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 identity the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement no.:
(3) Filing Party:
(4) Date Filed:
<PAGE>
J. Scott Fox
President
Aetna Series Fund, Inc.
May 30, 2000
Dear Shareholder:
I am writing to let you know that, as stated in the enclosed Proxy
Statement, a special shareholder meeting will be held on July 28, 2000. The
purpose of the meeting is for you to vote on a proposal to liquidate four series
of Aetna Series Fund, Inc. ("the Company"): Aetna High Yield Fund, Aetna Index
Plus Bond Fund, Aetna Mid Cap Fund, and Aetna Real Estate Securities Fund, and
on amendments to the Company's charter necessary to reflect the liquidations.
On March 1, the Board of Directors considered and agreed to submit to
shareholders a proposal by the funds' investment adviser to liquidate these four
funds. (The funds were closed to new direct investors on March 6 and to new
retirement plan investment on May 15.) If approved by shareholders at the July
28 meeting, the liquidations will occur no later than September 1, 2000. FOR
RETIREMENT PLAN PARTICIPANTS AND IRA ACCOUNTS, AN ALTERNATIVE INVESTMENT OPTION
MUST BE ELECTED BY THAT DATE. Direct shareholders will receive a cash
distribution equal to the value of their shares as of the close of business on
the liquidation date. Shareholders may redeem their shares or exchange their
shares into another Aetna fund at any time prior to the liquidation date. Please
note, however, that direct shareholders who redeem their shares prior to the
liquidation date and do not exchange into another Aetna fund will not benefit
from the front-end sales charge reimbursement (Class A shareholders) and
contingent deferred sales charge waivers (Class B shareholders) discussed in the
Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS APPROVE THE PROPOSAL
DESCRIBED IN THE ENCLOSED PROXY STATEMENT. Their recommendation is based on a
number of factors, including the Funds' inability to sell a sufficient number of
shares to lower operating expenses, and poor sales trends. The reasons for
recommending this course of action are described in detail in the Proxy
Statement, which you should consider carefully before casting your vote.
PLEASE VOTE AND RETURN YOUR PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE AS SOON AS POSSIBLE. Your vote is critical, no matter how large or
small your holdings may be.
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 for each account.
PLEASE VOTE AND RETURN EACH PROXY CARD THAT YOU RECEIVE.
If you have any questions before you vote, please call 1-800-238-6263,
Option 2. We'll help you get the answers you need promptly. Thank you for your
participation in this important matter.
Sincerely,
/S/ J. SCOTT FOX
J. Scott Fox
(enclosures)
<PAGE>
NOTICE OF A SPECIAL MEETING
OF THE SHAREHOLDERS OF
AETNA SERIES FUND, INC.
Aetna High Yield Fund
Aetna Mid Cap Fund
Aetna Index Plus Bond Fund
Aetna Real Estate Securities Fund
A Special Meeting of the Shareholders (the "Special Meeting") of Aetna
High Yield Fund, Aetna Mid Cap Fund, Aetna Index Plus Bond Fund and Aetna Real
Estate Securities Fund (each a "Fund"), each a series of Aetna Series Fund, Inc.
(the "Company"), will be held on July 28, 2000, at 10:00 a.m., Eastern time, at
10 State House Square, Hartford, Connecticut 06103-3602 for the following
purposes:
1. to consider and vote on a Plan of Liquidation for each Fund and, in
connection therewith, proposed amendments to the charter of the Company, as set
forth in Articles of Amendment; and
2. 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 proposal to be placed before the Special Meeting. The
shareholders of each Fund will vote separately with respect to their Fund.
Shareholders of record at the close of business on May 1, 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 and
sign 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,
Amy R. Doberman
Secretary
May 30, 2000
<PAGE>
10
PRELIMINARY COPIES
AETNA SERIES FUND, INC.
Aetna High Yield Fund
Aetna Mid Cap Fund
Aetna Index Plus Bond Fund
Aetna Real Estate Securities Fund
PROXY STATEMENT
May 30, 2000
This Proxy Statement provides you with information you should review
before voting on the matter listed in the Notice of Special Meeting on the
previous page for Aetna High Yield Fund, Aetna Mid Cap Fund, Aetna Index Plus
Bond Fund and Aetna Real Estate Securities Fund (each a "Fund" and,
collectively, 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 July
28, 2000, at 10:00 a.m., Eastern time, and, if the Special Meeting is adjourned,
at any adjournment of that Meeting.
This Proxy Statement describes the matter that will be voted on at the
Special Meeting (the "Proposal"). The solicitation of votes is made by the
mailing of this Proxy Statement and the accompanying proxy card on or about May
30, 2000. Aeltus Investment Management, Inc. ("Aeltus"), the Funds' investment
adviser, or its affiliates may contact Fund shareholders directly commencing in
June 2000 to discuss the Proposal. The expenses incurred in connection with
preparing this Proxy Statement and of all solicitations will be paid by Aeltus.
