AETNA SERIES FUND, INC.
AETNA INDEX PLUS LARGE CAP FUND
PROSPECTUS
March 1, 2000
Aetna Series Fund, Inc. is an open-end investment company authorized to issue
multiple series of shares. This prospectus offers shares of Aetna Index Plus
Large Cap Fund (Fund).
The Securities and Exchange Commission has not approved or disapproved these
securities or determined whether this prospectus is truthful or complete. Anyone
who represents to the contrary has committed a criminal offense.
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TABLE OF CONTENTS
THE FUND'S INVESTMENTS 3
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RISKS,
INVESTMENT PERFORMANCE 3
FUND EXPENSES 5
OTHER CONSIDERATIONS 7
MANAGEMENT OF THE FUND 7
INVESTING IN THE FUND 8
OPENING AN ACCOUNT AND SELECTING A SHARE CLASS 8
HOW TO BUY SHARES 11
HOW TO SELL SHARES 14
TIMING OF REQUESTS 15
OTHER INFORMATION ABOUT SHAREHOLDER ACCOUNTS AND SERVICES 15
DIVIDENDS AND DISTRIBUTIONS 17
TAX INFORMATION 17
PRIVATE ACCOUNT PERFORMANCE 18
FINANCIAL HIGHLIGHTS 19
ADDITIONAL INFORMATION 21
2
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THE FUND'S INVESTMENTS
INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND RISKS, INVESTMENT
PERFORMANCE
Investment Objective Seeks to OUTPERFORM THE TOTAL RETURN PERFORMANCE of the
STANDARD & POOR'S 500 COMPOSITE INDEX (S&P 500), while maintaining a market
level of risk.
Principal Investment Strategies The Fund invests at least 80% of its net assets
in stocks included in the S&P 500 (other than Aetna Inc. common stock). The S&P
500 is a stock market index comprised of common stocks of 500 of the largest
companies in the U.S. selected by Standard & Poor's Corporation.
In managing the Fund, Aeltus Investment Management, Inc. (Aeltus), the
investment manager to the Fund, attempts to achieve the Fund's objective by
overweighting those stocks in the S&P 500 that Aeltus believes will outperform
the index, and underweighting (or avoiding altogether) those stocks that Aeltus
believes will underperform the index. In determining stock weightings, Aeltus
uses internally developed quantitative computer models to evaluate various
criteria, such as the financial strength of each company and its potential for
strong, sustained earnings growth. At any one time, Aeltus generally includes in
the Fund approximately 400 of the stocks included in the S&P 500. Although the
Fund will not hold all the stocks in the S&P 500, Aeltus expects that there will
be a close correlation between the performance of the Fund and that of the S&P
500 in both rising and falling markets, as the Fund is designed to have risk
characteristics (e.g., price-to-earnings ratio, dividend yield, volatility)
which approximate those of the S&P 500.
Principal Risks The principal risks of investing in the Fund are those
generally attributable to stock investing. These risks include sudden and
unpredictable drops in the value of the market as a whole and periods of
lackluster or negative performance. The success of the Fund's strategy depends
significantly on Aeltus' skill in determining which securities to overweight,
underweight or avoid altogether.
SHARES OF THE FUND WILL RISE AND FALL IN VALUE AND YOU COULD LOSE MONEY BY
INVESTING IN IT. THERE IS NO GUARANTY THE FUND WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. SHARES OF THE FUND ARE NOT BANK DEPOSITS AND ARE NOT GUARANTEED,
ENDORSED OR INSURED BY ANY FINANCIAL INSTITUTION, THE FDIC OR ANY OTHER
GOVERNMENT AGENCY.
3
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<TABLE>
<CAPTION>
INVESTMENT PERFORMANCE
YEARS ENDED DECEMBER 31,
<S> <C> <C> <C>
YEAR-BY-YEAR TOTAL RETURN (CLASS I) 1997 1998 1999
33.93% 32.50% 24.51%
[arrow up] BEST QUARTER:
fourth quarter 1998, up 22.49%
[arrow down] WORST QUARTER:
third quarter 1998, down 9.00%
AS OF DECEMBER 31, 1999
AVERAGE ANNUAL TOTAL RETURN 1 YEAR SINCE INCEPTION INCEPTION DATE
Class I 24.51% 29.08% 12/10/96
Class A* 20.56% 27.30% 12/10/96
Class B* 18.36% 27.21% 12/10/96
Class C* 22.95% 28.14% 12/10/96
S&P 500 Index** 21.04% 25.88% 12/02/96
</TABLE>
The performance table and bar chart provide an indication of the historical risk
of an investment in the Fund. All figures assume reinvestment of dividends and
distributions.
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* On February 2, 1998, the Fund redesignated Adviser Class shares as Class A
shares. The Fund introduced Class B and Class C shares on March 1, 1999 and June
30, 1998, respectively. For periods prior to the Class A inception date, Class A
performance is calculated using the performance of Class I shares, and deducting
the Class A front-end sales charge and the internal fees and expenses of the
Adviser Class shares. For periods prior to the Class B and Class C inception
dates, Class B and Class C performance is calculated using the performance of
Class I shares, and deducting the internal fees and expenses of the Class B and
Class C shares, respectively. All Class B share returns, and Class C share
1-year returns, reflect the deduction of the applicable contingent deferred
sales charge (CDSC) as described under "Opening an Account and Selecting a Share
Class."
