As filed with the Securities and Exchange File No. 33-27247
Commission on April 27, 1999 File No. 811-5773
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
- --------------------------------------------------------------------------------
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 17
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment no. 23
AETNA BALANCED VP, INC.
-----------------------
151 Farmington Avenue, Hartford, Connecticut 06156
--------------------------------------------------------
(860) 275-2032
Amy R. Doberman, Counsel
10 State House Square SH11, Hartford, Connecticut 06103-3602
------------------------------------------------------------
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
X on May 3, 1999 pursuant to paragraph (b) of Rule 485
----
<PAGE>
AETNA BALANCED VP, INC.
Prospectus
May 3, 1999
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Anyone
who represents to the contrary has committed a criminal offense.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Page
----
THE FUND'S INVESTMENTS ..................................................... 3
Investment Objective, Principal Investment Strategies and Risks, Investment
Performance ............................................................... 3
FUND EXPENSES .............................................................. 6
OTHER CONSIDERATIONS ....................................................... 7
MANAGEMENT OF THE FUND ..................................................... 8
INVESTMENTS IN AND REDEMPTIONS FROM THE FUND ............................... 8
TAX INFORMATION ............................................................ 9
FINANCIAL HIGHLIGHTS ....................................................... 10
ADDITIONAL INFORMATION ..................................................... 11
</TABLE>
2 Aetna Balanced VP, Inc.
<PAGE>
THE FUND'S INVESTMENTS
Investment Objective, Principal Investment Strategies and Risks, Investment
Performance
Investment Objective. Aetna Balanced VP, Inc. (Fund) seeks to maximize
investment return, consistent with reasonable safety of principal, by investing
in a diversified portfolio of one or more of the following asset classes:
stocks, bonds and cash equivalents, based on the judgment of the Fund's
investment adviser, Aeltus Investment Management, Inc. (Aeltus), of which of
those sectors or mix thereof offers the best investment prospects.
Principal Investment Strategies. Under normal market conditions, the Fund
allocates its assets among the following asset classes:
o Equities, such as common and preferred stocks.
o Debt, such as bonds, mortgage-related and other asset-backed
securities, U.S. Government securities, and money market
instruments.
Aeltus typically maintains approximately 60% of the Fund's total assets in
equities and approximately 40% of its total assets in debt (including money
market instruments), although those percentages may vary from time to time
depending on Aeltus' view of the relative attractiveness of each asset class. In
making asset allocation decisions, Aeltus uses current market statistics and
economic indicators to attempt to forecast returns for the equity and debt
sectors of the securities market. Within each asset class, Aeltus uses
quantitative computer models to evaluate financial criteria in an attempt to
identify those issuers whose full value is not reflected in their equity or debt
securities. Aeltus generally does not attempt to respond to short-term swings in
the market by quickly changing the characteristics of the Fund's portfolio.
In managing the equity component of the Fund, Aeltus typically emphasizes
investment in stocks of larger companies, although it may invest in stocks of
smaller companies to a significant extent.
In managing the debt component of the Fund, Aeltus looks to select investments
with the opportunity to enhance the portfolio's yield and total return, focusing
on performance over the long term. The Fund may invest up to 15% of its total
assets in high-yield, high-risk bonds (high-yield bonds). High-yield bonds are
fixed income securities rated below BBB- by Standard and Poor's Corporation or
Baa3 by Moody's Investors Services, Inc. or, if unrated, considered by Aeltus to
be of comparable quality.
Aetna Balanced VP, Inc. 3
<PAGE>
Principal Risks. The principal risks of investing in the Fund are those
generally attributable to stock and bond investing. The success of the Fund's
strategy depends on Aeltus' skill in allocating Fund assets between equities and
debt and in choosing investments within those categories. Because the Fund's
assets are allocated between equities and fixed income securities, the Fund may
underperform stock funds when stocks are in favor and underperform bond funds
when bonds are in favor.
Risks attributable to stock investing include sudden and unpredictable drops in
the value of the market as a whole and periods of lackluster or negative
performance. Stocks of smaller companies tend to be less liquid and more
volatile than stocks of larger companies. Further, stocks of smaller companies
also can be particularly sensitive to expected changes in interest rates,
borrowing costs and earnings.
The Fund's fixed-income investments are subject to the risk that interest rates
will rise, which generally causes bond prices to fall. Also, economic and market
conditions may cause issuers to default or go bankrupt. In either case, the
price of Fund shares may fall. High-yield bonds are even more sensitive to
economic and market conditions than other bonds.
