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Home My WebLink AboutAetna Life Insurance & Annuity Company; 1981-06-01;h ,- . * ,. Btna Life Insurance and Annuity Cornpa Home Office: 151 FARMINGTON AVE. HARTFORD, CONNECTICUT 061 56 (203) 273-0123 Herein called Ktna -_ - 4 ..- Agrees to pay benefits as stated in this Contract. SP E C IFIC AT1 ONS i -_ * -- LAN IWNER ,~ -ROUP, CONTRACT NO. FFECTIVE DATE C' __ 4 'HIS CONTRACT IS DELIVERED IN LND IS SUBJECT TO THE LAWS OF THAT JURISDICTJON CALIFORNIA DETAILS OF VARIABLE FEATURES OF THIS CONTRACT ARE IN THE DEP( RESERVE, AND SURRENDER PROVISIONS, AND ANNUITY PROVISIONS, RIGHT TO CANCEL The Owner may cancel this Contract within 10 days of receiving it, by send written notice to Etna at the above address or to the agent from whom it purchased. Xtna will return all payments made for this Contract within 7 days it receives the notice of cancellation and this Contract. This page, and the following pages, and the application, make up the e Signed at Hartford, Connecticut on the Effective Date. - k75L-42 &A G President GROUP VARIABLE OR FIXED ANNUITY OR COMBINATION CONTRACT NON-PARTICIPATING ALL PAYMENTS AND VALUES PROVIDED BY THIS CONTRACT, WHEN BASED ON INVESTMENT EXPERIENCE OF A SEPARATE ACCOUN'I ARE VARIABLE AND ARE NOT GUARANTEED AS TO FIXED DOLLAR AMOL (39168) CAT 02881' PRINTED IN SPECIFICATIONS PLAN OWNER GROUP CONTRACT NO. EFFECTIVE DATE THIS CONTRACT IS DELIVERED IN AND IS SUBJECT TO THE LAWS OF THAT JURISDICTION CALIFORNIA Deduction from Deposit(s) - The amount of the Net Deposit(s) applied will be deposit(s) received minus a deduction for premium taxes, if any then deducted ( Deposit, Reserve, and Surrender Provisions of this Contract). Deductions From The Separate Account And The Funds - Total deductions eq 1.5% on an annual basis. Once Annuity payments begin, Btna must earn a gr return on the assets of the Separate Account of: (a) 5% on an annual basis if assumed net return rate of 3.5% is chosen; or (b) 6.5% on an annual basis if assumed net return rate of 5% is chosen; in order that the dollar amount of Variable Annuity payments will not decrease. GID-CDA-HO 2 1 .. COVER SHEET This Contract is-a Ikgal contract between the Owner and Rtna. READ THIS CONTRACT CAREFULLY. This cover sheet is only a brief outline of som important features of this Contract. This cover sheet is not the insurance contract. C actual terms of this Contract will control. This Contract sets forth, in detail, all of th and obligations of both you and Etna. IT IS THEREFORE IMPORTANT THAT YO1 THIS CONTRACT CAREFULLY. TABLE OF CONTENTS GENERAL DEFINITIONS 1. Participant ............................................................. 2. Annuitant .............................................................. 3. Annuity ................................................................ 4. Fixed Annuity ......................................................... 5. Variable Annuity ....................................................... 6. General Account ........................................................ 7. Separate Accounts ...................................................... 8. Fund(s) ................................................................ 9. Valuation Period ........................................................ GENERAL PROVISIONS 1. Contract ............................................................... 2. Incontestability ......................................................... 3. Control of Contract and Individual Accounts ............................. 4. Change of Contract by Rtna ............................................ 5. Individual Certificates .................................................. 6. Designation of Beneficiary .............................................. 7. Misstatements and Adjustments ......................................... 8. State Laws ............................................................. 9. Grace Period ........................................................... 10. Non-Participating Contract .............................................. 1. Net Deposit ........................................................... 2. Individual Accounts .................................................... 3. Guaranteed Interest Rate - General Account ............................ 4. Record Units - Separate Account ....................................... 5. Investment Increment Factors - Separate Account ....................... 6. Record Unit Value - Separate Account 7. Individual Account Reserve ............................................. 8. Active Life Fund ....................................................... 9. Experience Credits ...................................................... 10. Transfer of Individual Account Reserves ................................. 11. Notice to the Owner .................................................... 13. Surrender Value ........................................................ 1. Choices to be Made .................................................... DEPOSIT, RESERVE, AND SURRENDER PROVISIONS ................................. 12. Sum Payable at Death (Before Annuity Payments Start) ................... ANNUITY PROVISIONS . 2. Fund(s) Annuity Units - Separate Account. ............................. 3. Fund(s) Annuity Unit Value - Separate Account.. ....................... 4. Annuity Options ....................................................... 5. Other Terms of 'Annuity Options ........................................ 6. Death of AnnuitanVBeneficiary .......................................... GID- CD A-H 0 3 . GENERAL DEFINITIONS 1. PARTICIPANT - A person who participates in the Plan and for whom ben being accrued under this Contract. ANNUITANT - A Participant or beneficiary on whose life an Annuity h effected under this Contract. ANNUITY - Payment of an income: (a) for the life of one or two people; (b) for a stated period; (c) for some mix of (a) and (b); or (d) until there are no funds left. FIXED ANNUITY - An Annuity of a fixed dollar amount paid from the Account. VARIABLE ANNUITY - An Annuity of a varying dollar amount paid from the 1 Account. GENERAL ACCOUNT - The Account which holds the assets of Ktna, other th assets of Etna in the Separate Accounts. Reserves for a Fixed Annuity are he1 General Account. SEPARATE ACCOUNTS - Accounts set up by Etna under the Connecticut Ir Laws. Assets for this class of variable contracts are set apart from other assets ( Reserves for a Variable Annuity are held in a Separate Account and invested in 5 Fund(s). FUND(S) - The open-end management investment companies (mutual fund tered under the Investment Company Act of 1940. They are: (a) Etna Variable Fund, Inc. (Variable Fund); (b) Etna Variable Encore Fund, Inc. (Encore Fund); (c) Etna Income Shares, Inc. (Income Fund); and (d) Other funds (if any) which Etna may allow. VALUATION PERIOD - The period of time from the end of one business day to of the next business day. 2. 3. 4. 5. 6. 7. 8. 9. GID-CDA-HO ' 4 GENERAL PROVISIONS 1. Contract This Contract may be changed only by an officer of Etna. Any change must be writing. Any choices under this Contract by the Owner, Annuitant or beneficit be in writing. Until receipt of such choices in the Home Office of Atna, Etna x on any previous choices made. Etna will make Annuity payments as and when due. Any other payments will by Etna within 7 days of receipt of the written claim for payment, except as 01 provided in the Surrender Value provision. 2. Incontestability Etna cannot cancel this Contract because of any error of fact on the applic 3. Control of Contract and Individual Accounts All of the benefits and rights granted by this Contract, or allowed by Etna. belor Owner. 4. Change of Contract by Etna Etna may change any of the terms of this Contract. Etna will notify the 0 writing 30 days before the effective date of any such change. Any such change affect the amount or terms of any Annuity which began prior to such change. ( that affect the following provisions of this Contract: (a) Annuity Options; Deposit; (c) Guaranteed Interest Rate; (d) Individual Account Reserve; and (e) Si Value; will only apply to deposits made on behalf of Participants who become under this Contract on or after the effective date of such change. If the Ownei agree to any such change, no new Participants may be covered under this C Etna will continue to accept contributions for the Participants covered un Contract prior to the change. This Contract is subject to change as required by fE state law. 5. Individual Certificates Etna shall issue certificates for each Participant as required by the state in wf Contract is delivered. The certificate will contain a summary of the benefits proT this Contract. Certificates are not a part of this Contract. 