** The Standard & Poor's 500 Index is a value-weighted, unmanaged index of 500
widely held stocks and is considered to be representative of the stock market in
general.
4
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FUND EXPENSES
The following tables describe the Fund's expenses. Shareholder Fees are paid
directly by shareholders. Annual Fund Operating Expenses are expressed as a
percentage of the Fund's average daily net assets, and are thus paid indirectly
by all Fund shareholders.
SHAREHOLDER FEES(1)
(fees paid directly from your investment)
Maximum Sales Maximum Deferred Sales
Charge (Load) on Purchases Charge (Load) (as a % of
(as a % of purchase price) gross redemption proceeds)
Class I None None
Class A 3.00% None(2)
Class B None 5.00%(3)
Class C None 0.75%(4)
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES(5)
(expenses that are deducted from Fund assets)
Distribution Total Fee Waiver/
Management (12b-1) and Other Operating Expense Net
Fee Service Fees Expenses Expenses Reimbursement Expenses
<S> <C> <C> <C> <C> <C> <C>
Class I 0.45% 0.00% 0.30% 0.75% 0.05% 0.70%
Class A 0.45% 0.25% 0.30% 1.00% 0.05% 0.95%
Class B 0.45% 1.00% 0.30% 1.75% 0.05% 1.70%
Class C 0.45% 0.75% 0.30% 1.50% 0.05% 1.45%
</TABLE>
(1) The Fund does not impose any sales charge (load) on reinvested dividends or
exchanges.
(2) A CDSC of up to 0.50% is assessed only on certain redemptions of Class A
shares that were purchased without a front-end sales charge.
(3) The Fund charges a CDSC of 5.00% on shares redeemed in the first year,
declining to 1.00% on shares redeemed in the sixth year. No CDSC is charged
thereafter.
(4) The Fund charges a CDSC of 0.75% on shares redeemed in the first 18 months.
No CDSC is charged thereafter.
(5) Aeltus is contractually obligated, through December 31, 2000, to waive all
or a portion of its management fee and/or its administrative services fee
and/or reimburse a portion of the Fund's other expenses in order to ensure
that the Fund's total operating expenses do not exceed the percentage of the
Fund's average daily net assets reflected in the table under Net Expenses.
An administrative services fee of 0.10% is included in Other Expenses. The
expenses shown above are based on the year ended October 31, 1999.
5
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EXAMPLE
The following example is designed to help you compare the costs of investing in
the Fund with the costs of investing in other mutual funds. Using the annual
fund operating expenses percentages above, you would pay the following expenses
on a $10,000 investment, assuming a 5% annual return and redemption at the end
of each of the periods shown:
1 Year* 3 Years* 5 Years* 10 Years*
Class I $ 72 $235 $ 412 $ 926
Class A 394 604 831 1,483
Class B 673 846 1,144 1,860
Class C 223 469 814 1,786
* Aeltus is contractually obligated to waive fees and/or reimburse expenses
through December 31, 2000. Therefore, figures reflect this waiver/reimbursement
for the first year of the period.
THIS EXAMPLE SHOULD NOT BE CONSIDERED AN INDICATION OF PRIOR OR FUTURE EXPENSES.
ACTUAL EXPENSES FOR THE CURRENT YEAR MAY VARY FROM THOSE SHOWN.
Long-term shareholders may pay more than the economic equivalent of the maximum
sales charge permitted by the NASD, because of the distribution and shareholder
service (12b-1) fees. Registered representatives may receive different levels of
compensation depending on the class sold.
6
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OTHER CONSIDERATIONS
In addition to the principal investments and strategies described on the
previous page, the Fund may also invest in other securities, engage in other
practices, and be subject to additional risks, as discussed below and in the
Statement of Additional Information (SAI).
Futures Contracts and Options The Fund may enter into futures contracts and use
options. The Fund primarily uses futures contracts and options to hedge against
price fluctuations or increase exposure to a particular asset class. To a
limited extent, the Fund also may use these instruments for speculation
(investing for potential income or capital gain).
o Futures contracts are agreements that obligate the buyer to buy and the seller
to sell a certain quantity of securities at a specific price on a specific
date.
o Options are agreements that give the holder the right, but not the obligation,
to purchase or sell a certain amount of securities or futures contracts during
a specified period or on a specified date.
The main risk of investing in futures contracts and options is that these
instruments can amplify a gain or loss, potentially earning or losing
substantially more money than the actual cost of the instrument. In addition,
while a hedging strategy can guard against potential risks for the Fund as a
whole, it adds to the Fund's expenses and may reduce or eliminate potential
gains. There is also a risk that a futures contract or option intended as a
hedge may not perform as expected.
