INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(A) of the
Securities Exchange Act of 1934 (Amendment No.__ )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission Only
(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AETNA SERIES FUND, INC.
AETNA VARIABLE PORTFOLIOS, INC.
(Name of Registrant as Specified in Its Charter/Declaration of Trust)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
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Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identity the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
AETNA SERIES FUND, INC.
Aetna Value Opportunity Fund
AETNA VARIABLE PORTFOLIOS, INC.
Aetna Value Opportunity VP
Dear Fellow Shareholders and Contractholders:
You are cordially invited by the Boards of Directors of Aetna Series
Fund, Inc. and Aetna Variable Portfolios, Inc. (each a "Fund"), on behalf of
Aetna Value Opportunity Fund and Aetna Value Opportunity VP (each a "Value
Opportunity Series"), respectively, to attend a Special Meeting of each Fund's
Shareholders (each a "Special Meeting") on September 4, 1998 at 9:00 a.m. to
consider a recommendation which is important to you and your Fund.
YOUR PARTICIPATION IN THIS PROCESS IS VERY IMPORTANT. PLEASE READ THE
ENCLOSED PROXY STATEMENT AND VOTE BY COMPLETING, SIGNING AND RETURNING THE
ENCLOSED PROXY CARD. WE NEED YOUR VOTE TO OBTAIN THE QUORUM NECESSARY
TO HOLD THE SPECIAL MEETINGS.
The proposal to be voted on at each Special Meeting is reviewed in
detail in the enclosed Notice and Proxy Statement. The proposal requests
approval of a subadvisory arrangement for each Value Opportunity Series.
The proposal seeks your approval of a new subadvisory agreement
pursuant to which Bradley, Foster & Sargent, Inc. ("Bradley") will serve as
subadviser to your Value Opportunity Series, appointing Peter Canoni to serve as
portfolio manager. PLEASE NOTE THAT THE NEW SUBADVISORY AGREEMENT WILL NOT
RESULT IN ANY CHANGES IN ADVISORY FEES OR OTHER EXPENSES FOR EITHER OF THE VALUE
OPPORTUNITY SERIES. The new subadvisory agreement is intended to maintain
continuity of management for each Value Opportunity Series in light of the
decision of its portfolio manager, Peter Canoni, to resign from Aeltus
Investment Management, Inc. ("Aeltus"), the Series' investment adviser, to
become a principal member of Bradley. Bradley, a registered investment adviser,
currently has over $350 million under management.
The Board of Directors of each Fund has carefully considered the
proposal to be voted on at this Special Meeting and unanimously recommends your
approval of the new subadvisory agreement.
If you have any questions related to the Special Meeting and/or the
Proxy Statement, please call us at 1-888-423-5887.
Thank you for your participation in this process and your investment in
our Funds.
Sincerely,
J. Scott Fox
President
July 22, 1998
<PAGE>
NOTICE OF SPECIAL MEETINGS
OF THE SHAREHOLDERS OF
AETNA SERIES FUND, INC.
Aetna Value Opportunity Fund
AETNA VARIABLE PORTFOLIOS, INC.
Aetna Value Opportunity VP
Special Meetings of the Shareholders (each a "Special Meeting") of each
of Aetna Series Fund, Inc. and Aetna Variable Portfolios, Inc. (each a "Fund"),
on behalf of Aetna Value Opportunity Fund and Aetna Value Opportunity VP (each a
"Value Opportunity Series"), respectively, will be held on September 4, 1998, at
9:00 a.m., Eastern time, at 242 Trumbull Street, Hartford, Connecticut
06103-1205 for the following purposes:
1. to approve or disapprove a Subadvisory Agreement by and
among Aeltus Investment Management, Inc., Bradley, Foster & Sargent, Inc. and
the Fund, on behalf of its Value Opportunity Series; and
2. to transact such other business as may properly come before the
Special Meeting and any adjournments thereof.
Shareholders of record at the close of business on June 30, 1998
are entitled to notice of and to vote at the Special Meeting.
Amy R. Doberman
Secretary
July 22, 1998
<PAGE>
AETNA SERIES FUND, INC.
Aetna Value Opportunity Fund
AETNA VARIABLE PORTFOLIOS, INC.
Aetna Value Opportunity VP
JOINT PROXY STATEMENT
JULY 22, 1998
This Proxy Statement is given to you to provide information you should
review before voting on the matter listed in the Notice of Special Meetings on
the previous page for each of Aetna Series Fund, Inc. and Aetna Variable
Portfolios, Inc. (each a "Fund"), on behalf of Aetna Value Opportunity Fund and
Aetna Value Opportunity VP (each a "Series" or "Value Opportunity Series"),
respectively. Your Fund's Board of Directors (the "Directors") is soliciting
your vote for a Special Meeting of Shareholders of the Fund (the "Special
Meeting") to be held at 242 Trumbull Street, Hartford, Connecticut 06103-1205,
on September 4, 1998, at 9:00 a.m., Eastern time, and, if the Special Meeting is
adjourned, at any adjournment of that Meeting.
This Proxy Statement describes the matter that will be voted on at
the Special Meeting (the "Proposal"). The solicitation of votes is made by the
mailing of this Proxy Statement and the accompanying proxy card or authorization
card on or about July 22, 1998. Aeltus Investment Management, Inc. ("Aeltus")
and its affiliates may contact Fund shareholders directly commencing in August
1998 to discuss the Proposal. The expenses incurred in connection with preparing
this Proxy Statement and its enclosures and of all solicitations will be paid by
Aeltus.
A copy of Aetna Value Opportunity VP's Annual Report for the fiscal
year ended December 31, 1997, was mailed to its shareholders on or about
February 28, 1998. That Series' Semi-Annual Report for the period ended June 30,
1998 will be mailed to its shareholders on or about September 4, 1998. Aetna
Value Opportunity Fund's Semi-Annual Report for the period from February 2, 1998
(commencement of operations) to April 30, 1998 will be mailed to its
shareholders on or about June 29, 1998. Aetna Value Opportunity VP's Annual
Report and each Value Opportunity Series' most recent Semi-Annual Report will be
provided to the applicable Series' shareholders upon request, without charge. If
you did not receive an Annual Report or Semi-Annual Report, as applicable, for
your Value Opportunity Series, you may request one by writing to Wayne Baltzer,
c/o Aeltus Investment Management, Inc., ALT7 242 Trumbull Street, Hartford,
Connecticut, 06103-1205, or by calling 1-888-423-5887.