The prices of mortgage-related securities, in addition to being sensitive to
changes in interest rates, also are sensitive to changes in the prepayment
patterns on the underlying instruments. If the principal on the underlying
mortgage notes is repaid faster than anticipated, which typically occurs in
times of low or declining interest rates, the price of the mortgage-related
security may fall.
Fund shares will rise and fall in value and you could lose money by investing in
the Fund. There is no guaranty the Fund will achieve its investment objective.
Shares of the Fund are not bank deposits and are not guaranteed, endorsed or
insured by any financial institution, the FDIC or any other government agency.
Shares of the Fund are offered to insurance company separate accounts that fund
both annuity and life insurance contracts and to certain tax-qualified
retirement plans. Due to differences in tax treatment or other considerations,
the interests of various contract owners participating in the Fund and the
interests of qualified plans investing in the Fund might at some time be in
conflict. The Fund's Board of Directors (Board) will monitor the Fund for any
material conflicts and determine what action, if any, should be taken to resolve
these conflicts.
4 Aetna Balanced VP, Inc.
<PAGE>
Investment Performance
Year-by-Year Total Return
[Begin Bar Chart]
Years Ended December 31,
1990 5.72%
1991 18.37%
1992 6.39%
1993 9.90%
1994 -0.35%
1995 27.73%
1996 15.17%
1997 22.48%
1998 16.94%
[up arrowhead] Best Quarter:
fourth quarter 1998,
up 13.05%
[down arrowhead] Worst Quarter:
third quarter 1998,
down 6.59%
[End Bar Chart]
This performance bar chart shows changes in the Fund's performance from year to
year. The fluctuation in returns illustrates the Fund's performance volatility.
The chart is accompanied by the Fund's best and worst quarterly returns
throughout the years noted in the bar chart.
As of December 31, 1998
<TABLE>
<CAPTION>
Average Annual Total Return 1 Year 5 Years Since Inception Inception Date
<S> <C> <C> <C> <C>
Balanced 16.94% 15.90% 12.97% 04/03/89
S&P 500 Index* 28.57% 24.06% 18.91% 03/31/89
LBAB** 8.69% 7.27% 9.38% 03/31/89
60% S&P 500/40% LBAB 20.98% 17.32% 15.22% 03/31/89
</TABLE>
This table shows the Fund's average annual total return. The table also compares
the Fund's performance to the performance of broad-based securities market
indices. The Fund's past performance is not necessarily an indication of how it
will perform in the future.
The performance table and bar chart provide an indication of the historical risk
of an investment in the Fund. The performance numbers do not reflect the
deduction of any insurance fees or charges. If such charges were deducted,
performance would be lower.
* The Standard & Poor's 500 Index is a value-weighted, unmanaged index of 500
widely held stocks that assumes the reinvestment of all dividends, and is
considered to be representative of the stock market in general.
** The Lehman Brothers Aggregate Bond Index (LBAB) is an unmanaged index of
corporate, government and mortgage bonds.
Aetna Balanced VP, Inc. 5
<PAGE>
FUND EXPENSES
The following table describes Fund expenses. Shareholder Fees are paid directly
by shareholders. Annual Fund Operating Expenses are deducted from Fund assets
every year, and are thus paid indirectly by all Fund shareholders. Shareholders
who acquire Fund shares through an insurance company separate account should
refer to the applicable contract prospectus, prospectus summary or disclosure
statement for a description of insurance charges that may apply.
<TABLE>
<CAPTION>
Shareholder Fees
(fees paid directly from your investment)
<S> <C>
Maximum Sales Charge (Load) on Purchases None
Maximum Deferred Sales Charge (Load) None
Annual Fund Operating Expenses(1)
(expenses that are deducted from Fund assets)
Management Fee 0.50%
Other Expenses 0.09%
Total Operating Expenses 0.59%
</TABLE>
(1) Prior to May 1, 1998, the investment adviser provided administrative
services to the Fund and assumed the Fund's ordinary recurring direct
expenses under an administrative services agreement. Effective May 1, 1998,
under the current Administrative Services Agreement, Aeltus provides
administrative services to the Fund but will not assume the Fund's ordinary
recurring direct costs. The "Other Expenses" shown are not based on actual
figures for the year ended December 31, 1998, but reflect the fee payable
under the current Administrative Services Agreement and estimate the Fund's
ordinary recurring direct costs.
