As filed with the Securities and Exchange File No. 33-41694
Commission on November 17, 1995 File No. 811-6352
- ----------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 10
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 16
--
AETNA SERIES FUND, INC.
-----------------------
(Exact Name of Registrant as Specified in Charter)
151 Farmington Avenue RE4C, Hartford, Connecticut 06156
-------------------------------------------------------
(Address of Principal Executive Offices)
(203) 273-7834
(Registrant's Telephone Number, including Area Code)
Susan E. Bryant, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue RE4C, Hartford, Connecticut 06156
-------------------------------------------------------
(Name and Address of Agent for Service)
- -----------------------------------------------------------------------------
Approximate date of proposed public offering - as soon after effectiveness as
is practicable
It is proposed that this filing will become effective (check appropriate space):
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on ___________ pursuant to paragraph (b) of Rule 485
__X__ 60 days after filing pursuant to paragraph (a)(1) of Rule 485
_____ on ___________ pursuant to paragraph (a)(1) of Rule 485
_____ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
_____ on ___________ pursuant to paragraph (a)(2) of Rule 485
Aetna Series Fund, Inc. has registered an indefinite number of its securities
under the Securities Act of 1933 pursuant to Rule 24f-2 of the Investment
Company Act of 1940. Aetna Series Fund, Inc. filed its Rule 24f-2 Notice for
its fiscal year ended October 31, 1994 on December 28, 1994.
<PAGE>
AETNA SERIES FUND, INC.
Cross-Reference Sheet
Form N-1A
Item No. Caption in Prospectus
- -------- ---------------------
1. Cover Page Cover Page
2. Synopsis Highlights
Fees Tables
3. Condensed Financial Information Financial Highlights
4. General Description of Registrant Description of the Funds
Risk Factors and Other Considerations
Investment Restrictions
5. Management of the Fund Management of the Funds
Portfolio Management
5A. Management's Discussion of Fund Financial Highlights
Performance
6. Capital Stock and Other Securities General Information
Fund Distributions
Taxes
Shareholder Services
7. Purchase of Securities Being Offered Management of the Funds
Net Asset Value
Shareholder Services
Fees and Charges (Adviser Class
Prospectus only)
8. Redemption or Repurchase Shareholder Services
Fees and Charges (Adviser Class
Prospectus only)
9. Pending Legal Proceedings Not applicable
Caption in Statement of Additional
Information
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information and History
13. Investment Objectives and Policies General Information and History
Additional Investment Restrictions and
Policies of the Funds
Description of Various Securities and
Investment Techniques
14. Management of the Registrant Directors and Officers of the
Company
15. Control Persons and Principal Control Persons and Principal
Holders of Securities Holders of the Funds
16. Investment Advisory and Other The Investment Advisory Contract
Services The Administrative Services Agreement
Sub-advisory Agreements
17. Brokerage Allocation and Other Brokerage Allocation
Practices
<PAGE>
18. Capital Stock and Other Securities Description of Shares
19. Purchase, Redemption and Pricing Sale and Redemption of Shares
of Securities Being Offered Net Asset Value
Distribution Arrangements
20. Tax Status Tax Status
21. Underwriters Principal Underwriter
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
<PAGE>
AETNA SERIES FUND, INC.
Select Class
The Prospectus for the Aetna Series Fund, Inc. dated March 31, 1995 is amended
as follows:
1. The Aetna Tax-Free Fund is not offered by this prospectus. References
to the Aetna Tax-Free Fund are deleted.
2. All references to Dunedin Fund Managers, Ltd. are deleted.
On Page 38, the first paragraph of the section entitled
"Subadvisers" is deleted and replaced with the following:
The Investment Adviser has engaged Aeltus as the sub-adviser to the
Tax-Free Fund, Growth Fund and the Small Company Growth Fund. Aeltus
Far East serves as the sub-adviser to the Asian Growth Fund pending its
merger with the International Growth Fund. Aeltus is a Connecticut
corporation located at 151 Farmington Avenue, Hartford, Connecticut
06156. Aeltus is a wholly owned subsidiary of Aetna Life Insurance
Company which is in turn owned by Aetna. Aeltus Far East has its
principal place of business at 2 Pacific Place, 88 Queensway, Hong
Kong. Each sub-adviser is registered as an investment adviser with the
Commission.
3. The following is added after the heading "Aetna Asian Growth Fund" on
page 22:
On September 29, 1995, the Board of Directors of the Aetna Series
Fund, Inc. adopted a Plan of Reorganization and Liquidation on behalf
of the Aetna Asian Growth Fund (the "Plan"). If the Plan is approved
by the Asian Growth Fund shareholders, the Aetna International Growth
Fund would acquire all of the assets of the Asian Growth Fund, the
shareholders of the Asian Growth Fund would become shareholders of the
International Growth Fund, and the Asian Growth Fund would be
liquidated.
4. The third paragraph on page 40 is deleted and replaced in its entirety
by the following:
Growth and Income Fund. Kevin M. Means, Portfolio Manager, ALIAC. Mr.
Means has over eight years investment management experience. Before
joining ALIAC in 1994 he was with INVESCO Capital Management, Inc.
Vincent Fioramonti, who is responsible for Hong Kong transactions for
this Fund, has been with ALIAC since 1994 and has over 7 years of
international investment experience.
<PAGE>
5. Pages 7 through 15 are deleted in their entirety and replaced with the
following:
Fee Tables
The following is provided to assist you in understanding the various expenses
that you would bear directly or indirectly as an investor in the Funds. A
complete description of expenses starts on page 36.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Select Class
Shareholder Transaction Expenses
Deferred Sales Charge on
Sales Charge on Sales Charge Dividend Exchange
Purchases on Redemptions Reinvestment Fee
<S> <C> <C> <C> <C>
Money Market None None None None
Government None None None None
Bond None None None None
Aetna Fund None None None None
Growth and Income None None None None
Growth None None None None
Small Company Growth None None None None
International Growth None None None None
Asian Growth None None None None
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Select Class
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Total Fund Operating
Expenses
Management / Administrative Fee (after fee waiver /
Advisory Fee (after fee waiver) Other expense
(after fee waiver) Expenses reimbursement)
<S> <C> <C> <C> <C>
Money Market 0.00% 0.10% 0.20% 0.30%
Government 0.04% 0.25% 0.41% 0.70%
Bond 0.19% 0.25% 0.31% 0.75%
Aetna Fund 0.80% 0.25% 0.27% 1.32%
Growth and Income 0.68% 0.25% 0.10% 1.03%
Growth 0.70% 0.25% 0.47% 1.42%
Small Company Growth 0.85% 0.25% 0.48% 1.58%
International Growth 0.85% 0.25% 0.78% 1.88%
Asian Growth 0.41% 0.25% 0.89% 1.55%
</TABLE>
From time to time, the Investment Advisor may agree to waive all or a portion of
its Management/Advisory Fee and/or its Administrative Fee for a particular Fund
and to reimburse some or all of a particular Fund's Other Expenses. Such fee
waiver/expense reimbursement arrangements will increase a Fund's total return
and may be modified or terminated at any time.
The expenses shown above have been annualized based on the ten month period
ended October 31, 1994 and reflect the most current fee waiver/expense
arrangements as of the date of this Supplement. Fee waiver/expense arrangements
are in effect for the Money Market Fund, the Government Fund, the Bond Fund and
the Asian Growth Fund. These arrangements currently limit the Total Fund
Operating Expenses for these Funds at the amounts shown above. Without these
arrangements, expenses would have been as follows: Money Market Fund's
Management/Advisory Fees, Administrative Fees and Total Fund Operating Expenses
would have been 0.40%, 0.25%, and 0.85%, respectively; Government Fund's
Management/Advisory Fees and Total Fund Operating Expenses would have been 0.50%
and 1.16%, respectively; Bond Fund's Management/Advisory Fees and Total Fund
Operating Expenses would have been 0.50% and 1.06%, respectively; and Asian
Growth Fund's Management/Advisory Fees and Total Fund Operating Expenses would
have been 1.00% and 2.14%, respectively.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Select Class
Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and redemption at the end of each of the
periods shown:
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $ 3 $10 $ 17 $ 38
Government 7 22 39 87
Bond 8 24 42 93
Aetna Fund 13 42 72 159
Growth and Income 11 33 57 126
Growth 14 45 78 170
Small Company Growth 16 50 86 188
International Growth 19 59 102 220
Asian Growth 16 49 84 185
</TABLE>
This example should not be considered an indication of past or future expenses.
Actual expenses may be greater or less than those shown.
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Adviser Class
Shareholder Transaction Expenses
Deferred Sales Sales Charge on
Sales Charge on Charge on Dividend Exchange
Purchases Redemptions1 Reinvestment Fee
<S> <C> <C> <C> <C>
Money Market None 1.0% None None
Government None 1.0% None None
Bond None 1.0% None None
Aetna Fund None 1.0% None None
Growth and Income None 1.0% None None
Growth None 1.0% None None
Small Company Growth None 1.0% None None
International Growth None 1.0% None None
Asian Growth None 1.0% None None
</TABLE>
1 The contingent deferred sales charge set forth in the above table is the
maximum redemption charge imposed on Adviser Class shares. Direct purchases into
the Money Market Fund are not subject to a sales charge on redemption. Investors
may pay charges less than 1.0%, depending on the length of time the shares are
held. Adviser Class shares of each Fund other than the Money Market Fund are
also subject to an annual distribution fee of 0.50% and an annual service fee of
0.25% of the value of average daily net assets of the Adviser Class. The Money
Market Fund is subject to an annual service fee of 0.10% of the value of average
daily net assets of its Adviser Class. See "Fees and Charges" in the Adviser
class prospectus.
<PAGE>
<TABLE>
<CAPTION>
=============================================================================================================
Adviser Class
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Total Fund
Operating Expenses
Management/Advisory Administrative (after fee
Fee (after Fee waiver/expense
fee waiver) (after fee 12b-1 Other reimbursement)
waiver) Fees Expenses
<S> <C> <C> <C> <C> <C>
Money Market 0.00% 0.10% 0.00% 0.20% 0.30%
Government 0.04% 0.25% 0.50% 0.66% 1.45%
Bond 0.19% 0.25% 0.50% 0.56% 1.50%
Aetna Fund 0.80% 0.25% 0.50% 0.52% 2.07%
Growth and Income 0.68% 0.25% 0.50% 0.99% 2.42%
Growth 0.70% 0.25% 0.50% 0.72% 2.17%
Small Company Growth 0.85% 0.25% 0.50% 0.54% 2.14%
International Growth 0.85% 0.25% 0.50% 0.81% 2.41%
Asian Growth 0.41% 0.25% 0.50% 1.14% 2.30%
</TABLE>
From time to time, the Investment Advisor may agree to waive all or a portion of
its Management/Advisory Fee and/or its Administrative Fee for a particular Fund
and to reimburse some or all of a particular Fund's Other Expenses. Such fee
waiver/expense reimbursement arrangements will increase a Fund's total return
and may be modified or terminated at any time.
The expenses shown above have been estimated based on annualized expenses for
the period from inception of the class (April 15, 1994) through October 31, 1994
and reflect the most current fee waiver/expense arrangements as of the date of
this Supplement. Fee waiver/expense arrangements are in effect for the Money
Market Fund, the Government Fund, the Bond Fund and the Asian Growth Fund. These
arrangements currently limit the Total Fund Operating Expenses for these Funds
at the amounts shown above. Without these arrangements, expenses would have been
as follows: Money Market Fund's Management/Advisory Fees, Administrative Fees,
Other Expenses and Total Fund Operating Expenses would have been 0.40%, 0.25%,
0.30%, and 0.95%, respectively; Government Fund's Management/Advisory Fees and
Total Fund Operating Expenses would have been 0.50% and 1.91%, respectively;
Bond Fund's Management/Advisory Fees and Total Fund Operating Expenses would
have been 0.50% and 1.81%, respectively; and Asian Growth Fund's
Management/Advisory Fees and Total Fund Operating Expenses would have been 1.00%
and 2.50%, respectively (2.89% actual expense reduced to comply with California
state law).
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Adviser Class
Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and either redemption at the end of each
of the periods shown or no redemption:
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market
Redemption at end of each time period $13 $15 $ 17 $ 38
No Redemption 3 10 17 38
Government
Redemption at end of each time period 25 51 79 174
No Redemption 15 46 79 174
Bond
Redemption at end of each time period 25 52 82 179
No Redemption 15 47 82 179
Aetna Fund
Redemption at end of each time period 31 70 111 240
No Redemption 21 65 111 240
Growth and Income
Redemption at end of each time period 35 80 129 276
No Redemption 25 75 129 276
Growth
Redemption at end of each time period 32 73 116 250
No Redemption 22 68 116 250
Small Company Growth
Redemption at end of each time period 32 72 115 247
No Redemption 22 67 115 247
International Growth
Redemption at end of each time period 34 80 129 275
No Redemption 24 75 129 275
Asian Growth
Redemption at end of each time period 33 77 123 264
No Redemption 23 72 123 264
This example should not be considered an indication of past or future expenses.
Actual expenses may be greater or less than those shown. This example reflects,
among other things, the application of the maximum Deferred Sales Charge imposed
on adviser Class shares. Direct purchases into the Money Market Fund are not
subject to the Deferred Sales Charge on redemption.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
As noted above, each Fund has two classes, Adviser Class shares and Select Class
shares. Because the expenses and sales charges vary between the classes, the
performance of each class will vary. Registered representatives may receive
different levels of compensation when selling shares of the Fund's classes.
Additional information regarding each Fund's classes may be obtained by calling
your representative or 1-800-367-7732.
<PAGE>
Financial Highlights -- Select Class Shares
(for one outstanding share throughout each period)
The selected data presented below for, and as of the end of, each of the periods
listed are derived from the financial statements of Aetna Series Fund, Inc. The
financial statements as of April 30, 1995 (unaudited) are included in the SAI
amendment dated December 1, 1995. The financial statements for the years ended
December 31, 1993 and December 31, 1992 and for the 10-month period ended
October 31, 1994 have been audited by KPMG Peat Marwick LLP, independent
auditors. The financial statements as of October 31, 1994 and the financial
highlights for the 10-month period ended October 31, 1994 and the years ended
December 31, 1993 and December 31, 1992, and the independent auditors' report
thereon, are included in the SAI.
Additional information about the performance of Aetna Series Fund, Inc. is
contained in the Annual Report dated October 31, 1994. The Report is
incorporated herein by reference and is available, without charge, by writing to
the Company at the address listed on the cover of this Prospectus or by calling
1-800-367-7732.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------
Money Market Fund
--------------------------------------------------------------------
Six-month
period ended Ten-month
April 30, 1995 period ended Year ended Year ended
(unaudited) Oct. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 1.00 1.00 1.00 1.00
--------- ---------- ---------- ----------
Income from investment operations:
Net investment income............ .03 .03 .03 .04
Less distributions:
From net investment income....... (.03) (.03) (.03) (.04)
---------- ----------- ----------- -----------
Net asset value, end of period... $ 1.00 1.00 1.00 1.00
========= ========== ========== ==========
Total return..................... 2.86% 3.33% 3.29% 3.98%
Net assets, end of period (000's) $ 184,790 161,756 107,844 36,522
Ratio of total expenses to
average net assets*.............. 0.25% 0.21% 0.00% 0.00%
Ratio of net investment income to
average net assets*.............. 5.77% 4.05% 3.33% 3.93%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 0.86% 0.85% 0.95% 1.04%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 5.16% 3.38% 2.38% 2.87%
Portfolio turnover rate.......... N/A N/A N/A N/A
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
<PAGE>
----------------------------------
Government Fund
----------------------------------
Six-month
period ended Ten-month
April 30, 1995 period ended
(unaudited) Oct. 31, 1994
Net asset value, beginning of
period........................... $ 9.41 10.00
---------- ----------
Income from investment operations:
Net investment income............ .32 .40
Net realized and change in
unrealized gain (loss)........... .26 (.63)
---------- -----------
Total............................ .58 (.23)
Less distributions:
From net investment income....... (.32) (.36)
----------- -----------
Net asset value, end of period... $ 9.67 9.41
========== ==========
Total return..................... 6.23% (2.37)%
Net assets, end of period (000's) $ 19,240 26,110
Ratio of total expenses to
average net assets*.............. 0.70% 0.41%
Ratio of net investment income to
average net assets*.............. 6.83% 5.29%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 1.14% 1.16%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 6.38% 4.54%
Portfolio turnover rate.......... 75.52% 43.63%
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
The Government Fund commenced operations on January 2, 1994.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Bond Fund
--------------------------------------------------------------------
Six-month
period ended Ten-month
April 30, 1995 period ended Year ended Year ended
(unaudited) Oct. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 9.58 10.37 9.99 10.00
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income............ .33 .52 .55 .53
Net realized and change in
unrealized gain (loss)........... .20 (.86) .45 .16
---------- ----------- ---------- ----------
Total............................ .53 (.34) 1.00 .69
Less distributions:
From net investment income....... (.31) (.45) (.55) (.53)
In excess of net investment income .00 .00 (.07) (.17)
---------- ---------- ----------- -----------
Net asset value, end of period... $ 9.80 9.58 10.37 9.99
========== ========== ========== ==========
Total return..................... 5.62% (3.31)% 10.20% 7.23%
Net assets, end of period (000's) $ 30,282 27,584 46,788 37,209
Ratio of total expenses to
average net assets*.............. 0.75% 0.76% 0.47% 0.05%
Ratio of net investment income to
average net assets*.............. 6.89% 6.29% 5.34% 5.44%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 1.04% 1.06% 1.01% 1.10%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 6.60% 5.98% 4.80% 4.39%
Portfolio turnover rate.......... 25.30% 51.80% 50.01% 57.05%
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------
The Aetna Fund
--------------------------------------------------------------------
Six-month
period ended Ten-month
April 30, 1995 period ended Year ended Year ended
(unaudited) Oct. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 10.65 10.82 10.18 10.00
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income............ .18 .23 .34 .43
Net realized and change in
unrealized gain (loss)........... .46 (.28) .64 .24
---------- ----------- ---------- ----------
Total............................ .64 (.05) .98 .67
Less distributions:
From net investment income....... (.20) (.12) (.30) (.39)
In excess of net investment income .00 .00 (.01) (.10)
Return of capital distribution... .00 .00 (.03) .00
---------- ---------- ----------- ----------
Net asset value, end of period... $ 11.09 10.65 10.82 10.18
========== ========== ========== ==========
Total return..................... 6.12% (0.42)% 9.84% 6.64%
Net assets, end of period (000's) $ 81,680 76,267 63,982 37,726
Ratio of total expenses to
average net assets*.............. 1.25% 1.09% 0.93% 0.07%
Ratio of net investment income to
average net assets*.............. 3.51% 2.65% 3.21% 4.31%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 1.28% 1.32% 1.34% 1.47%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 3.49% 2.42% 2.79% 2.91%
Portfolio turnover rate.......... 76.37% 86.10% 19.95% 13.35%
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------
Growth and Income Fund
--------------------------------------------------------------------
Six-month
period ended Ten-month
April 30, 1995 period ended Year ended Year ended
(unaudited) Oct. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 11.11 11.03 10.51 10.00
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income............ .11 .12 .19 .26
Net realized and change in
unrealized gain.................. .64 .04 .50 .51
---------- ---------- ---------- ----------
Total............................ .75 .16 .69 .77
Less distributions:
From net investment income....... (.07) (.08) (.16) (.26)
Return of capital distribution... .00 .00 (.01) .00
---------- ---------- ----------- ----------
Net asset value, end of period... $ 11.79 11.11 11.03 10.51
========== ========== ========== ==========
Total return..................... 6.90% 1.40% 6.58% 7.81%
Net assets, end of period (000's) $ 325,815 301,360 60,127 31,473
Ratio of total expenses to
average net assets*.............. 1.01% 0.92% 1.13% 0.33%
Ratio of net investment income to
average net assets*.............. 2.03% 1.51% 1.77% 2.83%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 1.01% 1.03% 1.27% 1.72%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 2.03% 1.39% 1.55% 1.44%
Portfolio turnover rate.......... 78.63% 54.13% 23.60% 14.44%
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
<PAGE>
<TABLE>
<CAPTION>
---------------------------------- ---------------------------------
Growth Fund Small Company Growth Fund
---------------------------------- ---------------------------------
Six-month Six-month
period ended Ten-month period ended Ten-month
April 30, 1995 period ended April 30, 1995 period ended
(unaudited) Oct. 31, 1994 (unaudited) Oct. 31, 1994
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 10.78 10.00 10.39 10.00
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income............ .02 .09 .00 .02
Net realized and change in
unrealized gain.................. .80 .69 1.06 .37
---------- ---------- ---------- ----------
Total............................ .82 .78 1.06 .39
Less distributions:
From net investment income....... (.09) .00 (.02) .00
----------- ---------- ----------- ----------
Net asset value, end of period... $ 11.51 10.78 11.43 10.39
========== ========== ========== ==========
Total return..................... 7.83% 7.70% 10.23% 3.90%
Net assets, end of period (000's) $ 31,940 27,188 28,756 25,879
Ratio of total expenses to
average net assets*.............. 1.20% 0.92% 1.40% 1.15%
Ratio of net investment income to
average net assets*.............. 0.30% 1.10% (0.08)% 0.21%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 1.25% 1.42% 1.44% 1.58%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 0.24% 0.60% (0.13)% (0.22)%
Portfolio turnover rate.......... 63.90% 120.32% 64.45% 116.28%
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
The Growth Fund and Small Company Growth Fund commenced operations on January 2,
1994.
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------
International Growth Fund
--------------------------------------------------------------------
Six-month
period ended Ten-month
April 30, 1995 period ended Year ended Year ended
(unaudited) Oct. 31, 1994 Dec. 31, 1993 Dec. 31, 1992
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 11.56 11.17 8.88 10.00
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income............ .01 .06 .05 .06
Net realized and change in
unrealized gain (loss)........... (.39) .33 2.65 (1.15)
----------- ---------- ---------- -----------
Total............................ (.38) .39 2.70 (1.09)
Less distributions:
From net investment income....... (.31) .00 (.05) (.03)
In excess of net investment income .00 .00 (.34) .00
From realized gain............... (.53) .00 (.02) .00
----------- ---------- ----------- ----------
Net asset value, end of period... $ 10.34 11.56 11.17 8.88
========== ========== ========== ==========
Total return..................... (3.22)% 3.49% 30.37% (10.84)%
Net assets, end of period (000's) $ 27,759 31,479 39,847 26,640
Ratio of total expenses to
average net assets*.............. 1.55% 1.66% 1.48% 0.50%
Ratio of net investment income to
average net assets*.............. 0.16% 0.71% 0.50% 1.36%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 1.63% 1.80% 1.77% 2.98%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 0.08% 0.57% 0.20% (1.12)%
Portfolio turnover rate.......... 21.51% 81.67% 110.38% 81.74%
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
<PAGE>
----------------------------------
Asian Growth Fund
----------------------------------
Six-month
period ended Ten-month
April 30, 1995 period ended
(unaudited) Oct. 31, 1994
Net asset value, beginning of
period........................... $ 9.49 10.00
---------- ----------
Income from investment operations:
Net investment income............ .02 .05
Net realized and change in
unrealized gain (loss)........... (1.69) (.56)
----------- -----------
Total............................ (1.67) (.51)
Less distributions:
From net investment income....... (.03) .00
----------- ----------
Net asset value, end of period... $ 7.79 9.49
========== ==========
Total return..................... (17.61)% (5.10)%
Net assets, end of period (000's) $ 22,401 29,386
Ratio of total expenses to
average net assets*.............. 1.55% 1.25%
Ratio of net investment income to
average net assets*.............. 0.56% 0.71%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 2.14% 1.81%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... (0.02)% 0.15%
Portfolio turnover rate.......... 29.97% 65.50%
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
The Asian Growth Fund commenced operations on January 2, 1994.
The date of this amendment is December 1, 1995.
<PAGE>
Select Class
March 31, 1995
Aetna
Mutual Funds
Prospectus
- -------------------------------------------------------------------------------
The Company Aetna Series Fund, Inc. (the "Company") is an open-end management
investment company authorized to issue multiple series of shares, each
representing a diversified portfolio of investments (collectively the "Funds,"
individually a "Fund") with different investment objectives, policies and
restrictions. Currently, each Fund is authorized to offer two classes of
shares, the Select Class and the Adviser Class. The Select Class of shares of
each Fund is no-load.
The Prospectus This Prospectus contains information you should know before
investing. A Statement of Additional Information ("SAI") dated March 31, 1995,
has been filed with the Securities and Exchange Commission ("Commission") and
is incorporated by reference into this Prospectus. The SAI is available,
without charge, by writing to Aetna Series Fund, Inc., 151 Farmington Avenue,
Hartford, CT 06156-8962, or by calling 1-800-367-7732.
This Prospectus is for investors eligible to purchase Select Class shares of
each Fund. A separate Prospectus is available for all other investors. Sales
charges, expenses and performance will vary with respect to each class.
Investment Objectives
- -------------------------------------------------------------------------------
Aetna Money Market Fund seeks to provide high current return, consistent with
preservation of capital and liquidity, through investment in high-quality money
market instruments.
Although the Money Market Fund will strive to maintain a $1.00 net asset value
per share, there is no assurance that it will be able to do so. Investments in
this Fund are neither insured nor guaranteed by the U.S. Government.
Aetna Government Fund seeks to provide income consistent with the preservation
of capital through investment in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Aetna Bond Fund seeks to provide high total return (i.e., income and capital
appreciation), consistent with reasonable risk, primarily through investment in
a diversified portfolio of high-quality corporate bonds and securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.
Aetna Tax-Free Fund seeks to provide income exempt from federal income tax
consistent with the preservation of capital primarily through investment in
municipal securities, the interest from which is exempt from federal income
tax.
<PAGE>
The Aetna Fund seeks to maximize total return with reasonable safety of
principal by investing in a diversified portfolio of stocks, bonds and money
market instruments; the Aetna Fund may involve less investment risk than a
portfolio consisting entirely of common stocks.
Aetna Growth and Income Fund seeks long-term growth of capital and income
through investment in a diversified portfolio primarily of common stocks and
securities convertible into common stocks believed to offer above-average
growth potential.
Aetna Growth Fund seeks growth of capital through investment in a diversified
portfolio primarily of common stocks and securities convertible into common
stocks believed to offer growth potential.
Aetna Small Company Growth Fund seeks growth of capital primarily through
investment in a diversified portfolio of common stocks and securities
convertible into common stocks of companies with smaller market
capitalizations.
Aetna International Growth Fund seeks long-term capital growth primarily
through investment in a diversified portfolio of common stocks principally
traded in countries outside of North America.
Aetna Asian Growth Fund seeks long-term growth of capital primarily through
investment in a diversified portfolio of common stocks principally traded in
countries in Asia excluding Japan.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PLEASE READ THIS
PROSPECTUS CAREFULLY BEFORE INVESTING AND RETAIN FOR FUTURE REFERENCE.
2 Aetna Mutual Funds Prospectus
<PAGE>
Table of Contents
Highlights............................. 4
Fee Tables............................. 7
Financial Highlights................... 12
Description of the Funds............... 16
Risk Factors and Other Considerations.. 23
Investment Restrictions................ 28
Shareholder Services................... 29
Other Features......................... 35
Cross-Fund Investing................... 36
Management of the Funds................ 36
Portfolio Management................... 39
Fund Distributions..................... 40
Net Asset Value........................ 41
Taxes.................................. 42
General Information.................... 43
Performance Data....................... 45
Glossary of Investment Terms........... 45
Description of Corporate Bond Ratings.. 48
Aetna Mutual Funds Prospectus 3
<PAGE>
Highlights
What is a Mutual Fund and What are its Advantages? A mutual fund is an
investment company that buys and sells securities on behalf of individuals
sharing common financial goals. Mutual funds allow you to pool your money with
others, to spread risk through diversification and to benefit from professional
management. You have immediate access to your money simply by writing a letter
or, in the case of the Aetna Money Market Fund, by writing a check.
What Funds are Offered? The Company is currently comprised of 13 different
Funds, each with its own objective and policies and all of which are
diversified portfolios under the Investment Company Act of 1940. The following
ten Funds are described in this Prospectus:
(bullet) Aetna Money Market Fund (Money Market Fund) - a portfolio consisting of
high-quality money market instruments
(bullet) Aetna Government Fund (Government Fund) - a portfolio of U.S.
Government securities
(bullet) Aetna Bond Fund (Bond Fund) - a portfolio primarily of high-quality
corporate and U.S. Government securities
(bullet) Aetna Tax-Free Fund (Tax-Free Fund) - a portfolio primarily of
municipal securities
(bullet) The Aetna Fund (Aetna Fund) - a flexible portfolio of stocks, bonds and
money market instruments
(bullet) Aetna Growth and Income Fund (Growth and Income Fund) - a common stock
portfolio
(bullet) Aetna Growth Fund (Growth Fund) - a common stock portfolio of companies
believed to have potential for growth
(bullet) Aetna Small Company Growth Fund (Small Company Growth Fund) - a common
stock portfolio of companies with smaller market capitalizations
(bullet) Aetna International Growth Fund (International Growth Fund) - a common
stock portfolio of companies traded outside North America
(bullet) Aetna Asian Growth Fund (Asian Growth Fund) - a common stock portfolio
of companies traded in Asia excluding Japan
Risk Factors The different types of securities purchased and investment te
chniques used by a Fund involve varying amounts of risk. For example, equity
securities are subject to a decline in the stock market or in the value of the
company and preferred stocks have price risk and some interest rate and credit
risk. The value of debt securities may be affected by changes in general
interest rates and in the creditworthiness of the issuer. In addition, foreign
securities have currency
4 Aetna Mutual Funds Prospectus
<PAGE>
risk. For more information, see "Risk Factors and Other Considera-
tions".
What is the Select Class of Shares? Each Fund has two classes of shares, the
Select Class shares and the Adviser Class shares. Select Class shares are only
offered to certain corporate retirement plans, salaried employees and persons
retired from salaried positions (including members of employees' and retired
persons' immediate families) with Aetna Life Insurance and Annuity Company
("ALIAC") and its affiliates, insurance companies (including separate
accounts), registered investment companies, investment advisers and
broker-dealers acting for their own account, current shareholders at the time
of first offering of Adviser Class shares and their immediate family members,
as long as they maintain a shareholder account, and members of such other
groups as may be approved by the Company's Board of Directors from time to
time. Adviser Class shares are offered to those persons not eligible to buy
Select Class shares. Select Class shares are no-load, which means you do not
pay any sales charges, distribution or service fees.
Adviser Class shares are subject to a contingent deferred sales charge at a
maximum rate of 1%, declining to 0% after 4 years from the date of initial
purchase. Additionally, Adviser Class shares of each Fund other than the Money
Market Fund are subject to an annual distribution fee of 0.50% and an annual
service fee of 0.25% (0.10% for the Money Market Fund) of the value of average
daily net assets of the Adviser Class.
How Can I Purchase Shares? You may purchase shares by completing an Aetna
Series Fund Select Class Application ("Application"). Your initial purchase
must be for a minimum of $1,000 for each Fund with a minimum of $500 for
Individual Retirement Accounts ("IRA"). Participants in employer-sponsored
retirement plans should refer to their enrollment material. We also of fer a
systematic investment program that enables investors to purchase shares on a
regular basis. Please refer to "Shareholder Services" for complete details.
When Can I Redeem Shares? Shares may be redeemed on each day the New York Stock
Exchange Inc. (NYSE) is open for business. Select Class shares are redeemable
at net asset value. See "Shareholder Services" for further information.
Who is the Manager? ALIAC is the Investment Adviser to each Fund. It is a
wholly owned subsidiary of Aetna Life and Casualty Company ("Aetna") which,
with affiliated companies, comprises one of the world's leading providers of
insurance and financial services. As of
Aetna Mutual Funds Prospectus 5
<PAGE>
December 31, 1994, the Investment Adviser managed over $19 billion of assets
worldwide for both individual and institutional investors.
Aeltus Investment Management, Inc. ("Aeltus") is the sub-adviser to the
Tax-Free Fund, the Growth Fund and the Small Company Growth Fund and Aeltus
Investment Management International (F.E.) Limited ("Aeltus Far East") is the
sub-adviser to the Asian Growth Fund. As of December 31, 1994, Aeltus and its
affiliate, Aeltus Far East, managed over $20 billion of assets.
Dunedin Fund Managers Ltd. ("Dunedin") is the sub-adviser to the International
Growth Fund. Dunedin is an operationally independent subsidiary of The Bank of
Scotland and has a history of fund management dating back to 1873. Dunedin had
total funds under management of $7.4 billion as of December 31, 1994. Dunedin
is a member of the Investment Management Regulatory Organization ("IMRO").
Dunedin's conduct of investment business is regulated by IMRO.
Please refer to "Management of the Funds" for further information.
Customer Service Shareholders in the Funds enjoy a high level of personalized se
rvice. Please call 1-800-367-7732 for details or refer to "Shareholder
Services" for detailed information.
6 Aetna Mutual Funds Prospectus
<PAGE>
Fee Tables
The following is provided to assist you in understanding the various expenses
that you would bear directly or indirectly as an investor in the Funds. A
complete description of expenses starts on page 36.
- -------------------------------------------------------------------------------
Select Class
Shareholder Transaction Expenses
Deferred Sales Charge
Sales Charge Sales Charge on Dividend Exchange
on Purchases on Redemptions Reinvestment Fee
- ----------------------------------------------------------------------
Money Market None None None None
Government None None None None
Bond None None None None
Tax-Free None None None None
Aetna Fund None None None None
Growth and Income None None None None
Growth None None None None
Small Company Growth None None None None
International Growth None None None None
Asian Growth None None None None
- -------------------------------------------------------------------------------
Select Class
Annual Fund Operating Expenses*
(as a percentage of average daily net assets)
Total Fund
Management/ Administrative Other Operating
Advisory Fee Fee Expenses Expenses
(after expense (after expense (after expense (after expense
reimbursement) reimbursement) reimbursement) reimbursement)
- --------------------------------------------------------------------------------
Money Market 0.00% 0.04% 0.17% 0.21%
Government 0.01% 0.09% 0.31% 0.41%
Bond 0.21% 0.25% 0.30% 0.76%
Tax-Free 0.03% 0.05% 0.23% 0.30%
Aetna Fund 0.57% 0.25% 0.27% 1.09%
Growth and Income 0.59% 0.25% 0.08% 0.92%
Growth 0.20% 0.24% 0.48% 0.92%
Small Company Growth 0.42% 0.24% 0.49% 1.15%
International Growth 0.72% 0.25% 0.69% 1.66%
Asian Growth 0.39% 0.25% 0.61% 1.25%
The Investment Adviser may, from time to time, reimburse a Fund for some or all
of its operating expenses. Such reimbursement arrangements will increase a
Fund's return and may be terminated at any time.
Without expense reimbursement/fee waiver, the Total Annualized Fund Operating
Expenses for 1994 would have been: 0.85% for Money Market; 1.16% for
Government; 1.06% for Bond; 1.20% for Tax-Free; 1.32% for Aetna Fund; 1.03% for
Growth and Income; 1.42% for Growth; 1.58% for Small Company Growth; 1.80% for
International Growth; and 1.81% for Asian Growth.
* The expenses shown have been annualized based on the actual expenses for the
ten-month period ended October 31, 1994.
- -------------------------------------------------------------------------------
Aetna Mutual Funds Prospectus 7
<PAGE>
- -------------------------------------------------------------------------------
Select Class
Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and redemption at the end of each of
the periods shown:
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------
Money Market $2 $7 $12 $27
Government 4 13 23 52
Bond 8 24 42 94
Tax-Free 3 10 17 38
Aetna Fund 11 35 60 133
Growth and Income 9 29 51 113
Growth 9 29 51 113
Small Company Growth 12 37 63 140
International Growth 17 52 90 197
Asian Growth 13 40 69 151
This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
- -------------------------------------------------------------------------------
Adviser Class
Shareholder Transaction Expenses
Deferred Sales Charge
Sales Charge Sales Charge on Dividend Exchange
on Purchases on Redemptions1 Reinvestment Fee
- -----------------------------------------------------------------------
Money Market None 1.0% None None
Government None 1.0% None None
Bond None 1.0% None None
Tax-Free None 1.0% None None
Aetna Fund None 1.0% None None
Growth and Income None 1.0% None None
Growth None 1.0% None None
Small Company Growth None 1.0% None None
International Growth None 1.0% None None
Asian Growth None 1.0% None None
1 The contingent deferred sales charge set forth in the above table is the
maximum redemption charge imposed on Adviser Class shares. Direct purchases
into the Money Market Fund are not subject to a sales charge on redemption.
Investors may pay charges less than 1.0%, depending on the length of time the
shares are held. Adviser Class shares of each Fund other than the Money
Market Fund are also subject to an annual distribution fee of 0.50% and an
annual service fee of 0.25% (0.10% for Money Market Fund) of the value of
average daily net assets of the Adviser Class. See "Fees and Charges" in the
Adviser Class prospectus.
8 Aetna Mutual Funds Prospectus
<PAGE>
- -------------------------------------------------------------------------------
Adviser Class
Annual Fund Operating Expenses*
(as a percentage of average daily net assets)
Total Fund
Management/ Other Operating
Advisory Fee Expenses** Expenses
(after expense 12b-1 (after expense (after expense
reimbursement) Fee reimbursement) reimbursement)
- -----------------------------------------------------------------------
Money Market 0.00% 0.00% 0.40% 0.40%
Government 0.19% 0.50% 0.77% 1.46%
Bond 0.48% 0.50% 0.77% 1.75%
Tax-Free 0.25% 0.50% 0.85% 1.60%
Aetna Fund 0.80% 0.50% 0.70% 2.00%
Growth and Income 0.65% 0.50% 0.65% 1.79%
Growth 0.65% 0.50% 0.82% 1.97%
Small Company Growth 0.86% 0.50% 0.80% 2.16%
International Growth 0.75% 0.50% 1.05% 2.30%
Asian Growth 0.74% 0.50% 1.08% 2.32%
* The Company began offering Adviser Class shares on April 15, 1994.
Consequently, figures are based on estimated amounts for 1995.
** Other Expenses include Shareholder Services Fees.
The Investment Adviser may, from time to time, reimburse a Fund for some or all
of its operating expenses. Such reimbursement arrangements will increase a
Fund's return and may be terminated at any time. Without expense
reimbursement/fee waiver, the estimated Total Fund Operating Expenses for 1995
would be: 0.96% for Money Market; 1.80% for Government; 1.77% for Bond; 1.85%
for Tax-Free; 2.00% for Aetna Fund; 1.79% for Growth and Income; 2.01% for
Growth; 2.16% for Small Company Growth; 2.40% for International Growth; and
2.58% for Asian Growth.
- -------------------------------------------------------------------------------
Aetna Mutual Funds Prospectus 9
<PAGE>
- -------------------------------------------------------------------------------
Adviser Class
Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and either redemption at the end of
each of the periods shown or no redemption:
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------
Money Market
Redemption at end of each time period $ 4 $13 $ 22 $ 51
No Redemption 4 13 22 51
Government
Redemption at end of each time period 25 51 80 175
No Redemption 15 46 80 175
Bond
Redemption at end of each time period 28 60 95 206
No Redemption 18 55 95 206
Tax-Free
Redemption at end of each time period 26 55 87 190
No Redemption 16 50 87 190
Aetna Fund
Redemption at end of each time period 30 68 108 233
No Redemption 20 63 108 233
Growth and Income
Redemption at end of each time period 28 61 97 211
No Redemption 18 56 97 211
Growth
Redemption at end of each time period 30 67 106 230
No Redemption 20 62 106 230
Small Company Growth
Redemption at end of each time period 32 73 116 249
No Redemption 22 68 116 249
International Growth
Redemption at end of each time period 33 77 123 264
No Redemption 23 72 123 264
Asian Growth
Redemption at end of each time period 34 77 124 266
No Redemption 24 72 124 266
This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
10 Aetna Mutual Funds Prospectus
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
Aetna Mutual Funds Prospectus 11
<PAGE>
Financial Highlights
(for one outstanding share throughout each period)
The selected data presented below for, and as of the end of, each of the years
in the two-year period ended December 31, 1993 and the ten-month period ended
October 31, 1994 are derived from the financial statements of Aetna Series
Fund, Inc., which financial statements have been audited by KPMG Peat Marwick
LLP, independent auditors. The financial statements as of October 31, 1994 and
the financial highlights for the ten-month period ended October 31, 1994 and
each of the years in the two-year period ended December 31, 1993, and the
independent auditors' report thereon, are included in the SAI.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Select Class Shares~
Net
Net Asset Realized and Dividends Dividends
Value Net Unrealized Total from from Net in Excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income on Investments Operations Income Income
--------- ---------- -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund
Ten-month period ended
October 31, 1994 $ 1.00 $0.03 $ 0.00 $ 0.03 $ (0.03) $ 0.00
Year Ended December 31, 1993 1.00 0.03 0.00 0.03 (0.03) 0.00
Year Ended December 31, 1992 1.00 0.04 0.00 0.04 (0.04) 0.00
Government Fund
Ten-month period ended
October 31, 1994 10.00 0.40 (0.63) (0.23) (0.36) 0.00
Bond Fund
Ten-month period ended
October 31, 1994 10.37 0.52 (0.86) (0.34) (0.45) 0.00
Year Ended December 31, 1993 9.99 0.55 0.45 1.00 (0.55) (0.07)
Year Ended December 31, 1992 10.00 0.53 0.16 0.69 (0.53) (0.17)
Tax-Free Fund
Ten-month period ended
October 31, 1994 10.00 0.38 (1.07) (0.69) (0.33) 0.00
The Aetna Fund
Ten-month period ended
October 31, 1994 10.82 0.23 (0.28) (0.05) (0.12) 0.00
Year Ended December 31, 1993 10.18 0.34 0.64 0.98 (0.30) (0.01)
Year Ended December 31, 1992 10.00 0.43 0.24 0.67 (0.39) (0.10)
</TABLE>
~The Company commenced offering Adviser Class shares on April 15, 1994. Prior
to that date, the Company offered only Select Class shares.
*Annualized for periods less than one year.
Per share data calculated using weighted average of shares outstanding during
the period.
The Government Fund, Tax-Free Fund, Growth Fund, Small Company Growth Fund and
Asian Growth Fund commenced operations on January 2, 1994.
Additional information about the performance of Aetna Series Fund, Inc. is
contained in the Annual Report dated October 31, 1994. The Report is
incorporated herein by reference and is available,without charge, by writing to
the Company at the address listed on the cover of this Prospectus or by calling
1-800-367-7732.
12 Aetna Mutual Funds Prospectus
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratio of
Ratio of Net
Total Investment
Investment Income
Ratio of Expense Before
Total Ratio of Before Reimburse-
Distributions Net Invest- Net Invest- Reimburse- ment
from Return of Asset Net Assets ment ment ment and Waiver
Realized Capital Value End of Expenses Income to and Waiver to Average
Gain on Distri- End of Total Period to Average Average to Average Net Portfolio
Investments bution Period Return (in thousands) Net Assets* Net Assets* Net Assets* Assets* Turnover
- ------------- --------- ------ --------- -------------- ----------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $0.00 $1.00 3.33% $161,756 0.21% 4.05% 0.85% 3.38% N/A
0.00 0.00 1.00 3.29% 107,884 0.00% 3.33% 0.95% 2.38% N/A
0.00 0.00 1.00 3.98% 36,522 0.00% 3.93% 1.04% 2.87% N/A
0.00 0.00 9.41 (2.37)% 26,110 0.41% 5.29% 1.16% 4.54% 43.63%
0.00 0.00 9.58 (3.31)% 27,584 0.76% 6.29% 1.06% 5.98% 51.80%
0.00 0.00 10.37 10.20% 46,788 0.47% 5.34% 1.01% 4.80% 50.01%
0.00 0.00 9.99 7.23% 37,209 0.05% 5.44% 1.10% 4.39% 57.05%
0.00 0.00 8.98 (6.95)% 1,465 0.30% 4.85% 1.20% 3.94% 29.14%
0.00 0.00 10.65 (0.42)% 76,267 1.09% 2.65% 1.32% 2.42% 86.10%
0.00 (0.03) 10.82 9.84% 63,982 0.93% 3.21% 1.34% 2.79% 19.95%
0.00 0.00 10.18 6.64% 37,726 0.07% 4.31% 1.47% 2.91% 13.35%
</TABLE>
Aetna Mutual Funds Prospectus 13
<PAGE>
Financial Highlights (continued)
(for one outstanding share throughout each period)
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Select Class Shares~
Net
Net Asset Realized and Dividends Dividends
Value Net Unrealized Total from from Net in Excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income on Investments Operations Income Income
--------- ---------- -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Growth and Income Fund
Ten-month period ended
October 31, 1994 $11.03 $0.12 $0.04 $0.16 $(0.08) $ 0.00
Year Ended December 31, 1993 10.51 0.19 0.50 0.69 (0.16) 0.00
Year Ended December 31, 1992 10.00 0.26 0.51 0.77 (0.26) 0.00
Growth Fund
Ten-month period ended
October 31, 1994 10.00 0.09 0.69 0.78 0.00 0.00
Small Company Growth Fund
Ten-month period ended
October 31, 1994 10.00 0.02 0.37 0.39 0.00 0.00
International Growth Fund
Ten-month period ended
October 31, 1994 11.17 0.06 0.33 0.39 0.00 0.00
Year Ended December 31, 1993 8.88 0.05 2.65 2.70 (0.05) (0.34)
Year Ended December 31, 1992 10.00 0.06 (1.15) (1.09) (0.03) 0.00
Asian Growth Fund
Ten-month period ended
October 31, 1994 10.00 0.05 (0.56) (0.51) 0.00 0.00
</TABLE>
~The Company commenced offering Adviser Class shares on April 15, 1994. Prior
to that date, the Company offered only Select Class shares.
*Annualized for periods less than one year.
Per share data calculated using weighted average of shares outstanding during
the period.
The Government Fund, Tax-Free Fund, Growth Fund, Small Company Growth Fund and
Asian Growth Fund commenced operations on January 2, 1994.
Additional information about the performance of Aetna Series Fund, Inc. is
contained in the Annual Report dated October 31, 1994. The Report is
incorporated herein by reference and is available, without charge, by writing
to the Company at the address listed on the cover of this Prospectus or by
calling 1-800-367-7732.
14 Aetna Mutual Funds Prospectus
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratio of
Ratio of Net
Total Investment
Investment Income
Ratio of Expense Before
Total Ratio of Before Reimburse-
Distributions Net Invest- Net Invest- Reimburse- ment
from Return of Asset Net Assets ment ment ment and Waiver
Realized Capital Value End of Expenses Income to and Waiver to Average
Gain on Distri- End of Total Period to Average Average to Average Net Portfolio
Investments bution Period Return (in thousands) Net Assets* Net Assets* Net Assets* Assets* Turnover
- ------------- --------- ------ ---------- -------------- ----------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$ 0.00 $0.00 $11.11 1.40% $301,360 0.92% 1.51% 1.03% 1.39% 54.13%
0.00 0.01 11.03 6.58% 60,127 1.13% 1.77% 1.27% 1.55% 23.60%
0.00 0.00 10.51 7.81% 31,473 0.33% 2.83% 1.72% 1.44% 14.44%
0.00 0.00 10.78 7.70% 27,188 0.92% 1.10% 1.42% 0.60% 120.32%
0.00 0.00 10.39 3.90% 25,879 1.15% 0.21% 1.58% (0.22)% 116.28%
0.00 0.00 11.56 3.49% 31,479 1.66% 0.71% 1.80% 0.57% 81.67%
(0.02) 0.00 11.17 30.37% 39,847 1.48% 0.50% 1.77% 0.20% 110.38%
0.00 0.00 8.88 (10.84)% 26,640 0.50% 1.36% 2.98% (1.12)% 81.74%
0.00 0.00 9.49 (5.10)% 29,386 1.25% 0.71% 1.81% 0.15% 65.50%
</TABLE>
Aetna Mutual Funds Prospectus 15
<PAGE>
Description of the Funds
Each Fund has an investment objective which is a fundamental policy and may not
be changed without the vote of a majority of the holders of that Fund's
outstanding shares. There can be no assurance that the Funds will meet their
investment objectives. Each Fund is subject to investment restrictions
described in this Prospectus and in the SAI, some of which are fundamental
policies. No fundamental investment policy may be changed without shareholder
approval.
A glossary describing various investment terms relating to securities that may
be held by the Funds starts on page 45.
Aetna Money Market Fund
Investment Objective The Money Market Fund seeks to provide high current
return, consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments.
Investment Policy The Money Market Fund invests in U.S. Treasury bills, notes
and bonds; obligations of agencies and instrumentalities of the U.S.
Government; obligations of domestic banks and U.S. dollar denominated
obligations of foreign banks (providing the issuing bank has reported assets in
excess of $5 billion and meets strict capital and profitability criteria),
finance company commercial paper, corporate commercial paper (including
variable-rate instruments), discounted notes of domestic banks, domestic
banker's acceptances eligible for discounting at the Federal Reserve, Yankee
certificates of deposit, Yankee commercial paper, Eurodollar securities,
repurchase agreements, corporate bonds and notes and other debt instruments and
may purchase securities on a when-issued or delayed-delivery basis. All
investments will have a maturity at the time of purchase, as defined under the
federal securities laws, of 397 days or less. Any foreign securities or
obligations will be U.S. dollar denominated.
In addition, the Money Market Fund will invest at least 95% of its total
assets in high-quality securities. High-quality securities are those receiving
the highest credit rating by any two rating agencies (or one, if only one
rating agency has rated the security). High-quality securities may also include
unrated securities if the Investment Adviser determines the security to be of
comparable quality. The remainder of the Money Market Fund's assets will be
invested in securities rated within the two highest rating categories by any
two rating agencies (or one, if only one rating agency has rated the security)
and unrated securities if the Investment Adviser determines the security to be
of comparable quality. With respect to these securities, the Money Market Fund
will
Description of
Money Market
Fund
16 Aetna Mutual Funds Prospectus
<PAGE>
not invest more than the greater of 1% of the market value of its total assets
or $1 million in the securities or obligations of any one issuer.
The Money Market Fund will use nationally recognized rating agencies such as
Standard & Poor's Corporation and Moody's Investors Service, Inc. when
determining security credit ratings. All investments will be determined to
present minimal credit risks.
The Money Market Fund's dollar weighted average maturity will not exceed 90
days. Although the Investment Adviser will use its best efforts to maintain a
constant net asset value of $1.00 per share, there can be no assurance that the
net asset value will not vary.
Aetna Government Fund
Investment Objective The Government Fund seeks to provide income consistent
with the preservation of capital through investment in securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
Investment Policy The Government Fund invests at least 65% of its assets in
direct obligations of the U.S. Government, such as treasury bills, notes and
bonds which are backed by the full faith and credit of the United States, or in
indirect obligations of the U.S. Government, such as notes and bonds which are
guaranteed by agencies and instrumentalities of the U.S. Government. Securities
of such agencies and instrumentalities are backed by either the full faith and
credit of the U.S. Treasury, the right of the issuer to borrow from the U.S.
Treasury, or the credit of the agency or instrumentality. Such agencies and
instrumentalities include, but are not limited to, the Government National Mo
rtgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") and the Student
Loan Marketing Association ("SLMA").
The Government Fund may also invest in repurchase agreements collateralized by
U.S. Government agency securities, STRIPs, zero coupon bonds and options and
futures contracts.
Aetna Bond Fund
Investment Objective The Bond Fund seeks to provide high total return (i.e.,
income and capital appreciation), consistent with reasonable risk, primarily
through investment in a diversified portfolio of high-quality corporate bonds
and securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Investment Policy The Bond Fund will normally invest at least 65% of its total
assets in high-quality corporate bonds, mortgage-related and other asset-backed
and debt securities, and securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities. Such
Description of
Government Fund
Description of
Bond Fund
Aetna Mutual Funds Prospectus 17
<PAGE>
securities will be rated AA or above by Standard & Poor's Corporation, Aa or
above by Moody's Investors Service, Inc., similarly rated by other nationally
recognized statistical rating organizations or be considered by the Investment
Adviser to be of comparable quality. The Fund will not target any given
maturity, thus giving it flexibility to invest in short- and long-term
securities as market conditions change. The Bond Fund may also invest in
repurchase agreements, equity securities (not to exceed 5% of total assets) and
securities issued by any foreign corporation or instrumentality or political
subdivision of foreign governments (not to exceed 25% of total assets). The
Bond Fund may also purchase securities on a when-issued or delayed-delivery
basis.
Additionally, the Bond Fund may invest in commercial paper, other short-term
investments, including variable-rate instruments, all having a maturity of less
than one year, debt securities with equity features, convertibles, and straight
debt securities.
The Bond Fund may invest up to 15% of its total assets in high risk high-yield
securities or "junk bonds" (securities rated BB/Ba or below, or, if unrated,
considered by the Investment Adviser to be of comparable quality). This will
limit the Fund's ability to earn a higher return which may be associated with
high risk non-investment grade securities. See "Risk Factors and Other
Considerations" for further information.
As of October 31, 1994, the weighted average distribution of bonds in the Bond
Fund based on Standard & Poor's and Moody's bond ratings was 58% in AAA, 12% in
AA, 11% in A, 7% in BBB, 4% in BB, 3% in B and 5% in unrated bonds.
Aetna Tax-Free Fund
Investment Objective The Tax-Free Fund seeks to provide income exempt from
federal income tax consistent with the preservation of capital primarily
through investment in municipal securities, the interest from which is exempt
from federal income tax.
Investment Policy The Tax-Free Fund will invest at least 80% of its total
assets in municipal securities, the interest from which is exempt from federal
income taxes. This percentage will not include tax-exempt bonds, the interest
from which is a tax preference item for purposes of the federal alternative
minimum tax. There is no limit on the maturity of any individual security. The
Tax-Free Fund may also purchase securities on a when-issued or delayed-delivery
basis and may utilize the full range of tax-exempt securities and their
derivatives. At least 70% of the securities held by the Tax-Free Fund will be
rated A or higher, while not more than 30% will be invested in securities rated
Description of
Tax-Free Fund
18 Aetna Mutual Funds Prospectus
<PAGE>
BBB/Baa or of comparable quality (i.e., securities having speculative
characteristics compared to higher rated investment grade securities). In
addition, not more than 5% will be unrated and not more than 5% will be
invested in high risk high-yield securities or "junk bonds." The Tax Free Fund
may invest up to 5% in municipal lease obligations.
The Fund may, for temporary defensive purposes, purchase taxable investments
such as obligations of the U.S. Government, its agencies or instrumentalities,
commercial paper, certificates of deposit and banker's acceptances including
variable-rate instruments, repurchase agreements on these securities, or any
other fixed income securities that the Investment Adviser considers consistent
with such defensive strategies.
Special Considerations Before investing in a tax-exempt fund, you should decide
whether your after-tax return may be higher with a taxable fund or with a
tax-exempt fund. To compare taxable and tax-free income, you should calculate
the taxable equivalent yield of the investment you are considering, and compare
it with a similar taxable investment. This can be done by using the following
formula:
Tax-exempt yield
- ----------------------- = Your equivalent taxable yield
100% - Your tax bracket
For example, if you are in a 28% tax bracket and the tax-exempt yield is 8%,
the equivalent taxable yield would be 11.11%.
8%
- ---------- = 11.11% equivalent taxable yield
100% - 28%
In this example, you would choose the tax-free investment if a similar taxable
fund's yield was less than 11.11%.
It is not recommended that the Tax-Free Fund be used as a vehicle for IRAs or
other qualified plans. You should seek advice from your tax advisor regarding
whether an investment in the Tax-Free Fund is appropriate for you.
The Aetna Fund
Investment Objective The Aetna Fund seeks to maximize total return with
reasonable safety of principal by investing in a diversified portfolio of
stocks, bonds and money market instruments. The Aetna Fund may involve less
investment risk than a portfolio consisting entirely of common stocks.
A special note
for investors in
Tax-Free Fund
Description of
Aetna Fund
Aetna Mutual Funds Prospectus 19
<PAGE>
Investment Policy The Investment Adviser will allocate assets among common and
preferred stocks, bonds, including mortgage-related and other asset-backed
securities, U.S. Government securities, U.S. Government derivatives, and money
market instruments, including variablerate instruments and repurchase
agreements, in proportions that reflect the anticipated returns and risks of
each asset class.
The Aetna Fund will not invest more than 15% of the total value of its assets
in high risk high-yield securities, or "junk bonds." It may buy and sell listed
covered put and call options and stock index futures contracts and related
options. The Aetna Fund may also purchase securities on a when-issued or
delayed-delivery basis.
The Investment Adviser employs current market statistics and economic in
dicators to forecast returns for each sector of the securities market for the
Aetna Fund. These calculations provide a disciplined framework for assessing
the relative attractiveness of stocks, bonds, and cash equivalents. The
Investment Adviser uses proprietary computer programs to help calculate the
optimal asset exposure over specified time periods for the Aetna Fund.
Special Considerations Investors should be aware that the investment results of
the Aetna Fund partly depend upon the Investment Adviser's ability to
anticipate correctly the relative performance of stocks, bonds and money market
instruments.
While the Investment Adviser has substantial experience in managing all asset
classes, there can be no assurance that the Investment Adviser will always
allocate assets to the best performing sectors. The Aetna Fund's performance
would suffer if a major proportion of its assets were allocated to stocks in a
declining market or, similarly, if a major proportion of its assets were
allocated to bonds at a time of adverse interest rate movement.
Aetna Growth and Income Fund
Investment Objectives The Growth and Income Fund seeks long-term growth of
capital and income through investment in a diversified portfolio primarily of
common stocks and securities convertible into common stocks believed to offer
above-average growth potential.
Investment Policies The Growth and Income Fund is expected to invest primarily
in common stocks which have significant potential for capital or income growth.
It may also invest in convertible and nonconvertible preferred stocks, debt
securities, rights and warrants.
Additionally, the Growth and Income Fund may lend portfolio securities, write
and buy listed covered call options and buy and sell listed covered put options
and stock index futures and options. The Growth
Description of
Growth and
Income Fund
20 Aetna Mutual Funds Prospectus
<PAGE>
and Income Fund may also enter into repurchase agreements with domestic banks
and broker dealers, invest up to 25% of its assets in foreign securities,
engage in currency hedging and purchase securities on a when-issued or
delayed-delivery basis. The Growth and Income Fund will not invest more than
15% of the total value of its assets in high risk high-yield securities or
"junk bonds."
Aetna Growth Fund
Investment Objective The Growth Fund seeks growth of capital through investment
in a diversified portfolio primarily of common stocks and securities
convertible into common stocks believed to offer growth potential.
Investment Policy The Growth Fund will normally invest at least 65% of its
total assets in common stocks which have potential for capital growth. It may
also invest in convertible and non-convertible preferred stocks.
Additionally, the Growth Fund may lend portfolio securities, buy and sell put
and call options, and stock index futures and options. The Growth Fund may also
enter into repurchase agreements, invest up to 25% of its assets in foreign
securities, engage in currency hedging and purchase securities on a
when-issued, delayed delivery or forward commitment basis. The Growth Fund will
not invest more than 15% of the total value of its assets in high risk
high-yield securities or "junk bonds."
Investments of the Growth Fund are selected with the assistance of
computer-aided quantitative analysis and research. However, the Fund's
investments are not solely driven by quantitative techniques and asset
allocation decisions will always remain at the discretion of the Investment
Adviser.
Aetna Small Company Growth Fund
Investment Objective The Small Company Growth Fund seeks growth of capital
primarily through investment in a diversified portfolio of common stocks and
securities convertible into common stocks of companies with smaller market
capitalizations.
Investment Policy The Small Company Growth Fund will normally invest at least
65% of its total assets in the common stock of companies with equity market
capitalizations at the time of purchase of $1 billion or less. The Small
Company Growth Fund may also invest in convertible and non-convertible stocks.
Additionally, the Small Company Growth Fund may lend portfolio securities, buy
and sell put and call options and stock index futures
Description of
Growth Fund
Description of
Small Company
Growth Fund
Aetna Mutual Funds Prospectus 21
<PAGE>
and options. The Small Company Growth Fund may also enter into repurchase
agreements, invest up to 25% of its assets in foreign securities, engage in
currency hedging and purchase securities on a when-issued, delayed delivery or
forward commitment basis. The Small Company Growth Fund will not invest more
than 15% of the total value of its assets in high risk high-yield securities or
"junk bonds."
Investments for the Small Company Growth Fund are selected with the assistance
of computer-aided quantitative analysis and research. However, the Fund's
investments are not solely driven by quantitative techniques and asset
allocation decisions will remain at the discretion of the Investment Adviser.
Aetna International Growth Fund
Investment Objective The International Growth Fund seeks long-term capital
growth primarily through investment in a diversified portfolio of common stocks
principally traded in countries outside of North America. The International
Growth Fund will not target any given level of current income.
Investment Policy The International Growth Fund will invest at least 65% of its
total assets among securities principally traded in three or more countries
including Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong
Kong, Indonesia, Italy, Japan, Korea, Luxembourg, Malaysia, New Zealand, the
Netherlands, Norway, the Philippines, Singapore, Spain, Sweden, Switzerland,
Taiwan, Thailand, and the United Kingdom.
The International Growth Fund will invest primarily in equity securities but
may invest in convertible and preferred stocks. Further, from time to time the
International Growth Fund may hold up to 10% of its total assets in long-term
debt securities with an equivalent Standard & Poor's Corporation or Moody's
Investors Service, Inc. rating of AA/Aa or above.
The International Growth Fund may enter into forward foreign exchange co
ntracts or purchase financial futures or options (including options on futures)
as a means to moderate the impact of foreign currency fluctuations. It also may
purchase securities on a when-issued or delayed-delivery basis.
Aetna Asian Growth Fund
Investment Objective The Asian Growth Fund seeks long-term growth of capital
primarily through investment in a diversified portfolio of common stocks
principally traded in countries in Asia excluding Japan. The Asian Growth Fund
will not target any given level of current income.
Description of
International
Growth Fund
Description of
Asian Growth
Fund
22 Aetna Mutual Funds Prospectus
<PAGE>
Investment Policy The Asian Growth Fund will invest at least 65% of its total
assets among securities principally traded in China, Hong Kong, India,
Indonesia, Malaysia, Pakistan, the Philippines, Singapore, South Korea, Sri
Lanka, Taiwan, and Thailand.
The Asian Growth Fund will invest primarily in equity securities but may
invest in convertible and preferred stocks. In addition, the Asian Growth Fund
may invest up to 10% of its assets in long-term debt securities if the
Investment Adviser believes they will provide superior returns to common
stocks. The Asian Growth Fund may also enter into forward foreign exchange
contracts and purchase financial futures or options, and purchase securities on
a when-issued or delayed-delivery basis.
Special Considerations for International Investors In the last 30 years,
foreign economic growth has frequently outpaced that of the U.S. and returns
from equity investments have often exceeded those on comparable U.S.
securities. The Investment Adviser believes that investment in foreign
securities offers significant potential for long-term capital appreciation and
affords substantial opportunities for investment diversification.
However, investments in securities of foreign companies and in securities de
nominated in foreign currencies involve additional risks not present in U.S.
securities. Please refer to "Risk Factors and Other Considerations" for further
information.
Risk Factors and Other Considerations
General Considerations The different types of securities purchased and
investment techniques used by a Fund involve varying amounts of risk. For
example, equity securities are subject to a decline in the stock market or in
the value of the company and preferred stocks have price risk and some interest
rate and credit risk. The value of debt securities may be affected by changes
in general interest rates and in the credit worthiness of the issuer. Debt
securities with longer maturities (for example, over ten years) are more
affected by changes in interest rates and provide less price stability than
securities with short term maturities (for example, one to ten years). Also, on
each debt security, there is a risk of principal and interest default which
will be greater with higher-yielding, lower-grade securities. High risk,
high-yield securities ("junk bonds") may provide a higher return but with added
risk. In addition, foreign securities have currency risk.
Portfolio Turnover Portfolio turnover refers to the frequency of portfolio tr
ansactions and the percentage of portfolio assets being bought and sold in the
aggregate durig the year. The Funds, excluding the Money Market Fund, do not
intend to make a general practice of short-term trading. It is anticipated that
under normal market conditions average annual portfolio turnover rates will not
exceed 100% for the Funds.
A special note
for Investors in
International
Growth Fund
and Asian
Growth Fund
Aetna Mutual Funds Prospectus 23
<PAGE>
A high turnover rate will result in increased brokerage commissions and may
increase taxable capital gains. Please see "Taxes" for further information.
Cash or Cash Equivalents All Funds reserve the right to temporarily depart from
their investment objective by investing up to 100% of their assets in cash or
cash equivalents for defense against potential market decline. Such cash
equivalents will be the same type of instruments invested in by the Money
Market Fund.
All the Funds may use the following:
Derivatives In order to manage its exposure to changing interest rates,
securities prices and currency exchange rates, or to increase its investment re
turn, a Fund may engage in hedging and other strategies using derivatives. A
derivative is a financial instrument whose value depends on (or "derives" from)
the value of an underlying asset, such as a security, interest rate, currency
rate or index. Derivatives which may be used in the Funds include forward
contracts, swaps, structured notes, collateralized mortgage obligations
("CMOs"), futures and options (see below). The risks involved in using
derivatives include the risk that the derivative may experience greater price
swings than other securities and may be less liquid than other securities.
Leveraged derivatives involve borrowing. The Funds may use derivatives as a
hedge against foreign currency, equity market or interest rate risk, or to gain
additional exposure to certain markets for investment purposes, within the
limitations set forth below. In addition, they may be used to enhance a Fund's
yield. For purposes other than hedging, a Fund will invest no more than 5% of
its assets in derivatives which at the time of purchase are considered by
management to involve high risk to the Fund, such as inverse floaters, interest
only ("IO") and principal only ("PO") debt instruments. A Fund (except the
Money Market Fund) may invest up to 30% of its assets in lower risk derivatives
for hedging purposes.
Borrowing A Fund may borrow up to 5% of its total assets from a bank for
temporary or emergency purposes. The Funds do not intend to borrow for other
purposes, except that they may invest in leveraged derivatives which have
certain risks as outlined above.
Repurchase Agreements Under a repurchase agreement, a Fund may acquire a debt
instrument for a relatively short period subject to an obligation by the seller
to repurchase and by the Fund to resell the instrument at a fixed price and
time.
The Funds may enter into repurchase agreements with domestic banks and
broker-dealers. Such agreements, although fully collateral-
24 Aetna Mutual Funds Prospectus
<PAGE>
ized, involve the risk that the seller of the securities may fail to
repurchase them. In that event, a Fund may incur costs in liquidating the
collateral or a loss if the collateral declines in value. If the default on the
part of the seller is due to insolvency and the seller initiates bankruptcy pr
oceedings, the ability of a Fund to liquidate the collateral may be delayed or
limited.
The Company's Board of Directors has established credit standards for issuers
of repurchase agreements entered into by a Fund.
Asset-Backed Securities The Funds may purchase securities collateralized by a
specified pool of assets, including, but not limited to, automobile loans,
computer leases, boat loans, home equity loans, mobile home loans, recreational
vehicles or credit card receivables. These securities are subject to prepayment
risk. In periods of declining interest rates, reinvestment would thus be made
at lower and less attractive rates.
Bank Obligations The Funds may invest in obligations issued by domestic banks
or foreign banks (including bankers' acceptances, time deposits and
certificates of deposit) provided the issuing bank has a minimum of $5 billion
in assets and a primary capital ratio of at least 4.25%.
Illiquid and Restricted Securities A Fund may invest up to 15% of its total
assets in illiquid securities (10% in the case of the Money Market Fund).
Illiquid securities are securities that are not readily marketable or cannot be
disposed of promptly within seven days in the ordinary course of business
without taking a materially reduced price. In addition, a Fund may invest in
securities that are subject to legal or contractual restrictions as to resale,
including securities purchased under Rule 144A and Section 4(2) of the
Securities Act of 1933. The Board of Directors has established a policy to
determine the liquidity of such securities.
All Funds except the Tax-Free Fund
may also use the following:
Foreign Securities The purchase of foreign securities may involve certain
additional risks. Such risks include: currency fluctuations and related
currency conversion costs; less liquidity; price or income volatility; less
government supervision and regulation of foreign stock exchanges, brokers and
listed companies; possible difficulty in obtaining and enforcing judgments
against foreign entities; adverse foreign political and economic developments;
different accounting procedures and auditing standards; the possible imposition
of withholding taxes on interest income payable on securities; the possible
seizure or nationalization of foreign assets; the possible establishment of
exchange con-
Aetna Mutual Funds Prospectus 25
<PAGE>
trols or other foreign laws or restrictions which might adversely affect the
payment and transferability of principal, interest and dividends on securities;
higher transaction costs; possible settlement delays; and less publicly
available information about foreign issuers.
All Funds except the Money Market Fund
may also use the following:
Futures Contracts A Fund may enter into futures contracts or options on futures
to manage the risk of changes in interest rates, equity prices, currency
exchange rates or in anticipation of future purchases or sales of securities.
Certain risks are involved in futures contracts, including but not limited to:
no assurance that futures contracts transactions can be effected at favorable
prices; possible reduction in a Fund's total return and yield; possible
reduction in value of the futures instrument; the inability of a Fund to limit
losses by closing its position due to lack of a liquid secondary market or due
to daily limits of price fluctuation; imperfect correlation between the value
of the contracts and the related securities; and potential losses in excess of
the amount invested in the futures contracts themselves.
The use of futures involves a high degree of leverage because of the low
margin requirements. As a result, small price movements in futures contracts
may result in immediate and potentially unlimited losses or gains to a Fund.
The amount of gains or losses on investments in futures contracts depends on
the portfolio manager's ability to predict correctly the direction of stock
prices, interest rates and other economic factors.
Options Options are used to minimize principal fluctuation or to generate
additional premium income but they do involve risks. Writing call options, for
example, involves the risk of not being able to effect closing transactions at
favorable prices or to participate in the appreciation of the underlying
securities. Purchasing put options involves the risk of losing the entire
purchase price of the option.
All Funds except the Money Market Fund, Government Fund, International Growth
Fund and Asian Growth Fund may also use the following:
High-Yield Securities A Fund may invest in high risk high-yield securities, of
ten called junk bonds. These securities are rated BB/Ba or below, or, if
unrated, considered by the Investment Adviser to be of comparable quality. The
Funds will not invest in high-yield securities rated below B (securities with
the capacity to meet interest and principal payments but with greater
vulnerability to default). These securities
26 Aetna Mutual Funds Prospectus
<PAGE>
tend to offer higher yields than investment-grade bonds because of the
additional risks associated with them. These risks include: a lack of
liquidity; an unpredictable secondary market; a greater likelihood of default;
increased sensitivity to difficult economic and corporate developments; call
provisions which may adversely affect investment returns; and loss of the
entire principal and interest.
Although junk bonds are high risk investments, the Investment Adviser may
purchase these securities if they are thought to offer good value. This may
happen if, for example, the rating agencies have, in the Investment Adviser's
opinion, misclassified the bonds or overlooked the potential for the issuer's
enhanced creditworthiness.
The Government Fund, Bond Fund,
Tax-Free Fund and The Aetna Fund
may also use the following:
Mortgage-Backed Securities A Fund may invest in mortgage-backed and other
pass-through securities. Payments of interest and principal on these securities
may be guaranteed by an agency or instrumentality of the U.S. Government such
as the GNMA, the FHLMC and the FNMA. These securities represent part ownership
of a pool of mortgage loans where principal is scheduled to be paid back by the
borrower over the length of the loan rather than returned in a lump sum at
maturity. A Fund may also invest in private mortgage pass-through securities
backed by pools of conventional fixed-rate or adjustable-rate mortgage loans.
In addition, a Fund may invest in CMOs and securities issued by real estate
mortgage investment conduits ("REMICs"). Mortgage-backed securities are also
subject to the same prepayment risk as asset-backed securities.
The Tax-Free Fund may also use the following:
Municipal Securities Municipal securities are debt obligations issued by state
and local governments or any of their political subdivisions, agencies and
instrumentalities. Municipal securities are both municipal bonds (those
securities with maturities of five years or more) and municipal notes
(securities with maturities of less than five years). Interest on these
securities is exempt from federal income taxes and, in some instances, from
state or local income taxes. Municipal securities are issued to obtain funds
for a variety of reasons: to construct public facilities, to refund outstanding
debt obligations, and to pay various operating expenses. They may also be
issued to finance certain privately operated activities, such as airports,
housing, and water, gas and sewage works.
Municipal securities have many of the same risks as other debt securities, wi
th the additional risk that there may be less information about
Aetna Mutual Funds Prospectus 27
<PAGE>
the financial condition of an issuer of municipal securities than would be
available for corporations whose securities are publicly traded.
Municipal lease obligations may take the form of a lease or an installment
purchase contract issued by a state or local government authority to obtain
funds to acquire a wide variety of equipment and facilities. Some municipal
lease securities may be deemed to be "illiquid."
Although the Tax-Free Fund may invest in municipal securities which it
believes are exempt from federal income tax at the time of purchase, it cannot
guarantee the tax exempt status of the income earned.
Alternative Minimum Tax The Tax-Free Fund may invest in certain municipal bonds
the interest from which is a tax preference item for purposes of the federal
alternative minimum tax. If you are subject to the federal alternative minimum
tax, a portion of your income distributions that are exempt from the regular
federal income tax may not be exempt from the alternative minimum tax. You
should discuss your tax situation with your tax advisor.
The Aetna Fund, Growth and Income Fund,
Growth Fund and Small Company Growth Fund
may also use the following:
Small Capitalization Companies These companies may be in an early developmental
stage or older companies entering a new stage of growth due to management
changes, new technology, products or markets. They may also be undervalued due
to poor economic conditions, market decline or actual or anticipated
unfavorable developments affecting the issuer of the security or its industry.
Securities of small capitalization companies tend to offer greater potential
for growth than securities of larger, more established issuers but there are
additional risks associated with them. These risks include: limited
marketability; more abrupt or erratic market movements than securities of larger
capitalization companies; and less publicly available information about the
issuer. In addition, these companies may be dependent on relatively few products
or services, have limited financial resources and lack of management depth, and
may have less of a track record or historical pattern of performance.
Investment Restrictions
A Fund will not concentrate its investments in any one industry except that a
Fund 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 indus-
28 Aetna Mutual Funds Prospectus
<PAGE>
tries 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 by the U.S. Government, its agencies and
instrumentalities and, in the case of the Money Market Fund, to securities
invested in, or repurchase agreements for, U.S. Government securities, and
certificates of deposit, bankers' acceptances, or securities of banks and bank
holding companies. Also, a Fund will not 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, its agencies or instrumentalities) or
purchase more than 10% of the outstanding voting securities of any one issuer.
This restriction applies only to 75% of a Fund's total assets. See the SAI for
additional restrictions.
Shareholder Services
The Company offers several services to its Fund shareholders. These may be
chosen from the Application.
These services may not be available through employer-sponsored retirement
plans. For information on services that are available under employer-sponsored
retirement plans, such as 401(k) plans, please refer to your enrollment
material. The specific provisions of your plan will govern the investment
options and services available to you.
Shareholder Inquiries If you have any questions about the Funds or the
shareholder services described below, please call 1-800-367-7732.
How to Purchase Shares Select Class shares may be purchased directly from the
Company, through a registered representative of a broker-dealer affiliated with
the Company, through a registered representative of an unaffiliated
broker-dealer, or through an employer-sponsored retirement plan (if you are
purchasing through such a plan, please refer to your enrollment materials).
How to Open an Account To open an account, please complete and submit an
Application with the amount to be invested. You may open an account with a
minimum investment of $1,000 or $500 for IRAs. Minimum investments may be
waived if an investment is made through exchange of the entire amount invested
in another Fund. Minimums may also be waived for certain circumstances such as
for persons investing through certain benefit plans, insurance settlement
options or by systematic investments. (Please refer to "Other
Features-Systematic Investment.")
How to
Purchase
Shares
Aetna Mutual Funds Prospectus 29
<PAGE>
Crediting of Shares If Firstar Trust Company (the transfer agent) receives a
completed and signed Application, accompanied by a check in payment for the
shares at its Milwaukee offices prior to 4:00 p.m. Eastern time on any day that
the New York Stock Exchange is open for business ("Business Day"), the Select
Class shares will be purchased at the net asset value determined as of 4:15
p.m. on that date. Orders received after 4:00 p.m. will be processed at the net
asset value determined on the following Business Day. For investors purchasing
shares in connection with retirement plans offered by certain institutions
(Institutions) under Section 401 of the Internal Revenue Code, shares will be
purchased at the next price calculated on a day the NYSE is open provided that
the Institution receives the investor's request before the time specified by
such Institution. Investors participating in such a plan should refer to their
enrollment materials for a discussion of any specific instructions on the
timing or restrictions on the purchase of shares. Please refer to "Net Asset
Value" for information on how the Funds are valued.
Once you have opened an account in a Fund, additional investments may be made
by mail ($100 minimum), wire transfer ($500 minimum) or exchange from the same
class of another Fund in the Aetna Series Fund, Inc.
All checks must be drawn on a bank located within the United States and
payable in U.S. dollars.
Purchase by Mail To purchase shares by mail, please complete and sign the
Application, make a check payable to the Aetna Series Fund, Inc. and mail to
the transfer agent, as follows:
Aetna Series Fund, Inc. c/o Mutual Fund Services, 3rd Floor P.O. Box 701
Milwaukee, WI 53201-0701
Applications mailed by overnight courier should be sent to the transfer agent,
as follows:
Aetna Series Fund, Inc. c/o Mutual Fund Services, 3rd Floor 615 E. Michigan
Street Milwaukee, WI 53202
You can make additional investments to your accounts by using the investment
stubs from your confirmation statements or by letter. Your letter should
indicate your name, account numbers, the Select Class shares of which Funds you
wish to invest in, and the amount to be invested. Letters should be mailed to
the address listed above under
You can make
a purchase
by mail
30 Aetna Mutual Funds Prospectus
<PAGE>
Purchase by Mail. When opening an account, your check should be made payable to
Aetna Series Fund, Inc. or Firstar Trust Company. Cash, credit cards and third
party checks cannot be used to open an account. Firstar will accept checks for
subsequent purchases which are made payable to the account owner(s).
Purchase by Wire If you have an account in a Fund you may purchase additional
Select Class shares of that Fund by wire. For federal funds wire instructions,
please call 1-800-367-7732. Federal funds wire purchase orders will be accepted
only when the Fund and custodian bank are open for business.
Purchase by Electronic Funds Transfer Once an account has been established in
any of the Funds, you may wish to make additional purchases of Select Class
shares by using Electronic Funds Transfer ("EFT") facilities under the
Systematic Investment feature. This will allow you to transfer money between a
bank account and a specific Fund. The appropriate election must be made on the
Aetna Series Fund Application to authorize this option.
Purchase by Exchange You may open an account or purchase additional shares by
making an exchange between Select Class shares of Aetna Series Fund, Inc. See
"Other Features" for automatic exchange privileges. An exchange may be made by
submitting a letter requesting the exchange and specifying the name and account
number of your current Fund account, the name of the Fund you wish to exchange
into, the amount to be exchanged, and the signatures of all shareholders. Send
your request to the transfer agent as follows:
Aetna Series Fund, Inc. c/o Mutual Fund Services, 3rd Floor P.O. Box 701
Milwaukee, WI 53201-0701
You may exchange your Select Class shares by calling 1-800-367-7732. Please
provide the Fund names, account number, your Social Security number or taxpayer
identification number, account address and the amount to be exchanged. Requests
received prior to 4:00 p.m. Eastern time will be processed that business day.
You should carefully consider the following before making an
exchange:
(bullet) Each exchange may result in a gain or loss and is treated as a sale and
as a purchase of shares for tax purposes.
You can
purchase by
wire, electronic
funds transfer
or exchange
Aetna Mutual Funds Prospectus 31
<PAGE>
(bullet) An exchange which represents an initial investment in a Fund must meet
the minimum investment requirements.
(bullet) The shares received in an exchange must be identically registered. A
letter with signature guarantees must accompany any exchange request to
transfer shares into a Fund account that is not registered identically
to the transferring Fund account.
(bullet) Following an investment in a Fund, there is a required eight-day
holding period before those shares can be exchanged.
There is currently no limit on the number of exchanges. However, each Fund
reserves the right to temporarily or permanently terminate the exchange
privilege for any person who makes more than five exchanges out of a Fund per
calendar year. In addition, each Fund reserves the right to refuse exchange
purchases by any person or group if, in the Investment Adviser's judgment, that
Fund would be unable to invest effectively in accordance with its investment
objective as a result of such exchange. Each Fund also reserves the right to
revise the exchange privilege at any time.
You automatically receive telephone exchange privileges when you establish
your account. If you do not want telephone exchange privileges, write to the
transfer agent at the above address or call 1-800-367-7732. The Funds will
employ reasonable procedures to confirm that instructions received are genuine.
If the Funds do not follow those procedures, they may be liable for any losses
due to unauthorized or fraudulent instructions. For your protection, all
telephone exchange transactions will be recorded, and you will be asked for
certain identifying information.
Distribution Options When completing an Application, you must select one of the
following options:
(bullet) Full Reinvestment - Both dividends and capital gains distributions from
a Fund will be reinvested in additional Select Class shares of that
Fund. This option will be selected automatically unless one of the
other options is specified. (Please refer to "Fund Distributions.")
(bullet) Or . . . Capital Gains Reinvestment - Capital gains distributions from
a Fund will be reinvested in additional Select Class shares of that
Fund and all net income dividends will be distributed in cash.
(bullet) Or . . . All Cash - Dividends and capital gains distributions will be
paid in cash.
If a cash distribution option is selected you can elect to have distributions au
tomatically invested in Select Class shares of another Fund of Aetna Series
Fund, Inc.
Your distribution
option can be
changed at any
time by calling
1-800-367-7732
32 Aetna Mutual Funds Prospectus
<PAGE>
How to Redeem Shares To redeem all or a portion of the Select Class shares in
your account, a redemption request should be submitted as described below.
Shares will be redeemed at the net asset value next determined after receipt of
the redemption request by the transfer agent. Redemptions received by 4:00 p.m.
Eastern time will be processed at the net asset value determined as of 4:15
p.m. on that date if all required documentation is received by the transfer
agent by 4:00 p.m. Redemption requests received after 4:00 p.m. will be
processed at the net asset value determined on the following business day.
Redeem by Mail Shares of any Fund may be redeemed by sending a letter of
instruction to the transfer agent identifying the Fund, the number of shares or
dollar amount to be redeemed, your name and the Fund account number. The letter
of instruction must be signed by all person(s) required to sign for the Fund
account, exactly as it is registered, and accompanied by a signature
guarantee(s). Certain nonindividual shareholders may also be required to
furnish copies of a corporate resolution, trust document or other supporting
documents.
Once shares are redeemed, the relevant Fund will normally send the proceeds of
such redemption within one or two business days. However, if making immediate
payment could adversely affect a Fund, the Fund may defer distribution for up
to seven days or the maximum period allowed by law, if shorter. Also, a Fund
will hold payment of redemption proceeds until a purchase check or systematic
investment clears, which may take up to 12 calendar days. The Fund(s) may
suspend redemptions or postpone payments when the New York Stock Exchange is
closed or when trading is restricted for any reason other than its customary
weekend or holiday closings, or under any emergency circumstances as determined
by the Commission.
Redeem by Wire Redemption proceeds will be transferred by wire to your
designated bank account if federal funds wire instructions are provided with
your signature guaranteed letter of redemption. A $7.50 fee will be charged for
this service. A minimum redemption of $1,000 is required for wire transfers.
Signature Guarantee The Funds will waive the signature guarantee requirement
for redemption requests for amounts of $10,000 or less. However, if you wish to
have your redemption proceeds transferred by wire to your designated bank
account, paid to someone other than the shareholder of record, or sent
somewhere other than the shareholder address of record, you must provide a
signature guarantee with your written redemption instructions regardless of the
amount of redemption.
The Funds reserve the right to amend or discontinue this waiver of signature
guarantee policy at any time and establish other criteria for verifying
redemption request authenticity.
For help with
redemptions, call
1-800-367-7732
Aetna Mutual Funds Prospectus 33
<PAGE>
Any one of the following institutions may provide a signature guarantee: a
national or state bank (or savings bank in New York or Massachusetts only); a
trust company; a federal savings and loan association; or a member firm of the
New York, American, Boston, Midwest, or Pacific Stock Exchange. Please note
that signature guarantees are not provided by notary publics.
Minimum Account Balance To keep your account open, you must maintain a minimum
balance of $500 in each Fund account. If this minimum balance is not maintained
due to redemptions, the Fund reserves the right to redeem all of your remaining
shares in that account and mail the proceeds to you at the address of record.
Shares will be redeemed at net asset value on the day the account is closed.
The Fund will give you 60 days notice that such redemption will occur unless
you make an additional investment to increase the account balance to the $500
minimum.
Tax-Deferred Retirement Plans Aetna Series Fund can be used for investment by a
variety of tax-deferred plans. These plans let you save for retirement and can
defer taxes on your investment income. Some of these plans are:
(bullet) IRAs, available to individuals who work and their spouses.
(bullet) 401(k) Programs, available to corporations of all sizes to benefit
their employees.
Shareholder Information The transfer agent will maintain shareholder accounts.
A confirmation statement is sent to you after every trans-action that affects
your share balance or account registration. A Form 1099 will also be sent each
year by January 31. You will also receive an annual and semiannual report of
the Funds. The transfer agent may charge you a fee for special reports such as
an historical transcript of your account.
Consolidated Statements, reflecting current account values and year-to-date
transactions, will be sent each quarter. All accounts identified by the same
social security number and address will be consolidated. For example, you could
receive a Consolidated Statement showing your individual and IRA accounts.
Annual and semiannual reports will also be consolidated on this basis. With the
prior permission of the other shareholders involved, you have the option of
requesting that accounts controlled by those other shareholders be shown on one
Consolidated Statement. For example, information on your individual account,
your IRA, your spouse's individual account and your spouse's IRA may be shown
on the Consolidated Statement.
Information you
will receive
34 Aetna Mutual Funds Prospectus
<PAGE>
Other Features
Systematic Investment The Systematic Investment feature, using the EFT
capability, allows you to make automatic monthly investments in any of the
Funds. You may select, on the Application, the amount of money to be moved and
the Fund to be invested in. There is no minimum initial cash investment
required to open your account. However, the minimum monthly Systematic
Investment is $50 per Fund account. Your application must be received at least
15 business days prior to the first EFT transaction. The Systematic Investment
feature and EFT capability will be terminated upon total redemption of your
account. Also, a Fund will hold payment of redemption proceeds until a
Systematic Investment has cleared, which may take up to 12 calendar days.
Automatic Cash Withdrawal Plan The Automatic Cash Withdrawal Plan provides a
convenient way for you to receive a systematic distribution while maintaining
an investment in the Funds. The Automatic Cash Withdrawal Plan permits you to
have payments of $100 or more automatically transferred from your account(s) in
the Fund(s) to your designated bank account on a monthly basis. In order to
start this plan, you must have a minimum balance of $10,000 in any Fund account
utilizing this feature. Your automatic cash withdrawals will be processed on a
regular basis beginning on or about the 1st day of the month. There may be tax
consequences associated with these transactions. Please consult your tax
advisor.
Checkwriting Service Checkwriting is available with the Money Market Fund.
There is currently no charge for this service. Checks must be for a minimum of
$250. The checkwriting service may not be used for a complete redemption of
your account. If the amount of the check is greater than the value of your
account, the check will be returned unpaid. In addition, checks written against
shares purchased by check or Systematic Investment in the past 12 calendar days
will be returned unpaid due to uncollected funds. The option for this service
is included on the Application. All notices with respect to checks must be
given to the transfer agent. The checkwriting service is not available for IRAs
or other retirement accounts.
TDD Service Firstar Trust Company, the transfer agent, offers
Telecommunication Device for the Deaf (TDD) services for hearing impaired
shareholders. The dedicated number for this service is 1-800-684-3416 and
appears on shareholder account statements.
Changes to Service The Funds reserve the right to amend the shareholder
services or to change the terms or conditions.
A convenient way
to make regular
investments
For more
information, call
1-800-367-7732
Be sure to
sign up for
checkwriting
services
Aetna Mutual Funds Prospectus 35
<PAGE>
Cross-Fund Investing
(bullet) Dividend Investing - You may elect to have dividend and/or capital
gains distributions automatically invested in one other Select Class
Fund account.
(bullet) Systematic Exchange - You may establish an automatic exchange of Select
Class shares from one Fund account to another. The exchange will occur
on or about the 15th day of each month and must be for a minimum of $50
per month. As this transaction is treated as an exchange, the policies
related to the exchange privilege apply. Please read the "Shareholder
Services-Purchase by Exchange" section carefully. There may be tax
consequences associated with these exchanges. Please consult your tax
advisor.
Cross-Fund Investing may only be made in a Fund account that has been
previously established with the Fund's minimum investment. To request either or
both of these features, please call 1-800-367-7732 to obtain the appropriate
application.
Management of the Funds
Directors The business affairs of each Fund are managed under the direction of
the Board of Directors (Directors). The Directors set broad policies for the
Company and each Fund. Information about the Directors is found in the SAI.
Investment Adviser ALIAC, the Investment Adviser for each Fund, is a
Connecticut corporation with its principal offices at 151 Farmington Avenue,
Hartford, Connecticut 06156. The Investment Adviser is registered with the
Commission as an investment adviser and in addition to managing the Funds,
provides investment advisory services to other investment companies and for its
general account, all of which together hold over $6 billion in assets. The
Investment Adviser is a wholly owned subsidiary of Aetna Life and Casualty
Company which, with affiliated companies, comprises one of the world's leading
providers of insurance and financial services.
Under an investment advisory agreement, the Investment Adviser is, subject to
the supervision of the Directors, responsible for managing the assets of each
Fund in accordance with its investment objectives and policies.
The Investment Adviser furnishes all necessary facilities and pays the
salaries and other related costs of personnel engaged in providing investment
advice to the Company. It also pays salary, other fees and expenses for
Directors and officers of the Company who are employees or affiliated persons
of the Investment Adviser.
Your
Investment
Adviser
36 Aetna Mutual Funds Prospectus
<PAGE>
The Investment Adviser receives a monthly fee from each Fund at an annual rate
based on average daily net assets of each Fund as follows:
Fee Assets
- ---------------------------------------------------
Money Market Fund 0.400% On first $500 million
0.350% On next $500 million
0.340% On next $1 billion
0.330% On next $1 billion
0.300% Over $3 billion
- ---------------------------------------------------
Government Fund 0.500% On first $250 million
0.475% On next $250 million
0.450% On next $250 million
0.425% On next $1.25 billion
0.400% Over $2 billion
Fee Assets
- ---------------------------------------------------
Bond Fund 0.500% On first $250 million
0.475% On next $250 million
0.450% On next $250 million
0.425% On next $1.25 billion
0.400% Over $2 billion
- ---------------------------------------------------
Tax-Free Fund 0.500% On first $250 million
0.475% On next $250 million
0.450% On next $250 million
0.425% On next $1.25 billion
0.400% Over $2 billion
- ---------------------------------------------------
Aetna Fund 0.800% On first $500 million
0.750% On next $500 million
0.700% On next $1 billion
0.650% Over $2 billion
- ---------------------------------------------------
Growth and Income Fund 0.700% On first $250 million
0.650% On next $250 million
0.625% On next $250 million
0.600% On next $1.25 billion
0.550% Over $2 billion
- ---------------------------------------------------
Growth Fund 0.700% On first $250 million
0.650% On next $250 million
0.625% On next $250 million
0.600% On next $1.25 billion
0.550% Over $2 billion
Advisory
Fees
Aetna Mutual Funds Prospectus 37
<PAGE>
Fee Assets
- ------------------------------------------------------
Small Company Growth
Fund 0.850% On first $250 million
0.800% On next $250 million
0.775% On next $250 million
0.750% On next $1.25 billion
0.725% Over $2 billion
- ------------------------------------------------------
International Growth Fund 0.850% On first $250 million
0.800% On next $250 million
0.775% On next $250 million
0.750% On next $1.25 billion
0.700% Over $2 billion
- ------------------------------------------------------
Asian Growth 1.000% On first $250 million
0.875% On next $250 million
0.850% On next $250 million
0.825% On next $1.25 billion
0.800% Over $2 billion
- ------------------------------------------------------
The investment advisory and administrative service fees, when taken together,
applicable to (before expense reimbursement) the Aetna Fund, Growth and Income
Fund, Growth Fund, Small Company Growth Fund, International Growth Fund and
Asian Growth Fund are higher than those charged by some other investment
advisers to other registered investment companies.
Sub-Advisers The Investment Adviser has engaged Aeltus as the sub-adviser to
the Tax-Free Fund, the Growth Fund and the Small Company Growth Fund, Aeltus
Far East as the sub-adviser to the Asian Growth Fund, and Dunedin as the
sub-adviser to the International Growth Fund. Aeltus is a Connecticut
corporation located at 151 Farmington Avenue, Hartford, Connecticut, 06156.
Aeltus is a wholly owned subsidiary of Aetna Life Insurance Company which is in
turn owned by Aetna. Aeltus Far East has its principal place of business at 2
Pacific Place, 88 Queensway, Hong Kong. Dunedin is headquartered in Edinburgh,
Scotland. Each sub-adviser is registered as an investment adviser with the
Commission.
Under Sub-advisory Agreements with the Investment Adviser, the sub-advisers
are subject to the supervision of the Investment Adviser and the Directors, and
are responsible for managing the assets of each respective Fund in accordance
with its investment objective and policies. The sub-advisers pay the salaries
and other related costs of per-
Sub-advisers to
Aetna Series
Fund, Inc.
38 Aetna Mutual Funds Prospectus
<PAGE>
sonnel engaged in providing investment advice including office space,
facilities and equipment.
The Investment Adviser has overall responsibility for monitoring the
investment program maintained by the sub-advisers for compliance with
applicable laws and regulations and the respective Fund's investment objective.
Administrator ALIAC acts as administrator for each Fund and performs certain
administrative and internal accounting services, including maintaining general
ledger accounts, regulatory compliance, preparation of financial information
for semiannual and annual reports, preparing registration statements,
calculating net asset values (except for the International Growth and Asian
Growth Funds), shareholder communications and supervision of the custodians and
transfer agent.
For these services, each Fund pays ALIAC a monthly fee at an annual rate based
on average daily net assets as follows: 0.25% on the first $250 million, 0.24%
on the next $250 million, 0.23% on the next $250 million, 0.22% on the next
$250 million, 0.20% on the next $1 billion and 0.18% on assets over $2.0
billion.
Principal Underwriter ALIAC is the principal underwriter for the Company. ALIAC
may contract with various broker-dealers, including one or more affiliates, for
distribution of Select Class shares. ALIAC may also sell shares of the Funds
directly.
Transfer Agent Firstar Trust Company acts as each Fund's transfer and
dividend-paying agent. Firstar is responsible for the issuance, transfer and
redemption of shares and the opening and maintenance of shareholder accounts.
Fund Expenses Each Fund bears the costs of its operations. Expenses directly
attributable to a Fund are charged to that Fund. Some expenses are allocated
proportionately among all the Funds in relation to the net assets of each Fund
and some expenses are allocated equally to each Fund.
Portfolio Management
The following individuals are primarily responsible for the day-to-day
management of the Funds, as indicated below. All of the following individuals
may also decide as a group what strategy may benefit all of the Funds.
Money Market Fund, Government Fund and Bond Fund Jeanne Wong-Boehm, Managing
Director, ALIAC. Ms. Wong-Boehm has been with ALIAC since 1982 and has over 10
years of investment experience.
Aetna Mutual Funds Prospectus 39
<PAGE>
Tax-Free Fund Neil Grabowski, Managing Director, Aeltus. Mr. Grabowski has been
with Aetna since 1982 and has over 12 years experience managing tax-exempt
securities.
Aetna Fund John Y. Kim, Chief Investment Officer, ALIAC. Mr. Kim joined ALIAC
in May 1994. Mr. Kim has over 10 years of investment management experience with
ALIAC, an affiliate of ALIAC, and Mitchell Hutchins Institutional Investors,
Inc.
Growth and Income Fund Martin J. Duffy, Portfolio Manager, ALIAC. Mr. Duffy has
been with ALIAC since 1972 and has over 20 years of investment experience.
Vince Fioramonti, who is responsible for Hong Kong transactions for this Fund,
has been with Aetna since 1994 and has over 7 years of international investment
experience.
Growth Fund Peter B. Canoni, Managing Director, Aeltus. Mr. Canoni has been
with Aetna since 1980 and has over 20 years of investment experience.
Small Company Growth Fund Thomas J. DiBella, Investment Officer, Aeltus. Before
joining Aeltus, Mr. DiBella was Investment Officer at Bethlehem Steel from 1989
to 1991. Mr. DiBella has over 10 years of investment experience.