A copy of the Company's Annual Report for the fiscal year ended October
31, 1999, was mailed to its shareholders on or about December 30, 1999. This
Proxy Statement should be read in conjunction with the Annual Report. You can
obtain a copy of the Annual Report or any more recent Semi-Annual Report,
without charge, by writing to Aeltus Investment Management, Inc., 10 State House
Square, Hartford, Connecticut, 06103-3602, Attention: Wayne Baltzer, or by
calling 1-888-423-5887.
Shareholders of record on May 1, 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 offered four classes of shares to the public: Class A
shares, Class B shares, Class C shares and Class I 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 borne by each class; (c) the expenses allocable exclusively to each class;
(d) voting rights on matters exclusively affecting a single class; and (e) the
exchange privilege of each class. As of the record date, each Fund had the
following shares issued and outstanding:
Number of Shares Outstanding
as of May 1, 2000
Aetna High Yield Fund
Class A
Class B
Class C
Class I
Aetna Mid Cap Fund
Class A
Class B
Class C
Class I
Aetna Index Plus Bond Fund
Class A
Class B
Class C
Class I
Aetna Real Estate Securities Fund
Class A
Class B
Class C
Class I
To the best of the Company's knowledge, as of the record date, no
person owned beneficially more than 5% of any class of any Fund, except as set
forth in Appendix 1. Appendix 2 hereto sets forth the number of shares of each
Fund owned directly or beneficially by the Company's Directors.
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, the Meeting may be adjourned by a majority
of those shareholders present in person or by proxy until a quorum exists. In
addition, if a quorum is present but there are insufficient votes to approve the
Proposal, the persons named as proxies may propose one or more adjournments to
permit additional time for the solicitation of proxies.
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.
The Proposal must be approved by the affirmative vote by holders of a
majority (more than 50%) of the outstanding voting securities of a Fund.
Shareholders of each Fund will vote as a single class regardless of the class of
shares they own. Abstentions and broker non-votes will have the effect of a "no"
vote on the Proposal. Shares of each Fund held by Aetna Inc. affiliates will be
voted with respect to the Proposal in the same proportion as shares held by
other shareholders of that Fund.
The Proposal relates to all of the Funds but will be voted upon
separately by the shareholders of each Fund. If the shareholders of one or more
of the Funds do not approve the Proposal but the shareholders of the other Funds
approve the Proposal, the Plan of Liquidation, and the related proposed
amendments to the charter of the Company, as set forth in Articles of Amendment,
will apply only to those Funds whose shareholders have approved the Proposal.
Conforming changes will then be made to the Plan of Liquidation and Articles of
Amendment, described below.
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. Proxy votes may be revoked by written notice to Aeltus prior to the
Special Meeting or by attending the Meeting in person and indicating that you
want to vote your shares in person.
The appointed proxies will vote in their discretion on any other
business as may properly come before the Special Meeting or any adjournments or
postponements thereof. Additional matters would only include matters that were
not anticipated as of the date of this Proxy Statement.
MATTER TO BE ACTED UPON
PROPOSAL TO CONSIDER AND VOTE ON A PLAN
OF LIQUIDATION FOR EACH FUND AND, IN CONNECTION THEREWITH,
PROPOSED AMENDMENTS TO THE CHARTER OF THE COMPANY,
AS SET FORTH IN ARTICLES
OF AMENDMENT
The Company's Board, including the Directors who are not "interested
persons" of the Company, as defined by the Investment Company Act of 1940, as
amended (the "Investment Company Act"), have approved, and recommend that the
shareholders of each Fund approve, a Plan of Liquidation for the Fund, and
proposed amendments to the charter of the Company (the "Charter") in connection
with the Plan of Liquidation, as set forth in Articles of Amendment appended to
the Plan of Liquidation as an exhibit (the "Articles of Amendment"). The
shareholders of each Fund will vote separately on this Proposal with respect to
their Fund.
Background
Aetna High Yield Fund ("High Yield Fund") and Aetna Real Estate
Securities Fund ("Real Estate Fund") commenced operations on February 2, 1998,
and Aetna Index Plus Bond Fund ("Index Plus Bond Fund") and Aetna Mid Cap Fund
("Mid Cap Fund") commenced operations on February 4, 1998, each as a series of
the Company. The following table sets forth the level of each Fund's net assets
as of October 31, 1999, the date of each Fund's most recent fiscal year end.
Net Assets
As of October 31, 1999
High Yield Fund $9,519,185
Mid Cap Fund $6,116,681
Index Plus Bond Fund $15,416,514
Real Estate Fund $4,379,530
High Yield Fund has sought high current income and growth of capital
primarily through investment in a diversified portfolio of fixed-income
securities rated below investment grade. Mid Cap Fund has sought growth of
capital primarily through investment in a diversified portfolio of common stocks
and securities convertible into common stocks of companies having medium market
capitalizations. Index Plus Bond Fund's objective has been maximum total return,
consistent with preservation of capital, through investment in a diversified
portfolio of fixed-income securities chosen to substantially replicate the
characteristics of the Lehman Brothers Aggregate Bond Index. Real Estate Fund's
objective has been maximum total return primarily through investment in a
diversified portfolio of equity securities of real estate companies, the
majority of which are real estate investment trusts (REITs).
