As filed with the Securities and Exchange File No. 33-12723
Commission on December 15, 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. 20
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 23
Aetna Get Fund
151 Farmington Avenue, Hartford, Connecticut 06156
(860) 275-2032
Amy R. Doberman, Counsel
Aetna GET Fund
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 March 1, 2000 pursuant to paragraph (a)(2) of Rule 485
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Aetna GET Fund - [Series I]
[Series J]
[Series K]
Prospectus
[ _______, 2000]
Aetna GET Fund (Fund) is an open-end investment company authorized to issue
multiple series of shares. This prospectus offers shares of [Series I] [Series
J] [Series K] (Series). [Series I shares will be offered from March 15, 2000
through June 14, 2000] [Series J shares will be offered from June 15, 2000
through September 13, 2000] [Series K shares will be offered from September 14,
2000 through December 13, 2000] 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.
SUBJECT TO COMPLETION OR AMENDMENT
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SUPPLEMENT SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
<PAGE>
TABLE OF CONTENTS
Page
Investment Objective, Principal Investment Strategies and Risks...............1
Other Considerations..........................................................4
Management of the Series......................................................5
Investments in, Exchanges and Redemptions from the Series.....................6
Tax Information...............................................................7
Additional Information........................................................8
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Investment Objective, Principal Investment Strategies and Risks
Shares of the Series are offered to Aetna separate accounts that fund variable
annuity contracts. The Series has both an Offering Period and a Guarantee
Period. The only time investors can invest in the Series is during the Offering
Period. The Offering Period will run from [March 15, 2000 through June 14, 2000
for Series I] [June 15, 2000 through September 13, 2000 for Series J] [September
14, 2000 through December 13, 2000 for Series K]. During the Offering Period all
assets of the Series will be invested exclusively in short-term instruments.
Once the Offering Period terminates, the Guarantee Period begins. The Guarantee
Period will run from [June 15, 2000 through June 14, 2005 for Series I (Maturity
Date)] [September 14, 2000 through September 13, 2005 for Series J (Maturity
Date)] [December 14, 2000 through December 13, 2005 for Series K (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 they will receive no less than
the value of their separate account investment directed to the Series as of the
last day of the Offering Period, adjusted for certain charges (Guarantee). The
value of dividends and distributions made by the Series throughout the Guarantee
Period is taken into account in determining whether, for purposes of the
Guarantee, the value of a shareholder's investment on the Maturity Date is no
less than the value of their investment as of the last day of the Offering
Period. Amounts withdrawn prior to the Maturity Date do not get the benefit of
the Guarantee. Please refer to the contract prospectus, prospectus summary or
disclosure statement for more information about the Guarantee. Aeltus Investment
Management, Inc. (Aeltus) serves as investment adviser of the Series.
Shares of the Series will rise and fall in value and you could lose money by
investing in the Series if you redeem shares prior to the Maturity Date. There
is no guaranty that the Series will achieve its investment objective. An
investment in the Series is not a bank deposit and is not insured or guaranteed
by the FDIC or any other government agency.
Investment Objective. The Series 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. The Series allocates its assets among the
following asset classes:
. During the Offering Period, the Series' assets will be invested in
short-term instruments.
. During the Guarantee Period, the Series' assets will be allocated
between the:
. Equity Component, consisting primarily of common stocks included
in the Standard and Poor's 500 Index (S&P 500); and the
. Fixed Component, consisting primarily of short- to
intermediate-duration U.S. Government securities.
The minimum Targeted Return is 1.5% per year over the Guarantee Period. The
minimum Targeted Return is set by the Fund's Board of Trustees (Board) and takes
into consideration the Series' total annual expenses as well as the insurance
company separate account expenses assessed to contract holders and participants
acquiring interests in the Fund through Aetna separate accounts. There is no
assurance that the Fund will achieve the Targeted Return. The Guarantee promises
investors only a return of the amount invested in the Series through the
separate account (less certain maintenance charges). The Guarantee does not
promise that investors will earn the Targeted Return.
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Equity Component Aeltus invests at least 80% of the Equity Component's net
assets in stocks included in the 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 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
between 400 and 450 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 within three months of
the Maturity Date. The Fixed Component will consist primarily (meaning no less
than 55%) of securities issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, including 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. No more than
45% of the Fixed Component's assets may consist of mortgage backed securities
which are rated AAA or Aaa at the time of purchase by Moody's Investors Service,
Inc. (Moody's) or S&P, respectively, or corporate obligations which are rated at
the time of purchase AA- or higher by S&P and/or Aa3 or higher by Moody's.
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
the Series then prevailing interest rates, equity market volatility, the
Targeted Return and the Maturity Date. The model determines the initial
allocation between the Equity Component and the Fixed Component on the first day
of the Guarantee Period 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.
