As filed with the Securities and Exchange File No. 33-12723
Commission on May 25, 1999 File No. 811-5062
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
- --------------------------------------------------------------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 15
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF
1940
Amendment No. 18
AETNA GET FUND
--------------
151 Farmington Avenue, Hartford, Connecticut 06156
--------------------------------------------------
(860) 275-2032
Amy R. Doberman, Counsel
10 State House Square SH11, Hartford, Connecticut 06103-3602
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
X On June 1, 1999 pursuant to paragraph (b) of Rule 485
----
<PAGE>
AETNA GET FUND
Series E
PROSPECTUS
JUNE 1, 1999
Aetna GET Fund (Fund) is an open-end investment company authorized to issue
multiple series of shares. This prospectus offers shares of Series E (GET E).
GET E shares will be offered from June 15, 1999 through September 14, 1999, as a
funding option under certain variable annuity contracts issued by Aetna Life
Insurance and Annuity Company (Aetna).
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Anyone
who represents to the contrary has committed a criminal offense.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
-----
<S> <C>
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RISKS .......... 3
OTHER CONSIDERATIONS ..................................................... 5
MANAGEMENT OF GET E ...................................................... 6
INVESTMENTS IN, EXCHANGES AND REDEMPTIONS FROM GET E ..................... 7
TAX INFORMATION .......................................................... 8
PERFORMANCE OF A SIMILARLY MANAGED FUND .................................. 8
ADDITIONAL INFORMATION ................................................... 9
</TABLE>
2 Aetna GET Fund
<PAGE>
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RISKS
Shares of GET E are offered to Aetna separate accounts that fund variable
annuity contracts. GET E has both an Offering Period and a Guarantee Period. The
Offering Period is the only time investors can invest in GET E. The Offering
Period will run from June 15, 1999 through September 14, 1999. During the
Offering Period all deposits made by investors will be invested exclusively in
money market securities. Once the Offering Period terminates, the Guarantee
Period begins. The Guarantee Period will run from September 15, 1999 through
September 14, 2004 (Maturity Date). During the Guarantee Period all assets will
be invested in accordance with the investment objective and strategies described
below. Investors receive a guarantee from Aetna that on the Maturity Date, if
they do not redeem their shares prior to the Maturity Date, they will receive no
less than the value of their separate account investment directed to GET E, as
of the last day of the Offering Period, adjusted for certain charges
(Guarantee). The Guarantee does not apply to dividends or distributions made by
GET E. Please refer to the contract prospectus, prospectus summary or disclosure
statement for more information about the Guarantee.
o Set forth below is a description of the investment objective, the
principal investment strategies, and the principal risks associated with
investing in GET E.
o Aeltus Investment Management, Inc. (Aeltus) serves as investment adviser
of GET E.
Shares of GET E will rise and fall in value and you could lose money by
investing in GET E if you redeem your shares prior to the Maturity Date. There
is no guaranty that GET E will achieve its investment objective. An investment
in GET E is not a bank deposit and is not insured or guaranteed by the FDIC or
any other government agency.
Investment Objective. GET E seeks to achieve maximum total return without
compromising a minimum targeted return (Targeted Return) by participating in
favorable equity market performance during the Guarantee Period.
Principal Investment Strategies. Under normal market conditions, GET E
allocates its assets among the following asset classes:
o Prior to September 15, 1999, GET E assets will be invested in money market
instruments.
o On and after September 15, 1999, GET E assets will be allocated between
the:
o Equity Component, consisting primarily of common stocks; and the
o Fixed Component, consisting primarily of short- to intermediate-term
U.S. Government securities.
The minimum Targeted Return is 1.5% per year over the Guarantee Period. The
Targeted Return is determined by taking into consideration the insurance company
separate account charges assessed on a contract owner or retirement plan
participant investing in the GET E investment option through an Aetna variable
annuity contract and the expenses of GET E. There is no assurance that the Fund
will achieve the Targeted Return. However, the Guarantee promises investors only
a return of the principal amount invested in GET E through the separate account
(less certain maintenance charges). The Guarantee does not promise that
investors will earn the Targeted Return.
Equity Component Aeltus invests at least 80% of the Equity Component's net
assets in stocks included in the Standard and Poor's 500 Index (S&P 500), other
than Aetna Inc. The S&P 500 is a stock market index comprised of common stocks
of 500 of the largest companies in the U.S. selected by Standard and Poor's
Corporation (S&P).
Aeltus manages the Equity Component by overweighting those stocks in the S&P 500
that it believes will outperform the S&P 500, and underweighting (or avoiding
altogether) those stocks that Aeltus
Aetna GET Fund 3
<PAGE>
believes will underperform the S&P 500. Stocks that Aeltus believes are likely
to match the performance of the S&P 500 are invested in proportion to their
representation in the index. To determine which stocks to weight more or less
heavily, Aeltus uses internally developed quantitative computer models to
evaluate various criteria, such as the financial strength of each company and
its potential for strong, sustained earnings growth. At any one time, Aeltus
generally includes in the Equity Component approximately 400 stocks included in
the S&P 500. Although the Equity Component will not hold all of the stocks in
the S&P 500, Aeltus expects that there will be a close correlation between the
performance of the Equity Component and that of the S&P 500 in both rising and
falling markets.
Fixed Component Aeltus looks to select investments for the Fixed Component with
financial characteristics that will, at any point in time, closely resemble
those of a portfolio of zero coupon bonds which mature on the Maturity Date. The
Fixed Component will consist primarily of securities issued or guaranteed by the
U.S. Government, its agencies or instrumentalities, particularly STRIPS
(Separate Trading of Registered Interest and Principal of Securities). STRIPS
are created by the Federal Reserve Bank by separating the interest and principal
components of an outstanding U.S. Treasury or agency bond and selling them as
individual securities. The Fixed Component may also consist of corporate
obligations which are rated at the time of purchase within one of the four
highest rating categories assigned by Moody's Investors Service, Inc. (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. The Fixed Component may also
include money market instruments.
Asset Allocation Aeltus uses a proprietary computer model to determine on a
daily basis the percentage of assets allocated to the Equity Component and to
the Fixed Component in an attempt to meet or exceed the Targeted Return. The
model evaluates a number of factors, including the then current market value of
GET E, interest rates, market volatility, the Targeted Return and the Maturity
Date. The model determines the initial allocation between the Equity Component
and the Fixed Component on September 15, 1999 and evaluates the allocations on a
daily basis thereafter. 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 amount
directed to the Equity Component is always restricted so that even if it were to
experience a 30% decline in value on a given day and before being redirected to
the Fixed Component, the remaining assets would still be sufficient to meet the
Targeted Return.
Principal Risks. The principal risks of investing in GET E are those generally
attributable to stock and bond investing. The success of GET E's strategy
depends on Aeltus' skill in allocating assets between the Equity Component and
the Fixed Component and in selecting investments within each component. Because
GET E invests in both stocks and bonds, GET E may underperform stock funds when
stocks are in favor and underperform bond funds when bonds are in favor.
The risks associated with investing in stocks include sudden and unpredictable
drops in the value of the market as a whole and periods of lackluster or
negative performance. The performance of the Equity Component also depends
significantly on Aeltus' skill in determining which securities to overweight,
underweight or avoid altogether.
The principal risk associated with investing in bonds is that interest rates may
rise, which generally causes bond prices to fall. The market price of STRIPS
generally are more volatile than the market prices of other fixed income
securities with similar maturities that pay interest periodically. STRIPS are
likely to respond to changes in interest rates to a greater degree than do
securities having similar maturities and credit quality. With corporate bonds,
there is a risk that the issuer will default on the payment of principal or
interest.
If at the inception of, or any time during, the Guarantee Period, interest rates
are low, GET E assets may be largely invested in the Fixed Component in order to
increase the likelihood of achieving the Targeted
4 Aetna GET Fund
<PAGE>
Return at the Maturity Date. The effect of low interest rates on GET E would
likely be more pronounced at the beginning of the Guarantee Period, as the
initial allocation of assets would include more fixed income securities. In
addition, if during the Guarantee Period the equity markets experienced a major
decline, GET E assets may become largely invested in the Fixed Component in
order to increase the likelihood of achieving the Targeted Return at the
Maturity Date. In fact, if the value of the Equity Component were to decline by
30% in a single day, a complete reallocation to the Fixed Component would likely
occur to ensure that the Targeted Return would be achieved at the end of the
Guarantee Period. Use of the Fixed Component reduces GET E's ability to
participate as fully in upward equity market movements, and therefore represents
some loss of opportunity, or opportunity cost, compared to a portfolio that is
fully invested in equities.
Because GET E is new, it does not have return information an investor might find
useful in evaluating the risks of investing in the Fund.
