of net assets of the Fund upon its liquidation.
3. Shareholders of the Fund shall vote separately as a class on any
matter to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to the Fund as provided in, Rule 18f-2 under
the Investment Company Act of 1940, as amended, as from time to time in effect,
or any successor rule and in the Declaration of Trust.
4. The Trustees (including any successor Trustee) shall have the right at
any time and from time to time to reallocate assets and expenses or to change
the designation of any Fund now or hereafter created, or to otherwise change the
special and relative rights of any such Fund provided that such change shall not
adversely affect the rights of shareholders of a Fund.
<PAGE>
The foregoing shall be effective upon execution.
/s/ Shaun P. Mathews
___________________________________________________
Shaun P. Mathews, as Trustee and not individually
/s/ Morton Ehrlich
___________________________________________________
Morton Ehrlich, as Trustee and not individually
/s/ Maria T. Fighetti
___________________________________________________
Maria T. Fighetti, as Trustee and not individually
/s/ David L. Grove
___________________________________________________
David L. Grove, as Trustee and not individually
/s/ Daniel Kearney
___________________________________________________
Daniel P. Kearney, as Trustee and not individually
/s/ Timothy A. Holt
___________________________________________________
Timothy A. Holt, as Trustee and not individually
/s/ Sidney Koch
___________________________________________________
Sidney Koch, as Trustee and not individually
/s/ Corine T. Norgaard
___________________________________________________
Corine T. Norgaard, as Trustee and not individually
/s/ Richard G. Scheide
___________________________________________________
Richard G. Scheide, as Trustee and not individually
Dated: June 18, 1996
--
AMENDMENT TO
DECLARATION OF TRUST
OF
AETNA GET FUND
Amending and Restating Articles 5.2 and 5.3 of the Declaration of Trust
The undersigned, being a duly elected and qualified Trustee of Aetna GET Fund
(the "Trust"), a Massachusetts business trust, acting pursuant to Section 11.3
of the Declaration of Trust (the "Declaration of Trust") dated March 9, 1987, as
amended, hereby sates that the shareholders of the Trust, upon approval and
recommendation of the Board of Trustees, on July 19, 1996, approved the
amendment and restatement of Articles 5.2 and 5.3 of the Declaration of Trust as
follows:
5.2. Non-Liability of Trustees, and Others.
The exercise by the Trustees of their powers and discretion
hereunder shall be binding upon everyone interested. A Trustee shall be liable
to the Trust and the Shareholders for such Trustee's own willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
conduct of the office of Trustee, and for nothing else, and shall not be liable
for errors of judgment or mistakes of fact and law. Subject to the foregoing,
the Trustees shall not be responsible or liable in any event for any neglect or
wrongdoing of any officer, agent, employee, consultant, adviser, administrator,
distributor or principal underwriter, custodian or transfer, dividend
disbursing, shareholder servicing or accounting agent of the Trust, nor shall
any Trustee be responsible for the act or omission of any other Trustee.
Furthermore, no officer, employee or agent of the Trust shall be liable to the
Trust, its Shareholders, or to any Shareholder, Trustee, officer, employee, or
agent for any action or failure to act (including the failure to compel in any
way any former or acting Trustee to redress any breach of trust), except upon a
showing of bad faith, willful misfeasance, gross negligence or reckless
disregard of duties.
5.3. Indemnification.
The Trust shall indemnify its Trustees and officers and any person
who serves at the request of the Trust as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise as
follows:
(a) Every person who is or has been a Trustee or officer of the
Trust and persons who serve at the Trust's request as director
or officer of another corporation, partnership, joint venture,
trust or other enterprise shall be indemnified by the Trust to
the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid in connection
with any debt, claim, action, demand, suit, proceeding,
judgment, decree, liability or obligation of any kind in which
he or she becomes involved as a party or otherwise by virtue
of being or having been a Trustee of officer of the Trust or
of another corporation, partnership, joint venture, trust or
other enterprise at the request of the Trust and against
amounts paid or incurred in the settlement thereof.
<PAGE>
(b) The words "claim," "action," "suit" or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil,
criminal, administrative, legislative, investigative or other,
including appeals), actual or threatened, and the words
"liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement,
fines, penalties and other liabilities.
(c) No indemnification shall be provided hereunder to a Trustee,
officer, employee or agent against any liability to the Trust
or its shareholders by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties
involved in the conduct of office.
(d) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be
severable, shall not affect any other rights to which any
Trustee, officer, employee or agent may now or hereafter be
entitled, shall continue as to a person who has ceased to be
such Trustee, officer, employee or agent and shall inure to
the benefit of the heirs, executors and administrators of such
a person.
(e) In the absence of a final decision on the merits by a court or
other body before which such proceeding was brought, an
indemnification payment will not be made, except as provided
in paragraph (f) of this Article, unless in the absence of
such a decision, a reasonable determination based upon a
factual review has been made (1) by a majority vote of a
quorum of non-party Trustees who are not interested persons of
the Trust, or (2) by independent legal counsel in a written
opinion that the indemnitee was not liable for an act of
willful misfeasance, bad faith, gross negligence, or reckless
disregard of duties.
(f) The Trust further undertakes that advancement of expenses
incurred in the defense of a proceeding (upon undertaking for
repayment unless it is ultimately determined that
indemnification is appropriate) against a Trustee or officer
of the Trust will not be made absent the fulfillment of at
least one of the following conditions: (i) the indemnitee
provides security for his undertaking, (ii) the Trust is
insured against losses arising by reason of any lawful
advances of (iii) a majority of a quorum of disinterested
non-party Trustees or independent legal counsel in a written
opinion shall have determined, based on a review of readily
available facts (as opposed to a full trial-type inquiry) that
there is reason to believe the indemnitee ultimately will be
entitled to indemnification.
(g) No amendment of this Declaration or repeal of any of its
provisions shall limit or eliminate the rights of
indemnification provided hereunder with respect to acts or
omission occurring prior to such amendment or repeal.
The foregoing shall be effective as of July 19, 1996.
/s/ Shaun P. Mathews
- ----------------------------------------------------
Shaun P. Mathews, Trustee and President
2
AMENDMENT TO DECLARATION OF TRUST OF
AETNA GET FUND
Designating a New Series of Beneficial Interests
The undersigned, being a majority of the duly elected and qualified
Trustees of Aetna GET Fund, a Massachusetts business trust (the "Trust"), acting
pursuant to Sections 1.1, 6.2 and 11.3 of the Declaration of Trust dated March
3, 1987, as amended (the "Declaration of Trust"), hereby divide the shares of
beneficial interest of the Trust into and establish a separate series (the
"Fund") distinct from shares of the Trust previously issued, with the Fund to
have the following special and relative rights:
1. The Fund shall be designated as follows:
Series D
2. The Fund shall be authorized to hold cash and invest in securities and
instruments and use investment techniques as described in the Trust's
registration statement under the Securities Act of 1933 and the Investment
Company Act of 1940 ("Investment Company Act"), as amended from time to time.
Each share of beneficial interest of the Fund ("share") shall be redeemable as
provided in the Declaration of Trust, shall be entitled to one vote (or fraction
thereof in respect of a fractional share) on matters on which shares of the Fund
shall be entitled to vote and shall represent a pro rata beneficial interest in
the assets allocated to the Fund. The proceeds of sales of shares of the Fund,
together with any income and gain thereon, less any diminution or expenses
thereof, shall irrevocably belong to the Fund, unless otherwise required by law.
Each share of the Fund shall be entitled to receive its pro rata share of net
assets of the Fund upon its liquidation.
3. Shareholders of the Fund shall vote separately as a class on any matter
to the extent required by, and any matter shall be deemed to have been
effectively acted upon with respect to the Fund as provided in, Rule 18f-2 under
the Investment Company Act or any successor rule and in the Declaration of
Trust.
4. The Trustees (including any successor Trustee) shall have the right at
any time and from time to time to allocate assets and expenses pursuant to
Sections 6.2(c) and 6.2(d) of the Declaration of Trust, to change the
designation of any Fund now or hereafter created, or to otherwise change the
special and relative rights of any such Fund provided that such change shall not
adversely affect the rights of shareholders of a Fund.
<PAGE>
The foregoing shall be effective upon execution.
/s/ Albert E. DePrince, Jr.
- -----------------------------------------------
Albert E. DePrince, Jr., as Trustee and not individually
/s/ Maria T. Fighetti
- -----------------------------------------------
Maria T. Fighetti, as Trustee and not individually
/s/ J. Scott Fox
- ------------------------------------------------
J. Scott Fox, as Trustee and not individually
s/ David L. Grove
- ------------------------------------------------
David L. Grove, as Trustee and not individually
/s/ John Y. Kim
- ------------------------------------------------
John Y. Kim, as Trustee and not individually
/s/ Sidney Koch
- ------------------------------------------------
Sidney Koch, as Trustee and not individually
/s/ Shaun P. Mathews
- ------------------------------------------------
Shaun P. Mathews, as Trustee and not individually
/s/ Corine T. Norgaard
- ------------------------------------------------
Corine T. Norgaard, as Trustee and not individually
/s/ Richard G. Scheide
- ------------------------------------------------
Richard G. Scheide, as Trustee and not individually
Dated: September 24, 1998
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT, INC., a
Connecticut corporation (the "Adviser") and AETNA GET FUND, a Massachusetts
business trust (the "Fund"), on behalf of its Series D (the "Series"), with
respect to the following recital of facts:
R E C I T A L
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 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 Series, and the Adviser desire to enter into
an agreement to provide for investment advisory and management services for the
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 Trustees (the "Board"), the Fund, on behalf of
the Series, hereby appoints the Adviser to serve as the investment adviser to
the 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 as otherwise expressly authorized, it is acting as an
independent contractor and not as an agent of the Series and has no authority to
act for or represent the 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 Series;
<PAGE>
2. select the securities to be purchased, sold or exchanged by the
Series or otherwise represented in the Series' investment portfolio,
place trades for all such securities and regularly report thereon to
the Board;
3. formulate and implement continuing programs for the purchase and
sale of securities and regularly report thereon to the Board;
4. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally, the
Series, securities held by or under consideration for the Series, or
the issuers of those securities;
5. provide economic research and securities analyses as the Adviser
considers necessary or advisable in connection with the Adviser's
performance of its duties hereunder;
6. obtain the services of, contract with, and provide instructions to
custodians and/or subcustodians of the Series' securities, transfer
agents, dividend paying agents, pricing services and other service
providers as are necessary to carry out the terms of this Agreement;
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
incorporated and is in good standing under the laws of the
State of Connecticut and is fully authorized to enter into
this Agreement and carry out its duties and obligations
hereunder.
2. Registration. The Adviser is registered as an investment
adviser with the Commission under the Advisers Act. The
Adviser shall maintain such registration in effect at all
times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall provide its best
judgment and effort to the Series in carrying out its
obligations hereunder.
B. Representations and Warranties of the Series and the Fund
The Fund, on behalf of the Series, hereby represents and warrants to the
Adviser as follows:
- 2 -
<PAGE>
1. Due Incorporation and Organization. The Fund has been duly
organized 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
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 Series,
the Adviser may enter into a Subadvisory Agreement to engage a subadviser
to the Adviser with respect to the Series.