The Funds have been slow to attract assets. The Funds' marketing
efforts, as well as Aeltus' commitment to limit Fund expenses, have been
unsuccessful in significantly increasing the size of the Funds. Since each
Fund's inception, Aeltus has waived its fees and reimbursed the Fund for a
significant portion of the Fund's operating expenses.
For the most recent fiscal year, each Fund's ratios of operating
expenses were:
Ratio of Net Expenses Ratio of Expenses to
to Average Net Assets Average Net Assets
Before Reimbursement
and Waiver
Aetna High Yield Fund
Class A 1.20% 2.23%
Class B 1.95%* 2.98%*
Class C 1.95% 2.98%
Class I 0.95% 1.98%
Aetna Mid Cap Fund
Class A 1.40% 2.97%
Class B 2.15%* 3.72%*
Class C 2.15% 3.72%
Class I 1.15% 2.72%
Aetna Index Plus Bond Fund
Class A 0.85% 1.48%
Class B 1.60%* 2.23%*
Class C 1.35% 1.98%
Class I 0.60% 1.23%
Aetna Real Estate Securities Fund
Class A 1.55% 3.65%
Class B 2.30%* 4.40%*
Class C 2.30% 4.40%
Class I 1.30% 3.40%
* Annualized; period from March 1, 1999 (date of initial public offering) to
October 31, 1999. Each Fund's expense ratios for the current fiscal year are
expected to be substantially the same as the Fund's ratios for the previous
year.
The Funds have not been able to sell a sufficient number of shares to
lower their operating expense ratios by spreading expenses over a larger asset
base and, consequently, have had to rely on Aeltus' contractual commitment to
limit the Funds' expenses. These contractual expense limitations expire on
December 31, 2000. In the event that the Proposal is not approved with respect
to a Fund, Aeltus has indicated to the Board that it may not be willing to
continue to waive fees and bear expenses of the Fund to maintain the Fund's
expenses at current levels beyond December 31, 2000.
At a March 1, 2000 meeting, the Board reviewed a number of factors in
consideration of the proposal to liquidate the Funds, including the amount of
each Fund's net assets, each Fund's expense ratio (with and without the waiver
and reimbursement of expenses by Aeltus), and the likelihood that additional
sales of each Fund's shares could enable it to attain an asset level that would
sustain an acceptable expense ratio. The Board also reviewed the expenses that
had been assumed by Aeltus during the life of each Fund, the efforts and
expenses of the Company's principal underwriter to distribute shares of the
Fund, and the effect of the operating expenses on the historic and anticipated
returns of shareholders. The Board considered that Aeltus had not been able to
collect or retain any significant advisory or administrative fees during the
life of each Fund, that there appears to be little prospect that this will
change in the near future, and that Aeltus is unwilling to subsidize
indefinitely the operation of the Funds.
The Board determined that an increase in Fund expenses attributable to
the likely discontinuance or reduction of the fee waiver and reimbursement of
Fund expenses in the future would adversely affect each Fund's performance.
Moreover, the availability of larger funds with similar objectives that are
better able to operate on an efficient basis and provide higher returns to
shareholders make it unlikely that the Funds could realize significant increases
in asset sizes and achieve economies of scale. The Board concluded, therefore,
that it would be in the interests of each Fund's shareholders to liquidate the
Fund promptly in accordance with a Plan of Liquidation (the "Plan").
Aeltus and the Board have regularly reviewed developments and
considered alternatives regarding the Funds, including whether a merger with or
transfer of assets to another fund would be possible, and if such alternatives
would produce desirable results for shareholders. After reviewing current market
conditions, the relatively small size of each Fund and the absence of
appropriate merger candidates (i.e., funds with similar investment objectives),
Aeltus recommended and the Board agreed that liquidating the Funds is preferable
to effectuating a merger or transfer of assets.
In approving the Plan for each Fund, the Board received assurances
from Aeltus that Aeltus or one of its affiliates would reimburse to those
shareholders receiving a liquidating distribution under the Plan any front-end
sales charges paid by the Fund's Class A shareholders. In addition, the Board
approved the waiver of the contingent deferred sales charge ("CDSC") normally
imposed upon Class B and Class C shareholders and, in certain instances, upon
Class A shareholders, with respect to shareholders of those classes receiving
liquidating distributions under the Plan. THE REIMBURSEMENT OF ANY FRONT-END
SALES CHARGE AND THE WAIVER OF ANY APPLICABLE CDSC APPLY ONLY TO FUND
SHAREHOLDERS RECEIVING A LIQUIDATING DISTRIBUTION UNDER THE PLAN AND NOT TO
SHAREHOLDERS WHO REDEEM THEIR FUND SHARES OR EXCHANGE INTO ANOTHER AETNA FUND
PRIOR TO A FUND'S LIQUIDATION.