Shareholders of record on June 30, 1998 (the "record date") are
entitled to be present and to vote at the Special Meeting or any adjourned
meeting. As of the record date, Aetna Value Opportunity VP offered one class of
shares and Aetna Value Opportunity Fund offered two classes of shares to the
public: Class A shares and Class I shares. Class A shares and Class I shares of
Aetna Value Opportunity Fund have the same rights, privileges and preferences,
except with respect to: (a) the effect of sales charges, if any; (b) the
different 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. As of
the record date, each Value Opportunity Series had the following shares issued
and outstanding:
[S] [C]
Number of Shares
Outstanding as of June 30, 1998
AETNA SERIES FUND, INC.
Aetna Value Opportunity Fund
Class A 29,771.96
Class I 488,108.97
AETNA VARIABLE PORTFOLIOS, INC.
Aetna Value Opportunity VP 4,258,042.45
As of the record date, Aetna Life Insurance and Annuity Company*
("ALIAC") and its affiliates owned the following amount of shares of Aetna Value
Opportunity Fund:
[S] [C] [C]
Amount and
Nature of
Beneficial Ownership** Percent of Class
AETNA SERIES FUND, INC.
Aetna Value Opportunity Fund
Class A 10,000.00 33.59%
Class I 480,942.03 98.53%
[FN]
*ALIAC's principal office is located at 151 Farmington Avenue, Hartford,
Connecticut 06156-8962. **ALIAC and its affiliates have sole voting and
investment power with respect to the shares.
Shares of Aetna Value Opportunity VP are offered only to insurance
companies to fund benefits under their variable annuity contracts and variable
life insurance policies. Accordingly, as of the record date, all shares of Aetna
Value Opportunity VP were held by separate accounts of ALIAC and its subsidiary,
Aetna Insurance Company of America, Inc. ( "Aetna Insurance"), on behalf of
their respective separate accounts. These shares were owned by ALIAC and Aetna
Insurance as depositors for their respective variable annuity contracts or
variable life insurance policies (each a "Contract") issued to individual
contractholders or to a group of which the individual contractholders are a
part. Under the terms of the Contracts, contractholders have the right to
instruct ALIAC and Aetna Insurance how to vote the shares related to their
interests through their Contracts. This Proxy Statement is used to solicit
instructions for voting shares of Aetna Value Opportunity VP. All persons
entitled to direct the voting of shares, whether or not they are shareholders,
will be described as voting for purposes of this Proxy Statement.
The shares of Aetna Value Opportunity VP held by ALIAC and Aetna
Insurance are held on behalf of the following separate accounts which hold
assets for the Contracts:
[S] [C] [C]
Separate Account Name Number of Shares Percentage
LIAC Separate Account B 1,236,607.93 29.04%
ALIAC Separate Account C 1,945,002.54 45.68%
ALIAC Separate Account D 755,785.50 17.75%
AICA Separate Account I 320,646.48 7.53%
ALIAC and Aetna Insurance will vote the shares of Aetna Value
Opportunity VP held in their names as directed. The group contractholder of some
group Contracts has the right to direct the vote for all shares under the
Contract, for, against or abstaining, in the same proportions as shares for
which instructions have been given under the same Contract. If ALIAC and Aetna
Insurance do not receive voting instructions for all of the shares held under
Contracts, they will vote all the shares in all the listed separate accounts,
for, against or abstaining, in the same proportions as the shares for which they
have received instructions.
To the best of each Fund's knowledge, as of the record date, no person
owned beneficially more than 5% of any class of its Value Opportunity Series,
except as stated above. As of the record date, officers and Directors of each
Fund, both individually and as a group, owned less than 1% of the outstanding
shares of any class of the applicable Fund's Value Opportunity Series.
In the event that a quorum of shareholders is not represented at the
Special Meeting, the Meeting may be adjourned until a quorum exists, or, even if
a quorum is represented, the Meeting may be adjourned until sufficient votes to
approve the proposal are received. More than 50% of the total outstanding shares
of a Value Opportunity Series must be present at the Special Meeting to have a
quorum to conduct business. For purposes of determining the presence of a quorum
for transacting business at the Special Meeting, abstentions and broker
"non-votes" will be treated as shares that are present but which have not been
voted. Broker non-votes are proxies received by a Fund from brokers or nominees
when the broker or nominee has neither received instructions from the beneficial
owner or other persons entitled to vote nor has discretionary power to vote on a
particular matter. The persons named as proxies may propose and vote for one or
more adjournments of the Special Meeting in accordance with applicable law.
Adjourned meetings must be held within a reasonable time after the date
originally set for the meeting (but not more than 120 days after the record
date). Solicitation of votes may continue to be made without any obligation to
provide any additional notice of the adjournment. The persons named as proxies
will vote Value Opportunity Series shares in favor of such adjournment those
proxies which they are entitled to vote in favor and will vote against any such
adjournment those proxies to be voted against the Proposal.
The Proposal requires the vote of a "majority of the outstanding voting
securities" of a Value Opportunity Series. A "majority of the outstanding voting
securities" of a Value Opportunity Series means the lesser of: (i) 67% of that
Series' shares present at the Special Meeting, if the holders of more than 50%
of the shares of that Series then outstanding are present in person or by proxy;
or (ii) more than 50% of the outstanding voting securities of that Series.
Shareholders of Aetna Value Opportunity Fund will vote as a single class
regardless of whether they are Class A or Class I shareholders. If the vote is
determined on the basis of the affirmative vote of 67% of the Series' shares
present at the Special Meeting, as described in clause (i) of the first sentence
of this paragraph, abstentions and broker non-votes will not constitute "yes" or
"no" votes for the Proposal and will be disregarded in determining the voting
securities present. If the Proposal is determined on the basis of obtaining the
affirmative vote of more than 50% of all the outstanding voting securities of
the Series, as described in clause (ii) above, broker non-votes will have the
effect of a "no" vote on the Proposal.