Example
The following example is designed to help you compare the costs of investing in
the Fund with the costs of investing in other mutual funds. Using the annual
fund operating expenses percentages above, you would pay the following expenses
on a $10,000 investment, assuming a 5% annual return and redemption at the end
of each of the periods shown:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C>
$60 $189 $329 $738
</TABLE>
This example should not be considered an indication of prior or future expenses.
Actual expenses for the current year may be greater or less than those shown.
6 Aetna Balanced VP, Inc.
<PAGE>
OTHER CONSIDERATIONS
In addition to the principal investments and strategies described above, the
Fund 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 and Options. The Fund may enter into futures contracts and use
options. The Fund primarily uses futures contracts and options to hedge against
price fluctuations or increase exposure to a particular asset class.
o Futures contracts are agreements that obligate the buyer to buy
and the seller to sell a specific quantity of securities at a
specific price on a specific date.
o Options are agreements that give the holder the right, but not the
obligation, to purchase or sell a certain amount of securities or
futures contracts during a specified period or on a specified
date.
The main risk with futures contracts and options is that they can amplify a gain
or loss, potentially earning or losing substantially more money than the actual
cost of the instrument. In addition, while a hedging strategy can guard against
potential risks for the Fund as a whole, it adds to the Fund's expenses and may
reduce or eliminate potential gains. There is also a risk that a futures
contract or option intended as a hedge may not perform as expected.
Defensive Investing. In response to unfavorable market conditions, the Fund may
make temporary investments that are not consistent with its principal investment
objective and policies. In that event, the Fund may not achieve its investment
objective.
Year 2000. The date-related computer issue known as the "Year 2000 problem"
could have an adverse impact on the quality of services provided to the Fund and
its shareholders. However, the Fund understands that its key service providers,
including but not limited to Aeltus and its affiliates, the transfer agent, the
custodian, and broker-dealers through which its trades are executed, are taking
steps to address the issue. The costs of these efforts will not affect the Fund.
The Year 2000 problem also may adversely affect the issuers in which the Fund
invests. For example, issuers may incur substantial costs to address the
problem. They may also suffer losses caused by corporate and governmental data
processing errors. The Fund and Aeltus will continue to monitor developments
relating to this issue.
Aetna Balanced VP, Inc. 7
<PAGE>
MANAGEMENT OF THE FUND
Aeltus Investment Management, Inc., 10 State House Square, Hartford, Connecticut
06103-3602, serves as investment adviser to the Fund. Aeltus is responsible for
managing the assets of the Fund in accordance with the Fund's investment
objective and policies, subject to oversight by the Board. Aeltus has acted as
adviser or subadviser to mutual funds since 1994 and has managed institutional
accounts since 1972.
Advisory Fees
For its most recent fiscal year, the Fund paid Aeltus aggregate advisory fees
equal to an annual rate of 0.50% of the average daily net assets of the Fund.
Portfolio Management
Geoffrey A. Brod, Portfolio Manager, Aeltus, has been managing large cap stocks
for the Fund since August 1998. He has over 30 years of experience in
quantitative applications and has over 11 years of experience in equity
investments. Mr. Brod has been with the Aetna organization since 1966.
Thomas DiBella, Portfolio Manager, Aeltus, has been managing small cap stocks
for the Fund since May 1999. Mr. DiBella joined Aeltus in 1991 and is currently
responsible for the management of several small-capitalization portfolios.
Steven C. Huber, Vice President, Aeltus, has been managing fixed-income
securities for the Fund since May 1999. Mr. Huber joined the Aetna organization
in 1987 as a quantitative analyst and has been managing fixed-income portfolios
since 1989.
INVESTMENTS IN AND REDEMPTIONS FROM THE FUND
Investors purchasing shares in connection with an insurance company contract or
policy should refer to the documents pertaining to the contract or policy for
information on how to direct investments in or redemptions from (including
making exchanges into or out of) the Fund, and any fees that may apply.
Orders for the purchase or redemption of Fund shares that are received before
the close of regular trading on the New York Stock Exchange (normally 4:00 p.m.
eastern time) are effected at the net asset value (NAV) per share determined
that day, as described below. The insurance company has been designated an agent
of the Fund for receipt of purchase and redemption orders. Therefore, receipt of
an order by the insurance company constitutes receipt by the Fund, provided that
the Fund receives notice of the order by 9:30 a.m. eastern time the next day on
which the New York Stock Exchange is open for trading.
Net Asset Value. The NAV of the Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. eastern time).