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Principal Risks. The principal risks of investing in the Series are those
generally attributable to stock and bond investing. The success of the Series'
strategy depends on Aeltus' skill in allocating assets between the Equity
Component and the Fixed Component and in selecting investments within each
component. Because the Series invests in both stocks and bonds, the Series 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 prices of STRIPS
generally are more volatile than the market prices of other fixed income
securities with similar maturities that pay interest periodically. 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, the Series' assets may be largely invested in the Fixed Component in
order to increase the likelihood of achieving the Targeted Return at the
Maturity Date. The effect of low interest rates on the Series would likely be
more pronounced at the inception 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, the
Series' 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 the Series' 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 the Series is new, it does not have return information an investor might
find useful in evaluating the risks of investing in the Fund.
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Other Considerations
In addition to the principal investments, strategies and risks described above,
the Series 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. The Series 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. The Series uses futures for hedging purposes or to
temporarily increase or limit 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.
Closing the Fund. If the Series 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 Board reserves the right not
to operate the Series in accordance with its Investment Objective. In that
event, Aeltus will continue to invest the Series assets in short-term
instruments and Aetna will notify investors within 15 days after the end of the
Offering Period that the Series is being discontinued. Investors will have 45
days following the end of the Offering Period to transfer their money from the
Series. If, at the end of the 45-day period, an investor does not make an
election, his or her investment in the Series will be transferred to Aetna Money
Market VP.
Management of the Series
Aeltus Investment Management, Inc., 10 State House Square, Hartford, Connecticut
06103-3602, serves as investment adviser of the Series. Aeltus is responsible
for managing the assets of the Series 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 the Series.
Offering Period 0.25%
Guarantee Period 0.60%
Portfolio Management
Asset Allocation. Neil Kochen, Managing Director, Aeltus, is responsible for
overseeing the overall strategy of the Series and the allocation of the Series
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 12 years of experience in equity investments. Mr. Brod
has been with the Aetna organization since 1966.
Fixed Component. The Fixed Component is managed by a team of fixed-income
specialists.
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Investments in, Exchanges and Redemptions from the Series
Please refer to the documents pertaining to the contract or policy for
information on how to direct investments in or redemptions from (including
making exchanges into or out of) the Series and any fees that may apply, and
what your options are on the Maturity Date. 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. Aetna has been designated an agent of the Fund for
receipt of purchase and redemption orders. Therefore, receipt of an order by
Aetna 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 the Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. eastern time).
In calculating the NAV, securities are valued primarily by independent pricing
services using market quotations. Short-term debt securities maturing in 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 10:00 p.m. eastern time Monday through Friday and from 8:00 a.m. to 4:00 p.m.
eastern time on Saturday.
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 the Fund's investment objective.
The Fund reserves the right to suspend the offering of shares. 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.
Maturity Date. Before the Maturity Date, Aetna will send a notice to investors
who have amounts in the Series to remind them that the Maturity Date is
approaching and to choose other investment options into which Series amounts
will be transferred to at the close of business on the Maturity Date. If
investors do not make a choice, at the close of business on the Maturity Date
Aetna will transfer investors Series amounts to another available series of the
GET Fund that is accepting deposits, or if no GET Fund series is available, to
the fund or funds designated by Aetna.
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Tax Information
The Series intends to qualify as a regulated investment company by satisfying
the requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (Code), including requirements with respect to diversification of
assets, distribution of income and sources of income. As a regulated investment
company, the Series generally will not be subject to tax on its ordinary income
and net realized capital gains.
The Series also intends to comply with the diversification requirements of
Section 817(h) of the Code for those investors who acquire shares through Aetna
variable annuity contracts so that those contract owners should not be subject
to federal tax on distributions from the Series to Aetna's 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 calendar year.
Both income dividends and capital gains distributions are paid by the Series on
a per share basis. As a result, at the time of payment, the share price of the
Series will be reduced by the amount of the payment.
<PAGE>
Additional Information
The SAI, which is incorporated by reference into this Prospectus, contains
additional information about the Series and the Fund generally.
You may request free of charge the current SAI or other information about the
Series, 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
EDGAR Database on the SEC's website (http://www.sec.gov) or at the SEC's public
reference room in Washington, D.C. You may call 1-202-942-8090 to get
information about the operations of the public reference room. You may obtain
copies of reports and other information about the Fund, after paying a
duplicating fee, by sending an e-mail request to: [email protected], or by
writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
Investment Company Act File No. 811-5062.