OTHER CONSIDERATIONS
In addition to the principal investments, strategies and risks described above,
GET E may also invest in other securities, engage in other practices, and be
subject to additional risks, as discussed below and in the Statement of
Additional Information (SAI).
Futures Contracts. GET E may invest in futures contracts, which provide for the
future sale by one party and purchase by another party of a specified amount of
a financial instrument or a specific stock market index for a specified price on
a designated date. GET E uses futures primarily to increase exposure to a
particular asset class.
The main risk with futures contracts is that they can amplify a gain or loss,
potentially earning or losing substantially more money than the actual
investment made in the futures contract.
Year 2000. The date-related computer issue known as the "Year 2000 problem"
could have an adverse impact on the quality of services provided to GET E and
its shareholders. However, GET E understands that its key service providers,
including but not limited to the investment adviser and its affiliates, transfer
agent, custodian, and the broker-dealers through which its trades are executed,
are taking steps to address the issue. The costs of these efforts will not
affect GET E. The Year 2000 problem also may adversely affect the issuers in
which GET E invests. For example, issuers may incur substantial costs to address
the problem. They may also suffer losses caused by corporate and governmental
data processing errors. GET E and its investment adviser will continue to
monitor developments relating to this issue.
Closing the Fund. If GET E assets do not reach $100 million by the end of the
Offering Period, or in the event of severe market volatility or adverse market
conditions during the Offering Period, the Fund's Board of Trustees (Board)
reserves the right not to operate GET E in accordance with its Investment
Objective and its Principal Investment Strategies. In that event, Aeltus will
continue to invest GET E assets in money market instruments and Aetna will
notify investors within 15 days after the end of the Offering Period that GET E
is being discontinued. Investors will have 45 days following the end of the
Offering Period to transfer their money from GET E. If at the end of the 45-day
period, an investor does not make an election, his or her investment in GET E
will be transferred to Aetna Money Market VP, a money market fund.
Aetna GET Fund 5
<PAGE>
MANAGEMENT OF GET E
Aeltus Investment Management, Inc., 10 State House Square, Hartford, Connecticut
06103-3602, serves as investment adviser of GET E. Aeltus is responsible for
managing the assets of GET E in accordance with its investment objective and
policies, subject to oversight by the Board. Aeltus has acted as adviser or
subadviser to mutual funds since 1994 and has managed institutional accounts
since 1972.
Advisory Fees. For its services, Aeltus is entitled to receive an advisory fee,
which is set forth below. The advisory fee is expressed as an annual rate based
on the average daily net assets of GET E.
<TABLE>
<CAPTION>
<S> <C>
Offering Period 0.25%
Guarantee Period 0.60%
</TABLE>
Portfolio Management
Asset Allocation. Neil Kochen, Managing Director, Aeltus, is responsible for
overseeing the overall strategy of GET E and the allocation of GET E assets
between the Equity and Fixed Components. Mr. Kochen joined the Aetna
organization in 1985 and has served as head of fixed income quantitative
research, head of investment strategy and policy, and as a senior portfolio
manager.
The following people are primarily responsible for the day-to-day management of
the Fund:
Equity Component. Geoffrey A. Brod, Portfolio Manager, Aeltus, manages the
Equity Component. He has over 30 years of experience in quantitative
applications and has over 11 years of experience in equity investments. Mr.
Brod has been with the Aetna organization since 1966.
Fixed Component. Hugh T.M. Whelan, Portfolio Manager, Aeltus, manages the Fixed
Component. Mr. Whelan joined the Aetna organization in 1989 and manages
fixed-income portfolios employing different strategies.
6 Aetna GET Fund
<PAGE>
INVESTMENTS IN, EXCHANGES AND REDEMPTIONS FROM GET E
Investors purchasing shares in connection with an insurance company contract or
policy should refer to the documents pertaining to the contract or policy for
information on how to direct investments in or redemptions from (including
making exchanges into or out of) GET E, and any fees that may apply. The Fund
has authorized Aetna to receive purchase and redemption orders on its behalf.
Orders for the purchase or redemption of Fund shares that are received before
the close of regular trading on the New York Stock Exchange (normally 4:00 p.m.
eastern time) are effected at the net asset value (NAV) per share determined
that day, as described below. The insurance company has been designated an agent
of the Fund for receipt of purchase and redemption orders. Therefore, receipt of
an order by the insurance company constitutes receipt by the Fund, provided that
the Fund receives notice of the orders by 9:30 a.m. eastern time the next day on
which the New York Stock Exchange is open for trading.
Net Asset Value. The NAV of GET E is determined as of the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. eastern time).
In calculating the NAV, securities are valued primarily by independent pricing
services using market quotations. Short-term debt securities maturing in less
than 60 days are valued using amortized cost. Securities for which market
quotations are not readily available are valued at their fair value, subject to
procedures adopted by the Board.
Business Hours. The Fund is open on the same days as the New York Stock
Exchange (generally, Monday through Friday). Representatives are available from
8:00 a.m. to 8:00 p.m. eastern time on those days.
The Fund may refuse to accept any purchase request, especially if as a result of
such request, in Aeltus' judgment, it would be too difficult to invest
effectively in accordance with GET E's investment objective.
The Fund reserves the right to suspend the offering of shares, or to reject any
specific purchase order. The Fund may suspend redemptions or postpone payments
when the New York Stock Exchange is closed or when trading is restricted for any
reason or under emergency circumstances as determined by the Securities and
Exchange Commission.
Aetna GET Fund 7
<PAGE>
TAX INFORMATION
GET E intends to qualify as a regulated investment company by satisfying the
requirements under Subchapter M of the Internal Revenue Code of 1986, as amended
(Code), including requirements with respect to diversification of assets,
distribution of income and sources of income. As a regulated investment company,
GET E generally will not be subject to tax on its ordinary income and net
realized capital gains.
GET E also intends to comply with the diversification requirements of Section
817(h) of the Code for those investors who acquire shares through variable
annuity contracts so that those contract owners should not be subject to federal
tax on distributions from GET E to the insurance company separate accounts.
Contract owners should review their contract prospectus, prospectus summary or
disclosure statement for information regarding the personal tax consequences of
purchasing a contract.
Dividends and Distributions. Dividends and capital gains distributions, if any,
are paid on an annual basis around the end of the year, December 31.
Both income dividends and capital gains distributions are paid by GET E on a per
share basis. As a result, at the time of payment, the share price of GET E will
be reduced by the amount of the payment.
PERFORMANCE OF A SIMILARLY MANAGED FUND
GET E is recently organized and does not yet have a performance record. However,
GET E has an investment objective and investment strategies substantially
similar to a separate series of the Fund, GET C. Therefore, the performance of
GET C is provided below.
The results shown reflect the reinvestment of dividends and distributions, and
were calculated in the same manner that will be used by GET E to calculate its
own performance. GET C performance data:
o Was calculated on a total return basis and includes all dividends and
interest, accrued income and realized and unrealized gains and losses.
o Reflects the deduction of the historical fees and expenses paid by GET
C, and not those charged to GET E.
The performance information does not reflect the deduction of any fees or
charges that are imposed by Aetna in connection with its sale of variable
contracts. Had those fees and charges been deducted, performance would have been
lower. Please refer to your contract prospectus for information pertaining to
these fees and charges.
Investors should be mindful that the performance of GET E will be driven, to a
great extent, by the allocation of assets between the Equity Component and the
Fixed Component, and the performance of the equity and bond markets during the
Guarantee Period. Investors should not expect that the initial or subsequent
allocations of assets of GET E, or pertinent market conditions during GET E's
Guarantee Period, will be similar to those in effect during GET C's Guarantee
Period.
The following table shows average annual total returns for the period ended
March 31, 1999 for GET C and its respective benchmark index. Investors should
not consider the performance data of GET C to be an indication of the future
performance of GET E.
<TABLE>
<CAPTION>
1 Year Since Inception
<S> <C> <C>
GET C 18.58% 26.50% (12/17/96)
S&P 500 Index 18.45% 29.86% (12/31/96)
</TABLE>
8 Aetna GET Fund
<PAGE>
ADDITIONAL INFORMATION
The SAI, which is incorporated by reference into this Prospectus, contains
additional information about GET E and the Fund generally.
You may request free of charge the current SAI or other information about GET E,
by calling 1-800-525-4225 or writing to:
Aetna GET Fund
151 Farmington Avenue
Hartford, Connecticut 06156-8962
The SEC also makes available to the public reports and information about the
Fund. Certain reports and information, including the SAI, are available on the
SEC's website (http://www.sec.gov) or at the SEC's public reference room in
Washington, D.C. You may call 1-800-SEC-0330 to get information about the
operations of the public reference room or you may write to Public Reference
Section, Washington, D.C. 20549-6009 to get information from the Public
Reference Section. The Public Reference Section will charge a duplicating fee
for copying and sending any information you request.