V. BROKER-DEALER RELATIONSHIPS
A. Series Trades
The Adviser shall place all orders for the purchase and sale of portfolio
securities for the 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 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
may also select brokers or dealers to effect transactions for the Series
that provide payment for expenses of the Series. The Adviser is authorized
to pay a broker or dealer who provides such brokerage or research services
or expenses, and that has provided assistance in the distribution of
shares of the Series to the extent permitted by law, a commission for
executing a portfolio transaction for the Series that is in excess of the
amount of commission another broker or dealer would have charged for
effecting that transaction if the Adviser determines in good faith that
such amount of commission 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 Board shall
periodically review the commissions paid by the Series to determine if the
- 3 -
<PAGE>
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 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 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
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 guaranteed period. Except as
hereinafter set forth, compensation under this Agreement shall be calculated and
accrued daily at the rate of 1/365 of 0.25% of the daily net assets of the
Series during the offering period and at the rate of 1/365 of 0.60% of the daily
net assets of the Series during the guaranteed 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 Series shall be allocated
between the Series and the Adviser as follows:
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<PAGE>
A. Expenses of the Adviser
The Adviser shall pay:
1. the salaries, employment benefits and other related costs and
expenses of those of its personnel engaged in providing
investment advice to the Series, including without limitation,
office space, office equipment, telephone and postage costs;
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 Series
The Series shall pay:
1. investment advisory fees pursuant to this Agreement;
2. brokers' commissions, issue and transfer taxes or other
transaction fees payable in connection with any transactions
in the securities in the Series' investment portfolio or other
investment transactions incurred in managing the Series'
assets, including portions of commissions that may be paid to
reflect brokerage research services provided to the Adviser;
3. fees and expenses of the Series' 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 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 trustees) of the Fund;
8. all fees and expenses of the trustees, who are not "interested
persons" (as defined in the 1940 Act) of the Fund or the
Adviser;
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<PAGE>
9. expenses of preparing, printing and distributing proxies,
proxy statements, prospectuses and reports to shareholders of
the Series, except for those expenses paid by third parties in
connection with the distribution of Series shares and all
costs and expenses of shareholders' meetings;
10. all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares of
the Series or in cash;
11. costs and expenses (other than those detailed in paragraph 9
above) of promoting the sale of shares in the Series,
including preparing prospectuses and reports to shareholders
of the Series, provided, nothing in this Agreement shall
prevent the charging of such costs to third parties involved
in the distribution and sale of Series shares;
12. fees payable by the Series to the Commission or to any state
securities regulator or other regulatory authority for the
registration of shares of the Series in any state or territory
of the United States or of the District of Columbia;
13. all costs attributable to investor services, administering
shareholder accounts and handling shareholder relations,
(including, without limitation, telephone and personnel
expenses), which costs may also be charged to third parties by
the Adviser; and
14. any other ordinary, routine expenses incurred in the
management of the Series' assets, and any nonrecurring or
extraordinary expenses, including organizational expenses,
litigation affecting the Series and any indemnification by the
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 Series
that are not required by this Agreement. Such services will be performed on
behalf of the Series and the Adviser may receive from the 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 Series
and its shareholders. Payment or assumption by the Adviser of any 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 Series nor
obligate the Adviser to pay or assume any similar Series expense on any
subsequent occasions. Such services may include, but are not limited to, (a) the
services of a principal financial officer of the Fund (including applicable
office space, facilities and equipment) whose normal duties consist of
maintaining the financial accounts and books and records of the Fund and the
Series and the services (including applicable office space, facilities and
equipment) of any of the personnel operating under the direction of such
principal financial officer; (b) the services of staff to respond to shareholder
inquiries concerning the status of their accounts, providing assistance to
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<PAGE>
shareholders in exchanges among the investment companies managed or advised by
the Adviser, changing account designations or changing addresses, assisting in
the purchase or redemption of shares; or otherwise providing services to
shareholders of the Series; and (c) such other administrative services as may be
furnished from time to time by the Adviser to the Fund or the Series at the
request of the Board.
XI. NONEXCLUSIVITY
The services of the Adviser to the 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 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
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 October 1, 1998, and shall remain in
force and effect through December 31, 1999, unless earlier terminated under the
provisions of Article XV.
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 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 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 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
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<PAGE>
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.
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, on behalf of the Series:
242 Trumbull Street
Hartford, Connecticut 06103-1205
Fax number 860/275-2158
Attention: President
if to the Adviser:
242 Trumbull Street
Hartford, Connecticut 06103-1205
Fax number 860/275-4440
Attention: President or Chief Compliance Officer
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.
- 8 -
<PAGE>
XVIII. SERVICE MARK
The service mark of the Fund and the 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 Series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the 25th day of September, 1998.
Aeltus Investment Management, Inc.
Attest: /s/ Katherine Cheng By: /s/ John Y. Kim
----------------------- -----------------------
Name: Katherine Cheng Name: John Y. Kim
----------------------- -----------------------
Title: Assistant Secretary Title: President
----------------------- -----------------------
Aetna GET Fund,
on behalf of its Series D
Attest: /s/ Daniel E. Burton By: /s/ J. Scott Fox
----------------------- -----------------------
Name: Daniel E. Burton Name: J. Scott Fox
----------------------- -----------------------
Title: Assistant Secretary Title: President
----------------------- -----------------------
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AETNA GET FUND
TRUSTEES' DEFERRED COMPENSATION PLAN
I. INTRODUCTION
1.01 This Deferred Compensation Plan (the "Plan") has been
established by resolution of the Boards of Trustees/Directors
(the "Board") of Aetna GET Fund (the "Fund") using the format
that has been established for use by all open-end management
investment companies, whether now existing or to be created,
that are advised by Aetna Life Insurance and Annuity Company
("ALIAC") or its successor. The purpose of the Plan is to
provide retirement benefits for those directors or trustees, as
the case may be, of the Fund who are not employees of the Fund,
its distributor or administrator, or ALIAC, or any affiliate of
ALIAC.
1.02 The Plan shall be administered by the Board or by such person or
persons as the Board may designate to carry out administrative
functions hereunder (the "Plan Administrator"). The Plan
Administrator shall have complete discretion to interpret and
administer the Plan in accordance with its terms, and its
determinations shall be binding on all persons except for the
provisions of ARTICLE VIII, whereunder action by the full Board
shall be required.
II. DEFINITIONS
2.01 Beneficiary or Beneficiaries: The person, persons, or legal
entities designated by the Participant in the Participant's
Deferral Agreement who are entitled to receive payments under
this Plan that become payable to such person, persons, or legal
entities in the event of the Participant's death. If more than
one designated beneficiary survives the Participant, payments
shall be made equally, unless otherwise provided in the
beneficiary designation. Nothing herein shall prevent the
Participant from designating primary and secondary
beneficiaries. Secondary beneficiaries are considered designated
beneficiaries and are entitled to payments under the Plan only
in the event that there are no primary beneficiaries surviving
the Participant.
2.02 Compensation. The annual retainer fees earned by a Participant
for service as a director of the Fund; the annual retainer fee
earned by a Participant for membership to a Committee of the
Board; and any fees earned by a Participant for attendance at
meetings of the Board and any of its Committees, all or a
portion of which may be deferred.
2.03 Deferral Agreement: The agreement between the Fund and the
Participant to defer Compensation under the Plan.
<PAGE>
2.04 Deferred Compensation: The amount, as mutually agreed to by the
Participant and the Fund, by which any Compensation not yet
earned shall be reduced in return for the benefits provided
under this Plan.
2.05 Lump Sum: A single payment of the entire balance credited to the
Participant's bookkeeping account under ARTICLE IV.
2.06 Notional Fund: Any open-end management investment company
registered under the Investment Company Act of 1940 with respect
to which ALIAC serves as investment adviser, shares of which are
sold to the public, and which the Plan Administrator designates
as a Notional Fund under the Plan.
2.07 Participant: Any Eligible Director of the Fund who fulfills the
eligibility and enrollment requirements of ARTICLE III.
2.08 Retirement: The time at which the Participant ceases to serve as
an Eligible Director of the Fund in conformity with the
Retirement Policy of the Board in effect at the time of such
cessation of service.
2.09 Termination of Services: The time at which the Participant
ceases to serve as an Eligible Director of the Fund for any
reason other than Retirement or death.
2.10 Unforeseeable Emergency: An unanticipated emergency that is
caused by an event beyond the control of the Participant and
that would result in severe financial hardship to the individual
if early withdrawal were not permitted in accordance with
ARTICLE VII hereof.
III. PARTICIPATION IN THE PLAN
3.01 Eligibility: Any director or trustee of the Fund who is not an
employee of the Fund or of the Fund's distributor or
administrator, or who is not an employee of ALIAC or any
affiliate of ALIAC, and who is not eligible to participate in
the Retirement Plan for Employees of Aetna Inc. ("Eligible
Director"), is eligible to participate in the Plan.
3.02 Enrollment in the Plan:
(a) An Eligible Director may become a Participant by
executing a Deferral Agreement whereunder that
Eligible Director agrees to defer all or a portion of
Compensation not yet earned and agrees to the
provisions of the Plan.
(b) An election by the Eligible Director to defer
Compensation under the Plan for any calendar year
shall not be effective unless such election is made
on or before December 31 of the preceding year,
except that
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<PAGE>
(1) in the year in which the Plan is first
implemented, the Eligible Director may elect
to participate in the Plan within thirty
days of the date on which the Plan is
implemented, with deferral of Compensation
to begin on the first day of the month
subsequent to the month in which the
election is made, or
(2) An Eligible Director may elect to
participate in the Plan within thirty days
of the date upon which such Director first
meets the eligibility requirements of
Section 3.01, with deferral of Compensation
to begin on the first day of the month
subsequent to the month in which the
election is made.
(c) An Eligible Director who defers Compensation may not
modify the Eligible Director's Deferral Agreement to
change the amount deferred except with respect to
Compensation earned in a subsequent calendar year
where the Participant notifies the Plan Administrator
in writing or except as provided in ARTICLE VII
hereof with respect to WITHDRAWALS.
(d) A Participant may elect the manner in which benefits
will be distributed under the Deferral Agreement. The
distribution election may be subsequently changed by
the Participant by notifying the Plan Administrator
in writing of the Participant's election, but such
amendment will only be effective with respect to the
distribution of Compensation earned and amounts
credited on such Compensation in the Participant's
bookkeeping account in calendar years following the
year in which the amendment is requested.
IV. ACCUMULATION OF DEFERRED COMPENSATION
4.01 The Plan Administrator shall establish a bookkeeping account on
behalf of the Participant, the value of which at any given time
shall determine the benefits payable to the Participant under
ARTICLES V and VI and the Withdrawal values under ARTICLE VII.
Beginning on the date the Participant first enrolls in the Plan,
the account shall be credited with an amount equal to the
Participant's Deferred Compensation at such times as the
Compensation subject to deferral would otherwise have been paid.
Until the account is removed from the books of the Fund, the
account shall be further adjusted for notional investment
experience as described in Section 4.02.
4.02 Amounts credited to the Participant's bookkeeping account shall
be periodically adjusted for notional investment experience. In
each case such notional investment experience shall be
determined by treating such account as though an equivalent
dollar amount had been invested and reinvested in one or more of
the Notional Funds. The Notional Funds used as a basis for
determining notional
3
<PAGE>
investment experience with respect to the Participant's account
shall be designated by the Participant in writing by instrument
of election and may be changed prospectively by similar written
election no later than thirty days before the end of a calendar
quarter effective as of the first day of the subsequent calendar
quarter. The Plan Administrator may from time to time limit the
Notional Funds available for purposes of such election. If at
any time any Notional Fund that has previously been designated
by the Participant as a notional investment shall cease to exist
or shall be unavailable for any reason, or if the Participant
fails to designate one or more Notional Funds pursuant to this
Section 4.02, the Plan Administrator may, at its discretion and
upon notice to the Participant, treat any amounts previously
notionally invested or to be notionally invested in such
Notional Fund as being invested in Aetna Money Market Fund or if
such Notional Fund ceases to exist or is unavailable for any
reason, such other short-term high-quality fixed-income Notional
Fund as the Plan Administrator may from time to time designate,
in all cases only until such time as the Participant shall have
made another investment election in accordance with the
foregoing procedures. The Participant's bookkeeping account
shall continue to be adjusted for notional investment experience
until distributed in full in accordance with the distribution
methods set forth in this Plan.
4.03 It is specifically provided that neither the Plan Administrator
nor the Fund shall be obligated to make actual cash deposits in
the account, but only to make bookkeeping entries as if deposits
had been made. If for its own convenience the Fund should make
deposits, it is further provided that any sums thus deposited
shall remain a general unrestricted asset of the Fund and shall
not be deemed as being held in trust, escrow, or in any other
fiduciary manner for the benefit of the Participant. The
Participant understands that the value of the Participant's
bookkeeping account will fluctuate due to the investment
experience of the Notional Funds and that at the time at which
benefits become payable under the Plan, the value of the
Participant's bookkeeping account may be less than the total
amount of Compensation deferred under the Plan. The Fund is not
responsible or liable for any amount by which the total amount
of Compensation deferred exceeds the value of the bookkeeping
account and the Fund shall have no obligation to restore any
such difference.