The number of shares that you may vote is the total of the number shown
on the proxy card or authorization card, as the case may be, accompanying this
Proxy Statement. If you own shares of Aetna Value Opportunity VP through a
Contract, the number of shares which you are entitled to vote is calculated
according to the formula described in the materials relating to your Contract.
Shareholders are entitled to one vote for each full share and a proportionate
vote for each fractional share held. Votes may be revoked by written notice to
Aeltus prior to the Special Meeting or by attending the Meeting in person and
indicating that you want to vote your shares.
Shares of Aetna Value Opportunity Fund held by ALIAC and its affiliates
will be voted in the same proportion as shares held by non-ALIAC shareholders of
that Series.
The appointed proxies will vote in their discretion on any other
business as may properly come before the Special Meeting or any adjournments or
postponements thereof. Additional matters would only include matters that were
not anticipated as of the date of this Proxy Statement.
MATTER TO BE ACTED UPON
PROPOSAL 1
APPROVAL OF SUBADVISORY AGREEMENT
FOR EACH VALUE OPPORTUNITY SERIES
The Directors of each Fund, including the Directors who are not
"interested persons" of the Fund (the "Independent Directors"), as defined by
the Investment Company Act of 1940, as amended (the "1940 Act"), have
unanimously approved, and recommend that the shareholders of each Value
Opportunity Series approve, a subadvisory agreement for the Series (the
"Subadvisory Agreement"), among the applicable Fund, on behalf of its Value
Opportunity Series, Aeltus, and Bradley, Foster & Sargent, Inc. ("Bradley").
Shareholders of each Value Opportunity Series are being asked to
approve a separate Subadvisory Agreement for their Series.
The Subadvisory Agreements on behalf of each Value Opportunity Series
are identical in all material respects. A copy of the form of the Subadvisory
Agreement is included with this Proxy Statement as Exhibit A.
WHAT ARE THE SIGNIFICANT PROVISIONS OF THE EXISTING INVESTMENT ADVISORY
AGREEMENTS?
Aeltus acts as investment adviser to each Value Opportunity Series
pursuant to investment advisory agreements entered into between Aeltus and each
Fund, on behalf of its Value Opportunity Series (each an "Advisory Agreement").
The Advisory Agreement between Aeltus and Aetna Variable Portfolios, Inc., on
behalf of its Value Opportunity Series, was approved by the Fund's Directors on
December 10, 1997, became effective May 1, 1998 and replaces the advisory
agreement with ALIAC, the Fund's former investment adviser, which agreement was
approved by the Series' sole shareholder on September 13, 1996. The Advisory
Agreement between Aeltus and Aetna Series Fund, Inc., on behalf of its Value
Opportunity Series, was also approved by the Fund's Directors on December 10,
1997, became effective February 2, 1998 and was approved by the Series' sole
shareholder effective February 2, 1998. Each Advisory Agreement gives Aeltus
broad latitude in selecting securities for each Value Opportunity Series subject
to the Directors' oversight. Under the Advisory Agreement, Aeltus may delegate
to a subadviser some or all of its responsibilities in managing each Value
Opportunity Series' investment portfolio, subject to Aeltus' oversight. The
Advisory Agreement also provides that Aeltus is responsible for all of its own
costs, including costs of Aeltus' personnel required to carry out its investment
advisory duties.
Each Advisory Agreement allows Aeltus to place trades through brokers
of its choosing and to take into consideration the quality of the brokers'
services and execution, as well as services such as research, or paying Series
expenses, in setting the amount of commissions paid to a broker. Aeltus may pay
higher commission rates than the lowest available when it is reasonable to do so
in light of the value of the brokerage and research services received generally
or in connection with a particular transaction. Aeltus only uses these
commissions for services and expenses to the extent authorized by applicable law
and the rules and regulations of the Securities and Exchange Commission (the
"SEC"). It is Aeltus' policy to obtain the best quality of execution available,
giving attention to net price (including commission where applicable), execution
capability (including the adequacy of a firm's capital position), research and
other services related to execution; the relative priority given to these
factors will depend on all of the circumstances regarding a specific trade.
Aeltus receives brokerage and research services from brokerage firms in
return for the execution by such brokerage firms of trades on behalf of a Fund.
These brokerage and research services may 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 its series, including the Value Opportunity
Series, and other investment companies, services related to the execution of
trades in a Series' securities and advice as to the valuation of securities, the
providing of equipment used to communicate research information and specialized
consultations with Series' personnel with respect to computerized systems and
data furnished to the Series as a component of other research services.
Research services furnished by brokers through whom a Fund effects
securities transactions may be used by Aeltus in servicing all of its accounts;
not all such services will be used by Aeltus to benefit the Fund.
Each Advisory Agreement provides that it will be effective through
December 31, 1999 and thereafter from year to year if approved by the Directors,
including a majority of the Independent Directors. Each Advisory Agreement will
terminate automatically if there is an assignment of the agreement, as defined
in the 1940 Act. It can be terminated by the Directors, shareholders of the
Value Opportunity Series, or Aeltus on 60 days' notice.
WHO IS AELTUS?
Aeltus is a Connecticut corporation organized in 1972 under the name
Aetna Capital Management, Inc. It currently has its principal offices at 242
Trumbull Street, Hartford, Connecticut. Aeltus is a part of the Aetna
organization, and is an affiliate of ALIAC and an indirect wholly-owned
subsidiary of Aetna Inc., a financial services company with stock listed for
trading on the New York Stock Exchange. John Y. Kim currently serves as the
President, Chief Executive Officer and Chief Investment Officer of Aeltus.