Investment Company Act File No. 811-5062.
Aetna GET Fund 9
<PAGE>
PROS.GETE-99 June 1999
<PAGE>
AETNA GET FUND
SERIES E
Statement of Additional Information dated June 1, 1999
This Statement of Additional Information (Statement) is not a Prospectus and
should be read in conjunction with the current Prospectus for Aetna GET Fund
(Fund), Series E (GET E). Capitalized terms not defined herein are used as
defined in the Prospectus. Aetna GET Fund is authorized to issue multiple series
of shares, each representing a diversified portfolio of investments with
different investment objectives, policies and restrictions. Aetna GET Fund
currently has authorized five series. This Statement applies to GET E.
A free copy of GET E's Prospectus is available upon request by writing to the
Fund at: 151 Farmington Avenue, Hartford, Connecticut 06156, or by calling:
(800) 367-7732.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
GENERAL INFORMATION........................................................ 1
INVESTMENT OBJECTIVE AND RESTRICTIONS...................................... 2
INVESTMENT TECHNIQUES AND RISK FACTORS..................................... 3
OTHER CONSIDERATIONS....................................................... 8
THE ASSET ALLOCATION PROCESS............................................... 9
TRUSTEES AND OFFICERS OF THE FUND..........................................10
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS.................................13
INVESTMENT ADVISORY AGREEMENT..............................................13
ADMINISTRATIVE SERVICES AGREEMENT..........................................13
CUSTODIAN..................................................................14
TRANSFER AGENT.............................................................14
INDEPENDENT AUDITORS.......................................................14
PRINCIPAL UNDERWRITER......................................................14
BROKERAGE ALLOCATION AND TRADING POLICIES..................................14
PURCHASE AND REDEMPTION OF SHARES..........................................16
NET ASSET VALUE............................................................16
TAX STATUS.................................................................16
PERFORMANCE INFORMATION....................................................17
</TABLE>
<PAGE>
GENERAL INFORMATION
Organization Aetna GET Fund was organized as a Massachusetts business trust on
March 9, 1987. GET E currently operates under a Declaration of Trust
(Declaration) dated March 9, 1987.
Capital Stock Shares of GET E have no preemptive or conversion rights. Each
share has the same rights to share in dividends declared by GET E. Upon
liquidation of GET E, shareholders are entitled to share pro rata in the net
assets of the Fund available for distribution to shareholders. Shares of GET E
are fully paid and nonassessable.
Shareholder Liability Aetna GET Fund is organized as a "Massachusetts business
trust." Under Massachusetts law, shareholders of such a business trust may,
under certain circumstances, be held personally liable as partners for the
obligations of GET E, which is not true in the case of a corporation. The
Declaration of GET E provides that shareholders shall not be subject to any
personal liability for the acts or obligations of the Fund and that every
written agreement, obligation, instrument or undertaking made by GET E shall
contain a provision to the effect that shareholders are not personally liable
thereunder. With respect to tort claims, contract claims where the provision
referred to is omitted from the undertaking, and claims for taxes and certain
statutory liabilities in other jurisdictions, a shareholder may be held
personally liable to the extent that claims are not satisfied by GET E. However,
upon payment of any such liability the shareholder will be entitled to
reimbursement from the general assets of the Fund. The Board of Trustees (Board)
intends to conduct the operations of GET E, with the advice of counsel, in such
a way as to avoid, as much as possible, ultimate liability of the shareholders
for liabilities of the Fund.
Voting Rights Shareholders of GET E are entitled to one vote for each full share
held (and fractional votes for fractional shares held) and will vote in the
election of the Board (to the extent hereinafter provided) and on other matters
submitted to the vote of shareholders. Investors who select GET E for investment
through their variable annuity contract (VA Contract) are not the shareholders
of the Fund. The insurance companies who issue the separate accounts are the
true shareholders, but generally pass through voting to investors as described
in the prospectus for the applicable VA Contract. Once the initial members of
the Board are elected, no meeting of the shareholders for the purpose of
electing Trustees will be held unless and until such time as less than a
majority of the Board holding office have been elected by the shareholders, or
shareholders holding 10% or more of the outstanding shares request such a vote.
The Board members then in office will call a shareholder meeting for election of
Trustees. Vacancies occurring between any such meeting shall be filled as
allowed by law, provided that immediately after filling any such vacancy, at
least two-thirds of the Board holding office have been elected by the
shareholders. Except as set forth above, the Trustees shall continue to hold
office and may appoint successor Trustees. A Trustee may be removed from office
(1) at any time by two-thirds vote of the Board; (2) by a majority vote of the
Board where any Trustee becomes mentally or physically incapacitated; or (3) at
a special meeting of shareholders by a two-thirds vote of the outstanding
shares. Trustees may be removed at any meeting of shareholders by the vote of a
majority of all shares entitled to vote. Any Trustee may also voluntarily resign
from office. Voting rights are not cumulative, so that the holders of more than
50% of the shares voting in the election of Trustees can, if they choose to do
so, elect all the Trustees of GET E, in which event the holders of the remaining
shares will be unable to elect any person as a Trustee.
1
<PAGE>
INVESTMENT OBJECTIVE AND RESTRICTIONS
The investment objective for GET E 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
"Guarantee Period," from September 15, 1999 through September 14, 2004, the
Maturity Date. In seeking to achieve its investment objective, GET E 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 GET E 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 GET E.
As a matter of fundamental policy, GET E 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) Act as an underwriter of securities except to the extent that, in
connection with the disposition of securities by GET E for its portfolio, GET E
or the Fund may be deemed to be an underwriter under the provisions of the 1933
Act.
(3) Purchase real estate, interests in real estate or real estate limited
partnership interests except that, to the extent appropriate under its
investment program, GET E 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.
(4) Make loans, except that, to the extent appropriate under its investment
program, GET E may purchase bonds, debentures or other debt securities,
including short-term obligations and enter into repurchase transactions.
(5) Invest in commodity contracts, except that GET E 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.
(6) Alter, amend or modify either the Investment Objective or the Principal
Investment Strategies of GET E, as described in the Prospectus.
(7) With respect to 75% of its total assets, invest more than 5% of its
total assets in the securities of any one 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.
(8) Concentrate its investments in any one industry except that GET E 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.
2
<PAGE>
Where the investment objective or policy restricts GET E to holding or investing
a specified percentage of its assets in any type of instrument, that percentage
is measured at the time of purchase. There will be no violation of any
investment policy or restriction if that restriction is complied with at the
time the relevant action is taken, notwithstanding a later change in the market
value of an investment, in net or total assets, in securities rating of the
investment or any other change.
GET E also has adopted certain other investment policies and restrictions
reflecting the current investment practices of GET E, which may be changed by
the Board and without shareholder vote. Under such policies and restrictions,
GET E will not:
(1) Mortgage, pledge or hypothecate its assets except in connection with
loans of securities as described in (4) above, borrowings as described in (1)
above, and permitted transactions involving options, futures contracts and
options on such contracts.
(2) Invest in companies for the purpose of exercising control or
management.
(3) 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 GET E.
INVESTMENT TECHNIQUES AND RISK FACTORS
Futures and Other Derivative Instruments
GET E may use certain derivative instruments, described below and in the
Prospectus, as a means of achieving its investment objective. GET E may invest
up to 30% of its assets in derivatives to gain additional exposure to certain
markets for investment purposes while maintaining liquidity to meet shareholder
redemptions and minimizing trading costs. GET E may also use derivative
instruments for hedging purposes.
The following provides additional information about those derivative instruments
GET E may use.
Futures Contracts GET E may enter into futures contracts subject to the
restrictions described below under "Additional Restrictions on the Use of
Futures Contracts." GET E may enter into futures contracts that are traded on
notional futures exchanges and are standardized as to maturity date and
underlying financial instrument. The futures exchanges and trading in the U.S.
are regulated under the Commodity Exchange Act by the Commodities Futures
Trading Commission (CFTC).
A futures contract provides for the future sale by one party and purchase by
another party of a specified amount of a financial instrument or a specific
stock market index for a specified price on a designated date. 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, 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.
3
<PAGE>
There can be no assurance, however, that GET E will be able to enter into an
offsetting transaction with respect to a particular contract at a particular
time. If GET E 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 by, among other
things, actual and anticipated changes in interest rates and equity prices,
which in turn are affected by fiscal and monetary policies and national and
international political and economic events. Small price movements in futures
contracts may result in immediate and potentially unlimited loss or gain to GET
E relative to the size of the margin commitment. A purchase or sale of a futures
contract may result in losses in excess of the amount initially invested in the
futures contract.
When using futures contracts as a hedging technique, at best, the correlation
between changes in prices of futures contracts and of the instruments or
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 as well as
the expenses associated with creating the hedge.