V. BENEFITS ON RETIREMENT
5.01 If the Participant continues in the service of the Fund until
Retirement, the Fund shall pay to such Participant the amount
then and thereafter standing credited to the bookkeeping account
described in ARTICLE IV at the time and in the manner as elected
by the Participant in the Participant's Deferral Agreement. If
monthly or annual installments are elected by the Participant,
the estimated payments must be at least $1,000 per month or
$10,000 per year; if the applicable minimum is not met, the
payout duration will be adjusted to meet the minimums.
Installment payments shall be substantially equal over the
period elected. Any excess
4
<PAGE>
amounts remaining in the account shall be paid out in the final
installment. With respect to benefits payable in a Lump Sum, the
Lump Sum shall be an amount equal to the current value of the
Participant's bookkeeping account on the date of the
Participant's Retirement. The Lump Sum shall be paid to the
Participant no later than the fifteenth day of the month
following the date of the Participant's Retirement.
5.02 Should the Participant die at any time after Retirement, whether
prior to or after the Participant has begun to receive the
retirement payments provided for in Section 5.01, the
Participant's designated Beneficiary or Beneficiaries shall be
entitled to receive the balance of such payments as they fall
due, or, in the sole discretion of the Plan Administrator, in a
Lump Sum equal to the current value of the deceased
Participant's bookkeeping account on the date of the
Participant's death. If no Beneficiary or Beneficiaries are
designated as provided in Section 2.01 of this Plan at the time
the Participant dies, then the Participant's estate shall be
paid by the Plan as promptly as possible after due proof of
death a Lump Sum amount equal to the value of the Participant's
bookkeeping account on the date of the Participant's death. If a
designated Beneficiary or Beneficiaries survive the death of the
Participant, and said designated Beneficiary or Beneficiaries do
not survive the period during which payments are to be made
under this Plan, then:
(a) If there is only one designated Beneficiary, then the
designated Beneficiary's estate shall be paid by the
Plan as promptly as possible after due proof of death
a Lump Sum amount equal to the value of the
Participant's bookkeeping account on the date of the
designated Beneficiary's death, or
(b) If there is more than one designated Beneficiary,
then the death of any designated Beneficiary who is
not the last to die shall cause all prospective
payments under this Plan previously designated to the
deceased Beneficiary to be redistributed
proportionately among the surviving designated
Beneficiaries.
Upon the death of the last designated Beneficiary, such
designated Beneficiary's estate shall be paid by the Plan as
promptly as possible after due proof of death a Lump Sum amount
equal to the value of the Participant's bookkeeping account on
the date of the designated Beneficiary's death.
VI. BENEFITS ON TERMINATION OF SERVICES OR DEATH PRIOR TO RETIREMENT
6.01 In the event there is a Termination of Services, the Fund shall
pay to the Participant the amount then and thereafter standing
credited to the bookkeeping account described in ARTICLE IV at
the time and in the manner as elected by the Participant in the
Participant's Deferral Agreement. If monthly or annual
5
<PAGE>
installments are elected by a Participant, the estimated
payments must be at least $1,000 per month or $10,000 per year;
if the applicable minimum is not met, the payout duration will
be adjusted to meet the minimums. Installment payments shall be
substantially equal over the period elected. Any excess amounts
remaining in the account shall be paid out in the final
installment. With respect to benefits payable in a Lump Sum, the
Lump Sum shall be an amount equal to the current value of the
Participant's bookkeeping account on the date of Termination of
Services. The Lump Sum shall be paid to the Participant no later
than the fifteenth day of the month following the date of
Termination of Services.
6.02 In the event the Participant dies before the Participant's
Retirement or the Participant dies prior to receiving all of the
payments under Section 6.01, the Participant's designated
Beneficiary or Beneficiaries shall be entitled to receive the
balance remaining of such payments as they fall due, or, in the
sole discretion of the Plan Administrator, in a Lump Sum equal
to the current value of the deceased Participant's bookkeeping
account on the date of the Participant's death. If no
Beneficiary or Beneficiaries are designated as provided in
Section 2.01 of this Plan at the time the Participant dies, then
the Participant's estate shall be paid by the Plan as promptly
as possible after due proof of death a Lump Sum amount equal to
the value of the Participant's bookkeeping account on the date
of the Participant's death. If a designated Beneficiary or
Beneficiaries survive the death of the Participant, and said
designated Beneficiary or Beneficiaries do not survive the
period during which payments are to be made under this Plan,
then:
(a) If there is only one designated Beneficiary, then the
designated Beneficiary's estate shall be paid by the
Plan as promptly as possible after due proof of death
a Lump Sum amount equal to the value of the
Participant's bookkeeping account on the date of the
designated Beneficiary's death, or
(b) If there is more than one designated Beneficiary,
then the death of any designated Beneficiary who is
not the last to die shall cause all prospective
payments under this Plan previously designated to the
deceased Beneficiary to be redistributed
proportionately among the surviving designated
Beneficiaries.
Upon the death of the last designated Beneficiary,
such designated Beneficiary's estate shall be paid by
the Plan as promptly as possible after due proof of
death a Lump Sum amount equal to the value of the
Participant's bookkeeping account on the date of the
designated Beneficiary's death.
6
<PAGE>
VII. WITHDRAWALS
In the event of an Unforeseeable Emergency, the Participant
may apply to the Plan Administrator for early withdrawal from
the Plan of an amount limited to that which is necessary to
meet the emergency. If such application for withdrawal is
approved by the Plan Administrator, the withdrawal will be
effective at the latter of the date specified in the
Participant's application or the date of approval by the Plan
Administrator. Whenever an application for withdrawal is
honored, the Plan Administrator shall pay the Participant from
the Participant's bookkeeping account described in ARTICLE IV
only those amounts necessary to meet the emergency. The
Participant's bookkeeping account shall be appropriately
adjusted to reflect the amounts withdrawn. An Unforeseeable
Emergency shall include the following: bankruptcy or impending
bankruptcy, unexpected and nonreimbursable major expenses
resulting from illness to person or accident to person or
property and other types of unexpected and nonreimbursable
expenses of a major or emergency nature where withdrawal of
funds would be necessary to prevent serious financial hardship
to the Participant. Withdrawals for foreseeable expenditures
such as the down payment on a home, vacation expenses,
purchase of an automobile, or education expenses will not be
permitted. As provided in Section 1.02, the Plan Administrator
shall make the required findings under this provision and such
findings shall be binding upon all persons.
VIII. AMENDMENT OR TERMINATION OF PLAN
8.01 The Board may at any time terminate this Plan. Upon such
termination, the Participant will be deemed to have revoked
the election to defer Compensation as of the date of such
termination. Upon termination, no part of the Participant's
Compensation will be deferred and the Participant shall be
treated as if there had been a Termination of Services under
Section 6.01 on the date of the termination for purposes of
payment of benefits under the Plan.
8.02 The Board may amend the provisions of this Plan at any time
provided, however, that no amendment shall adversely affect
the rights of the Participant or the designated Beneficiary or
Beneficiaries, if any, as to the receipt of payments under the
Plan to the extent of any Compensation deferred before the
time of the amendment.
IX. PARTICIPANT STATUS
The Participant in the Plan shall have only the status of
general unsecured creditor of the Fund. The Plan constitutes a
mere promise by the Fund to make payments in the future.
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X. NON-ASSIGNABILITY CLAUSE
It is expressly provided that neither the Participant nor the
Participant's Beneficiary or Beneficiaries, nor any other
designee, shall have any right to commute, sell, assign,
transfer or otherwise convey the right to receive any payments
hereunder which payments and rights thereto are expressly
declared to be non-assignable and non-transferable and, in the
event of any attempted assignment or transfer, the Fund shall
have no further liability hereunder. Moreover, no unpaid
benefits shall be subject to attachment, garnishment or
execution, or be transferable by operation of law in the event
of bankruptcy or insolvency, except to the extent otherwise
required by law. The right of the Participant or the
Participant's Beneficiary or Beneficiaries to payments under
the Plan are not subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Participant or
the Participant's Beneficiary or Beneficiaries.
XI. APPLICABLE LAW
This Plan shall be construed under the law of the State of
Connecticut.
XII. EFFECTIVE DATE
This Plan shall be effective on the date of its adoption by
the Fund's Board of Directors or on such later date as may be
provided in the vote, resolution or consent in which such
adoption takes place.
Adopted by the Board, by resolution, on September 24, 1997.
- --------------------------------------------------------------------------------
Custodian Agreement
between
Mellon Bank, N.A.
and
Aetna GET Fund
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Appointment................................................1
2. Delivery of Documents......................................2
3. Definitions................................................3
4. Delivery and Registration of the Property..................4
5. Receipt and Disbursement of Money..........................5
6. Receipt of Securities......................................5
7. Use of Book-Entry System...................................6
8. Instructions Consistent with Declaration, Etc..............7
9. Transactions Not Requiring Instructions....................8
10. Transactions Requiring Instructions........................9
11. Segregated Accounts; Securities Lending...................11
12. Dividends and Distributions...............................13
13. Purchases of Securities...................................13
14. Sales of Securities.......................................14
15. Records...................................................14
16. Reports...................................................15
17. Cooperation with Accountants..............................15
18. Confidentiality...........................................16
19. Right to Receive Advise...................................16
20. Compensation..............................................17
21. Indemnification...........................................17
22. Responsibility of the Bank................................18
23. Collections...............................................19
24. Duration and Termination..................................20
25. Notices...................................................22
26. Further Actions...........................................22
27. Amendments................................................22
28. Counterparts..............................................23
29. Miscellaneous.............................................23
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CUSTODIAN AGREEMENT
THIS AGREEMENT is made by and between AETNA GUARANTEED EQUITY TRUST, a
Massachusetts Business Trust (the "Fund"), and MELLON BANK, N.A., a national
banking association (the "Bank").
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act") which currently issues one series (Series A) of units of beneficial
interest (the "Shares") and which may create additional series in the future,
each of which would represent a separate investment portfolio; and
WHEREAS, the Fund, for which Aetna Life and Annuity Company ("Adviser")
serves as investment adviser, desires to retain the Bank to serve as the Fund's
custodian for Series A, as well as for some or all of any additional series
created by the Fund in the future, and the Bank is willing to serve as such on
the terms set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment
The Fund hereby appoints the Bank to act as custodian of the portfolio
securities, cash and other property belonging to the Fund for the period and on
the terms set forth in this Agreement. The Bank accepts such appointment and
agrees to furnish the services herein set forth in return for the compensation
as provided in Paragraph 20 of this Agreement. The Bank agrees to comply with
all relevant provisions of the 1940 Act and applicable rules and regulations
thereunder. It is understood that each series of the Fund represents a separate
investment portfolio of the Fund and, accordingly, that the Bank shall identify
to each such series Property belonging to such series and in such reports,
confirmations and notices to the Fund called for under this Agreement shall
identify the series to which such report, confirmation or notice pertains.
2. Delivery of Documents
The Fund has furnished the Bank with copies properly certified or
authenticated of each of the following:
(a) Resolutions of the Fund's Board of Trustees authorizing the
appointment of the Bank as custodian of the portfolio securities, cash and other
property belonging to the Fund and approving this Agreement;
(b) Appendix A identifying and containing the signatures of the Fund's
officers and/or officers of the Fund's Adviser authorized to issue Oral
Instructions and to sign Written Instructions, as hereinafter defined, on behalf
of the Fund;
(c) The Fund's Declaration of Trust as filed with the Secretary of the
Commonwealth of Massachusetts and all amendments thereto (such Declaration of
Trust, as presently in effect and as they shall from time to time be amended,
are herein called the "Declaration");
(d) The Fund's By-Laws and all amendments thereto (such By-Laws, as
presently in effect and as they shall from time to time be amended, are herein
called the "By-Laws");
(e) The Investment Advisory Agreement currently in effect (the "Advisory
Agreement") between the Fund and the Adviser; and
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(f) The Fund's most recent prospectus and statement of additional
information relating to Shares (such prospectus and statement of additional
information as presently in effect and all amendments and supplements thereto
are herein called the "Prospectus");
The Fund will furnish the Bank from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
3. Definitions
(a) "Authorized Person". As used in this Agreement, the term "Authorized
Person" means any of the officers of the Fund or the Adviser (whether or not any
such person is an officer or employee of the Fund): (i) who is duly authorized
by the Board of Trustees of the Fund or under the terms of the Advisory
Agreement, the Declaration or the By-Laws, as each may from time to time be
amended, to act on behalf of the Fund; and (ii) whose name is listed on the
Certificate annexed hereto as Appendix A or any amendment thereto as may be
received by the Bank from time to time.