<PAGE>
Plan of Liquidation
The Board has approved a Plan of Liquidation for the Funds, which is
set forth in Exhibit 1 to this proxy statement and summarized below.
The Plan will become effective with respect to a Fund on the date of
its adoption and approval by the affirmative vote of a majority of all votes
entitled to be cast on the Proposal by the holders of the outstanding voting
shares of the Fund (the "Effective Date"). Following this approval, the
applicable Fund will cease to invest its assets in accordance with its
investment objective and, in an orderly manner, will sell all its portfolio
securities in order to convert the Fund's assets to cash. The Fund will then
make a cash distribution to each shareholder based on the shareholder's
proportionate share of the Fund's net assets, after payment to (or reservation
of assets for the payment to) all creditors of the Fund, in redemption and
cancellation of the outstanding shares of the Fund. This distribution will be
made as soon as possible after the Effective Date of the Plan with respect to a
Fund, but in any event within thirty days thereafter. All shareholders of the
Fund will receive information concerning the sources of the liquidating
distribution. (See Section 7 of the Plan.)
The date on which a Fund makes the liquidating distribution of its
assets to shareholders and redeems and cancels its outstanding shares will be
known as its "Liquidation Date". (See Section 2 of the Plan). As of the close of
business on the Liquidation Date, the Fund will cease its business as an
investment company and will not engage in any business activities except for the
purposes of winding up its business and affairs.
The proportionate interest of each shareholder in the assets of a Fund
shall be fixed on the basis of that shareholder's respective holdings as of the
close of business on the Liquidation Date. On such date the books of the
applicable Fund will be closed. (See Section 4 of the Plan.)
Aeltus will bear all expenses incurred in connection with carrying out
the Plan that the Fund normally would not incur if it were to continue in
business, including legal and auditing expenses and printing, mailing,
soliciting and miscellaneous expenses arising from the liquidation. Normal
operating expenses of each Fund will be borne by the respective Fund to the same
extent such expenses would have been incurred absent a liquidation. Any expenses
and liabilities attributed to a Fund subsequent to the mailing of the
liquidating distribution will be borne by Aeltus. (See Section 8 of the Plan.)
Under the Plan, the outstanding shares of each Fund will be cancelled
and reclassified, as more fully described below (see Articles of Amendment,
attached to the Plan as Exhibit A). The Plan provides that the Board shall have
the authority to authorize such variations from or amendments to the provisions
of the Plan as may be necessary or appropriate to marshal the assets of each
Fund and to effect the complete liquidation and termination of the existence of
each Fund and the purposes to be accomplished by the Plan. (See Section 10 of
the Plan.)
Prior to the Liquidation Date, shareholders may redeem their Fund
shares or exchange them for shares of another series of the Company in
accordance with the procedures set forth in the current prospectus and
retirement plan, trust agreement or custodial account agreement, as applicable,
without waiting for the Fund to take any action respecting its liquidation.
In the case of shareholders that are retirement plans, the
determination of whether to redeem or exchange Fund shares held by the
retirement plan prior to the Fund's liquidation and/or how liquidating cash
distributions are to be reinvested must be communicated by the appropriate plan
fiduciary in accordance with the terms of the applicable retirement plan, trust
agreement or custodial account agreement. RETIREMENT PLAN PARTICIPANTS ARE URGED
TO PROVIDE ALTERNATIVE ALLOCATION INSTRUCTIONS WITH RESPECT TO ASSETS INVESTED
IN THE FUNDS. Those retirement plan participants who do not provide instructions
prior to the Liquidation Date will have their proceeds distributed to their
plan's trustee or custodian, which may be obligated to reinvest the proceeds of
the distribution in accordance with any procedures outlined in their retirement
plan, trust agreement or custodial account agreement. For certain retirement
plan arrangements, participants must provide their plan fiduciary with explicit
instruction on how to reinvest distributions. You should refer to your
retirement plan documents or custodial account agreement, where applicable, for
information on the reinvestment of distributions.
Articles of Amendment. In connection with the Plan, and as described
therein, the Company's Charter is proposed to be amended, as set forth in the
Articles of Amendment, as follows: (1) each unissued share of each Fund would be
reclassified as, and would become, one unissued, unclassified share of capital
stock of the Company; (2) each issued and outstanding share of each Fund would
be cancelled and would be reclassified as one unissued, unclassified share of
capital stock of the Company; and (3) the provisions of the Charter designating
and classifying shares of stock of the Company into shares of each Fund and
setting forth the attributes of such shares, would be deleted. A vote in favor
of the Proposal will constitute a vote in favor of the proposed amendments to
the Company's Charter as well as the Plan of Liquidation.
Federal Income Tax Consequences
The following summary provides general information regarding the
federal income tax consequences to each Fund resulting from its liquidation and
to its shareholders on their receipt of liquidating distributions from the Fund.