6. Designation of Beneficiary The beneficiary for each Participant shall be as named, or later changed, by the If no beneficiary is living at the death of the Participant, payment of any amo will be made to the Owner. GID-CD A-HO 5 * 7. Misstatements and Adjustments If the age or sex of any payee is found to be misstated, the correct facts will bt adjust payments. 8. State Laws This Contract follows the laws of the state in which it is delivered. Any cash, Annuity payments are equal to or greater than the minimum required by su 9. Grace Period This Contract will remain in effect even if deposits are not continued. 10. Non-Participating Contract The Owner will have no right to share in the earnings of Etna. DEPOSIT, RESERVE, AND SURRENDER PROVISIONS 1. Net Deposit The Net Deposit is the actual deposit minus a charge to pay premium taxes, if i rule, Etna will take this charge out of an Individual Account Reserve (see belo annuity payments are to start. But, if Etna determines that it must pay any premium tax at any other time, it may take out the charge at any time. 2. Individual Accounts Etna will maintain Individual Accounts for each Participant. On the basis of tion supplied by the Owner, Etna will credit the Net Deposit(s) to such Acc either: [a) the General Account; (b) the Separate Account where they are invested in Fund[s) as directed by the or (c) a mix of (a) and (b). 3. Guaranteed Interest Rate - General Account On Net Deposit[s) made to the General Account, Etna will add interest daj annual rate no less than: (a) 4% except under the Annuity Provisions; and (b) 3.5% under the Annuity Provisions. Btna may add interest daily at any higher rate. GID-CDA-HO 6 4. Record Units - Separate Account The portion of the Net Deposit applied to the Separate Account Fund(s) will de the number of Record Units. This number is equal to the Net Dcposit(s) divide( Record Unit Value (see below) for the Valuation Period when the Net De received. 5. Investment Increment Factors - Separate Account Investment Increment Factors are those items used to determine a Fund’s ne factor for each Valuation Period. The net return factor(s) are then used to corn Separate Account values and payments. The gross return is equal to: (a) investment income; plus (b) realized and unrealized capital gains; minus (c) realized and unrealized capital losses; minus (d) certain investment expenses; and minus (e) a daily charge at an annual rate of .25% for investment management expe profit. The gross return is divided by the net assets of the Fund at the start of the V Period to compute the gross return rate. A gross return rate may be more or lesi The net return rate is equal to: (a) the gross return rate; plus or minus (b) taxes (or charges to a tax reserve) on the Separate Account; and minus (c) a daily charge at an annual rate of 1.25% for annuity mortality and expeI and profit. A net return rate may be more or less than 0. The net return factor for each Fund is equal to the net return rate plus 1.0 6. Record Unit Value - Separate Account The Record Unit Value for each Separate Account Fund is computed by multipl net return factor for the current Valuation Period by the Record Unit Value previous Period. The dollar value of Record Units, Separate Account Reseri Variable Annuity payments may go up or down due to investment gain or 7. Individual Account Reserve The Individual Account Reserve for each Participant is equal to: (a) Net Deposit(s) credited to the General Acdount (if any); plus (b) General Account interest added by Etna; plus GID-CDA-HO 7 . (c) the value,of Separate Account Record Units (if any); plus (d) any amount due to Experience Credits (see below); minus (e) a charge of $20 on each anniversary of each Individual Account effective d minus (f) any amounts previously surrendered. 8. Active Life Fund The Active Life Fund is equal to the combined Reserves of all Individual A except those Accounts applied to the payment of Annuities. 9. Experience Credits Etna may apply Experience Credits to Individual Accounts in the Active Li under this Contract. Any such credit will be computed as decided by Ktnz 10. Transfer of Individual Account Reserves The Owner may transfer any portion of the Individual Account Reserves from a to any other Fund or to the General Account. Reserves cannot be transferred 1 General Account to any of the Funds. A transfer of Reserves cannot be made M. days of a previous transfer. 11. Notice to the Owner Ktna will notify the Owner each year of: (a) the investments held in the Fund(s) for the Separate Account; and (b) the number of record units; or (c) the number of annuity units; and (d) the value of a unit. Such number or values will be as of a date no more than 60 days before the da notice. 12. Sum Payable at Death (Before Annuity Payments Start) Btna will pay to the beneficiary the Individual Account Reserve if (a) the participant dies before Annuity payments start; and (b) the notice of death is received by Etna. The sum paid will be the Reserve on the date when the notice is receiv beneficiary may choose to apply any sum under Annuity Options (see Provisions). GID-CDA-HO ' 8 1'3. Surrender Value 4 The amount paid by Etna upon the surrender of all or any portion of the Act Fund or Individual Account(s) shall be reduced by a surrender fee. The surrei will be a percentage of the amount surrendered and will vary according to the nu Deposit Cycles completed for the Individual Account(s) being surrendered. The of deposits to be made in a year is chosen by the Owner. A Deposit Cycle is COI when this number of deposits has been made. For each surrender from an In( Account, the fee will be as follows: Number of Deposit Cycles Completed Fee Less than 5 5% 7 or more but less than 9 3% 9 or more 2 Yo 5 or more but less than 7 4 yo In no event, however, will the Fee on a total surrender of an Individual Accouni 9% of the actual deposits made to that Account. If the Active Life Fund invested in the General Account exceeds $500,00( reserves the right to pay out any surrender in equal installments over a perio exceed 60 months. Under certain emergency conditions, Rtna has the right to defer payment surrender value as provided by federal or state law. ANNUITY PROVISIONS I. Choices to be Made The Owner may tell Ktna to pay the Individual Account Reserve (minus any ch; premium taxes) as a premium for an Annuity under Options 2, 3,4, and 5 (see The first Annuity payment must generally be made no later than the first da month following the Annuitant's 75th birthday. The Owner may tell Ktna to II first Annuity payment on the first day of any prior month. When any option is chosen, the Owner or beneficiary choosing the option II Etna if payments are to be made other than monthly. They must also tell Etnz (a) a Fixed Annuity; (b) a Variable Annuity using Variable Fund; (c) a Variable Annuity using Income Fund; or (d) any mix of these. When choosing a Variable Annuity, an assumed net return rate of 5% per year chosen. If not chosen, Ktna will use an assumed net return rate of 3.5% PC GID-CDA-HO 9 2. Fund(s) Annuity Units - Separate Account The amount' of the first Variable Annuity payment will be equal to: [a) the portion of the Individual Account Reserve (minus any charges for p taxes) to be used to pay a Variable Annuity using the Fund(s); times (b) the rate for each $1,000 for the Option chosen. Such amount, or portion, of the payment using a Fund will be divided by the Annuity Unit Value [see below) on the due date of the first payment to detern number of the Fund(s) Annuity Units. Such number of the Fund(s) Annuity Units remains fixed. Each future payment to such number times the Fund(s) Annuity Unit Value on the due date of each p Fund(s) Annuity Unit Value - Separate Account For any Valuation Period the Fund(s) Annuity Unit Value is equal to: [a) the Value for the next previous Period; times (b) the net return factor(s) (see Investment Increment Factors - Separate 1 provisions) for the tenth previous Period; times (c) a factor to reflect the assumed net return rate. The factor for 3.5% per year is .9999058; for 5% per year it is -9998663. The dollar amount of Annuity Units, values, and payments may go up or dowi investment gain or loss. Payments shall not be changed due to mortality or expense results. 3. 