(b) "Book-Entry System". As used in this Agreement, the term "Book-Entry
System" means the Federal Reserve Treasury book-entry system for United States
and federal agency securities, its successor or successors and its nominee or
nominees and any book-entry system maintained by a clearing agency registered
with the Securities and Exchange Commission (the "SEC") under Section 17A of the
Securities Exchange Act of 1934 (the "1934 Act").
(c) "Oral Instructions". As used in this Agreement, the term "Oral
Instructions" means oral instructions actually received by the Bank from an
Authorized Person or from a person reasonably believed by the Bank to be an
Authorized Person. The Fund agrees to deliver to the Bank, at the time and in
the manner specified in Paragraph 8(b) of this Agreement, Written Instructions
confirming Oral Instructions.
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(d) "Property". The term "Property", as used in this Agreement, means:
(i) any and all securities and other property which the Fund may
from time to time deposit, or cause to be deposited, with the Bank or which the
Bank may from time to time hold for the Fund;
(ii) all income in respect of any of such securities or other
property; (iii) all proceeds of the sale of any such securities or other
property; and (iv) all proceeds of the sale of securities issued by the Fund,
which are received by the Bank from time to time from or on behalf of the Fund.
(e) "Written Instructions". As used in this Agreement, the term "Written
Instructions" means written instructions delivered by hand (including Federal
Express or other express courier), certified or registered mail, return receipt
requested, tested telegram, cable, telex or facsimile sending device, received
by the Bank and signed by an Authorized Person and shall also include computer
transmission with coded access as agreed upon by the Bank and the Fund.
4. Delivery and Registration of the Property
The Fund will deliver or cause to be delivered to the Bank all securities
and all moneys owned by it, including cash received for the issuance of Shares,
at any time during the period of this Agreement. The Bank will not be
responsible for such securities and such moneys until actually received by it.
All securities delivered to the Bank (other than in bearer form) shall be
registered in the name of the Fund or in the name of a nominee of the Fund or in
the name of any nominee of the Bank (with or without indication of fiduciary
status), or in the name of any sub-custodian or any nominee of any such
sub-custodian appointed pursuant to Paragraph 6 hereof or shall be properly
endorsed and in form for transfer satisfactory to the Bank.
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<PAGE>
5. Receipt and Disbursement of Money
(a) Not less frequently than once on the afternoon of each
business day, all cash held in the custody account, other than cash required to
settle securities transactions on such business day, shall be transferred to the
trustee under a Trust Agreement of even date herewith between the Bank and the
Fund and attached hereto as Exhibit A.
The Bank shall make payments of cash to, or for the account of, the Fund
from such cash only (i) for the purchase of securities for the Fund's portfolio
as provided in Paragraph 13 hereof; (ii) upon receipt of Written Instructions,
for the payment of interest, dividends, taxes, fees or expenses of the Fund;
(iii) upon receipt of Written instructions, for payments in connection with the
conversion, exchange or surrender of securities owned or subscribed to by the
Fund and held by or to be delivered to the Bank; (iv) to a sub-custodian
pursuant to Paragraph 6 hereof; (v) for the redemption of Shares; (vi) for
payment of the amount of dividends received in respect of securities sold short
against the box; or (vii) upon receipt of Written Instructions, for other proper
Fund purposes. No payment pursuant to (i) above shall be made unless the Bank
has received a copy of the broker's or dealer's confirmation or the payee's
invoice, as appropriate.
(b) The Bank is hereby authorized to endorse and collect all
checks, drafts or other orders for the payment of money received as custodian
for the account of the Fund.
6. Receipt of Securities
(a) Except as provided by Paragraph 7 hereof, the Bank shall hold
and physically segregate in a separate account, identifiable at all times from
those of any other persons, firms, or corporations, all securities and non-cash
property received by it for the account of the Fund. All such securities and
non-cash property are to be held or disposed of by the Bank for the Fund
pursuant to the terms of this Agreement. In the absence of Written Instructions
accompanied by a certified resolution of the Fund's
5
<PAGE>
Board of Trustees authorizing the transaction, the Bank shall have no power or
authority to withdraw, deliver, assign, hypothecate, pledge or otherwise dispose
of any such securities and investments except in accordance with the express
terms provided for in this Agreement. In no case may any director, officer,
employee or agent of the Fund withdraw any securities.
In connection with its duties under this Paragraph 6, the Bank may, at
its own expense, enter into sub-custodian agreements with other banks or trust
companies for the receipt of certain securities and cash to be held by the Bank
for the account of the Fund pursuant to this Agreement, provided that each such
bank or trust company has an aggregate capital, surplus and undivided profits,
as shown by its last published report, of not less than ten million dollars
($10,000,000) and that such bank or trust company agrees with the Bank to comply
with all relevant provisions of the 1940 Act and applicable rules and
regulations thereunder. The Bank shall remain responsible for the performance of
all of its duties under this Agreement and shall hold the Fund harmless from the
acts and omissions, under the standards of care applicable to the Bank under
Paragraph 22 hereof, of any bank or trust company that it might choose pursuant
to this Paragraph 6 or of the Book-Entry System.
(b) Where securities are transferred to an account of the Fund
established pursuant to Paragraph 7 hereof, the Bank shall also by book-entry or
otherwise identify as belonging to the Fund the quantity of securities in a
fungible bulk of securities registered in the name of the Bank (or its nominee)
or shown in the Bank's account on the books of the Book-Entry System. The Bank
shall furnish the Fund with reports relating to Property held for the Fund under
this Agreement in accordance with Paragraph 16 hereof.
7. Use of Book-Entry System
The Fund shall deliver to the Bank certified resolutions of the Board of
Trustees of the Fund approving, authorizing and instructing the Bank on a
continuous and on-going basis until instructed to the
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<PAGE>
contrary by Oral or Written Instructions actually received by the Bank (a) to
deposit in the Book-Entry System all securities belonging to the Fund eligible
for deposit therein and (b) to use the Book-Entry System to the extent possible
in connection with settlements of purchases and sales of securities by the Fund,
and deliveries and returns of securities loaned, subject to repurchase
agreements or used as collateral in connection with borrowings. Without limiting
the generality of such use, it is agreed that the following provisions shall
apply thereto:
(a) Securities and any cash of the Fund deposited in the
Book-Entry System will at all times be segregated from any assets and cash
controlled by the Bank in other than a fiduciary or custodian capacity but may
be commingled with other assets held in such capacities.
(b) All books and records maintained by the Bank which relate to
the Fund's participation in the Book-Entry System will at all times during the
Bank's regular business hours be open to the inspection of the Fund's duly
authorized employees or agents, and the Fund will be furnished with all
information in respect of the services rendered to it as it may require.
(c) The Bank will provide the Fund with copies of any report
obtained by the Bank on the system of internal accounting control of the
Book-Entry System promptly after receipt of such a report by the Bank. The Bank
will also provide the Fund with such reports on its own system of internal
control as the Fund may reasonably request from time to time.
8. Instructions Consistent with Declaration, Etc.
(a) Unless otherwise provided in this Agreement, the Bank shall
act only upon Oral and Written Instructions. Although the Bank may know of the
provisions of the Declaration and By-Laws of the Fund, the Bank may assume that
any Oral or Written Instructions received hereunder are not in any way
inconsistent with any provisions of such Declaration or By-Laws or any vote,
resolution or proceeding or the Fund's shareholders, or of its board of
trustees, or of any committee thereof.
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<PAGE>
(b) the Bank shall be entitled to rely upon any Oral Instructions
and any Written Instructions actually received by the Bank pursuant to this
Agreement. The Fund agrees to forward to the Bank Written Instructions
confirming Oral Instructions in such manner that the Written Instructions are
received by the Bank by the close of business of the same day that such Oral
Instructions are given to the Bank. The Fund agrees that the fact that such
confirming Written Instructions are not received by the Bank shall in no way
affect the validity of the transactions or enforceability of the transactions
authorized by the Fund by giving Oral Instructions. The Fund agrees that the
Bank shall incur no liability to the Fund in acting upon Oral Instructions given
to the Bank hereunder concerning such transactions, provided such instructions
reasonably appear to the Bank to have been received from an Authorized Person.
9. Transactions Not Requiring Instructions
In the absence of contrary Written Instructions, the Bank is authorized
to take the following actions:
(a) Collections of Income and Other Payments. The Bank shall:
(i) collect and receive for the account of the Fund, all
income and other payments and distributions, including (without limitation)
stock dividends, rights, bond coupons, option premiums and similar items,
included or to be included in the Property, and promptly advise the Fund of such
receipt and shall credit such income, as collected, to the Fund's custodian
account;
(ii) endorse and deposit for collection, in the name of the
Fund, checks, drafts, or other orders for the payment of money on the same day
as received;
(iii) receive and hold for the account of the Fund all
securities received as a distribution on the Fund's portfolio securities as a
result of a stock dividend, share split-up or reorganization,
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<PAGE>
recapitalization, readjustment or other rearrangement or distribution of rights
or similar securities issued with respect to any portfolio securities belonging
to the Fund held by the Bank hereunder;
(iv) present for payment and collect the amount payable upon
all securities which may mature or be called, redeemed, or retired, or otherwise
become payable on the date such securities become payable; and
(v) take any action which may be necessary and proper in
connection with the collection and receipt of such income and other payments and
the endorsement for collection of checks, drafts, and other negotiable
instruments as described in Paragraph 23 of this Agreement.
(b) Miscellaneous Transactions. The Bank is authorized to deliver
or cause to be delivered Property against payment or other consideration or
written receipt therefor in the following cases:
(i) for examination by a broker selling for the account of
the Fund in accordance with street delivery custom;
(ii) for the exchange of interim receipts or temporary
securities for definitive securities; and (iii) for transfer
of securities into the name of the Fund or the Bank or
nominee of either, or for
exchange of securities for a different number of bonds, certificates, or other
evidence, representing the same aggregate face amount or number of units bearing
the same interest rate, maturity date and call provisions, if any; provided
that, in any such case, the new securities are to be delivered to the Bank.
10. Transactions Requiring Instructions
Upon receipt of Oral or Written Instructions and not otherwise, the Bank,
directly or through the use of the Book-Entry System, shall:
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<PAGE>
(a) execute and deliver to such persons as may be designated in
such Oral or Written Instructions, proxies, consents, authorizations, and any
other instruments whereby the authority of the Fund as owner of any securities
may be exercised;
(b) deliver any securities held for the Fund against receipt of
other securities or cash issued or paid in connection with the liquidation,
reorganization, refinancing, tender offer, merger, consolidation or
recapitalization of any corporation, or the exercise of any conversion
privilege;
(c) deliver any securities held for the Fund to any protective
committee, reorganization committee or other person in connection with the
reorganization, refinancing, merger, consolidation, recapitalization or sale of
assets of any corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or other instruments or
documents as may be issued to it to evidence such delivery;
(d) make such transfers or exchanges of the assets of the Fund and
take such other steps as shall be stated in said Oral or Written Instructions to
be for the purpose of effectuating any duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of the Fund;
(e) release securities belonging to the Fund to any bank or trust
company for the purpose of pledge or hypothecation to secure any loan incurred
by the Fund; provided, however, that securities shall be released only upon
payment to the Bank of the monies to be received by the Bank in accordance with
such Oral or Written Instructions, except that in cases where additional
collateral is required to secure a borrowing already made, in which case and
subject to receipt by the Bank of "Oral or Written Instructions", further
securities may be released for that purpose; an repay such loan upon redelivery
to it of the securities pledged or hypothecated therefor and upon surrender of
the note or notes evidencing the loan;
10
<PAGE>
(f) release and deliver securities owned by the Fund in connection
with any repurchase agreement entered into on behalf of the Fund, but only on
receipt of payment therefor; and pay out moneys of the Fund in connection with
such repurchase agreements, but only upon the delivery of the securities; and
(g) otherwise transfer, exchange or deliver securities in
accordance with Oral or Written Instructions.