Aeltus is registered with the SEC as an investment adviser. In addition to
providing investment advisory services, Aeltus serves as each Fund's
administrator and provides certain administrative and shareholder services
necessary for Fund operations and is responsible for the supervision of other
service providers. The principal underwriter of Aetna Series Fund, Inc. is
Aeltus Capital, Inc., 242 Trumbull Street, Hartford, Connecticut 06103-1205, a
wholly-owned subsidiary of Aeltus and an indirect wholly-owned subsidiary of
Aetna Inc. ALIAC serves as principal underwriter to Aetna Variable Portfolios,
Inc. These entities will continue to provide services to the Funds after the
approval of the proposed subadvisory arrangements.
WHAT FEES OR CHARGES ARE PAID BY EACH VALUE OPPORTUNITY SERIES?
During 1997, ALIAC, an affiliate of Aeltus, served as investment
adviser, administrator and principal underwriter to the Aetna Value Opportunity
VP. ALIAC received fees for serving as the investment adviser to Aetna Value
Opportunity VP and for providing administrative services to it. The table below
describes the fees that ALIAC received from Aetna Value Opportunity VP for
providing these services for the fiscal year ended December 31, 1997.
[S] [C] [C] [C]
MANAGEMENT ADMINISTRATIVE DISTRIBUTION
SERIES* FEES SERVICES FEES FEES
Aetna Value
Opportunity VP $38,520 $9,630 $0
[FN]
* Fee information is not available for Aetna Value Opportunity Fund, which
commenced operations on February 2, 1998.
Below are schedules that list the annual advisory fee rate for each
Value Opportunity Series. As of June 30, 1998, the net assets of Aetna Value
Opportunity Fund and Aetna Value Opportunity VP were $5,806,271 and $56,594,953,
respectively.
SERIES MANAGEMENT FEE SCHEDULES
(expressed as a percentage of each Value Opportunity Series' average daily
net assets)
Aetna Value Opportunity Fund:
0.70% on the first $250 million 0.65% on the next $250 million
0.625% on next $250 million 0.60% on next $1.25 billion 0.55%
over $2 billion
Aetna Value Opportunity VP
0.60%
WHY IS AELTUS PROPOSING A SUBADVISORY ARRANGEMENT?
Peter B. Canoni, a Managing Director of Aeltus, has been the
portfolio manager for the Value Opportunity Series since each Series' inception.
Mr. Canoni recently decided to resign from Aeltus effective August 1, 1998 to
become a principal member of Bradley. In order to maintain continuity of
management for each Value Opportunity Series, Aeltus proposes that each Fund, on
behalf of its Value Opportunity Series, enter into a Subadvisory Agreement with
Bradley. Following Mr. Canoni's departure, one or more Aeltus portfolio managers
will manage each Value Opportunity Series on an interim basis pending the
outcome of the Proposal at the Special Meeting. If the subadvisory relationship
is approved for the Value Opportunity Series, Mr. Canoni, as a Bradley
principal, will serve as portfolio manager. Mr. Canoni has 26 years of
investment experience and in-depth knowledge of the equity markets. Aeltus
expects to retain Bradley as a Subadviser only so long as Mr. Canoni serves as
portfolio manager of the Value Opportunity Series. Each Subadvisory Agreement
can be terminated by Aeltus, Bradley or the applicable Fund, on behalf of its
Value Opportunity Series, on 60 days' notice. In this regard, Bradley's
relationship with the Fund may be terminated if, for example, the Series
performance results are unsatisfactory, Mr. Canoni is no longer associated with
Bradley, or he elects not to continue assuming day-to-day responsibility for
management of the Series.
Under the Subadvisory Agreements, Aeltus would bear the ultimate
responsibility for overseeing the investment advice provided to each Value
Opportunity Series. It would monitor Bradley's activities to ensure that Bradley
is following regulatory requirements, and Board policies, restrictions and
guidelines in managing each Value Opportunity Series' assets. Aeltus would
determine that Bradley had established and at all times maintained appropriate
policies and procedures including, but not limited to, a code of ethics, which
are designed to ensure that the management of each Value Opportunity Series is
implemented in compliance with the 1940 Act, the Investment Advisers Act of
1940, as amended, and the rules thereunder. Aeltus believes that its experience
in managing assets for mutual funds should enable it to effectively monitor
Bradley's activities to the advantage of each Value Opportunity Series'
shareholders.
WHO IS BRADLEY?
Bradley, a Connecticut corporation organized in 1993, maintains its
primary office at City Place II - 185 Asylum Street, Hartford, Connecticut
06103. It is registered with the SEC as an investment adviser and manages
private client assets as well as 401(k), profit sharing and other retirement
plan assets. Bradley has not previously served as an investment adviser or
subadviser to a mutual fund. As of June 1, 1998, Bradley managed in excess of
$350 million of assets.
The principal occupations and positions of Bradley's principal
executive officer and each principal are as follows:
[S] [C]
NAME AND ADDRESS* PRINCIPAL OCCUPATION
Robert H. Bradley ** Principal and President, Bradley, Foster & Sargent, Inc.
Timothy H. Foster Principal, Bradley, Foster & Sargent, Inc.
Joseph D. Sargent Principal, Bradley, Foster & Sargent, Inc.
Jeffrey G. Marsted Principal, Bradley, Foster & Sargent, Inc.
J. Edward Roney, Jr. Principal, Bradley, Foster & Sargent, Inc.
[FN]
* The principal business address of each person listed above, other than Mr.
Roney, is City Place II - 185 Asylum Street, Hartford, Connecticut 06103. The
principal business address of Mr. Roney is 79 Milk Street, Boston, Massachusetts
02109.
** Principal executive officer.
No officer or Director of either Fund is an officer, employee or
director of Bradley. No officer or Director of either Fund owns any securities
of, or has any other material direct or indirect interest in, Bradley or any of
its affiliates. No Director of either Fund has had any direct or indirect
material interest in any material transaction since January 1, 1997, or in any
material proposed transactions, to which Bradley or any subsidiary was or is to
be a party. There is no arrangement or understanding in connection with the
Subadvisory Agreements with respect to the composition of the Board of Directors
of either Fund or of Bradley, or with respect to the selection or appointment of
any person to any office of any such company. As described more fully above,
however, it is contemplated in connection with the approval of the proposed
Subadvisory Agreements that Bradley will appoint Peter Canoni as portfolio
manager of each Value Opportunity Series.