Most U.S. futures exchanges limit the amount of fluctuation permitted in
interest rate futures contract prices during a single trading day, and temporary
regulations limiting price fluctuations for stock index futures contracts are
also in effect. The daily limit establishes the maximum amount that the price of
a futures contract may vary either up or down from the previous day's settlement
price at the end of a trading session. Once the daily limit has been reached in
a particular type of contract, no trades may be made on that day at a price
beyond that limit. The daily limit governs only price movement during a
particular trading day and therefore does not limit potential losses, because
the limit may prevent the liquidation of unfavorable positions. Futures contract
prices have occasionally moved to the daily limit for several consecutive
trading days with little or no trading, thereby preventing prompt liquidation of
futures positions and subjecting some persons engaging in futures transactions
to substantial losses.
"Margin" is the amount of funds that must be deposited by GET E with a
commodities broker in a custodian account in order to initiate futures trading
and to maintain open positions in GET E's futures contracts. A margin deposit is
intended to assure GET E'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 the
margin requirement, 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 GET E. These daily payments to and from
GET E are called variation margin. At times of extreme price volatility,
intra-day variation margin payments may be required. In computing daily net
asset values, GET E will mark-to-market the current value of its open futures
contracts. GET E expects to earn interest income on its initial margin deposits.
When GET E 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.
4
<PAGE>
GET E may purchase and sell futures contracts 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 GET E's total assets at market value at the time of entering into
a contract and (b) no more than 5% of the assets, at market value at the time of
entering into a contract, shall be committed to margin deposits in relation to
futures contracts.
Additional Restrictions on the Use of Futures Contracts CFTC regulations require
that to prevent GET E from being a commodity pool, GET E 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. As evidence of its hedging intent, GET E
expects that at least 75% of futures contract purchases will be "completed";
that is, upon the sale of these long contracts, equivalent amounts of related
securities will have been or are then being purchased by it in the cash market.
With respect to futures contracts that are entered into for purposes that may be
considered speculative, the aggregate initial margin for futures contracts will
not exceed 5% of GET E'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 GET E 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, GET E's loss will consist of the net amount of contractual interest
payments that GET E has not yet received. Aeltus will monitor the
creditworthiness of counterparties to GET E's interest rate swap transactions on
an ongoing basis. GET E will enter into swap transactions with appropriate
counterparties pursuant to master netting agreements. A master netting agreement
provides that all swaps done between GET E 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".
Zero Coupon Securities and STRIPS
GET E may invest in zero coupon securities, STRIPS (Separate Trading of
Registered Interest and Principal of Securities) and similarly structured
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 or agency bond and selling them as
individual securities. The market prices of zero coupon securities and STRIPS
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.
5
<PAGE>
Zero coupon securities issued by corporations are also subject to the risk that
in the event of a default, GET E may realize no return on its investment.
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 GET E's transactions in derivatives.
Risk of Imperfect Correlation GET E's ability to hedge effectively all or a
portion of its portfolio through transactions in futures on securities and
indices depends on the degree to which movements in the value of the securities
or index underlying such hedging instrument correlates with movements in the
value of the assets being hedged. If the value of the assets being hedged do not
move in the same amount or direction as the underlying security or index, the
hedging strategy for GET E might not be successful and it 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 contract and the portfolio securities
being hedged, which could result in losses both on the hedging transaction and
the portfolio securities. In such instances, GET E's overall return could be
less than if the hedging transactions had not been undertaken.
Potential Lack of a Liquid Secondary Market Prior to exercise or expiration, a
futures position may be terminated only by entering into a closing sale
transaction, which requires a secondary market on the exchange on which the
position was originally established. While GET E will establish a futures
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
contract at any specific time. In such event, it may not be possible to close
out a position held by GET E which could require it 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
positions also could have an adverse impact on GET E's ability effectively to
hedge its portfolio, or the relevant portion thereof.
The trading of futures 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 GET E may be poorer than if it had not entered into any
such contract. For example, if GET E 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, GET E 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 GET E 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.
Counterparty Risk With some derivatives there is also the risk that the
counterparty may fail to honor its contract terms, causing a loss for GET E.
6
<PAGE>
Repurchase Agreements
GET E may enter into repurchase agreements with domestic banks and
broker-dealers meeting certain size and creditworthiness standards approved by
the Board. Under a repurchase agreement, GET E 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 GET E to resell the instrument at a
fixed price and time, thereby determining the yield during the GET E's 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 GET E. 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 GET E. In
that event, GET E may incur disposition costs in connection with liquidating the
collateral, or 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, GET E's ability to liquidate the collateral may be
delayed or limited. Repurchase agreements maturing in more than seven days will
not exceed 10% of the total assets of GET E.
Variable Rate Demand Instruments
GET E may invest in variable rate demand instruments. Variable rate demand
instruments (including floating rate instruments) held by GET E may have
maturities of more than one year, provided: (i) GET E 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. GET E 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, GET E might be unable to dispose of the
note and a loss would be incurred to the extent of the default. GET E 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 GET E will also be monitored to determine whether such
notes should continue to be 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.
Foreign Securities
GET E may invest in depositary receipts of foreign companies included in the S&P
500. Depositary receipts are typically dollar denominated, although their market
price is subject to fluctuations of the foreign currency in which the underlying
securities are denominated. Depositary receipts are typically American
Depositary Receipts (ADRs), which are designed for U.S. investors and held
either in physical form or in book entry form.
Real Estate Securities
GET E may invest in real estate securities through interests in real estate
investment trusts (REITs). REITs are trusts that sell securities to investors
and use the proceeds to invest in real estate or interests in real estate. A
REIT may focus on a particular project, such as apartment complexes, or
geographic region, such as the Northeastern U.S., or both.
7
<PAGE>
Investing in stocks of real estate-related companies presents certain risks that
are more closely associated with investing in real estate directly than with
investing in the stock market generally, including: periodic declines in the
value of real estate, generally, or in the rents and other income generated by
real estate; periodic over-building, which creates gluts in the market, as well
as changes in laws (such as zoning laws) that impair the property rights of real
estate owners; and adverse developments in the real estate industry.
Bank Obligations
GET E may invest in obligations issued by domestic banks (including banker's
acceptances, commercial paper, bank notes, time deposits and certificates of
deposit).
Illiquid Securities
GET E may invest 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 shall determine
whether a particular security is deemed to be illiquid based on the trading
markets for the specific security and other factors. Illiquid securities will
not exceed 15% of the net assets of GET E.
OTHER CONSIDERATIONS
Acceptance of Deposits During Guarantee Period
In extreme circumstances, Aetna reserves the right to accept additional
deposits, including both new annuity monies and internal variable annuity
transfers, during the Guarantee Period and to discontinue this practice at its
discretion at any time.
Year 2000
As a healthcare and financial services enterprise, Aetna Inc. (referred to
collectively with its affiliates and subsidiaries as "Aetna"), is dependent on
computer systems and applications to conduct its business. Aetna has developed
and is currently executing a comprehensive risk-based plan designed to make its
mission-critical information technology (IT) systems and embedded systems Year
2000 ready. The plan for IT systems covers five stages including (i) assessment,
(ii) remediation, (iii) testing, (iv) implementation and (v) Year 2000 approval.
At year-end 1997, Aetna, including Aeltus, had substantially completed the
assessment stage. The remediation of mission-critical IT systems was completed
year-end 1998. Testing of all mission-critical IT systems is underway with Year
2000 approval targeted for completion by mid-1999. The costs of these efforts
will not affect the Fund.
Aeltus and the Fund also have relationships with broker-dealers, transfer
agents, custodians or other securities industry participants or other service
providers that are not affiliated with Aetna. Aetna, including Aeltus, has
initiated communication with its critical external relationships to determine
the extent to which Aetna may be vulnerable to such parties' failure to resolve
their own Year 2000 issues. Aetna and Aeltus have assessed and are prioritizing
responses in an attempt to mitigate risks with respect to the failure of these
parties to be Year 2000 ready. 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 GET E, including, without limitation, its operation
or the valuation of its assets.
8
<PAGE>
In addition, the Year 2000 problem may adversely affect issuers in which GET E
invests. For example, issuers may incur substantial costs to address the
problem. Aeltus and GET E will continue to monitor developments relating to this
issue.
THE ASSET ALLOCATION PROCESS
The initial allocation of the GET E 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
Guarantee Period. In periods of low interest rates, more assets have to be
allocated to the Fixed Component. Aeltus will then monitor the allocation of GET
E assets on a daily basis.
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 would have to be
allocated to the Fixed Component. On the other hand, if the Fixed Component
performance is poorer than expected, more assets would have to be allocated to
the Fixed Component, and the ability of GET E to participate in any subsequent
upward movement in the equity market would be 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 that will require reallocations only when
Equity Component and Fixed Component values have deviated by more than certain
minimal amounts since the last reallocation.