MANAGEMENT OF THE FUND
Aeltus, 10 State House Square, Hartford, Connecticut 06103-3602 serves as
investment adviser to the Fund. Aeltus is responsible for managing the assets of
the Fund in accordance with the investment objective and policies, subject to
oversight by the Aetna Series Fund, Inc. (Company) Board of Directors (Board).
Aeltus has acted as adviser or subadviser to mutual funds since 1994 and has
managed institutional accounts since 1972.
Advisory Fees For the year ended October 31, 1999, Aeltus received an aggregate
advisory fee of 0.40%, as a percentage of the Fund's average net assets. That
fee reflects the fee waiver and expense reimbursement. See the Fund Operating
Expense table for the advisory fee (Management Fee) Aeltus was entitled to
receive.
Portfolio Management Geoffrey A. Brod, Portfolio Manager, Aeltus, has been
managing the Fund since its inception in December 1996. He has over 30 years of
experience in quantitative applications and has over 12 years of experience in
equity investments. Mr. Brod has been with the Aetna organization since 1966.
7
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INVESTING IN THE FUND
OPENING AN ACCOUNT AND SELECTING A SHARE CLASS
How to Open an Account You may open an account either through your investment
professional or through the sponsor of your employer-sponsored retirement plan.
If you are opening an account through your investment professional, he or she
will guide you through the process of investing in the Fund. If you are
investing through a retirement plan, please refer to your plan materials.
Selecting a Class
ALTHOUGH ALL INVESTORS ARE GENERALLY ELIGIBLE TO PURCHASE CLASS A, CLASS B AND
CLASS C SHARES, ONLY CERTAIN INVESTORS MAY PURCHASE CLASS I SHARES.
CLASS I SHARES
o No front-end sales charge applies.
o No CDSC applies.
o No Distribution (12b-1) Fee applies.
Class I shares of the Fund are offered only to:
o Certain retirement plans.
o Certain registered investment advisers having an agreement with the Company to
invest a minimum of $1 million within one year of initial purchase.
o Employees and retired employees of Aetna Inc. and its affiliates (including
members of employees' and retired persons' immediate families, board members
and trustees, and their immediate families).
o Insurance companies (including separate accounts).
o Registered investment companies.
o Shareholders holding Select Class shares of the Company at the time such
shares were redesignated as Class I shares, and their immediate family
members, as long as they maintain a shareholder account.
o Certain bank and independent trust companies investing on behalf of their
clients for which they charge trust or investment management fees.
o Members of the Board.
o NASD-registered representatives of Aeltus Capital, Inc. (ACI) or any
affiliated broker-dealer (including members of their immediate families).
o Other groups as may be approved by the Board from time to time.
8
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CLASS A SHARES
o Front-end sales charge applies (at the time of purchase), which will vary
depending on the size of your purchase.
o No CDSC applies, except in certain limited instances (see below).
o Distribution (12b-1) Fee of 0.25% applies.
Sales Charges: Class A Shares The table below shows the front-end sales charge
you will pay if you purchase Class A shares of the Fund in any amount up to $1
million.
<TABLE>
<CAPTION>
THIS % IS DEDUCTED WHICH EQUALS THIS %
FOR SALES CHARGES OF YOUR INVESTMENT
WHEN YOU INVEST THIS AMOUNT
<S> <C> <C>
under $50,000 3.00% 3.09%
$50,000 or more but under $100,000 2.50 2.56
$100,000 or more but under $250,000 2.00 2.04
$250,000 or more but under $500,000 1.50 1.52
$500,000 or more but under $1,000,000 1.00 1.01
</TABLE>
Class A Shares Sales Charge Waivers Generally, no front-end sales charge
applies if you are buying Class A shares with money you received within the past
60 days by redeeming Class A shares of another series of the Company on which a
front-end sales charge was paid or with money you received within the past 30
days by redeeming shares of another mutual fund on which you paid a front-end
sales charge. The Fund also waives the Class A front-end sales charge for
purchases made by certain types of investors. (See the SAI or call
1-800-367-7732 for additional details.)
CDSC on Class A Shares The Fund does not impose a CDSC on Class A shares
purchased with an aggregate investment in the Company of less than $1 million.
The Fund may impose a CDSC on Class A shares purchased (i) with an aggregate
investment in the Company in excess of $1 million or (ii) by certain
participant-directed employee benefit plans. The CDSC on Class A shares will
apply only to shares for which a finder's fee is paid to investment
professionals pursuant to a distribution agreement with the Fund. The CDSC
imposed for all Class A shares is as follows:
THIS % IS DEDUCTED FROM
WHEN YOU INVEST THIS AMOUNT YOUR PROCEEDS
$1 million but under $3 million Year 1-0.50%
Year 2-0.50%
$3 million or greater Year 1-0.25%
Year 2-0.25%
9
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CLASS B SHARES
o No front-end sales charge applies.
o CDSC applies (if you sell your shares within six years of purchase).
o Distribution (12b-1) Fee of 0.75% applies.
o Service Fee of 0.25% applies.
o Automatic conversion to Class A shares after eight years.
ORDERS FOR CLASS B SHARES FOR $250,000 OR MORE WILL BE TREATED AS ORDERS FOR
CLASS A SHARES.