4. Annuity Options Option 1 - Payment of Interest on Sum Left With Ktna - This option may only by the beneficiary when the death of the Participant is before Etna has paying an Annuity. A portion or all of the sum due may be held in the General 1 of Etna at interest [see Guaranteed Interest Rate - General Account provisic beneficiary may later tell Rtna to: (a) pay a portion, or all, of the sum held by Etna; or (b) apply a portion, or all, of the sum held by Etna under any of the Annuity below. Option 2 - Payments of a Stated Dollar Amount - An Annuity of a chosen amo be paid until there are no funds left. The payments to be made in a year must bc than $60 for each $1,000 applied to this Option, but cannot exceed an amoun would deplete the funds in less than 3 years. 3 GID-CDA-HO 10 . Where there*is- a right under Federal Securities Law to forgo futlure payme receive the pre-sent value of the Annuity under this Option in a lump sum, the of that right within a 3 year period after the start of payments shall be trea surrender [see Surrender Value under Deposit, Reserve and Surrender Provi Option 3 - Payments for a Stated Period of Time - An Annuity will be paic number of years chosen. The number of years must be no less than 3 and no m 30. Where there is a right under Federal Securities Law to forgo future paymc receive the present value of the Annuity under this Option in a lump sum, the of that right within a 3 year period after the start of payments shall be trea surrender (see Surrender Value under Deposit, Reserve and Surrender Provj 1 GID-CD A-HO 11 j AMOUNT OF FIRST MONTHLY PAYMENT FOK EACH $1,000 AFTER-DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% PAYMENTS FOR A STATED PERIOD Years Years Years of Pay- Amount of of Pay- Amount of of Pay- Amo rnents Payments ments Payments ments Pay1 3 $29.19 13 $7.94 22 $5 4 22.27 14 7.49 23 5. 5 18.12 15 7.10 24 5. 6 15.35 16 6.76 25 4, 7 13.38 17 6.47 26 4. 8 11.90 18 6.20 27 4. 9 10.75 19 5.97 28 4 10 9.83 20 5.75 29 4. 11 9.09 21 5.56 30 4. 12 8.46 Rates for a Variable Annuity with Assumed Net Return Rate of 5% PAYMENTS FOR A STATED PERIOD Years Years Years of Pay- Amount of of Pay- Amount of of Pay- Amo ments Payments ments Payments ments Pay1 3 $29.80 13 $8.64 22 $6 4 22.89 14 8.20 23 6. 5 18.74 15 7.82 24 5. 6 15.99 16 7.49 25 5. 7 14.02 17 7.20 26 5. 8 12.56 18 6.94 27 5. 9 11.42 19 6.71 28 5. 10 10.51 20 6.51 29 5. 11 9.77 21 6.33 30 5. 12 9.16 1 GID-CDA-HO 12 c 9 Option 4 - Life 1ncome~- An Annuity will be paid for life. Payments may be ma minimum stated-period, if chosen, of 60, 120, 180 or 240 months. If the Annuiti before the end of such stated period, payments will be made to the beneficiary for th the stated period. AMOUNT OF FIRST MONTHLY PAYhqENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% LIFE INCOME WITH Age of Male Female Payments Guaranteed for a Stated Period of Months: Annuitant None 60 120 180 - 50 55 $ 4.98 $4.96 $4.89 $4.77 $4 51 56 5.08 5.05 4.98 4.85 4 52 57 5.18 5.16 5.07 4.93 4 53 58 5.30 5.26 5.17 5.01 4 54 59 5.41 5.38 5.27 5.09 4 55 60 5.54 5.49 5.37 5.17 4 56 61 5.67 5.62 5.48 5.26 4 57 62 5.80 5.75 5.59 5.35 5 - 58 63 5.95 5.89 5.71 5.44 5 59 64 6.10 6.03 5.83 5.53 5 60 65 6.27 6.19 5.96 5.62 5 61 66 6.44 6.35 6.09 5.72 5 62 67 6.63 6.52 6.23 5.81 5 63 68 6.82 6.71 6.38 5.91 5 64 69 7.04 6.90 6.53 6 .OO 5 65 70 7.26 7.11 6.68 6.10 5 66 71 7.50 7.33 6.84 6.19 5 67 72 7.76 7.56 7.01 6.28 5 68 73 8.04 7.80 7.18 6.37 5 69 74 8.34 8.07 7.35 6.46 5 70 75 8.67 8.34 7.52 6.54 5 71 9.01 8.63 7.70 6.62 5 72 9.39 8.94 7.88 6.69 5 73 9.79 9.26 8.05 6.76 5 74 10.22 9.61 8.22 6.81 5 75 10.69 9.96 8.39 6.87 5 Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. GID-CDA-HO 13 9 AMOUNT OF FIRST hlONTHLY PAYMENT FOR EACH $1,000 AFTER-DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Variable Annuity with Assumed Net Return Rate of 5% LIFE INCOME WITH Age of Male Female Payments Guaranteed for a Stated Period of Months: Annuitant None 60 120 180 - 50 55 $ 5.89 $ 5.86 $5.78 $5.65 $5 51 56 5.99 5.96 5.86 5.71 c. E 52 57 6.09 6.06 5.95 5.79 L. E 53 58 6.20 6.16 6.04 5.86 L E 54 59 6.32 6.27 6.14 5.94 L E: 55 60 6.44 6.39 6.24 6.02 c. c 56 61 6.57 6.51 6.34 6.10 c E 57 62 6.71 6.64 6.45 6.18 L c 58 63 6.85 6.77 6.56 6.26 L E 59 64 7.00 6.92 6.6 8 6.35 E 60 65 7.16 7.07 6.80 6.43 E 61 66 7.34 7.23 6.93 6.52 E 62 67 7.52 7.40 7.06 6.61 E 63 68 7.72 7.58 7.20 6.70 E 64 69 7.93 7.77 7.35 6.79 E 65 70 8.16 7.97 7.50 6.88 E 66 71 8.40 8.19 7.65 6.97 E 67 72 8.66 8.42 7.81 7.05 € 68 73 8.94 8.66 7.97 7.14 E 69 74 9.24 8.92 8.13 7.22 € 70 75 9.56 9.19 8.30 7.29 € 71 9.91 9.48 8.47 7.36 E 72 10.29 9.78 8.64 7.43 t 73 10.69 10.10 8.80 7.49 € 74 11.13 10.43 8.97 7.55 t 75 11.60 10.79 9.13 7.60 € Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. Option 5 - Life Income for Two Payees - An Annuity will be paid during the livc Annuitant and a second annuitant. At the death of either, payments will continu survivor. When this option is chosen, a choice must be made of: (a) lOOo/0 of the payment to continue to the survivor; (b) 662/3% of the payment to continue to the survivor; (c) 50% of the payment to continue to the survivor; or (d) payments for a minimum of 120 months, with 100% of the payment to con the survivor. GID-CDA-HO * 1. 14 e AiLIOU,hTT OF FIRST MONTHLY PAYMENT FOR EACH $1,000 AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% JOINT AND LAST SURVIVOR ANNLJITY 100% TO THE SURVIVOR NO MINIMUM PERIOD Age of Age of Annuitant Second Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 M, - Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 50 55 $4.10 $4.27 $4.43 $4.57 $4.69 $4.79 $L 55 60 4.21 4.43 4.65 4.86 5.04 5.20 E 60 65 4.30 4.57 4.86 5.15 5.43 5.68 65 70 4.38 4.69 5.04 5.43 5.83 6.21 I 70 75 4.44 4.79 5.20 5.68 6.21 6.78 75 80 4.48 4.86 5.32 5.88 6.56 7.33 I 80 85 - 4.91 5.41 6.03 6.82 7.80 I r Rates for a Variable Annuity with Assumed Net Return Rate of 5% JOINT AND LAST SURVIVOR ANNUITY 100% TO THE SURVIVOR NO MINIMUM PERIOD Age of Age of Annuitant Second Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 M - Male Female Female 50 Female 55 Female 60 FemaIe 65 Female 70 Female 75 50 55 $5.00 $5.16 $5.31 $5.44 $5.57 $5.67 $ 55 60 5.11 5.31 5.51 5.71 5.90 6.06 60 65 5.20 5.44 5.71 5.99 6.26 6.52 65 70 5.28 5.57 5.90 6.26 6.65 7.04 70 75 5.34 5.67 6.06 6.52 7.04 7.59 75 80 5.38 5.75 6.19 6.73 7.38 8.14 80 85 - 5.81 6.29 6.90 7.66 8.62 Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. GID- CD A-H 0 15 AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,800 AFTER-DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% JOINT AND LAST SURVIVOR ANNUITY NO MINIMUM PERIOD SS2/3% TO THE SURVIVOR Age of Age of Annuitant Second Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Mi Male Female Female 50 Fernale 55 Female 60 Female 65 Female 70 Fernale 75 50 55 $4.51 $4.72 $4.94 $5.18 $5.44 $5.71 $ 55 60 4.70 4.94 5.20 5.49 5.81 6.14 60 65 4.90 5.18 5.49 5.84 6.23 6.65 65 70 5.11 5.44 5.81 6.23 6.71 7.25 70 75 5.34 5.71 6.14 6.65 7.25 7.93 75 80 5.58 6.00 6.49 7.09 7.82 8.69 80 85 - 6.28 6.84 7.53 8.39 9.47 1 Rates for a Variable Annuity with Assumed Net Return Rate of 5% JOINT AND LAST SURVIVOR ANNUITY NO MINIMUM PERIOD 662/3% TO THE SURVIVOR Age of Age of Annuitant Second Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 M; 50 55 $5.43 $5.62 $5.84 $6.08 $6.36 $ 6.65 $ I 55 60 5.62 5.84 6.10 6.38 6.70 7.06 60 65 5.82 6.08 6.38 6.72 7.11 7.54 t 65 70 6.06 6.36 6.70 7.11 7.58 8.12 t 70 75 6.31 6.65 7.06 7.54 8.12 8.80 ( 75 80 6.59 6.98 7.44 8.01 8.71 9.56 1I 80 85 - 7.31 7.84 8.49 9.33 10.38 1 Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 m GID-CD A-HO 16 / AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1,OQO AFTER DEDUCTION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% JOINT AND LAST SURVIVOR ANNUITY NO MINIMUM PERIOD 50% TO THE SURVIVOR Age of Age of Annuitant Second Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Ma 50 55 $4.75 $4.98 $5.24 $5.55 $5.91 $ 6.32 $ 1 55 60 4.99 5.24 5.54 5.88 6.28 6.76 60 65 5.26 5.55 5.88 6.27 6.73 7.27 65 70 5.59 5.91 6.28 6.73 7.26 7.90 4 70 75 5.96 6.32 6.76 7.27 7.90 8.67 I 75 80 6.37 6.79 7.30 7.90 8.65 9.57 11 1. 