11. Segregated Accounts; Securities Lending
(a) the Bank shall upon receipt of Written or Oral Instructions
establish and maintain a segregated account or accounts on its records for and
on behalf of the Fund, into which account or accounts may be transferred cash
and/or securities, including securities in the Book-Entry System (i) for the
purposes of compliance by the Fund with the procedures required by a securities
or option exchange, provided such procedures comply with the 1940 Act and
Investment Company Act Release No. 10666 (April 18, 1979) or any subsequent
release or releases of the SEC relating to the maintenance of segregated
accounts by registered investment companies, and (ii) for other proper corporate
purposes, but only, in the case of clause (ii), upon receipt of Written
Instructions.
(b) The Bank hereby acknowledges that the Fund may require it to
enter into one or more third-party custodial agreements regarding Fund's
purchases and sales of futures contracts and options thereon, and that any such
third-party agreement with a futures commission merchant may contain any
provisions which the Fund and the futures commission merchant reasonably deem
necessary and which do not subject the Bank to higher standards of care (except
as may be required by law) than does this Agreement.
(c) The Fund may, from time to time, furnish the Bank with copies
of securities loan agreements (singly "Securities Loan Agreement" and
collectively "Securities Loan Agreements"),
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<PAGE>
pursuant to which the Fund may lend securities of any series of the Fund to the
respective brokerage firms named therein (singly the "Brokerage Firm" and
collectively the "Brokerage Firms").
In each such case, and until the Fund shall have given the Bank Written
Instructions that such Securities Loan Agreement has terminated, the Fund
authorizes the Bank, as its agent in connection with the lending of securities
from time to time upon receipt by the Bank of Oral or Written Instructions: (a)
to deliver to the Brokerage Firm named in the Securities Loan Agreement specific
securities held for the Fund's account, it being understood that in each case
the Bank will give prompt notice thereof to the Fund; (b) to receive from the
Brokerage Firm a certified or bank cashier's check, in immediately available
funds, or obligations of the U. S. Government in an amount equal to the then
market value of the securities, as specified in such Instructions.
The Fund will evaluate on a daily basis its rights and obligations under
each Securities Loan Agreement, such as marking to market, and will demand that
additional collateral be delivered to the Bank by the Brokerage Firm under
proper advice to the Bank, or shall give Oral or Written Instructions to the
Bank to release excess collateral to the Brokerage Firm.
The Bank may, through its commercial, trust or other departments, be a
creditor for its own account, or represent in a fiduciary capacity other
creditors and/or customers, or any Brokerage Firm, even though any of such
interests may potentially be in conflict with those of the Fund.
The Fund represents that it has the power and authority to lend the
securities in accordance with a Securities Loan Agreement and that such lending
as provided in such Securities Loan Agreement and as provided herein, has been
duly authorized by all necessary action, has received any required regulatory
approval and will not violate any law, regulation, Declaration, By-law or other
instrument, restriction or provision applicable to the Fund.
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<PAGE>
With respect to acting as agent for the Fund in connection with the
lending of securities to Brokerage Firms pursuant to Securities Loan Agreements,
the Bank shall have no duties or responsibilities except those expressly set
forth herein and the Fund will indemnify the Bank against any liability which it
may incur in connection with such lending in accordance with Paragraph 21
hereof; the Bank shall have no responsibility in connection with the present or
future financial condition of any such Brokerage Firm or any failure on the part
of any such Brokerage Firm or any failure on the part of any such Brokerage Firm
to return any such securities for any reason whatsoever or to comply with any
provision of any Securities Loan Agreement or any failure on the part of any
such Brokerage Firm to comply with any law or regulation, all such risks being
assumed by the Fund.
12. Dividends and Distributions
The Fund shall furnish the Bank with appropriate evidence of action by
the Fund's Board of Trustees declaring and authorizing the payment of any
dividends and distributions. Upon receipt by the Bank of Written Instructions
with respect to dividends and distributions declared by the Fund's Board of
Trustees and payable to shareholders of the Fund who have elected in the proper
manner to receive their distributions or dividends in cash, and in conformance
with procedures mutually agreed upon by the Bank, the Fund, and the Fund's
transfer agent, the Bank shall pay to the Fund's transfer agent, as agent for
the Fund's shareholders, an amount equal to the amount indicated in said Written
Instructions as payable by the Fund to such shareholders for distribution in
cash by the transfer agent to such shareholders.
13. Purchases of Securities
Promptly after each decision to purchase securities by the Advisor, the
Fund, through the Advisor, shall deliver to the Bank Written or Oral
Instructions specifying with respect to each such purchase: (a) the name of the
issuer and the title of the securities, (b) the number of shares or the
principal amount
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purchased and accrued interest, if any, (c) the date of purchase and settlement,
(d) the purchase price per unit, (e) the total amount payable upon such purchase
and (f) the name of the person from whom or the broker through whom the purchase
was made. Oral Instructions shall be confirmed by Written Instructions. The Bank
shall upon receipt of securities purchased by or for the Fund pay out of the
moneys held for the account of the Fund the total amount payable to the person
from whom or the broker through whom the purchase was made, provided that the
same conforms to the total amount payable as set forth in such Oral Instructions
in accordance with current industry practices.
14. Sales of Securities
Promptly after each decision to sell securities by the Advisor or
exercise of an option written by the Fund, the Fund, through the Advisor, shall
deliver to the Bank Oral or Written Instructions, specifying with respect to
each such sale: (a) the name of the issuer and the title of the security, (b)
the number of shares or principal amount sold, and accrued interest, if any, (c)
the date of sale and settlement, (d) the sale price per unit, (e) the total
amount payable to the Fund upon such sale, and (f) the name of the broker
through whom or the person to whom the sale was made. The Bank shall deliver the
securities upon receipt of the total amount payable to the Fund upon such sale,
provided that the same conforms to the total amount payable as set forth in such
Oral Instructions in accordance with current industry practice. Subject to the
foregoing, the Bank may accept payment in such form as shall be satisfactory to
it, and may deliver securities and arrange for payment in accordance with the
customs prevailing among dealers in securities.
15. Records
The books and records pertaining to the Fund which are in the possession
of the Bank shall be the property of the Fund. Such books and records shall be
prepared and maintained as required by the 1940 Act and other applicable
securities laws and regulations. The Fund, or the Fund's authorized
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<PAGE>
representatives, shall have access to such books and records at all times during
the Bank's normal business hours. Upon the reasonable request of the Fund,
copies of any such books and records shall be provided by the Bank to the Fund
or the Fund's authorized representative at the Fund's expense.
16. Reports
(a) The Bank shall furnish the Fund the following reports:
(1) such periodic and special reports as the Fund may
reasonably request;
(2) a daily report detailing all transactions (cash and
securities) that have been posted to the Fund's account; such report, which
shall be in such form as may be agreed upon by the Bank and the Fund from time
to time, shall be received not later than the morning of the business day next
following the day to which the report relates;
(3) statements, at such intervals as the Fund may reasonably
request but not less frequently than monthly, summarizing all transactions and
entries for the account of the Fund, listing the portfolio securities belonging
to the Fund with the adjusted average cost of each issue and the market value at
the end of such month, and stating the cash account of the Fund including
disbursements;
(4) the reports to be furnished to the Fund pursuant to Rule
17f-4 under the 1940 Act; and (5) such other information as may be agreed upon
from time to time between the Fund and the Bank.
(b) The Bank shall transmit promptly to the Fund any proxy
statement, proxy materials, notice of a call or conversion or similar
communications received by it as Custodian of the Property.
17. Cooperation with Accountants
The Bank shall cooperate with the Fund's independent public accountants
and shall take all reasonable action in the performance of its obligations under
this Agreement to assure that the necessary
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<PAGE>
information is made available to such accountants for the expression of their
opinion, as such may be required from time to time by the Fund.
18. Confidentiality
The Bank agrees on behalf of itself and its employees to treat
confidentially all records and other information relative to the Fund and its
prior, present, or potential shareholders, except, after prior notification to
and approval in writing by the Fund, which approval shall not be unreasonably
withheld and may not be withheld where the Bank may be exposed to civil or
criminal contempt proceedings for failure to comply, when requested to divulge
such information by duly constituted authorities, or when so requested by the
Fund.
19. Right to Receive Advise
(a) Advice of Fund. If the Bank shall be in doubt as to any action
to be taken or omitted by it, it may request, and shall receive, from the Fund
directions or advice, including Oral or Written Instructions where appropriate.
(b) Advice of Counsel. If the Bank shall be in doubt as to any
question of law involved in any action to be taken or omitted by the Bank, it
may request advice at its own cost from counsel of its own choosing (who may be
counsel for the Advisor, the Fund or the Bank, at the option of the Bank).
(c) Conflicting Advice. In case of conflict between directions,
advice or Oral or Written Instructions received by the Bank pursuant to
subparagraph (a) of this Paragraph and advice received by the Bank pursuant to
subparagraph (b) of this Paragraph, the Bank shall be entitled to rely on and
follow the advice received pursuant to the latter provision alone.
(d) Protection of the Bank. The Bank shall be protected in any
action or inaction which it takes in reliance on any directions, advice or Oral
or Written Instructions received pursuant to subparagraphs (a) or (b) of this
Paragraph which the Bank, after receipt of any such directions, advice or
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<PAGE>
Oral or Written Instructions, in good faith believes to be consistent with such
directions, advice or Oral or Written Instructions, as the case may be. However,
nothing in this Paragraph shall be construed as imposing upon the Bank any
obligation (i) to seek such directions, advice or Oral or Written Instructions,
or (ii) to act in accordance with such directions, advice or Oral or Written
Instructions when received, unless, under the terms of another provision of this
Agreement, the same is a condition to the Bank's properly taking or omitting to
take such action. Nothing in this subsection shall excuse the Bank when an
action or omission on the part of the Bank constitutes willful misfeasance, bad
faith, negligence or reckless disregard by the Bank of any duties or obligations
under this Agreement.
20. Compensation
As compensation for the services rendered by the Bank during the term of
this Agreement, the Fund will pay to the Bank fees in accordance with the fee
schedule agreed upon from time to time in writing by the Bank and the Fund.
21. Indemnification
The Fund, as sole owner of the Property, agrees to indemnify and hold
harmless the Bank and its nominees from all taxes, charges, expenses,
assessments, claims and liabilities and expenses, including attorneys' fees and
disbursements, arising directly or indirectly from any action or thing which the
Bank takes or does or omits to take or do upon receipt of Oral or Written
Instructions or under this Agreement, provided, that neither the Bank nor any of
its nominees shall be indemnified against any liability to the Fund or to its
shareholders (or any expenses incident to such liability) arising out of the
Bank's or such nominee's own willful misfeasance, bad faith, negligence or
reckless disregard of its duties or responsibilities under this Agreement.
17
<PAGE>
22. Responsibility of the Bank
(a) In the performance of its duties hereunder, the Bank shall be
obligated to exercise care and diligence and to act in good faith and to use its
best efforts to assure the accuracy and completeness of all services performed
under this Agreement. Except as provided in (b) below, the Bank shall be
responsible for all direct losses occasioned by the Bank's negligent failure to
perform its duties under this Agreement, including but not limited to losses
related to inaccuracies in the daily reports (upon which the Fund and its agents
rely in calculating the Fund's net asset value and in determining whether the
Fund is in compliance with the 1940 Act and the requirements of Subchapter M of
the Internal Revenue Code of 1986 (as amended) to be provided under Paragraph 16
hereof or otherwise. However, the Bank shall not be liable for any incidental,
consequential or punitive damages.