9
<PAGE>
TRUSTEES AND OFFICERS OF THE FUND
The investments and administration of the Fund are under the direction of the
Board. The Board 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 the same positions with other investment
companies in the same Fund Complex: Aetna Series Fund, Inc., Aetna Variable
Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna Balanced VP, Inc.,
Aetna Generation Portfolios, Inc., and Aetna Variable Portfolios, Inc.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Principal Occupation During Past Five Years (and
Name, Position(s) Held Positions held with Affiliated Persons or
Address and Age With each Fund Principal Underwriters of the Fund)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
J. Scott Fox* Trustee and President Director, Managing Director, Chief Operating
10 State House Square Officer, Chief Financial Officer, Aeltus
Hartford, Connecticut Investment Management, Inc., October 1997 to
Age 44 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.
- --------------------------------------------------------------------------------------------------------------------
Wayne F. Baltzer Vice President Vice President, Aeltus Capital, Inc., May 1998 to
10 State House Square present.
Hartford, Connecticut
Age 55
- --------------------------------------------------------------------------------------------------------------------
Albert E. DePrince, Jr. Trustee Professor, Middle Tennessee State University,
3029 St. Johns Drive 1991 to present.
Murfreesboro, Tennessee
Age 58
- --------------------------------------------------------------------------------------------------------------------
Stephanie A. DeSisto Vice President, Vice President, Mutual Fund Accounting, Aeltus
10 State House Square 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.
- --------------------------------------------------------------------------------------------------------------------
Amy R. Doberman Secretary General Counsel, Aeltus Investment Management,
10 State House Square Inc., February 1999 to present; Counsel, Aetna
Hartford, Connecticut Life Insurance and Annuity Company, December 1996
Age 37 to present; Attorney, Securities and Exchange
Commission, March 1990 to November 1996.
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
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 Private Investor; Economic/Financial Consultant,
5 The Knoll December 1985 to present.
Armonk, New York
Age 81
- --------------------------------------------------------------------------------------------------------------------
John Y. Kim* Trustee Director, President, Chief Executive Officer,
10 State House Square Chief Investment Officer, Aeltus Investment
Hartford, Connecticut Management, Inc., December 1995 to present;
Age 38 Director, Aetna Life Insurance and Annuity
Company, February 1995 to March 1998; 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 64
- --------------------------------------------------------------------------------------------------------------------
Frank Litwin Vice President Managing Director, Aeltus Investment Management,
10 State House Square Inc., August 1997 to present; Managing Director,
Hartford, Connecticut Aeltus Capital, Inc., May 1998 to present; Vice
Age 49 President, Fidelity Investments Institutional
Services Company, April 1992 to August 1997.
- --------------------------------------------------------------------------------------------------------------------
Shaun P. Mathews* Trustee Director, Vice President/Senior Vice President,
151 Farmington Avenue Aetna Life Insurance and Annuity Company, March
Hartford, Connecticut 1991 to present; Director, Aetna Investment
Age 43 Services, Inc., July 1993 to present; Senior
Vice President, Aetna Investment Services,
Inc., July 1993 to February, 1999.
- --------------------------------------------------------------------------------------------------------------------
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, Connecticut present; Professor, Accounting and Dean of the
Age 61 School of Management, SUNY Binghamton
(Binghamton, NY), August 1993 to August 1996
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
11
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Richard G. Scheide Trustee Trust and Private Banking Consultant, David Ross
11 Lily Street Palmer Consultants, July 1991 to present.
Nantucket, Massachusetts
Age 70
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
During the fiscal year ended December 31, 1998, members of the Board who are
also directors, officers or employees of Aetna Inc. and its affiliates were not
entitled to any compensation from the Funds. As of December 31, 1998, the
unaffiliated members of the Board received compensation in the amounts included
in the following table. No member of the Board was entitled to receive pension
or retirement benefits.
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
Aggregate Compensation from Total Compensation from the Funds and Fund
Name of Person Aetna GET Fund Complex Paid to Trustees
Position
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Corine Norgaard 1,636 68,500
Trustee
- ----------------------------------------------------------------------------------------------------------------
Sidney Koch 1,648 69,000
Trustee
- ----------------------------------------------------------------------------------------------------------------
Maria T. Fighetti* 1,624 68,000
Trustee
- ----------------------------------------------------------------------------------------------------------------
Richard G. Scheide 1,779 74,500
Trustee, Chairperson
Audit Committee
- ----------------------------------------------------------------------------------------------------------------
David L. Grove* 1,744 73,000
Trustee, Chairperson
Contract Committee
- ----------------------------------------------------------------------------------------------------------------
Albert E. DePrince, Jr. 1,216 50,778
Trustee
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
*During the fiscal year ended December 31, 1998, Ms.T Fighetti and Dr. Grove
elected to defer compensation in the amount of $20,000 and $73,000
respectively.
12
<PAGE>
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
It is expected that GET E shares will be sold to Aetna and its affiliates and
allocated to variable annuity separate accounts to fund obligations thereunder.
Contract holders in these separate accounts are provided the right to direct the
voting of fund shares at shareholder meetings. Aetna and its affiliates vote the
shares that they own in these separate accounts in accordance with contract
holders' directions. Undirected shares of GET E will be voted for each account
in the same proportion as directed shares.
Aetna (like Aeltus) is an indirect wholly-owned subsidiary of Aetna Retirement
Services, Inc., which is in turn an indirect wholly-owned subsidiary of Aetna
Inc. Aetna's principal office is located at 151 Farmington Avenue, Hartford,
Connecticut 06156. Aetna is registered with the Commission as an investment
adviser.
INVESTMENT ADVISORY AGREEMENT
The Fund entered into an investment advisory agreement (Advisory Agreement)
appointing Aeltus as the investment adviser of GET E. Under the Advisory
Agreement, and subject to the supervision of the Board, Aeltus has
responsibility for supervising all aspects of the operations of GET E 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. Aeltus is an indirect wholly-owned subsidiary of Aetna Inc., a
publicly-owned holding company whose principal operating subsidiaries engage in
the health benefits, insurance and financial services businesses in the U.S. and
internationally.
The Advisory Agreement provides that Aeltus is responsible for payment of all
costs of its personnel, its overhead and of its employees who also serve as
officers or members of the Board of GET E and that GET E is responsible for
payment of all other of its costs.
For the services under the Advisory Agreement, Aeltus will receive an annual
fee, payable monthly, as described in the Prospectus.
The service mark of GET E and the name "Aetna" have been adopted by the Fund
with the permission of Aetna Services, Inc. (ASI). Their continued use is
subject to the right of ASI to withdraw this permission in the event Aeltus or
another subsidiary or affiliate of Aetna Inc. should not be the investment
adviser of GET E.
ADMINISTRATIVE SERVICES AGREEMENT
Pursuant to an Administrative Services Agreement, Aeltus acts as administrator
and provides certain administrative and shareholder services necessary for GET
E's 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 semi-annual and annual reports
to shareholders; (5) calculating the net asset value (NAV); (6) preparing
certain shareholder communications; (7) supervising the custodians and transfer
agent; and (8) reporting to the Board.
Aeltus is the administrator for GET E. Aeltus has responsibility for certain
administrative and internal accounting and reporting services, maintenance of
relationships with third party service providers such as the transfer agent and
custodian, calculation of the NAV and other financial reports prepared for GET
E.
Listed below is the administrative services fee Aeltus is entitled to receive on
an annual rate based on average daily net assets of GET E:
13
<PAGE>
<TABLE>
<CAPTION>
Administrative Fee Series Assets
------------------ -------------
<S> <C>
0.075% on the first $5 billion
0.050% on all assets over $5 billion
</TABLE>
Aeltus is contractually obligated through the Maturity Date to waive all or a
portion of its investment advisory fee and/or its administrative services fee
and/or to reimburse a portion of GET E's other expenses in order to ensure that
the Fund's total expense ratio does not exceed 0.75% of GET E's average daily
net assets.
CUSTODIAN
Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, Pennsylvania, 15258,
serves as custodian for the assets of GET E. The custodian does not participate
in determining the investment policies of GET E nor in deciding which securities
are purchased or sold by GET E. GET E may, however, invest in obligations of the
custodian and may purchase or sell securities from or to the custodian.
TRANSFER AGENT
First Data Investor Services Group, Inc. 4400 Computer Drive, Westborough,
Massachusetts 01581 serves as the transfer agent and dividend-paying agent to
GET E.
INDEPENDENT AUDITORS
KPMG LLP, CityPlace II, Hartford, Connecticut 06103 serves as independent
auditors to GET E. KPMG LLP, provides audit services, assistance and
consultation in connection with the Commission filings.