Sales Charges: Class B Shares The Fund imposes a CDSC on redemptions, but not
exchanges, made within six years of purchase. The table below shows the
applicable CDSC based on the time invested.
Redemption During CDSC
1st year since purchase 5%
2nd year since purchase 4%
3rd year since purchase 3%
4th year since purchase 3%
5th year since purchase 2%
6th year since purchase 1%
7th year since purchase None
CLASS C SHARES
o No front-end sales charge applies.
o CDSC applies (if you sell your shares within 18 months of purchase).
o Distribution (12b-1) Fee of 0.50% applies.
o Service Fee of 0.25% applies.
Sales Charges: Class C Shares The Fund imposes a CDSC on redemptions made
within 18 months of purchase. The CDSC imposed on redemptions is 0.75%.
OTHER POLICIES RELATING TO CHARGES AND FEES
Application of a CDSC To determine whether a CDSC is payable on any redemption,
the Fund will FIRST redeem shares not subject to any charge, and THEN shares
held longest during the CDSC period. The CDSC is assessed on an amount equal to
the lesser of the current market value or the original cost of the shares being
redeemed.
Unless otherwise specified, when you request to sell a stated dollar amount, the
Fund will redeem additional shares to cover any CDSC. For requests to sell a
stated number of shares, the Fund will deduct the amount of the CDSC, if any,
from the sale proceeds.
When the CDSC Does Not Apply The CDSC does not apply in certain situations,
including certain exchanges, certain retirement distributions, and certain
redemptions made because of disability or death. (See the SAI or call
1-800-367-7732 for additional details.)
Distribution (12b-1) Fees With respect to its Class A, Class B and Class C
shares, the Fund has adopted a plan that allows the Fund to pay fees for the
sale and distribution of Fund shares (Rule 12b-1 plan). The 12b-1 fees are paid
out of Fund assets on an ongoing basis, and as a result, over time, these fees
will increase the cost of your investment and may cost you more than paying
other types of sales charges. Some of the distribution (12b-1) fees are used to
compensate financial professionals who sell Fund shares.
Service Fee The Fund, with respect to its Class B and Class C shares, has
adopted a Shareholder Services Plan that allows the payment of a service fee.
The service fee is used primarily to pay selling dealers and their agents for
servicing and maintaining shareholder accounts.
10
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HOW TO BUY SHARES
<TABLE>
<CAPTION>
Minimum Investments
INITIAL INVESTMENT ADDITIONAL INVESTMENTS
<S> <C> <C>
Individual Retirement Accounts $500 o $100 except by wire or Systematic
(including Roth IRAs) Investment
o $500 by wire
o $50 by Systematic Investment
All other investments $1,000 o $100 except by wire or Systematic
Investment
o $500 by wire
o $50 by Systematic Investment
</TABLE>
INSTRUCTIONS FOR BUYING FUND SHARES
PLEASE CONTACT YOUR INVESTMENT PROFESSIONAL OR CONSULT YOUR PLAN MATERIALS
REGARDING THE PURCHASE OF FUND SHARES. If you are purchasing Fund shares through
your investment professional, he or she will guide you through the process of
opening an account and purchasing additional shares, as follows.
<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO PURCHASE ADDITIONAL SHARES
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BY MAIL Complete and sign your Fill out the investment stub from your
application, make your check confirmation statement or send a letter
payable to Aetna Series Fund, indicating your name, account
Inc. and mail to: number(s), the Fund and the amount
you want to invest.
Aetna Series Fund, Inc.
c/o PFPC Inc. Make your check payable to Aetna
P.O. Box 9681 Series Fund, Inc. and mail to:
Providence, RI 02940
Aetna Series Fund, Inc
Your check must be drawn on a c/o PFPC Inc.
bank located within the United P.O. Box 9663
States and payable in U.S. dollars. Providence, RI 02940
Cash, credit cards and third party
checks cannot be used to open Your check must be drawn on a bank
an account. located within the United States and
payable in U.S. dollars. The Fund will
accept checks which are made payable
to you and endorsed to Aetna Series
Fund, Inc.
</TABLE>
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<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO PURCHASE ADDITIONAL SHARES
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BY OVERNIGHT COURIER Follow the instructions above Follow the instructions above for
for "By Mail" but send your "By Mail" but send your check and
completed application and investment stub or letter to:
check to:
Aetna Series Fund, Inc.
Aetna Series Fund, Inc. c/o PFPC Inc.
c/o PFPC Inc. 4400 Computer Drive
4400 Computer Drive Westborough, MA 01581
Westborough, MA 01581
- ---------------------------------------------------------------------------------------------------------------------
BY WIRE Not Available. Call 1-800-367-7732 prior to sending
the wire in order to obtain a
confirmation number.
Instruct your bank to wire funds to:
Boston Safe Deposit & Trust Company
ABA # 011001234
Credit to:
Boston Safe Deposit & Trust Company
Account # 176656
Further Credit to:
Name of Fund
Shareholder Account Number
Shareholder Registration
Federal funds wire purchase orders
will be accepted only when the Fund's
transfer agent and custodian bank are
open for business.
