SCHEDULE 14A
(RULE 14A-101)
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: ___
__X Preliminary Proxy Statement __ Confidential, for Use of
the Commission Only
(as permitted by
Rule 14a-6(e)(2))
__ Definitive Proxy Statement
__ Definitive additional materials
__ Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
AETNA SERIES FUND, 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:
__ 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 identify 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:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
J. Scott Fox
President
Aetna Series Fund, Inc.
October [ ], 2000
Dear Shareholder:
Aetna Inc. ("Aetna"), the indirect parent company of Aeltus Investment
Management, Inc. ("Aeltus"), your Fund's investment adviser, has entered into an
agreement to sell its financial services and international businesses, including
Aeltus, to ING Groep N.V. ("ING"). Headquartered in Amsterdam, ING is a global
financial institution active in the fields of insurance, banking, and asset
management. A more thorough description of ING's businesses is contained in the
proxy statement.
At the shareholder meeting on November 22, 2000, you will be asked to
approve a new advisory agreement for your Fund (and, if you are a shareholder of
Aetna Technology Fund, a new subadvisory agreement) to take effect after the
closing of the transaction. With the exception of the effective dates of the
agreements and the extension of expense limitation provisions through December
31, 2001 for certain Funds, these new agreements are the same in all material
respects as those currently in effect. If the agreements are approved, Aeltus
will continue to manage the Funds following the transaction. Approval of the new
advisory and subadvisory agreements is sought so that management of each Fund
can continue uninterrupted after the transaction, because the current agreements
may terminate automatically as a result of the transaction. At the shareholder
meeting, you also will be asked to ratify the selection of the independent
auditors and to elect Directors for Aetna Series Fund, Inc. (the "Company").
After careful consideration, the Company's Board of Directors
unanimously approved each of the proposals and recommends that shareholders vote
"FOR" each proposal.
Your vote is important regardless of the number of shares you own.
Please take a few minutes to read the proxy statement and cast your vote. It is
important that your vote be received by no later than the time of the
shareholder meeting on November 22, 2000.
If you are a shareholder of more than one Fund, or have more than one
account registered in your name, you will receive one proxy card for each
account. Please vote and return each proxy card that you receive.
If you have any questions before you vote, please call 1-800-646-8155.
We'll help you get the answers you need promptly. We appreciate your
participation and prompt response in this matter and thank you for your
continued support.
Sincerely,
/s/ J. SCOTT FOX
J. Scott Fox
(enclosures)
<PAGE>
NOTICE OF A SPECIAL MEETING
OF THE SHAREHOLDERS OF
AETNA SERIES FUND, INC.
Capital Appreciation Funds Index Plus Funds
Aetna Growth Fund Aetna Index Plus Large Cap Fund
Aetna International Fund Aetna Index Plus Mid Cap Fund
Aetna Small Company Fund Aetna Index Plus Small Cap Fund
Aetna Technology Fund
Aetna Value Opportunity Fund Generation Funds
Aetna Ascent Fund
Growth & Income Funds Aetna Crossroads Fund
Aetna Balanced Fund Aetna Legacy Fund
Aetna Growth and Income Fund
Principal Protection Funds
Income Funds Aetna Principal Protection Fund I
Aetna Bond Fund Aetna Principal Protection Fund II
Aetna Government Fund Aetna Principal Protection Fund III
Aetna Money Market Fund Aetna Principal Protection Fund IV
Brokerage Cash Reserves
(each a "Fund" and collectively, the "Funds")
Notice is hereby given that a Special Meeting of the Shareholders (the
"Special Meeting") of the Funds, each a series of Aetna Series Fund, Inc. (the
"Company"), will be held on November 22, 2000, at 10:00 a.m., Eastern time, at
10 State House Square, Hartford, Connecticut 06103-3602 for the following
purposes:
1. For shareholders of all the Funds, to consider the election of 8
Directors to serve until their successors are elected and qualified;
2. For shareholders of all the Funds, to approve or disapprove new
Investment Advisory Agreements between the Company, on behalf of the
Funds, and Aeltus Investment Management, Inc. ("Aeltus") to reflect
the pending acquisition of the financial services and international
businesses of Aetna Inc. ("Aetna"), of which Aeltus is an indirect
wholly owned subsidiary, by ING Groep N.V. ("ING"), with no change in
the advisory fees payable to Aeltus;
3. For shareholders of Aetna Technology Fund, to approve or disapprove a
new Subadvisory Agreement among the Company, on behalf of the Fund,
Aeltus and Elijah Asset Management, LLC ("EAM") to reflect the pending
acquisition of the financial services and international businesses of
Aetna by ING, with no change in the subadvisory fee payable to EAM;
4. For shareholders of all the Funds, to ratify or reject the selection
of KPMG LLP as independent auditors for the Funds for the fiscal year
ending October 31, 2001; and
5. To transact such other business as may properly come before the
Special Meeting and any adjournments thereof.
Please read the enclosed proxy statement carefully for information
concerning the proposals to be placed before the Special Meeting.
Shareholders of record at the close of business on September 27, 2000
are entitled to notice of and to vote at the Special Meeting. You are invited to
attend the Special Meeting. If you cannot do so, however, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY, AND RETURN IT IN THE ACCOMPANYING ENVELOPE AS
PROMPTLY AS POSSIBLE. Any shareholder attending the Special Meeting may vote in
person even though a proxy has already been returned.
By Order of the Board of Directors,
Daniel E. Burton
Secretary
October [ ], 2000
<PAGE>
AETNA SERIES FUND, INC.
IMPORTANT NEWS FOR SHAREHOLDERS
While we encourage you to read the full text of the enclosed Proxy
Statement, here's a brief overview of some matters affecting your Fund that will
be the subject of a shareholder vote.
Q & A: QUESTIONS AND ANSWERS
Q. WHAT IS HAPPENING?
A. Aetna Inc. ("Aetna"), the indirect parent company of your Fund's
investment adviser, Aeltus Investment Management, Inc. ("Aeltus"), has
agreed to sell its financial services and international businesses,
including Aeltus, to ING Groep N.V. ("ING"). Headquartered in
Amsterdam, ING is a global financial institution active in the fields
of insurance, banking, and asset management. After completion of the
transaction, Aetna's financial services and international businesses
will be owned 100% by ING.
To ensure that there is no interruption in the services Aeltus
provides to your Fund, we are asking the shareholders of each Fund to
approve a new investment advisory agreement. The most important
matters to be voted upon by you are approval of the new investment
advisory agreement and the election of Directors. Shareholders of
Aetna Technology Fund are also being asked to approve a new
subadvisory agreement with Elijah Asset Management, LLC ("EAM"), the
subadviser to that Fund. The following pages give you additional
information about ING, the new investment advisory and subadvisory
agreements and certain other matters. The Board Members of your Fund,
including those who are not affiliated with the Fund, Aeltus, ING, EAM
or any of their affiliates, recommend that you vote FOR these
proposals.
Q. WHY DID YOU SEND ME THIS BOOKLET?
A. You are receiving these proxy materials -- a booklet that includes the
Proxy Statement and one or more proxy cards -- because you have the
right to vote on important proposals concerning your investment in the
Fund.
Q. WHY ARE MULTIPLE CARDS ENCLOSED?
A. If you own shares of more than one Fund, you will receive a proxy
card for each Fund that you own.
Q. WHY AM I BEING ASKED TO VOTE ON THE NEW INVESTMENT ADVISORY AND
SUBADVISORY AGREEMENTS?
A. The Aetna-ING transaction will result in a change in ownership of
Aetna's financial services and international businesses, which may be
deemed to cause a "change in control" of Aeltus, even though the
services provided by Aeltus to the Funds are not expected to be
materially affected as a result. A "change in control" may cause each
Fund's investment advisory agreement with Aeltus and the subadvisory
agreement with EAM for Aetna Technology Fund, to which Aeltus is a
party, to terminate.
To ensure continuity of service, we are seeking shareholder approval of
a new investment advisory agreement with your Fund and, for Aetna
Technology Fund, a new subadvisory agreement with EAM.
Q. HOW WILL THE AETNA-ING TRANSACTION AFFECT ME AS A FUND SHAREHOLDER?
A. We do not expect the transaction to affect you as a Fund shareholder.
Your Fund and its investment objectives will not change as a result of
the transaction. You will still own the same shares in the same Fund.
The new investment advisory and subadvisory agreements are the same in
all material respects as the current agreements, with the exception of
the effective dates of the agreements and, in certain cases, the
extension of expense limitation provisions through December 31, 2001.
If shareholders do not approve the new investment advisory or
subadvisory agreements, the agreements will terminate upon the closing
of the transaction (Aetna's goal is to complete the transaction during
the fourth quarter of 2000) and the Board Members of your Fund will
take such action as they deem to be in the best interests of your Fund
and its shareholders.
Q. WILL THE INVESTMENT ADVISORY AND SUBADVISORY FEES INCREASE AS A RESULT
OF THE TRANSACTION?
A. No, the proposals to approve the new agreements seek no
increase in the investment advisory and
subadvisory fee rates.
Q. WHAT OTHER MATTERS AM I BEING ASKED TO VOTE ON?
A. As noted above, you are being asked to reelect the current members of
the Board, except for one individual who is not standing for reelection
as a Director. You are also being asked to vote for the ratification of
the Board's selection of the Fund's accountants.
Q. HOW DO THE BOARD MEMBERS OF MY FUND RECOMMEND THAT I VOTE?
A. After careful consideration, the Board members of your Fund, including
those who are not affiliated with the Fund, Aeltus, ING, EAM or their
affiliates, recommend that you vote FOR the Proposals.
Q. WILL THE FUND PAY FOR THIS PROXY SOLICITATION?
A. No, Aeltus, ING and/or their affiliates will bear these costs.
Q. WHOM DO I CALL FOR MORE INFORMATION?
A. Please call Aetna's proxy representative at 1-800-646-8155.
<PAGE>
PRELIMINARY COPIES
AETNA SERIES FUND, INC.
10 State House Square
Hartford, Connecticut 06103-3602
(800) 238-6254
Capital Appreciation Funds Index Plus Funds
Aetna Growth Fund Aetna Index Plus Large Cap Fund
("Growth") ("Index Plus Large Cap")
Aetna International Fund Aetna Index Plus Mid Cap Fund
("International") ("Index Plus Mid Cap")
Aetna Small Company Fund Aetna Index Plus Small Cap Fund
("Small Company") ("Index Plus Small Cap")
Aetna Technology Fund
("Technology") Generation Funds
Aetna Value Opportunity Fund Aetna Ascent Fund
("Value Opportunity") ("Ascent")
Aetna Crossroads Fund
Growth & Income Funds ("Crossroads")
Aetna Balanced Fund Aetna Legacy Fund
("Balanced") ("Legacy")
Aetna Growth and Income Fund
("Growth and Income") Principal Protection Funds
Aetna Principal Protection Fund I
Income Funds ("PPF I")
Aetna Bond Fund Aetna Principal Protection Fund II
("Bond Fund") ("PPF II")
Aetna Government Fund Aetna Principal Protection Fund III
("Aetna Government Fund") ("PPF III")
Aetna Money Market Fund Aetna Principal Protection Fund IV
("Money Market") ("PPF IV")
Brokerage Cash Reserves
"(Brokerage Cash Reserves")
(each a "Fund" and collectively, the "Funds")
PROXY STATEMENT
October [ ], 2000
This Proxy Statement provides you with information you should review
before voting on the matters listed in the Notice of Special Meeting (each a
"Proposal") on the previous page for the Funds, each a series of Aetna Series
Fund, Inc. (the "Company"). The Company's Board of Directors (the "Board") is
soliciting your vote for a Special Meeting of Shareholders of each Fund (the
"Special Meeting") to be held at 10 State House Square, Hartford, Connecticut
06103-3602, on November 22, 2000, at 10:00 a.m., Eastern time, and, if the
Special Meeting is adjourned, at any adjournment of that Meeting.
Solicitation of Proxies
The Company's Board is soliciting votes from shareholders of a Fund
only with respect to the particular Proposals that affect that Fund. The
solicitation of votes is made by the mailing of this Proxy Statement and the
accompanying proxy card on or about October 16, 2000. The following table
identifies the Funds entitled to vote on each Proposal.
<PAGE>
<TABLE>
<CAPTION>
Proposal
<S> <C> <C> <C> <C>
1. 2. 3. 4.
Approval of
Investment Approval of Ratification of
Fund Election of Advisory Agreement Subadvisory Selection of
Directors Agreement Auditors
Growth |X| |X| |X|
International |X| |X| |X|
Small Company |X| |X| |X|
Technology |X| |X| |X| |X|
Value Opportunity |X| |X| |X|
Balanced |X| |X| |X|
Growth and Income |X| |X| |X|
Index Plus Large Cap |X| |X| |X|
Index Plus Mid Cap |X| |X| |X|
Index Plus Small Cap |X| |X| |X|
Ascent |X| |X| |X|
Crossroads |X| |X| |X|
Legacy |X| |X| |X|
Bond Fund |X| |X| |X|
Aetna Government Fund |X| |X| |X|
Money Market |X| |X| |X|
Brokerage Cash Reserves |X| |X| |X|
PPF I |X| |X| |X|
PPF II |X| |X| |X|
PPF III |X| |X| |X|
PPF IV |X| |X| |X|
</TABLE>
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.
Shareholder Reports
Copies of the Company's Annual Report for the fiscal year ended October
31, 1999, and its Semi-Annual Report for the period ended April 30, 2000, have
previously been mailed to shareholders. This Proxy Statement should be read in
conjunction with the Annual and Semi-Annual Reports. You can obtain copies of
those Reports, without charge, by writing to Aeltus Investment Management, Inc.,
10 State House Square, Hartford, Connecticut, 06103-3602, Attention: Wayne
Baltzer, or by calling 1-800-238-6263.
GENERAL OVERVIEW
On July 19, 2000, Aetna Inc. ("Aetna") entered into an agreement to
sell certain of its businesses, including Aeltus Investment Management, Inc.
("Aeltus"), to ING Groep N.V. ("ING") (the "Transaction"). ING is a global
financial institution active in the fields of insurance, banking and asset
management. Headquartered in Amsterdam, it conducts business in more than 60
countries, and has almost 90,000 employees. ING seeks to provide a full range of
integrated financial services to private, corporate, and institutional clients
through a variety of distribution channels. As of June 30, 2000, ING had total
assets of approximately $531.8 billion and assets under management of
approximately $344.5 billion. ING includes, among its numerous direct and
indirect subsidiaries, Baring Asset Management, Inc., ING Investment Management
Advisors B.V., ReliaStar Financial Corp., Furman Selz Capital Management LLC and
ING Investment Management LLC. Consummation of the Transaction is subject to a
number of contingencies, including regulatory and shareholder approvals and
other closing conditions. Aetna's goal is to close the Transaction during the
fourth quarter of 2000.
The Fund operations of Aeltus are not expected to be materially
affected by the Transaction. Aeltus does not currently anticipate that there
will be any changes in the investment personnel primarily responsible for the
management of the Funds in connection with the Transaction. Following the
Transaction, ING anticipates that it will evaluate capabilities across the ING
companies and, where appropriate, will consider changes designed to maximize
investment capabilities and achieve expense and resource efficiencies.
ING's principal executive offices are located at Strawinskylaan 2631,
1077 zz Amsterdam, P.O. Box 810, 1000 AV Amsterdam, the Netherlands.
MATTERS TO BE ACTED UPON
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Board has nominated 8 individuals (the "Nominees") for election to
the Company's Board. Shareholders are being asked to elect the Nominees to serve
as Directors, each to serve until his or her successor is duly elected and
qualified. Pertinent information about each Nominee is set forth below. Each
Nominee is currently a Director of the Company and has consented to continue to
serve as a Director if reelected by shareholders.
Information Regarding Nominees
Below are the names, ages, business experience during the past five
years and other directorships of the Nominees. An asterisk (*) has been placed
next to the name of each Nominee who would constitute an "interested person," as
defined in the Investment Company Act, by virtue of that person's affiliation
with any of the Funds, Aeltus, ING or any of their affiliates. The business
address of each Nominee is 10 State House Square, Hartford, Connecticut
06103-3602.
<TABLE>
<CAPTION>
Name and Age Position(s) Held With Principal Occupation During Past 5 Years
the Company
<S> <C> <C>
J. Scott Fox* Director (since 1997) Director, Managing Director, Chief Operating Officer and Chief
(Age 45) and President Financial Officer, Aeltus Investment Management, Inc. (investment
(Principal Executive adviser), April 1994 to present; Director, Managing Director, Chief
Officer) Operating Officer and Chief Financial Officer, Aeltus Capital, Inc.
(broker-dealer), February 1995 to present; Director, Managing
Director, Chief Operating Officer and Chief Financial Officer, Aeltus
Trust Company, May 1996 to present; Senior Vice President--Operations
(Interim Assignment), Aetna Life Insurance and Annuity Company, March
1997 to December 1997; Director/Trustee and President, December 1997
to present (Vice President and Treasurer, March 1996 to December
1997), Aetna Variable Fund, Aetna Income Shares, Aetna Variable
Encore Fund, Aetna Balanced VP, Inc., Aetna GET Fund, Aetna
Generation Portfolios, Inc. and Aetna Variable Portfolios, Inc.
(collectively, the "Aetna Variable Portfolios").
Albert E. DePrince, Jr. Director Director, Business and Economic Research Center, and Professor of
(Age 59) (since 1998) Economics and Finance, Middle Tennessee State University, 1991 to
present; Director/Trustee, Aetna Variable Portfolios.
Maria T. Fighetti Director Associate Commissioner for Contract Management (1996 to present),
(Age 56) (since 1994) Manager/Attorney (1973 to 1996), Health Services, New York City
Department of Mental Health, Mental Retardation and Alcohol Services;
Director/Trustee, Aetna Variable Portfolios.
David L. Grove Director Private Investor; Economic/Financial Consultant, 1985 to present;
(Age 82) (since 1991) Director/Trustee, Aetna Variable Portfolios.
John Y. Kim* Director Director, President, Chief Executive Officer and Chief Investment
(Age 40) (since 1997) Officer, Aeltus Investment Management, Inc., December 1995 to
present; Director and President, Aeltus Capital, Inc., March 1996
to present; President, Aetna Life Insurance and Annuity Company,
May 2000 to September 2000; Chief Investment Officer, Aetna Life Insurance
and Annuity Company, May 2000 to present; Director, Aetna Life Insurance
and Annuity Company, February 1995 to September 2000; Senior Vice President,
Aetna Life Insurance and Annuity Company, September 1994 to May 2000 and
September 2000 to present; Director, President, Chief Executive Officer
and Chief Investment Officer, Aeltus Trust Company, May 1996 to present;
Director and President, Aetna Investment Adviser Holding Company, Inc.,
May 2000 to present; Director, Aetna Retirement Services, Inc., May 2000
to present; Vice President, Aetna Life Insurance Company, September 1992
to present; Director/Trustee, Aetna Variable Portfolios.
Sidney Koch Director Financial Adviser, self-employed, January 1993 to present;
(Age 65) (since 1994) Director/Trustee, Aetna Variable Portfolios.