In calculating the NAV, securities are valued primarily by independent pricing
services using market quotations. Short-term debt securities maturing in less
than 60 days are valued using amortized cost. Securities for which market
quotations are not readily available are valued at their fair value, subject to
procedures adopted by the Board.
Business Hours. The Fund is open on the same days as the New York Stock
Exchange (generally, Monday through Friday). Representatives are available from
8:00 a.m. to 8:00 p.m. eastern time on those days.
The Fund may refuse to accept any purchase order, especially if as a result of
such order, 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, or to reject any
specific purchase order. The Fund may suspend redemptions or postpone payments
when the New York Stock Exchange is closed or when trading is restricted for any
reason or under emergency circumstances as determined by the Securities and
Exchange Commission.
8 Aetna Balanced VP, Inc.
<PAGE>
The Fund is not designed for professional market timing organizations or other
entities using programmed or frequent exchanges. The Fund reserves the right to
reject any specific purchase or exchange request, including a request made by a
market timer.
TAX INFORMATION
The Fund intends to qualify as a regulated investment company by satisfying the
requirements under Subchapter M of the Internal Revenue Code of 1986, as amended
(Code), including requirements with respect to diversification of assets,
distribution of income and sources of income. As a regulated investment company,
the Fund generally will not be subject to tax on its ordinary income and net
realized capital gains.
The Fund also intends to comply with the diversification requirements of Section
817(h) of the Code for those investors who acquire shares through variable
annuity contracts and variable life insurance policies so that those contract
owners and policy owners should not be subject to federal tax on distributions
from the Fund to the insurance company separate accounts. Contract owners and
policy owners should review the applicable contract prospectus, prospectus
summary or disclosure statement for information regarding the personal tax
consequences of purchasing a contract or policy.
Dividends and Distributions. Dividends and capital gains distributions, if any,
are paid on an annual basis around the end of the year, December 31. To comply
with federal tax regulations, the Fund may also pay an additional capital gains
distribution, usually in June.
Both income dividends and capital gains distributions are paid by each Fund on a
per share basis. As a result, at the time of payment, the share price of the
Fund will be reduced by the amount of the payment.
Aetna Balanced VP, Inc. 9
<PAGE>
FINANCIAL HIGHLIGHTS
These highlights are intended to help you understand the Fund's performance for
the past 5 years. Certain information reflects financial results for a single
Fund share. The total returns in the table represent the rate an investor would
have earned (or lost) on an investment in the Fund (assuming reinvestment of all
dividends and distributions). The information in this table has been audited by
KPMG LLP, independent auditors, whose report, along with the Fund's Financial
Statements, is included in the Fund's current Annual Report, which is available
upon request.
(for one outstanding share throughout each period)
<TABLE>
<CAPTION>
Years Ended December 31,
-------------------------------------------------------------------
1998 1997 1996 1995+ 1994+
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period $16.03 $15.12 $14.50 $12.23 $12.80
------ ------ ------ ------ ------
Income from investment
operations:
Net investment income 0.46 0.50+ 0.47+ 0.54 0.48
Net realized and change in
unrealized gain or loss on
investments 2.11 2.73 1.59 2.73 (0.53)
------ ------ ------ ------ ------
Total from investment
operations 2.57 3.23 2.06 3.27 (0.05)
------ ------ ------ ------ ------
Less distributions:
From net investment income (0.39) (1.10) (0.35) (0.67) (0.45)
From net realized gains on
investments (2.48) (1.22) (1.09) (0.33) (0.07)
------ ------ ------ ------ ------
Total distributions (2.87) (2.32) (1.44) (1.00) (0.52)
------ ------ ------ ------ ------
Net asset value, end of period $15.73 $16.03 $15.12 $14.50 $12.23
====== ====== ====== ====== ======
Total return* 16.94% 22.48% 15.17% 27.23% (0.35)%
Net assets, end of period
(millions) $1,852 $1,642 $1,364 $1,196 $958
Ratio of net expenses to average
net assets 0.59% 0.58% 0.45% 0.31% 0.32%
Ratio of net investment income to
average net assets 3.01% 3.01% 3.21% 3.96% 3.83%
Portfolio turnover rate 85.83% 112.03% 107.80% 141.21% 112.05%
</TABLE>
* The total return percentage does not reflect any separate account charges
under variable annuity contracts and life policies.
+ Per share data calculated
using weighted average number of shares outstanding throughout the period.