PRINCIPAL UNDERWRITER
Aetna has agreed to use its best efforts to distribute the shares as the
principal underwriter of GET E pursuant to an Underwriting Agreement between it
and the Fund. The Agreement was approved on March 31, 1999 to continue through
December 31, 2000. The Underwriting Agreement may be continued from year to year
thereafter if approved annually by the Trustees or by a vote of holders of a
majority of GET E'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 GET E's shares without the payment of any penalty.
BROKERAGE ALLOCATION AND TRADING POLICIES
Subject to the supervision of the Board, 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
registered investment companies advised by Aeltus as a factor in the selection
of brokerage firms to execute GET E's portfolio transactions, subject to Aeltus'
duty to obtain best execution.
14
<PAGE>
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
GET E. 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 GET E and other investment companies,
services related to the execution of trades on behalf of GET E and advice as to
the valuation of securities, the providing of equipment used to communicate
research information and specialized consultations with Fund personnel with
respect to computerized systems and data furnished to GET E 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 GET E's securities and may pay higher commission rates than the lowest
available when it is reasonable to do so in light of the value of the brokerage
and research services received generally or in connection with a particular
transaction. 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 that provide
additional services to Aeltus.
Research services furnished by brokers through whom GET E 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 GET E.
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 GET E.
GET E has no present intention of effecting any brokerage transactions in
portfolio securities with Aeltus or any other affiliated person.
GET E 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 GET E and the other
accounts, 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 Board 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.
The Board also adopted a Code of Ethics governing personal trading by persons
who manage, or who have access to trading activity by, GET E. The Code of Ethics
allows trades to be made in securities that may be held by GET E. However, it
prohibits a person from taking advantage of GET E trades or from acting on
inside information. Aeltus also has adopted a Code of Ethics, which the Board
reviews annually.
15
<PAGE>
PURCHASE AND REDEMPTION OF SHARES
Shares of GET E are purchased and redeemed at the NAV next determined after
receipt of a purchase or redemption order in acceptable form as described in the
Prospectus.
The value of shares redeemed may be more or less than the shareholder's costs,
depending upon the market value of the portfolio securities at the time of
redemption. Payment for shares redeemed will be made by GET E within seven days
or the maximum period allowed by law, if shorter, after the redemption request
is received by GET E or by Aetna.
NET ASSET VALUE
Securities of GET E 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 that 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 that 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. 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. Securities for
which market quotations are not readily available are valued at their fair value
in such manner as may be determined, from time to time, in good faith, by or
under the authority of, the Board.
TAX STATUS
The following is only a limited discussion of certain additional tax
considerations generally affecting GET E. No attempt is made to present a
detailed explanation of the tax treatment of GET E and no explanation is
provided with respect to the tax treatment of any shareholder. The discussions
here and in the Prospectus are not intended as substitutes for careful tax
planning. Holders of VA Contracts must consult their contract prospectus,
prospectus summary or disclosure statement for information concerning the
federal income tax consequences of owning such contracts.
Qualification as a Regulated Investment Company
GET E has elected to be taxed as a regulated investment company under Subchapter
M of the Code. If for any taxable year GET E 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 GET E's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Qualification of Segregated Asset Accounts
Under Code section 817(h), a segregated asset account upon which a variable
annuity contract 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
16
<PAGE>
the "safe harbor" discussed below, as of the end of each calendar quarter (or
within 30 days thereafter) no more than 55% of GET E's total assets may be
represented by any one investment, no more than 70% by any two investments, no
more than 80% by any three investments and no more than 90% by any four
investments. For this purpose, all securities of the same issuer are considered
a single investment, and 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.
Foreign Investments
Investment income from foreign securities may be subject to foreign taxes
withheld at the source. It is impossible to determine the effective rate of
foreign tax in advance since the amount of GET E's assets to be invested in
various countries is not known.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on the undistributed income of 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 ).
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.
GET E 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 GET E may in certain circumstances be required to liquidate portfolio
investments to make sufficient distributions to avoid excise tax liability.
PERFORMANCE INFORMATION
Performance information for GET E including the total return, may appear in
reports or promotional literature to current or prospective shareholders.
Average Annual Total Return
Quotations of average annual total return for GET E will be expressed in terms
of the average annual compounded rate of return of a hypothetical investment in
GET E over a period of one and five years (or, if GET E has not been in
existence for such periods, up to the life of GET E), calculated pursuant to the
formula:
P(1 + T)(n) = ERV
17
<PAGE>
Where:
P = a hypothetical initial payment of $1,000
T = an average annual total return
n = the number of years
ERV = the ending redeemable value of a hypothetical $1,000 payment made at the
beginning of the 1, 5, or 10 year period at the end of the 1, 5, or 10 year
period (or fractional portion thereof).
Performance information for GET E may be compared, in reports and promotional
literature, to: (a) the S&P 500 and/or the Lehman Brothers Aggregate Bond Index,
or other indices (including, where appropriate, a blending of indices) that
measure performance of a pertinent group of securities widely regarded by
investors as representative of the securities markets in general; (b) other
groups of investment companies tracked by Morningstar or Lipper Analytical
Services, widely used independent research firms that rank mutual funds and
other investment companies by overall performance, investment objectives, and
assets, or tracked by other services, companies, publications, or persons who
rank such investment companies on overall performance or other criteria; and (c)
the Consumer Price Index (measure for inflation) to assess the real rate of
return from an investment in GET E.
Statement of Additional Information
18
<PAGE>
PART C
OTHER INFORMATION
-----------------
Item 23. Exhibits
- ------------------
(a.1) Declaration of Trust(1)
(a.2) Form of Amendment to Declaration of Trust (October 28, 1993)
(a.3) Amendment to Declaration of Trust (June 18, 1996)(1)
(a.4) Amendment to Declaration of Trust (July 19, 1996)(1)
(a.5) Amendment to Declaration of Trust (September 24, 1998)(1)
(a.6) Amendment to Declaration of Trust (March 31, 1999)
(b) Amended and Restated By-laws(2)
(c) Instruments Defining Rights of Holders(3)
(d) Investment Advisory Agreement between Aeltus Investment
Management, Inc. and Aetna GET Fund
(e) Underwriting Agreement between Aetna GET Fund and Aetna Life
Insurance and Annuity Company
(f) Trustees' Deferred Compensation Plan(1)
(g.1) Custodian Agreement between Mellon Bank, N.A. and Aetna GET
Fund(1)
(g.2) Amendment to Custodian Agreement (November 24, 1993)(1)
(g.3) Amendment to Custodian Agreement (August 26, 1996)(1)
(g.4) Amendment to Custodian Agreement (September 29, 1998)(1)
(g.5) Amendment to Custodian Agreement (April 16, 1999)
(h.1) Administrative Services Agreement between Aeltus and Aetna GET
Fund (March 25, 1998)(1)
(h.2) Amendment to Administrative Services Agreement between Aeltus
and Aetna GET Fund (September 25, 1998)(1)
(h.3) Amendment to Administrative Services Agreement between Aeltus
and Aetna GET Fund (April 1, 1999)
(i) Opinion and Consent of Counsel
(j) Not applicable
(k) Not applicable
(l) Agreement Concerning Initial Capital(4)
(m) Not applicable
(n) Not applicable
(o) Not applicable
(p.1) Power of Attorney (November 6, 1998)(5)
(p.2) Authorization for Signatures(6)
<PAGE>
1. Incorporated by reference to Post-Effective Amendment No. 13 to Registration
Statement on Form N-1A (File No. 33-12723), as filed with the Securities and
Exchange Commission on September 30, 1998.
2. 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.
3. 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.
4. 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.
5. Incorporated by reference to Post-Effective Amendment No. 14 to Registration
Statement on Form N-1A (File No. 33-12723) as filed with the Securities and
Exchange Commission on March 10, 1999.
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.
<PAGE>
Item 24. Persons Controlled by or Under Common Control
- ------------------------------------------------------
Registrant is a Massachusetts business trust for which separate financial
statements are filed. As of April 30, 1999, all of the Registrant's
outstanding voting securities were held in the name of Aetna Life
Insurance and Annuity Company ("Aetna").
A list of all persons directly or indirectly under common control with
the Registrant and a list which indicates the principal business of each
such company referenced in the diagram are incorporated herein by
reference to Item 24 of the Registration Statement on Form N-1A (File No.
33-41694), as filed with the Securities and Exchange Commission on May
17, 1999.
Item 25. Indemnification
- ------------------------
Article 5.3 of the Registrant's Amendment to Declaration of Trust,
incorporated herein by reference to Exhibit (a.1) to the Registrant's
Registration Statement on Form N-1A (File No. 33-12723), as filed
electronically on September 30, 1998, 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, incorporated
herein as Exhibit (h.1) to the Registrant's Registration Statement on
Form N-1A (File No. 33-12723), as filed electronically on September 30,
1998, provides for indemnification of the Administrator.