80 85 - 7.30 7.88 8.59 9.49 Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 10.61 Rates for a Variable Annuity with Assumed Net Return Rate of 5% JOINT AND LAST SURVIVOR ANNUITY NO MINIMUM PERIOD 50% TO THE SURVIVOR Age of Age of Annuitant Second Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 Ma Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 50 55 $5.67 $5.89 $6.15 $6.47 $ 6.84 $ 7.29 $ 55 60 5.91 6.15 6.44 6.78 7.20 7.70 60 65 6.20 6.47 6.78 7.16 7.63 8.19 65 70 6.54 6.84 7.20 7.63 8.16 8.80 70 75 6.95 7.29 7.70 8.19 8.80 9.56 1 75 80 7.42 7.81 8.28 8.86 9.58 10.48 1 80 85 - 8.39 8.94 9.61 10.46 11.56 3 Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. . GID-CDA-HO 17 L AMOUNT OF FIRST MONTHLY PAYMENT FOR EACH $1.000 AFTER-'DEDUCIION OF ANY CHARGE FOR PREMIUM TAXES Rates for a Fixed Annuity with Guaranteed Jnterest Rate of 3.5%; and Rates for a Variable Annuity with Assumed Net Return Rate of 3.5% JOINT AND LAST SURVIVOR ANNUITY 120 MONTHS MINIMUM PERIOD 100% TO THE SURVIVOR Age of Age of Annuitant Second Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 M - Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 50 55 $4.10 $4.27 $4.42 $4.56 $4.68 $4.77 $1 55 60 4.21 4.42 4.64 4 .a4 5.02 5.16 60 65' 4.30 4.56 4 .a4 5.12 5.38 5.61 65 70 4.37 4.68 5.02 5.38 5.76 6.10 t I r 70 75 4.42 4.77 5.16 5.61 6.10 6.58 1 75 a0 4.46 4.83 5.26 5.78 6.37 7.00 1 80 a5 - 4.86 5.33 5.88 6.55 7.29 t Rates for a Variable Annuity with Assumed Net Return Rate of 5% JOINT AND LAST SURVIVOR ANNUITY 120 MONTHS MINIMUM PERIOD 100% TO THE SURVIVOR Age of Age of Annuitant Second Annuitant Male 45 Male 50 Male 55 Male 60 Male 65 Male 70 M, Male Female Female 50 Female 55 Female 60 Female 65 Female 70 Female 75 - 50 55 $5.00 $5.15 $5.30 $5.43 $5.55 $5.64 $! 55 60 5.10 5.30 5.50 5.69 5.87 6.01 z 60 65 5.19 5.43 5.69 5.96 6.21 6.44 € 65 70 5.27 5.55 5.87 6.21 6.57 6.90 I 70 75 5.32 5.64 6.01 6.44 6.90 7.37 I 75 80 5.36 5.71 6.12 6.61 7.17 7.78 E 80 a5 - 5.75 6.19 6.72 7.35 8.06 E Rates for ages not shown will be provided on request and will be computed on a basis consistent with the rates in the above tables. GID-CDA-HO , 18 ia a ,, , .. 5. Other Terms -of Annuity Options * -3 No choice of any Annuity Option may be made if the first payment would be $20 or if the total payments in a year would be less than $100. Age, where used in the above tables, means age nearest birthday on the date o payment. The tables for Options 4 and 5 use the Annuity table for 1949 w (a) a 1 year age reduction for males; and (b) a 6 year age reduction for females. If Fixed Annuity Options 3,4, or 5 are chosen and Etna’s current applicable rat time are larger than the rates above, the larger payment will be made. 6. Death of AnnuitantBeneficiary When an Annuitant dies while payments are being made under an Annuity payments will be continued to the beneficiary as provided by the optia beneficiary is living, the present value of any remaining payments will be pai sum to the Owner. The present value will assume the same interest rate that 7 when the first payment was made. When a beneficiary dies while a sum is held at interest, the amount held will bc one sum to the estate of the beneficiary. When a beneficiary dies while payrr being made under an Annuity Option, the present value of any remaining paym be paid in one sum to the estate of the beneficiary. The present value will ass same interest rate that was used when the first payment was made. GID-CDA-HO 19 Dated May 1, 1981 Variable Fund, Inc. 151 Farmington Ave., Hartford, Connecticut 061 56 Telephone: (203) 273-4806 Prospectus Dated May 1,1981 Etna Variable Fund, Inc. (“Fund”) is a diversified open-end management investn company, commonly referred to as a mutual fund. The primary investment objective of the F is long-term capital appreciation. Realization of current investment income is a seconc objective. In pursuit of these objectives, assets of the Fund will be invested primarily in comi stock and securities convertible into common stock. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, the curities of Etna Variable Fund, Inc. in any jurisdiction in which such sale, offer to sell, or solicits may not be lawfully made. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECl TIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON‘ ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO - CONTRARY IS A CRIMINAL OFFENSE. Read and retain this prospectus for future reference. 3aia, UOLL & &mu %om lu 8 % 5 'SEf .- KCEz a+ 3 QZS -5s gs c C t'GC a,..&?z - .- FL a, '- =-%O LO20 .a a m.-L %:m %z L& s 2 =mC 45 .G -732 ma5 .gg ._ K c .- E$2 &JZ& a, .%$S a,?€ -0 2 2 rEa, ??sS '1 v, fLz a,=--cJ zg sz +am ajog m~)n, a o'5:r - a,$S a0 .- c CU 8 2: g h.~ g 2 pga, m>za c ,m€S 9p-E mcag - 0 iEia,'d goo g5.s Eo 0 z 025 DtC> vEs a,a,.Y ,mE$ c c 'G a 1@% ma0.G $ :.gs ~5: x'im SE.22 m- 3 v) &SO E'm La2 c E"g mz* ?,,.E 2 c,p)mo -zz zsrn 5g+- a,.%& e? - 2 -WU $:2 >> zi.E2a v) 552 z .r ,g Q x-a, oo,E fEei % Q59 84 =Cm gzg 0.-a. 20- :gam zz$ g S$E a;TA 5 0:$ Cd-E'FY a,rm uE 3%E r-o$ g a,)..L 3t;oa w a, E 7Jca ;?ha z sgz ga,uz $3: -I m" 2 $2: $;a,g X I='&+ mE02 300 me @ on2 3 Q5O0 g ;5zscj 3$zK 3Qm a 2 o SF? 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( .036) ( .034) ( ,031) ( .028) ( ,030) ( .01 Net investment income. .............. .783 .741 ,606 ,514 ,473 .3c Dividends from net investment income. ............ (1.509) ( .612) - ( ,973) ( .270) - Net realized and unrealized gain (loss) on Distributions from net realized gain on Increase (decrease) in net asset value ............ 1.1 71 1.793 1.094 (1.594) 2.332 .6! Beginning of period.. 12.485 1 1.391 12.985 10.653 10.01 .......................... 14.278 End of period . . - - - - -- 1980 1979 1978 1977 ~~______~- investments .......................... 2.706 1.793 .488 ( ,713) 2.129 .34 ........... ( .809) ( .129) - ( .422) - - ~~~~~- investments Net asset value: ~___~______- ......... $15.449 $14.278 $12.485 $11.391 $12.985 $10.6 ~-~~~- ___-~___~- Ratio of expense to average net assets ........... .25% .25% .25% .25% .25% .17 Ratio of net investment income to average net assets.. ................................... 5.47% 5.45% 5.01 Yo 4.51 Yo 4.02% 3.OE Portfolio turnover .... ... ....... 27.42% 20.90% 22.76% 20.50% 22.39% 10.17 Number of shares outstanding at end of period. ................................. 46,909,304 41,561,964 42,515,734 39,104,829 35,519,964 34,365 *Initial period of operations is from May 1, 1975. TABLE OF CONTENTS F Investment Objectives and Policies of the Fund ................................................. Investment Restrictions ..................................................................... Investment Management .................. ............................................ Sale and Redemption of Shares .............................................................. Capitalstock ............................................. ............................. Legal Proceedings .......................................................................... CustodiansandTransferAgent ............................................................... Distributions and Federal Income Tax Considerations. ........................................... Experts ................................................................................... Other Considerations ............ ............................................ Directors and Officers of the Fund.. ........................................................... Financialstatements ....................................................................... s.:5 & &.sqg.:&& p& & m a-0 LC" Atka, L;zq a, AS+ ,os.., +m22% 2 0' k6:sS 2s Ax- 30mx 5 m- ; E2?E .Q 'G :..-.z $c3~;00 mmmoo .r .e a + c s.= 3 5 8: 6." 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E.g,5g :ab >u. ooraE :5,oaa- -E rnDU.EF ," a o'$g.g2!_n a,- a- 0 8s 0 :;.sz 2 L- kj *.- 8 a, "is $2 Aga, 21 0Ca-c' -I- _ o c?=L .z 8 E,E a&* a,cQ--zv)uu~-~0cs~~~ h,oU F-l '- u o 0.2 5.i WV, mv)o:gp 552 0 c 0 - a, 2 &.%F $LL g-c"-,w,%naZ n.cz- m s 3.=z.z 2 .@.= =3$ E& Em's: $'.G.s o:$.&g&j a, 0 a,'-- a, t- E.2z-cs& 8% cL35 gx v) ,mza .= 3tj > a, =m,g 3-c.: + 3.- C m m- L &) En t"L?.$,O i 0"Q & Z.G.2 ," QZ- .)SS E L a,-.- +&ma ca,caO .o n.= =-ip:;ot;m~$,ts_g, a,o?E"-o.C~FEm';j rv) z EYp2c zz so'Ev) 3'- 8 o.i5r.k e&a, mu 0 Q.?Z+ €2 ru O)s::$zgm; a,0 x'rg w2 230 Cv)c~a,~$~:gE-Lr~-~c $36 kw z.-- a,_cv)nfZ a, $ECa,'-mZgU- m a as*%= E= Qmc gs f.g'$E E K QU "-8 5 '"g g E a2.x CJ Kc L xO)3+--c. wg 2 %a, t- 6 a, ~''~~E$~~~~~~ g>5 gs m E 2 p~~~~.> a 2 p&EO.,o LZEv) .z .- 0.r cq '-> ma,,3,".gZ &LC - C.= 0 3, &~-=UJr5g@~~ga,~aC Qma onsUg2." m 'rm5 mC 3.- 0 ms a,)li;, AQ, .Ez.& 0)- +v) t;gE$- O,""~~~.," OmOC OF$& ~~~~~3Q2m& $?Ea, Zy a, no., z $ %gD ,058 E=.?.%a LL 0 n EU 82 L E mm, 2 g tj a$ 0 v) m 0 3 o= z' - 'zoQ+j.E; aEz'-mm ~,~~o~~>"-V)V1~~~'C~~,~~~_~~tj~.