International Growth Fund Douglas A. Thomson, Dunedin Fund Managers, Ltd.,
began managing the Fund May 1, 1994. Mr. Thomson has 9 years of investment
experience with Dunedin.
Asian Growth Fund Anna Tong, Managing Director, Aeltus Far East. Ms. Tong has
been with Aetna since 1985 and has over 10 years of Asian investment
experience.
Fund Distributions
(bullet) The Money Market Fund declares dividends daily and pays monthly.
(bullet) The Government Fund, the Bond Fund and the Tax-Free Fund declare and
pay dividends monthly.
(bullet) The Aetna Fund and the Growth and Income Fund declare and pay dividends
semiannually.
(bullet) The Growth Fund, Small Company Growth Fund, International Growth Fund
and Asian Growth Fund declare and pay dividends annually.
(bullet) All capital gains distributions, if any, are paid on an annual basis.
Income dividends are derived from investment income, including dividends, in
terest, realized short-term capital gains, and certain foreign
How to
receive
dividends
40 Aetna Mutual Funds Prospectus
<PAGE>
currency gains received by a Fund. Capital gains distributions are derived from
each Fund's realized long-term capital gains. The per share dividends and
distributions of Select Class shares will be higher than the per share
dividends and distributions of the Adviser Class as a result of the
distribution fees and service fees applicable to the Adviser Class.
Money Market Fund shares begin to accrue dividends the day after they are
purchased; a redemption will include dividends declared through the redemption
date.
Reinvestment of Income Dividends and Capital Gains Distributions Unless you
elect otherwise, as permitted in the Application, income dividends and capital
gains distributions with respect to a particular Fund will be reinvested in
additional Select Class shares of that Fund and will be credited to your
account at the next determined net asset value per share. Both income dividends
and capital gains distributions are paid by a Fund on a per-share basis. As a
result, at the time of such payment, the net asset value per share of a Fund
(except the Money Market Fund) will be reduced by the amount of such payment.
If you wish to change the manner in which you receive income dividends and
capital gains distributions, your notification of such change must be received
by the transfer agent at least ten days before the next scheduled distribution.
Net Asset Value
The net asset value per share ("NAV") of each Fund is determined as of 4:15
p.m. Eastern time on each day that the NYSE is open for trading. Except for the
Money Market Fund, the NAV is computed by dividing the total value of a Fund's
securities, plus any cash or other assets (including dividends accrued but not
collected) less all liabilities (including accrued expenses), by the number of
shares outstanding.
Portfolio securities are valued primarily on the basis of market quotations.
All other assets, including restricted securities and other 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 Directors.
The Money Market Fund's portfolio securities are valued by the amortized cost
method of valuation. The Money Market Fund's use of amortized cost is part of
its effort to maintain a constant net asset value of $1.00 per share.
Pricing
your Fund
Aetna Mutual Funds Prospectus 41
<PAGE>
Taxes
Introduction The tax information described below is only a summary of federal
income tax consequences and is based on tax laws and regulations in effect as
of the date of this Prospectus. Please refer to the SAI for a more detailed
discussion of federal income tax considerations. In addition to federal taxes,
you may be subject to state and local taxes and you should discuss your
individual tax situation with your tax advisor.
Shareholder Distributions Distributions of net long-term capital gains are
taxable to you as long-term capital gains regardless of the length of time you
have owned your shares. Distributions of net investment income and net
short-term capital gains are taxable to you as ordinary income. Depending on a
Fund's investments, part or all of ordinary income dividends could be treated
as: (1) "U.S. Government Interest Dividends" which are exempt from state and
local taxes; (2) "Qualifying Dividends" which for corporate shareholders would
qualify for the 70% dividends-received deduction; or (3) "Exempt Interest
Dividends" which are excluded from regular federal tax and possibly from state
and local tax. Dividends paid by the Government Fund may be U.S. Government
Interest Dividends. Substantially all dividends paid by the Growth and Income
Fund, and, to a lesser degree, the Aetna Fund, the Growth Fund and the Small
Company Growth Fund will be Qualifying Dividends. Currently, only the Tax-Free
Fund pays Exempt Interest Dividends, which would be included in determining the
taxability of social security benefits and a portion of which may be a
"tax-preference item" for purposes of the alternative minimum tax.
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 a Fund's assets to be invested in
various countries is not known. The International Growth and Asian Growth Funds
may elect to "pass through" foreign taxes paid in order to permit shareholders
to claim a credit or deduction, if more than 50% of the value of such Fund's
assets at the close of a taxable year consist of stock or securities of foreign
corporations.
A Fund's distributions are taxable in the year they are received, whether you
take them in cash or reinvest them in additional shares. However, distributions
declared in December and paid in January are taxable as if paid on December 31.
Each Fund will send a statement to shareholders by January 31 indicating the
tax status of distributions made during the previous year, and any foreign
taxes "passed-through" to shareholders.
Form 1099-DIV
will be mailed
to you in January
42 Aetna Mutual Funds Prospectus
<PAGE>
Buying a Dividend If you buy shares of a Fund (other than the Money Market
Fund) just before the ex-dividend date, you will be taxed on the entire amount
of the dividend received.
Share Redemptions Any gain or loss realized when you redeem (sell) or exchange
shares of a Fund will be treated as a taxable long-term or short-term capital
gain or loss. Please see the SAI for information regarding any limitation on
deductibility of such losses.
Tax Withholding When you fill out your Application, you will be asked to
certify that your Social Security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding by the Internal Revenue
Service ("IRS"). If you are subject to backup withholding, the IRS can require
a Fund to withhold 31% of your taxable dividends, capital gains distributions
and redemptions.
General Information
Articles of Incorporation The Company was incorporated under the laws of
Maryland on June 17, 1991. The Articles of Incorporation (Articles) provide for
the issuance of multiple series of shares each representing a portfolio of
investments with different investment objectives, policies and restrictions.
The Company currently offers 13 series or Funds. Ten of the Funds are described
in this Prospectus.
Share Classes Each Fund offers shares of common stock currently classified into
two classes, Select Class shares and Adviser Class shares. Each class of shares
has the same rights, privileges and preferences, except with respect to: (a)
the effect of the respective sales charge, if any, for each class; (b) the
distributions and/or service fees borne by each class; (c) the expenses
allocable exclusively to each class; (d) voting rights on matters exclusively
affecting a single class and (e) the exchange privilege of each class. The
Board of Directors does not anticipate that there will be any conflicts among
the interests of the holders of the different classes of shares of the Fund.
The Directors continue to consider whether any such conflicts exist and, if so,
take appropriate action.
The Company has obtained a ruling from the IRS with respect to the ten Funds
described in this Prospectus to the effect that differing distributions among
the classes of its shares will not result in the Fund's dividends or other
distributions being regarded as "preferential dividends" under the Code. The
Company is currently seeking a similar ruling for its three newest Funds. For
additional information, see the SAI.
Capital Stock The Articles currently authorize the issuance of 4.8 billion
shares of capital stock of the Company. All shares are nonassessable,
transferable and redeemable. There are no preemptive rights.
Aetna Mutual Funds Prospectus 43
<PAGE>
As of December 31, 1994, the following shares were owned by Aetna
companies:
ALIAC
----------------------
Select Adviser
---------- -----------
Money Market Fund 112,766
Government Fund 2,775,194
Bond Fund 264,524 2,685,214
Tax-Free Fund 125,485 2,175,175
The Aetna Fund 306,564 2,473,594
Growth and Income Fund 67,107 469,715
Growth Fund 2,232,815
Small Company Growth Fund 2,472,661
International Growth Fund 180,693 478,766
Asian Growth Fund 1,013,800
Aetna Ascent 20,000
Aetna Crossroads 20,000
Aetna Legacy 20,000
ALIC
----------------------
Select Adviser
---------- -----------
Money Market Fund 2,248,769 25,942,654
Asian Growth Fund 2,043,588
The Aetna Casualty and
Surety Company
----------------------
Select Adviser
---------- -----------
International Growth Fund 498,517 1,962,943
All shares were acquired for investment and can be disposed of only by
redemption. ALIAC and its affiliates may make additional investments into the
Funds.
Shareholder Meetings The Company is not required and does not intend to hold
annual shareholder meetings. The Articles provide for meetings of shareholders
to elect Directors at such times as may be determined by the Directors or as
required by the Investment Company Act of 1940. If requested by the holders of
at least 10% of a Fund's outstanding shares, the Company will hold a
shareholder meeting for the purpose of voting on the removal of one or more
Directors and will assist with communication concerning that shareholder
meeting.
Voting Rights Shareholders of each class are entitled to one vote for each full
share held and fractional votes for fractional shares of each class held on
matters submitted to the shareholders of the Company. Voting rights are not
cumulative. Generally, shares of the Company will be voted on a Company-wide
basis on all matters except matters affecting only the interests of one Fund or
one class of shares.
44 Aetna Mutual Funds Prospectus
<PAGE>
Payments to Dealers From time to time, ALIAC or its affiliates may make
payments (up to 0.25%, computed on an annualized basis, of average monthly
account values) to other dealers and/or their agents who sell Select Class
shares or who provide shareholder services to you. These payments are made from
the resources of the paying entity so the price you pay for Select Class shares
and the value of your investment will be unaffected.
Performance Data
The Funds may compare their performance to other mutual funds with similar
investment objectives and to the industry as a whole, as quoted by ranking
services and publications of general interest. These may include the Standard &
Poor's 500 Stock Index ("S&P 500"), Shearson Lehman Aggregate Bond Index, Dow
Jones Industrial Average ("DJIA"), Lipper Analytical Services, Inc.,
IBC/Donoghue's Taxable MFA, the Morgan Stanley Capital International Europe,
Australia, Far East ("EAFE") Index and the Morgan Stanley Capital
International Far East Free ("FEF ex. Japan") Index.
Glossary of Investment Terms
This glossary describes some of the securities used by the Funds. Further in
formation is available in the SAI:
Banker's Acceptance A banker's acceptance is a time draft drawn on a bank and
is customarily used by corporations as a means of financing payment for traded
goods. When a draft is accepted by a bank, the bank guarantees to pay the face
value of the debt at maturity.
Certificates of Deposit For large deposits not withdrawable on demand, banks
issue certificates of deposit ("CDs") as evidence of ownership. CDs are usually
negotiable and traded among investors such as mutual funds and banks.
Commercial Paper Commercial paper is short-term debt instruments issued by
companies or banks with a maturity ranging from five to 270 days.
Eurodollars Eurodollars are U.S. dollars held in banks outside the United
States, mainly in Europe but also in other countries, and are commonly used for
the settlement of international transactions. There are many types of
Eurodollar securities including Eurodollar CDs and bonds; these securities are
not registered with the Commission. Certain Eurodollar deposits are not FDIC
insured and may be subject to future political and economic developments and
governmental restrictions.
Aetna Mutual Funds Prospectus 45
<PAGE>
High Risk High-Yield Securities Bonds of low quality security backing rated BB
or below by Standard & Poor's Corp. or Ba or below by Moody's Investors
Service, Inc., or other agencies, or, if unrated, considered by the Investment
Adviser to be of comparable quality. These bonds are often called "junk bonds"
because of the greater possibility of default.
Municipal Securities Debt obligations issued by states, territories and
possessions of the United States, the District of Columbia and their political
subdivisions, agencies and instrumentalities, or multi-state agencies or
authorities. Such securities provide interest income that is exempt from
federal income taxes, and in some instances, state and local income taxes.
Pay-in-Kind Bonds Pay-in-kind bonds are securities that pay interest through
the issuance of additional bonds.
Repurchase Agreements A repurchase agreement or "repo" is an agreement between
a seller and buyer, usually of U.S. Government securities, to sell and
subsequently repurchase securities at a fixed price on a future date. The
primary attraction of repurchase agreements is the flexibility of maturities.
U.S. Government Derivatives A Fund may purchase separately traded principal and
interest components of certain U.S. Government securi-ties ("STRIPS"). In
addition, a Fund may acquire custodial receipts that represent ownership in a
U.S. Government security's future interest or principal payments. These
securities are known by such exotic names as TIGRS and CATS and may be issued
at a discount to face value. They are generally more volatile than normal fixed
income securities because interest payments are accrued rather than paid out in
regular installments.
U.S. Government Securities Securities issued by the U.S. Government and its
agencies.
Direct Obligations of the U.S. Government are:
Treasury Bills - issued with short maturities (one year or less) and priced at
a discount to face value. The income for investors is the difference between
the purchase price and the face value.
46 Aetna Mutual Funds Prospectus
<PAGE>
Treasury Notes - intermediate-term securities with maturities of between one to
ten years. Income to investors is paid in semiannual interest payments.
Treasury Bonds - long-term securities with maturities from ten years to up to
thirty years. Income is paid to investors on a semi-annual basis.
In addition, U.S. Government Agencies issue debt securities to finance ac
tivities for the U.S. Government. These agencies include among others the
Federal Home Loan Bank, Federal National Mortgage Association ("FNMA" or
"Fannie Mae"), Government National Mortgage Association ("GNMA" or "Ginnie
Mae"), Export-Import Bank and the Tennessee Valley Authority.
Not all agencies are backed by the full faith and credit of the United States;
for example the FNMA may borrow money from the U.S. Treasury only under certain
circumstances. There is no guarantee that the government will support these
types of securities and they therefore involve more risk than direct government
obligations.
Variable Rate Instruments A variable or floating rate instrument is one whose
terms provide for the adjustment of its interest rate on set dates and which
can reasonably be expected to have a market value close to par value.
Yankee Bonds A bond issued in the United States by foreign countries,
corporations and banks. Similarly, Yankee CDs are issued in the U.S. by
branches of foreign banks.
Zero Coupon Bonds Bonds issued at a deep discount to face value. These bonds
pay no interest but are redeemed at full face value. The price of zero coupon
bonds are more volatile than bonds which pay interest but are rated on the same
principles as all fixed-income investments.
The Funds also use some of the following securities to manage risk and
volatility:
Call Option The right to buy a security, currency or stock index at a stated
price, or strike price, within a fixed period. A call option will be exercised
if the spot price rises above the strike price; if not, the option expires
worthless.
Put Option The right to sell a security, currency or stock index at a stated
price, or strike price, within a fixed period. A put option will be exercised
if the spot price falls below the strike price; if not, the option expires
worthless.
Aetna Mutual Funds Prospectus 47
<PAGE>
Covered Call Options A call option backed by the securities underlying the
option. The owner of a security will normally sell covered call options to
collect premium income or to reduce price fluctuations of the security. A
covered call option limits the capital appreciation of the underlying security.
Convertible Stock Corporate securities, which may be either bonds or preferred
shares, that can be exchanged for shares at a fixed price.
Futures Contracts to buy securities, currencies or stock indexes in the future
at a price agreed in advance. A futures contract obliges the buyer to purchase
the security and the seller to sell it, unlike an option where the buyer can
choose whether or not to exercise the option.
Preferred Stock Shares which pay a fixed dividend, in contrast to common stock
whose dividends depend on the profits of the company.
Warrants A security, normally offered with bonds or preferred stock, that
entitles investors to buy shares at a prescribed price within a named period.
The time period is usually longer than that of a call option.
Description of Corporate Bond Ratings
Moody's Investors Service, Inc.
"Aaa" Rating Bonds rated Aaa are judged to be of the best quality and carry the
smallest degree of investment risk. Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa" Rating Bonds rated Aa are judged to be of high-quality by all standards.
Together with the Aaa group, they are generally known as high-grade bonds. They
are rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat greater than in Aaa securities.
"A" Rating Bonds rated A possess many favorable investment attributes and are
considered upper-medium-grade obligations. Factors relating to security of
principal and interest are considered adequate but elements may be present
which suggest possible impairment sometime in the future.
48 Aetna Mutual Funds Prospectus
<PAGE>
"Baa" Rating Bonds rated Baa are considered medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and have
speculative characteristics.
"Ba" Rating Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby not well safeguarded
during other good and bad times over the future. Uncertainty of position
characterizes this class of bond.
"B" Rating Bonds rated B generally lack characteristics of the desirable in
vestment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
The modifier 1 indicates that the bond ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its rating category.
Standard & Poor's Corporation
"AAA" Rating Bonds rated AAA have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
"AA" Rating Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
"A" Rating Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
"BBB" Rating Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
"BB" Rating Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, the bonds face ma-
Aetna Mutual Funds Prospectus 49
<PAGE>
jor uncertainties or exposure to adverse business, financial, or economic co
nditions which could lead to inadequate capacity to meet timely interest and
principal payments.
"B" Rating Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal.
The ratings from "AA" to "B" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
50 Aetna Mutual Funds Prospectus
<PAGE>
Aetna Series Fund, Inc.
151 Farmington Avenue
Hartford, CT 06156-8962
1-800-367-7732
Investment Adviser
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, CT 06156
Custodians
Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Brown Brothers Harriman & Company
40 Water Street
Boston, MA 02109
Transfer Agent
Firstar Trust Company
P.O. Box 701
Milwaukee, WI 53201-0701
Independent Auditors
KPMG Peat Marwick LLP
CityPlace II
Hartford, CT 06103-4103
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, the securities of a Fund in any jurisdiction in which such sale,
offer to sell, or solicitation may not be lawfully made.
Aetna Mutual Funds Prospectus 51
<PAGE>
AETNA SERIES FUND, INC.
Adviser Class
The Prospectus for the Aetna Series Fund, Inc. dated March 31, 1995 is amended
as follows.
1. The Aetna Tax-Free Fund is not offered by this prospectus. References to
the Aetna Tax-Free Fund are deleted.
2. All references to Dunedin Fund Managers, Ltd. are deleted.
On Page 38, the first paragraph of the section entitled "Subadvisers" is
deleted and replaced with the following:
The Investment Adviser has engaged Aeltus as the sub-adviser to the Tax
Free Fund, Growth Fund and the Small Company Growth Fund. Aeltus Far East
serves as the sub-adviser to the Asian Growth Fund pending its merger with
the International Growth Fund. Aeltus is a Connecticut corporation located
at 151 Farmington Avenue, Hartford, Connecticut 06156. Aeltus is a wholly
owned subsidiary of Aetna Life Insurance Company which is in turn owned by
Aetna. Aeltus Far East has its principal place of business at 2 Pacific
Place, 88 Queensway, Hong Kong. Each sub-adviser is registered as an
investment adviser with the Commission.
3. The following is added after the heading "Aetna Asian Growth Fund"
on page 20.
On September 29, 1995, the Board of Directors of the Aetna Series Fund,
Inc. adopted a Plan of Reorganization and Liquidation on behalf of the
Aetna Asian Growth Fund (the "Plan"). If the Plan is approved by the Asian
Growth Fund shareholders, the Aetna International Growth Fund would
acquire all of the assets of the Asian Growth Fund, the shareholders of
the Asian Growth Fund would become shareholders of the International
Growth Fund, and the Asian Growth Fund would be liquidated.
4. On page 40, the last paragraph is deleted and replaced in its entirety by
the following:
Growth and Income Fund. Kevin M. Means, Portfolio Manager, ALIAC. Mr.
Means has over eight years investment management experience. Before
joining ALIAC in 1994 he was with INVESCO Capital Management, Inc. Vincent
Fioramonti, who is responsible for Hong Kong transactions for this Fund,
has been with ALIAC since 1994 and has over 7 years of international
investment experience.
<PAGE>
5. Pages 6 though 13 are deleted in their entirety and replaced with the
following:
Fee Tables
The following is provided to assist you in understanding the various expenses
that you would bear directly or indirectly as an investor in the Funds. A
complete description of expenses starts on page 36.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Adviser Class
Shareholder Transaction Expenses
Deferred Sales Sales Charge on
Sales Charge on Charge on Dividend Exchange
Purchases Redemptions1 Reinvestment Fee
<S> <C> <C> <C> <C>
Money Market None 1.0% None None
Government None 1.0% None None
Bond None 1.0% None None
Aetna Fund None 1.0% None None
Growth and Income None 1.0% None None
Growth None 1.0% None None
Small Company Growth None 1.0% None None
International Growth None 1.0% None None
Asian Growth None 1.0% None None
</TABLE>
1 The contingent deferred sales charge set forth in the above table is the
maximum redemption charge imposed on Adviser Class shares. Direct purchases into
the Money Market Fund are not subject to a sales charge on redemption. Investors
may pay charges less than 1.0%, depending on the length of time the shares are
held. Adviser Class shares of each Fund other than the Money Market Fund are
also subject to an annual distribution fee of 0.50% and an annual service fee of
0.25% of the value of average daily net assets of the Adviser Class. The Money
Market Fund is subject to an annual service fee of 0.10% of the value of average
daily net assets of its Adviser Class. See "Fees and Charges" in the Adviser
class prospectus.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Adviser Class
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Total Fund
Operating Expenses
Management/Advisory Administrative (after fee
Fee (after Fee waiver/expense
fee waiver) (after fee 12b-1 Other reimbursement)
waiver) Fees Expenses
<S> <C> <C> <C> <C> <C>
Money Market 0.00% 0.10% 0.00% 0.20% 0.30%
Government 0.04% 0.25% 0.50% 0.66% 1.45%
Bond 0.19% 0.25% 0.50% 0.56% 1.50%
Aetna Fund 0.80% 0.25% 0.50% 0.52% 2.07%
Growth and Income 0.68% 0.25% 0.50% 0.99% 2.42%
Growth 0.70% 0.25% 0.50% 0.72% 2.17%
Small Company Growth 0.85% 0.25% 0.50% 0.54% 2.14%
International Growth 0.85% 0.25% 0.50% 0.81% 2.41%
Asian Growth 0.41% 0.25% 0.50% 1.14% 2.30%
</TABLE>
From time to time, the Investment Advisor may agree to waive all or a portion of
its Management/Advisory Fee and/or its Administrative Fee for a particular Fund
and to reimburse some or all of a particular Fund's Other Expenses. Such fee
waiver/expense reimbursement arrangements will increase a Fund's total return
and may be modified or terminated at any time.
The expenses shown above have been estimated based on annualized expenses for
the period from inception of the class (April 15, 1994) through October 31, 1994
and reflect the most current fee waiver/expense arrangements as of the date of
this Supplement. Fee waiver/expense arrangements are in effect for the Money
Market Fund, the Government Fund, the Bond Fund and the Asian Growth Fund. These
arrangements currently limit the Total Fund Operating Expenses for these Funds
at the amounts shown above. Without these arrangements, expenses would have been
as
<PAGE>
follows: Money Market Fund's Management/Advisory Fees, Administrative Fees,
Other Expenses and Total Fund Operating Expenses would have been 0.40%, 0.25%,
0.30%, and 0.95%, respectively; Government Fund's Management/Advisory Fees and
Total Fund Operating Expenses would have been 0.50% and 1.91%, respectively;
Bond Fund's Management/Advisory Fees and Total Fund Operating Expenses would
have been 0.50% and 1.81%, respectively; and Asian Growth Fund's Management/
Advisory Fees and Total Fund Operating Expenses would have been 1.00% and 2.50%,
respectively (2.89% actual expense reduced to comply with California state law).
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Adviser Class Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and either redemption at the end of each
of the periods shown or no redemption:
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market
Redemption at end of each time period $13 $15 $ 17 $ 38
No Redemption 3 10 17 38
Government
Redemption at end of each time period 25 51 79 174
No Redemption 15 46 79 174
Bond
Redemption at end of each time period 25 52 82 179
No Redemption 15 47 82 179
Aetna Fund
Redemption at end of each time period 31 70 111 240
No Redemption 21 65 111 240
Growth and Income
Redemption at end of each time period 35 80 129 276
No Redemption 25 75 129 276
Growth
Redemption at end of each time period 32 73 116 250
No Redemption 22 68 116 250
Small Company Growth
Redemption at end of each time period 32 72 115 247
No Redemption 22 67 115 247
International Growth
Redemption at end of each time period 34 80 129 275
No Redemption 24 75 129 275
Asian Growth
Redemption at end of each time period 33 77 123 264
No Redemption 23 72 123 264
</TABLE>
This example should not be considered an indication of past or future expenses.
Actual expenses may be greater or less than those shown. This example reflects,
among other things, the application of the maximum Deferred Sales Charge imposed
on adviser Class shares. Direct purchases into the Money Market Fund are not
subject to the Deferred Sales Charge on redemption.
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Select Class
Shareholder Transaction Expenses
Deferred Sales Charge on
Sales Charge on Sales Charge Dividend Exchange
Purchases on Redemptions Reinvestment Fee
<S> <C> <C> <C> <C>
Money Market None None None None
Government None None None None
Bond None None None None
Aetna Fund None None None None
Growth and Income None None None None
Growth None None None None
Small Company Growth None None None None
International Growth None None None None
Asian Growth None None None None
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Select Class
Annual Fund Operating Expenses
(as a percentage of average daily net assets)
Total Fund Operating
Expenses
Management / Administrative Fee (after fee waiver /
Advisory Fee (after fee waiver) Other expense
(after fee waiver) Expenses reimbursement)
<S> <C> <C> <C> <C>
Money Market 0.00% 0.10% 0.20% 0.30%
Government 0.04% 0.25% 0.41% 0.70%
Bond 0.19% 0.25% 0.31% 0.75%
Aetna Fund 0.80% 0.25% 0.27% 1.32%
Growth and Income 0.68% 0.25% 0.10% 1.03%
Growth 0.70% 0.25% 0.47% 1.42%
Small Company Growth 0.85% 0.25% 0.48% 1.58%
International Growth 0.85% 0.25% 0.78% 1.88%
Asian Growth 0.41% 0.25% 0.89% 1.55%
</TABLE>
From time to time, the Investment Advisor may agree to waive all or a portion of
its Management/Advisory Fee and/or its Administrative Fee for a particular Fund
and to reimburse some or all of a particular Fund's Other Expenses. Such fee
waiver/expense reimbursement arrangements will increase a Fund's total return
and may be modified or terminated at any time.
The expenses shown above have been annualized based on the ten month period
ended October 31, 1994 and reflect the most current fee waiver/expense
arrangements as of the date of this Supplement. Fee waiver/expense arrangements
are in effect for the Money Market Fund, the Government Fund, the Bond Fund and
the Asian Growth Fund. These arrangements currently limit the Total Fund
Operating Expenses for these Funds at the amounts shown above. Without these
arrangements, expenses would have been as follows: Money Market Fund's
Management/Advisory Fees, Administrative Fees and Total Fund Operating Expenses
would have been 0.40%, 0.25%, and 0.85%, respectively; Government Fund's
Management/Advisory Fees and Total Fund Operating Expenses would have been 0.50%
and 1.16%, respectively; Bond Fund's Management/Advisory Fees and Total Fund
Operating Expenses would have been 0.50% and 1.06%, respectively; and Asian
Growth Fund's Management/Advisory Fees and Total Fund Operating Expenses would
have been 1.00% and 2.14%, respectively.
- -------------------------------------------------------------------------------
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
Select Class
Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and redemption at the end of each of the
periods shown:
1 Year 3 Years 5 Years 10 Years
<S> <C> <C> <C> <C>
Money Market $ 3 $10 $ 17 $ 38
Government 7 22 39 87
Bond 8 24 42 93
Aetna Fund 13 42 72 159
Growth and Income 11 33 57 126
Growth 14 45 78 170
Small Company Growth 16 50 86 188
International Growth 19 59 102 220
Asian Growth 16 49 84 185
</TABLE>
This example should not be considered an indication of past or future expenses.
Actual expenses may be greater or less than those shown.
- -------------------------------------------------------------------------------
As noted above, each Fund has two classes, Adviser Class shares and Select Class
shares. Because the expenses and sales charges vary between the classes, the
performance of each class will vary. Registered representatives may receive
different levels of compensation when selling shares of the Fund's classes.
Additional information regarding each Fund's classes may be obtained by calling
your representative or 1-800-367-7732.
<PAGE>
Financial Highlights -- Adviser Class Shares
(for one outstanding share throughout each period)
The selected data presented below for, and as of the end of, each of the periods
listed are derived from the financial statements of Aetna Series Fund, Inc. The
financial statements as of April 30, 1995 (unaudited) are included in the SAI
amendment dated December 1, 1995. The financial statements for the period ended
October 31, 1994 have been audited by KPMG Peat Marwick LLP, independent
auditors. The financial statements as of October 31, 1994 and the financial
highlights for the period ended October 31, 1994 and the independent auditors'
report thereon, are included in the SAI. The Company commenced offering Adviser
Class shares on April 15, 1994. Prior to that date, the Company offered only
Select Class shares.
Additional information about the performance of Aetna Series Fund, Inc. is
contained in the Annual Report dated October 31, 1994. The Report is
incorporated herein by reference and is available, without charge, by writing to
the Company at the address listed on the cover of this Prospectus or by calling
1-800-367-7732.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
----------------------------------- ---------------------------------
Money Market Fund Government Fund
----------------------------------- ---------------------------------
Six-month Six-month
period ended Period from Apr. period ended Period from
April 30, 1995 15,1994 - April 30, 1995 Apr. 15, 1994 -
(unaudited) Oct. 31, 1994 (unaudited) Oct. 31, 1994
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 1.00 1.00 9.41 9.67
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income............ .03 .03 .27 .24
Net realized and change in
unrealized gain (loss)........... .00 .00 .25 (.24)
---------- ---------- ---------- -----------
Total .03 .03 .52 .00
Less distributions:
From net investment income....... (.03) (.03) (.28) (.26)
----------- ----------- ----------- -----------
Net asset value, end of period... $ 1.00 1.00 9.65 9.41
========== ========== ========== ==========
Total return..................... 2.86% 2.41% 5.66% (0.06)%
Net assets, end of period (000's) $ 72,699 47,350 257 151
Ratio of total expenses to
average net assets*.............. 0.25% 0.21% 1.59% 1.28%
Ratio of net investment income to
average net assets*.............. 5.66% 4.27% 6.07% 4.68%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 0.86% 0.92% 2.04% 2.11%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 5.05% 3.67% 5.62% 3.85%
Portfolio turnover rate.......... N/A N/A 75.52% 43.63%
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------- ---------------------------------
Bond Fund The Aetna Fund
----------------------------------- ---------------------------------
Six-month Six-month
period ended Period from Apr. period ended Period from
April 30, 1995 15,1994 - April 30, 1995 Apr. 15, 1994 -
(unaudited) Oct. 31, 1994 (unaudited) Oct. 31, 1994
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 9.58 9.92 10.62 10.54
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income............ .28 .28 .12 .19
Net realized and change in
unrealized gain (loss)........... .21 (.35) .45 .00
---------- ----------- ---------- ----------
Total .49 (.07) .57 .19
Less distributions:
From net investment income....... (.28) (.27) (.14) (.11)
----------- ----------- ----------- -----------
Net asset value, end of period... $ 9.79 9.58 11.05 10.62
========== ========== ========== ==========
Total return..................... 5.19% (0.68)% 5.41% 1.84%
Net assets, end of period (000's) $ 14,297 25,405 818 26,396
Ratio of total expenses to
average net assets*.............. 1.50% 1.49% 2.04% 1.87%
Ratio of net investment income to
average net assets*.............. 6.07% 5.36% 2.65% 1.90%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 1.79% 1.81% 2.07% 2.06%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 5.78% 5.04% 2.62% 1.67%
Portfolio turnover rate.......... 25.30% 51.80% 76.37% 86.10%
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------- ---------------------------------
Growth and Income Fund Growth Fund
----------------------------------- ---------------------------------
Six-month Six-month
period ended Period from Apr. period ended Period from
April 30, 1995 15,1994 - April 30, 1995 Apr. 15, 1994 -
(unaudited) Oct. 31, 1994 (unaudited) Oct. 31, 1994
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 11.08 10.75 10.74 10.26
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss)..... .07 .11 (.03) (.02)
Net realized and change in
unrealized gain.................. .66 .30 .81 .50
---------- ---------- ---------- ----------
Total .73 .41 .78 .48
Less distributions:
From net investment income....... (.03) (.08) (.07) .00
----------- ----------- ----------- ----------
Net asset value, end of period... $ 11.78 11.08 11.45 10.74
========== ========== ========== ==========
Total return..................... 6.71% 3.71% 7.43% 4.58%
Net assets, end of period (000's) $ 1,166 5,740 944 417
Ratio of total expenses to
average net assets*.............. 1.77% 2.32% 1.97% 1.72%
Ratio of net investment income to
average net assets*.............. 1.40% 1.74% (0.51)% (0.25)%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 1.77% 2.42% 2.02% 2.17%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... 1.40% 1.65% (0.57)% (0.71)%
Portfolio turnover rate.......... 78.63% 54.13% 63.90% 120.32%
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------- ---------------------------------
Small Company Growth Fund International Growth Fund
----------------------------------- ---------------------------------
Six-month Six-month
period ended Period from Apr. period ended Period from
April 30, 1995 15,1994 - April 30, 1995 Apr. 15, 1994 -
(unaudited) Oct. 31, 1994 (unaudited) Oct. 31, 1994
<S> <C> <C> <C> <C>
Net asset value, beginning of
period........................... $ 10.35 10.24 11.51 11.24
---------- ---------- ---------- ----------
Income from investment operations:
Net investment income (loss)..... (.05) (.04) (.03) .01
Net realized and change in
unrealized gain (loss)........... 1.06 .15 (.39) .26
---------- ---------- ----------- ----------
Total 1.01 .11 (.42) .27
Less distributions:
From net investment income....... .00 .00 (.25) .00
From realized gain............... .00 .00 (.53) .00
---------- ---------- ----------- ----------
Net asset value, end of period... $ 11.36 10.35 10.31 11.51
========== ========== ========== ==========
Total return..................... 9.86% 0.98% (3.59)% 2.40%
Net assets, end of period (000's) $ 581 205 28,590 26,647
Ratio of total expenses to
average net assets*.............. 2.14% 1.78% 2.29% 2.27%
Ratio of net investment income to
average net assets*.............. (0.87)% (0.72)% (0.48)% 0.17%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 2.18% 2.14% 2.30% 2.41%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... (0.92)% (1.07)% (0.56)% 0.02%
Portfolio turnover rate.......... 64.45% 116.28% 21.51% 81.67%
</TABLE>
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
<PAGE>
-----------------------------------
Asian Growth Fund
-----------------------------------
Six-month
period ended Period from Apr.
April 30, 1995 15,1994 -
(unaudited) Oct. 31, 1994
Net asset value, beginning of
period........................... $ 9.46 8.56
---------- ----------
Income from investment operations:
Net investment income (loss)..... .00 (.01)
Net realized and change in
unrealized gain (loss)........... (1.67) .91
----------- ----------
Total (1.67) .90
Less distributions:
From net investment income....... (.01) .00
----------- ----------
Net asset value, end of period... $ 7.78 9.46
========== ==========
Total return..................... (17.63)% 10.51%
Net assets, end of period (000's) $ 418 314
Ratio of total expenses to
average net assets*.............. 2.82% 1.42%
Ratio of net investment income to
average net assets*.............. (0.08)% (0.24)%
Ratio of net expenses before
reimbursement and waiver to
average net assets*.............. 2.90% 1.73%
Ratio of net investment income
before reimbursement and waiver
to average net assets*........... (0.69)% (0.55)%
Portfolio turnover rate.......... 29.97% 65.50%
*Annualized
Per share data calculated using average number of shares outstanding throughout
the period.
The date of this amendment is December 1, 1995.
<PAGE>
Adviser Class
March 31, 1995
Aetna
Mutual Funds
Prospectus
- -------------------------------------------------------------------------------
The Company Aetna Series Fund, Inc. (the "Company") is an open-end management
investment company authorized to issue multiple series of shares, each
representing a diversified portfolio of investments (collectively the "Funds,"
individually a "Fund") with different investment objectives, policies and
restrictions. Currently, each Fund is authorized to offer two classes of
shares, the Adviser Class and the Select Class.
The Prospectus This Prospectus contains information you should know before
investing. A Statement of Additional Information ("SAI") dated March 31, 1995,
has been filed with the Securities and Exchange Commission ("Commission") and
is incorporated by reference into this Prospectus. The SAI is available,
without charge, by writing to Aetna Series Fund, Inc., 151 Farmington Avenue,
Hartford, CT 06156-8962, by calling 1-800-367-7732, or through your
representative.
This Prospectus is for investors eligible to purchase Adviser Class shares of
each Fund. A separate Prospectus is available for investors eligible to
purchase Select Class shares of each Fund. Sales charges, expenses and
performance will vary with respect to each class.
Investment Objectives
- -------------------------------------------------------------------------------
Aetna Money Market Fund seeks to provide high current return, consistent with
preservation of capital and liquidity, through investment in high-quality money
market instruments.
Although the Money Market Fund will strive to maintain a $1.00 net asset value
per share, there is no assurance that it will be able to do so. Investments in
this Fund are neither insured nor guaranteed by the U.S. Government.
Aetna Government Fund seeks to provide income consistent with the preservation
of capital through investment in securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities.
Aetna Bond Fund seeks to provide high total return (i.e., income and capital
appreciation), consistent with reasonable risk, primarily through investment in
a diversified portfolio of high-quality corporate bonds and securities issued
or guaranteed by the U.S. Government, its agencies or instrumentalities.
Aetna Tax-Free Fund seeks to provide income exempt from federal income tax
consistent with the preservation of capital primarily through investment in
municipal securities, the interest from which is exempt from federal income
tax.
<PAGE>
The Aetna Fund seeks to maximize total return with reasonable safety of
principal by investing in a diversified portfolio of stocks, bonds and money
market instruments; the Aetna Fund may involve less investment risk than a
portfolio consisting entirely of common stocks.
Aetna Growth and Income Fund seeks long-term growth of capital and income
through investment in a diversified portfolio primarily of common stocks and
securities convertible into common stocks believed to offer above-average
growth potential.
Aetna Growth Fund seeks growth of capital through investment in a diversified
portfolio primarily of common stocks and securities convertible into common
stocks believed to offer growth potential.
Aetna Small Company Growth Fund seeks growth of capital primarily through
investment in a diversified portfolio of common stocks and securities
convertible into common stocks of companies with smaller market
capitalizations.
Aetna International Growth Fund seeks long-term capital growth primarily
through investment in a diversified portfolio of common stocks principally
traded in countries outside of North America.
Aetna Asian Growth Fund seeks long-term growth of capital primarily through
investment in a diversified portfolio of common stocks principally traded in
countries in Asia excluding Japan.
LIKE ALL MUTUAL FUNDS, THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. PLEASE READ THIS
PROSPECTUS CAREFULLY BEFORE INVESTING AND RETAIN FOR FUTURE REFERENCE.
2 Aetna Mutual Funds Prospectus
<PAGE>
Table of Contents
Highlights .................................. 4
Fee Tables .................................. 6
Financial Highlights ........................ 10
Description of the Funds .................... 14
Risk Factors and Other Considerations ....... 21
Investment Restrictions ..................... 26
Shareholder Services ........................ 27
Other Features .............................. 33
Cross-Fund Investing ........................ 34
Fees and Charges ............................ 34
Management of the Funds ..................... 36
Portfolio Management ........................ 40
Fund Distributions .......................... 41
Net Asset Value ............................. 42
Taxes ....................................... 42
General Information ......................... 44
Performance Data ............................ 46
Glossary of Investment Terms ................ 46
Description of Corporate Bond Ratings ....... 49
Aetna Mutual Funds Prospectus 3
<PAGE>
Highlights
What is a Mutual Fund and What are its Advantages? A mutual fund is an
investment company that buys and sells securities on behalf of individuals
sharing common financial goals. Mutual funds allow you to pool your money with
others, to spread risk through diversification and to benefit from professional
management. You have immediate access to your money simply by writing a letter
or, in the case of the Aetna Money Market Fund, by writing a check.
What Funds are Offered? The Company is currently comprised of 13 different
Funds, each with its own objective and policies and all of which are
diversified portfolios under the Investment Company Act of 1940. The following
ten Funds are described in this Prospectus:
(bullet) Aetna Money Market Fund (Money Market Fund) - a portfolio consisting of
high-quality money market instruments
(bullet) Aetna Government Fund (Government Fund) - a portfolio of U.S.
Government securities
(bullet) Aetna Bond Fund (Bond Fund) - a portfolio primarily of high-quality
corporate and U.S. Government securities
(bullet) Aetna Tax-Free Fund (Tax-Free Fund) - a portfolio primarily of
municipal securities
(bullet) The Aetna Fund (Aetna Fund) - a flexible portfolio of stocks, bonds and
money market instruments
(bullet) Aetna Growth and Income Fund (Growth and Income Fund) - a common stock
portfolio
(bullet) Aetna Growth Fund (Growth Fund) - a common stock portfolio of companies
believed to have potential for growth
(bullet) Aetna Small Company Growth Fund (Small Company Growth Fund) - a common
stock portfolio of companies with smaller market capitalizations
(bullet) Aetna International Growth Fund (International Growth Fund) - a common
stock portfolio of companies traded outside North America
(bullet) Aetna Asian Growth Fund (Asian Growth Fund) - a common stock portfolio
of companies traded in Asia excluding Japan
Risk Factors The different types of securities purchased and investment te
chniques used by a Fund involve varying amounts of risk. For example, equity
securities are subject to a decline in the stock market or in the value of the
company and preferred stocks have price risk and some interest rate and credit
risk. The value of debt securities may be affected by changes in general
interest rates and in the credit worthiness of the issuer. In addition, foreign
securities have currency risk. For more information, see "Risk Factors and
Other Considerations."
What is the Adviser Class of Shares? Each Fund has two classes of shares:
Adviser Class shares, which are offered primarily to the general public, and
Select Class shares, which are offered principally to institutions.
4 Aetna Mutual Funds Prospectus
<PAGE>
Adviser Class shares are subject to a contingent deferred sales charge (CDSC).
The maximum CDSC is 1.0% of redemption proceeds, declining by 0.25% each year
after the date of purchase to zero, so that no charge is imposed on shares
purchased over four years prior to redemption. Adviser Class shares of each
Fund are also subject to an annual service fee of 0.25% (0.10% for the Money
Market Fund) and (except for the Money Market Fund) an annual distribution fee
of 0.50% of the value of average daily net assets. See "Fees and Charges" for
more information.
How Can I Purchase Shares? You may purchase Adviser Class shares by completing
an Aetna Series Fund Adviser Class Application ("Application"). Your initial
purchase must be for a minimum of $1,000 for each Fund with a minimum of $500
for Individual Retirement Accounts ("IRA"). We also of fer a systematic
investment program that enables investors to purchase shares on a regular
basis. Please refer to "Shareholder Services" for complete details.
When Can I Redeem Shares? Shares may be redeemed on each day the New York Stock
Exchange, Inc. (NYSE) is open for business. Adviser Class shares are redeemable
at net asset value less any applicable CDSC. See "Shareholder Services" for
more information.
Who is the Manager? Aetna Life Insurance and Annuity Company ("ALIAC") is the
Investment Adviser to each Fund. It is a wholly owned subsidiary of Aetna Life
and Casualty Company ("Aetna") which, with affiliated companies, comprises one
of the world's leading providers of insurance and financial services. As of
December 31, 1994, the Investment Adviser managed over $19 billion of assets
worldwide for both individual and institutional investors.
Aeltus Investment Management, Inc. ("Aeltus") is the sub-adviser to the
Tax-Free Fund, the Growth Fund and the Small Company Growth Fund and Aeltus
Investment Management International (F.E.) Limited ("Aeltus Far East") is the
sub-adviser to the Asian Growth Fund. As of December 31, 1994, Aeltus and its
affiliate Aeltus Far East managed over $20 billion of assets.
Dunedin Fund Managers Ltd. ("Dunedin") is the sub-adviser to the International
Growth Fund. Dunedin is an operationally independent subsidiary of The Bank of
Scotland and has a history of fund management dating back to 1873. Dunedin had
total funds under management of $7.4 billion as of December 31, 1994. Dunedin
is a member of the Investment Management Regulatory Organization ("IMRO").
Dunedin's conduct of investment business is regulated by IMRO.
Please refer to "Management of the Funds" for further information.
Customer Service Shareholders in the Funds enjoy a high level of personalized se
rvice. Please call your representative for details or refer to "Shareholder
Services" for detailed information.
Aetna Mutual Funds Prospectus 5
<PAGE>
Fee Tables
The following is provided to assist you in understanding the various expenses
that you would bear directly or indirectly as an investor in the Funds. A
complete description of expenses starts on page 34.
- -------------------------------------------------------------------------------
Adviser Class
Shareholder Transaction Expenses
Deferred Sales Charge
Sales Charge Sales Charge on Dividend Exchange
on Purchases on Redemptions1 Reinvestment Fee
- -----------------------------------------------------------------------
Money Market None 1.0% None None
Government None 1.0% None None
Bond None 1.0% None None
Tax-Free None 1.0% None None
Aetna Fund None 1.0% None None
Growth and Income None 1.0% None None
Growth None 1.0% None None
Small Company Growth None 1.0% None None
International Growth None 1.0% None None
Asian Growth None 1.0% None None
1 The contingent deferred sales charge set forth in the above table is the
maximum redemption charge imposed on Adviser Class shares. Direct purchases
into the Money Market Fund are not subject to a sales charge on redemption.
Investors may pay charges less than 1.0%, depending on the length of time the
shares are held. Adviser Class shares of each Fund other than the Money Market
Fund are also subject to an annual distribution fee of 0.50% and an annual
service fee of 0.25% (0.10% for Money Market Fund) of the value of average
daily net assets of the Adviser Class. See "Fees and Charges."
- -------------------------------------------------------------------------------
Adviser Class
Annual Fund Operating Expenses*
(as a percentage of average daily net assets)
Total Fund
Management/ Other Operating
Advisory Fee Expenses** Expenses
(after expense 12b-1 (after expense (after expense
reimbursement) Fee reimbursement) reimbursement)
- -----------------------------------------------------------------------
Money Market 0.00% 0.00% 0.40% 0.40%
Government 0.19% 0.50% 0.77% 1.46%
Bond 0.48% 0.50% 0.77% 1.75%
Tax-Free 0.25% 0.50% 0.85% 1.60%
Aetna Fund 0.80% 0.50% 0.70% 2.00%
Growth and Income 0.65% 0.50% 0.65% 1.79%
Growth 0.65% 0.50% 0.82% 1.97%
Small Company Growth 0.86% 0.50% 0.80% 2.16%
International Growth 0.75% 0.50% 1.05% 2.30%
Asian Growth 0.74% 0.50% 1.08% 2.32%
* The Company began offering Adviser Class shares on April 15, 1994.
Consequently, figures are based on estimated amounts for 1995.
** Other Expenses include Shareholder Services Fees.
The Investment Adviser may, from time to time, reimburse a Fund for some or all
of its operating expenses. Such reimbursement arrangements will increase a
Fund's return and may be terminated at any time. Without expense
reimbursement/fee waiver, the estimated Total Fund Operating Expenses for 1995
would be: 0.96% for Money Market Fund; 1.80% for Government; 1.77% for Bond;
1.85% for Tax-Free; 2.00% for Aetna Fund; 1.88% for Growth and Income; 2.01%
for Growth; 2.16% for Small Company Growth; 2.40% for International Growth; and
2.58% for Asian Growth.
- -------------------------------------------------------------------------------
6 Aetna Mutual Funds Prospectus
<PAGE>
- -------------------------------------------------------------------------------
Adviser Class
Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and either redemption at the end of
each of the periods shown or no redemption:
1 Year 3 Years 5 Years 10 Years
- ---------------------------------------------------------------------
Money Market
Redemption at end of each time period $4 $13 $22 $51
No Redemption 4 13 22 51
Government
Redemption at end of each time period 25 51 80 175
No Redemption 15 46 80 175
Bond
Redemption at end of each time period 28 60 95 206
No Redemption 18 55 95 206
Tax-Free
Redemption at end of each time period 26 55 87 190
No Redemption 16 50 87 190
Aetna Fund
Redemption at end of each time period 30 68 108 233
No Redemption 20 63 108 233
Growth and Income
Redemption at end of each time period 28 61 97 211
No Redemption 18 56 97 211
Growth
Redemption at end of each time period 30 67 106 230
No Redemption 20 62 106 230
Small Company Growth
Redemption at end of each time period 32 73 116 249
No Redemption 22 68 116 249
International Growth
Redemption at end of each time period 33 77 123 264
No Redemption 23 72 123 264
Asian Growth
Redemption at end of each time period 34 77 124 266
No Redemption 24 72 124 266
This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
Aetna Mutual Funds Prospectus 7
<PAGE>
- -------------------------------------------------------------------------------
Select Class
Shareholder Transaction Expenses
Deferred Sales Charge
Sales Charge Sales Charge on Dividend Exchange
on Purchases on Redemptions Reinvestment Fee
- ----------------------------------------------------------------------
Money Market None None None None
Government None None None None
Bond None None None None
Tax-Free None None None None
Aetna Fund None None None None
Growth and Income None None None None
Growth None None None None
Small Company Growth None None None None
International Growth None None None None
Asian Growth None None None None
- -------------------------------------------------------------------------------
Select Class
Annual Fund Operating Expenses*
(as a percentage of average daily net assets)
Total Fund
Management/ Administrative Other Operating
Advisory Fee Fee Expenses Expenses
(after expense (after expense (after expense (after expense
reimbursement) reimbursement) reimbursement) reimbursement)
- --------------------------------------------------------------------------------
Money Market 0.00% 0.04% 0.17% 0.21%
Government 0.01% 0.09% 0.31% 0.41%
Bond 0.21% 0.25% 0.30% 0.76%
Tax-Free 0.03% 0.05% 0.23% 0.30%
Aetna Fund 0.57% 0.25% 0.27% 1.09%
Growth and Income 0.59% 0.25% 0.08% 0.92%
Growth 0.20% 0.24% 0.48% 0.92%
Small Company Growth 0.42% 0.24% 0.49% 1.15%
International Growth 0.72% 0.25% 0.69% 1.66%
Asian Growth 0.39% 0.25% 0.61% 1.25%
The Investment Adviser may, from time to time, reimburse a Fund for some or all
of its operating expenses. Such reimbursement arrangements will increase a
Fund's return and may be terminated at any time. Without expense reimburse-
ment/fee waiver, the Total Annualized Fund Operating Expenses for 1994
would have been: 0.85% for Money Market; 1.16% for Government; 1.06% for Bond;
1.20% for Tax-Free; 1.32% for Aetna Fund; 1.03% for Growth and Income; 1.42%
for Growth; 1.58% for Small Company Growth; 1.80% for International Growth; and
1.81% for Asian Growth.
*The expenses shown have been annualized based on the actual expenses for the
ten-month period ended October 31, 1994.
- -------------------------------------------------------------------------------
8 Aetna Mutual Funds Prospectus
<PAGE>
Select Class
Example
Using the above expenses, you would pay the following expenses on a $1,000
investment, assuming a 5% annual return and redemption at the end of each of
the periods shown:
1 Year 3 Years 5 Years 10 Years
- ----------------------------------------------------
Money Market $2 $7 $12 $ 27
Government 4 13 23 52
Bond 8 24 42 94
Tax-Free 3 10 17 38
Aetna Fund 11 35 60 133
Growth and Income 9 29 51 113
Growth 9 29 51 113
Small Company Growth 12 37 63 140
International Growth 17 52 90 197
Asian Growth 13 40 69 151
This example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown.
- -------------------------------------------------------------------------------
As noted above, each Fund has two classes, Adviser Class shares and Select
Class shares. Because the expenses and sales charges vary between the classes,
the performance of each class will vary. Registered representatives may receive
different levels of compensation when selling shares of the Fund's classes.
Additional information regarding each Fund's classes may be obtained by calling
your representative or 1-800-367-7732.
Aetna Mutual Funds Prospectus 9
<PAGE>
Financial Highlights
(for one outstanding share throughout each period)
The selected data presented below for, and as of the end of, the ten-month
period ended October 31, 1994 are derived from the financial statements of
Aetna Series Fund, Inc., which financial statements have been audited by KPMG
Peat Marwick LLP, independent auditors. The financial statements as of October
31, 1994 and the financial highlights for the ten-month period ended October
31, 1994, and the independent auditors' report thereon, are included in the
SAI.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Adviser Class Shares~
Net
Net Asset Realized and Dividends Dividends
Value Net Unrealized Total from from Net in Excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income on Investments Operations Income Income
--------- ---------- -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Money Market Fund
Period from April 15, 1994-
October 31, 1994 $ 1.00 $0.03 $ 0.00 $ 0.03 $(0.03) $0.00
Government Fund
Period from April 15, 1994-
October 31, 1994 9.67 0.24 (0.24) 0.00 (0.26) 0.00
Bond Fund
Period from April 15, 1994-
October 31, 1994 9.92 0.28 (0.35) (0.07) (0.27) 0.00
Tax-Free Fund
Period from April 15, 1994-
October 31, 1994 9.32 0.21 (0.33) (0.12) (0.23) 0.00
The Aetna Fund
Period from April 15, 1994-
October 31, 1994 10.54 0.19 0.00 0.19 (0.11) 0.00
</TABLE>
~ The Company commenced offering Adviser Class shares on April 15, 1994. Prior
to that date, the Company offered only Select Class shares.
* Annualized for periods less than one year.
Per share data calculated using weighted average of shares outstanding during
the period.
The Government Fund, Tax-Free Fund, Growth Fund, Small Company Growth Fund and
Asian Growth Fund commenced operations on January 2, 1994.
Additional information about the performance of Aetna Series Fund, Inc. is
contained in the Annual Report dated October 31, 1994. The Report is
incorporated herein by reference and is available, without charge, by writing
to the Company at the address listed on the cover of this Prospectus or by
calling 1-800-367-7732.
10 Aetna Mutual Funds Prospectus
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratio of
Ratio of Net
Total Investment
Investment Income
Ratio of Expense Before
Total Ratio of Before Reimburse-
Distributions Net Invest- Net Invest- Reimburse- ment
from Return of Asset Net Assets ment ment ment and Waiver
Realized Capital Value End of Expenses Income to and Waiver to Average
Gain on Distri- End of Total Period to Average Average to Average Net Portfolio
Investments bution Period Return (in thousands) Net Assets* Net Assets* Net Assets* Assets* Turnover
- ------------- --------- ------ ---------- -------------- ----------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $0.00 $ 1.00 2.41% $47,350 0.21% 4.27% 0.92% 3.67% N/A
0.00 0.00 9.41 (0.06)% 151 1.28% 4.68% 2.11% 3.85% 43.63%
0.00 0.00 9.58 (0.68)% 25,405 1.49% 5.36% 1.81% 5.04% 51.80%
0.00 0.00 8.97 (1.32)% 25,581 1.27% 4.20% 1.87% 3.60% 29.14%
0.00 0.00 10.62 1.84% 26,396 1.87% 1.90% 2.06% 1.67% 86.10%
</TABLE>
Aetna Mutual Funds Prospectus 11
<PAGE>
Financial Highlights (continued)
(for one outstanding share throughout each period)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Adviser Class Shares~
Net
Net Asset Realized and Dividends Dividends
Value Net Unrealized Total from from Net in Excess of
Beginning Investment Gain (Loss) Investment Investment Net Investment
of Period Income on Investments Operations Income Income
--------- ---------- -------------- ---------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Growth and Income Fund
Period from April 15, 1994-
October 31, 1994 $10.75 $0.11 $0.30 $0.41 $(0.08) $0.00
Growth Fund
Period from April 15, 1994-
October 31, 1994 10.26 (0.02) 0.50 0.48 0.00 0.00
Small Company Growth Fund
Period from April 15, 1994-
October 31, 1994 10.24 (0.04) 0.15 0.11 0.00 0.00
International Growth Fund
Period from April 15, 1994-
October 31, 1994 11.24 0.01 0.26 0.27 0.00 0.00
Asian Growth Fund
Period from April 15, 1994-
October 31, 1994 8.56 (0.01) 0.91 0.90 0.00 0.00
</TABLE>
~The Company commenced offering Adviser Class shares on April 15, 1994. Prior
to that date, the Company offered only Select Class shares.
*Annualized for periods less than one year.
Per share data calculated using weighted average of shares outstanding during
the period.
The Government Fund, Tax-Free Fund, Growth Fund, Small Company Growth Fund and
Asian Growth Fund commenced operations on January 2, 1994.
Additional information about the performance of Aetna Series Fund, Inc. is
contained in the Annual Report dated October 31, 1994. The Report is
incorporated herein by reference and is available, without charge, by writing
to the Company at the address listed on the cover of this Prospectus or by
calling 1-800-367-7732.
12 Aetna Mutual Funds Prospectus
<PAGE>
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratio of
Ratio of Net
Total Investment
Investment Income
Ratio of Expense Before
Total Ratio of Before Reimburse-
Distributions Net Invest- Net Invest- Reimburse- ment
from Return of Asset Net Assets ment ment ment and Waiver
Realized Capital Value End of Expenses Income to and Waiver to Average
Gain on Distri- End of Total Period to Average Average to Average Net Portfolio
Investments bution Period Return (in thousands) Net Assets* Net Assets* Net Assets* Assets* Turnover
- ------------- --------- ------ ------- -------------- ----------- ----------- ----------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$0.00 $0.00 $11.08 3.71% $ 5,740 2.32% 1.74% 2.42% 1.65% 54.13%
0.00 0.00 10.74 4.58% 417 1.72% (0.25)% 2.17% (0.71)% 120.32%
0.00 0.00 10.35 0.98% 205 1.78% (0.72)% 2.14% (1.07)% 116.28%
0.00 0.00 11.51 2.40% 26,647 2.27% 0.17% 2.41% 0.02% 81.67%
0.00 0.00 9.46 10.51% 314 1.42% (0.24)% 1.73% (0.55)% 65.50%
</TABLE>
Aetna Mutual Funds Prospectus 13
<PAGE>
Description of the Funds
Each Fund has an investment objective which is a fundamental policy and may not
be changed without the vote of a majority of the holders of that Fund's
outstanding shares. There can be no assurance that the Funds will meet their
investment objectives. Each Fund is subject to investment restrictions
described in this Prospectus and in the SAI, some of which are fundamental
policies. No fundamental investment policy may be changed without shareholder
approval.
A glossary describing various investment terms relating to securities that may
be held by the Funds starts on page 46.
Aetna Money Market Fund
Investment Objective The Money Market Fund seeks to provide high current
return, consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments.
Investment Policy The Money Market Fund invests in U.S. Treasury bills, notes
and bonds; obligations of agencies and instrumentalities of the U.S.
Government; obligations of domestic banks and U.S. dollar denominated
obligations of foreign banks (providing the issuing bank has reported assets in
excess of $5 billion and meets strict capital and profitability criteria),
finance company commercial paper, corporate commercial paper (including
variable-rate instruments), discounted notes of domestic banks, domestic
banker's acceptances eligible for discounting at the Federal Reserve, Yankee
certificates of deposit, Yankee commercial paper, Eurodollar securities,
repurchase agreements, corporate bonds and notes and other debt instruments and
may purchase securities on a when-issued or delayed-delivery basis. All
investments will have a maturity at the time of purchase, as defined under the
federal securities laws, of 397 days or less. Any foreign securities or
obligations will be U.S. dollar denominated.
In addition, the Money Market Fund will invest at least 95% of its total
assets in high-quality securities. High-quality securities are those receiving
the highest credit rating by any two rating agencies (or one, if only one
rating agency has rated the security). High-quality securities may also include
unrated securities if the Investment Adviser determines the security to be of
comparable quality. The remainder of the Money Market Fund's assets will be
invested in securities rated within the two highest rating categories by any
two rating agencies (or one, if only one rating agency has rated the security)
and unrated securities if the Investment Adviser determines the security to be
of comparable quality. With respect to these securities, the Money Market Fund
will not invest more than the greater of 1% of the market value of its total
assets or $1 million in the securities or obligations of any one issuer.
Description of
Money Market
Fund
14 Aetna Mutual Funds Prospectus
<PAGE>
The Money Market Fund will use nationally recognized rating agencies such as
Standard & Poor's Corporation and Moody's Investors Service, Inc. when
determining security credit ratings. All investments will be determined to
present minimal credit risks.
The Money Market Fund's dollar weighted average maturity will not exceed 90
days. Although the Investment Adviser will use its best efforts to maintain a
constant net asset value of $1.00 per share, there can be no assurance that the
net asset value will not vary.
Aetna Government Fund
Investment Objective The Government Fund seeks to provide income consistent
with the preservation of capital through investment in securities issued or
guaranteed by the U.S. Government, its agencies or instrumentalities.
Investment Policy The Government Fund invests at least 65% of its assets in
direct obligations of the U.S. Government, such as treasury bills, notes and
bonds which are backed by the full faith and credit of the United States, or in
indirect obligations of the U.S. Government, such as notes and bonds which are
guaranteed by agencies and instrumentalities of the U.S. Government. Securities
of such agencies and instrumentalities are backed by either the full faith and
credit of the U.S. Treasury, the right of the issuer to borrow from the U.S.
Treasury, or the credit of the agency or instrumentality. Such agencies and
instrumentalities include, but are not limited to, the Government National Mo
rtgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA"), the Federal Home Loan Mortgage Corporation ("FHLMC") and the Student
Loan Marketing Association ("SLMA").
The Government Fund may also invest in repurchase agreements collateralized by
U.S. Government agency securities, STRIPs, zero coupon bonds and options and
futures contracts.
Aetna Bond Fund
Investment Objective The Bond Fund seeks to provide high total return (i.e.,
income and capital appreciation), consistent with reasonable risk, primarily
through investment in a diversified portfolio of high-quality corporate bonds
and securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities.
Investment Policy The Bond Fund will normally invest at least 65% of its total
assets in high-quality corporate bonds, mortgage-related and other asset-backed
and debt securities, and securities issued or guaranteed by the U.S.
Government, its agencies and instrumentalities. Such securities will be rated
AA or above by Standard & Poor's Corporation, Aa or above by Moody's Investors
Service, Inc., similarly rated
Description of
Government Fund
Description of
Bond Fund
Aetna Mutual Funds Prospectus 15
<PAGE>
by other nationally recognized statistical rating organizations, or be
considered by the Investment Adviser to be of comparable quality. The Fund will
not target any given maturity, thus giving it flexibility to invest in short
and long-term securities as market conditions change. The Bond Fund may also
invest in repurchase agreements, equity securities (not to exceed 5% of total
assets) and securities issued by any foreign corporation or instrumentality or
political subdivision of foreign governments (not to exceed 25% of total
assets). The Bond Fund may also purchase securities on a when-issued or
delayed-delivery basis.
Additionally, the Bond Fund may invest in commercial paper, other short-term
investments, including variable-rate instruments, all having a maturity of less
than one year, debt securities with equity features, convertibles, and straight
debt securities.
The Bond Fund may invest up to 15% of its total assets in high risk high-yield
securities or "junk bonds" (securities rated BB/Ba or below, or if unrated,
considered by the Investment Adviser to be of comparable quality). This will
limit the Fund's ability to earn a higher return which may be associated with
high risk non-investment grade securities. See "Risk Factors and Other
Considerations" for further information.
As of October 31, 1994, the weighted average distribution of bonds in the Bond
Fund based on Standard & Poor's and Moody's bond ratings was 58% in AAA, 12% in
AA, 11% in A, 7% in BBB, 4% in BB, 3% in B and 5% in unrated bonds.
Aetna Tax-Free Fund
Investment Objective The Tax-Free Fund seeks to provide income exempt from
federal income tax consistent with the preservation of capital primarily
through investment in municipal securities, the interest from which is exempt
from federal income tax.
Investment Policy The Tax-Free Fund will invest at least 80% of its total
assets in municipal securities, the interest from which is exempt from federal
income taxes. This percentage will not include tax-exempt bonds, the interest
from which is a tax preference item for purposes of the federal alternative
minimum tax. There is no limit on the maturity of any individual security. The
Tax-Free Fund may also purchase securities on a when-issued or delayed-delivery
basis and may utilize the full range of tax-exempt securities and their
derivatives. At least 70% of the securities held by the Tax-Free Fund will be
rated A or higher, while not more than 30% will be invested in securities rated
BBB/Baa or of comparable quality (i.e., securities having speculative
characteristics compared to higher rated investment grade securities).
Description of
Tax-Free Fund
16 Aetna Mutual Funds Prospectus
<PAGE>
In addition, not more than 5% will be unrated and not more than 5% will be
invested in high risk high-yield securities or "junk bonds." The Tax-Free Fund
may invest up to 5% in municipal lease obligations.
The Fund may, for temporary defensive purposes, purchase taxable investments
such as obligations of the U.S. Government, its agencies or instrumentalities,
commercial paper, certificates of deposit and banker's acceptances including
variable-rate instruments, repurchase agree ments on these securities, or any
other fixed income securities that the Investment Adviser considers consistent
with such defensive strategies.
Special Considerations Before investing in a tax-exempt fund, you should decide
whether your after-tax return may be higher with a taxable fund or with a
tax-exempt fund. To compare taxable and tax-free income, you should calculate
the taxable equivalent yield of the investment you are considering, and compare
it with a similar taxable investment. This can be done by using the following
formula:
Tax-exempt yield
- ----------------------- = Your equivalent taxable yield
100% - Your tax bracket
For example, if you are in a 28% tax bracket and the tax-exempt yield is 8%,
the equivalent taxable yield would be 11.11%.
8%
- ---------- = 11.11% equivalent taxable yield
100% - 28%
In this example, you would choose the tax-free investment if a similar taxable
fund's yield was less than 11.11%.
It is not recommended that the Tax-Free Fund be used as a vehicle for IRAs or
other qualified plans. You should seek advice from your tax advisor regarding
whether an investment in the Tax-Free Fund is appropriate for you.
The Aetna Fund
Investment Objective The Aetna Fund seeks to maximize total return with
reasonable safety of principal by investing in a diversified portfolio of
stocks, bonds and money market instruments. The Aetna Fund may involve less
investment risk than a portfolio consisting entirely of common stocks.
Investment Policy The Investment Adviser will allocate assets among common and
preferred stocks, bonds, including mortgage-related and other asset-backed
securities, U.S. Government securities, U.S. Government derivatives, and money
market instruments, including variable-
A special note
for investors in
Tax-Free Fund
Description of
Aetna Fund
Aetna Mutual Funds Prospectus 17
<PAGE>
rate instruments and repurchase agreements, in proportions that reflect the
anticipated returns and risks of each asset class.
The Aetna Fund will not invest more than 15% of the total value of its assets
in high risk high-yield securities, or "junk bonds."
It may buy and sell listed covered put and call options and stock index futures
contracts and related options. The Aetna Fund may also purchase securities on a
when-issued or delayed-delivery basis.
The Investment Adviser employs current market statistics and economic in
dicators to forecast returns for each sector of the securities market for the
Aetna Fund. These calculations provide a disciplined framework for assessing
the relative attractiveness of stocks, bonds, and cash equivalents. The
Investment Adviser uses proprietary computer programs to help calculate the
optimal asset exposure over specified time periods for the Aetna Fund.
Special Considerations Investors should be aware that the investment results of
the Aetna Fund partly depend upon the Investment Adviser's ability to
anticipate correctly the relative performance of stocks, bonds and money market
instruments.
While the Investment Adviser has substantial experience in managing all asset
classes, there can be no assurance that the Investment Adviser will always
allocate assets to the best performing sectors. The Aetna Fund's performance
would suffer if a major proportion of its assets were allocated to stocks in a
declining market or, similarly, if a major proportion of its assets were
allocated to bonds at a time of adverse interest rate movement.
Aetna Growth and Income Fund
Investment Objectives The Growth and Income Fund seeks long-term growth of
capital and income through investment in a diversified portfolio primarily of
common stocks and securities convertible into common stocks believed to offer
above-average growth potential.
Investment Policies The Growth and Income Fund is expected to invest primarily
in common stocks which have significant potential for capital or income growth.
It may also invest in convertible and nonconvertible preferred stocks, debt
securities, rights and warrants.
Additionally, the Growth and Income Fund may lend portfolio securities, write
and buy listed covered call options and buy and sell listed covered put options
and stock index futures and options. The Growth and Income Fund may also enter
into repurchase agreements with domestic banks and broker dealers, invest up to
25% of its assets in foreign securities, engage in currency hedging and
purchase securities on a when-issued or delayed-delivery basis. The Growth and
Income
Description of
Growth and
Income Fund
18 Aetna Mutual Funds Prospectus
<PAGE>
Fund will not invest more than 15% of the total value of its assets in high
risk high-yield securities or "junk bonds."
Aetna Growth Fund
Investment Objective The Growth Fund seeks growth of capital through investment
in a diversified portfolio primarily of common stocks and securities
convertible into common stocks believed to offer growth potential.
Investment Policy The Growth Fund will normally invest at least 65% of its
total assets in common stocks which have potential for capital growth. It may
also invest in convertible and non-convertible preferred stocks.
Additionally, the Growth Fund may lend portfolio securities, buy and sell put
and call options, and stock index futures and options. The Growth Fund may also
enter into repurchase agreements, invest up to 25% of its assets in foreign
securities, engage in currency hedging and purchase securities on a
when-issued, delayed delivery or forward commitment basis. The Growth Fund will
not invest more than 15% of the total value of its assets in high risk
high-yield securities or "junk bonds."
Investments of the Growth Fund are selected with the assistance of
computer-aided quantitative analysis and research. However, the Fund's
investments are not solely driven by quantitative techniques and asset
allocation decisions will always remain at the discretion of the Investment
Adviser.
Aetna Small Company Growth Fund
Investment Objective The Small Company Growth Fund seeks growth of capital
primarily through investment in a diversified portfolio of common stocks and
securities convertible into common stocks of companies with smaller market
capitalizations.
Investment Policy The Small Company Growth Fund will normally invest at least
65% of its total assets in the common stock of companies with equity market
capitalizations at the time of purchase of $1 billion or less. The Small
Company Growth Fund may also invest in convertible and non-convertible stocks.
Additionally, the Small Company Growth Fund may lend portfolio securities, buy
and sell put and call options and stock index futures and options. The Small
Company Growth Fund may also enter into repurchase agreements, invest up to 25%
of its assets in foreign securities, engage in currency hedging and purchase
securities on a whenissued, delayed delivery or forward commitment basis. The
Small Company Growth Fund will not invest more than 15% of the total value of
its assets in high risk high-yield securities or "junk bonds."
Description of
Growth Fund
Description of
Small Company
Growth Fund
Aetna Mutual Funds Prospectus 19
<PAGE>
Investments for the Small Company Growth Fund are selected with the assistance
of computer-aided quantitative analysis and research. However, the Fund's
investments are not solely driven by quantitative techniques and asset
allocation decisions will remain at the discretion of the Investment Adviser.
Aetna International Growth Fund
Investment Objective The International Growth Fund seeks long-term capital
growth primarily through investment in a diversified portfolio of common stocks
principally traded in countries outside of North America. The International
Growth Fund will not target any given level of current income.
Investment Policy The International Growth Fund will invest at least 65% of its
total assets among securities principally traded in three or more countries
including Australia, Austria, Belgium, Denmark, Finland, France, Germany, Hong
Kong, Indonesia, Italy, Japan, Korea, Luxembourg, Malaysia, New Zealand, the
Netherlands, Norway, the Philippines, Singapore, Spain, Sweden, Switzerland,
Taiwan, Thailand, and the United Kingdom.
The International Growth Fund will invest primarily in equity securities but
may invest in convertible and preferred stocks. Further, from time to time the
International Growth Fund may hold up to 10% of its total assets in long-term
debt securities with an equivalent Standard & Poor's Corporation or Moody's
Investors Service, Inc. rating of AA/Aa or above.
The International Growth Fund may enter into forward foreign exchange co
ntracts or purchase financial futures or options (including options on futures)
as a means to moderate the impact of foreign currency fluctuations. It also may
purchase securities on a when-issued or delayed-delivery basis.
Aetna Asian Growth Fund
Investment Objective The Asian Growth Fund seeks long-term growth of capital
primarily through investment in a diversified portfolio of common stocks
principally traded in countries in Asia excluding Japan. The Asian Growth Fund
will not target any given level of current income.
Investment Policy The Asian Growth Fund will invest at least 65% of its total
assets among securities principally traded in China, Hong Kong, India,
Indonesia, Malaysia, Pakistan, the Philippines, Singapore, South Korea, Sri
Lanka, Taiwan, and Thailand.
Description of
International
Growth Fund
Description of
Asian Growth
Fund
20 Aetna Mutual Funds Prospectus
<PAGE>
The Asian Growth Fund will invest primarily in equity securities but may
invest in convertible and preferred stocks. In addition, the Asian Growth Fund
may invest up to 10% of its assets in long-term debt securities if the
Investment Adviser believes they will provide superior returns to common
stocks. The Asian Growth Fund may also enter into forward foreign exchange
contracts and purchase financial futures or options, and purchase securities on
a when-issued or delayed-delivery basis.
Special Considerations for International Investors In the last 30 years,
foreign economic growth has frequently outpaced that of the U.S. and returns
from foreign equity investments have often exceeded those on comparable U.S.
securities. The Investment Adviser believes that investment in foreign
securities offers significant potential for long-term capital appreciation and
affords substantial opportunities for investment diversification.
However, investments in securities of foreign companies and in securities
denominated in foreign currencies involve additional risks not present in U.S.
securities. Please refer to "Risk Factors and Other Considerations" for further
information.
Risk Factors and Other Considerations
General Considerations The different types of securities purchased and
investment techniques used by a Fund involve varying amounts of risk. For
example, equity securities are subject to a decline in the stock market or in
the value of the company and preferred stocks have price risk and some interest
rate and credit risk. The value of debt securities may be affected by changes
in general interest rates and in the credit worthiness of the issuer. Debt
securities with longer maturities (for example, over ten years) are more
affected by changes in interest rates and provide less price stability than
securities with short term maturities (for example, one to ten years). Also, on
each debt security, there is a risk of principal and interest default which
will be greater with higher-yielding, lower-grade securities. High risk,
high-yield securities ("junk bonds") may provide a higher return but with added
risk. In addition, foreign securities have currency risk.
Portfolio Turnover Portfolio turnover refers to the frequency of portfolio
transactions and the percentage of portfolio assets being bought and sold in the
aggregate during the year. The Funds, excluding the Money Market Fund, do not
intend to make a general practice of short-term trading. It is anticipated that
under normal market conditions average annual portfolio turnover rates will not
exceed 100% for the Funds.
A special note
for Investors in
International
Growth Fund
and Asian
Growth Fund
Aetna Mutual Funds Prospectus 21
<PAGE>
A high turnover rate will result in increased brokerage commissions and may
increase taxable capital gains. Please see "Taxes" for further information.
Cash or Cash Equivalents All Funds reserve the right to temporarily depart from
their investment objective by investing up to 100% of their assets in cash or
cash equivalents for defense against potential market decline. Such cash
equivalents will be the same type of instruments invested in by the Money
Market Fund.
All the Funds may use the following:
Derivatives In order to manage its exposure to changing interest rates,
securities prices and currency exchange rates, or to increase its investment
return, a Fund may engage in hedging and other strategies using derivatives. A
derivative is a financial instrument whose value depends on (or "derives" from)
the value of an underlying asset, such as a security, interest rate, currency
rate or index. Derivatives which may be used in the Funds include forward
contracts, swaps, structured notes, collateralized mortgage obligations
("CMOs"), futures and options (see below). The risks involved in using
derivatives include the risk that the derivative may experience greater price
swings than other securities and may be less liquid than other securities.
Leveraged derivatives involve borrowing. The Funds may use derivatives as a
hedge against foreign currency, equity market or interest rate risk, or to gain
additional exposure to certain markets for investment purposes, within the
limitations set forth below. In addition, they may be used to enhance a Fund's
yield. For purposes other than hedging, a Fund will invest no more than 5% of
its assets in derivatives which at the time of purchase are considered by
management to involve high risk to the Fund, such as inverse floaters, interest
only ("IO") and principal only ("PO") debt instruments. A Fund (except the
Money Market Fund) may invest up to 30% of its assets in lower risk derivatives
for hedging purposes.
Borrowing A Fund may borrow up to 5% of its total assets from a bank for
temporary or emergency purposes. The Funds do not intend to borrow for other
purposes, except that they may invest in leveraged derivatives which have
certain risks as outlined above.
Repurchase Agreements Under a repurchase agreement, a Fund may acquire a debt
instrument for a relatively short period subject to an obligation by the seller
to repurchase and by the Fund to resell the instrument at a fixed price and
time.
The Funds may enter into repurchase agreements with domestic banks and
broker-dealers. Such agreements, although fully collateral-
22 Aetna Mutual Funds Prospectus
<PAGE>
ized, involve the risk that the seller of the securities may fail to
repurchase them. In that event, a Fund may incur costs in liquidating the
collateral or a loss if the collateral declines in value. If the default on the
part of the seller is due to insolvency and the seller initiates bankruptcy
proceedings, the ability of a Fund to liquidate the collateral may be delayed or
limited.
The Company's Board of Directors has established credit standards for issuers
of repurchase agreements entered into by a Fund.
Asset-Backed Securities The Funds may purchase securities collateralized by a
specified pool of assets, including, but not limited to, automobile loans,
computer leases, boat loans, home equity loans, mobile home loans, recreational
vehicles or credit card receivables. These securities are subject to prepayment
risk. In periods of declining interest rates, reinvestment would thus be made
at lower and less attractive rates.
Bank Obligations The Funds may invest in obligations issued by domestic banks
or foreign banks (including bankers' acceptances, time deposits and
certificates of deposit) provided the issuing bank has a minimum of $5 billion
in assets and a primary capital ratio of at least 4.25%.
Illiquid and Restricted Securities A Fund may invest up to 15% of its total
assets in illiquid securities (10% in the case of the Money Market Fund).
Illiquid securities are securities that are not readily marketable or cannot be
disposed of promptly within seven days in the ordinary course of business
without taking a materially reduced price. In addition, a Fund may invest in
securities that are subject to legal or contractual restrictions as to resale,
including securities purchased under Rule 144A and Section 4(2) of the
Securities Act of 1933. The Board of Directors has established a policy to
determine the liquidity of such securities.
All Funds except the Tax-Free Fund
may also use the following:
Foreign Securities The purchase of foreign securities may involve certain
additional risks. Such risks include: currency fluctuations and related
currency conversion costs; less liquidity; price or income volatility; less
government supervision and regulation of foreign stock exchanges, brokers and
listed companies; possible difficulty in obtaining and enforcing judgments
against foreign entities; adverse foreign political and economic developments;
different accounting procedures and auditing standards; the possible imposition
of withholding taxes on interest income payable on securities; the possible
seizure or nationalization of foreign assets; the possible establishment of
exchange con-
Aetna Mutual Funds Prospectus 23
<PAGE>
trols or other foreign laws or restrictions which might adversely affect the
payment and transferability of principal, interest and dividends on securities;
higher transaction costs; possible settlement delays; and less publicly
available information about foreign issuers.
All Funds except the Money Market Fund
may also use the following:
Futures Contracts A Fund may enter into futures contracts or options on futures
to manage the risk of changes in interest rates, equity prices, currency
exchange rates or in anticipation of future purchases or sales of securities.
Certain risks are involved in futures contracts, including but not limited to:
no assurance that futures contracts transactions can be effected at favorable
prices; possible reduction in a Fund's total return and yield; possible
reduction in value of the futures instrument; the inability of a Fund to limit
losses by closing its position due to lack of a liquid secondary market or due
to daily limits of price fluctuation; imperfect correlation between the value
of the contracts and the related securities; and potential losses in excess of
the amount invested in the futures contracts themselves.
The use of futures involves a high degree of leverage because of the low
margin requirements. As a result, small price movements in futures contracts
may result in immediate and potentially unlimited losses or gains to a Fund.
The amount of gains or losses on investments in futures contracts depends on
the portfolio manager's ability to predict correctly the direction of stock
prices, interest rates and other economic factors.
Options Options are used to minimize principal fluctuation or to generate
additional premium income but they do involve risks. Writing call options, for
example, involves the risk of not being able to effect closing transactions at
favorable prices or to participate in the appreciation of the underlying
securities. Purchasing put options involves the risk of losing the entire
purchase price of the option.
All Funds except the Money Market Fund,
Government Fund, International Growth Fund,
and Asian Growth Fund may also use the following:
High-Yield Securities A Fund may invest in high risk high-yield securities, of
ten called junk bonds. These securities are rated BB/Ba or below, or, if
unrated, considered by the Investment Adviser to be of comparable quality. The
Funds will not invest in high-yield securities rated below B (securities with
the capacity to meet interest and princi-
24 Aetna Mutual Funds Prospectus
<PAGE>
pal payments but with greater vulnerability to default). These securities tend
to offer higher yields than investment-grade bonds because of the additional
risks associated with them. These risks include: a lack of liquidity; an
unpredictable secondary market; a greater likelihood of default; increased
sensitivity to difficult economic and corporate developments; call provisions
which may adversely affect investment returns; and loss of the entire principal
and interest.
Although junk bonds are high risk investments, the Investment Adviser may
purchase these securities if they are thought to offer good value. This may
happen if, for example, the rating agencies have, in the Investment Adviser's
opinion, misclassified the bonds or overlooked the potential for the issuer's
enhanced creditworthiness.
The Government Fund, Bond Fund,
Tax-Free Fund and the Aetna Fund
may also use the following:
Mortgage-Backed Securities A Fund may invest in mortgage-backed and other
pass-through securities. Payments of interest and principal on these securities
may be guaranteed by an agency or instrumentality of the U.S. Government such
as the GNMA, the FHLMC and the FNMA. These securities represent part ownership
of a pool of mortgage loans where principal is scheduled to be paid back by the
borrower over the length of the loan rather than returned in a lump sum at
maturity. A Fund may also invest in private mortgage pass-through securities
backed by pools of conventional fixed-rate or adjustable-rate mortgage loans.
In addition, a Fund may invest in CMOs and securities issued by real estate
mortgage investment conduits ("REMICs"). Mortgage-backed securities are also
subject to the same prepayment risk as asset-backed securities.
The Tax-Free Fund may also use the following:
Municipal Securities Municipal securities are debt obligations issued by state
and local governments or any of their political subdivisions, agencies and
instrumentalities. Municipal securities are both municipal bonds (those
securities with maturities of five years or more) and municipal notes
(securities with maturities of less than five years). Interest on these
securities is exempt from federal income taxes and, in some instances, from
state or local income taxes. Municipal securities are issued to obtain funds
for a variety of reasons: to construct public facilities, to refund outstanding
debt obligations, and to pay various operating expenses. They may also be
issued to finance certain privately operated activities, such as airports,
housing, and water, gas and sewage works.
Aetna Mutual Funds Prospectus 25
<PAGE>
Municipal securities have many of the same risks as other debt securities,
with the additional risk that there may be less information about the financial
condition of an issuer of municipal securities than would be available for
corporations whose securities are publicly traded.
Municipal lease obligations may take the form of a lease or an installment
purchase contract issued by a state or local government authority to obtain
funds to acquire a wide variety of equipment and facilities. Some municipal
lease securities may be deemed to be "illiquid."
Although the Tax-Free Fund may invest in municipal securities which it
believes are exempt from federal income tax at the time of purchase, it cannot
guarantee the tax exempt status of the income earned.
Alternative Minimum Tax The Tax-Free Fund may invest in certain municipal bonds
the interest from which is a tax preference item for purposes of the federal
alternative minimum tax. If you are subject to the federal alternative minimum
tax, a portion of your income distributions that are exempt from the regular
federal income tax may not be exempt from the alternative minimum tax. You
should discuss your tax situation with your tax advisor.
The Aetna Fund, Growth and Income Fund,
Growth Fund and Small Company Growth Fund
may also use the following:
Small Capitalization Companies These companies may be in an early developmental
stage or older companies entering a new stage of growth due to management
changes, new technology, products or markets. They may also be undervalued due
to poor economic conditions, market decline or actual or anticipated
unfavorable developments affecting the issuer of the security or its industry.
Securities of small capitalization companies tend to offer greater potential
for growth than securities of larger, more established issuers but there are
additional risks associated with them. These risks include: limited
marketability; more abrupt or erratic market movements than securities of
larger capitalization companies; and less publicly available information about
the issuer. In addition, these companies may be dependent on relatively few
products or services, have limited financial resources and lack of management
depth, and may have less of a track record or historical pattern of
performance.
Investment Restrictions
A Fund will not concentrate its investments in any one industry except that a
Fund may invest up to 25% of its total assets in securities issued
26 Aetna Mutual Funds Prospectus
<PAGE>
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 by the U.S. Government, its agencies and
instrumentalities and in the case of the Money Market Fund, to securities
invested in, or repurchase agreements for, U.S. Government securities, and
certificates of deposit, bankers' acceptances, or securities of banks and bank
holding companies. Also, a Fund will not 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, its agencies or instrumentalities) or
purchase more than 10% of the outstanding voting securities of any one issuer.
This restriction applies only to 75% of a Fund's total assets. See the SAI for
additional restrictions.
Shareholder Services
The Company offers several services to its Fund shareholders. These may be
chosen from the Application.
These services may not be available through employer-sponsored retirement
plans. For information on services that are available under employer-sponsored
retirement plans, such as 401(k) plans, please refer to your enrollment
material. The specific provisions of your plan will govern the investment
options and services available to you.
Shareholder Inquiries If you have any questions about the Funds or the
shareholder services described below, please call your representative or
1-800-367-7732.
How to Purchase Shares Adviser Class shares may be purchased directly from the
Company, through a registered representative of a broker-dealer affiliated with
the Company, through a registered representative of an unaffiliated
broker-dealer, or through an employer-sponsored retirement plan (if you are
purchasing through such a plan, please refer to your enrollment materials).
How to Open an Account To open an account, please complete and submit an
Application with the amount to be invested. You may open an account with a
minimum investment of $1,000 or $500 for IRAs. Minimum investments may be
waived if an investment is made through exchange of the entire amount invested
in another Fund. Minimums may also be waived for certain circumstances such as
for per-
How to
Purchase
Shares
Aetna Mutual Funds Prospectus 27
<PAGE>
sons investing through certain benefit plans, insurance settlement options or
by systematic investments. (Please refer to "Other Features-Systematic
Investment.")
Crediting of Shares If Firstar Trust Company (the transfer agent) receives a
completed and signed Application, accompanied by a check in payment for the
shares, at its Milwaukee offices prior to 4:00 p.m. Eastern time on any day
that the New York Stock Exchange is open for business (Business Day), the
Adviser Class shares will be purchased at the net asset value determined as of
4:15 p.m. on that date. Orders received after 4:00 p.m. will be processed at
the net asset value determined on the following Business Day. For investors
purchasing shares in connection with retirement plans offered by certain
institutions (Institutions) under Section 401 of the Internal Revenue Code,
shares will be purchased at the next price calculated on a day the NYSE is open
provided that the Institution receives the investor's request before the time
specified by such Institution. Investors participating in such a plan should
refer to their enrollment materials for a discussion of any specific
instructions on the timing or restrictions on the purchase of shares. Please
refer to "Net Asset Value" for information on how the Funds are valued.
No initial sales charge is imposed at the time of purchase. A CDSC is imposed,
however, on certain redemptions of Adviser Class shares. See "Fees and
Charges-Contingent Deferred Sales Charge" which describes the CDSC in greater
detail.
Once you have opened an account in a Fund, additional investments may be made
by mail ($100 minimum), wire transfer ($500 minimum) or exchange from the same
class of another Fund in the Aetna Series Fund, Inc.
All checks must be drawn on a bank located within the United States and
payable in U.S. dollars.
Purchase by Mail To purchase shares by mail, please complete and sign the
Application, make a check payable to the Aetna Series Fund, Inc. and return
both to your agent or representative.
You can make additional investments to your accounts by using the investment
stubs from your confirmation statements or by letter. Your letter should
indicate your name, account numbers, the Adviser Class shares of which Funds
you wish to invest in, and the amount to be invested. Letters should be mailed
to the transfer agent as follows:
Aetna Series Fund, Inc.
c/o Mutual Fund Services, 3rd Floor,
P.O. Box 701,
Milwaukee, WI 53201-0701.
You can make
a purchase
by mail
28 Aetna Mutual Funds Prospectus
<PAGE>
When opening an account, your check should be made payable to Aetna Series
Fund, Inc. or Firstar Trust Company. Cash, credit cards and third party checks
cannot be used to open an account. Firstar will accept checks for subsequent
purchases which are made payable to the account owner(s).
Purchase by Wire If you have an account in a Fund you may purchase additional
Adviser Class shares of that Fund by wire. For federal funds wire instructions,
please call 1-800-367-7732. Federal funds wire purchase orders will be accepted
only when the Fund and custodian bank are open for business.
Purchase by Electronic Funds Transfer Once an account has been established in
any of the Funds, you may wish to make additional purchases of Adviser Class
shares by using Electronic Funds Transfer ("EFT") facilities under the
Systematic Investment feature. This will allow you to transfer money between a
bank account and a specific Fund. The appropriate election must be made on the
Application to authorize this option.
Purchase by Exchange You may open an account or purchase additional shares by
making an exchange between Adviser Class shares of Aetna Series Fund, Inc.
without charge. See "Other Features" for automatic exchange privileges. An
exchange may be made by submitting a letter requesting the exchange and
specifying the name and account number of your current Fund account, the name
of the Fund you wish to exchange into, the amount to be exchanged, and the
signatures of all shareholders. Send your request to the transfer agent as
follows:
Aetna Series Fund, Inc. c/o Mutual Fund Services, 3rd Floor P.O. Box 701
Milwaukee, WI 53201-0701
You may exchange your Adviser Class shares by calling 1-800-367-7732. Please
provide the Fund names, account number, your Social Security number or taxpayer
identification number, account address and the amount to be exchanged. Requests
received prior to 4:00 p.m. Eastern time will be processed that business day.
You should carefully consider the following before making an
exchange:
(bullet) Each exchange may result in a gain or loss and is treated as a sale and
as a purchase of shares for tax purposes.
(bullet) An exchange which represents an initial investment in a Fund must meet
the minimum investment requirements.
You can
purchase by
wire, electronic
funds transfer
or exchange
Aetna Mutual Funds Prospectus 29
<PAGE>
(bullet) The shares received in an exchange must be identically registered. A
letter with signature guarantees must accompany any exchange request to
transfer shares into a Fund account that is not registered identically
to the transferring Fund account.
(bullet) Following an investment in a Fund, there is a required eight-day
holding period before those shares can be exchanged.
There is currently no limit on the number of exchanges. However, each Fund
reserves the right to temporarily or permanently terminate the exchange
privilege for any person who makes more than five exchanges out of a Fund per
calendar year. In addition, each Fund reserves the right to refuse exchange
purchases by any person or group if, in the Investment Adviser's judgment, that
Fund would be unable to invest effectively in accordance with its investment
objective as a result of such exchange. Each Fund also reserves the right to
revise the exchange privilege at any time.
You automatically receive telephone exchange privileges when you establish
your account. If you do not want telephone exchange privileges, write to the
transfer agent at the above address or call 1-800-367-7732. The Funds will
employ reasonable procedures to confirm that instructions received are genuine.
If the Funds do not follow those procedures, they may be liable for any losses
due to unauthorized or fraudulent instructions. For your protection, all
telephone exchange transactions will be recorded, and you will be asked for
certain identifying information.
Distribution Options When completing an Application, you must select one of the
following options:
(bullet) Full Reinvestment - Both dividends and capital gains distributions from
a Fund will be reinvested in additional Adviser Class shares of that
Fund. This option will be selected automatically unless one of the
other options is specified. (Please refer to "Fund Distributions".)
(bullet) Or . . . Capital Gains Reinvestment - Capital gains distributions from
a Fund will be reinvested in additional Adviser Class shares of that
Fund and all net income dividends will be distributed in cash.
(bullet) Or . . . All Cash - Dividends and capital gains distributions will be
paid in cash.
If a cash distribution option is selected you can elect to have distributions
automatically invested in Adviser Class shares of another Fund of Aetna Series
Fund, Inc.
Your distribution
option can be
changed at any
time by calling
1-800-367-7732
30 Aetna Mutual Funds Prospectus
<PAGE>
How to Redeem Shares To redeem all or a portion of the Adviser Class shares in
your account, a redemption request should be submitted as described below.
Shares will be redeemed at the net asset value next determined after receipt of
the redemption request by the transfer agent. Redemptions received by 4:00 p.m.
Eastern time will be processed at the net asset value determined as of 4:15
p.m. on that date if all required documentation is received by the transfer
agent by 4:00 p.m. Redemption requests received after 4:00 p.m. will be
processed at the net asset value determined on the following business day.
Redemptions may be subject to a contingent deferred sales charge. See Fees and
Charges for more information.
Redeem by Mail Shares of any Fund may be redeemed by sending a letter of
instruction to the transfer agent identifying the Fund, the number of shares or
dollar amount to be redeemed, your name and the Fund account number. The letter
of instruction must be signed by all person(s) required to sign for the Fund
account, exactly as it is registered, and accompanied by a signature
guarantee(s). Certain nonindividual shareholders may also be required to
furnish copies of a corporate resolution, trust document or other supporting
documents.
Once shares are redeemed, the relevant Fund will normally send the proceeds of
such redemption within one or two business days. However, if making immediate
payment could adversely affect a Fund, the Fund may defer distribution for up
to seven days or the maximum period allowed by law, if shorter. Also, a Fund
will hold payment of redemption proceeds until a purchase check or systematic
investment clears, which may take up to 12 calendar days. The Fund(s) may
suspend redemptions or postpone payments when the New York Stock Exchange is
closed or when trading is restricted for any reason other than its customary
weekend or holiday closings, or under any emergency circumstances as determined
by the Commission.
Redeem by Wire Redemption proceeds will be transferred by wire to your
designated bank account if federal funds wire instructions are provided with
your signature guaranteed letter of redemption. A $7.50 fee will be charged for
this service. A minimum redemption of $1,000 is required for wire transfers.
Signature Guarantee The Funds will waive the signature guarantee requirement
for redemption requests for amounts of $10,000 or less. However, if you wish to
have your redemption proceeds transferred by wire to your designated bank
account, paid to someone other than the shareholder of record, or sent
somewhere other than the shareholder address of record, you must provide a
signature guarantee with your written redemption instructions regardless of the
amount of redemption.
For help with
redemptions, call
your agent
or representative
or 1-800-367-7732
Aetna Mutual Funds Prospectus 31
<PAGE>
The Funds reserve the right to amend or discontinue this waiver of signature
guarantee policy at any time and establish other criteria for verifying
redemption request authenticity.
Any one of the following institutions may provide a signature guarantee: a
national or state bank (or savings bank in New York or Massachusetts only); a
trust company; a federal savings and loan association; or a member firm of the
New York, American, Boston, Midwest, or Pacific Stock Exchange. Please note
that signature guarantees are not provided by notary publics.
Minimum Account Balance To keep your account open, you must maintain a minimum
balance of $500 in each Fund account. If this minimum balance is not maintained
due to redemptions, the Fund reserves the right to redeem all of your remaining
shares in that account and mail the proceeds to you at the address of record.
Shares will be redeemed at net asset value on the day the account is closed.
The Fund will give you 60 days notice that such redemption will occur unless
you make an additional investment to increase the account balance to the $500
minimum.
Tax-Deferred Retirement Plans Aetna Series Fund can be used for investment by a
variety of tax-deferred plans. These plans let you save for retirement and can
defer taxes on your investment income. Some of these plans are:
(bullet) IRAs, available to individuals who work and their spouses.
(bullet) 401(k) Programs, available to corporations of all sizes to benefit
their employees.
Shareholder Information The transfer agent will maintain shareholder accounts.
A confirmation statement is sent to you and your agent or representative after
every transaction that affects your share balance or account registration. A
Form 1099 will also be sent each year by January 31. You will also receive an
annual and semiannual report of the Funds. The transfer agent may charge you a
fee for special reports such as an historical transcript of your account.
Consolidated Statements, reflecting current account values and year-to-date
transactions, will be sent each quarter. All accounts identified by the same
social security number and address will be consolidated. For example, you could
receive a Consolidated Statement showing your individual and IRA accounts.
Annual and semiannual reports will also be consolidated on this basis. With the
prior permission of the other shareholders involved, you have the option of
requesting that accounts controlled by those other shareholders be shown on one
Consolidated Statement. For example, information on your individual account,
your IRA, your spouse's individual account and your spouse's IRA may be shown
on the Consolidated Statement.
Information you
will receive
32 Aetna Mutual Funds Prospectus
<PAGE>
Other Features
Systematic Investment The Systematic Investment feature, using the EFT
capability, allows you to make automatic monthly investments in any of the
Funds. You may select, on the Application, the amount of money to be moved and
the Fund to be invested in. There is no minimum initial cash investment
required to open your account. However, the minimum monthly Systematic
Investment is $50 per Fund account. Your application must be received at least
15 business days prior to the first EFT transaction. The Systematic Investment
feature and EFT capability will be terminated upon total redemption of your
account. Also, a Fund will hold payment of redemption proceeds until a
Systematic Investment has cleared, which may take up to 12 calendar days.