10 Aetna Balanced VP, Inc.
<PAGE>
ADDITIONAL INFORMATION
The SAI, which is incorporated by reference into this Prospectus, contains
additional information about the Fund. The most recent annual and semi-annual
reports also contain information about the Fund's investments, as well as a
discussion of the market conditions and investment strategies that significantly
affected the Fund's performance during the past fiscal year.
You may request free of charge the current SAI or the most recent annual and
semi-annual reports, or other information about the Fund, by calling
1-800-525-4225 or writing to:
Aetna Balanced VP, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156-8962
The SEC also makes available to the public reports and information about the
Fund. Certain reports and information, including the SAI, are available on the
SEC's website (http://www.sec.gov) or at the SEC's public reference room in
Washington, D.C. You may call 1-800-SEC-0330 to get information about the
operations of the public reference room or you may write to Public Reference
Section, Washington, D.C. 20549-6009 to get information from the Public
Reference Section. The Public Reference Section will charge a duplicating fee
for copying and sending any information you request.
Investment Company Act File No. 811-5773.
Aetna Balanced VP, Inc. 11
<PAGE>
PART B
------
The Statement of Additional Information is incorporated into Part B of this
Post-Effective Amendment No. 17 by reference to Post-Effective Amendment No. 8
to the Registration Statement on Form N-1A (File No. 333-05173), as filed
electronically on April 27, 1999.
<PAGE>
PART C
OTHER INFORMATION
-----------------
Item 23. Exhibits
- -----------------
<TABLE>
<S> <C>
(a.1) Articles of Incorporation(1)
(a.2) Articles of Amendment (March 8, 1989)(2)
(a.3) Articles of Amendment (April 6, 1998)(3)
(b) Amended and Restated Bylaws (adopted by Board of Directors
September 25, 1996)(3)
(c) Instruments Defining Rights of Holders(4)
(d) Investment Advisory Agreement between Aeltus Investment Management, Inc.
("Aeltus") and Aetna Balanced VP, Inc.(3)
(e) Underwriting Agreement between Aetna Life Insurance and Annuity
Company and Aetna Balanced VP, Inc.(2)
(f) Directors' Deferred Compensation Plan(3)
(g) Custodian Agreement between Aetna Balanced VP, Inc. and Mellon Bank, N.A.(1)
(h.1) Administrative Services Agreement between Aeltus and Aetna Balanced VP, Inc.(3)
(h.2) License Agreement(2)
(i) Opinion and Consent of Counsel
(j) Consent of Independent Auditors
(k) Not applicable
(l) Not applicable
(m) Not applicable
(n) See exhibit 27 below
(o) Not applicable
(p.1) Power of Attorney (November 6, 1998)(5)
(p.2) Authorization for Signatures(6)
(27) Financial Data Schedule
</TABLE>
1. Incorporated by reference to Post-Effective Amendment No. 12 to the
Registration Statement on Form N-1A (File No. 33-27247), as filed
electronically with the Securities and Exchange Commission on April 25, 1996.
2. Incorporated by reference to Post-Effective Amendment No. 15 to Registration
Statement on Form N-1A (File No. 33-27247), as filed electronically with the
Securities and Exchange Commission on April 11, 1997.
3. Incorporated by reference to Post-Effective Amendment No. 16 to Registration
Statement on Form N-1A (File No. 33-27247), as filed electronically with the
Securities and Exchange Commission on April 27, 1998.
4. Incorporated by reference to Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A (File No. 33-27247), as filed
electronically with the Securities and Exchange Commission on June 7, 1996.
<PAGE>
5. Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement on Form N-1A (File No. 33-41694), as filed
electronically with the Securities and Exchange Commission on December 17,
1998.
6. Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A (File No. 333-05173), as filed
electronically with the Securities and Exchange Commission on September 26,
1997.
<PAGE>
Item 24. Persons Controlled by or Under Common Control
- ------------------------------------------------------
Registrant is a Maryland corporation for which separate financial
statements are filed. As of March 31, 1999, Aetna Life Insurance and
Annuity Company (Aetna), and its affiliates, owned 100% of Registrant's
outstanding voting securities, through direct ownership or through one of
Aetna's separate accounts.
Aetna is an indirectly wholly owned subsidiary of Aetna Inc.
A list of all persons directly or indirectly under common control with the
Registrant and a list which indicates the principal business of each such
company referenced in the diagram are incorporated herein by reference to
Item 24 of Post-Effective Amendment No. 14 to the Registration Statement on
Form N-1A (File No. 33-12723), as filed electronically with the Securities
and Exchange Commission on March 10, 1999.