This summary generally applies to shareholders who are individual U.S. citizens
(other than dealers in securities) and does not address the particular federal
income tax consequences that may apply to shareholders that are, for example,
corporations, trusts, estates, tax-exempt organizations, or non-resident aliens;
nor does this summary address state or local tax consequences. The tax
consequences discussed herein may affect shareholders differently, depending on
their particular tax situations unrelated to the receipt of liquidating
distributions, and accordingly this summary is not a substitute for careful tax
planning. Shareholders may wish to consult their personal tax advisers
concerning their particular tax situations and the impact thereon of receiving
the liquidating distribution as discussed herein, including any state and local
tax consequences.
As discussed above, if the Plan is approved by its shareholders, each
Fund will sell its assets and distribute the proceeds to the shareholders of
record. Each Fund anticipates that it will retain its qualification for
treatment as a regulated investment company under the Internal Revenue Code of
1986, as amended ("the Code"), during the liquidation period and thus will not
be taxed on any of its net gain realized from the sale of its assets.
Retirement Plan Participants and IRA Account Holders. Normally, a
shareholder's receipt of a liquidating distribution would constitute a taxable
event, as described more fully below; however, assets of retirement plans, such
as plans that satisfy the requirements of section 401(a) or section 403(b)(7) of
the Code ("Retirement Plans"), and assets held in Individual Retirement Accounts
("IRA Accounts"), generally are exempt from federal income tax until they are
distributed to Retirement Plan participants or IRA Account holders,
respectively. Liquidating distributions made in redemption and cancellation of
fund shares held by any such Retirement Plan or IRA Account will not be taxable
for federal income tax purposes as long as the proceeds received continue to be
held under the Retirement Plan by the Retirement Plan's trustee or custodian or
by the IRA custodian. The proceeds from the liquidating distribution would be
taxable immediately, however, to the extent they are distributed from the
Retirement Plan to a Retirement Plan participant, or from the IRA custodian to
the IRA Account holder, unless the participant or IRA Account holder rolls the
distribution over in accordance with applicable law into an eligible Retirement
Plan or IRA Account.
Non-Retirement Plan Shareholders. Shareholders who receive a
liquidating distribution in redemption and cancellation of their Fund shares
will be treated as having sold those shares for the amount of the liquidating
distribution. A shareholder will recognize gain or loss on that sale measured by
the difference between his, her, or its adjusted tax basis for the shares and
the liquidating distribution. If the shares are held as capital assets, the gain
or loss will be characterized as capital gain or loss. Capital gain or loss
attributable to shares held for more than one year will constitute long-term
capital gain or loss, while capital gain or loss attributable to shares held for
one year or less will be short-term. Shareholders also should be aware that each
Fund is required to withhold 31% of liquidating distributions payable to any
individuals and certain other non-corporate shareholders who do not provide the
Fund with a correct taxpayer identification number.
Failure to Approve the Proposal with Respect to a Fund
If a Fund's shareholders do not approve the Plan, that Fund will
continue to exist as a series of the Company in accordance with its stated
investment objective and policies. The Board would then meet to consider what,
if any, steps to take in the interests of shareholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF EACH FUND VOTE
FOR THE APPROVAL OF THE PLAN OF LIQUIDATION AND, IN CONNECTION THEREWITH,
PROPOSED AMENDMENTS TO THE CHARTER OF THE COMPANY, AS SET FORTH IN
ARTICLES OF AMENDMENT.
<PAGE>
GENERAL INFORMATION
Investment Adviser, Principal Underwriter and Administrator
The investment adviser and administrator to each Fund is Aeltus
Investment Management, Inc., 10 State House Square, Hartford, Connecticut
06103-3602. Aeltus is a part of the Aetna organization, and is an indirect
wholly-owned subsidiary of Aetna Inc., a health care and financial services
company with stock listed for trading on the New York Stock Exchange. The
Company's principal underwriter is Aeltus Capital, Inc., 10 State House Square,
Hartford, Connecticut 06103-3602, a wholly-owned subsidiary of Aeltus and an
indirect wholly-owned subsidiary of Aetna Inc.
OTHER BUSINESS
The management of each Fund knows of no other business to be presented
at the Special Meeting other than the matter set forth in this Proxy Statement.
If any other business properly comes before the Special Meeting, the proxies
will exercise their best judgment in deciding how to vote on such matters.
SHAREHOLDER PROPOSALS
The Company's Charter and By-laws provide that the Funds need not hold
annual shareholder meetings, except as required by the Investment Company Act.
Therefore, in the event that the Proposal is not approved by a Fund's
shareholders, it is probable that no annual meeting of shareholders will be held
in 2000 or in subsequent years until so required. For those years in which
annual or special shareholder meetings are held, proposals which shareholders of
a Fund intend to present for inclusion in the proxy materials with respect to
the meeting of shareholders must be received by the Fund within a reasonable
period of time before the solicitation is made. The timely submission of a
proposal does not guarantee its inclusion.
Please complete the enclosed proxy card, as applicable, and return it
promptly in the enclosed self-addressed, postage-paid envelope. You may revoke
your proxy at any time prior to the Special Meeting by written notice to Aeltus
or by submitting a proxy card bearing a later date.