Automatic Cash Withdrawal Plan The Automatic Cash Withdrawal Plan provides a
convenient way for you to receive a systematic distribution while maintaining
an investment in the Funds. The Automatic Cash Withdrawal Plan permits you to
have payments of $100 or more automatically transferred from your account(s) in
the Fund(s) to your designated bank account on a monthly basis. In order to
start this plan, you must have a minimum balance of $10,000 in any Fund account
utilizing this feature. Your automatic cash withdrawals will be processed on a
regular basis beginning on or about the 1st day of the month. There may be tax
consequences associated with these transactions. Please consult your tax
adviser.
Checkwriting Service Checkwriting is available with the Money Market Fund and
any applicable CDSC will be charged to your account. Checks must be for a
minimum of $250. The checkwriting service may not be used for a complete
redemption of your account. If the amount of the check including any applicable
CDSC is greater than the value of your account, the check will be returned
unpaid. In addition, checks written against shares purchased by check or
Systematic Investment in the past 12 calendar days will be returned unpaid due
to uncollected funds. The option for this service is included on the
Application. All notices with respect to checks must be given to the transfer
agent. The checkwriting service is not available for IRAs or other retirement
accounts.
TDD Service Firstar Trust Company, the transfer agent, offers
Telecommunication Device for the Deaf (TDD) services for hearing impaired
shareholders. The dedicated number for this service is 1-800-684-3416 and
appears on shareholder account statements.
A convenient way
to make regular
investments
For more informa-
tion, call your
agent or represen-
tative or 1-800-367-7732.
Be sure to
sign up for
checkwriting
services
Aetna Mutual Funds Prospectus 33
<PAGE>
Changes to Service The Funds reserve the right to amend the shareholder
services or to change the terms or conditions.
Cross-Fund Investing
(bullet) Dividend Investing - You may elect to have dividend and/or capital
gains distributions automatically invested in one other Adviser Class
Fund account.
(bullet) Systematic Exchange - You may establish an automatic exchange of
Adviser Class shares from one Fund account to another. The exchange
will occur on or about the 15th day of each month and must be for a
minimum of $50 per month. As this transaction is treated as an
exchange, the policies related to the exchange privilege apply. Please
read the "Shareholder Services-Purchase by Exchange" section carefully.
There may be tax consequences associated with these exchanges. Please
consult your tax advisor.
Cross-Fund Investing may only be made in a Fund account that has been
previously established with the Fund's minimum investment. To request either or
both of these features, please call your agent or representative, or call
1-800-367-7732.
Fees and Charges
Shareholder Services Fee Under a Shareholder Services Plan approved by the
Board of Directors, ALIAC is paid a service fee at an annual rate of 0.25%
(0.10% for the Money Market Fund) of the daily net assets of the Adviser Class
shares of each Fund. This fee is used as compensation for expenses incurred in
servicing shareholder accounts.
12b-1 Distribution Fee The Board of Directors and the Adviser Class
shareholders have approved a Distribution Plan under Rule 12b-1 of the 1940
Act. Under this plan ALIAC is paid a 12b-1 distribution fee at an annual rate
of 0.50% of the average daily net assets of the Adviser Class shares of each
Fund except the Money Market Fund.
The 12b-1 distribution fee may be used to cover expenses incurred in promoting
the sale of Adviser Class shares, including (i) costs of printing and
distributing each Funds' prospectus, SAI and sales literature to prospective
investors; (ii) payments to registered representatives and other persons who
provide support services in connection with the distribution of shares; (iii)
overhead and other ALIAC distribution related expenses; and (iv) accruals for
interest on the amount of the foregoing expenses that exceed 12b-1 distribution
fees and the CDSC received by ALIAC.
34 Aetna Mutual Funds Prospectus
<PAGE>
Contingent Deferred Sales Charge You may buy Adviser Class shares of any Fund
without an initial sales charge. However, ALIAC will impose a contingent
deferred sales charge (CDSC) on certain Fund share redemptions.
There is no CDSC on redemptions of Adviser Class shares purchased through
reinvestment of dividends or capital gains distributions or shares purchased
more than four years prior to the redemption. Redemptions of Adviser Class
shares within four years of purchase are subject to a CDSC. The charge is
assessed on an amount equal to the lesser of the current market value or the
original cost of the shares being redeemed. The result is there is no sales
charge on increases in the net asset value of shares above the initial purchase
price. In addition, there is no CDSC on Money Market Fund redemptions unless
those shares were purchased through an exchange from another Fund within four
years prior to the redemption.
The CDSC is calculated by multiplying the redemption proceeds by the
percentage shown below based on the time invested:
Redemption During CDSC
- ----------------------- -----
1st year since purchase 1.00%
2nd year since purchase .75%
3rd year since purchase .50%
4th year since purchase .25%
5th year and thereafter None
When you request a redemption of Adviser Class shares, to determine whether
the CDSC is applicable, the Company will assume that you are redeeming shares
not subject to the CDSC first. In determining the number of years the shares
have been held, each Fund will aggregate all purchases of Adviser Class shares
made during a month and consider them made on the first day of the month.
For example, assume that you have made purchase payments for Adviser Class
shares of a Fund of $2,000 annually for 2 years (total $4,000) and that the
value of your investment, including appreciation and reinvested distributions,
has grown to $5,200 in the third year. Since there is no CDSC on appreciation
or reinvested dividends, you could redeem $1,200 without incurring a charge.
For a redemption of $2,000, the first $1,200 would not be subject to a CDSC,
but the remaining $800 would be subject to the CDSC and would be assumed to
have come from your oldest purchase payment. Thus, a 0.50% CDSC would be
imposed (for redemptions of shares in the third year since purchase), for a
total charge of $4.00.
Because the CDSC is assessed on a fund-by-fund basis, shareholders who
contemplate a redemption and have invested in multiple Funds
How we calculate
the deferred sales
charge
Aetna Mutual Funds Prospectus 35
<PAGE>
should consider redeeming from the Fund that would produce the low-
est CDSC.
Waivers of CDSC The CDSC will be waived on (a) exchanges; (b) redemptions of
shares following the death or disability of the shareholder; (c) redemptions of
shares in connection with distributions and withdrawals from retirement plans
or IRAs; (d) redemptions of shares purchased by active or retired employees of
the Underwriter or affiliated companies; (e) redemptions by shareholders with a
current account balance of $1 million or more in the account from which they
wish to redeem; and (f) involuntary redemptions.
Management of the Funds
Directors The business affairs of each Fund are managed under the direction of
the Board of Directors (Directors). The Directors set broad policies for the
Company and each Fund. Information about the Directors is found in the SAI.
Investment Adviser ALIAC, the Investment Adviser for each Fund, is a
Connecticut corporation with its principal offices at 151 Farmington Avenue,
Hartford, Connecticut 06156. The Investment Adviser is registered with the
Commission as an investment adviser and in addition to managing the Funds,
provides investment advisory services to other investment companies and for its
general account, all of which together hold over $6 billion in assets. The
Investment Adviser is a wholly owned subsidiary of Aetna Life and Casualty
Company which, with affiliated companies, comprises one of the world's leading
providers of insurance and financial services.
Under an investment advisory agreement, the Investment Adviser is, subject to
the supervision of the Directors, responsible for managing the assets of each
Fund in accordance with its investment objectives and policies.
The Investment Adviser furnishes all necessary facilities and pays the
salaries and other related costs of personnel engaged in providing investment
advice to the Company. It also pays salary, other fees and expenses for
Directors and officers of the Company who are employees or affiliated persons
of the Investment Adviser.
Your Investment
Adviser
36 Aetna Mutual Funds Prospectus
<PAGE>
The Investment Adviser receives a monthly fee from each Fund at an annual rate
based on average daily net assets of each Fund as follows:
Fee Assets
- ---------------------------------------------------
Money Market Fund 0.400% On first $500 million
0.350% On next $500 million
0.340% On next $1 billion
0.330% On next $1 billion
0.300% Over $3 billion
- ---------------------------------------------------
Government Fund 0.500% On first $250 million
0.475% On next $250 million
0.450% On next $250 million
0.425% On next $1.25 billion
0.400% Over $2 billion
- ---------------------------------------------------
Bond Fund 0.500% On first $250 million
0.475% On next $250 million
0.450% On next $250 million
0.425% On next $1.25 billion
0.400% Over $2 billion
- ---------------------------------------------------
Tax-Free Fund 0.500% On first $250 million
0.475% On next $250 million
0.450% On next $250 million
0.425% On next $1.25 billion
0.400% Over $2 billion
- ---------------------------------------------------
Aetna Fund 0.800% On first $500 million
0.750% On next $500 million
0.700% On next $1 billion
0.650% Over $2 billion
- ---------------------------------------------------
Growth and Income Fund 0.700% On first $250 million
0.650% On next $250 million
0.625% On next $250 million
0.600% On next $1.25 billion
0.550% Over $2 billion
- ---------------------------------------------------
Growth Fund 0.700% On first $250 million
0.650% On next $250 million
0.625% On next $250 million
0.600% On next $1.25 billion
0.550% Over $2 billion
Advisory
Fees
Aetna Mutual Funds Prospectus 37
<PAGE>
Fee Assets
- ------------------------------------------------------
Small Company Growth Fund 0.850% On first $250 million
0.800% On next $250 million
0.775% On next $250 million
0.750% On next $1.25 billion
0.725% Over $2 billion
- ------------------------------------------------------
International Growth Fund 0.850% On first $250 million
0.800% On next $250 million
0.775% On next $250 million
0.750% On next $1.25 billion
0.700% Over $2 billion
- ------------------------------------------------------
Asian Growth 1.000% On first $250 million
0.875% On next $250 million
0.850% On next $250 million
0.825% On next $1.25 billion
0.800% Over $2 billion
The above investment advisory and administrative service fees, when taken
together, applicable to (before expense reimbursement) the Aetna Fund, Growth
and Income Fund, Growth Fund, Small Company Growth Fund, International Growth
Fund and Asian Growth Fund are higher than those charged by some other
investment advisers to other registered investment companies.
Sub-Advisers The Investment Adviser has engaged Aeltus as the sub-adviser to
the Tax-Free Fund, the Growth Fund and the Small Company Growth Fund, Aeltus
Far East as the sub-adviser to the Asian Growth Fund, and Dunedin as the
sub-adviser to the International Growth Fund. Aeltus is a Connecticut
corporation located at 151 Farmington Avenue, Hartford, Connecticut, 06156.
Aeltus is a wholly owned subsidiary of Aetna Life Insurance and Annuity Company
which is in turn owned by Aetna. Aeltus Far East has its principal place of
business at 2 Pacific Place, 88 Queensway, Hong Kong. Dunedin is headquartered
in Edinburgh, Scotland. Each sub-adviser is registered as an investment adviser
with the Commission.
Under Sub-advisory Agreements with the Investment Adviser, the sub-advisers
are subject to the supervision of the Investment Adviser and the Directors, and
are responsible for managing the assets of each respective Fund in accordance
with its investment objective and policies. The sub-advisers pay the salaries
and other related costs of personnel engaged in providing investment advice
including office space, facilities and equipment.
Sub-advisers to
Aetna Series Fund,
Inc.
38 Aetna Mutual Funds Prospectus
<PAGE>
The Investment Adviser has overall responsibility for monitoring the
investment program maintained by the sub-advisers for compliance with
applicable laws and regulations and the respective Fund's investment objective.
Administrator ALIAC acts as administrator for each Fund and performs certain
administrative and internal accounting services, including maintaining general
ledger accounts, regulatory compliance, preparation of financial information
for semiannual and annual reports, preparing registration statements,
calculating net asset values (except for the International Growth and Asian
Growth Funds), shareholder communications and supervision of the custodians and
transfer agent.
For these services, each Fund pays ALIAC a monthly fee at an annual rate based
on average daily net assets as follows: 0.25% on the first $250 million, 0.24%
on the next $250 million, 0.23% on the next $250 million, 0.22% on the next
$250 million, 0.20% on the next $1 billion and 0.18% on assets over $2.0
billion.
Principal Underwriter ALIAC is the principal underwriter for the Company. ALIAC
may contract with various broker-dealers, including one or more affiliates, for
distribution of Adviser Class shares. ALIAC may also sell shares of the Funds
directly. ALIAC is paid an annual service fee and an annual 12b-1 distribution
fee with respect to Adviser Class shares for all Funds (except the Money Market
Fund). The fees are authorized under a Shareholder Services Plan and a
Distribution Plan (Plans) adopted by the Board of Directors with respect to the
Adviser Class shares of each Fund. See "Fees and Charges" for more information.
Although it is anticipated that some promotional activities will be conducted
on a Company-wide basis, payments made by a Fund under the Distribution Plan
generally will be used to finance the distribution of shares of that Fund.
Expenses incurred in connection with Company-wide activities may be allocated
pro-rata among all Funds of the Company on the basis of their relative net
assets.
Payments under the Plans are not tied exclusively to the distribution and
shareholder service expenses actually incurred by ALIAC, and the payments may
exceed expenses actually incurred. The Company's Board of Directors evaluates
the appropriateness of the Plans and the payment terms on a continuing basis
and in doing so will consider all relevant factors, including expenses borne by
ALIAC and the amounts received under the Plans and the proceeds of the CDSC.
On a quarterly basis, the Company's Board of Directors reviews a report on
expenditures under the Plans and the purposes for which those expenditures were
made. The Directors conduct an additional,
Aetna Mutual Funds Prospectus 39
<PAGE>
more extensive review annually in determining whether the Plans will be
continued. By their terms, continuation of the Plans from year to year is
contingent on annual approval by a majority of the Company's Directors and by a
majority of the Directors who are not "interested persons" as defined in the
1940 Act, and who have no direct or indirect financial interest in the
operation of the Plans or related agreements (the "Plan Directors"). The
Distribution Plan may be terminated by the Plan Directors or a majority of the
outstanding shares of the Funds. The Shareholder Services Plan may be
terminated by the Directors.
Transfer Agent Firstar Trust Company acts as each Fund's transfer and
dividend-paying agent. Firstar is responsible for the issuance, transfer and
redemption of shares and the opening and maintenance of shareholder accounts.
Fund Expenses Each Fund bears the costs of its operations. Expenses directly
attributable to a Fund are charged to that Fund. Some expenses are allocated
proportionately among all the Funds in relation to the net assets of each Fund
and some expenses are allocated equally to each Fund.
Portfolio Management
The following individuals are primarily responsible for the day-to-day
management of the Funds, as indicated below. All of the following individuals
may also decide as a group what strategy may benefit all of the Funds.
Money Market Fund, Government Fund and Bond Fund Jeanne Wong-Boehm, Managing
Director, ALIAC. Ms. Wong-Boehm has been with ALIAC since 1982 and has over 10
years of investment experience.
Tax-Free Fund Neil Grabowski, Managing Director, Aeltus. Mr. Grabowski has been
with Aetna since 1982 and has over 12 years experience managing tax-exempt
securities.
Aetna Fund John Y. Kim, Chief Investment Officer, ALIAC. Mr. Kim joined ALIAC
in May 1994. Mr. Kim has over 10 years of investment management experience with
ALIAC, an affiliate of ALIAC, and Mitchell Hutchins Institutional Investors,
Inc.
Growth and Income Fund Martin J. Duffy, Portfolio Manager, ALIAC. Mr. Duffy has
been with ALIAC since 1972 and has over 20 years of investment experience.
Vince Fioramonti, who is responsible for Hong Kong transactions for this Fund,
has been with Aetna since 1994 and has over 7 years of international investment
experience.
40 Aetna Mutual Funds Prospectus
<PAGE>
Growth Fund Peter B. Canoni, Managing Director, Aeltus. Mr. Canoni has been
with Aetna since 1980 and has over 20 years of investment experience.
Small Company Growth Fund Thomas J. DiBella, Investment Officer, Aeltus. Before
joining Aeltus, Mr. DiBella was Investment Officer at Bethlehem Steel from 1989
to 1991. Mr. DiBella has over 10 years of investment experience.
International Growth Fund Douglas A. Thomson, Dunedin Fund Managers, Ltd.,
began managing the Fund May 1, 1994. Mr. Thomson has 9 years of investment
experience with Dunedin.
Asian Growth Fund Anna Tong, Managing Director, Aeltus Far East. Ms. Tong has
been with Aetna since 1985 and has over 10 years of Asian investment
experience.
Fund Distributions
(bullet) The Money Market Fund declares dividends daily and pays monthly.
(bullet) The Government Fund, the Bond Fund and the Tax-Free Fund declare and
pay dividends monthly.
(bullet) The Aetna Fund and the Growth and Income Fund declare and pay dividends
semiannually.
(bullet) The Growth Fund, Small Company Growth Fund, International Growth Fund
and Asian Growth Fund declare and pay dividends annually.
(bullet) All capital gains distributions, if any, are paid on an annual basis.
Income dividends are derived from investment income, including dividends,
interest, realized short-term capital gains, and certain foreign currency gains
received by a Fund. Capital gains distributions are derived from each Fund's
realized long-term capital gains. The per share dividends and distributions on
Adviser Class shares will be less than the per share dividends and
distributions of the Select Class as a result of the distribution fees and
service fees applicable to The Adviser Class.
Money Market Fund shares begin to accrue dividends the day after they are
purchased; a redemption will include dividends declared through the redemption
date.
Reinvestment of Income Dividends and Capital Gains Distributions Unless you
elect otherwise, as permitted in the Application, income dividends and capital
gains distributions with respect to a particular Fund
How to
receive
dividends
Aetna Mutual Funds Prospectus 41
<PAGE>
will be reinvested in additional Adviser Class shares of that Fund and will be
credited to your account at the next determined net asset value per share. Both
income dividends and capital gains distributions are paid by a Fund on a
per-share basis. As a result, at the time of such payment, the net asset value
per share of a Fund (except the Money Market Fund) will be reduced by the
amount of such payment.
If you wish to change the manner in which you receive income dividends and
capital gains distributions, your notification of such change must be received
by the transfer agent at least ten days before the next scheduled distribution.
Net Asset Value
The net asset value per share ("NAV") of each Fund is determined as of 4:15
p.m. Eastern time on each day that the NYSE is open for trading. Except for the
Money Market Fund, the NAV is computed by dividing the total value of a Fund's
securities, plus any cash or other assets (including dividends accrued but not
collected) less all liabilities (including accrued expenses), by the number of
shares outstanding. Portfolio securities are valued primarily on the basis of
market quotations. All other assets, including restricted securities and other
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 Directors.
The Money Market Fund's portfolio securities are valued by the amortized cost
method of valuation. The Money Market Fund's use of amortized cost is part of
its effort to maintain a constant net asset value of $1.00 per share.
Taxes
Introduction The tax information described below is only a summary of federal
income tax consequences and is based on tax laws and regulations in effect as
of the date of this Prospectus. Please refer to the SAI for a more detailed
discussion of federal income tax considerations. In addition to federal taxes,
you may be subject to state and local taxes and you should discuss your
individual tax situation with your tax advisor.
Shareholder Distributions Distributions of net long-term capital gains are
taxable to you as long-term capital gains regardless of the length of time you
have owned your shares. Distributions of net investment income and net
short-term capital gains are taxable to you as ordinary income. Depending on a
Fund's investments, part or all of ordinary income dividends could be treated
as: (1) "U.S. Government Interest
Pricing
your Fund
Form 1099-DIV
will be mailed
to you in January
42 Aetna Mutual Funds Prospectus
<PAGE>
Dividends" which are exempt from state and local taxes; (2) "Qualifying
Dividends" which for corporate shareholders would qualify for the 70%
dividends-received deduction; or (3) "Exempt Interest Dividends" which are
excluded from regular federal tax and possibly from state and local tax.
Dividends paid by the Government Fund may be U.S. Government Interest
Dividends. Substantially all dividends paid by the Growth and Income Fund, and,
to a lesser degree, the Aetna Fund, the Growth Fund and the Small Company
Growth Fund will be Qualifying Dividends. Currently, only the Tax-Free Fund
pays Exempt Interest Dividends, which would be included in determining the
taxability of social security benefits and a portion of which may be a
"tax-preference item" for purposes of the alternative minimum tax.
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 a Fund's assets to be invested in
various countries is not known. The International Growth and Asian Growth Funds
may elect to "pass through" foreign taxes paid in order to permit shareholders
to claim a credit or deduction, if more than 50% of the value of such Fund's
assets at the close of a taxable year consist of stock or securities of foreign
corporations.
A Fund's distributions are taxable in the year they are received, whether you
take them in cash or reinvest them in additional shares. However, distributions
declared in December and paid in January are taxable as if paid on December 31.
Each Fund will send a statement to shareholders by January 31 indicating the
tax status of distributions made during the previous year, and any foreign
taxes "passed-through" to shareholders.
Buying a Dividend If you buy shares of a Fund (other than the Money Market
Fund) just before the ex-dividend date, you will be taxed on the entire amount
of the dividend received.
Share Redemptions Any gain or loss realized when you redeem (sell) or exchange
shares of a Fund will be treated as a taxable long-term or short-term capital
gain or loss. Please see the SAI for information regarding any limitation on
deductibility of such losses.
Tax Withholding When you fill out your Application, you will be asked to
certify that your Social Security or taxpayer identification number is correct
and that you are not subject to 31% backup withholding by the Internal Revenue
Service ("IRS"). If you are subject to backup withholding, the IRS can require
a Fund to withhold 31% of your taxable dividends, capital gains distributions
and redemptions.
Aetna Mutual Funds Prospectus 43
<PAGE>
General Information
Articles of Incorporation The Company was incorporated under the laws of
Maryland on June 17, 1991. The Articles of Incorporation (Articles) provide for
the issuance of multiple series of shares each representing a portfolio of
investments with different investment objectives, policies and restrictions.
The Company currently offers 13 series or Funds. Ten of the Funds are described
in this Prospectus.
Share Classes Each Fund offers shares of common stock currently classified into
two classes, Select Class shares and Adviser Class shares. Each class of shares
has the same rights, privileges and preferences, except with respect to: (a)
the effect of the respective sales charge, if any, for each class; (b) the
distributions and/or service fees borne by each class; (c) the expenses
allocable exclusively to each class; (d) voting rights on matters exclusively
affecting a single class and (e) the exchange privilege of each class. The
Board of Directors does not anticipate that there will be any conflicts among
the interests of the holders of the different classes of shares of the Fund.
The Directors continue to consider whether any such conflicts exist and, if so,
take appropriate action.
The Company has obtained a ruling from the IRS with respect to the ten Funds
described in this Prospectus to the effect that differing distributions among
the classes of its shares will not result in the Fund's dividends or other
distributions being regarded as "preferential dividends" under the Code. The
Company is currently seeking a similar ruling for its three newest Funds. For
additional information, see the SAI.
Capital Stock The Articles currently authorize the issuance of 4.8 billion
shares of capital stock of the Company. All shares are nonassessable,
transferable and redeemable. There are no preemptive rights.
As of December 31, 1994, the following shares were owned by
Aetna companies:
ALIAC
-------------------
Adviser Select
--------- ---------
Money Market Fund 112,766
Government Fund 2,775,194
Bond Fund 2,685,214 264,524
Tax Free Fund 2,175,175 125,485
The Aetna Fund 2,473,594 306,564
Growth and Income Fund 469,715 67,107
Growth Fund 2,232,315
Small Company Growth Fund 2,472,661
44 Aetna Mutual Funds Prospectus
<PAGE>
ALIAC
----------------------
Adviser Select
----------- ----------
International Growth Fund 478,766 180,693
Asian Growth Fund 1,013,800
Aetna Ascent 20,000
Aetna Crossroads 20,000
Aetna Legacy 20,000
ALIC
----------------------
Adviser Select
----------- ----------
Money Market Fund 25,942,654 2,248,769
Asian Growth Fund 2,043,588
The Aetna Casualty and
Surety Company
----------------------
Adviser Select
----------- ----------
International Growth Fund 1,962,943 498,517
All shares were acquired for investment and can be disposed of only by
redemption. ALIAC and its affiliates may make additional investments into the
Funds.
Shareholder Meetings The Company is not required and does not intend to hold
annual shareholder meetings. The Articles provide for meetings of shareholders
to elect Directors at such times as may be determined by the Directors or as
required by the Investment Company Act of 1940. If requested by the holders of
at least 10% of a Fund's outstanding shares, the Company will hold a
shareholder meeting for the purpose of voting on the removal of one or more
Directors and will assist with communication concerning that shareholder
meeting.
Voting Rights Shareholders of each class are entitled to one vote for each full
share held and fractional votes for fractional shares of each class held on
matters submitted to the shareholders of the Company. Voting rights are not
cumulative. Generally, shares of the Company will be voted on a Company-wide
basis on all matters except matters affecting only the interest of one Fund or
one class of shares.
Payments to Dealers For sales of Funds' shares (other than Money Market Fund),
ALIAC may pay registered representatives a sales commission of up to 4% of the
amount invested for initial and subsequent sales. Registered representatives
receive payments of up to 0.50% for distribution-related services and for
services to shareholders (see "Fees and Charges"). From time to time, ALIAC may
also award merchandise or trips with an estimated value up to $1,000 to
registered
Aetna Mutual Funds Prospectus 45
<PAGE>
representatives that sell a certain amount of fund shares or establish a
certain number of new accounts. Incentive commissions and prizes are paid by
ALIAC so the price you pay for Adviser Class shares and the value of your
investment will be unaffected.
Performance Data
The Funds may compare their performance to other mutual funds with similar
investment objectives and to the industry as a whole, as quoted by ranking
services and publications of general interest. These may include the Standard &
Poor's 500 Stock Index ("S&P 500"), Shearson Lehman Aggregate Bond Index, Dow
Jones Industrial Average ("DJIA"), Lipper Analytical Services, Inc.,
IBC/Donoghue's Taxable MFA, the Morgan Stanley Capital International Europe,
Australia, Far East ("EAFE") Index and the Morgan Stanley Capital
International Far East Free ("FEF ex. Japan") Index.
Glossary of Investment Terms
This glossary describes some of the securities used by the Funds. Further in
formation is available in the SAI:
Banker's Acceptance A banker's acceptance is a time draft drawn on a bank and
is customarily used by corporations as a means of financing payment for traded
goods. When a draft is accepted by a bank, the bank guarantees to pay the face
value of the debt at maturity.
Certificates of Deposit For large deposits not withdrawable on demand, banks
issue certificates of deposit ("CDs") as evidence of ownership. CDs are usually
negotiable and traded among investors such as mutual funds and banks.
Commercial Paper Commercial paper is short-term debt instruments issued by
companies or banks with a maturity ranging from five to 270 days.
Eurodollars Eurodollars are U.S. dollars held in banks outside the United
States, mainly in Europe but also in other countries, and are commonly used for
the settlement of international transactions. There are many types of
Eurodollar securities including Eurodollar CDs and bonds; these securities are
not registered with the Commission. Certain Eurodollar deposits are not FDIC
insured and may be subject to future political and economic developments and
governmental restrictions.
High Risk High-Yield Securities Bonds of low quality security backing rated BB
or below by Standard & Poor's Corp. or Ba or below by
46 Aetna Mutual Funds Prospectus
<PAGE>
Moody's Investors Service, Inc., or other agencies or, if unrated, considered by
the Investment Adviser to be of comparable quality. These bonds are often
called "junk bonds" because of the greater possibility of default.
Municipal Securities Debt obligations issued by states, territories and
possessions of the United States, the District of Columbia and their political
subdivisions, agencies and instrumentalities, or multi-state agencies or
authorities. Such securities provide interest income that is exempt from
federal income taxes, and in some instances, state and local income taxes.
Pay-in-Kind Bonds Pay-in-kind bonds are securities that pay interest through
the issuance of additional bonds.
Repurchase Agreements A repurchase agreement or "repo" is an agreement between
a seller and buyer, usually of U.S. Government securities, to sell and
subsequently repurchase securities at a fixed price on a future date. The
primary attraction of repurchase agreements is the flexibility of maturities.
U.S. Government Derivatives A Fund may purchase separately traded principal and
interest components of certain U.S. Government securities ("STRIPS"). In
addition, a Fund may acquire custodial receipts that represent ownership in a
U.S. Government security's future interest or principal payments. These
securities are known by such exotic names as TIGRS and CATS and may be issued
at a discount to face value. They are generally more volatile than normal fixed
income securities because interest payments are accrued rather than paid out in
regular installments.
U.S. Government Securities Securities issued by the U.S. Government and its
agencies.
Direct Obligations of the U.S. Government are:
Treasury Bills - issued with short maturities (one year or less) and priced at
a discount to face value. The income for investors is the difference between
the purchase price and the face value.
Treasury Notes - intermediate-term securities with maturities of between one to
ten years. Income to investors is paid in semiannual interest payments.
Treasury Bonds - long-term securities with maturities from ten years to up to
thirty years. Income is paid to investors on a semiannual basis.
In addition, U.S. Government Agencies issue debt securities to finance
activities for the U.S. Government. These agencies include
Aetna Mutual Funds Prospectus 47
<PAGE>
among others the Federal Home Loan Bank, Federal National Mortgage Association
("FNMA" or "Fannie Mae"), Government National Mortgage Association ("GNMA" or
"Ginnie Mae"), Export-Import Bank and the Tennessee Valley Authority.
Not all agencies are backed by the full faith and credit of the United States;
for example the FNMA may borrow money from the U.S. Treasury only under certain
circumstances. There is no guarantee that the government will support these
types of securities and they therefore involve more risk than direct government
obligations.
Variable Rate Instruments A variable or floating rate instrument is one whose
terms provide for the adjustment of its interest rate on set dates and which
can reasonably be expected to have a market value close to par value.
Yankee Bonds A bond issued in the United States by foreign countries,
corporations and banks. Similarly, Yankee CDs are issued in the U.S. by
branches of foreign banks.
Zero Coupon Bonds Bonds issued at a deep discount to face value. These bonds
pay no interest but are redeemed at full face value. The price of zero coupon
bonds are more volatile than bonds which pay interest but are rated on the same
principles as all fixed-income investments.
The Funds also use some of the following securities to manage risk and
volatility:
Call Option The right to buy a security, currency or stock index at a stated
price, or strike price, within a fixed period. A call option will be exercised
if the spot price rises above the strike price; if not, the option expires
worthless.
Put Option The right to sell a security, currency or stock index at a stated
price, or strike price, within a fixed period. A put option will be exercised
if the spot price falls below the strike price; if not, the option expires
worthless.
Covered Call Options A call option backed by the securities underlying the
option. The owner of a security will normally sell covered call options to
collect premium income or to reduce price fluctuations of the security. A
covered call option limits the capital appreciation of the underlying security.
48 Aetna Mutual Funds Prospectus
<PAGE>
Convertible Stock Corporate securities, which may be either bonds or preferred
shares, that can be exchanged for shares at a fixed price.
Futures Contracts to buy securities, currencies or stock indexes in the future
at a price agreed in advance. A futures contract obliges the buyer to purchase
the security and the seller to sell it, unlike an option where the buyer can
choose whether or not to exercise the option.
Preferred Stock Shares which pay a fixed dividend, in contrast to common stock
whose dividends depend on the profits of the company.
Warrants A security, normally offered with bonds or preferred stock, that
entitles investors to buy shares at a prescribed price within a named period.
The time period is usually longer than that of a call option.
Description of Corporate Bond Ratings
Moody's Investors Service, Inc.
"Aaa" Rating Bonds rated Aaa are judged to be of the best quality and carry the
smallest degree of investment risk. Interest payments are protected by a large
or by an exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized are
most unlikely to impair the fundamentally strong position of such issues.
"Aa" Rating Bonds rated Aa are judged to be of high-quality by all standards.
Together with the Aaa group, they are generally known as high-grade bonds. They
are rated lower than the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make the
long-term risks appear somewhat greater than in Aaa securities.
"A" Rating Bonds rated A possess many favorable investment attributes and are
considered upper-medium-grade obligations. Factors relating to security of
principal and interest are considered adequate but elements may be present
which suggest possible impairment sometime in the future.
"Baa" Rating Bonds rated Baa are considered medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and have
speculative characteristics.
"Ba" Rating Bonds rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of interest
and principal payments may be very moderate and thereby
Aetna Mutual Funds Prospectus 49
<PAGE>
not well safeguarded during other good and bad times over the future.
Uncertainty of position characterizes this class of bond.
"B" Rating Bonds rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
The modifier 1 indicates that the bond ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its rating category.
Standard & Poor's Corporation
"AAA" Rating Bonds rated AAA have the highest rating assigned by Standard &
Poor's. Capacity to pay interest and repay principal is extremely strong.
"AA" Rating Bonds rated AA have a very strong capacity to pay interest and
repay principal and differ from the highest rated issues only in small degree.
"A" Rating Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.
"BBB" Rating Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
"BB" Rating Bonds rated BB have less near-term vulnerability to default than
other speculative issues. However, the bonds face major uncertainties or
exposure to adverse business, financial, or economic conditions which could
lead to inadequate capacity to meet timely interest and principal payments.
"B" Rating Bonds rated B have a greater vulnerability to default but currently
have the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will
likely impair capacity or willingness to pay interest and repay
principal.
The ratings from "AA" to "B" may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.
50 Aetna Mutual Funds Prospectus
<PAGE>
Aetna Series Fund, Inc.
151 Farmington Avenue
Hartford, CT 06156-8962
1-800-367-7732
Investment Adviser
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, CT 06156
Custodians
Mellon Bank N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Brown Brothers Harriman & Company
40 Water Street
Boston, MA 02109
Transfer Agent
Firstar Trust Company
P.O. Box 701
Milwaukee, WI 53201-0701
Independent Auditors
KPMG Peat Marwick LLP
CityPlace II
Hartford, CT 06103-4103
This Prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy, the securities of a Fund in any jurisdiction in which such sale,
offer to sell, or solicitation may not be lawfully made.
Aetna Mutual Funds Prospectus 51
<PAGE>
AETNA SERIES FUND, INC.
151 Farmington Avenue
Hartford, Connecticut 06156-8962
The Statement of Additional Information for the Aetna
Series Fund, Inc. dated March 31, 1995 is amended as
follows:
1. The Aetna Tax-Free Fund is no longer offered.
2. The table on page 19 including information about Directors and Officers
of the Fund is deleted and replaced with the following:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Position(s)
Name, Address and Age Held Principal Occupation During Past Five
with Registrant Years and Positions held with affiliated
persons or Principal Underwriters of the
Registrant
- -----------------------------------------------------------------------------------------
Shaun P. Mathews * Director and Senior Vice President and Director of
151 Farmington Avenue President ALIAC, March 1991 to Present; Director
Hartford, Connecticut and Chief Operations Officer, Aetna
Age 39 Investment Services, Inc., July 1993 to
Present; President, Aetna Investment
Services, Inc., March 1994 to Present;
Assistant Vice President, Pension
Operations, ALIAC, June 1989 to March
1991.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
James C. Hamilton * Vice President Vice President, Treasurer and Director
151 Farmington Avenue and Treasurer of ALIAC, October 1988 to Present.
Hartford, Connecticut
Age 53
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
John Y. Kim* Director and Senior Vice President and Director,
151 Farmington Avenue Vice President ALIAC Investments and Chief Investment
Hartford, Connecticut Officer, Aetna Life and Casualty
Age 34 Company, May 1994 to Present; Managing
Director, Mitchell Hutchins
Institutional Investors, New York, NY,
September 1993 to April 1994; Vice
President of Investor Relations and
Senior Portfolio Manager, Aetna Life and
Casualty Company, October 1991 to August
1993; Fixed Income Portfolio Manager,
ALIAC, November 1989 to October 1991.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Susan E. Bryant Secretary Counsel, Aetna Life and Casualty
151 Farmington Avenue Company, March 1993 to Present; General
Hartford, Connecticut Counsel and Corporate Secretary, First
Age 47 Investors Corporation, April 1991 to
March 1993; Administrator, Oklahoma
Department of Securities, March 1986 to
April 1991; President, North American
Securities Administrators Association,
1989 to 1990.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Morton Ehrlich Director Chairman and Chief Executive Officer,
1000 Venetian Way Integrated Management Corp. (an
Miami, Florida entrepreneurial company) and Universal
Age 60 Research Technologies, 1992 to Present;
Director and Chairman, Audit Committee,
National Bureau of Economic Research;
1985 to 1992; President, LIFECO, Travel
Services Corp., October 1988 to December
1991.
- -----------------------------------------------------------------------------------------
<PAGE>
- -----------------------------------------------------------------------------------------
Maria T. Fighetti Director Manager/Attorney, Health Services, New
325 Piermont Road York City Department of Mental Health,
Closter, New Jersey Mental Retardation and Alcohol Services,
Age 51 1973 to Present.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
David L. Grove Director Private Investor; Economic/Financial
5 The Knoll Consultant, December 1985 to Present.
Armonk, New York
Age 77
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Daniel P. Kearney* Director Executive Vice President of Aetna Life
151 Farmington Avenue and Casualty Company, 1993 to Present;
Hartford, Connecticut Group Executive, Aetna Life and Casualty
Age 56 Company, 1991 to 1993; Financial
Consultant, Daniel P. Kearney, Inc.,
1990 to 1991.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Sidney Koch Director Financial Adviser, self-employed,
455 East 86th Street January 1993 to Present; Senior Adviser,
New York, New York Daiwa Securities America, Inc., January
Age 60 1992 to January 1993; Executive Vice
President, Member of Executive
Committee, Daiwa Securities America,
Inc., January 1986 to January 1992.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Corine T. Norgaard Director, Chair Professor, Accounting and Dean of the
School of Management Audit Committee School of Management, Binghamton
Binghamton University and Contract University, Binghamton, NY, August 1993
Binghamton, New York Committee to Present; Professor, Accounting,
Age 57 University of Connecticut, Storrs,
Connecticut, September 1969 to June
1993; Director, The Advest Group
(holding company for brokerage firm).
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Richard G. Scheide Director Trust and Private Banking Consultant,
11 Lily Street David Ross Palmer Consultants, July 1991
Nantucket, Massachusetts to Present; Executive Vice President and
Age 66 Manager, Bank of New England, N.A., June
1976 to July 1991.
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
Eugene M. Trovato Vice President, Vice President Controller, (February
22 Fox Den Road Controller 1995 - Present), Assistant Vice
West Simsbury, Connecticut (chief President Planning, Reporting, and
Age 45 accounting Analysis (October 1992 - February 1995),
officer) Assistant Vice President of Financial
Reporting (July 1989 - October 1992),
Director of Financial Reporting in
Corporate Controllers (February 1989 -
July 1989), Aetna Life Insurance and
Annuity Company
- -----------------------------------------------------------------------------------------
</TABLE>
3. All references to Dunedin Fund Managers, Ltd. are deleted.
4. Yield quotations on pages 39 and 40 are replaced with the following:
The yield and effective yield for the Money Market Fund for the seven
days ended April 30, 1995 were 6.00% and 6.18%, respectively.
The yield for the Bond Fund for the 30-day period ended April 30, 1995
was 7.21% for the Select Class, and 6.45% for the Adviser Class.
5. The Total Return Quotations on page 41 are replaced with the following:
Annualized Total Return Quotations
Select Class
Assumptions:
- The 1 year figures are based on an initial $1,000 purchase made May 1,
1994 and redeemed on April 30, 1995.
- The From Inception figures are based on an initial $1,000 purchase made
January 1, 1992 (effective date of Funds) and redeemed on April 30, 1995.
1 Year From Inception
------ --------------
Money Market 5.13% 4.07%
Bond 6.16% 5.80%
The Aetna Fund 8.47% 6.61%
Growth and Income 10.81% 6.81%
International Growth (1.16)% 4.67%
Assumption:
- The 1 year figures are based on an initial $1,000 purchase made May 1,
1994 and redeemed on April 30, 1995.
- The From Inception figures are based on an initial $1,000 purchase made
January 1, 1994 (effective date of Funds) and redeemed on April 30, 1995.
1 Year From Inception
------ --------------
Government 6.71% 2.77%
Growth 13.29% 11.87%
Small Company Growth 10.44% 10.71%
Asian Growth (8.76)% (16.85)%
Adviser Class
Assumption:
- The 1 year figures are based on an initial $1,000 purchase made May 1,
1994 and redeemed on April 30, 1995.
- The From Inception figures are based on an initial $1,000 purchase made
April 15, 1994 (effective date of the Adviser Class shares) and redeemed
on April 30, 1995.
1 Year From Inception
------ --------------
Money Market 4.08% 4.33%
Government 4.75% 4.58%
Bond 4.33% 3.51%
The Aetna Fund 6.39% 6.25%
Growth and Income 9.26% 9.39%
Growth 11.34% 10.99%
Small Company Growth 8.45% 9.65%
International Growth (2.88)% (1.97)%
Asian Growth (9.98)% (9.32)%
All figures are based on actual investment performance. Performance figures for
the Adviser Class Shares reflect the deduction of the maximum contingent
deferred sales charge of 1%, declining by 0.25% each year after the date of
purchase to zero, assuming shares were redeemed at the end of the period.
The following are the unaudited interim financial statements of the Fund for the
six-month period ended April 30, 1995:
Statements of Assets and Liabilities
April 30, 1995 (Unaudited)See Notes to Financial Statements.Aetna Mutual
Funds Semi-Annual Report
<TABLE>
<CAPTION>
--------------------------------------- ------------------ -----------------
Aetna Series Fund, Inc. Money Market Fund Government Fund
<S> <C> <C>
Assets:
Investments, at market value (Note 1) $252,370,276 $19,308,879
Cash 4,986,488 0
Receivable for:
Dividends and interest 1,086,581 198,853
Investments sold 131,389 7,865
Fund shares sold 470 0
Deferred organizational expenses 20,055 0
------------------ -----------------
Total assets 258,595,259 19,515,597
------------------ -----------------
Liabilities:
Payable for:
Investments purchased 841,388 0
Fund shares redeemed 0 441
Other liabilities 264,802 18,182
Deferred premiums on written options,
at market value (Note 5) 0 0
------------------ -----------------
Total liabilities 1,106,190 18,623
------------------ -----------------
NET ASSETS $257,489,069 $19,496,974
================== =================
Net assets represented by:
Paid-in capital $257,489,069 $20,283,984
Unrealized gain (loss) 0 57,451
Undistributed net investment income 0 100,901
Accumulated net realized loss 0 (945,362)
------------------ -----------------
NET ASSETS $257,489,069 $19,496,974
================== =================
Capital shares, $.001 par value
Select Class:Outstanding 184,789,662 1,990,344
Net Assets $184,789,662 $19,239,882
Net Asset Value per share $ 1.00 $ 9.67
Adviser Class: Outstanding 72,699,407 26,628
Net Assets $ 72,699,407 $ 257,092
Net Asset Value per share $ 1.00 $ 9.65
Cost of Investments $252,370,276 $19,251,428
</TABLE>
12 See Notes to Financial Statements.
<PAGE>
Statements of Assets and Liabilities
April 30, 1995 (unaudited)
<TABLE>
<CAPTION>
------------ ------------------- ---------------------
Bond Fund Tax-Free Fund The Aetna Fund
<S> <C> <C>
$42,745,565 $23,795,738 $84,986,156
17,895 158 17,091
783,775 418,961 514,144
2,095,041 4,513 920,280
0 0 0
20,055 0 20,055
------------ ------------------- ---------------------
45,662,331 24,219,370 86,457,726
------------ ------------------- ---------------------
1,012,100 979,792 3,710,080
0 0 0
71,557 31,014 119,912
0 0 130,000
------------ ------------------- ---------------------
1,083,657 1,010,806 3,959,992
------------ ------------------- ---------------------
$44,578,674 $23,208,564 $82,497,734
============ =================== =====================
$46,186,246 $24,421,818 $77,531,489
(215,809) (471,824) 5,380,575
124,901 36,852 694,142
(1,516,664) (778,282) (1,108,472)
------------ ------------------- ---------------------
$44,578,674 $23,208,564 $82,497,734
============ =================== =====================
3,089,655 204,638 7,367,500
$30,281,864 $ 1,925,554 $81,680,139
$ 9.80 $ 9.41 $ 11.09
1,459,663 2,262,474 73,988
$14,296,810 $21,283,010 $ 817,595
$ 9.79 $ 9.41 $ 11.05
$42,961,374 $24,267,562 $79,504,921
</TABLE>
Aetna Mutual Funds Semi-Annual Report 13
<PAGE>
<TABLE>
<CAPTION>
--------------------------------------------- ------------------------- --------------
Aetna Series Fund, Inc. Growth and Income Fund Growth Fund
<S> <C> <C>
Assets:
Investments, at market value (Note 1) $329,516,875 $33,423,618
Cash 112,101 183
Cash denominated in foreign currencies 294,429 0
Receivable for:
Dividends and interest 580,161 11,056
Investments sold 3,768,911 448,642
Fund shares sold 164,606 5,659
Recoverable taxes 2,026 0
Variation margin 1,180 0
Forward foreign currency exchange contracts
(Note 7) 9,400,168 0
Deferred organizational expenses 20,083 0
------------------------- --------------
Total assets 343,860,540 33,889,158
------------------------- --------------
Liabilities:
Payable for:
Investments purchased 6,733,575 942,613
Fund shares redeemed 276,749 20,491
Forward foreign currency exchange contracts
(Note 7) 9,628,963 0
Other liabilities 241,016 30,737
Deferred premiums on written options, at
market value (Note 5) 0 11,438
------------------------- --------------
Total liabilities 16,880,303 1,005,279
------------------------- --------------
NET ASSETS $326,980,237 $32,883,879
========================= ==============
Net assets represented by:
Paid-in capital $298,897,914 $29,407,895
Unrealized gain (loss) 28,708,957 4,908,755
Undistributed (distributions in excess of)
net investment income 1,702,741 8,925
Accumulated net realized gain (loss) (2,329,375) (1,441,696)
------------------------- --------------
NET ASSETS $326,980,237 $32,883,879
========================= ==============
Capital shares, $.001 par value
Select Class:Outstanding 27,625,555 2,775,049
Net Assets $325,814,679 $31,940,091
Net Asset Value per share $ 11.79 $ 11.51
Adviser Class: Outstanding 98,930 82,448
Net Assets $ 1,165,558 $ 943,788
Net Asset Value per share $ 11.78 $ 11.45
Cost of Investments $300,615,297 $28,528,745
</TABLE>
14 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
---------------------------- --------------------------- ---------------------
Small Company Growth Fund International Growth Fund Asian Growth Fund
<S> <C> <C>
$29,186,693 $56,071,807 $22,299,673
3,332 0 0
0 32,526 292,268
5,373 241,915 158,251
893,890 3,695,749 126,798
0 18,871 4,581
0 79,423 1,422
0 0 0
0 8,200,000 0
0 20,083 0
---------------------------- --------------------------- ---------------------
30,089,288 68,360,374 22,882,993
---------------------------- --------------------------- ---------------------
720,536 2,410,183 0
0 2,409 2,184
0 9,520,319 0
31,804 78,298 61,731
0 0 0
---------------------------- --------------------------- ---------------------
752,340 12,011,209 63,915
---------------------------- --------------------------- ---------------------
$29,336,948 $56,349,165 $22,819,078
============================ =========================== =====================
$26,108,538 $55,077,724 $26,318,392
3,992,312 308,421 (1,042,660)
(25,779) 271,497 74,777
(738,123) 691,523 (2,531,431)
---------------------------- --------------------------- ---------------------
$29,336,948 $56,349,165 $22,819,078
============================ =========================== =====================
2,515,254 2,685,855 2,874,045
$28,755,779 $27,759,331 $22,401,054
$ 11.43 $ 10.34 $ 7.79
51,141 2,773,868 53,758
$ 581,169 $28,589,834 $ 418,024
$ 11.36 $ 10.31 $ 7.78
$25,194,381 $54,454,925 $23,341,491
</TABLE>
Aetna Mutual Funds Semi-Annual Report 15
<PAGE>
Statements of Operations
Six-month period ended April 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
------------------------------------------ --------------------- ---------------------
Aetna Series Fund, Inc. Money Market Fund Government Fund
<S> <C> <C>
Investment income: (Note 1)
Dividends $ 0 $ 0
Interest 6,918,491 884,920
--------------------- ---------------------
6,918,491 884,920
Foreign taxes withheld 0 0
--------------------- ---------------------
Total investment income 6,918,491 884,920
--------------------- ---------------------
Expenses: (Notes 2 and 3)
Investment advisory fee 461,546 58,833
Administrative service fee 288,466 29,416
12b-1 and service fees 29,884 952
Organizational expenses 5,691 0
Printing and postage expenses 23,375 701
Custody fees 10,743 7,021
Transfer agent fees 95,432 13,048
Audit fees 5,729 6,685
Directors' fees 10,289 5,031
State and federal fees 55,572 10,625
Miscellaneous 6,290 3,146
--------------------- ---------------------
Expenses before reimbursement and waiver
from Adviser 993,017 135,458
Expense reimbursement and waiver from
Adviser (704,551) (52,335)
--------------------- ---------------------
Net expenses 288,466 83,123
--------------------- ---------------------
Net investment income 6,630,025 801,797
--------------------- ---------------------
Realized and unrealized gain (loss):
(Notes 1, 4, 5 and 7)
Realized gain (loss) on:
Sales of investments, excluding
short-term investments 0 (674,470)
Futures and forward currency contracts 0 0
--------------------- ---------------------
Net realized gain (loss) 0 (674,470)
--------------------- ---------------------
Net change in unrealized gain (loss) on:
Investments 0 1,198,252
Written options 0 0
--------------------- ---------------------
Net change in unrealized gain 0 1,198,252
--------------------- ---------------------
Net realized and change in unrealized gain 0 523,782
--------------------- ---------------------
Net increase in net assets resulting from
operations $6,630,025 $1,325,579
===================== =====================
</TABLE>
16 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
----------- ------------------- ---------------------
Bond Fund Tax-Free Fund The Aetna Fund
<S> <C> <C>
$ 18,503 $ 0 $ 737,123
1,819,791 723,053 1,436,311
----------- ------------------- ---------------------
1,838,294 723,053 2,173,434
0 0 (4,982)
----------- ------------------- ---------------------
1,838,294 723,053 2,168,452
----------- ------------------- ---------------------
120,810 61,435 366,450
60,405 30,718 114,516
74,285 86,074 53,307
5,691 0 5,691
5,877 734 11,332
5,250 3,115 11,420
18,559 12,306 29,870
7,066 7,163 7,066
5,665 5,069 6,781
18,664 10,977 26,584
3,596 3,155 4,454
----------- ------------------- ---------------------
325,868 220,746 637,471
(70,415) (30,302) (11,840)
----------- ------------------- ---------------------
255,453 190,444 625,631
----------- ------------------- ---------------------
1,582,841 532,609 1,542,821
----------- ------------------- ---------------------
(523,908) (270,716) 238,192
0 0 101,165
----------- ------------------- ---------------------
(523,908) (270,716) 339,357
----------- ------------------- ---------------------
1,393,538 1,395,744 2,866,341
0 0 (100,660)
----------- ------------------- ---------------------
1,393,538 1,395,744 2,765,681
----------- ------------------- ---------------------
869,630 1,125,028 3,105,038
----------- ------------------- ---------------------
$2,452,471 $1,657,637 $4,647,859
=========== =================== =====================
</TABLE>
Aetna Mutual Funds Semi-Annual Report 17
<PAGE>
Statements of Operations
Six-month period ended April 30, 1995 (Unaudited)
<TABLE>
<CAPTION>
------------------------------------------ ----------------------- ------------
Aetna Series Fund, Inc. Growth and Income Fund Growth Fund
Investment income: (Note 1)
<S> <C> <C>
Dividends $ 4,176,095 $ 181,438
Interest 664,845 36,850
----------------------- ------------
4,840,940 218,288
Foreign taxes withheld (18,404) (3,899)
----------------------- ------------
Total investment income 4,822,536 214,389
----------------------- ------------
Expenses: (Notes 2 and 3)
Investment advisory fee 1,088,974 100,401
Administrative service fee 394,996 35,858
12b-1 and service fees 12,855 2,447
Organizational expenses 5,663 0
Printing and postage expenses 12,984 1,065
Custody fees 16,005 4,104
Transfer agent fees 21,402 12,353
Audit fees 6,685 6,685
Directors' fees 7,599 5,031
State and federal fees 41,094 10,953
Miscellaneous 7,002 3,161
----------------------- ------------
Expenses before reimbursement and waiver
from Adviser 1,615,259 182,058
Expense reimbursement and waiver from
Adviser 0 (7,760)
----------------------- ------------
Net expenses 1,615,259 174,298
----------------------- ------------
Net investment income (loss) 3,207,277 40,091
----------------------- ------------
Net realized and unrealized gain (loss):
(Notes 1, 4, 5 and 7)
Realized gain (loss) on:
Sales of investments, excluding
short-term investments (666,653) (853,039)
Written options 0 (571,812)
Futures and forward currency contracts 645,656 0
Foreign currencies (43,545) 0
----------------------- ------------
Net realized gain (loss) (64,542) (1,424,851)
----------------------- ------------
Net change in unrealized gain (loss) on:
Investments 18,779,770 3,701,141
Written options 0 13,882
Futures and forward currency contracts (251,017) 0
Foreign currency related transactions 5,226 0
----------------------- ------------
Net change in unrealized gain (loss) 18,533,979 3,715,023
----------------------- ------------
Net realized and change in unrealized gain
(loss) 18,469,437 2,290,172
----------------------- ------------
Increase (decrease) in net assets
resulting from operations $21,676,714 $ 2,330,263
======================= ============
</TABLE>
18 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
---------------------------- --------------------------- ---------------------
Small Company Growth Fund International Growth Fund Asian Growth Fund
<S> <C> <C>
$ 115,759 $ 426,230 $ 255,819
56,983 93,661 31,548
---------------------------- --------------------------- ---------------------
172,742 519,891 287,367
0 (33,085) (20,828)
---------------------------- --------------------------- ---------------------
172,742 486,806 266,539
---------------------------- --------------------------- ---------------------
111,816 236,037 126,407
32,887 69,423 31,602
1,470 98,631 1,338
0 5,663 0
931 6,096 1,134
4,505 81,350 70,900
13,706 19,705 14,070
6,685 7,406 7,406
5,031 5,738 5,125
10,641 17,714 11,115
3,144 1,660 2,162
---------------------------- --------------------------- ---------------------
190,816 549,423 271,259
(5,494) (22,482) (75,096)
185,322 526,941 196,163
---------------------------- --------------------------- ---------------------
(12,580) (40,135) 70,376
---------------------------- --------------------------- ---------------------
226,995 870,754 (2,247,193)
0 0 0
0 (128,140) 0
0 (42,918) 4,551
---------------------------- --------------------------- ---------------------
226,995 699,696 (2,242,642)
---------------------------- --------------------------- ---------------------
2,512,857 (1,647,413) (3,066,750)
0 0 0
0 (1,095,088) 0
0 904 (2,303)
---------------------------- --------------------------- ---------------------
2,512,857 (2,741,597) (3,069,053)
---------------------------- --------------------------- ---------------------
2,739,852 (2,041,901) (5,311,695)
$2,727,272 $(2,082,036) $(5,241,319)
</TABLE>
Aetna Mutual Funds Semi-Annual Report 19
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
-------------------------------------------------------- -------------------------------------------
Aetna Series Fund, Inc. Money Market Fund
Six-month
period ended Ten-month
April 30, 1995 period ended
(Unaudited) October 31, 1994
------------------- ---------------------
<S> <C> <C>
Operations:
Net investment income $ 6,630,025 $ 5,571,226
------------------- ---------------------
Net increase in net assets resulting from operations 6,630,025 5,571,226
------------------- ---------------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (4,904,128) (4,776,403)
Adviser Class:
From net investment income (1,725,897) (794,823)
------------------- ---------------------
Decrease in net assets from distributions to
shareholders (6,630,025) (5,571,226)
------------------- ---------------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 99,365,093 184,288,133
Reinvestment of distributions 4,296,792 4,313,330
Cost of shares redeemed (80,628,602) (134,729,463)
Adviser Class:
Proceeds from shares sold 44,702,797 49,918,444
Reinvestment of distributions 1,683,600 788,233
Cost of shares redeemed (21,037,486) (3,356,170)
------------------- ---------------------
Net increase in net assets from fund share transactions 48,382,194 101,222,507
------------------- ---------------------
Change in net assets 48,382,194 101,222,507
Net assets:
Beginning of period 209,106,875 107,884,368
------------------- ---------------------
End of period $257,489,069 $ 209,106,875
=================== =====================
End of period net assets includes undistributed net
investment income $ 0 $ 0
=================== =====================
</TABLE>
20 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------- -------------------------------------------
Aetna Series Fund, Inc. Government Fund
Six-month
period ended Ten-month
April 30, 1995 period ended
(Unaudited) October 31, 1994
------------------- ---------------------
<S> <C> <C>
Operations:
Net investment income $ 801,797 $ 975,250
Net realized loss (674,470) (298,826)
Net change in unrealized gain (loss) 1,198,252 (1,140,801)
------------------- ---------------------
Net increase (decrease) in net assets resulting from
operations 1,325,579 (464,377)
------------------- ---------------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (803,227) (836,799)
Adviser Class:
From net investment income (6,354) (1,832)
------------------- ---------------------
Decrease in net assets from distributions to
shareholders (809,581) (838,631)
------------------- ---------------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 2,918,017 26,189,218
Reinvestment of distributions 669,448 1,222,008
Cost of shares redeemed (10,966,804) (904)
Adviser Class:
Proceeds from shares sold 196,539 165,129
Reinvestment of distributions 5,404 2,374
Cost of shares redeemed (102,099) (14,346)
------------------- ---------------------
Net increase (decrease) in net assets from fund share
transactions (7,279,495) 27,563,479
------------------- ---------------------
Change in net assets (6,763,497) 26,260,471
Net assets:
Beginning of period 26,260,471 0
------------------- ---------------------
End of period $ 19,496,974 $26,260,471
=================== =====================
End of period net assets includes undistributed net
investment income $ 100,901 $ 108,685
=================== =====================
</TABLE>
Aetna Mutual Funds Semi-Annual Report 21
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
------------------------------------------------------- -------------------------------------------
Aetna Series Fund, Inc. Bond Fund
Six-month
period ended Ten-month
April 30, 1995 period ended
(Unaudited) October 31, 1994
------------------- ---------------------
<S> <C> <C>
Operations:
Net investment income $ 1,582,841 $ 2,507,230
Net realized loss (523,908) (882,788)
Net change in unrealized gain (loss) 1,393,538 (3,401,549)
------------------- ---------------------
Net increase (decrease) in net assets resulting from
operations 2,452,471 (1,777,107)
------------------- ---------------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (926,551) (1,488,587)
Adviser Class:
From net investment income (585,446) (709,993)
------------------- ---------------------
Decrease in net assets from distributions to
shareholders (1,511,997) (2,198,580)
------------------- ---------------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 4,968,023 13,687,226
Reinvestment of distributions 847,121 1,375,268
Cost of shares redeemed (3,791,315) (31,166,825)
Adviser Class:
Proceeds from shares sold 51,153 25,571,124
Reinvestment of distributions 585,300 709,934
Cost of shares redeemed (12,011,318) (231)
------------------- ---------------------
Net increase (decrease) in net assets from fund share
transactions (9,351,036) 10,176,496
------------------- ---------------------
Change in net assets (8,410,562) 6,200,809
Net assets:
Beginning of period 52,989,236 46,788,427
------------------- ---------------------
End of period $ 44,578,674 $ 52,989,236
=================== =====================
End of period net assets includes undistributed net
investment income $ 124,901 $ 54,057
=================== =====================
</TABLE>
22 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------- -------------------------------------------
Aetna Series Fund, Inc. Tax-Free Fund
Six-month
period ended Ten-month
April 30, 1995 period ended
(Unaudited) October 31, 1994
------------------- ---------------------
<S> <C> <C>
Operations:
Net investment income $ 532,609 $ 841,965
Net realized loss (270,716) (507,566)
Net change in unrealized gain (loss) 1,395,744 (1,867,568)
------------------- ---------------------
Net increase (decrease) in net assets resulting from
operations 1,657,637 (1,533,169)
------------------- ---------------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (42,304) (178,416)
Adviser Class:
From net investment income (470,052) (646,950)
------------------- ---------------------
Decrease in net assets from distributions to
shareholders (512,356) (825,366)
------------------- ---------------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 399,002 28,310,131
Reinvestment of distributions 36,080 177,341
Cost of shares redeemed (48,390) (25,636,777)
Adviser Class:
Proceeds from shares sold 496,475 25,973,435
Reinvestment of distributions 466,773 645,691
Cost of shares redeemed (6,332,319) (65,624)
------------------- ---------------------
Net increase (decrease) in net assets from fund share
transactions (4,982,379) 29,404,197
------------------- ---------------------
Change in net assets (3,837,098) 27,045,662
Net assets:
Beginning of period 27,045,662 0
------------------- ---------------------
End of period $23,208,564 $ 27,045,662
=================== =====================
End of period net assets includes undistributed net
investment income $ 36,852 $ 16,599
=================== =====================
</TABLE>
Aetna Mutual Funds Semi-Annual Report 23
<PAGE>
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
------------------------------------------------------- -------------------------------------------
Aetna Series Fund, Inc. The Aetna Fund
Six-month
period ended Ten-month
April 30, 1995 period ended
(Unaudited) October 31, 1994
------------------- ---------------------
<S> <C> <C>
Operations:
Net investment income $ 1,542,821 $ 1,981,437
Net realized gain (loss) 339,357 (802,729)
Net change in unrealized gain (loss) 2,765,681 (1,255,675)
------------------- ---------------------
Net increase (decrease) in net assets resulting from
operations 4,647,859 (76,967)
------------------- ---------------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (1,480,798) (729,483)
Adviser Class:
From net investment income (341,514) (267,325)
------------------- ---------------------
Decrease in net assets from distributions to
shareholders (1,822,312) (996,808)
------------------- ---------------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 12,411,043 50,816,381
Reinvestment of distributions 1,461,252 1,709,717
Cost of shares redeemed (11,671,405) (38,967,995)
Adviser Class:
Proceeds from shares sold 404,857 25,942,576
Reinvestment of distributions 301,808 267,247
Cost of shares redeemed (25,897,563) (14,313)
------------------- ---------------------
Net increase (decrease) in net assets from fund share
transactions (22,990,008) 39,753,613
------------------- ---------------------
Change in net assets (20,164,461) 38,679,838
Net assets:
Beginning of period 102,662,195 63,982,357
------------------- ---------------------
End of period $ 82,497,734 $102,662,195
=================== =====================
End of period net assets includes undistributed net
investment income $ 694,142 $ 973,633
=================== =====================
</TABLE>
24 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------- -------------------------------------------
Aetna Series Fund, Inc. Growth and Income Fund
Six-month
period ended Ten-month
April 30, 1995 period ended
(Unaudited) October 31, 1994
------------------- ---------------------
<S> <C> <C>
Operations:
Net investment income $ 3,207,277 $ 1,391,759
Net realized loss (64,542) (1,478,608)
Net change in unrealized gain 18,533,979 5,934,488
------------------- ---------------------
Net increase in net assets resulting from operations 21,676,714 5,847,639
------------------- ---------------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (2,091,970) (609,602)
Adviser Class:
From net investment income (16,183) (178,540)
------------------- ---------------------
Decrease in net assets from distributions to
shareholders (2,108,153) (788,142)
------------------- ---------------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 62,713,641 283,178,288
Reinvestment of distributions 2,089,674 607,349
Cost of shares redeemed (59,924,539) (47,350,637)
Adviser Class:
Proceeds from shares sold 590,670 26,073,067
Reinvestment of distributions 0 178,486
Cost of shares redeemed (5,157,672) (20,772,927)
------------------- ---------------------
Net increase in net assets from fund share transactions 311,774 241,913,626
------------------- ---------------------
Change in net assets 19,880,335 246,973,123
Net assets:
Beginning of period 307,099,902 60,126,779
------------------- ---------------------
End of period $326,980,237 $307,099,902
=================== =====================
End of period net assets includes undistributed net
investment income $ 1,702,741 $ 603,617
=================== =====================
</TABLE>
Aetna Mutual Funds Semi-Annual Report 25
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
------------------------------------------------------- -------------------------------------------
Aetna Series Fund, Inc. Growth Fund
Six-month
period ended Ten-month
April 30, 1995 period ended
(Unaudited) October 31, 1994
------------------- ---------------------
<S> <C> <C>
Operations:
Net investment income $ 40,091 $ 191,217
Net realized loss (1,424,851) (1,009)
Net change in unrealized gain 3,715,023 1,193,732
------------------- ---------------------
Net increase in net assets resulting from operations 2,330,263 1,383,940
------------------- ---------------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (234,150) 0
Adviser Class:
From net investment income (4,069) 0
------------------- ---------------------
Decrease in net assets from distributions to
shareholders (238,219) 0
------------------- ---------------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 6,518,373 25,821,070
Reinvestment of distributions 234,137 0
Cost of shares redeemed (4,032,864) (6,065)
Adviser Class:
Proceeds from shares sold 533,860 406,304
Reinvestment of distributions 4,068 0
Cost of shares redeemed (70,736) (252)
------------------- ---------------------
Net increase in net assets from fund share transactions 3,186,838 26,221,057
------------------- ---------------------
Change in net assets 5,278,882 27,604,997
Net assets:
Beginning of period 27,604,997 0
------------------- ---------------------
End of period $32,883,879 $27,604,997
=================== =====================
End of period net assets includes undistributed net
investment income $ 8,925 $ 207,053
=================== =====================
</TABLE>
26 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------ -------------------------------
Aetna Series Fund, Inc. Small Company Growth Fund
Six-month
period ended Ten-month
April 30, period ended
1995 October 31,
(Unaudited) 1994
------------- ---------------
<S> <C> <C>
Operations:
Net investment income (loss) $ (12,580) $ 35,562
Net realized gain (loss) 226,995 (964,005)
Net change in unrealized gain 2,512,857 1,479,455
------------- ---------------
Net increase in net assets resulting from operations 2,727,272 551,012
------------- ---------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (49,874) 0
------------- ---------------
Decrease in net assets from distributions to shareholders (49,874) 0
------------- ---------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 277,601 25,355,267
Reinvestment of distributions 49,835 0
Cost of shares redeemed (73,221) (22,139)
Adviser Class:
Proceeds from shares sold 329,861 199,540
Cost of shares redeemed (7,957) (249)
------------- ---------------
Net increase in net assets from fund share transactions 576,119 25,532,419
------------- ---------------
Change in net assets 3,253,517 26,083,431
Net assets:
Beginning of period 26,083,431 0
------------- ---------------
End of period $29,336,948 $26,083,431
============= ===============
End of period net assets includes undistributed
(distributions in excess of) net investment income $ (25,779) $ 36,675
============= ===============
</TABLE>
Aetna Mutual Funds Semi-Annual Report 27
<PAGE>
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
------------------------------------------------------------- -------------------------------------------
Aetna Series Fund, Inc. International Growth Fund
Six-month
period ended Ten-month
April 30, 1995 period ended
(Unaudited) October 31, 1994
------------------- ---------------------
<S> <C> <C>
Operations:
Net investment income (loss) $ (40,135) $ 203,386
Net realized gain 699,696 3,714,070
Net change in unrealized loss (2,741,597) (2,277,817)
------------------- ---------------------
Net increase (decrease) in net assets resulting from
operations (2,082,036) 1,639,639
------------------- ---------------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (896,398) 0
From realized gain on investments (1,520,291) 0
Adviser Class:
From net investment income (587,128) 0
From realized gain on investments (1,232,388) 0
------------------- ---------------------
Decrease in net assets from distributions to shareholders (4,236,205) 0
------------------- ---------------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 3,985,723 17,741,029
Reinvestment of distributions 2,389,683 0
Cost of shares redeemed (6,451,707) (27,138,021)
Adviser Class:
Proceeds from shares sold 22,347,325 26,042,111
Reinvestment of distributions 1,818,810 0
Cost of shares redeemed (19,548,452) (5,489)
------------------- ---------------------
Net increase in net assets from fund share transactions 4,541,382 16,639,630
------------------- ---------------------
Change in net assets (1,776,859) 18,279,269
Net assets:
Beginning of period 58,126,024 39,846,755
------------------- ---------------------
End of period $ 56,349,165 $ 58,126,024
=================== =====================
End of period net assets includes undistributed net
investment income $ 271,497 $ 1,795,158
=================== =====================
</TABLE>
28 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------- -------------------------------------------
Aetna Series Fund, Inc. Asian Growth Fund
Six-month
period ended Ten-month
April 30, 1995 period ended
(Unaudited) October 31, 1994
------------------- ---------------------
<S> <C> <C>
Operations:
Net investment income $ 70,376 $ 142,060
Net realized loss (2,242,642) (329,231)
Net change in unrealized gain (loss) (3,069,053) 2,026,393
------------------- ---------------------
Net increase (decrease) in net assets resulting from
operations (5,241,319) 1,839,222
------------------- ---------------------
Distributions to shareholders: (Note 1)
Select Class:
From net investment income (96,668) 0
Adviser Class:
From net investment income (549) 0
------------------- ---------------------
Decrease in net assets from distributions to shareholders (97,217) 0
------------------- ---------------------
Fund share transactions: (Note 8)
Select Class:
Proceeds from shares sold 1,102,843 27,568,716
Reinvestment of distributions 96,642 0
Cost of shares redeemed (2,914,268) (10,261)
Adviser Class:
Proceeds from shares sold 189,340 303,864
Reinvestment of distributions 548 0
Cost of shares redeemed (17,827) (1,205)
------------------- ---------------------
Net increase (decrease) in net assets from fund share
transactions (1,542,722) 27,861,114
------------------- ---------------------
Change in net assets (6,881,258) 29,700,336
Net assets:
Beginning of period 29,700,336 0
------------------- ---------------------
End of period $22,819,078 $29,700,336
=================== =====================
End of period net assets includes undistributed net
investment income $ 74,777 $ 101,618
=================== =====================
</TABLE>
Aetna Mutual Funds Semi-Annual Report 29
<PAGE>
Aetna Series Fund, Inc.
Notes to Financial Statements
April 30, 1995 (Unaudited)
1. Summary of Significant Accounting Policies
Aetna Mutual Funds Semi-Annual ReportAetna Series Fund, Inc. ("Company") is
registered under the Investment Company Act of 1940 as a diversified,
open-end management investment company incorporated under the laws of
Maryland on June 17, 1991. The Articles of Incorporation permit the Company
to offer separate funds ("Funds") each of which has its own investment
objectives, policies and restrictions.
Shares of each Fund are available to all investors including employers and
employees who utilize the Funds as investment options under retirement plans.
Each Fund offers two classes of shares, the Select Class and the Adviser
Class. The Select Class is offered principally to institutions and is not
subject to sales charges or service fees. The Adviser Class is offered
primarily to the general public and is subject to deferred sales charges
payable upon redemption within four calendar years after the year of
purchase. The Adviser Class was made available to the public on April 15,
1994. Additionally, the Adviser Class is subject to a shareholder service fee
and an annual Rule 12b-1 distribution plan expense.
The Company offers the following Funds:
<TABLE>
<CAPTION>
<S> <C>
Aetna Money Market Fund Aetna Growth and Income Fund
Aetna Government Fund Aetna Growth Fund
Aetna Bond Fund Aetna Small Company Growth Fund
Aetna Tax-Free Fund Aetna International Growth Fund
The Aetna Fund Aetna Asian Growth Fund
</TABLE>
Aetna Life Insurance and Annuity Company ("ALIAC") serves as the Investment
Adviser and principal underwriter to each Fund. Aeltus Investment Management,
Inc. ("Aeltus") is employed as a sub-adviser to the Tax-Free Fund, the Growth
Fund and the Small Company Growth Fund. Aeltus Investment Management
International (F.E.) Limited ("Aeltus Far East") is employed as a sub-adviser
to the Asian Growth Fund. Dunedin Fund Managers Ltd. ("Dunedin") is employed
as the sub- adviser to the International Growth Fund.
Effective October 31, 1994, the Company changed its fiscal year end from
December 31 to October 31.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles.
A. Valuation of Investments
Except in the Money Market Fund, investments are stated at market values
based upon closing sales prices as reported on national securities exchanges
or, for over- the-counter securities, at the mean of the bid and asked
prices. Short-term invest-
30 Aetna Mutual Funds Semi-Annual Report
<PAGE>
1. Summary of Significant Accounting Policies (Continued)
ments maturing in more than sixty days for which market quotations are
readily available are valued at current market value. Short-term investments
maturing in less than sixty days are valued at amortized cost which when
combined with accrued interest approximates market. Securities for which
market quotations are not considered to be readily available are valued in
good faith using methods approved by the Board of Directors. The Money Market
Fund states all investments at amortized cost which approximates market
value.
The accounting records of the Funds are maintained in U.S. dollars.
Investment securities and other assets and liabilities denominated in a
foreign currency are translated into U.S. dollars at the prevailing rates of
exchange at the end of the period. Purchases and sales of securities, income
receipts, and expense payments are translated into U.S. dollars at the
prevailing exchange rate on the respective dates of the transactions.
B. Option Contracts
The Funds may purchase and sell put and call options and write covered call
options as a hedge against adverse movements in the value of portfolio
holdings.
Option contracts are valued daily, and unrealized gains or losses are
recorded based upon the last sales price on the principal exchange on which
the options are traded.
The Funds will realize a gain or loss upon the expiration or closing of the
option contract. When an option is exercised, the proceeds on sales for a
written call option, the purchase cost for a written put option, or the cost
of the security for a purchased put or call option is adjusted by the amount
of premium received or paid. Realized and unrealized gains or losses on
option contracts are reflected in the accompanying financial statements.
The risk in writing a call option is that the Funds give up the opportunity
for profit if the market price of the security increases and the option is
exercised. The risk in writing a put option is that the Funds may incur a
loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Funds pay a premium
whether or not the option is exercised. Risks may also arise from an illiquid
secondary market, or from the inability of counterparties to meet the terms
of the contract.
C. Futures and Forward Foreign Currency Exchange Contracts
A futures contract is an agreement between two parties to buy and sell a
specific amount of a commodity, security or financial instrument including an
index of stocks at a set price on a future date. The Funds use futures
contracts as a hedge
Aetna Mutual Funds Semi-Annual Report 31
<PAGE>
1. Summary of Significant Accounting Policies (Continued)
against declines in the value of portfolio securities. The Funds may also
purchase futures contracts to gain market exposure as it may be more cost
effective than purchasing individual securities.
Upon entering into a futures contract, the Funds are required to deposit with
a broker an amount (initial margin) equal to a percentage of the purchase
price indicated by the futures contract. Subsequent deposits (variation
margin) are received or paid each day by the Funds equal to the daily
fluctuations in the market value of the contract. These amounts are recorded
by the Funds as unrealized gains or losses. When a contract is closed, the
Funds record a realized gain or loss equal to the difference between the
value of the contract at the time it was opened and the value at the time it
was closed. Generally, futures contracts are closed prior to expiration.
A forward foreign currency exchange contract is an agreement to pay or
receive specific amounts of a currency at a future date in exchange for
another currency at an agreed upon exchange rate. The Funds may use forward
foreign currency exchange contracts to hedge certain foreign currency assets.
Contracts are recorded at market value and marked-to-market daily.
The risks associated with futures and foreign currency exchange contracts may
arise from an imperfect correlation between the change in market value of the
securities held by the Funds and the price of the contracts. Risks may also
arise from an illiquid secondary market, or from the inability of
counterparties to meet the terms of the contracts.
Realized and unrealized gains or losses on futures and foreign currency
exchange contracts are reflected in the accompanying financial statements.
For federal tax purposes, any futures contracts and forward foreign currency
exchange contracts which remain open at the end of the fiscal year are
marked-to-market and the resultant net gain or loss is included in federal
taxable income.
D. Illiquid and Restricted Securities
Illiquid securities are securities that are not readily marketable. Disposing
of illiquid investments may involve time-consuming negotiation and legal
expenses, and it may be difficult or impossible for the Funds to sell them
promptly at an acceptable price. Restricted securities are subject to legal
or contractual restrictions on resale and may not be publicly sold without
registration under the Federal Securities Act of 1933. The Funds may invest
up to 15% (10% in the case of the Money Market Fund) of its total assets in
illiquid securities. Illiquid and restricted securities are valued using
market quotations when readily available. In the absence of market
32 Aetna Mutual Funds Semi-Annual Report
<PAGE>
1. Summary of Significant Accounting Policies (Continued)
quotations, the securities are valued based upon their fair value determined
under procedures approved by the Board of Directors. The Funds will not pay
the costs of disposition of restricted securities other than ordinary
brokerage fees, if any.
E. Federal Income Taxes
As a qualified regulated investment company, each Fund is relieved of federal
income and excise taxes by distributing its net taxable investment income and
capital gains, if any, in compliance with the applicable provisions of the
Internal Revenue Code.
F. Distributions
Distributions are recorded on the ex-dividend date. Income and capital gain
distributions are determined in accordance with income tax regulations which
may differ from generally accepted accounting principles. These differences
are primarily due to differing treatments for foreign currency transactions
and losses deferred due to wash sales.
G. Other
Investment transactions are accounted for on the day following trade date,
except same day settlements which are accounted for on the trade date.
Interest income is recorded on an accrual basis. Discounts and premiums on
securities purchased are amortized over the life of the respective security.
Dividend income is recorded on the ex-dividend date. Realized gains and
losses from investment transactions are determined on an identified cost
basis.
H. Deferred Organizational Costs
The Company paid organizational expenses in connection with the start-up and
initial registration of the Company. These organizational expenses have been
capitalized and allocated equally to the Money Market Fund, the Bond Fund,
The Aetna Fund, the Growth and Income Fund, and the International Growth
Fund. Organizational expenses are being amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or
all of the shares representing initial capital of each Fund are redeemed by
any holder thereof prior to the end of the amortization period, the proceeds
will be reduced by the unamortized organizational expense balance in the same
proportion as the number of shares redeemed bears to the number of initial
shares outstanding immediately preceding the redemption.
Aetna Mutual Funds Semi-Annual Report 33
<PAGE>
2. Investment Advisory, Management, Shareholder Service and Distribution Fees
The Funds pay the Investment Adviser annual fees expressed as a weighted
average percentage of average daily net assets of each Fund. As the Funds'
net assets exceed predetermined thresholds, lower advisory fees are applied.
Below are the Funds' Investment Adviser fee effective rates as of April 30,
1995:
<TABLE>
<CAPTION>
Effective Effective
Rate Rate
---------- -----------
<S> <C> <C> <C>
Money Market Fund .40% Growth and Income Fund .69%
Government Fund .50% Growth Fund .70%
Bond Fund .50% Small Company Growth Fund .85%
Tax-Free Fund .50% International Growth Fund .85%
The Aetna Fund .80% Asian Growth Fund 1.00%
</TABLE>
The Investment Adviser has entered into sub-advisory agreements with Aeltus,
Aeltus Far East, and Dunedin. The sub-advisers supervise the investment and
reinvestment of cash and securities and receive the fees from the Investment
Adviser based on the average daily net assets of the Funds. The fees range
from .20% to .65% depending on the investment objective and the average daily
net assets of the Fund.
The Company has entered into an administrative services agreement under which
ALIAC acts as administrator and provides certain administrative and
shareholder services and is responsible for the supervision of other service
providers. Each Fund pays ALIAC a monthly fee at an annual rate based on
average daily net assets of 0.25% on the first $250 million. As each Fund's
net assets exceed $250 million, lower fees will apply.
The Funds have adopted a Shareholder Service Plan for the Adviser Class
shares. Under the Shareholder Service Plan, ALIAC is paid a service fee at an
annual rate of 0.25% (0.10% for the Money Market Fund) of the daily net
assets of the Adviser Class of each fund. This fee is used as compensation
for expenses incurred in servicing shareholder accounts. For the six-month
period ended April 30, 1995, the Funds paid ALIAC $140,286 in service fees.
The Funds have adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Distribution Plan provides for payments
to ALIAC at an annual rate 0.50% of the daily net assets of the Adviser Class
shares of each Fund, except for the Money Market Fund. Amounts paid by the
Funds are used to pay expenses incurred by ALIAC in promoting the sales of
the Adviser Class shares. For the six-month period ended April 30, 1995, the
Funds paid ALIAC $220,958 in Rule 12b-1 fees. Presently, the Funds class
specific expenses are limited to Shareholder Service and Distribution Plan
expenses incurred by the Adviser Class shares.
34 Aetna Mutual Funds Semi-Annual Report
<PAGE>
3. Reimbursement from Investment Adviser
The Investment Adviser may, from time to time, make reimbursements to a Fund
for some or all of its operating expenses. Reimbursement arrangements, which
may be terminated at any time without notice, will increase a Fund's yield
and total return.
4. Purchase and Sales of Investment Securities
Purchases and sales of investment securities, excluding short-term
investments, for all Funds except the Money Market Fund, for the six-month
period ended April 30, 1995:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
------------ -------------
<S> <C> <C>
Money Market Fund $2,478,187,764 $2,436,362,170
Government Fund 14,916,797 19,732,665
Bond Fund 11,464,179 21,591,646
Tax-Free Fund 2,853,008 7,695,768
The Aetna Fund 65,877,341 87,561,526
Growth and Income Fund 246,834,842 236,357,842
Growth Fund 20,850,303 17,872,515
Small Company Growth Fund 17,027,921 16,063,845
International Growth Fund 11,713,302 12,348,716
Asian Growth Fund 7,421,573 7,584,060
</TABLE>
5. Options
All Funds except the Money Market Fund may use options. For the six-month
period ended April 30, 1995, the following reflects the covered call and put
option activity:
<TABLE>
<CAPTION>
The Aetna Fund
-----------------------------------------
Number of Deferred
Call Option Premium Realized
Contracts Received Gain (Loss)
-------------- -------- -------------
<S> <C> <C> <C>
Outstanding October 31 -- $ -- $--
Written 400 47,340 --
Cancelled -- -- --
Exercised (200) (18,000) --
Expired -- -- --
-------------- -------- -------------
Outstanding April 30 200 $ 29,340 $0
============== ======== =============
</TABLE>
Aetna Mutual Funds Semi-Annual Report 35
<PAGE>
5. Options (Continued)
<TABLE>
<CAPTION>
Growth Fund
--------------------------------------------
Number of Deferred
Call Option Premium Realized
Contracts Received Gain (Loss)
-------------- --------- ---------------
<S> <C> <C> <C>
Outstanding October 31 595 $ 228,645 $--
Written 1,030 523,205 --
Cancelled (1,410) (647,998) (701,657)
Exercised -- -- --
Expired (155) (78,533) 78,533
-------------- --------- ---------------
Outstanding April 30 60 $ 25,319 $(623,124)
============== ========= ===============
</TABLE>
<TABLE>
<CAPTION>
Growth Fund
--------------------------------------------
Number of Deferred
Put Option Premium Realized
Contracts Received Gain (Loss)
-------------- --------- ---------------
<S> <C> <C> <C>
Outstanding October 31 325 $ 306,600 $--
Written 200 233,100 --
Cancelled (325) (306,600) 51,312
Exercised -- -- --
Expired -- -- --
-------------- --------- ---------------
Outstanding April 30 200 $ 233,100 $51,312
============== ========= ===============
</TABLE>
6. Capital Loss Carryforwards
At April 30, 1995, for federal income tax purposes the Funds had the
following capital loss carryforwards:
<TABLE>
<CAPTION>
Capital Loss Year of
Fund Carryforward Expiration
--------------------- ------------ -----------
<S> <C> <C>
Government Fund $ 271,000 2002
--------------------- ------------ -----------
Bond Fund 129,000 2001
835,000 2002
--------------------- ------------ -----------
Tax-Free Fund 508,000 2002
--------------------- ------------ -----------
Aetna Fund 435,000 2001
992,000 2002
--------------------- ------------ -----------
Growth and Income 55,000 2000
Fund 621,000 2001
965,000 2002
--------------------- ------------ -----------
Small Company Fund 832,000 2002
--------------------- ------------ -----------
Asian Growth Fund 289,000 2002
</TABLE>
The Board of Directors will not distribute any realized gains until the
capital loss carry forwards have been offset or expire.
36 Aetna Mutual Funds Semi-Annual Report
<PAGE>
7. Forward Foreign Currency Exchange Contracts
At April 30, 1995, the Growth and Income Fund and the International Growth
Fund had the following open forward foreign currency exchange contracts that
obligate the Fund to deliver currencies at specified future dates. The
unrealized losses of $228,795 and $1,320,319, respectively, on these
contracts are included in the accompanying financial statements. The terms of
the open contracts are as follows:
Growth and Income Fund:
<TABLE>
<CAPTION>
U.S. $ Value U.S. $ Value
Exchange Currency to be as of Currency to be as of
Date Delivered April 30, 1995 Received April 30, 1995
--------- --------------------- ------------------ -------------------- -------------------
<S> <C> <C> <C> <C>
6/07/95 6,100,000 600,187
Austrian Shilling $ 628,233 U.S. Dollar $ 600,187
--------- --------------------- ------------------ -------------------- -------------------
6/13/95 2,160,000 220,899
Austrian Shilling 222,509 U.S. Dollar 220,899
--------- --------------------- ------------------ -------------------- -------------------
6/21/95 2,510,000 575,307
Finnish Markka 590,019 U.S. Dollar 575,307
--------- --------------------- ------------------ -------------------- -------------------
5/10/95 525,936 326,000
U.S. Dollar 525,936 British Pound 526,190
--------- --------------------- ------------------ -------------------- -------------------
6/21/95 1,385,000 2,203,448
British Pound 2,226,443 U.S. Dollar 2,203,448
--------- --------------------- ------------------ -------------------- -------------------
9/13/95 155,300,000 1,826,470
Japanese Yen 1,883,229 U.S. Dollar 1,826,470
--------- --------------------- ------------------ -------------------- -------------------
9/13/95 919,610 75,500,000
U.S. Dollar 919,610 Japanese Yen 915,543
--------- --------------------- ------------------ -------------------- -------------------
9/18/95 63,000,000 713,517
Japanese Yen 764,492 U.S. Dollar 713,517
--------- --------------------- ------------------ -------------------- -------------------
6/16/95 1,045,000 663,731
Dutch Guilder 675,979 U.S. Dollar 663,731
--------- --------------------- ------------------ -------------------- -------------------
5/24/95 5,152,000 797,424
Norwegian Krone 829,052 U.S. Dollar 797,424
--------- --------------------- ------------------ -------------------- -------------------
4/28/95 23,680 33,000
U.S. Dollar 23,680 Singapore Dollar 23,693
--------- --------------------- ------------------ -------------------- -------------------
6/28/95 470,000 333,759
Singapore Dollar 339,781 U.S. Dollar 333,759
------------------ -------------------
$9,628,963 $9,400,168
================== ===================
</TABLE>
Aetna Mutual Funds Semi-Annual Report 37
<PAGE>
7. Forward Foreign Currency Exchange Contracts (Continued)
International Growth Fund:
<TABLE>
<CAPTION>
U.S. $ Value U.S. $ Value
Exchange Currency to be as of Currency to be as of
Date Delivered April 30, 1995 Received April 30, 1995
---------- ------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
11/16/95 778,426,000 $9,520,319 8,200,000 $8,200,000
================== ===================
Japanese Yen U.S. Dollar
</TABLE>
8. Authorized Capital Shares and Capital Share Transactions
The Funds are authorized to issue a total of 4.0 billion shares. Of those 4.0
billion shares, 3.8 billion have been designated to the Funds as follows: All
of the Funds, except Money Market, have been allocated 100 million shares
each of Select and Adviser Class shares. Money Market has been allocated one
billion shares each of Select and Adviser Class shares. Share transactions
for each Fund were as follows:
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Money Market Fund
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 99,365,093 184,288,133 44,702,797 49,918,644
Shares issued upon
reinvestment 4,296,792 4,313,330 1,683,600 788,233
Shares redeemed (80,628,602) (134,729,463) (21,037,486) (3,356,170)
------------------ ------------------ ------------------ -------------------
Net increase 23,033,283 53,872,000 25,348,911 47,350,507
================== ================== ================== ===================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Government Fund
<S> <C> <C> <C> <C>
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
Shares sold 309,636 2,647,126 20,802 17,344
Shares issued upon
reinvestment 70,673 126,976 569 162
Shares redeemed (1,163,972) (95) (10,746) (1,503)
------------------ ------------------ ------------------ -------------------
Net increase
(decrease) (783,663) 2,774,007 10,625 16,003
================== ================== ================== ===================
</TABLE>
38 Aetna Mutual Funds Semi-Annual Report
<PAGE>
8. Authorized Capital Shares and Capital Share Transactions (Continued)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Bond Fund
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 516,200 1,375,291 5,330 2,577,890
Shares issued upon
reinvestment 88,033 161,898 61,077 73,112
Shares redeemed (393,999) (3,169,473) (1,257,722) (24)
------------------ ------------------ ------------------ -------------------
Net increase
(decrease) 210,234 (1,632,284) (1,191,315) 2,650,978
================== ================== ================== ===================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Tax-Free Fund
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 42,809 2,896,031 53,823 2,770,659
Shares issued upon
reinvestment 3,890 19,126 50,914 87,705
Shares redeemed (5,102) (2,752,116) (693,330) (7,297)
------------------ ------------------ ------------------ -------------------
Net increase
(decrease) 41,597 163,041 (588,593) 2,851,067
================== ================== ================== ===================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
The Aetna Fund
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 1,176,159 4,761,580 38,552 2,469,921
Shares issued upon
reinvestment 141,173 166,181 29,159 16,842
Shares redeemed (1,108,945) (3,684,549) (2,479,120) (1,366)
------------------ ------------------ ------------------ -------------------
Net increase
(decrease) 208,387 1,243,212 (2,411,409) 2,485,397
================== ================== ================== ===================
</TABLE>
Aetna Mutual Funds Semi-Annual Report 39
<PAGE>
8. Authorized Capital Shares and Capital Share Transactions (Continued)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Growth and Income Fund
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 5,706,979 26,001,787 52,969 2,425,064
Shares issued upon
reinvestment 194,086 57,454 0 16,760
Shares redeemed (5,408,972) (4,378,789) (472,237) (1,923,626)
------------------ ------------------ ------------------ -------------------
Net increase
(decrease) 492,093 21,680,452 (419,268) 518,198
================== ================== ================== ===================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Growth Fund
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 608,464 2,522,145 49,947 38,832
Shares issued upon
reinvestment 22,557 0 393 0
Shares redeemed (377,551) (566) (6,700) (24)
------------------ ------------------ ------------------ -------------------
Net increase 253,470 2,521,579 43,640 38,808
================== ================== ================== ===================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Small Company Growth Fund
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 26,486 2,492,687 32,111 19,811
Shares issued upon
reinvestment 4,983 0 0 0
Shares redeemed (6,759) (2,143) (757) (24)
------------------ ------------------ ------------------ -------------------
Net increase 24,710 2,490,544 31,354 19,787
================== ================== ================== ===================
</TABLE>
40 Aetna Mutual Funds Semi-Annual Report
<PAGE>
8. Authorized Capital Shares and Capital Share Transactions (Continued)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
International Growth Fund
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 381,446 1,569,806 2,257,005 2,315,445
Shares issued upon
reinvestment 232,686 0 177,272 0
Shares redeemed (651,436) (2,413,248) (1,975,369) (485)
------------------ ------------------ ------------------ -------------------
Net increase
(decrease) (37,304) (843,442) 458,908 2,314,960
================== ================== ================== ===================
</TABLE>
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------
Asian Growth Fund
Select Adviser
For the For the For the For the
Six-Month Ten-Month Six-Month Ten-Month
Period Ended Period Ended Period Ended Period Ended
April 30, 1995 October 31, 1994 April 30, 1995 October 31, 1994
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares sold 138,674 3,099,129 22,675 33,362
Shares issued upon
reinvestment 11,728 0 67 0
Shares redeemed (374,383) (1,103) (2,214) (132)
------------------ ------------------ ------------------ -------------------
Net increase
(decrease) (223,981) 3,098,026 20,528 33,230
================== ================== ================== ===================
</TABLE>
Aetna Mutual Funds Semi-Annual Report 41
<PAGE>
Financial Highlights
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Money Market Fund
Select Class Adviser Class
Six-month Six-month Period
period Ten-month period from
ended period Year Year ended Apr. 15,
Apr. 30, ended ended ended Apr. 30, 1994-
1995 Oct. 31, Dec. 31, Dec. 31, 1995 Oct. 31,
(Unaudited) 1994 1993 1992 (Unaudited) 1994
---------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value,
beginning of period $ 1.00 1.00 1.00 1.00 1.00 1.00
---------- ----------- ----------- ----------- ---------- -----------
Income from
investment operations:
Net investment income .03 .03 .03 .04 .03 .03
Less distributions:
From net investment
income (.03) (.03) (.03) (.04) (.03) (.03)
---------- ----------- ----------- ----------- ---------- -----------
Net asset value, end
of period $ 1.00 1.00 1.00 1.00 1.00 1.00
========== =========== =========== =========== ========== ===========
Total return 2.86% 3.33% 3.29% 3.98% 2.86% 2.41%
Net assets, end of
period (000's) $184,790 161,756 107,844 36,522 72,699 47,350
Ratio of total expenses
to average net assets* 0.25% 0.21% 0.00% 0.00% 0.25% 0.21%
Ratio of net investment
income to average net
assets* 5.77% 4.05% 3.33% 3.93% 5.66% 4.27%
Ratio of net expenses
before reimbursement
and waiver to average
net assets* 0.86% 0.85% 0.95% 1.04% 0.86% 0.92%
Ratio of net investment
income before
reimbursement and
waiver to average net
assets* 5.16% 3.38% 2.38% 2.87% 5.05% 3.67%
Portfolio turnover rate N/A N/A N/A N/A N/A N/A
* Annualized
Per share data calculated using average number of shares outstanding throughout the period.
</TABLE>
42 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------
Government Fund
Select Class Adviser Class
Six-month Ten-month Six-month
period ended period ended period ended Period from
April 30, 1995 October 31, April 30, 1995 April 15, 1994-
(Unaudited) 1994 (Unaudited) October 31, 1994
---------------- --------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 9.41 10.00 9.41 9.67
---------------- --------------------- ---------------- -----------------
Income from
investment operations:
Net investment income .32 .40 .27 .24
Net realized and change in
unrealized gain (loss) .26 (.63) .25 (.24)
---------------- --------------------- ---------------- -----------------
Total .58 (.23) .52 .00
Less distributions:
From net investment income (.32) (.36) (.28) (.26)
---------------- --------------------- ---------------- -----------------
Net asset value, end of period $ 9.67 9.41 9.65 9.41
================ ===================== ================ =================
Total return 6.23% (2.37)% 5.66% (0.06)%
Net assets, end of period
(000's) $19,240 26,110 257 151
Ratio of total expenses to
average net assets* 0.70% 0.41 % 1.59% 1.28%
Ratio of net investment income
to average net assets* 6.83% 5.29 % 6.07% 4.68%
Ratio of net expenses before
reimbursement and waiver to
average net assets* 1.14% 1.16 % 2.04% 2.11%
Ratio of net investment income
before reimbursement and
waiver to average net assets* 6.38% 4.54 % 5.62% 3.85%
Portfolio turnover rate 75.52% 43.63 % 75.52% 43.63%
</TABLE>
Aetna Mutual Funds Semi-Annual Report 43
<PAGE>
Financial Highlights
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------
Bond Fund
Select Class Adviser Class
Six-month Six-month Period
period Ten-month period from
ended period Year Year ended Apr. 15,
Apr. 30, ended ended ended Apr. 30, 1994-
1995 Oct. 31, Dec. 31, Dec. 31, 1995 Oct. 31,
(Unaudited) 1994 1993 1992 (Unaudited) 1994
------------ ------------ ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 9.58 10.37 9.99 10.00 9.58 9.92
Income from
investment operations:
Net investment income .33 .52 .55 .53 .28 .28
Net realized and change
in unrealized gain
(loss) .20 (.86) .45 .16 .21 (.35)
------------ ------------ ---------- ------------ ------------ -----------
Total .53 (.34) 1.00 .69 .49 (.07)
Less distributions:
From net investment
income (.31) (.45) (.55) (.53) (.28) (.27)
In excess of net
investment income .00 .00 (.07) (.17) .00 .00
------------ ------------ ---------- ------------ ------------ -----------
Net asset value, end of
period $ 9.80 9.58 10.37 9.99 9.79 9.58
============ ============ ========== ============ ============ ===========
Total return 5.62% (3.31)% 10.20% 7.23% 5.19% (0.68)%
Net assets, end of
period (000's) $30,282 27,584 46,788 37,209 14,297 25,405
Ratio of total expenses
to average net assets* 0.75% 0.76 % 0.47% 0.05% 1.50% 1.49 %
Ratio of net investment
income to average net
assets* 6.89% 6.29 % 5.34% 5.44% 6.07% 5.36 %
Ratio of net expenses
before reimbursement
and waiver to average
net assets* 1.04% 1.06 % 1.01% 1.10% 1.79% 1.81 %
Ratio of net investment
income before
reimbursement and
waiver to average net
assets* 6.60% 5.98 % 4.80% 4.39% 5.78% 5.04 %
Portfolio turnover rate 25.30% 51.80 % 50.01% 57.05% 25.30% 51.80 %
*Annualized
Per share data calculated using average number of shares outstanding throughout the period.