(b) The Bank shall assume entire responsibility for loss
occasioned by robbery, burglary, fire, theft or mysterious disappearance
irrespective of whether such losses occur while such Property is in possession
of the Bank or the possession of one of the Bank's agents, nominees,
depositories, correspondents or sub-custodians appointed pursuant to Paragraph 6
hereof or any Book-Entry System. In the event of any such loss the Bank's
liability shall be limited to the replacement value thereof as of the date of
the discovery of such loss and the Bank, at the Fund's option, shall make prompt
replacement of Property with like kind and quality or shall make prompt
restitution to the Fund for such loss. In addition, in the event of any loss of
the Property due to any other cause, unless the Bank can prove that it and its
agents, nominees, depositories and correspondents were not negligent and did not
act with willful misconduct, the Bank will be liable for such loss.
Notwithstanding the foregoing, the Bank shall not be liable for losses occurring
by reason of acts of civil or military authority, national emergencies, floods,
acts of God, insurrections, wars, riots or similar catastrophes.
18
<PAGE>
(c) The Bank shall not have any duty or obligation to inquire (i)
into the validity or invalidity or authority or lack thereof of any Oral or
Written Instruction, notice or other instrument which conforms to the applicable
requirements of this Agreement, if any, and which the Bank reasonably believes
to be genuine; (ii) the validity or invalidity of the issuance of any securities
included or to be included in the Property, the legality or illegality of the
purchase of such securities, or the propriety or impropriety of the amount paid
therefor; (iii) the legality or illegality of the sale (or exchange) of any
Property or the propriety or impropriety of the amount for which such Property
is sold (or exchanged); or (iv) whether any Property at any time delivered to or
held by the Bank may properly be held by or for the Fund.
23. Collections
All collections of monies or other property in respect, or which are to
become part, of the Property (but not the safekeeping thereof upon receipt by
the Bank) shall be at the sole risk of the Fund, provided that the Bank agrees
to the following procedures:
(i) upon maturity of any security held by the Fund, proceeds
will be credited and available for investment by the Fund on the maturity date;
(ii) with respect to sales of securities held by the Fund
and provided the Bank receives timely and accurate notification of any such
sale, sale proceeds will be credited and available for investment by the Fund on
the settlement date for transactions settled in Federal funds, and on settlement
date plus one for transactions settled in Clearinghouse funds;
(iii) with respect to income and principal from securities
held by the Fund, where the precise amount to be received is known prior to
payable date, such moneys will be credited to the Fund on the payable date and
will be made available to the Fund for investment on such date in cases where
19
<PAGE>
such moneys are to be received in Federal funds or, in cases where such moneys
are to be received in Clearinghouse funds, on the day following the payable
date;
(iv) with respect to any income and principal payment on
securities held by the Fund the amount of which is unknown either by the Bank or
the Adviser, such payments will be credited to the Fund upon receipt by the
Bank, it being understood that the Bank will make every effort to collect such
payments as quickly as possible.
With respect to items referred to in (i), (ii) and (iii) above, in any
case where the Bank does not receive any payment due to the Fund within a
reasonable time after the Bank has made proper demands for the same, it shall so
notify the Fund in writing, including copies of all demand letters, any written
responses thereto, and memoranda of all oral responses thereto and to telephonic
demands, and shall thereafter have the right to reverse the credit previously
posted to the Fund with respect to such item. The Bank shall not be obliged to
take legal action for collection of any unpaid item unless and until reasonably
indemnified to its satisfaction.
24. Duration and Termination
This Agreement shall continue until termination by the Fund on 60 days
written notice or by the Bank on 120 days' written notice. In the event of such
notice of termination, the Fund's Board of Trustees shall, by resolution duly
adopted, promptly appoint a Successor Custodian to serve upon the terms set
forth in this Agreement. Upon termination hereof the Fund shall pay to the Bank
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Bank for its reasonable costs, expenses and disbursements
incurred prior to such termination. The Bank shall have no lien, right of
set-off, or claim of any kind whatsoever against any Property of the Fund
(including records relating to the Fund maintained by the Bank) in the
possession of the Bank.
20
<PAGE>
If a Successor Custodian is appointed by the Trustees, the Bank shall,
upon termination, deliver to such Successor Custodian the records of the Bank
with respect to the Fund, and duly endorsed and in form for transfer, all
securities then held hereunder and all funds or other properties of the Fund
deposited with or held by the Bank under this Agreement.
In the event that no such Successor Custodian is appointed within 90 days
after the date of such notice of termination by the Bank, Fund will promptly
submit to its shareholders the question whether they wish to terminate the Fund
or to function without a bank custodian, and the Bank shall deliver the funds
and property of the Fund to the Fund only pursuant to a certified copy of a
resolution of the Fund's Board of Trustees, signed by a majority of the Board of
Trustees of the Fund in the exercise of such power conferred upon the Fund by
its shareholders, such delivery to be made in accordance with such Resolution.
In the event that the Bank is not notified of the appointment of a
Successor Custodian on or before the date of the termination of this Agreement,
the Bank shall have the right to deliver to a bank or trust company of its own
selection (a) with significant experience in serving as a custodian for
registered investment companies; and (b) having an aggregate capital, surplus,
and undivided profits, as shown by its last published report, of not less than
$10,000,000, all securities, records, and other properties then held by the Bank
to be held by such bank or trust company provided that such bank or trust
company agrees to serve as custodian for such securities, records and other
properties substantially in accordance with the term hereof and in accordance
with its customary fee schedule for such services.
In the event that securities, funds, and other properties remain in the
possession of the Bank after the date of termination hereof owing to failure of
the Board of Trustees to appoint a Successor Custodian, the Bank shall be
entitled to fair compensation for its services during such period and the
provisions of this Agreement relating to the duties and obligations of the Bank
shall remain in full force
21
<PAGE>
and effect. If any Property remains in the custody of the Bank pursuant to the
preceding sentence for more than six months, the Bank shall be entitled to
receive a premium of one and one-half percent over the fees to which it would
otherwise be entitled for its services for each succeeding month during which
the Bank remains in possession of such property.
25. Notices
All notices and other communications (collectively referred to as
"Notice" or "Notices" in this Paragraph) under this Agreement (other than
Written or Oral Instructions as defined in this Agreement and as referred to in
Paragraph 8 (b)) must be in writing and will be deemed to have been duly given
or delivered when delivered by hand (including by Federal Express or similar
express courier) or three days after being mailed by prepaid registered or
certified mail, return receipt requested: (a) if to the Bank at the Bank's
address, 1735 Market Street, Philadelphia, Pennsylvania 19101-7899, marked for
the attention of Donna Owens, Trust Officer (or her successor); (b) if to the
Fund, at the address of the Fund, 151 Farmington Avenue, Hartford, CT
06156-8962, marked for the attention of the Fund's Treasurer; or (c) to such
other address as shall have been last designated by Notice in accordance with
this Paragraph 25. All postage, cable, telegram, telex and facsimile sending
device charges arising from the sending of a Notice hereunder shall be paid by
the sender.
26. Further Actions
Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof.
27. Amendments
This Agreement or any part hereof may be changed or waived only by an
instrument in writing signed by the party against which enforcement of such
change or waiver is sought.
22
<PAGE>
28. Counterparts
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
29. Miscellaneous
This Agreement embodies the entire agreement and understanding between
the parties hereto, and supersedes all prior agreements and understandings
relating to the subject matter hereof, provided that the parties hereto may
embody in one or more separate documents their agreement, if any, with respect
to delegated and/or Oral Instructions. The captions in this Agreement are
included for convenience of reference only and in no way define or delimit any
of the provisions hereof or otherwise affect their construction or effect. This
Agreement shall be deemed to be a contract made in Pennsylvania and governed by
Pennsylvania law. If any provision of this Agreement shall be held or made
invalid by a court decision, statue, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding and
shall inure to the benefit of the parties hereto and their respective
successors.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers designated below on this 1 day of September , 1992.
[SEAL] MELLON BANK, N. A .
Attest: /s/ Sandy McKenna By /s/ Donna Owens
[SEAL] AETNA GET FUND
Attest: /s/ George N. Gingold By /s/ James C. Hamilton
23
<PAGE>
EXHIBIT A
TRUST AGREEMENT
THIS TRUST AGREEMENT is made between AETNA GUARANTEED EQUITY TRUST, a
Massachusetts business trust (the "Fund") as Settlor, and MELLON BANK, N. A., a
national banking association (the "Bank") as Trustee.
I. Background: The background of this Agreement is as follows:
A. The Fund is registered as an open-end, diversified
management investment company under the Investment
Company Act of 1940, as amended;
B. The Fund has retained the Bank to serve as the Fund's
custodian under a Custodian Agreement of even date herewith
("Custodian Agreement") for the Series A class of shares of
the Fund's units of beneficial interest and for such
additional series as may from time to time be offered by the
Fund on the terms set forth herein (each, a "Series"), and
the Bank is willing to serve as such; and
C. The Fund intends to transfer to the Bank to hold as trustee
under this Agreement all the income and principal cash
balances which are transferred to it in accordance with
Paragraph 5(a) of the Custodian Agreement (the Bank in such
capacity is hereinafter referred to as the "Trustee"), and
hereby directs the Trustee to hold such cash balances in
accordance with the following terms.
II. Dispositive Terms: The Trustee shall invest and manage the income
and principal cash balances of each Series in accordance with the
provisions of Article III hereof for the purpose of safekeeping
pending distribution or investment. Distributions to or from the
trust shall be as directed from time to time by the Fund.
III. Management Provisions: The Trustee shall invest as it deems
appropriate in any one or more money market demand accounts of
the Bank or of any other bank, provided the accounts are fully
insured by the FDIC and any excess above the insurance limit is
collateralized by securities in accordance with Regulation
9.10(b) of the Comptroller of the Currency, 12 CFR 9.10 (b).
IV. Accounting: The Trustee will send the Fund statements at least
monthly showing the transactions in the trust. The Fund must
report any errors to the Trustee, including the non-receipt of a
statement, within 90 days after the Fund normally receives a
statement. Otherwise, the Fund, at the Trustee's discretion, may
be deemed to have accepted the transactions as stated.
V. Provisions Regarding the Trustee:
<PAGE>
A. The "Authorized Person" to act for the Fund and the methods
of properly acting for the Fund under this Agreement shall
be the same as specified in the Custodian Agreement, as that
may be amended from time to time;
B. The fact that the Bank is Trustee and in such capacity
deposits trust assets of the Series in banking accounts of
the Bank shall no be deemed a conflict of interest. The Bank
may receive its usual charges or profits for that service;
and
C. The Trustee may resign upon 120 days' notice to the Fund;
Settlor may terminate this Agreement at any time.
Immediately upon termination, the Trustee shall pay all
trust assets held hereunder to the Successor Custodian or
the Fund in accordance with Paragraph 24 of the Custodian
Agreement.
VI. Situs and Governing Law: The situs of this Trust shall be in
Pennsylvania, and all questions as to the construction, validity,
effect or administration of this trust shall be governed by
Pennsylvania law.
VII. Rights Reserved: The Fund reserves the right to revoke this trust
by writing delivered to the Trustee and to amend this trust with
the Trustee's approval.
Signed September 1 ,1992
ATTEST: AETNA GUARANTEED EQUITY TRUST
/s/ George N. Gingold By: /s/ James C. Hamilton
The foregoing trust was delivered, and is hereby accepted in Pennsylvania on
September 21, 1992.
ATTEST: MELLON BANK, N.A.
/s/ Sandy McKenna By: /s/ Donna Owens
2
<PAGE>
BALLARD SPAHR ANDREWS & INGERSOLL
1735 MARKET STREET, 51ST FLOOR
PHILADELPHIA, PENNSYLVANIA
19103-7599
TELEPHONE 215-665-8500
FAX 215-864-8999
MEMORANDUM
October 27, 1992
To: Martin T. Conroy (ALIAC)
Donna M. Owens (Mellon Bank)
From: Laura Anne Corsell (Ballard Spahr)
Re: Aetna Life Insurance and Annuity Company
Aetna Series Fund, Inc.