~$a.E pato -"S,$~~$o_,p~~m,+ - €Om- K$ 28.2 cs tsgu v)nemfrOa,_o -v)-~~u~~~a,0mmCs5~~3~mC- a t~Qm 2?3a a0 c 'a,a,m kv)mo QOa, fr'%.Ei 6 g; ~v)c-~+~F&,$gg--gn c32 - O%2$ '~~~~"~dXzS~~,CgOm~-C>~u30v)oo~,~ a, L a> v) 0 * 3.P$ Q, a, c,&-, a= applicable New York Stock Exchange rules, the Fund may engage in lending portfolio securities to qualified broker-dealers, provided, however, that (i) the loan collateral will be either cash or short-term direct obli- gations of the United States Government or agencies thereof; (ii) cash collateral will be invested only in highly liquid short-term investments; (iii) during the existence of a loan the Fund will continue to receive any distributions paid on the borrowed securities or amounts equivalent thereto; and (iv) no more than one-third of its total assets may be on loan at any one time. (6) The Fund may write and purchase call op- tions which are listed on a national Securities ex- change. Options may be written Only on Securities in its portfolio or purchased concurrently with writing the option; options may be purchased only for the pur- pose of cancelling options previously written. No more than 20% of the Fund’s total assets may be subject to options at any one time. (7) The Fund will not underwrite the securities of other issuers. (This restriction shall not prevent the Fund from acquiring portfolio securities under cir- cumstances where if sold the Fund might be deemed to be an underwriter for purposes of the Securities Act of 1933. See 8 below.) (8) The Fund will not acquire assets, including debt securities purchased in private placements (see (5) above) or real estate (see (4) above), which are subject to legal or contractual restrictions upon re- sale or are otherwise not readily marketable, if the purchase would cause more than 10% of the value Of the Fund’s assets to be so invested (see “Restricted Securities”, page 7). (9) Purchases Will not be l’l’lade on margin (ex- Cept for such short-term credits as are neCeSSalY for the Clearance Of transactions), nor Will short Sales Of securities be made. (10) The Fund will not engage in the purchase or sale of commodities or commodity contracts. (1 1) The Fund may acquire limited amounts of securities of one or more investment companies as permitted by the Investment Company Act of 1940, in connection with the acquisition of or merger with such companies. (12) The Fund will not invest in compan the purpose of or with the effect of acquiring c( (13) The Fund will not invest in interests gas and other mineral exploration or develo programs. (14) The Fund will not purchase securitie: suers which (together with predecessors) have in operation less than three years, including securities not readily marketable, if more than the value of its assets would be so invested. (15) The Fund will not knowingly purchi retain the securities of any issuer if those office directors of the Fund or its investment adviser o individually more than 1/2 of 1% of the securi‘ such issuer together own beneficially more thi of such issuer’s securities. Wherever any investment restriction st: maximum percentage of the Fund’s assets ’ may be invested in any security or other propen intended that any excess of the actual perce shall not be considered a violation of such inves restriction unless such excess existed immec after the Fund’s acquisition of such security or erty and resulted in whole or in part from such i sition. Additionally, the Fund will make no inves which will significantly impair its liquidity. The investment objectives of the Fund, ar policy relating to the extent assets will be fu vested, see page 4 above, and restrictior through (10) are fundamental policies and m: be changed without afavorable vote of a “major the Fund’s outstanding shares, which, as used i prospectus, means the lesser of (i) 67% or mc the Fund’s shares represented at a meeting of I holders if the holders of more than 50% of the F outstanding shares are present in person or by F or (ii) more than 5001~ of the Fund’s outsta shares. Restrictions (1 1) through (15) ma changed without stockholder vote. Securities Lending As stated in restriction (5) above, the Fun( lend up to one-third of its assets, although it is i pated that less than 10% of such assets will L loan at any one time. In the Company’s opinion, .c $% &A)ZZ ZZ2:- v) 0 0 e,aL+&..-.= Cn m5-r 0 0 Aw: 9 c pE &i &.G,&Z 22.g c-5zZE-z ?Es 2OE$lCa& i-4 3 >g c a,--C $'& o Q.i 3z2s 22% % 5 >o 5 = m,O 5 .i g e,Y~VJ.+~Em~m3 .E 7) ,> a .+= '- "03zz - .- 0 a,.z ac%QF a, sg,3 (-E =.v, a, c C O'F.-oG.E c a, a, cD-u a-= a, 35.5 a, QAZ-2 * L.F2 3 a, 0.g 2 3 ._o r~~2.~,0~~8~YSEC~~~Ua~~ Lam 'Q"m.'za 5.z 3% 2 g2 =-a-o?i g,z5= 0 Q-CZ c.g.g VJ 2 0 3zn z2sD S'$%F a,a, +If: -0 *5 ,' c .% Q C ~~,$~+-.M EO m,GO 'C E_o g 1"$ s vJ.0 a a,.? v, Z.Ga,s E % m? z&.e&.g--- ~eLI),~,Mg~~5~~om.~C-~~o' 2LL 2.2 v) 2 9 e, p 0.2 %S b.g 2 O m" amE C L o'sg2 r-g a.o.?v) C C-,g a, ip a,=-- %2:]E: -gpg gg$g$;"~=~g~u8zEo'l= 3Su VJa o 02 0 0, amu $307 ma,$.E5Zs 223s xVJu m F-C.G5z.s ::0 E C v, a5-c C .= --a,a,rzaa,Leg Q)*-CU" Ea'+&;;; rno~rnno~rnr~u mJ= am: o_or:XO$cEo3$ oC~SuE~grmrmo=or,x,,E.n~- VJ% 0 C v, a.0 & F'Zz L m 'ZaC o>E,xmS$ 0- 3-5 mecam s3='gsa z.gEs'r30,zaQ$ 3VJhF~cz .u v)u$amQmm $Ea,$lF'2 e, 2 2 sz &Zs- W%m a, La,Q~v)r;~r~.r;.m.;;Ea,r~'u, 2.Gg.kza, 3t.-ga, U~sla,E~O C Qo'zs 'Rh 0.g &Ue,Oo -e, c -s$,Gvp.$'$ Co.-i-4+-. 0i.g 0 KUE$zZ$O cs+LLKC.-O ai3mro 2 $g$gG 22 0'0- -C $&'- Egg 3 a)= cr.2 a, cz &g?S a) a, x .g 8 2 a, 2t;j a L CD c o a- 3p 0'ppu o>Co cy.s Q 3 2 no x v) 0 me 0 0 a+-+ L'm Eo z5-r:5 O.r L OZ2 L- Q3 m ar e, 3"- c $25 8 mt,3a,o-coo~~~~~~~~~,0'5~ O,E'oo"& $22 gg; L 0'5.5 g$qVJ VJ > 0 a, L 3 VJ E.LS655 0 c 0-J .b v)nha,r 42 2 m m a, a-c n2a Zrnv) me= g;a,+-Q"uss g g,gss./E $js wo o r@;g: >,- L o 0 pz G 3n E 8.5 or d% a, a LC g au-5 Uc.& 2 2 %-qi oEx"$ a, 3a v) f =-2w=cz.E-a,s % 2.g QC 3 0,- 2 63 cg gz;: g.'g 20 a2 v) 0" -IL 3 10 aE 3 *- 0 cn_o 5 & ~~~~.z Ea,Ea,v) c ,.z~ Lao 0 Q . $,g 3 a, 0 &'E a 3-z Q .a,$lioa,g~LI)zCa,VJf aSe,ke,ooQSQ%J-)= L'J-O~~ Q &xDL 'c % g.g f 5 ES $+ 5 0C.QO Q.e Q D S2-a rog=~9D-0ma VJ "'I t a% 8 & $3a,o mCom'llaocc2 3--LLtOCa~-C-C~= mLYa,J=c~Cm&~g v)x5~~zaa,$?E3r m5 os .& ?.2.-.."1 g.,"u:= c a, " a .PEF9Oa,a,'caa,$ c m L a, v) a, 3.2 a, mk- e, e,= 0 z2.g 8 9 E 8 *z 3.2 Ok c"" 2 b z g 2+ a, VJ kjga 0 a, a, VJ a >e c cF% .~~~~E$U'~~?~$~ 2mVJD&DfQa)z$oG %i,&.%9-'- C,E 0 -KK~~~?~ g gU-K.6a.z 0- pa- " C.2W v) m CnL c a,%$% 2% v) O,a,3, g zcs 3 SZS2 g.2 X$a,.a,U.& '"a 5= ' e, s 5s vj "C x.c.ta no2 5.z VJ ODs2 C2 m.2 Q oc g: e, .=.?D 3 c ono gDrc o5;E -oca ._o+&mr"+,oo3&a,~ - 3+5::pm0a3+ I- ,Oai.o.~5UB~J===Qa >-EQ~ E'-'aaa, 5 0 a, o.x vi€ E a, 2s VI rr,_O= > a, az(& a0 "'7ij $.c 2w-W CnE a,Ei m cf. k.s o, - yo ms m= 2 ZE 0 OE B a,%=o=-- a.5=*- a,- oc rnc 0 Qv)g a~r >U o oz 00 b= 0~~0~ <Q v).sZ"sz E 2 30'o, Qa 3nmm-t.n.- 0 "&a x %-Fcn^r-'5 oc - 0 ~~~~y~ a,w E 5 ysi Caa, + + Q, 3 CCC-J.=OO% 0 3 .- 0 L f c L L 0-a ,O 3 m ~:08~~~,~ E os m 3 tp..,$a, Q 0 e, c c 2 5 'E ._o = VJ 3.T -.== oy-- Q- C i a'- w Q?!_o Ovs $5; c >,E VJ= VJZ -0 g 2: m.a, c a a rrU,m~~Q-~~ l?.EuC-Qg3~&~' "-ac,c,scs2!-- ~~~,~'.$~ Q-V v) LI) QO (I) 5 a,cm=.o~2~a,a,o2~~~~cm,f.~n-~ 2 e,g,3 v) 0-C r"a VJ'L o '-0 c",cpg2e,s Q$ E % g zz.zc: CC-CJU~~Q oye,cc 2@.cose, a,m ma,~SF.z: 2, cmoE e,-o->-s c TDoc kz C -- a,.- 3 0 g 3.G 0 v) C 3K g.23 2 $5 g$zzzC&g.$=L.g 0 3 0 0 (UC E.- o - f cZ E C --DL 3 WU 0's E 0 &' m '- a e, k b%$ z*gE,= C.L C e, v) L ma,u ~u a, VJ c=5 a, m mVJa,cvj 002.- a,mpa,n I=^ v)" .- QV, 3 a,~ cEz L a,s~ rn a, 2- C 3s > $ L v, a,z aa e,t.-s v)U- a,re a,+@g.c 0) m v) (il a, 0.E VJ mX~.--c fl) g .-r 0 x- L 0 a: a- 0 2 v)o.2~ZEa$ 1"s o.gJag c 2 aw(DEz~LI)mLL s2 %: F.g$sE $07 3c (D ----a 232 0 x zz zg $ a, E $ ," ~2.g L- a, c>'--- xa,LLQ-r3 "52 e, 0.k 0 !_oVJcSaQoca3 -e a, m.- VJ e, ~cmvc VJc-.- 1 305=ca a) 2% m5 c &; 2 m%',oog 'E c 5 & $5 0, C 2 $a5S'G .- e c so 9)c-O a, = 0 L l- 2 a, 3, e,.-- > a,LL 3s c c a) vj $0 > o'- O'CC& +--O c g c 09 ~0 m 3 ZsE c .E,ogzizgg$.&~.