By Order of the Board of Directors,
Amy R. Doberman
Secretary
<PAGE>
EXHIBIT 1
AETNA SERIES FUND, INC.
Aetna High Yield Fund
Aetna Mid Cap Fund
Aetna Index Plus Bond Fund
Aetna Real Estate Securities Fund
PLAN OF LIQUIDATION
This Plan of Liquidation ("Plan") is made by Aetna Series Fund, Inc.
(the "Company"), a corporation organized and existing under the laws of the
State of Maryland, with respect to Aetna High Yield Fund, Aetna Mid Cap Fund,
Aetna Index Plus Bond Fund and Aetna Real Estate Securities Fund (each a
"Fund"), each a separate portfolio or series of stock, and a segregated
portfolio of assets of the Company. Each Fund is a series of an investment
company registered under the Investment Company Act of 1940, as amended (the
"Investment Company Act"). The Plan is intended to accomplish the complete
liquidation of each Fund and the redemption and cancellation of the outstanding
shares thereof, in conformity with all provisions of Maryland law and the
Company's Charter and By-laws.
WHEREAS, due to the small size of the Funds, their high expense ratios
absent fee waivers and expense reimbursements, the investment adviser's
unwillingness to maintain indefinitely the Funds' expenses at current levels,
and the relative lack of investor interest in the Funds, the Company's Board of
Directors, on behalf of each Fund, has determined that it is in the best
interests of the Fund and its shareholders to liquidate the Fund and to redeem
and cancel the outstanding shares thereof; and
WHEREAS, at a meeting of the Board of Directors of the Company on March
1, 2000, the Board of Directors considered and adopted this Plan as the method
of liquidating each Fund and directed that this Plan be submitted to
shareholders of each Fund for approval in accordance with applicable provisions
of Maryland law and the Company's Charter and By-laws, including, but not
limited to, Article Second, Section Seventh, Paragraph (e) of the Company's
Articles of Amendment and Restatement filed with the State Department of
Assessments and Taxation of Maryland (the "Department") on September 2, 1997;
NOW THEREFORE, the liquidation of each Fund shall be carried out in the
manner hereinafter set forth:
1. Effective Date of Plan. The Plan shall be and become effective with respect
to a Fund only upon the adoption and approval of the Plan, at a meeting of
shareholders called for the purpose of voting upon the Plan, by the affirmative
vote of the holders of a majority of the outstanding voting shares of the Fund.
The date of such adoption and approval of the Plan by shareholders of a Fund is
hereinafter called the "Effective Date" with respect to such Fund.
<PAGE>
2. Liquidation Date. The date on which a Fund makes the liquidating distribution
to shareholders, described in Section 7 below, and redeems and cancels its
outstanding shares shall be known as the "Liquidation Date" with respect to such
Fund.
3. Cessation of Business. As of the close of business on the Liquidation Date
with respect to a Fund, the Fund shall cease its business as an investment
company and shall not engage in any business activities except for the purposes
of winding up its business and affairs.
4. Restriction of Transfer and Redemption of Shares. The proportionate interests
of shareholders in the assets of a Fund shall be fixed on the basis of their
respective shareholdings at the close of business on the Liquidation Date. On
such date, the books of the applicable Fund shall be closed. Thereafter, unless
the books are reopened because the Plan cannot be carried into effect under the
laws of the State of Maryland or otherwise, the shareholders' respective
interests in the applicable Fund's assets shall not be transferable or
redeemable.
5. Liquidation of Assets. As soon as is reasonable and practicable after the
Effective Date applicable to a Fund, all portfolio securities, and other assets,
if any, of each Fund shall be converted to cash and cash equivalents.
6. Payment of Debts. As soon as practicable after the Effective Date, the Fund
shall determine and pay, or set aside in cash equivalents, the amount of all
known or reasonably ascertainable liabilities of the Fund incurred or expected
to be incurred prior to the date of the liquidating distribution provided for in
Section 7 below, subject to Section 8 below.
7. Liquidating Distribution. As soon as possible after the Effective Date of the
Plan applicable to a Fund, but in no event later than 30 days after the
Effective Date, the Fund shall deliver the following to each shareholder by
mail, in complete redemption and cancellation of the shares of the Fund held by
such shareholder: (a) a liquidating distribution equal to the shareholder's
proportionate interest in the net assets of the Fund as of the close of business
on the Liquidation Date, and (b) information concerning the sources of the
liquidating distribution.
8. Management and Expenses of a Fund Subsequent to the Liquidating Distribution.
The Funds' investment adviser, Aeltus Investment Management, Inc. ("Aeltus"),
shall bear all expenses incurred in connection with carrying out this Plan with
respect to each Fund including, but not limited to, all printing, legal and
accounting fees and the expenses of any reports to or meeting of shareholders.
Any expenses and liabilities attributed to a Fund subsequent to the mailing of
the liquidating distribution will also be borne by Aeltus.