</TABLE>
44 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------
Tax-Free Fund
Select Class Adviser Class
Six-month Ten-month Six-month
period ended period ended period ended Period from
April 30, 1995 October 31, April 30, 1995 April 15, 1994-
(Unaudited) 1994 (Unaudited) October 31, 1994
----------------- ------------------ ---------------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period $ 8.98 10.00 8.97 9.32
----------------- ------------------ ---------------- ------------------
Income from
investment operations:
Net investment income .23 .38 .20 .21
Net realized and change in
unrealized gain (loss) .44 (1.07) .43 (.33)
----------------- ------------------ ---------------- ------------------
Total .67 (.69) .63 (.12)
Less distributions:
From net investment income (.24) (.33) (.19) (.23)
----------------- ------------------ ---------------- ------------------
Net asset value, end of period $ 9.41 8.98 9.41 8.97
================= ================== ================ ==================
Total return 7.50% (6.95)% 7.11% (1.32)%
Net assets, end of period (000's) $1,926 1,465 21,283 25,581
Ratio of total expenses to average
net assets* 0.85% 0.30 % 1.60% 1.27 %
Ratio of net investment income to
average net assets* 5.04% 4.85 % 4.29% 4.20 %
Ratio of net expenses before
reimbursement and waiver to
average net assets* 1.10% 1.20 % 1.85% 1.87 %
Ratio of net investment income
before reimbursement and waiver
to average net assets* 4.79% 3.94 % 4.04% 3.60 %
Portfolio turnover rate 12.36% 29.14 % 12.36% 29.14 %
</TABLE>
Aetna Mutual Funds Semi-Annual Report 45
<PAGE>
Financial Highlights
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
The Aetna Fund
Select Class Adviser Class
Six-month Six-month Period
period Ten-month period from
ended period Year Year ended Apr. 15,
Apr. 30, ended ended ended Apr. 30, 1994-
1995 Oct. 31, Dec. 31, Dec. 31, 1995 Oct. 31,
(Unaudited) 1994 1993 1992 (Unaudited) 1994
------------ ----------- ----------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 10.65 10.82 10.18 10.00 10.62 10.54
------------ ----------- ----------- ----------- ------------ -----------
Income from
investment operations:
Net investment income .18 .23 .34 .43 .12 .19
Net realized and change
in unrealized gain
(loss) .46 (.28) .64 .24 .45 .00
------------ ----------- ----------- ----------- ------------ -----------
Total .64 (.05) .98 .67 .57 .19
Less distributions:
From net investment
income (.20) (.12) (.30) (.39) (.14) (.11)
In excess of net
investment income .00 .00 (.01) (.10) .00 .00
Return of capital
distribution .00 .00 (.03) .00 .00 .00
------------ ----------- ----------- ----------- ------------ -----------
Net asset value, end of
period $ 11.09 10.65 10.82 10.18 11.05 10.62
============ =========== =========== =========== ============ ===========
Total return 6.12% (0.42)% 9.84% 6.64% 5.41% 1.84%
Net assets, end of
period (000's) $81,680 76,267 63,982 37,726 818 26,396
Ratio of total expenses
to average net assets* 1.25% 1.09 % 0.93% 0.07% 2.04% 1.87%
Ratio of net investment
income to average net
assets* 3.51% 2.65 % 3.21% 4.31% 2.65% 1.90%
Ratio of net expenses
before reimbursement
and waiver to average
net assets* 1.28% 1.32 % 1.34% 1.47% 2.07% 2.06%
Ratio of net investment
income before
reimbursement and
waiver to average net
assets* 3.49% 2.42 % 2.79% 2.91% 2.62% 1.67%
Portfolio turnover rate 76.37% 86.10 % 19.95% 13.35% 76.37% 86.10%
*Annualized
Per share data calculated using average number of shares outstanding throughout the period.
</TABLE>
46 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
Growth and Income Fund
Select Class Adviser Class
Six-month Six-month Period
period Ten-month period from
ended period Year Year ended Apr. 15,
Apr. 30, ended ended ended Apr. 30, 1994-
1995 Oct. 31, Dec. 31, Dec. 31, 1995 Oct. 31,
(Unaudited) 1994 1993 1992 (Unaudited) 1994
---------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 11.11 11.03 10.51 10.00 11.08 10.75
---------- ----------- ----------- ----------- ---------- -----------
Income from
investment operations:
Net investment income .11 .12 .19 .26 .07 .11
Net realized and change
in unrealized gain .64 .04 .50 .51 .66 .30
---------- ----------- ----------- ----------- ---------- -----------
Total .75 .16 .69 .77 .73 .41
Less distributions:
From net investment
income (.07) (.08) (.16) (.26) (.03) (.08)
Return of capital
distribution .00 .00 (.01) .00 .00 .00
---------- ----------- ----------- ----------- ---------- -----------
Net asset value, end of
period $ 11.79 11.11 11.03 10.51 11.78 11.08
========== =========== =========== =========== ========== ===========
Total return 6.90% 1.40% 6.58% 7.81% 6.71% 3.71%
Net assets, end of period
(000's) $325,815 301,360 60,127 31,473 1,166 5,740
Ratio of total expenses
to average net assets* 1.01% 0.92% 1.13% 0.33% 1.77% 2.32%
Ratio of net investment
income to average net
assets* 2.03% 1.51% 1.77% 2.83% 1.40% 1.74%
Ratio of net expenses
before reimbursement
and waiver to average
net assets* 1.01% 1.03% 1.27% 1.72% 1.77% 2.42%
Ratio of net investment
income before reim-
bursement and waiver to
average net assets* 2.03% 1.39% 1.55% 1.44% 1.40% 1.65%
Portfolio turnover rate 78.63% 54.13% 23.60% 14.44% 78.63% 54.13%
</TABLE>
Aetna Mutual Funds Semi-Annual Report 47
<PAGE>
Financial Highlights
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Growth Fund
Select Class Adviser Class
Six-month Ten-month Six-month Period from
period ended period ended period ended April 15, 1994-
April 30, 1995 October 31, April 30, 1995 October 31,
(Unaudited) 1994 (Unaudited) 1994
---------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.78 10.00 10.74 10.26
---------------- ---------------- ----------------- -----------------
Income from
investment operations:
Net investment income (loss) .02 .09 (.03) (.02)
Net realized and change in unrealized
gain .80 .69 .81 .50
---------------- ---------------- ----------------- -----------------
Total .82 .78 .78 .48
Less distributions:
From net investment income (.09) .00 (.07) .00
---------------- ---------------- ----------------- -----------------
Net asset value, end of period $ 11.51 10.78 11.45 10.74
================ ================ ================= =================
Total return 7.83% 7.70% 7.43 % 4.58 %
Net assets, end of period (000's) $31,940 27,188 944 417
Ratio of total expenses to average
net assets* 1.20% 0.92 % 1.97 % 1.72 %
Ratio of net investment income to
average net assets* 0.30% 1.10% (0.51)% (0.25)%
Ratio of net expenses before
reimbursement and waiver to
average net assets* 1.25% 1.42% 2.02 % 2.17 %
Ratio of net investment income before
reimbursement and waiver to average
net assets* 0.24% 0.60% (0.57)% (0.71)%
Portfolio turnover rate 63.90% 120.32% 63.90 % 120.32 %
*Annualized
Per share data calculated using average number of shares outstanding throughout the period.
</TABLE>
48 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Small Company Growth Fund
Select Class Adviser Class
Six-month Ten-month Six-month Period from
period ended period ended period ended April 15, 1994-
April 30, 1995 October 31, April 30, 1995 October 31,
(Unaudited) 1994 (Unaudited) 1994
---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.39 10.00 10.35 10.24
---------------- ---------------- ---------------- -----------------
Income from
investment operations:
Net investment income (loss) .00 .02 (.05) (.04)
Net realized and change in unrealized
gain 1.06 .37 1.06 .15
---------------- ---------------- ---------------- -----------------
Total 1.06 .39 1.01 .11
Less distributions:
From net investment income (.02) .00 .00 .00
---------------- ---------------- ---------------- -----------------
Net asset value, end of period $ 11.43 10.39 11.36 10.35
================ ================ ================ =================
Total return 10.23% 3.90% 9.86% 0.98%
Net assets, end of period (000's) $28,756 25,879 581 205
Ratio of total expenses to average
net assets* 1.40% 1.15 % 2.14% 1.78%
Ratio of net investment income to
average net assets* (0.08)% 0.21% (0.87)% (0.72)%
Ratio of net expenses before
reimbursement and waiver to
average net assets* 1.44% 1.58% 2.18% 2.14%
Ratio of net investment income before
reimbursement and waiver to average
net assets* (0.13)% (0.22)% (0.92)% (1.07)%
Portfolio turnover rate 64.45% 116.28% 64.45% 116.28%
</TABLE>
Aetna Mutual Funds Semi-Annual Report 49
<PAGE>
Financial Highlights
Selected data for a fund share outstanding throughout each period:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------
International Growth Fund
Select Class Adviser Class
Six-month Six-month
period Ten-month period Period
ended period Year Year ended from
Apr. 30, ended ended ended Apr. 30, Apr. 15,
1995 Oct. 31, Dec. 31, Dec. 31, 1995 1994-
(Unaudited) 1994 1993 1992 (Unaudited) Oct. 31, 1994
------------ ----------- ----------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 11.56 11.17 8.88 10.00 11.51 11.24
------------ ----------- ----------- ----------- ---------- -------------
Income from
investment operations:
Net investment income
(loss) .01 .06 .05 .06 (.03) .01
Net realized and change
in unrealized gain
(loss) (.39) .33 2.65 (1.15) (.39) .26
------------ ----------- ----------- ----------- ---------- -------------
Total (.38) .39 2.70 (1.09) (.42) .27
Less distributions:
From net investment
income (.31) .00 (.05) (.03) (.25) .00
In excess of net
investment income .00 .00 (.34) .00 .00 .00
From realized gain (.53) .00 (.02) .00 (.53) .00
------------ ----------- ----------- ----------- ---------- -------------
Net asset value, end of
period $ 10.34 11.56 11.17 8.88 10.31 11.51
============ =========== =========== =========== ========== =============
Total return (3.22)% 3.49% 30.37% (10.84)% (3.59)% 2.40%
Net assets, end of
period (000's) $27,759 31,479 39,847 26,640 28,590 26,647
Ratio of total expenses
to average net assets* 1.55% 1.66% 1.48% 0.50% 2.29% 2.27%
Ratio of net investment
income to average net
assets* 0.16% 0.71% 0.50% 1.36% (0.48)% 0.17%
Ratio of net expenses
before reimbursement
and waiver to average
net assets* 1.63% 1.80% 1.77% 2.98% 2.30% 2.41%
Ratio of net investment
income before reim-
bursement and waiver
to average net assets* 0.08% 0.57% 0.20% (1.12)% (0.56)% 0.02%
Portfolio turnover rate 21.51% 81.67% 110.38% 81.74% 21.51% 81.67%
*Annualized
Per share data calculated using average number of shares outstanding throughout the period.
</TABLE>
50 See Notes to Financial Statements.
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Asian Growth Fund
Select Class Adviser Class
Six-month Ten-month Six-month Period from
period ended period ended period ended April 15, 1994-
April 30, 1995 October 31, April 30, 1995 October 31,
(Unaudited) 1994 (Unaudited) 1994
---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.49 10.00 9.46 8.56
---------------- ---------------- ---------------- -----------------
Income from
investment operations:
Net investment income (loss) .02 .05 .00 (.01)
Net realized and change in unrealized
gain (loss) (1.69) (.56) (1.67) .91
---------------- ---------------- ---------------- -----------------
Total (1.67) (.51) (1.67) .90
Less distributions:
From net investment income (.03) .00 (.01) .00
---------------- ---------------- ---------------- -----------------
Net asset value, end of period $ 7.79 9.49 7.78 9.46
================ ================ ================ =================
Total return (17.61)% (5.10)% (17.63)% 10.51 %
Net assets, end of period (000's) $22,401 29,386 418 314
Ratio of total expenses to average
net assets* 1.55 % 1.25 % 2.82 % 1.42 %
Ratio of net investment income to
average net assets* 0.56 % 0.71 % (0.08)% (0.24)%
Ratio of net expenses before
reimbursement and waiver to
average net assets* 2.14 % 1.81 % 2.90 % 1.73 %
Ratio of net investment income before
reimbursement and waiver to average
net assets* (0.02)% 0.15 % (0.69)% (0.55)%
Portfolio turnover rate 29.97 % 65.50 % 29.97 % 65.50 %
</TABLE>
Aetna Mutual Funds Semi-Annual Report 51
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Money Market Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Government and Agency Obligations (3.50%)
Federal National Mortgage Association 4.84%, 02/18/97 $ 4,000,000 $ 4,005,997
Student Loan Marketing Association, FRN, 5.20%, 12/01/97 5,000,000 5,004,466
-------------
Total Government & Agency Obligations (cost $9,010,463) $ 9,010,463
-------------
Corporate & Foreign Obligations (94.51%)
Foreign & Supranational Obligations (7.56%)
Australian Wheat Board, MTN, 5.53%, 07/24/95 3,000,000 2,999,032
Nordbanken N.A., Comm. Paper 6.10%, 06/02/95 5,000,000 4,972,889
Province of British Columbia, Comm. Paper 6.05%, 06/13/95 1,000,000 992,774
Province of British Columbia, Comm. Paper 6.10%, 08/09/95 500,000 491,528
Svenska Handelsbanken, Inc., FRCD 4.00%, 05/19/95 5,000,000 5,000,000
Svenska Handelsbanken, Inc., FRCD 5.64%, 05/23/95 5,000,000 5,000,018
-------------
Total Foreign & Supranational Obligations $ 19,456,241
-------------
Corporate Obligations (86.96%)
Aerospace & Aircraft (0.78%)
Lockheed Corp., MTN, 4.013%, 05/11/95 $ 2,000,000 $ 2,000,155
-------------
Asset-Backed Securities (4.35%)
Carco Auto Loan Trust 1993-2, Corp. Note 3.225%, 11/15/98 4,500,000 4,500,000
Olympic Automobile Receivables, Corp. Note 5.56%, 09/15/95 1,697,721 1,697,721
Money Market Credit Card Trust 1989-1, Corp. Note 3.26%, 06/10/96 181,818 181,818
Money Market Credit Card Trust 1989-1, Corp. Note 3.40%, 06/10/96 272,727 272,461
Money Market Credit Card Trust 1989-1, Corp. Note 3.50%, 06/10/96 545,454 545,454
Sheffield Receivables Corp., Comm. Paper 6.15%, 05/02/95 4,000,000 3,999,317
-------------
11,196,771
-------------
Autos & Auto Equipment (9.16%)
Cooper Industries, Inc., Comm. Paper, 6.00%, 05/01/95 11,728,000 11,728,000
Hertz Corporation, Comm. Paper, 6.06%, 05/23/95 4,000,000 3,985,187
Hertz Corporation, Comm. Paper, 6.10%, 08/23/95 3,000,000 2,942,050
</TABLE>
See Notes to Financial Statements.
52 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Money Market Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Hertz Corporation, Comm. Paper 6.10%, 07/25/95 $ 5,000,000 $ 4,927,986
-------------
23,583,223
-------------
Banks (6.02%)
First Fidelity Bank, N.A., Corp. Note, 9.75%, 05/25/95 5,000,000 5,011,928
First National Bank, Boston, Corp. Note, 6.33%, 09/27/95 10,500,000 10,501,418
-------------
15,513,346
-------------
Chemicals (4.26%)
Monsanto Co., Comm. Paper, 6.15%, 05/01/95 3,000,000 3,000,000
Monsanto Co., Comm. Paper, 6.15%, 05/03/95 3,000,000 2,998,975
Monsanto Co., Comm. Paper, 6.05%, 06/07/95 5,000,000 4,968,910
-------------
10,967,885
-------------
Computer & Office Equipment (1.79%)
Xerox Mexicana S.A. de C.V., Comm. Paper, 6.03%, 05/04/95 4,600,000 4,597,689
-------------
Diversified (8.40%)
General American Transportation Corp., Comm. Paper, 6.20%, 05/31/95 1,600,000 1,591,733
General American Transportation Corp., Comm. Paper, 6.26%, 05/15/95 $ 800,000 $ 798,052
Honeywell, Inc., Comm. Paper, 6.10%, 05/30/95 2,300,000 2,288,698
Honeywell, Inc., Comm. Paper, 6.25%, 08/21/95 1,000,000 980,556
ITT Corp., Comm. Paper, 6.05%, 05/02/95 9,500,000 9,498,403
Whirlpool Corp., Comm. Paper, 6.10%, 10/23/95 3,000,000 2,911,042
Whirlpool Corp., Comm. Paper, 6.05%, 06/15/95 3,600,000 3,572,775
-------------
21,641,259
-------------
Finance (51.52%)
American Express Credit Corp., Comm. Paper, 6.05%, 05/08/95 4,000,000 3,995,293
American Express Credit Corp., Comm. Paper, 6.08%, 09/11/95 4,000,000 3,910,150
American Express Credit Corp., Comm. Paper, 6.10%, 08/15/95 3,500,000 3,437,136
American Honda Finance Corp., Comm. Paper, 6.14%, 06/14/95 3,080,000 3,056,886
American Honda Finance Corp., Comm. Paper, 6.20%, 09/12/95 1,000,000 976,922
</TABLE>
Aetna Mutual Funds Semi-Annual Report 53
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Money Market Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
American Honda Finance Corp., Comm. Paper, 6.20%, 09/15/95 $ 917,000 $ 895,364
AVCO Financial Services, MTN, 3.62%, 06/02/95 4,000,000 4,000,000
Beneficial Corp., Comm. Paper, 4.20%, 06/09/95 5,000,000 5,000,000
Beneficial Corp., MTN, 9.35%, 07/05/95 700,000 703,565
Beneficial Corp., MTN, 6.13%, 06/12/95 4,000,000 3,971,393
Bridgestone/Firestone Master Trust, Inc., Comm. Paper, 6.12%,
05/23/95 3,748,000 3,748,000
Caterpillar Financial Services Corp., MTN, 6.86%, 08/10/95 1,460,000 1,461,699
Caterpillar Financial Services Corp., Comm. Paper, 6.10%, 05/03/95 1,529,000 1,528,482
Chrysler Financial Corp., Corp. Note, 6.10%, 05/30/95 3,000,000 2,985,258
Chrysler Financial Corp., Corp. Note, 6.13%, 07/05/95 3,000,000 2,966,796
Chrysler Financial Corp., MTN, 6.958%, 07/18/95 3,000,000 3,004,218
CIESCO, L.P., Comm. Paper, 6.08%, 05/11/95 4,000,000 3,993,244
CIESCO, L.P., Comm. Paper, 6.30%, 08/16/95 $3,800,000 $ 3,728,845
Dana Credit Corp., Comm. Paper, 6.563%, 10/26/95 2,300,000 2,302,141
Dean Witter, Discover 95, Corp. Note, 6.415%, 12/15/95 7,000,000 7,006,495
J. Deere Capital Corp., MTN, 6.125%, 03/11/96 8,250,000 8,250,000
Discover Credit Corp., MTN, 6.165%, 07/24/95 1,000,000 1,000,438
Discover Credit Corp., MTN, 6.115%, 06/30/95 1,600,000 1,600,724
Fleet Financial Group Inc., MTN, 6.22%, 10/13/95 500,000 499,812
Fleetwood Credit Corp., 6.07%, 05/31/95 3,300,000 3,283,308
Ford Motor Credit Co., Comm. Paper, 6.05%, 06/22/95 5,000,000 4,956,306
General Electric Capital Corp., MTN, 6.40%, 01/10/96 5,000,000 4,999,280
General Motors Acceptance Corp., Corp. Note, 8.75%, 02/01/96 1,770,000 1,788,295
General Motors Acceptance Corp., Corp. Note, 6.18%, 10/13/95 1,750,000 1,700,431
General Motors Acceptance Corp., Corp. Note, 9.45%, 05/18/95 2,000,000 2,003,445
</TABLE>
See Notes to Financial Statements.
54 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Money Market Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
General Motors Acceptance Corp., Corp. Note, 6.19%, 08/09/95 $ 500,000 $ 491,403
General Motors Acceptance Corp., Corp. Note, 6.40%, 03/01/96 1,100,000 1,100,000
General Motors Acceptance Corp., MTN, 6.625%, 04/22/96 1,650,000 1,652,209
Greyhound Financial Corp., Comm. Paper, 6.06%, 02/15/96 3,425,000 3,426,579
Greyhound Financial Corp., Comm. Paper, 6.563%, 02/15/96 6,325,000 6,330,389
Household Finance Corp., MTN, 9.00%, 09/01/95 500,000 504,010
International Lease Finance Corp., Comm. Paper, 6.04%, 06/28/95 2,600,000 2,574,699
ITT Financial Corp., Comm. Paper, 4.66%, 05/25/95 3,000,000 2,996,460
Pitney Bowes Credit Corp., Comm. Paper, 6.03%, 10/23/95 2,000,000 1,941,375
Prudential Funding Corp., Comm. Paper, 6.13%, 06/14/95 4,000,000 3,970,031
Transamerica Financial Group, Comm. Paper, 6.22%, 07/07/95 $5,000,000 $ 4,942,119
Transamerica Financial Group, Comm. Paper, 6.32%, 08/14/95 4,900,000 4,809,677
Transamerica Financial Group, Comm. Paper, 6.15%, 08/07/95 500,000 491,629
Whirlpool Financial Corp., Comm. Paper, 6.05%, 07/17/95 4,000,000 3,948,239
Xerox Credit Corp., Comm. Paper, 6.10%, 06/01/95 725,000 721,192
-------------
132,653,937
-------------
Health Services (0.68%)
Columbia/HCA Healthcare Corp., Corp. Note, 4.65%, 07/28/97 1,750,000 1,749,307
-------------
Total Corporate Obligations $223,903,572
-------------
Total Corporate & Foreign Obligations (cost $243,359,813) $243,359,813
-------------
Total Investments (cost $252,370,276) -------------
$252,370,276
-------------
</TABLE>
Notes to Portfolio of Investments
(a) The cost of investments for income tax purposes is identical to book.
There were no unrealized gains and losses at April 30, 1995.
Category percentages are based on net assets.
See Notes to Financial Statements.
Aetna Mutual Funds Semi-Annual Report 55
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Government Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
U.S. Government & Agency Obligations (76.75%)
Agency Backed Mortgage Obligations (44.21%)
Government National Mortgage Association, 8.50%, 10/15/07 $ 728,400 $ 751,163
Government National Mortgage Association, 9.00%, 07/15/16 591,694 613,697
Government National Mortgage Association, 9.00%, 05/16/16 553,771 574,365
Federal National Mortgage Association, 4.95%, 09/30/98 5,000,000 4,685,045
Federal National Mortgage Association, 8.00%, 04/01/25 2,000,000 1,995,626
-------------
8,619,896
-------------
U.S. Agency Obligations (18.88%)
Private Export Funding Corp., 5.48%, 09/15/03 850,000 794,750
Small Business Administration, 8.25%, 11/01/11 897,070 929,736
Small Business Administration 92-20k, 7.55%, 11/01/12 943,896 936,817
Student Loan Marketing Association, 7.82%, 10/14/99 $1,000,000 $ 1,020,280
-------------
3,681,583
-------------
U.S. Government Obligations (13.65%)
U.S. Treasury Bond, 7.50%, 11/15/24 1,500,000 1,522,500
U.S. Treasury Strip, Zero Coupon, 05/15/03 2,000,000 1,139,688
-------------
2,662,188
-------------
Total U.S. Government & Agency Obligations (cost $14,917,905) $14,963,667
-------------
Foreign & Supranational Obligations (2.95%)
International Bank For Reconstruction and Development, 9.25%,
05/17/07 500,000 574,720
-------------
Total Foreign & Supranational Obligations (cost $567,320) $ 574,720
-------------
Corporate Notes & Obligations (5.14%)
First Chicago Corp. 94i-A 5.983%, 11/17/97 1,000,000 1,002,570
-------------
Total Corporate Notes & Obligations (cost $998,281) $ 1,002,570
-------------
Short-Term Investments (14.33%)
General Signal Corp., 6.10%, 05/08/95 700,000 699,170
Koch Industries Inc., 5.95%, 05/01/95 569,000 569,000
</TABLE>
See Notes to Portfolio of Investments.
56 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Government Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Province of British Columbia, 5.95%, 05/02/95 $800,000 $ 799,868
USL Capital Corp., 5.95%, 05/02/95 700,000 699,884
-------------
Total Short-Term Investments (cost $2,767,922) $ 2,767,922
-------------
Total Investments (cost $19,251,428) -------------
$19,308,879
-------------
</TABLE>
Notes to Portfolio of Investments
(a) The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at April 30, 1995 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized gains $ 224,202
Unrealized losses (166,751)
----------
Net unrealized gains $ 57,451
==========
</TABLE>
Category percentages are based on net assets.
See Notes to Portfolio of Investments.
Aetna Mutual Funds Semi-Annual Report 57
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Bond Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Long Term Bonds & Notes (89.41%)
U.S. Government & Agency Obligations (28.82%)
Agency Mortgage Backed Securities (9.44%)
Federal Home Loan Mortgage Corp., 5.625%, 12/01/22 $ 989,810 $ 1,009,297
Federal National Mortgage Association, Zero Coupon, 06/25/22 974,475 791,761
Federal National Mortgage Association, Zero Coupon, 06/25/19 553,796 461,910
Federal National Mortgage Association, 8.00%, 04/01/25 1,000,000 997,813
Government National Mortgage Association, 10.00%, 04/15/19 111,910 120,198
Government National Mortgage Association, 10.00%, 11/15/18 167,708 180,129
Government National Mortgage Association, 9.50%, 07/15/18 432,413 454,980
Government National Mortgage Association, 10.00%, 07/15/19 174,903 187,857
-------------
4,203,945
-------------
U.S. Agency Obligations (5.67%)
Private Export Funding Corp, 5.48%, 09/15/03 $1,700,000 $ 1,589,500
Small Business Administration 92-20k, 7.55%, 11/01/12 943,896 936,817
-------------
2,526,317
-------------
U.S. Government Obligations (13.70%)
U.S. Treasury Bond, 7.50%, 11/15/24 1,500,000 1,522,500
U.S. Treasury Note, 6.75%, 05/31/97 4,000,000 4,010,000
U.S. Treasury Strip, Zero Coupon, 02/15/12 2,000,000 569,680
-------------
6,102,180
-------------
Total U.S. Governnment and Agency Obligations $12,832,442
-------------
Domestic Corporate & Convertible Bonds and Notes (23.82%)
Asset-Backed Securities (9.01%)
Advanta Credit Card 1993-2, 6.043%, 08/31/00 2,000,000 2,009,600
First Chicago Corp., 5.983%, 11/17/97 2,000,000 2,005,140
-------------
4,014,740
-------------
Finance Companies (9.65%)
American Express Credit Corp., 8.50%, 06/15/99 1,000,000 1,038,968
</TABLE>
See Notes to Financial Statements.
58 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Bond Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Associates Corp., 8.55%, 07/15/99 $1,000,000 $ 1,084,179
Commercial Credit Corp., 8.70%, 06/15/09 1,000,000 1,113,464
ITT Financial Corp., 8.875%, 06/15/03 1,000,000 1,060,978
-------------
4,297,589
-------------
Other Corporate Bonds (9.66%)
Healthtrust, Inc., 10.75%, 05/01/02 1,000,000 1,100,000
Stone Container Corp., 9.875%, 02/01/01 1,000,000 998,750
TRW Inc., 9.35%, 06/04/20 1,000,000 1,147,434
Tele-Communications, Inc., 9.25%, 04/15/02 1,000,000 1,054,768
-------------
4,300,952
-------------
Total Domestic Corporate & Convertible Bonds and Notes $12,613,281
-------------
Foreign & Non-Agency Mortage-Backed (36.77%)
Foreign & Supranational Obligations (21.72%)
African Development Bank, 8.80%, 09/01/19 250,000 277,903
China International Trust, 9.00%, 10/15/06 1,000,000 1,005,000
Empresa Dist Sur FRN, 9.763%, 05/17/96 $1,500,000 $ 1,387,500
Interamerican Development Bank, 12.25%, 12/15/08 1,200,000 1,648,189
International Bank For Reconstruction and Development, 9.25%,
07/15/17 1,500,000 1,724,160
KFW International Finance, 8.85%, 07/15/99 500,000 529,209
Quebec Province, 7.125%, 02/09/24 1,000,000 864,540
Swire Pacific, Ltd. 8.50%, 09/29/04 (a) 1,000,000 995,000
European Investment Bank, 13.00%, 08/31/96 1,182,000 1,241,100
-------------
Total Foreign & Supranational Obligations $ 9,672,601
-------------
Non-Agency Mortgage-Backed Securities (10.53%)
Chase Mortgage Finance, 1992-F, 8.25%, 05/25/08 1,059,000 1,057,719
Marine Midland 1992-1 AM, 8.00%, 04/25/23 972,373 934,198
Prudential Home Mortgage 1992 13 M1, 7.50%, 05/25/07 701,824 675,505
Prudential Home Mortgage 92-39 M 7.00%, 12/25/07 906,777 857,667
</TABLE>
Aetna Mutual Funds Semi-Annual Report 59
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Bond Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Residential Funding Corp. 1992 S2A7, 8.00%, 05/25/20 $ 165,843 $ 165,239
Resolution Trust Corp. 1991 17B6, 8.20%, 09/25/21 1,000,000 1,005,913
-------------
4,696,241
-------------
Total Foreign & Non-Agency Mortgage-Backed $14,368,842
-------------
Total Long Term Investments (cost $40,030,374) $39,814,565
-------------
Short Term Investments (6.58%)
Honeywell, Inc., Comm. Paper, 6.00%, 05/01/95 2,931,000 2,931,000
-------------
Total Short Term Investments (cost $2,931,000) $ 2,931,000
-------------
Total Investments--100.00% (cost $42,961,374) -------------
$42,745,565
-------------
</TABLE>
Notes to Portfolio of Investments
(a) The cost of investments for income tax purposes amounted to $42,990,014.
Unrealized gains and losses, based on identified tax cost at April 30,
1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized gains $ 384,946
Unrealized losses (629,395)
----------
Net unrealized losses $(244,449)
==========
</TABLE>
Category percentages are based on net assets.
60 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Tax-Free Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Long Term Bonds & Notes (92.27%)
Airport (4.42%)
City and County of Denver, Colorado, Airport System Revenue Bonds,
7.00%, 11/15/99 $1,000,000 $1,025,000
-------------
Electric Revenue (10.70%)
Seattle, Washington Light and Power System, Light and Power Revenue
Refunding Bonds, 4.90%, 05/01/03 1,000,000 942,500
Southern Minnesota Municipal Power Agency, Power Supply System
Revenue Bonds, 5.50%, 01/01/03 640,000 633,600
Washington Public Power Supply System, Nuclear Project No. 2 Revenue
Refunding Bonds, 5.375%, 07/01/11 1,000,000 907,500
-------------
2,483,600
-------------
Escrowed to Maturity (1.59%)
Southern Minnesota Municipal Power Agency, Power Supply System
Revenue Bonds, 5.50%, 01/01/03 360,000 369,000
-------------
General Obligation (8.27%)
Cedar Rapids, Iowa, 5.125%, 06/01/11 $1,000,000 $ 920,000
City and County of Honolulu, Hawaii, 5.50%, 04/01/06 1,000,000 998,750
-------------
1,918,750
-------------
Housing (4.11%)
Virginia Housing Development Authority, Mortgage Revenue Bonds,
5.70%, 01/01/11 1,000,000 953,750
-------------
Insured (12.42%)
Atlanta, Georgia, Airport Facilities Revenue Refunding Bonds,
(Ambac- Insured), 5.30%, 01/01/03 1,000,000 1,002,500
Florida Municipal Power Agency, All Requirements Power Supply Revenue
Bonds (Ambac-Insured), 5.10%, 10/01/14 1,000,000 896,250
Kentucky Turnpike Authority, Economic Development Road Revenue
Refunding Bonds (Ambac-Insured), 5.50%, 07/01/09 1,000,000 983,750
-------------
2,882,500
-------------
</TABLE>
See Notes to Financial Statements.
Aetna Mutual Funds Semi-Annual Report 61
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Tax-Free Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Lease (4.33%)
Indiana Transportation Finance Authority, Airport Facilities Lease
Revenue Bonds, 6.50%, 11/01/07 $1,000,000 $1,030,000
-------------
Pollution Control (3.80%)
Illinois Development Finance Authority, Pollution Control Revenue
Refunding Bonds (Commonwealth Edison Project), 5.85%, 01/15/14 1,000,000 905,000
-------------
Prerefunded (13.81%)
San Antonio, Texas, General Obligation Limited Tax Bonds (Prerefunded
8/01/97 @ 100), 7.875%, 08/01/10 1,000,000 1,067,500
Tarrant County, Texas Water Control and Improvement District No. 1,
Water Revenue Bonds (Prerefunded 3/01/98 @ 100), 7.70%, 03/01/00 1,000,000 1,077,500
State of Wisconsin, General Obligation Bonds (Prerefunded 5/01/98 @
101), 6.60%, 05/01/08 1,000,000 1,060,000
-------------
3,205,000
-------------
Sales/Special Tax (3.89%)
State of Illinois, Sales Tax Revenue Bonds, 5.25%, 06/15/13 $1,000,000 $ 902,500
-------------
University (8.20%)
California Educational Facility Authority Revenue Bonds, University
of Southern California Project, 5.75%, 10/01/15 1,000,000 958,750
Dormitory Authority of the State of New York, Consolidated City
University System Revenue Bonds, 5.75%, 07/01/09 1,000,000 945,000
-------------
1,903,750
-------------
Water/Sewer (16.52%)
DuPage Water Commission, Illinois, Water Revenue Refunding Bonds,
5.25%, 05/01/11 1,000,000 928,750
Massachusetts Water Resources Authority
General Revenue Refunding Bonds, 5.25%, 03/01/13 1,000,000 903,750
City of Philadelphia Water & Wastewater, 5.625%, 06/15/09 1,000,000 976,250
</TABLE>
See Notes to Portfolio of Investments.
62 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Tax-Free Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Portland, Oregon, Sewer System Revenue Bonds, 6.10%, 06/01/10 $1,000,000 $ 1,026,250
-------------
3,835,000
-------------
Total Long Term Bonds & Notes (cost $21,885,674) $21,413,850
-------------
Short-Term Investments (10.01%)
Koch Industries, Inc., Comm. Paper, 5.95%, 05/01/95 1,000,000 1,000,000
Prudential Funding Corp., Comm. Paper, 5.95%, 05/01/95 707,000 707,000
USL Capital Corp., Comm. Paper, 5.95%, 05/02/95 675,000 674,888
-------------
Total Short-Term Investments (cost $2,381,888) $ 2,381,888
-------------
Total Investments (cost $24,267,562) -------------
$23,795,738
-------------
</TABLE>
Notes to Portfolio of Investments
(a) The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at April 30, 1995 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized gains $ 184,269
Unrealized losses (656,093)
----------
Net unrealized loss ($ 471,824)
==========
</TABLE>
Category percentages are based on net assets.
See Notes to Portfolio of Investments.
Aetna Mutual Funds Semi-Annual Report 63
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Common Stocks (61.86%)
Aerospace & Defense (1.14%)
Kaman Corporation Class "A" 2,300 $ 28,463
Lockheed Martin Corp. 4,000 231,000
McDonnell Douglas Corp. 11,000 682,000
-------------
941,463
-------------
Air Transportation (0.82%)
AMR Corp. 3,100 208,863
Pittston Service Group 17,500 415,625
UAL Corp. 400 48,000
-------------
672,488
-------------
Autos & Auto Equipment (1.82%)
Borg-Warner Automotive, Inc. 400 10,300
Breed Technologies, Inc. 1,700 34,213
Eaton Corp. 8,000 459,000
Echlin, Inc. 1,300 47,450
Ford Motor Co. 11,800 318,600
Kaydon Corp. 400 11,000
Masland Corp. 2,000 27,250
Oshkosh Truck Corp. 500 6,344
SPX Corp. 900 12,263
TRW Inc. 7,700 572,688
-------------
1,499,108
-------------
Banks (3.06%)
Anchor Bancorp Wisconsin, Inc. 200 $ 6,663
Associated Banc-Corp. 100 3,675
Bank of Boston Corp. 8,000 268,000
Bankamerica Corp. 8,000 396,000
Bankers First Corp. 400 10,700
Centerbank 1,000 13,125
Centura Banks, Inc. 800 20,700
Charter One Financial, Inc. 2,200 50,463
Chemical Banking Corp. 9,500 396,625
Citicorp 4,400 204,050
City National Corp. 3,300 33,413
Commerce Bancorp, Inc. 400 6,825
Commerce Bancshares, Inc 700 21,350
Cullen/Frost Bankers 600 22,200
FFY Financial Corp. 400 7,200
First American Corp. (Tenn.) 1,100 38,088
First Commonwealth Financial Corp. 300 4,575
First Interstate Bancorp 6,800 522,750
Firstier Financial, Inc. 100 3,363
Fulton Financial Corp. 200 4,025
Hibernia Corp. Class "A" 5,300 42,400
MAF Bancorp, Inc. 200 4,700
</TABLE>
See Notes to Portfolio of Investments .
64 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Mellon Bank Corp. 3,900 $ 153,075
Midlantic Corporation, Inc. 900 32,850
National Commerce Bancorporation 200 4,950
North Side Savings Bank 300 6,788
Old National Bancorp 200 6,900
Peoples Bank of Bridgeport, CT. 1,100 16,363
Putnam Trust Co. 100 4,138
Queens County Bancorp, Inc. 1,200 36,750
Reliance Bancorp 800 10,100
Silicon Valley Bancshares 700 11,025
Standard Financial, Inc. 1,000 12,250
Star Banc Corp. 800 33,400
Summit Bancorporation 1,100 21,244
Susquehanna Bancshares, Inc. 300 6,844
TCF Financial Corp. 1,100 47,163
The Boston Bancorp 300 11,663
Trustmark Corp. 300 5,025
Valley National Bancorp 935 23,375
-------------
2,524,793
-------------
Building Materials &
Construction (0.57%)
Ameron, Inc. 100 3,663
Armstrong World Industries, Inc. 4,000 $ 182,000
Champion Enterprises, Inc. 1,400 42,000
Florida Rock Industries, Inc. 200 5,550
Granite Construction Inc. 2,000 40,375
Kasler Holding Co. 600 3,675
Modine Manufacturing Co. 500 17,000
National Steel Corp. 2,600 33,150
NCI Building Systems, Inc. 600 10,725
Redman Industries, Inc. 300 5,888
Stone & Webster, Inc. 1,000 29,750
Texas Industries 1,200 45,150
Tredegar Industries, Inc. 400 9,100
UNR Industries, Inc. 400 2,388
Del Webb Corp. 2,200 42,075
-------------
472,489
-------------
Chemicals (1.59%)
ARCO Chemical Co. 800 37,200
Cabot Corp. 1,300 51,025
Cytec Industries 2,100 76,388
du Pont (E.I.) de Nemours 1,900 125,163
Fuller (H.B.) Co. 800 30,300
IMC Global, Inc. 900 44,213
Learonal Inc. 1,500 29,063
</TABLE>
Aetna Mutual Funds Semi-Annual Report 65
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Lyondell Petrochemical Co. 1,000 $ 24,875
Morton International, Inc. 12,500 387,500
OM Group, Inc. 300 7,163
PPG Industries, Inc. 3,300 129,938
Sterling Chemicals, Inc. 4,000 50,000
Synalloy Corp. 200 4,525
The Geon Gompany 1,900 51,300
Union Carbide Corp. 7,600 243,200
Vigoro Corp. 600 23,925
-------------
1,315,778
-------------
Commercial Services (0.70%)
Actava Group Inc. 1,200 11,100
California Water Service Co. 100 3,188
Devry, Inc. 800 30,300
Franklin Quest Co. 1,400 46,550
Health Management Systems, Inc. 50 1,163
Interim Services, Inc. 1,600 46,100
Ionics, Inc. 500 14,000
Jacobs Engineering Group Inc. 2,800 55,300
Jenny Craig Inc. 600 4,500
Kelly Services Inc. Class "A" 1,400 47,600
Manpower Inc. 100 3,338
Paychex, Inc. 200 9,538
Regis Corp. 800 13,800
Robert Half International Inc. 1,000 $ 26,375
Safeguard Services, Inc. 3,900 68,250
Service Corp. International 5,300 149,725
True North Communications, Inc. 2,000 38,000
United Video Satellite Group Inc. Class "A" 500 12,688
-------------
581,515
-------------
Computer & Office
Equipment (3.27%)
Ceridian Corp. 17,100 589,950
Fair Isaac & Company, Inc. 200 9,400
Gateway 2000, Inc.+ 400 7,575
Harris Corp. 900 42,300
HBO and Co. 300 13,650
International Business Machines Corp. 14,100 1,335,975
Planar Systems, Inc. 1,700 33,150
Read-Rite Corp. 5,800 123,613
Sun Microsystems, Inc. 3,700 147,075
Xerox Corp. 3,200 394,000
-------------
2,696,688
-------------
Computer Software (0.79%)
American Management Systems, Inc.+ 2,100 44,100
</TABLE>
See Notes to Portfolio of Investments .
66 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
CACI International, Inc.+ 100 $ 1,013
Cadence Design Systems, Inc. 1,700 54,825
Cheyenne Software, Inc. 500 7,250
Compuware Corp. 900 23,400
Control Data Systems, Inc. 700 6,519
Dell Computer Corp. 1,100 60,156
Exabyte Corp. 2,100 26,250
FTP Software, Inc. 3,600 94,275
Kronos, Inc. 300 9,038
Legent Corp. 1,300 35,425
Mapinfo Corp. 300 9,000
Medic Computer Systems, Inc. 200 8,850
Medicus Systems Corp. 700 7,788
Microsoft Corp. 700 57,269
Policy Management Systems Corp.+ 1,000 50,375
Recognition International, Inc. 100 738
Reynolds & Reynolds 1,700 45,050
Sungard Data Systems Inc.+ 2,200 102,025
System Software Assoc., Inc. 300 7,519
-------------
650,865
-------------
Consumer Products (0.45%)
Alberto-Culver Company 3,400 $107,100
Block Drug Co., Inc. 200 7,288
Consolidated Papers Inc. 1,100 53,900
Fieldcrest Cannon, Inc. 1,800 39,825
First Brands Corp. 300 11,550
Guilford Mills, Inc. 300 7,425
Helene Curtis Industries, Inc. 800 27,500
Libbey, Inc. 900 17,438
Maybelline, Inc. 1,200 26,400
Natures Sunshine Products, Inc. 160 2,060
Phillips-Van Heusen Corp. 300 4,613
Tambrands Inc. 300 12,488
Unifi, Inc. 1,600 40,200
Valspar Corp. 400 14,150
-------------
371,937
-------------
Diversified (1.64%)
Astec Industries, Inc. 400 4,500
BIC 200 6,775
Cyrk International, Inc. 3,100 44,563
Eastern Enterprises 2,300 68,713
Griffon Corp. 3,600 27,900
Harsco Corp. 1,000 47,625
ITT Corp. 5,300 553,850
Katy Industries 300 2,738
</TABLE>
Aetna Mutual Funds Semi-Annual Report 67
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Kulicke & Soffa Industries, Inc. 2,400 $ 101,850
Loews Corporation 200 20,375
Mercer International, Inc. 1,000 14,938
Santa Anita Realty Enterprises, Inc. 200 3,275
Standex International Corp. 600 18,825
Textron Inc. 4,000 228,000
United Waste Systems, Inc. 700 20,038
VF Corp. 3,700 186,850
-------------
1,350,815
-------------
Electric Utilities (1.02%)
Boston Edison Co. 1,300 31,038
California Energy Co. 300 4,988
Central Maine Power Co. 4,200 46,725
Cipsco, Inc. 900 26,100
General Public Utilities Corp. 400 11,400
Green Mountain Power Corp. 500 12,813
Illinova Corp. 600 13,950
Interstate Power Co. 200 4,825
LG&E Corp. 700 27,038
MDU Resources Group, Inc. 200 5,525
New York State Electric & Gas Corp. 600 13,125
Nipsco Industries, Inc. 1,500 $ 48,375
Northwestern Public Service Co. 200 5,450
Ohio Edison Co. 14,200 285,775
Oklahoma Gas and Electric Co. 1,200 41,250
Philadelphia Suburban Corp. 300 5,400
Public Service Co. Of New Mexico 4,200 53,550
Sierra Pacific Resources 1,000 20,875
Southern California Water Co. 600 10,275
United Illuminating Co. 2,500 80,313
Wisconsin Energy Corp. 2,000 55,500
WPS Resources Corp. 1,400 40,425
-------------
844,715
-------------
Electrical Equipment (4.47%)
3Com Corp. 600 33,563
Ametek, Inc. 1,900 30,875
AMP Inc. 6,000 256,500
Avnet, Inc. 1,200 53,400
Baldor Electric Co. 800 23,600
Burr-Brown Corp. 900 22,950
Cellstar Corp. 1,500 28,875
Dionex Corp. 100 4,188
Emerson Electric Company 8,900 598,525
</TABLE>
See Notes to Portfolio of Investments.
68 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
General Electric Corp. (U.S.) 15,700 $ 879,200
Itel Corp.+ 1,000 36,000
Kemet Corp. 1,500 58,688
Kuhlman Corp. 1,700 19,975
Marshall Industries 600 16,575
Microchip Technology Corp. 5,500 153,656
Molex, Inc. 1,700 64,600
Park Electrochemical Corp. 2,000 75,000
Parker-Hannifin Corp. 4,800 249,600
Sundstrand Corp. 400 22,200
Tektronix, Inc. 10,700 486,850
Telco Systems, Inc. 1,200 14,550
Teradyne, Inc. 1,200 60,750
Texas Instruments, Inc. 3,300 349,800
Valmont Industries+ 300 6,375
W. W. Grainger Inc. 2,400 145,200
-------------
3,691,495
-------------
Electrical & Electronics (1.26%)
Compaq Computer Corp. 2,700 102,600
Esterline Technology 3,900 65,813
FPL Group, Inc. 1,000 36,750
Intel Corp. 3,700 379,019
Logicon Inc. 200 7,400
Loral Corp. 2,300 108,100
Merix Corp 1,000 22,500
Micron Technology Inc. 900 $ 74,025
Motorola, Inc. 700 39,813
Tandy Corp. 4,000 198,000
Western Digital Corp. 200 3,200
-------------
1,037,220
-------------
Electronics (0.29%)
Best Power Technology, Inc. 500 6,313
Cohu, Inc. 200 7,300
CTS Corp. 100 3,313
Dovatron International Inc. 1,100 24,475
Dynatech Corp. 4,100 70,725
Glenayre Technologies, Inc. 600 36,825
Maxim Integrated Products, Inc. 1,000 36,500
Rogers Corp. 200 10,700
Seagate Technology, Inc. 700 22,313
Unitrode Corp. 1,200 24,900
-------------
243,364
-------------
Environmental Control (0.25%)
Browning-Ferris Industries, Inc. 6,100 201,300
Groundwater Technology, Inc. 600 7,800
-------------
209,100
-------------
Financial Services (1.77%)
American General Corp. 4,100 135,300
</TABLE>
Aetna Mutual Funds Semi-Annual Report 69
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Astoria Financial Corp. 2,600 $ 88,563
AutoFinance Group 600 8,963
Bank of New York Co., Inc. 6,100 200,538
Banponce Corp. 400 12,925
Baybanks, Inc. 500 31,188
Bell Bancorp, Inc. 600 16,800
Brooklyn Bancorp 600 19,200
Dean Witter Discover and Co. 9,100 385,613
Deposit Guaranty Corp. 700 24,238
Duff & Phelps Corp. 2,600 28,275
Federal Home Loan Mortgage Corp. 2,500 163,125
First Empire State Corp. 200 32,100
Foothill Group Class "A" 400 8,700
GP Financial Corp. 400 9,575
Great Financial Corp. 1,100 19,456
Home Financial Corp. 2,800 35,350
John Nuveen & Company, Inc. Class "A" 200 4,475
Keystone Financial, Inc. 500 14,406
Leader Financial Corp. 1,200 32,625
Mark Twain Bancshares, Inc. 200 6,288
Mercury Finance Co. 1,000 15,125
Morgan Keegan Inc. 500 $ 7,875
Pioneer Group, Inc. 500 12,719
River Forest Bancorp, Inc. 300 10,988
SEI Corp. 500 9,563
Transmedia Network Inc. 600 7,350
Travelers Group, Inc. 2,600 107,575
World Acceptance Corp. 200 5,700
Zions Bancorp. 200 8,550
-------------
1,463,148
-------------
Food & Beverage (4.40%)
American Maize Products Co. Class "A" 700 23,100
Anheuser Busch Co. 7,500 435,938
Archer-Daniels- Midland Co. 30,550 557,538
Cagle's, Inc. 300 5,963
Campbell Soup Co. 2,400 123,000
Coca-Cola Co. (The) 12,800 744,000
Conagra, Inc. 16,700 555,275
Goodmark Foods, Inc. 300 4,781
Heinz (H.J.) Co. 1,000 42,000
Hormel Foods Corp. 1,300 35,588
Hudson Foods, Inc. Class "A" 1,400 24,150
IBP, Inc. 1,300 48,100
International Dairy Queen, Inc. 700 13,475
International Multifoods Corp. 1,500 30,750
</TABLE>
See Notes to Portfolio of Investments.
70 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Kroger Co. (The) 1,500 $ 38,250
Luby's Cafeterias Inc. 13,700 260,300
Mondavi (Robert) Corp.+ 600 8,625
Quality Food Centers, Inc. 374 7,667
Richfood Holdings, Inc. 2,200 43,450
Safeway, Inc. 1,000 37,500
Sara Lee Corp. 18,500 515,688
Sbarro, Inc. 300 7,725
Smith's Food & Drug Centers, Inc. 1,600 34,600
Thorn Apple Valley 400 7,200
Universal Foods Corp. 700 22,750
-------------
3,627,413
-------------
Health Services (1.10%)
Columbia/HCA Healthcare Corp. 8,300 348,600
Coventry Corp. 2,300 53,906
Employee Benefit Plans, Inc. 1,600 13,600
Health Management Associates Class "A" 400 11,600
Humana Inc. 18,300 356,850
Integrated Health Services, Inc. 200 6,925
Invacare Corp. 300 11,775
Living Centers Of America, Inc. 200 5,675
Owens & Minor, Inc. 100 $ 1,350
Pharmacy Management Services, Inc.+ 1,100 17,463
Ren Corp.+ 1,100 17,875
Sun Healthcare Group, Inc. 300 7,238
Universal Health Services, Inc.+ 2,200 58,025
-------------
910,882
-------------
Health Technology (0.35%)
Amsco International, Inc. 7,000 88,375
Cordis Corp.+ 400 28,800
Fresenius USA, Inc.+ 300 3,075
Isomedix, Inc.+ 200 2,975
Life Technologies, Inc. 500 10,938
Puritan-Bennett Corp. 1,100 27,019
Research Industries Corp. 2,600 45,663
Sybron International Corp. 2,200 81,675
-------------
288,520
-------------
Home Furnishings & Appliances (0.10%)
Bombay Co., Inc. 1,100 8,250
Haverty Furniture Co., Inc. 400 4,150
Kimball International, Inc. Class "B" 100 2,625
Lancaster Colony Corp. 500 17,563
</TABLE>
Aetna Mutual Funds Semi-Annual Report 71
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Leggett & Platt, Inc. 1,200 $ 46,200
-------------
78,788
-------------
Hotels & Restaurants (0.08%)
Marcus Corp. 200 5,325
Marriott International, Inc. 1,600 57,600
Sholodge, Inc. 300 4,388
-------------
67,313
-------------
Household Products (0.95%)
Oneida Ltd. 100 1,500
Procter & Gamble Co. 3,800 265,525
Springs Industries, Inc. Class "A" 11,800 458,725
Toro Co. 2,100 60,638
-------------
786,388
-------------
Insurance (2.04%)
AFLAC, Inc. 1,000 41,250
Allied Group, Inc. 200 5,825
Allmerica Property & Casualty Co., Inc. 900 17,100
Allstate Corp. 1,300 39,488
American Bankers Insurance Group, Inc. 900 28,575
American Travellers Corp. 400 8,000
Argonaut Group, Inc. 600 18,150
Capital American Financial Corp. 200 4,375
Capital Guaranty Corp. 300 $ 5,325
Executive Risk Inc. 400 7,050
Fund American Enterprises Inc. 290 20,916
Gainsco, Inc. 900 9,563
Healthwise Of America, Inc. 100 2,825
Home Beneficial Company 200 4,025
Horace Mann Educators Corp. 200 4,125
Lawyers Title Corp. 200 2,900
Life Partners Group, Inc. 3,000 58,500
Maxicare Health Plans, Inc. 200 3,138
National Re Holdings Corp. 300 9,075
Ohio Casualty Corp. 1,100 32,244
Old Republic International Corp. 1,300 33,475
Progressive Corp. 5,300 200,075
Protective Life Corp. 800 36,300
PXRE Corporation 400 9,800
Reinsurance Group of America 300 7,463
Reliastar Financial Corp. 2,400 86,100
Security-Connecticut Corp. 1,700 42,500
St. Paul Companies, Inc. 17,400 837,375
Transnational Re Corp. Class "A" 700 14,175
</TABLE>
See Notes to Portfolio of Investments.
72 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Unitrin, Inc. 700 $ 33,775
Vesta Insurance Group, Inc. 1,600 53,400
Washington National Corp. 500 9,188
-------------
1,686,075
-------------
Leisure & Entertainment (0.41%)
Carmike Cinemas, Inc. Class "A"+ 1,400 31,150
Carnival Corp. 600 14,925
Chris-Craft Industries Inc. 824 27,810
Fleetwood Enterprises, Inc. 3,400 78,200
Polaris Industries, Inc. 2,000 90,500
Walt Disney Co. 1,800 99,675
-------------
342,260
-------------
Machinery (0.37%)
Caterpillar Inc. 1,700 99,450
Deere & Co. 1,000 82,000
Fluor Corp. 2,000 103,000
Regal Beloit Corp. 1,500 22,875
-------------
307,325
-------------
Machinery & Equipment (0.56%)
Arctco, Inc. 4,000 56,000
Barnes Group, Inc. 300 13,463
Clarcor, Inc. 100 2,100
Commercial Intertech Corp. 1,700 37,613
Danaher Corp. 1,700 50,575
Donaldson Company, Inc. 1,200 $ 29,850
FSI International, Inc. 2,000 92,250
Harnischfeger Industries, Inc. 1,700 50,150
IDEX Corp. 400 13,350
Indresco Inc. 1,200 16,800
JLG Industries, Inc. 800 16,200
Lindsay Manufacturing Co. 400 12,950
L.S. Starrett Company Class "A" 200 4,600
Raymond Corp. (The) 1,050 21,263
Tecumseh Products Co. Class "A" 600 30,000
Watts Industries, Inc. 300 6,825
Zero Corp. 500 6,875
-------------
460,864
-------------
Media (1.14%)
Belo (A.H.) Corp. 700 42,088
Capital Cities/ABC, Inc. 2,600 219,700
Clear Channel Communications, Inc. 1,600 90,000
Media General, Inc. 1,400 45,500
Park Communications, Inc. 700 21,306
Tele-Communications, Inc. 27,100 519,981
-------------
938,575
-------------
</TABLE>
Aetna Mutual Funds Semi-Annual Report 73
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Medical Services (0.03%)
HealthSouth Corp.+ 1,300 $ 25,675
-------------
Medical Supplies (0.69%)
Becton, Dickinson & Co. 7,300 406,975
Horizon Healthcare Corp.+ 4,700 98,113
Nellcor, Inc.+ 1,100 45,788
Superior Surgical Manufacturing Co. 600 7,275
Tecnol Medical Products Inc.+ 400 7,500
West Co., Inc. 200 5,600
-------------
571,251
-------------
Medical Technology (0.05%)
Bio-Rad Laboratories, Inc. Class A 300 8,663
Collagen Corp. 1,600 30,600
-------------
39,263
-------------
Metals (1.21%)
Alcan Aluminum Ltd. 7,300 207,138
Alumax Inc. 1,600 45,200
Ashland Coal, Inc. 200 5,525
Brush Wellman Inc. 1,300 25,675
Castle, (A.M.) & Co. 600 8,625
Cleveland Cliffs Inc. 400 14,650
Commercial Metals Co. 700 18,550
Cyprus Amax Minerals Co. 6,800 189,550
Handy & Harman 1,300 19,500
J&L Specialty Steel, Inc. 1,300 $ 24,050
Kennametal Inc. 900 30,150
Magma Copper Co. 2,500 41,875
Material Sciences Corp. 500 9,063
Minerals Technologies, Inc. 1,700 56,525
Nucor Corp. 3,600 172,800
Phelps Dodge Corp. 2,000 113,250
Rouge Steel Co. 700 15,663
-------------
997,789
-------------
Oil & Gas (5.20%)
Box Energy Corp. Class "B" 2,200 18,700
Chevron Corp. 5,900 279,513
Dekalb Energy Co. 1,600 37,900
Exxon Corp. 12,900 898,163
Leviathan Gas Pipeline Partners L.P. 1,000 25,000
Mobil Corp. 8,200 777,975
Newfield Exploration Co. 900 20,700
Oneok, Inc. 2,600 49,725
Panhandle Eastern Corp. 9,400 225,600
Penn Virginia Corp. 100 3,350
Quaker State Corp. 2,400 34,200
Royal Dutch Petroleum Co. 11,000 1,364,000
</TABLE>
See Notes to Portfolio of Investments.
74 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Santa Fe Pacific Pipeline Partners, L.P. 800 $ 29,600
Shell Transport Class "A" 6,300 448,875
Smith International Inc. 3,600 62,100
Tide West Oil Co. 600 6,188
Wiser Oil Co. 300 4,425
-------------
4,286,014
-------------
Oil & Gas Utilities (0.81%)
Cascade Natural Gas Corp. 300 4,200
Connecticut Energy Corp. 200 3,825
Energen Corp. 200 4,400
Laclede Gas Co. 200 3,775
New Jersey Resources Corp. 600 13,500
Northwest Natural Gas Co. 400 12,300
Pacific Enterprises 3,100 76,338
Piedmont Natural Gas, Inc. 800 16,300
Public Service Co. of North Carolina 600 8,925
Schlumberger, Ltd. 6,300 396,113
South Jersey Industries 800 16,100
Southern Indiana Gas & Electric Co. 1,200 36,300
Southwest Gas Corp. 600 8,850
Tesoro Petroleum 2,900 $ 28,638
Union Texas Petroleum Holdings, Inc. 1,800 38,475
-------------
668,039
-------------
Paper & Containers (2.20%)
ACX Technologies, Inc. 400 17,400
Aptargroup, Inc. 600 17,700
Avery Dennison Corp. 7,000 284,375
Ball Corp. 16,100 551,425
Champion International Corp. 3,900 171,600
Chesapeake Corp. 4,000 124,000
Georgia-Pacific Corp. 1,000 79,375
International Paper Co. 5,100 392,700
Longview Fibre Co. 2,000 33,250
Mead Corp. 300 15,525
Potlatch Corp. 2,000 85,250
Rayoner Inc. 1,200 39,750
Seda Speciality Packing Co. 300 3,094
-------------
1,815,444
-------------
Pharmaceuticals (4.36%)
Allergan, Inc. 500 13,563
A.L. Pharma, Inc. Class "A" 500 11,938
Barr Laboratories, Inc.+ 500 10,500
Blount Inc., Class "A" 600 26,775
</TABLE>
Aetna Mutual Funds Semi-Annual Report 75
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Bristol-Myers Squibb Co. 7,000 $ 455,875
Foxmeyer Health Corp. 600 11,400
Johnson & Johnson 12,700 825,500
Marion Merrell Dow, Inc. 1,000 23,875
Medtronic, Inc. 4,400 327,250
Mylan Laboratories 8,300 255,225
Pfizer Inc. 4,500 389,813
Rhone-Poulenc Rorer, Inc. 600 25,125
Schering-Plough 5,300 399,488
Smithkline Beecham 14,600 567,575
Walgreen Co. 3,300 155,100
Watson Pharmaceuticals, Inc.+ 3,100 96,100
-------------
3,595,102
-------------
Publishing & Printing (1.11%)
American Media Inc. 1,200 7,500
Banta Corp. 2,000 66,250
Cadmus Communications 1,600 29,100
Central Newspapers, Inc.--Class "A" 400 10,400
Devon Group, Inc. 1,500 40,125
Gannett Company, Inc. 11,400 599,925
Graphic Industries, Inc. 600 5,813
International Imaging Materials, Inc. 600 $ 15,975
Lee Enterprises, Inc. 800 28,700
Meredith Corp. 1,000 25,000
Playboy Enterprises, Inc. 600 4,875
Pulitzer Publishing Co. 500 20,188
Scholastic Corp. 300 16,800
Tribune Co. 800 47,300
-------------
917,951
-------------
Real Estate Investment
Trusts (0.01%)
Smith (Charles E.) Residential Realty Co. 500 11,375
-------------
Retail (2.97%)
Albertson's Inc. 23,000 727,375
Arbor Drugs, Inc. 400 10,200
Blair Corp. 200 6,925
Casey's General Stores, Inc. 1,200 20,550
Cash America International, Inc. 2,100 16,013
Circuit City Stores, Inc. 1,600 41,400
Dayton Hudson Corp. 1,900 127,538
Dollar General Corp. 1,800 41,850
General Nutrition Companies, Inc. 1,400 34,825
Hanover Direct, Inc. 2,100 4,988
Hills Stores Co. 800 16,100
</TABLE>
See Notes to Portfolio of Investments.
76 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Mac Frugal's Bargain Close-Outs, Inc. 2,600 $ 38,350
Medicine Shoppe International, Inc. 200 6,400
Nautica Enterprises, Inc. 1,000 27,875
Neiman Marcus Group, Inc. 4,100 59,963
Nike, Inc. 1,000 76,625
Office Depot, Inc. 4,600 104,650
Oshkosh B'Gosh, Inc. 100 1,625
Rex Stores Corp. 1,300 17,713
Rhodes, Inc. 2,100 20,738
Rite Aid Corp. 18,600 432,450
Sears, Roebuck & Co. 5,300 287,525
Staples, Inc. 2,600 62,238
Strawbridge & Clothier 300 5,925
Waban Inc. 2,100 34,913
Wal-Mart Stores, Inc. 9,000 213,750
Weis Markets, Inc. 300 7,838
-------------
2,446,342
-------------
Telecommunications (2.05%)
Ameritech Corp. 18,000 810,000
AT&T Corp. 9,500 482,125
Computer Associates International, Inc. 5,400 347,625
Equifax, Inc. 1,500 48,563
-------------
1,688,313
-------------
Transportation (0.40%)
Arnold Industries, Inc. 800 $ 14,300
Conrail Inc. 2,000 109,250
Expeditors International of Washington, Inc. 300 6,825
Florida East Coast Railway Co. 100 7,175
Harper Group, Inc. 400 7,650
Intertrans Corp. 900 19,294
Kirby Corp. 500 6,875
Landstar Systems, Inc. 2,900 83,738
M.S. Carriers, Inc. 700 16,800
Rural/Metro Corp. 1,000 18,500
Swift Transportation Co., Inc. 400 6,250
Xtra Corp. 700 33,775
-------------
330,432
-------------
Wholesale (0.13%)
Fusion Systems Corp. 2,000 62,750
Cardinal Health Inc. 1,000 46,125
-------------
108,875
-------------
Utilities - Electric (1.89%)
Central Hudson Gas & Electric 2,000 51,750
DQE, Inc. 1,000 33,750
Peco Energy Co. 4,800 123,600
Rochester Gas & Electric Corp. 1,500 30,938
Scecorp 32,700 547,725
</TABLE>
Aetna Mutual Funds Semi-Annual Report 77
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Unicom Corp. 15,800 $ 414,750
Union Electric Co. 10,000 356,250
-------------
1,558,763
-------------
Utilities - Telephone (2.32%)
Bell Atlantic 9,400 515,825
Bellsouth Corp. 5,000 306,250
C-TEC Corp. 200 4,250
Citizens Utilities Co. 2,500 30,625
GTE Corp. 3,700 126,203
Pacific Telesis Group 2,400 74,100
Southern New England Telecommunications, Corp. 1,400 46,375
Sprint Corp. 23,000 759,000
Tellabs, Inc. 700 48,300
Transaction Network Services, Inc. 300 4,238
-------------
1,915,166
-------------
Total Common Stocks (cost $45,428,533) $51,037,178
-------------
Preferred Stocks (1.10%)
Aerospace & Defense (0.95%)
Kaman Corp 6.5%, Series 2 14,818 785,354
-------------
Banking (0.15%)
Citicorp, PERCS 6,300 126,000
-------------
Total Preferred Stocks (cost $783,684) $ 911,354
-------------
Principal Market
Amount Value
---------- -------------
Long Term Bonds & Notes (35.28%)
U. S. Government & Agency Obligations (16.98%)
Agency Mortgage-Backed Securities (5.02%)
FNMA 1991-3 Z Tranche, 8.50%, 01/25/21 $3,153,251 $ 3,212,406
FNMA 92 114A, PO, Zero Coupon, 06/25/22 1,146,441 931,483
-------------
4,143,889
-------------
U.S. Government Obligations (11.96%)
U.S. Treasury Bond, 7.625%, 02/15/25 1,750,000 1,811,250
U.S. Treasury Bond, 6.25%, 08/31/96 3,700,000 3,689,592
U.S. Treasury Bond, 7.50%, 01/31/97 4,300,000 4,364,500
-------------
9,865,342
-------------
U.S. Government & Agency Obligations (cost $14,153,345) $14,009,231
-------------
Domestic Corporate & Convertible Bonds and Notes (11.39%)
Electric Utilities (0.91%)
CMS Energy, Zero Coupon, 10/01/99 750,000 747,207
-------------
Financial Services (4.23%)
Auburn Hills Trust, 12.00%, 05/01/20 850,000 1,169,599
Commercial Credit Corp., 8.70%, 06/15/09 1,000,000 1,113,464
</TABLE>
See Notes to Portfolio of Investments.
78 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
General Motors Accept. Corp., MTN., 6.15%, 01/16/01 $1,300,000 $ 1,209,369
-------------
3,492,432
-------------
Industrial (5.32%)
American General Corp., 8.45%, 10/15/09 1,000,000 1,092,143
Beazer Homes USA 9.00%, 03/01/04 300,000 252,750
Kaman Corp., 6.00%, 03/15/12 499,000 386,725
News American Holdings, 8.50%, 02/23/25 700,000 720,882
Textron Financial Corp., 6.540%, 11/24/95 1,000,000 1,000,000
Viacom, 8.00%, 07/07/06 1,000,000 933,750
-------------
4,386,250
-------------
Paper and Containers (0.93%)
Stone Container Corp., 9.875%, 02/01/01 770,000 769,038
-------------
Domestic Corporate & Convertible Bonds and Notes (cost $9,250,490) $ 9,394,927
-------------
Foreign & Supranational Obligations and Non-Agency Mortgage-Backed Securities (6.91%)
Foreign & Supranational Obligations (5.69%)
African Development Bank, 8.80%, 09/01/19 $1,000,000 $ 1,111,610
Argentina FRB, 03/31/05 1,800,000 1,071,000
Argentina Pars Var, 4.25%, 03/31/23 630,000 281,925
Banco Nacuibak de Comercio Exterior, S.N.C., 7.25%, 02/02/04 600,000 409,297
South Africa Global Bond, 9.625%, 12/15/99 500,000 498,533
Swire Pacific Ltd., 8.50%, 09/29/04 1,000,000 995,000
Transport de Gas Del Sur, 7.75%, 12/23/98 400,000 327,000
-------------
4,694,365
-------------
Non-Agency Mortgage-Backed Securities--1.22%
Resolution Trust Corp. 1991 17B6, 8.20%, 09/25/21 1,000,000 1,005,913
-------------
Total Foreign & Supranational Obligations and Non-Agency Mortgage-Backed
Securities (cost $5,440,869) $ 5,700,278
-------------
</TABLE>
Aetna Mutual Funds Semi-Annual Report 79
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
The Aetna Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Total Long Term Bonds and Notes (cost $28,844,704) $29,104,436
-------------
Short-Term Investments (4.77%)
Baxter International, Inc., 6.05%, 05/01/95 $3,219,000 3,219,000
PECO Energy Corp., 6.05%, 05/01/95 515,000 515,000
U.S. Treasury Note, 4.25%, 07/31/95 200,000 199,188
-------------
Total Short-Term Investments (cost $4,448,000) 3,933,188
-------------
Total Investments (cost $79,504,921) -------------
$84,986,156
-------------
</TABLE>
Notes to Portfolio of Investments
+Non-income producing security.
(a) The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at April 30, 1995 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized gains $6,375,712
Unrealized losses (894,478)
-----------
Net unrealized gains $5,481,234
===========
</TABLE>
Category percentages are based on net assets.
Call Options
No. of Unit Value Exercise Expiration Market
Contracts Per Contract Price Date Value
--------- ------------ ------- --------- --------
Argentine FRB 1.8 $1,000,000 $55 05/22/95 $130,000
See Notes to Portfolio of Investments.
80 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Common Stocks (97.67%)
Aerospace & Defense (1.50%)
Kaman Corporation Class "A" 2,700 $ 33,413
Lockheed Martin Corp. 18,600 1,074,150
McDonnell Douglas Corp. 57,400 3,558,800
Precision Castparts Corp. 300 8,250
Rohr Inc. 300 3,225
Smiths Industries Plc 9,900 77,271
Watkins-Johnson Company 4,000 158,500
-------------
4,913,609
-------------
Air Transportation (1.05%)
AMR Corp. 20,500 1,381,188
Pittston Service Group 87,000 2,066,250
-------------
3,447,438
-------------
Autos & Auto Equipment (2.25%)
Borg-Warner Automotive, Inc. 6,500 167,375
Breed Technologies, Inc. 7,500 150,938
Detroit Diesel Corp. 200 4,650
Eaton Corp. 18,000 1,032,750
Echlin, Inc. 4,900 178,850
Ford Motor Co. 74,600 2,014,200
Kaydon Corp. 1,900 52,250
Masland Corp. 4,400 59,950
Smith (A.O.) Corp. 2,700 64,463
SPX Corp. 600 $ 8,175
Standard Motor Products, Inc. 100 1,950
TRW Inc. 48,500 3,607,188
-------------
7,342,739
-------------
Banks (4.71%)
AMMB Bhd 4,000 39,527
Associated Banc-Corp. 500 18,375
Bank of Boston Corp. 16,600 556,100
Bankamerica Corp. 40,000 1,980,000
Bankatlantic Bancorp, Inc. 800 12,300
Barnett Banks, Inc. 26,400 1,234,200
Baybanks, Inc. 3,200 199,600
CCB Financial Corp. 500 20,813
Centura Banks, Inc. 1,100 28,463
Charter One Financial 2,000 45,875
Chemical Banking Corp. 74,600 3,114,550
Citicorp 43,000 1,994,125
City National Corp. 5,000 50,625
CNB Bancshares, Inc. 400 11,900
Commerce Asset Holdings 10,000 43,739
Commerce Bancorp, Inc. 1,400 23,888
Corestates Financial Corp. 17,500 570,938
Cullen/Frost Bankers Inc. 900 33,300
FFY Financial Corp. 1,700 30,600
First American Corp. (Tenn.) 2,400 83,100
</TABLE>
Aetna Mutual Funds Semi-Annual Report 81
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
First Commercial Corp. 400 $ 10,000
First Commonwealth Financial Corp. 1,100 16,775
First Financial Corp. (Wis.) 800 12,650
First Interstate Bancorp 36,200 2,782,875
Firstier Financial, Inc. 300 10,088
Hawkeye Bancorporation 500 11,313
Hibernia Corp.
Class "A" 6,500 52,000
HSBC Holdings Plc 8,600 99,025
JSB Financial, Inc. 2,100 62,738
Loyola Capital Corp. 300 8,550
MAF Bancorp, Inc. 400 9,400
Mellon Bank Corp. 38,900 1,526,825
National Commerce Bancorporation 400 9,900
New York Bancorp., Inc. 600 11,325
North Fork Bancorp. 1,100 19,250
N.S. Bancorp, Inc. 100 2,956
Queens County Bancorp, Inc. 1,600 49,000
Reliance Bancorp 1,600 20,200
Security Capital Corp. 2,000 94,500
Silicon Valley Bancshares 500 7,875
Standard Financial, Inc. 900 11,025
Star Banc Corp. 2,100 87,675
St. Francis Capital Corp. 600 $ 11,250
Summit Bancorporation 2,400 46,350
Susquehanna Bancshares, Inc. 400 9,125
TCF Financial Corp. 5,500 235,813
The Boston Bancorp 1,800 69,975
Trustmark Corp. 600 10,050
Valley National Bancorp 945 23,625
-------------
15,414,151
-------------
Building Materials & Construction (0.83%)
American Buildings Company 2,000 37,125
Armstrong World Industries, Inc. 26,900 1,223,950
Butler Manufacturing Company 400 15,900
Carlisle Cos., Inc. 600 22,575
Champion Enterprises, Inc. 2,200 66,000
Granite Construction Inc. 1,500 30,281
Hong Leong Industries Bhd 7,000 37,138
Hume Industries- Malaysia 8,000 31,913
Metra Oy 'B' 700 28,447
Modine Manufacturing Co. 1,700 57,800
National Steel Corp. 11,100 141,525
NCI Building Systems, Inc. 900 16,088
</TABLE>
See Notes to Portfolio of Investments.
82 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Radex-Heraklith Industrial AG 1,000 $ 30,949
Redman Industries, Inc. 3,800 74,575
Security Capital Industrial Trust 9,100 142,188
Skyline Corp. 800 14,200
Stone & Webster, Inc. 800 23,800
Strabag Oesterreich AG 300 45,961
Texas Industries, Inc. 1,800 67,725
Tredegar Industries, Inc. 900 20,475
UNR Industries, Inc. 1,500 8,953
VA Technologie AG 700 77,445
Vulcan Materials Co. 1,300 75,400
Webb (Del E.) Corp. 10,600 202,725
WHX Corp. 12,300 132,225
Wienerberger Baustoffind 100 33,623
Wing Tai Holdings 36,000 60,969
-------------
2,719,955
-------------
Chemicals (2.47%)
ARCO Chemical Co. 1,800 83,700
Cabot Corp. 6,800 266,900
Chemed Corp. 1,500 46,125
Cytec Industries+ 2,400 87,300
du Pont (E.I.) de Nemours & Co. 12,900 849,788
Dyno Industrier AS 1,300 34,474
Eastman Chemical Co. 5,700 323,475
First Mississippi Corp. 8,500 $ 212,500
Fuji Photo Film Ord 3,000 73,554
Fuller (H.B.) Co. 300 11,363
IMC Global, Inc. 3,700 181,763
Loctite Corp. 1,100 54,725
Lyondell Petrochemical Co. 11,200 278,600
Morton International, Inc. 82,700 2,563,700
Norsk Hydro AS 4,100 167,044
Olin Corp. 4,700 262,613
OM Group, Inc. 2,200 52,525
PPG Industries, Inc. 21,300 838,688
Sekisui Chemical Co. 5,000 62,485
Sterling Chemicals, Inc. 10,400 130,000
The Geon Gompany 9,900 267,300
Union Carbide Corp. 26,100 835,200
Vigoro Corp. 6,000 239,250
Wellman, Inc. 5,900 159,300
-------------
8,082,372
-------------
Commercial Services (0.90%)
Actava Group, Inc. 1,300 12,025
Allwaste, Inc.+ 2,900 17,400
California Water Service Co. 400 12,750
Devry, Inc. 3,200 121,200
Flightsafety International, Inc. 1,000 49,250
Flughafen Wien AG 800 35,700
Franklin Quest Co.+ 4,100 136,325
GRC International Inc. 2,100 30,450
</TABLE>
Aetna Mutual Funds Semi-Annual Report 83
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Health Management Systems, Inc. 150 $ 3,488
Inchcape Plc 22,400 114,994
Interim Services, Inc. 500 14,406
Ionics, Inc. 2,000 56,000
Jacobs Engineering Group Inc.+ 2,300 45,425
Kelly Services Inc. Class "A" + 100 3,400
Kindercare Learning Centers, Inc. 4,500 60,750
Manpower Inc. 400 13,350
Olsten Corp. 7,500 255,938
Orkla A/S Class "A" 3,000 111,279
Paychex, Inc. 300 14,306
Robert Half International Inc. 7,400 195,175
Rollins Inc. 800 22,500
Royal PTT NV 2,700 94,281
Security Capital Pacific Trust 15,700 274,750
Service Corp. International 36,300 1,025,475
Stewart Enterprises, Inc. 3,100 86,025
True North Communications, Inc. 2,000 38,000
Welsh Water Plc 6,400 63,754
Western Waste Industries 2,100 38,850
-------------
2,947,246
-------------
Computer & Office Equipment (5.30%)
Adaptec, Inc. 4,200 $ 134,925
Ceridian Corp. 116,800 4,029,600
Champion Industries, Inc. 600 12,525
Dell Computer Corp. 6,000 328,125
Ennis Business Forms, Inc. 100 1,338
Fair Isaac & Company, Inc. 200 9,400
Gartner Group, Inc.+ 1,700 70,444
Gateway 2000, Inc.+ 6,200 117,413
HBO and Co. 300 13,650
In Focus Systems, Inc. 5,100 136,425
International Business Machines Corp. 100,300 9,503,425
OPTI, Inc.+ 7,700 116,463
Planar Systems, Inc.+ 6,900 134,550
Read-Rite Corp. 13,900 296,244
Standard Register Co. 400 7,250
Sterling Software, Inc. 7,700 261,800
Stratus Computer, Inc. 300 8,925
Sun Microsystems, Inc. 24,500 973,875
Telxon Corp. 1,000 16,000
United Stationers, Inc. 44 759
Xerox Corp. 9,300 1,145,063
-------------
17,318,199
-------------
Computer Software (0.88%)
Adobe Systems, Inc. 3,200 186,000
American Management Systems, Inc.+ 6,100 128,100
Autodesk, Inc. 38,600 1,317,225
</TABLE>
See Notes to Portfolio of Investments
84 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Boole & Babbage, Inc. 500 $ 14,500
CACI International, Inc. 300 3,038
Cadence Design Systems, Inc. 7,400 238,650
Continum, Inc. 1,700 56,100
Exabyte Corp. 12,400 155,000
Informix Corp. 7,600 298,775
Kronos, Inc. 1,500 45,188
National Data Corp. 900 16,763
Peoplesoft, Inc.+ 300 15,450
Policy Management Systems Corp.+ 100 5,038
Reynolds & Reynolds Co. Class "A" 4,000 106,000
Sungard Data Systems Inc.+ 6,000 278,250
-------------
2,864,077
-------------
Consumer Products (1.20%)
Chic By HIS Inc.+ 1,400 14,875
Cobra Golf, Inc. 4,700 101,638
Consolidated Papers Inc. 5,400 264,600
Dial Corp. 26,200 632,075
Ekco Group, Inc. 100 588
Fieldcrest Cannon, Inc.+ 4,100 90,713
First Brands Corp. 9,300 358,050
Gencorp Inc. 4,500 56,813
Guilford Mills, Inc. 200 4,950
Huffy Corp. 1,800 26,100
Libbey Inc. 1,700 32,938
Natures Sunshine Products, Inc. 1,340 $ 17,253
Oneida Ltd. 600 9,000
Procter & Gamble Co. 21,300 1,488,338
Reckitt & Coleman Plc 10,200 105,219
Springs Industries, Inc. Class "A" 1,400 54,425
Unifi, Inc. 3,400 85,425
Valspar Corp. 2,400 84,900
VF Corp. 10,000 505,000
-------------
3,932,900
-------------
Diversified (3.02%)
Applied Power, Inc. 1,300 34,288
Astec Industries, Inc.+ 1,600 18,000
Bic Corp. 1,000 33,875
Blount Inc. Class "A" 300 13,388
Brascan Ltd. 'A' 1,400 18,776
Brau-Union Goess- Reining. AG 600 38,620
Cyrk International, Inc. 2,800 40,250
Dover Corp. 42,100 2,736,500
Eastern Enterprises 7,000 209,125
Elkjop 2,000 35,358
Griffon Corp. 5,800 44,950
Hagemeyer N.V. 500 43,245
Harrisons & Crosfield Plc 39,200 97,781
Harsco Corp. 3,000 142,875
Helix Technology Corp. 1,200 39,000
Insilco Corp. 800 21,700
ITT Corp. 35,000 3,657,500
Katy Industries 800 7,300
</TABLE>
Aetna Mutual Funds Semi-Annual Report 85
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Kulicke & Soffa Industries, Inc. 5,000 $ 212,188
Loews Corp. 1,900 193,563
Lonrho Plc 41,300 109,666
Lydall, Inc. 400 14,800
Oasis Residential Inc. 11,600 253,750
Pentair, Inc. 2,400 110,100
Plantronics Inc. 700 19,075
Santa Anita Realty Enterprises, Inc. 600 9,825
Spieker Properties, Inc. 4,300 83,850
SPS Technologies, Inc.+ 400 12,650
Standex International Corp. 1,100 34,513
Summit Properties Inc. 2,100 34,913
Textron Inc. 26,200 1,493,400
Valmet Corp. Class "A" 1,000 22,716
Varlen Corp. 600 13,950
Westmont Bhd 7,000 30,334
-------------
9,881,824
-------------
Electric Utilities (4.54%)
Allegheny Power System, Inc. 4,000 94,000
Aquarion Company 800 17,700
Baltimore Gas & Electric 13,900 328,388
Boston Edison Co. 5,200 124,150
California Energy Co. 1,700 28,263
Central Hudson Gas & Electric 3,300 85,388
Central Maine Power Co. 10,200 $ 113,475
CILCORP, Inc. 1,900 69,113
CMS Energy Corp. 5,800 135,575
Commonwealth Energy System Co. 800 32,800
DPL Inc. 6,700 139,863
DQE, Inc. 5,500 185,625
Evn-Energie-Versorgung 300 39,360
Florida Progress Corp. 1,800 54,900
General Public Utilities Corp. 6,500 185,250
Green Mountain Power Corp. 800 20,500
Hokkaido Electric Power 3,000 81,409
IES Industries, Inc. 2,500 51,875
Illinova Corp. 10,500 244,125
Kansas City Power & Light Co. 2,100 47,775
LG&E Corp. 1,100 42,488
MDU Resources Group, Inc. 1,500 41,438
Midwest Resources, Inc. 1,900 27,075
Montana Power Co. 2,900 67,063
National Power Plc--Adr 5,350 60,856
New York State Electric & Gas Corp. 6,100 133,438
Nipsco Industries, Inc. 7,800 251,550
Northern States Power Co. (Minn.) 12,000 531,000
Oesterreichisch Elektriz 1,300 85,948
Ohio Edison Company 136,000 2,737,000
</TABLE>
See Notes to Portfolio of Investments.
86 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Oklahoma Gas and Electric 3,200 $ 110,000
Orange and Rockland Utilities, Inc. 2,600 82,550
Otter Tail Power Co. 500 16,625
Peco Energy Co. 30,300 780,225
Pinnacle West Capital Corp. 11,200 240,800
Portland General Corp. 6,900 143,175
Powergen Plc 5,350 68,213
Public Service Co. Of New Mexico 18,300 233,325
Rochester Gas & Electric Corp. 3,700 76,313
Scecorp 229,000 3,835,750
Sierra Pacific Resources 3,300 68,888
Siliconix Inc. 200 2,725
Southwestern Public Service Company 700 19,950
Tenaga Nasional Bhd 9,000 40,094
Three-Five Systems, Inc. 1,600 38,800
TNP Enterprises, Inc. 700 11,113
Transalta Corp. 3,100 31,893
Unicom Corp. 83,400 2,189,250
Union Electric Co. 7,300 260,063
United Illuminating Co. 2,000 64,250
Western Resources, Inc. 2,100 63,788
Wisconsin Energy Corp. 11,400 316,350
WPS Resources Corp. 2,700 77,963
-------------
14,829,493
-------------
Electrical Equipment (7.21%)
3Com Corp.+ 3,300 $ 184,594
AMETEK, Inc. 4,600 74,750
AMP Inc. 33,600 1,436,400
Avnet, Inc. 4,600 204,700
Belden Inc. 2,700 60,750
Burr-Brown Corp. 2,400 61,200
Cellstar Corp. 6,500 125,125
Diebold, Inc. 300 12,450
Dionex Corporation 500 20,938
Emerson Electric Co. 49,300 3,315,425
First Alert, Inc. 8,400 102,375
General Electric Co. 123,900 6,938,400
Grainger, (W.W.), Inc. 6,100 369,050
Harman International Industries 2,800 102,200
Hitachi Ltd. (Hit. Seisakusho) 7,000 71,233
International Rectifier Corp. 8,900 225,838
Itel Corp 2,300 82,800
Kemet Corp. 3,500 136,938
Linear Technology Corp. 400 23,750
Littlefuse, Inc. 800 27,000
Marshall Industries 400 11,050
Microchip Technology Corp. 19,700 550,369
Mitsubishi Electric Corp. 8,000 56,748
Molex, Inc. 1,300 49,400
Park Electrochemical Corp. 1,200 45,000
</TABLE>
Aetna Mutual Funds Semi-Annual Report 87
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Parker-Hannifin Corp. 51,000 $ 2,652,000
Pittway Corp. Class "A" 1,100 48,538
Sunstrand Corp. 1,600 88,800
Tektronix, Inc. 83,400 3,794,700
Telco Systems, Inc. 3,300 40,013
Teleflex Inc. 800 33,100
Teradyne, Inc. 5,000 253,125
Texas Instruments, Inc. 22,300 2,363,800
Valmont Industries 700 14,875
-------------
23,577,434
-------------
Electronics (2.00%)
Alcatel STK AS 600 28,930
Allen Group Inc. 3,000 67,875
Austria Mikro Systeme International+ 300 29,859
Bell Industries, Inc. 1,100 22,138
Best Power Technology, Inc. 1,000 12,625
CTS Corp. 500 16,563
Dynatech Corp. 3,200 55,200
Esterline Technology+ 1,800 30,375
Glenayre Technologies, Inc. 3,300 202,538
Input/Output Inc. 3,700 125,338
Intel Corp. 18,000 1,843,875
Kyocera Corp. 1,000 77,363
Logicon Inc. 1,600 59,200
Loral Corp. 12,000 564,000
Matsushita Electric Industrial Co. Ltd. 4,000 $ 67,127
Maxim Integrated Products, Inc. 3,500 127,750
Micron Technology Inc. 3,300 271,425
Motorola, Inc. 8,300 472,063
MTS Systems Corp. 300 7,388
Nintendo Corp. Ltd.+ 1,000 64,151
Philips Electronics N.V. 2,800 106,990
Pioneer Standard Electronics, Inc. 700 13,825
Rohm Company 3,000 138,896
Seagate Technology, Inc. 3,700 117,938
Sensormatic Electronics Corp. 7,500 223,125
Tandy Corp. 27,000 1,336,500
Tencor Instruments 3,500 237,563
Tracor Inc. 3,500 45,281
Unitrode Corp. 1,600 33,200
Varian Associates, Inc. 2,300 105,800
Venture Manufacturing Ltd. 11,000 26,207
-------------
6,531,108
-------------
Environmental Control (0.41%)
Browning-Ferris Industries, Inc. 40,100 1,323,300
Groundwater Technology, Inc.+ 1,500 19,500
-------------
1,342,800
-------------
</TABLE>
See Notes to Portfolio of Investments.
88 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Financial Services (3.52%)
Abbey National Plc 11,900 $ 89,051
ABN-Amro Holdings NV 1,200 46,240
Advanta Corporation 1,200 41,400
ALBANK Financial Corp. 1,600 41,200
America General Corp. 117,900 3,890,700
Astoria Financial Corp.+ 2,500 85,156
AT&T Capital Corp. 700 18,725
Bank of Montreal 2,200 44,863
Bank of New York Co., Inc. 13,700 450,388
Bankers Corp. 3,100 50,956
Barclays Plc 10,600 109,004
Bell Bancorp, Inc. 500 14,000
Brooklyn Bancorp+ 300 9,600
Canadian Imperial Bank of Commerce 1,600 39,830
Cincinnati Financial Corp. 400 22,300
Citizens Bancorp 100 2,950
CNA Financial Corp. 600 46,200
Coral Gables Fedcorp, Inc. 1,600 42,000
Creditanstalt- Bankverein 1,500 86,062
Dean Witter Discover & Co. 62,400 2,644,200
Deposit Guaranty Corp. 1,000 34,625
Development Bank Of Singapore+ 7,000 $ 74,848
Duff & Phelps Corp. 7,100 77,213
Federal Home Loan Mortgage Corp. 19,600 1,278,900
Finova Group Inc. 1,200 40,500
First Bank System, Inc. 4,400 178,200
First Empire State Corp. 300 48,150
First Midwest Bancorp 100 2,400
First Palm Beach Bancorp 1,200 21,450
Fort Wayne National Corp. 400 10,850
GP Financial Corp. 5,900 141,231
Great Financial Corp. 1,000 17,688
Home Financial Corp. 4,100 51,763
Kagoshima Bank 4,000 35,753
Keystone Financial, Inc. 300 8,644
Leader Financial Corp. 600 16,313
Leucadia National Corp. 1,400 62,650
Liberty Financial Companies 450 11,194
Lion Land Bhd 25,000 28,856
Mark Twain Bancshares, Inc. 1,200 37,725
Money Store Inc. (The) 500 11,781
Nippon Shinpan Co. 6,000 47,560
Orient Corp. 10,000 54,749
</TABLE>
Aetna Mutual Funds Semi-Annual Report 89
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Oversea-Chinese Banking 4,000 $ 43,631
Peoples Heritage Financial Group 3,100 43,206
Pioneer Group, Inc. 5,200 132,275
Promise Co., Ltd. 2,000 87,360
Rashid Hussain Bhd 12,000 28,187
Raymond James Financial, Inc. 100 1,750
Republic Bancorp, Inc. 800 9,300
River Forest Bancorp, Inc. 200 7,325
Rochester Community Savings Bank 1,900 35,388
Royal Bank Of Canada 1,700 37,322
Sanyo Shinpan Finance Co. 1,000 81,766
Sparebanken Nor (Union Bank of Norway) 1,700 34,699
Student Loan Corp. 100 2,488
Travelers Group, Inc. 17,000 703,375
Union Bank 700 27,300
Unitas Bank Ltd. Class "A" 14,900 44,101
United Overseas Bank Ltd. 3,000 31,216
Vallicorp Holdings, Inc. 1,500 22,125
World Acceptance Corp. 300 8,550
Yasuda Trust & Banking 9,000 $ 72,840
-------------
11,522,072
-------------
Food & Beverage (7.91%)
Anheuser Busch Co. 58,000 3,371,250
Archer-Daniels- Midland Co. 185,400 3,383,550
Associated British Foods 7,900 82,510
Bob Evans Farms, Inc. 1,900 38,950
Bols Wessanen Cva 1,300 27,606
Cadbury Schweppes Plc 10,000 72,016
Cagle's, Inc. 1,300 25,838
Campbell Soup Co. 22,000 1,127,500
Coca-Cola Co. (The) 87,000 5,056,875
Coca-Cola Enterprises, Inc. 10,600 237,175
Conagra, Inc. 108,400 3,604,300
CPC International Inc. 33,000 1,934,625
Cultor Oy 800 26,310
Goodmark Foods, Inc. 900 14,344
Hillsdown Holdings Plc 29,900 88,537
Hormel Foods Corp. 7,000 191,625
Hudson Foods, Inc. Class "A" 11,250 194,063
Huhtamaki Group Class "I" 800 25,934
IBP, Inc. 7,400 273,800
International Multifoods Corp. 3,500 71,750
</TABLE>
See Notes to Portfolio of Investments.
90 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Kikkoman 9,000 $ 75,518
Kroger Co. 23,400 596,700
Lance, Inc. 1,000 17,625
Luby's Cafeterias Inc. 17,100 324,900
McDonald's Corp. 6,000 210,000
Michael Foods, Inc. 1,600 20,200
Molson Companies Ltd. 2,200 33,546
Mondavi (Robert) Corp.+ 800 11,500
Nash-Finch Company 1,300 20,881
Oester Brau- Beteiligungs 700 35,988
Richfood Holdings, Inc. 2,600 51,350
Safeway, Inc. 5,600 210,000
Sara Lee Corp. 99,600 2,776,350
Smith's Food & Drug Centers, Inc. 200 4,325
Super Food Services, Inc. 800 8,900
Supervalu Inc. 47,000 1,239,625
Thorn Apple Valley, Inc. 2,300 41,400
Tyson Foods, Inc. 7,600 179,075
Unilever N.V. 800 107,248
Universal Foods Corp. 1,700 55,250
-------------
25,868,939
-------------
Gas Utilities (0.01%)
Public Service Co. of North Carolina 800 11,900
South Jersey Industries 500 $ 10,063
-------------
21,963
-------------
Health Services (0.01%)
Advantage Health Corp. 600 16,950
Columbia/HCA Healthcare Corp. 54,200 2,276,400
Health Management Associates Class "A" 1,400 40,600
Horizon Healthcare Corp. 11,200 233,800
Humana Inc. 77,500 1,511,250
Invacare Corp. 2,200 86,350
Lincare Holdings, Inc.+ 7,200 221,400
Owens & Minor, Inc. 6,600 89,100
Pharmacy Management Services, Inc.+ 1,500 23,813
Quorum Health Group, Inc. 1,200 24,600
Respironics, Inc. 600 8,625
Surgical Care Affiliates, Inc. 3,600 83,700
Universal Health Services, Inc. 2,600 68,575
West Co., Inc. 400 11,200
-------------
4,696,363
-------------
Health Technology (0.13%)
Barr Laboratories, Inc. 400 8,400
Cordis Corp. 2,600 187,200
Isomedix, Inc. 400 5,950
Kinetic Concepts, Inc. 900 6,863
</TABLE>
Aetna Mutual Funds Semi-Annual Report 91
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Sullivan Dental Products, Inc. 300 $ 4,125
Sybron International Corp. 5,300 196,763
-------------
409,301
-------------
Home Furnishings & Appliances (0.04%)
Harvestry Furniture Company, Inc. 3,500 36,313
Juno Lighting, Inc. 100 2,050
Kimball International, Inc. Class "B" 300 7,875
Leggett & Platt, Inc. 2,200 84,700
-------------
130,938
-------------
Hotel & Restaurant (0.19%)
Compass Group Plc 16,700 89,629
Cracker Barrel Old Country Store, Inc. 3,000 63,563
Hotel Properties Ltd. 18,000 33,585
La Quinta Inns Inc. 5,200 155,350
Marcus Corp. 400 10,650
Prime Hospitality Corp. 2,500 25,000
RFS Hotel Investors, Inc. 6,600 96,525
Sonic Corp. 4,900 127,400
Uno Restaurant Corp. 1,625 17,773
-------------
619,475
-------------
Insurance (3.00%)
Acceptance Insurance Companies, Inc.+ 1,400 21,350
Aegon N.V. 1,100 85,555
AFLAC, Inc. 7,500 $ 309,375
Allied Group, Inc. 700 20,388
Allmerica Property & Casualty Co. 1,100 20,900
Allstate Corp. 7,000 212,625
American Travellers Corp.+ 1,600 32,000
AON Corp. 7,000 258,125
Argonaut Group, Inc. 600 18,150
Capital American Financial Corp. 1,100 24,063
Cigna Corp 3,300 239,663
CMAC Investment Corp. 5,900 218,300
Ea-Generali AG 300 78,967
Emphesys Financial Group, Inc. 100 2,638
E. W. Blanch Holdings, Inc. 300 5,625
Fremont General Corp. 3,100 68,588
Fund American Enterprises 404 29,139
Gallagher (Arthur J.) & Co. 1,700 58,225
General Re Corp. 21,500 2,738,563
Guardian Royal Exchange 23,700 71,895
HCC Insurance Holdings, Inc. 300 6,825
Healthwise Of America, Inc. 600 16,950
Lawyers Title Corp. 600 8,700
</TABLE>
See Notes to Portfolio of Investments.