<PAGE>
AETNA GET FUND
[SERIES I]
[SERIES J]
[SERIES K]
Statement of Additional Information dated __________, 2000
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 I] [Series J] [Series K] (the "Series"). Capitalized terms not
defined herein are used as defined in the Prospectus. The Fund is authorized to
issue multiple series of shares, each representing a diversified portfolio of
investments with different investment objectives, policies and restrictions.
This Statement applies to the Series.
A free copy of the Series' Prospectus is available upon request by writing to
the Fund at: 151 Farmington Avenue, Hartford, Connecticut 06156, or by calling:
(800) 367-7732.
SUBJECT TO COMPLETION OR AMENDMENT
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS STATEMENT OF ADDITIONAL INFORMATION SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL THERE BE ANY
SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE
WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE. THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A
PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION...........................................................1
INVESTMENT OBJECTIVE AND RESTRICTIONS.........................................2
INVESTMENT TECHNIQUES AND RISK FACTORS........................................3
OTHER CONSIDERATIONS..........................................................8
THE ASSET ALLOCATION PROCESS..................................................8
TRUSTEES AND OFFICERS OF THE FUND.............................................9
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS...................................12
INVESTMENT ADVISORY AGREEMENT................................................12
ADMINISTRATIVE SERVICES AGREEMENT............................................12
CUSTODIAN....................................................................13
TRANSFER AGENT...............................................................13
INDEPENDENT AUDITORS.........................................................13
PRINCIPAL UNDERWRITER........................................................13
BROKERAGE ALLOCATION AND TRADING POLICIES....................................13
PURCHASE AND REDEMPTION OF SHARES............................................14
NET ASSET VALUE..............................................................15
TAX STATUS...................................................................15
PERFORMANCE INFORMATION......................................................16
<PAGE>
GENERAL INFORMATION
Organization The Fund was organized as a Massachusetts business trust on March
9, 1987. The Series currently operates under a Declaration of Trust
(Declaration) dated March 9, 1987.
Capital Stock Shares of the Series have no preemptive or conversion rights. Each
share has the same rights to share in dividends declared by the Series. Upon
liquidation of the Series, shareholders are entitled to share pro rata in the
net assets of the Fund available for distribution to shareholders. Shares of the
Series are fully paid and nonassessable.
Shareholder Liability The 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 the Series, which is not true in the case of a corporation. The Declaration
of the Series 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 the Series 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 the Series.
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 the Series, 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 the Series 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 the Series
for investment through their Aetna Life Insurance and Annuity Company (Aetna)
variable annuity contract (VA Contract) are not the shareholders of the Fund.
Aetna is the true shareholder, but generally passes 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 the Series, in which event the holders of the
remaining shares will be unable to elect any person as a Trustee.
<PAGE>
INVESTMENT OBJECTIVE AND RESTRICTIONS
The investment objective for the Series 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 [June 15, 2000 through June 14, 2005 for Series I,]
[September 14, 2000 through September 13, 2005 for Series J,] [December 14, 2000
through December 13, 2005 for Series K,] the Maturity Date. In seeking to
achieve its investment objective, the Series 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 the
Series 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 the Series.
As a matter of fundamental policy, the Series 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 the Series for its portfolio,
the Series 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, the Series 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, the Series may purchase bonds, debentures or other debt securities,
including short-term obligations and enter into repurchase transactions.
(5) Invest in commodity contracts, except that the Series 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 the Series, 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 the Series
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.
<PAGE>
Where the Fund's investment objective or policy restricts it 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.
The Series also has adopted certain other investment policies and restrictions
reflecting the current investment practices of the Series, which may be changed
by the Board and without shareholder vote. Under such policies and restrictions,
the Series 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 the Series.
INVESTMENT TECHNIQUES AND RISK FACTORS
Futures and Other Derivative Instruments
The Series may use certain derivative instruments, described below and in the
Prospectus, as a means of achieving its investment objective. The Series 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. The Series may also use
derivative instruments for hedging purposes.
The following provides additional information about those derivative instruments
the Series may use.
Futures Contracts The Series may enter into futures contracts subject to the
restrictions described below under "Additional Restrictions on the Use of
Futures Contracts." The Series will only enter into futures contracts on the S&P
500 Index and U.S. Treasury securities. S&P 500 Index futures may not exceed 20%
of the market value of the Equity Component. The notional value of U.S. Treasury
futures may not exceed 50% of the market value of the Fixed Component. Futures
contracts may not be used for speculative purposes. The futures exchanges and
trading in the U.S. are regulated under the Commodity Exchange Act by the
Commodity 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.