Corine T. Norgaard Director Dean of the Barney School of Business, University of Hartford (West
(Age 63) (since 1991) Hartford, CT), August 1996 to present; Professor, Accounting and Dean
of the School of Management, SUNY Binghamton (Binghamton, NY), August 1993
to August 1996; Director, Advest Bank & Trust, April 1997 to present;
Director, MassMutual Participation Investors and MassMutual Corporate
Investors (closed-end investment companies), April 1998 to present;
Director/Trustee, Aetna Variable Portfolios.
Richard G. Scheide Director Principal, LoBue Associates Inc. (wealth management industry
(Age 71) (since 1993) consultants), October 1999 to present; Trust and Private Banking
Consultant, David Ross Palmer Consultants, July
1991 to October 1999; Director/Trustee, Aetna
Variable Portfolios.
</TABLE>
Director Not Standing for Reelection
Shaun P. Mathews, a former Director of the Company and an officer of
several affiliates of Aeltus, resigned as a Board member effective August 30,
2000 to permit the Company to comply with a regulatory requirement that during
the three year period immediately following the change in control of a fund's
investment adviser at least 75% of the fund's board must not be "interested
persons" of the investment adviser or the predecessor investment adviser within
the meaning of the Investment Company Act of 1940 (the "Investment Company Act")
(see "General Information: Section 15(f) of the Investment Company Act" below).
Ownership of Fund Shares
Appendix 3 hereto sets forth the number of shares of each class of
each Fund owned directly or beneficially by the Directors. To the best of the
Company's knowledge, as of August 31, 2000, no Director owned 1% or more of the
outstanding shares of any class of a Fund, and the Directors of the Funds owned,
as a group, less than 1% of the shares of each class of each Fund, except as
otherwise noted in Appendix 3.
Committees
Audit Committee. The Board has an Audit Committee whose function is to
assist the Board in fulfilling its responsibilities to shareholders of the Funds
relating to accounting and reporting, internal controls and the adequacy of
auditing relative thereto. The Committee currently consists of Albert E.
DePrince, Jr., Maria T. Fighetti, David L. Grove, Sidney Koch, Corine T.
Norgaard, and Richard G. Scheide. Mr. Scheide and Ms. Fighetti serve as
Chairperson and Vice Chairperson, respectively, of the Committee. During the
fiscal year ended October 31, 1999, the Audit Committee met twice.
Contracts Committee. The Board has a Contracts Committee whose
function is to review the Funds' contractual arrangements, including investment
advisory, subadvisory, distribution and administrative contracts, at least
annually in connection with considering the continuation of those contracts. The
Committee also may meet any time there is a proposal to materially amend any of
those contracts. The Contracts Committee currently consists of Albert E.
DePrince, Jr., Maria T. Fighetti, David L. Grove, Sidney Koch, Corine T.
Norgaard, and Richard G. Scheide. Dr. DePrince and Dr. Grove serve as
Chairperson and Vice Chairperson, respectively, of the Committee. The Contracts
Committee met once during the fiscal year ended October 31, 1999.
Nominating Committee. The Board has a Nominating Committee for the
purpose of considering and presenting to the Board candidates it proposes for
nomination to fill independent Director vacancies on the Board. The Nominating
Committee currently consists of Albert E. DePrince, Jr., Maria T. Fighetti,
David L. Grove, Sidney Koch, Corine T. Norgaard, and Richard G. Scheide. Mr.
Koch serves as Chairperson of the Committee. The Company does not currently have
a policy regarding whether the Nominating Committee will consider nominees
recommended by shareholders of the Company. During the fiscal year ended October
31, 1999, the Nominating Committee did not meet.
During the fiscal year ended October 31, 1999, the Board held five
meetings. Each Director attended 100% of the aggregate of the total number of
Board meetings and meetings held by all committees of the Board on which he or
she served.
Executive Officers of the Company
The Company's officers are elected by the Board and hold office until
they resign, are removed or are otherwise disqualified to serve. The executive
officers of the Company, together with such person's position with the Company
and principal occupation for the last five years, are listed in Appendix 4
attached hereto.
Remuneration of Directors and Officers
For service on the Board and the boards of other investment companies
in the Aetna fund complex, each Director who is not an "interested person" of
Aeltus is entitled to receive (i) an annual retainer of $48,000, payable in
equal quarterly installments; (ii) $5,000 per meeting for each Board meeting in
which the Director participates; (iii) $5,000 per meeting for each Contracts
Committee meeting in which the Director participates; (iv) $3,000 per meeting,
other than for a Contracts Committee meeting and the two regular Audit Committee
meetings, for each committee meeting in which the Director participates; (v)
$500 per meeting for each telephone conference meeting in which the Director
participates; (vi) $10,000 per annum for serving as Chairperson of the Contracts
Committee, payable in equal quarterly installments; (vii) $5,000 per annum for
serving as Chairperson of the Audit Committee, payable in equal quarterly
installments; (viii) $5,000 per annum for serving as Chairperson of the
Nominating Committee (in periods in which the Committee has operated), payable
in equal quarterly installments; (ix) $5,000 and $2,500 per annum for serving as
Committee Vice Chairman of the Contracts and Audit Committees, respectively,
payable in equal quarterly installments; and (x) reimbursement for out-of-pocket
expenses. The pro rata share paid by each Fund is based on the Fund's average
net assets as a percentage of the average net assets of all the funds managed by
Aeltus for which the Directors serve in common as directors or trustees as of
the date the payment is due. None of the Directors is entitled to receive
pension or retirement benefits.
The following table sets forth the compensation paid to each of the
Directors for the fiscal year ended October 31, 1999. Directors and officers of
the Company who are also directors, officers or employees of Aetna and its
affiliates were not entitled to receive any compensation from the Company. In
the column headed "Total Compensation from Company and Fund Complex Paid to
Directors," the number in parentheses indicates the total number of investment
company boards of directors/trustees in the Aetna fund complex on which the
Director served during the year.
Aggregate Total Compensation from
Compensation the Company and Fund
Name of Person, Position from the Company Complex Paid to Directors#
Albert E. DePrince, Jr.* $10,361 $75,375
Director, Chairperson, (8 companies)
Contracts Committee
Maria T. Fighetti** $10,361 $75,375
Director (8 companies)
David L. Grove** $10,790 $78,500
Director, (8 companies)
Sidney Koch $10,103 $73,500
Director, (8 companies)
Chairperson,
Nominating Committee
Corine T. Norgaard $10,103 $73,500
Director (8 companies)
Richard G. Scheide $10,790 $78,500
Director, Chairperson, (8 companies)
Audit Committee
# Directors and officers hold the same positions with other investment companies
in the same fund complex: Aetna Variable Fund, Aetna Income Shares, Aetna
Variable Encore Fund, Aetna Balanced VP, Inc., Aetna GET Fund, Aetna Generation
Portfolios, Inc. and Aetna Variable Portfolios, Inc.
* Dr. DePrince replaced Dr. Grove as Chairperson of the Contracts Committee as
of April 2000.
** During the year ended October 31, 1999, Ms. Fighetti and Dr. Grove deferred
$3,299 and $10,790, respectively, of their compensation from the Company. For
the same period, Ms. Fighetti and Dr. Grove deferred $24,000 and $78,500,
respectively, of their compensation from the fund complex.
Vote Required
The affirmative vote of a plurality of the shares of the Company voting
at the Special Meeting is required to approve the election of each Nominee.
The Board recommends that shareholders vote "FOR" each of the Nominees
under Proposal No. 1.
PROPOSAL NO. 2
APPROVAL OF INVESTMENT ADVISORY AGREEMENTS
Shareholders of each of the Funds are being asked to approve new
Investment Advisory Agreements (the "New Agreements") between the Company, on
behalf of their Fund, and Aeltus. Approval of the New Agreements is sought so
that the management of each Fund can continue uninterrupted after the
Transaction, because the current Investment Advisory Agreements (the "Current
Agreements") may terminate automatically as a result of the Transaction.
Aetna's goal is to complete the Transaction during the fourth quarter
of 2000. As a result of the Transaction, Aetna will become a wholly owned
subsidiary of ING America Insurance Holdings, Inc., a subsidiary of ING. Aeltus
will remain an indirect wholly owned subsidiary of Aetna, although Aetna will be
renamed in connection with the Transaction. The change in ownership of Aeltus
resulting from the Transaction may be deemed under the Investment Company Act to
be an assignment of the Current Agreements. The Current Agreements provide for
their automatic termination upon an assignment. Accordingly, the New Agreements
between Aeltus and the Funds are proposed for approval by shareholders of each
Fund. A form of the New Agreements is attached as Exhibit A to this Proxy
Statement and the description of their terms in this section is qualified in its
entirety by reference to Exhibit A.
Appendix 5 shows the date when each Fund commenced operations, the date
of each Current Agreement, and the dates when each Fund's Current Agreement was
approved by the Board and the applicable Fund's shareholders (or, in some cases,
a Fund's sole initial shareholder). In December 1999, the Board approved the
revision of certain Funds' Investment Advisory Agreements in order to continue
specific expense limitation provisions and to make immaterial changes to clarify
certain provisions and to promote uniformity among all the Agreements.
Aeltus does not anticipate that the Transaction will cause any
reduction in the quality of services now provided to the Funds or have any
adverse effect on Aeltus' ability to fulfill its obligations to the Funds.
At the September 27, 2000 meeting of the Board, each New Agreement was
approved unanimously by the Board, including all of the Directors who are not
interested parties to the New Agreements or interested persons of such parties.
Each New Agreement as approved by the Board is submitted for approval by the
shareholders of the Fund to which the New Agreement applies. Each New Agreement
must be voted upon separately by the shareholders of the Fund to which it
pertains.
If the New Agreements are approved by shareholders, they will take
effect immediately after the closing of the Transaction. The New Agreements will
remain in effect through December 31, 2001, and, unless earlier terminated, will
continue from year to year thereafter, provided that each such continuance is
approved annually with respect to each Fund (i) by the Board or by the vote of a
majority of the outstanding voting securities of the particular Fund, and, in
either case, (ii) by a majority of the Company's Directors who are not parties
to the New Agreement or "interested persons" of any such party (other than as
Directors of the Company).
The Terms of the New Agreements
The terms of each New Agreement will be the same in all material
respects as those of its respective Current Agreement, except for the effective
dates and the extension of expense limitation provisions through December 31,
2001 for certain Funds. In addition, certain other nonmaterial, clarifying
modifications have been made to each New Agreement in order to promote
consistency among all of the funds currently advised by Aeltus and to permit
ease of administration. Each New Agreement requires Aeltus, subject to the
policies and control of the Board, to (i) supervise all aspects of the
operations of the applicable Fund, (ii) select the securities to be purchased,
sold or exchanged by the Fund or otherwise represented in the Fund's investment
portfolio, place trades for all such securities and regularly report thereon to
the Board, (iii) formulate and implement continuing programs for the purchase
and sale of securities and regularly report thereon to the Board, (iv) obtain
and evaluate pertinent information about significant developments and economic,
statistical and financial data, domestic, foreign or otherwise, whether
affecting the economy generally, the Fund, securities held by or under
consideration for the Fund, or the issuers of those securities, (v) provide
economic research and securities analyses as Aeltus considers necessary or
advisable in connection with Aeltus' performance of its duties thereunder, (vi)
obtain the services of, contract with, and provide instructions to custodians
and/or subcustodians of the Fund's securities, transfer agents, dividend paying
agents, pricing services and other service providers as are necessary to carry
out the terms of the Agreement, and (vii) take any other actions which appear to
Aeltus and the Board necessary to carry into effect the purposes of the
Agreement. Any investment program undertaken by Aeltus pursuant to each New
Agreement, as well as any other activities undertaken by Aeltus on behalf of the
applicable Fund pursuant thereto, shall at all times be subject to any
directives of the Board. Under the New Agreements, subject to the approval of
the Board and the shareholders of a Fund, Aeltus may enter into a subadvisory
agreement to engage a subadviser to Aeltus with respect to the Fund.
This Proposal to approve the New Agreements seeks no increase in
advisory fees for any of the Funds. The annual advisory fees under the New
Agreements for each Fund are listed in Appendix 6 to this Proxy Statement.
Each New Agreement provides that Aeltus shall place all orders for the
purchase and sale of portfolio securities for the applicable Fund with brokers
or dealers selected by Aeltus, which may include brokers or dealers affiliated
with Aeltus. Aeltus is obligated to use its best efforts to seek to execute
portfolio transactions at prices that are advantageous to the Fund and at
commission rates that are reasonable in relation to the benefits received. Under
each New Agreement, in selecting broker-dealers qualified to execute a
particular transaction, brokers or dealers may be selected who also provide
brokerage or research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934 (the "Exchange Act") to Aeltus and/or the
other accounts over which Aeltus or its affiliates exercise investment
discretion. Aeltus is authorized to pay a broker or dealer who provides such
brokerage or research services a commission for executing a portfolio
transaction for the Fund that is in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if Aeltus
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage or research services provided by such
broker or dealer and is paid in compliance with Section 28(e).
Under each New Agreement, upon the request of the Board, Aeltus may
perform certain accounting, shareholder servicing or other administrative
services on behalf of the applicable Fund that are not required by the New
Agreement. Such services will be performed on behalf of the Fund and Aeltus may
receive from the Fund such reimbursement for costs or reasonable compensation
for such services as may be agreed upon between Aeltus and the Board on a
finding by the Board that the provision of such services by Aeltus is in the
best interests of the Fund and its shareholders. Payment or assumption by Aeltus
of any Fund expense that Aeltus is not otherwise required to pay or assume under
the New Agreement shall not relieve Aeltus of any of its obligations to the Fund
nor obligate Aeltus to pay or assume any similar Fund expense on any subsequent
occasions.
Each New Agreement provides that the services of Aeltus to a Fund are
not to be deemed to be exclusive, and Aeltus shall be free to render investment
advisory or other services to others (including other investment companies) and
to engage in other activities, so long as its services under the New Agreement
are not impaired thereby.
Like the Current Agreements, each New Agreement provides that Aeltus
shall be liable to the Company and shall indemnify the Company for any losses
incurred by the Company, 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 Aeltus or its officers, directors or employees, that is
found to involve willful misfeasance, bad faith or negligence, or reckless
disregard by Aeltus of its duties under the New Agreement, in connection with
the services rendered by Aeltus thereunder.
Each New Agreement may be terminated at any time, without the payment
of any penalty, by vote of the Board or by vote of a majority of the Fund's
outstanding voting securities (as defined in Section 2(a)(42) of the Investment
Company Act), or by Aeltus, on sixty (60) days' written notice to the other
party. Notice provided for in the Agreement may be waived by the party required
to be notified. Each New Agreement will automatically terminate in the event of
its "assignment" as defined in Section 2(a)(4) of the Investment Company Act.
Expense Limitations
Under each New Agreement, the applicable Fund generally pays all fees
and expenses incurred in connection with its management, except that Aeltus is
specifically responsible for the salaries, employment benefits and other related
costs and expenses of those of its personnel engaged in providing investment
advice to the Fund, including without limitation, office space, office
equipment, telephone and postage costs, and all fees and expenses of all
Directors, officers and employees, if any, of the Company who are employees of
Aeltus, including any salaries and employment benefits payable to those persons.
The Current Agreements applicable to certain Funds contain a provision
obligating Aeltus to limit the expenses of those Funds until December 31, 2000,
or, in the case of Brokerage Cash Reserves and the PPFs, indefinitely. In this
regard, an expense limitation applicable to Money Market that has since expired
will not be reflected in the New Agreement for Money Market. The expense limits
for the Funds that have such arrangements are shown in Appendix 7. The terms of
the expense limitation provisions set forth in the New Agreements are the same
as those currently in effect, except that Aeltus has agreed to extend the
expense limitations through December 31, 2001 for those Funds whose expense
limitations would otherwise expire at the end of 2000.
Information About Aeltus
Aeltus Investment Management, Inc. is a Connecticut corporation
organized in 1972. It currently has its principal offices at 10 State House
Square, Hartford, Connecticut 06103-3602. Aeltus is an indirect wholly owned
subsidiary of Aetna, a financial services company with stock listed for trading
on the New York Stock Exchange. Please refer to Appendix 8 to this Proxy
Statement for the name of Aeltus' parent company and the names of its immediate
parents. Appendix 8 also contains a list of the principal executive officer and
directors of Aeltus and identifies those individuals serving as officers and/or
Directors of the Company that are also officers and/or directors of Aeltus.
Aeltus is registered with the Securities and Exchange Commission ("SEC") as an
investment adviser.
Appendix 9 sets forth the amount of investment advisory fees that have
been paid by the Funds to Aeltus during each Fund's most recent fiscal year.
Please refer to Appendix 10 for a list of other investment companies with
investment objectives similar to those of the Funds for which Aeltus acts as
investment adviser, including the rates of Aeltus' compensation from such
investment companies.
In addition to providing investment advisory services, Aeltus serves as
each Fund's administrator pursuant to an Administrative Services Agreement and
provides certain administrative and shareholder services necessary for Fund
operations. These services include: (a) internal accounting services; (b)
monitoring regulatory compliance, such as reports and filings with the SEC and
state securities commissions; (c) preparing financial information for proxy
statements; (d) preparing semi-annual and annual reports to shareholders; (e)
calculating the net asset value per share; (f) preparation of certain
shareholder communications; (g) supervising the custodian and transfer agent;
and (h) reporting to the Board. For its services, Aeltus is entitled to receive
from each Fund a fee at an annual rate of 0.10% of the Fund's average daily net
assets.
The Company's principal underwriter is Aeltus Capital, Inc. ("ACI"), 10
State House Square, Hartford, Connecticut 06103-3602, a wholly owned subsidiary
of Aeltus and an indirect wholly owned subsidiary of Aetna. With respect to
Class A shares of the Funds (other than Brokerage Cash Reserves and Money
Market), ACI is paid an annual distribution fee at the rate of 0.25% of the
value of average daily net assets attributable to those shares under a
Distribution Plan adopted by the Company pursuant to Rule 12b-1 under the
Investment Company Act ("Distribution Plan"). With respect to Class B shares of
the Funds (other than Brokerage Cash Reserves), ACI is paid an annual
distribution fee at the rate of 0.75% of the value of average daily net assets
attributable to those shares under a Distribution Plan. With respect to Class C
shares of the Funds (other than Brokerage Cash Reserves, Money Market and the
PPFs), ACI is paid an annual distribution fee at the rate of 0.75% (0.50% for
the Index Plus Funds) of the value of average daily net assets attributable to
those shares under a Distribution Plan. Class B shares (other than Brokerage
Cash Reserves) and Class C shares (other than Brokerage Cash Reserves, Money
Market and the PPFs) each are also subject to a Shareholder Services Plan
adopted pursuant to Rule 12b-1 ("Shareholder Services Plan"). Under the Class B
Shareholder Services Plan, ACI is paid a servicing fee at an annual rate of
0.25% of the average daily net assets of the Class B shares of each Fund (other
than Brokerage Cash Reserves). Under the Class C Shareholder Services Plan, ACI
is paid a servicing fee at an annual rate of 0.25% of the average daily net
assets of the Class C shares of each Fund (other than Money Market, the PPFs and
Brokerage Cash Reserves). Brokerage Cash Reserves, which does not offer separate
classes of shares, pays ACI an annual distribution fee at the rate of 0.50%,
under a Distribution Plan, and a servicing fee at an annual rate of 0.15%, under
a Shareholder Services Plan, of the value of average daily net assets
attributable to its shares.