92 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Life Partners Group, Inc. 2,900 $ 56,550
Markel Corp. 400 20,650
Maxicare Health Plans, Inc.+ 6,700 105,106
Mutual Assurance, Inc. 400 10,600
Ohio Casualty Corp. 4,800 140,700
Old Republic International 3,100 79,825
Orion Capital Corp. 2,200 77,275
Progressive Corp. 36,200 1,366,550
Protective Life Corp. 1,100 49,913
PXRE Corp. 700 17,150
Reliastar Financial Corp. 3,945 141,527
Royal Insurance Holdings 17,800 86,796
Security-Connecticut Corp. 2,200 55,000
Selective Insurance Group 1,300 38,025
St. Paul Companies, Inc. 50,100 2,411,063
Transatlantic Holdings, Inc. 2,300 146,050
Trenwick Group, Inc. 300 13,313
Uni Storebrand AS 24,500 91,747
United American Healthcare Corp. 2,100 35,438
Unitrin, Inc. 4,000 193,000
Vesta Insurance Group, Inc. 4,000 133,500
Zenith National Insurance 300 $ 6,113
-------------
9,822,500
-------------
Leisure & Entertainment (0.46%)
Arctco, Inc. 10,200 142,800
Carmike Cinemas Class "A" 2,700 60,075
Chris-Craft Industries Inc. 3,430 115,763
Fleetwood Enterprises, Inc. 22,800 524,400
Topps Co., Inc.+ 700 4,331
Walt Disney Co. 11,600 642,350
-------------
1,489,719
-------------
Machinery (1.27%)
AGCO Corp 7,500 267,188
Caterpillar Inc. 40,700 2,380,950
Fluor Corp. 10,600 545,900
Ralston-Ralston Purina Group 20,000 950,000
Regal-Beloit Corp. 1,600 24,400
-------------
4,168,438
-------------
Machinery & Equipment (0.31%)
Barnes Group, Inc. 600 26,925
Clarcor, Inc. 1,000 21,000
Danaher Corp. 5,400 160,650
Donaldson Company, Inc. 4,900 121,888
Electroglas, Inc. 200 8,750
Harnischfeger Industries, Inc. 9,600 283,200
Indresco Inc. 4,600 64,400
</TABLE>
Aetna Mutual Funds Semi-Annual Report 93
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Jenbacher Werke AG 200 $ 31,772
JLG Industries, Inc. 800 16,200
Kone Corporation class "B" 200 24,900
Koyo Seiko Co., Ltd. 7,000 73,649
Raymond Corp. (The) 525 10,631
Tecumseh Products Co. Class "A" 2,900 145,000
Tsukishima Kikai 1,000 19,043
Watts Industries, Inc. 900 20,475
-------------
1,028,483
-------------
Media (1.42%)
Advo, Inc. 1,900 38,238
Capital Cities/ABC, Inc. 38,300 3,236,350
Clear Channel Communications, Inc. 1,700 95,625
Finnair Oy 2,500 19,673
Genting Bhd 7,000 63,786
Granada Group Plc 7,100 65,071
Heritage Media Corp. Class "A" 2,200 56,100
King World Productions, Inc.+ 3,900 156,975
Magnum Corp. Bhd 21,000 38,272
Media General, Inc. 2,300 74,750
Park Communications, Inc.+ 500 15,219
Regal Cinemas, Inc. 2,400 65,700
Viacom International Class "B" 15,800 $ 724,825
-------------
4,650,584
-------------
Medical Services (0.05%)
Health Management, Inc. 3,400 61,625
Healthcare Compare Corp.+ 2,400 72,300
Healthsouth Corp.+ 1,000 19,750
-------------
153,675
-------------
Medical Supplies (1.32%)
Amsco International, Inc.+ 12,700 160,338
Baxter International, Inc. 100 3,475
Becton, Dickinson & Co. 66,700 3,718,525
Cardinal Health Inc. 5,500 253,688
Datascope Corp.+ 1,900 34,675
Nellcor, Inc. 3,500 145,688
Spacelabs Medical, Inc. 500 12,250
-------------
4,328,639
-------------
Metals (1.90%)
Acme Metals, Inc.+ 1,500 24,656
Alcan Aluminum Ltd. 36,700 1,041,230
Alumax Inc.+ 8,000 226,000
Asarco, Inc. 14,300 389,675
Ashland Coal, Inc. 1,100 30,388
Brenco, Inc. 1,100 14,919
British Steel Plc 32,100 87,303
Cleveland Cliffs Inc. 1,100 40,288
Commercial Metals Co. 900 23,850
</TABLE>
See Notes to Portfolio of Investments.
94 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Cyprus Amax Minerals Co. 26,000 $ 724,750
Dofasco, Inc. 2,300 28,733
Elkem AS Class "A"+ 0 44,339
Freeport McMoRan Copper & Gold, Inc. 6,476 135,187
Freeport McMoRan, Inc. 6,100 107,513
Handy & Harman 5,000 75,000
J & L Specialty Steel, Inc. 1,500 27,750
Kennametal Inc. 16,600 556,100
Kon. Ned. Hoogovens En 700 27,019
Magma Copper Co. 11,800 197,650
Material Sciences Corp. 700 12,688
Minerals Technologies, Inc. 1,600 53,200
Noranda, Inc. 2,300 40,353
Nucor Corp. 9,200 441,600
Outokumpu Oy Class "A" 1,600 28,640
Phelps Dodge Corp. 14,100 798,413
Rautaruukki Oy 5,000 39,934
Rouge Steel Co. 43,900 982,263
-------------
6,199,441
-------------
Oil & Gas (7.86%)
Alberta Energy Co. Ltd. 2,200 33,951
Amoco Corp. 7,100 465,938
Box Energy Corp.-- Class "B" 1,200 $ 10,200
Burmah Castrol Plc 6,700 94,130
Castle Energy Corp. 300 2,606
Conwest Exploration Co. 1,100 20,209
Dekalb Energy Co. 2,600 61,588
Exxon Corp. 100,000 6,982,350
Falconbridge Ltd. 2,200 33,951
Global Industries Ltd. 2,700 69,863
Imperial Oil Ltd. 1,100 39,104
Leviathan Gas Pipeline Partners L.P. 1,300 32,500
Mobil Corp. 55,400 5,256,075
Newfield Exploration Co. 900 20,700
Newpark Resources, Inc. 1,100 24,338
Oneok Inc. 5,800 110,925
Panhandle Eastern Corp. 80,000 1,920,000
Penn Virginia Corp. 100 3,350
Petro-Canada 2,900 27,438
Phoenix Resource Companies, Inc. 2,600 74,100
Quaker State Corp. 4,900 69,825
Royal Dutch Petroleum Co. 70,700 8,766,800
Saga Petroleum AS 2,800 40,726
Santa Fe Pacific Pipeline Partners, L.P. 1,000 37,000
Shell Transport Class "A" 18,600 1,325,250
</TABLE>
Aetna Mutual Funds Semi-Annual Report 95
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Sonat Offshore Drilling Co. 2,300 $ 62,100
Tesoro Petroleum Corp. 5,300 52,338
Texas Meridian Resources Corp. 200 2,450
Tide West Oil Co. 1,200 12,375
Transcanada Pipelines Ltd. 2,500 33,069
-------------
25,685,249
-------------
Oil & Gas Utilities (1.11%)
Connecticut Energy Corp. 700 13,388
New Jersey Resources Corp. 2,500 56,250
Northwest Natural Gas Co. 1,000 30,750
OEMV AG 800 82,915
Pacific Enterprises 21,000 517,125
Piedmont Natural Gas, Inc. 900 18,338
Schlumberger, Ltd. 42,000 2,640,750
Southern Indiana Gas & Electric Co. 1,200 36,300
Southwest Gas Corp. 1,200 17,700
Union Texas Petroleum Holdings, Inc. 9,300 198,788
Westcoast Energy Inc. 2,000 31,783
-------------
3,644,087
-------------
Oil & Gas Equipment (0.09%)
Camco International Inc. 6,600 155,925
Smith International Inc. 7,500 $ 129,375
-------------
285,300
-------------
Paper & Containers (3.60%)
Abitibi-Price Inc. 2,600 36,302
ACX Technologies, Inc.+ 400 17,400
Aptargroup, Inc. 800 23,600
Avery Dennison Corp. 50,500 2,051,563
Ball Corp. 99,000 3,390,750
Bowater Inc. 3,000 114,750
Champion International Corp. 22,200 976,800
Chesapeake Corp. 9,600 297,600
Enso-Gutzeit Oy 5,400 48,203
Gaylord Container Corp. 5,700 64,125
Glatfelter (P.H.) Co. 1,200 21,600
International Paper Co. 50,000 3,850,000
Koninklijke KNP BHT 1,000 30,207
Kymmene Oy 1,600 48,109
Leykam-Muerztaler Papier 700 28,430
Longview Fibre Co. 1,900 31,588
Macmillan Bloedel Ltd. 2,900 37,827
Mayr-Melnhof Karton AG 600 34,795
Metsa Serla Class "B" 1,000 43,693
Owens-Illinois Inc.+ 4,900 58,188
Rayoner Inc. 6,900 228,563
Repola Oy 2,900 58,381
</TABLE>
See Notes to Portfolio of Investments.
96 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Rock-Tenn Co. Class "A" 900 $ 15,300
Stone-Consolidated Corp. 1,900 23,736
Thermo Fibertek Inc. 300 5,513
Willamette Industries, Inc. 4,500 228,938
-------------
11,765,961
-------------
Personal Care (0.05%)
American Safety Razor Co.+ 1,500 18,375
Block Drug Co., Inc. 500 18,219
DSG International Ltd. 6,000 111,750
Helene Curtis Industries, Inc. 400 13,750
-------------
162,094
-------------
Pharmaceuticals (6.51%)
Allergan, Inc. 32,400 878,850
A.L. Pharma, Inc.-- Class "A" 3,700 88,338
Bristol-Myers Squibb Co. 30,800 2,005,850
Carter-Wallace, Inc. 1,100 13,888
Foxmeyer Health Corp. 1,600 30,400
Johnson & Johnson 87,500 5,687,500
Marion Merrell Dow, Inc. 7,900 188,613
Medtronic, Inc. 29,700 2,208,938
Pfizer Inc. 15,200 1,316,700
Rhone-Poulenc Rorer, Inc. 4,500 $ 188,438
Schering Plough 45,800 3,452,175
Smithkline Beecham Plc 96,600 3,755,325
Warner Lambert Co. 16,600 1,323,850
Watson Pharmaceuticals, Inc. 4,800 148,800
-------------
21,287,665
-------------
Printing & Publishing (1.62%)
Banta Corp. 6,900 228,563
Belo (A.H.) Corp. 4,000 240,500
Cadmus Communications Corp. 400 7,275
CCH Inc. 300 5,025
Central Newspapers, Inc. Class "A" 3,000 78,000
Devon Group, Inc. 2,200 58,850
Gannett Company, Inc. 75,900 3,994,238
International Imaging Materials 1,500 39,938
Lee Enterprises, Inc. 1,200 43,050
Meredith Corp. 2,400 60,000
Omnicom Group 2,700 150,188
Pulitzer Publishing Co. 1,825 73,684
Reader's Digest Association, Inc. 100 3,938
Scholastic Corp. 3,400 190,400
Scientific Games Holdings Corp. 3,700 89,263
</TABLE>
Aetna Mutual Funds Semi-Annual Report 97
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
VNU-Verenigde Nederlands Uitger Ver Beait 300 $ 33,615
-------------
5,296,527
-------------
Rails (0.24%)
Conrail Inc. 14,100 770,213
-------------
Real Estate (1.09%)
Amli Residential Properties Trust 4,300 78,475
Amresco, Inc. 2,100 14,963
Camden Property Trust 6,000 126,000
Centerpoint Properties Corp. 200 3,800
Chelsea GCA Realty, Inc. 7,700 187,688
Colonial Properties Trust 4,600 105,225
Crown America Realty Trust 10,100 126,250
Debartolo Realty Corp. 19,300 267,788
Duke Realty Investments, Inc. 11,200 305,200
Equity Inns, Inc. 6,500 73,938
Equity Residential Properties Trust 12,100 323,675
General Growth Properties 5,100 103,275
Health Care Properties Investors, Inc. 6,400 193,600
Irvine Apartment Communities, Inc. 17,100 $ 269,325
Merry Land & Investment Co., Inc. 19,400 366,175
MGI Properties 2,800 39,550
Post Properties, Inc. 9,700 287,363
Price Enterprise, Inc. 23,400 274,950
Tanger Factory Outlet Centers, Inc. 7,100 165,963
United Dominion Realty Trust, Inc. 18,100 253,400
-------------
3,566,603
-------------
Real Estate Investment Trusts (1.02%)
Associated Estates Realty Corp. 2,800 55,300
Beacon Properties Corp. 1,100 21,588
Burnham Pacific Properties, Inc. 300 3,563
CBL & Associates Properties, Inc. 1,200 23,400
Cousins Properties, Inc. 1,900 31,825
Crescent Real Estate Equities, Inc. 2,200 63,250
Developers Diversified Realty Corp. 5,000 137,500
Essex Property Trust, Inc. 1,700 27,625
Excel Realty Trust, Inc. 600 11,475
Factory Stores of America, Inc. 4,800 94,200
</TABLE>
See Notes to Portfolio of Investments.
98 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
First Industrial Realty Trust, Inc. 4,600 $ 80,500
Franchise Finance Corporation of America 5,800 114,550
Healthcare Realty Trust, Inc. 1,900 35,625
Highwood Properties, Inc. 7,700 169,400
Kesko 2,800 28,941
Kimco Realty Corp. 6,300 237,825
Kranzco Realty Trust 14,500 400,925
Mills Corp. 9,000 153,000
Mitsubishi Estate Co. Ltd. 7,000 84,147
National Golf Properties, Inc. 3,500 68,250
Nationwide Health Properties, Inc. 3,000 108,375
Olympia Industries Bhd 32,000 29,418
RPS Realty Trust 1,300 5,850
Sekisui House 5,000 66,056
Shurgard Storage Centers Inc. Class "A" 4,600 106,950
Smith (Charles E.) Residential 1,300 29,575
South West Property Trust 7,875 93,516
Storage Equities Inc. 5,600 90,300
Storage USA, Inc. 600 17,175
Tan & Tan Development Bhd 23,000 $ 24,498
Urban Shopping Centers, Inc. 5,000 99,375
Vornado Realty Trust 2,500 84,375
Weingarten Realty Investors 12,400 434,000
Wellsford Residential Property Trust 15,200 307,800
-------------
3,340,152
-------------
Retail (5.46%)
Albertson's Inc. 36,100 1,141,663
Arbor Drugs, Inc. 1,400 35,700
Argyll Group Plc 18,500 85,148
Big B, Inc. 8,200 119,925
Blair Corp. 700 24,238
Bon-Ton Stores, Inc. 1,000 10,500
Bruno's, Inc. 7,500 90,938
Burton Group Plc 79,200 99,097
Caldor Corp. 100 1,938
Casey's General Stores, Inc. 2,200 37,675
Circuit City Stores, Inc. 11,600 300,150
Citizen Watch Co., Ltd. 8,000 57,415
Clayton Homes Inc. 12,500 210,938
Dollar General Corp. 1,000 23,250
Eckerd Corp. 2,100 61,163
Egghead, Inc. 4,800 46,200
Fabri-Centers of America 600 11,100
Forschner Group Inc. 700 7,613
</TABLE>
Aetna Mutual Funds Semi-Annual Report 99
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Genovese Drug Stores, Inc. 200 $ 2,075
Giant Food, Inc. Class "A" 20,000 537,500
Greswig AS 1,600 22,372
Gymboree Corp. 8,200 191,675
Hannaford Brothers, Co. 600 15,825
Hi-Lo Automotive, Inc. 2,900 24,288
Horizon Outlet Centers, Inc. 6,700 147,400
Hudson's Bay Co. 2,000 36,743
Ito-Yokado Co. Ltd. 2,000 107,831
Koninklijke Ahold N.V. 1,900 65,488
Kroger Equity, Inc. 1,700 12,856
Laclede Gas Co. 900 16,988
Mac Frugal's Bargains 3,500 51,625
Macerich Co. (The) 4,500 90,563
Medicine Shoppe International, Inc. 2,100 67,200
Neiman Marcus Group, Inc. 1,700 24,863
Nike, Inc. 28,800 2,206,800
Office Depot, Inc. 32,000 728,000
Oriental Holdings Bhd 6,000 28,673
Oshkosh B'Gosh, Inc. 100 1,625
Rex Stores Corp. 2,600 35,425
Rhodes, Inc.+ 2,600 25,675
Rite Aid Corp. 130,100 $ 3,024,825
Ruddick Corp. 700 14,525
Russ Berrie & Co. Inc. 1,500 21,938
Sears, Roebuck & Co. 34,500 1,871,625
Staples, Inc.+ 18,300 438,056
Stop & Shop Companies, Inc. 4,000 106,500
Strawbridge & Clothier 1,000 19,750
Talbots, Inc. 1,200 36,450
Tesco Plc 28,600 128,643
Tractor Supply Co.+ 100 2,144
Viking Office Products, Inc. 5,500 150,563
Waban Inc. 12,300 204,488
Walgreen Co. 75,900 3,567,300
Wal-Mart Stores, Inc. 60,700 1,441,625
Zale Corp.+ 2,100 24,544
-------------
17,859,117
-------------
Specialty Consumer Durables (0.09%)
Bio-Rad Laboratories, Inc. Class "A" 1,900 54,863
Coats Viyella Plc 7,200 23,522
Collagen Corp. 2,900 55,463
Department 56, Inc.+ 1,200 44,400
Knape & Vogt Manufacturing Co. 400 6,600
Polaris Industries, Inc. 1,600 72,400
Superior Surgical Manufacturing Co. 800 9,700
Whittacker Corp. 800 16,800
-------------
283,748
-------------
</TABLE>
See Notes to Portfolio of Investments.
100 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Telecommunications (3.23%)
Ameritech Corp. 111,300 $ 5,008,500
AT&T Corp. 63,100 3,202,325
Computer Associates International Inc. 34,500 2,220,938
Equifax, Inc. 4,000 129,500
-------------
10,561,263
-------------
Telephone Utilities (0.17%)
Cable & Wireless Plc 13,100 84,644
Citizens Utilities Co. 5,500 67,375
DDI Corp. 9 79,267
Executone Information Systems, Inc.+ 2,600 8,288
Nippon Telegraph & Telegraph Corp. 8 70,745
Singapore Telecomm Ltd. 8,000 15,960
Southern New England Telecommunications Corp. 2,900 96,063
Telekom Malaysia Bhd 7,000 48,194
Tellabs, Inc. 1,300 89,700
Transaction Network Services, Inc. 800 11,300
-------------
571,536
-------------
Transportation (0.47%)
Alaska Air Group, Inc.+ 600 10,275
American Medical Responses, Inc.+ 1,300 33,313
Arnold Industries, Inc. 800 $ 14,300
Arkanas Best Corp. 400 4,000
British Airways Plc 11,800 76,054
Det Norske Luftfartselsk 800 32,273
East Japan Railway Co. 5 26,006
Expeditors International of Washington, Inc. 900 20,475
Fritz Companies, Inc. 2,000 119,500
Harper Group, Inc. 1,900 36,338
Illinois Central Corp. 1,800 63,225
J.B. Hunt Transport Services, Inc. 2,800 52,500
Keppel Corporation Ltd. 5,000 40,545
Kirby Corp. 1,000 13,750
KLM Royal Dutch Airlines 800 24,372
Kvaerner AS 2,000 91,610
Laidlaw Inc. Class "B" 2,900 25,573
Landstar Systems, Inc. 3,700 106,838
M.S. Carriers, Inc. 2,100 50,400
Overseas Shiphold 800 16,000
Peninsular & Orient Steam Navigation Co. 14,000 130,450
Rollins Truck Leasing Co. 3,000 33,000
Singapore Airlines Ltd. 4,000 38,464
</TABLE>
Aetna Mutual Funds Semi-Annual Report 101
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Swift Transportation Co., Inc. 2,900 $ 45,313
TNT Freightways Corp. 1,800 42,638
United Airlines Corp. 2,000 240,000
Wilh. Wilhelmsen Ltd. AS 1,000 21,858
Xtra Corp. 2,600 125,450
-------------
1,534,520
-------------
Utilities Natural Gas (0.37%)
Brooklyn Union Gas Co. 1,600 38,800
Equitable Resources, Inc. 9,200 263,350
Williams Cos., Inc. 27,400 900,775
-------------
1,202,925
-------------
Utilities Telephone (3.45%)
BCE, Inc, 21,600 685,800
Bell Atlantic 46,000 2,524,250
Bellsouth Corp. 49,900 3,056,375
GTE Corp. 2,200 75,075
Pacific Telesis Group 9,400 290,225
Sprint Corp. 131,353 4,334,649
Telephone and Data Systems, Inc. 8,800 327,800
-------------
11,294,174
-------------
Total Common Stocks $319,367,009
-------------
Preferred Stocks (0.46%)
Automobiles & Trucks (0.40%)
Ford Motor Co. $50 Par 14,800 1,304,250
-------------
Diversified (0.01%)
Sea Containers, Ltd. 800 $ 34,300
-------------
Metals (0.01%)
Cyprus Amax Minerals Co. 400 24,600
-------------
Electronics (0.04%)
Nokia Class "A" 3,200 130,796
-------------
Total Preferred Stocks $ 1,493,946
-------------
Total Common and Preferred Stocks (cost $292,134,062) $320,860,955
-------------
</TABLE>
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Corporate Bonds & Notes (0.90%)
Commercial Services (0.04%)
Browning-Ferris Industries, Inc., 6.75%, 07/18/05 $150,000 $143,625
-------------
Computer Software (0.03%)
Automatic Data Processing, Inc., Zero Coupon, 02/20/12 200,000 87,750
-------------
Consumer Products (0.01%)
Fieldcrest Cannon, Inc., 6.00%, 03/15/12 50,000 38,500
-------------
Electric Utilities (0.08%)
Oryx Energy Co., 7.50%, 05/15/14 50,000 41,500
Potomac Electric Power Corp., 7.00%, 01/15/18 250,000 227,813
-------------
269,313
-------------
</TABLE>
See Notes to Portfolio of Investments.
102 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Electrical Equipment (0.01%)
Arrow Electric Inc., 5.75%, 10/15/02 15,000 $ 21,019
-------------
Electronics (0.07%)
Motorola, Inc., Zero Coupon, 09/27/13 $300,000 216,750
-------------
Financial Services (0.06%)
Ogden Corp,. 6.00, 25,000 21,750
Re Capital Corp., 5.50%, 08/01/00 50,000 53,813
Fremont General Corp., Zero Coupon, 10/12/13 300,000 105,375
Old Republic International, 5.75%, 08/15/02 15,000 15,825
-------------
196,763
-------------
Food & Beverage (0.05%)
Guilford Mills, 6.00%, 09/15/12 84,000 80,430
Kroger Co., 6.375%, 12/01/99 50,000 68,688
-------------
149,118
-------------
Hotel & Restaurant (0.01%)
Carnival Corp., 4.50%, 07/01/97 20,000 28,925
-------------
Media & Entertainment (0.05%)
Time Warner Inc., 8.75%, 01/10/15 150,000 150,563
-------------
Metals (0.02%)
Agnico-Eagle Mines Ltd., 3.50%, 01/27/04 100,000 79,250
-------------
Oil & Gas (0.25%)
Amoco Canada Petroleum Co. Ltd., 7.375%, 09/01/13 $340,000 $ 424,575
Apache Corp., 6.00%, 01/15/02 60,000 65,700
Baker Hughes Inc., Zero Coupon, 05/05/08 525,000 316,313
-------------
806,588
-------------
Oil & Gas Utilities (0.02%)
Consolidated Natural Gas Co., 7.25%, 12/15/15 50,000 51,250
-------------
Retail (0.19%)
Costco Wholesale Inc., 5.75%, 05/15/02 175,000 151,156
Hechinger Co., 5.50%, 04/01/12 140,000 93,625
Rite Aid Corp., Zero Coupon, 07/24/06 800,000 377,000
-------------
621,781
-------------
Transportation (0.02%)
Delta Air Lines, 3.23%, 06/15/03 79,000 68,335
-------------
Total Bonds & Notes (cost $2,755,134) $2,929,530
-------------
</TABLE>
Aetna Mutual Funds Semi-Annual Report 103
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth and Income Fund
<TABLE>
<CAPTION>
Principal Market
Amount Value
---------- -------------
<S> <C> <C>
Short Term Investments (1.75%)
Peco Energy Co., Comm. Paper, 6.05%, 05/01/95 $5,329,000 $ 5,329,000
U.S. Treasury Note, 5.125%, 03/31/96 150,000 148,406
U.S. Treasury Note, 4.25%, 07/31/95 250,000 248,984
-------------
Total Short-Term Investments (cost $5,726,101) $ 5,726,390
-------------
Total Investments (cost $300,615,297) -------------
$329,516,875
-------------
</TABLE>
Notes to Portfolio of Investments
(a) The cost of investments for income tax purposes amounted to $300,709,622.
Unrealized gains and losses, based on identified tax cost at April 30,
1995 are as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized gains $31,707,904
Unrealized losses (2,900,651)
------------
Net unrealized gain $28,807,253
------------
</TABLE>
(b) At April 30, 1995, U.S. Treasury Note 5.125%, 03/31/96, par value
$150,000 was pledged to cover margin requirements for open futures
contracts (See Note 1 of Notes to Financial Statements). Information
concerning open futures contracts is shown below:
<TABLE>
<CAPTION>
No. of Face Expiration Unrealized
Contracts Value Date Gain/Loss
----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Toronto Stock Exchange Future 3 $ 861,124 June 95 $ 257
FTSE 100 Future 7 240,469 June 95 54,018
Tokyo Stock Price Index Future 4 (626,256) June 95 (23,327)
-------------
$ 30,948
</TABLE>
+ Non-income producing security.
Category percentages are based on net assets.
See Notes to Financial Statements.
104 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Common Stocks (97.92%)
Aerospace & Defense (3.51%)
Boeing Co. 21,000 $1,155,000
-------------
Air Transportation (2.05%)
AMR Corp.+ 10,000 673,750
-------------
Autos & Auto Equipment (2.10%)
Daimler Benz Aktiengesellschaft ADR 15,000 691,875
-------------
Building Materials & Construction (3.59%)
National Gypsum Co.+ 24,000 1,179,000
-------------
Chemicals (8.35%)
Engelhard Corp. 25,000 959,375
Hercules Inc. 20,000 997,500
PPG Industries, Inc. 20,000 787,500
-------------
2,744,375
-------------
Computers & Office Equipment (8.21%)
Bay Networks Inc.+ 20,000 726,250
Compaq Computer Corp.+ 30,000 1,140,000
Sun Microsystems, Inc.+ 21,000 834,750
-------------
2,701,000
-------------
Diversified (2.86%)
ITT Corp. 9,000 940,500
-------------
Electrical & Electronics (8.29%)
Micron Technology Inc. 20,000 1,645,000
Motorola, Inc. 19,000 1,080,625
-------------
2,725,625
-------------
Financial Services (2.98%)
Sunamerica, Inc. 20,000 $ 980,000
-------------
Insurance (5.05%)
American International Group, Inc. 8,000 854,000
Partnerre Holdings Ltd. 35,000 807,188
-------------
1,661,188
-------------
Machinery (6.33%)
Caterpillar Inc. 10,000 585,000
Clark Equipment Co.+ 17,500 1,496,250
-------------
2,081,250
-------------
Media & Entertainment (6.68%)
Carmike Cinemas, Inc. Class "A"+ 30,000 667,500
CBS, Inc. 10,880 697,680
Walt Disney Company 15,000 830,625
-------------
2,195,805
-------------
Metals & Mining (5.21%)
Aluminum Company of America 20,000 897,500
Nucor Corp. 17,000 816,000
-------------
1,713,500
-------------
Oil & Gas (8.15%)
Amoco Corp. 15,000 984,375
Atlantic Richfield Co. 7,000 801,500
Imperial Oil Ltd. 25,000 893,750
-------------
2,679,625
-------------
Pharmaceuticals (10.04%)
Amgen Inc.+ 18,000 1,308,375
Becton, Dickinson & Co. 10,000 557,500
</TABLE>
See Notes to Portfolio of Investments.
Aetna Mutual Funds Semi-Annual Report 105
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Centocor, Inc.+ 50,000 $ 709,375
Upjohn Co. 20,000 725,000
-------------
3,300,250
-------------
Retail (12.10%)
Home Depot, Inc. 22,500 939,375
Nordstrom, Inc. 27,000 1,034,438
Tandy Corp. 18,000 891,000
US Shoe Corp. 40,000 1,115,000
-------------
3,979,813
-------------
Telecommunications (2.42%)
Scientific-Atlanta, Inc. 35,000 796,250
-------------
Total Common Stocks (cost $27,098,645) $32,198,806
-------------
Shares Value
---------- -------------
Put Options (0.08%)
S & P 500 Index Expiration Date 06/17/95 10,000 4,687
S & P 500 Index Expiration Date 09/16/95 10,000 23,125
-------------
Total Put Options (cost $233,100) $ 27,812
-------------
Short-Term Investments (3.64%)
Market
Principal Value
---------- -------------
CCU of Michigan, 5.95%, 05/01/95 $1,197,000 $ 1,197,000
-------------
Total Short-Term Investments (cost $1,197,000) $ 1,197,000
-------------
Total Investments (cost $28,528,745) $33,423,618
-------------
</TABLE>
Notes to Portfolio of Investments
+Non-income producing security.
The cost of investments for income tax purposes amounted to $29,510,946.
Unrealized gains and losses, based on identified tax cost at April 30, 1995
are as follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized gains $4,252,854
Unrealized losses (340,182)
-----------
Net unrealized gain $3,912,672
===========
</TABLE>
Category percentages are based on net assets.
Call Options
Exercise Expiration Market
Contracts Price Date Value
--------- ------- --------- -------
CBS, Inc. 60 $65 5/20/95 $11,438
See Notes to Financial Statements.
106 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Small Company Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Common Stocks (95.6%)
Aerospace & Defense (1.2%)
Orbital Sciences Corp.+ 20,500 $ 348,500
-------------
Autos & Auto Equipment (2.0%)
Copart, Inc.+ 10,000 203,750
Lear Seating Corp.+ 19,500 375,375
-------------
579,125
-------------
Banks (2.4%)
Cullen/Frost Bankers, Inc. 10,000 370,000
Dime Bancorp Inc.+ 35,000 336,875
-------------
706,875
-------------
Building Materials & Construction (6.6%)
Corrpro Companies, Inc.+ 20,000 370,000
J. Ray McDermott, S.A.+ 27,000 742,500
Lone Star Industries, Inc.+ 20,000 435,000
National Gypsum Co.+ 8,000 393,000
-------------
1,940,500
-------------
Chemicals (5.2%)
NL Industries, Inc.+ 50,200 740,450
Vigoro Corp. 20,000 797,500
-------------
1,537,950
-------------
Commercial Services (2.9%)
ECC International Corp.+ 20,000 237,500
Sotheby's Holdings, Inc. Class "A" 45,000 601,875
-------------
839,375
-------------
Computer Software (1.8%)
BTG, Inc.+ 30,000 $ 275,625
Softkey International, Inc.+ 10,000 246,875
-------------
522,500
-------------
Electrical & Electronics (11.2%)
BMC Industries, Inc. 35,000 630,000
Logicon, Inc. 24,000 888,000
Oak Industries, Inc.+ 15,000 438,750
Silicon Valley Group, Inc.+ 30,000 873,750
Tech-Sym Corp.+ 18,400 464,600
-------------
3,295,100
-------------
Financial Services (5.0%)
Foothill Group, Inc. Class A 32,500 706,875
The Money Store, Inc. 32,500 765,781
-------------
1,472,656
-------------
Food & Beverage (3.0%)
International Multifoods Corp. 20,000 410,000
Ralcorp Holdings, Inc.+ 20,000 462,500
-------------
872,500
-------------
Health Care Products (6.3%)
Foxmeyer Health Corp.+ 45,200 858,800
McKesson Corp. 25,000 990,625
-------------
1,849,425
-------------
Health Services (1.7%)
Coram Healthcare Corp.+ 25,000 512,500
-------------
</TABLE>
See Notes to Portfolio of Investments.
Aetna Mutual Funds Semi-Annual Report 107
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Small Company Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Insurance (5.4%)
American Eagle group, Inc. 30,000 $ 281,250
Life Partners Group, Inc. 20,000 390,000
Markel Corp.+ 6,300 325,238
Security-Connecticut Corp. 23,000 575,000
-------------
1,571,488
-------------
Leisure & Entertainment (3.5%)
Carmike Cinemas, Inc. Class A+ 23,500 522,875
Topps Co., Inc.+ 80,000 495,000
-------------
1,017,875
-------------
Machinery & Equipment (6.1%)
Acme-Cleveland Corp. 35,700 740,775
Fedders Corp.+ 80,000 560,000
Millipore Corp. 8,000 491,000
-------------
1,791,775
-------------
Metals & Mining (3.1%)
Brush Wellman, Inc. 25,000 493,750
Cleveland-Cliffs, Inc. 11,000 402,875
-------------
896,625
-------------
Oil & Gas (4.3%)
Arakis Energy Corp.+ 30,000 217,500
Basic Petroleum International, Ltd.+ 10,000 137,500
Benton Oil & Gas Co.+ 35,000 433,125
Seitel, Inc.+ 15,000 480,000
-------------
1,268,125
-------------
Oil & Gas Utilities (0.7%)
Valero Energy Corp. 10,000 $ 216,250
-------------
Paper & Containers (4.2%)
Aptargroup, Inc. 10,000 295,000
Gaylord Container Corp.+ 35,000 393,750
Repap Enterprises, Inc.+ 75,000 530,861
-------------
1,219,611
-------------
Personal Care (3.1%)
Alberto-Culver Company Class "B" 15,000 472,500
Helen Of Troy Ltd.+ 25,000 431,250
-------------
903,750
-------------
Pharmaceuticals (4.1%)
Biovail Corporation International+ 20,000 337,500
Medeva Plc ADR 30,000 487,500
Quidel Corp.+ 100,000 375,000
-------------
1,200,000
-------------
Publishing & Printing (3.2%)
Edmark Corporation+ 20,000 517,500
Media General, Inc. Class "A" 13,000 422,500
-------------
940,000
-------------
Retail (7.5%)
Friedman's Inc.
Class "A"+ 15,000 264,375
Intelligent Electronics, Inc. 40,000 387,500
Medicine Shoppe International, Inc. 15,000 480,000
</TABLE>
See Notes to Portfolio of Investments.
108 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Small Company Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
National Presto Industries, Inc. 5,000 $ 231,250
Wolverine World Wide, Inc. 25,000 837,500
-------------
2,200,625
-------------
Telecommunications (1.2%)
General Cable Plc ADR+ 25,000 351,563
-------------
Total Common Stocks
(cost $25,194,381) $28,054,693
-------------
Principal
Amount Value
---------- -------------
Short-Term Investments--3.9%
CCU Of Michigan, Comm. Paper, 5.95%, 05/01/95 $1,132,000 1,132,000
-------------
Total Short-Term Investments (cost $1,132,000) $ 1,132,000
-------------
Total Investments (cost $25,194,381)
$29,186,693
-------------
</TABLE>
Notes to Portfolio of Investments
+ Non-income producing security.
(a) The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at April 30, 1995 are as
follows:
Unrealized gains $4,332,494
Unrealized losses (340,182)
-----------
Net Unrealized gain $3,992,312
===========
Category percentages are based on net assets.
See Notes to Financial Statements.
Aetna Mutual Funds Semi-Annual Report 109
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Aetna International Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Common Stocks (93.3%)
Australia (3.0%)
Energy Sources (0.8%)
Broken Hill Proprietary Company Ltd. 30,000 $ 437,283
-------------
Hotels & Restaurants (0.4%)
AAPC Ltd. 378,000 200,705
-------------
Manufacturing (0.9%)
Australian National Industries Ltd. 508,000 524,681
-------------
Metals (0.5%)
QNI Ltd.+ 202,000 273,280
-------------
Oil & Gas Utilities (0.4%)
Australian Gas & Light Company Ltd. 70,000 229,115
-------------
Total Australia 1,665,064
-------------
France (10.6%)
Autos & Auto Equipment (1.1%)
PSA Peugeot SA+ 4,500 648,015
-------------
Banks (1.9%)
Banque Nationale de Paris 10,800 524,261
Credit Local de France 6,300 536,143
-------------
1,060,404
-------------
Building Materials & Construction (0.9%)
Lafarge Coppee 6,300 490,078
-------------
Consumer Products (1.0%)
Christian Dior SA 6,000 535,473
-------------
Financial Services (0.6%)
Cetelem Group 1,550 $ 327,094
-------------
Food & Household Products (0.7%)
Eridania-Beghin Say SA 2,400 370,468
-------------
Insurance (0.5%)
Assurances Generales de France 8,000 264,202
-------------
Metals (0.9%)
Ugine 7,500 530,111
-------------
Petroleum (1.0%)
Societe Nationale Elf Aquitaine 7,150 570,286
-------------
Pharmaceuticals (0.9%)
Sanofi SA 9,600 528,405
-------------
Retail (1.1%)
Pinault-Printemps SA 2,800 632,396
-------------
Total France 5,956,932
-------------
Germany (4.5%)
Building Materials & Trade (0.8%)
Bilfinger & Berger Bau AG 1,000 466,073
-------------
Banks (1.0%)
Deutsche Bank AG 1,125 551,766
-------------
Machinery & Equipment (1.9%)
Linde AG 900 518,488
Mannesmann AG 2,000 542,549
-------------
1,061,037
-------------
Transportation (0.8%)
Veba AG 1,250 465,351
-------------
Total Germany 2,544,227
-------------
</TABLE>
See Notes to Financial Statements.
110 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Aetna International Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Great Britain (19.3%)
Autos & Auto Equipment (0.8%)
T & N 181,000 $ 439,687
-------------
Banks (1.0%)
Abbey National 74,000 554,761
-------------
Building Materials & Construction (0.7%)
BPB Industries 95,000 412,644
-------------
Chemicals (1.7%)
Albright And Wilson Plc 200,000 553,410
Hanson 100,000 380,469
-------------
933,879
-------------
Coal Mining & Steel (0.8%)
British Steel Plc 170,000 462,194
-------------
Communications (1.2%)
British Telecommunications+ 109,700 684,742
-------------
Food & Beverage (1.0%)
Grand Metropolitan 51,000 327,364
Hillsdown Holdings 100,000 296,010
-------------
623,374
-------------
Hotels & Restaurants (1.0%)
Ladbroke Group 180,000 521,234
Greenalls Group Plc 73,000 536,695
-------------
1,057,929
-------------
Machine Equipment (0.8%)
Siebe 50,000 452,863
Tomkins Plc 129,000 485,617
-------------
938,480
-------------
Metals (1.0%)
Cookson Group 144,000 $ 542,084
-------------
Petroleum (0.5%)
British Petroleum 40,000 287,966
-------------
Pharmaceutical (0.6%)
Smithkline Beecham Units 44,711 340,583
-------------
Publishing & Printing (0.8%)
Mirror Group Plc 214,000 461,325
-------------
Retail (1.6%)
Tesco 85,000 382,198
Great Universal Stores Plc 55,000 522,924
-------------
905,122
-------------
Textile (0.9%)
Coats Viyella 150,000 489,864
-------------
Transportation (0.7%)
Peninsular & Oriental Steam 45,000 417,712
-------------
Utilities (2.4%)
British Gas 95,800 463,895
North West Water 56,750 517,651
Powergen Plc+ 116,000 358,301
-------------
1,339,847
-------------
Total Great Britain 10,892,193
-------------
Italy (2.1%)
Building Materials & Construction (0.5%)
Italcementi 48,100 288,869
-------------
Telecommunications (1.6%)
Stet D Risp Port 400,000 916,159
-------------
Total Italy 1,205,028
-------------
</TABLE>
Aetna Mutual Funds Semi-Annual Report 111
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Aetna International Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Japan (35.9%)
Autos & Auto Equipment (4.0%)
Honda Motor Co. 52,000 $ 841,454
Mazda Motor+ 130,000 573,859
Nippondenso Co. Ltd. 42,000 844,548
-------------
2,259,861
-------------
Banks (4.6%)
Shizuoka Bank 94,000 1,297,400
Sumitomo Bank 60,000 1,299,304
-------------
2,596,704
-------------
Chemicals (1.5%)
Shin-etsu Chemical Co. 43,000 833,958
-------------
Consumer Products (4.8%)
Canon Inc. 57,000 942,709
Shimano Inc. 34,000 659,409
Sony Corp. 22,000 1,109,882
-------------
2,712,000
-------------
Electrical Equipment (7.1%)
Hitachi Ltd. 119,000 1,210,601
Mitsubishi Electric Corp. 110,000 780,059
TDK Corp. 20,000 913,796
-------------
2,904,456
-------------
Electric Utilities (1.4%)
Tohoku Electric Power Co. Inc. 27,000 774,228
-------------
Financial Services (1.4%)
Nomura Securities Co. Ltd. 40,000 809,090
-------------
Home Furnishings & Appliances (0.5%)
Keiyo Co. 26,250 $ 304,212
-------------
Machine Equipment (7.7%)
Amada Sonoike Co. Ltd. 110,000 844,191
Fuji Machine Manufacturing 27,000 658,576
Mitsubishi Heavy Industries Ltd. 126,000 914,510
NTN Corp. 132,000 873,246
Sumitomo Corp. 105,000 1,043,191
-------------
4,333,714
-------------
Publishing (1.5%)
Toppan Printing Co. Ltd. 60,000 870,962
-------------
Retail (1.9%)
Aoyama Trading Co. Ltd. 17,000 329,704
Best Denki Co. Ltd. 45,000 717,473
-------------
1,047,177
-------------
Textiles (1.5%)
Kuraray Co. Ltd. 65,000 772,622
-------------
Total Japan 20,218,984
-------------
Malaysia (2.3%)
Consumer Products (0.8%)
Sime Darby Bhd 187,000 476,674
-------------
Financial Services (0.4%)
AMMB Holdings Bhd 21,000 207,323
-------------
Metals (0.3%)
Aluminum Company of Malaysia 171,000 196,496
-------------
</TABLE>
See Notes to Portfolio of Investments.
112 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Aetna International Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Transportation (0.8%)
Malaysian International Ship 154,666 $ 400,511
Total Malaysia -------------
1,281,004
-------------
Netherlands (4.8%)
Banks (0.7%)
ABN Amro Holdings NV 10,506 404,049
-------------
Electrical Equipment (1.5%)
Philips Electronics 21,600 823,755
-------------
Insurance (1.2%)
Internatinale Nederlanden Groep NV 13,100 690,314
-------------
Media & Entertainment (1.4%)
Polygram 13,500 761,834
-------------
Total Netherlands 2,679,952
-------------
Norway (0.8%)
Energy (0.8%)
Norsk Hydro AS 11,111 452,828
-------------
Total Norway 452,828
-------------
Singapore (2.8%)
Banks (1.4%)
Development Bank of Singapore Ltd. 36,000 384,930
United Overseas Bank Ltd. 38,900 404,772
-------------
789,702
-------------
Transportation (1.4%)
Jurong Shipyard Ltd. 49,000 376,247
Singapore Airlines Ltd. (Foreign- Registered shares) 40,000 $ 384,643
-------------
760,890
-------------
Total Singapore 1,550,592
-------------
Spain (2.9%)
Building Materials & Construction (1.3%)
Dragados Y Construciones SA 25,000 378,666
Repsol SA 12,000 382,036
-------------
760,702
-------------
Metals (0.9%)
Acerinox SA 4,400 503,859
-------------
Telephone Utilities (0.7%)
Telefonica De Espana 29,000 354,463
-------------
Total Spain 1,619,024
-------------
Sweden (2.1%)
Electrical Equipment (2.1%)
Electrolux Ab B Free 13,500 688,614
-------------
Machine & Engineering (0.8%)
Atlas Copco Ab Free 34,250 470,901
-------------
Total Sweden 1,159,515
-------------
Switzerland (2.3%)
Electrical Engineering & Electronics (1.1%)
BBC Brown Boveri AG 660 651,219
-------------
Manufacturing (1.2%)
Holderbank Financiere Glaris AG 845 678,212
-------------
Total Switzerland 1,329,431
-------------
Total Common Stocks 52,554,774
-------------
</TABLE>
Aetna Mutual Funds Semi-Annual Report 113
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Aetna International Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Preferred Stock (1.3%)
Italy (1.3%)
Auto & Auto Equipment
Fiat SpA 280,000 $ 721,266
-------------
Total Preferred Stock 721,266
-------------
Warrants (0.0%)
Italy
Italcementi 12/31/96 11,100 2,767
-------------
Total Warrants $ 2,767
-------------
Principal Market
Amount Value
---------- -------------
Short-term Investments (5.0%)
Ford Motor Company 5.85%, 05/01/95 $2,793,000 $ 2,793,000
-------------
Total Short-term Investments $ 2,793,000
-------------
Total Investments (cost $54,454,925) $56,071,807
-------------
</TABLE>
Notes to Portfolio of Investments
+ Non-income producing security.
The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at April 30, 1995 are as
follows:
Unrealized gains $ 4,233,227
Unrealized losses (2,616,345)
------------
Net unrealized gain $ 1,616,882
============
Category percentages are based on net assets.
See Notes to Financial Statements.
114 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Asian Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Common Stocks (95.1%)
Australia (0.1%)
Building Materials & Construction (0.1%)
Odin Mining & Investments 38,750 $ 15,502
-------------
Total Australia 15,502
-------------
Hong Kong (32.1%)
Automotive (0.9%)
Qingling Motor Companies
Class "H" 1,100,000 211,730
-------------
Banks (6.0%)
Hang Seng Bank 86,000 566,593
HSBC Holdings Plc 68,800 797,675
-------------
1,364,268
-------------
Building Materials & Construction (2.3%)
Hopewell Holdings 735,000 522,219
-------------
Chemicals (1.7%)
Yizheng Chemical Fibre Company 1,150,000 378,827
-------------
Diversified (6.5%)
Citic Pacific Ltd. 320,000 789,562
Hutchison Whampoa 160,000 692,417
-------------
1,481,979
-------------
Electric Utilities (4.1%)
China Light & Power Co. Ltd. 50,000 235,757
Hong Kong Electric Holdings Ltd. 230,000 704,173
-------------
939,930
-------------
Financial Services (2.5%)
Guangdong Investment Ltd. 1,250,000 577,283
-------------
Real Estate (2.9%)
Hong Kong Land Holding 225,000 $ 423,000
Swire Pacific
Class "A" 100,000 668,518
-------------
1,091,518
-------------
Telephone Utilities (3.3%)
Hong Kong Telecommunications Ltd. 390,000 760,754
-------------
Total Hong Kong 7,328,510
-------------
Indonesia (8.8%)
Banks (2.0%)
Bank Tiara Asia (Foreign-Registered shares) 440,000 374,384
Modern Bank (Foreign-
Registered shares) 121,500 92,499
-------------
466,883
-------------
Financial Services (1.3%)
Wicaksana Overseas International (Foreign-
Registered shares) 129,000 294,626
-------------
Paper & Containers (4.6%)
Indorayon (Foreign- Registered shares) 250,000 459,023
Pabrik Kertas Tjiwi Kimia (Foreign- Registered shares) 98,000 138,245
Barito Pacific Timber (Foreign-Registered shares) 250,000 279,893
Sumalindo Lestari Jaya (Foreign-Registered shares)+ 100,000 163,457
-------------
1,040,618
-------------
</TABLE>
See Notes to Portfolio of Invesmtents.
Aetna Mutual Funds Semi-Annual Report 115
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Asian Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Real Estate (0.9%)
Pakuwon Jati (Foreign-Registered shares) 332,000 $ 156,113
Dharmala Intiland (Foreign-Registered shares) 75,000 43,663
-------------
199,776
-------------
Total Indonesia 2,001,903
-------------
South Korea (1.9%)
Oil & Gas (1.9%)
Yukong Ltd. 9,600 425,631
-------------
Total South Korea 425,631
-------------
Malaysia (16.6%)
Banking (1.5%)
Malayan Banking Bhd 50,000 341,897
-------------
Building Materials & Construction (2.2%)
Sungei Way Holdings 125,000 495,650
-------------
Diversified (2.8%)
Sime Darby Bhd 250,000 637,265
-------------
Paper & Containers (1.4%)
Aokam Perdana Bhd 70,000 314,384
-------------
Real Estate (6.0%)
Kampong Lanjut Tin Dredging 175,000 431,924
Land & General Bhd 232,500 672,618
Tan & Tan Development Bhd 250,000 266,033
-------------
1,370,575
-------------
Textiles (2.8%)
Jaya Tiasa Holdings Bhd 170,000 629,375
-------------
Total Malaysia 3,789,146
-------------
Philippines (6.3%)
Banks (0.1%)
Philippine National Bank 3,354 $ 32,832
-------------
Building Materials & Construction (2.0%)
South East Asia Cement Holdings Inc. 3,500,000 298,273
Sanitary Wares Manufacturing Corp. 434,700 155,190
-------------
453,463
-------------
Electric Utilities (0.0%)
Manila Electric Company "B" Shares 400 4,261
-------------
Real Estate (2.1%)
Ayala Land Inc. 212,000 260,422
SM Prime Holdings Inc.+ 700,000 214,971
-------------
475,393
-------------
Telephone Utilities (2.1%)
Philippine Long Distance Telephone 7,500 472,169
-------------
Total Philippines 1,438,118
-------------
Singapore (15.4%)
Banks (3.9%)
Development Bank of Singapore (Foreign-Registered shares) 55,000 588,087
United Overseas Bank (Foreign-Registered shares) 28,000 291,353
-------------
879,440
-------------
Diversified (1.7%)
Jardine Matheson 48,000 381,600
-------------
</TABLE>
116 Aetna Mutual Funds Semi-Annual Report
<PAGE>
Portfolio of Investments
April 30, 1995 (Unaudited)
Asian Growth Fund
<TABLE>
<CAPTION>
Number of Market
Shares Value
---------- -------------
<S> <C> <C>
Real Estate (2.9%)
Straits Steamship Land Ltd. 200,000 $ 665,949
DBS Land 253,000 697,180
-------------
1,363,129
-------------
Ship Repair (2.4%)
Jurong Shipyard 70,000 537,496
Sembawang Corporation Ltd. 50,000 342,662
-------------
880,158
-------------
Total Singapore 3,504,327
-------------
Thailand (14.0%)
Banks & Financial Services (6.9%)
Bank Of Ayudhya Public Co. Ltd. (Foreign-Registered shares) 115,000 514,332
Bangkok Metropolitan Bank (Foreign- Registered shares)+ 550,000 559,057
Nava Finance & Securities P Co. Ltd. (Foreign- Registered shares) 120,000 246,391
Siam City Bank Public Co. Ltd. (Foreign-Registered shares) 250,000 256,658
-------------
1,576,438
-------------
Building Materials & Construction (2.8%)
Siam Cement Public Co. Ltd. (Foreign- Registered shares) 7,000 402,440
TPI Polene Public Co. Ltd. (Foreign- Registered shares) 40,000 226,062
-------------
628,502
-------------
Electrical Equipment (2.9%)
Electricity Generating Public Co. Ltd. (Foreign-Registered shares)+ 220,000 $ 670,868
-------------
Metals (1.4%)
Sahavirya Steel Industry Public Co. Ltd. (Foreign-Registered shares)+ 125,000 322,728
-------------
Total Thailand 3,198,536
-------------
Principal Market
Amount Value
---------- -------------
Short-term Investments (2.6%)
Ford Motor Co., Comm. Paper 5.85% 05/01/95 598,000 598,000
-------------
Total Short-term Investments $ 598,000
-------------
Total Investments (cost $23,341,491) (a) -------------
$22,299,673
-------------
</TABLE>
Notes to Portfolio of Investments
(a) The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at April 30, 1995 are as
follows:
<TABLE>
<CAPTION>
<S> <C>
Unrealized gains $ 1,481,597
Unrealized losses (2,523,415)
------------
Net unrealized loss ($ 1,041,818)
============
</TABLE>
+ Non-income producing security.
Category percentages are based on net assets.
See Notes to Financial Statements.
Aetna Mutual Funds Semi-Annual Report 117
<PAGE>
The date of this amendment is December 1, 1995.
<PAGE>
AETNA SERIES FUND, INC.
151 Farmington Avenue
Hartford, Connecticut 06156-8962
Statement of Additional Information dated: March 31, 1995
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Aetna Series Fund, Inc. dated
March 31, 1995. A free prospectus is available upon request by writing or
calling:
Aetna Series Fund, Inc.
151 Farmington Avenue
Hartford, Connecticut 06156-8962
1-800-367-7732
Read the prospectus before you invest.
TABLE OF CONTENTS
General Information and History ................................. 2
Additional Investment Restrictions and Policies of the Funds..... 2
Description of Various Securities and Investment Techniques..... 5
Directors and Officers of the Company ........................... 19
Control Persons and Principal Holders of the Funds .............. 21
The Investment Advisory Contract ................................ 21
The Administrative Services Agreement ........................... 24
Sub-Advisory Agreements ......................................... 25
Custodian ....................................................... 26
Independent Auditors ............................................ 26
Principal Underwriter ........................................... 26
Distribution Arrangements ....................................... 27
Brokerage Allocation ............................................ 27
Description of Shares ........................................... 28
Sale and Redemption of Shares ................................... 30
Net Asset Value ................................................. 31
Tax Status ...................................................... 31
Performance Information ......................................... 39
The Aetna Way Investment Philosophy ............................. 42
Independent Auditors ............................................ 42
Financial Statements ............................................ 43
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Series Fund, Inc. (Company) is a diversified, open-end management
investment company which currently offers thirteen different series of Funds,
each representing a diversified portfolio of investments with different
investment objectives, policies and restrictions. The following ten Funds are
described in this Statement of Additional Information:
1. Aetna Money Market Fund (Money Market Fund), a portfolio consisting
of high-quality money market instruments;
2. Aetna Government Fund (Government Fund), a portfolio of U.S.
Government securities;
3. Aetna Bond Fund (Bond Fund), a portfolio primarily of high-quality
corporate and U.S. Government securities;
4. Aetna Tax-Free Fund (Tax-Free Fund), a portfolio primarily of
municipal securities;
5. The Aetna Fund (Aetna Fund), a flexible portfolio of stocks, bonds
and money market instruments;
6. Aetna Growth and Income Fund (Growth and Income Fund), a common stock
portfolio;
7. Aetna Growth Fund (Growth Fund), a common stock portfolio of
companies believed to have potential for growth;
8. Aetna Small Company Growth Fund (Small Company Growth Fund), a common
stock portfolio of companies with smaller market capitalizations;
9. Aetna International Growth Fund (International Growth Fund), a common
stock portfolio of companies traded outside North America;
10. Aetna Asian Growth Fund (Asian Growth Fund), a common stock
portfolio of companies traded in Asia excluding Japan.
The investment objectives and general investment policies of each Fund
are described in the Prospectus.
ADDITIONAL INVESTMENT RESTRICTIONS AND POLICIES OF THE FUNDS
The investment objectives and certain investment restrictions of the
Funds are matters of fundamental policy for purposes of the Investment Company
Act of 1940 (the 1940 Act) and therefore cannot be changed, with regard to a
particular Fund, without the approval of a majority of the outstanding voting
securities of that Fund. This means the lesser of: (i) 67% of the shares of a
Fund present at a shareholders' meeting if the holders of more than 50% of the
shares of that Fund then outstanding are present in person or by proxy; or (ii)
more than 50% of the outstanding voting securities of a Fund.
As a matter of fundamental policy, none of the above mentioned Funds will:
(1) hold more than 5% of the value of its total assets in the securities of any
one issuer or hold more than 10% of the outstanding voting securities of any
one issuer. This restriction applies only to 75% of the value of a Fund's
total assets. Securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities are excluded from this restriction;
(2) concentrate its investments in any one industry except that a Fund 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 user of their services, such as automobile finance, computer finance and
consumer finance. This limitation will not, however, apply to securities
issued or guaranteed by the U.S. Government, its agencies and
instrumentalities. Additionally, for the Money Market Fund, investments in
the following shall not be subject to the 25% limitation: securities
invested in, or repurchase agreements for, U.S. Government securities;
2
<PAGE>
and certificates of deposit, bankers' acceptances, or securities of banks
and bank holding companies;
(3) make loans, except that, to the extent appropriate under its investment
program, a Fund may (a) purchase bonds, debentures or other debt securities,
including short-term obligations; (b) enter into repurchase transactions;
and (c) lend portfolio securities provided that the value of such loaned
securities does not exceed one-third of the Fund's total assets;
(4) issue any senior security (as defined in the 1940 Act), except that (a) a
Fund may enter into commitments to purchase securities in accordance with
that Fund's investment program, including reverse repurchase agreements,
delayed delivery and when-issued securities, which may be considered the
issuance of senior securities, (b) a Fund may engage in transactions that
may result in the issuance of a senior security to the extent permitted
under applicable regulations, interpretations of the 1940 Act or an
exemptive order; (c) a Fund (other than the Money Market Fund) may engage in
short sales of securities to the extent permitted in its investment program
and other restrictions; (d) the purchase or sale of futures contracts and
related options shall not be considered to involve the issuance of senior
securities; and (e) subject to fundamental restrictions, a Fund may borrow
money as authorized by the 1940 Act;
(5) purchase real estate, interests in real estate or real estate limited
partnership interests except that, to the extent appropriate under its
investment program, a Fund 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;
(6) invest in commodity contracts, except that a Fund may, to the extent
appropriate under its investment program, purchase securities of companies
engaged in such activities; may (other than the Money Market Fund) enter
into transactions in financial and index futures contracts and related
options; may engage in transactions on a when-issued or forward commitment
basis; and may enter into forward currency contracts;
(7) borrow money, except that (a) a Fund (other than the Money Market Fund) may
enter into certain futures contracts and options related thereto; (b) a Fund
may enter into commitments to purchase securities in accordance with that
Fund's investment program, including delayed delivery and when-issued
securities and reverse repurchase agreements; (c) for temporary emergency
purposes, a Fund may borrow money in amounts not exceeding 5% of the value
of its total assets at the time when the loan is made and (d) for purposes
of leveraging, a Fund (other than the Money Market Fund) may borrow money
from banks (including its custodian bank) only if, immediately after such
borrowing, the value of that Fund's 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 that Fund's assets
fails to meet the 300% asset coverage requirement relative only to
leveraging, that Fund will, within three days (not including Sundays and
holidays), reduce its borrowings to the extent necessary to meet the 300%
test; or
(8) act as an underwriter of securities except to the extent that, in connection
with the disposition of portfolio securities by a Fund, that Fund may be
deemed to be an underwriter under the provisions of the Securities Act of
1933.
The Company also has adopted certain other investment restrictions
reflecting the current investment practices of the Funds which may be changed by
the Company's directors and without shareholder vote. Under such restrictions,
none of the Funds will:
3
<PAGE>
(1) 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 each Fund;
(2) except for the International Growth Fund and Asian Growth Fund, invest more
than 25% of its total assets in securities or obligations of foreign
issuers, including marketable securities of, or guaranteed by, foreign
governments (or any instrumentality or subdivision thereof). A Fund will
invest in securities or obligations of foreign banks only if such banks have
a minimum of $5 billion in assets and a primary capital ratio of at least
4.25%. The Money Market Fund may only purchase foreign securities or
obligations that are U.S. dollar denominated;
(3) invest in companies for the purpose of exercising control or management;
(4) purchase the securities of any other investment company, except as permitted
under the 1940 Act;
(5) purchase interests in oil, gas or other mineral exploration programs;
however, this limitation will not prohibit the acquisition of securities of
companies engaged in the production or transmission of oil, gas, or other
minerals; or
(6) invest more than 25% of the total value of its assets in high risk
high-yield securities or "junk bonds" (securities rated BB/Ba or lower by
Standard & Poor's Corporation or Moody's Investors Service, Inc., or, if
unrated, considered by the Investment Adviser to be of comparable quality).
In order to permit the sale of its shares in certain states, the Funds
have undertaken to adhere to the following investment policies, each of which
may be changed without shareholder approval:
(1) No Fund will invest more than 5% of the value of a Fund's net assets in
warrants, valued at the lower of cost or market. Included within that
amount, but not more than 2% of the value of a Fund's net assets, may be
warrants which are not listed on the New York, American or any recognized
foreign stock exchange. Warrants acquired by a Fund in units or attached to
securities may be deemed to be without value;
(2) No Fund will invest more than 15% (10% for the Money Market Fund) of its
total assets in illiquid securities. Illiquid securities are securities that
are not readily marketable or cannot be disposed of promptly within seven
days and in the usual course of business without taking a materially reduced
price. Such securities include, but are not limited to, time deposits and
repurchase agreements with maturities longer than seven days. Securities
that may be resold under Rule 144A or securities offered pursuant to Section
4(2) of the Securities Act of 1933, as amended, shall not be deemed illiquid
solely by reason of being unregistered. The Investment Adviser shall
determine whether a particular security is deemed to be liquid based on the
trading markets for the specific security and other factors; and
(3) A Fund may not purchase securities of companies which together with their
predecessors have a record of less than three years' continuous operations,
if, as a result, more than 5% of such Fund's net assets would then be
invested in such securities.
4
<PAGE>
A Fund may make additional commitments more restrictive than the
investment limitations described in the preceding paragraphs in order to sell
its shares in a particular state. Should a Fund determine that any such
commitment, either those currently in effect or any future commitment, is no
longer in its best interest, it will revoke the commitment and terminate sales
of its shares in the state involved.
Where a Fund's investment objective or policy restricts it to a
specified percentage of its total 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 the securities rating of the
investment or any other change.
DESCRIPTION OF VARIOUS SECURITIES AND INVESTMENT TECHNIQUES
Futures Contracts
Each Fund, except the Money Market Fund, may enter into interest rate or
stock index futures contracts (futures or futures contracts) or options thereon
as a hedge against changes in interest rates or equities prices and in
anticipation of future purchases or sales of securities (see discussion in the
Prospectus under the caption "Risk Factors and Other Considerations"). A Fund's
hedging may include sales of futures as an offset against the effect of expected
increases in interest rates or declines in equities prices. Although techniques
other than sales and purchases of futures contracts could be used to reduce the
exposure of a Fund to market fluctuations, it may be able to hedge its exposure
more effectively and perhaps at a lower cost through using futures contracts.
A Fund may enter into futures contracts or options thereon which are
traded on national futures exchanges and are standardized as to maturity date
and underlying financial instrument. Futures exchanges and trading are regulated
under the Commodity Exchange Act by the Commodity Futures Trading Commission.
A Fund (other than the Money Market Fund) may purchase and sell futures
contracts and related options under the following conditions: (a) the
then-current aggregate futures market prices of financial instruments required
to be delivered and purchased under open futures contracts shall not exceed 30%
of a Fund's total assets, at market value; 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. As evidence of
this hedging intent, each Fund 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 that Fund in the cash market.
A futures contract provides for the future sale by one party and
purchase by another party of a specified amount of a specific financial
instrument(s) (debt security) or a specific stock market index for a specified
price at a designated date, time, and place. Brokerage fees are incurred when a
futures contract is bought or sold and at expiration, and margin deposits must
be maintained.
Although interest rate futures contracts typically require actual future
delivery of and payment for the underlying instruments, those contracts are
usually closed out before the delivery date. Stock index futures contracts do
not contemplate actual future delivery and will be settled in cash at expiration
or closed out prior to expiration. Closing out an open futures contract sale or
purchase is effected by entering into an offsetting futures contract purchase or
sale, respectively, for the same aggregate amount of the identical type of
underlying instrument and the same delivery date. There can be no assurance,
however, that a Fund will be able to enter into an offsetting transaction with
5
<PAGE>
respect to a particular contract at a particular time. If a Fund is not able to
enter into an offsetting transaction, it will continue to be required to
maintain the margin deposits on the contract.
The prices of futures contracts are volatile and are influenced, among
other things, by actual and anticipated changes in interest rates and equities
prices, which in turn are affected by fiscal and monetary policies and national
and international political and economic events.
At best, the correlation between changes in prices of futures contracts
and of the securities being hedged can be only approximate. The degree of
imperfection of correlation depends upon circumstances such as: variations in
speculative market demand for futures and for securities, including technical
influences in futures trading; and differences between the financial instruments
being hedged and the instruments underlying the standard futures contracts
available for trading. Even a well-conceived hedge may be unsuccessful to some
degree because of unexpected market behavior or stock market or interest rate
trends.
Most United States futures exchanges limit the amount of fluctuation
permitted in interest rate futures contract prices during a single trading day,
and, as noted, temporary regulations limiting price fluctuations for stock index
futures contracts are also now 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.
The risk involved in writing options on futures contracts or market
indices is that there could be an increase in the market value of such contracts
or indices. If that occurred, the option would be exercised and the Fund
involved would not benefit from any increase in value above the exercise price.
Usually, this risk can be eliminated by entering into an offsetting transaction.
However, the cost to do an offsetting transaction and terminate the Fund's
obligation might be more or less than the premium received when it originally
wrote the option. Further, the Fund might occasionally not be able to close the
option because of insufficient activity in the options market.
Sales of futures contracts which are intended to hedge against a change
in the value of securities held by a Fund may affect the holding period of such
securities and, consequently, the nature of the gain or loss on such securities
upon disposition.
"Margin" is the amount of funds that must be deposited by a Fund with a
commodities broker in a custodian account in order to initiate futures trading
and to maintain open positions in a Fund's futures contracts. A margin deposit
is intended to assure the Fund's performance of the futures contract. The margin
required for a particular futures contract is set by the exchange on which the
contract is traded and may be significantly modified from time to time by the
exchange during the term of the contract.
If the price of an open futures contract changes (by increase in the
case of a sale or by decrease in the case of a purchase) so that the loss on the
futures contract reaches a point at which the margin on deposit does not satisfy
margin requirements, the broker will require an increase in the margin. However,
if the value of a position increases because of favorable price changes in the
futures contract so that the margin deposit exceeds the required margin, the
broker will promptly pay the excess to a Fund. These daily payments to and from
a Fund are called variation margin. At times of
6
<PAGE>
extreme price volatility such as occurred during the week of October 19, 1987,
intra-day variation margin payments may be required. In computing daily net
asset values, each Fund will mark to market the current value of its open
futures contracts. Each Fund expects to earn interest income on its initial
margin deposits. Furthermore, in the case of a futures contract purchase, each
Fund has deposited in a segregated account money market instruments sufficient
to meet all futures contract initial margin requirements.
Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. As a result, small price movements in futures
contracts may result in immediate and potentially unlimited losses or gains to a
Fund. For example, if at the time of purchase 10% of the value of the futures
contract is deposited as margin, a subsequent 10% decrease in the value of the
futures contract would result in a total loss of the margin deposit before any
deduction for the transaction costs, if the contract were then closed out. A 15%
decrease in the value of the futures contract would result in a loss equal to
150% of the original margin deposit, if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of the
amount initially invested in the futures contract. However, a Fund would
presumably have sustained comparable losses if, instead of the futures contract,
it had invested in the underlying financial instrument and sold it after the
decline.
Covered Call and Put Options on Securities
Each Fund (except the Money Market Fund) may write (sell) covered call
options (call options) and purchase put options (put options) on securities and
indexes, and purchase call and sell put options to close out positions
previously opened by a Fund, provided, however, that it will not have call
options outstanding at any one time on more than 30% of its total assets nor
will it buy put options if more than 3% of the assets of a Fund immediately
following such purchase would consist of put options. The purpose of writing
call options and purchasing put options will be to reduce the effect of price
fluctuations of the securities owned by a Fund (and involved in the options) on
the net asset value per share of a Fund.
A call option gives the holder (buyer) the right to purchase a security
at a specified price (the exercise price) at any time until a certain date (the
expiration date). So long as the obligation of the writer of a call option
continues, he may be assigned an exercise notice by the broker-dealer through
whom such option was settled, requiring him to deliver the underlying security
against payment of the exercise price. This obligation terminates upon the
expiration of the call option, by the exercise of the call option, or by
entering into an offsetting transaction. To secure his obligation to deliver the
underlying security in the case of a call option, a writer is required to
deposit in escrow the underlying security or other assets in accordance with the
rules of the clearing corporations and of the exchanges. A put option gives the
holder (buyer) the right to sell a security at a specified price (the exercise
price) at any time until a certain date (the expiration date). A Fund will only
write a call option on a security which it already owns and will not write call
options on when-issued securities. A Fund may purchase a put option on a
security that it already owns and on stock indexes.
A Fund will write call options and purchase put options in standard
contracts listed on national securities exchanges, or write call options with
and purchase put options directly from investment dealers meeting the
creditworthiness criteria of the Investment Adviser or subadviser.
When writing a call option, a Fund, in return for the premium, gives up
the opportunity for profit from a price increase in the underlying security
above the exercise price, but conversely retains the risk of loss should the
price of the security decline. If a call option which a Fund has written
expires, that Fund will realize a gain in the amount of the premium; however,
such gain may be offset by a decline in the market value of the underlying
security during the option period. If the
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call option is exercised, a Fund will realize a gain or loss from the sale of
the underlying security. A Fund will purchase put options only when the
Investment Adviser or sub adviser believes that a temporary defensive position
is desirable in light of market conditions, but does not desire to sell the
portfolio security. Therefore, the purchase of put options will be utilized to
protect a Fund's holdings in an underlying security against a substantial
decline in market value. Such protection is, of course, only provided during the
life of the put option when a Fund, as the holder of the put option, is able to
sell the underlying security at the put exercise price regardless of any decline
in the underlying security's market price. By using put options in this manner,
a Fund will reduce any profit it might otherwise have realized in its underlying
security by the premium paid for the put option and by transaction costs. The
security covering the call or put option will be maintained in a segregated
account of a Fund's custodian. The Funds do not consider a security covered by a
call or put option to be "pledged" as that term is used in their policies which
limit the pledging or mortgaging of their assets.
The premium a Fund will receive from writing a call option, or that a
Fund will pay when purchasing a put option, will reflect, among other things,
the current market price of the underlying security, the relationship of the
exercise price to such market price, the historical price volatility of the
underlying security, the length of the option period, and the general interest
rate environment. The premium received by a Fund for writing call options will
be recorded as a liability in the statement of assets and liabilities of that
Fund. This liability will be adjusted daily to the option's current market
value. The liability will be extinguished upon expiration of the option, by the
exercise of the option, or by entering into an offsetting transaction.
Similarly, the premium paid by a Fund when purchasing a put option will
be recorded as an asset in the statement of assets and liabilities of that Fund.
This asset will be adjusted daily to the option's current market value. The
asset will be extinguished upon expiration of the option, by selling an
identical option in a closing transaction, or by exercising the option.
Closing transactions will be effected in order to realize a profit on an
outstanding call or put option, to prevent an underlying security from being
called or put, or to permit the exchange or tender of the underlying security.
Furthermore, effecting a closing transaction will permit a Fund to write another
call option, or purchase another put option, on the underlying security with
either a different exercise price or expiration date or both. If a Fund desires
to sell a particular security from its portfolio on which it has written a call
option, or purchased a put option, it will seek to effect a closing transaction
prior to, or concurrently with, the sale of the security. There is, of course,
no assurance that a Fund will be able to effect such closing transactions at a
favorable price. If a Fund cannot enter into such a transaction, it may be
required to hold a security that it might otherwise have sold, in which case it
would continue to be at market risk on the security. A Fund will pay brokerage
commissions in connection with the sale or purchase of options to close out
previously established option positions. Such brokerage commissions are normally
higher as a percentage of underlying asset values than those applicable to
purchases and sales of portfolio securities.
The exercise price of an option may be below, equal to, or above the
current market price of the underlying security at the time the option is
written. From time to time, a Fund may purchase an underlying security for
delivery in accordance with an exercise notice of a call option assignment,
rather than delivering such security from its portfolio. In such cases
additional brokerage commissions will be incurred.
A Fund will realize a profit or loss from a closing purchase transaction
if the cost of the transaction is less or more than the premium received from
the writing of the call option; however, any loss so incurred in a closing
purchase transaction may be partially or entirely offset by the premium received
from a simultaneous or subsequent sale of a different call option. Also, because
increases in the market price of a call option will generally reflect increases
in the market price of
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the underlying security, any loss resulting from the repurchase of a call option
is likely to be offset in whole or in part by appreciation of the underlying
security owned by a Fund.
Additional Risk Factors
In addition to any risk factors which may be described above, the
following sets forth certain information regarding the potential risks
associated with a Fund's futures and options transactions.
Risk of Imperfect Correlation - A Fund's ability to hedge effectively all or a
portion of its portfolio through transactions in futures, options on futures or
options on securities and indexes depends on the degree to which movements in
the value of the securities or index underlying such hedging instrument
correlate with movements in the value of the relevant portion of the Fund's
portfolio. If the values of the portfolio securities being hedged do not move in
the same amount or direction as the underlying security or index, the hedging
strategy for a Fund might not be successful and the Fund could sustain losses on
its hedging transactions which would not be offset by gains on its portfolio. It
is also possible that there may be a negative correlation between the security
or index underlying a futures or option contract and the portfolio securities
being hedged, which could result in losses both on the hedging transaction and
the portfolio securities. In such instances, the Fund's overall return could be
less than if the hedging transactions had not been undertaken. Stock index
futures or options based on a narrower index of securities may present greater
risk than options or futures based on a broad market index, as a narrower index
is more susceptible to rapid and extreme fluctuations resulting from changes in
the value of a small number of securities. The Fund would, however, effect
transactions in such futures or options only for hedging purposes (or to close
out open positions).
The trading of futures and options on indexes involves the additional
risk of imperfect correlation between movements in the futures or option price
and the value of the underlying index. The anticipated spread between the prices
may be distorted due to differences in the nature of the markets, such as
differences in margin requirements, the liquidity of such markets and the
participation of speculators in the futures and options market. The purchase of
an option on a futures contract also involves the risk that changes in the value
of underlying futures contracts will not be fully reflected in the value of the
option purchased. The risk of imperfect correlation, however, generally tends to
diminish as the maturity date of the futures contract or termination date of the
option approaches. The risk incurred in purchasing an option on a futures
contract is limited to the amount of the premium plus related transaction costs,
although it may be necessary under certain circumstances to exercise the option
and enter into the underlying futures contract in order to realize a profit.
Under certain extreme market conditions, it is possible that the Fund will not
be able to establish hedging positions, or that any hedging strategy adopted
will be insufficient to completely protect the Fund.
The Fund will purchase or sell futures contracts or options only if, in
the Company's judgment, there is expected to be a sufficient degree of
correlation between movements in the value of such instruments and changes in
the value of the relevant portion of the Fund's portfolio for the hedge to be
effective. There can be no assurance that the Company's judgment will be
accurate.
Potential Lack of a Liquid Secondary Market - The ordinary spreads between
prices in the cash and futures markets, due to differences in the natures of
those markets, are subject to distortions. First, all participants in the
futures market are subject to initial deposit and variation margin requirements.
This could require a Fund to post additional cash or cash equivalents as the
value of the position fluctuates. Further, rather than meeting additional
variation margin requirements, investors may close futures contracts through
offsetting transactions which could distort the normal relationship between the
cash and futures markets. Second, the liquidity of the futures or options
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market may be lacking. Prior to exercise or expiration, a futures or option
position may be terminated only by entering into a closing purchase or sale
transaction, which requires a secondary market on the exchange on which the
position was originally established. While the Fund will establish a futures or
option position only if there appears to be a liquid secondary market therefor,
there can be no assurance that such a market will exist for any particular
futures or option contract at any specific time. In such event, it may not be
possible to close out a position held by the Fund, which could require the Fund
to purchase or sell the instrument underlying the position, make or receive a
cash settlement, or meet ongoing variation margin requirements. The inability to
close out futures or option positions also could have an adverse impact on the
Fund's ability effectively to hedge its portfolio, or the relevant portion
thereof.
The liquidity of a secondary market in a futures contract or an option
on a futures contract may be adversely affected by "daily price fluctuation
limits" established by the exchanges, which limit the amount of fluctuation in
the price of a contract during a single trading day and prohibit trading beyond
such limits once they have been reached. The trading of futures and options
contracts also is subject to the risk of trading halts, suspensions, exchange or
clearing house equipment failures, government intervention, insolvency of the
brokerage firm or clearing house or other disruptions of normal trading
activity, which could at times make it difficult or impossible to liquidate
existing positions or to recover excess variation margin payments.
Risk of Predicting Interest Rate Movements - Investments in futures contracts on
fixed income securities and related indexes involve the risk that if the
Company's investment judgment concerning the general direction of interest rates
is incorrect, a Fund's overall performance may be poorer than if it had not
entered into any such contract. For example, if a Fund 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 Fund 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 Fund has insufficient
cash, it may have to sell bonds from its portfolio to meet daily variation
margin requirements, possibly at a time when it may be disadvantageous to do so.
Such sale of bonds may be, but will not necessarily be, at increased prices
which reflect the rising market.
Trading and Position Limits - Each contract market on which futures and option
contracts are traded has established a number of limitations governing the
maximum number of positions which may be held by a trader, whether acting alone
or in concert with others. The Company does not believe that these trading and
position limits will have an adverse impact on the hedging strategies regarding
a Fund's portfolio.
Restrictions on the Use of Futures and Option Contracts
Regulations of the CFTC require that the Fund enter into transactions in
futures contracts and options thereon for hedging purposes only, in order to
assure that they are not deemed to be "commodity pools" under such regulations.
In particular, CFTC regulations require that all short futures positions be
entered into for the purpose of hedging the value of securities held in the
Fund's portfolio, 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 for the Fund, and accrued profits on such
positions.
A Fund's ability to engage in the hedging transactions described herein
may be further limited by the current federal income tax requirement that a Fund
derive less than 30% of its gross income from the sale or other disposition of
stock or securities held for less than three months.
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Repurchase Agreements
Each Fund may enter into repurchase agreements with domestic banks and
broker-dealers meeting certain size and creditworthiness standards established
by the Company's Board of Directors. Under a repurchase agreement, a Fund may
acquire a debt instrument for a relatively short period (usually not more than
one week) subject to an obligation of the seller to repurchase and a Fund to
resell the instrument at a fixed price and time, thereby determining the yield
during a Fund's holding period. This results in a fixed rate of return insulated
from market fluctuations during such period. Such underlying debt instruments
serving as collateral will meet the quality standards of a Fund. The market
value of the underlying debt instruments will, at all times, be equal to the
dollar amount invested. Repurchase agreements, although fully collateralized,
involve the risk that the seller of the securities may fail to repurchase them
from a Fund. In that event, a Fund may incur (a) disposition costs in connection
with liquidating the collateral, or (b) a loss if the collateral declines in
value. Also, if the default on the part of the seller is due to insolvency and
the seller initiates bankruptcy proceedings, a Fund's ability to liquidate the
collateral may be delayed or limited. Under the 1940 Act, repurchase agreements
are considered loans by a Fund. Repurchase agreements maturing in more than
seven days will not exceed 10 percent of the total assets of a Fund.
Variable Rate Demand Instruments
Variable rate demand instruments (including floating rate instruments)
held by a Fund may have maturities of more than one year, provided: (i) the Fund
is entitled to the payment of principal at any time, or during specified
intervals not exceeding one year, upon giving the prescribed notice (which may
not exceed 30 days), and (ii) the rate of interest on such instruments is
adjusted at periodic intervals not to exceed one year. In determining whether a
variable rate demand instrument has a remaining maturity of one year or less,
each instrument will be deemed to have a maturity equal to the longer of the
period remaining until its next interest rate adjustment or the period remaining
until the principal amount can be recovered through demand. A Fund will be able
(at any time or during specified periods not exceeding one year, depending upon
the note involved) to demand payment of the principal of a note. If an issuer of
a variable rate demand note defaulted on its payment obligation, a Fund might be
unable to dispose of the note and a loss would be incurred to the extent of the
default. A Fund may invest in variable rate demand notes only when the
investment is deemed to involve minimal credit risk. The continuing
creditworthiness of issuers of variable rate demand notes held by a Fund will
also be monitored to determine whether such notes should continue to be held.
Variable and floating rate instruments with demand periods in excess of seven
days and which cannot be disposed of promptly within seven business days and in
the usual course of business without taking a reduced price will be treated as
illiquid securities that are subject to the limitations on illiquid securities
set forth in this SAI.
Securities Lending
The Funds can lend portfolio securities subject to the following
conditions: (i) the borrower will provide at least 100% collateral throughout
the life of the loan; (ii) loans will be made subject to the rules of the New
York Stock Exchange; (iii) the loan collateral will be either cash or direct
obligations of the U.S. government or agencies thereof; (iv) cash collateral
will be invested only in highly liquid short-term investments; (v) during the
existence of a loan, a Fund will continue to receive any distributions paid on
the borrowed securities or amounts equivalent thereto; and (vi) no more than
one-third of the net assets of a Fund will be on loan at any one time.
In the Investment Adviser's opinion, lending portfolio securities to
qualified broker-dealers affords a Fund a means of increasing the yield on its
portfolio. A Fund will be entitled either to receive a fee from the borrower or
to retain some or all of the income derived from its investment of cash
collateral. A Fund will continue to receive the interest or dividends paid on
any securities
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loaned, or amounts equivalent thereto. Although voting rights will pass to the
borrower of securities, whenever a material event affecting the borrowed
securities is to be voted on, the Investment Adviser or subadviser may terminate
the loan to vote such proxy.
The primary risk a Fund assumes in loaning securities is that the
borrower may become insolvent on a day on which the loaned security is rapidly
increasing in price. In such event, if the borrower fails to return the loaned
securities, the existing collateral might be insufficient to purchase back the
full amount of the security loaned, and the borrower would be unable to furnish
additional collateral. The borrower would be liable for any shortage, but a Fund
would be an unsecured creditor as to such shortage and might not be able to
recover all or any part of it. A loan may be terminated at any time by the
borrower or lender upon proper notice.
Foreign Securities
Investments in foreign securities offer potential benefits not available
solely through investment in securities of domestic issuers. Foreign securities
offer the opportunity to invest in foreign issuers that appear to offer growth
potential, or in foreign countries with economic policies or business cycles
different from those of the United States, or to reduce fluctuations in
portfolio value by taking advantage of foreign stock markets that may not move
in a manner parallel to U.S. markets. Investments in securities of foreign
issuers involve certain risks not ordinarily associated with investments in
securities of domestic issuers. Such risks include fluctuations in exchange
rates, adverse foreign political and economic developments, and the possible
imposition of exchange controls or other foreign governmental laws or
restrictions. Since the Funds (except the Money Market Fund) may invest in
securities denominated or quoted in currencies other than the U.S. dollar,
changes in foreign currency exchange rates will affect the value of securities
in the portfolio and the unrealized appreciation or depreciation of investments
so far as U.S. investors are concerned. In addition, with respect to certain
countries, there is the possibility of expropriation of assets, confiscatory
taxation, political or social instability, or diplomatic developments that could
adversely affect investments in those countries.
There may be less publicly available information about a foreign company
than about a U.S. company, and foreign companies may not be subject to
accounting, auditing, and financial reporting standards and requirements
comparable to or as uniform as those of U.S. companies. Foreign securities
markets, while growing in volume, have, for the most part, substantially less
volume than U.S. markets. Securities of many foreign companies are less liquid
and their prices more volatile than securities of comparable U.S. companies.
Transactional costs in non-U.S. securities markets are generally higher than in
U.S. securities markets. There is generally less government supervision and
regulation of exchanges, brokers, and issuers than there is in the U.S. The
Company might have greater difficulty taking appropriate legal action with
respect to foreign investments in non-U.S. courts than with respect to domestic
issuers in U.S. courts. In addition, transactions in foreign securities may
involve greater time from the trade date until settlement than domestic
securities transactions and involve the risk of possible losses through the
holding of securities by custodians and securities depositories in foreign
countries.
Currently, direct investment in equity securities in China and Taiwan is
restricted, and investments may only be made through a limited number of
approved vehicles. At present this includes investment in listed and unlisted
investment companies, subject to limitations under the 1940 Act. Investment in
these closed-end funds may involve the payment of additional premiums to acquire
shares in the open-market and the yield of these securities will be reduced by
the operating expenses of such companies. In addition, an investor should
recognize that he will bear not only his proportionate share of the expenses of
the Fund, but also indirectly bear similar expenses of the underlying closed-end
fund. Also, as a result of a Fund's policy of investing in closed-end mutual
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funds, investors in the Fund may receive taxable capital gains distributions to
a greater extent than if he or she had invested directly in the underlying
closed-end fund.
Dividend and interest income from foreign securities may generally be
subject to withholding taxes by the country in which the issuer is located and
may not be recoverable by a Fund or its investors.
Depository receipts are typically dollar denominated, although their
market price is subject to fluctuations of the foreign currency in which the
underlying securities are denominated. Depository receipts include: American
Depository Receipts (ADRs), which are typically designed for U.S. investors. The
ADR securities are held either in physical form or in book entry form; European
Depository Receipts (EDRs), which are similar to ADRs, but may be listed and
traded on a European exchange as well as in the U.S. Typically, these securities
are traded on the Luxembourg exchange in Europe; and Global Depository Receipts
(GDRs), which are similar to EDRs, although they may be held through foreign
clearing agents, such as Euroclear and other foreign depositories. All
depository receipts will be considered foreign securities for purposes of a
Fund's investment limitation concerning investment in foreign securities.
Municipal Bonds
The Tax-Free Fund invests in debt obligations issued by states and their
political subdivisions (for example, counties, cities, towns, villages,
districts and authorities) the interest from which is, in the opinion of bond
counsel, exempt from federal income tax ("Municipal Bonds"). Such obligations
are issued to obtain funds to construct, repair or improve various public
facilities such as airports, bridges, highways, housing, schools, streets and
water and sewer works. Municipal Bonds may also be issued to refinance
outstanding obligations or to obtain funds for general operating expenses. In
addition, certain types of "private activity" bonds may be issued by public
authorities to finance privately operated housing facilities, local facilities
for water supply, gas, electricity or sewage or solid waste disposal, student
loans, or to obtain funds to lend to public or private institutions for the
construction of educational, hospital and housing facilities. Such obligations
are included under the definition of Municipal Bonds if the interest paid
thereon is, in the opinion of bond counsel, exempt from federal income tax.
The two principal classifications of Municipal Bonds are "general
obligation" and "revenue" or "special tax" bonds. General obligation bonds are
backed by the issuer's pledge of its full faith, credit and taxing power for the
payment of principal and interest. Short-term municipal obligations include tax
anticipation notes and revenue anticipation notes, as well as tax-exempt
commercial paper. Revenue or special tax bonds are payable only from a
particular facility or class of facilities or, in some cases, from the proceeds
of a special excise or revenue tax, but not from general tax revenues. Certain
revenue bonds, such as industrial revenue bonds, do not have the pledge of
credit of the issuer. The payment of principal and interest on such revenue
bonds is dependent solely on the ability of the user of the facilities financed
by the bonds to meet its financial obligations and the pledge, if any, of real
and personal property financed as security for such payment.
From time to time, proposals have been introduced before Congress and
before State and local legislatures to restrict or eliminate the federal income
tax exemption or state and local income tax exemption, respectively, for
interest on Municipal Bonds. If any such proposal were enacted, it might
restrict the ability of the Tax-Free Fund to achieve its investment objective.
In that event, the Fund's directors and officers would reevaluate its investment
objectives and policies.
Additionally, the Tax-Free Fund purchases Municipal Bonds based on the
opinions of bond counsel regarding the federal income tax status of the
obligations. These opinions generally will be based upon covenants by the
issuers regarding continuing compliance with federal tax requirements.
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If the issuer of an obligation fails to comply with its covenants at any time,
interest on the obligation could become federally taxable retroactive to the
date the obligation was issued.
Municipal Lease Obligations
The Tax-Free Fund may invest up to 5% of its net assets in municipal
lease obligations. Municipal leases may take the form of a lease or an
installment purchase contract issued by a state or local government authority to
obtain funds to acquire a wide variety of equipment and facilities. Although
lease obligations do not constitute general obligations of the municipality for
which the municipality's taxing power is pledged, a lease obligation is
ordinarily backed by the municipality's covenant to budget for, appropriate and
make the payments due under the lease obligation. However, certain lease
obligations contain "non-appropriation" clauses which provide that the
municipality has no obligation to make lease or installment purchase payments in
future years unless money is appropriated for such purpose on a yearly basis. In
addition to the risk of "non-appropriation," municipal lease securities do not
yet have a highly developed market to provide the degree of liquidity of
conventional municipal bonds. Municipal leases, like other municipal debt
obligations, are subject to the risk of non-payment. The ability of issuers of
municipal leases to make timely lease payments may be adversely affected in
general economic downturns and as relative governmental cost burdens are
reallocated among federal, state and local governmental units. Such non-payment
would result in a reduction of income to the Fund, and could result in a
reduction in the value of the municipal lease experiencing non-payment and a
potential decrease in the net asset value of the Fund.
Mortgage-Related Debt Securities
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
United States whose securities and guarantees are backed by the full faith and
credit of the United States. FNMA, a federally chartered and privately owned
corporation, and FHLMC, a federal corporation, are instrumentalities of the
United States 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 which is part of the regular monthly
payment. A borrower is more likely to repay a mortgage which bears a relatively
high rate of interest. This means that in times of declining interest rates,
some higher yielding securities held by a Fund might be converted to cash, and
the Fund 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 a Fund 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.
As noted in the Prospectus, a Fund may also invest in collateralized
mortgage obligations (CMOs) and real estate mortgage investment conduits
(REMICs). 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,
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assuming no repayments -- and has an "average life" -- the average time to
receipt of a principal payment 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 of such obligations is made from payment generated by the underlying
mortgage assets. The underlying mortgages may 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 may be issued in a number of
classes or "tranches" with different maturities. These classes are retired in
sequence as the underlying mortgages are repaid.
Asset-Backed Securities
Asset-backed securities are collateralized by short-term loans such as
automobile loans, computer leases, or credit card receivables. The payments from
the collateral are passed through to the security holder. As noted above with
respect to CMOs and REMICs, the average life for these securities is the
conventional proxy for maturity. Asset-backed securities may pay all interest
and principal to the holder, or they may pay a fixed rate of interest, with any
excess over that required to pay interest going either into a reserve account or
to a subordinate class of securities, which may be retained by the originator.
The originator may guarantee interest and principal payments. These guarantees
often do not extend to the whole amount of principal, but rather to an amount
equal to a multiple of the historical loss experience of similar portfolios.
Other asset-backed securities are similar to CMOs and REMICs in
structure and operations. Two varieties of asset-backed securities are CARs and
CARDs. CARs are securities, representing either ownership interests in fixed
pools of automobile receivables, or debt instruments supported by the cash flows
from such a pool. CARDs are participations in fixed pools of credit accounts.
These securities have varying terms and degrees of liquidity.
CMOs, REMICs and other asset-backed securities are subject to the type
of prepayment risk discussed above due to the possibility that prepayments on
the underlying assets will alter the cash flow. The collateral behind
asset-backed securities tends to have prepayment rates that do not vary with
interest rates; the short-term nature of the loans may also tend to reduce the
impact of any change in prepayment level. However, faster prepayments will
shorten the average life and slower prepayments will lengthen it. Asset-backed
securities may be pass-through, representing actual equity ownership of the
underlying assets, or pay-through, representing debt instruments supported by
cash flows from the underlying assets.
The coupon rate of interest on mortgage-related and asset-backed
securities is lower than the interest rates paid on the mortgages included in
the underlying pool, by the amount of the fees paid to the mortgage pooler,
issuer, and/or guarantor. Actual yield may vary from the coupon rate, however,
if such securities are purchased at a premium or discount, traded in the
secondary market at a premium or discount, or to the extent that the underlying
assets are prepaid as noted above.
High Risk High-Yield Securities
15
<PAGE>
All of the Funds except the Money Market Fund, Government Fund,
International Growth Fund and Asian Growth Fund may invest in high risk
high-yield securities (junk bonds) which are fixed income securities that offer
a current yield above that generally available on debt securities rated in the
four highest categories by Moody's Investors Service, Inc. (Moody's) and
Standard & Poor's Corporation (S&P) or other rating agencies, or, if unrated,
are considered to be of comparable quality by the Investment Adviser. These
securities include:
(a) fixed rate corporate debt obligations (including bonds, debentures
and notes) rated Ba or lower by Moody's or BB or lower by S&P;
(b) preferred stocks that have yields comparable to those of
high-yielding debt securities; and
(c) any securities convertible into any of the foregoing.
Debt obligations rated BB/Ba or lower are regarded as speculative, and
generally involve more risk of loss of principal and income than higher-rated
securities. Also their yields and market values tend to fluctuate more.
Fluctuations in value do not affect the cash income from the securities but are
reflected in a Fund's net asset value. The greater risks and fluctuations in
yield and value occur, in part, because investors generally perceive issuers of
lower-rated and unrated securities to be less creditworthy. Lower ratings,
however, may not necessarily indicate higher risks. In pursuing a Fund's
objectives, the Investment Adviser seeks to identify situations in which the
rating agencies have not fully perceived the value of the security or in which
the Investment Adviser believes that future developments will enhance the
creditworthiness and the ratings of the issuer.
High risk high-yield securities (junk bonds) will constitute no more
than 25% of the assets of any Fund (5% of the assets of the Tax-Free Fund).
The yields earned on high risk high-yield securities (junk bonds)
generally are related to the quality ratings assigned by recognized ratings
agencies. The securities in which the Funds invest tend to offer higher yields
than those of other securities with the same maturities because of the
additional risks associated with them. These risks include:
(1) Sensitivity to Interest Rate and Economic Changes. High risk
high-yield securities (junk bonds) are more sensitive to adverse
economic changes or individual corporate developments but less
sensitive to interest rate changes than are investment grade bonds.
As a result, when interest rates rise, causing bond prices to fall,
the value of these securities may not fall as much as investment
grade corporate bonds. Conversely, when interest rates fall, these
securities may underperform investment grade corporate bonds because
the prices of high risk high-yield securities (junk bonds) tend not
to rise as much as the prices of these other bonds.
Also, the financial stress resulting from an economic downturn or
adverse corporate developments could have a greater negative effect
on the ability of issuers of these securities to service their
principal and interest payments, to meet projected business goals
and to obtain additional financing, than on more creditworthy
issuers. Holders of these securities could also be at greater risk
because these securities are generally unsecured and subordinated to
senior debt holders and secured creditors. If the issuer of a high
risk high-yield security (junk bond) owned by a Fund defaults, the
Fund may incur additional expenses to seek recovery. In addition,
periods of economic uncertainty and changes can be expected to
result in increased volatility of market prices of these securities
and a Fund's net asset value. Furthermore, in the case of high risk
high-yield securities (junk bonds) structured as zero coupon or
pay-in-kind securities, their market prices are affected to a
16
<PAGE>
greater extent by interest rate changes and thereby tend to be more
speculative and volatile than securities which pay interest
periodically and in cash.
(2) Payment Expectations. High risk high-yield securities (junk bonds)
present risks based on payment expectations. For example, these
securities may contain redemption or call provisions. If an issuer
exercises these provisions in a declining interest rate market, the
Fund may have to replace the securities with a lower yielding
security, resulting in a decreased return for investors. Also, the
value of these securities may decrease in a rising interest rate
market. In addition, there is a higher risk of non-payment of
interest and/or principal by issuers of these securities than in the
case of investment grade bonds.
(3) Liquidity and Valuation Risks. High risk high-yield securities (junk
bonds) are often traded among a small number of broker-dealers
rather than in a broad secondary market. Purchasers of these
securities tend to be institutions rather than individuals, a factor
that further limits the secondary market. Many of such securities
may not be as liquid as investment grade bonds. The ability to value
or sell these securities will be adversely affected to the extent
that such securities are thinly traded or illiquid. Adverse
publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease or increase the values and
liquidity of these securities more than other securities, especially
in a thinly-traded market.
(4) Limitations of Credit Ratings. The credit ratings assigned to high
risk high-yield securities (junk bonds) may not accurately reflect
the true risks of an investment. Credit ratings typically evaluate
the safety of principal and interest payments, rather than the
market value risk of such securities. In addition, credit agencies
may fail to adjust credit ratings to reflect rapid changes in
economic or company conditions that affect a security's market
value. Although the ratings of recognized rating services such as
Moody's and S&P are considered, the Investment Adviser primarily
relies on its own credit analysis which includes a study of existing
debt, capital structure, ability to service debts and to pay
dividends, the issuer's sensitivity to economic conditions, its
operating history and the current trend of earnings. Thus the
achievement of a Fund's investment objective may be more dependent
on the Investment Adviser's own credit analysis than might be the
case for a fund which does not invest in these securities.
(5) Congressional Proposals. New laws and proposed new laws may have a
negative impact on the market for high-risk high-yield securities
(junk bonds). As examples, recent legislation requires
federally-insured savings and loan associations to divest themselves
of their investments in these securities and other proposals are
designed to limit the use of, or tax and other advantages of, these
securities. Any such proposals, if enacted, could have a negative
effect on a Fund's net asset value.