Neither the Fund nor its agents are
responsible for the consequences of
delays resulting from the banking or
Federal Reserve wire system or from
incomplete instructions.
</TABLE>
12
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<TABLE>
<CAPTION>
TO OPEN AN ACCOUNT TO PURCHASE ADDITIONAL SHARES
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BY ELECTRONIC Not Available. Use the Systematic Investment Option.
FUNDS TRANSFER Sign up for this service when opening
your account or by requesting the
appropriate information.
- -----------------------------------------------------------------------------------------------------------------------
BY EXCHANGE Submit a written request to the Submit a written request to the address
address listed above under listed above under "By Mail." Include:
"By Mail." Include: o Your name and account number.
o Your name and account number. o The names of the Fund and series of
o The names of the Fund and series the Company into and out of which you
of the Company into and out of wish to exchange.
which you wish to exchange. o The amount to be exchanged and the
o The amount to be exchanged signatures of all shareholders.
and the signatures of all
shareholders. You may also exchange your shares by
calling 1-800-367-7732. Please be
You may also exchange your prepared to provide:
shares by calling 1-800-367-7732. o Your account number(s).
Please be prepared to provide: o Your Social Security number or
o Your account number(s). taxpayer identification number.
o Your Social Security number or o Your address.
taxpayer identification number. o The amount to be exchanged.
o Your address.
o The amount to be exchanged.
</TABLE>
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HOW TO SELL SHARES
To redeem all or a portion of the shares in your account, you should submit a
redemption request through your investment professional, plan sponsor or as
described below. Your investment professional may charge you a fee for selling
your shares.
Redemption requests may be made in writing or, in amounts up to $50,000, by
telephone. The Company requires a signature guarantee if the amount of the
redemption request is over $50,000. You may obtain a signature guarantee at most
banks and securities dealers. Please note that notaries public cannot provide
signature guarantees.
Once your redemption request is received in good order as described below, the
Fund normally will send the proceeds of such redemption within one or two
business days. However, if making immediate payment could adversely affect the
Fund, the distribution may be deferred for up to seven days or a longer period
if permitted. If you redeem shares of the Fund shortly after purchasing them,
the Fund will hold payment of redemption proceeds until a purchase check or
systematic investment clears, which may take up to 12 calendar days. A
redemption request made within 15 calendar days after submission of a change of
address is permitted only if the request is in writing and is accompanied by a
signature guarantee.
REDEMPTIONS BY MAIL You may redeem shares you own in
the Fund by sending written instructions
to:
Aetna Series Fund, Inc.
c/o PFPC Inc.
P.O. Box 9681
Providence, RI 02940
Your instructions should identify:
o The Fund.
o The number of shares or dollar amount
to be redeemed.
o Your name and account number.
Your instructions must be signed by all
person(s) required to sign for the
Fund account, exactly as the shares are
registered, and, if necessary, accompanied
by a signature guarantee(s).
- --------------------------------------------------------------------------------
REDEMPTIONS BY WIRE A minimum redemption of $1,000 is required
for wire transfers. Redemption proceeds
will be transferred by wire to your
previously designated bank account or to
another destination if the federal funds
wire instructions provided with your
redemption request are accompanied by a
signature guarantee. A $12 fee will be
charged for this service.
- --------------------------------------------------------------------------------
REDEMPTIONS BY TELEPHONE Call 1-800-367-7732. Please be prepared
to provide your account number, account
name and the amount of the redemption,
which generally must be no less than $500
and no more than $50,000.
14
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TIMING OF REQUESTS
Orders that are received by the Fund's transfer agent, or as otherwise provided
below, before the close of regular trading on the New York Stock Exchange
(usually 4:00 p.m. eastern time) will be processed at the Net Asset Value (NAV)
calculated that business day (adjusted for the front-end sales charge or CDSC,
if applicable). Orders received after the close of regular trading on the New
York Stock Exchange will be processed at the NAV calculated on the following
business day (adjusted for the front-end sales charge or CDSC, if applicable).
The Company may appoint certain financial intermediaries and institutions
(Institutions) as parties that may accept purchase and redemption orders on
behalf of the Company. If you purchase or redeem shares in connection with
programs offered by these Institutions, and the Institution receives your order
before the close of regular trading on the New York Stock Exchange, your shares
will be purchased or redeemed at the NAV determined that business day, subject
to the applicable front-end sales charge or CDSC.
Institutions may be authorized to designate other intermediaries to accept
purchase and redemption orders on the Company's behalf, subject to the Company's
approval. In that case, the Company will be deemed to have received a purchase
or redemption order when the Institution's authorized designee accepts the
order.
Institutions may charge you fees or assess other charges for the services they
provide to their customers. These fees or charges are retained by the
Institution and are not remitted to the Company.
Investors purchasing through an Institution should refer to the Institution's
materials for a discussion of any specific instructions on the timing of or
restrictions relating to the purchase or redemption of shares.