Appendix 11 to this Proxy Statement identifies fees that have been paid
by the Funds to Aeltus and ACI for administrative and distribution/shareholder
services, respectively, during each Fund's most recent fiscal year. It is
anticipated that these entities will continue to provide the same services to
the Funds after the approval of the New Agreements.
From time to time, Aeltus receives brokerage and research services from
brokers that execute securities transactions for certain of the Funds. The
commission paid by a Fund to a broker that provides such services to Aeltus may
be greater than the commission would be if the Fund used a broker that does not
provide the same level of brokerage and research services. Additionally, Aeltus
may use such services for clients other than the specific Fund or Funds from
which the related commissions are derived. The Funds have not effected any
brokerage transactions in portfolio securities with Aeltus or any other
affiliated person of the Company.
Interests of Executive Officers and Directors in the Transaction
The Company's executive officers and its Directors who are affiliated
with Aetna are, in certain cases, shareholders of Aetna. If the Transaction is
completed, Aetna shareholders will receive one share of common stock of the
health care company to be formed in connection with the Transaction and
approximately $35 in cash for each share of Aetna common stock that they own.
The exact amount of cash Aetna shareholders will receive for each share of Aetna
common stock that they own will depend on a number of factors, including the
number of shares of Aetna common stock that are outstanding as of completion of
the Transaction, the amount of unpaid interest that has accrued as of the
closing on certain Aetna debt to be assumed by ING and certain other matters.
The Company's executive officers and its Directors who are affiliated
with Aetna may have interests in the Transaction that are different from, or in
addition to, their interests as shareholders of Aetna generally. Aetna's Board
of Directors previously approved provisions to protect certain benefits of Aetna
employees upon a change in control of Aetna, which includes the Transaction. The
provisions provide that the Aetna severance plan (described below) will become
noncancellable for a period of two years following a change in control. Also,
all previously granted stock options that have not yet vested will become vested
and immediately exercisable. In addition, long-term incentive awards granted
under Aetna's 1996 Stock Incentive Plan and Aeltus' Equity Share Plan will vest
and be paid out as a result of the Transaction. Awards granted under Aeltus'
Performance Unit Incentive Compensation Plan, to the extent already vested, will
be paid out as of the closing of the Transaction. In connection with the closing
of the Transaction, Aetna also may pay other bonuses.
Aetna administers a severance plan under which employees terminated by
Aetna without cause may receive up to two weeks of continuing salary for every
credited full year of employment to a maximum of one year's salary. In addition,
when an employee's job is eliminated due to reengineering, reorganization or
staff reduction efforts, an employee, including Aetna's executive officers, are
eligible for an additional 13 weeks of salary continuation and outplacement
assistance. Under certain circumstances, determined on a case-by-case basis,
additional severance pay benefits will be granted for the purposes of inducing
employment of senior officers or rewarding past service. Certain benefits
continue during the severance pay and salary continuation periods.
John Kim, President and Chief Executive Officer of Aeltus, has been
informed that following the completion of the Transaction, he will assume a
senior management position within the ING organization.
Evaluation by the Board
In determining whether to approve the New Agreements and to recommend
their approval to shareholders, the Board, including the Directors who are not
interested persons of Aeltus (the "Independent Directors"), considered various
materials and representations provided by Aeltus and ING and met with senior
representatives of Aeltus and a senior representative of ING. The Independent
Directors were advised by independent legal counsel throughout this process. The
Company's Contracts Committee, consisting of the Independent Directors, met on
September 7, 2000 and September 26, 2000, and the full Board met on September
27, 2000, to review and consider, among other things, information relating to
the New Agreements.
In preparing for the meetings, the Directors were provided with a
variety of information about ING, the Transaction and Aeltus. The Directors
received copies of the agreement governing the Transaction, ING's most recent
financial statements and the New and Current Advisory and Subadvisory
Agreements. The Directors also reviewed information concerning (1) ING's
organizational structure and senior personnel; (2) ING's operations and, in
particular, its mutual fund advisory and distribution activities; (3) ING's
recent acquisition of ReliaStar Financial Corp.; (4) the personnel, operations
and financial condition, and investment management capabilities, methodologies,
and performance of Aeltus as investment adviser to the Funds; and (5) the
services provided by ACI as principal underwriter to the Funds and Aeltus as
administrator to the Funds, including the fees received by ACI for such
distribution/shareholder services and Aeltus for such administrative services.
At the meetings, the Directors were informed that (1) Aeltus and ING do not
expect Fund operations to be materially affected by the Transaction and that
neither entity expects there to be changes in the investment personnel primarily
responsible for the management of the Funds in connection with the Transaction;
(2) the senior management personnel responsible for the management of Aeltus are
expected to continue to be responsible for the management of Aeltus; (3) the
compensation to be received by Aeltus under the New Agreements is the same as
the compensation paid under the Current Agreements; (4) Aetna and ING will each
use its reasonable best efforts to ensure that an "unfair burden" (as defined in
the Investment Company Act) is not imposed on the Funds as a result of the
Transaction; and (5) Aeltus intends to maintain any expense limitations
currently in effect for the period contemplated by the applicable provision. The
Directors were also informed of measures taken by Aeltus to ensure continuity of
key personnel involved in Fund operations. In the course of their deliberations,
the Directors considered, in addition to the above information and
representations, (1) the commonality of the terms and provisions of the New
Agreements and the Current Agreements; (2) that the terms of the New Agreements
will permit the Directors to review the New Agreements again in 2001; (3) ING's
general reputation and its commitment to the advisory business; (4) the
potential for economies of scale to be achieved in light of existing ING
businesses; (5) the nature and quality of the services rendered by Aeltus under
the Current Agreements; and (6) the advantages to each Fund of maintaining
Aeltus as the Fund's adviser, which would provide continued access to the
demonstrated skills and capability of Aeltus' staff. In addition, the Directors
reviewed the fairness of the compensation payable to Aeltus under the New
Agreements.
Based upon the foregoing information and considerations, the Board
determined that each Fund's New Agreement is in the Fund's and its shareholders'
best interests. Accordingly, the Directors, including the Independent Directors,
unanimously voted to approve the New Agreement for each Fund and to submit the
Agreement to shareholders for approval.
The effectiveness of this Proposal No. 2 is conditioned on the
consummation of the Transaction. Accordingly, in the event that the Transaction
is not consummated, Aeltus will continue to manage the Funds pursuant to the
Current Agreements. If the shareholders of a Fund should fail to approve the New
Agreement pertaining to that Fund, the Board shall meet to consider appropriate
action for that Fund.
Vote Required
Shareholders of each Fund must separately approve the applicable New
Investment Management Agreement with respect to that Fund. Approval of this
Proposal No. 2 by a Fund requires an affirmative vote of the lesser of (i) 67%
or more of the Fund's shares present at the Special Meeting if more than 50% of
the outstanding shares of the Fund are present or represented by proxy, or (ii)
more than 50% of the outstanding shares of the Fund.
The Board recommends that shareholders vote "FOR" this Proposal No. 2.
PROPOSAL NO. 3
APPROVAL OF SUBADVISORY AGREEMENT
(Technology Only)
Shareholders of Technology are being asked to approve a new Subadvisory
Agreement with Elijah Asset Management, LLC ("EAM"), for that Fund. Shareholder
approval of a new Subadvisory Agreement (the "New Subadvisory Agreement") is
being sought so that the management of Technology can continue uninterrupted
after the Transaction, because the current Subadvisory Agreement (the "Current
Subadvisory Agreement") for Technology may terminate automatically as a result
of the Transaction. The form of New Subadvisory Agreement is attached to this
Proxy Statement as Exhibit B and the description of its terms in this section is
qualified in its entirety by reference to Exhibit B.
While the Board is seeking shareholder approval of the New Subadvisory
Agreement, this Agreement does not restrict the Board's ability to terminate or
replace the subadviser for Technology at any time in the future, subject to any
shareholder approval that may be required.
The New Subadvisory Agreement must be voted upon separately by
shareholders of Technology. If the New Subadvisory Agreement is approved by
shareholders of Technology, it will take effect immediately after the closing of
the Transaction. It will remain in effect through December 31, 2001, and, unless
earlier terminated, will continue in effect from year to year thereafter,
provided that each such continuance is approved at least annually (i) by the
Board or by the vote of a majority of the outstanding voting securities of
Technology, and, in either case, (ii) by a majority of the Company's Directors
who are not parties to the New Subadvisory Agreement or "interested persons" of
any such party (other than as Directors of the Company).
At the September 27, 2000 meeting of the Board, the New Subadvisory
Agreement was approved unanimously by the Board, including all of the Directors
who are not interested parties to the New Subadvisory Agreement or interested
persons of such parties.
Terms of the New Subadvisory Agreement
The terms of the New Subadvisory Agreement will be the same in all
material respects as those of the Current Subadvisory Agreement, except for the
effective dates. In addition, the New Subadvisory Agreement incorporates
immaterial changes to clarify certain provisions. The New Subadvisory Agreement,
like the Current Subadvisory Agreement, requires EAM, under the supervision of
Aeltus and subject to the approval and direction of the Board, to manage
Technology's assets.
The New Subadvisory Agreement states that EAM shall regularly provide
investment advice with respect to the assets held by Technology and shall
continuously supervise the investment and reinvestment of securities,
instruments or other property (excluding cash and cash instruments) comprising
the assets of Technology. In carrying out these duties, EAM is required to: (i)
select the securities (other than cash instruments) to be purchased, sold or
exchanged by Technology or otherwise represented in Technology's investment
portfolio and regularly report thereon to Aeltus and, at the request of Aeltus,
to the Board; (ii) place trade orders with broker-dealers (which may include
brokers or dealers affiliated with Aeltus or EAM), subject to EAM's obligation
to use its best efforts to seek to execute portfolio transactions at prices that
are advantageous to Technology giving consideration to the services and research
provided and at commission rates that are reasonable in relation to the benefits
received; (iii) formulate and implement continuing programs for the purchase and
sale of securities (other than cash instruments) and regularly report thereon to
Aeltus and, at the request of Aeltus or Technology, to the Board; (iv) inform
Aeltus on a daily basis of the amount of Fund assets that will need to be
invested or reinvested in cash and cash instruments; and (v) 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 Technology
is implemented in compliance with the Investment Company Act, the Investment
Advisers Act of 1940 ("Advisers Act"), and the rules thereunder. Any investment
program undertaken by EAM pursuant to the Agreement, as well as any other
activities undertaken by EAM at the direction of Aeltus, on behalf of
Technology, shall at all times be subject to any directives of the Board.
Under the New Subadvisory Agreement, Aeltus retains responsibility for
oversight of all activities of EAM and for monitoring its activities on behalf
of Technology. Aeltus also is responsible for the investment and reinvestment of
cash and cash instruments maintained by Technology. In carrying out its
obligations under the New Subadvisory Agreement and the new Investment Advisory
Agreement applicable to Technology, Aeltus will: (i) monitor the investment
program maintained by EAM for Technology and EAM's compliance program to ensure
that Technology's assets are invested in compliance with the New Subadvisory
Agreement and Technology's investment objectives and policies as adopted by the
Board and described in the most current effective amendment of the registration
statement for Technology, as filed with the SEC under the Securities Act of 1933
and the Investment Company Act; (ii) formulate and implement continuing programs
for the purchase and sale of cash and cash instruments; (iii) file all periodic
reports pertaining to Technology required to be filed with the applicable
regulatory authorities; (iv) review and deliver to the Board all financial,
performance and other reports prepared by EAM and/or Aeltus under the provisions
of the New Subadvisory Agreement or as requested by the Board; (v) maintain
contact with and enter into arrangements with the custodian, transfer agent,
auditors, outside counsel, and other third parties providing services to
Technology; and (vi) give instructions to the custodian and/or sub-custodian of
Technology concerning deliveries of securities and payments of cash for
Technology, as required to carry out the investment activities of Technology as
contemplated by the New Subadvisory Agreement. Under the New Subadvisory
Agreement, to the extent that the Technology incurs a loss as a result of
Aeltus' failure to adequately fulfill its duties thereunder, and not as a result
of EAM's negligence, Aeltus agrees that it shall be solely responsible to make
Technology whole.
Under the New Subadvisory Agreement, EAM represents that it has in
place compliance systems and procedures designed to meet the requirements of the
Advisers Act and the Investment Company Act and it shall at all times assure
that its activities in connection with managing Technology follow these
procedures.
The New Subadvisory Agreement provides that in selecting broker-dealers
qualified to execute a particular equity transaction, brokers or dealers may be
selected who also provide brokerage or research services (as those terms are
defined in Section 28(e) of the Exchange Act) to EAM and/or the other accounts
over which EAM or its affiliates exercise investment discretion. EAM is
authorized to pay a broker or dealer that provides such brokerage or research
services a commission for executing a portfolio transaction for Technology that
is in excess of the amount of commission another broker or dealer would have
charged for effecting that transaction if EAM determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage or
research services provided by such broker or dealer and is paid in compliance
with Section 28(e).
EAM is obligated under the New Subadvisory Agreement to pay the
salaries, employment benefits and other related costs of those of its personnel
engaged in providing investment advice to Technology, but is not responsible for
any other expenses related to the operation of Technology.
EAM's services with respect to Technology are not to be deemed to be
exclusive, and EAM shall be free to render investment advisory and
administrative or other services to others (including other investment
companies) and to engage in other activities.
The fees payable to EAM, which are paid by Aeltus and not by
Technology, will remain the same under the New Subadvisory Agreement. The New
Subadvisory Agreement provides for the payment of an annual fee equal to 0.50%
of the average daily net assets in Technology.
Like the Current Subadvisory Agreement, the New Subadvisory Agreement
provides that EAM shall be liable to Technology and Aeltus, and shall indemnify
Technology and Aeltus for any losses incurred by Technology or Aeltus 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 EAM or its officers,
directors or employees, that is found to involve willful misfeasance, bad faith
or negligence, or reckless disregard by EAM of its duties under the New
Subadvisory Agreement, in connection with the services rendered by EAM
thereunder. Aeltus shall be liable to Technology and EAM, and shall indemnify
Technology and EAM for any losses incurred by Technology or EAM 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 Aeltus or its officers,
directors or employees, that is found to involve willful misfeasance, bad faith
or negligence, or reckless disregard by Aeltus of its duties under the New
Subadvisory Agreement, in connection with the services rendered by Aeltus
thereunder. Nothing in the New Subadvisory Agreement shall relieve Aeltus of its
responsibilities to Technology, as set forth in the new Investment Advisory
Agreement.
The New Subadvisory Agreement may be terminated (i) 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 Technology; or (ii) by EAM on
sixty (60) days' written notice to both Aeltus and Technology, unless written
notice is waived by the party(ies) required to be notified; or (iii)
automatically in the event there is an "assignment" of this Agreement, as
defined in Section 2(a)(4) of the Investment Company Act.
Information about EAM
Elijah Asset Management, Inc., 100 Pine Street, Suite 420, San
Francisco, California 94111, a Delaware limited liability company formed in
January 1999, currently manages over $1.5 billion. Aeltus owns 24.9% of the
outstanding voting interests of EAM. Ronald E. Elijah owns 75.1% of the
outstanding voting interests of EAM. Please refer to Appendix 12 for information
concerning EAM's officers. EAM is registered with the SEC as an investment
adviser.
EAM provides investment advisory services for public and private
investment funds, institutions, offshore funds, high net worth individuals and
others. EAM also serves as subadviser to RS Information Age Fund, a registered
investment company not part of the Aetna fund complex with assets of
$375,021,878 as of July 31, 2000 that has an investment objective similar to
that of Technology. For the services it provides to RS Information Age Fund, EAM
receives an annual subadvisory fee equal to 0.50% of the fund's average daily
net assets. EAM has not waived, reduced or otherwise agreed to reduce its
compensation from RS Information Age Fund.
EAM has managed Technology pursuant to the Current Subadvisory
Agreement dated January 19, 2000. The Subadvisory Agreement was last approved by
the Board on December 15, 1999 and by the sole initial shareholder of Technology
effective February 29, 2000. No fees were received by EAM for the fiscal year
ended October 31, 1999, since Technology commenced operations on March 1, 2000.
From time to time, EAM receives brokerage and research services from
brokers that execute securities transactions for Technology. The commission paid
by Technology to a broker that provides such services to EAM may be greater than
the commission would be if Technology used a broker that does not provide the
same level of brokerage and research services. Additionally, EAM may use such
services for clients other than Technology. Technology has not effected any
brokerage transactions in portfolio securities with Aeltus, EAM or any other
affiliated person of the Company.
Evaluation by the Board
In determining whether or not it was appropriate to approve the New
Subadvisory Agreement for Technology and to recommend its approval to
shareholders, the Board considered, among other things, the fact that Technology
will continue to be managed by EAM, that the compensation to be received by EAM
under the New Subadvisory Agreement is the same as the compensation paid under
the Current Subadvisory Agreement, that the other terms of the New Subadvisory
Agreement are substantially similar to those of the Current Subadvisory
Agreement and that the Transaction is not otherwise expected to have any effect
on services rendered by EAM. Further, the Board considered (1) the nature and
quality of the services rendered by EAM under the Current Subadvisory Agreement;
(2) the fairness of the compensation payable to EAM under the New Subadvisory
Agreement; (3) the results achieved by EAM for Technology; and (4) the
personnel, operations and financial condition, and investment management
capabilities, methodologies, and performance of EAM. The Board also noted the
factors cited in the preceding Proposal with respect to ING, Aeltus and the
approval of a New Agreement for Technology and the advantages to Technology of
maintaining EAM as the Fund's subadviser, which would provide continued access
to the demonstrated skills and capability of EAM's staff.
Based upon its review, the Board has determined that, by approving the
New Subadvisory Agreement, Technology can best be assured that services from EAM
will be provided without interruption. The Board believes that retaining EAM is
in the best interests of Technology and its shareholders. Accordingly, after
consideration of the above factors, and such other factors and information it
considered relevant, the Board unanimously approved the New Subadvisory
Agreement and voted to recommend its approval by Technology's shareholders.
The effectiveness of this Proposal No. 3 is conditioned on the
consummation of the Transaction. Accordingly, in the event that the Transaction
is not consummated, EAM will continue to manage Technology pursuant to the
Current Subadvisory Agreement. If the shareholders of Technology should fail to
approve the New Subadvisory Agreement, the Board shall meet to consider
appropriate action.
Vote Required
Approval of this Proposal No. 3 by Technology requires an affirmative
vote of the lesser of (i) 67% or more of Technology's shares present at the
Special Meeting if more than 50% of the outstanding shares of Technology are
present or represented by proxy, or (ii) more than 50% of the outstanding shares
of Technology.
The Board recommends that shareholders of Technology vote "FOR" this
Proposal No. 3.
PROPOSAL NO. 4
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Funds are being asked to ratify the selection of the accounting
firm of KPMG LLP ("KPMG") to act as the independent auditors for the Company for
the fiscal year ending October 31, 2001.