Zero Coupon and Pay-in-Kind Securities
All of the Funds may invest in zero coupon securities and all Funds
except the Money Market Fund may invest in pay-in-kind securities. In addition,
the Funds may invest in STRIPS (Separate Trading of Registered Interest and
Principal of Securities). Zero coupon, or deferred interest, securities are debt
obligations that do not entitle the holder to any periodic payment of interest
prior to maturity or a specified date when the securities begin paying current
interest (the "cash payment date") and therefore are issued and traded at a
discount from their face amounts or par value. The discount varies, depending on
the time remaining until maturity or cash payment date, prevailing interest
rates, liquidity of the security and the perceived credit quality of the issuer.
The discount, in the absence of financial difficulties of the issuer, decreases
as the final maturity or cash payment date of the security approaches. STRIPS
are created by the Federal reserve bank by separating the
17
<PAGE>
interest and principal components of an outstanding U.S. treasury bond and
selling them as individual securities. The market prices of zero coupon, STRIPS
and delayed interest securities generally are more volatile than the market
prices of securities with similar maturities that pay interest periodically and
are likely to respond to changes in interest rates to a greater degree than do
non-zero coupon securities having similar maturities and credit quality.
The risks associated with lower-rated debt securities apply to these
securities. Zero coupon and pay-in-kind securities are also subject to the risk
that in the event of a default, the Funds may realize no return on its
investment, because these securities do not pay cash interest.
Convertibles
A convertible bond or convertible preferred stock gives the holder the
option of converting these securities into common stock. Some convertible
securities contain a call feature whereby the issuer may redeem the security at
a stipulated price, thereby limiting the possible appreciation.
Warrants
Warrants allow the holder to subscribe for new shares in the issuing
company within a specified time period, according to a predetermined formula
governing the number of shares per warrant and the price to be paid for those
shares. Warrants may be issued separately or in association with a new issue of
bonds, preferred stock, common stock or other securities.
Covered warrants allow the holder to purchase existing shares in the
issuing company, or in a company associated with the issuer, or in a company in
which the issuer has or may have a share stake which covers all or part of the
warrant's subscription rights.
When-Issued or Delayed-Delivery Securities
During any period that a Fund has outstanding a commitment to purchase
securities on a when-issued or delayed-delivery basis, that Fund will maintain
a segregated account consisting of cash, U.S. Government securities or other
high-quality debt obligations with its custodian bank. To the extent that the
market value of securities held in this segregated account falls below the
amount that the purchasing Fund will be required to pay on settlement,
additional assets may be required to be added to the segregated account. Such
segregated accounts could affect the purchasing Fund's liquidity and ability to
manage its portfolio. When a Fund engages in when-issued or delayed-delivery
transactions, it is effectively relying on the seller of such securities to
consummate the trade; failure of the seller to do so may result in the Fund's
incurring a loss or missing an opportunity to invest funds held in the
segregated account more advantageously. A Fund will not pay for securities
purchased on a when-issued or delayed-delivery basis, or start earning interest
on such securities, until the securities are actually received. However, any
security so purchased will be recorded as an asset of the purchasing Fund at the
time the commitment is made. Because the market value of securities purchased on
a when-issued or delayed-delivery basis may increase or decrease prior to
settlement as a result of changes in interest rates or other factors, such
securities will be subject to changes in market value prior to settlement and a
loss may be incurred if the value of the security to be purchased declines prior
to settlement.
Portfolio Turnover
The Funds (excluding the Money Market Fund) do not intend to make a
general practice of short-term trading, although they may occasionally realize
short-term gains or losses. Purchases and sales will be made whenever such
action is deemed prudent and consistent with a Fund's investment objectives. It
is anticipated that under normal market conditions average annual portfolio
turnover rates will not exceed 100% for the Funds. A high turnover rate involves
greater expenses and may involve greater risk to a Fund.
DIRECTORS AND OFFICERS OF THE COMPANY
18
<PAGE>
The investments and administration of the Company are under the direction of the
Board of Directors. The Directors and executive officers of the Company and
their principal occupations for the past five years are listed below. Those
directors who are "interested persons," as defined in the 1940 Act, are
indicated by an asterisk (*), and hold similar positions with other investment
companies in the same fund complex managed by the Investment Adviser.
<TABLE>
<CAPTION>
- ---------------------------------- -------------------- ----------------------------------------------------
Position(s) Held
Name, Address and Age with Registrant Principal Occupation During Past Five Years
- ---------------------------------- -------------------- ----------------------------------------------------
<S> <C> <C>
Shaun P. Mathews * Director and Senior Vice President, Strategic Markets and
151 Farmington Avenue President Products, and Director of ALIAC.
Hartford, Connecticut
Age 38
- ---------------------------------- -------------------- ----------------------------------------------------
- ---------------------------------- -------------------- ----------------------------------------------------
Morton Ehrlich Director Chairman and Chief Executive Officer, Integrated
1000 Venetian Way Management Corp. and Universal Research
Miami, Florida Technologies; Director and Chairman, Audit
Age 60 Committee, National Bureau of Economic Research;
from October 1988 to December 1991, President,
LIFECO, Travel Services Corp.; from October 1985
to October 1988, Executive Vice President, TWA.
- ---------------------------------- -------------------- ----------------------------------------------------
- ---------------------------------- -------------------- ----------------------------------------------------
Maria T. Fighetti Director Manager/Attorney, Health Services, Mental Hygiene
325 Piermont Road Services.
Closter, New Jersey
Age 50
- ---------------------------------- -------------------- ----------------------------------------------------
- ---------------------------------- -------------------- ----------------------------------------------------
David L. Grove Director Private Investor; Economic/Financial Consultant.
5 The Knoll
Armong, New York
Age 76
- ---------------------------------- -------------------- ----------------------------------------------------
- ---------------------------------- -------------------- ----------------------------------------------------
Daniel P. Kearney * Director Executive Vice President of Aetna Life and
151 Farmington Avenue Casualty Company.
Hartfor d, Connecticut
Age 54
- ---------------------------------- -------------------- ----------------------------------------------------
- ---------------------------------- -------------------- ----------------------------------------------------
Sidney Koch Director Financial Adviser, Hambro America, Inc.; from
455 East 86th Street January 1988 to January 1993, Financial Adviser,
New York, New York Daiwa Securities America, Inc.
Age 59
- ---------------------------------- -------------------- ----------------------------------------------------
- ---------------------------------- -------------------- ----------------------------------------------------
Corine T. Norgaard Director Professor, Accounting and Dean of the School of
School of Management Management School of Management, Binghamton
Binghamton University University, Binghamton, NY; Professor, Accounting,
Binghamton, New York University of Connecticut, Storrs, Connecticut;
Age 58 Director, The Advest Group, Inc. (holding company
for brokerage firm).
- ---------------------------------- -------------------- ----------------------------------------------------
- ---------------------------------- -------------------- ----------------------------------------------------
Richard G. Scheide Director Consultant, Fleet Bank of Massachusetts, N.A. from
11 Lily Street 1976 to 1991, Executive Vice President, Bank of
Nantucket, Massachusetts New England, N.A.
Age 65
- ---------------------------------- -------------------- ----------------------------------------------------
- ---------------------------------- -------------------- ----------------------------------------------------
James C. Hamilton * Vice President Vice President, Treasurer and Director of ALIAC.
151 Farmington Avenue and Treasurer
Hartford, Connecticut
Age 53
- ---------------------------------- -------------------- ----------------------------------------------------
- ---------------------------------- -------------------- ----------------------------------------------------
Susan E. Bryant Secretary Counsel, from 1991 to 1993, General Counsel, First
151 Farmington Avenue Investors Corporation; 1986 to
19
<PAGE>
1991, Hartford, Connecticut
Administrator, Oklahoma Department of Securities
Age 47 and President, North American Securities
Administrators Association.
- ---------------------------------- -------------------- ----------------------------------------------------
</TABLE>
Members of the Board of Directors who are also directors, officers or employees
of Aetna Life and Casualty Company are not entitled to any fee. Members of the
Board of Directors who are not affiliated as employees of Aetna or its
subsidiaries receive an annual retainer of $5,000 for service on the Board, and
a fee of $200 per Fund for each meeting of such Board (equal to an aggregate
annual fee of $10,400). They may also receive an annual fee of $2,000 or $2,500
for service on the Audit and Contract Committees, respectively.
As of December 31, 1994, the unaffiliated members of the Board of Directors were
compensated as follows:
<TABLE>
<CAPTION>
- --------------------------- ------------------- -------------------- ------------------- -------------------
Pension or Total
Retirement Compensation from
Benefits Accrued Estimated Annual Registrant and
Aggregate as Part of Fund Benefits Upon Fund Complex*
Name of Person, Compensation from Expenses Retirement Paid to Directors
Position Registrant
- --------------------------- ------------------- -------------------- ------------------- -------------------
<S> <C> <C> <C> <C>
Corine Norgaard $ 12,375 None None $ 29,500
Director and
Chairman, Audit and
Contract Committees
- --------------------------- ------------------- -------------------- ------------------- -------------------
- --------------------------- ------------------- -------------------- ------------------- -------------------
Sidney Koch $ 9,000 None None $ 21,750
Director and
Member, Audit and
Contract Committees
- --------------------------- ------------------- -------------------- ------------------- -------------------
- --------------------------- ------------------- -------------------- ------------------- -------------------
Maria T. Fighetti $ 8,750 None None $ 21,250
Director and
Member, Audit and
Contract Committees
- --------------------------- ------------------- -------------------- ------------------- -------------------
- --------------------------- ------------------- -------------------- ------------------- -------------------
Morton Ehrlich $ 9,000 None None $ 23,250
Director and
Member, Audit and
Contract Committees
- --------------------------- ------------------- -------------------- ------------------- -------------------
- --------------------------- ------------------- -------------------- ------------------- -------------------
Richard G. Scheide $ 12,750 None None $ 25,500
Director and
Member, Audit and
Contract Committees
- --------------------------- ------------------- -------------------- ------------------- -------------------
- --------------------------- ------------------- -------------------- ------------------- -------------------
David L.Grove $ 12,500 ** None None $ 29,250 **
Director and
Member, Audit and
Contract Committees
- --------------------------- ------------------- -------------------- ------------------- -------------------
</TABLE>
* Fund Complex presently consists of: Aetna Series Fund, Inc., Aetna Variable
Fund, Aetna Income Shares, Aetna Variable Encore Fund, Aetna Investment
Advisers Fund, Inc. and Aetna Get Fund (Series B).
** Mr. Grove elected to defer all such compensation.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF THE FUNDS
20
<PAGE>
As of February 28, 1995, for the Select Class shares, ALIAC owned
113,278 (0.06%) shares of the Money Market Fund; 265,816 (8.80%) shares of the
Bond Fund; 11,161 (0.15%) shares of The Aetna Fund; 10,564 (0.04%) shares of the
Growth and Income Fund; 11,260 (0.38%) shares of the International Growth Fund;
1,720,522 (85.45%) shares of the Government Fund; 126,020 (67.28%) shares of the
Tax-Free Fund; 2,185,847 (81.11%) shares of the Growth Fund; 2,472,661 (98.43%)
shares of the Small Company Growth Fund; and 1,013,800 (31.77%) shares of the
Asian Growth Fund. In addition, Aetna Life Insurance Company (ALIC) owned
2,258,986 (1.28%) shares of the Money Market Fund and 2,043,588 (64.05%) shares
of the Asian Growth Fund, and The Aetna Casualty and Surety Company owned
498,517 (16.73%) shares of the International Growth Fund.
As of February 28, 1995, for the Adviser Class shares, ALIAC owned
1,434,917 (99.24%) shares of the Bond Fund; 2,703,236 (97.60%) shares of the
International Growth Fund; 2,182,828 (96.18%) shares of the Tax-Free Fund. In
addition, ALIC owned 26,060,530 (39.78%) shares of the Money Market Fund.
As of February 28, 1995, officers and Directors owned less than 1% of
the outstanding shares of any of the Funds.
THE INVESTMENT ADVISORY CONTRACT
On December 13, 1994 the Company's Board of Directors (Directors)
reapproved an investment advisory agreement (Management Agreements) between the
Company and the Investment Adviser with respect to each of the Funds. Under the
Management Agreements, the Investment Adviser has responsibility for managing
the investment and reinvestment of the assets of the Funds, subject to the
supervision of the Directors. The Management Agreements direct the Investment
Adviser to continuously furnish an investment program for each Fund, determine
what securities and other instruments should be purchased or sold by each Fund,
obtain and evaluate economic, statistical and financial data affecting any
Fund's portfolio, and take any actions necessary to carry out its investment
advisory responsibilities.
The Investment Adviser furnishes to the Company all necessary office
space, facilities and equipment and pays the salaries, employment benefits and
other related costs of personnel engaged in providing investment advice. In
addition, the Investment Adviser pays any fees and expenses of all Directors of
the Company who are employees of the Investment Adviser or an affiliated
corporation and any salaries and employment benefits of officers of the Company
who are affiliated persons of the Investment Adviser for acting as officers of
the Company.
For its services the Investment Adviser receives the following annual
investment advisory fees expressed as a percentage of the daily net assets of
each Fund:
21
<PAGE>
Money Market Fund Bond Fund
Fee Assets Fee Assets
0.40% On first $500 million 0.50% On first $250 million
0.35% On next $500 million 0.475% On next $250 million
0.34% On next $1 billion 0.45% On next $250 million
0.33% On next $1 billion 0.425% On next $1.25 billion
0.30% Over $3 billion 0.40% Over $2 billion
Government Fund Tax-Free Fund
Fee Assets Fee Assets
0.50% On first $250 million 0.50% On first $250 million
0.475% On next $250 million 0.475% On next $250 million
0.450% On next $250 million 0.45% On next $250 million
0.425% On next $1.25 billion 0.425% On next $1.25 billion
0.40% Over $2 billion 0.40% Over $2 billion
The Aetna Fund Growth and Income Fund
Fee Assets Fee Assets
0.80% On first $500 million 0.70% On first $250 million
0.75% On next $500 million 0.65% On next $250 million
0.70% On next $1 billion 0.625% On next $250 million
0.65% Over $2 billion 0.60% On next $1.25 billion
0.55% Over $2 billion
Growth Fund Small Company Growth Fund
Fee Assets Fee Assets
0.70% On first $250 million 0.850% On first $250 million
0.65% On next $250 million 0.80% On next $250 million
0.625% On next $250 million 0.775% On next $250 million
0.60% On next $1.25 billion 0.75% On next $1.25 billion
0.55% On next $2 billion 0.725% On next $2 billion
International Growth Fund Asian Growth Fund
Fee Assets Fee Assets
0.85% On first $250 million 1.00% On first $250 million
0.80% On next $250 million 0.875% On next $250 million
0.775% On next $250 million 0.85% On next $250 million
0.75% On next $1.25 billion 0.825% On next $1.25 billion
0.70% Over $2 billion 0.80% Over $2 billion
The Investment Adviser received investment advisory fees as follows:
22
<PAGE>
Total Investment Net Investment
Investment Adviser Advisory Fees
Advisory Fees Reimbursement Paid
For Year Ended
December 31, 1992
Money Market Fund $114,880 $114,880 $ 0
Bond Fund 147,232 147,232 0
The Aetna Fund 223,049 223,049 0
Growth and Income Fund 101,055 86,296 14,759
International Growth Fund 13,409 113,409 0
For Year Ended
December 31, 1993
Money Market Fund $289,838 $289,838 $ 0
Bond Fund 213,990 180,946 33,044
The Aetna Fund 380,035 188,012 192,023
Growth and Income Fund 296,943 61,659 235,284
International Growth Fund 267,280 92,553 174,727
For Period Ended
October 31, 1994*
Money Market Fund $544,857 $544,857 $ 0
Government Fund 91,999 90,010 1,989
Bond Fund 210,162 128,686 81,476
Tax-Free Fund 96,433 83,178 13,255
The Aetna Fund 569,014 156,406 412,608
Growth and Income Fund 625,998 101,043 524,955
Growth Fund 121,917 82,976 38,941
Small Company Growth Fund 144,601 73,512 71,089
International Growth Fund 357,374 55,230 302,144
Asian Growth Fund 183,192 111,555 71,637
* In 1994, the Company changed its fiscal year to end on October 31.
The Investment Adviser has agreed to reimburse the Funds for any
expenses (including management fees, but excluding taxes, interest, brokerage
commissions and certain extraordinary expenses) which may be incurred in any one
year in excess of the allowable expense limitations of the state in which shares
of the Fund are registered for sale having the most stringent expense
reimbursement provisions. As of the date of this SAI, the most stringent
limitation rate applicable to a Fund is 2-1/2% of the first $30 million of a
Fund's average net assets, 2% of the next $70 million of such Fund's average net
assets, and 1-1/2% of the remaining average net assets of such Fund for any
fiscal year.
Unless terminated earlier, the Management Agreements remain in effect
from year-to-year if approved annually by a majority vote of the Directors,
including a majority of the Directors who are not "interested persons," cast in
person at a meeting called for that purpose. Each Management Agreement may be
terminated as to a particular Fund without penalty at any time on sixty days'
written notice by (i) the Directors, (ii) a majority vote of the outstanding
voting securities of that Fund, or (iii) the Investment Adviser. The Management
Agreements terminate automatically in the event of assignment.
The service mark of each Fund and the name "Aetna" have been adopted by
the Company with the permission of Aetna Life and Casualty Company and their
continued use is subject to the right of
23
<PAGE>
Aetna Life and Casualty Company to withdraw this permission in the event the
Investment Adviser or another subsidiary or affiliated corporation of Aetna Life
and Casualty Company should not be the investment adviser of the Funds.
THE ADMINISTRATIVE SERVICES AGREEMENT
Pursuant to the Administrative Services Agreements described below,
ALIAC acts as administrator and provides certain administrative and shareholder
services necessary for Company operations and is responsible for the supervision
of other service providers. The services provided by ALIAC include: (1) internal
accounting services, (2) regulatory compliance, such as reports and filings with
the Commission and state securities commissions, (3) preparing financial
information for proxy statements, (4) preparing semiannual and annual reports to
shareholders, (5) preparing federal, state and local income tax returns, (6)
overseeing the determination and publication of net asset values, (7) certain
shareholder communications, (8) supervision of the custodians and transfer
agent, and (9) reporting to the Directors.
For its services, each Fund pays ALIAC a monthly fee at an annual rate
based on average net assets as follows: 0.25% on the first $250 million, 0.24%
on the next $250 million, 0.23% on the next $250 million, 0.22% on the next $250
million, 0.20% on the next $1 billion and 0.18% on assets over $2.0 billion. The
Investment Adviser received administrative service fees as follows:
Total Investment Net Administrative
Administrative Adviser Advisory Fees
Advisory Fees Reimbursement Paid
For Year Ended
December 31, 1992
Money Market Fund $ 71,800 $ 71,800 $ 0
Bond Fund 73,616 73,616 0
The Aetna Fund 69,703 69,703 0
Growth and Income Fund 36,091 24,157 11,934
International Growth Fund 33,355 25,124 8,231
For Year Ended
December 31, 1993
Money Market Fund $181,154 $181,154 $ 0
Bond Fund 106,995 42,167 64,828
The Aetna Fund 118,761 8,060 110,701
Growth and Income Fund 106,050 0 106,050
International Growth Fund 78,613 0 78,613
For Period Ended
October 31, 1994*
Money Market Fund $544,857 $544,857 $ 0
Government Fund 91,999 90,010 1,989
Bond Fund 210,162 128,686 81,476
Tax-Free Fund 96,433 83,178 13,255
The Aetna Fund 569,014 156,406 412,608
Growth and Income Fund 625,998 101,043 524,955
Growth Fund 121,917 82,976 38,941
Small Company Growth Fund 144,601 73,512 71,089
International Growth Fund 357,374 55,230 302,144
Asian Growth Fund 183,192 111,555 71,637
* In 1994, the Company changed its fiscal year to end on October 31.
24
<PAGE>
Unless terminated earlier, the Administrative Services Agreements remain in
effect from year-to-year if approved annually by a majority of the Directors who
are not "interested persons" as defined in the 1940 Act. It may be terminated by
either party on sixty days' written notice.
SUB-ADVISORY AGREEMENTS
On December 13, 1994, the Directors reapproved sub-advisory agreements
(Sub-advisory Agreements) between the Investment Adviser and the following
sub-advisers: Aeltus Investment Management, Inc. (Aeltus) with respect to the
Tax-Free Fund, the Growth Fund and the Small Company Growth Fund; Aeltus
Investment Management International (F.E.) Limited (Aeltus Far East) with
respect to the Asian Growth Fund; and Dunedin Fund Managers Ltd. (Dunedin) with
respect to the International Growth Fund. The Sub-advisory Agreements remain in
effect from year-to-year if approved annually by a majority vote of the
Directors, including a majority of the Directors who are not "interested
persons," cast in person at a meeting called for that purpose. The Sub-advisory
Agreements may be terminated without penalty at any time on sixty days' written
notice by (i) the Directors, (ii) a majority vote of the outstanding voting
securities of the respective Funds, (iii) the Investment Adviser, or (iv)
Aeltus, Aeltus Far East or Dunedin, respectively. The Sub-advisory Agreements
terminate automatically in the event of their assignment or in the event of the
termination of the Management Agreement.
Under the Sub-advisory Agreements, each sub-adviser supervises the
investment and reinvestment of cash and securities comprising the assets of the
applicable Funds. The Sub-advisory Agreements also direct the sub-advisers to
(a) determine the securities to be purchased or sold by the Funds, and (b) take
any actions necessary to carry out their investment sub-advisory
responsibilities.
Each sub-adviser pays the salaries, employment benefits and other
related costs of personnel engaged in providing investment advice including
office space, facilities and equipment.
As compensation, the Investment Adviser pays the sub-advisers a monthly
fee at an annual rate based on the average daily net assets of each Fund as
follows:
Tax-Free Fund Growth Fund
Fee Assets Fee Assets
0.30% On first $50 million 0.45% On first $50 million
0.25% On next $50 million 0.40% On next $50 million
0.20% On excess 0.30% On next $50 million
$100,000 minimum 0.25% On excess
$100,000 minimum
Small Company Growth Fund International Growth Fund
Fee Assets Fee Assets
0.55% On first $50 million 0.40% On first $250 million
0.40% On next $50 million 0.37% On next $250 million
0.30% On next $50 million 0.36% On next $250 million
0.25% On excess 0.35% On next $1.25 billion
$100,000 minimum 0.32% Over $2 billion
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Asian Growth Fund
Fee Assets
0.65% On first $50 million
0.50% On next $50 million
0.40% On next $50 million
0.30% On excess
$150,000 minimum
The Investment Adviser has certain obligations under the Sub-advisory
Agreements and retains overall responsibility for monitoring the investment
program maintained by Aeltus, Aeltus Far East and Dunedin for compliance with
applicable laws and regulations and each Funds' respective investment
objectives. The Investment Adviser will also obtain and evaluate data regarding
economic trends in the United States and industries in which the Funds invest
and consult with the Subadvisers on such data and trends. In addition, the
Investment Adviser will consult with and assist the Subadvisers in maintaining
appropriate policies, procedures and records and oversee matters relating to
promotion, marketing materials and reports by the Subadvisers to the Directors.
CUSTODIAN
Mellon Bank, N.A., One Mellon Bank Center, Pittsburgh, PA, 15258 serves
as custodian for assets of all Funds except the International Growth and Asian
Growth Funds. Brown Brothers Harriman & Company, 40 Water Street, Boston, MA
02109 serves as custodian for assets of the International Growth and Asian
Growth Funds. Neither custodian participates in determining the investment
policies of a Fund or in deciding which securities are purchased or sold by a
Fund. A Fund, however, may invest in obligations of the custodian and may
purchase or sell securities from or to the custodians.
Regarding portfolio securities which are purchased outside the United
States, Brown Brothers Harriman & Company has entered into sub-custodian
agreements with several foreign banks or clearing agencies which are designed to
comply with Rule 17f-5 under the 1940 Act with respect to portfolio securities
held in custody by foreign banks.
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP, CityPlace II, Hartford, Connecticut 06103-4103
serves as independent auditors to the Funds. KPMG Peat Marwick LLP provides
audit services, assistance and consultation in connection with Commission
filings.
PRINCIPAL UNDERWRITER
ALIAC is the principal underwriter of the Funds pursuant to a contract
(Underwriting Agreement) between it and the Company dated January 1, 1994. The
Underwriting Agreement may be continued annually if approved annually by the
Directors or by a vote of holders of a majority of each Fund's shares, and by a
vote of a majority of the Directors who are not "interested persons", as that
term is defined in the 1940 Act, of ALIAC, and who are not interested persons of
the Company, 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 Directors or ALIAC or by vote of holders of a majority of a Fund's shares
without the payment of any penalty.
ALIAC is registered as a broker-dealer with the Commission and is a
member of the National Association of Securities Dealers, Inc.
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DISTRIBUTION ARRANGEMENTS
Shares of the Company are distributed on a best efforts basis by ALIAC
which may contract with various broker-dealers, including one or more
affiliates, for distribution of shares of the Company. On February 8, 1994,
ALIAC entered into an agreement (Dealer Agreement) with Aetna Investment
Services Inc., an affiliate of ALIAC, to distribute shares of the Company. To
compensate ALIAC for the services it provides Adviser Class shareholders, ALIAC
is paid an annual service fee with respect to Adviser Class shares of the Funds
at the rate of 0.25% (0.10% for the Money Market Fund) of the average daily net
assets of the class pursuant to a Shareholder Services Plan. ALIAC is also paid
an annual distribution fee with respect to Adviser Class shares of the Funds
(other than the Money Market Fund) at the rate of 0.50% of average daily net
assets attributable to those shares under a Distribution Plan adopted by the
Company pursuant to Rule 12b-1 of the 1940 Act to cover expenses primarily
intended to result in the sale of Adviser Class shares.
For year ended 1993, ALIAC received no payments under the Shareholder
Services Plan or Distribution Plan. For the fiscal period ended October 31,
1994, ALIAC received $229 from Government Fund; $102,308 from Bond Fund;
$104,602from Tax-Free fund; $103,950 from Aetna Fund; $102,402 from Growth and
Income Fund; $545 from Growth Fund; $321 from Small Company Growth Fund;
$104,655 from International Growth Fund; $305 from Asian Growth Fund for
Shareholder Service and Distribution Fees.
The Shareholder Services Plan and the Distribution Plan (Plans) continue
from year-to-year, provided such continuance is approved annually by vote of the
Directors, including a majority of Directors who are not interested persons of
the Company and who have no direct or indirect financial interest in the
operation of the Plans (Independent Directors). The Distribution Plan may not be
amended to increase the amount to be spent for the services provided by ALIAC
without shareholder approval. All amendments to the Plans must be approved by
the Directors in the manner described above. The Plans may be terminated at any
time, without penalty, by vote of a majority of the independent Directors on not
more than 30 days written notice to any other party to the Plan. Pursuant to the
Plans, ALIAC will provide the Directors periodic reports of amounts expended
under the Plans and the purpose for which such expenditures were made.
BROKERAGE ALLOCATION
Subject to the direction of the Directors, the Investment Adviser and
Subadvisers (Advisers) have responsibility for making a Fund's investment
decisions, for effecting the execution of trades for a Fund's portfolio and for
negotiating any brokerage commissions thereon. It is the Advisers' policy 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 other services provided.
The Advisers receive 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 Funds. 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 Funds and other investment companies,
services related to the execution of trades in a Fund's securities 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 Fund as a component of
other research
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services. The Advisers consider the quantity and quality of such brokerage and
research services provided by a brokerage firm along with the nature and
difficulty of the specific transaction in negotiating commissions for trades in
a Fund's securities and may pay higher commission rates than the lowest
available when it is reasonable to do so in light of the value of the brokerage
and research services received generally or in connection with a particular
transaction.
The research services provided by a particular broker may be useful only
to one or more of the advisory accounts of ALIAC and its affiliates. Investment
research received for the commission of those other accounts may be useful to
one or more of the Funds and such other accounts.
Consistent with federal legislation, the Advisers 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. The
Adviser's 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 the Adviser's opinion as to
which services and which means of payment are in the long-term best interests of
the Funds. The Funds will not effect any brokerage transactions in portfolio
securities with ALIAC or any affiliate of the Funds or the Investment Adviser
except in accordance with applicable SEC rules. Such transactions will comply
with Rule 17e-1 of the 1940 Act.
Certain executive officers of the Investment Adviser also have
supervisory responsibility with respect to the securities portfolio of the
Investment Adviser's own general account. Further, the Investment Adviser also
acts as investment adviser to other investment companies registered under the
1940 Act. In placing orders for the purchase and sale of debt securities for a
Fund, the Investment Adviser will normally use its own facilities. A Fund and
another advisory client of the Investment Adviser, or the Investment Adviser
itself, may desire to buy or sell the same publicly traded security at or about
the same time. In such a case, the purchases or sales will normally be 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 investment objectives of a Fund and the other portfolios,
the relative size of portfolio holdings of the same or comparable securities,
availability of cash for investment by a Fund and the other portfolios, and the
size of the Funds' respective investment commitments. Trades may be executed
between Funds and such trades are executed at "current market price" in
compliance with SEC Rule 17a-7.
For 1992, the following brokerage commissions were paid: $2,916 by the
Bond Fund; $39,090 by The Aetna Fund; $38,678 by the Growth and Income Fund; and
$200,818 by the International Growth Fund. For 1993, the following brokerage
commissions were paid: $3,708 by the Bond Fund; $56,633 by The Aetna Fund;
$58,319 by the Growth and Income Fund; and $277,873 by the International Growth
Fund. For the fiscal period ended October 31, 1994, the following brokerage
commissions were paid: $58,000 for the Tax-Free Fund; $5,112 by the Bond Fund;
$129,278 by The Aetna Fund; $278,919 by the Growth and Income Fund; $96,666 for
the Growth Fund; $122,178 for the Small Company Growth Fund.
DESCRIPTION OF SHARES
The Company's Articles of Incorporation, as amended (Articles) permit
the Directors to cause the Company to issue full and fractional shares of one or
more series, each of which represents a proportionate interest in one Fund equal
to each other share in that Fund. The Directors have the power to divide or
combine the shares of a particular series into a greater or lesser number of
shares without thereby changing the proportional beneficial interest in a Fund.
The Directors also have the
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power to subdivide each series into classes of shares having different
attributes so long as each share of each class represents a proportionate
interest in one Fund equal to each other share in that Fund. The Company
currently issues shares in thirteen Series with each Series issuing common stock
classified into two classes, Adviser Class shares and Select Class shares. Each
class of shares has the same rights, privileges and preferences, except with
respect to: (a) the effect of the respective sales charges, if any, for each
class; (b) the distribution and/or service fees borne by each class; (c) the
expenses allocable exclusively to each class; (d) voting rights on matters
exclusively affecting a single class; and (e) the exchange privilege of each
class.
The Company has obtained a ruling from the Internal Revenue Service
(IRS) with respect to the ten Funds described in this SAI to the effect that
differing distributions among the classes of its shares will not result in the
Fund's dividends or other distributions being regarded as "preferential
dividends" under the Internal Revenue Code of 1986, as amended. Generally, a
preferential dividend is a dividend which a Fund cannot treat as having been
distributed for purposes of determining (i) whether the Fund qualifies as a
regulated investment company (RIC) for federal income tax purposes and (ii) the
Fund's tax calculations. In order to qualify as a RIC, each Fund must satisfy
certain requirements, including an income distribution requirement. If a Fund so
qualifies, it generally will not be subject to federal tax on income timely
distributed to shareholders. The Company is currently seeking a similar ruling
for its three newest Funds.
Upon liquidation of any Fund, shareholders of the series of shares
representing an interest in that Fund are entitled to share pro rata in the net
assets of the Fund available for distribution to shareholders. Shares of each
Fund are fully paid and nonassessable when issued.
Nothing in the Articles protects a Director against any liability to
which he or she would otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his or her office.
Voting Rights
Shareholders of each class are entitled to one vote for each full share
held (and fractional votes for fractional shares of each class held) and will
vote on the election of Directors and on other matters submitted to the vote of
shareholders. Generally, shares of the Company will be voted on a Company-wide
basis on all matters except matters affecting only the interests of one Fund or
one class of shares. Voting rights are not cumulative, so that the holders of
more than 50% of the shares voting in the election of Directors can, if they
choose to do so, elect all the Directors, in which event the holders of the
remaining shares will be unable to elect any person as a Director.
The Articles may be amended by an affirmative vote of a majority of the
shares at any meeting of shareholders or by written instrument signed by a
majority of the Directors and consented to by a majority of the shareholders.
The Directors may also amend the Articles without the vote or consent of
shareholders, if they deem it necessary to conform the Articles to the
requirements of applicable federal laws or regulations or the requirements of
the regulated investment company provisions of the Internal Revenue Code of
1986, as amended, but the Directors shall not be liable for failing to do so.
Shares have no preemptive or conversion rights.
SALE AND REDEMPTION OF SHARES
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Adviser and Select Class shares of the Funds are sold and redeemed at
the net asset value next determined after receipt of a purchase or redemption
order in acceptable form by Firstar Trust Company, the transfer agent for each
Fund. If an order is received by the Company, shares will be priced at the net
asset value next-determined following receipt of the order by the Company.
Occasionally orders may be submitted through a broker. It is the broker's
responsibility to promptly remit orders to the transfer agent and shares will be
purchased as described above. No sales charge or redemption charge is imposed on
Select Class shares. No initial sales charge is imposed at the time of purchase
on Adviser Class shares; however, a contingent deferred sales charge is imposed
on certain redemptions of Adviser Class shares. The value of shares redeemed may
be more or less than the shareholder's cost, depending upon the market value of
the portfolio securities at the time of redemption. Payment for shares redeemed
will be made within seven days after the redemption request is received in
proper form by the transfer agent. Any written request to redeem shares must
bear the signatures of all the registered holders of those shares. The
signatures must be guaranteed by a national or state bank, trust company or a
member of a national securities exchange. The transfer agent will, on request,
explain any additional requirements for shares held in the name of a
corporation, partnership, trustee, guardian or in any other representative
capacity.
The right to redeem a Fund's shares may be suspended or payment therefor
postponed for any period during which (a) trading on the New York Stock Exchange
(Exchange) is restricted as determined by the Securities and Exchange Commission
(Commission) or such Exchange is closed for other than weekends and holidays;
(b) an emergency exists, as determined by the Commission, as a result of which
(i) disposal by a Fund of securities owned by it is not reasonably practicable,
or (ii) it is not reasonably practicable for a Fund to determine fairly the
value of its net assets; or (c) the Commission by order so permits for the
protection of shareholders of a Fund.
An open account is automatically set up and maintained for each
shareholder to facilitate the voluntary accumulation of each Fund's shares. The
open account system makes unnecessary the issuance and delivery of stock
certificates, thereby relieving shareholders of the responsibility of
safekeeping. Through the open account system, each shareholder is informed of
his or her holdings after any transaction affecting the number of shares he or
she owns. Share certificates will not be issued.
There is a $1,000 minimum initial investment for each Fund with a
minimum of $500 for Individual Retirement Accounts. All minimum dollar amount
requirements may be waived for employees and retirees of, and persons associated
with, Aetna, the Systematic Investment feature and payroll deduction programs.
Checks sent to shareholders who have requested dividends and/or capital
gains distributions to be paid in cash and which are subsequently returned by
the United States Postal Service as not deliverable or which remain uncashed for
six months or more will be reinvested in the Fund and credited to the
shareholder's account at the then current net asset value. Further, subsequent
dividends and distributions will be automatically reinvested in the Fund and
credited to the shareholder's account.
A Fund reserves the right, if conditions exist which make cash payments
undesirable, to honor any request for redemption or repurchase of a Fund's
shares by making payment, in whole or in part, in securities chosen by that Fund
and valued in the same way as they would be valued for purposes of computing
that Fund's net asset value. If payment is made in securities, a shareholder may
incur transactions costs in converting these securities into cash. The Funds
have elected, however, to be governed by Rule 18f-1 under the 1940 Act so that a
Fund is obligated to redeem its shares solely in cash up to the lesser of
$250,000 or 1% of its net asset value during any 90-day period for any one
shareholder of a Fund.
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NET ASSET VALUE
Equity securities of a Fund which are traded on a registered securities
exchange are valued at 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 (including
long-term debt securities) are valued at the mean of the last bid and asked
price if current market quotations are not readily available. Short-term debt
securities which have a maturity date of more than sixty days will be valued at
the mean of the last bid and asked price obtained from principal market makers.
Short-term debt securities maturing in sixty days or less at the date of
purchase, and all securities in the Money Market Fund, 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. Long-term debt securities are valued at the mean of the last bid and
asked price of such securities obtained from a broker who is a market-maker in
the securities or a service providing quotations based upon the assessment of
market-makers in those securities.
Options are valued at the mean of the last bid and asked price on the
exchange where the option is primarily traded. Stock index futures contracts and
interest rate futures contracts are valued daily at a settlement price based on
rules of the exchange where the futures contract is primarily traded.
TAX STATUS
The following is only a summary of certain additional tax considerations
generally affecting each Fund and its shareholders that are not described in the
Prospectus. No attempt is made to present a detailed explanation of the tax
treatment of each Fund or its shareholders, and the discussions here and in the
Prospectus are not intended as substitutes for careful tax planning.
Qualification as a Regulated Investment Company
Each Fund has elected to be taxed as a regulated investment company
under Subchapter M of the Internal Revenue Code of 1986, as amended (Code). As a
regulated investment company, a Fund is not subject to federal income tax on the
portion of its net investment income (i.e., taxable interest, dividends and
other taxable ordinary income, net of expenses) and capital gain net income
(i.e., the excess of capital gains over capital losses) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income (i.e., net investment income and the excess of net
short-term capital gain over net long-term capital loss) and at least 90% of its
tax-exempt income (net of expenses allocable thereto) for the taxable year
(Distribution Requirement), and satisfies certain other requirements of the Code
that are described below. Distributions by a Fund made during the taxable year
or, under specified circumstances, within twelve months after the close of the
taxable year, will be considered distributions of income and gains of the
taxable year and can therefore satisfy the Distribution Requirement.
In addition to satisfying the Distribution Requirement, a regulated
investment company must: (1) derive at least 90% of its gross income from
dividends, interest, certain payments with respect to securities loans, gains
from the sale or other disposition of stock or securities or foreign currencies
(to the extent such currency gains are directly related to the regulated
investment company's principal business of investing in stock or securities) and
other income (including but not limited to gains from options, futures or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies (Income Requirement); and (2) derive less than
30% of its gross income (exclusive of certain gains on designated hedging
transactions that are offset by realized or unrealized losses on offsetting
positions) from the sale or other disposition of stock, securities or
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foreign currencies (or options, futures or forward contracts thereon) held for
less than three months (Short-Short Gain Test). For purposes of these
calculations, gross income includes tax-exempt income. However, foreign currency
gains, including those derived from options, futures and forwards, will not in
any event be characterized as Short-Short Gain if they are directly related to
the regulated investment company's investments in stock or securities (or
options or futures thereon). Because of the Short-Short Gain Test, a Fund may
have to limit the sale of appreciated securities that it has held for less than
three months. However, the Short-Short Gain Test will not prevent a Fund from
disposing of investments at a loss, since the recognition of a loss before the
expiration of the three-month holding period is disregarded for this purpose.
Interest (including original issue discount) received by a Fund at maturity or
upon the disposition of a security held for less than three months will not be
treated as gross income derived from the sale or other disposition of such
security within the meaning of the Short-Short Gain Test. However, income that
is attributable to realized market appreciation will be treated as gross income
from the sale or other disposition of securities for this purpose.
In general, gain or loss recognized by a Fund on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation (including municipal obligations) purchased by
a Fund at a market discount (generally, at a price less than its principal
amount) will be treated as ordinary income to the extent of the portion of the
market discount which accrued during the period of time the Fund held the debt
obligation. In addition, under the rules of Code Section 988, gain or loss
recognized on the disposition of a debt obligation denominated in a foreign
currency or an option with respect thereto (but only to the extent attributable
to changes in foreign currency exchange rates), and gain or loss recognized on
the disposition of a foreign currency forward contract, futures contract, option
or similar financial instrument, or of foreign currency itself, except for
regulated futures contracts or non-equity options subject to Code Section 1256
(unless the Fund elects otherwise), will generally be treated as ordinary income
or loss.
In general, for purposes of determining whether capital gain or loss
recognized by a Fund on the disposition of an asset is long-term or short-term,
the holding period of the asset may be affected if (1) the asset is used to
close a "short sale" (which includes for certain purposes the acquisition of a
put option) or is substantially identical to another asset so used, (2) the
asset is otherwise held by the Fund as part of a "straddle" (which term
generally excludes a situation where the asset is stock and the Fund grants a
qualified covered call option (which, among other things, must not be
deep-in-the-money) with respect thereto) or (3) the asset is stock and the Fund
grants an in-the-money qualified covered call option with respect thereto.
However, for purposes of the Short-Short Gain Test, the holding period of the
asset disposed of may be reduced only in the case of clause (1) above. In
addition, a Fund may be required to defer the recognition of a loss on the
disposition of an asset held as part of a straddle to the extent of any
unrecognized gain on the offsetting position.
Any gain recognized by a Fund on the lapse of, or any gain or loss
recognized by a Fund from a closing transaction with respect to, an option
written by the Fund will be treated as a short-term capital gain or loss. For
purposes of the Short-Short Gain Test, the holding period of an option written
by a Fund will commence on the date it is written and end on the date it lapses
or the date a closing transaction is entered into. Accordingly, a Fund may be
limited in its ability to write options which expire within three months and to
enter into closing transactions at a gain within three months of the writing of
options.
Transactions that may be engaged in by a Fund (such as regulated futures
contracts, certain foreign currency contracts, and options on stock indexes and
futures contracts) will be subject to special tax treatment as "Section 1256
contracts." Section 1256 contracts are treated as if they are sold for their
fair market value on the last business day of the taxable year, even though a
taxpayer's obligations (or rights) under such contracts have not terminated (by
delivery, exercise, entering into
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a closing transaction or otherwise) as of such date. Any gain or loss recognized
as a consequence of the year-end deemed disposition of Section 1256 contracts is
taken into account for the taxable year together with any other gain or loss
that was previously recognized upon the termination of Section 1256 contracts
during that taxable year. Any capital gain or loss for the taxable year with
respect to Section 1256 contracts (including any capital gain or loss arising as
a consequence of the year-end deemed sale of such contracts) is generally
treated as 60% long-term capital gain or loss and 40% short-term capital gain or
loss. A Fund, however, may elect not to have this special tax treatment apply to
Section 1256 contracts that are part of a "mixed straddle" with other
investments of the Fund that are not Section 1256 contracts. The IRS has held in
several private rulings (and Treasury Regulations now provide) that gains
arising from Section 1256 contracts will be treated for purposes of the
Short-Short Gain Test as being derived from securities held for not less than
three months if the gains arise as a result of a constructive sale under Code
Section 1256.
A Fund may purchase securities of certain foreign investment funds or
trusts which constitute passive foreign investment companies (PFICs) for federal
income tax purposes. If a Fund invests in a PFIC, it may elect to treat the PFIC
as a qualifying electing fund (QEF) in which event the Fund will each year have
ordinary income equal to its pro rata share of the PFIC's ordinary earnings for
the year and long-term capital gain equal to its pro rata share of the PFIC's
net capital gain for the year, regardless of whether the Fund receives
distributions of any such ordinary earning or capital gain from the PFIC. If a
Fund does not (because it is unable to, chooses not to or otherwise) elect to
treat the PFIC as a QEF, then in general (1) any gain recognized by the Fund
upon sale or other disposition of its interest in the PFIC or any excess
distribution received by the Fund from the PFIC will be allocated ratably over
the Fund's holding period of its interest in the PFIC, (2) the portion of such
gain or excess distribution so allocated to the year in which the gain is
recognized or the excess distribution is received shall be included in the
Fund's gross income for such year as ordinary income (and the distribution of
such portion by the Fund to shareholders will be taxable as an ordinary income
dividend, but such portion will not be subject to tax at the Fund level), (3)
the Fund shall be liable for tax on the portions of such gain or excess
distribution so allocated to prior years in an amount equal to, for each such
prior year, (i) the amount of gain or excess distribution allocated to such
prior year multiplied by the highest tax rate (individual or corporate) in
effect for such prior year plus (ii) interest on the amount determined under
clause (i) for the period from the due date for filing a return for such prior
year until the date for filing a return for the year in which the gain is
recognized or the excess distribution is received at the rates and methods
applicable to underpayments of tax for such period, and (4) the distribution by
the Fund to shareholders of the portions of such gain or excess distribution so
allocated to prior years (net of the tax payable by the Fund thereon) will again
be taxable to the shareholders as an ordinary income dividend.
Under recently proposed Treasury regulations a Fund can elect to
recognize as gain the excess, as of the last day of its taxable year, of the
fair market value of each share of PFIC stock over the Fund's adjusted tax basis
in that share ("mark to market gain"). Such mark to market gain will be included
by the Fund as ordinary income, such gain will not be subject to the Short-Short
Gain Test, and the Fund's holding period with respect to such PFIC stock
commences on the first day of the next taxable year. If a Fund makes such
election in the first taxable year it holds PFIC stock, the Fund will include
ordinary income from any mark to market gain, if any, and will not incur the tax
described in the previous paragraph.
Treasury regulations permit a regulated investment company, in
determining its investment company taxable income and net capital gain (i.e.,
the excess of net long-term capital gain over net short-term capital loss) for
any taxable year, to elect (unless it has made a taxable year election for
excise tax purposes as discussed below) to treat all or any part of any net
capital loss, any net long-term capital loss or any net foreign currency loss
incurred after October 31 as if it had been incurred in the succeeding year.
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In addition to satisfying the requirements described above, each Fund
must satisfy an asset diversification test in order to qualify as a regulated
investment company. Under this test, at the close of each quarter of a Fund's
taxable year, at least 50% of the value of the Fund's assets must consist of
cash and cash items, U.S. Government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Fund has
not invested more than 5% of the value of the Fund's total assets in securities
of such issuer and as to which the Fund does not hold more than 10% of the
outstanding voting securities of such issuer), and no more than 25% of the value
of its total assets may be invested in the securities of any one issuer (other
than U.S. Government securities and securities of other regulated investment
companies), or in two or more issuers which the Fund controls and which are
engaged in the same or similar trades or businesses. Generally, an option (call
or put) with respect to a security is treated as issued by the issuer of the
security not the issuer of the option. However, with regard to forward currency
contracts, there does not appear to be any formal or informal authority which
identifies the issuer of such instrument. For purposes of asset diversification
testing, obligations issued or guaranteed by agencies or instrumentalities of
the U.S. Government such as the Federal Agricultural Mortgage Corporation, the
Farm Credit System Financial Assistance Corporation, a Federal Home Loan Bank,
the Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association, the Government National Mortgage Corporation, and the Student Loan
Marketing Association are treated as U.S.
Government securities.
If for any taxable year a Fund 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 Fund's current and
accumulated earnings and profits. Such distributions generally will be eligible
for the dividends-received deduction in the case of corporate shareholders.
Excise Tax on Regulated Investment Companies
A 4% non-deductible excise tax is imposed on a regulated investment
company that fails to distribute in each calendar year an amount equal to 98% of
ordinary taxable income for the calendar year and 98% of capital gain net income
for the one-year period ended on October 31 of such calendar year (or, at the
election of a regulated investment company having a taxable year ending November
30 or December 31, for its taxable year (taxable year election)). Tax-exempt
interest on municipal obligations is not subject to the excise tax.) The balance
of such income must be distributed during the next calendar year. For the
foregoing purposes, a regulated investment company is treated as having
distributed any amount on which it is subject to income tax for any taxable year
ending in such calendar year.
For purposes of the excise tax, a regulated investment company shall:
(1) reduce its capital gain net income (but not below its net capital gain) by
the amount of any net ordinary loss for the calendar year; and (2) exclude
foreign currency gains and losses incurred after October 31 of any year (or
after the end of its taxable year if it has made a taxable year election) in
determining the amount of ordinary taxable income for the current calendar year
(and, instead, include such gains and losses in determining ordinary taxable
income for the succeeding calendar year).
Each Fund intends to make sufficient distributions or deemed
distributions of its ordinary taxable income and capital gain net income prior
to the end of each calendar year to avoid liability for the excise tax. However,
investors should note that a Fund may in certain circumstances be
34
<PAGE>
required to liquidate portfolio investments to make sufficient distributions to
avoid excise tax liability.
Fund Distributions
Each Fund anticipates distributing substantially all of its investment
company taxable income for each taxable year. Depending on a Fund's
investment's, distributions by a Fund may be treated as a net capital gain
dividend, an ordinary income dividend, a U. S. Government interest dividend, a
qualifying dividend, or an exempt interest dividend. Dividends paid on Select
Class and Advisor Class shares are calculated at the same time and in the same
manner. In general, dividends on Advisor Class shares are expected to be lower
than those on Select Class shares due to the higher distribution expenses borne
by the Advisor Class shares. Dividends may also differ between classes as a
result of differences in other class specific expenses.
Each Fund may either retain or distribute to shareholders its net
capital gain for each taxable year. Each Fund currently intends to distribute
any such amounts. If net capital gain is distributed and designated as a capital
gain dividend, it will be taxable to shareholders as long-term capital gain,
regardless of the length of time the shareholder has held his shares or whether
such gain was recognized by the Fund prior to the date on which the shareholder
acquired his shares. The Code provides, however, that under certain conditions
only 50% of the capital gain recognized upon the Fund's disposition of domestic
"small business" stock will be subject to tax.
Conversely, if a Fund elects to retain its net capital gain, the Fund
will be taxed thereon (except to the extent of any available capital loss
carryovers) at the 35% corporate tax rate. If the Fund elects to retain its net
capital gain, it is expected that the Fund also will elect to have shareholders
of record on the last day of its taxable year treated as if each received a
distribution of his pro rata share of such gain, with the result that each
shareholder will be required to report his pro rata share of such gain on his
tax return as long-term capital gain, will receive a refundable tax credit for
his pro rata share of tax paid by the Fund on the gain, and will increase the
tax basis for his shares by an amount equal to the deemed distribution less the
tax credit.
The Tax-Free Fund intends to qualify to pay exempt-interest dividends by
satisfying the requirement that at the close of each quarter of the Tax-Free
Fund's taxable year at least 50% of the Tax-Free Fund's total assets consists of
tax-exempt municipal obligations. Distributions from the Tax-Free Fund will
constitute exempt-interest dividends to the extent of the Tax-Free Fund's
tax-exempt interest income (net of expenses and amortized bond premium).
Exempt-interest dividends distributed to shareholders of the Tax-Free Fund are
excluded from gross income for federal income tax purposes. However,
shareholders required to file a federal income tax return will be required to
report the receipt of exempt-interest dividends on their returns. Moreover,
while exempt-interest dividends are excluded from gross income for federal
income tax purposes, they may be subject to alternative minimum tax (AMT) in
certain circumstances and may have other collateral tax consequences as
discussed below. Distributions by the Tax-Free Fund of any investment company
taxable income or of any net capital gain will be taxable to shareholders as
discussed above.
AMT is imposed in addition to, but only to the extent it exceeds, the
regular tax and is computed at a maximum marginal rate of 28% for noncorporate
taxpayers and 20% for corporate taxpayers on the excess of the taxpayer's
alternative minimum taxable income (AMTI) over an exemption amount. In addition,
under the Superfund Amendments and Reauthorization Act of 1986, a tax is imposed
for taxable years beginning after 1986 and before 1996 at the rate of 0.12% on
the excess of a corporate taxpayer's AMTI (determined without regard to the
deduction for this tax and the AMT net operating loss deduction) over $2
million. Exempt-interest dividends derived from certain "private activity"
municipal obligations issued after August 7, 1986 will generally constitute an
item
35
<PAGE>
of tax preference includable in AMTI for both corporate and noncorporate
taxpayers. In addition, exempt-interest dividends derived from all municipal
obligations, regardless of the date of issue, must be included in adjusted
current earnings, which are used in computing an additional corporate preference
item (i.e., 75% of the excess of a corporate taxpayer's adjusted current
earnings over its AMTI (determined without regard to this item and the AMT net
operating loss deduction)) includable in AMTI.
Exempt-interest dividends must be taken into account in computing the
portion, if any, of social security or railroad retirement benefits that must be
included in an individual shareholder's gross income and subject to federal
income tax. Further, a shareholder of the Tax-Free Fund is denied a deduction
for interest on indebtedness incurred or continued to purchase or carry shares
of the Tax-Free Fund. Moreover, a shareholder who is (or is related to) a
"substantial user" of a facility financed by industrial development bonds held
by the Tax-Free Fund will likely be subject to tax on dividends paid by the
Tax-Free Fund which are derived from interest on such bonds. Receipt of
exempt-interest dividends may result in other collateral federal income tax
consequences to certain taxpayers, including financial institutions, property
and casualty insurance companies and foreign corporations engaged in a trade or
business in the United States. Prospective investors should consult their own
tax advisers as to such consequences.
Ordinary income dividends paid by a Fund with respect to a taxable year
will qualify for the 70% dividends-received deduction generally available to
corporations (other than corporations, such as S corporations, which are not
eligible for the deduction because of their special characteristics and other
than for purposes of special taxes such as the accumulated earnings tax and the
personal holding company tax) to the extent of the amount of qualifying
dividends received by a Fund from domestic corporations for the taxable year.
Generally, substantially all of the dividends paid by the Growth and Income
Fund, and, to a lesser degree, by the Aetna Fund, the Growth Fund, and the Small
Company Growth Fund, will qualify for the 70% dividends-received deduction. A
dividend received by a Fund will not be treated as a qualifying dividend (1) if
it has been received with respect to any share of stock that the Fund has held
for less than 46 days (91 days in the case of certain preferred stock),
excluding for this purpose under the rules of Code Section 246(c)(3) and (4):
(i) any day more than 45 days (or 90 days in the case of certain preferred
stock) after the date on which the stock becomes ex-dividend and (ii) any period
during which the Fund has an option to sell, is under a contractual obligation
to sell, has made and not closed a short sale of, is the grantor of a
deep-in-the-money or otherwise nonqualified option to buy, or has otherwise
diminished its risk of loss by holding other positions with respect to, such (or
substantially identical) stock; (2) to the extent that the Fund is under an
obligation (pursuant to a short sale or otherwise) to make related payments with
respect to positions in substantially similar or related property; or (3) to the
extent the stock on which the dividend is paid is treated as debt-financed under
the rules of Code Section 246A. Moreover, the dividends-received deduction for a
corporate shareholder may be disallowed or reduced (1) if the corporate
shareholder fails to satisfy the foregoing requirements with respect to its
shares of the Fund or (2) by application of Code Section 246(b) which in general
limits the dividends-received deduction to 70% of the shareholder's taxable
income (determined without regard to the dividends-received deduction and
certain other items).
For purposes of the corporate AMT and the environmental superfund tax
(which are discussed above), the corporate dividends-received deduction is not
itself an item of tax preference that must be added back to taxable income or is
otherwise disallowed in determining a corporation's AMTI. However, corporate
shareholders will generally be required to take the full amount of any dividend
received from a Fund into account (without a dividends-received deduction) in
determining its adjusted current earnings, which are used in computing an
additional corporate preference item (i.e., 75% of the excess of a corporate
taxpayer's adjusted current earnings over its AMTI (determined without regard to
this item and the AMT net operating loss deduction)) includable in AMTI.
36
<PAGE>
Investment income that may be received by a Fund from sources within
foreign countries may be subject to foreign taxes withheld at the source. The
United States has entered into tax treaties with many foreign countries which
entitle a Fund to a reduced rate of, or exemption from, taxes on such income. It
is impossible to determine the effective rate of foreign tax in advance since
the amount of a Fund's assets to be invested in various countries is not known.
The International Growth Fund and the Asian Growth Fund anticipate investing
substantially in foreign securities. If more than 50% of the value of a Fund's
total assets at the close of its taxable year consist of the stock or securities
of foreign corporations, the Fund may elect to "pass through" to the Fund
shareholders the amount of foreign taxes paid by the Fund. If the Fund so
elects, each shareholder would be required to include in gross income, even
though not actually received, his pro rata share of the foreign taxes paid by
the Fund, but would be treated as having paid his pro rata share of such foreign
taxes and would therefore be allowed to either deduct such amount in computing
taxable income or use such amount (subject to various Code limitations) as a
foreign tax credit against federal income tax (but not both). For purposes of
the foreign tax credit limitation rules of the Code, each shareholder would
treat as foreign source income his pro rata share of such foreign taxes plus the
portion of dividends received from a Fund representing income derived from
foreign sources. No deduction for foreign taxes could be claimed by an
individual shareholder who does not itemize deductions. Each shareholder should
consult his own tax adviser regarding the potential application of foreign tax
credits.
Distributions by a Fund that do not constitute ordinary income
dividends, exempt-interest dividends or capital gain dividends will be treated
as a return of capital to the extent of (and in reduction of) the shareholder's
tax basis in his shares; any excess will be treated as gain from the sale of his
shares, as discussed below.
Distributions by a Fund will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Fund (or of another fund). Shareholders receiving a
distribution in the form of additional shares will be treated as receiving a
distribution in an amount equal to the fair market value of the shares received,
determined as of the reinvestment date. In addition, if the net asset value at
the time a shareholder purchases shares of a Fund reflects undistributed net
investment income or recognized capital gain net income, or unrealized
appreciation in the value of the assets of the Fund, distributions of such
amounts will be taxable to the shareholder in the manner described above,
although such distributions economically constitute a return of capital to the
shareholder.
Ordinarily, shareholders are required to take distributions by a Fund
into account in the year in which the distributions are made. However, dividends
declared in October, November or December of any year and payable to
shareholders of record on a specified date in such a month will be deemed to
have been received by the shareholders (and made by a Fund) on December 31 of
such calendar year if such dividends are actually paid in January of the
following year. Shareholders will be advised annually as to the U.S. federal
income tax consequences of distributions made (or deemed made) during the year.
Each Fund will be required in certain cases to withhold and remit to the
U.S. Treasury 31% of ordinary income dividends and capital gain dividends, and
the proceeds of redemption of shares, paid to any shareholder (1) who has
provided either an incorrect tax identification number or no number at all, (2)
who is subject to backup withholding by the IRS for failure to report the
receipt of interest or dividend income properly, or (3) who has failed to
certify to the Fund that it is not subject to backup withholding or that it is a
corporation or other "exempt recipient."
Sale or Redemption of Shares
37
<PAGE>
The Money Market Fund seeks to maintain a stable net asset value of
$1.00 per share; however, there can be no assurance that the Money Market Fund
will do this. In such a case, and in the case of all other Funds (including the
Tax-Free Fund), a shareholder will recognize gain or loss on the sale or
redemption of shares of a Fund in an amount equal to the difference between the
proceeds of the sale or redemption and the shareholder's adjusted tax basis in
the shares (even if the gain is attributable to a dividend that would otherwise
be received tax-free by the shareholder). All or a portion of any loss so
recognized may be disallowed if the shareholder purchases other shares of the
Fund within 30 days before or after the sale or redemption. In general, any gain
or loss arising from (or treated as arising from) the sale or redemption of
shares of a Fund will be considered capital gain or loss and will be long-term
capital gain or loss if the shares were held for longer than one year. However,
any capital loss arising from the sale or redemption of shares held for six
months or less will be disallowed to the extent of the amount of exempt-interest
dividends received on such shares and (to the extent not disallowed) will be
treated as a long-term capital loss to the extent of the amount of capital gain
dividends received on such shares. For this purpose, the special holding period
rules of Code Section 246(c)(3) and (4) (discussed above in connection with the
dividends-received deduction for corporations) generally will apply in
determining the holding period of shares. Long-term capital gains of
noncorporate taxpayers are currently taxed at a maximum rate 11.6% lower than
the maximum rate applicable to ordinary income. Capital losses in any year are
deductible only to the extent of capital gains plus, in the case of a
noncorporate taxpayer, $3,000 of ordinary income.
Foreign Shareholders
Taxation of a shareholder who, as to the United States, is a nonresident
alien individual, foreign trust or estate, foreign corporation, or foreign
partnership (foreign shareholder), depends on whether the income from a Fund is
"effectively connected" with a U.S. trade or business carried on by such
shareholder.
If the income from a Fund is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, ordinary income dividends paid
to a foreign shareholder will be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate) upon the gross amount of the dividend. Furthermore,
such a foreign shareholder may be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate) on the gross income resulting from the Fund's
election to treat any foreign taxes paid by it as paid by its shareholders, but
may not be allowed a deduction against this gross income or a credit against
this U.S. withholding tax for the foreign shareholder's pro rata share of such
foreign taxes which it is treated as having paid. Such a foreign shareholder
would generally be exempt from U.S. federal income tax on gains realized on the
sale of shares of the Fund, capital gain dividends and exempt-interest dividends
and amounts retained by the Fund that are designated as undistributed capital
gains.
If the income from a Fund is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then ordinary income dividends,
capital gain dividends, and any gains realized upon the sale of shares of the
Fund will be subject to U.S. federal income tax at the rates applicable to U.S.
citizens or domestic corporations.
In the case of foreign noncorporate shareholders, a Fund may be required
to withhold U.S. federal income tax at a rate of 31% on distributions that are
otherwise exempt from withholding tax (or taxable at a reduced treaty rate)
unless such shareholders furnish the Fund with proper notification of its
foreign status.
38
<PAGE>
The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in a Fund,
including the applicability of foreign taxes.
Effect of Future Legislation; Local Tax Considerations
The foregoing general discussion of U.S. federal income tax consequences
is based on the Code and the Treasury Regulations issued thereunder as in effect
on the date of this Statement of Additional Information. Future legislative or
administrative changes or court decisions may significantly change the
conclusions expressed herein, and any such changes or decisions may have a
retroactive effect with respect to the transactions contemplated herein.
Rules of state and local taxation of ordinary income dividends,
exempt-interest dividends and capital gain dividends from regulated investment
companies often differ from the rules for U.S. federal income taxation described
above. Shareholders are urged to consult their tax advisers as to the
consequences of these and other state and local tax rules affecting investment
in a Fund.
PERFORMANCE INFORMATION
Performance information for each class of shares of the Funds including
the yield and effective yield of the Money Market Fund, the yield of the
remaining Funds, and the total return of all Funds, may appear in reports or
promotional literature to current or prospective shareholders.
Money Market Fund Yields
Current yield for the Money Market Fund will be computed by determining
the net change, exclusive of capital changes, at the beginning of a seven-day
period in the value of a hypothetical investment, subtracting any deductions
from shareholder accounts, and dividing the difference by the value of the
hypothetical investment at the beginning of the base period to obtain the base
period return. This base period return is then multiplied by (365/7) with the
resulting yield figure carried to at least the nearest hundredth of one percent.
Calculation of "effective yield" begins with the same "base period return" used
in the calculation of yield, which is then annualized to reflect weekly
compounding pursuant to the following formula:
365/7
Effective Yield = [(Base Period Return + 1) ] - 1
The yield and effective yield for the Money Market Fund for the seven
days ended October 31, 1994 were 4.88% and 5.01%, respectively.
30-Day Yield for Non-Money Market Funds
Quotations of yield for the remaining Funds will be based on all
investment income per share earned during a particular 30-day period, less
expenses accrued during the period ("net investment income"), and will be
computed by dividing net investment income by the value of a share on the last
day of the period, according to the following formula:
6
YIELD = 2[((a-b/cd) + 1) - 1]
Where: a = dividends and interest earned during the period
b = the expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period
39
<PAGE>
d = the maximum offering price per share on the last day of the period
The yield for the Bond Fund for the 30-day period ended October 31, 1994
was 6.85% for the Select Class, and 6.06% for the Adviser Class.
Average Annual Total Return for Non-Money Market Funds
Quotations of average annual total return for any Fund will be expressed
in terms of the average annual compounded rate of return of a hypothetical
investment in a Fund over a period of one, five and ten years (or, if less, up
to the life of the Fund), calculated pursuant to the formula:
n
P(1 + T) = 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 a Fund may be compared, in reports and
promotional literature, to: (i) the Standard & Poor's 500 Stock Index (S&P 500),
Shearson Lehman Aggregate Bond Index, Dow Jones Industrial Average (DJIA),
Donoghue Money Market Averages, Russell 2000 or other indices that measure
performance of a pertinent group of securities widely regarded by investors as
representative of the securities markets in general; (ii) other groups of
investment companies tracked by Lipper Analytical Services, a widely used
independent research firm which ranks 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 of other criteria; (iii) the Consumer Price
Index (measure for inflation) to assess the real rate of return from an
investment in a Fund; (iv) the Morgan Stanley Capital International Europe,
Australia, Far East (EAFE) Index and (v) the Morgan Stanley Capital
International Far East Free (FEF ex. Japan) Index.
The Funds may also from time to time include in such advertising a total
return figure that is not calculated according to the formula set forth above in
order to compare more accurately the performance of a Fund with other measures
of investment return. For example: Unmanaged indices may assume the reinvestment
of dividends but generally do not reflect deductions for administrative and
management costs and expenses.
40
<PAGE>
Total Return Quotations
Select Class
Assumptions:
* The 1 year figures are based on an initial $1,000 purchase made January 1,
1994 and redeemed on October 31, 1994. * The 5 year figures are based on an
initial $1,000 purchase made January 1, 1992 (effective date of Funds) and
redeemed on October 31, 1994.
1 Year 5 Years
Money Market 3.33% 3.74%
Bond (3.31)% 4.82%
The Aetna Fund (0.42)% 4.15%
Growth and Income 1.40% 5.54%
International Growth 3.49% 6.74%
Assumption:
* The 1 year figures are based on an initial $1,000 purchase made January 1,
1994 (effective date of Funds) and redeemed on October 31, 1994.
1 Year
Government (2.37)%
Tax-Free (6.95)%
Growth 7.70%
Small Company Growth 3.90%
Asian Growth (5.10)%
Assumption:
* The 1 year figures are based on an initial $1,000 purchase made April 15, 1994
(effective date of Adviser Class shares) and redeemed on October 31, 1994.
1 Year
Money Market 3.20%
Government (1.06)%
Bond (1.68)%
Tax-Free (2.30)%
The Aetna Fund 0.82%
Growth and Income 2.67%
Growth 3.54%
Small Company Growth (0.03)%
International Growth 1.38%
Asian Growth 9.41%
All figures are based on actual investment performance. Performance figures for
the Adviser Class shares reflect the deduction of the maximum contingent
deferred sales charge of 1% assuming shares were redeemed at the end of the
period.
41
<PAGE>
From time to time sales materials and advertisements may include
discussions which compare the cost of borrowing a specific amount of money at a
given loan rate over a set period of time to the cost of a monthly investment
program, over the same time period, which earns the same rate of return. The
comparison may involve historical rates of return on a given index, or may
involve performance of any of the Funds. In addition, the value of a college
education may be expressed in sales and advertising materials as a comparison of
salaries between college graduates and non-college graduates.
THE AETNA WAY INVESTMENT PHILOSOPHY
The Investment Adviser believes that the best way for most individual
investors to achieve consistent investment results and to outperform inflation
is to rigorously apply time-tested principles of conservative investing. These
include a well-diversified portfolio that balances risk and return and a
long-term view of security markets. We consider this "The Aetna Way" of
investing.
INDEPENDENT AUDITORS
The financial statements and financial highlights of Aetna Series Fund,
Inc. as of October 31, 1994 and for each of the years in the two-year period
ended December 31, 1993 and the ten-month period ended October 31, 1994, are
included herein and elsewhere in the registration statement in reliance upon the
report of KPMG Peat Marwick LLP, independent auditors, and upon the authority of
said firm as experts in accounting and auditing.
42
<PAGE>
<TABLE>
<CAPTION>
Aetna Series Fund, Inc. Money Market Fund Government Fund
Assets:
<S> <C> <C>
Investments, at market value (Note 1)........ $206,636,828 $26,001,654
Cash......................................... 752 656
Receivable for: Dividends and interest....... 764,881 274,011
Investments sold............................ 0 0
Fund shares sold............................ 2,218,521 0
----------------- ---------------
Total receivables............................ 2,983,402 274,011
Deferred organizational expenses............. 25,747 0
----------------- ---------------
Total assets................................. 209,646,729 26,276,321
----------------- ---------------
Liabilities:
Payable for: Investments purchased........... 0 0
Fund shares redeemed........................ 490,907 158
Other liabilities........................... 48,947 15,692
----------------- ---------------
Total liabilities............................ 539,854 15,850
----------------- ---------------
NET ASSETS applicable to outstanding
fund shares.................................. $209,106,875 $26,260,471
================= ===============
Net assets represented by:
Capital stock................................ $209,107 $2,790
Additional paid-in capital................... 208,897,768 27,560,689
----------------- ---------------
209,106,875 27,563,479
Unrealized gain (loss) on investments........ 0 (1,140,801)
Undistributed net investment income.......... 0 108,685
Accumulated net realized gain (loss) on
investments.................................. 0 (270,892)
----------------- ---------------
Total - representing net assets applicable to
outstanding fund shares...................... $209,106,875 $26,260,471
================= ===============
Capital Shares, $.001 par value
Select Class: Outstanding.................... 161,756,379 2,774,007
Net Assets................................... $161,756,379 $26,109,899
Net Asset Value per share.................... $1.00 $9.41
Adviser Class: Outstanding................... 47,350,496 16,003
Net Assets................................... $47,350,496 $150,572
Net Asset Value per share.................... $1.00 $9.41
Cost of Investments.......................... $206,636,828 $27,142,455
</TABLE>
Statements of Assets and Liabilities
October 31, 1994
See Notes to Financial Statements.
43
<PAGE>
<TABLE>
<CAPTION>
Bond Fund Tax-Free Fund The Aetna Fund
<S> <C> <C>
$50,837,696 $26,597,750 $102,959,340
108,495 936 497
885,009 542,686 487,617
2,712,287 0 2,488,980
8,464 0 59,357
- ------------ ------------- --------------
3,605,760 542,686 3,035,954
25,747 0 25,747
- ------------ ------------- --------------
54,577,698 27,141,372 106,021,538
- ------------ ------------- --------------
1,498,875 0 3,037,773
40,235 59,403 198,234
49,352 36,307 123,336
- ------------ ------------- --------------
1,588,462 95,710 3,359,343
- ------------ ------------- --------------
$52,989,236 $27,045,662 $102,662,195
============ ============= ==============
$5,530 $3,014 $9,645
55,531,752 29,401,183 100,511,852
- ------------ ------------- --------------
55,537,282 29,404,197 100,521,497
(1,609,347) (1,867,568) 2,614,894
54,057 16,599 973,633
(992,756) (507,566) (1,447,829)
- ------------ ------------- --------------
$52,989,236 $27,045,662 $102,662,195
============ ============= ==============
2,879,421 163,041 7,159,113
$27,584,028 $1,464,577 $76,266,505
$9.58 $8.98 $10.65
2,650,978 2,851,067 2,485,397
$25,405,208 $25,581,085 $26,395,690
$9.58 $8.97 $10.62
$52,447,043 $28,465,318 $100,344,446
</TABLE>
Aetna Mutual Funds Annual Report
44
<PAGE>
<TABLE>
<CAPTION>
Aetna Series Fund, Inc. Growth and Income Fund Growth Fund
<S> <C> <C>
Assets:
Investments, at market value (Note 1)..... $306,028,411 $27,953,490
Cash...................................... 672 440
Cash denominated in foreign currencies.... 0 0
Receivable for: Dividends and interest.... 319,418 36,010
Investments sold......................... 5,731,138 1,089,194
Fund shares sold......................... 73,995 49,422
Recoverable taxes........................ 0 0
Variation margin
(Note 7).................................. 53,170 0
Forward foreign currency
exchange contracts
(Note 7).................................. 0 0
---------------------- ------------
Total receivables......................... 6,177,721 1,174,626
Deferred organizational expenses.......... 25,747 0
---------------------- ------------
Total assets.............................. 312,232,551 29,128,556
---------------------- ------------
Liabilities:
Payable for: Investments purchased........ 4,842,793 1,166,370
Fund shares redeemed..................... 124,372 0
Forward foreign currency
exchange contracts
(Note 7).................................. 0 0
Other liabilities........................ 165,484 27,720
Deferred premiums on written options, at
market value (Note 5)..................... 0 329,469
---------------------- ------------
Total liabilities......................... 5,132,649 1,523,559
---------------------- ------------
NET ASSETS applicable to outstanding
fund shares............................... $307,099,902 $27,604,997
====================== ============
Net assets represented by:
Capital stock............................. $27,652 $2,560
Additional paid-in capital................ 298,558,488 26,218,497
---------------------- ------------
298,586,140 26,221,057
Unrealized gain (loss) on investments and
foreign currency transactions............. 10,174,978 1,193,732
Undistributed net investment income....... 603,617 207,053
Accumulated net realized gain (loss) on
investments............................... (2,264,833) (16,845)
---------------------- ------------
Total - representing net assets applicable
to outstanding fund shares................ $307,099,902 $27,604,997
====================== ============
Capital Shares, $.001 par value
Select Class: Outstanding................. 27,133,462 2,521,579
Net Assets................................ $301,360,039 $27,188,261
Net Asset Value per share................. $11.11 $10.78
Adviser Class: Outstanding................ 518,198 38,808
Net Assets................................ $5,739,863 $416,736
Net Asset Value per share................. $11.08 $10.74
Cost of Investments....................... $295,906,603 $26,658,933
</TABLE>
Statements of Assets and Liabilities
October 31, 1994
See Notes to Financial Statements.
45
<PAGE>
<TABLE>
<CAPTION>
Small Company Growth Fund International Growth Fund Asian Growth Fund
<S> <C> <C>
$26,040,231 $58,662,111 $29,245,895
2,833 23 866
0 0 577,156
12,847 185,617 88,016
1,590,685 586,387 826,688
0 50,895 826
0 75,575 0
0 0 0
0 9,800,000 0
- ------------------------- ------------------------- -----------------
1,603,532 10,698,474 915,530
0 25,746 0
- ------------------------- ------------------------- -----------------
27,646,596 69,386,354 30,739,447
- ------------------------- ------------------------- -----------------
1,532,487 1,144,689 999,582
0 13 0
0 10,025,231 0
30,678 90,397 39,529
0 0 0
- ------------------------- ------------------------- -----------------
1,563,165 11,260,330 1,039,111
- ------------------------- ------------------------- -----------------
$26,083,431 $58,126,024 $29,700,336
========================= ========================= =================
$2,510 $5,038 $3,131
25,529,909 50,531,304 27,857,983
- ------------------------- ------------------------- -----------------
25,532,419 50,536,342 27,861,114
1,479,455 3,050,018 2,026,393
36,675 1,795,158 101,618
(965,118) 2,744,506 (288,789)
- ------------------------- ------------------------- -----------------
$26,083,431 $58,126,024 $29,700,336
========================= ========================= =================
2,490,544 2,723,159 3,098,026
$25,878,721 $31,478,842 $29,385,839
$10.39 $11.56 $9.49
19,787 2,314,960 33,230
$204,710 $26,647,182 $314,497
$10.35 $11.51 $9.46
$24,560,776 $55,397,816 $27,220,963
</TABLE>
Aetna Mutual Funds Annual Report
46
<PAGE>
<TABLE>
<CAPTION>
Aetna Series Fund, Inc. Money Market Fund Government Fund
<S> <C> <C>
Investment income: (Note 1)
Dividends (net of foreign taxes
withheld of $15,364 in The
Aetna Fund).................................... $0 $0
Interest....................................... 5,839,361 1,051,240
----------------- ---------------
Total investment income........................ 5,839,361 1,051,240
Investment expenses: (Notes 2 and 3)
Investment advisory fee........................ 544,857 91,999
Administrative service fee..................... 340,536 46,000
12b-1 and service fees......................... 17,959 229
Other expenses................................. 273,986 76,307
----------------- ---------------
Expenses before reimbursement
and waiver from Adviser........................ 1,177,338 214,535
Expense reimbursement and
waiver from Adviser............................ (909,203) (138,545)
----------------- ---------------
Total investment expenses...................... 268,135 75,990
----------------- ---------------
Net investment income.......................... 5,571,226 975,250
----------------- ---------------
Realized and unrealized gain (loss)
on investments: (Notes 1, 4 and 5)
Realized gain (loss) on sales of
investments (excluding short-term investments):
Proceeds from sales............................ 0 7,331,513
Cost of investments sold....................... 0 7,630,339
----------------- ---------------
0 (298,826)
Realized gain (loss) on written
options........................................ 0 0
----------------- ---------------
Net realized gain (loss) on
investments.................................... 0 (298,826)
Unrealized gain (loss) on
investments
Beginning of period............................ 0 0
End of period.................................. 0 (1,140,801)
----------------- ---------------
0 (1,140,801)
Net realized and unrealized gain
(loss) on investments.......................... 0 (1,439,627)
----------------- ---------------
Increase (decrease) in net assets
resulting from operations...................... $5,571,226 $(464,377)
================= ===============
</TABLE>
Statements of Operations
Ten-month period ended October 31, 1994
See Notes to Financial Statements.
47
<PAGE>
<TABLE>
<CAPTION>
Bond Fund Tax-Free Fund The Aetna Fund
<S> <C> <C>
$111,966 $0 $1,055,428
2,813,748 1,036,452 1,811,322
- ------------- ------------- --------------
2,925,714 1,036,452 2,866,750
210,162 96,433 569,014
105,128 48,217 177,792
102,308 104,602 103,950
129,572 75,724 190,963
- ------------- ------------- --------------
547,170 324,976 1,041,719
(128,686) (130,489) (156,406)
- ------------- ------------- --------------
418,484 194,487 885,313
- ------------- ------------- --------------
2,507,230 841,965 1,981,437
- ------------- ------------- --------------
24,333,222 6,408,990 66,778,263
25,216,010 6,916,556 68,213,735
- ------------- ------------- --------------
(882,788) (507,566) (1,435,472)
0 0 632,743
- ------------- ------------- --------------
(882,788) (507,566) (802,729)
1,792,202 0 3,870,569
(1,609,347) (1,867,568) 2,614,894
- ------------- ------------- --------------
(3,401,549) (1,867,568) (1,255,675)
(4,284,337) (2,375,134) (2,058,404)
- ------------- ------------- --------------
$(1,777,107) $(1,533,169) $(76,967)
============= ============= ==============
</TABLE>
Aetna Mutual Funds Annual Report
48
<PAGE>
<TABLE>
<CAPTION>
Aetna Series Fund, Inc. Growth and Income Fund Growth Fund
<S> <C> <C>
Investment income: (Note 1)
Dividends*..................................... $1,972,381 $287,741
Interest....................................... 440,846 65,120
---------------------- ------------
Total investment income........................ 2,413,227 352,861
Investment expenses: (Notes 2 and 3)
Investment advisory fee........................ 625,998 121,917
Administrative service fee..................... 223,571 43,542
12b-1 and service fees......................... 102,402 545
Other expenses................................. 170,540 83,223
---------------------- ------------
Expenses before reimbursement and
waiver from Adviser............................ 1,122,511 249,227
Expense reimbursement and waiver
from Adviser................................... (101,043) (87,583)
---------------------- ------------
Total investment expenses...................... 1,021,468 161,644
---------------------- ------------
Net investment income.......................... 1,391,759 191,217
---------------------- ------------
Realized and unrealized gain (loss)
on investments: (Notes 1, 4, 5 and 7)
Realized gain (loss) on sales of
investments (excluding short-term investments):
Proceeds from sales............................ 58,873,474 24,532,825
Cost of investments sold....................... 60,793,131 24,614,896
---------------------- ------------
(1,919,657) (82,071)
Realized gain (loss) on written
options........................................ 441,049 88,437
Realized gain (loss) on futures and
forward currency contracts..................... 0 (7,375)
Realized gain (loss) on foreign
currency related transactions.................. 0 0
---------------------- ------------
Net realized gain (loss) on
investments.................................... (1,478,608) (1,009)
Unrealized gain (loss) on
investments
Beginning of period............................ 4,240,490 0
End of period.................................. 10,121,808 1,193,732
---------------------- ------------
5,881,318 1,193,732
Unrealized gain (loss) on futures
and forward currency contracts................. 53,170 0
Unrealized gain (loss) on foreign
currency related transactions.................. 0 0
---------------------- ------------
Net unrealized gain (loss) on
investments.................................... 5,934,488 1,193,732
---------------------- ------------
Net realized and unrealized gain
(loss) on investments.......................... 4,455,880 1,192,723
---------------------- ------------
Increase (decrease) in net assets
resulting from operations...................... $5,847,639 $1,383,940
====================== ============
</TABLE>
*Amounts are net of foreign taxes withheld of $22,846 in The Growth and Income
Fund, $1,897 in The Growth Fund, $142,109 in The International Growth Fund, and
$23,731 in The Asian Growth Fund.
Statements of Operations
Ten-month period ended October 31, 1994
See Notes to Financial Statements.
49
<PAGE>
<TABLE>
<CAPTION>
Small Company Growth Fund International Growth Fund Asian Growth Fund
<S> <C> <C> <C>
$139,235 $846,020 $316,724
92,522 102,225 76,404
- ------------------------- ------------------------- -----------------
231,757 948,245 393,128
144,601 357,374 183,192
42,530 105,110 45,798
321 104,655 305
82,255 232,950 133,328
- ------------------------- ------------------------- -----------------
269,707 800,089 362,623
(73,512) (55,230) (111,555)
- ------------------------- ------------------------- -----------------
196,195 744,859 251,068
- ------------------------- ------------------------- -----------------
35,562 203,386 142,060
- ------------------------- ------------------------- -----------------
22,425,880 38,557,449 14,220,567
23,389,885 34,441,009 14,509,355
- ------------------------- ------------------------- -----------------
(964,005) 4,116,440 (288,788)
0 0 0
0 (315,272) 0
0 (87,098) (40,443)
- ------------------------- ------------------------- -----------------
(964,005) 3,714,070 (329,231)
0 5,327,835 0
1,479,455 3,264,295 2,024,932
- ------------------------- ------------------------- -----------------
1,479,455 (2,063,540) 2,024,932
0 (225,231) 0
0 10,954 1,461
- ------------------------- ------------------------- -----------------
1,479,455 (2,277,817) 2,026,393
- ------------------------- ------------------------- -----------------
515,450 1,436,253 1,697,162
- ------------------------- ------------------------- -----------------
$551,012 $1,639,639 $1,839,222
========================= ========================= =================
</TABLE>
Aetna Mutual Funds Annual Report
50
<PAGE>
<TABLE>
<CAPTION>
Aetna Series Fund, Inc. Money Market Fund Government Fund
Ten-month Ten-month
period ended Year ended period ended
October 31, December 31, October 31,
1994 1993 1994
-------------- ------------- -------------
<S> <C> <C> <C>
From Operations:
Net investment income...................... $5,571,226 $2,421,246 $975,250
Net realized gain (loss) on investments.... 0 271 (298,826)
Net unrealized gain (loss) on
investments................................ 0 0 (1,140,801)
-------------- ------------- -------------
Increase (decrease) in net assets resulting
from operations............................ 5,571,226 2,421,517 (464,377)
-------------- ------------- -------------
From Distributions to Shareholders: (Note 1)
Select Class:
Dividends to shareholders from net
investment income.......................... (4,776,403) (2,421,246) (836,799)
Dividends in excess of net investment
income..................................... 0 (271) 0
Distributions to shareholders from
realized gain on investments............... 0 0 0
Return of capital distributions............ 0 0 0
Adviser Class:
Dividends to shareholders from net
investment income.......................... (794,823) 0 (1,832)
Dividends in excess of net investment
income..................................... 0 0 0
Distributions to shareholders from
realized gain on investments............... 0 0 0
-------------- ------------- -------------
Decrease in net assets from distributions
to shareholders............................ (5,571,226) (2,421,517) (838,631)
-------------- ------------- -------------
From Fund Share Transactions:
(Note 8)
Select Class:
Proceeds from shares sold.................. 184,288,133 125,536,601 26,189,218
Net asset value of shares issued upon
reinvestment of dividends and
distributions.............................. 4,313,330 2,276,753 1,222,008
Cost of shares redeemed.................... (134,729,463) (56,450,873) (904)
Adviser Class:
Proceeds from shares sold.................. 49,918,444 0 165,129
Net asset value of shares issued upon
reinvestment of dividends and
distributions.............................. 788,233 0 2,374
Cost of shares redeemed.................... (3,356,170) 0 (14,346)
-------------- ------------- -------------
Increase in net assets from fund share
transactions............................... 101,222,507 71,362,481 27,563,479
-------------- ------------- -------------
Change in net assets....................... 101,222,507 71,362,481 26,260,471
Net Assets:
Beginning of period........................ 107,884,368 36,521,887 0
-------------- ------------- -------------
End of period.............................. $209,106,875 $107,884,368 $26,260,471
============== ============= =============
End of period net assets includes
undistributed (distributions in excess
of) net investment income.................. $0 $0 $108,685
============== ============= =============
</TABLE>
Statements of Changes in Net Assets
See Notes to Financial Statements.
51
<PAGE>
<TABLE>
<CAPTION>
Bond Fund Tax-Free Fund The Aetna Fund
Ten-month Ten-month Ten-month
period ended Year ended period ended period ended Year ended
October 31, December 31, October 31, October 31, December 31,
1994 1993 1994 1994 1993
- ------------- ------------ ------------- ------------- ------------
<S> <C> <C> <C> <C>
$ 2,507,230 $2,285,560 $841,965 $1,981,437 $1,525,462
(882,788) 394,102 (507,566) (802,729) (447,354)
(3,401,549) 1,339,297 (1,867,568) (1,255,675) 3,380,936
- ------------- ------------ ------------- ------------- ------------
(1,777,107) 4,018,959 (1,533,169) (76,967) 4,459,044
- ------------- ------------ ------------- ------------- ------------
(1,488,587) (2,285,560) (178,416) (729,483) (1,525,462)
0 (279,904) 0 0 (75,813)
0 0 0 0 0
0 0 0 0 (147,662)
(709,993) 0 (646,950) (267,325) 0
0 0 0 0 0
0 0 0 0 0
- ------------- ------------ ------------- ------------- ------------
(2,198,580) (2,565,464) (825,366) (996,808) (1,748,937)
- ------------- ------------ ------------- ------------- ------------
13,687,226 8,345,965 28,310,131 50,816,381 24,210,202
1,375,268 2,452,026 177,341 1,709,717 1,731,510
(31,166,825) (2,672,035) (25,636,777) (38,967,995) (2,395,178)
25,571,124 0 25,973,435 25,942,576 0
709,934 0 645,691 267,247 0
(231) 0 (65,624) (14,313) 0
- ------------- ------------ ------------- ------------- ------------
10,176,496 8,125,956 29,404,197 39,753,613 23,546,534
- ------------- ------------ ------------- ------------- ------------
6,200,809 9,579,451 27,045,662 38,679,838 26,256,641
46,788,427 37,208,976 0 63,982,357 37,725,716
- ------------- ------------ ------------- ------------- ------------
$ 52,989,236 $46,788,427 $ 27,045,662 $102,662,195 $63,982,357
============= ============ ============= ============= ============
$54,057 $(235,823) $16,599 $973,633 $(10,996)
============= ============ ============= ============= ============
</TABLE>
Aetna Mutual Funds Annual Report
52
<PAGE>
<TABLE>
<CAPTION>
Aetna Series Fund, Inc. Growth and Income Fund Growth Fund
Ten-month Ten-month
period ended Year ended period ended
October 31, 1994 December 31, 1993 October 31, 1994
---------------- ----------------- ----------------
<S> <C> <C> <C>
From Operations:
Net investment income.................... $ 1,391,759 $753,283 $191,217
Net realized gain (loss) on investments.. (1,478,608) (671,266) (1,009)
Net unrealized gain (loss) on
investments.............................. 5,934,488 2,931,172 1,193,732
---------------- ----------------- ----------------
Increase (decrease) in net assets
resulting from operations................ 5,847,639 3,013,189 1,383,940
---------------- ----------------- ----------------
From Distribution to Shareholders: (Note 1)
Select Class:
Dividends to shareholders from net
investment income........................ (609,602) (753,283) 0
Dividends in excess of net investment
income................................... 0 0 0
Distributions to shareholders from
realized gain on investments............. 0 0 0
Return of capital distributions.......... 0 (35,277) 0
Adviser Class:
Dividends to shareholders from net
investment income........................ (178,540) 0 0
Dividends in excess of net investment
income................................... 0 0 0
Distributions to shareholders from
realized gain on investments............. 0 0 0
---------------- ----------------- ----------------
Decrease in net assets from distributions
to shareholders.......................... (788,142) (788,560) 0
---------------- ----------------- ----------------
From Fund Share Transactions:
(Note 8)
Select Class:
Proceeds from shares sold................ 283,178,288 28,504,057 25,821,070
Net asset value of shares issued upon
reinvestment of dividends and
distributions............................ 607,349 785,403 0
Cost of shares redeemed.................. (47,350,637) (2,860,348) (6,065)
Adviser Class:
Proceeds from shares sold................ 26,073,067 0 406,304
Net asset value of shares issued upon
reinvestment of dividends and
distributions............................ 178,486 0 0
Cost of shares redeemed.................. (20,772,927) 0 (252)
---------------- ----------------- ----------------
Increase in net assets from fund share
transactions............................. 241,913,626 26,429,112 26,221,057
---------------- ----------------- ----------------
Change in net assets..................... 246,973,123 28,653,741 27,604,997
Net Assets:
Beginning of period...................... 60,126,779 31,473,038 0
---------------- ----------------- ----------------
End of period............................ $307,099,902 $60,126,779 $27,604,997
================ ================= ================
End of period net assets includes
undistributed (distributions in excess
of) net investment income................ $ 603,617 $0 $ 207,053
================ ================= ================
</TABLE>
Statements of Changes in Net Assets
See Notes to Financial Statements.
53
<PAGE>
<TABLE>
<CAPTION>
Small Company Growth Fund International Growth Fund Asian Growth Fund
Ten-month Ten-month Ten-month
period ended period ended Year ended period ended
October 31, 1994 October 31, 1994 December 31, 1993 October 31, 1994
- ------------------------- ---------------- ----------------- -----------------
<S> <C> <C> <C> <C>
$35,562 $203,386 $156,376 $142,060
(964,005) 3,714,070 2,789,870 (329,231)
1,479,455 (2,277,817) 5,524,689 2,026,393
- ------------------------- ---------------- ----------------- -----------------
551,012 1,639,639 8,470,935 1,839,222
- ------------------------- ---------------- ----------------- -----------------
0 0 (156,376) 0
0 0 (1,174,798) 0
0 0 (80,365) 0
0 0 0 0
0 0 0 0
0 0 0 0
0 0 0 0
- ------------------------- ---------------- ----------------- -----------------
0 0 (1,411,539) 0
- ------------------------- ---------------- ----------------- -----------------
25,355,267 17,741,029 6,065,970 27,568,716
0 0 1,281,531 0
(22,139) (27,138,021) (1,200,499) (10,261)
199,540 26,042,111 0 303,864
0 0 0 0
(249) (5,489) 0 (1,205)
- ------------------------- ---------------- ----------------- -----------------
25,532,419 16,639,630 6,147,002 27,861,114
- ------------------------- ---------------- ----------------- -----------------
26,083,431 18,279,269 13,206,398 29,700,336
0 39,846,755 26,640,357 0
- ------------------------- ---------------- ----------------- -----------------
$26,083,431 $58,126,024 $39,846,755 $29,700,336
========================= ================ ================= =================
$36,675 $1,795,158 $0 $101,618
========================= ================ ================= =================
</TABLE>
Aetna Mutual Funds Annual Report
54
<PAGE>
1. Summary of Significant Accounting Policies
Aetna Series Fund, Inc. ("Company") is registered under the Investment Company
Act of 1940 as a diversified, open-end management investment company
incorporated under the laws of Maryland on June 17, 1991. The Articles of
Incorporation permit the Company to offer separate funds ("Funds") each of
which has its own investment objectives, policies and restrictions. Operations
of the Company commenced on December 23, 1991.
Shares of each Fund are available to all investors including employers and
employees who utilize the Funds as investment options under retirement plans.
Each Fund offers two classes of shares, the Select Class shares and the Adviser
Class shares. The Select Class of shares are offered principally to
institutions and are not subject to sales charges or service fees. The Adviser
Class of shares are offered primarily to the general public and are subject to
deferred sales charges payable upon redemption within four calendar years after
the year of purchase. The Adviser Class shares were made available to the
public on April 15, 1994. Additionally, the Adviser Class is subject to a
shareholder service fee and an annual Rule 12b-1 distribution plan expense.
The Company offers the following ten Funds:
~ Aetna Money Market Fund (Money Market Fund)* - a portfolio consisting of
high-quality money market instruments;
~ Aetna Government Fund (Government Fund)** - a portfolio of U.S. Government
securities;
~ Aetna Bond Fund (Bond Fund)* - a portfolio primarily of high-quality
corporate and U.S. Government securities;
~ Aetna Tax-Free Fund (Tax-Free Fund)** - a portfolio primarily of municipal
securities;
~ The Aetna Fund (The Aetna Fund)* - a flexible portfolio of stocks, bonds and
money market instruments;
~ Aetna Growth and Income Fund (Growth and Income Fund)* - a diversified
common stock portfolio;
~ Aetna Growth Fund (Growth Fund)** - a common stock portfolio of companies
believed to have potential for growth;
~ Aetna Small Company Growth Fund (Small Company Growth Fund)** - a common st
ock portfolio of companies with smaller market capitalizations;
~ Aetna International Growth Fund (International Growth Fund)* - a common stock
portfolio of companies traded outside North America; and
~ Aetna Asian Growth Fund (Asian Growth Fund)** - a common stock portfolio of
companies traded in Asia excluding Japan.
* Funds became available for sale to the public on December 23, 1991.
** Funds became available for sale to the public on January 2, 1994.
Aetna Series Fund, Inc.
Notes to Financial Statements
October 31, 1994
Aetna Mutual Funds Annual Report
55
<PAGE>
1. Summary of Significant Accounting Policies (Continued)
Aetna Life Insurance and Annuity Company ("ALIAC") serves as the Investment
Adviser and as principal underwriter to each Fund. Aeltus Investment
Management, Inc. ("Aeltus") is employed as a sub-adviser to the Tax-Free Fund,
the Growth Fund and the Small Company Growth Fund. Aeltus Investment Management
International (F.E.) Limited ("Aeltus Far East") is employed as a sub-adviser
to the Asian Growth Fund. Dunedin Fund Managers Ltd. ("Dunedin") is employed as
the sub-adviser to the International Growth Fund.
Effective October 31, 1994, the Company changed its fiscal year end from
December 31 to October 31.
The following is a summary of significant accounting policies consistently
followed by the Funds in the preparation of their financial statements. The
policies are in conformity with generally accepted accounting principles.
A. Valuation of Investments
In all Funds except the Money Market Fund, investments are stated at market
values based upon closing sales prices as reported on national securities
exchanges or, for over-the-counter securities, at the mean of the bid and asked
prices, except that short-term investments are amortized to maturity value
during the sixty days prior to maturity. Other securities are valued in good
faith using methods approved by the Board of Directors. Short-term investments
maturing in more than sixty days for which market quotations are readily
available are valued at current market value. Short-term investments maturing
in more than sixty days when purchased which are held on the sixtieth day prior
to maturity are valued at amortized cost (market value on the sixtieth day
adjusted for amortization of premium or accretion of discount) which when
combined with accrued interest approximates market. The Money Market Fund
states all investments at amortized cost which approximates market value.
Securities traded in foreign currency amounts are translated into United States
dollars as follows: market value of investments, assets and liabilities at the
daily rate of exchange; purchases and sales of investments, income, and
expenses at the rate of exchange prevailing on the respective dates of such
transactions.
B. Option Contracts
Purchases of call options are recorded as an investment, the value of which is
marked-to-market daily. When a purchased option expires, the Funds will realize
a loss equal to the premium paid. When the Funds enter into a closing sale
transaction, the Funds will realize a gain or loss depending on whether the
sales proceeds from the closing sale transaction are greater or less than the
cost of the option. When the
Aetna Mutual Funds Annual Report
56
<PAGE>
1. Summary of Significant Accounting Policies (Continued)
Funds exercise a call option, the cost of the security which the Funds purchase
upon exercise will be increased by the premium originally paid.
The Funds write covered call options. When the Funds write a covered call
option, an amount equal to the premium received by the Funds is recorded as a
liability, the value of which is marked-to-market daily. When a written option
expires, the Funds will realize a gain equal to the amount of the premium
received. When the Funds enter into a closing purchase transaction, the Funds
will realize a gain (or loss if the cost of the closing purchase transaction
exceeds the premium received when the option was written) without regard to any
unrealized gain or loss on the underlying security, and the liability related
to such option is eliminated. When a covered call option is exercised, the
Funds will realize a gain or loss from the sale of the underlying security and
the proceeds from such sale are increased by the premium originally received.
Unlike options on specific securities, all settlements of options on stock
indices are in cash and gains or losses depend on general movements in the
stocks included in the index rather than price movements in a particular stock.