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna Income Shares
Aetna Guaranteed Equity Trust
Aetna Variable Fund
The purpose of this memorandum is to clarify certain technical
items which appear in the text of the recently executed custodian agreements
("Agreements") between Mellon Bank, N.A. and Aetna Life Insurance and Annuity
Company ("ALIAC") and the various mutual funds for which ALIAC serves as
investment adviser ("ALIAC Funds"), respectively. In addition, enclosed is a
corrected first page for each of those Agreements relating to the ALIAC Funds to
reflect the correct name of the adviser.
1. The words "cash", "monies" and "moneys" are used
interchangeably in the Agreements and refer to all uninvested funds (in the form
of either currency or checks) but do not include funds represented by cash
equivalents such as repurchase agreements, certificates of deposit, treasury
bills or notes and the like.
2. The term "Shares" as used in those Agreements relating to
the ALIAC Funds refers to "units of beneficial interest" in the case of those
mutual funds that are organized as Massachusetts business trusts and "shares of
common stock" in the case of those mutual funds organized as Maryland
corporations.
Similarly, the term "Board of Trustees" as used in such
agreements encompasses the Board of Trustees in those cases where the relevant
mutual fund is organized as a Massachusetts business trust.
<PAGE>
3. The transactions referred to in paragraphs 10, 13 and 14
may be authorized either by Written Instructions or Oral Instructions. In
accordance with paragraph 8(b), all Oral Instructions must be confirmed by
Written Instructions.
4. With respect to the Agreements relating to Aetna Income
Shares, Aetna Variable Fund, Aetna Guaranteed Equity Trust and Aetna Variable
Encore Fund, the term "Trust Agreement" as used in paragraph 26 refers to the
Declaration of Trust of each such mutual fund and does not refer in any way to
the trust arrangement evidenced by Exhibit A to each such agreement.
As noted above, the foregoing items are intended to clarify
the text of the Agreements as executed and do not change the substance of the
various Agreements. Please file a copy of this memorandum with each of the
Agreements, as executed.
cc(w/encls.): George Gingold, Esq.
Ms. Pat Rup
AMENDMENT TO CUSTODIAN AGREEMENT
between
AETNA GET FUND
and
MELLON BANK, N.A.
WITNESSETH:
WHEREAS, Aetna GET Fund (the "Fund"), formerly named Aetna Guaranteed
Equity Trust, and Mellon Bank, N.A. ("Mellon"), entered into a Custodian
Agreement (the "Agreement") on September 1, 1992 with respect to the assets of
the Fund's Series A and some or all additional series that the Fund may
establish from time to time (individually a "Portfolio," and collectively, the
"Portfolios");
WHEREAS, the Fund has authorized the creation of a new series
portfolio, Series B, and has amended its registration statement on Form N-1A to
register shares of beneficial interest of Series B with the Securities and
Exchange Commission;
WHEREAS, the Fund desires to appoint Mellon as custodian of the assets
of its Series B;
NOW THEREFORE, it is agreed as follows:
1. The Fund, on behalf of Series B, hereby appoints Mellon, and Mellon
hereby accepts appointment, as the custodian of the assets of Series B, in
accordance with all the terms and conditions set forth in the Agreement.
2. The Fund is entering into the Agreement on behalf of Series B
individually, and not jointly with any other Portfolio. In the Agreement, the
term "Fund" shall refer to the Fund solely on behalf of each Portfolio
individually to which a particular Futures Contract transaction or other
obligation under the Agreements relates. The responsibilities and benefits set
forth in the Agreements shall refer to each Portfolio severally and not jointly.
No individual Portfolio shall have any responsibility for any obligation arising
out of a Futures Contract transaction entered into by any other Portfolio.
Without otherwise limiting the generality of the foregoing,
(a) any breach of the Agreement regarding the Fund with respect to
any one Portfolio shall not create a right or obligation with
respect to any other Portfolio;
(b) under no circumstances shall the Bank have the right to set
off claims relating to a Portfolio by applying property of any
other Portfolio;
<PAGE>
(c) no Portfolio shall have the right of set off against the
assets held by any other Portfolio;
(d) the business and contractual relationships created by the
Agreement as amended hereby, and the consequences of such
relationships relate solely to the particular Portfolio to
which such relationship was created; and
(e) all property held by the Bank on behalf of a particular
Portfolio shall relate solely to the particular Portfolio.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their officers designated below on the date mentioned below.
Mellon Bank, N.A. Aetna GET Fund, on behalf of
Series B individually
By: /s/ Donna Owens By: /s/ James C. Hamilton
----------------------- -----------------------
Name: Donna Owens Name: James C. Hamilton
Title: Assistant Vice President Title: Vice President & Treasurer
Date: 11/24/93 Date: 11/18/93
AMENDMENT TO CUSTODIAN AGREEMENT
between
AETNA GET FUND
and
MELLON BANK, N.A.
WITNESSETH:
WHEREAS, Aetna GET Fund (the "Fund"), formerly named Aetna Guaranteed
Equity Trust, and Mellon Bank, N.A. ("Mellon"), are parties to a Custodian
Agreement (the "Agreement") dated September 1, 1992, as amended, with respect to
the assets of the Fund's Series A and some or all additional series that the
Fund may establish from time to time (individually a "Portfolio," and
collectively, the "Portfolios");
WHEREAS, the Fund has authorized the creation of a new series
portfolio, Series C, and has amended its registration statement on Form N-1A to
register shares of beneficial interest of Series C with the Securities and
Exchange Commission;
WHEREAS, the Fund desires to appoint Mellon as custodian of the assets
of its Series C;
NOW THEREFORE, it is agreed as follows:
1. The Fund, on behalf of Series C, hereby appoints Mellon, and Mellon
hereby accepts appointment, as the custodian of the assets of Series C, in
accordance with all the terms and conditions set forth in the Agreement.
2. The Fund is entering into the Agreement on behalf of Series C
individually, and not jointly with any other Portfolio. In the Agreement, the
term "Fund" shall refer to the Fund solely on behalf of each Portfolio
individually to which a particular Futures Contract transaction or other
obligation under the Agreements relates. The responsibilities and benefits set
forth in the Agreements shall refer to each Portfolio severally and not jointly.
No individual Portfolio shall have any responsibility for any obligation arising
out of a Futures Contract transaction entered into by any other Portfolio.
Without otherwise limiting the generality of the foregoing,
(a) any breach of the Agreement regarding the Fund with respect to
any one Portfolio shall not create a right or obligation with
respect to any other Portfolio;
(b) under no circumstances shall the Bank have the right to set
off claims relating to a Portfolio by applying property of any
other Portfolio;
<PAGE>
(c) no Portfolio shall have the right of set off against the
assets held by any other Portfolio;
(d) the business and contractual relationships created by the
Agreement as amended hereby, and the consequences of such
relationships relate solely to the particular Portfolio to
which such relationship was created; and
(e) all property held by the Bank on behalf of a particular
Portfolio shall relate solely to the particular Portfolio.
3. The Fund and Mellon agree that the Trustees, officers, employees and
agents of the Fund and the shareholders of any of its funds shall not personally
be bound by or liable under this Agreement, as provided in the Fund's
Declaration of Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Fund and executed and delivered by an
authorized officer of the Fund, acting as such, and neither such authorization
nor such execution and delivery shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the assets and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their officers designated below on the date mentioned below.
Mellon Bank, N.A. Aetna GET Fund, on behalf of
Series C individually
By: /s/ Donna Owens By:/s/ Stephanie A. Taylor
----------------------- -----------------------
Name: Donna Owens Name: Stephanie A. Taylor
Title: Assistant Vice President Title: Assistant Treasurer
Date: 8/26/96 Date: 8/21/96
AMENDMENT TO CUSTODIAN AGREEMENT
between
AETNA GET FUND
and
MELLON BANK, N.A.
WITNESSETH:
WHEREAS, Aetna GET Fund (the "Fund"), formerly named Aetna Guaranteed
Equity Trust, and Mellon Bank, N.A. ("Mellon"), are parties to a Custodian
Agreement (the "Agreement") dated September 1, 1992, as amended, with respect to
the assets of the Fund's Series A and some or all additional series that the
Fund may establish from time to time ("Series"); and
WHEREAS, the Fund has authorized the creation of a new series, Series D,
and has amended its registration statement on Form N-1A to register shares of
beneficial interest of Series D with the Securities and Exchange Commission; and
WHEREAS, the Fund, for which Aeltus Investment Management, Inc.
serves as investment adviser to Series D, desires to appoint Mellon as
custodian of the assets of its Series D;
NOW THEREFORE, it is agreed as follows:
1. The Fund, on behalf of Series D, hereby appoints Mellon, and Mellon
hereby accepts appointment, as the custodian of the assets of Series D, in
accordance with all the terms and conditions set forth in the Agreement.
2. The Fund is entering into the Agreement on behalf of Series D
individually, and not jointly with any other Series. Without otherwise limiting
the generality of the foregoing,
(a) any breach of the Agreement regarding the Fund with respect to any
one Series shall not create a right or obligation with respect to
any other Series;
(b) under no circumstances shall the Bank have the right to set off
claims relating to a Series by applying property of any other
Series;
(c) no Series shall have the right of set off against the assets held
by any other Series;
<PAGE>
(d) the business and contractual relationships created by the Agreement
as amended hereby, and the consequences of such relationships relate
solely to the particular Series to which such relationship was
created; and
(e) all property held by the Bank on behalf of a particular Series
shall relate solely to the particular Series.
3. The Fund and Mellon agree that the trustees, officers, and agents of
the Fund and the shareholders of any of its Series shall not personally be bound
by or liable under this Agreement, as provided in the Fund's Declaration of
Trust. The execution and delivery of this Agreement have been authorized by the
trustees of the Fund and executed and delivered by an authorized officer of the
Fund, acting as such, and neither such authorization nor such execution and
delivery shall be deemed to have been made by any of them individually or to
impose any liability on any of them personally, but shall bind only the assets
and property of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their officers designated below on the date mentioned below.
Mellon Bank, N.A. Aetna GET Fund, on behalf of
Series D, individually
By: /s/ Christi R. Caperton By: /s/ Stephanie A. Taylor
------------------------ ---------------------------
Name: Christi R. Caperton Name: Stephanie A. Taylor
Title: Vice President, Mellon Bank, N.A. Title: Treasurer
Date: 9/29/98 Date: 8/31/98
- 2 -
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made by and between AETNA GET FUND, a Massachusetts
business trust (the "Fund"), on behalf of its Series B and Series C (the
"Series"), and AELTUS INVESTMENT MANAGEMENT, INC., a Connecticut corporation
(the "Administrator"), with respect to the following recital of facts:
R E C I T A L
WHEREAS, the Fund is registered as an open-end diversified management
investment company under the Investment Company Act of 1940 (the "1940 Act");
and
WHEREAS, the Administrator is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as an
investment adviser and an administrator of investment companies; and
WHEREAS, the Fund has established the Series; and
WHEREAS, the Fund, on behalf of each of its Series, and the
Administrator desire to enter into an agreement to provide for administrative
services for the Series on the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable considerations, the receipt of which is
hereby acknowledged, the parties agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADMINISTRATOR
The Administrator is hereby appointed to serve as the Administrator to
the Series, to provide the administrative services described herein and assume
the obligations set forth in Section II, subject to the terms of this Agreement
and the control of the Fund's Board of Trustees (the "Board"). The Administrator
shall, for all purposes herein, be deemed an independent contractor and shall
have, unless otherwise expressly provided or authorized, no authority to act for
or represent the Series in any way or otherwise be deemed an agent of the
Series.