Bradley utilizes an Investment Committee to review and select
securities for inclusion in its "Guidance List." All securities purchased on
behalf of a client's portfolio, including the portfolios of the Value
Opportunity Series, must be on the Guidance List. The decision to add or delete
a security from the List is made by the Investment Committee. Each principal of
the firm is a member of the Investment Committee. When Mr. Canoni joins Bradley,
he will become a principal of the firm and a voting member of the Investment
Committee. Decisions by Mr. Canoni as to the timing of purchases or sales of
securities would not require the approval of the Investment Committee. Instead,
only the addition of new securities to the Guidance List need be approved by the
Investment Committee in advance. Mr. Canoni will inform the Board of Directors
of each Fund in the event that his management of the investment portfolio of the
Value Opportunity Series has been constrained by the existence of the Guidance
List.
WHAT ARE THE MATERIAL TERMS OF THE PROPOSED SUBADVISORY AGREEMENTS WITH BRADLEY?
The Subadvisory Agreements give Bradley broad latitude in selecting
securities for each Value Opportunity Series consistent with the investment
objectives and policies of the Series, subject to Aeltus' oversight. The
Agreements contemplate that Bradley will be responsible only for making and
communicating investment decisions. Aeltus will remain responsible for all other
aspects of managing and administering the Value Opportunity Series, including
trade execution. Aeltus will cause Bradley to be provided with continued
communication with its sell-side brokerage relationships. Aeltus will provide
Bradley with current portfolio information, including cash positions. Bradley
will provide all other necessary support to the investment decision process.
Bradley will institute internal compliance policies and procedures designed to
monitor potential conflicts of interest that may arise from trades placed on
behalf of the Value Opportunity Series and on behalf of other Bradley clients.
The Subadvisory Agreements provide that Bradley is not precluded from serving as
adviser or subadviser to any other registered investment company or series
thereof; provided however, that no such investment company or series shall have
investment objectives, strategies and restrictions that are substantially
similar to those employed by the Value Opportunity Series unless Aeltus
expressly consents.
The Subadvisory Agreements, if approved, will be effective October 1,
1998 or, if the Special Meeting is adjourned, on the first day of the next
month following the date on which the shareholders approve the Subadvisory
Agreements. They will continue in effect until December 31, 1999 and thereafter
from year to year if approved by the Directors of the applicable Fund, including
a majority of the Independent Directors. A Subadvisory Agreement will terminate
automatically if the corresponding Investment Advisory Agreement terminates or
if there is a change in control of Bradley. Each can be terminated by Aeltus,
Bradley or the applicable Fund, on behalf of its Value Opportunity Series, on 60
days' notice. If the Subadvisory Agreement terminates, Aeltus, the Value
Opportunity Series' investment adviser, would automatically assume all
management functions for the Series. Bradley can be held liable to Aeltus and
the Funds for negligence, bad faith, willful malfeasance or reckless disregard
of its obligations or duties under the Subadvisory Agreements.
WHAT WILL AELTUS PAY UNDER THE SUBADVISORY AGREEMENTS ON BEHALF OF EACH
SERIES?
The Subadvisory Agreement for each Value Opportunity Series provides
that, for the duration of the Agreement, Bradley's subadvisory fee will be paid
monthly at an annual rate of 0.15% of the Series' average daily net assets on
the first $250 million of assets, and 0.10% of the Series' average daily net
assets on assets above $250 million.
Aeltus believes this proposed compensation is fair and reasonable
for the services being provided by Bradley. The fees are not charged back to, or
paid by, a Value Opportunity Series; they are paid by Aeltus out of its own
resources, including fees and charges it receives from or in connection with
each Fund. If the subadvisory agreements are approved, Aeltus intends to retain
Bradley to provide certain shareholder communication services and marketing
assistance through December 31, 1999. The fee for these services has not yet
been determined but is expected to be approximately $13,000 per month.
WHAT IS EACH BOARD OF DIRECTORS' RECOMMENDATION?
The Board of Directors of each Fund unanimously recommends voting FOR
approval of the Subadvisory Agreement on behalf of its Value Opportunity Series.
WHAT FACTORS DID EACH BOARD OF DIRECTORS CONSIDER IN REACHING ITS
RECOMMENDATION?
The Directors of each Fund considered the proposed Subadvisory
Agreement applicable to its Value Opportunity Series at a meeting held on June
24, 1998. The Contract Review Committee of each Board of Directors, consisting
solely of the Independent Directors, considered the Subadvisory Agreement at a
meeting held on June 23, 1998. In preparation for the Contract Committee and
Board meetings, counsel for the Independent Directors requested, and the
Directors were provided, certain relevant information, including: Bradley's Form
ADV, as well as a detailed background of the firm and its principals, Bradley's
financial statements, Bradley's performance record achieved on behalf of its
clients and assets under management, Bradley's Code of Professional Conduct,
information with respect to Bradley's compliance record, Bradley's record of
client service and communication, Mr. Canoni's performance as the portfolio
manager of the Value Opportunity Series, and a copy of the form of subadvisory
agreement.
The Directors acknowledged that approval of the Subadvisory
Agreement would mean that the shareholders would receive the benefits of the
talents of Aeltus and Bradley, including Mr. Canoni, working for the Value
Opportunity Series at no additional cost to shareholders.
In recommending the approval of the Subadvisory Agreement to the
shareholders of its Value Opportunity Series, each Fund's Board of Directors
considered such factors as it deemed reasonably necessary and appropriate,
including: (1) the fact that the Subadvisory Agreement would permit that Value
Opportunity Series to continue to receive the services of Mr. Canoni as
portfolio manager; (2) the nature and quality of the services to be provided to
the Value Opportunity Series; (3) the compensation to be paid to Bradley; (4)
Bradley's financial soundness; (5) Mr. Canoni's experience as a portfolio
manager generally and in connection with his management of the Value Opportunity
Series; (6) the performance of the Value Opportunity Series during Mr. Canoni's
tenure as a portfolio manager relative to the performance of comparably managed
mutual funds; (7) Bradley's personnel, resources, investment methodology, and
investment management experience; (8) the total fees paid by the Value
Opportunity Series; and (9) the fact that none of the expenses incurred in
connection with this proxy solicitation and the related transactions would be
borne by the Value Opportunity Series. Each Board of Directors also noted that
the advisory fees paid by each Fund to Aeltus would remain the same and that
Aeltus would pay all fees to Bradley under the Subadvisory Agreement. Although
the Board of Directors of each Fund considered the above factors in approving
the Subadvisory Agreement, each Board attached particular significance to the
fact that Mr. Canoni will serve as portfolio manager of the Value Opportunity
Series. After considering the above factors, each Board of Directors, including
the Independent Directors, concluded that the Subadvisory Agreement was in the
best interest of shareholders of the Value Opportunity Series.