OTHER INFORMATION ABOUT SHAREHOLDER ACCOUNTS AND SERVICES
Business Hours The Fund is open on the same days as the New York Stock Exchange
(generally, Monday through Friday). Fund representatives are available from 8:00
a.m. to 8:00 p.m. eastern time Monday through Friday.
Net Asset Value The NAV of the Fund is determined as of the close of regular
trading on the New York Stock Exchange (normally 4:00 p.m. eastern time).
In calculating the NAV, securities are valued primarily by independent pricing
services using market quotations. Short-term debt securities maturing in less
than 60 days are valued using amortized cost. Securities for which market
quotations are not readily available are valued at their fair value, subject to
procedures adopted by the Board.
Exchange Privileges Please contact your investment professional or consult your
plan materials regarding exchange privileges. There is no fee to exchange shares
from the Fund to another series of the Company. When you exchange shares, your
new shares will be in the equivalent class of your current shares. For Class B
and Class C shares, any CDSC that applies to your current shares will apply to
the new shares. The CDSC will be calculated from the date of your original
purchase.
There are no limits on the number of exchanges you can make. However, the Fund
may suspend or terminate your exchange privilege if you make more than five
exchanges out of the Fund in any calendar year, and the Fund may refuse to
accept any exchange request, especially if as a result of the exchange, in
Aeltus' judgment, it would be too difficult to invest effectively in accordance
with the Fund's investment objective.
The Fund is not designed for professional market timing organizations or other
entities using programmed or frequent exchanges. The Fund reserves the right to
reject any specific purchase or exchange request, including a request made by a
market timer.
Cross Investing
o DIVIDEND INVESTING You may elect to have dividend and/or capital gains
distributions automatically invested in the same class of shares of another
series of the Company.
o SYSTEMATIC EXCHANGE You may establish an automatic exchange of shares from
the Fund to another series of the Company.
Please contact your investment professional or consult your plan materials
regarding your ability to engage in cross investing.
Telephone Exchange and Redemption Privileges You automatically receive
telephone exchange and redemption privileges when you establish your account. If
you do not want these telephone privileges, you may call 1-800-367-7732 to have
them removed. All telephone transactions may be recorded, and you will be asked
for certain identifying information.
15
<PAGE>
Telephone redemption requests will be accepted if the request is for a minimum
of $500 or a maximum of $50,000. Telephone redemption requests will not be
accepted if you:
o Have submitted a change of address within the preceding 15 calendar days.
o Are selling shares in a retirement plan account held in trust.
The Fund reserves the right to amend telephone exchange and redemption
privileges at any time upon notice to shareholders and may refuse a telephone
exchange or redemption if the Fund believes it is advisable to do so.
Minimum Account Balance You must maintain a minimum balance of $500 in the
Fund. If you do not, the Fund may give you 60 days' notice to increase the
account balance to the $500 minimum. If you fail to increase your account
balance to the minimum, the Fund may redeem all of your remaining shares and
mail the proceeds to you at the address of record. The Fund will not redeem
shares for failing to maintain an adequate account balance if the account
balance falls below the minimum balance only because the value of Fund shares
has decreased.
Additional Services The Fund offers the following additional investor services.
The Fund reserves the right to terminate or amend these services at any time.
For all of the services, certain terms and conditions apply. Please contact your
investment professional, consult your plan materials, see the SAI or call
1-800-367-7732 for additional details.
o SYSTEMATIC INVESTMENT You can make automatic monthly investments in the Fund.
o LETTER OF INTENT If you agree to purchase a specific amount of Class A shares
of one or more series of the Company over a period of up to 13 months, the
front-end sales charge will be calculated at the rate that would have been
charged had you purchased the entire amount all at once. You may qualify for a
reduced front-end sales charge by notifying us of your intent by completing
and returning to us the relevant portion of your application. After the Letter
of Intent is filed, each additional investment will be entitled to the
front-end sales charge applicable to the level of investment indicated on the
Letter of Intent.
o RIGHT OF ACCUMULATION/CUMULATIVE QUANTITY DISCOUNTS To determine if you may
pay a reduced front-end sales charge on Class A purchases, you may add the
amount of your current purchase to the cost or current value, whichever is
higher, of other Class A shares of the Fund or other series of the Company
owned by you, your family and your company (if you are the sole owner).
o 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 Fund.
o TDD SERVICE Telecommunication Device for the Deaf (TDD) services are offered
for hearing impaired investors. The dedicated number for this service is
1-800-688-4889.
o TAX-DEFERRED RETIREMENT PLANS The Fund may be used for investment by a
variety of tax-deferred retirement plans, such as individual retirement
accounts (IRAs, including Roth IRAs) and certain programs sponsored by
employers (such as 401(k) and 403(b)(7) plans). There is no minimum investment
or minimum account balance applicable to investments in 403(b)(7) accounts
except that a rollover from a 403(b)(7) account must be for at least $500.
Purchases made in connection with IRAs and 403(b)(7) accounts may be subject
to an annual custodial fee of $10.00 for each account registered under the
same taxpayer identification number. This fee will be deducted directly from
your account(s). The custodial fee will be waived for IRAs and 403(b)(7)
accounts registered under the same taxpayer identification number having an
aggregate balance over $30,000 at the time such fee is scheduled to be
deducted.