~ p~,~~$a~a,'o~ - 0" tion, the Fund will remain the record owner of that Etna Variable Annuity Life Insurance Compar stock, entitling it to receive all dividends paid on the Etna Life Insurance and Annuity Company on Ji stock and to vote on all matters voted on by stock- ary 1,1980. The Company, a wholly-owned sub holders. ary of Etna, is registered with the Securities Exchange Commission (“Commission”) as ar Restricted Securities vestment adviser and is responsible for mana the portfolio securities of the Fund, Etna Vari invest up to 10% of its assets in securities which are vestment objective is current income through in, subject to legal or contractual restrictions upon re- merit in money market instruments and c sale (“restricted securities”). Such purchases may short-term debt securities), E~~~ lncOme Shz increase the risk of investment in the Fund compared Inc. (a mutual fund whose primary investment ot to similar funds which cannot do so. It may be difficult tive is current income through investment in a div to sell such securities at prices representing their fair fied porffolio consisting primarily of long-term market value except pursuant to an effective registra- securities), the C~~~~~~’~ separate accounts, tion statement under the Securities Act of 1933. An its general account, for which it maintains an in, cision is made to sell restricted securities and the company, including an Arkansas predecessor H date of an effective registration statement. If adverse merged into it at the end of 1976, has engaged il market conditions develop during such interval, the Sale of variable annuity contracts Since 1954. Pri Fund may not be able to obtain as favorable a price a restructuring in 1975, it was an internally-man; as that prevailing when the initial decision to Sell was investment company. ln 1975, the Company rt made. The Fund will endeavor to have the issuer tered as an investment adviser to manage the F agree to register such securities on request and pay but the C~~~~~~’~ senior investment officer the expenses of such registration. If this is not possi- managed the Fund and its predecessor since 1 ble, the Fund may not be able to obtain registration of ~~~i~~ this time, the ~~~d’~ assets grew from such securities when a decision is made to sell, and million to Over $700 million. The company alSO r even if the issuer does agree to register such securi- ages the two aforementioned mutual funds w~ the expenses of registration, which could be consid- own general assets which amount to approxim $955 million. When purchases or sales of the s erable. In instances where the Fund buys restricted se- Securities are made at Or about the .Same time f0 curities, such securities will be valued in such man- Fund and these other portfolios, they will normal ner as may be determined, from time to time, in good allocated as nearly as practicable on a pro rata t faith by the Board of Directors in determining the net in Propoflion to the ~rnounts to be Purchased Or asset value of Fund shares. Such valuations will be by em3-1. The Company is also the Principal ur made on an individual basis in light of the particular Writer for all variable Contracts funded by its Sep; circumstances affecting each such security, taking accounts. Registration of the Company and the I into account the market value of the securities, if any, with the Commission does not involve supervisil the period of time they must be held before they may management or investment practices or Politic be publicly sold without registration and other rele- the omm mission. vant factors. Under a Management Agreement executc the Fund and the Company on February 5,197e approved by a vote of holders of a majority o INVESTMENT MANAGEMENT Etna Life Insurance and Annuity Company, the Fund’s shares on May 19, 1976, the Compan) investment adviser of the Fund, is a Connecticut in- responsibility for managing the investment and surance corporation with its Home Office located at vestment of the Fund’s assets and for administ 151 Farmington Avenue, Hartford, Connecticut its other affairs, subject to the supervision o 061 56. The Company’s name was changed from Fund’s Board of Directors. The Company has a$ As stated in restriction (8) above, the Fund may Encore Fund, Inc. (a mutual fund whose primar extended period may elapse between the time a de- merit department of experienced personnel. ties, the Fund may be required to bear all or a part of assets, in the aggregate, exceed $1 20 million, ar % Oa, a,z L d, 2 a: 8 c% 8 2 m c CD amsag 52 2g ;$;; m 2 PUT 2.2 m L ar~ a OGx m &eCa, UJLt; Ea,K!?z0%Ea, QLUcuS , 0 k&.??%&tza)t XCIAZ - a> anm-l.~Los -c. +-QYUG s2.a. rnma gggg 0 m!=a c @s(Kpg> a, ./,a 0 00' 0 0 E-- 0 2.r a, "2 g:2" gg pg .gs$k ;ijr g ~ '5 g E QZ ; .$ bCtma,zz-L:uE m2.G = L aE 3 afJ 0 3-CQ >aa Ca m - o >E 3 >.g- 20 l-0 LLea,,_oga,,oom I-== C.-U $F%Qm?E a, m, 0 E zE $."g{ 5; s E-" 2.9-2 znoG.2 21 9 I,GZ E o= $3 a,P .r 0 a, E L z.gZ.g%; 5 .oo fn -Du.Q) 0 :z.s .- ~v)v)300~?av)v)m m'Gk 0- Cnau a, a, a u=xo2 mp aJ0 t +$- C 2: 2 x-- u:, h agLLg -2f0,v)Km QcrJ 3 hc&z 2 F7J5 mm,z 32 2 o v) v) 0, 0.0 EJ= g.D g2u z m '- mz.,v)mn-- emtLzQav)-*-a, .=nus5 2a,.ZJ=mK' me0 mU,c 8 2ga,g$(B;; 0 a& $ E ."'i Eg :: a, * m 3 00.g o g gs v) oOQ v).E a, > m '- zspna, cZgLv)$.%ml 02gu0 a, F e 00 +i fn a,,...,S5',.Z a,LLa,.o-, Qn 2 .r ? ,E 5 .: c 9 (r) $+g .- = X.!? E a, a, 2 $3?zz a, x-c g_o Q, za Os,K& m C- X5 m 2 E,& E.GU.5 c o 3 0 $2 g.g.2 E C f Go'o 5 5.: 2 Q .= omj$s3Q( 0 .Q, 6"fn .b- m E C g 'r: m.- .L E..F% 0qga,7zi - 3E=rO a,mg m.P E=m50m>or E % $2: p.2.0 &e:f .E 2 :ez 2 ?,&% - 2u mn,o (r: m ~ s'cr, ,"O a,s? h7J y mzu,= m nog m.E.i;- - ?$,C3 I-2 v) v)$,.,G{ uu.c+o : e.,. g.5~ XLC" rn b-5 00 a, as x?mo-- a, 0 0 Qgz Ea mg,-y m o a,.L.L gEE0'E;;i;; L 2= L E ?'E$'$ a.5 02.y~ m L.-sG t 5S-h Kz at; A=-& s t $62 E 5 €5: g.2 g g €%a 2 $,g= ac m2.z zagU- t;? E" m 5 a, a, c.I;;i (J3 a,.-- v) m.E m a, a, 27J > shorn 8s g $. - a, 3.- Z~s-02 3b 0 3 v)2,oZcd$co Ea, - $$F3UL * ~ omtj:e a, ojgs-u 2z k,G u mC m c-0 a,CU ma, gxu 0 a, 3z.8 Lss--.2w- >* Q, bv)2 a C'- EO L v) a, g.2 5 2gg.g L nor g ;ij v).2? m = a&LL a, 0 m'i gu g..:"? 8 E r - v) 0 .a, y= 5 E 2.2 fq $8, IG2 na, 2 E "2 E .-E go 9- o $?E Qo a, a, 0 O.L-z.lJ)f,"* v) a, 2 >sa g E.5 5 0 a& 2% r.roLoo - "E.& ma,Q 2%x2z.s.yQ0&2 & -E > 0 a, 0 g .= t; m - zt-E m 0,OFp'E &WO Xa,% F6*=Cu ggz~oa=jma 0 <?$> x m 2gZ.Z atszz ZZ m a, 3 a,a- 02 ,-m?g ma, 0325 EU C 1 0) I - fn0Q -C'% C t m 0 k! m 05' ch~,~s- a,a,-~~o~,.id~.t 2 =- gg L c mm.& m a,.- 2 a $$-Q a, c > m;g 0 13 0 C m o KC 0 fn'c c 0r.2 5 > $o"-& sG? g v) m,- c,z 3 nsr- a, 5 ma k & gz a,5"fn Q$Z aU.s E'% 6g 3.5 m QZa a' a, u.-8% $UZ8 0 E v)- Qaz cn,Ol==.Eo c a, >u ~~E~i?;g=oOlu=WKv)-'~.~o,.~goOm=~;j$ '~"z$2?Ec+c v)m 0 ~~s~~5~~x,~,-~ :Fa, sa,v)e >a,m-caod a,gv- zDnz aLzgc tj $22 g &U 09- &&.- v)'G 9 z 3 02 ill;; $ ?.$ $&E gg g gg E sz a, 3 a m-w- '-? c a-n= m=LL O = Fs& ~U~~&E;;idUO, 2=.0 LoQ-mc 0 g,,, ,=Lc3_ozco.g~& 3s 3mma, uLa,o .r,jx'Og+T -CLo$03n$sgg 'x" ma,ra,-a,.E~~~~~!=t2~~~~r,-~~u.~~- 0 a, Q) != x 3 0- 3 N Sg;pEa,,"% ma, +02: ''~~~~E~r€~89omy~~um~~0~~~ "maa,Sz&ps, a0 $a,." -x~, u g a, t r >=.g C -C 0 +. zs;,s -cS ne &.lo$% L o+"' +- mFOE.p mu c.z a, 05% C - a,= x% 038 0 z,gv)=w a, g J"2 mECz6:: "o $ 2"m,2.5E Qv) t.OE?.$b [1 -z a a - 0 :g g: 8 g22.2 0 a,€ (nS2 Oa,Q'zz zur 3~u.E v)"yOJzC;zsLnv) sz-3c Fs I m a, C 0 0.- .o m C X .? - a, Am25 8= fn EE a, (z1 a m$.E &s 2 gs F.2 Cu mS 8: 0 05s >cr~s$ 02Cn'- tir a7 a, Q c.- ~tcm,~~~ brz Qa, o a,E 65 aI a, c Cu m% x >v)s )-x o-.- .- +a,-+- o-o- .- +- La)€ fn~~.~$K~3 L.=~?)C a,C Km,OOO 30~~~~t33.0>- C-'- mum. Q, fno m m 3 ar"," g ?a,x=a,a, nnmo XC m'Gu5 m c c LLLlI= E c .- & c&,&-~+!- L ag &.'TU z a,.-v)bg~a,'73a,oo- C I a, 0 ,o vOoBbrn._oogga,5~r~,~~~.2~a,v)~;; 05 a,--,& QL- ,-a, v) m $ $2,. 5 ::- $ (,j? zrn L a, no mg a,'o E v) v) t a, 5 2 a,-$ 69 m.Ga~&~~~~maCua,.~a,~~~~~m v) a,- L a, a, mgmm_m--,,-m~ca,omd- E- ~~--g~a~~~~~g @.) t^oo E', aK-m X)- 0-0 0 a .s 'i u E % ,&.,-2-v) 0 K3.- a a, E z Q) a,= 0 gz &$m KC 2 X~5 L C - ._ r-6k.g m fn I ,-~a,$lJ-- CL$~OZ~.C~~E~~SE$~ ~g$~g~~~~~~~$ 25,"s am+- (u c ," g z 0 o v) o~~~~m- 0 0 8 C c 8 m-5 o with the nature and difficulty of the specific transac- tion in negotiating commissions for trades in the Fund’s securities. Consistent with Federal legislation, the Com- means of commissions (in which case the additional which case the additional costs will be absorbed by whether and how it will obtain the specific brokerage and research services will be based upon its analysis of the quality of such services and the cost (depend- be offered by brokerage firms) and will reflect the Company’s opinion as to which services and which means of payment are in the long-term best interests transactions in portfolio securities with the Company or any affiliate of the Fund or the Company. Total brokerage commissions paid by the Fund in 1978, 1979 and 1980 were $656,897, $765,540 and $1,048,772, respectively. is received in proper form by Bradford. Where tificates have been issued, any written reque deem shares must bear the signatures of registered holders of those shares. Where cates have been issued, such redemption tered, exactly as their nameS appear on thei a member of a national securities exchangc ments f& shares held in the name of a rorp partnership, trustee, guardian or in any othe sentative capacity. However, the rig,,i to postponed for any period during which (a) tra the New York Stock Exchange is restricted a mined by the Commission or such Exchc emergency exists, as determined by the c sion, as a result of which (i) disposal by the securities owned by it is not reasonably prac or (ii) it is not reasonably practicable for the determine fairly the value of its net assets; o Commission by order so permits for the prote stockholders of the Fund. Etna Financial is the principal underwriti Fund Pursuant to a contract (‘’Distribution merit") beh~een it and the Fund. The Disl Agreement Will continue in effect from Year tc approved annualiY by the Board of IXector Fund Or by a vote of holders of a majoritl Fund’s shares, and by a vote of a majorit! Fund’s Board of Directors who are not “int persons”, as that term is defined in the Invc Company Act of 1940 (“Act”), of Etna Finan( who are not interested persons of the Fund, ing in person at a meeting called for the put approving such agreement. This agreemer nates automatically upon assignment, and terminated at any time on sixty (60) days’ wr, tice by the Fund,s Board of Directors or by holders of a majority of the Fund,s .