WHAT HAPPENS IF THE SUBADVISORY AGREEMENTS ARE NOT APPROVED?
If the Subadvisory Agreements are not approved for both Value
Opportunity Series, Aeltus would continue as investment adviser to both Series
and would appoint a permanent portfolio manager for them. Aeltus reserves the
right to adjourn the meeting if it reasonably believes that the shareholders of
either Value Opportunity Series will not vote to approve the proposal.
OTHER BUSINESS
The management of each Fund knows of no other business to be presented
at the Special Meeting other than the matter set forth in this Proxy Statement.
If any other business properly comes before the Special Meeting, the proxies
will exercise their best judgment in deciding how to vote on such matters.
SHAREHOLDER PROPOSALS
The Articles of Incorporation and the By-Laws of each Fund provide that
the Fund need not hold annual shareholder meetings, except as required by the
1940 Act. Therefore, it is probable that no annual meeting of shareholders will
be held in 1998 or in subsequent years until so required. For those years in
which annual shareholder meetings are held, proposals which shareholders of a
Fund intend to present for inclusion in the proxy materials with respect to the
annual meeting of shareholders must be received by the Fund within a reasonable
period of time before the solicitation is made.
Please complete the enclosed proxy card or authorization card, as
applicable, and return it promptly in the enclosed self-addressed postage-paid
envelope. You may revoke your proxy at any time prior to the Special Meeting by
written notice to Aeltus or by submitting a proxy card or an authorization card,
as the case may be, bearing a later date.
Amy R. Doberman
Secretary
<PAGE>
Exhibit A
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by AELTUS INVESTMENT MANAGEMENT, INC., a Connecticut
corporation (the "Adviser"), [NAME OF FUND], a Maryland Corporation (the
"Fund"), on behalf of its [NAME OF VALUE OPPORTUNITY SERIES] (the "Portfolio")
and Bradley, Foster & Sargent, Inc., a Connecticut corporation (the
"Subadviser"), as of the date set forth below.
W I T N E S S E T H
WHEREAS, the Fund is registered with the Securities and Exchange Commission (the
"Commission") as an open-end, diversified, management investment company
consisting of multiple investment portfolios, under the Investment Company Act
of 1940, as amended (the "1940 Act"); and
WHEREAS, pursuant to authority granted by the Fund's Articles of Incorporation,
the Fund has established the Portfolio as a separate investment portfolio; and
WHEREAS, both the Adviser and the Subadviser are registered with the Commission
as investment advisers under the Investment Advisers Act of 1940, as amended
(the "Advisers Act") and both are in the business of acting as investment
advisers; and
WHEREAS, the Adviser has entered into an Investment Advisory Agreement with the
Fund, on behalf of the Portfolio (the "Investment Advisory Agreement"), which
appoints the Adviser as the investment adviser for the Portfolio; and
WHEREAS, Article IV of the Investment Advisory Agreement authorizes the Adviser
to delegate all or a portion of its obligations under the Investment Advisory
Agreement to a subadviser;
NOW THEREFORE, the parties agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER
Subject to the terms and conditions of this Agreement, the Adviser and the Fund,
on behalf of the Portfolio, hereby appoint the Subadviser to manage the assets
of the Portfolio as set forth below in Section II, under the supervision of the
Adviser and subject to the approval and direction of the Fund's Board of
Directors (the "Board"). The Subadviser hereby accepts such appointment and
agrees that it shall, for all purposes herein, undertake such obligations as an
independent contractor and not as an agent of the Adviser. The Subadviser
agrees, that except as required to carry out its duties under this Agreement or
as otherwise expressly authorized, it has no authority to act for or represent
the Portfolio, the Fund or the Adviser in any way. The Subadviser agrees that
the Adviser shall have the right at all times to inspect the offices and the
records of the Subadviser that relate to the Subadviser's performance of this
Agreement.
II. DUTIES OF THE SUBADVISER AND THE ADVISER
A. Duties of the Subadviser
The Subadviser shall regularly provide investment advice with respect
to the assets held by the Portfolio and shall continuously supervise
the investment and reinvestment of cash, securities and instruments or
other property comprising the assets of the Portfolio. In carrying out
these duties, the Subadviser shall:
1. select the securities to be purchased, sold or
exchanged by the Portfolio or otherwise represented
in the Portfolio's investment portfolio, communicate
trade orders to the Adviser for all such securities,
and regularly report thereon to the Adviser and, at
the request of the Adviser, to the Board;
2. formulate and implement continuing programs for the
purchase and sale of securities and regularly report
thereon to the Adviser and, at the request of the
Adviser or the Portfolio, to the Board; and
3. establish and maintain appropriate policies and
procedures including, but not limited to, a code of
ethics, which are designed to ensure that the
management of the Portfolio is implemented in
compliance with the 1940 Act, the Advisers Act, and
the rules thereunder.