Item 26. Business and Other Connections of Investment Adviser
- -------------------------------------------------------------
The investment adviser, Aeltus Investment Management, Inc. ("Aeltus"), is
registered as an investment adviser with the Securities and Exchange
Commission. In addition to serving as the investment adviser and
administrator for the Registrant, Aeltus acts as investment adviser and
administrator for Aetna Income Shares, Aetna Variable Fund, Aetna
Variable Encore Fund, Aetna Balanced VP, 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, 1996/Addresses*
----------------------- ------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John Y. Kim Director, President, Chief Director (February 1995 - March 1998) -- Aetna Life
Executive Officer, Chief Insurance and Annuity Company; Senior Vice President
Investment Officer (since September 1994) -- Aetna Life Insurance and
Annuity Company.
J. Scott Fox Director, Managing Director, Vice President (since April 1997) -- Aetna Retirement
Chief Operating Officer, Chief Services, Inc.; Director and Senior Vice President (March
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.
Catherine H. Smith Director Chief Financial Officer (since February 1998) -- Aetna
Retirement Services, Inc.; Director, Senior Vice
President and Chief Financial Officer (since February
1998) -- Aetna Life Insurance and Annuity Company; Vice
President, Strategy, Finance and Administration,
Financial Relations (September 1996 - February 1998) --
Aetna Inc.
Lennart A. Carlson Vice President, Fixed Income Managing Director (since January 1996) --Aeltus Trust
Investments Company.
Stephanie A. DeSisto Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Name Positions and Offices Other Principal Position(s) Held
- ---- with Investment Adviser Since Oct. 31, 1996/Addresses*
----------------------- ------------------------------
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Amy R. Doberman Vice President, General Counsel (since December 1996) -- Aetna Life Insurance and
Counsel and Secretary Annuity Company; Attorney (March 1990 to November 1996)
-- Securities and Exchange Commission.
Steven C. Huber Vice President, Fixed Income Managing Director (since August 1996) -- Aeltus Trust
Investments 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.
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 (since August 1996) -- Aeltus Trust
Investments 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.
</TABLE>
* Except with respect to Mr. McInerney and Ms. Smith, the principal business
address of each person named is 10 State House Square, Hartford, Connecticut
06103-3602. The address of Mr. McInerney and Ms. Smith is 151 Farmington
Avenue, Hartford, Connecticut 06156.
Item 27. Principal Underwriters
- -------------------------------
(a) In addition to serving as the principal underwriter for the Registrant,
Aetna also acts as the principal underwriter for Aetna Income Shares, Aetna
Variable Fund, Aetna Variable Encore Fund, Aetna Balanced VP, 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
<PAGE>
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
Alan Baker Senior Vice President None
David E. Bushong Senior Vice President None
Steven A. Haxton Senior Vice President None
John Y. Kim Senior Vice President Trustee
Deborah Koltenuk Vice President, Treasurer and Corporate None
Controller
Therese Squillacote Vice President and Chief Compliance Officer None
Thomas P. Waldron Senior Vice President None
Kirk P. Wickman Senior Vice President, General Counsel and None
Corporate Secretary
</TABLE>
* Except with respect to Mr. Kim, the principal business address of all
directors and officers listed is 151 Farmington Avenue, Hartford, Connecticut
06156. Mr. Kim's address is 10 State House Square, Hartford, Connecticut
06103-3602.
(c) Not applicable
Item 28. Location of Accounts and Records
- -----------------------------------------
As required by Section 31(a) of the 1940 Act and the rules thereunder,
the Registrant and its investment adviser, Aeltus, maintain physical
possession of each account, book or other document, at 151 Farmington
Avenue, Hartford, Connecticut 06156 and 10 State House Square, Hartford,
Connecticut 06103-3602, respectively.
<PAGE>
Item 29. Management Services
- ----------------------------
Not applicable.
Item 30. Undertakings
- ---------------------
Not applicable.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, Aetna GET Fund certifies that it meets all of the
requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement under Rule 485(b) under the Securities Act of 1933 and
has duly caused this registration statement to be signed on its behalf by the
undersigned, duly authorized, in the City of Hartford, and State of Connecticut,
on the 25th day of May, 1999.
AETNA GET FUND
--------------
Registrant
By J. Scott Fox*
-------------
J. Scott Fox
President
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons in the capacities and
on the date(s) indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <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 )
) May
David L. Grove* Trustee ) 25, 1999
- ----------------------------------------- )
David L. Grove )
)
John Y. Kim* Trustee )
- ----------------------------------------- )
John Y. Kim )
)
Sidney Koch* Trustee )
- ----------------------------------------- )
Sidney Koch )
)
Shaun P. Mathews* Trustee )
- ----------------------------------------- )
Shaun P. Mathews )
)
Corine T. Norgaard* Trustee )
- ----------------------------------------- )
Corine T. Norgaard )
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
Richard G. Scheide* Trustee )
- ----------------------------------------- )
Richard G. Scheide )
)
Stephanie A. DeSisto* Treasurer and Chief Financial Officer )
- ----------------------------------------- (Principal Financial and Accounting Officer) )
Stephanie A. DeSisto )
</TABLE>
By: /s/ Amy R. Doberman
-------------------
*Amy R. Doberman
Attorney-in-Fact
* Executed pursuant to Power of Attorney dated November 6, 1998 and filed with
the Securities and Exchange Commission on March 10, 1999.
<PAGE>
Aetna GET Fund
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
----------- ------- ----
<S> <C> <C>
99-(a.2) Form of Amendment to Declaration of Trust (October 28, 1993) --------------------
99-(a.6) Amendment to Declaration of Trust (March 31, 1999) --------------------
99-(d) Investment Advisory Agreement between Aeltus Investment Management, Inc.
and Aetna GET Fund --------------------
99-(e) Underwriting Agreement between Aetna GET Fund and Aetna Life Insurance
and Annuity Company --------------------
99-(g.5) Amendment to Custodian Agreement (April 16, 1999) --------------------
99-(h.3) Amendment to Administrative Services Agreement between Aeltus and Aetna
GET Fund (April 1, 1999) --------------------
99-(i) Opinion and Consent of Counsel --------------------
</TABLE>
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
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 E
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: March 31, 1999
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 E (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;
2. select the securities to be purchased, sold or exchanged by
the Series or otherwise represented in the Series' investment
portfolio, place trades for all such securities and regularly
report thereon to the Board;
<PAGE>
3. formulate and implement continuing programs for the purchase
and sale of securities and regularly report thereon to the
Board;
4. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy
generally, the Series, securities held by or under
consideration for the Series, or the issuers of those
securities;
5. provide economic research and securities analyses as the
Adviser considers necessary or advisable in connection with
the Adviser's performance of its duties hereunder;
6. obtain the services of, contract with, and provide
instructions to custodians and/or subcustodians of the Series'
securities, transfer agents, dividend paying agents, pricing
services and other service providers as are necessary to carry
out the terms of this Agreement; and
7. take any other actions which appear to the Adviser and the
Board necessary to carry into effect the purposes of this
Agreement.
III. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of the Adviser
The Adviser hereby represents and warrants to the Fund as follows:
1. Due Incorporation and Organization. The Adviser is
duly 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:
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-
<PAGE>
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 commissions paid over representative periods of time
were reasonable in relation to the benefits received.
-3-
<PAGE>
VI. CONTROL BY THE BOARD
Any investment program undertaken by the Adviser pursuant to this Agreement, as
well as any other activities undertaken by the Adviser on behalf of the 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:
A. Expenses of the Adviser
The Adviser shall pay:
-4-
<PAGE>
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;
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;
-5-
<PAGE>
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.
Notwithstanding the above, the Adviser may waive a portion or all of the fees it
is entitled to receive.
In addition, the Adviser may reimburse the Fund, on behalf of a Series, for
expenses allocated to a Series.
The Adviser has agreed to waive fees and/or reimburse expenses so that the
Series' total annual operating expenses (excluding distribution fees) do not
exceed 0.75% of the average daily net assets.
X. ADDITIONAL SERVICES
Upon the request of the Board, the Adviser may perform certain accounting,
shareholder servicing or other administrative services on behalf of the 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
shareholders in exchanges among the investment companies managed or advised by
the Adviser, changing
-6-
<PAGE>
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 June 15, 1999, and shall remain in
force and effect through December 31, 2000, unless earlier terminated under the
provisions of Article XIV.
XIII. RENEWAL
Following the expiration of its initial term, the Agreement shall continue in
force and effect from year to year, provided that such continuance is
specifically approved at least annually:
1. a. by the Board, or
b. by the vote of a majority of the 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 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).