-.hares wit, payment of any penalty. An open account is automatically set maintained for each stockholder to facilitate untary accumulation of Fund shares. The c count system makes unnecessary the issua pany may Obtain such brokerage and research ser- vices regardless Of whether they are paid for (I) by must be accompanied by share certificates er by ail persons in whose names the shares ar costs wi‘‘ be borne directly by the Fund); Or (2) by meanS Of separate? non-commission payments (in cates. In both instances, the signatures n guaranteed by a commercial bank, trust corn the Company). The Company’s judgment as to ford will on request, explain any additional 1 ing ‘POn the various methods Of payment which may Fund shares may be suspended or payment i of the Fund. The Fund will not effect any brokerage closed for other than weekends and holidays CUSTODIANS AND TRANSFER AGENT All securities, cash and other similar assets of the Fund are held in custody by The Riggs National Bank of Washington, D.C. (“Riggs”), P.O. Box ’1 149, Washington, D.C. 2001 3 and Bradford Trust Com- pany of Boston (“Bradford”), P.O. Box 712, Boston, Massachusetts 02102. Neither Riggs nor Bradford performs any managerial or policy functions for the Fund. Bradford is also the Fund’s transfer, dividend disbursing and redemption agent. SALE AND REDEMPTION OF SHARES Shares of the Fund are sold and redeemed at their net asset value next determined after receipt of a purchase or redemption order in acceptable form by Bradford. No sales charge or redemption charge is made. The value of shares redeemed may be more or less than the stockholder’s cost, depending upon the market value of the portfolio securities at the time of redemption. Payment for shares redeemed will be made within seven days after the redemption request mQKgU $@.$+Ed 2 1 5.g.a L 0% -3 q QQ rn75.L Q d, 6 iz'.g-., s3s Fs aQ a 022 uc a'9,xz ,m.575~-~zP:m-mo =Qa+ ,g K 0 0 a, a, (2\ a 2: : g E.:: s'zi..r E 0 mmD no a 0 E gL2 2 '5 22 E' E 3o &k E 3 %z I a, mfjm.2 0 0- 0 0 9.G 0 ox &;jj+.CaZI 0 51 - a, p 2 $% 0" ;j ,m23 Frn'a,u-3 wj= -ooaa-a,FzO: oc aa, c a m.54 ;25.sm g a rc( x = 3 a.-.-- Fu g F.2 (d o'c.5z.Sf 5% & Z%& a, 03 '-aUKQ a,K K mY-KQ) ng WE $2- c rn-Q2~gE: a,mgggsp~g ca,v)52m 0 $~KKn~'~a~m~n ?za.-& !A" .~Q)~QO.-~-~,.! C' a a_ E 7 a, K EmGp m FL nn zg 552 K.+$- < Dm c a on gz 3$.ga, a, ,?E 2i z zj; a $$2s.3,g.:3 g+ 2fj;S ajc 3 ca, v)sz ,3,E5%&$3I)0Ea, y.2ra%?, *o Qz .a,K m >s'q $.;g >1 z $5 %2.g E? E a,,xG 2 a,z$ mu 25 $ ;g t; 2 zo E'73 a, mZ.&C a, m.v, - c &E 22u a, a x * as K Ln& a > g$,g g .- & a-./,."z 0 0% yl&F2szm g; 0 as$; 8 gzsz- 55 a (n a@ o.=,o v) E SI;; a, mn a, 22 =$- as-; %,-".= ' 5 cdX 3 -*2F L- v) (I) 'clyZ0 a!! K~v)~;3m-m.-r~ F a, 3.--m.K 0 m.- c @@?.=a mu ~moEEa,Oo~.~ a,'= $0" =J m 0 0 2.55 a, mzs* 0 0 EE c Fz 00% 252% F &~?~x~~E~~ Po anK abbe C m~ G ??E o ~1 '" nz L= $;a2 gzgz.: - a a,?.SE m g >- z 5 F + 5 5 502 E -2 5 5 m O.5 2 O 0.- a am ms..c ~ $)a a,rz d, a o7 ."?E 3 a,u $m m 0 =sz E& v) k 26E m.- OE255f ELL v)a,ny.Ta, QO?, 73- 0 62 c-oa,sa za,a~ao~~~~ oov)~~_O~~'~~.~ ro=,E3 tr%o 0 2 0-c 3: 2sL2ggE 6 & &? .??-mo3 2 gk rn'k.5 a=; a-m a5 m 0 x I -COK aaO v)agaOChC K'-CUChK g A7 mgoma, LO+K+(fJ a:-; uLu: 822-.. 2 $$-c a, Zm3ZGS La Com:F pz 0 as.+- 6,O;;u gp@g ax+ a&sm$a$soE GEgZ .-3 cna,smL2 zg$.g E :s '- 0 1 >.EZZ 2 a,% 8-ca L a sgo E % E 2 F3 m-ce goo -0. 0.5 & mu ,m 8 a OS .& >,o Qa- 2%; g c2.g.p .z ;;,- v)- a_ 3 v) L oaaoa 0.g E z 68 LY O 3 g-." $ gm? zg2%gx. E $ sF $9 m$g gz a, 2 a, o L a,a, a m oE CTZ.!? 0 E 0 s gg .& I 'a, .: g 0 o= 2 a,F.;5 %"," xa,.- soL8~g,,.g;;i a,- m 0 m "a2 L2? &$2moo mug =-,-E mp~o=m~a,zoa~3QGs% E % 0: z-5'5 v& oa,~~c$2~+-o~~ 3 mu a, m.2 E"1)> 2 e ",x L&( m c - $.&EG.S oo Lg+g+v m-.& a, -a a=- a":;= v) mas (0.- aa, $2 a, $.; 2 I: E L: 82 075 ma, E2,&K3-05 am 02$:00 5 a,.& 22 CCD a, oa,a,-o~~m."m.t~ Q 207 z;gr"222 o-c.i!cfoC og 2 30.Ka,m a,,az qa&o gE22: p ?2 $5 003% 2xr $ a, 0Q-c O rll z TSE? sz 0 PZ>~ g $2 2 5 5 2252 P 2~~ Cbm a,ti SF E a, 0 25 vj $*L =,a, 0 =I (0.2 0 30 hg%g 2 0 =I 0rtj-Z a 0 $ .$ a-6 5 Fm;FV~.p~~~a~ +&%- I- am- c.mwaE 0.&~~~~-3~~-~ra~'~2~~~~ a, v) mm-a$2 a-c a- 2 v) g-c .- 5 zca am .G? <E$.';' E $ +.g.g 0 sa $0- QI 2 a =I 0 K v)v)nQ)co B t-2: 3s r*=;jj.??o K QK ha 3 C E-- mzL> o DO'Z'u- OL XOC QC K.5 K (c;omm u-l E CZ,G F a,C a o 0c a,c a a a aLL =,5 O.c:g 0" o c a L,- x Fj * ma, n - a g =; mhowxEz v)'Ex % ;n E SE.GU a,,u m a, -5G$ x > .- om=,&, a, a,5C a x a, E a, Q, 2 %%,& E,? ~~ 0 om30g9;;&w K 09- .?? 2mra m > a, c 0 gx ~%a,.CS~ a, 2- m~$o& az +.QK~~.G~K a,3L.=.-c KO nEy,O.m- us!.? $.$ ST= a, $2: ,E c 0 a,WZ LI: OC~ '"m.i- (I) a, C $2 mg.b ,_ a K c a, a,.- 0 o a, a,O E,.L 3 mas% ,g a>(ij ,U a K E .o> -a,..;,c3pzv)h 0 8' a,'- cz 2 =, mc L a,a,aa,XP 0 ' L I-O za Xo-cgh7 J== aIa0.r- a a,- ~~O-~ KO SWLZ a,.Et- (r) ( S5.2ZSO OC.9 v) > 'Z m.g& nu+. 0 ol= a m c m.=k gz > 0 cos c3v) Ez c go( v) >- .z (L, --3< =I 2a,c - azf .& C C C- 0.c z 2 x E n; .& 0 $25,- a, m a,z g go a, a, C=- ow mzS -ro-os o.- v)- a a, 'G >$.) 'e go QI a, ma, -xo m m5.z.K.- c C 3% E, -2 n N o - a a, ,m'Z%g QT.S 2 a, 30 v) f gCz a, 0- a> om- z >u- y 0 P ffl~ca,a,u~ 2 o oa 0s% pK 5 A%&.& f 0u a~~-~~~g.= O~?.%>gEfjs~ COgLoC&a, CIsZ v)ij % 52' .+-c v)- m aSy0, C=-O~?C~ ~~UKJ~,,~~ oogl-~a~c-cr, - %"a ooace.&$$?6m$ ggzg& a,m~"~~-D,rS;~ti"Xa,-~~mc~ 2 Kg$ -0 '= 0 'E m CrJ = tj ,2 €0 a U-C 0 am 3 65225; -- '- a, 0 a-c L.- The Fund intends to conduct all of its investment activities in a way which will insure that all income not qualifying under Section 851 (b)(2) of the Code will be less than the 10% limit established by that Section for the Fund to qualify under Subchapter M. Under the Tax Reform Act of 1976 premium income received from lapsed option contracts or net premium income from a closed option contract is short-term capital The Fund has authorized capitalizatio gain. Qualification of the Fund as a Subchapter M 60,~~~,~~~ shares of Common stock, $l.OC company will limit gains from the sale or other dispo- value, of which 48,364,288 were outstanding sition of securities held for less than three months to March 31, 1981. Approximately 92% Of the FI less than 30% of its annual gross income. stock is owned by the Company, a Connecticu poration, and is held in the Company’s separat Distributions Of net investment income and net counts to fund the Company’s obligations L short-term capital gains are treated by stockholders variable annuity contracts. The company pro, as ordinary iflcome for Federal hCome tax purposes variable annuity contract Owners the right to ( whether reinvested in Fund shares Or received in the voting of Fund shares at stockholder meetin cash. the extent required by law. An additional 5% I 71.300/~ of the dividend paid by the Fund in Fund’s stock is owned by affiliates of the Com March, 1980 and 69.49% of the dividend paid by the including lEtna. lEtna and the ComPanY ma Fund in December, 1980 were eligible for the $100 their Principal Offices at 151 Farmington AVI dividends-received exclusion available to individuals Harffordy Connecticut 061 56. All shares are ( and the 85% inter-corporate dividends-received de- Same class with equal rights and privileges. Ea( duction available to corporate stockholders. Distribu- share is entitled to One vote! and each frat tions of long-term capital gains, however, do not share is entitled to a PrOpOrtiOnate fractional VO qualify for such treatment. Distributions of any net all matters submitted to a Vote Of stockhoider long-term capital gains whether reinvested in Fund shares, full and fractional, participate proportior shares or received