<PAGE>
There can be no assurance, however, that the Series will be able to enter into
an offsetting transaction with respect to a particular contract at a particular
time. If the Series 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 the
Series 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 the Series with a
commodities broker in a custodian account in order to initiate futures trading
and to maintain open positions in the Series' futures contracts. A margin
deposit is intended to assure the Series' 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 the Series. These daily payments to and
from the Series are called variation margin. At times of extreme price
volatility, intra-day variation margin payments may be required. In computing
daily net asset values, the Series will mark-to-market the current value of its
open futures contracts. The Series expects to earn interest income on its
initial margin deposits.
When the Series 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.
<PAGE>
The Series 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 the Series' 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 the Series from being a commodity pool, the Series 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, the Series 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.
Zero Coupon Securities and STRIPS
The Series may invest in U.S. Treasury, agency or corporate zero coupon
securities maturing within 90 days preceding the Maturity Date. U.S. Treasury or
agency zero coupon securities shall be limited to non-callable, non-interest
bearing obligations and shall include STRIPS (Separate Trading of Registered
Interest and Principal of Securities); CATS (Certificates of Accrual on Treasury
Securities); TIGRs (Treasury Investment Growth Receipts) and TRs (Generic
Treasury Receipts). 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. The
market prices of zero coupon securities generally are more volatile than the
market prices of securities with similar maturities that pay interest
periodically and are likely to respond to changes in interest rates to a greater
degree than do non-zero coupon securities having similar maturities and credit
quality.
Zero coupon securities issued by corporations are also subject to the risk that
in the event of a default, the Series 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 the Series' transactions in derivatives.
Risk of Imperfect Correlation The Series' 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 the Series 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, the Series' overall return could be
less than if the hedging transactions had not been undertaken.
<PAGE>
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 the Series 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 the Series 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 the Series' ability to
effectively 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 the Series may be poorer than if it had not entered into
any such contract. For example, if the Series has been hedged against the
possibility of an increase in interest rates which would adversely affect the
price of bonds held in its portfolio and interest rates decrease instead, the
Series will lose part or all of the benefit of the increased value of its bonds
which have been hedged because it will have offsetting losses in its futures
positions. In addition, in such situations, if the Series 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 the
Series.
Foreign Securities
The Series 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
The Series may invest in real estate securities through interests in real estate
investment trusts (REITs) included in the S&P 500. 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.
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
The Series may invest in obligations issued by domestic banks (including
banker's acceptances, commercial paper, bank notes, time deposits and
certificates of deposit).
<PAGE>
Illiquid Securities
The Series 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 the Series.
Corporate Bonds
The Fixed Component may consist of non-callable corporate bonds, provided that
no less than 40% of the Series' assets are allocated to the Equity Component.
The Fixed Component may not consist of corporate bonds issued by Aetna Inc. Each
such bond must mature within three (3) years before the Maturity Date. In
addition, each such bond must be rated AA- or higher by S&P or Aa3 or higher by
Moody's, provided that if both S&P and Moody's have issued a rating on the
security, such rating shall not be less than AA-/Aa3. If a corporate bond is
downgraded below this level, Aeltus shall divest the security within 15 business
days following the public announcement of such downgrade. No more than 2% of the
Series' assets shall be invested in corporate debt securities of any issuer or
its affiliates at the time of investment therein.
Mortgage-Related Debt Securities
The Series may invest in mortgage-related debt securities, collateralized
mortgage obligations (CMOs) and real estate mortgage investment conduits
(REMICs). However, each such security must be rated AAA or higher by S&P or Aaa
or higher by Moody's, provided that if both S&P and Moody's have issued a rating
on the security, such rating shall not be less than AAA/Aaa. If a mortgage
related debt security is downgraded below this level, Aeltus shall divest the
security within 15 business days following the public announcement of such
downgrade.
Federal mortgage-related securities include obligations issued or guaranteed by
the Government National Mortgage Association (GNMA), the Federal National
Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation
(FHLMC). GNMA is a wholly owned corporate instrumentality of the U.S., the
securities and guarantees of which are backed by the full faith and credit of
the U.S. FNMA, a federally chartered and privately owned corporation, and FHLMC,
a federal corporation, are instrumentalities of the U.S. with Presidentially
appointed board members. The obligations of FNMA and FHLMC are not explicitly
guaranteed by the full faith and credit of the federal government.
Pass-through mortgage-related securities are characterized by monthly payments
to the holder, reflecting the monthly payments made by the borrowers who
received the underlying mortgage loans. The payments to the security holders,
like the payments on the underlying loans, represent both principal and
interest. Although the underlying mortgage loans are for specified periods of
time, often twenty or thirty years, the borrowers can, and typically do, repay
such loans sooner. Thus, the security holders frequently receive repayments of
principal, in addition to the principal that is part of the regular monthly
payment. A borrower is more likely to repay a mortgage bearing a relatively high
rate of interest. This means that in times of declining interest rates, some
higher yielding securities held by the Series might be converted to cash, and
the Series could be expected to reinvest such cash at the then prevailing lower
rates. The increased likelihood of prepayment when interest rates decline also
limits market price appreciation of mortgage-related securities. If the Series
buys mortgage-related securities at a premium, mortgage foreclosures or mortgage
prepayments may result in losses of up to the amount of the premium paid since
only timely payment of principal and interest is guaranteed.