There is no physical delivery of securities.
The risk associated with purchasing call options is limited to the premium
originally paid. The risk in writing a covered call option is that the Fund may
forego the opportunity for profit if the market price of the underlying
security increases and the option is exercised. There is also the risk the Fund
may not be able to enter into a closing transaction because of an illiquid
secondary market. In addition, the Fund could be exposed to risks if the
counterparties to the transaction are unable to meet the terms of the
contracts.
C. Futures and Forward Foreign Currency Exchange Contracts
A futures contract is an agreement between two parties to buy and sell a
specific amount of a commodity, security, financial instrument, or, in the case
of a stock index, cash at a set price on a future date. Upon entering into a
futures contract the Fund is required to deposit with a broker an amount
("initial margin") equal to a certain percentage of the purchase price
indicated in the futures contract. Subsequent payments ("variation margin") are
made or received by the Fund each day, as the value of the underlying
instrument or index fluctuates, and are recorded for book purposes as
unrealized gains or losses by the Fund.
From time to time, the Fund may enter into forward foreign currency exchange
contracts to hedge certain foreign currency assets. Contracts are recorded at
market value and marked to market daily. Realized gains and losses arising from
such
Aetna Mutual Funds Annual Report
57
<PAGE>
1. Summary of Significant Accounting Policies (Continued)
transactions are included in realized gain (loss) on foreign currency related
transactions. The Fund is subject to the credit risk that the other party will
not complete the obligations of the contract.
For federal tax purposes, any futures and forward foreign currency exchange
contracts which remain open at the end of the fiscal year are marked-to-market
and the resultant net gain or loss is included in federal taxable income.
D. Illiquid and Restricted Securities
Illiquid securities are securities that are not readily marketable. Disposing
of illiquid investments may involve time-consuming negotiation and legal
expenses, and it may be difficult or impossible for the Funds to sell them
promptly at an acceptable price. Restricted securities are subject to legal or
contractual restrictions on resale and may not be publicly sold without
registration under the Federal Securities Act of 1933. The Funds may invest up
to 15% (10% in the case of the Money Market Fund) of its total assets in
illiquid securities. Illiquid and restricted securities are valued using market
quotations when readily available. In the absence of market quotations, the
securities are valued based upon their fair value determined under procedures
approved by the Board of Directors. The Funds will not pay the costs of
disposition of restricted securities other than ordinary brokerage fees, if
any.
E. Federal Income Taxes
The Funds have qualified, and intend to qualify in the future, as a regulated
investment company under the Internal Revenue Code of 1986, as amended
("Internal Revenue Code"). Thus, the Funds are relieved of any federal income
tax liability by distributing all of their net taxable investment income and
net taxable capital gains, if any, to shareholders. The Funds intend to avoid
excise tax liability by making the distributions required under the Internal
Revenue Code.
F. Distributions and Dividends
The Funds distribute all net investment income and net capital gains, if any,
to shareholders. Distributions from net investment income are based on taxable
net income and are made as follows: Money Market Fund declares dividends daily
and pays them monthly; Government Fund, Bond Fund, and Tax-Free Fund declare
and pay dividends monthly; The Aetna Fund and Growth and Income Fund declare
and pay dividends semi-annually in June and December; and, Growth Fund, Small
Company Growth Fund, International Growth Fund, and Asian Growth Fund declare
and pay dividends annually in December. All Funds distribute net capital gains,
if any, annually.
Aetna Mutual Funds Annual Report
58
<PAGE>
1. Summary of Significant Accounting Policies (Continued)
The Board of Directors of the Funds declared the following dividends from net
investment income during the ten-month period ended October 31, 1994 (per
share):
Select Class Adviser Class
------------ -------------
Money Market Fund ....... $0.03 $0.03
Government Fund ......... 0.36 0.26
Bond Fund ............... 0.45 0.27
Tax-Free Fund ........... 0.33 0.23
The Aetna Fund .......... 0.12 0.11
Growth and Income Fund .. 0.08 0.08
On November 30, 1994, the Board of Directors declared and paid the following
dividends per share from net investment income to shareholders of record on
November 29, 1994.
Select Class Adviser Class
------------ -------------
Money Market Fund .. $0.0042 $0.0042
Government Fund .... 0.0450 0.0430
Bond Fund .......... 0.0450 0.0425
Tax-Free Fund ...... 0.0350 0.0280
Net investment income and net realized gains differ for financial statement and
tax purposes primarily because of the treatment of currency gains and losses as
ordinary income and the deferral of "wash sale" losses for tax purposes. The
character of distributions made during the year from net investment income or
net realized gains may also differ from its ultimate characterization for
federal income tax purposes. The effect on dividend distributions of permanent
book-to-tax differences, if any, are reflected in additional paid-in capital.
On the Statements of Assets and Liabilities, due to current permanent
book-to-tax differences, accumulated net realized gain (loss), and
undistributed net investment income have been increased (decreased) as follows:
Accumulated Undistributed Additional
Net Realized Net Investment Paid-in
Gain (Loss) Income Capital
------------- -------------- ----------
Government Fund ............ $27,934 $(27,934) $-
Bond Fund .................. 18,769 (19,866) 1,097
Growth Fund ................ (15,836) 15,836 -
Small Company Growth Fund .. (1,113) 1,113 -
International Growth Fund .. (1,591,772) 1,591,772 -
Asian Growth Fund .......... 40,442 (40,442) -
Aetna Mutual Funds Annual Report
59
<PAGE>
1. Summary of Significant Accounting Policies (Continued)
G. Other
The Funds record short-term investment transactions on a trade-date basis. All
other investment transactions are accounted for on the day after the trade
date. On the Funds' Statements of Assets and Liabilities, all investment
transactions have been adjusted to trade date. Interest income is recorded as
earned. Dividend income and stock splits as well as dividends and distributions
to the shareholders are recorded on the ex-dividend date. Realized gains and
losses from investment transactions are determined on an identified cost basis.
H. Deferred Organizational Costs
The Company paid organizational expenses in connection with the start-up and
initial registration of the Company. These organizational expenses have been
capitalized and allocated equally to the Money Market Fund, the Bond Fund, The
Aetna Fund, the Growth and Income Fund, and the International Growth Fund. The
organizational expenses are being amortized over 60 months on a straight-line
basis beginning with the commencement of operations. If any or all of the
shares representing initial capital of each Fund are redeemed by any holder
thereof prior to the end of the amortization period, the proceeds will be
reduced by the unamortized organizational expense balance in the same
proportion as the number of shares redeemed bears to the number of initial
shares outstanding immediately preceding the redemption.
2. Investment Advisory, Management, Shareholder Service and Distribution Fees
The Funds pay the Investment Adviser the following annual fees expressed as a
percentage of the average daily net assets of each Fund. As the Funds' net
assets exceed predetermined thresholds ($500 million for Money Market Fund and
The Aetna Fund, $250 million for Government Fund, Bond Fund, Tax-Free Fund,
Growth and Income Fund, Growth Fund, Small Company Growth Fund, International Gr
owth Fund, and Asian Growth Fund) lower advisory fees apply.
Fee
----
Money Market Fund.. .40%
Government Fund.... .50%
Bond Fund.......... .50%
Tax-Free Fund...... .50%
The Aetna Fund..... .80%
Fee
-----
Growth and Income Fund..... .70%
Growth Fund................ .70%
Small Company Growth Fund.. .85%
International Growth Fund.. .85%
Asian Growth Fund.......... 1.00%
The Adviser has entered into sub-advisory agreements with Aeltus, Aeltus Far
East, and Dunedin. The sub-advisers supervise the investment and reinvestment
of cash and securities and receive a fee from the investment adviser based on
the average
Aetna Mutual Funds Annual Report
60
<PAGE>
2. Investment Advisory, Management, Shareholder Service and Distribution Fees
(continued)
daily net assets of the Funds. As each Fund's net assets exceed predetermined
thresholds ($50 million for Tax-Free Fund, Growth Fund, Small Company Growth
Fund and Asian Growth Fund and $250 million for International Growth Fund)
lower fees apply.
Fund Sub-Adviser Fees
- ---------------------------- --------------- ----
Tax-Free Fund .............. Aeltus .30%
Growth Fund ................ Aeltus .45%
Small Company Growth Fund .. Aeltus .55%
Asian Growth Fund .......... Aeltus Far East .65%
International Growth Fund .. Dunedin .40%
The Company has entered into an administrative services agreement with ALIAC
under which ALIAC acts as administrator and provides certain administrative and
shareholder services necessary for Company operations and is responsible for
the supervision of other service providers. Each Fund pays ALIAC a monthly fee
for its services at an annual rate based on average daily net assets of 0.25%
on the first $250 million. As each Fund's net assets exceed $250 million, lower
fees apply.
The Funds have adopted a Shareholder Service Plan for the Adviser Class shares.
Under the Shareholder Service Plan, ALIAC is paid a service fee at an annual
rate of 0.25% (0.10% for the Money Market Fund) of the daily net assets of the
Adviser Class of each fund. This fee is used as compensation for expenses
incurred in servicing shareholder accounts. For the ten-month period ended
October 31, 1994, the Funds paid ALIAC $191,071 in service fees. Additionally,
the Funds have adopted a Distribution Plan pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The Distribution Plan provides for payments to
ALIAC at an annual rate 0.50% of the daily net assets of the Adviser Class
shares of each Fund, except for the Money Market Fund. Amounts paid by the
Funds under the Adviser Class Distribution Plan are used to pay expenses
incurred in promoting the sales of the Adviser Class shares. For the ten-month
period ended October 31, 1994, the Funds paid ALIAC $346,205 in Rule 12b-1
fees. Presently, the Funds class specific expenses are limited to Shareholder Se
rvice and Distribution Plan expenses incurred by the Adviser Class shares.
Aetna Mutual Funds Annual Report
61
<PAGE>
3. Other Investment Expenses and Reimbursement from Adviser
Other investment expenses for the ten-month period ended October 31, 1994
follow:
Money The
Market Government Bond Tax-Free Aetna
Fund Fund Fund Fund Fund
-------- ---------- -------- -------- --------
Organizational Expenses.. $9,983 $- $9,983 $- $9,983
Printing/Postage......... 8,556 5,694 8,556 5,694 8,556
Custody Fees............. 22,888 7,490 11,554 7,185 38,717
Transfer Agent Fees...... 157,816 22,099 36,626 22,118 60,863
Audit Fees............... 11,180 10,044 9,649 9,747 10,867
Directors' Fees.......... 7,083 7,083 7,083 7,083 7,083
Proxy.................... 11,225 - 7,125 - 8,538
State and Federal Fees... 39,681 18,323 33,422 18,323 40,782
Miscellaneous............ 5,574 5,574 5,574 5,574 5,574
-------- ---------- -------- -------- --------
Total.................... $273,986 $76,307 $129,572 $75,724 $190,963
======== ========== ======== ======== ========
Growth Small
and Company International Asian
Income Growth Growth Growth Growth
Fund Fund Fund Fund Fund
-------- ------- ------- ------------- --------
Organizational Expenses.. $9,983 $- $- $9,983 $-
Printing/Postage......... 8,556 5,694 5,694 8,556 5,694
Custody Fees............. 42,361 14,294 13,435 123,101 63,644
Transfer Agent Fees...... 44,570 22,104 22,218 32,111 22,891
Audit Fees............... 9,785 10,151 9,928 9,227 10,119
Directors' Fees.......... 7,083 7,083 7,083 7,083 7,083
Proxy.................... 7,613 - - 7,169 -
State and Federal Fees... 35,015 18,323 18,323 30,146 18,323
Miscellaneous............ 5,574 5,574 5,574 5,574 5,574
-------- ------- ------- ------------- --------
Total.................... $170,540 $83,223 $82,255 $232,950 $133,328
======== ======= ======= ============= ========
Total fund investment expenses include investment advisory fees, administrative
service fees and other expenses that a Fund incurs. The Investment Adviser may,
from time to time, make reimbursements to a Fund for some or all of its
operating expenses. Reimbursement arrangements, which may be terminated at any
time without notice, will increase a Fund's yield. For the ten-month period
ended October 31, 1994, the Investment Adviser reimbursed a portion of its fees
and expenses which is reflected as a reduction of expenses in the Statements of
Operations.
Aetna Mutual Funds Annual Report
62
<PAGE>
4. Purchases and Sales of Investment Securities
Purchases and sales of investment securities excluding short-term investments
for all Funds except the Money Market Fund, for the ten-month period ended
October 31, 1994:
Cost of Proceeds
Purchases from Sales
-------------- --------------
Money Market Fund .......... $3,069,652,206 $2,989,457,790
Government Fund ............ 30,239,903 7,331,513
Bond Fund .................. 32,917,730 24,333,222
Tax-Free Fund .............. 33,981,900 6,408,990
The Aetna Fund ............. 110,864,233 66,778,263
Growth and Income Fund ..... 295,250,529 58,873,474
Growth Fund ................ 49,588,790 24,532,825
Small Company Growth Fund .. 45,903,349 22,425,880
International Growth Fund .. 52,706,095 38,557,449
Asian Growth Fund .......... 39,659,318 14,220,567
5. Options
All Funds except the Money Market Fund may use options. For the ten-month
period ended October 31, 1994, the following reflects the covered call option
activity:
The Aetna Fund
---------------------------------
Number of Deferred
Option Premium Realized
Contracts Received Gain (Loss)
--------- ----------- -----------
Outstanding January 1 ... 1,814 $521,998 $-
Written ................. 1,790 627,606 -
Cancelled ............... (1,172) (418,982) 53,975
Exercised ............... (548) (151,854) -
Expired ................. (1,884) (578,768) 578,768
--------- ----------- -----------
Outstanding October 31 .. - $- $632,743
========= =========== ===========
Growth and Income Fund
----------------------------------
Number of Deferred
Option Premium Realized
Contracts Received Gain (Loss)
--------- ------------ -----------
Outstanding January 1 ... 624 $187,656 $-
Written ................. 2,417 764,141 -
Cancelled ............... (1,152) ( 380,144) 103,393
Exercised ............... (732) ( 233,997) -
Expired ................. (1,157) ( 337,656) 337,656
--------- ------------ -----------
Outstanding October 31 .. - $- $441,049
========= ============ ===========
Aetna Mutual Funds Annual Report
63
<PAGE>
5. Options (Continued)
Growth Fund
---------------------------------
Number of Deferred
Option Premium Realized
Contracts Received Gain (Loss)
--------- ----------- -----------
Outstanding January 1... - $- $-
Written................. 923 424,911 -
Cancelled............... (153) (75,451) (18,308)
Exercised............... (60) (14,070) -
Expired................. (115) (106,745) 106,745
--------- ----------- -----------
Outstanding October 31.. 595 $228,645 $ 88,437
========= =========== ===========
6. Capital Loss Carryforward
At October 31, 1994, for federal income tax purposes the Funds had the
following capital loss carryforwards:
Capital Loss Year of
Fund Carryforward Expiration
- ---------------------- ------------ ----------
Government Fund $270,893 2002
- ----------------------------------------------
Bond Fund 128,736 2001
835,379 2002
- ----------------------------------------------
Tax-Free Fund 507,565 2002
- ----------------------------------------------
Aetna Fund 434,615 2001
992,264 2002
- ----------------------------------------------
Growth and Income Fund 54,853 2000
621,144 2001
965,089 2002
- ----------------------------------------------
Small Company Fund 832,297 2002
- ----------------------------------------------
Asian Growth Fund 288,788 2002
The Board of Directors will not distribute any realized gains until the capital
loss carry forwards have been offset or expire.
7. Open Futures and Forward Foreign Currency Exchange Contracts
At October 31, 1994, the Growth and Income Fund had 38 S&P 500 open futures
contracts with a short position. The open futures contracts had a market value
of $8,976,500 and cost $9,030,480. The unrealized gain of $53,170 on these
contracts is reflected in the accompanying financial statements.
Aetna Mutual Funds Annual Report
64
<PAGE>
7. Open Futures and Forward Foreign Currency Exchange Contracts (Continued)
At October 31, 1994, the International Growth Fund had the following open
forward foreign currency exchange contracts that obligate the Fund to deliver
currencies at specified future dates. The unrealized loss of $225,231 on these
contracts is included in the accompanying financial statements. The terms of
the open contracts are as follows:
U.S. $ Value
Exchange Currency to be as of Currency to be
Date Delivered October 31, 1994 Received
- ---------- -------------- ---------------- --------------
2,485,040
12/07/94 . Deutsche Mark $ 1,653,056 $1,600,000
809,668,000
11/16/94 . Japanese Yen 8,372,175 8,200,000
---------------- --------------
$10,025,231 $9,800,000
================ ==============
Aetna Mutual Funds Annual Report
65
<PAGE>
8. Authorized Capital Shares and Capital Share Transactions
The Funds are authorized to issue a total of 4.0 billion shares. Of those 4.0
billion shares, 3.8 billion have been designated to the Funds as follows: All
of the Funds, except the Money Market Fund, have been allocated 100 million
shares each of Select Class shares and Adviser Class shares. The Money Market
Fund has been allocated one billion shares each of Select Class shares and
Adviser Class shares.
Select and Adviser Class share transactions for each Fund were as follows:
Money Market Fund
<TABLE>
<CAPTION>
Select
Adviser
For the For the
Ten-Month For the Ten-Month
Period Ended Year Ended Period Ended
October 31, 1994 December 31, 1993 October 31, 1994
---------------- ----------------- ----------------
<S> <C> <C> <C>
Shares sold....................... 184,288,133 125,536,601 49,918,444
Shares issued upon reinvestment .. 4,313,330 2,276,753 788,233
Shares redeemed .................. (134,729,463) (56,450,873) (3,356,170)
---------------- ----------------- ----------------
Net increase ..................... 53,872,000 71,362,481 47,350,507
================ ================= ================
<CAPTION>
Government Fund
Select
Adviser
For the For the
Ten-Month Ten-Month
Period Ended Period Ended
October 31, 1994 October 31, 1994
---------------- ----------------
Shares sold ...................... 2,647,126 17,344
Shares issued upon reinvestment .. 126,976 162
Shares redeemed .................. (95) (1,503)
---------------- ----------------
Net increase ..................... 2,774,007 16,003
================ ================
<CAPTION>
Bond Fund
Select
Adviser
For the For the
Ten-Month For the Ten-Month
Period Ended Year Ended Period Ended
October 31, 1994 December 31, 1993 October 31, 1994
---------------- ----------------- ----------------
Shares sold ...................... 1,375,291 808,633 2,577,890
Shares issued upon reinvestment .. 161,898 237,279 73,112
Shares redeemed .................. (3,169,473) (258,122) (24)
---------------- ----------------- ----------------
Net increase (decrease) .......... (1,632,284) 787,790 2,650,978
================ ================= ================
</TABLE>
Aetna Mutual Funds Annual Report
66
<PAGE>
8. Authorized Capital Shares and Capital Share Transactions (Continued)
Tax-Free Fund
<TABLE>
<CAPTION>
Select
Adviser
For the For the
Ten-Month Ten-Month
Period Ended Period Ended
October 31, 1994 October 31, 1994
---------------- ----------------
<S> <C> <C>
Shares sold ...................... 2,896,031 2,770,659
Shares issued upon reinvestment .. 19,126 87,705
Shares redeemed .................. (2,752,116) (7,297)
---------------- ----------------
Net increase ..................... 163,041 2,851,067
================ ================
<CAPTION>
The Aetna Fund
Select
Adviser
For the For the
Ten-Month For the Ten-Month
Period Ended Year Ended Period Ended
October 31, 1994 December 31, 1993 October 31, 1994
---------------- ----------------- ----------------
<S> <C> <C> <C>
Shares sold ...................... 4,761,580 2,272,022 2,469,921
Shares issued upon reinvestment .. 166,181 162,417 16,842
Shares redeemed .................. (3,684,549) (225,285) (1,366)
---------------- ----------------- ----------------
Net increase ..................... 1,243,212 2,209,154 2,485,397
================ ================= ================
<CAPTION>
Growth and Income Fund
Select
Adviser
For the For the
Ten-Month For the Ten-Month
Period Ended Year Ended Period Ended
October 31, 1994 December 31, 1993 October 31, 1994
---------------- ----------------- ----------------
<S> <C> <C> <C>
Shares sold ...................... 26,001,787 2,648,946 2,425,064
Shares issued upon reinvestment .. 57,454 72,293 16,760
Shares redeemed .................. (4,378,789) (264,193) (1,923,626)
---------------- ----------------- ----------------
Net increase ..................... 21,680,452 2,457,046 518,198
================ ================= ================
<CAPTION>
Growth Fund
Select
Adviser
For the For the
Ten-Month Ten-Month
Period Ended Period Ended
October 31, 1994 October 31, 1994
---------------- ----------------
<S> <C> <C>
Shares sold ...................... 2,522,145 38,832
Shares issued upon reinvestment .. 0 0
Shares redeemed .................. (566) (24)
---------------- ----------------
Net increase ..................... 2,521,579 38,808
================ ================
Aetna Mutual Funds Annual Report
67
</TABLE>
<PAGE>
8. Authorized Capital Shares and Capital Share Transactions (Continued)
Small Company Growth Fund
<TABLE>
<CAPTION>
Select
Adviser
For the Ten-Month For the Ten-Month
Period Ended Period Ended
October 31, 1994 October 31, 1994
----------------- -----------------
<S> <C> <C>
Shares sold ...................... 2,492,687 19,811
Shares issued upon reinvestment .. 0 0
Shares redeemed .................. (2,143) (24)
----------------- -----------------
Net increase ..................... 2,490,544 19,787
================= =================
<CAPTION>
International Growth Fund
Select
Adviser
For the Ten-Month For the Ten-Month
Period Ended For the Year Ended Period Ended
October 31, 1994 December 31, 1993 October 31, 1994
----------------- ------------------ -----------------
<S> <C> <C> <C>
Shares sold ...................... 1,569,806 555,141 2,315,445
Shares issued upon reinvestment .. 0 124,679 0
Shares redeemed .................. (2,413,248) (113,510) (485)
----------------- ------------------ -----------------
Net increase (decrease) .......... (843,442) 566,310 2,314,960
================= ================== =================
<CAPTION>
Asian Growth Fund
Select
Adviser
For the Ten-Month For the Ten-Month
Period Ended Period Ended
October 31, 1994 October 31, 1994
----------------- -----------------
<S> <C> <C>
Shares sold ...................... 3,099,129 33,362
Shares issued upon reinvestment .. 0 0
Shares redeemed .................. (1,103) (132)
----------------- -----------------
Net increase ..................... 3,098,026 33,230
================= =================
</TABLE>
Aetna Mutual Funds Annual Report
68
<PAGE>
<TABLE>
<CAPTION>
Money Market Fund
Select Class Adviser Class*
Ten-month
period ended Year ended Year ended
October 31, December 31, December 31, Period from
1994 1993 1992 April 15, 1994-October 31, 1994
------------ ------------ ------------ -------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.. $1.00 1.00 1.00 1.00
------------ ------------ ------------ -------------------------------
Income from
Investment Operations
Net investment income................. .03 .03 .04 .03
Net realized and unrealized gain
(loss) on investments................. .00 .00 .00 .00
------------ ------------ ------------ -------------------------------
Total................................. .03 .03 .04 .03
Less Distributions
Dividends from net investment
income................................ (.03) (.03) (.04) (.03)
Dividends in excess of net investment
income................................ .00 .00 .00 .00
Distributions from realized gain on
investments........................... .00 .00 .00 .00
------------ ------------ ------------ -------------------------------
Net asset value, end of period........ $1.00 1.00 1.00 1.00
============ ============ ============ ===============================
Total return.......................... 3.33% 3.29% 3.98% 2.41%
Net assets, end of period (000's)..... $161,756 107,844 36,522 47,350
Ratio of total investment expenses to
average net assets**.................. 0.21% 0.00% 0.00% 0.21%
Ratio of net investment income to
average net assets**.................. 4.05% 3.33% 3.93% 4.27%
Ratio of net investment expense before
reimbursement and waiver to average
net assets**.......................... 0.85% 0.95% 1.04% 0.92%
Ratio of net investment income before
reimbursement and waiver to average
net assets**.......................... 3.38% 2.38% 2.87% 3.67%
</TABLE>
* The Adviser class became available for sale on April 15, 1994.
** Annualized for periods less than one year.
Per share data calculated using average number of shares outstanding throughout
the period.
Financial Highlights
Selected data for a fund share outstanding throughout each period:
See Notes to Financial Statements.
69
<PAGE>
<TABLE>
<CAPTION>
Government Fund
Select Class Adviser Class*
Ten-month
period ended Period from
October 31, 1994 April 15, 1994-October 31, 1994
---------------- -------------------------------
<S> <C> <C>
Net asset value, beginning of period........................ $10.00 9.67
---------------- -------------------------------
Income from
Investment Operations
Net investment income....................................... .40 .24
Net realized and unrealized gain (loss) on investments...... (.63) (.24)
---------------- -------------------------------
Total....................................................... (.23) .00
Less Distributions
Dividends from net investment income........................ (.36) (.26)
Dividends in excess of net investment income................ .00 .00
Distributions from realized gain on investments............. .00 .00
---------------- -------------------------------
Net asset value, end of period.............................. $ 9.41 9.41
================ ===============================
Total return................................................ (2.37)% (0.06)%
Net assets, end of period (000's)........................... $26,110 151
Ratio of total investment expenses to average net assets**.. 0.41 % 1.28 %
Ratio of net investment income to average net assets**...... 5.29 % 4.68 %
Ratio of net investment expense before reimbursement and
waiver to average net assets**.............................. 1.16 % 2.11 %
Ratio of net investment income before reimbursement and
waiver to average net assets**.............................. 4.54 % 3.85 %
Portfolio turnover rate..................................... 43.63 % 43.63 %
</TABLE>
Aetna Mutual Funds Annual Report
70
<PAGE>
<TABLE>
<CAPTION>
Bond Fund
Select Class Adviser Class*
Ten-month
period ended Year ended Year ended Period from
October 31, December 31, December 31, April 15, 1994-October 31,
1994 1993 1992 1994
------------ ------------ ------------ --------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.. $10.37 9.99 10.00 9.92
------------ ------------ ------------ --------------------------
Income from
Investment Operations
Net investment income................. .52 .55 .53 .28
Net realized and unrealized gain
(loss) on investments................. (.86) .45 .16 (.35)
------------ ------------ ------------ --------------------------
Total................................. (.34) 1.00 .69 (.07)
Less Distributions
Dividends from net investment
income................................ (.45) (.55) (.53) (.27)
Dividends in excess of net investment
income................................ .00 (.07) (.17) .00
Distributions from realized gain on
investments........................... .00 .00 .00 .00
------------ ------------ ------------ --------------------------
Net asset value, end of period........ $ 9.58 10.37 9.99 9.58
============ ============ ============ ==========================
Total return.......................... (3.31)% 10.20% 7.23% (0.68)%
Net assets, end of period (000's)..... $27,584 46,788 37,209 25,405
Ratio of total investment expenses to
average net assets**.................. 0.76 % 0.47% 0.05% 1.49 %
Ratio of net investment income to
average net assets**.................. 6.29 % 5.34% 5.44% 5.36 %
Ratio of net investment expense before
reimbursement and waiver to average
net assets**.......................... 1.06 % 1.01% 1.10% 1.81 %
Ratio of net investment income before
reimbursement and waiver to average
net assets**.......................... 5.98 % 4.80% 4.39% 5.04 %
Portfolio turnover rate............... 51.80 % 50.01% 57.05% 51.80 %
</TABLE>
* The Adviser class became available for sale on April 15, 1994.
** Annualized for periods less than one year.
*** The .33 distribution in the Select Class is composed of .25 of tax exempt
and .08 taxable income per share. The .23 distribution in the Adviser Class is
composed of .21 of tax exempt and .02 of taxable income per share.
Per share data calculated using average number of shares outstanding throughout
the period.
Financial Highlights
Selected data for a fund share outstanding throughout each period:
See Notes to Financial Statements.
71
<PAGE>
<TABLE>
<CAPTION>
Tax-Free Fund
Select Class Adviser Class*
Ten-month
period ended Period from
October 31, 1994 April 15, 1994-October 31, 1994
---------------- -------------------------------
<S> <C> <C>
Net asset value, beginning of period........................ $10.00 9.32
---------------- -------------------------------
Income from
Investment Operations
Net investment income....................................... .38 .21
Net realized and unrealized gain (loss) on investments...... (1.07) (.33)
---------------- -------------------------------
Total....................................................... (.69) (.12)
Less Distributions
Dividends from net investment income***..................... (.33) (.23)
Dividends in excess of net investment income................ .00 .00
Distributions from realized gain on investments............. .00 .00
---------------- -------------------------------
Net asset value, end of period.............................. $ 8.98 8.97
================ ===============================
Total return................................................ (6.95)% (1.32)%
Net assets, end of period (000's)........................... $1,465 25,581
Ratio of total investment expenses to average net assets**.. 0.30 % 1.27 %
Ratio of net investment income to average net assets**...... 4.85 % 4.20 %
Ratio of net investment expense before reimbursement and
waiver to average net assets**.............................. 1.20 % 1.87 %
Ratio of net investment income before reimbursement and
waiver to average net assets**.............................. 3.94 % 3.60 %
Portfolio turnover rate..................................... 29.14 % 29.14 %
</TABLE>
Aetna Mutual Funds Annual Report
72
<PAGE>
<TABLE>
<CAPTION>
The Aetna Fund
Select Class Adviser Class*
Ten-month
period ended Year ended Year ended Period from
October 31, December 31, December 31, April 15, 1994-
1994 1993 1992 October 31, 1994
------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................. $10.82 10.18 10.00 10.54
------------ ------------ ------------ ----------------
Income from
Investment Operations
Net investment income.............. .23 .34 .43 .19
Net realized and unrealized gain
(loss) on investments.............. (.28) .64 .24 .00
------------ ------------ ------------ ----------------
Total.............................. (.05) .98 .67 .19
Less Distributions
Dividends from net investment
income............................. (.12) (.30) (.39) (.11)
Dividends in excess of net
investment income.................. .00 (.01) (.10) .00
Distributions from realized gain
on investments..................... .00 .00 .00 .00
Return of capital distribution..... .00 (.03) .00 .00
------------ ------------ ------------ ----------------
Net asset value, end of period..... $10.65 10.82 10.18 10.62
============ ============ ============ ================
Total return....................... (0.42)% 9.84% 6.64% 1.84%
Net assets, end of period (000's).. $76,267 63,982 37,726 26,396
Ratio of total investment expenses
to average net assets**............ 1.09 % 0.93% 0.07% 1.87%
Ratio of net investment income to
average net assets**............... 2.65 % 3.21% 4.31% 1.90%
Ratio of net investment expense
before reimbursement and
waiver to average net assets**..... 1.32 % 1.34% 1.47% 2.06%
Ratio of net investment income
before reimbursement and
waiver to average net assets**..... 2.42 % 2.79% 2.91% 1.67%
Portfolio turnover rate............ 86.10 % 19.95% 13.35% 86.10%
</TABLE>
* The Adviser class became available for sale on April 15, 1994.
** Annualized for periods less than one year.
Per share data calculated using average number of shares outstanding throughout
the period.
Financial Highlights
Selected data for a fund share outstanding throughout each period:
See Notes to Financial Statements.
73
<PAGE>
<TABLE>
<CAPTION>
Growth and Income Fund
Select Class Adviser Class*
Ten-month
period ended Year ended Year ended Period from
October 31, December 31, December 31, April 15, 1994-
1994 1993 1992 October 31, 1994
------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................. $11.03 10.51 10.00 10.75
------------ ------------ ------------ ----------------
Income from
Investment Operations
Net investment income.............. .12 .19 .26 .11
Net realized and unrealized gain
(loss) on investments.............. .04 .50 .51 .30
------------ ------------ ------------ ----------------
Total.............................. .16 .69 .77 .41
Less Distributions
Dividends from net investment
income............................. (.08) (.16) (.26) (.08)
Dividends in excess of net
investment income.................. .00 .00 .00 .00
Distributions from realized gain
on investments..................... .00 .00 .00 .00
Return of capital distribution..... .00 (.01) .00 .00
------------ ------------ ------------ ----------------
Net asset value, end of period..... $11.11 11.03 10.51 11.08
============ ============ ============ ================
Total return....................... 1.40% 6.58% 7.81% 3.71%
Net assets, end of period (000's).. $301,360 60,127 31,473 5,740
Ratio of total investment expenses
to average net assets**............ 0.92% 1.13% 0.33% 2.32%
Ratio of net investment income to
average net assets**............... 1.51% 1.77% 2.83% 1.74%
Ratio of net investment expense
before reimbursement and
waiver to average net assets**..... 1.03% 1.27% 1.72% 2.42%
Ratio of net investment income
before reimbursement and
waiver to average net assets**..... 1.39% 1.55% 1.44% 1.65%
Portfolio turnover rate............ 54.13% 23.60% 14.44% 54.13%
Aetna Mutual Funds Annual Report
74
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Growth Fund
Select Class Adviser Class*
Ten-month Period from
period ended April 15, 1994-
October 31, 1994 October 31, 1994
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period........................ $10.00 10.26
---------------- ----------------
Income from
Investment Operations
Net investment income (loss)................................ .09 (.02)
Net realized and unrealized gain (loss) on investments...... .69 .50
---------------- ----------------
Total....................................................... .78 .48
Less Distributions
Dividends from net investment income........................ .00 .00
Dividends in excess of net investment income................ .00 .00
Distributions from realized gain on investments............. .00 .00
---------------- ----------------
Net asset value, end of period.............................. $10.78 10.74
================ ================
Total return................................................ 7.70 % 4.58 %
Net assets, end of period (000's)........................... $27,188 417
Ratio of total investment expenses to average net assets**.. 0.92 % 1.72 %
Ratio of net investment income to average net assets**...... 1.10 % (0.25)%
Ratio of net investment expense before reimbursement and
waiver to average net assets**.............................. 1.42 % 2.17 %
Ratio of net investment income before reimbursement and
waiver to average net assets**.............................. 0.60 % (0.71)%
Portfolio turnover rate..................................... 120.32 % 120.32 %
</TABLE>
* The Adviser class became available for sale on April 15, 1994.
** Annualized for periods less than one year.
Per share data calculated using average number of shares outstanding throughout
the period.
Financial Highlights
Selected data for a fund share outstanding throughout each period:
See Notes to Financial Statements.
75
<PAGE>
<TABLE>
<CAPTION>
Small Company Growth Fund
Select Class Adviser Class*
Ten-month Period from
period ended April 15, 1994-
October 31, 1994 October 31, 1994
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period.................... $10.00 10.24
---------------- ----------------
Income from
Investment Operations
Net investment income (loss)............................ .02 (.04)
Net realized and unrealized gain (loss) on investments.. .37 .15
---------------- ----------------
Total................................................... .39 .11
Less Distributions
Dividends from net investment income.................... .00 .00
Dividends in excess of net investment income............ .00 .00
Distributions from realized gain on investments......... .00 .00
---------------- ----------------
Net asset value, end of period.......................... $10.39 10.35
================ ================
Total return............................................ 3.90 % 0.98 %
Net assets, end of period (000's)....................... $25,879 205
Ratio of total investment expenses to average net
assets**................................................ 1.15 % 1.78 %
Ratio of net investment income to average net assets**.. 0.21 % (0.72)%
Ratio of net investment expense before reimbursement
and waiver to average net assets**...................... 1.58 % 2.14 %
Ratio of net investment income before reimbursement and
waiver to average net assets**.......................... (0.22)% (1.07)%
Portfolio turnover rate................................. 116.28 % 116.28 %
</TABLE>
Aetna Mutual Funds Annual Report
76
<PAGE>
<TABLE>
<CAPTION>
International Growth Fund
Select Class Adviser Class*
Ten-month
period ended Year ended Year ended Period from
October 31, December 31, December 31, April 15, 1994-
1994 1993 1992 October 31, 1994
------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period............................. $11.17 8.88 10.00 11.24
------------ ------------ ------------ ----------------
Income from
Investment Operations
Net investment income.............. .06 .05 .06 .01
Net realized and unrealized gain
(loss) on investments.............. .33 2.65 (1.15) .26
------------ ------------ ------------ ----------------
Total.............................. .39 2.70 (1.09) .27
Less Distributions
Dividends from net investment
income............................. .00 (.05) (.03) .00
Dividends in excess of net
investment income.................. .00 (.34) .00 .00
Distributions from realized gain
on investments..................... .00 (.02) .00 .00
------------ ------------ ------------ ----------------
Net asset value, end of period..... $11.56 11.17 8.88 11.51
============ ============ ============ ================
Total return....................... 3.49% 30.37 % (10.84)% 2.40%
Net assets, end of period (000's).. $31,479 39,847 26,640 26,647
Ratio of total investment expenses
to average net assets**............ 1.66% 1.48 % 0.50 % 2.27%
Ratio of net investment income to
average net assets**............... 0.71% 0.50 % 1.36 % 0.17%
Ratio of net investment expense
before reimbursement and
waiver to average net assets**..... 1.80% 1.77 % 2.98 % 2.41%
Ratio of net investment income
before reimbursement and
waiver to average net assets**..... 0.57% 0.20 % (1.12) % 0.02%
Portfolio turnover rate............ 81.67% 110.38 % 81.74 % 81.67%
</TABLE>
* The Adviser class became available for sale on April 15, 1994.
** Annualized for periods less than one year.
Per share data calculated using average number of shares outstanding throughout
the period.
Financial Highlights
Selected data for a fund share outstanding throughout each period:
See Notes to Financial Statements.
77
<PAGE>
<TABLE>
<CAPTION>
Asian Growth Fund
Select Class Adviser Class*
Ten-month Period from
period ended April 15 1994-
October 31, 1994 October 31, 1994
---------------- ----------------
<S> <C> <C>
Net asset value, beginning of period........................ $10.00 8.56
---------------- ----------------
Income from
Investment Operations
Net investment income (loss)................................ .05 (.01)
Net realized and unrealized gain (loss) on investments...... (.56) .91
---------------- ----------------
Total....................................................... (.51) .90
Less Distributions
Dividends from net investment income........................ .00 .00
Dividends in excess of net investment income................ .00 .00
Distributions from realized gain on investments............. .00 .00
---------------- ----------------
Net asset value, end of period.............................. $9.49 9.46
================ ================
Total return................................................ (5.10)% 10.51 %
Net assets, end of period (000's)........................... $29,386 314
Ratio of total investment expenses to average net assets**.. 1.25 % 1.42 %
Ratio of net investment income to average net assets**...... 0.71 % (0.24)%
Ratio of net investment expense before reimbursement and
waiver to average net assets**.............................. 1.81 % 1.73 %
Ratio of net investment income before reimbursement and
waiver to average net assets**.............................. 0.15 % (0.55)%
Portfolio turnover rate..................................... 65.50 % 65.50 %
Aetna Mutual Funds Annual Report
78
</TABLE>
<PAGE>
Principal Market
Amount Value
---------- ------------
Government and Agency
Obligations (11.8%)
Federal Home Loan
Bank System,
4.75%, 11/25/94 $1,500,000 $ 1,501,016
Federal National
Mortgage
Association, 4.75%,
11/29/94 6,000,000 5,977,833
Federal National
Mortgage
Association, MTN,
4.84%, 2/18/97 4,000,000 4,007,644
Student Loan
Marketing
Association, FRN,
5.20%, 1/21/97 5,000,000 5,005,747
U.S. Treasury Bill,
4.915%, 2/09/95 3,000,000 2,959,042
U.S. Treasury Note,
3.875%, 4/30/95 5,000,000 4,965,738
------------
Total Government and Agency
Obligations (cost $24,417,020) $ 24,417,020
------------
Corporate and Foreign
Obligations (87.9%)
Foreign & Supranational
Obligations (15.0%)
Australian Wheat
Board, Comm.
Paper, 5.53%,
7/24/95 3,000,000 2,996,946
Government
Development Bank
of Puerto Rico,
Comm. Paper,
5.05%, 11/01/94 6,500,000 6,500,000
See Notes to Portfolio of Investments.
Principal Market
Amount Value
---------- ------------
Nordbanken N.A.,
Inc., Comm. Paper,
4.80%, 12/05/94 $4,000,000 $ 3,981,867
Nordbanken N.A.,
Inc., Comm. Paper,
5.12%, 2/07/95 1,200,000 1,183,275
Nordbanken N.A.,
Inc., Comm. Paper,
5.24%, 3/14/95 500,000 490,321
Province Of British
Columbia, Comm.
Paper, 4.69%,
12/05/94 4,000,000 3,982,282
Skandinaviska
Enskilda Banken
Funding, Comm.
Paper, 3.46%,
12/13/94 7,000,000 7,000,000
Svenska
Handelsbanken,
Inc., Comm. Paper,
4.00%, 5/19/95 5,000,000 5,000,000
------------
Total Foreign & Supranational
Obligations $ 31,134,691
------------
Corporate Obligations (72.9%)
Aerospace & Aircraft (0.7%)
Lockheed
Corporation,
Comm. Paper,
4.013%, 5/11/95 1,500,000 1,502,048
------------
Asset-Backed Securities (10.1%)
Carco Auto Loan
Trust 1993-2, Corp.
Note, 3.225%,
11/15/98 4,500,000 4,500,000
Portfolio of Investments
October 31, 1994
Money Market Fund
Aetna Mutual Funds Annual Report
79
<PAGE>
Principal Market
Amount Value
---------- ------------
Case Equipment Loan
Trust, Corp. Note,
3.58%, 2/15/95 $1,191,005 $ 1,190,528
Caterpillar Financial
Trust 1993-2, Class
A-1, 4.688%,
6/25/95 2,218,231 2,218,110
Money Market Credit
Card Trust 1989-1,
Corp. Note, 3.26%,
6/10/96 727,273 727,273
Money Market Credit
Card Trust 1989-1,
Corp. Note, 3.34%,
6/10/96 1,089,367 1,089,367
Money Market Credit
Card Trust 1989-1,
Corp. Note, 3.50%,
6/10/96 2,181,818 2,181,818
Olympic Automobile
Receivables, Corp.
Note, 5.56%,
9/15/95 9,089,482 9,089,482
------------
20,996,578
------------
Autos & Auto Equipment (1.0%)
General Motors
Corp., Corp. MTN,
8.90%, 2/07/95 2,000,000 2,016,919
------------
Banks (2.5%)
First Fidelity Bank,
N.A., Corp. Note,
9.75%, 5/25/95 5,000,000 5,101,883
------------
Computer and Office
Equipment (2.9%)
Xerox Mexicana S.A.
de C.V., Comm.
Paper, 5.04%,
11/08/94 2,000,000 1,998,040
Principal Market
Amount Value
---------- ------------
Xerox Mexicana S.A.
de C.V., Comm.
Paper, 5.15%,
11/08/94 $4,000,000 $ 3,995,994
------------
5,994,034
------------
Diversified (1.3%)
Dover Corp., Comm.
Paper, 4.87%,
11/14/94 (a) 1,000,000 998,241
Dover Corp., Comm.
Paper, 4.87%,
12/29/94 (a) 1,000,000 992,154
Enron Corporation,
Comm. Paper,
5.05%, 11/02/94 585,000 584,918
------------
2,575,313
------------
Electric Utilities (2.9%)
Central & South West
Corporation,
Comm. Paper,
5.00%, 12/05/94 3,000,000 2,985,833
Pennsylvania Power
and Light Co.,
Comm. Paper,
4.80%, 11/02/94 3,000,000 2,999,600
------------
5,985,433
------------
Equipment Leasing (3.9%)
International Lease
Finance
Corporation,
Comm. Paper,
4.82%, 11/15/94 4,000,000 3,992,502
USL Capital
Corporation,
Comm. Paper,
5.10%, 12/20/94 4,000,000 3,972,233
------------
7,964,735
------------
Money Market Fund
Aetna Mutual Funds Annual Report
80
<PAGE>
Principal Market
Amount Value
---------- ------------
Finance (45.4%)
American Express
Credit Corp.,
Comm. Paper,
4.15%, 12/05/94 $1,000,000 $ 999,270
American Honda
Finance
Corporation, Corp.
Note, 3.865%,
3/10/95 (a) 3,100,000 3,099,519
AVCO Financial
Services, Inc.,
Corp. MTN,
3.62%, 6/02/95 4,000,000 4,000,000
Beneficial
Corporation, Corp.
MTN, 4.20%,
6/09/95 5,000,000 5,000,000
Bridgestone Firestone
Master Trust,
Comm. Paper,
4.90%, 11/17/94 (a) 4,000,000 4,000,000
Bridgestone Firestone
Master Trust,
Comm. Paper,
4.92%, 11/14/94 (a) 3,000,000 3,000,000
Budget Funding
Corporation, Corp.
Note, 5.09%,
12/27/94 2,500,000 2,480,206
Budget Funding
Corporation, Corp.
Note, 5.09%,
12/28/94 2,500,000 2,479,852
Caterpillar Financial
Services, Comm.
Paper, 5.08%,
11/16/94 1,500,000 1,496,825
See Notes to Portfolio of Investments.
Principal Market
Amount Value
---------- ------------
CIESCO, L.P.,
Comm. Paper,
4.85%, 11/01/94 $6,696,000 $ 6,696,000
Corporate Asset
Funding, Comm.
Paper, 4.84%,
11/23/94 4,000,000 3,988,169
Countrywide Funding
Corporation,
Comm. Paper,
4.43%, 2/17/95 5,000,000 5,000,000
Countrywide Funding
Corporation, Corp.
MTN, 4.85%,
11/09/94 4,500,000 4,495,150
CSW Credit Inc.,
Comm. Paper,
5.15%, 11/30/94 3,300,000 3,286,310
Dean Witter,
Discover & Co.,
Comm. Paper,
4.81%, 11/07/94 3,250,000 3,247,395
Fleet Mortgage
Group, Inc.,
Comm. Paper,
4.87%, 11/14/94 7,000,000 6,987,690
General Motors
Accept.
Corporation, Corp.
MTN, 9.05%,
12/12/94 2,000,000 2,008,411
General Motors
Accept.
Corporation, Corp.
MTN, 9.45%,
5/18/95 2,000,000 2,040,119
Greyhound Financial
Corp., Comm.
Paper, 4.925%,
11/14/94 2,200,000 2,196,087
Portfolio of Investments
October 31, 1994
Money Market Fund
Aetna Mutual Funds Annual Report
81
<PAGE>
Principal Market
Amount Value
---------- ------------
Greyhound Financial
Corp., Comm.
Paper, 5.05%,
11/28/94 $1,500,000 $ 1,494,319
Household Finance
Corporation,
Comm. Paper,
5.15%, 11/28/94 3,300,000 3,287,250
Household Finance
Corporation, Corp.
MTN, 3.13%,
11/10/94 1,500,000 1,500,000
ITT Financial
Corporation, Corp.
Note, 3.158%,
11/17/94 3,500,000 3,499,849
ITT Financial
Corporation, Corp.
Note, 5.21%,
12/12/94 3,000,000 2,982,199
Paccar Financial
Corporation, Corp.
MTN, 6.13%,
12/15/94 1,500,000 1,504,171
Prudential Funding
Corp., Comm.
Paper, 3.44%,
2/24/95 5,000,000 4,998,923
Sears Roebuck
Acceptance Corp.,
Corp. MTN,
9.03%, 3/21/95 1,000,000 1,013,147
Transamerica
Financial Corp.,
Comm. Paper,
4.65%, 11/22/94 3,000,000 2,991,863
See Notes to Financial Statements.
Principal Market
Amount Value
---------- ------------
Whirlpool Financial
Corporation,
Comm. Paper,
5.50%, 1/17/95 $1,500,000 $1,482,354
Whirlpool Financial
Corporation,
Comm. Paper,
5.52%, 2/13/95 3,000,000 2,952,160
------------
94,207,238
------------
Health Services (0.8%)
Columbia/HCA
Healthcare Corp.,
FRN, 4.65%,
7/28/97 1,750,000 1,749,153
------------
Retail (1.4%)
Dayton Hudson
Corporation,
Comm. Paper,
4.93%, 11/21/94 3,000,000 2,991,783
------------
Total Corporate Obligations $151,085,117
------------
Total Corporate and Foreign
Obligations
(cost $182,219,808) $182,219,808
------------
Total Investments
(cost $206,636,828) (b) $206,636,828
Notes to Portfolio of Investments
(a) Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(b) The cost of investments for income tax purposes is identical to book. There
were no unrealized gains and losses at October 31, 1994.
Category percentages are based on net assets.
Money Market Fund
Aetna Mutual Funds Annual Report
82
<PAGE>
Principal Market
Amount Value
---------- -----------
U.S. Government and Agency
Obligations (75.6%)
Agency Mortgage-Backed
Securities (14.7%)
Federal National
Mortgage
Association, 7.00%,
6/01/23 $ 987,340 $ 899,715
Federal National
Mortgage
Association, 7.00%,
8/01/23 1,008,212 918,733
Government National
Mortgage
Association, 9.00%,
7/15/16 610,159 621,409
Government National
Mortgage
Association, 9.00%,
5/15/16 559,558 569,875
Government National
Mortgage
Association, 8.50%,
10/15/07 827,736 844,036
-----------
3,853,768
-----------
U.S. Agency Obligations (10.0%)
Private Export
Funding, 5.48%,
9/15/03 900,000 821,853
Small Business
Administration,
8.25%, 11/01/11 909,107 895,915
Small Business
Administration
92-20K, 7.55%,
11/01/12 959,233 909,870
-----------
2,627,638
-----------
See Notes to Portfolio of Investments.
Principal Market
Amount Value
----------- -----------
U.S. Government Obligations (50.9%)
U.S. Treasury Bond,
10.375%, 11/15/12 $ 2,000,000 $ 2,370,000
U.S. Treasury Note,
5.125%, 4/30/98 5,000,000 4,676,560
U.S. Treasury Note,
5.125%, 6/30/98 2,500,000 2,328,905
U.S. Treasury Note,
6.50%, 4/30/99 2,000,000 1,930,624
U.S. Treasury Strips,
Zero Coupon,
5/15/03 4,000,000 2,062,544
-----------
13,368,633
-----------
Total U.S. Government and Agency
Obligations
(cost $20,935,397) $19,850,039
-----------
Foreign & Supranational
Obligations (4.1%)
International Bank for
Reconstruction and
Development,
9.25%, 7/15/07 1,000,000 1,077,940
-----------
Total Foreign & Supranational
Obligations
(cost $1,133,383) $1,077,940
-----------
Short-Term Investments (19.3%)
American Express
Credit Corp.,
4.72%, 11/02/94 1,279,000 1,278,832
CIESCO, L.P.,
4.85%, 11/01/94 1,200,000 1,200,000
General Electric Co.
(U.S.), 4.72%,
11/01/94 465,000 465,000
Portfolio of Investments
October 31, 1994
Government Fund
Aetna Mutual Funds Annual Report
83
<PAGE>
Principal Market
Amount Value
---------- -----------
Koch Industries
Incorporated, 4.84%,
11/01/94 (a) $ 930,000 $930,000
Norwest Financial,
Inc., 4.70%,
11/02/94 1,200,000 1,199,843
-----------
Total Short-Term Investments
(cost $5,073,675) $5,073,675
-----------
Total Investments
(cost $27,142,455) (b) $26,001,654
See Notes to Financial Statements.
Notes to Portfolio of Investments
(a) Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(b) The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at October 31, 1994 are as
follows:
Unrealized gains..... $0
Unrealized losses.... (1,140,801)
-------------
Net unrealized loss.. $(1,140,801)
=============
Category percentages are based on net assets.
Government Fund
Aetna Mutual Funds Annual Report
84
<PAGE>
Principal Market
Amount Value
----------- -----------
Long-Term Bonds and Notes (91.6%)
U.S. Government and Agency
Obligations (30.8%)
Agency Mortgage-Backed
Securities (8.0%)
Federal Home Loan
Mortgage Corp.,
5.625%, 12/01/22 $ 995,515 $ 1,004,848
Federal National
Mortgage
Association, 7.00%,
12/01/23 1,014,521 924,482
Federal National
Mortgage
Association, 90 34 C
PO, CMO, Zero
Coupon, 6/25/19 642,099 492,008
Federal National
Mortgage
Association, 92
114A PO, CMO,
Zero Coupon,
6/25/22 1,077,407 809,402
Government National
Mortgage
Association, 10.00%,
11/15/18 176,631 189,326
Government National
Mortgage
Association, 10.00%,
4/15/19 122,101 130,877
Government National
Mortgage
Association, 10.00%,
7/15/19 175,784 188,418
Government National
Mortgage
Association, 10.00%,
7/15/19 34,348 36,816
See Notes to Portfolio of Investments.
Principal Market
Amount Value
---------- -----------
Government National
Mortgage
Association, 9.50%,
7/15/18 $ 434,760 $ 454,732
-----------
4,230,909
-----------
U.S. Agency Obligations (4.8%)
Private Export
Funding, 5.48%,
9/15/03 1,800,000 1,643,706
Small Business
Administration
92-20K, 7.55%,
11/01/12 959,233 909,870
-----------
2,553,576
-----------
U.S. Government
Obligations (18.0%)
U.S. Treasury Bond,
10.375%, 11/15/12 2,000,000 2,370,000
U.S. Treasury Note,
5.125%, 2/28/98 2,000,000 1,878,124
U.S. Treasury Note,
6.75%, 5/31/97 4,000,000 3,975,000
U.S. Treasury Strips,
Zero Coupon,
2/15/12 2,000,000 487,836
U.S. Treasury Strips,
Zero Coupon,
8/15/10 3,000,000 828,318
-----------
9,539,278
-----------
Total U.S. Government and
Agency Obligations $16,323,763
-----------
Domestic Corporate & Convertible
Bonds and Notes (23.3%)
Asset-Backed Securities (3.8%)
Advanta Credit Card
1993-2, 5.105%,
8/31/00 2,000,000 1,993,750
-----------
Portfolio of Investments
October 31, 1994
Bond Fund
Aetna Mutual Funds Annual Report
85
<PAGE>
Principal Market
Amount Value
---------- -----------
Finance Companies (11.5%)
American Express
Credit Corp., 8.50%,
6/15/99 $1,000,000 $ 1,020,347
Associates Corp.,
8.55%, 7/15/09 1,000,000 1,045,060
Commercial Credit
Corp., 8.70%,
6/15/09 1,000,000 1,048,430
General Electric
Capital Corporation,
6.65%, 4/14/08 1,000,000 966,714
ITT Financial
Corporation,
8.875%, 6/15/03 1,000,000 1,038,661
Textron Financial
Corp. FRC-MTN,
5.26%, 11/24/95 (a) 1,000,000 1,000,000
-----------
6,119,212
-----------
Other Corporate Bonds (7.9%)
Georgia Pacific Corp.,
9.50%, 12/01/11 1,000,000 1,035,218
Healthtrust Inc.,
10.75%, 5/01/02 1,000,000 1,086,250
Tele-Communications,
Inc., 9.25%, 4/15/02 1,000,000 1,016,724
TRW Incorporated,
9.35%, 6/04/20 1,000,000 1,073,690
-----------
4,211,882
-----------
Total Domestic Corporate &
Convertible Bonds and Notes $12,324,844
-----------
Foreign & Supranational
Obligations (28.2%)
Abbey National FRN,
5.335%, 4/27/95 (a) 2,000,000 1,994,420
Principal Market
Amount Value
---------- -----------
Bank of China, 6.75%,
3/15/99 $1,000,000 $ 942,110
CEMEX S.A., 10.00%,
11/05/99 1,000,000 1,005,000
Empresa Dist Sur
FRN, 8.763%,
5/17/96 1,500,000 1,507,500
European Investment
Bank, 13.00%,
8/31/96 1,182,000 1,270,366
Interamerican
Development Bank,
12.25%, 12/15/08 1,200,000 1,578,276
International Bank for
Reconstruction and
Development,
9.25%, 7/15/07 2,000,000 2,162,475
KFW International
Finance, 8.85%,
6/15/99 1,500,000 1,562,103
Korean Development
Bank, 8.60%,
3/25/02 1,000,000 993,670
Republic of Argentina,
10.95%, 11/01/99 1,000,000 987,500
Swire Pacific Ltd.,
8.50%, 9/29/04 (a) 1,000,000 978,125
-----------
14,981,545
-----------
Non-Agency Mortgage-Backed Securities (9.3%)
Chase Mortgage
1992-F, 8.25%,
5/25/08 1,059,000 1,051,159
Marine Midland
1992-1 AM, 8.00%,
4/25/23 977,004 972,119
Bond Fund
Aetna Mutual Funds Annual Report
86
<PAGE>
Principal Market
Amount Value
---------- -----------
Prudential Home
Mortgage 1992 13
M1, 7.50%, 5/25/07 $ 720,021 $ 666,020
Prudential Home
Mortgage 92-39 M,
7.00%, 12/25/07 925,115 844,482
Residential Funding
Corp. 1992 S2A7,
8.00%, 5/25/20 400,922 401,451
Resolution Trust Corp.
1991 17B6, 8.20%,
9/25/21 1,000,000 995,313
-----------
4,930,544
-----------
Total Foreign & Supranational
Obligations and Non-Agency
Mortgage-Backed Securities $19,912,089
-----------
Total Long-Term Bonds and
Notes (cost $50,181,905) $48,560,696
-----------
Number
of Market
Shares Value
---------- -----------
Preferred Stocks (2.2%)
Banking (1.1%)
Citicorp PERCS 30,000 588,750
-----------
Retail (1.1%)
Sears Roebuck and Co.
PERCS 10,000 566,250
-----------
Total Preferred Stocks
(cost $1,143,138) $1,155,000
-----------
See Notes to Financial Statements.
Principal Market
Amount Value
---------- -----------
Short-Term Investments (2.1%)
CIESCO, L.P., Comm.
Paper, 4.85%,
11/01/94 $1,122,000 $1,122,000
-----------
Total Short-Term Investments
(cost $1,122,000) $1,122,000
-----------
Total Investments
(cost $52,447,043) (b) $50,837,696
Notes to Portfolio of Investments
(a) Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(b) The cost of investments for income tax purposes amounted to $52,475,683.
Unrealized gains and losses, based on identified tax cost at October 31,
1994 are as follows:
Unrealized gains..... $124,903
Unrealized losses.... (1,762,890)
-------------
Net unrealized loss.. $(1,637,987)
=============
Category percentages are based on net assets.
Portfolio of Investments
October 31, 1994
Bond Fund
Aetna Mutual Funds Annual Report
87
<PAGE>
Principal Market
Amount Value
---------- -----------
Long-Term Bonds and Notes (93.0%)
Airport (3.7%)
City and County of
Denver, Colorado,
Airport System
Revenue Bonds,
7.00%, 11/15/99 $1,000,000 $ 990,000
-----------
Electric Revenue (10.0%)
Seattle, Washington
Light and Power
System, Light and
Power Revenue
Refunding Bonds,
4.90%, 5/01/03 1,000,000 916,250
Southern Minnesota
Municipal Power
Agency, Power
Supply System
Revenue Bonds,
5.50%, 1/01/03 1,000,000 973,750
Washington Public
Power Supply
System, Nuclear
Project No. 2
Revenue Refunding
Bonds, 5.375%,
7/01/11 1,000,000 846,250
-----------
2,736,250
-----------
General Obligation (17.4%)
Cedar Rapids, Iowa,
General Obligation
Bonds, 5.125%,
6/01/11 1,000,000 855,000
Chesapeake, Virginia,
General Obligation
Bonds, 5.70%,
5/01/07 1,000,000 963,750
See Notes to Portfolio of Investments.
Principal Market
Amount Value
---------- -----------
City and County of
Honolulu, Hawaii,
General Obligation
Bonds, 5.50%,
4/01/06 $1,000,000 $ 951,250
Commonwealth of
Puerto Rico, General
Obligation Bonds,
6.30%, 7/01/09 1,000,000 975,000
State of Delaware,
General Obligation
Refunding Bonds,
5.20%, 7/01/02 1,000,000 972,500
-----------
4,717,500
-----------
Housing (3.3%)
Virginia Housing
Development
Authority, Mortgage
Revenue Bonds,
5.70%, 1/01/11 1,000,000 890,000
-----------
Insured (10.0%)
Atlanta, Georgia,
Airport Facilities
Revenue Refunding
Bonds, (Ambac-Insured), 5.30%,
1/01/03 1,000,000 971,250
Florida Municipal
Power Agency, All
Requirements Power
Supply Project
Revenue Bonds
(Ambac-Insured),
5.10%, 10/01/14 1,000,000 813,750
Portfolio of Investments
October 31, 1994
Tax-Free Fund
Aetna Mutual Funds Annual Report
88
<PAGE>
Principal Market
Amount Value
---------- -----------
Kentucky Turnpike
Authority, Economic
Development Road
Revenue Refunding
Bonds (Ambac-Insured), 5.50%,
7/01/09 $1,000,000 $ 913,750
-----------
2,698,750
-----------
Lease (7.2%)
Indiana Transportation
Finance Authority,
Airport Facilities
Lease Revenue
Bonds, 6.50%,
11/01/07 1,000,000 987,500
State Public Works
Board of the State of
California, Lease
Revenue Bonds,
(The Regents of the
University of
California), 6.125%,
10/01/07 1,000,000 961,250
-----------
1,948,750
-----------
Pollution Control (6.6%)
Gulf Coast Waste
Disposal Authority,
Texas, Solid Waste
Disposal Revenue
Refunding Bonds,
(The Quaker Oats
Project), 5.70%,
5/01/06 1,000,000 933,750
See Notes to Portfolio of Investments.
Principal Market
Amount Value
---------- -----------
Illinois Development
Finance Authority,
Pollution Control
Revenue Refunding
Bonds,
(Commonwealth
Edison Project),
5.85%, 1/15/14 $1,000,000 $ 857,500
-----------
1,791,250
-----------
Prerefunded (11.8%)
San Antonio, Texas,
General Obligation
Limited Tax Bonds
(Prerefunded 8/01/97
@ 100), 7.875%,
8/01/10 1,000,000 1,072,500
State of Wisconsin,
General Obligation
Bonds (Prerefunded
5/01/98 @ 101),
6.60%, 5/01/08 1,000,000 1,052,500
Tarrant County, Texas
Water Control and
Improvement
District No. 1, Water
Revenue Bonds
(Prerefunded 3/01/98
@ 100), 7.70%,
3/01/00 1,000,000 1,076,250
-----------
3,201,250
-----------
Sales/Special Tax (3.1%)
State of Illinois, Sales
Tax Revenue Bonds,
5.25%, 6/15/13 1,000,000 832,500
-----------
Portfolio of Investments
October 31, 1994
Tax-Free Fund
Aetna Mutual Funds Annual Report
89
<PAGE>
Principal Market
Amount Value
---------- -----------
Transportation (3.6%)
Pennsylvania Turnpike
Commission,
Pennsylvania
Turnpike Revenue
Bonds, 5.80%,
12/01/06 $1,000,000 $ 968,750
-----------
University (6.5%)
Dormitory Authority of
the State of New
York, Consolidated
City University
System Revenue
Bonds, 5.75%,
7/01/09 1,000,000 897,500
University of Alabama-Birmingham
Educational
Foundation, Student
Housing Revenue
Refunding Bonds,
5.30%, 12/01/14 1,000,000 847,500
-----------
1,745,000
-----------
Water/Sewer (9.8%)
DuPageWater
Commission,
Illinois, Water
Revenue Refunding
Bonds, 5.25%,
5/01/11 1,000,000 857,500
Massachusetts Water
Resources Authority,
General Revenue
Refunding Bonds,
5.25%, 3/01/13 1,000,000 831,250
See Notes to Financial Statements.
Principal Market
Amount Value
---------- -----------
Portland, Oregon,
Sewer System
Revenue Bonds,
6.10%, 6/01/10 $1,000,000 $950,000
-----------
2,638,750
-----------
Total Long-Term Bonds and Notes
(cost $27,026,318) $25,158,750
-----------
Short-Term Investments (5.3%)
Prudential Funding
Corp., Comm. Paper,
4.82%, 11/01/94 439,000 439,000
Travelers, Inc., Comm.
Paper, 4.82%,
11/01/94 1,000,000 1,000,000
-----------
Total Short-Term Investments
(cost $1,439,000) $1,439,000
-----------
Total Investments
(cost $28,465,318) (a) $26,597,750
Notes to Portfolio of Investments
(a) The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at October 31, 1994 are as
follows:
Unrealized gains..... $0
Unrealized losses.... (1,867,568)
-------------
Net unrealized loss.. $(1,867,568)
=============
Category percentages are based on net assets.
Tax-Free Fund
Aetna Mutual Funds Annual Report
90
<PAGE>
Number of Market
Shares Value
--------- ------------
Common Stocks (56.5%)
Aerospace & Defense (2.4%)
Martin Marietta
Corp. 36,800 $ 1,688,200
McDonnell Douglas
Corp. 4,400 620,400
Northrop Grumman
Corp. 3,200 140,400
------------
2,449,000
------------
Autos & Auto Equipment (1.9%)
Chrysler Corp. 5,500 268,125
Eaton Corporation 11,000 576,125
Ford Motor Co. 37,400 1,103,300
------------
1,947,550
------------
Banks (3.0%)
Citicorp 16,000 764,000
First Interstate
Bancorp. 9,000 720,000
First Union Corp. 2,500 112,500
Nationsbank
Corporation 14,843 734,729
Norwest Corp. 22,200 543,900
State Street Boston
Corp. 7,500 248,906
------------
3,124,035
------------
Building Materials &
Construction (0.3%)
Martin Marietta
Materials Inc. 14,100 290,813
------------
Chemicals (2.8%)
Dow Chemical Co. 2,400 176,400
See Notes to Portfolio of Investments.
Number of Market
Shares Value
--------- ------------
du Pont (E.I.) de
Nemours & Co. 21,700 $ 1,293,862
Georgia Gulf Corp.~ 5,200 201,500
Lubrizol Corp. 13,600 438,600
Monsanto Company 3,900 296,887
Morton International,
Inc. 12,600 359,100
Praxair, Inc. 2,600 60,125
Union Carbide Corp. 3,500 115,937
------------
2,942,411
------------
Commercial Services (0.1%)
Fluor Corp. 2,500 123,750
------------
Computer & Office
Equipment (3.4%)
Cabletron Systems,
Inc.~ 9,300 467,325
Compaq Computer
Corp.~ 15,300 613,912
Hewlett Packard
Company 9,500 928,625
International
Business
Machines Corp. 17,700 1,318,650
Sun Microsystems,
Inc.~ 2,100 69,037
Tektronix, Inc. 1,500 57,000
------------
3,454,549
------------
Computer Software (0.3%)
Computer Associates
International, Inc. 6,200 307,675
------------
Consumer Products (1.9%)
Alberto-Culver
Company 4,000 101,500
Portfolio of Investments
October 31, 1994
The Aetna Fund
Aetna Mutual Funds Annual Report
91
<PAGE>
Number of Market
Shares Value
--------- ------------
Nike, Inc. Class B 2,200 $ 133,925
Procter & Gamble
Co. 5,500 343,750
Reebok International
Ltd. 6,000 239,250
Springs Industries,
Inc., Class A 16,000 646,000
Unilever N.V. 2,000 237,500
VF Corporation 5,800 293,625
------------
1,995,550
------------
Diversified (1.6%)
Minnesota Mining &
Manufacturing Co. 7,800 431,925
Textron Inc. 10,400 530,400
TRW Incorporated 9,000 641,250
------------
1,603,575
------------
Electric Utilities (2.9%)
American Electric
Power Co., Inc. 9,400 300,800
Baltimore Gas &
Electric Co. 2,600 60,450
Consolidated Edison
Co. of New York,
Inc. 28,700 713,913
Detroit Edison
Company 4,600 121,325
Duke Power Co. 10,900 431,913
PECO Energy
Company 24,000 615,000
Southern Co. 19,000 375,250
Unicom Corp. 14,000 302,750
Union Electric Co. 1,100 39,462
------------
2,960,863
------------
Number of Market
Shares Value
--------- ------------
Electrical Equipment (3.0%)
Emerson Electric
Company 11,600 $ 704,700
General Electric Co.
(U.S.) 28,200 1,378,275
General Instrument
Corp.~ 13,400 448,900
Grainger (W.W.),
Inc. 9,700 533,500
------------
3,065,375
------------
Financial Services (0.9%)
Dean Witter,
Discover & Co. 14,000 540,750
MBNA Corporation 12,700 339,725
------------
880,475
------------
Food, Beverage & Tobacco (3.7%)
Anheuser Busch
Companies, Inc. 10,000 507,500
Archer-Daniels-Midland Co. 28,100 804,363
Coca Cola Company
(The) 13,700 688,425
Conagra, Inc. 22,000 684,750
Coors (Adolph) Co. 14,500 250,125
CPC International
Inc. 8,000 428,000
Sara Lee Corp. 1,700 41,863
Seagram Co. Ltd. 14,500 447,687
------------
3,852,713
------------
Health Services (0.5%)
Humana Inc.~ 20,400 497,250
------------
The Aetna Fund
Aetna Mutual Funds Annual Report
92
<PAGE>
Number of Market
Shares Value
---------- ------------
Health Technology (4.0%)
Allergan, Inc. 2,700 $ 71,213
Amgen Inc.~ 12,600 703,238
Baxter International,
Inc. 12,400 322,400
Johnson & Johnson 22,000 1,201,750
Medtronic, Inc. 12,700 661,987
Merck & Co., Inc. 4,000 143,000
Pfizer Inc. 6,200 459,575
Schering Plough
Corp. 7,200 513,000
------------
4,076,163
------------
Hotel, Restaurant & Casino (0.2%)
Caesars World, Inc.~ 3,700 162,338
------------
Insurance (1.6%)
Progressive Corp.
(Ohio) 1,700 64,600
SAFECO Corp. 2,500 125,000
St. Paul Companies,
Inc. 28,000 1,221,500
TIG Holdings, Inc. 11,900 229,075
------------
1,640,175
------------
Integrated Oil (5.3%)
Amoco Corp. 13,000 823,875
Atlantic Richfield
Co. 100 10,837
Exxon Corp. 11,700 735,638
Kerr-Mcgee Corp. 6,200 304,575
MAPCO Inc. 7,700 420,613
Mobil Corp. 14,400 1,238,400
See Notes to Portfolio of Investments.
Number of Market
Shares Value
--------- ------------
Royal Dutch
Petroleum Co. 11,100 $ 1,293,150
Shell Transport and
Trading Co., Plc-ADR 8,500 606,688
------------
5,433,776
------------
Machinery & Equipment (1.6%)
Caterpillar Inc. 14,000 836,500
Clark Equipment
Co.~ 900 63,112
Dover Corp. 11,900 660,450
Parker-Hannifin
Corp. 1,400 65,450
------------
1,625,512
------------
Media & Entertainment (0.3%)
Capital Cities/ABC,
Inc. 3,800 315,875
------------
Metals (1.2%)
American Barrick
Resource Corp. 5,300 126,537
Asarco Inc. 1,800 56,475
Homestake Mining
Co. 22,700 425,625
Nucor Corp. 1,000 61,750
Phelps Dodge Corp. 1,000 61,375
Rouge Steel
Company 19,400 501,975
------------
1,233,737
------------
Oil & Gas Exploration and
Production (0.6%)
Equitable Resources
Inc. 20,400 622,200
------------
Portfolio of Investments
October 31, 1994
The Aetna Fund
Aetna Mutual Funds Annual Report
93
<PAGE>
Number of Market
Shares Value
--------- ------------
Oil & Gas Utilities (0.3%)
Coastal Corp. (The) 8,000 $ 228,000
Sonat Inc. 2,500 81,250
------------
309,250
------------
Paper & Containers (1.3%)
Ball Corp. 2,100 59,325
Bemis Co., Inc. 10,000 247,500
Crown Cork & Seal
Company, Inc.~ 5,500 213,813
International Paper
Co. 1,400 104,300
Mead Corp. 1,200 59,550
Scott Paper Co. 4,600 304,175
Weyerhaeuser Co. 8,900 349,325
------------
1,337,988
------------
Publishing (0.9%)
Gannett Co., Inc. 16,900 811,200
Tribune Co. 2,100 110,513
------------
921,713
------------
Retail (2.9%)
Albertson
Incorporated 29,700 891,000
Dayton Hudson
Corporation 2,600 201,500
Kroger Co. (The)~ 4,200 109,725
May Department
Stores Co. (The) 12,700 477,838
Rite Aid Corporation 17,000 408,000
Toys R Us, Inc.~ 14,000 539,000
Number of Market
Shares Value
--------- ------------
Wal-Mart Stores,
Inc. 17,000 $ 399,500
------------
3,026,563
------------
Semiconductors &
Electronics (0.7%)
General Motors
Corp., Class H 6,300 226,799
Micron Technology
Inc. 1,100 43,588
Motorola, Inc. 8,400 494,550
------------
764,937
------------
Specialty Consumer
Durables (0.1%)
Fleetwood
Enterprises, Inc. 2,600 59,800
------------
Telephone Utilities (6.0%)
Airtouch
Communications~ 8,000 239,000
Ameritech Corp. 23,000 928,625
AT&T Corp. 17,500 962,500
BCE Inc. 13,000 455,000
Bell Atlantic Corp. 14,700 769,912
BellSouth Corp. 18,200 969,150
MCI
Communications
Corp. 16,000 369,000
Pacific Telesis
Group 15,000 474,375
Sprint Corp. 29,700 968,962
------------
6,136,524
------------
Transportation (0.8%)
Burlington Northern
Inc. 1,200 59,850
The Aetna Fund
Aetna Mutual Funds Annual Report
94
<PAGE>
Number of Market
Shares Value
--------- ------------
Chicago and North
Western
Transportation
Company~ 20,900 $ 425,837
Pittston Service
Group 12,400 342,550
------------
828,237
------------
Total Common Stocks $57,990,372
------------
Preferred Stocks (2.9%)
Aerospace & Defense (0.7%)
Kaman Corp. 6.5%
Preferred 14,819 668,685
------------
Autos & Auto Equipment (0.7%)
Chrysler Corp., $50
Par (a) 5,000 681,875
------------
Banks (0.1%)
Citicorp PERCS 6,300 123,638
------------
Computer Software (0.0%)
American Express
DECS 300 13,500
------------
Retail (1.4%)
Sears Roebuck and
Co. PERCS 25,600 1,449,600
------------
Total Preferred Stocks $2,937,298
------------
Total Common and Preferred
Stocks (cost $56,976,710 ) $60,927,670
------------
See Notes to Portfolio of Investments.
Principal Market
Amount Value
------------ ------------
Long-Term Bonds and Notes (37.7%)
U.S. Government and
Agency Obligations (17.8%)
Agency Mortgage-Backed
Securities (3.8%)
Federal National
Mortgage
Association 1991-3
Z Tranche, 8.50%,
1/25/21 $3,022,498 $ 2,929,677
Federal National
Mortgage
Association, 92
114A, PO, CMO,
Zero Coupon,
6/25/22 1,267,538 952,238
------------
3,881,915
------------
U.S. Government Obligations (14.0%)
U.S. Treasury Bill,
4.57%, 12/15/94 200,000 198,883
U.S. Treasury Bond,
7.50%, 11/15/24 400,000 378,875
U.S. Treasury Note,
6.50%, 9/30/96 5,000,000 4,979,685
U.S. Treasury Note,
6.875%, 7/31/99 1,000,000 977,500
U.S. Treasury Note,
9.375%, 4/15/96 7,500,000 7,795,313
------------
14,330,256
------------
Total U.S. Government and Agency
Obligations $18,212,171
------------
Portfolio of Investments
October 31, 1994
The Aetna Fund
Aetna Mutual Funds Annual Report
95
<PAGE>
Principal Market
Amount Value
---------- ------------
Domestic Corporate & Convertible
Bonds and Notes (11.9%)
Electric Utilities (1.1%)
CMS Energy, Zero
Coupon, 10/01/99 $ 750,000 $ 707,294
Long Island Lighting
Co., 6.25%,
7/15/01 500,000 414,219
------------
1,121,513
------------
Financial Services (5.1%)
American General
Finance, 8.45%,
10/15/09 1,000,000 1,030,801
Commercial Credit
Corp., 8.70%,
6/15/09 1,000,000 1,048,437
General Motors
Accept.
Corporation,
6.15%, 1/16/01 1,300,000 1,157,812
Plus Capital Co. II
Ltd., 5.625%,
12/07/94 (a) 1,000,000 998,750
Textron Financial
Corp., 5.26%,
11/24/95 (a) 1,000,000 1,000,000
------------
5,235,800
------------
Industrial (5.7%)
Beazer Homes USA
Senior Note,
9.00%, 3/01/04 300,000 253,500
Hospitality Franchise
Systems, Inc.,
4.50%, 10/01/99 3,000,000 2,910,000
Principal Market
Amount Value
---------- ------------
Kaman Corp., 6.00%,
3/15/12 $ 499,000 $ 370,508
News American
Holdings, 8.50%,
2/15/05 700,000 672,183
Unisys Corporation,
10.625%, 10/01/99 800,000 809,999
Viacom Inc., 8.00%,
7/07/06 1,000,000 865,371
------------
5,881,561
------------
Total Domestic Corporate &
Convertible Bonds and Notes $ 12,238,874
------------
Foreign & Supranational
Obligations (3.4%)
African Development
Bank, 8.80%,
9/01/19 1,000,000 1,064,063
Argentina FRB-Floating/Sinking,
5.00%, 3/31/05 900,000 652,500
Banco Nacional de
Comercio Exterior,
S.N.C., 7.50%,
7/01/00 500,000 455,625
Swire Pacific Ltd.,
8.50%, 9/29/04 (a) 1,000,000 978,125
Transportadora de
Gas Del Sur,
7.75%, 12/23/98 400,000 354,000
------------
Total Foreign &
Supranational
Obligations 3,504,313
------------
The Aetna Fund
Aetna Mutual Funds Annual Report
96
<PAGE>
Principal Market
Amount Value
---------- ------------
Non-Agency Mortgage-
Backed Securities (4.6%)
DLJ Mortgage
Acceptance 94-MF11 A3, 8.10%,
5/18/04 $4,000,000 $ 3,740,000
Resolution Trust
Corp. 1991 17B6,
8.20%, 9/25/21 1,000,000 995,312
------------
4,735,312
------------
Total Foreign & Supranational
Obligations and Non-Agency
Mortgage-Backed Securities $8,239,625
------------
Total Long-Term Bonds and Notes
(cost $40,026,736) $38,690,670
------------
Short-Term Investments (3.3%)
Conagra, Inc., 4.90%,
11/01/94 3,341,000 3,341,000
------------
Total Short-Term Investments
(cost $3,341,000) $3,341,000
------------
Total Investments
(cost $100,344,446) (b) $102,959,340
See Notes to Financial Statements.
Notes to Portfolio of Investments
~ Non-income producing security.
(a) Securities that may be resold to "qualified institutional buyers" under
Rule 144A or securities offered pursuant to section 4(2) of the Securities
Act of 1933, as amended. These securities have been determined to be liquid
under guidelines established by the Board of Directors.
(b) The cost of investments for income tax purposes amounted to $100,365,397.
Unrealized gains and losses, based on identified tax cost at October 31,
1994 are as follows:
Unrealized gains..... $5,379,942
Unrealized losses.... (2,785,999)
-------------
Net unrealized gain.. $2,593,943
=============
Category percentages are based on net assets.
Portfolio of Investments
October 31, 1994
The Aetna Fund
Aetna Mutual Funds Annual Report
97
<PAGE>
Number of Market
Shares Value
--------- ------------
Common Stocks (93.8%)
Aerospace & Defense (2.1%)
Martin Marietta
Corp. 54,200 $ 2,486,425
McDonnell Douglas
Corp. 23,800 3,355,800
Northrop Grumman
Corp. 14,100 618,638
------------
6,460,863
------------
Autos & Auto Equipment (2.3%)
Chrysler Corp. 30,800 1,501,500
Eaton Corporation 18,000 942,750
Ford Motor Co. 164,500 4,852,750
------------
7,297,000
------------
Banks (5.3%)
Bankamerica Corp. 14,000 609,000
Citicorp 95,300 4,550,575
First Interstate
Bancorp. 36,200 2,896,000
First Union Corp. 51,900 2,335,500
Nationsbank
Corporation 67,600 3,346,200
Norwest Corp. 34,800 852,600
State Street Boston
Corp. 60,400 2,004,525
------------
16,594,400
------------
Building Materials & Construction (0.1%)
Martin Marietta
Materials Inc. 11,000 226,875
------------
See Notes to Portfolio of Investments.
Number of Market
Shares Value
--------- ------------
Chemicals (5.6%)
Dow Chemical Co. 3,400 $ 249,900
du Pont (E.I.) de
Nemours & Co. 119,700 7,137,113
Lubrizol Corp. 70,900 2,286,525
Monsanto Company 24,500 1,865,063
Morton International,
Inc. 31,900 909,150
PPG Industries, Inc. 84,500 3,443,375
Praxair, Inc. 21,700 501,813
Union Carbide Corp. 26,100 864,563
------------
17,257,502
------------
Commercial Services (0.6%)
Fluor Corp. 36,400 1,801,800
------------
Computer and Office Equipment (6.0%)
Alco Standard Corp. 50,000 2,850,000
Compaq Computer
Corp.~ 88,300 3,543,038
Hewlett Packard
Company 44,300 4,330,325
International
Business
Machines Corp. 100,300 7,472,350
Tektronix, Inc. 3,200 121,600
------------
18,317,313
------------
Computer Software (0.4%)
Computer Associates
International, Inc. 23,500 1,166,188
------------
Consumer Products (2.3%)
American Greetings
Corp. Class A 70,700 1,939,831
Portfolio of Investments
October 31, 1994
Growth and Income Fund
Aetna Mutual Funds Annual Report
98
<PAGE>
Number of Market
Shares Value
--------- ------------
Gillette Company 5,500 $ 409,063
Nike, Inc. Class B 28,800 1,753,200
Procter & Gamble
Co. 21,300 1,331,250
Reebok International
Ltd. 20,500 817,438
Unilever N.V. 2,000 237,500
VF Corporation 10,000 506,250
------------
6,994,532
------------
Diversified (1.5%)
Corning Inc. 19,500 663,000
DSG International
Ltd.~ 6,000 156,000
Minnesota Mining &
Manufacturing Co. 15,300 847,238
Textron Inc. 37,900 1,932,900
TRW Incorporated 14,400 1,026,000
------------
4,625,138
------------
Electric Utilities (4.9%)
American Electric
Power Co., Inc. 52,000 1,664,000
Baltimore Gas &
Electric Co. 13,900 323,175
CINergy Corp. 9,821 223,200
Consolidated Edison
Co. of New York,
Inc. 83,500 2,077,063
Detroit Edison
Company 4,900 129,238
Duke Power Co. 43,200 1,711,800
FPL Group, Inc. 48,400 1,603,250
See Notes to Portfolio of Investments.
Number of Market
Shares Value
--------- -----------
Houston Industries
Inc. 2,200 $ 76,725
PECO Energy
Company 87,600 2,244,750
Southern Co. 157,000 3,100,750
Unicom Corporation 79,400 1,717,025
Union Electric Co. 3,600 129,150
-----------
15,000,126
-----------
Electrical Equipment (4.2%)
Emerson Electric
Company 49,300 2,994,975
General Electric Co.
(U.S.) 154,700 7,560,963
General Instrument
Corp.~ 34,000 1,139,000
Grainger (W.W.), Inc. 22,000 1,210,000
-----------
12,904,938
-----------
Financial Services (1.6%)
Dean Witter, Discover
& Co. 74,600 2,881,425
MBNA Corporation 75,400 2,016,950
-----------
4,898,375
-----------
Food, Beverage & Tobacco (6.6%)
Anheuser Busch
Companies, Inc. 58,000 2,943,500
Archer-Daniels-Midland Co. 116,900 3,346,263
Coca Cola Company
(The) 71,100 3,572,775
Conagra, Inc. 108,400 3,373,950
Coors (Adolph) Co. 30,300 522,675
CPC International Inc. 25,300 1,353,550
Portfolio of Investments
October 31, 1994
Growth and Income Fund
Aetna Mutual Funds Annual Report
99
<PAGE>
Number of Market
Shares Value
---------- ------------
Ralston-Ralston
Purina Group 17,000 $ 722,500
Sara Lee Corp. 99,300 2,445,263
Seagram Co. Ltd. 68,700 2,121,113
------------
20,401,589
------------
Health Services (0.6%)
Foundation Health
Corp.~ 18,300 599,325
Humana Inc.~ 50,500 1,230,938
------------
1,830,263
------------
Health Technology (7.8%)
Allergan, Inc. 32,400 854,550
Amgen Inc.~ 55,400 3,092,013
Baxter International,
Inc. 73,900 1,921,400
Bristol-Myers
Squibb Co. 30,800 1,797,950
Johnson & Johnson 127,900 6,986,538
Medtronic, Inc. 31,600 1,647,150
Merck & Co., Inc. 23,800 850,850
Pfizer Inc. 15,200 1,126,700
Schering Plough
Corp. 21,700 1,546,125
SmithKline Beecham
Plc 29,700 905,850
Warner Lambert Co. 42,900 3,271,125
------------
24,000,251
------------
Hotel, Restaurant & Casino (0.1%)
McDonald's Corp. 9,200 264,500
------------
Insurance (2.9%)
First Colony Corp. 13,000 260,000
General Re Corp. 21,500 2,408,000
Number of Market
Shares Value
--------- ------------
Progressive Corp.
(Ohio) 20,000 $ 760,000
SAFECO Corp. 26,800 1,340,000
St. Paul Companies,
Inc. 50,100 2,185,613
TIG Holdings, Inc. 84,100 1,618,925
Torchmark Corp. 5,700 210,188
------------
8,782,726
------------
Integrated Oil (10.2%)
Amoco Corp. 98,200 6,223,425
Ashland Oil Inc. 10,100 392,635
Exxon Corp. 65,800 4,137,175
Kerr-Mcgee Corp. 20,500 1,007,063
MAPCO Inc. 18,500 1,010,563
Mobil Corp. 87,900 7,559,400
Royal Dutch
Petroleum Co. 82,900 9,657,850
Shell Transport and
Trading Co., Plc 18,600 1,327,575
------------
31,315,686
------------
Machinery & Equipment (4.2%)
Caterpillar Inc. 85,200 5,090,700
Dover Corp. 57,500 3,191,250
General Signal Corp. 32,500 1,170,000
Johnson Controls,
Inc. 11,900 592,025
Parker-Hannifin
Corp. 20,000 935,000
Tyco International,
Ltd. 28,400 1,370,300
York International
Corp. 17,600 686,400
------------
13,035,675
------------
Growth and Income Fund
Aetna Mutual Funds Annual Report
100
<PAGE>
Number of Market
Shares Value
--------- ------------
Media & Entertainment (1.0%)
Capital Cities/ABC,
Inc. 38,300 $ 3,183,685
------------
Metals (2.0%)
American Barrick
Resource Corp. 39,300 938,288
Homestake Mining
Co. 53,500 1,003,125
Phelps Dodge Corp. 19,500 1,196,813
Rouge Steel
Company 40,000 1,035,000
USX-U.S. Steel
Group 50,800 1,905,000
------------
6,078,226
------------
Oil & Gas Exploration and
Production (0.7%)
Equitable Resources
Inc. 40,150 1,224,575
Western Atlas Inc.~ 19,800 910,800
------------
2,135,375
------------
Oil & Gas Utilities (1.1%)
Coastal Corp. (The) 33,700 960,450
Williams
Companies, Inc.
(The) 80,600 2,337,400
------------
3,297,850
------------
Paper & Containers (2.0%)
Ball Corp. 20,800 587,600
Bemis Co., Inc. 30,500 754,875
See Notes to Portfolio of Investments.
Number of Market
Shares Value
--------- -------------
Crown Cork & Seal
Company, Inc.~ 43,500 $ 1,691,063
International Paper
Co. 18,900 1,408,050
Scott Paper Co. 8,100 535,613
Union Camp Corp. 22,200 1,054,500
-------------
6,031,701
-------------
Publishing (1.4%)
Dun & Bradstreet
Corp. 12,300 721,088
Gannett Co., Inc. 75,900 3,643,200
-------------
4,364,288
-------------
Retail (4.4%)
Albertson
Incorporated 36,100 1,083,000
CUC International
Inc.~ 33,700 1,082,613
Dayton Hudson
Corporation 18,000 1,395,000
Kroger Co. (The)~ 9,900 258,638
May Department
Stores Co. (The) 74,700 2,810,588
Melville Corp. 37,700 1,258,238
Price/Costco, Inc.~ 35,900 563,181
Rite Aid
Corporation 71,900 1,725,600
Toys R Us, Inc.~ 29,200 1,124,200
Wal-Mart Stores,
Inc. 89,500 2,103,250
-------------
13,404,308
-------------
Portfolio of Investments
October 31, 1994
Growth and Income Fund
Aetna Mutual Funds Annual Report
101
<PAGE>
Number of Market
Shares Value
----------- ------------
Semiconductors & Electronics (0.9%)
General Motors
Corp., Class H 34,900 $ 1,256,400
Motorola, Inc. 8,300 488,663
Sensormatic
Electronics Corp. 23,100 869,138
------------
2,614,201
------------
Specialty Consumer Durables (0.0%)
Fleetwood
Enterprises, Inc. 5,700 131,100
------------
Telephone Utilities (9.9%)
Airtouch
Communications~ 58,500 1,747,685
Ameritech Corp. 111,300 4,493,738
AT&T Corp. 86,200 4,741,000
BCE Inc. 59,200 2,072,000
Bell Atlantic Corp. 66,500 3,482,935
BellSouth Corp. 99,100 5,277,075
Cincinnati Bell Inc. 7,900 145,160
GTE Corp. 2,200 67,650
MCI
Communications
Corp. 26,000 599,625
Pacific Telesis
Group 86,900 2,748,210
Number of Market
Shares Value
--------- ------------
Sprint Corp. 131,353 $ 4,285,390
U.S. West, Inc. 15,900 598,239
------------
30,258,707
------------
Transportation (1.1%)
Federal Express
Corp.~ 15,000 911,250
Norfolk Southern
Corp. 21,100 1,329,300
Union Pacific Corp. 25,900 1,265,863
------------
3,506,413
------------
Total Common Stocks $288,181,594
------------
Preferred Stocks (2.3%)
Autos & Auto Equipment (0.5%)
Ford Motor Co. $50
Par 14,800 1,431,900
------------
Computer Software (0.6%)
American Express
DECS 38,200 1,719,000
------------
Retail (1.3%)
Sears Roebuck and
Co. PERCS 70,700 4,003,385
------------
Total Preferred Stocks $ 7,154,285
------------
Total Common and Preferred
Stocks (cost $285,214,071) $295,335,879
------------
Growth and Income Fund
Aetna Mutual Funds Annual Report
102
<PAGE>
Principal Market
Amount Value
---------- ------------
Short-Term Investments (3.5%)
CIESCO, L.P.,
4.85%, 11/1/94 $9,897,000 $9,897,000
U.S. Treasury Bill,
4.57%, 12/15/94~~ 800,000 795,532
Total Short-Term Investments
(cost $10,692,532) $10,692,532
------------
Total Investments
(cost $295,906,603) (a) $306,028,411
Notes to Portfolio of Investments
~ Non-income producing security.
~~ $800,000 in principal of U.S. Treasury Bills has been pledged as collateral
for initial margin for futures contracts.
(a) The cost of investments for income tax purposes amounted to $296,447,668.
Unrealized gains and losses, based on identified tax cost at October 31,
1994 are as follows:
Unrealized gains..... $11,624,697
Unrealized losses.... (2,043,954)
------------
Net unrealized gain.. $9,580,743
============
Category percentages are based on net assets.
See Notes to Financial Statements.
Portfolio of Investments
October 31, 1994
Growth and Income Fund
Aetna Mutual Funds Annual Report
103
<PAGE>
Number of Market
Shares Value
--------- -----------
Common Stocks (95.6%)
Autos & Auto Equipment (5.9%)
Daimler Benz AKT-ADR 11,000 $ 559,625
Ford Motor Co. 15,000 442,500
General Motors Corp. 16,000 632,000
-----------
1,634,125
-----------
Building Materials & Construction (2.5%)
National Gypsum
Co.~ 20,000 675,000
- -----------
Chemicals (6.6%)
Hercules Inc. 9,000 1,050,750
Monsanto Company 10,000 761,250
-----------
1,812,000
-----------
Computer and Office Equipment (16.0%)
Bay Networks, Inc.~ 40,000 1,012,500
Compaq Computer
Corp.~* 25,000 1,003,125
Sun Microsystems,
Inc.~ 20,000 657,500
Tandem Computers
Inc.~* 50,000 881,250
Unisys Corporation ~ 80,000 850,000
-----------
4,404,375
-----------
Electrical Equipment (3.0%)
General Instrument
Corp.~ 25,000 837,500
-----------
Financial Services (2.8%)
Sunamerica Inc. 20,000 777,500
-----------
Food, Beverage & Tobacco (2.7%)
Cott Corp. 75,000 754,687
-----------
See Notes to Portfolio of Investments.
Number of Market
Shares Value
--------- -----------
Health Technology (8.8%)
Abbott Laboratories 25,000 $ 775,000
Amgen Inc.* 18,000 1,004,625
Upjohn Company 20,000 660,000
-----------
2,439,625
-----------
Insurance (2.6%)
Partnerre Holdings
Ltd. 35,000 715,313
-----------
Integrated Oil (10.5%)
Atlantic Richfield Co. 10,000 1,083,750
British Petroleum Plc-ADR 7,000 595,000
Imperial Oil Ltd. 20,000 717,500
Smith International
Inc.~ 30,000 502,500
-----------
2,898,750
-----------
Machinery & Equipment (4.7%)
Caterpillar Inc.* 14,000 836,500
Trinova Corp. 13,000 455,000
-----------
1,291,500
-----------
Media & Entertainment (4.2%)
Brunswick Corp. 25,000 512,500
CBS, Inc. 10,880 651,440
-----------
1,163,940
-----------
Metals (4.4%)
Aluminum Company
of America 8,400 716,100
Brush Wellman Inc. 30,000 502,500
-----------
1,218,600
-----------
Growth Fund
Portfolio of Investments
October 31, 1994
Aetna Mutual Funds Annual Report
104
<PAGE>
Number of Market
Shares Value
--------- -----------
Retail (12.4%)
Hechinger Co. Class A 45,000 $ 506,250
Home Depot, Inc.
(The) 17,500 796,250
Intelligent Electronics
Inc. 30,000 465,000
Nordstrom Inc. 19,000 938,125
U.S. Shoe
Corporation 40,000 715,000
-----------
3,420,625
-----------
Semiconductors & Electronics (6.9%)
Micron Technology
Inc.* 20,000 792,500
Motorola, Inc.* 19,000 1,118,625
-----------
1,911,125
-----------
Transportation (1.6%)
Consolidated
Freightways Inc.~ 20,000 447,500
-----------
Total Common Stocks
(cost $24,973,894) $26,402,165
-----------
Index Options (0.6%)
Market
Units Value
------ ---------
Put Options Purchased
S&P 500 Index
Exercise Price $460,
Expiration Date
12/17/94............. 10,000 $ 46,875
S&P 500 Index
Exercise Price $465,
Expiration Date
12/17/94............. 22,500 126,563
---------
Total Index Options
Purchased (cost
$306,600)............ $1173,438
=========
See Notes to Financial Statements.
Principal Market
Amount Value
---------- -----------
Short-Term Investments (5.0%)
Cooper Industries, Inc.,
4.83%, 11/01/94......... $1,030,000 $1,030,000
U.S. Treasury Bill,
3.47%, 12/15/94......... 250,000 248,491
U.S. Treasury Bill,
4.10%, 12/15/94......... 100,000 99,396
-----------
Total Short-Term Investments
(cost $1,378,439) $1,377,887
-----------
Total Investments
(cost $26,658,933) (a) $27,953,490
Notes to Portfolio of Investments
~ Non-income producing security.
(a) The cost of investments for income tax purposes amounted to $26,675,779.
Unrealized gains and losses, based on identified tax cost at October 31,
1994 are as follows:
Unrealized gains..... $2,245,312
Unrealized losses.... (967,601)
-----------
Net unrealized gain.. $1,277,711
===========
* Call options have been written against stock outstanding. See schedule on
page 85.
Category percentages are based on net assets.
Portfolio of Investments
October 31, 1994
Growth Fund
Aetna Mutual Funds Annual Report
105
<PAGE>
Growth Fund
Call Options
Exercise Expiration Market
Shares Price Date Value
------ -------- ---------- -------
Amgen Inc................................... 6,500 $55 01/21/95 $ 28,844
Caterpillar Inc............................. 7,000 53 11/19/94 51,625
Compaq Computer Corp........................ 10,000 38 01/21/95 45,000
Micron Technology Inc....................... 20,000 36 01/21/95 120,000
Motorola, Inc............................... 8,000 55 01/21/95 46,500
Tandem Computers Inc........................ 20,000 18 01/21/95 37,500
--------
Total Deferred Premiums on Written Options.. $329,469
========
See Notes to Portfolio of Investments.