II. DUTIES OF THE ADMINISTRATOR
In carrying out the terms of this Agreement, the Administrator shall:
A. provide office space, equipment and facilities (which may be the
Administrator's or its affiliates') for maintaining the Fund's organization, for
meetings of the Fund's Board and shareholders, and for performing administrative
services hereunder;
<PAGE>
B. supervise and manage all aspects of the Series' operations (other
than investment advisory activities), supervise relations with, and monitor the
performance of, custodians, depositories, transfer and pricing agents,
accountants, attorneys, underwriters, brokers and dealers, insurers and other
persons in any capacity deemed to be necessary and desirable by the Board;
C. provide internal clerical and legal services, and stationery and
office supplies;
D. provide accounting services, including:
1. determining and arranging for the publication of the net asset
value of each Series;
2. preparing financial information for presentation to the Fund's
Board and management;
3. preparing and monitoring the Fund's annual expense budget, and
establishing daily accruals;
4. coordinating payment of fund expenses;
5. calculating periodic dividend rates to be declared in accordance
with management guidelines;
6. calculating total return information as defined in the current
prospectus and statement of additional information;
7. coordinating audit packages for use by independent public
accountants;
8. responding to regulatory audits;
E. provide non-investment related statistical and research data and
such other reports, evaluations and information as the Series may request from
time to time;
F. monitor each Series' compliance with the current prospectus and
statement of additional information, the 1940 Act, the Internal Revenue Code and
other applicable laws and regulations;
G. prepare, to the extent requested by the Fund, registration
statements, proxy statements and annual and semi-annual reports to shareholders;
H. arrange for the printing and mailing (at the Series' expense) of
proxy statements and other reports or other materials provided to the Series'
shareholders;
I. support outside auditors in preparing and filing all the Series'
federal and state tax returns and required tax filings other than those required
to be made by the Series' custodian and transfer agent;
-2-
<PAGE>
J. prepare periodic reports to and filings with the Securities and
Exchange Commission (the "SEC") and state Blue Sky authorities with the advice
of the Series' counsel;
K. maintain the Fund's existence, and during such times as the shares
of the Series are publicly offered, maintain the registration and qualification
of the Series' shares under federal and state law;
L. keep and maintain the financial accounts and records of the Series;
M. provide the Board on a regular basis with reports and analyses of
the Series' operations and the operations of comparable investment companies;
and
N. take any other actions which appear to the Administrator and the
Board necessary to carry into effect the purposes of this Agreement.
III. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE ADMINISTRATOR
The Administrator hereby represents and warrants to the Fund as
follows:
1. Due Incorporation and Organization. The Administrator is duly
organized and is in good standing under the laws of the State of Connecticut and
is fully authorized to enter into this Agreement and carry out its duties and
obligations hereunder.
2. Best Efforts. The Administrator at all times shall provide its
best judgment and effort to the Series in carrying out its obligations
hereunder.
B. REPRESENTATIONS AND WARRANTIES OF THE SERIES AND THE FUND
The Fund, on behalf of each of its Series, hereby represents and
warrants to the Administrator 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 terms.
2. Registration. The Fund is registered as an investment company
with the SEC under the 1940 Act and shares of the Series are registered or
qualified for offer and sale to the public under the Securities Act of 1933 (the
"1933 Act"), and all applicable state securities laws. Such registrations or
qualifications will be kept in effect during the term of this Agreement.
-3-
<PAGE>
IV. CONTROL BY THE BOARD OF TRUSTEES
Any activities undertaken by the Administrator pursuant to this
Agreement on behalf of the Series shall at all times be subject to any
directives of the Board.
V. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Administrator
shall at all times conform to:
A. all applicable provisions of the 1940 Act;
B. the provisions of the registration statement of the Fund under the
1933 Act and the 1940 Act;
C. the provisions of the Fund's Articles of Incorporation, as amended;
D. the provisions of the By-Laws of the Fund, as amended; and
E. any other applicable provisions of state and federal law.
VI. DELEGATION OF RESPONSIBILITIES
All services to be provided by the Administrator under this Agreement
may be furnished by any directors, officers or employees of the Administrator or
by any affiliates of the Administrator under the Administrator's supervision.
VII. COMPENSATION
For the services to be rendered, the facilities furnished and the
expenses assumed by the Administrator, the Fund, on behalf of each of its
Series, shall pay to the Administrator an annual fee, payable monthly (in
arrears), based upon the following average daily net assets of each of its
Series:
<TABLE>
<CAPTION>
Rate Net Assets
---- ----------
<S> <C> <C>
.075% on the 1st $5 billion
.05% over $5 billion
</TABLE>
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily at the rate of 1/365 of the annual administration
fee applied to the daily net assets of the Series. If this Agreement becomes
effective subsequent to the first day of a month or shall terminate before the
last day of a month, compensation for that part of the month this Agreement is
in effect shall be prorated in a manner consistent with the calculation of the
fees as set forth above.
-4-
<PAGE>
VIII. NON-EXCLUSIVITY
The services of the Administrator to the Series are not to be deemed to
be exclusive, and the Administrator shall be free to render administrative or
other services to others (including other investment companies) and to engage in
other activities, so long as its services under this Agreement are not impaired
thereby. It is understood and agreed that officers and directors of the
Administrator may serve as officers or trustees of the Fund, and that officers
or trustees of the Fund may serve as officers or directors of the Administrator
to the extent permitted by law; and that the officers and directors of the
Administrator are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners,
officers, directors or trustees of any other firm or trust, including other
investment companies.
IX. TERM
This Agreement shall become effective on May 1, 1998, and shall
continue through December 31, 1998. Thereafter it shall continue for successive
annual 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 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.
X. TERMINATION
This Agreement may be terminated at any time, without the payment of
any penalty, by vote of the Fund's trustees or by vote of a majority of the
Series' outstanding voting securities, as defined in Section 2(a)(42) of the
1940 Act, or by the Administrator, on sixty (60) days' written notice to the
other party.
XI. LIABILITY OF ADMINISTRATOR AND INDEMNIFICATION
A. LIABILITY
The Administrator shall be liable to the 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 Administrator or its officers, directors
or employees, that is found to involve willful misfeasance, bad faith or
negligence, or reckless disregard by the Administrator of its duties under this
Agreement, in connection with the services rendered by the Administrator
hereunder.
-5-
<PAGE>
B. INDEMNIFICATION
In the absence of willful misfeasance, bad faith, negligence or
reckless disregard of obligations or duties hereunder on the part of the
Administrator or any officer, director or employee of the Administrator, to the
extent permitted by applicable law, the Fund hereby agrees to indemnify and hold
the Administrator harmless from and against all claims, actions, suits and
proceedings at law or in equity, whether brought or asserted by a private party
or a governmental agency, instrumentality or entity of any kind, relating to the
sale, purchase, pledge of, advertisement of, or solicitation of sales or
purchases of any security (whether of the Series or otherwise) by the Fund, its
officers, trustees, employees or agents in alleged violation of applicable
federal, state or foreign laws, rules or regulations.
XII. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Administrator for this
purpose shall be 242 Trumbull Street, Hartford, Connecticut 06103-1205, and the
address of the Fund for this purpose shall be 151 Farmington Avenue, Hartford,
Connecticut 06156.
XIII. QUESTIONS OF INTERPRETATIONS
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 SEC issued pursuant to the 1940 Act, or contained in no-action and
interpretive positions taken by the SEC 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 SEC, such provisions shall be deemed to
incorporate the effect of such rule or order.
XIV. SERVICE MARK
The service mark of the Fund and the 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
-6-
<PAGE>
Company) and their continued use is subject to the right of Aetna Services, Inc.
to withdraw this permission in the event the Administrator or another subsidiary
or affiliated corporation of Aetna Services, Inc. should not be the
Administrator of the Series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the 25th day of March,
1998.
AELTUS INVESTMENT
MANAGEMENT, INC.
Attest: /s/ Susan Harinstein By: /s/ John Y. Kim
-------------------- ---------------
Name: Susan Harinstein Name: John Y. Kim
---------------------- --------------
Title: Assistant Secretary Title: President
--------------------- -------------
AETNA GET FUND,
on behalf its Series B and Series C
Attest: /s/ DeAnn S. Anastasio By: /s/ J. Scott Fox
----------------------- ----------------
Name: DeAnn S. Anastasio Name: J. Scott Fox
------------------------ --------------
Title: Assistant Secretary Title: President
----------------------- -------------
-7-
AMENDMENT
TO
ADMINISTRATIVE SERVICES AGREEMENT
WHEREAS, AETNA GET FUND, a Massachusetts business trust (the "Fund"), on
behalf of its Series B and Series C (the "Series"), has entered into an
Administrative Services Agreement (the "Agreement") with AELTUS INVESTMENT
MANAGEMENT, INC., a Connecticut corporation ("Aeltus"), effective May 1, 1998;
and
WHEREAS, the Fund has established a new series, Series D; and
WHEREAS, the Fund, on behalf of Series D, desires to appoint
Aeltus as the administrator of Series D;
NOW THEREFORE, it is agreed as follows:
1. The Fund, on behalf of Series D, hereby appoints Aeltus, and Aeltus
hereby accepts appointment, as the administrator, in accordance with all
the terms and conditions set forth in the Agreement.
2. The Compensation provision for Series D will be as follows:
VII. COMPENSATION
For the services to be rendered, the facilities furnished, and the
expenses assumed by the Administrator under this Agreement, the Fund, on
behalf of the Series, shall pay to the Administrator an annual fee,
payable monthly (in arrears), based upon the following average daily net
assets of the Series:
Rate Net Assets
---- ----------
.075% on the 1st $5 billion
.05% over $5 billion
Except as hereinafter set forth, compensation under this Agreement shall
be calculated and accrued daily at the rate of 1/365 of the annual
administration fee applied to the daily net assets of the Series. 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 will be prorated in a manner
consistent with the calculation of the fees as set forth above.
<PAGE>
The Administrator will reimburse the Fund, on behalf of the Series, for
out-of-pocket expenses not covered by this Agreement to ensure that such
charges do not exceed .075% of the average daily net assets of the
Series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the 25th day of
September, 1998.
AELTUS INVESTMENT
MANAGEMENT, INC.
Attest: /s/ Katherine Cheng By: /s/ John Y. Kim
----------------------- -----------------------
Name: Katherine Cheng Name: John Y. Kim
----------------------- -----------------------
Title: Assistant Secretary Title: President
----------------------- -----------------------
AETNA GET FUND,
on behalf of its Series D
Attest: /s/ Daniel E. Burton By: /s/ J. Scott Fox
----------------------- -----------------------
Name: Daniel E. Burton Name: J. Scott Fox
----------------------- -----------------------
Title: Assistant Secretary Title: President
----------------------- -----------------------
Aetna Inc.
242 Trumbull Street
Hartford, CT 06103-1205
September 30, 1998 Amy R. Doberman
Counsel
Law Division, ALT5
Investments & Financial Services
(860) 275-2032
Fax: (860) 275-2158
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Aetna GET Fund
Post-Effective Amendment No. 13 to
Registration Statement on Form N-1A
(File No. 33-12723 and 811-5062)
Dear Sir or Madam:
The undersigned serves as counsel to Aeltus Investment Management, Inc., the
investment adviser to Aetna GET 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, and do not purport to be an expert on the laws of any other state.
<PAGE>
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.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Amy R. Doberman
Amy R. Doberman
Counsel
POWER OF ATTORNEY
I, the undersigned officer of Aetna GET Fund, Aetna Income Shares, Aetna
Variable Fund and Aetna Variable Encore Fund hereby constitute and appoint Amy
R. Doberman, Julie E. Rockmore and Daniel E. Burton, and each of them
individually, my true and lawful attorneys, with full power to them and each of
them to sign for me, and in my name and in the capacity indicated below, any and
all amendments to the Registration Statements listed below filed with the
Securities and Exchange Commission under the Securities Act of 1933 and the
Investment Company Act of 1940:
Registration Statements filed under the Securities Act of 1933:
<TABLE>
<S> <C>
Aetna GET Fund 33-12723
Aetna Income Shares 2-47232
Aetna Variable Fund 2-51739
Aetna Variable Encore Fund 2-53038
</TABLE>
Registration Statements filed under the Investment Company Act of 1940:
<TABLE>
<S> <C>
Aetna GET Fund 811-5062
Aetna Income Shares 811-2361
Aetna Variable Fund 811-2514
Aetna Variable Encore Fund 811-2565
</TABLE>
hereby ratifying and confirming on this 29th day of September, 1998, my
signature as it may be signed by my said attorneys to any and all amendments to
such Registration Statements.
Signature/Title
---------------
/s/ Stephanie A. DeSisto
--------------------------------------------------------------
Stephanie A. DeSisto
Vice President, Treasurer
and Chief Financial Officer