<PAGE>
CMOs and REMICs are securities which are collateralized by mortgage pass-through
securities. Cash flows from underlying mortgages are allocated to various
classes or tranches in a predetermined, specified order. Each sequential tranche
has a "stated maturity" - the latest date by which the tranche can be completely
repaid, assuming no repayments - and has an "average life" - the average time to
receipt of a principal weighted by the size of the principal payment. The
average life is typically used as a proxy for maturity because the debt is
amortized, rather than being paid off entirely at maturity, as would be the case
in a straight debt instrument.
CMOs and REMICs are typically structured as "pass-through" securities. In these
arrangements, the underlying mortgages are held by the issuer, which then issues
debt collateralized by the underlying mortgage assets. The security holder thus
owns an obligation of the issuer and payment of interest and principal on such
obligations is made from payment generated by the underlying mortgage assets.
The underlying mortgages may or may not be guaranteed as to payment of principal
and interest by an agency or instrumentality of the U.S. Government such as GNMA
or otherwise backed by FNMA or FHLMC. Alternatively, such securities may be
backed by mortgage insurance, letters of credit or other credit enhancing
features. Both CMOs and REMICs are issued by private entities. They are not
directly guaranteed by any government agency and are secured by the collateral
held by the issuer. CMOs and REMICs are subject to the type of prepayment risk
described above due to the possibility that prepayments on the underlying assets
will alter the cash flow.
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.
THE ASSET ALLOCATION PROCESS
In pursuing the Series' investment objective, Aeltus looks to allocate assets
among the Equity Component and the Fixed Component. The allocation of assets
depends on a variety of factors, including, but not limited to, the then
prevailing level of interest rates, equity market volatility, the then current
market value of the Series, the Targeted Return and the Maturity Date. If
interest rates are low (particularly at the inception of the Guarantee Period),
the Series' assets may be largely invested in the Fixed Component in order to
increase the likelihood of meeting the investment objective. In addition, if
during the Guarantee Period the equity markets experienced a major decline, the
Series' assets may become largely invested in the Fixed Component in order to
increase the likelihood of meeting the investment objective.
The initial allocation of the Series' 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. If at the inception of the Guarantee Period interest rates are
low, more assets may have to be allocated to the Fixed Component. Aeltus will
monitor the allocation of the Series' 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 Aeltus' proprietary software model, fewer assets would have to be
allocated to the Fixed Component. On the other hand, if the performance of the
Fixed Component is poorer than expected, more assets would have to be allocated
to the Fixed Component, and the ability of the Series 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.
<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>
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Principal Occupation During Past Five Years (and
Positions held with Affiliated Persons or
Name, Position(s) Held Principal Underwriters of the Fund)
Address and Age With each Fund
- ------------------------------------------------------------------------------------------------------------------
J. Scott Fox* Trustee and President Director, Managing Director, Chief Operating
10 State House Square (Principal Executive Officer) Officer, Chief Financial Officer, Aeltus
Hartford, Connecticut Investment Management, Inc., October 1997 to
Age 45 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; Vice President, Aetna Investment
Hartford, Connecticut Services, Inc., July 1993 to May 1998.
Age 56
- ------------------------------------------------------------------------------------------------------------------
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 (Principal present; Director, Mutual Fund Accounting, Aetna
Age 46 Financial and Accounting Life Insurance and Annuity Company, August 1994
Officer) to November 1995.
- ------------------------------------------------------------------------------------------------------------------
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.
- ------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------
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 56
- ------------------------------------------------------------------------------------------------------------------
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 39 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 50 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 44 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 62 School of Management, SUNY Binghamton
(Binghamton, NY), August 1993 to August 1996
- ------------------------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------------------------
Richard G. Scheide Trustee Trust and Private Banking Consultant, David Ross
11 Lily Street Palmer Consultants, July 1991 to present.
Nantucket, Massachusetts
Age 70
- ------------------------------------------------------------------------------------------------------------------
During the fiscal year ended December 31, 1999, 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, 1999, 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.