Payments to Securities Dealers and Selection of Executing Brokers From time to
time, ACI or its affiliates may make payments to other dealers and/or their
registered representatives who may or may not be affiliates of Aetna, who sell
shares or who provide shareholder services. The value of a shareholder's
investment will be unaffected by these payments.
Aeltus may consider the sale of shares of other investment companies or series
thereof advised by Aeltus as a factor in the selection of brokerage firms to
execute the Fund's portfolio transactions, subject to Aeltus' duty to obtain
best execution.
16
<PAGE>
DIVIDENDS AND DISTRIBUTIONS
Dividends Dividends are declared and paid annually.
Capital gains distributions, if any, are paid on an annual basis in December. To
comply with federal tax regulations, the Fund may also pay an additional capital
gains distribution, usually in June.
Both income dividends and capital gains distributions are paid by the Fund on a
per share basis. As a result, at the time of this payment, the share price of a
Fund will be reduced by the amount of the payment.
Distribution Options When completing your application, you must select one of
the following three options for dividends and capital gains distributions:
o FULL REINVESTMENT Both dividends and capital gains
distributions from the Fund will be reinvested in additional shares of the
same class of shares of the Fund. This option will be selected automatically
unless one of the other options is specified.
o CAPITAL GAINS REINVESTMENT Capital gains distributions from the Fund will be
reinvested in additional shares of the same class of shares of the Fund and
all net income from dividends will be distributed in cash.
o ALL CASH Dividends and capital gains distributions will be paid in cash. If
you select a cash distribution option, you can elect to have distributions
automatically invested in shares of another series of the Company.
Distributions paid in shares will be credited to your account at the next
determined NAV per share.
TAX INFORMATION
o In general, dividends and short-term capital gains distributions you receive
from the Fund are taxable as ordinary income.
o Distributions of other capital gains generally are taxable as capital gains.
o Ordinary income and capital gains are taxed at different rates.
o The rates that you will pay on capital gains distributions will depend on how
long the Fund holds its portfolio securities. This is true no matter how long
you have owned your shares in the Fund or whether you reinvest your
distributions or take them as cash.
o The sale of shares in your account may produce a gain or loss, and typically
is a taxable event. For tax purposes, an exchange is the same as a sale.
Every year, the Fund will send you information detailing the amount of ordinary
income and capital gains distributed to you for the previous year. You should
consult your tax professional for assistance in evaluating the tax implications
of investing in the Fund.
Backup Withholding By law, the Fund must withhold 31% of your distributions and
proceeds if you have not provided complete, correct taxpayer information.
17
<PAGE>
PRIVATE ACCOUNT PERFORMANCE
The Fund is recently organized and does not yet have a long-term performance
record. However, the Fund has an investment objective, policies and strategies
substantially similar to those employed by Aeltus in managing accounts for
certain institutional investors (Private Account). Therefore, the performance of
this Private Account is provided below. Note that the Private Account, unlike
the Fund, is not subject to certain investment limitations, diversification
requirements and other restrictions imposed by the Investment Company Act of
1940 and the Internal Revenue Code of 1986, as amended, which, if applicable,
could have adversely affected the Private Account's performance.
The Private Account Performance data, shown below, was calculated in accordance
with the standards established by the Association for Investment Management and
Research (AIMR). AIMR is a nonprofit membership and education organization that,
among other things, has formulated a set of performance presentation standards
for investment advisers. AIMR has not been involved with the preparation or
review of the performance shown.
The Private Account performance data:
o Was calculated on a time-weighted total return basis and includes all
dividends and interest, accrued income, and realized and unrealized gains and
losses.
o Reflects the reinvestment of dividends and distributions.
o Reflects the deduction of the investment advisory fee and brokerage
commissions paid by the Private Account, but does not reflect the deduction of
custodial fees.
o Includes cash and cash equivalents.
The historical fees and expenses paid by the Private Account are significantly
lower than those paid by the Fund. Had Fund level expenses been charged to the
Private Account, performance would have been lower.
The following table shows average annual total returns for the periods ended
December 31, 1999 for the Fund, the Private Account and their benchmark index.
All figures assume reinvestment of dividends and distributions. Investors should
not consider the historical performance of the Private Account as an indication
of the future performance of the Fund.