At a meeting of the Board held on September 27, 2000, the Board,
including a majority of Independent Directors, selected KPMG to act as the
independent auditors for the fiscal year ending October 31, 2001.
KPMG or its predecessor has served as independent auditors for the
Company with respect to its financial statements since the Company's inception.
KPMG has advised the Company that it is an independent auditing firm
and has no direct financial or material indirect financial interest in the
Company. Representatives of KPMG are not expected to be at the Special Meeting,
but have been given the opportunity to make a statement if they wish, and will
be available telephonically should any matter arise requiring their
participation.
Vote Required
The affirmative vote of a majority of the shares of the Company voted
at the Special Meeting is required to approve this Proposal No. 4.
The Board recommends that shareholders vote "FOR" this Proposal No. 4.
GENERAL INFORMATION
Other Matters to Come Before the Meeting
Management of the Funds does not know of any matters to be presented at
the Special Meeting other than those described in this Proxy Statement. If other
business should properly come before the Meeting, the proxy holders will vote
thereon in accordance with their best judgment.
Section 15(f) of the Investment Company Act
ING and Aetna have agreed to use their reasonable best efforts to
assure compliance with the conditions of Section 15(f) of the Investment Company
Act. Section 15(f) provides a non-exclusive safe harbor for an investment
adviser or any affiliated persons thereof to receive any amount or benefit in
connection with a transaction that results in a change in control of or identity
of the investment adviser to an investment company as long as two conditions are
met. First, no "unfair burden" may be imposed on the investment company as a
result of the transaction relating to the change in control, or any express or
implied terms, conditions or understandings applicable thereto. As defined in
the Investment Company Act, the term "unfair burden" includes any arrangement
during the two-year period after the change in control whereby the investment
adviser (or predecessor or successor adviser), or any interested person of any
such adviser, receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its security holders (other than fees
for bona fide investment advisory or other services), or from any person in
connection with the purchase or sale of securities or other property to, from,
or on behalf of the investment company (other than bona fide ordinary
compensation as principal underwriter of the investment company). Second, during
the three year period immediately following the change in control, at least 75%
of an investment company's board of directors must not be "interested persons"
of the investment adviser or the predecessor investment adviser within the
meaning of the Investment Company Act.
Voting Rights
Shareholders of record on September 27, 2000 (the "record date") are
entitled to be present and to vote at the Special Meeting or any adjourned
meeting. As of the record date, each Fund (other than the PPFs and Brokerage
Cash Reserves) offered four classes of shares to the public: Class A, Class B,
Class C and Class I shares. The Principal Protection Funds offered two classes
of shares: Class A and Class B shares. Each class of shares has 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, if any,
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. Brokerage Cash Reserves did not offer separate
classes of shares. Appendix 1 sets forth the number of shares of each class of
each Fund issued and outstanding as of the record date. Shareholders of each
Fund will vote on each applicable Proposal as a single class regardless of the
class of shares they own.
The presence in person or by proxy of a Fund's shareholders entitled to
cast a majority in number of votes is necessary to constitute a quorum for the
transaction of business. In the event that a quorum of shareholders is not
represented at the Special Meeting with respect to one or more Funds, the
Meeting may be adjourned by a majority of the applicable Fund's shareholders
present in person or by proxy until a quorum exists. If there are insufficient
votes to approve a Proposal, the persons named as proxies may propose one or
more adjournments of the Special Meeting to permit additional time for the
solicitation of proxies, 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 in favor of
such adjournment those proxies which they are entitled to vote in favor of the
Proposal and will vote against any such adjournment those proxies to be voted
against the Proposal.
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 in favor of the
Proposal. 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. Accordingly, shareholders are urged to forward
their voting instructions promptly. Abstentions and broker non-votes will not be
counted in favor of, but will have no other effect on, Proposals 1 and 4, and
will have the effect of a "no" vote on Proposals 2 and 3.
The Funds expect that, before the Special Meeting, broker-dealer firms
holding shares of the Funds in "street name" for their customers will request
voting instructions from their customers and beneficial owners. If these
instructions are not received by the date specified in the broker-dealer firms'
proxy solicitation materials, the Funds understand that the broker-dealers that
are members of the New York Stock Exchange may vote on the items to be
considered at the Special Meeting on behalf of their customers and beneficial
owners under rules of the New York Stock Exchange.
Some shares of a Fund may be held by Aetna affiliates in various
capacities and will be voted in the following manner: shares of a Fund owned
beneficially by an Aetna affiliate as an initial capital investment in a Fund or
other direct investment of the Aetna affiliate will be voted with respect to a
Proposal in the same proportion as shares held by other shareholders of that
Fund. Shares of a Fund held of record by an Aetna affiliate as trustee or
custodian in connection with an employee benefit plan will only be voted in
accordance with actual instructions received from such employee benefit plan or,
under some plans, the plan participants. With respect to shares of a Fund held
by Aetna Life Insurance and Annuity Company ("ALIAC") in its Variable Annuity
Account F as depositor under variable annuity contracts, this Proxy Statement is
used to solicit instructions for voting shares of each Fund relating to such
contract holders' interests in each Fund. ALIAC will only vote shares of each
Fund held through Variable Annuity Account F in accordance with actual
instructions from such contract holders and will not vote shares for which no
instructions are received.
The number of shares that you may vote is the total of the number shown
on the proxy card accompanying this Proxy Statement. Shareholders are entitled
to one vote for each full share and a proportionate vote for each fractional
share held. Any shareholder giving a proxy has the power to revoke it by mail
(addressed to the Secretary at the principal executive office of the Company at
the address shown at the beginning of this Proxy Statement) or in person at the
Special Meeting, by executing a superseding proxy or by submitting a notice of
revocation to the Company.
Beneficial Owners
To the best of the Company's knowledge, as of August 31, 2000, no
person owned beneficially more than 5% of any class of any Fund, except as set
forth in Appendix 2.
Expenses
Aeltus, ING, and/or one or more of their affiliates will pay the
expenses of the Funds in connection with this Notice and Proxy Statement and the
Special Meeting, including the printing, mailing, solicitation and vote
tabulation expenses, legal fees, and out-of-pocket expenses. The Funds will not
bear the expenses of the Proxy Statement.
Additional Proxy Solicitation Information
In addition to solicitation by mail, certain officers and
representatives of the Company, officers and employees of Aeltus and certain
financial services firms and their representatives, who will receive no extra
compensation for their services, may solicit proxies by telephone, telegram or
personally.
Georgeson Shareholder Communications Inc. (the "Solicitor") has been
engaged to assist in the solicitation of proxies, at an estimated cost of
$60,000. As noted above, this cost will be borne by Aeltus, ING and/or one or
more of their affiliates, not by the Funds. As the date of the Special Meeting
approaches, certain Fund shareholders may receive a telephone call from a
representative of the Solicitor if their votes have not yet been received.
Authorization to permit the Solicitor to execute proxies may be obtained by
telephonic or electronically transmitted instructions from shareholders of a
Fund. Proxies that are obtained telephonically will be recorded in accordance
with the procedures set forth below. The Board believes that these procedures
are reasonably designed to ensure that both the identity of the shareholder
casting the vote and the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the Solicitor
representative is required to ask for each shareholder's full name, address,
social security or employer identification number, title (if the shareholder is
authorized to act on behalf of an entity, such as a corporation), and the number
of shares owned, and to confirm that the shareholder has received the proxy
materials in the mail. If the information solicited agrees with the information
provided to the Solicitor, then the Solicitor representative has the
responsibility to explain the process, read the Proposals on the proxy card(s),
and ask for the shareholder's instructions on the Proposals. Although the
Solicitor representative is permitted to answer questions about the process, he
or she is not permitted to recommend to the shareholder how to vote, other than
to read any recommendation set forth in the Proxy Statement. The Solicitor will
record the shareholder's instructions on the card. Within 72 hours, the
shareholder will be sent a letter or mailgram to confirm his or her vote and
asking the shareholder to call the Solicitor immediately if his or her
instructions are not correctly reflected in the confirmation.
If a shareholder wishes to participate in the Special Meeting, but does
not wish to give a proxy by telephone or electronically, the shareholder may
still submit the proxy card(s) originally sent with the Proxy Statement or
attend in person. Should shareholders require additional information regarding
the proxy or replacement proxy card(s), they may contact the Solicitor toll-free
at 1-800-646-8155. As explained above, any proxy given by a shareholder is
revocable until voted at the Special Meeting.
Shareholders may also provide their voting instructions through
telephone touch-tone voting or Internet voting. These options require
shareholders to input a control number which is located on each proxy card.
After inputting this number, shareholders will be prompted to provide their
voting instructions on the Proposals. Shareholders will have an opportunity to
review their voting instructions and make any necessary changes before
submitting their voting instructions and terminating their telephone call or
Internet link. Shareholders who vote on the Internet, in addition to confirming
their voting instructions prior to submission, will also receive an e-mail
confirming their instructions.
Shareholder Proposals
The Funds are not required to hold annual meetings of shareholders and
currently do not intend to hold such meetings unless shareholder action is
required in accordance with the Investment Company Act. A shareholder proposal
to be considered for inclusion in the proxy statement at any subsequent meeting
of shareholders must be submitted a reasonable time before the proxy statement
for that meeting is mailed. Whether a proposal is submitted in the proxy
statement will be determined in accordance with applicable federal and state
laws. The timely submission of a proposal does not guarantee its inclusion.
Please complete the enclosed proxy card(s) and return the card(s)
promptly in the enclosed self-addressed, postage-paid envelope.
By Order of the Board,
Daniel E. Burton
Secretary
<PAGE>
EXHIBIT A
FORM OF NEW
INVESTMENT ADVISORY AGREEMENT
THIS AGREEMENT is made by and between AELTUS INVESTMENT MANAGEMENT, INC., a
Connecticut corporation (the "Adviser"), and AETNA SERIES FUND, INC., a Maryland
corporation (the "Fund"), on behalf of its series, [Aetna [ ] Fund
[I/II/III/IV]][Brokerage Cash Reserves] (the "Series"), as of the date set forth
above the parties' signatures.
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 under
the Investment Company Act of 1940 (the "1940 Act"); and
WHEREAS, the Fund has established the Series; and
WHEREAS, the Adviser is registered with the Commission as an investment adviser
under the Investment Advisers Act of 1940 (the "Advisers Act"), and is in the
business of acting as an investment adviser; and
WHEREAS, the Fund, on behalf of the Series, and the Adviser desire to enter into
an agreement to provide for investment advisory and management services for the
Series on the terms and conditions hereinafter set forth;
NOW THEREFORE, the parties agree as follows:
I. APPOINTMENT AND OBLIGATIONS OF THE ADVISER
Subject to the terms and conditions of this Agreement and the policies and
control of the Fund's Board of Directors (the "Board"), the Fund, on behalf of
the Series, hereby appoints the Adviser to serve as the investment adviser to
the Series, to provide the investment advisory services set forth below in
Section II. The Adviser agrees that, except as required to carry out its duties
under this Agreement or otherwise expressly authorized, it is acting as an
independent contractor and not as an agent of the Series and has no authority to
act for or represent the Series in any way.
II. DUTIES OF THE ADVISER
In carrying out the terms of this Agreement, the Adviser shall do the following:
1. supervise all aspects of the operations of the Series;
2. select the securities to be purchased, sold or exchanged by the
Series or otherwise represented in the Series' investment portfolio, place
trades for all such securities and regularly report thereon to the Board;
3. formulate and implement continuing programs for the purchase and
sale of securities and regularly report thereon to the Board;
4. obtain and evaluate pertinent information about significant
developments and economic, statistical and financial data, domestic, foreign or
otherwise, whether affecting the economy generally, the Series, securities held
by or under consideration for the Series, or the issuers of those securities;
5. provide economic research and securities analyses as the Adviser
considers necessary or advisable in connection with the Adviser's performance of
its duties hereunder;
6. obtain the services of, contract with, and provide instructions to
custodians and/or subcustodians of the Series' securities, transfer agents,
dividend paying agents, pricing services and other service providers as are
necessary to carry out the terms of this Agreement; and
7. take any other actions which appear to the Adviser and the Board
necessary to carry into effect the purposes of this Agreement.
III. REPRESENTATIONS AND WARRANTIES
A. Representations and Warranties of the Adviser
The Adviser hereby represents and warrants to the Fund 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 in effect at all times during the term of this Agreement.
3. Best Efforts. The Adviser at all times shall provide its best
judgment and effort to the Series in carrying out its obligations hereunder.
B. Representations and Warranties of the Series and the Fund
The Fund, on behalf of the Series, hereby represents and warrants to
the Adviser as follows:
1. Due Incorporation and Organization. The Fund has been duly
incorporated under the laws of the State of Maryland and it is authorized to
enter into this Agreement and carry out its obligations hereunder.
2. Registration. The Fund is registered as an investment company with
the Commission under the 1940 Act and shares of the Series are registered or
qualified for offer and sale to the public under the Securities Act of 1933 and
all applicable state securities laws. Such registrations or qualifications will
be kept in effect during the term of this Agreement.
IV. DELEGATION OF RESPONSIBILITIES
Subject to the approval of the Board and the shareholders of the
Series, the Adviser may enter into a Subadvisory Agreement to engage a
subadviser to the Adviser with respect to the Series.
V. BROKER-DEALER RELATIONSHIPS
A. Series Trades
The Adviser shall place all orders for the purchase and sale of
portfolio securities for the Series with brokers or dealers selected by
the Adviser, which may include brokers or dealers affiliated with the
Adviser. The Adviser shall use its best efforts to seek to execute
portfolio transactions at prices that are advantageous to the Series
and at commission rates that are reasonable in relation to the benefits
received.
B. Selection of Broker-Dealers
In selecting broker-dealers qualified to execute a particular
transaction, brokers or dealers may be selected who also provide
brokerage or research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Adviser and/or the
other accounts over which the Adviser or its affiliates exercise
investment discretion. The Adviser is authorized to pay a broker or
dealer who provides such brokerage or research services a commission
for executing a portfolio transaction for the Series that is in excess
of the amount of commission another broker or dealer would have charged
for effecting that transaction if the Adviser determines in good faith
that such amount of commission is reasonable in relation to the value
of the brokerage or research services provided by such broker or dealer
and is paid in compliance with Section 28(e). This determination may be
viewed in terms of either that particular transaction or the overall
responsibilities that the Adviser and its affiliates have with respect
to accounts over which they exercise investment discretion. The Adviser
may consider the sale of shares of the Series and of other investment
companies advised by the Adviser as a factor in the selection of
brokers or dealers to effect transactions for the Series, subject to
the Adviser's duty to seek best execution. The Adviser may also select
brokers or dealers to effect transactions for the Series that provide
payment for expenses of the Series. The Board shall periodically review
the commissions paid by the Series to determine if the commissions paid
over representative periods of time were reasonable in relation to the
benefits received.
VI. CONTROL BY THE BOARD
Any investment program undertaken by the Adviser pursuant to this
Agreement, as well as any other activities undertaken by the Adviser on
behalf of the Series pursuant thereto, shall at all times be subject to
any directives of the Board.
VII. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Adviser shall
at all times conform to:
1. all applicable provisions of the 1940 Act;
2. the provisions of the current Registration Statement of the Fund;
3. the provisions of the Fund's Articles of Incorporation, as amended;
4. the provisions of the Bylaws of the Fund, as amended; and
5. any other applicable provisions of state and federal law.
VIII. COMPENSATION
[Following Two Paragraphs: PPFs I, II, III and IV only]
For the services to be rendered, the facilities furnished and the
expenses assumed by the Adviser, the Fund, on behalf of the Series,
shall pay to the Adviser an annual fee, payable monthly, equal to 0.25%
of the average daily net assets of the Series during the offering
period and equal to 0.65% of the average daily net assets of the Series
during the guarantee period.
Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily at the rate of 1/365 (1/366 in
the event of a leap year) of 0.25% of the daily net assets of the
Series during the offering period and at the rate of 1/365 (1/366 in
the event of a leap year) of 0.65% of the daily net assets of the
Series during the guarantee period. If this Agreement becomes effective
subsequent to the first day of a month or terminates before the last
day of a month, compensation for that part of the month this Agreement
is in effect shall be prorated in a manner consistent with the
calculation of the fees set forth above. Subject to the provisions of
Section X hereof, payment of the Adviser's compensation for the
preceding month shall be made as promptly as possible.
[All Other Funds]
For the services to be rendered, the facilities furnished and the
expenses assumed by the Adviser, the Fund, on behalf of the Series,
shall pay to the Adviser an annual fee, payable monthly, based upon the
following average daily net assets of the Series:
Asset Size of Series Fee
[Please refer to Appendix 6 for each Fund's fee rate]
Except as hereinafter set forth, compensation under this Agreement
shall be calculated and accrued daily at the rate of 1/365 (1/366 in
the event of a leap year) of the annual advisory fee applied to the
daily net assets of the Series. If this Agreement becomes effective
subsequent to the first day of a month or terminates before the last
day of a month, compensation for that part of the month this Agreement
is in effect shall be prorated in a manner consistent with the
calculation of the fees set forth above. Subject to the provisions of
Section X hereof, payment of the Adviser's compensation for the
preceding month shall be made as promptly as possible.
IX. EXPENSES
The expenses in connection with the management of the Series shall be
allocated between the Series and the Adviser as follows:
A. Expenses of the Adviser
The Adviser shall pay:
1. the salaries, employment benefits and other related costs and
expenses of those of its personnel engaged in providing investment advice to the
Series, including without limitation, office space, office equipment, telephone
and postage costs; and
2. all fees and expenses of all directors, officers and employees, if
any, of the Fund who are employees of the Adviser, including any salaries and
employment benefits payable to those persons.
B. Expenses of the Series
The Series shall pay:
1. investment advisory fees pursuant to this Agreement;
2. brokers' commissions, issue and transfer taxes or other transaction
fees payable in connection with any transactions in the securities in the
Series' investment portfolio or other investment transactions incurred in
managing the Series' assets, including portions of commissions that may be paid
to reflect brokerage research services provided to the Adviser;
3. fees and expenses of the Series' independent accountants and legal
counsel and the independent directors' legal counsel;
4. fees and expenses of any administrator, transfer agent, custodian,
dividend, accounting, pricing or disbursing agent of the Series;
5. interest and taxes;
6. fees and expenses of any membership in the Investment Company
Institute or any similar organization in which the Board deems it advisable for
the Fund to maintain membership;
7. insurance premiums on property or personnel (including officers and
directors) of the Fund;
8. all fees and expenses of the Fund's directors, who are not
"interested persons" (as defined in the 1940 Act) of the Fund or the Adviser;
9. expenses of preparing, printing and distributing proxies, proxy
statements, prospectuses and reports to shareholders of the Series, except for
those expenses paid by third parties in connection with the distribution of
Series shares and all costs and expenses of shareholders' meetings;
10. all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares of the Series or in
cash;
11. costs and expenses (other than those detailed in paragraph 9
above) of promoting the sale of shares in the Series, including preparing
prospectuses and reports to shareholders of the Series, provided, nothing in
this Agreement shall prevent the charging of such costs to third parties
involved in the distribution and sale of Series shares;
12. fees payable by the Series to the Commission or to any state
securities regulator or other regulatory authority for the registration of
shares of the Series in any state or territory of the United States or of the
District of Columbia;
13. all costs attributable to investor services, administering
shareholder accounts and handling shareholder relations, (including, without
limitation, telephone and personnel expenses), which costs may also be charged
to third parties by the Adviser; and
14. any other ordinary, routine expenses incurred in the management of
the Series' assets, and any nonrecurring or extraordinary expenses, including
organizational expenses, litigation affecting the Series and any indemnification
by the Fund of its officers, directors or agents.