- --------------------------------------------------------------------------------------------------------------
Name of Person Aggregate Compensation from Total Compensation from the Funds and Fund
Position Aetna GET Fund Complex Paid to Trustees
- --------------------------------------------------------------------------------------------------------------
Corine Norgaard
Trustee
- --------------------------------------------------------------------------------------------------------------
Sidney Koch
Trustee
- --------------------------------------------------------------------------------------------------------------
Maria T. Fighetti*
Trustee
- --------------------------------------------------------------------------------------------------------------
Richard G. Scheide
Trustee, Chairperson
Audit Committee
- --------------------------------------------------------------------------------------------------------------
David L. Grove*
Trustee, Chairperson
Contract Committee
- --------------------------------------------------------------------------------------------------------------
Albert E. DePrince, Jr.
Trustee
- --------------------------------------------------------------------------------------------------------------
</TABLE>
*During the fiscal year ended December 31, 1999, Ms. Fighetti and Dr. Grove
elected to defer compensation in the amount of $________ and $_______,
respectively.
<PAGE>
CONTROL PERSONS AND PRINCIPAL SHAREHOLDERS
It is expected that the Series shares will be sold to Aetna 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 votes the shares that it owns in
these separate accounts in accordance with contract holders' directions.
Undirected shares of the Series will be voted for each account in the same
proportion as directed shares.
Aetna is an indirect wholly-owned subsidiary of Aetna Retirement Services, Inc.,
which is, in turn, an indirect wholly-owned subsidiary of Aetna Inc. Aetna's
principal office is located at 151 Farmington Avenue, Hartford, Connecticut
06156. 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 the Series. Under the Advisory
Agreement, and subject to the supervision of the Board, Aeltus has
responsibility for supervising all aspects of the operations of the Series
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 a wholly-owned subsidiary of Aetna and an indirect
wholly-owned subsidiary of Aetna Inc.
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 and that the Series 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 the Series 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 the Series.
ADMINISTRATIVE SERVICES AGREEMENT
Pursuant to an Administrative Services Agreement, Aeltus acts as administrator
and provides certain administrative and shareholder services necessary for the
Series' 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 the Series. 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 the Series.
<PAGE>
Listed below is the administrative services fee Aeltus is entitled to receive on
an annual rate based on average daily net assets of the Series:
Administrative Fee Series Assets
------------------- -------------
0.075% on the first $5 billion
0.050% on all assets over $5 billion
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 the Series' other expenses in order to ensure
that the Fund's total expense ratio does not exceed 0.75% of the Series' average
daily net assets.
CUSTODIAN
Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, Pennsylvania, 15258,
serves as custodian for the assets of the Series. The custodian does not
participate in determining the investment policies of the Series nor in deciding
which securities are purchased or sold by the Series. The Series may, however,
invest in obligations of the custodian and may purchase or sell securities from
or to the custodian.
TRANSFER AGENT
PFPC, Inc., 4400 Computer Drive, Westborough, Massachusetts 01581 serves as the
transfer agent and dividend-paying agent to the Series.
INDEPENDENT AUDITORS
KPMG LLP, Hartford, Connecticut 06103 serves as independent auditors to the
Series. 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 the Series pursuant to an Underwriting Agreement
between it and the Fund. The Agreement was approved on December 15, 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 the Series' 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 the Series' 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 the Series' portfolio transactions, subject to
Aeltus' duty to obtain best execution.
<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
the Series. These brokerage and research services include, but are not limited
to, quantitative and qualitative research information and purchase and sale
recommendations regarding securities and industries, analyses and reports
covering a broad range of economic factors and trends, statistical data relating
to the strategy and performance of the Series and other investment companies,
services related to the execution of trades on behalf of the Series 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 the Series
as a component of other research services. Aeltus considers the quantity and
quality of such brokerage and research services provided by a brokerage firm
along with the nature and difficulty of the specific transaction in negotiating
commissions for trades in the Series' securities and may pay higher commission
rates than the lowest available when it is reasonable to do so in light of the
value of the brokerage and research services received generally or in connection
with a particular transaction. Aeltus' policy in selecting a broker to effect a
particular transaction is to seek to obtain "best execution," which means prompt
and efficient execution of the transaction at the best obtainable price with
payment of commissions which are reasonable in relation to the value of the
services provided by the broker, taking into consideration research and
brokerage services provided. When the trader believes that more than one broker
can provide best execution, preference may be given to brokers that provide
additional services to Aeltus.
Research services furnished by brokers through whom the Series 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 the Series.
Consistent with federal law, Aeltus may obtain such brokerage and research
services regardless of whether they are paid for (1) by means of commissions, or
(2) by means of separate, non-commission payments. Aeltus' judgment as to
whether and how it will obtain the specific brokerage and research services will
be based upon its analysis of the quality of such services and the cost
(depending upon the various methods of payment which may be offered by brokerage
firms) and will reflect Aeltus' opinion as to which services and which means of
payment are in the long-term best interests of the Series.