9. Power of Board of Directors. The Board of Directors and, subject to the
approval of the Board, the officers shall have authority to do or authorize any
or all acts and things as provided for in the Plan and any and all such further
acts and things as they may consider necessary or desirable to carry out the
purposes of the Plan, including the execution and filing of all certificates,
documents, information returns, tax returns and other papers which may be
necessary or appropriate to implement the Plan or which may be required by the
provisions of the Investment Company Act or any other applicable laws. The
death, resignation or disability of any Director or any officer of the Company
shall not impair the authority of the surviving or remaining Directors or
officers to exercise any of the powers provided for in the Plan.
10. Amendment of Plan. The Board shall have the authority to authorize such
variations from or amendments to the provisions of the Plan as may be necessary
or appropriate to effect the marshalling of Fund assets and the complete
liquidation and termination of the existence of a Fund, and the distribution of
the Fund's net assets to shareholders in redemption and cancellation of the
outstanding shares of the Fund, in accordance with the laws of the State of
Maryland and the purposes to be accomplished by the Plan.
11. Failure to Obtain Approval on Behalf of All the Funds. In the event that
shareholders of a Fund do not approve this Plan with respect to such Fund, the
Plan shall not apply to that Fund.
12. Filings with the State of Maryland. In connection with the Plan and in
furtherance thereof, the Charter of the Company as currently in effect will be
amended substantially as set forth in Articles of Amendment attached hereto as
Exhibit A (the "Articles of Amendment") in order to provide for, among other
things, the liquidation of the assets of each Fund, the distribution of the
proceeds therefrom to the shareholders of the Fund and the cancellation of the
outstanding shares of the Fund. The adoption and approval of the Plan by the
shareholders of a Fund, by the affirmative vote of a majority of the outstanding
voting securities of the Fund, shall constitute adoption and approval by such
shareholders of the Articles of Amendment with respect to the Fund. In the event
the shareholders of a Fund do not approve this Plan with respect to such Fund,
the Articles of Amendment shall not apply to that Fund and the form thereof
shall be adjusted accordingly. The Articles of Amendment pertaining to the Funds
whose shareholders have approved the Plan shall be filed with the Department on,
or as expeditiously as possible after, the Effective Date of the Plan with
respect to such Funds.
AETNA SERIES FUND, INC.
On behalf of Aetna High Yield Fund,
Aetna Mid Cap Fund, Aetna Index Plus Bond Fund
and Aetna Real Estate Securities Fund
By: ______________________
J. Scott Fox, President
Accepted:
Aeltus Investment Management, Inc.
By: ______________________
Name:
Title:
<PAGE>
EXHIBIT A
AETNA SERIES FUND, INC.
ARTICLES OF AMENDMENT
AETNA SERIES FUND, INC., a Maryland corporation registered as an open-end
investment company under the Investment Company Act of 1940 and having its
principal office in the State of Maryland in Baltimore City, Maryland
(hereinafter referred to as the "Corporation") hereby certifies to the State
Department of Assessments and Taxation of Maryland (the "Department") that:
FIRST: In connection with and in furtherance of a plan of liquidation
of Aetna Real Estate Securities Fund, Aetna High Yield Fund, Aetna Mid Cap Fund
and Aetna Index Plus Bond Fund, each a separate fund, and Series of stock of the
Corporation (each a "Liquidating Series"), the Corporation hereby amends its
Charter as currently in effect (the "Charter") to include the following:
A. As of the Effective Date (as hereinafter defined):
(i) each unissued share of each Liquidating Series of
the Corporation, par value $0.01 per share, is
hereby reclassified into, and shall become, one
unissued unclassified share of capital stock of the
Corporation; and
(ii) the Corporation shall proceed to sell and
liquidate all assets belonging to each Liquidating
Series and to pay from the proceeds thereof all
liabilities belonging to such Liquidating Series.
After payment of the liabilities belonging to such
Liquidating Series, the remaining proceeds from
the sale and liquidation of the assets belonging
to such Liquidating Series shall be distributed as
a liquidating distribution, as soon as practicable
following the Effective Date, but in any event
within thirty days thereafter, among the holders
of the shares of such Liquidating Series. The date
that the liquidating distribution is paid shall be
the "Liquidation Date". Holders of the shares of
the Liquidating Series shall receive a liquidating
distribution in proportion to the number of such
shares held by them and recorded on the books of
the Corporation as of the close of business on the
Liquidation Date.
B. Upon payment by the Corporation of the liquidating
distribution on the Liquidation Date to the holders of
shares of each Liquidating Series, each issued and
outstanding share of such Liquidating Series shall be
canceled and shall cease to be issued and outstanding,
and each such canceled share shall be reclassified
into, and shall become, one unissued, unclassified
share of capital stock of the Corporation.