[Following Two Paragraphs: All Funds except Growth, Growth and Income, and
Balanced] Notwithstanding the above, the Adviser may waive a portion or all of
the fees it is entitled to receive.
In addition, the Adviser may reimburse the Fund, on behalf of a Series, for
expenses allocated to a Series.
[Following Paragraph: Brokerage Cash Reserves only]
The Adviser has agreed to waive fees and/or reimburse expenses so that the total
annual operating expenses do not exceed 0.95% of the average daily net assets.
[Following Paragraph: PPFs I, II, III and IV only]
The Adviser has agreed to waive fees and/or reimburse expenses so that the total
annual operating expenses (excluding distribution and shareholder service fees)
do not exceed 1.25% of the average daily net assets.
[Please refer to Appendix 7 for information concerning expense limitation levels
for the following Funds.]
[Following Paragraph: Technology, Index Plus Large Cap, Index Plus Mid Cap,
Index Plus Small Cap, Value Opportunity, Crossroads, Ascent, Legacy, Small
Company, Aetna Government Fund, International, and Bond Fund only] The Adviser
has agreed to waive fees and/or reimburse expenses through December 31, 2001 so
that the total annual operating expenses (excluding distribution and shareholder
service fees) do not exceed [ ]% of the average daily net assets.
X. ADDITIONAL SERVICES
Upon the request of the Board, the Adviser may perform certain accounting,
shareholder servicing or other administrative services on behalf of the Series
that are not required by this Agreement. Such services will be performed on
behalf of the Series and the Adviser may receive from the Series such
reimbursement for costs or reasonable compensation for such services as may be
agreed upon between the Adviser and the Board on a finding by the Board that the
provision of such services by the Adviser is in the best interests of the Series
and its shareholders. Payment or assumption by the Adviser of any Series expense
that the Adviser is not otherwise required to pay or assume under this Agreement
shall not relieve the Adviser of any of its obligations to the Series nor
obligate the Adviser to pay or assume any similar Series expense on any
subsequent occasions.
XI. NONEXCLUSIVITY
The services of the Adviser to the Series are not to be deemed to be exclusive,
and the Adviser shall be free to render investment advisory or other services to
others (including other investment companies) and to engage in other activities,
so long as its services under this Agreement are not impaired thereby. It is
understood and agreed that officers and directors of the Adviser may serve as
officers or directors of the Fund, and that officers or directors of the Fund
may serve as officers or directors of the Adviser to the extent permitted by
law; and that the officers and directors of the Adviser are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers, directors or trustees of any
other firm or trust, including other investment companies.
XII. TERM
This Agreement shall become effective on ________________, 200__ and
shall remain in force and effect through December 31, 2001 unless earlier
terminated under the provisions of Article XIV.
XIII. RENEWAL
Following the expiration of its initial term, the Agreement shall continue in
force and effect from year to year, provided that such continuance is
specifically approved at least annually:
1. a. by the Board, or
b. by the vote of a majority of the Series' 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.
XIV. TERMINATION
This Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Board or by vote of a majority of the Series'
outstanding voting securities (as defined in Section 2(a)(42) of the 1940 Act),
or by the Adviser, on sixty (60) days' written notice to the other party. The
notice provided for herein may be waived by the party required to be notified.
This Agreement shall automatically terminate in the event of its "assignment"
(as defined in Section 2(a)(4) of the 1940 Act).
XV. LIABILITY
The Adviser shall be liable to the Fund and shall indemnify the Fund for any
losses incurred by the Fund, 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 Adviser or its officers, directors or employees,
that is found to involve willful misfeasance, bad faith or negligence, or
reckless disregard by the Adviser of its duties under this Agreement, in
connection with the services rendered by the Adviser hereunder.
XVI. 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 addresses shall be:
if to the Fund, on behalf of the Series:
10 State House Square
Hartford, Connecticut 06103
Fax number 860/275-2158
Attention: President
if to the Adviser:
10 State House Square
Hartford, Connecticut 06103
Fax number 860/275-4440
Attention: President or Chief Compliance Officer
XVII. 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 or orders of the
Securities and Exchange Commission issued pursuant to the 1940 Act, or contained
in no-action and interpretive positions taken by the Commission staff. In
addition, where the effect of a requirement of the 1940 Act reflected in the
provisions of this Agreement is revised by rule or order of the Commission, such
provisions shall be deemed to incorporate the effect of such rule or order.
XVIII. SERVICE MARK
The service mark of the Fund and the Series and the name "Aetna" have been
adopted by the Fund with the permission of Aetna Services, Inc. (formerly known
as Aetna Life and Casualty Company) and their continued use is subject to the
right of Aetna Services, Inc. to withdraw this permission in the event the
Adviser or another affiliated corporation of Aetna Services, Inc. should not be
the investment adviser of the Series.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the _____ day of ______________,
200__.
Aeltus Investment Management, Inc.
By:
Attest: Name:
Name: Title:
Title:
Aetna Series Fund, Inc.
on behalf of its series,
[Aetna [ ] Fund [I/II/III/IV]]
[Brokerage Cash Reserves]
By:
Attest: Name:
Name: Title:
Title:
<PAGE>
EXHIBIT B
FORM OF NEW
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and among AELTUS INVESTMENT MANAGEMENT, INC., a
Connecticut corporation (the "Adviser"), AETNA SERIES FUND, INC., a Maryland
Corporation (the "Fund"), on behalf of its AETNA TECHNOLOGY FUND (the "Series")
and Elijah Asset Management, LLC, a Delaware limited liability company (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 Series 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 Series (the "Investment Advisory Agreement"), which
appoints the Adviser as the investment adviser for the Series; and
WHEREAS, 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 Series, hereby appoint the Subadviser to manage the assets of
the Series 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
Series, the Fund or the Adviser in any way. The Subadviser agrees that the
Adviser shall have the right at all times upon reasonable notice 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 Series and shall continuously supervise the
investment and reinvestment of securities, instruments or other
property (excluding cash and cash instruments) comprising the assets of
the Series. In carrying out these duties, the Subadviser shall:
1. select the securities (other than cash instruments) to be
purchased, sold or exchanged by the Series or otherwise represented in the
Series' investment portfolio and regularly report thereon to the Adviser and, at
the request of the Adviser, to the Board;
2. place trade orders with broker-dealers, which may include brokers
or dealers affiliated with the Subadviser or the Adviser. The Subadviser shall
use its best efforts to seek to execute portfolio transactions at prices that
are advantageous to the Series giving consideration to the services and research
provided and at commission rates that are reasonable in relation to the benefits
received;
3. formulate and implement continuing programs for the purchase and
sale of securities (other than cash instruments) and regularly report thereon to
the Adviser and, at the request of the Adviser or the Series, to the Board;
4. inform the Adviser on a daily basis of the amount of Series assets
that will need to be invested or reinvested in cash and cash instruments; and
5. 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 Series 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
Series. The Adviser also is responsible for the investment and
reinvestment of cash and cash instruments maintained by the Series. 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
Series and the Subadviser's compliance program to ensure that the Series' assets
are invested in compliance with the Subadvisory Agreement and the Series'
investment objectives and policies as adopted by the Board and described in the
most current effective amendment of the registration statement for the Fund, as
filed with the Commission under the Securities Act of 1933, as amended (the
"1933 Act"), and the 1940 Act ("Registration Statement");
2. formulate and implement continuing programs for the purchase and
sale of cash and cash instruments;
3. file all periodic reports pertaining to the Series required to be
filed with the applicable regulatory authorities;
4. review and deliver to the Board all financial, performance and
other reports prepared by the Subadviser and/or Adviser under the provisions of
this Agreement or as requested by the Board;
5. maintain contact with and enter into arrangements with the
custodian, transfer agent, auditors, outside counsel, and other third parties
providing services to the Series; and
6. give instructions to the custodian and/or sub-custodian of the
Series, concerning deliveries of securities and payments of cash for the Series,
as required to carry out the investment activities of the Series as contemplated
by this Agreement.
To the extent that the Series incurs a loss as a result of the
Adviser's failure to adequately fulfill its duties hereunder, and not
as a result of the Subadviser's negligence, the Adviser agrees that it
shall be solely responsible to make the Series whole.
III. Representations and Warranties
A. Representations and Warranties of the Subadviser
The Subadviser hereby represents and warrants to the Fund and Adviser
as follows:
1. Due Organization and Authorization. The Subadviser is duly
organized and is in good standing under the laws of the State of Delaware 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 Series 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 Series follow these procedures.
B. Representations and Warranties of the Adviser
The Adviser hereby represents and warrants to the Subadviser as
follows:
1. Due Organization and Authorization. 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 Series immediately if any such order is issued or if any proceeding is
commenced that could result in such an order.
4. Compliance. The Adviser 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 Series follow these procedures.
C. Representations and Warranties of the Fund
The Fund hereby represents and warrants to the Adviser and Subadviser
as follows:
1. Due Organization and Authorization. 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. BROKER-DEALER RELATIONSHIPS
In selecting broker-dealers qualified to execute a particular equity
transaction, brokers or dealers may be selected who also provide
brokerage or research services (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934) to the Subadviser and/or
the other accounts over which the Subadviser or its affiliates exercise
investment discretion. The Subadviser is authorized to pay a broker or
dealer that provides such brokerage or research services a commission
for executing a portfolio transaction for the Series that is in excess
of the amount of commission another broker or dealer would have charged
for effecting that transaction if the Subadviser determines in good
faith that such amount of commission is reasonable in relation to the
value of the brokerage or research services provided by such broker or
dealer and is paid in compliance with Section 28(e). This determination
may be viewed in terms of either that particular transaction or the
overall responsibilities that the Subadviser and its affiliates have
with respect to accounts over which they exercise investment
discretion. The Subadviser may consider the sale of shares of the
Series and of other investment companies advised by the Adviser as a
factor in the selection of brokers or dealers to effect transactions
for the Series, subject to the Subadviser's duty to seek best
execution. The Subadviser may also select brokers or dealers to effect
transactions for the Series that provide payment for expenses of the
Series. The Board shall periodically review the commissions paid by the
Series to determine if the commissions paid over representative periods
of time were reasonable in relation to the benefits received.
V. CONTROL BY THE BOARD OF DIRECTORS
Any investment program undertaken by the Subadviser pursuant to this Agreement,
as well as any other activities undertaken by the Subadviser at the direction of
the Adviser on behalf of the Series, shall at all times be subject to any
directives of the Board.
VI. COMPLIANCE WITH APPLICABLE REQUIREMENTS
In carrying out its obligations under this Agreement, the Adviser and 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 Series 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.
VII. COMPENSATION
The Adviser shall pay the Subadviser, as compensation for services rendered
hereunder, from its own assets, an annual fee equal to 0.50% of the average
daily net assets in the Series. 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 (1/366 in the event of a leap year) of the
annual fee applied to the daily net assets of the Series. If this Agreement
becomes effective subsequent to the first day of a month or shall terminate
prior to 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.
VIII. ALLOCATION OF EXPENSES
The Subadviser shall pay the salaries, employment benefits and other related
costs of those of its personnel engaged in providing investment advice to the
Series hereunder, including, but not limited to, office space, office equipment,
telephone and postage costs. The Subadviser shall not be responsible for any
other expenses related to the operation of the Fund.
IX. NONEXCLUSIVITY
The services of the Subadviser with respect to the Series are not to be deemed
to be exclusive, and the Subadviser shall be free to render investment advisory
and administrative or other services to others (including other investment
companies) and to engage in other activities. It is understood 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.
X. 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, 2001, unless
earlier terminated under the provisions of Article XI. 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 Series'
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.
XI. 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
Series;
2. by the Subadviser on sixty (60) days' written notice to both the
Adviser and the Fund, unless written notice is waived by the party(ies) required
to be notified; or
3. automatically in the event there is an "assignment" of this
Agreement, as defined in Section 2(a)(4) of the 1940 Act.
XII. LIABILITY
The Subadviser shall be liable to the Series and the Adviser, and shall
indemnify the Series and the Adviser for any losses incurred by the Series 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.
The Adviser shall be liable to the Series and the Subadviser, and shall
indemnify the Series and the Subadviser for any losses incurred by the Series or
the Subadviser 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 Adviser or its officers, directors or employees, that is found
to involve willful misfeasance, bad faith or negligence, or reckless disregard
by the Adviser of its duties under this Agreement, in connection with the
services rendered by the Adviser hereunder.
Nothing herein shall relieve the Adviser of its responsibilities to the Fund, as
set forth in the Investment Advisory Agreement.
XIII. 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 Series or the Adviser:
10 State House Square, SH11
Hartford, Connecticut 06103-3602
Fax number: 860/275-2158
Attn: Secretary
if to the Subadviser:
100 Pine Street, Suite 420
San Francisco, California 94111
Fax number: 415/274-2461
Attention: Chief Executive Officer
XIV. QUESTIONS OF INTERPRETATION
This Agreement shall be governed by the laws of the State of Connecticut. Either
party shall have the right to require that any dispute arising under the
Agreement be submitted to binding arbitration at the American Arbitration
Association ("AAA") located in New York, New York, in accordance with the AAA's
applicable rules and procedures for dispute resolution.
XV. 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 Series shares or that include the name of the
Series or the Adviser without obtaining the Adviser's prior written approval.
Notwithstanding the foregoing, nothing herein shall prohibit the Subadviser or
any of its principals from using the name of the Fund, the Series or the Adviser
in a biographical description of the Subadviser or its principals or prohibit
the use of the performance of the Fund or the Series (to the extent permissible
under the U.S. federal and state securities laws) in sales literature,
advertising material or other communications of the Subadviser that describes
the composite performance record of the Subadviser or its principals.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the ____ day of _______________,
200__.
Aeltus Investment Management, Inc.
ATTEST:
By By
Name Name
Title Title
Elijah Asset Management, LLC
ATTEST:
By By
Name Name
Title Title
Aetna Series Fund, Inc.
on behalf of Aetna Technology Fund
ATTEST:
By By
Name Name
Title Title
<PAGE>
Appendix 1
Number of Shares Outstanding as of the Record Date
Total Shares
Fund Class A Class B Class C Class I Outstanding
Growth
International
Small Company
Technology
Value Opportunity
Balanced
Growth and Income
Index Plus Large Cap
Index Plus Mid Cap
Index Plus Small Cap
Ascent
Crossroads
Legacy
Bond Fund
Aetna Government Fund
Money Market
Brokerage Cash Reserves N/A N/A N/A N/A
PPF I N/A N/A
PPF II N/A N/A
PPF III N/A N/A
PPF IV N/A N/A
<PAGE>
Appendix 2
<TABLE>
<CAPTION>
Beneficial Owners of More than 5% of Any Class of a Fund
As of August 31, 2000
<S> <C> <C> <C>
Amount and Nature
of Beneficial
Ownership* Percent of
Fund Name and Class Name and Address of Beneficial Owner Class
Aetna Ascent Fund
Class A Fleet Bank Connecticut NA 2,010,395.834 93.97%
Attn: Gordon Elrod
151 Farmington Avenue
Hartford, CT 06156-0001
Class B Olde Discount FBO B6604728 12,175.325 75.21%
751 Griswold Street
Detroit, MI 48226
Aeltus Trust Co. Cust. 1,777.060 10.97%
FBO Margaret R. Smith
Rollover IRA
6240 Taylor
Groves, TX 77619
Donaldson Lufkin Jenrette 822.368 5.07%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Class C Donaldson Lufkin Jenrette 14,797.732 6.43%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
Class I Aliac Sep Account Fund 2,824,666.600 79.99%
Central Valuation Unit
151 Farming Avenue TN 41
Hartford, CT 06156-0001
Mac & Co. 531,681.128 15.05%
AEOF 1956432
Mellon Bank NA
Mutual Funds Dept.
P.O. Box 3198
Pittsburgh, PA 15230-3198
Aetna Balanced Fund
Class A Fleet Bank Connecticut NA 1,828,419.012 78.68%
Attn: Gordon Elrod
151 Farmington Avenue
Hartford, CT 06155-7591
Class B BNY Clearing Services LLC 7,539.573 9.42%
A/C 1061-0721
Veda L. Aleo
Dolores Aleo Genitempo JTWROS
111 East Kilbourn Avenue
Milwaukee, TX 77057
Eileen G Riner 7,123.432 8.90%
2 Charnley Road
Enfield CT 06082
Frances M Holmes (IRA) 5,206.485 6.50%
JMS LLC Cust. FBO
A/C 4297-3266
Class C Judy S. Carrasco 17,091.060 10.94%
1041 E. Mequite St.
Gilbert, AZ 85296
Lalani S. Wickramasinghe & Mohanlal R. 10,522.176 6.73%
Wickramasinghe JTWROS
8532 Wedgewood Dr.
Burr Ridge, IL 60521-6353
Donaldson Lufkin Jenrette 8,865.687 5.67%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
Class I Aliac Sep Account Fund 1,825,582.999 31.78%
Central Valuation Unit
151 Farmington Avenue TN 41
Hartford, CT 06156-0001
Fleet Bank Connecticut NA 1,355,788.559 23.60%
Attn: Gordon Elrod
151 Farmington Avenue
Hartford, CT 06156-0001
Mac & Co. 1,326,696.082 23.10%
AEOF 1956432
Mellon Bank NA
Mutual Funds Dept.