The Series has no present intention of effecting any brokerage transactions in
portfolio securities with Aeltus or any other affiliated person.
The Series and another advisory client of Aeltus or Aeltus itself, may desire to
buy or sell the same security at or about the same time. In such a case, the
purchases or sales will normally be aggregated, and then allocated as nearly as
practicable on a pro rata basis in proportion to the amounts to be purchased or
sold by each. In some cases the smaller orders will be filled first. In
determining the amounts to be purchased and sold, the main factors to be
considered are the respective investment objectives of the Series and the other
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, the Series. The Code of
Ethics allows trades to be made in securities that may be held by the Series.
However, it prohibits a person from taking advantage of the Series trades or
from acting on inside information. Aeltus also has adopted a Code of Ethics,
which the Board reviews annually.
PURCHASE AND REDEMPTION OF SHARES
Shares of the Series 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.
<PAGE>
The value of shares redeemed may be more or less than an shareholder's cost,
depending upon the market value of the portfolio securities at the time of
redemption. Payment for shares redeemed will be made by the Series within seven
days or the maximum period allowed by law, if shorter, after the redemption
request is received by the Series or by Aetna.
NET ASSET VALUE
Securities of the Series 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 the Series. No attempt is made to present a
detailed explanation of the tax treatment of the Series 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
The Series has elected to be taxed as a regulated investment company under
Subchapter M of the Code. If for any taxable year the Series does not qualify as
a regulated investment company, all of its taxable income (including its net
capital gain) will be subject to tax at regular corporate rates without any
deduction for distributions to shareholders, and such distributions will be
taxable to the shareholders as ordinary dividends to the extent of the Series'
current and accumulated earnings and profits. Such distributions generally will
be eligible for the dividends-received deduction in the case of corporate
shareholders.
Qualification of Segregated Asset Accounts
Under Code section 817(h), a segregated asset account upon which a variable
annuity contract is based must be "adequately diversified." A segregated asset
account will be adequately diversified if it satisfies one of two alternative
tests set forth in the Treasury Regulations. Specifically, the Treasury
Regulations provide, that except as permitted by the "safe harbor" discussed
below, as of the end of each calendar quarter (or within 30 days thereafter) no
more than 55% of the Series' total assets may be represented by any one
investment, no more than 70% by any two investments, no more than 80% by any
three investments and no more than 90% by any four investments. For this
purpose, all securities of the same issuer are considered a single investment,
and while each U.S. Government agency and instrumentality is considered a
separate issuer, a particular foreign government and its agencies,
instrumentalities and political subdivisions may be considered the same issuer.
As a safe harbor, a separate account will be treated as being adequately
diversified if the diversification requirements under Subchapter M are satisfied
and no more than 55% of the value of the account's total assets are cash and
cash items, U.S. government securities and securities of other regulated
investment companies.
<PAGE>
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 the Series' 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.
The Series 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, shareholders
should note that the Series may in certain circumstances be required to
liquidate portfolio investments to make sufficient distributions to avoid excise
tax liability.
PERFORMANCE INFORMATION
Performance information for the Series 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 the Series will be expressed in
terms of the average annual compounded rate of return of a hypothetical
investment in the Series over a period of one and five years (or, if the Series
has not been in existence for such periods, up to the life of the Series),
calculated pursuant to the formula:
P(1 + T)n = ERV
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 the Series 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 the Series.
[Form No.] Statement of Additional Information
<PAGE>
PART C
OTHER INFORMATION
Item 23. Exhibits
<TABLE>
<S> <C> <C>
(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)(2)
(a.7) Amendment to Declaration of Trust (June 28, 1999)(3)
(a.8) Amendment to Declaration of Trust (November 18, 1999)(4)
(a.9) Amendment to Declaration of Trust (________)*
(b) Amended and Restated By-laws(5)
(c) Instruments Defining Rights of Holders(6)
(d) Investment Advisory Agreement between Aeltus Investment Management, Inc. (Aeltus) 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)(2)
(g.6) Amendment to Custodian Agreement (July 26, 1999)(3)
(g.7) Amendment to Custodian Agreement (November 17, 1999)(4)
(g.8) Amendment to Custodian Agreement (________)*
(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)(2)
(h.4) Amendment to Administrative Services Agreement between Aeltus and Aetna GET Fund (July 28, 1999)(3)
(h.5) Amendment to Administrative Services Agreement between Aeltus and Aetna GET Fund (September 27, 1999)(4)
(h.6) Amendment to Administrative Services Agreement between Aeltus and Aetna GET Fund (_______________)*
(i) Opinion and Consent of Counsel
(j) Not applicable
(k) Not applicable
(l) Agreement Concerning Initial Capital(7)
(m) Not applicable
(n) Not applicable
(o) Not applicable
(p.1) Power of Attorney (November 6, 1998)(8)
(p.2) Authorization for Signatures(9)
<PAGE>
* To be filed by amendment
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. 15 to
Registration Statement on Form N-1A (File No. 33-12723), as filed with the
Securities and Exchange Commission on May 24, 1999.