-7-
<PAGE>
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:
10 State House Square
Hartford, Connecticut 06103
Fax number 860/275-2158
Attention: President
if to the Adviser:
10 State House Square
Hartford, Connecticut 06103
Fax number 860/275-4440
Attention: President or Chief Compliance Officer
XVII. 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 1st day of April, 1999.
Aeltus Investment Management, Inc.
By: /s/John Y. Kim
Attest: /s/Katherine Cheng --------------------------
- -------------------------- Name: John Y. Kim
Name: Katherine Cheng Title: President
Title: Assistant Secretary
Aetna GET Fund,
on behalf of its Series E
By: /s/J. Scott Fox
Attest: /s/Michael Gioffre --------------------------
- --------------------------- Name: J. Scott Fox
Name: Michael Gioffre Title: President
Title: Assistant Secretary
AETNA GET FUND
UNDERWRITING AGREEMENT
THIS AGREEMENT is entered into this 1st day of April, 1999, by and between Aetna
Life Insurance and Annuity Company, Inc., a Connecticut corporation (Aetna), and
Aetna GET Fund, a Massachusetts Business Trust (Fund).
WHEREAS, the Fund is an open-end management investment company registered with
the Securities and Exchange Commission (Commission) under the Investment Company
Act of 1940, as amended (1940 Act); and
WHEREAS the Fund has registered its shares for offer and sale to the public
under the Securities Act of 1933, as amended; and
WHEREAS, the Fund is offering and selling to the public distinct series of
shares of common stock, each corresponding to a distinct series (Series); and
WHEREAS, the Fund wishes to retain Aetna, and Aetna is willing to act, as
exclusive principal underwriter in connection with the offer and sale of each
Series' shares as now exists and as hereafter may be established (Shares); and
NOW, THEREFORE, in consideration of the promises and mutual covenants herein
contained, the parties agree as follows:
1. Appointment of Underwriter. The Fund hereby appoints Aetna and Aetna hereby
accepts appointment as exclusive principal underwriter in connection with the
offering and sale of the Shares of each Series as are now registered for sale
with the Commission and such other Series and classes of Shares of Series as may
hereafter be so registered. The Series are set forth in Schedule I. The Fund
authorizes Aetna to solicit orders for the purchase of the Shares as set forth
in the Registration Statement currently effective with the Commission for the
Shares. It is understood that the Shares are offered only through variable
annuity contracts and variable life policies issued by Aetna and its affiliates.
2. Compensation. Aetna shall receive no separate compensation for providing
services under this Agreement. It is understood that the compensation Aetna
receives in connection with the issuance of the variable annuity contracts or
variable life policies shall be the only consideration it receives for serving
as underwriter hereunder.
3. Aetna Expenses. Aetna shall be responsible for any costs of printing and
distributing prospectuses and statements of additional information necessary to
offer and sell the Shares, and such other sales literature, reports, forms and
advertisements in connection as it elects to prepare, provided such materials
comply with the applicable provisions of federal and state law.
4. Fund Expenses. The Fund shall be responsible for the costs of registering the
Shares with the Commission and for the costs of preparing prospectuses,
statements of additional information
<PAGE>
and such other documents as are required to maintain the registration of the
Shares with the Commission. Each Series shall bear all expenses related to
preparing and typesetting such prospectuses, statements of additional
information, and such other documents, including printing and mailing expenses,
related to such Series' communications with existing shareholders of that
Series.
5. Share Certificates. The Fund shall not issue certificates representing
Shares.
6. Status of Underwriter and Other Persons. Aetna is an independent contractor
and shall be agent for the Fund only in respect to the sale and redemption of
the Shares. Any person, even though also an officer, director, employee or agent
of Aetna, who may be or become an officer, director, employee or agent of the
Fund, shall be deemed, when rendering services to the Fund or acting in any
business of the Fund, to be rendering such services to or acting solely for the
Fund and not as an officer, director, employee or agent or one under the control
or direction of Aetna even though paid by Aetna.
7. Nonexclusivity. The services of Aetna to the Fund under this Agreement are
not to be deemed exclusive, and Aetna shall be free to render similar services
or other services to others and to engage in other activities related or
unrelated to those provided under this agreement.
8. Effectiveness and Termination of Agreement. This Agreement shall become
effective at the close of business on the date set forth in the first paragraph
of this Agreement and shall remain in force and effect through December 31,
1999, unless earlier terminated under the provisions of Section 9. Following the
expiration of its initial term, the Agreement shall continue in force and effect
for one year periods, provided such continuance is specifically approved at
least annually by the Fund's trustees, or by the vote of a majority of the
Fund's outstanding voting securities (as defined in Section 2(a)(42) of the 1940
Act).
9. Termination. This Agreement may be terminated at any time, by either party,
without the payment of any penalty, on sixty (60) days' written notice to the
other party.
10. Liability of Aetna. Aetna shall be liable to the Fund and shall indemnify
the Fund for any losses incurred by the Fund, to the extent that such losses
resulted from an act or omission on the part of Aetna or its officers, directors
or employees in carrying out its duties hereunder, that is found to involve
willful misfeasance, bad faith or negligence, or reckless disregard by Aetna of
its duties under this Agreement.
11. Liability of Trustees. A copy of the Declaration of Trust of the Fund is on
file with the Secretary of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the trustees of the
Fund as trustees and not individually and that the obligations of this
instrument are not binding upon any of the trustees or shareholders individually
but are binding only upon the assets and property of the Fund. No provision of
this Agreement shall be construed to protect any trustee or officer of the Fund
or director or officer of Aetna from liability in violation of Section 17(h) and
(i) of the 1940 Act.
-2-
<PAGE>
12. Amendments. This Agreement may be amended or changed only by an instrument
in writing signed by both parties.
13. Applicable Law. This Agreement shall be construed in accordance with the
laws of the State of Connecticut and the 1940 Act. To the extent that the
applicable laws of the State of Connecticut conflict with the applicable
provisions of the 1940 Act, however, the latter shall control.
14. 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 orAetna:
151 Farmington Avenue, TN41
Hartford, Connecticut 06156
Fax number: 860/273-4247
15. 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, regulations or orders of the Commission issued pursuant to the 1940
Act. In addition, where the effect of a requirement of the 1940 Act reflected in
the provisions of this Agreement is revised by rule, regulation or order of the
Commission, such provisions shall be deemed to incorporate the effect of such
rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the 1st day of April, 1999.
AETNA LIFE INSURANCE AND ANNUITY COMPANY
Attest: By: /s/John Y. Kim
Name: John Y. Kim
/s/Rose-Marie DeRensis ----------------------------
- ------------------------------- Title: Senior Vice President
Rose-Marie DeRensis
Assistant Corporate Secretary
-3-
<PAGE>
AETNA GET FUND
By: /s/J. Scott Fox
----------------------
Name: J. Scott Fox
Attest: Title: President
/s/Daniel E. Burton
- -------------------
Daniel E. Burton
Assistant Secretary
-4-
<PAGE>
Schedule 1
List of Series
As of June 1, 1999
GET B
GET C
GET D
GET E
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
E, and has amended its registration statement on Form N-1A to register shares of
beneficial interest of Series E with the Securities and Exchange Commission; and
WHEREAS, the Fund, for which Aeltus Investment Management, Inc. serves
as investment adviser to Series E, desires to appoint Mellon as custodian of the
assets of its Series E;
NOW THEREFORE, it is agreed as follows:
1. The Fund, on behalf of Series E, hereby appoints Mellon, and Mellon
hereby accepts appointment, as the custodian of the assets of Series E, 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 E
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;
(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
<PAGE>
(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 E, individually
By: /s/ Christi R. Caperton By: /s/ J. Scott Fox
------------------------------- -----------------------
Name: Christi R. Caperton Name: J. Scott Fox
Title: Vice President Title: President
Date: 4/16/99 Date: 4/1/99
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 E; and
WHEREAS, the Fund, on behalf of Series E, desires to appoint Aeltus as
the administrator of Series E;
NOW THEREFORE, it is agreed as follows:
1. The Fund, on behalf of Series E, 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. Section VII of the Agreement is amended as follows:
With respect to services rendered on behalf of Series E, the
Administrator has agreed to waive fees and/or reimburse expenses
so that the Series' total annual operating expenses do not exceed
0.75% of the average daily net assets.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers as of the 1st day of April,
1999.
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 E
Attest: /s/Michael Gioffre By: /s/J. Scott Fox
- --------------------------- --------------------------
Name: Michael Gioffre Name: J. Scott Fox
Title: Assistant Secretary Title: President
[AETNA LOGO] 10 State House Square, SH11
[AETNA LETTERHEAD] Hartford, CT 06103-3602
Amy R. Doberman
Counsel
Aetna GET Fund
May 25, 1999 (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. 15 to
Registration Statement on Form N-1A
(File No. 33-12723 and 811-5062)
Dear Sir or Madam:
The undersigned serves as counsel 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.
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