P.O. Box 3198
Pittsburgh, PA 15230-3198
Aetna Bond Fund
Class A Fleet Bank Connecticut NA 1,488,077.076 77.94%
Attn: Gordon Elrod
151 Farmington Avenue
Hartford, CT 06155-7591
Class B Donaldson Lufkin Jenrette 10,006.525 29.37%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Doris Jane James 6,377.732 18.72%
11181 San Sabastian Ln
Bonita Springs, FL 34135-5308
Aeltus Trust Co. Cust. 4,350.950 12.77%
FBO John A. Stanislas
Rollover IRA
196 Montgomery
Chicopee, MA 01020-1911
Harold F. Baldwin & 2,384.890 7.00%
Janet C. Baldwin JTWROS
11 Woodland Drive
Springfield, VT 05156-2138
A G Edwards & Sons Inc C/F 2,365.285 6.94%
Pamela Koren
Rollover IRA Account
9867 High Water Court
Burke, VA 22015-1808
DB Alex Brown LLC 1,980.078 5.81%
FBO 487-14391-15
PO Box 1346
Baltimore, MD 21203
Class C Aeltus Trust Co. Cust. 9,015.322 15.12%
FBO Richard C Dunsay
Rollover IRA
6404 Wilshire Blvd #1001
Los Angeles, CA 90048-5512
Aeltus Trust Co. Cust. 6,543.494 10.97%
FBO Steven Shenker
Rollover IRA
26025 Mesa Oak
San Antonio, TX 78255-3533
Donaldson Lufkin Jenrette 5,725.191 9.60%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
Doris H. Luckadoo 4,795.851 8.04%
12016 Baywoods Dr.
Tega Cay, SC 29715
Aeltus Trust Co. Cust. 3,787.242 6.35%
FBO Marilyn G. Schreck
IRA
13604 W. Fountain Ct.
New Berlin, WI 53151-3975
Class I Aliac Sep Account Fund 1,658,128.680 54.56%
Central Valuation Unit
151 Farmington Avenue
Hartford, CT 06156-0001
Fleet Bank Connecticut NA 206,768.385 6.80%
Attn: Gordon Elrod
151 Farmington Avenue
Hartford, CT 06155-7591
Brokerage Cash Reserves Pershing Div of DLJ Secs Corp 324,042,931.990 99.99%
for Exclusive Benefit of Aetna
Customer Accounts
1 Pershing Plaza
Jersey City, NJ 07399-0002
Aetna Crossroads Fund
Class A Fleet Bank Connecticut NA 2,822,327.292 97.10%
Attn: Gordon Elrod
151 Farmington Ave.
Hartford, CT 06101
Class B Aetna Life Insurance &
Annuity Co. - Investment 9,017.133 95.89%
151 Farmington Ave.
Hartford, CT 06156-0001
Class C Aeltus Trust Co. Cust. 2,833.089 19.64%
FBO Judith A. Kasecky
Rollover IRA
2876 Ben Franklin Highway
Ebensburg, PA 15931-7422
A. Robin Broadfield & Connie J.
Wineland JTWROS 2,392.180 16.59%
5118 Chevy Chase Pkwy, NW
Washington, DC 20008-2919
Aeltus Trust Co. Cust. 2,077.007 14.40%
FBO Joan N. Brennan
Rollover IRA
107 Clarendoh Dr. S.
Nashville, NC 27856
Robert E. Loving & Brenda G. Loving JTWROS 1,677.394 11.63%
7107 Tanya Ave.
Richmond, VA 23228-4611
Barbara H. Furusho & Sally Rudnick JTWROS 1,467.238 10.17%
4848 W. Powell Blvd. #102
Gresham, OR 97030-4061
Class I Aliac Sep Acct F 3,301,279.841 77.35%
Central Valuation Unit
151 Farmington Ave. TN41
Hartford, CT 06156-0001
Fleet Bank Connecticut NA 590,112.407 13.82%
Attn: Gordon Elrod
151 Farmington Ave.
Hartford, CT 06155-7591
Mac & Co 360,939.779 8.45%
AEOF1956432
Mellon Bank NA
Mutual Funds Dept.
P.O. Box 3198
Pittsburgh, PA 15230-3198
Aetna Government Fund
Class A Fleet Bank Connecticut NA 952,929.833 89.84%
Attn: Gordon Elrod
151 Farmington Ave.
Hartford, CT 06101
Class B Donaldson Lufkin Jenrette 4,149.141 61.52%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
Janney Montgomery Scott LLC 1,567.414 23.24%
A/C 1454-9448
Michael Belitz
1801 Market Street
Philadelphia, PA 19103-1675
Aeltus Trust Co. Cust. 832.807 12.35%
FBO Scott R. Foulds
SEP IRA
815 Neelys Creek Rd.
Rock Hill, SC 29730-8647
Class C Donaldson Lufkin Jenrette 4,859.086 36.71%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette 2,237.971 16.90%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Aeltus Trust Co. Cust. 1,264.645 9.55%
FBO Marilyn G. Schreck
IRA
13604 W. Fountain Ct.
New Berlin, WI 53151-3975
A.G. Edwards & Sons Inc. C/F 789.878 5.96%
Mary K. Jeselnick
Simple IRA Account
180 Primrose Circle
Chesterton, IN 46304-3300
A. G. Edwards & Sons Inc C/F 789.878 5.96%
James L. Jeselnick
Simple IRA Account
180 Primrose Circle
Chesterton, IN 46304-3300
Aeltus Trust Co. Cust. 722.249 5.45%
FBO Dongyuan Cheng
Medical College of Wisconsin 403B
2614 N. 64th Street
Wauwatosa, WI 53213-1407
Class I Aliac Sep Acct F 736,684.050 67.79%
Central Valuation Unit
151 Farmington Ave., TN41
Hartford, CT 06156-0001
Fleet Bank Connecticut NA 212,080.214 19.51%
Attn: Gordon Elrod
151 Farmington Ave.
Hartford, CT 06101
Aetna Growth Fund
Class A Fleet Bank Connecticut NA 3,327,136.198 82.36%
Attn: Gordon Elrod
151 Farmington Ave.
Hartford, CT 06101
Class B Donaldson Lufkin Jenrette 13,386.881 6.36%
Securities Corporation Inc.
P.O. Box 2052
Jersey City, NJ 07303-9998
Class I Mac & Co. 8,512,810.018 79.22%
AEOF1956432
Mellon Bank NA
Mutual Funds Dept.
PO Box 3198
Pittsburgh, PA 15230-3198
Aliac Sep Acct F 1,634,541.083 15.21%
Central Valuation Unit
151 Farmington Ave TN41
Hartford, CT 06156-0001
Aetna Growth and Income Fund
Class A Fleet Bank Connecticut NA 4,558,494.814 81.83%
Attn: Gordon Elrod
151 Farmington Ave.
Hartford, CT 06101
Class B Raymond L. Cole & Elaine E. Cole JTWROS 5,716.939 8.63%
48 Vt Rt 30
Wells, VT 05774-9758
Fiserv Securities Inc. 3,550.587 5.36%
FAO 43501035
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7008
Class C Aeltus Trust Co Cust. 19,182.374 11.51%
FBO Josephine S. Malley
Roth Conversion IRA
2 Virginia Rd
Terryville, CT 06786-5501
Class I Mac & Co 23,147,807.774 69.74%
AEOF1956432
Mellon Bank NA
Mutual Funds
PO Box 3198
Pittsburgh PA 15230-3198
Aliac Sep Acct F 5,428,400.259 16.35%
Central Valuation Unit
151 Farmington Ave TN41
Hartford, CT 06156-0001
Fleet Bank Connecticut NA 3,436,339.036 10.35%
Attn: Gordon Elrod
151 Farmington Ave.
Hartford, CT 06101
Aetna Index Plus Large Cap Fund
Class A Fleet Bank Connecticut NA 6,229,759.776 74.55%
Attn: Gordon Elrod
151 Farmington Ave.
Hartford, CT 06101
Class I Aliac Sep Account F 3,716,873.926 41.85%
Central Valuation Unit
151 Farmington Ave TN41
Hartford, CT 06156-0001
Mac & Co 3,548,964.313 39.96%
AEOF1956432
Mellon Bank NA
Mutual Funds
PO Box 3198
Pittsburgh, PA 15230-3198
Fleet Bank Connecticut NA 1,238,606.755 13.94%
ATTN: Gordon Elrod
151 Farmington Ave.
Hartford CT 06101
Aetna Index Plus Mid Cap Fund
Class A Fleet National Bank 321,292.509 50.83%
151 Farmington Ave.
Central Valuation Unit TN41
Hartford, CT 06101
Donaldson Lufkin Jenrette 112,665.416 17.82%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-2052
Class B US Clearing Corp 28,251.804 35.07%
FBO 218-97380-12
26 Broadway
New York, NJ 10004-1703
Fiserv Securities Inc. 4,404.243 5.46%
FAO 43501035
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7008
Donaldson Lufkin Jenrette 4,292.026 5.32%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-2052
Class C Aeltus Trust Co Cust. 10,964.861 11.36%
FBO Richard C. Dunsay
Rollover IRA
6404 Wilshire Blvd #1001
Los Angeles, CA 90048-5512
Donaldson Lufkin Jenrette 7,898.727 8.18%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette 7,552.989 7.82%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-9998
Donaldson Lufkin Jenrette 7,227.298 7.49%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-2052
Class I Aetna Life Insurance & Annuity Co. 156,483.897 85.28%
Additional Investments
151 Farmington Ave.
Hartford, CT 06103
Aetna Life Insurance & Annuity Co. 10,000.000 5.45%
Seed Money
151 Farmington Ave.
Hartford, CT 06103
Aetna Index Plus Small Cap Fund
Class A Fleet National Bank 184,453.216 57.92%
151 Farmington Ave.
Central Valuation Unit TN41
Hartford, CT 06101
Class B Donaldson Lufkin Jenrette 2,072.783 8.12%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jenrette 1,723.277 6.75%
Securities Corporation Inc.
PO Box 2052
Jersey City, NJ 07303-2052
Janney Montgomery Scott Inc. 1,504.514 5.89%
A/C 8173-1119
Natalie L Dyen (IRA)
1801 Market Street
Philadelphia, PA 19103-1628
Fiserv Securities Inc. 1,339.768 5.24%
FAO 43501035
Attn: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7008
Class C NFSC FEBO #HDM-078484 5,444.600 10.32%
NFSC/FMTC IRA Rollover
FBO Christine W. Germain
P. O. Box 984
526 Farrant Street
Newport, VT 05855
Carolyn M. Cohen 3,094.250 5.86%
131 Rt 37 South
Sherman, CT 06784-2202
Bear Stearns Securities Corp. 2,902.000 5.50%
FBO 654-20661-10
1 Metrotech Center North
Brooklyn, NY 11201-3870
Class I Aetna Life Insurance & Annuity Company 391,934.013 95.24%
Additional Investments
151 Farmington Ave.
Hartford, CT 06103
Aetna International Fund
Class A Fleet Bank Connecticut NA 3,474,165.642 68.18%
ATTN: Gordon Elrod
151 Farmington Avenue
Hartford, CT 06101
Class I Mellon Bank NA 1,842,278.858 57.62%
Mutual Funds
P. O. Box 3198
Pittsburgh, PA 15230-3198
Fleet Bank Connecticut NA 467,227.261 14.61%
ATTN: Gordon Elrod
151 Farmington Avenue
Hartford, CT 06101
Aliac SEP Acct F 221,873.503 6.94%
Central Valuation Unit
151 Farmington Avenue TN 41
Hartford, CT 06156-0001
Aetna Legacy Fund
Class A Fleet Bank Connecticut NA 1,530,668.908 91.88%
ATTN: Gordon Elrod
151 Farmington Avenue
Hartford, CT 06101
Class B Aetna Life Insurance & Annuity Co. - Investment 9,920.635 91.80%
151 Farmington Avenue
Hartford, CT 06156-00001
Fiserv Securities Inc. 846.184 7.83%
FAO 43810095
ATTN: Mutual Funds Dept.
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7008
Class C Aeltus Trust Co. Cust. 4,548.122 17.58%
FBO Thressa Kaye Katt
IRA
1083 Heavenridge Road
Essexville, MI 48732-1737
Aeltus Trust Co. Cust. 3,140.964 12.14%
FBO V A Smith
Rollover IRA
722 Santa Clara Dr
Kingsville, TX 78363-3430
Doris Newman & 3,005.174 11.61%
John E. Newman
JT Ten
2400 Payson Road
Quincy, IL 62301-6474
Russell A Wood & 2,976.699 11.50%
Jean C. Wood JTWROS
7983 Kenmore Drive
Mechanicsville, VA 23111-3617
Aeltus Trust Co Cust. 2,032.607 7.85%
FBO Thelma Y Lee
Rollover IRA
94-1485 Waipio Uka St #D-204
Waipahu, HI 96797-4370
Gail Hoevet 1,858.008 7.18%
8526 Timberwilde St
San Antonio, TX 78250-4429
Class I Aliac Sep Acct F 1,699,794.078 69.53%
Central Valuation Unit
151 Farmington Ave
Hartford, CT 06156-00001
Mac & Co 657,111.759 26.88%
AEOF196432
Mellon Bank NA
Mutual Funds Dept
P.O. Box 3198
Pittsburgh, PA 15230-3198
Aetna Money Market Fund
Class A Fleet Bank Connecticut NA 21,315,775.670 25.69%
ATTN: Gordon Elrod
151 Farmington Avenue
Hartford, CT 06101
Class B Aeltus Trust Co Cust. 33,691.640 23.45%
FBO Norah Collins Takaoka
Rollover IRA
27835 Sheffield Ave
Mission Viejo, CA 92692-2809
Aeltus Trust Co Cust. 30,325.550 21.11%
FBO Elizabeth Jan Urban
Rollover IRA
13526 Harvest Point Drive
Huntersville, NC 28078-5924
DB Alex Brown LLC 16,950.110 11.80%
FBO 725-64228-12
P.O. Box 1346
Baltimore, MD 21203
Mary Jane Curson 16,262.970 11.32%
15 Rhine Street
Kenner, LA 70065-1129
Aeltus Trust Co Cust. 15,483.000 10.78%
FBO Richard A. Graveline
SEP IRA
P.O. Box 2561
Eugene, OR 97402-0206
Jason P. Russo & 15,000.000 10.44%
Gilbert Russo JTWROS
P.O. Box 14030
USNA-01
Annapolis, MD 21412
Class C Mueller Trade Bindery Corporation 1,437,767.570 16.97%
c/o Atty Michael Dowley
116 Washington St
Middletown, CT 06457-2818
Aeltus Trust Co Cust. 788,926.630 9.31%
FBO Tillie E Bruell
IRA Rollover
2901 Willowbridge Circle
Austin, TX 78703-1055
Class I Aliac Sep Acct F 109,456,201.310 58.99%
Central Valuation Unit
151 Farmington Ave TN41
Hartford CT 06156-0001
Aetna Principal Protection Fund II Class A
PaineWebber For the Benefit of 100,293.035 8.73%
Reeder Chevrolet Company
Profit Sharing Plan
T Paul Siler Trustee
P. O. Box 12450
Knoxville, TN 37912-0450
Aetna Principal Protection Fund III Class A
Singapore Airlines Ltd. 60,017.507 5.68%
c/o Finance and Admin Manager Americas
5670 Wilshire Blvd. Suite 1800
Los Angeles, CA 90036
PaineWebber for the Benefit of 58,823.529 5.56%
Michael J. Brickman
P. O. Box 879
Charlestown, SC 29402-0879
Aetna Principal Protection Fund IV Class A
Olde Discount FBO C6216547 31,286.209 6.78%
751 Griswold Street
Detroit, MI 48226
Donaldson Lufkin Jennrette 24,900.398 5.39%
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
A G Edwards & Sons Inc. C/F 24,342.746 5.27%
Thomas C. McElroy
Rollover IRA Account
28369 Wooley Springs Rd.
Athens, AL 35613-3301
Aetna Small Company Fund
Class A Fleet Bank Connecticut NA 1,927,171.871 63.97%
Attn: Gordon Elrod
151 Farmington Ave.
Hartford, CT 06101
Citicorp USA Inc. 258,169.056 8.57%
As Collateral Pledge of Wilshire Associates Inc.
One Sansome Street, 24th Floor
San Francisco, CA 94104
Class B Donaldson Lufkin Jenrette 5,335.716 6.94%
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
Aeltus Trust Co. Cust. 4,002.920 5.20%
FBO Theodore Snowert
IRA
11208 Claywood Drive
St. Louis, MO 63126-3416
Class I Key Bank Co. 3,990.353.868 32.98%
The Parker Hannifin Retirement Savings Plan
4900 Tiedeman Road
Brooklyn, OH 44144
Mac & Co. 3,902,946.068 32.26%
AEOF1956432
Mellon Bank NA
Mutual Funds
P. O. Box 3198
Pittsburgh, PA 15230-3198
Aliac Sep Acct F 3,259,320.248 26.94%
Central Valuation Unit
151 Farmington Ave. TN 41
Hartford, CT 06156-0001
Aetna Technology Fund
Class A Aetna Trust Company 218,317.084 34.94%
AFS Central Valuation Unit
Attn: Gordon Elrod TN41
151 Farmington Ave.
Hartford, CT 06156
Class C Robert Egger Ttee 19,411.074 5.93%
Robert Egger Trust
U/A DTD 3-9-81
FBO Robert Egger Jr.
538 Calle De La Sierra
El Cajon, CA 92019-1241
Class I Wayne F. Baltzer & 14,218.009 80.00%
Linda A. Baltzer JTWROS
304 Tall Timbers Road
Glastonbury, CT 06033
J. Scott Fox & 9,708.738 5.46%
Elizabeth S. Fox Ten Com
45 Portage Crossing
Farmington, CT 06032
George R. Stewart 9,424.579 5.30%
1340 W. Larkspur Ln.
River Hills, WI 53217-2117
Aetna Value Opportunity Fund Class A
Fleet National Bank 379,394.383 80.03%
151 Farmington Ave.
Central Valuation Unit-TN41
Hartford, CT 06101
Class B Donaldson Lufkin Jennrette 2,125.676 25.08%
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-2052
Donaldson Lufkin Jennrette 811.947 9.58%
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-2052
Janney Montgomery Scott LLC 747.384 8.82%
A/C 1361-4790
Shirley A Barrett (IRA)
1801 Market Street
Philadelphia, PA 19103-1675
Carol A. Massie 717.703 8.47%
3560 Oak Knoll Drive
Marietta, GA 30068
Aeltus Trust Co. Cust. 545.555 6.43%
FBO Jonita Sims
Rollover IRA
4764 N 41 St.
Milwaukee, WI 53209-5822
Class C Aetna Life Insurance & Annuity Co. 8,890.747 28.10%
Investment
151 Farmington Ave.
Hartford, CT 06156-0001
Lawrence B. Owens Jr. 6,214.227 19.64%
4956 Windhaven Court
Atlanta, GA 30338-5106
Helen D. Owens 5,416.577 17.12%
4956 Windhaven Court
Atlanta, GA 30338-5106
Donaldson Lufkin Jennrette 1,949.560 6.16%
Securities Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303-9998
Class I Aetna Life Insurance & Annuity Co. 221,434.594 89.10%
Additional Investments
151 Farmington Ave.
Hartford, CT 06103
</TABLE>
* Each of these entities is the shareholder of record and may be deemed to be
the beneficial owner of the shares listed for certain purposes under the
securities laws, although in certain instances they may not have an economic
interest in these shares and would, therefore, ordinarily disclaim any
beneficial ownership therein.
<PAGE>
Appendix 3
<TABLE>
<CAPTION>
Director Shareholdings
As of August 31, 2000
<S> <C> <C>
Amount and
Nature of
Beneficial
Fund Name and Class Name of Beneficial Owner Ownership*
Aetna Growth Fund, Class I J. Scott Fox 8,378[1]
Aetna Growth Fund, Class I John Y. Kim 401[2]
Aetna Growth and Income Fund, Class I John Y. Kim 638[3]
Aetna Index Plus Large Cap Fund, Class I J. Scott Fox 428[4]
Aetna Index Plus Large Cap Fund, Class I Maria T. Fighetti N/A
Aetna Index Plus Large Cap Fund, Class I David L. Grove N/A
Aetna Small Company Fund, Class I J. Scott Fox 5,097[5]
Aetna Technology Fund, Class I J. Scott Fox 9,709[6]
Aetna Technology Fund, Class I Sidney Koch 2,079
</TABLE>
* Unless otherwise noted, beneficial ownership is based on sole voting and
investment power. Maria T. Fighetti and David L. Grove have deferred
$71,949 and $269,770 of director compensation, respectively, pursuant to
a deferred compensation plan, which amounts have been invested in the
Funds listed above pursuant to the terms of the plan.