3. Incorporated by reference to Post-Effective Amendment No. 17 to
Registration Statement on Form N-1A (File No. 33-12723), as filed with the
Securities and Exchange Commission on August 3, 1999.
4 Incorporated by reference to Post-Effective Amendment No. 19 to
Registration Statement on Form N-1A (File No. 33-12723), as filed with the
Securities and Exchange Commission on November 30, 1999.
5. 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.
6. 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.
7. 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.
8. 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.
9. 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 October 31, 1999, all of the Registrant's
outstanding voting securities were held in the name of Aetna Life
Insurance and Annuity Company (Aetna).
Aetna is an indirect wholly-owned subsidiary of Aetna Inc.
A list of all persons directly or indirectly under common control with
the Registrant and a list which indicates the principal business of each
such company referenced in the diagram are incorporated herein by
reference to Item 26 of the Registration Statement on Form N-4 (File No.
333-56297), as filed with the Securities and Exchange Commission on
November 23, 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 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 ICI Mutual Insurance Company which
expires on October 1, 2002.
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>
- -----------------------------------------------------------------------------------------------------------------------
Name Positions and Offices Other Principal Position(s) Held
with Investment Adviser Since Oct. 31, 1997/Addresses*
- -----------------------------------------------------------------------------------------------------------------------
John Y. Kim Director, President, Chief Director (February 1995 - March 1998) -- Aetna Life
Executive Officer, Chief Investment Insurance and Annuity Company; Senior Vice President
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
Financial Officer (March 1997 - February 1998) -- Aetna Life Insurance
and Annuity Company.
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.
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.
Stephanie A. DeSisto Vice President
Amy R. Doberman Vice President, General Counsel (since December 1996) -- Aetna Life Insurance
Counsel and Secretary and Annuity Company.
Brian K. Kawakami Vice President, Chief Compliance Chief Compliance Officer & Director (since January
Officer 1996) -- 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
Marketing and Sales
L. Charles Meythaler Managing Director, Director (since July 1997) -- Aeltus Trust Company;
Institutional Marketing Managing Director (since June 1997) -- Aeltus Trust
and Sales Company.
James Sweeney Managing Director, Fixed
Income Investments
</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.
<PAGE>
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 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>
<S> <C> <C>
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwriter with Registrant
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
Martin T. Conroy Vice President and Treasurer None
Paul R. Donovan Senior Vice President None
Steven A. Haxton Senior Vice President None
Gary J. Hegedus Senior Vice President None
Willard I. Hill, Jr. Senior Vice President None
John Y. Kim Senior Vice President and Chief Investment Trustee
Officer
Deborah Koltenuk Vice President, Corporate Controller and None
Assistant Treasurer
Kathleen A. Murphy Senior Vice President and Deputy General Counsel None
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
* 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 or 10 State House Square, Hartford,
Connecticut 06103-3602.
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 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 15th day of December, 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.
Signature Title Date
J. Scott Fox* President and Trustee )
- ------------------------------ (Principal Executive Officer) )
J. Scott Fox )
)
Albert E. DePrince, Jr.* Trustee )
- ------------------------------ )
Albert E. DePrince, Jr. )
)
Maria T. Fighetti* Trustee )
- ------------------------------ )
Maria T. Fighetti )
) December
David L. Grove* Trustee ) 15, 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 )
)
Richard G. Scheide* Trustee )
- ------------------------------ )
Richard G. Scheide )
)
Stephanie A. DeSisto* Treasurer and Chief )
- ------------------------------ Financial Officer )
Stephanie A. DeSisto (Principal Financial and )
Accounting Officer) )
By: /s/ Amy R. Doberman
-----------------------------
*Amy R. Doberman
Attorney-in-Fact
*Executed pursuant to Power of Attorney dated November 6, 1998 and filed with
the Securities and Exchange Commission on March 10, 1999.
<PAGE>
Aetna GET Fund
EXHIBIT INDEX
Exhibit No. Exhibit Page
99-(a.2) Form of Amendment to Declaration of Trust (October 28, 1993) 37
99-(i) Opinion and Consent of Counsel 38
</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.
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
10 State House Square, SH11
Hartford, CT 06103-3602
Amy R. Doberman
Counsel
Aetna GET Fund
December 15, 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. 20 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