Item 25. Indemnification
- ------------------------
Article 8, Section (d) of the Registrant's Articles of Incorporation, which
are incorporated herein by reference to Exhibit (a.1) of this
Post-Effective Amendment, provides for indemnification of directors and
officers. In addition, the Registrant's officers and directors are
currently covered under a directors and officers errors and omissions
liability insurance policy issued by Gulf Insurance Company which expires
on October 1, 1999.
Section XI.B of the Administrative Services Agreement, incorporated herein
by reference to Exhibit (h.1) of this Post-Effective Amendment, provides
for indemnification of the Administrator.
Reference is also made to Section 2-418 of the Corporations and
Associations Article of the Annotated Code of Maryland which provides
generally that (1) a corporation may (but is not required to) indemnify its
directors for judgments, fines and expenses in proceedings in which the
director is named a party solely by reason of being a director, provided
the director has not acted in bad faith, dishonestly or unlawfully, and
provided further that the director has not received any "improper personal
benefit"; and (2) that a corporation must (unless otherwise provided in the
corporation's charter or articles of incorporation) indemnify a director
who is successful on the merits in defending a suit against him by reason
of being a director for "reasonable expenses." The statutory provisions are
not exclusive; i.e., a corporation may provide greater indemnification
rights than those provided by statute.
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 Variable Fund, Aetna Income Shares, Aetna Variable
Encore Fund, Aetna Generation Portfolios, Inc., Aetna GET Fund, Aetna
Variable Portfolios, Inc., and Aetna Series Fund, Inc. (all management
investment companies registered under the Investment Company Act of 1940
(1940 Act)). It also acts as investment adviser to certain private
accounts.
<PAGE>
The following table summarizes the business connections of the directors
and principal officers of the investment adviser.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Name Positions and Offices Other Principal Position(s) Held
- ---- with Investment Adviser Since Oct. 31, 1996/Addresses*
----------------------- --------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John Y. Kim Director, President, Chief Director (February 1995 - March 1998) -- Aetna Life
Executive Officer, Chief Insurance and Annuity Company; Senior Vice President
Investment Officer (since September 1994) -- Aetna Life Insurance and
Annuity Company.
J. Scott Fox Director, Managing Director, Vice President (since April 1997) -- Aetna Retirement
Chief Operating Officer, Chief Services, Inc.; Director and Senior Vice President
Financial Officer (March 1997 - February 1998) -- Aetna Life Insurance
and Annuity Company; Managing Director, Chief Operating
Officer, Chief Financial Officer, Treasurer (April 1994 -
March 1997) - Aeltus Investment Management, Inc.
Thomas J. McInerney Director President (since August 1997) -- Aetna Retirement
Services, Inc.; Director and President (since September
1997) -- Aetna Life Insurance and Annuity Company;
Executive Vice President (since August 1997) -- Aetna
Inc.; Vice President, Strategy (March 1997 - August
1997) - Aetna Inc.; Vice President, Marketing and Sales
(December 1996 - March 1997) -- Aetna U.S. Healthcare;
Vice President, National Accounts (April 1996 -
December 1996) -- Aetna U.S. Healthcare.
Catherine H. Smith Director Chief Financial Officer (since February 1998) -- Aetna
Retirement Services, Inc.; Director, Senior Vice
President and Chief Financial Officer (since February
1998) -- Aetna Life Insurance and Annuity Company; Vice
President, Strategy, Finance and Administration,
Financial Relations (September 1996 - February 1998) --
Aetna Inc.
Lennart A. Carlson Vice President, Fixed Managing Director (since January 1996) -- Aeltus Trust
Income Investments Company.
Stephanie A. DeSisto Vice President
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Name Positions and Offices Other Principal Position(s) Held
- ---- with Investment Adviser Since Oct. 31, 1996/Addresses*
----------------------- --------------------------------
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Amy R. Doberman Vice President, General Counsel (since December 1996) -- Aetna Life Insurance and
Counsel and Secretary Annuity Company; Attorney (March 1990 - November 1996) --
Securities and Exchange Commission.
Steven C. Huber Vice President, Fixed Managing Director (since August 1996) -- Aeltus Trust
Income Investments Company.
Brian K. Kawakami Vice President, Chief Chief Compliance Officer & Director (since January
Compliance 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 Vice President, Strategic Marketing (April, 1992 -
Marketing and Sales August, 1997) -- Fidelity Investments Institutional
Services Company.