Portfolio of Investments
October 31, 1994
Aetna Mutual Funds Annual Report
106
<PAGE>
Number
of Market
Shares Value
------ ------------
Common Stocks (92.0%)
Aerospace & Defense (3.7%)
Orbital Sciences
Corp.~ 20,500 $ 438,188
Thiokol Corp. 21,300 524,512
------------
962,700
------------
Autos & Auto Equipment (1.2%)
Lear Seating Corp.~ 15,000 300,000
------------
Banks (5.6%)
Cullen/Frost Bankers
Inc. 15,000 498,750
Dime Bancorp Inc.~ 60,000 525,000
FirstFed Michigan
Corp. 21,500 448,812
------------
1,472,562
------------
Building Materials & Construction (2.3%)
Hughes Supply Inc. 18,500 342,250
National Gypsum
Co.~ 8,000 270,000
------------
612,250
------------
Chemicals (5.4%)
NL Industries, Inc.~ 60,200 767,550
Terra Industries Inc. 30,000 318,750
Vigoro Corporation 10,000 307,500
------------
1,393,800
------------
Commercial Services (4.1%)
McKesson Corp.
(When Issued)~ 20,000 632,500
Right Mgmt
Consultants Inc.~ 19,000 420,375
------------
1,052,875
------------
See Notes to Portfolio of Investments.
Number
of Market
Shares Value
------ ------------
Computer and Office Equipment (2.1%)
Quantum Corp.~ 20,000 $ 305,000
Western Digital Corp.~ 15,000 255,000
------------
560,000
------------
Consumer Products (2.3%)
Fieldcrest Cannon Inc.~ 12,500 318,750
Rawlings Sporting
Goods Co.~ 22,000 270,875
------------
589,625
------------
Diversified (4.3%)
Blount Inc. Class A 10,000 426,250
Trigen Energy Corp. 35,000 700,000
------------
1,126,250
------------
Financial Services (3.8%)
Foothill Group Inc.
Class A 22,500 337,500
Money Store Inc. 32,500 666,250
------------
1,003,750
------------
Food, Beverage & Tobacco (2.2%)
Thorn Apple Valley
Inc. 20,000 567,500
------------
Health Services (4.4%)
Employee Benefit Plans
Inc.~ 35,000 398,125
Helen Of Troy Ltd.~ 25,000 468,750
Universal Health
Services Inc.
Class B~ 11,000 292,875
------------
1,159,750
------------
Portfolio of Investments
October 31, 1994
Small Company Growth Fund
Aetna Mutual Funds Annual Report
107
<PAGE>
Number
of Market
Shares Value
------ -----------
Health Technology (2.9%)
Foxmeyer Health Corp.~ 45,200 $ 751,450
-----------
Insurance (3.9%)
American Eagle Group
Inc. 30,000 277,500
Markel Corp.~ 6,300 259,088
Security-Connecticut
Corp. 23,000 480,125
-----------
1,016,713
-----------
Integrated Oil (4.3%)
Camco International Inc. 25,000 515,625
Offshore Pipelines Inc.~ 12,000 244,500
Western Co. of N.
America~ 20,700 367,425
-----------
1,127,550
-----------
Machinery & Equipment (8.5%)
Acme-Cleveland Corp. 50,700 684,450
Agco Corp. 15,000 825,000
Millipore Corp. 8,000 411,000
Regal Beloit Corp. 21,000 294,000
-----------
2,214,450
-----------
Media & Entertainment (2.0%)
Carmike Cinemas Inc.
Class A~ 23,500 511,125
-----------
Metals (6.4%)
Brush Wellman Inc. 42,300 708,525
Cleveland Cliffs Inc. 6,000 228,750
Minerals Technologies
Inc. 25,000 743,750
-----------
1,681,025
-----------
Number
of Market
Shares Value
------- -----------
Paper & Containers (1.9%)
Repap Enterprises Inc.~ 100,000 $ 493,750
-----------
Retail (6.7%)
Bradlees Inc. 30,000 461,250
Dress Barn 20,000 195,000
Forschner Group Inc.~ 4,700 53,756
Lillian Vernon Corp. 9,900 167,063
Rex Stores Corp.~ 17,000 323,000
Warnaco Group, Inc.
(The) Class A~ 10,000 188,750
Wolverine World Wide,
Inc. 15,000 367,500
-----------
1,756,319
-----------
Semiconductors & Electronics (14.0%)
BMC Industries, Inc. 16,200 263,250
Burr-Brown Corp.~ 40,000 545,000
Logicon Inc. 34,100 1,048,575
Merix Corp.~ 20,000 270,000
Oak Industries Inc.~ 15,000 386,250
Silicon Valley Group
Inc.~ 35,000 682,500
Tech-Sym Corp.~ 18,400 443,900
-----------
3,639,475
-----------
Total Common Stocks
(cost $22,513,464) $23,992,919
-----------
Small Company Growth Fund
Aetna Mutual Funds Annual Report
108
<PAGE>
Principal Market
Amount Value
---------- -----------
Short-Term Investments (7.8%)
Cooper Industries, Inc.,
4.83%, 11/1/94 $1,198,000 $1,198,000
Countrywide Funding
Corporation, 4.86%,
11/7/94 850,000 849,312
-----------
Total Short-Term Investments
(cost $2,047,312) $2,047,312
-----------
Total Investments
(cost $24,560,776 ) (a) $26,040,231
Notes to Portfolio of Investments
~ Non-income producing security.
(a) The cost of investments for income tax purposes amounted to $24,693,596.
Unrealized gains and losses, based on identified tax cost at October 31,
1994 are as follows:
Unrealized gains..... $2,084,101
Unrealized losses.... (737,466)
-----------
Net unrealized gain.. $1,346,635
===========
Category percentages are based on net assets.
See Notes to Financial Statements.
Small Company Growth Fund
Portfolio of Investments
October 31, 1994
Aetna Mutual Funds Annual Report
109
<PAGE>
Number Market
of Shares Value
--------- -----------
Common Stocks (94.1%)
Australia (1.4%)
Building Materials &
Construction (0.5%)
Australian National
Industries Ltd. 270,000 $290,728
-----------
Media & Entertainment
(0.5%)
News Corporation
Ltd. 48,000 295,495
-----------
Oil & Gas Utilities
(0.4%)
Australian Gas Light
Company Ltd. 75,000 242,274
-----------
Total Australia 828,497
-----------
Finland (1.8%)
Metals (1.0%)
Outokumpu Oy~ 27,500 581,437
-----------
Paper & Containers
(0.8%)
Enso-Gutzeit Oy 52,500 465,638
-----------
Total Finland 1,047,075
-----------
France (9.1%)
Autos & Auto
Equipment (1.2%)
PSA Peugeot
Citroen~ 4,500 673,886
-----------
Banks (1.7%)
Banque Nationale de
Paris BNP 10,800 534,704
Credit Local de
France SA CLF 6,300 482,243
-----------
1,016,947
-----------
See Notes to Portfolio of Investments.
Number Market
of Shares Value
--------- -----------
Building Materials &
Construction (0.9%)
Lafarge-Copee SA 6,300 $499,619
-----------
Diversified (1.7%)
Pechiney
International SA 15,200 470,599
Ste. Nationale Elf
Aquitaine 7,150 528,421
-----------
999,020
-----------
Financial Services (0.5%)
Cetelem 1,550 302,564
-----------
Food, Beverage &
Tobacco (0.6%)
Eridania Beghin Say
SA 2,400 324,910
-----------
Insurance (0.6%)
Assurances Generales
de France 8,000 326,775
-----------
Metals (1.9%)
Compagnie de St.
Gobain SA 4,400 558,065
Ugine SA~ 7,500 563,756
-----------
1,121,821
-----------
Total France 5,265,542
-----------
Germany (5.5%)
Autos & Auto
Equipment (1.0%)
BMW AG 1,090 561,650
-----------
Banks (1.0%)
Deutsche Bank AG 1,125 554,254
-----------
Chemicals (1.0%)
BASF AG 2,800 592,560
-----------
Diversified (0.9%)
Preussag AG 1,800 527,176
-----------
Portfolio of Investments
October 31, 1994
International Growth Fund
Aetna Mutual Funds Annual Report
110
<PAGE>
Number Market
of Shares Value
--------- -----------
Electric Utilities (0.7%)
Veba AG 1,250 $418,869
-----------
Machinery &
Equipment (0.9%)
Mannesmann AG 2,000 534,557
-----------
Total Germany 3,189,066
-----------
Italy (2.9%)
Autos & Auto
Equipment (0.6%)
Fiat Sp A~ 156,500 378,445
-----------
Building Materials &
Construction (0.6%)
Italcementi Fabbriche
Riunt 48,100 319,241
Italcementi Fabbriche
Riunt Warrants~ 11,100 2,381
-----------
321,622
-----------
Telephone Utilities (1.7%)
STET Di Risp 400,000 989,377
-----------
Total Italy 1,689,444
-----------
Japan (39.3%)
Autos & Auto
Equipment (2.9%)
Honda Motor Co. 52,000 907,289
Mazda Motor Corp.~ 130,000 771,732
-----------
1,679,021
-----------
Banks (4.3%)
Shizuoka Bank Ltd. 94,000 1,281,025
Sumitomo Bank Ltd. 65,000 1,221,350
-----------
2,502,375
-----------
See Notes to Portfolio of Investments.
Number Market
of Shares Value
--------- -----------
Building Materials &
Construction (2.0%)
Kuraray Co. Ltd. 90,000 $1,142,887
-----------
Chemicals (1.6%)
Shin-etsu Chemical
Co. Ltd. 43,000 914,516
-----------
Consumer Products (3.0%)
Canon, Inc. 57,000 1,059,261
Shimano Inc. 34,000 677,473
-----------
1,736,734
-----------
Electrical & Equipment
(8.4%)
Hitachi Ltd. 119,000 1,240,863
Nippondenso Co.
Ltd. 42,000 897,584
Sega Enterprises Ltd. 8,000 415,445
Sony Corp. 22,000 1,342,350
TDK Corp. 20,000 982,862
-----------
4,879,104
-----------
Electric Utilities (1.5%)
Tohoku Electric
Power Co. Inc. 35,000 896,139
-----------
Financial Services (1.7%)
Japan Associated
Finance Co. Ltd. 800 118,109
Nomura Securities
Company Ltd. 40,000 838,323
-----------
956,432
-----------
Home Furnishings &
Appliances (0.7%)
Keiyo Co. Ltd. 26,250 428,195
-----------
Portfolio of Investments
October 31, 1994
International Growth Fund
Aetna Mutual Funds Annual Report
111
<PAGE>
Number Market
of Shares Value
--------- -----------
Machinery &
Engineering (9.6%)
Amada Sonoike Co.,
Ltd. 110,000 $993,702
Fuji Machine
Manufacturing Co.
Ltd. 27,000 886,434
Mitsubishi Heavy
Industries Ltd. 171,000 1,392,928
NTN Corporation 132,000 1,015,280
Sumitomo Corp. 126,000 1,300,847
-----------
5,589,191
-----------
Publishing (1.5%)
Toppan Printing Co.
Ltd. 60,000 885,812
-----------
Retail (2.1%)
Aoyama Trading Co.
Ltd. 17,000 523,023
Best Denki Co., Ltd. 45,000 710,820
-----------
1,233,843
-----------
Total Japan 22,844,249
-----------
Malaysia (1.8%)
Consumer Products (0.4%)
Sime Darby Berhad 85,000 234,540
-----------
Financial Services (0.5%)
AMMB Holdings
Berhad 27,000 295,890
-----------
Metals (0.4%)
Aluminum Co.
Malaysia 171,000 254,325
-----------
Transportation (0.5%)
Malaysian Intl. Ship
Corp. 258,837
-----------
Total Malaysia 1,043,592
-----------
Number Market
of Shares Value
--------- -----------
Netherlands (4.9%)
Banks (0.6%)
ABN Amro Holdings
N.V. 10,506 $373,251
-----------
Chemicals (0.9%)
Akzo Nobel 4,125 520,879
-----------
Electrical Equipment (1.2%)
Philips Electronics
N.V. 21,600 714,867
-----------
Insurance (1.1%)
ING 13,100 613,035
-----------
Media & Entertainment
(1.1%)
Polygram N.V. 13,500 600,526
-----------
Total Netherlands 2,822,558
-----------
Norway (0.8%)
Chemicals (0.8%)
Norsk Hydro A.S. 11,111 447,798
-----------
Total Norway 447,798
-----------
Singapore (1.8%)
Banks (1.2%)
Development Bank
of Singapore Ltd. 36,000 382,431
United Overseas
Bank Ltd. 27,900 305,884
-----------
688,315
-----------
Transportation (0.6%)
Jurong Shipyard Ltd. 42,000 377,528
-----------
Total Singapore 1,065,843
-----------
Spain (2.8%)
Building Materials &
Construction (0.6%)
Dragados Y
Construction SA 25,000 373,434
-----------
International Growth Fund
Aetna Mutual Funds Annual Report
112
<PAGE>
Number Market
of Shares Value
--------- -----------
Metals (0.8%)
Acerinox SA 4,000 $442,848
-----------
Oil & Gas Expl. and
Prod. (0.7%)
Repsol SA 12,000 383,898
-----------
Telephone Utilities (0.7%)
Telefonica de Espana 29,000 392,644
-----------
Total Spain 1,592,824
-----------
Sweden (2.0%)
Home Furnishings &
Appliances (1.2%)
Electrolux AB 13,500 701,496
-----------
Machinery & Equipment
(0.8%)
Atlas Copco AB 34,250 469,351
-----------
Total Sweden 1,170,847
-----------
Switzerland (2.1%)
Building Materials &
Construction (1.1%)
Holderbank Finlan
Glarus 825 636,637
Holderbank Finlan
Glarus Warrants~ 4,125 5,749
-----------
642,386
-----------
Metals (1.0%)
Alusuisse-Lonza
Holdings AG 1,200 598,232
-----------
Total Switzerland 1,240,618
-----------
United Kingdom (17.9%)
Banks (0.9%)
Abbey National Plc 74,000 502,713
-----------
Building Materials &
Construction (1.6%)
BPB Ind. Plc 95,000 465,975
See Notes to Portfolio of Investments
Number Market
of Shares Value
--------- -----------
Cookson Group 120,000 $465,975
-----------
931,950
-----------
Diversified (0.8%)
Bunzel 178,000 471,468
-----------
Food, Beverages &
Tobacco (1.8%)
Greenalls Group Plc 73,000 492,339
Hillsdown Holdings 210,000 575,111
-----------
1,067,450
-----------
Health Services (1.0%)
Smithkline Beecham 99,070 602,968
-----------
Media & Entertainment
(1.5%)
Ladbroke Group 180,000 447,336
Rank Organization
Plc 63,000 417,170
-----------
864,506
-----------
Metals (0.8%)
British Steel Plc 170,000 445,415
-----------
Oil & Gas Utilities (3.3%)
British Gas Plc 65,800 315,218
British Petroleum
Co., Plc 82,000 583,204
Eastern Electricity 30,000 390,193
North West Water
Plc 65,000 599,391
-----------
1,888,006
-----------
Publishing (0.8%)
Mirror Group Plc 214,000 493,345
-----------
Retail (1.9%)
Great Universal
Stores Plc 55,000 503,580
Portfolio of Investments
October 31, 1994
International Growth Fund
Aetna Mutual Funds Annual Report
113
<PAGE>
Number Market
of Shares Value
--------- -----------
Tesco Plc 155,000 $595,548
-----------
1,099,128
-----------
Semiconductors &
Electronics (1.5%)
Croda International
Plc 80,000 460,416
Siebe Plc 50,000 438,180
-----------
898,596
-----------
Telephone Utilities
(1.2%)
British Telecom Plc 109,700 706,676
-----------
Transportation (0.8%)
Peninsular & Oriental
Steam 45,000 467,937
-----------
Total United Kingdom 10,440,158
-----------
Total Common Stocks
(cost $51,423,816) $54,688,111
-----------
Principal
Amount
--------- -----------
Short-Term Investments (6.8%)
American Express
Corp., Comm. Paper,
4.60%, 11/01/94 27,500 2,750,000
See Notes to Financial Statements.
Principal Market
Amount Value
--------- -----------
Chevron Corp., Comm.
Paper, 4.63%,
11/01/94 12,240 $1,224,000
-----------
Total Short-Term
Investments
(cost $3,974,000)(a) $3,974,000
-----------
Total Investments
(cost $55,397,816) (a) $58,662,111
Notes to Portfolio of Investments
~ Non-income producing security.
(a) The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at October 31, 1994 are as
follows:
Unrealized gains..... $4,951,253
Unrealized losses.... (1,686,958)
-------------
Net unrealized gain.. $3,264,295
=============
Category percentages are based on net assets
International Growth Fund
Aetna Mutual Funds Annual Report
114
<PAGE>
Number of Market
Shares Value
--------- -----------
Common Stocks (91.5%)
Hong Kong (29.5%)
Banks (4.9%)
Hang Seng Bank Ltd. 86,000 $ 623,229
HSBC Holdings PLC 68,800 816,875
-----------
1,440,104
-----------
Building Materials & Construction (2.5%)
Hopewell Holdings
Ltd. 735,000 751,407
-----------
Diversified (4.7%)
Citic Pacific Ltd. 220,000 661,922
Hutchison Whampoa
Ltd. 160,000 739,178
-----------
1,401,100
-----------
Electric Utilities (4.6%)
China Light & Power
Co. Ltd. 122,000 636,247
Hong Kong Electric
Holdings Ltd. 230,000 723,261
-----------
1,359,508
-----------
Hotel, Restaurant & Casino (7.4
Amoy Properties Ltd. 300,000 372,695
Guangdong
Investments Ltd. 1,250,000 792,624
Hong Kong Land
Holdings Ltd. 225,000 576,512
Hysan Development
Co. Ltd. 175,000 466,516
-----------
2,208,347
-----------
Retail (1.0%)
Esprit Asia Holdings
Ltd. 630,000 297,574
-----------
Telephone Utilities (1.8%)
Hong Kong
Telecommunications
Ltd. 250,000 535,425
-----------
See Notes to Portfolio of Investments.
Number of Market
Shares Value
--------- -----------
Transportation (2.6%)
Swire Pacific Ltd. 100,000 $ 763,507
-----------
Total Hong Kong 8,756,972
-----------
Indonesia (11.2%)
Autos & Auto Equipment (1.9%)
PT Gadjah Tunggal
(Foreign-Registered
shares) 325,000 553,860
-----------
Banks (1.8%)
PT Bank Tiara Asia
(Foreign-Registered
shares) 220,000 395,187
PT Modern Bank
(Foreign-Registered
shares) 121,500 124,515
-----------
519,702
-----------
Financial Services (1.3%)
PT Wicaksana
Overseas
International
(Foreign-Registered
shares) 154,000 390,120
-----------
Hotel, Restaurant & Casino (2.2%)
PT Pakuwon Jati
(Foreign-Registered
shares) 332,000 355,530
PT Dharmala Intiland
(Foreign-Registered
shares) 225,000 308,308
-----------
663,838
-----------
Paper & Containers (4.0%)
PT Intl. Indorayon
Utama (Foreign-Registered shares) 250,000 679,371
PT Pabrik Kertas
Tjiwi Kimia
(Foreign-Registered
shares) 198,000 510,704
-----------
1,190,075
-----------
Total Indonesia 3,317,595
-----------
Portfolio of Investments
October 31, 1994
Asian Growth Fund
Aetna Mutual Funds Annual Report
115
<PAGE>
Number of Market
Shares Value
---------- -----------
South Korea (1.9%)
Oil & Gas Expl. & Prod. (1.9%)
Yukong Ltd. 9,600 $ 551,565
-----------
Total South Korea 551,565
-----------
Malaysia (16.7%)
Banks (1.2%)
Malayan Banking
BHD 50,000 340,509
-----------
Diversified (3.4%)
Mulpha International
BHD 300,000 472,016
Renong Berhad 350,000 547,945
-----------
1,019,961
-----------
Electric Utilities (1.8%)
Tenaga Nasional BHD 100,000 532,290
-----------
Hotel, Restaurant & Casino (4.8%)
Faber Group BHD 255,000 288,434
Kampong Lanjut Tin
Dredging Berhad 175,000 767,124
Tan & Tan
Developments BHD 250,000 371,820
-----------
1,427,378
-----------
Paper & Containers (4.5%)
Aokam Perdana
Berhad 50,000 412,915
Aokam Perdana
Berhad 'A' Shares 20,000 156,556
Land & General BHD 155,000 764,384
-----------
1,333,855
-----------
Publishing (1.0%)
The New Straits
Times Press BHD 75,000 293,541
-----------
Total Malaysia 4,947,534
-----------
Number of Market
Shares Value
--------- -----------
Philippines (7.5%)
Banks (2.4%)
Philippine National
Bank 46,354 $ 726,610
-----------
Commercial Services (3.1%)
Ayala Land, Inc. 212,000 332,315
SM Prime Holdings
Inc. 1,700,000 580,788
-----------
913,103
-----------
Electric Utilities (0.0%)
Manila Electric
Company 'B' shares 400 5,627
-----------
Food, Beverage & Tobacco (0.1%)
San Miguel
Corporation 'B'
shares 6,000 32,556
-----------
Home Furnishings & Appliances (0.9%)
Sanitary Wares
Manufacturing
Corp. 434,700 266,446
-----------
Telephone Utilities (1.0%)
Philippine Long
Distance Telephone 5,000 289,389
-----------
Total Philippines 2,233,731
-----------
Singapore (6.7%)
Banks (3.0%)
The Development
Bank of Singapore
Ltd. (Foreign-Registered shares) 55,000 584,270
Overseas-Chinese
Banking
Corporation Ltd.
(Foreign-Registered
shares) 28,000 306,980
-----------
891,250
-----------
Asian Growth Fund
Aetna Mutual Funds Annual Report
116
<PAGE>
Number of Market
Shares Value
--------- -----------
Diversified (2.4%)
Straits Steamship
Land Ltd. 200,000 $ 715,015
-----------
Transportation (1.3%)
Sembawang Corp.
Ltd. 50,000 388,151
-----------
Total Singapore 1,994,416
-----------
Thailand (16.5%)
Banks (8.6%)
Bangkok Bank
Company
Ltd.(Foreign-Registered shares) 60,000 650,002
Bangkok Metropolitan
Bank Public Co.
Ltd.(Foreign-Registered shares)..... 550,000 733,760
Nava Finance &
Securities Public
Co. Ltd. (Foreign-Registered shares) 60,000 467,038
Siam City Bank
Public Co.
Ltd.(Foreign-Registered shares) 505,000 714,250
-----------
2,565,050
-----------
Building Materials & Construction (2.5%)
Siam Cement Public
Co. Ltd. (Foreign-Registered shares) 7,000 403,884
TPI Polene Public Co.
Ltd. (Foreign-Registered shares) 32,000 346,668
-----------
750,552
-----------
Electrical Equipment (0.6%)
Electricity Generating
Public Co. Ltd. 220,000 194,198
-----------
See Notes to Portfolio of Investments.
Number of Market
Shares Value
--------- -----------
Home Furnishings & Appliances (0.5%)
Sanyo Universal
Electric Public Co.,
Ltd. (Foreign-Registered shares) 6,000 $ 134,815
-----------
Metals (4.3%)
Bangkok Steel
Industry Public
Company Ltd.
(Foreign-Registered
shares) 201,000 516,150
Sahaviriya Steel
Industry Public Co.
(Foreign-Registered
shares) 300,000 752,317
-----------
1,268,467
-----------
Total Thailand 4,913,082
-----------
United States (1.5%)
Financial Services (1.5%)
Benpress Holdings
Corp.-GDR 40,000 460,000
-----------
Total United States 460,000
-----------
Total Common Stocks
(cost $25,149,963 ) $27,174,895
-----------
Principal
Amount
--------- -----------
Short-Term Investments (7.0%)
American Express
Corp., Comm.
Paper, 4.60%,
11/01/94 1,071,000 1,071,000
Chevron Corp.,
Comm. Paper,
4.63%, 11/01/94 1,000,000 1,000,000
-----------
Total Short-Term
Investments
(cost $2,071,000) $2,071,000
-----------
Total Investments
(cost $27,220,963) (a) $29,245,895
Portfolio of Investments
October 31, 1994
Asian Growth Fund
Aetna Mutual Funds Annual Report
117
<PAGE>
Notes to Portfolio of Investments
~ Non-income producing security.
(a) The cost of investments for income tax purposes is identical. Unrealized
gains and losses, based on identified tax cost at October 31, 1994 are as
follows:
Unrealized gains..... $2,962,388
Unrealized losses.... (937,456)
-----------
Net unrealized gain.. $2,024,932
===========
Category percentages are based on net assets.
See Notes to Financial Statements.
Asian Growth Fund
Aetna Mutual Funds Annual Report
118
<PAGE>
The Shareholders and Board of Directors
Aetna Series Fund, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the portfolios of investments of Aetna Series Fund, Inc. (comprising,
respectively, Money Market Fund, Government Fund, Bond Fund, Tax-Free Fund, The
Aetna Fund, Growth and Income Fund, Growth Fund, Small Company Growth Fund,
International Growth Fund, and Asian Growth Fund) as of October 31, 1994, and
the related statements of operations, statements of changes in net assets and
financial highlights for Select Class shares for the ten month period ended
October 31, 1994 and financial highlights for the Adviser Class shares for the
period from April 15, 1994 (date of initial public offering) to October 31,
1994, and the statements of changes in net assets for the year ended December
31, 1993 and the financial highlights for each of the years in the two-year
period ended December 31, 1993 for Select Class shares of the Money Market
Fund, Bond Fund, The Aetna Fund, Growth and Income Fund and International
Growth Fund. These financial statements and financial highlights are the
responsibility of the Funds' management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit also includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
financial statements. Our procedures included confirmation of securities owned
as of October 31, 1994 by correspondence with the custodian and brokers. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective Funds constituting the Aetna Series Fund, Inc. as of October
31, 1994, the results of their operations, changes in their net assets and the
financial highlights for the Select Class shares and the Adviser Class shares
for the years and periods specified in the first paragraph above, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick llp
Hartford, Connecticut
December 16, 1994
Independent Auditors' Report
Aetna Mutual Funds Annual Report
119
<PAGE>
PART C
OTHER INFORMATION
-----------------
Item 24. Financial Statements and Exhibits
- ------------------------------------------
(a) Financial Statements:
(1) Included in Part A:
Financial Highlights
(2) Included in Part B:
Audited financial statements as of October 31, 1994, which include the
following:
Statements of Assets and Liabilities as of October 31, 1994
Statements of Operations for the 10 month period ended October 31,
1994
Statement of Changes in Net Assets for the 10 month period ended
October 31, 1994 and the year ended December 31, 1993
Notes to Financial Statements
Changes to Portfolio of Investments
Independent Auditors' Report
Unaudited financial statements as of April 30, 1995, which include the
following:
Statements of Assets and Liabilities as of April 30, 1995
Statements of Operations for the six month period ended April 30,
1995
Statements of Changes in Net Assets for the six month period ended
April 30, 1995 and the 10 month period ended October 31, 1994
Notes to Financial Statements
Unaudited Portfolio of Investments
(b) Exhibits:
(1)(a) Articles of Incorporation, including Articles
Supplementary1
(2) By-laws (as amended September 13, 1994)1
(3) Not applicable
(4) Not applicable
(5)(a) Form of Investment Advisory Agreement between Registrant
and Aetna Life Insurance and Annuity Company ("ALIAC")
(5)(b) Subadvisory Agreement between Aetna Life Insurance and
Annuity Company and Aeltus Far East (formerly Aeltus
Investment Management International (FE) Limited)
(5)(c) Form of Subadvisory Agreements between Aetna Life
Insurance and Annuity Company and Aetna Capital Management
Inc.
(6)(a) Underwriting Agreement between the Registrant and ALIAC1
(6)(b) Dealer Agreement for Registrant between ALIAC and Aetna
Investment Services, Inc. (February 8, 1994)1
(7) Not applicable
(8)(a)(1) Custodian Agreement - Mellon Bank, N.A.1
(8)(a)(2) Amendments to Custodian Agreement - Mellon Bank, N.A.1
<PAGE>
(9)(a) Form of Administrative Services Agreement1
(9)(b) License Agreement1
(10)(a) Consent of Counsel
(10)(b) Opinion of Counsel2
(11) Consent of Independent Auditors
(12) Not applicable
(13) Not applicable
(14) Not applicable
(15)(a) Distribution Plan1
(15)(b) Form of Shareholder Services Plan1
(16) Schedule for Computation of Performance Data
(18) Powers of Attorney3
(27) Financial Data Schedules
1 Incorporated herein by reference to the Registration Statement on Form N-1A,
File No. 33-85620, as filed electronically with the Securities and Exchange
Commission on June 28, 1995.
2 Incorporated herein by reference to the Rule 24f-2 notice filed with the
Securities and Exchange Commission on December 28, 1994.
3 Power of Attorney for Jon Y. Kim is included herein. Power of Attorney for
all other signatories incorporated herein by reference to the Registration
Statement on Form N-1A , File No. 33-41694, as filed with the Securities and
Exchange Commission on March 27, 1995.
<PAGE>
Item 25. Persons Controlled by or Under Common Control
- -------- ---------------------------------------------
Registrant is a Maryland corporation for which separate financial
statements are filed. As of September 30,1995, Aetna Life Insurance
Company owned .65% of the Select Class, Aetna Life Insurance and
Annuity Company owned 3.68% of the Select Class and 6.94% of the
Adviser Class and The Aetna Casualty and Surety Company owned .06%
of the Select Class of the Registrant's outstanding shares of
beneficial interest. All these companies are owned by Aetna Life and
Casualty Company, a Connecticut company.
A diagram of all persons directly or indirectly under common control
with the Registrant is incorporated herein by reference to the
Registration Statement on Form N-4, File No. 33-88720, as filed with
the Securities and Exchange Commission on January 20, 1995.
Item 26. Number of Holders of Securities
- -------- -------------------------------
(1) Title of Series (2) Number of Record Holders
------------------- ----------------------------
As of September 30, 1995
Select Class Adviser Class
------------ -------------
Money Market 6,821 3,853
Government 104 61
Bond 1,382 76
Tax-Free 55 86
The Aetna 2,678 308
Growth and Income 1,927 559
Growth 407 563
Small Company Growth 270 416
International Growth 1,391 379
Asian Growth 226 273
Ascent 4 0
Crossroads 4 0
Legacy 4 0
<PAGE>
Item 27. Indemnification
- -------- ---------------
Article 9, Section (d) of the Registrant's Articles of
Incorporation, provide for indemnification of directors and
officers. In addition, the Registrant's officers and directors are
covered under a directors and officers errors and omissions
liability insurance policy issued by Gulf Insurance Company which
expires in October, 1996.
Finally, reference is 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.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and
is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities
being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such
issue.
<PAGE>
Item 28. Business and Other Connections of Investment Adviser
- -------- ----------------------------------------------------
- ------------------------------------------------------------------------------
Name Positions and Offices Other Principal Position(s)
with Investment Held Since October 31,
Adviser 1992/Addresses*/**
- ------------------------------------------------------------------------------
Daniel P. Kearney Director, President Executive Vice President (since
and Chairman, December 1993), and Group
Executive Committee, Executive, Financial Division
Principal Executive (February 1993 - December 1993)
Officer Aetna Life and Casualty Company;
Director, Aetna Insurance Company
of America (since February 1993);
Director and Chairman, Aetna
Realty Investors, Inc. (since
January 3, 1992); Director of
MBIA, Inc. (since 1992); Director,
Margaretten Financial Corporation,
Edison, New Jersey (1992-1994).
David E. Bushong Acting Chief Financial Vice President, Strategy & Policy,
Officer Investment Group (July 1991 -
November 1992); Vice President,
Corporate Planning Finance and
Administration (November 1992 -
March 1994); Vice President, Bond
Investment, Portfolio Management
(March 1994 - July 1994) for Aetna
Life Insurance Company, The Aetna
Casualty and Surety Company, The
Standard Fire Insurance Company,
151 Farmington Avenue, Hartford,
CT 06118.
<PAGE>
Christopher J. Burns Director (1991); Vice President (August 1988 -
Senior Vice President, March 1991), Aetna Life Insurance
Life; Member of Company; Director (February 1992 -
Executive Committee December 1993) and Senior Vice
President (December 1992-December
1993) of Aetna Insurance Company
of America; Director (1992 - April
1995) and Senior Vice President,
North American Operations (1993 -
April 1995) of Aetna
International, Inc. ; Director and
member of Investment Committee
(1992 - March 1995) of Aetna Life
Insurance Company of Canada;
Director (1992 - May 1995) of
Seguros Monterrey Aetna, S.A.;
Director (1992 - May 1995) of
Fianzas Monterrey Aetna S.A.;
Series "B" Director (1992 May
1995) of Valores Monterrey Aetna
S.A. de C.V.
Laura R. Estes Director and Senior Director and Senior Vice
Vice President, ALIAC President, Aetna Insurance
Pension; Member of Company of America (since
Executive Committee February 1993); Director,
Aetna Investment Services,
Inc. (since 1993).
John Y. Kim Director and Senior Chief Investment Officer, Aetna
Vice President, ALIAC Life and Casualty Company (since
Investments May 1994); Managing Director,
Mitchell Hutchins Institutional
Investors, New York, NY (September
1993 - April 1994).
Shaun P. Mathews Director and Senior Director and Chief Operations
Vice President, Officer, Aetna Investment
Strategic Markets and Services, Inc. (since February
Products 1993); Director and Senior
Vice President, Aetna Insurance
Company of America (since February
1993); Vice President of Aetna
Life Insurance Company (since
1991).
<PAGE>
Scott A. Striegel Director and Senior Vice President, Aetna Life
Vice President Insurance Company (since 1992);
Senior Vice President (since 1992)
and Director (since June 1991),
Aetna Insurance Company of
America.
James C. Hamilton Director, Vice Chief Financial Officer, Aetna
President and Investment Services, Inc. (since
Treasurer 1993); Director, Vice President
and Treasurer, Aetna Insurance
Company of America (since February
1993); Director, Aetna Private
Capital, Inc. (since November
1990); Vice President and Actuary
of Aetna Life Insurance Company
(since 1988).
Gary G. Benanav Director Executive Vice President,
Property-Casualty Division (since
December 1993) and Group Executive
(April 1992-December 1993), Aetna
Life and Casualty Company, Aetna
Life Insurance Company and Aetna
Casualty and Surety Company;
Chairman and Chief Executive
Officer (since September 1992) and
Director (since October 1991),
Aetna Life Insurance Company of
America; Director and President
(1992-1994), Aetna Insurance
Company of America; President
(since August 1994) and Director
(1992-1994), Aetna Casualty
Company of Connecticut, Aetna
Commercial Insurance Company,
Aetna Excess and Surplus Lines
Company, Aetna Insurance Company,
Aetna Personal Security Insurance
Company, Farmington Casualty
Company, The Automobile Insurance
Company of Hartford, Connecticut;
Director Aetna Series Fund, Inc.
(April 30, 1993 - March 16,
1994); Director of Barnes Group,
Inc. (currently).
<PAGE>
Eugene M. Trovato Vice President, Vice President Controller,
Controller (February 1995 - Present),
(chief accounting Assistant Vice President Planning
officer) Reporting, and Analysis (October
1992- February 1995), Assistant
Vice President of Financial
Reporting (July 1989-October
1992), Director of Financial
Reporting in Corporate Controllers
(February 1989- July 1989), Aetna
Life Insurance and Annuity Company
Zoe Baird Senior Vice President Senior Vice President and General
and General Counsel Counsel of Aetna Life and
Casualty Company (since April
1992); Director, Zurn
Industries, Inc., Erie,
Pennsylvania (since April 1993);
Director, Southern New England
Telecommunication Corp. and
Southern New England Telephone
Company, New Haven, CT (since
November 1990).
Susan Schechter Counsel and Corporate Counsel, Aetna Life and Casualty
Secretary Company (since November 1993);
Corporate Secretary and Counsel,
Aetna Life Assignment Company
(since June 1994); Associate
Attorney, Steptoe & Johnson,
Washington, D.C. (September
1986-October 1993).
Fred J. Franklin Vice President and Chief Operating Officer and
Chief Compliance General Counsel, Barclay
Officer Investments, Inc., Providence,
RI (January 1991 - November 1993).
* The principal business address of each person named is 151 Farmington
Avenue, Hartford, Connecticut 06156.
** Certain officers and directors of the investment adviser currently hold
(or have held during the past two years) other positions with affiliates
of the Registrant which are not deemed to be principal positions.
<PAGE>
Item 29. Principal Underwriters
- -------- ----------------------
(a) In addition to serving as the principal underwriter for the
Registrant, Aetna Life Insurance and Annuity Company (ALIAC) also
acts as the principal underwriter for Aetna Variable Fund, Aetna
Income Shares, Aetna Variable Encore Fund, Aetna Investment Advisers
Fund, Inc., Aetna GET Fund, Aetna Generation Portfolios, Inc.
Variable Annuity Separate Accounts B, C, and G, (separate accounts
of ALIAC registered as unit investment trusts), and Separate Account
I (a separate account of Aetna Insurance Company of America
registered as a unit investment trust). ALIAC is also the depositor
of Variable Life Accounts B, C and G. Additionally, ALIAC is the
investment adviser for Aetna Variable Fund, Aetna Income Shares,
Aetna Variable Encore Fund, Aetna Investment Advisers Fund, Inc.,
Aetna GET Fund, Aetna Series Fund, Inc. and Aetna Generation
Portfolios, Inc.
(b)
Name and Principal Positions and Offices Positions and Offices
Business Address* with Principal Underwriter with Registrant
- ----------------- -------------------------- ---------------
David E. Bushong Acting Chief Financial
Officer
Daniel P. Kearney Director and President Director
Christopher J. Burns Director and Senior Vice
President, Life
Laura R. Estes Director and Senior Vice
President, ALIAC Pensions
John Y. Kim Director and Senior Vice Director and Vice
President, ALIAC Investments President
Shaun P. Mathews Director and Senior Vice Director and President
President, Strategic Markets
and Products
Scott A. Striegel Director and Senior Vice
President, Annuity
James C. Hamilton Director, Vice President Vice President and
and Treasurer Treasurer
Gary G. Benanav Director
Eugene M. Trovato Vice President Controller
<PAGE>
Zoe Baird Senior Vice President and
General Counsel
Fred J. Franklin Vice President and Chief
Compliance Officer
Susan Schechter Corporate Secretary and
Counsel
* The principal business address of all directors and officers listed
is 151 Farmington Avenue, Hartford, Connecticut 06156.
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
As required by Section 31(a) of the 1940 Act and the Rules
promulgated thereunder, the Registrant and its investment adviser,
ALIAC, maintain physical possession of each account, book or other
documents, except shareholder records, at its principal offices at
151 Farmington Avenue, Hartford, Connecticut 06156.
Shareholder records are maintained by the transfer agent, Firstar
Trust Company, 615 East Michigan Street, Milwaukee, Wisconsin 53261.
Item 31. Management Services
- -------- -------------------
Not applicable.
Item 32. Undertakings
- -------- ------------
The Registrant undertakes that if requested by the holders of at
least 10% of a Fund's outstanding shares, the Registrant will hold a
shareholder meeting for the purpose of voting on the removal of one
or more Directors and will assist with communication concerning that
shareholder meeting as if Section 16(c) of the Investment Company
Act of 1940 applied.
The Registrant undertakes to furnish to each person to whom a
prospectus is delivered a copy of the Fund's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
----------
Pursuant to the Securities Act of 1933 and the Investment Company Act of 1940,
Aetna Series Fund, Inc. (Registrant) and has duly caused this Post-Effective
Amendment No. 10 to the Registration Statement to be signed on its behalf by the
undersigned, thereto duly authorized, in the City of Hartford, and State of
Connecticut, on the 17th day of November, 1995.
AETNA SERIES FUND, INC.
-----------------------
(Registrant)
By Shaun P. Mathews*
-----------------------------------
Shaun P. Mathews
President
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons on November 17, 1995 in the capacities indicated.
Signature Title
- --------- -----
Shaun P. Mathews* President and Director
- ------------------------- (Principal Executive Officer)
James C. Hamilton* Vice President and Treasurer
- ------------------------- (Principal Financial and Accounting Officer)
Morton Ehrlich* Director
- -------------------------
Maria T. Fighetti* Director
- -------------------------
David L. Grove* Director
- -------------------------
Daniel P. Kearney* Director
- -------------------------
John Y. Kim* Director
- -------------------------
Sidney Koch* Director
- -------------------------
<PAGE>
Corine T. Norgaard* Director
- -------------------------
Richard G. Scheide* Director
- -------------------------
By: /s/ Susan E. Bryant
- ------------------------------------
* Susan E. Bryant
Attorney-in-Fact
<PAGE>
AETNA SERIES FUND, INC.
EXHIBIT INDEX
Exhibit No. Exhibit Page
- ----------- ------- ----
99-b(1) Articles of Incorporation, including *
Articles Supplementary
99-b(2) By-laws (as amended September 13, 1994) *
99-b(5)(a) Form of Investment Advisory Agreements
between Registrant and Aetna Life -
Insurance and Annuity Company ("ALIAC")
99-b(5)(b) Subadvisory Agreement between
Aetna Life Insurance and Annuity -
Company and Aeltus Far East (formerly
Aeltus Investment Management
International (FE) Limited)
99-b(5)(c) Form of Subadvisory Agreements between
Aetna Life Insurance and Annuity -
Company and Aetna Capital Management Inc.
99-b(6)(a) Underwriting Agreement between the *
Registrant and ALIAC
99-b(6)(b) Dealer Agreement for registrant between
ALIAC and Aetna Investment Services, Inc. *
(February 8, 1994)
99-b(8)(a)(1) Custodian Agreement - Mellon Bank, N.A. *
99-b(8)(a)(2) Amendments to Custodian Agreement - *
Mellon Bank, N.A.
99-b(9)(a) Form of Administrative Services Agreement *
99-b(9)(b) License Agreement *
99-b(10) Consent of Counsel -
99-b(11) Consent of Independent Auditors -
99-b(15)(a) Distribution Plan *
99-b(15)(b) Form of Shareholder Services Plan *
99-b(16) Schedule for Computation of Performance -
Data
99-6(18) Powers of Attorney -
Financial Data Schedules -
*Incorporated by reference.
FORM OF INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AETNA SERIES FUND, INC., a
Maryland corporation (the "Company"), on behalf of its series, ________________
and AETNA LIFE INSURANCE AND ANNUITY COMPANY, a Connecticut insurance
corporation (the "Adviser"), as of the Date set forth below.
R E C I T A L
WHEREAS, the Company is registered as an open-end diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act") and the rules and regulations promulgated thereunder;
WHEREAS, the Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and engages in
the business of acting as an investment adviser;
WHEREAS, the Company has established the Aetna Money Market
Fund series (the "Fund");
WHEREAS, the Company, on behalf of the Fund, and the Adviser desire to
enter into an agreement to provide for investment advisory and management
services for the Fund on the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER
The Adviser is hereby appointed to serve as the investment adviser to
the Fund, to provide investment advisory services set forth below in Section II,
subject to the terms of this Agreement and the policies and control of the
Company's Board of Directors (the "Board"). The Adviser shall, for all purposes
herein, be deemed an independent contractor and shall have, unless otherwise
expressly provided or authorized, no authority to act for or represent the Fund
in any way or otherwise be deemed an agent of the Fund.
II. DUTIES OF THE ADVISER
In carrying out the terms of this Agreement, the Adviser shall provide
the following services:
A. supervise all aspects of the operations of the Fund;
<PAGE>
B. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic,
foreign or otherwise, whether affecting the economy generally or the
Fund's portfolio and whether concerning the individual issuers of the
securities included in the Fund's portfolio or the activities in which
the issuers engage, or with respect to securities that the Adviser
considers desirable for inclusion in the Fund's portfolio;
C. determine which issuers and securities shall be
represented in the Fund's portfolio and regularly report
thereon to the Board;
D. formulate and implement continuing programs for
the purchases and sales of the securities of such issuers
and regularly report thereon to the Board;
E. give instructions to the custodian and/or
sub-custodian of the Fund appointed by the Board, as to
deliveries of securities, transfers of currencies and
payments of cash for the account of the Fund, in relation to
the matters contemplated by this Agreement; and
F. take, on behalf of the Fund, all actions which appear to the Company
and the Fund necessary to carry into effect the purchase and sale of
securities for the Fund and the supervisory functions listed above,
including the placing of orders for the purchase and sale of securities
for the Fund.
III. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE ADVISER
Adviser hereby represents and warrants to the Company as follows:
1. Due Incorporation and Organization. The Adviser is duly
organized and is in good standing under the laws of the State
of Connecticut and is fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder.
2. Registration. The Adviser is registered as an investment
adviser with the Securities and Exchange Commission (the
"SEC") under the Advisers Act, and is registered or licensed
as an investment adviser under the laws of all jurisdictions
in which its activities require it to be so registered or
licensed. The Adviser shall maintain such registration or
license in effect at all times during the term of this
Agreement.
3. Best Efforts. The Adviser at all times shall provide its
best judgment and effort to the Fund in carrying out its
obligations hereunder.
2
<PAGE>
B. REPRESENTATIONS AND WARRANTIES OF THE FUND AND THE
COMPANY
The Company, on behalf of the Fund, hereby represents
and warrants to the Adviser as follows:
1. Due Incorporation and Organization. The Company has been
duly incorporated under the laws of the State of Maryland and
it is authorized to enter into this Agreement and carry out
its terms.
2. Registration. The Company is registered as an investment
company with the SEC under the 1940 Act and shares of the Fund
are registered for offer and sale to the public under the
Securities Act of 1933, as amended (the "1933 Act") and all
applicable state securities laws. Such registrations will be
kept in effect during the term of this Agreement.
IV. DELEGATION OF RESPONSIBILITIES
A. APPOINTMENT OF SUBADVISER
Subject to the approval of the Board and the shareholders of
the Fund, the Adviser may enter into a Subadvisory Agreement to engage
a subadviser (the "Subadviser") to the Adviser with respect to the
Fund.
B. DUTIES OF SUBADVISER
Under a Subadvisory Agreement, the Subadviser shall:
1. provide the Adviser with such economic research and
securities analysis as the Adviser may from time to time
consider necessary or advisable in connection with the
Adviser's performance of its duties hereunder;
2. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy
generally or the Fund, and whether concerning the individual
issuers whose securities are included in the Fund or the
activities in which such issuers engage, or with respect to
securities that the Subadviser considers desirable for
inclusion in the Fund's investment portfolio;
3. determine which issuers and securities shall be purchased,
sold or exchanged by the Fund or otherwise represented in the
Fund's investment portfolio and regularly report thereon to
the Adviser and, at the request of the Adviser, to the Board;
and
3
<PAGE>
4. formulate and implement continuing programs for the
purchase and sale of the securities of such issuers and
regularly report thereon to the Adviser and, at the request of
the Adviser, to the Board.
C. DUTIES OF THE ADVISER
In the event the Adviser delegates certain responsibilities
hereunder to a Subadviser, the Adviser shall, among other things:
1. monitor the investment program maintained by the Subadviser
for the Fund to ensure that the Fund's assets are invested in
compliance with the Subadvisory Agreement and the Fund's
Registration Statement;
2. consult with and assist the Subadviser in maintaining
appropriate policies, procedures and records so that the
Sub-Adviser operates its business and any investment program
hereunder in compliance with applicable laws;
3. establish and maintain periodic communications with the
Subadviser to share information it obtains with the Subadviser
concerning the effect of developments and data on the
investment program maintained by the Subadviser; and
4. oversee matters relating to Fund promotion, marketing
materials and the Subadviser's reports to the Board.
V. BROKER-DEALER RELATIONSHIPS
A. PORTFOLIO TRADES
The Adviser, at its own expense, shall place all orders for the
purchase and sale of portfolio securities for the Fund with brokers or dealers
selected by the Adviser, which may include brokers or dealers affiliated with
the Adviser. The Adviser shall use its best efforts to seek to execute portfolio
transactions at prices that are advantageous to the Fund and at commission rates
that are reasonable in relation to the benefits received.
B. SELECTION OF BROKER-DEALERS
In selecting broker-dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) to the Fund and/or the other accounts over
which the Adviser or its affiliates exercise investment discretion. The Adviser
is authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund that is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Adviser determines in good faith
that such amount of commission is reasonable in relation to the
4
<PAGE>
value of the brokerage and research services provided by such broker or dealer.
This determination may be viewed in terms of either that particular transaction
or the overall responsibilities that the Adviser and its affiliates have with
respect to accounts over which they exercise investment discretion. The Board
shall periodically review the commissions paid by the Fund to determine if the
commissions paid over representative periods of time were reasonable in relation
to the benefits received.
VI. CONTROL BY THE BOARD OF DIRECTORS
Any investment program undertaken by the Adviser pursuant to this
Agreement, as well as any other activities undertaken by the Adviser on behalf
of the Fund pursuant thereto, shall at all times be subject to any directives of
the Board.
VII. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Adviser shall
at all times conform to:
A. all applicable provisions of the 1940 Act;
B. the provisions of the registration statement of the Company, as the
same may be amended from time to time, under the 1933 Act and the 1940
Act;
C. the provisions of the Company's Articles of Incorporation, as
amended;
D. the provisions of the By-Laws of the Company, as amended; and
E. any other applicable provisions of state and federal law.
VIII. COMPENSATION
For the services to be rendered, the facilities furnished and the
expenses assumed by the Adviser, the Company, on behalf of the Fund, shall pay
to the Adviser an annual fee, payable monthly, based upon the following average
daily net assets of the Fund:
New Insert
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily at the rate of 1/365 of the annual advisory fee
applied to the daily net assets of the Fund. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees as set
forth above. Subject to the provisions of Paragraph X hereof, payment of the
Adviser's compensation
5
<PAGE>
for the preceding month shall be made as promptly as
possible. For so long as a Subadvisory Agreement is in effect, the Company
acknowledges on behalf of the Fund that the Adviser will pay to the Subadviser,
as compensation for acting as Subadviser to the Fund, the fees specified in the
Subadvisory Agreement.
IX. EXPENSES
The expenses in connection with the management of the Fund shall be
allocable between the Fund and the Adviser as follows:
A. EXPENSES OF THE ADVISER
The Adviser shall pay:
1. The salaries, employment benefits and other related costs
of those of its personnel engaged in providing investment
advice to the Fund, including without limitation, office
space, office equipment, telephone and postage costs; and
2. Any fees and expenses of all directors of the Company who
are employees of the Adviser or an affiliated entity and any
salaries and employment benefits of officers of the Company
who are affiliated persons of the Adviser for acting as
officers of the Company.
B. EXPENSES OF THE FUND
The Fund shall pay:
1. Investment advisory fees pursuant to this Agreement;
2. Brokers' commissions, issue and transfer taxes or other
transaction fees chargeable in connection with securities or
other investment transactions, including portions of
commissions that may be paid to reflect brokerage research
services provided to the Adviser;
3. Fees and expenses of the Fund's independent public
accountants and outside legal counsel;
4. Expenses of printing and distributing proxies, proxy
statements, prospectuses and reports to shareholders of the
Fund, except as such expenses may be borne by any distributor
of the Fund;
5. Interest and taxes;
6. The fees and expenses of those of the Company's directors
who are not "interested persons" (as defined in the 1940 Act)
of the Company or the Adviser;
6
<PAGE>
7. Shareholders' meeting expenses;
8. Administrator, transfer agent, custodian and dividend
disbursing agent fees and expenses;
9. Fees of dividend, accounting or pricing agents appointed by
the Fund;
10. Fees payable by the Company to the SEC or in connection
with the registration of shares of the Fund under the laws of
any state or territory of the United States or of the District
of Columbia;
11. Fees and assessments of the Investment Company Institute
or any successor organization or other association memberships
approved by the Board;
12. Such nonrecurring or extraordinary expenses as may arise,
including organizational expenses, litigation affecting the
Fund and any indemnification by the Company of its officers,
directors or agents with respect thereto;
13. All other ordinary business expenses incurred in the
operations of the Fund unless specifically provided otherwise
in this paragraph IX;
14. All costs attributable to investor services, administering
shareholder accounts and handling shareholder relations
(including, without limitation, telephone and personnel
expenses);
15. All expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares of
the Fund or in cash; and
16. Insurance premiums on property or personnel (including
officers and directors) of the Company which inure to its
benefit.
X. EXPENSE LIMITATION
If, for any fiscal year, the total of all ordinary business expenses of
the Fund, including all investment advisory fees but excluding brokerage
commissions, distribution fees, taxes, interest and extraordinary expenses and
certain other excludable expenses, would exceed the most restrictive expense
limits imposed by any statute or regulatory authority of any jurisdiction in
which shares of the Fund are offered for sale (unless a waiver is obtained), the
Adviser shall reduce its advisory fee in order to reduce such excess expenses,
but will not be required to reimburse the Fund for any ordinary business
expenses which exceed the amount of its advisory fee for such fiscal year. The
amount of any such reduction is to be borne by the Adviser and shall be deducted
from the monthly management fee otherwise payable to the Adviser during such
fiscal year. For the purposes of this paragraph, the term "fiscal year" shall
exclude the portion of the current fiscal year which shall have elapsed prior to
the date hereof and shall include the
7
<PAGE>
portion of the then current fiscal year which shall have elapsed at the date
of termination of this Agreement.
XI. ADDITIONAL SERVICES
Upon the request of the Board of Directors, the Adviser may perform
certain accounting, shareholder servicing or other administrative services on
behalf of the Fund that are not required by this Agreement. Such services will
be performed on behalf of the Fund and the Adviser may receive from the Fund
such reimbursement for costs or reasonable compensation for such services as may
be agreed upon between the Adviser and the Board on a finding by the Board that
the provision of such services by the Adviser is in the best interests of the
Fund and its shareholders. Payment or assumption by the Adviser of any Fund
expense that the Adviser is not otherwise required to pay or assume under this
Agreement shall not relieve the Adviser of any of its obligations to the Fund
nor obligate the Adviser to pay or assume any similar Fund expense on any
subsequent occasions. Such services may include, but are not limited to, (a) the
services of a principal financial officer of the Company (including applicable
office space, facilities and equipment) whose normal duties consist of
maintaining the financial accounts and books and records of the Company and the
Fund and the services (including applicable office space, facilities and
equipment) of any of the personnel operating under the direction of such
principal financial officer; (b) the services of staff to respond to shareholder
inquiries concerning the status of their accounts, providing assistance to
shareholders in exchanges among the investment companies managed or advised by
the Adviser, changing account designations or changing addresses, assisting in
the purchase or redemption of shares; or otherwise providing services to
shareholders of the Fund; and (c) such other administrative services as may be
furnished from time to time by the Adviser to the Company or the Fund at the
request of the Board.
XII. NON-EXCLUSIVITY
The services of the Adviser to the Fund are not to be deemed to be
exclusive, and the Adviser shall be free to render investment advisory or other
services to others (including other investment companies) and to engage in other
activities, so long as its services under this Agreement are not impaired
thereby. It is understood and agreed that officers and directors of the Adviser
may serve as officers or directors of the Company, and that officers or
directors of the Company may serve as officers or directors of the Adviser to
the extent permitted by law; and that the officers and directors of the Adviser
are not prohibited from engaging in any other business activity or from
rendering services to any other person, or from serving as partners, officers,
directors or trustees of any other firm or trust, including other investment
companies.
8
<PAGE>
XIII. TERM
This Agreement shall become effective at the close of business on the
date hereof and shall remain in force and effect, subject to Paragraphs XIV and
XV hereof and approval by the Fund's shareholders, for a period of two years
from the date hereof.
XIV. RENEWAL
Following the expiration of its initial two-year term, the Agreement
shall continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
A. (1) by the Company's directors or (2) by the vote of a
majority of the Fund's outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and
B. by the affirmative vote of a majority of the directors who are not
parties to this Agreement or interested persons of a party to this
Agreement (other than as a director of the Company), by votes cast in
person at a meeting specifically called for such purpose.
XV. TERMINATION
This Agreement may be terminated at any time, without the payment of
any penalty, by vote of the Company's directors or by vote of a majority of the
Fund's outstanding voting securities (as defined in Section 2(a)(42) of the 1940
Act), or by the Adviser, on sixty (60) days' written notice to the other party.
The notice provided for herein may be waived by the party required to be
notified. This Agreement shall automatically terminate in the event of its
"assignment", as that term is defined in Section 2(a)(4) of the 1940 Act.
XVI. LIABILITY OF ADVISER AND INDEMNIFICATION
A. LIABILITY
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Adviser or its officers, directors or
employees, or reckless disregard by the Adviser of its duties under
this Agreement, the Adviser shall not be liable to the Company or to
any shareholder of the Company for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
B. INDEMNIFICATION
In the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties hereunder on
the part of the Adviser or any officer,
9
<PAGE>
director or employee of the Adviser, to the extent permitted by
applicable law, the Company hereby agrees to indemnify and hold the
Adviser harmless from and against all claims, actions, suits and
proceedings at law or in equity, whether brought or asserted by a
private party or a governmental agency, instrumentality or entity of
any kind, relating to the sale, purchase, pledge of, advertisement of,
or solicitation of sales or purchases of any security (whether of the
Fund or otherwise) by the Company, its officers, directors, employees
or agents in alleged violation of applicable federal, state or foreign
laws, rules or regulations.
XVII. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to the other party at such address as such
other party may designate for the receipt of such notice. Until further notice
to the other party, it is agreed that the address of the Adviser and that of the
Company for this purpose shall be 151 Farmington Avenue, Hartford, Connecticut
06156.
XVIII. QUESTIONS OF INTERPRETATION
This Agreement shall be governed by the laws of the State of
Connecticut. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act shall be resolved by reference to such term or provision of the
1940 Act and to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to the 1940 Act. In addition,
where the effect of a requirement of the 1940 Act reflected in the provisions of
this Agreement is revised by rule, regulation or order of the SEC, such
provisions shall be deemed to incorporate the effect of such rule, regulation or
order.
XIX. SERVICE MARK
The service mark of the Company and the Fund and the name "Aetna" have
been adopted by the Company with the permission of Aetna Life and Casualty
Company, and their continued use is subject to the right of Aetna Life and
Casualty Company to withdraw this permission in the event the Adviser or another
subsidiary or affiliated corporation of Aetna Life and Casualty Corporation
should not be the investment adviser of the Fund.
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers on the 13th
day of April, 1994.
Attest: AETNA SERIES FUND, INC.
/s/ Susan E. Bryant By:/s/Shaun P. Mathews
Name: Shaun P. Mathews
Title: President
Attest: AETNA LIFE INSURANCE AND
ANNUITY COMPANY
By:/s/James C. Hamilton
/s/ James C. Hamilton Name:James C. Hamilton
Title: Vice President and Treasurer
11
<PAGE>
Investment Advisory Agreement
Schedule of Parties
Investment Advisory Agreements have been entered into with the following parties
in substantially the same form and type as the exhibit included herewith.
Party Date
----- ----
Aetna Money Market Fund 4/13/94
Aetna Governement Fund 4/13/94
Aetna Bond Fund 4/13/94
The Aetna Fund 4/13/94
Aetna Growth and Income Fund 4/13/94
Aetna Growth Fund 4/13/94
Aetna Small Company Growth Fund 4/13/94
Aetna International Growth Fund 4/13/94
Aetna Asian Growth Fund 4/13/94
12
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Aetna Life Insurance and Annuity
Company, a Connecticut insurance corporation (the "Adviser") and Aeltus
Investment Management International (FE) Limited, a Hong Kong company (the
"Subadviser") as of the Date set forth below.
R E C I T A L
WHEREAS, Aetna Series Fund, Inc. (the "Company") is registered under
the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end,
diversified management investment company, consisting of multiple series of
investment portfolios;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Company's Articles of Incorporation authorizes the Board
of Directors of the Company to classify or reclassify authorized but unissued
shares of the Company into series of shares representing interests in various
investment portfolios;
WHEREAS, pursuant to such authority, the Company has established the
Aetna Asian Growth Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
dated December 8, 1993 with the Company (the "Investment Advisory Agreement"),
pursuant to which the Adviser shall act as investment adviser with respect to
the Fund; and
WHEREAS, pursuant to Paragraph IV of the Investment Advisory Agreement,
the Adviser wishes to retain the Subadviser for purposes of rendering advisory
services to the Adviser in connection with the Fund upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER
The Adviser hereby appoints the Subadviser to render to the Adviser
with respect to the Fund, investment research and advisory services set forth
below in Section II, under the supervision of the Adviser and subject to the
approval and direction of the Company's Board of
<PAGE>
Directors (the "Board"), and the Subadviser hereby accepts such appointment,
all subject to the terms and conditions contained herein. The Subadviser shall,
for all purposes herein, be deemed an independent contractor and shall have,
unless otherwise expressly provided or authorized, no authority to act for or
represent the Fund in any way or otherwise be deemed an agent of the Fund.
II. DUTIES OF THE SUBADVISER AND THE ADVISER
In carrying out the terms of this agreement, the Subadviser shall
provide the following services:
A. DUTIES OF THE SUBADVISER
The Subadviser shall regularly provide investment advice with
respect to the Fund and shall, subject to the terms of this Agreement,
continuously supervise the investment and reinvestment of cash,
securities and instruments or other property comprising the assets of
the Fund; and in furtherance thereof, the Subadviser's duties shall
include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are
included in the Fund or the activities in which such issuers
engage, or with respect to securities which the Subadviser
considers desirable for inclusion in the Fund's investment
portfolio;
2. Determining which issuers and securities shall be
purchased, sold or exchanged by the Fund or otherwise
represented in the Fund's investment portfolio and regularly
reporting thereon to the Adviser and, at the request of the
Adviser, to the Board;
3. Formulating and implementing continuing programs for the
purchases and sales of the securities of such issuers and
regularly reporting thereon to the Adviser and, at the request
of the Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to
the Subadviser necessary to carry into effect such investment
program, including the placing of purchase and sale orders,
and making appropriate reports thereon to the Adviser and the
Board.
B. DUTIES OF THE ADVISER
The Adviser shall retain responsibility for, among other
things, providing the following advice and services with respect to the
Fund:
2
<PAGE>
1. The Adviser shall monitor the investment program maintained
by the Subadviser for the Fund to ensure that the Fund's
assets are invested in compliance with the Subadvisory
Agreement and the Fund's Registration Statement;
2. The Adviser shall consult with and assist the Subadviser in
maintaining appropriate policies, procedures and records so
that the Subadviser operates its business and any investment
program hereunder in compliance with applicable laws;
3. The Adviser shall establish and maintain periodic
communications with the Subadviser to share information it
obtains with the Subadviser concerning the effect of
developments and data on the investment program maintained by
the Subadviser; and
4. The Adviser shall oversee matters relating to Fund
promotion, marketing materials and the Subadviser's reports to
the Board.
III. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE SUBADVISER
1. Due Incorporation and Organization. The Subadviser is duly
organized and is in good standing under the laws of Hong Kong
and is fully authorized to enter into this Agreement and carry
out its duties and obligations hereunder.
2. Registration. The Subadviser is registered as an investment
adviser with the Securities and Exchange Commission (the
"SEC") under the Advisers Act, and is registered or licensed
as an investment adviser under all of the laws of all
jurisdictions in which its activities require it to be so
registered or licensed. The Subadviser shall maintain such
registration or license in effect at all times during the term
of this Agreement.
3. Best Efforts. The Subadviser at all times shall provide its
best judgment and effort to the Fund in carrying out its
obligations hereunder.
B. REPRESENTATIONS AND WARRANTIES OF THE ADVISER
1. Due Incorporation and Organization. The Adviser is duly
organized and is in good standing under the laws of the State
of Connecticut and is fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder.
2. Registration. The Adviser is registered as an investment
adviser with the SEC under the Advisers Act, and is registered
or licensed as an investment adviser under all of the laws of
all jurisdictions in which its activities require it to be so
3
<PAGE>
registered or licensed. The Adviser shall maintain such
registration or license in effect at all times during the term
of this Agreement.
3. Best Efforts. The Adviser at all times shall provide its
best judgment and effort to the Fund in carrying out its
obligations hereunder.
IV. BROKER-DEALER RELATIONSHIPS
A. PORTFOLIO TRADES
The Subadviser, at its own expense, and in consultation with the
Adviser, shall place all orders for the purchase and sale of portfolio
securities for the Fund with brokers or dealers selected by the Subadviser,
which may include brokers or dealers affiliated with the Subadviser. The
Subadviser shall use its best efforts to seek to execute portfolio transactions
at prices that are advantageous to the Fund and at commission rates that are
reasonable in relation to the benefits received.
B. SELECTION OF BROKER-DEALERS
In selecting broker-dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Fund and/or the other accounts over which the
Subadviser or its affiliates exercise investment discretion. The Subadviser is
authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund that is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Subadviser determines in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction or
the overall responsibilities that the Subadviser and its affiliates have with
respect to accounts over which they exercise investment discretion. The Adviser
and the Board shall periodically review the commissions paid by the Fund to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits received.
V. CONTROL BY THE BOARD OF DIRECTORS.
Any investment program undertaken by the Subadviser pursuant to this
Agreement, as well as any other activities undertaken by the Subadviser with
respect to the Fund, shall at all times be subject to any directives of the
Board.
VI. COMPLIANCE WITH APPLICABLE REQUIREMENTS.
In carrying out its obligations under this Agreement, the Adviser shall
at all times conform to:
4
<PAGE>
A. all applicable provisions of the 1940 Act and any
rules and regulations adopted thereunder;
B. the provisions of the registration statement of the
Company, as the same may be amended from time to time, under
the Securities Act of 1933, as amended, and the 1940 Act;
C. the provisions of the Articles of Incorporation of
the Company, as amended from time to time;
D. the provisions of the by-laws of the Company, as
amended from time to time; and
E. any other applicable provisions of state or federal
law.
VII. COMPENSATION
The Adviser shall pay the Subadviser, as compensation for services
rendered hereunder, from its own assets, an annual fee, payable monthly, based
on the average daily net assets of the Fund as follows:
Fee Assets
--- ------
0.65% On first $50 million $150,000 minimum
0.50% On next $50 million
0.40% On next $50 million
0.30% Over $150 million
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily at the rate of 1/365 of the annual subadvisory fee
applied to the daily net assets of the Fund. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees set
forth above.
Subject to the provisions of Paragraph A. below, payment of the Subadviser's
compensation for the preceding month shall be made as promptly as possible. The
Subadviser acknowledges that, pursuant to the Investment Advisory Agreement, the
Adviser has agreed to reduce its fee or reimburse the Fund if the expenses borne
by the Fund exceed the expense limitations applicable to the Fund imposed by the
securities laws or regulations of any jurisdiction in which the Fund's shares
are qualified for sale. Accordingly, the Subadviser agrees as follows:
A. If, for any fiscal year, the total of all ordinary business expenses
of the Fund, including all investment advisory fees but excluding
brokerage commissions, distribution fees, taxes, interest and
extraordinary expenses and certain other excludable expenses, would
exceed the most restrictive expense limits imposed by any statute or
regulatory authority of any jurisdiction in which shares of the Fund
are offered for sale (unless a
5
<PAGE>
waiver is obtained), the Subadviser shall reduce its advisory fee in
order to reduce such excess expenses, but will not be required to
reimburse the Fund for any ordinary business expenses which exceed the
amount of its advisory fee for such fiscal year. The amount of any such
reduction is to be borne by the Subadviser and shall be deducted from
the fee otherwise payable to the Subadviser during such fiscal year.
For the purposes of this paragraph, the term "fiscal year" shall
exclude the portion of the current fiscal year which shall have elapsed
prior to the date hereof and shall include the portion of the then
current fiscal year which shall have elapsed at the date of termination
of this Agreement; and
B. Such reductions will, in each case, be proportionate to the
reduction in the Adviser's fee for the same period.
VIII. ALLOCATION OF EXPENSES
The Subadviser shall pay the salaries, employment benefits and other
related costs of those of its personnel engaged in providing investment advice
to the Fund hereunder, including, without limitation, office space, office
equipment, telephone and postage costs. In the event that any other expense
hereunder shall, in the first instance, be paid by the Subadviser, the Adviser
shall reimburse the Subadviser for such expense on presentation of a statement
with respect thereto.
IX. NON-EXCLUSIVITY
The services of the Subadviser with respect to the Company and the Fund
are not to be deemed to be exclusive, and the Subadviser shall be free to render
investment advisory and administrative or other services to others (including
other investment companies) and to engage in other activities. It is understood
and agreed that officers or directors of the Subadviser may serve as officers or
directors of the Adviser or of the Company; that officers or directors of the
Adviser or of the Company may serve as officers or directors of the Subadviser
to the extent permitted by law; and that the officers and directors of the
Subadviser are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners,
officers, directors or trustees of any other firm or trust, including other
investment advisory companies.
X. TERM
This Agreement shall become effective at the close of business on the
date hereof and shall remain in force and effect, subject to Paragraphs XI and
XII hereof and approval by the Fund's shareholders, for a period of two years
from the date hereof.
XI. RENEWAL
Following the expiration of its initial two-year term, the Agreement
shall continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
6
<PAGE>
A. (1) by the Company's directors or (2) by the vote
of a majority of the Fund's outstanding voting securities
(as defined in Section 2(a)(42) of the 1940 Act), and
B. by the affirmative vote of a majority of the
directors who are not parties to this Agreement or
interested persons of a party to this Agreement (other than
as a director of the Company), by votes cast in person at a
meeting specifically called for such purpose.
XII. TERMINATION
This Agreement may be terminated as to the Fund at any time, without
the payment of any penalty, by vote of the Company's directors or by vote of a
majority of the Fund's outstanding voting securities, or by the Adviser, or by
the Subadviser on sixty (60) days' written notice to the other party and to the
Company. The notice provided for herein may be waived by the party required to
be notified. This Agreement shall automatically terminate in the event of its
"assignment," as defined in Section 2 (a) (4) of the 1940 Act.
XIII. LIABILITY OF SUBADVISER
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Subadviser or any of its officers, directors or employees, the Subadviser shall
not be subject to liability to the Adviser for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security.
XIV. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to such address as may be designated for the
receipt of such notice with a copy to the Company. Until further notice, it is
agreed that (i) the address of the Company and of the Adviser shall be 151
Farmington Avenue, Hartford, Connecticut 06156; and (ii) the address of the
Subadviser shall be 2 Pacific Place, Suite 2106, 88 Queensway, Hong Kong.
XV. QUESTIONS OF INTERPRETATION
This Agreement shall be governed by the laws of the State of
Connecticut. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act shall be resolved by reference to such term or provision of the
1940 Act and to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to the 1940 Act. In addition,
where the effect of a requirement of the 1940 Act reflected in any provision of
the Agreement is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
7
<PAGE>
XVI. SERVICE MARK
The service mark of the Company and the Fund and the name "Aetna" have
been adopted by the Company with the permission of Aetna Life and Casualty
Company and their continued use is subject to the right of Aetna Life and
Casualty to withdraw this permission in the event the Subadviser or another
subsidiary or affiliated corporation of Aetna Life and Casualty Corporation
should not be the investment adviser of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the 15th day of April,
1994.
Attest: Aetna Life Insurance and Annuity Company
/s/ Lucille M. Nickerson By: /s/ James C. Hamilton
Attest: Aeltus Investment Management International (FE) Limited
/s/ Brian Kawakami By: /s/ Paul A. Ehrhardt
8
<PAGE>
9
FORM OF
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Aetna Life Insurance and Annuity
Company, a Connecticut insurance corporation (the "Adviser") and Aetna Capital
Management, Inc., a Connecticut corporation (the "Subadviser") as of the Date
set forth below.
R E C I T A L
WHEREAS, Aetna Series Fund, Inc. (the "Company") is registered under
the Investment Company Act of 1940, as amended (the "1940 Act") as an open-end,
diversified management investment company, consisting of multiple series of
investment portfolios;
WHEREAS, the Adviser is registered under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as an investment adviser and engages in
the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an investment
adviser;
WHEREAS, the Company's Articles of Incorporation authorizes the Board
of Directors of the Company to classify or reclassify authorized but unissued
shares of the Company into series of shares representing interests in various
investment portfolios;
WHEREAS, pursuant to such authority, the Company has
established the ________ Fund (the "Fund");
WHEREAS, the Adviser has entered into an Investment Advisory Agreement
of even date herewith with the Company (the "Investment Advisory Agreement"),
pursuant to which the Adviser shall act as investment advisor with respect to
the Fund; and
WHEREAS, pursuant to Paragraph IV of the Investment Advisory Agreement,
the Adviser wishes to retain the Subadviser for purposes of rendering advisory
services to the Adviser in connection with the Fund upon the terms and
conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER
The Adviser hereby appoints the Subadviser to render to the Adviser
with respect to the Fund, investment research and advisory services set forth
below in Section II, under the
<PAGE>
supervision of the Adviser and subject to the approval and direction of the
Company's Board of Directors (the "Board"), and the Subadviser hereby accepts
such appointment, all subject to the terms and conditions contained herein. The
Subadviser shall, for all purposes herein, be deemed an independent contractor
and shall have, unless otherwise expressly provided or authorized, no authority
to act for or represent the Fund in any way or otherwise be deemed an agent of
the Fund.
II. DUTIES OF THE SUBADVISER AND THE ADVISER
In carrying out the terms of this agreement, the Subadviser shall
provide the following services:
A. DUTIES OF THE SUBADVISER
The Subadviser shall regularly provide investment advice with
respect to the Fund and shall, subject to the terms of this Agreement,
continuously supervise the investment and reinvestment of cash,
securities and instruments or other property comprising the assets of
the Fund; and in furtherance thereof, the Subadviser's duties shall
include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and
financial data, domestic, foreign or otherwise, whether
affecting the economy generally or the Fund, and whether
concerning the individual issuers whose securities are
included in the Fund or the activities in which such issuers
engage, or with respect to securities which the Subadviser
considers desirable for inclusion in the Fund's investment
portfolio;
2. Determining which issuers and securities shall be
purchased, sold or exchanged by the Fund or otherwise
represented in the Fund's investment portfolio and regularly
reporting thereon to the Adviser and, at the request of the
Adviser, to the Board;
3. Formulating and implementing continuing programs for the
purchases and sales of the securities of such issuers and
regularly reporting thereon to the Adviser and, at the request
of the Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to
the Subadviser necessary to carry into effect such investment
program, including the placing of purchase and sale orders,
and making appropriate reports thereon to the Adviser and the
Board.
B. DUTIES OF THE ADVISER
The Adviser shall retain responsibility for, among other
things, providing the following advice and services with respect to the
Fund:
2
<PAGE>
1. The Adviser shall monitor the investment program maintained
by the Subadviser for the Fund to ensure that the Fund's
assets are invested in compliance with the Subadvisory
Agreement and the Fund's Registration Statement;
2. The Adviser shall consult with and assist the Subadviser in
maintaining appropriate policies, procedures and records so
that the Subadviser operates its business and any investment
program hereunder in compliance with applicable laws;
3. The Adviser shall establish and maintain periodic
communications with the Subadviser to share information it
obtains with the Subadviser concerning the effect of
developments and data on the investment program maintained by
the Subadviser; and
4. The Adviser shall oversee matters relating to Fund
promotion, marketing materials and the Subadviser's reports to
the Board.
III. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF THE SUBADVISER
1. Due Incorporation and Organization. The Subadviser is duly
organized and is in good standing under the laws of the State
of Connecticut and is fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder.
2. Registration. The Subadviser is registered as an investment
adviser with the Securities and Exchange Commission (the
"SEC") under the Advisers Act, and is registered or licensed
as an investment adviser under all of the laws of all
jurisdictions in which its activities require it to be so
registered or licensed. The Subadviser shall maintain such
registration or license in effect at all times during the term
of this Agreement.
3. Best Efforts. The Subadviser at all times shall provide its
best judgment and effort to the Fund in carrying out its
obligations hereunder.
B. REPRESENTATIONS AND WARRANTIES OF THE ADVISER
1. Due Incorporation and Organization. The Adviser is duly
organized and is in good standing under the laws of the State
of Connecticut and is fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder.
2. Registration. The Adviser is registered as an investment
adviser with the SEC under the Advisers Act, and is registered
or licensed as an investment adviser under all of the laws of
all jurisdictions in which its activities require it to be so
3
<PAGE>
registered or licensed. The Adviser shall maintain such
registration or license in effect at all times during the term
of this Agreement.
3. Best Efforts. The Adviser at all times shall provide its
best judgment and effort to the Fund in carrying out its
obligations hereunder.
IV. BROKER-DEALER RELATIONSHIPS
A. PORTFOLIO TRADES
The Subadviser, at its own expense, and in consultation with the
Adviser, shall place all orders for the purchase and sale of portfolio
securities for the Fund with brokers or dealers selected by the Subadviser,
which may include brokers or dealers affiliated with the Subadviser. The
Subadviser shall use its best efforts to seek to execute portfolio transactions
at prices that are advantageous to the Fund and at commission rates that are
reasonable in relation to the benefits received.
B. SELECTION OF BROKER-DEALERS
In selecting broker-dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide brokerage and
research services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934) to the Fund and/or the other accounts over which the
Subadviser or its affiliates exercise investment discretion. The Subadviser is
authorized to pay a broker or dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund that is
in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if the Subadviser determines in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage and research services provided by such broker or dealer. This
determination may be viewed in terms of either that particular transaction or
the overall responsibilities that the Subadviser and its affiliates have with
respect to accounts over which they exercise investment discretion. The Adviser
and the Board shall periodically review the commissions paid by the Fund to
determine if the commissions paid over representative periods of time were
reasonable in relation to the benefits received.
V. CONTROL BY THE BOARD OF DIRECTORS.
Any investment program undertaken by the Subadviser pursuant to this
Agreement, as well as any other activities undertaken by the Subadviser with
respect to the Fund, shall at all times be subject to any directives of the
Board.
VI. COMPLIANCE WITH APPLICABLE REQUIREMENTS.
In carrying out its obligations under this Agreement, the Adviser shall
at all times conform to:
4
<PAGE>
A. all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
B. the provisions of the registration statement of the Company, as the
same may be amended from time to time, under the Securities Act of
1933, as amended, and the 1940 Act;
C. the provisions of the Articles of Incorporation of the Company, as
amended from time to time;
D. the provisions of the by-laws of the Company, as amended from time
to time; and
E. any other applicable provisions of state or federal law.
VII. COMPENSATION
The Adviser shall pay the Subadviser, as compensation for services
rendered hereunder, from its own assets, an annual fee, payable monthly, based
on the average daily net assets of the Fund as follows:
Fee Assets
0.30% On first $50 million
$100,000 minimum
0.25% On next $50 million
0.20% Over $100 million
Except as hereinafter set forth, compensation under this Agreement shall be
calculated and accrued daily at the rate of 1/365 of the annual subadvisory fee
applied to the daily net assets of the Fund. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate before the last day of
a month, compensation for that part of the month this Agreement is in effect
shall be prorated in a manner consistent with the calculation of the fees set
forth above.
Subject to the provisions of Paragraph A. below, payment of the Subadviser's
compensation for the preceding month shall be made as promptly as possible. The
Subadviser acknowledges that, pursuant to the Investment Advisory Agreement, the
Adviser has agreed to reduce its fee or reimburse the Fund if the expenses borne
by the Fund exceed the expense limitations applicable to the Fund imposed by the
securities laws or regulations of any jurisdiction in which the Fund's shares
are qualified for sale. Accordingly, the Subadviser agrees as follows:
A. If, for any fiscal year, the total of all ordinary business expenses
of the Fund, including all investment advisory fees but excluding
brokerage commissions, distribution fees, taxes, interest and
extraordinary expenses and certain other excludable expenses, would
exceed the most restrictive expense limits imposed by any statute or
regulatory authority of any jurisdiction in which shares of the Fund
are offered for sale (unless a waiver is obtained), the Subadviser
shall reduce its advisory fee in order to reduce such
5
<PAGE>
excess expenses, but will not be required to reimburse the Fund for any
ordinary business expenses which exceed the amount of its advisory fee
for such fiscal year. The amount of any such reduction is to be borne
by the Subadviser and shall be deducted from the fee otherwise payable
to the Subadviser during such fiscal year. For the purposes of this
paragraph, the term "fiscal year" shall exclude the portion of the
current fiscal year which shall have elapsed prior to the date hereof
and shall include the portion of the then current fiscal year which
shall have elapsed at the date of termination of this Agreement; and
B. Such reductions will, in each case, be proportionate to the
reduction in the Adviser's fee for the same period.
VIII. ALLOCATION OF EXPENSES
The Subadviser shall pay the salaries, employment benefits and other
related costs of those of its personnel engaged in providing investment advice
to the Fund hereunder, including, without limitation, office space, office
equipment, telephone and postage costs. In the event that any other expense
hereunder shall, in the first instance, be paid by the Subadviser, the Adviser
shall reimburse the Subadviser for such expense on presentation of a statement
with respect thereto.
IX. NON-EXCLUSIVITY
The services of the Subadviser with respect to the Company and the Fund
are not to be deemed to be exclusive, and the Subadviser shall be free to render
investment advisory and administrative or other services to others (including
other investment companies) and to engage in other activities. It is understood
and agreed that officers or directors of the Subadviser may serve as officers or
directors of the Adviser or of the Company; hat officers or directors of the
Adviser or of the Company may serve as officers or directors of the Subadviser
to the extent permitted by law; and that the officers and directors of the
Subadviser are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners,
officers, directors or trustees of any other firm or trust, including other
investment advisory companies.
X. TERM
This Agreement shall become effective at the close of business on the
date hereof and shall remain in force and effect, subject to Paragraphs XI and
XII hereof and approval by the Fund's shareholders, for a period of two years
from the date hereof.
XI. RENEWAL
Following the expiration of its initial two-year term, the Agreement
shall continue in force and effect from year to year, provided that such
continuance is specifically approved at least annually:
6
<PAGE>
A. (1) by the Company's directors or (2) by the vote of a majority of
the Fund's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), and
B. by the affirmative vote of a majority of the directors who are not
parties to this Agreement or interested persons of a party to this
Agreement (other than as a director of the Company), by votes cast in
person at a meeting specifically called for such purpose.
XII. TERMINATION
This Agreement may be terminated as to the Fund at any time, without
the payment of any penalty, by vote of the Company's directors or by vote of a
majority of the Fund's outstanding voting securities, or by the Adviser, or by
the Subadviser on sixty (60) days' written notice to the other party and to the
Company. The notice provided for herein may be waived by the party required to
be notified. This Agreement shall automatically terminate in the event of its
"assignment," as defined in Section 2 (a) (4) of the 1940 Act.
XIII. LIABILITY OF SUBADVISER
In the absence of willful misfeasance, bad faith, gross negligence or
reckless disregard of obligations or duties hereunder on the part of the
Subadviser or any of its officers, directors or employees, the Subadviser shall
not be subject to liability to the Adviser for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security.
XIV. NOTICES
Any notices under this Agreement shall be in writing, addressed and
delivered or mailed postage paid to such address as may be designated for the
receipt of such notice with a copy to the Company. Until further notice, it is
agreed that the address of the Company, that of the Adviser and that of the
Subadviser shall be 151 Farmington Avenue, Hartford, Connecticut 06156.
XV. QUESTIONS OF INTERPRETATION
This Agreement shall be governed by the laws of the State of
Connecticut. Any question of interpretation of any term or provision of this
Agreement having a counterpart in or otherwise derived from a term or provision
of the 1940 Act shall be resolved by reference to such term or provision of the
1940 Act and to interpretations thereof, if any, by the United States Courts or,
in the absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to the 1940 Act. In addition,
where the effect of a requirement of the 1940 Act reflected in any provision of
the Agreement is revised by rule, regulation or order of the SEC, such provision
shall be deemed to incorporate the effect of such rule, regulation or order.
7
<PAGE>
XVI. SERVICE MARK
The service mark of the Company and the Fund and the name "Aetna" have
been adopted by the Company with the permission of Aetna Life and Casualty
Company and their continued use is subject to the right of Aetna Life and
Casualty to withdraw this permission in the event the Subadviser or another
subsidiary or affiliated corporation of Aetna Life and Casualty Corporation
should not be the investment adviser of the Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the 8th day of December,
1993.
Attest: Aetna Life Insurance and Annuity Company
/s/ Paige L. Falasco By: /s/ Lucille M. Nickerson
Attest: Aetna Capital Management, Inc.
/s/ Brian Kawakami By: /s/ Paul A. Ehrhardt
8
<PAGE>
Subadvisory Agreement
Schedule of Parties
Subadvisory Agreements have been entered into with the following parties in
substantially the same form and type as the exhibit included herewith.
Party Date
----- ----
Aetna Growth Fund 12/8/93
Aetna Small Company Growth 12/8/93
Aetna Tax Free Fund 12/8/93
9
November 17, 1995
Securities and Exchange Commission
450 Fifth Street N.W.
Washington, D.C. 20549
Dear Sir or Madam:
As Counsel of Aetna Life Insurance and Annuity Company (the "Company"), I hereby
consent to the use of my opinion dated December 23, 1994 (incorporated herein by
reference to the 24f-2 Notice for the fiscal year ended October 31, 1994 filed
on behalf of Aetna Series Fund, Inc.) as an exhibit to this Post-Effective
Amendment No. 10 to Registration Statement on Form N-1A (File Nos. 811-6352 and
33-41694) and to my being named under the caption "Legal Matters" in the
prospectus contained therein.
Sincerely,
/s/Susan E. Bryant
Susan E. Bryant
Counsel
Aetna Life Insurance and Annuity Company
Consent of Independent Auditors
The Board of Directors
Aetna Series Fund, Inc.:
We consent to the use of our report, included herein, 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 Peat Marwick LLP
Boston, Massachusetts
November 14, 1995
COMPUTATION OF PERFORMANCE DATA
TOTAL RETURN QUOTATIONS
In calculating the total return quotations, a hypothetical account was
established using a $1,000 initial payment.
Formula
n
P(1 + T) = ERV
P = a hypothetical initial payment of $1,000,
T = average annual total return,
n = number of years,
ERV = ending redeemable value at the end of the 1, 5, or 10 year
periods (or fractional portion thereof) of a hypothetical
$1,000 payment made at the beginning of the 1, 5, or 10 year
periods.
Select Class Shares
Assumptions:
- - The 1-year figure assumes the redemption on April 30, 1995 of values
attributable to a $1,000 payment made on May 1, 1994.
- - The Since Inception figure assumes the redemption on April 30, 1995 of values
attributable to a $1,000 payment made on January 1, 1992 (effective date of
Funds).
Aetna Money Market Fund
1 Year $1,000(1 + 5.13%)1 = $1,051.00
Since Inception $1,000(1 + 4.07%)3.33 = $1,142.00
Aetna Bond Fund
1 Year $1,000(1 + 6.16%)1 = $1,062.00
Since Inception $1,000(1 + 5.80%)3.33 = $1,207.00
The Aetna Fund
1 Year $1,000(1 + 8.47%)1 = $1,085.00
Since Inception $1,000(1 + 6.61%)3.33 = $1,238.00
Aetna Growth and Income Fund
1 Year $1,000(1 + 10.81%)1 = $1,108.00
Since Inception $1,000(1 + 6.81%)3.33 = $1,245.00
Aetna International Growth Fund
1 Year $1,000(1 + (1.16)%)1 = $ 988.00
Since Inception $1,000(1 + 4.67%)3.33 = $1,164.00
<PAGE>
COMPUTATION OF PERFORMANCE DATA
TOTAL RETURN QUOTATIONS (continued)
Assumptions:
- - The 1-year figure assumes the redemption on April 30, 1995 of values
attributable to a $1,000 payment made on May 1, 1994.
- - The Since Inception figure assumes the redemption on April 30, 1995 of values
attributable to a $1,000 payment made on January 1, 1994 (effective date of
Funds).
Aetna Government Fund
1 Year $1,000(1 + 6.71%)1 = $1,067.00
Since Inception $1,000(1 + 2.77%)1.33 = $1,037.00
Aetna Growth Fund
1 Year $1,000(1 + 13.29%)1 = $1,133.00
Since Inception $1,000(1 + 11.87%)1.33 = $1,161.00
Aetna Small Company Growth Fund
1 Year $1,000(1 + 10.44%)1 = $1,104.00
Since Inception $1,000(1 + 10.71%)1.33 = $1,145.00
Aetna Asian Growth Fund
1 Year $1,000(1 + (8.76)%)1 = $ 912.00
Since Inception $1,000(1 + (16.85)%)1.33 = $ 782.00
<PAGE>
COMPUTATION OF PERFORMANCE DATA
TOTAL RETURN QUOTATIONS (continued)
Adviser Class Shares
Assumptions:
- - The 1-year figure assumes the redemption on April 30, 1995 of values
attributable to a $1,000 payment made on May 1, 1994.
- - The Since Inception figure assumes the redemption on April 30, 1995 of values
attributable to a $1,000 payment made on April 15, 1994 (effective date of
Adviser Class shares).
- - The performance reflects the deduction of the maximum contingent deferred
sales charge of 1%, declining by 0.25% each year after the date of purchase to
zero, assuming shares were redeemed at the end of the period.
Aetna Money Market Fund
1 Year $1,000(1 + 4.08%)1 = $1,041.00
Since Inception $1,000(1 + 4.33%)1.04 = $1,045.00
Aetna Government Fund
1 Year $1,000(1 + 4.75%)1 = $1,048.00
Since Inception $1,000(1 + 4.58%)1.04 = $1,048.00
Aetna Bond Fund
1 Year $1,000(1 + 4.33%)1 = $1,043.00
Since Inception $1,000(1 + 3.51%)1.04 = $1,037.00
The Aetna Fund
1 Year $1,000(1 + 6.39%)1 = $1,064.00
Since Inception $1,000(1 + 6.25%)1.04 = $1,065.00
Aetna Growth and Income Fund
1 Year $1,000(1 + 9.26%)1 = $1,093.00
Since Inception $1,000(1 + 9.39%)1.04 = $1,098.00
Aetna Growth Fund
1 Year $1,000(1 + 11.34%)1 = $1,113.00
Since Inception $1,000(1 + 10.99%)1.04 = $1,115.00
Aetna Small Company Growth Fund
1 Year $1,000(1 + 8.45%)1 = $1,085.00
Since Inception $1,000(1 + 9.65%)1.04 = $1,101.00
Aetna International Growth Fund
1 Year $1,000(1 + (2.88)%)1 = $ 971.00
Since Inception $1,000(1 + (1.97)%)1.04 = $ 980.00
Aetna Asian Growth Fund
1 Year $1,000(1 + (9.98)%)1 = $ 900.00
Since Inception $1,000(1 + (9.32)%)1.04 = $ 903.00
Power of Attorney
I, John Y. Kim, an officer and director of Aetna Series Fund, Inc., do hereby
constitute and appoint Susan E. Bryant, Steven J. Lauwers, and Julie E. Rockmore
and each of them individually, my true and lawful attorneys, with full power to
them and each of them to sign for me, and in my name and in the capacity
indicated below, any and all amendments, including but not limited to
Pre-Effective and Post-Effective Amendments, to the Registration Statements
listed below filed with the Securities and Exchange Commission by Aetna Series
Fund, Inc. under the Securities Act of 1933, as amended, and/or the Investment
Company Act of 1940:
Registration Statements filed under the Securities Act of 1933, as amended:
33-41694
33-85620
Registration Statements filed under the Investment Company Act of 1940:
811-6352
hereby ratifying and confirming on this 13th day of November, 1995 my signature
as it may be signed by my said attorneys to any such registration statements and
any and all amendments thereto.
/s/ John Y. Kim
- -------------------------------
John Y. Kim
Director, Vice President
<TABLE> <S> <C>
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<NAME> Class A
<NUMBER> 021
<S> <C>
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<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
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<DISTRIBUTIONS-OF-INCOME> 926,551
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 516,200
<NUMBER-OF-SHARES-REDEEMED> 393,999
<SHARES-REINVESTED> 88,033
<NET-CHANGE-IN-ASSETS> (8,410,562)
<ACCUMULATED-NII-PRIOR> 54,057
<ACCUMULATED-GAINS-PRIOR> (992,756)
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<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 120,810
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<GROSS-EXPENSE> 325,868
<AVERAGE-NET-ASSETS> 28,776,849
<PER-SHARE-NAV-BEGIN> 9.58
<PER-SHARE-NII> .33
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Class B
<NUMBER> 022
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1995
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 42,961,374
<INVESTMENTS-AT-VALUE> 42,745,565
<RECEIVABLES> 2,878,816
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<TOTAL-ASSETS> 45,662,331
<PAYABLE-FOR-SECURITIES> 1,012,100
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<OTHER-ITEMS-LIABILITIES> 71,557
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 46,186,246
<SHARES-COMMON-STOCK> 1,459,663
<SHARES-COMMON-PRIOR> 2,650,978
<ACCUMULATED-NII-CURRENT> 124,901
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,516,664)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 124,901
<NET-ASSETS> 44,578,674
<DIVIDEND-INCOME> 18,503
<INTEREST-INCOME> 1,819,791
<OTHER-INCOME> 0
<EXPENSES-NET> 255,453
<NET-INVESTMENT-INCOME> 1,582,841
<REALIZED-GAINS-CURRENT> (523,908)
<APPREC-INCREASE-CURRENT> 869,630
<NET-CHANGE-FROM-OPS> 2,452,471
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 585,446
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 5,330
<NUMBER-OF-SHARES-REDEEMED> 1,257,722
<SHARES-REINVESTED> 61,077
<NET-CHANGE-IN-ASSETS> (8,410,562)
<ACCUMULATED-NII-PRIOR> 54,057
<ACCUMULATED-GAINS-PRIOR> (992,756)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 120,810
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<GROSS-EXPENSE> 325,868
<AVERAGE-NET-ASSETS> 19,915,808
<PER-SHARE-NAV-BEGIN> 9.58
<PER-SHARE-NII> .28
<PER-SHARE-GAIN-APPREC> .21
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> .28
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<PER-SHARE-NAV-END> 9.79
<EXPENSE-RATIO> 1.50
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Class A
<NUMBER> 011
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 252,370,276
<INVESTMENTS-AT-VALUE> 252,370,276
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<OTHER-ITEMS-LIABILITIES> 264,802
<TOTAL-LIABILITIES> 1,106,190
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 257,489,069
<SHARES-COMMON-STOCK> 184,789,662
<SHARES-COMMON-PRIOR> 161,756,379
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 257,489,069
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,918,491
<OTHER-INCOME> 0
<EXPENSES-NET> 288,466
<NET-INVESTMENT-INCOME> 6,630,025
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 6,630,025
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<DISTRIBUTIONS-OF-INCOME> 4,904,128
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 99,365,093
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<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 993,017
<AVERAGE-NET-ASSETS> 172,535,510
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
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<PER-SHARE-DIVIDEND> .03
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<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
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<ARTICLE> 6
<SERIES>
<NAME> Class B
<NUMBER> 012
<S> <C>
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<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
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<INVESTMENTS-AT-VALUE> 252,370,276
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<SENIOR-LONG-TERM-DEBT> 0
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<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 257,489,069
<SHARES-COMMON-STOCK> 72,699,407
<SHARES-COMMON-PRIOR> 47,350,496
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 257,489,069
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 6,918,491
<OTHER-INCOME> 0
<EXPENSES-NET> 288,466
<NET-INVESTMENT-INCOME> 6,630,025
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<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 6,630,025
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,725,897
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
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<SHARES-REINVESTED> 1,683,600
<NET-CHANGE-IN-ASSETS> 48,382,194
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 461,546
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 993,017
<AVERAGE-NET-ASSETS> 60,435,943
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> .03
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> .03
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> .25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Class A
<NUMBER> 061
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1994
<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
<INVESTMENTS-AT-COST> 19,251,428
<INVESTMENTS-AT-VALUE> 19,308,879
<RECEIVABLES> 206,718
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class B
<NUMBER> 062
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class A
<NUMBER> 071
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class B
<NUMBER> 072
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Class A
<NUMBER> 031
<S> <C>
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</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NAME> Class B
<NUMBER> 032
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class A
<NUMBER> 041
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class B
<NUMBER> 042
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class A
<NUMBER> 081
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class B
<NUMBER> 082
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class A
<NUMBER> 091
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class B
<NUMBER> 092
<S> <C>
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<PERIOD-START> NOV-01-1994
<PERIOD-END> APR-30-1995
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<PER-SHARE-NII> (.05)
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class A
<NUMBER> 101
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class B
<NUMBER> 102
<S> <C>
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</TABLE>
<TABLE> <S> <C>
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<SERIES>
<NAME> Class A
<NUMBER> 051
<S> <C>
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<TABLE> <S> <C>
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<SERIES>
<NAME> Class B
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<S> <C>
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<PER-SHARE-NII> (.03)
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