<PAGE>
C. Upon cancellation of the issued and outstanding shares
of each Liquidating Series, and the reclassification of
such canceled shares and all unissued shares of each
such Liquidating Series to unissued, unclassified
shares of capital stock of the Corporation, the
provisions of the Charter designating and classifying
shares of stock of the Corporation into shares of each
Liquidating Series, establishing and describing the
preferences, rights, voting powers, restrictions,
limitations as to dividends, qualifications and terms
and conditions of redemption of shares of each
Liquidating Series and the description, and terms and
conditions, of various classes of shares of each
Liquidating Series, shall be deleted from the Charter
of the Corporation. Such deletions from the Charter of
the Corporation shall include only provisions of the
Charter as they relate to shares of each Liquidating
Series, and to the extent which any provisions of the
Charter of the Corporation relate both to shares of a
Liquidating Series and one or more other Series of
stock of the Corporation, such provisions shall remain
in the Charter but shall be deemed to apply only to
such one or more other Series of stock of the
Corporation.
SECOND: The amendments to the Charter of the Corporation herein set
forth were duly advised by the Board of Directors of the Corporation and
approved by the stockholders entitled to vote thereon, as required by the
Charter and By-laws of the Corporation and applicable law.
THIRD: The amendments set forth herein do not increase the authorized
capital stock of the Corporation.
FOURTH: The amendments set forth herein shall become effective as of
the close of business on the date (the "Effective Date") which is the later of:
(i) ________________, 2000; and (ii) the date on which these Articles of
Amendment, having been duly advised, approved, signed, acknowledged and sealed
by the Corporation as required by the laws of the State of Maryland, and not
having been abandoned prior to the Liquidation Date by majority vote of the
entire Board of Directors of the Corporation, are filed for record with the
Department.
IN WITNESS WHEREOF, the Corporation has caused these Articles of
Amendment to be executed in its name and on its behalf by its undersigned
President and witnessed or attested to by its undersigned Secretary as of the
____ day of ________________, 2000 and its undersigned President acknowledges
that these Articles of Amendment are the act and deed of the Corporation and,
under penalties of perjury, that the matters and facts set forth herein are true
in all material respects to the best of his knowledge, information and belief.
AETNA SERIES FUND, INC.
By: _______________________________
J. Scott Fox, President
ATTEST:
By: _______________________________
Amy R. Doberman, Secretary
<PAGE>
Appendix 1
Beneficial Owners of More than 5% of a Fund's Shares
<TABLE>
<S> <C> <C> <C>
Amount and
Fund Name Name and Address of Nature of
And Class Beneficial Owner Beneficial Ownership Percent of Class
- --------- ---------------- -------------------- ----------------
Aetna High Yield Fund
Class A
Class B
Class C
Class I
Aetna Mid Cap Fund
Class A
Class B
Class C
Class I
Aetna Index Plus Bond Fund
Class A
Class B
Class C
Class I
Aetna Real Estate Securities Fund
Class A
Class B
Class C
Class I
</TABLE>
<PAGE>
Appendix 2
Fund Shares Owned by Directors*
Amount and
Nature of
Fund Name Name and Address of Beneficial Ownership
And Class Beneficial Owner Percent of Class
Aetna High Yield Fund
Class A
Class B
Class C
Class I
Aetna Mid Cap Fund
Class A
Class B
Class C
Class I
Aetna Index Plus Bond Fund
Class A
Class B
Class C
Class I
Aetna Real Estate Securities Fund
Class A
Class B
Class C
Class I
* AS OF THE RECORD DATE, THE COMPANY'S OFFICERS AND DIRECTORS, BOTH
INDIVIDUALLY AND AS A GROUP, OWNED LESS THAN 1% OF THE OUTSTANDING
SHARES OF ANY CLASS OF EACH FUND.
<PAGE>
PRELIMINARY COPIES
AETNA SERIES FUND, INC.
[Aetna High Yield Fund]
[Aetna Mid Cap Fund]
[Aetna Index Plus Bond Fund]
[Aetna Real Estate Securities Fund]
THIS PROXY CARD IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF AETNA SERIES
FUND, INC.
THIS PROXY CARD, WHEN PROPERLY EXECUTED AND RETURNED, WILL BE VOTED IN THE
MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY
CARD WILL BE VOTED FOR APPROVAL OF THE PROPOSAL.
Dated: __________________, 2000
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______________________
Please refer to the Proxy Statement for a discussion of these matters. This
proxy card is solicited in connection with the special meeting of the
shareholders of [Aetna High Yield Fund/Aetna Mid Cap Fund/Aetna Index Plus Bond
Fund/Aetna Real Estate Securities Fund] to be held at 10:00 a.m., Eastern Time,
on July 28, 2000, and at any adjournment thereof. THIS PROXY CARD, WHEN PROPERLY
EXECUTED, DIRECTS J. SCOTT FOX AND AMY R. DOBERMAN TO VOTE THE SHARES LISTED ON
THE FRONT OF THIS CARD AS DIRECTED AND REVOKES ALL PRIOR PROXY CARDS.
Please vote 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]
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE PROPOSAL.
Proposal: To approve the Plan of Liquidation for the Fund and, in connection
therewith, proposed amendments to the Charter of Aetna Series Fund, Inc., as set
forth in Articles of Amendment.
[ ] 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.