Kevin M. Means Managing Director, Equity Managing Director (since August 1996) -- Aeltus Trust
Investments Company.
L. Charles Meythaler Managing Director, Institutional Director (since July 1997) - Aeltus Trust Company;
Marketing and Sales Managing Director (since June 1997) -- Aeltus Trust
Company; President (June 1993 - April 1997) - New
England Investment Association.
</TABLE>
*Except with respect to Mr. McInerney and Ms. Smith, the principal business
address of each person named is 10 State House Square, Hartford,
Connecticut 06103-3602. The address of Mr. McInerney and Ms. Smith is 151
Farmington Avenue, Hartford, Connecticut 06156.
Item 27. Principal Underwriters
(a) In addition to serving as the principal underwriter for the Registrant,
Aetna also acts as the principal underwriter for Aetna Variable Fund, Aetna
Income Shares, Aetna Variable Encore Fund, Aetna GET Fund, 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
<PAGE>
Act). Additionally, Aetna acts as the principal underwriter and depositor
for Variable Annuity Account B of Aetna, Variable Annuity Account C of
Aetna, Variable Annuity Account G of Aetna, and Variable Life Account B of
Aetna (separate accounts of Aetna registered as unit investment trusts
under the 1940 Act). Aetna is also the principal underwriter for Variable
Annuity Account I of Aetna Insurance Company of America (AICA) (a separate
account of AICA registered as a unit investment trust under the 1940 Act).
(b) The following are the directors and principal officers of the Underwriter:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices with Principal Positions and Offices
Business Address* Underwriter with Registrant
- ------------------ ------------------------------------ ---------------------
<S> <C> <C>
Thomas J. McInerney Director and President None
Shaun P. Mathews Director and Senior Vice President Director
Catherine H. Smith Director, Senior Vice President and Chief Financial None
Officer
Allan Baker Senior Vice President None
David E. Bushong Senior Vice President None
Robert D. Friedhoff Senior Vice President None
Steven A. Haxton Senior Vice President None
John Y. Kim Senior Vice President Director
Deborah Koltenuk Vice President, Treasurer and Corporate Controller 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
</TABLE>
* Except with respect to Mr. Kim, the principal business address of all
directors and officers listed is 151 Farmington Avenue, Hartford, Connecticut
06156. Mr. Kim's address is 10 State House Square, Hartford, Connecticut
06103-3602.
(c) Not applicable
Item 28. Location of Accounts and Records
- -----------------------------------------
As required by Section 31(a) of the 1940 Act and the rules thereunder, the
Registrant and its investment adviser, Aeltus, maintain physical possession
of each account, book or other document, at 151 Farmington Avenue,
Hartford, Connecticut 06156 and 10 State House Square, Hartford,
Connecticut 06103-3602, respectively.
Item 29. Management Services
- ----------------------------
Not applicable.
Item 30. Undertakings
- ---------------------
Not applicable.
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Act and the Investment Company
Act, Aetna Balanced VP, Inc. certifies that it meets all of the requirements for
effectiveness of this Post-Effective Amendment to the Registration Statement
under Rule 485(b) under the Securities Act and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, duly authorized, in the
City of Hartford, and State of Connecticut, on the 27th day of April, 1999.
AETNA BALANCED VP, INC.
----------------------------------
Registrant
By J. Scott Fox*
-------------------------------
J. Scott Fox
President
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed below by the following persons in the capacities and on the
date(s) indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
J. Scott Fox * President and Director )
- --------------------------------------- (Principal Executive Officer) )
J. Scott Fox )
)
)
Albert E. DePrince, Jr.* Director )
- --------------------------------------- )
Albert E. DePrince, Jr. )
)
)
Maria T. Fighetti * Director )
- --------------------------------------- )
Maria T. Fighetti )
)
)
David L. Grove * Director ) April
- --------------------------------------- ) 27, 1999
David L. Grove )
)
)
John Y. Kim* Director )
- --------------------------------------- )
John Y. Kim )
)
)
Sidney Koch * Director )
- --------------------------------------- )
Sidney Koch )
)
Shaun P. Mathews* Director )
- --------------------------------------- )
Shaun P. Mathews )
)
<PAGE>
<S> <C> <C>
Corine T. Norgaard* Director )
- --------------------------------------- )
Corine T. Norgaard )
)
)
Richard G. Scheide* Director )
- --------------------------------------- )
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 December 17, 1998.