1 Of this amount, 1,813 shares were held through an incentive savings
plan.
2 These shares were held through an incentive savings plan.
3 These shares were held through an incentive savings plan.
4 These shares were held through an incentive savings plan.
5 These shares were held with shared voting and investment power.
6 These shares were held with shared voting and investment power. Mr.
Fox's shareholdings constitute approximately 5.46% of the outstanding
Class I shares of Aetna Technology Fund and, when aggregated with those
shares held by Mr. Koch, approximately 6.64% of such Class I shares.
<PAGE>
Appendix 4
<TABLE>
<CAPTION>
Executive Officers of Aetna Series Fund, Inc.
<S> <C> <C>
Position(s) With
Name and Age the Company Principal Occupation During Past 5 Years
J. Scott Fox Director (since 1997) Director, Managing Director, Chief Operating Officer, Chief Financial
(Age 45) and President Officer, Aeltus Investment Management, Inc. (investment adviser),
(Principal Executive April 1994 to present; Director, Managing Director, Chief Operating
Officer) Officer, Chief Financial Officer, Aeltus Capital, Inc. (broker-
dealer), February 1995 to present; Director, Managing Director,
Chief Operating Officer, Chief Financial Officer, Aeltus Trust
Company, May 1996 to present; Senior Vice President--Operations
(Interim Assignment), Aetna Life Insurance and Annuity Company,
March 1997 to December 1997; Director/Trustee and President,
December 1997 to present (Vice President and Treasurer, March
1996 to December 1997), Aetna Variable Fund, Aetna Income
Shares, Aetna Variable Encore Fund, Aetna Balanced VP, Inc.,
Aetna GET Fund, Aetna Generation Portfolios, Inc. and Aetna
Variable Portfolios, Inc.
Wayne F. Baltzer Vice President Vice President, Aeltus Capital, Inc., May 1998 to present; Vice
(Age 56) (since 1996) President, Aetna Investment Services, Inc., July 1993 to May 1998.
Stephanie A. DeSisto Vice President (since Vice President, Mutual Fund Accounting, Aeltus Investment Management,
(Age 46) 1998), Treasurer and Inc., November 1995 to present; Director, Mutual Fund Accounting,
Chief Financial Aetna Life Insurance and Annuity Company, August 1994 to November
Officer (Principal 1995.
Financial and
Accounting Officer)
(since 1997)
Frank J. Litwin Vice President Managing Director, Aeltus Investment Management, Inc., August 1997 to
(Age 50) (since 1997) present; Managing Director, Aeltus Capital, Inc., May 1998 to
present; Vice President, Fidelity Investments Institutional Services
Company, April 1992 to August 1997.
Daniel E. Burton Secretary Assistant General Counsel and Assistant Secretary, Aeltus Investment
(Age 33) (since 2000) Management, Inc., July 2000 to present; Assistant General Counsel and
Assistant Secretary, Aeltus Capital, Inc., July 2000 to present;
Assistant General Counsel and Assistant Secretary, Aeltus Trust
Company, July 2000 to present; Counsel, Aetna Financial Services
Company, September 1997 to present; Attorney, Securities and Exchange
Commission, August 1996 to August 1997; Associate, Kirkpatrick &
Lockhart, LLP, September 1992 to August 1996.
</TABLE>
<PAGE>
Appendix 5
Dates Relating to Investment Advisory Agreements
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Date Current Date Current
Investment Advisory Investment Advisory
Date of Current Agreement Last Agreement Last
Investment Advisory Approved by the Board Approved by
Commencement of Agreement Shareholders
Fund* Operations
Growth January 4, 1994 December 30, 1999 December 15, 1999 July 26, 1996
International December 27, 1991 December 30, 1999 December 15, 1999 July 26, 1996
Small Company January 4, 1994 December 30, 1999 December 15, 1999 July 26, 1996
Technology March 1, 2000 February 9, 2000 December 15, 1999 February 29, 2000
Value Opportunity February 2, 1998 December 30, 1999 December 15, 1999 July 8, 1998
Balanced December 27, 1991 December 30, 1999 December 15, 1999 July 26, 1996
Growth and Income December 27, 1991 December 30, 1999 December 15, 1999 July 26, 1996
Index Plus Large Cap December 10, 1996 December 30, 1999 December 15, 1999 December 9, 1996
Index Plus Mid Cap February 3, 1998 December 30, 1999 December 15, 1999 August 7, 1998
Index Plus Small Cap February 3, 1998 December 30, 1999 December 15, 1999 August 7, 1998
Ascent January 4, 1995 December 30, 1999 December 15, 1999 July 26, 1996
Crossroads January 4, 1995 December 30, 1999 December 15, 1999 July 26, 1996
Legacy January 4, 1995 December 30, 1999 December 15, 1999 July 26, 1996
Bond Fund December 27, 1991 December 30, 1999 December 15, 1999 July 26, 1996
Aetna Government Fund December 22, 1993 December 30, 1999 December 15, 1999 July 26, 1996
Money Market December 27, 1991 December 30, 1999 December 15, 1999 July 26, 1996
Brokerage Cash Reserves September 7, 1999 December 30, 1999 September 22, 1999 September 1, 1999
PPF I August 6, 1999 July 28, 1999 June 23, 1999 August 3, 1999
PPF II October 7, 1999 September 27, 1999 September 22, 1999 October 6, 1999
PPF III March 1, 2000 February 9, 2000 December 15, 1999 February 28, 2000
PPF IV July 6, 2000 July 5, 2000 April 12, 2000 July 6, 2000
</TABLE>
* In December 1999, the Board approved the revision of certain Funds' Investment
Advisory Agreements in order to continue specific expense limitation provisions
and to make several immaterial changes to clarify certain provisions and to
promote uniformity among all the Agreements. In those cases, the date of the
agreement may be later than the dates of approval by the Board and shareholders.
<PAGE>
Appendix 6
Investment Advisory Fee Rates
Advisory Fees for each Fund are allocated to a particular class on the basis of
the net assets of that class in relation to the net assets of the Fund (except
for Brokerage Cash Reserves, which does not have separate classes). Listed below
are the advisory fees that Aeltus is entitled to receive from each Fund at an
annual rate based on average daily net assets of the Fund:
Fund Advisory Fee Assets
CAPITAL APPRECIATION FUNDS
Growth 0.700% On first $250 million
0.650% On next $250 million
0.625% On next $250 million
0.600% On next $1.25 billion
0.550% Over $2 billion
International 0.850% On first $250 million
0.800% On next $250 million
0.775% On next $250 million
0.750% On next $1.25 billion
0.700% Over $2 billion
Small Company 0.850% On first $250 million
0.800% On next $250 million
0.775% On next $250 million
0.750% On next $1.25 billion
0.725% Over $2 billion
Value Opportunity 0.700% On first $250 million
0.650% On next $250 million
0.625% On next $250 million
0.600% On next $1.25 billion
0.550% Over $2 billion
Technology 1.050% On first $500 million
1.025% On next $500 million
1.000% Over $1 billion
GROWTH & INCOME FUNDS
Balanced 0.800% On first $500 million
0.750% On next $500 million
0.700% On next $1 billion
0.650% Over $2 billion
Growth and Income 0.700% On first $250 million
0.650% On next $250 million
0.625% On next $250 million
0.600% On next $1.25 billion
0.550% Over $2 billion
INCOME FUNDS
Bond Fund 0.500% On first $250 million
0.475% On next $250 million
0.450% On next $250 million
0.425% On next $1.25 billion
0.400% Over $2 billion
Aetna Government Fund 0.500% On first $250 million
0.475% On next $250 million
0.450% On next $250 million
0.425% On next $1.25 billion
0.400% Over $2 billion
Money Market 0.400% On first $500 million
0.350% On next $500 million
0.340% On next $1 billion
0.330% On next $1 billion
0.300% Over $3 billion
Brokerage Cash Reserves 0.200% On first $1 billion
0.190% On next $2 billion
0.180% Over $3 billion
INDEX PLUS FUNDS
Index Plus Large Cap 0.450% On first $500 million
0.425% On next $250 million
0.400% On next $1.25 billion
0.375% Over $2 billion
Index Plus Mid Cap 0.450% On first $500 million
0.425% On next $250 million
0.400% On next $1.25 billion
0.375% Over $2 billion
Index Plus Small Cap 0.450% On first $500 million
0.425% On next $250 million
0.400% On next $1.25 billion
0.375% Over $2 billion
GENERATION FUNDS
Ascent 0.800% On first $500 million
0.775% On next $500 million
0.750% On next $500 million
0.725% On next $500 million
0.700% Over $2 billion
Crossroads 0.800% On first $500 million
0.775% On next $500 million
0.750% On next $500 million
0.725% On next $500 million
0.700% Over $2 billion
Legacy 0.800% On first $500 million
0.775% On next $500 million
0.750% On next $500 million
0.725% On next $500 million
0.700% Over $2 billion
PRINCIPAL PROTECTION FUNDS
PPF I 0.25% Offering Period (August 6,
1999 through October 6, 1999)
0.65% Guarantee Period (October 7,
1999 through October 6, 2004)
PPF II 0.25% Offering Period (October 7,
1999 through December 20, 1999)
Guarantee Period (December 21,
0.65% 1999 through December 20, 2004)
PPF III 0.25% Offering Period (March 1, 2000
through May 31, 2000)
0.65% Guarantee Period (June 1, 2000
through May 31, 2005)
PPF IV 0.25% Offering Period (July 6, 2000
through September 6, 2000)
0.65%
Guarantee Period (September 7,
2000 through September 6, 2005)
<PAGE>
Appendix 7
Fund Expense Limitations
Aeltus currently is contractually obligated through December 31, 2000, in most
cases, to waive all or a portion of its investment advisory fee and/or its
administrative services fee for certain Funds and/or reimburse a portion of
those Funds' other expenses (excluding distribution and shareholder service
fees, except in the case of Brokerage Cash Reserves) in order to ensure that the
applicable Fund's total operating expenses do not exceed the percentage of the
Fund's average daily net assets set forth in the table below. There are no fee
waiver/expense reimbursement provisions applicable to Growth, Balanced, Growth
and Income, and Money Market.
Fund Expense Limitation
International 1.35%
Small Company 1.25%
Technology 1.50%
Value Opportunity 1.10%
Bond Fund 0.75%
Aetna Government Fund 0.70%
Brokerage Cash Reserves*@ 0.95%
Index Plus Large Cap 0.70%
Index Plus Mid Cap 0.75%
Index Plus Small Cap 0.75%
Ascent 1.00%
Crossroads 0.95%
Legacy 0.90%
PPF I* 1.25%
PPF II* 1.25%
PPF III* 1.25%
PPF IV* 1.25%
* There is no expiration date applicable to the expense limitation
provisions for Brokerage Cash Reserves and the PPFs.
@ Unlike other Funds listed, expense limitation does not exclude
distribution and shareholder service fees.
<PAGE>
Appendix 8
Additional Information about
Aeltus Investment Management, Inc.
Aeltus Investment Management, Inc. is a wholly owned subsidiary of Aetna
Investment Adviser Holding Company, Inc.; Aetna Investment Adviser Holding
Company, Inc. is a wholly owned subsidiary of Aetna Life Insurance and Annuity
Company; Aetna Life Insurance and Annuity Company is a wholly owned subsidiary
of Aetna Retirement Holdings, Inc.; Aetna Retirement Holdings, Inc. is a wholly
owned subsidiary of Aetna Retirement Services, Inc.; Aetna Retirement Services,
Inc. is a wholly owned subsidiary of Aetna Services, Inc.; and Aetna Services,
Inc. is a wholly owned subsidiary of Aetna Inc.
Aeltus Investment Management, Inc., is located at 10 State House Square,
Hartford, CT 06103-3602; the address for all other entities listed above is 151
Farmington Ave., Hartford, CT 06156-8962.
<TABLE>
<CAPTION>
Principal Executive Officer and Directors of Aeltus
<S> <C> <C>
Positions and Offices
Name* with Investment Adviser Other Principal Position(s) Held
John Y. Kim Director, President, Chief Executive Officer Senior Vice President and Chief
and Chief Investment Officer Investment Officer, Aetna Life Insurance
and Annuity Company; Director, President,
Chief Executive Officer and Chief
Investment Officer, Aeltus Trust Company;
Director and President, Aeltus Capital,
Inc.; Director and President, Aetna
Investment Adviser Holding Company, Inc.;
Director, Aetna Retirement Services,
Inc.; Vice President, Aetna Life
Insurance Company.
J. Scott Fox Director, Managing Director, Chief Operating Director, Managing Director, Chief
Officer and Chief Financial Officer Operating Officer and Chief Financial
Officer, Aeltus Capital, Inc.
(broker-dealer); Director, Managing
Director, Chief Operating Officer and
Chief Financial Officer, Aeltus Trust
Company.
Thomas J. McInerney Director Director and President, Aetna Life
Insurance and Annuity Company; Director
and President, Aetna Retirement Services,
Inc.; Executive Vice President, Aetna
Inc.; Executive Vice President, Aetna
Services, Inc.; Executive Vice President,
Aetna Life Insurance Company.
Catherine H. Smith Director Director, Senior Vice President and Chief
Financial Officer, Aetna Retirement
Services, Inc.; Director, Senior Vice
President and Chief Financial Officer,
Aetna Life Insurance and Annuity Company;
Director, Aetna Insurance Company of
America; Director, Aetna Investment
Adviser Holding Company, Inc.
</TABLE>
* Except with respect to Mr. McInerney and Ms. Smith, the principal business
address of each person named is 10 State House Square, Hartford, Connecticut
06103-3602. The address of Mr. McInerney and Ms. Smith is 151 Farmington Avenue,
Hartford, Connecticut 06156.
<TABLE>
<CAPTION>
Common Officers and Directors of Aetna Series Fund, Inc. and Aeltus
<S> <C> <C>
Name Position(s) with Company Position(s) with Aeltus
J. Scott Fox Director and President Director, Managing Director, Chief
Operating Officer, Chief Financial Officer
John Y. Kim Director Director, President, Chief Executive
Officer, Chief Investment Officer
Frank J. Litwin Vice President Managing Director, Retail Marketing and
Sales
Wayne F. Baltzer Vice President Vice President, Mutual Fund Administration
and Client Services
Mark A. Baral Assistant Treasurer Assistant Treasurer
Allan Shaer, Jr. Assistant Treasurer Assistant Treasurer
Michael Gioffre Assistant Secretary Assistant General Counsel and Secretary
Daniel E. Burton Secretary Assistant General Counsel and Assistant
Secretary
Stephanie A. DeSisto Vice President, Treasurer and Vice President
Chief Financial Officer
</TABLE>
<PAGE>
Appendix 9
Advisory Fees Paid to Aeltus Investment Management, Inc.
for the Fiscal Year Ended October 31, 1999
Total Investment Net Advisory
Fun d Advisory Fees Waiver Fees Paid
Growth $1,484,231 $ 0 $1,484,231
International 507,245 107,259 399,986
Small Company 488,647 12,768 475,879
Technology* N/A N/A N/A
Value Opportunity 43,946 43,946 0
Balanced 1,031,227 0 1,031,227
Growth and Income 4,374,490 0 4,374,490
Bond Fund 226,218 80,473 145,745
Aetna Government Fund 69,754 69,754 0
Money Market 1,844,102 658,067 1,186,035
Brokerage Cash Reserves** 80,456 80,456 0
Index Plus Large Cap 667,633 73,563 594,070
Index Plus Mid Cap 42,217 42,217 0
Index Plus Small Cap 35,558 35,558 0
Ascent 409,705 29,401 380,304
Crossroads 387,278 37,728 349,550
Legacy 242,377 77,162 165,215
PPF I# 96,488 85,068 11,420
PPF II@ 1,862 1,862 0
PPF III* N/A N/A N/A
PPF IV* N/A N/A N/A
* Technology and PPFs III and IV commenced operations after October 31,
1999.
** For the period from September 7, 1999 (commencement of operations) to
October 31, 1999.
# For the period from August 6, 1999 (commencement of operations) to
October 31, 1999.
@ For the period from October 7, 1999 (commencement of operations) to
October 31, 1999.
<PAGE>
Appendix 10
<TABLE>
<CAPTION>
Advisory Fee Rates
for Funds with Similar Investment Objectives
Advised by Aeltus Investment Management, Inc.
<S> <C> <C> <C> <C>
Advisory Fee
As a Percentage of
Net Assets Average Daily Net Assets
Fund1 As of August 31, 2000 Expense Limitation2
Aetna Balanced VP, Inc. $ 1,959,647,868.96 0.50% N/A
Aetna Income Shares 671,382,018.14 0.40% N/A
d/b/a Aetna Bond VP
Aetna Variable Fund 9,405,938,464.19 0.50% on first $10 billion N/A
d/b/a Aetna Growth and Income VP 0.45% on next $5 billion
0.425% over $15 billion
Aetna Variable Encore Fund 1,158,099,632.90 0.25% N/A
d/b/a Aetna Money Market VP
Aetna Variable Portfolios, Inc.:
Aetna Growth VP 519,234,416.72 0.60% 0.80%
Aetna Index Plus Large Cap VP 1,381,409,880.07 0.35% 0.55%
Aetna Index Plus Mid Cap VP 46,731,226.07 0.40% 0.60%
Aetna Index Plus Small Cap VP 16,861,489.71 0.40% 0.60%
Aetna International VP 49,203,046.86 0.85% 1.15%
Aetna Small Company VP 279,488,741.83 0.75% 0.95%
Aetna Technology VP 34,795,586.51 0.95% 1.15%
Aetna Value Opportunity VP 101,801,886.60 0.60% 0.80%
Aetna Generation Portfolios, Inc.:
Aetna Ascent VP 227,610,932.73 0.60% 0.75%
Aetna Crossroads VP 195,608,267.84 0.60% 0.70%
Aetna Legacy VP 127,953,730.43 0.60% 0.65%
Aetna GET Fund:
Series C 195,648,653.80 0.25% - Offering Period N/A
0.60% - Guarantee Period
Series D 571,335,114.79 0.25% - Offering Period 0.75%
0.60% - Guarantee Period
Series E 549,144,226.00 0.25% - Offering Period 0.75%
0.60% - Guarantee Period
Series G 248,636,548.25 0.25% - Offering Period 0.75%
0.60% - Guarantee Period
Series H 188,151,177.89 0.25% - Offering Period 0.75%
0.60% - Guarantee Period
Series I 102,745,858.52 0.25% - Offering Period 0.75%
0.60% - Guarantee Period
Series J 3,310,719.82 0.25% - Offering Period 0.75%
0.60% - Guarantee Period
Series K N/A3 0.25% - Offering Period 0.75%
0.60% - Guarantee Period
</TABLE>
1 Shares of each fund are offered only to insurance company separate
accounts that fund both annuity and life insurance contracts.