B. Duties of the Adviser
The Adviser shall retain responsibility for oversight of all activities
of the Subadviser and for monitoring its activities on behalf of the
Portfolio. In carrying out its obligations under this Agreement and the
Investment Advisory Agreement, the Adviser shall:
1. monitor the investment program maintained by the
Subadviser for the Portfolio and the Subadviser's
compliance program to ensure that the Portfolio's
assets are invested in compliance with the
Subadvisory Agreement and the Portfolio's investment
objectives and policies as adopted by the Board and
described in the most current effective amendment of
the registration statement for the Portfolio, as
filed with the Commission under the Securities Act of
1933, as amended (the "1933 Act"), and the 1940 Act
("Registration Statement");
2. place all trade orders communicated by the Subadviser
with brokers or dealers selected by the Adviser. The
Adviser shall use its best efforts to seek to execute
portfolio transactions at prices that are advantageous to
the Portfolio giving consideration to the services and
research provided and at commission rates that are
reasonable in relation to the benefits received;
3. review all reports prepared by the Subadviser to
assure that they are in compliance with applicable
requirements and meet the provisions of applicable
laws and regulations;
4. file all periodic reports required to be filed by the
Portfolio with the applicable regulatory authorities;
5. review and deliver to the Board all financial,
performance and other reports prepared by the
Subadviser under the provisions of this Agreement or
as requested by the Board;
6. maintain contact with and enter into arrangements
with the custodian, transfer agent, auditors, outside
counsel, and other third parties providing services
to the Portfolio;
7. give instructions to the custodian and/or
sub-custodian of the Portfolio, concerning deliveries
of securities, transfers of currencies and payments
of cash for the Portfolio, as required to carry out
the investment activities of the Portfolio as
contemplated by this Agreement;
8. provide such administrative and other services, such
as preparation of financial data, determination of
the Portfolio's net asset value, and preparation of
financial and performance reports; and
9. oversee all matters relating to (i) the offer and sale of
shares of the Portfolio, including promotions, marketing
materials, preparation of prospectuses, filings with the
Commission and state securities regulators, and
negotiations with broker-dealers; (ii) shareholder
services, including, confirmations, correspondence and
reporting to shareholders; (iii) all corporate matters on
behalf of the Portfolio, including monitoring the
corporate records of the Portfolio, maintaining contact
with the Board, preparing for, organizing and attending
meetings of the Board and the Portfolio's shareholders; (iv)
preparation of proxies when required; and (v) any other
matters not expressly delegated to the Subadviser by this
Agreement.
III. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of the Subadviser
The Subadviser hereby represents and warrants to the Adviser as
follows:
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 Commission under the
Advisers Act. The Subadviser shall maintain such
registration in effect at all times during the term
of this Agreement.
3. Regulatory Orders. The Subadviser is not subject to
any stop orders, injunctions or other orders of any
regulatory authority affecting its ability to carry
out the terms of this Agreement. The Subadviser will
notify the Adviser and the Portfolio immediately if
any such order is issued or if any proceeding is
commenced that could result in such an order.
4. Compliance. The Subadviser has in place compliance
systems and procedures designed to meet the
requirements of the Advisers Act and the 1940 Act and
it shall at all times assure that its activities in
connection with managing the Portfolio follow these
procedures.
5. Authority. The Subadviser is authorized to enter into
this Agreement and carry out the terms hereunder.
6. Best Efforts. The Subadviser at all times shall
provide its best judgment and effort to the Portfolio
in carrying out its obligations hereunder.
B. Representations and Warranties of the Adviser
The Adviser hereby represents and warrants to the Subadviser 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 Commission under the Advisers Act. The
Adviser shall maintain such registration or license in
effect at all times during the term of this Agreement.
3. Regulatory Orders. The Adviser is not subject to any stop
orders, injunctions or other orders of any regulatory
authority affecting its ability to carry out the terms of
this Agreement. The Adviser will notify the Subadviser and
the Portfolio immediately if any such order is issued or
if any proceeding is commenced that could result in such
an order.
4. Authority. The Adviser is authorized to enter into this
Agreement and carry out the terms hereunder.
5. Best Efforts. The Adviser at all times shall provide its
best judgment and effort to the Portfolio in carrying out
its obligations hereunder.
C. Representations and Warranties of the Fund
The Fund hereby represents and warrants to the Adviser as follows:
1. Due Incorporation and Organization. The Fund has
been duly incorporated as a Corporation under the laws of the
State of Maryland and it is authorized to enter into this
Agreement and carry out its obligations hereunder.
2. Registration. The Fund is registered as an investment
company with the Commission under the 1940 Act and shares of
the Fund are registered or qualified for offer and sale to the
public under the 1933 Act and all applicable state securities
laws. Such registrations or qualifications will be kept in
effect during the term of this Agreement.
IV. 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 at the direction of
the Adviser on behalf of the Portfolio, shall at all times be subject to any
directives of the Board.
V. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Subadviser shall at
all times conform to:
1. all applicable provisions of the 1940 Act, the Advisers Act and any
rules and regulations adopted thereunder;
2. all policies and procedures of the Portfolio as adopted by the Board and
as described in the Registration Statement;
3. the provisions of the Articles of Incorporation of the Fund, as amended from
time to time;
4. the provisions of the Bylaws of the Fund, as amended from time to time; and
5. any other applicable provisions of state or federal law.
VI. COMPENSATION
The Adviser shall pay the Subadviser, as compensation for services
rendered hereunder, from its own assets, an annual fee based on the
average daily net assets in the Portfolio, according to the following
schedule:
[S] [C]
Net Assets in Portfolio Annual Fee
$0 - $250 MM 0.15% of the Portfolio's average daily net assets
$250 MM 0.10% of the Portfolio's average daily net assets
The fee shall be payable monthly. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued daily
at the rate of 1/365 of the annual fee applied to the daily net assets
of the Portfolio. 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.
VII. 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
Portfolio hereunder, including, but not limited to, office space, office
equipment, telephone and postage costs.
VIII. NONEXCLUSIVITY
The services of the Subadviser with respect to the Portfolio 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; provided, however, that
the Subadviser will not undertake to manage a registered investment company with
substantially similar objectives, policies and restrictions to those of the
Portfolio without obtaining the Adviser's prior written approval. It is
understood that officers or 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.
IX. TERM
This Agreement shall become effective at the close of business on the date
hereof and shall remain in force and effect through December 31, 1999, unless
earlier terminated under the provisions of Article X. Following the expiration
of its initial term, the Agreement shall continue in force and effect for one
year periods, provided such continuance is specifically approved at least
annually:
1. (a) by the Board or (b) by the vote of a majority of the
Portfolio's outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), and
2. by the affirmative vote of a majority of the directors who are
not parties to this Agreement or interested persons of a party
to this Agreement (other than as a director of the Fund), by
votes cast in person at a meeting specifically called for such
purpose.