</TABLE>
<PAGE>
Aetna Balanced VP, Inc.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Exhibit Page
----------- ------- ----
<S> <C> <C>
99-(i) Opinion and Consent of Counsel
--------------
99-(j) Consent of Independent Auditors
--------------
(27) Financial Data Schedule
--------------
</TABLE>
10 State House Square, SH11
Hartford, CT 06103-3602
Amy R. Doberman
Counsel
Aetna Balanced VP, Inc.
April 27, 1999 (860) 275-3252
Fax: (860) 275-2158
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Filing Desk
Re: Aetna Balanced VP, Inc.
Post-Effective Amendment No. 17 to
Registration Statement on Form N-1A
(File No. 33-27247 and 811-5773)
Dear Sir or Madam:
The undersigned serves as counsel to Aetna Balanced VP, Inc., a Maryland
corporation (the "Company"). It is my understanding that the Company 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 Company, I have reviewed the prospectus
and the Company's Registration Statement on Form N-1A, as amended to the date
hereof, filed with the Securities and Exchange Commission under the 1933 Act and
the 1940 Act, pursuant to which the Shares will be sold (the "Registration
Statement"). I have also examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents and other instruments I have
deemed necessary or appropriate for the purpose of this opinion. For purposes of
such examination, I have assumed the genuineness of all signatures on original
documents and the conformity to the original of all copies.
I am admitted to practice law in Connecticut, Maryland and the District of
Columbia. My opinion herein as to Maryland law is based upon a limited inquiry
thereof that I have deemed appropriate under the circumstances.
Based upon the foregoing, and assuming the securities are issued and sold in
accordance with the provisions of the Company's Articles of Incorporation and
the Registration Statement, I am of the opinion that the securities will when
sold be legally issued, fully paid and nonassessable.
<PAGE>
Page 2
April 27, 1999
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Amy R. Doberman
Amy R. Doberman
Counsel
Consent of Independent Auditors
The Board of Directors and Shareholders
Aetna Balanced VP, Inc.:
We consent to the use of our report dated January 29, 1999 incorporated by
reference herein on Form N-1A relating to Aetna Balanced VP, Inc. and to the
references to our firm under the headings "Financial Highlights" in the
prospectus and "Independent Auditors" in the statement of additional
information.
/s/ KPMG LLP
KPMG LLP
Hartford, Connecticut
April 27, 1999
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000846799
<NAME> Aetna Balanced VP, Inc.
<MULTIPLIER> 1
<CURRENCY> USD
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<INVESTMENTS-AT-COST> 1,633,187,826
<INVESTMENTS-AT-VALUE> 1,859,478,407
<RECEIVABLES> 29,879,519
<ASSETS-OTHER> 331,283
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,889,689,209
<PAYABLE-FOR-SECURITIES> 29,640,766
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 7,692,940
<TOTAL-LIABILITIES> 37,333,706
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,490,221,671
<SHARES-COMMON-STOCK> 117,766,149
<SHARES-COMMON-PRIOR> 102,419,479
<ACCUMULATED-NII-CURRENT> 8,051,568
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 127,791,681
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 226,290,581
<NET-ASSETS> 1,852,355,501
<DIVIDEND-INCOME> 13,332,507
<INTEREST-INCOME> 50,074,996
<OTHER-INCOME> 0
<EXPENSES-NET> (10,350,590)
<NET-INVESTMENT-INCOME> 53,056,913
<REALIZED-GAINS-CURRENT> 129,611,198
<APPREC-INCREASE-CURRENT> 90,857,948
<NET-CHANGE-FROM-OPS> 273,526,059
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (45,005,345)
<DISTRIBUTIONS-OF-GAINS> (255,329,194)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 3,888,368
<NUMBER-OF-SHARES-REDEEMED> (8,207,096)
<SHARES-REINVESTED> 19,665,398
<NET-CHANGE-IN-ASSETS> 210,301,944
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 253,509,677
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 8,810,398
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 10,350,590
<AVERAGE-NET-ASSETS> 1,752,963,218
<PER-SHARE-NAV-BEGIN> 16.03
<PER-SHARE-NII> 0.46
<PER-SHARE-GAIN-APPREC> 2.11
<PER-SHARE-DIVIDEND> (0.39)
<PER-SHARE-DISTRIBUTIONS> (2.48)
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 15.73
<EXPENSE-RATIO> 0.59
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
</TABLE>