<TABLE>
<CAPTION>
SINCE
1 YEAR 3 YEARS 5 YEARS INCEPTION
<S> <C> <C> <C> <C>
Index Plus Large Cap (Class I) 24.51% 30.25% N/A 29.08% (12/10/96)
Index Plus Large Cap, Class A (assuming payment
of maximum front-end sales charge) 20.56% 28.43% N/A 27.30% (12/10/96)
Index Plus Large Cap, Class A (without payment
of front-end sales charge) 24.28% 29.74% N/A 28.57% (12/10/96)
Index Plus Large Cap Private Account
Composite 24.61% 30.18% 30.69% 21.94% (10/1/91)
S&P 500 Stock Index 21.04% 27.56% 28.55% 20.22% (10/1/91)
</TABLE>
18
<PAGE>
FINANCIAL HIGHLIGHTS
These highlights are intended to help you understand the Fund's performance
since commencement of operations. Certain information reflects financial results
for a single Fund share. The total returns in the tables represent the rate an
investor would have earned (or lost) on an investment in the Fund (assuming
reinvestment of all dividends and distributions). The information in these
tables has been audited by KPMG LLP, independent auditors, whose reports, along
with the Fund's Financial Statements, are included in the Company's Annual
Reports, which are available upon request.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Class I
- -----------------------------------------------------------------------------------------------------------------
Period From
December 10, 1996
(Commencement
Year Ended Year Ended of Operations) to
October 31, October 31, October 31,
1999 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period $ 13.78 $ 12.43 $ 10.00
- -----------------------------------------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.11 0.13 0.12
Net realized and change in unrealized gain or
loss on investments 3.86 2.57 2.33
- -----------------------------------------------------------------------------------------------------------------
Total from investment operations 3.97 2.70 2.45
- -----------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS:
From net investment income (0.07) (0.13) (0.02)
From net realized gains on investments (0.20) (1.22) -
- -----------------------------------------------------------------------------------------------------------------
Total distributions (0.27) (1.35) (0.02)
- -----------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 17.48 $ 13.78 $ 12.43
=================================================================================================================
Total return 29.05% 23.46% 24.49%
Net assets, end of period (000's) $141,377 $31,671 $10,876
Ratio of net expenses to average net assets 0.70%(2) 0.70% 0.70%(1)
Ratio of net investment income to average
net assets 0.67% 0.96% 1.15%(1)
Ratio of expenses before reimbursement and
waiver to average net assets 0.75% 1.17% 1.95%(1)
Portfolio turnover rate 72.14% 124.16% 82.31%
</TABLE>
(1) Annualized.
(2) Aeltus has waived, and is contractually obligated through December 31, 2000
to waive, all or a portion of its fees and/or to reimburse a portion of the
Fund's other expenses.
Per share data calculated using weighted average number of shares outstanding
throughout the period.
19
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Class A Class B Class C
- ----------------------------------------------------- -------------------- ----------------------------------
Period From Period From Period From
February 3, 1997 March 1, 1999 June 30, 1998
(Date of Initial (Date of Initial (Date of Initial
Year Ended Year Ended Public Offering) Public Offering) Year Ended Public Offering)
October 31, October 31, to October 31, to October 31, October 31, to October 31,
1999 1998 1997 1999 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 13.70 $ 12.36 $ 10.57 $ 15.68 $ 13.74 $ 14.17
- -------------------------------------------------------------------------------------------------------------------
0.07 0.09 0.02 (0.04) (0.01) 0.01
3.84 2.56 1.77 1.73 3.85 (0.44)
- -------------------------------------------------------------------------------------------------------------------
3.91 2.65 1.79 1.69 3.84 (0.43)
- -------------------------------------------------------------------------------------------------------------------
(0.05) (0.09) - - (0.05) -
(0.20) (1.22) - - (0.20) -
- -------------------------------------------------------------------------------------------------------------------
(0.25) (1.31) - - (0.25) -
- -------------------------------------------------------------------------------------------------------------------
$ 17.36 $ 13.70 $ 12.36 $ 17.37 $ 17.33 $ 13.74
===================================================================================================================
28.78% 23.09% 16.93% 10.78% 28.17% (3.04)%
$ 81,908 $ 6,422 $ 1,833 $ 17,386 $ 33,439 $ 910
0.95%(2) 0.99% 1.45%(1) 1.70%(1)(2) 1.45%(2) 1.43%(1)
0.42% 0.67% 0.16%(1) (0.32)%(1) (0.07)% 0.23%(1)
1.00% 1.46% 2.98%(1) 1.75%(1) 1.50% 1.90%(1)
72.14% 124.16% 82.31% 72.14% 72.14% 124.16%
</TABLE>
20
<PAGE>
ADDITIONAL INFORMATION
The SAI, which is incorporated by reference into this Prospectus, contains
additional information about the Fund. The Fund's most recent annual and
semiannual reports also contain information about the Fund's investments, as
well as a discussion of the market conditions and investment strategies that
significantly affected its performance during the past fiscal year.
You may request free of charge the current SAI or the most recent annual and
semiannual reports, or other information about the Fund, by calling
1-800-238-6263 or writing to:
Aetna Series Fund, Inc.
10 State House Square
Hartford, Connecticut 06103-3602
The SEC also makes available to the public reports and information about the
Fund. Certain reports and information, including the SAI, are available on the
EDGAR Database on the SEC's web site (http://www.sec.gov) or at the SEC's public
reference room in Washington, D.C. You may call 1-202-942-8090 to get
information about the operations of the public reference room. You may obtain
copies of reports and other information about the Fund, after paying a
duplicating fee, by sending an E-mail request to: [email protected], or by
writing to the SEC's Public Reference Section, Washington, D.C. 20549-0102.
Investment Company Act File No. 811-6352.
21