X. TERMINATION
This Agreement may be terminated:
1. at any time, without the payment of any penalty, by vote of
the Board or by vote of a majority of the outstanding voting
securities of the Portfolio; or
2. by the Adviser, the Fund, on behalf of the Portfolio, or the
Subadviser on sixty (60) days' written notice to the other
party, unless written notice is waived by the party required
to be notified; or
3. automatically in the event there is an "assignment" of
this Agreement, as defined in the 1940 Act.
XI. LIABILITY
The Subadviser shall be liable to the Portfolio and the Subadviser and shall
indemnify the Portfolio and the Adviser for any losses incurred by the Portfolio
or the Adviser whether in the purchase, holding, or sale of any security or
otherwise, to the extent that such losses resulted from an act or omission on
the part of the Subadviser or its officers, directors or employees, that is
found to involve willful misfeasance, bad faith or negligence, or reckless
disregard by the Subadviser of its duties under this Agreement, in connection
with the services rendered by the Subadviser hereunder.
Nothing herein shall relieve the Adviser of its responsibilities to the Fund, as
set forth in the Investment Advisory Agreement.
XII. NOTICES
Any notices under this Agreement shall be in writing, addressed and delivered,
mailed postage paid, or sent by other delivery service, or by facsimile
transmission to each party at such address as each party may designate for the
receipt of notice. Until further notice, such address shall be:
if to the Fund, on behalf of the Portfolio or the Adviser:
242 Trumbull Street ALT5
Hartford, Connecticut 06103-1205
Fax number: 860/275-2158
Attn: Secretary
if to the Subadviser:
185 Asylum Street
Hartford, Connecticut 06103
Fax number: 860/520-1557
Attention: President
XIII. QUESTIONS OF INTERPRETATION
This Agreement shall be governed by the laws of the State of Connecticut. Any
question of interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the 1940 Act
shall be resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or, in the absence
of any controlling decision of any such court, by rules, regulations or orders
of the Commission issued pursuant to the 1940 Act. In addition, where the effect
of a requirement of the 1940 Act reflected in any provision of the Agreement is
revised by rule, regulation or order of the Commission, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
XIV. SALES PROMOTION
The Subadviser may not use any sales literature, advertising material
(including material disseminated through radio, television, or other electronic
media) or other communications concerning Portfolio shares or that include the
name of the Portfolio or the Adviser without obtaining the Adviser's prior
written approval.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the _____ day of __________, 1998.
Aeltus Investment Management, Inc.
Attest: By
Name
Name Title
Title
Bradley, Foster & Sargent, Inc.
Attest: By
Name
Name Title
Title
[NAME OF FUND]
on behalf of
[Name of Value Opportunity Series]
Attest: By
Name
Name Title
Title
<PAGE>
AETNA SERIES FUND, INC. ("SERIES FUND")
Aetna Value Opportunity Fund
THIS PROXY CARD IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF THE SERIES FUND
THIS PROXY CARD, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY
CARD WILL BE VOTED FOR APPROVAL OF THE PROPOSAL.
Dated: __________________, 1998
Please sign exactly as name appears on this card. When account is
joint tenants, all should sign. When signing as administrator, trustee
or guardian, please give title. If a corporation or partnership,
sign in entity's name and by authorized persons.
X______________________
X______________________
Please refer to the Proxy Statement for a discussion of these matters. This
proxy card is solicited in connection with the special meeting of the
shareholders of Aetna Value Opportunity Fund to be held at 9:00 a.m., Eastern
Time, on September 4, 1998, and at any adjournment thereof. THIS PROXY CARD,
WHEN PROPERLY EXECUTED, DIRECTS J. SCOTT FOX AND AMY R. DOBERMAN TO VOTE THE
SHARES LISTED ON THE FRONT OF THIS CARD AS DIRECTED AND REVOKES ALL PRIOR PROXY
CARDS.
Please vote by filling in the appropriate box below, as shown, using blue or
black ink or dark pencil. Do not use red ink.
[ ] [box is filled in solidly]
1. Approval of the Subadvisory Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS, INCLUDING ANY ADJOURNMENT OF THE MEETING, AS MAY PROPERLY COME BEFORE
THE MEETING.
<PAGE>
AETNA VARIABLE PORTFOLIOS, INC. ("AVPI")
Aetna Value Opportunity VP
THIS AUTHORIZATION CARD IS SOLICITED ON BEHALF OF THE BOARD
OF DIRECTORS OF AVPI
THIS AUTHORIZATION CARD, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN
THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS
AUTHORIZATION CARD WILL BE VOTED FOR APPROVAL OF THE PROPOSAL.
Dated: __________________, 1998
Please sign exactly as name appears on this card. When account is
joint tenants, all should sign. When signing as administrator, trustee
or guardian, please give title. If a corporation or partnership,
sign in entity's name and by authorized persons.
X______________________
X______________________
Please refer to the Proxy Statement for a discussion of these matters. This
authorization card is solicited in connection with the special meeting of the
shareholders of Aetna Value Opportunity VP to be held at 9:00 a.m., Eastern
Time, on September 4, 1998, and at any adjournment thereof. THIS AUTHORIZATION
CARD, WHEN PROPERLY EXECUTED, DIRECTS J. SCOTT FOX AND AMY R. DOBERMAN TO VOTE
THE SHARES LISTED ON THE FRONT OF THIS CARD AS DIRECTED AND REVOKES ALL PRIOR
AUTHORIZATION CARDS.
Please vote by filling in the appropriate box below, as shown, using blue or
black ink or dark pencil. Do not use red ink.
[ ] [box is filled in solidly]
1. Approval of the Subadvisory Agreement.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER
BUSINESS, INCLUDING ANY ADJOURNMENT OF THE MEETING, AS MAY PROPERLY COME BEFORE
THE MEETING.