2 Aeltus currently is contractually obligated to waive fees and/or
reimburse expenses (excluding distribution fees, except in the case of
the Series G, H, I, J and K of Aetna GET Fund and Aetna Technology VP)
of the applicable fund through December 31, 2000 (except for the
Series of Aetna GET Fund, whose expense limitation provisions have no
expiration dates) so that the fund's total operating expenses do not
exceed this percentage of average daily net assets.
3 Aetna GET Fund, Series K had not commenced operations as of August 31,
2000.
<PAGE>
Appendix 11
<TABLE>
<CAPTION>
Administrative and Distribution/Shareholder Services
Fees Paid to Aeltus and ACI for the Fiscal Year
Ended October 31, 1999
<S> <C> <C> <C> <C>
Total
Total Net Admini- Distribution/
Administrative Administrator strative Shareholder Services
Fund Services Fees Waiver Services Fee Fees
Paid
Growth $212,043 $0 $212,043 $93,265
International 59,676 0 59,676 53,471
Small Company 57,488 0 57,488 47,171
Technology# N/A N/A N/A N/A
Value Opportunity 6,278 6,278 0 4,741
Balanced 128,903 0 128,903 46,064
Growth and Income 660,028 0 660,028 123,267
Index Plus Large Cap 148,363 0 148,363 267,873
Index Plus Mid Cap 9,381 9,381 0 8,318
Index Plus Small Cap 7,902 7,902 0 7,896
Ascent 51,213 0 51,213 36,042
Crossroads 48,410 0 48,410 20,360
Legacy 30,297 0 30,297 16,944
Bond Fund 45,244 0 45,244 22,641
Aetna Government Fund 13,951 13,951 0 8,320
Money Market 461,026 0 461,026 1,192
Brokerage Cash Reserves* 40,228 26,410 13,818 261,483
PPF I** 21,058 0 21,058 191,005
PPF II*** 745 745 0 7,168
PPF III# N/A N/A N/A N/A
PPF IV# N/A N/A N/A N/A
</TABLE>
# Technology and PPFs III and IV commenced operations after October 31,
1999.
* For the period from September 7, 1999 (commencement of operations) to
October 31, 1999.
** For the period from August 6, 1999 (commencement of operations) to
October 31, 1999.
*** For the period from October 7, 1999 (commencement of operations) to
October 31, 1999.
<PAGE>
Appendix 12
<TABLE>
<CAPTION>
OFFICERS OF ELIJAH ASSET MANAGEMENT, LLC
<S> <C> <C>
Positions and Offices
Name* with EAM Other Principal Position(s) Held
Ronald E. Elijah Manager, Chief Executive Officer, Portfolio N/A
Manager
John P. McNiff Manager, Secretary Managing Director, Longwood Investment
Advisors, Inc., Radnor, PA; Director,
Longwood Offshore Management, Berwyn, PA;
Officer, Trinity Capital Partners,
Radnor, PA.
Michael S. Dunn Manager, Chief Operating Officer N/A
Roderick R. Berry Manager, President, Portfolio Manager N/A
Scott Rowe Manager, Director of Client Services N/A
Andrew C. Morrison Manager, Treasurer, Analyst N/A
Jay J. Giacco Manager Vice President, Aeltus Investment
Management.
</TABLE>
* Except for Mr. Giacco, the principal business address of each person named is
100 Pine Street, Suite 420, San Francisco, CA 94111. Mr. Giacco's principal
business address is 10 State House Square, Hartford, CT 06103-3602.
<PAGE>
PRELIMINARY COPIES
AETNA SERIES FUND, INC.
(the "Company")
[Aetna Growth Fund] [Aetna Index Plus Large Cap Fund]
[Aetna International Fund] [Aetna Index Plus Mid Cap Fund]
[Aetna Small Company Fund] [Aetna Index Plus Small Cap Fund]
[Aetna Technology Fund] [Aetna Ascent Fund]
[Aetna Value Opportunity Fund] [Aetna Crossroads Fund]
[Aetna Balanced Fund] [Aetna Legacy Fund]
[Aetna Growth and Income Fund] [Aetna Principal Protection Fund I]
[Aetna Bond Fund] [Aetna Principal Protection Fund II]
[Aetna Government Fund] [Aetna Principal Protection Fund III]
[Aetna Money Market Fund] [Aetna Principal Protection Fund IV]
[Brokerage Cash Reserves]
(the "Fund")
THIS PROXY CARD IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF AETNA SERIES
FUND, INC.
IF THIS PROXY CARD IS PROPERLY EXECUTED AND RETURNED, YOUR SHARES WILL BE VOTED
BY THE PROXIES IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION
IS MADE, YOUR SHARES WILL BE VOTED BY THE PROXIES FOR APPROVAL OF THE PROPOSALS.
Please sign exactly as name appears on this card. When the account is in the
name of 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______________________
Signature(s)
Dated: __________________, 2000
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 the Fund to be held at 10:00 a.m., Eastern Time, on November 22,
2000, and at any adjournment or postponement thereof. THIS PROXY CARD, WHEN
PROPERLY EXECUTED, DIRECTS J. SCOTT FOX AND WAYNE F. BALTZER TO VOTE THE SHARES
LISTED ON THE FRONT OF THIS CARD AS DIRECTED AND REVOKES ALL PRIOR PROXY CARDS.
YOUR VOTE IS IMPORTANT!
VOTE TODAY BY MAIL,
TOUCH-TONE PHONE OR THE INTERNET
CALL TOLL FREE 1-888-221-0697 OR
LOG ON TO WWW.PROXYWEB.COM
SEE THE ENCLOSED INSERT FOR FURTHER INSTRUCTIONS ON VOTING BY PHONE OR INTERNET
*** CONTROL NUMBER XXX XXX XXX XXX XX ***
Please vote the shares listed on the front of this card 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] EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL.
1. To elect 8 Directors to serve until their successors are elected
and qualified;
FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT [ ]
Albert E. DePrince, Jr. John Y. Kim
Maria T. Fighetti Sidney Koch
J. Scott Fox Corine T. Norgaard
David L. Grove Richard G. Scheide
Note: If you do not wish your shares voted "For" a particular Nominee, mark the
"For All Except" box and strike a line through the name(s) of the Nominee(s).
Your shares will be voted for the remaining Nominee(s).
2. To approve a new Investment Advisory Agreement between the Company,
on behalf of the Fund, and Aeltus Investment Management, Inc. ("Aeltus");
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. (For Shareholders of Aetna Technology Fund Only) To approve a new
Subadvisory Agreement among the Company, on behalf of Aetna Technology Fund,
Aeltus and Elijah Asset Management, LLC; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the selection of KPMG LLP as independent auditors for the
Funds for the fiscal year ending October 31, 2001.
[ ] 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>
[buckslip regarding telephonic and internet voting to be included with
proxy card]
Voting Your Proxy: It's Easier Than Ever
The enclosed proxy discusses matters affecting your Aetna fund. It's important
to vote on these issues, and voting promptly can save the time and expense of
having to make a second mailing.
In addition to the option of mailing the proxy card back to us, we now offer you
two other ways to vote -- by touch-tone telephone and by computer via the
Internet. Using either saves time for you and helps reduce expenses.
So after you've read the proxy information about your fund, but before you sign,
date, seal, and mail the proxy card, consider voting either by telephone or by
computer via the Internet.
[Telephone symbol] By touch-tone telephone:
have the proxy card handy
call 1-888-221-0697 toll free
enter the control number found in the upper left corner of your proxy card
follow the simple recorded instructions
[Computer symbol] By computer via the Internet:
have the proxy card handy
go to the Web site www.proxyweb.com
enter the control number found in the upper left corner of your proxy card
follow the instructions on the screen
If you vote by computer or telephone, you do not need to mail the proxy card.
Thank you.
Aetna [logo]
Aeltus Capital, Inc., Distributor
<PAGE>
PRELIMINARY COPIES
AETNA SERIES FUND, INC.
(the "Company")
[Aetna Growth Fund] [Aetna Index Plus Large Cap Fund]
[Aetna International Fund] [Aetna Index Plus Mid Cap Fund]
[Aetna Small Company Fund] [Aetna Index Plus Small Cap Fund]
[Aetna Technology Fund] [Aetna Ascent Fund]
[Aetna Value Opportunity Fund] [Aetna Crossroads Fund]
[Aetna Balanced Fund] [Aetna Legacy Fund]
[Aetna Growth and Income Fund] [Aetna Principal Protection Fund I]
[Aetna Bond Fund] [Aetna Principal Protection Fund II]
[Aetna Government Fund] [Aetna Principal Protection Fund III]
[Aetna Money Market Fund] [Aetna Principal Protection Fund IV]
[Brokerage Cash Reserves]
(the "Fund")
THIS AUTHORIZATION CARD IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS.
VARIABLE ANNUITY ACCOUNT F
IF THIS AUTHORIZATION CARD IS PROPERLY EXECUTED AND RETURNED, YOUR INTEREST WILL
BE VOTED IN THE MANNER DIRECTED HEREIN BY YOU, THE UNDERSIGNED CONTRACT HOLDER
UNDER A VARIABLE ANNUITY CONTRACT FUNDED BY SEPARATE ACCOUNT F OF AETNA LIFE
INSURANCE AND ANNUITY COMPANY ("ALIAC"). ALIAC WILL ONLY VOTE THOSE SHARES OF
THE FUND ATTRIBUTABLE TO ACCOUNT F FOR WHICH IT RECEIVES INSTRUCTIONS.
Please sign exactly as name appears on this card.
When signing as administrator, trustee, plan sponsor
or other plan fiduciary, please give title. If a corporation or partnership,
sign in entity's name and by authorized persons.
X______________________
X______________________
(Signature of Contract Holder)
Dated: __________________, 2000
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 the Fund to be held at 10:00 a.m., Eastern Time, on November 22,
2000, and at any adjournment or postponement thereof (the "Special Meeting").
THIS AUTHORIZATION CARD, WHEN PROPERLY EXECUTED, DIRECTS ALIAC TO VOTE THE
INTEREST OF THE CONTRACT HOLDER(S) SIGNING ABOVE IN THE SHARES OF THE FUND HELD
IN SEPARATE ACCOUNT F AT THE SPECIAL MEETING AND AT ANY ADJOURNMENT OR
POSTPONEMENT THEREOF IN THE MANNER DIRECTED BELOW WITH RESPECT TO THE MATTERS
DESCRIBED IN THE NOTICE AND ACCOMPANYING PROXY STATEMENT FOR SAID MEETING AND
REVOKES ALL PRIOR AUTHORIZATION CARDS.
Please vote the shares listed on the front of this card 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] EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL.
1. To elect 8 Directors to serve until their successors are elected
and qualified;
FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT [ ]
Albert E. DePrince, Jr. John Y. Kim
Maria T. Fighetti Sidney Koch
J. Scott Fox Corine T. Norgaard
David L. Grove Richard G. Scheide
Note: If you do not wish your shares voted "For" a particular Nominee, mark the
"For All Except" box and strike a line through the name(s) of the Nominee(s).
Your shares will be voted for the remaining Nominee(s).
2. To approve a new Investment Advisory Agreement between the Company,
on behalf of the Fund, and Aeltus Investment Management, Inc. ("Aeltus");
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. (For Shareholders of Aetna Technology Fund Only) To approve a new
Subadvisory Agreement among the Company, on behalf of Aetna Technology Fund,
Aeltus and Elijah Asset Management, LLC; and
[ ] FOR [ ] AGAINST.... [ ] ABSTAIN
4. To ratify the selection of KPMG LLP as independent auditors for the
Funds for the fiscal year ending October 31, 2001.
[ ] 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>
PRELIMINARY COPIES
AETNA SERIES FUND, INC.
(the "Company")
[Aetna Growth Fund] [Aetna Index Plus Large Cap Fund]
[Aetna International Fund] [Aetna Index Plus Mid Cap Fund]
[Aetna Small Company Fund] [Aetna Index Plus Small Cap Fund]
[Aetna Technology Fund] [Aetna Ascent Fund]
[Aetna Value Opportunity Fund] [Aetna Crossroads Fund]
[Aetna Balanced Fund] [Aetna Legacy Fund]
[Aetna Growth and Income Fund] [Aetna Principal Protection Fund I]
[Aetna Bond Fund] [Aetna Principal Protection Fund II]
[Aetna Government Fund] [Aetna Principal Protection Fund III]
[Aetna Money Market Fund] [Aetna Principal Protection Fund IV]
[Brokerage Cash Reserves]
(the "Fund")
THIS AUTHORIZATION CARD IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS.
IF THIS AUTHORIZATION CARD IS PROPERLY EXECUTED AND RETURNED, YOUR INTEREST WILL
BE VOTED BY THE TRUSTEE OR CUSTODIAN FOR YOUR EMPLOYEE BENEFIT PLAN IN THE
MANNER DIRECTED HEREIN BY YOU, THE UNDERSIGNED PARTICIPANT(S) OR PLAN
FIDUCIARY(IES). THE EMPLOYEE BENEFIT PLAN'S TRUSTEE OR CUSTODIAN WILL ONLY VOTE
THOSE SHARES OF THE FUND ATTRIBUTABLE TO THE PLAN FOR WHICH IT RECEIVES
INSTRUCTIONS.
Please sign exactly as name appears on this card.
When signing as administrator, trustee, plan sponsor
or other plan fiduciary, please give title. If a corporation or partnership,
sign in entity's name and by authorized persons.
X______________________
X______________________
Signature(s)
Dated: __________________, 2000
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 the Fund to be held at 10:00 a.m., Eastern Time, on November 22,
2000, and at any adjournment or postponement thereof (the "Special Meeting").
THIS AUTHORIZATION CARD, WHEN PROPERLY EXECUTED, DIRECTS THE TRUSTEE OR
CUSTODIAN TO VOTE THE INTEREST OF THE PARTICIPANT(S) OR PLAN FIDUCIARY(IES)
SIGNING ABOVE IN THE SHARES OF THE FUND HELD THROUGH THE EMPLOYEE BENEFIT PLAN
AT THE SPECIAL MEETING AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF IN THE
MANNER DIRECTED BELOW WITH RESPECT TO THE MATTERS DESCRIBED IN THE NOTICE AND
ACCOMPANYING PROXY STATEMENT FOR SAID MEETING AND REVOKES ALL PRIOR
AUTHORIZATION CARDS.
Please vote the shares listed on the front of this card 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] EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL.
1. To elect 8 Directors to serve until their successors are elected
and qualified;
FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT [ ]
Albert E. DePrince, Jr. John Y. Kim
Maria T. Fighetti Sidney Koch
J. Scott Fox Corine T. Norgaard
David L. Grove Richard G. Scheide
Note: If you do not wish your shares voted "For" a particular Nominee, mark the
"For All Except" box and strike a line through the name(s) of the Nominee(s).
Your shares will be voted for the remaining Nominee(s).
2. To approve a new Investment Advisory Agreement between the Company,
on behalf of the Fund, and Aeltus Investment Management, Inc. ("Aeltus");
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. (For Shareholders of Aetna Technology Fund Only) To approve a new
Subadvisory Agreement among the Company, on behalf of Aetna Technology Fund,
Aeltus and Elijah Asset Management, LLC; and
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. To ratify the selection of KPMG LLP as independent auditors for the
Funds for the fiscal year ending October 31, 2001.
[ ] 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>
PRELIMINARY COPIES
AETNA SERIES FUND, INC.
(the "Company")
[Aetna Growth Fund] [Aetna Index Plus Large Cap Fund]
[Aetna International Fund] [Aetna Ascent Fund]
[Aetna Small Company Fund] [Aetna Crossroads Fund]
[Aetna Growth and Income Fund] [Aetna Legacy Fund]
(the "Fund")
THIS AUTHORIZATION CARD IS SOLICITED ON BEHALF OF
THE COMPANY'S BOARD OF DIRECTORS.
To: Participants in the Aetna Incentive Savings Plan
Mellon Bank, N.A., the trustee ("Trustee") under the Aetna Incentive Savings
Plan, has been instructed to solicit your instructions on how to vote your
interest in shares of the Fund held by the Trustee on your behalf in accordance
with the terms of the Plan and to vote those shares in accordance with your
instructions at the special meeting of the Fund to be held on November 22, 2000,
and at any adjournment or postponement thereof. Please indicate by checking the
appropriate box how you want these shares voted by the Trustee and return this
card to the Trustee in the envelope provided. We would like to remind you that
your individual voting instructions are held in strict confidence and will not
be disclosed to Aetna Inc. or its affiliates. IF THIS AUTHORIZATION CARD IS
PROPERLY EXECUTED AND RETURNED, YOUR INTEREST IN SHARES OF THE FUND HELD BY THE
TRUSTEE WILL BE VOTED IN THE MANNER DIRECTED BY YOU. IF YOU DO NOT RETURN THIS
AUTHORIZATION CARD TO THE TRUSTEE BY [November , 2000], THE TRUSTEE WILL VOTE
THE FUND SHARES HELD ON YOUR BEHALF THROUGH THE PLAN, FOR, AGAINST, OR
ABSTAINING, IN THE SAME PROPORTION AS THE SHARES FOR WHICH TIMELY VOTING
INSTRUCTIONS HAVE BEEN RECEIVED FROM OTHER PARTICIPANTS. [IF YOU RETURN THE
AUTHORIZATION CARD BUT DO NOT MARK YOUR VOTING INSTRUCTIONS ON THE REVERSE SIDE,
THE TRUSTEE WILL VOTE THE FUND SHARES HELD ON YOUR BEHALF THROUGH THE PLAN "FOR"
THE PROPOSALS.]
Please sign exactly as name appears on this card.
X______________________
Signature
Dated: __________________, 2000
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 the Fund to be held at 10:00 a.m., Eastern Time, on November 22,
2000, and at any adjournment or postponement thereof (the "Special Meeting").
THIS AUTHORIZATION CARD, WHEN PROPERLY EXECUTED, DIRECTS THE TRUSTEE TO VOTE THE
SHARES OF THE FUND HELD THROUGH THE PLAN ON BEHALF OF THE PARTICIPANT SIGNING
ABOVE AT THE SPECIAL MEETING AND AT ANY ADJOURNMENT OR POSTPONEMENT THEREOF IN
THE MANNER DIRECTED BELOW WITH RESPECT TO THE MATTERS DESCRIBED IN THE NOTICE
AND ACCOMPANYING PROXY STATEMENT FOR SAID MEETING AND REVOKES ALL PRIOR
AUTHORIZATION CARDS.
Please vote the shares listed on the front of this card 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] EXAMPLE
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" EACH PROPOSAL.
1. To elect 8 Directors to serve until their successors are elected
and qualified;
FOR [ ] WITHHOLD [ ] FOR ALL EXCEPT [ ]
Albert E. DePrince, Jr. John Y. Kim
Maria T. Fighetti Sidney Koch
J. Scott Fox Corine T. Norgaard
David L. Grove Richard G. Scheide
Note: If you do not wish your shares voted "For" a particular Nominee, mark the
"For All Except" box and strike a line through the name(s) of the Nominee(s).
Your shares will be voted for the remaining Nominee(s).
2. To approve a new Investment Advisory Agreement between the Company,
on behalf of the Fund, and Aeltus Investment Management, Inc. ("Aeltus");
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. To ratify the selection of KPMG LLP as independent auditors for the
Funds for the fiscal year ending October 31, 2001.
[ ] 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.