in cash will be taxable to stock- in any dividends and Capital gains distributions holders as net long-term capital gains when re- in the event of liquidation, in the Fund’s net ass€ ceived, regardless of the time Fund shares have maitling after Satisfaction Of outstanding liabi been held. When issued, each share is fully paid and assessable and stockholders have no preempt The Federal tax status of each year’s distribu- conversion rights. Fund shares have non-cumu tions Will be reported to stockholders. The foregoing voting rights, which means that holders of mor6 discussion relates only to Federal income taxes On 50% of the shares voting for the election of dirt distributions by the Fund, which distributions may can elect looyo of the directors if they choose also be subject to State and local taxation. Stock- so, and in such event the holders of the remi holders are urged to Consult their own counsel or tax shares SO voting will not be able to elec‘ adviser regarding Federal, state and local tax conse- directors. quences applicable to them. Distributions made by the Fund to the Company are taxable, if at all, to the Company; distributions are not taxable to variable annuity contract owners. Gen- erally, distributions of net investment income are not taxed, whether or not reinvested by the Company in Fund shares. The tax treatment of net capital gains, whether or not reinvested in Fund shares, depends on the tax status of the variable annuity contract in connection with which Fund shares are held by the Company. The Federal tax consequences, if any, of such distributions on purchasers of the Compi variable annuity contracts registered under the I rities Act of 1933 are described in the prospectu plicable to such contracts. CAPITAL STOCK LEGAL PROCEEDINGS In the opinion of counsel, there are no m legal proceedings pending to which the F~~ party or which would materially affect the F~~~ EXPERTS The financial statements included in thl spectus have been included herein in reliana the report of Peat, Marwick, Mitchell & Co., in( a, +- cn k a--C .L a, a,>.YQbza,x a, h ss<u v) L I - 0 3 g 2.5 m",m a,vj Z$Oo€ogg v)p ma,"' ym PSCZZ -(/j 0-c @ Q) mg E'v, ai 2 g a';nX3Zm"€ (p 5mc luz .s 0.sg= m,c oom 0 2 - ._ v) x- a, a, (I) m (r) 5.L Z.L +- > v)a, $a5 gLli.sp 0 3.5 c.2 3 3 $.i fro L!. t55.L L .- h ZD'ZUS 2%:mzg2s uc?, zmol=sus KOm~u=,aLm~5'E~E~ocQa,CI'-U~~ a, .- cz E o,o,p~o~,o-, xs mc- v) 0 02s P%E- v) 0 a, 0" azz.[I (d= 3v) 04a--- 3 F 2 2 %2%5 C aq n=.$ $gp$ sJ=c m3.2 0:= oxv)pg mS -3733;g- .- Q.&a,tj 2 -c "2- ~s~bE,2~~a~~~~u,,,,,,o zum ma, otE$g-ga,.,D 8 SS 5,. fn 2ug mb-4 m 25 g'i-du ri;jg L 2-c 'CL'E $pa nE -QF$oa,bg-gm 7JgFm-o rQa,.u$a,r.Q,, ou"0 p-3 p f.i-2 g --F(.?SZm * m *-o IL~,i~O~~Zm2;tip.~Z~m.Z1*tj 3LL z3ahCu .-v) 2:: - -u a.l .g g;s-gzd."5 G&:g_f.s.k 0 'cI 2 ,,m,,mEa,03mLa,0"~~.~~~~$.E-oJi~~~ 3-=2kv)Lc 52 ,o~ a,$ua,rmo'f,O g 'O~~~~~~~~u~~~2g-mv)m~~~~~u~.~- (13 o Q1 .- - 3w3 L u)-- 0'73.- "~'~~~.5C~o~P~~z3'~~=~uc mm.E, 7J 0 o 03=m58 v) A- .~~~~~ri'"u"u~ooUa,v)m,m~Q~~ m.Sz5 a,% p,5 v) v) 8 a, a, E.Z& m, 2 as &g2 L c E5 $ pg ac 23 ~ 5 .- .O.iCDm=,, =ac3xv)cD DO, ho xu'- a, (r) xaSj 0 QnZ'6.Z m 0- v) E "v) ,,& > o " x.u5 ?.&.- 0 (JZ v) c.C E L x (r) 0 p.z Q& 0" E =.- c 07 3 E %E QS %eo, a,7~2g ," 2.5 v)'L c m E c Qo 3z Eo ~DLCD~ 2 &j -~QONUU- Sv).?.t=*ora, m$am3znz - oLE2s- nzL? F5,yg.F 2 v) v) a, 5 ~006 aloa c, ," 0 tjS5 ,~2-s%,02 a, 3 m 3 a,xe.E -c oa,?ZIv)m_o& 2-0 z ma'% 2 85, a, &.t; C"'FSZamcsOc ~=C.,&,;~C~F_~,K-E$~S Lc -00~ a,Qv)*t3,$~0 .co m8 ,o;,ggp5,ssg 0 ~o~v)Q~g,O.~.;o" 30~?22ps2+.~-~r~v)~ rncr!-gzz g v).z : - x ~~Lo-.TOv) s =$zraE.E,x.=m3 xv) > mD"; :.Gg> mK m EG a,.g .; E E;,-U&$ e hZc ,gz c v)03--,ooc~ . Pa53 ' C ZF.%=-amK v) x.- v)uv) 3 &gzS m c.IT gE $+ Q) > m 3 4 0 %Mv)-5;Sb;2Ep&z a, I 0 c-ma,a-ca,.2+a,mL.2ghkE $2) P a.m.- QDcGm - 2 m v) or- 0 3 (0-Q -or.vi,oir a, a,au P$,O+s$ gzh~ % c m.r AZO,$ ob a, -& gg2 > cn 'gD == n 0 3 rnc 3 $2: E" 5 2 Ea2 3 a+- S*,$,m& """"g "0LtimlL mL%gpg 7J zs $6 g ; g $2 r x" a, om a, c- cQ?garO'po, La, 9- &l?-a,sp ti- u gs vj ="ss mmQ'&%S,Eo g.;v).- m C22D- a E 3.E 7JLa-o $ ,z Zfj :.s 3 c a, 9 0" 0,o 0 a, ,c *'Z m -c ,. 0 .gz g 0 %&k 5 v) 0 & x (J am mz,2 c m r G 0 0" g hL L CO'a,c)ZT 373% ;.G$2 v;,m a, m.sg % p a,--Qu" a, v).z 6 ,mV; p" $ 5% a,av)~~~a,o~,~a,0mg'~2~~~ 2 2 2 m QC ha pa) .o g m a2.2 L-C mrmg, a,' a cv) rJ gyLy.52g v) v) g)3 2g g g m m-K c; p?$r".@ gm a, a, a,% - 02 d, i., > m 'fs:@n,p 2 oa C QE a, c-Bo L cL.- 0orr;j m<od'n ..- 0, La,%$ %E ~~ w E mnr mu '2"=%,ommx~m ocrmrx'50$; Z:0EL c,o F 0825 Zc255 O.=z v) v) o 050.~8Vi~ e? = fox L&a,a, a.2 v) v) a, 2.5 c) a, a, a,,v)iis: L 22 E 0 +- c -D2"$; a,o m %=E~~~?Qxo a,OZ .mlyoL-c.~~S &.C$2 .i x S-C~EE$E 0% 00 Lm c pIL.~-c~~uu~gx~ c(rJcc - ' a&" LLy- t m @-Js f" q@; bz 2 m~v)~~mm,m~~a,uzooC"m v)UL v) ~ a, zs'ga 0s =VI xo- 2)- o.Ca0- -05 % x" ~SE~oa,a,~pUC~O %%x "FPQ$,"o >" ;?jgz; .f m a-Q$ C a, a, Cv) gF G-g g $Sj.~c - Qf.W a, v) c 3 3.9 a.2 0=E o2e.r L 0s E a, m E ,=-c mru > m L a, a, a0m-6 0- 0 s 3oKa a, t m a2 %a 0 .g = ."L? +3 I c Cy ox a, 3- U 2% Qn 0S-O 0 0 - oc'.~ E.67J o.Gsc a, Q 0; Q 0 am "K $? x~ o 2 a, a,,v,.-. = ,o-a,v)I v) gc a,m -c LJ O""~&s.2aS2afJJ,~g~g rro,o,Irm mmEv)mF .,C Q, xxv)~ 'u"~~ v)a*QILr dc E&, ZG 0 gr" 0 sF m.-.- ,z=-& ps 6.25 E :a a a, E r" m.- a, sa ,o.= 2 Cu0.Q-E c- c. +., 5: .= DIRECTORS AND OFFiCERS OFTHE FUND The directors and executive officers of the Fund and their principal occupations during the past five years are a$ lows: Name and Donald G. Conrad* 151 Farmington Avenue Company. Hartford, Connecticut Frank N. Gordon, Jr. Senior Vice President and a Director of The First Pyramid Pyramid Life Building Insurance Company of America, Little Rock, Arkansas; Pres Little Rock, Arkansas and Director, Frostyaire for Frozen Foods, Inc., Searcy, Arkans Louis 0. Kelso Chairman of the Board of Kelso & Co., Inc. (Investment Ban1 11 1 Pine Street San Francisco, California; Director, Brown Newspapers, San Francisco, California Brooks Cameras, Inc., San Francisco, California, and the St man Group, Inc. (Insurance), Des Moines, Iowa. Corine T. Norgaard Director Professor, Accounting, University of Connecticut, Storrs, University of Connecticut Connecticut. Storrs, Connecticut Dean E. Wolcott" 151 Farmington Avenue Hartford, Connecticut Joseph F. Crowe* 151 Farmington Avenue Hartford, Connecticut Charles N. Dawkins* 151 Farmington Avenue Hartford, Connecticut Robert G. Maxon* 151 Farmington Avenue Etna. Hartford, Connecticut Stephen B. Middlebrook* 151 Farmington Avenue Hartford, Connecticut Charles F. Reis* 151 Farmington Avenue Hartford, Connecticut Business Address Positions with Fund President and Director Executive Vice President and Director of Etna; Director o Principal Occupation During Past Five Years** Director Director Vice President and Director Vice President Senior Vice President and Director of the Company; Senior President of Etna and Etna Life Insurance Company; Pres and Director of Etna Financial. Vice President-Annuity Products and Director of the Company President and Director of Etna Financial. Vice President-Investments and Director of the Company. Vice President Vice President Vice President and Corporate Comptroller of the Compan) Secretary General Counsel and Secretary of the Company and Etna; I tary of Etna Financial. Treasurer of the Company and Etna Financial. Treasurer Directors' fees are paid by the Company only to those Directors who are not affiliated with Etna and its principal ance subsidiaries. For the year ended December 31, 1980, unaffiliated Directors received in the aggregate $1,900 for dance at board meetings, retainer fees of $4,000, Audit Committee fees of $567 and Company Investment Committee 1 $400. As of March 31, 1981, the following persons named above held shares of the Fund (including vested shares uni Etna Life & Casualty Incentive Savings Plan and indirect interest through participation in variable annuity contracts by the Company): Donald G. Conrad, 7,874; Joseph F. Crowe, 1,420; Charles N. Dawkins, 993; Robert G. Maxon, Stephen B. Middlebrook, 2,528; Corine T. Norgaard, 651 ; Dean E. Wolcott, 7,906. *Interested person as defined in the Investment Company Act of 1940. **Where an individual has held more than one position with the same organization during the five year period, the la position has been given. Each of the named individuals holds the same position with Etna Income Shares, Inc. aP.rl Variable Encore Fund, Inc. ma);; fJ?f.n xu a0 a a)o /-.n .?Gc mv, za &SI 2 gz Fa) $5? u- $Fa =o ac mo F? me, x .G m 0) E.? -* Qc u-& - a mg 5;: 5-L 22 =x e,x 2 g,f. 03 og: .eo zg .zn c (oo 2% P 2: s e,@ a)e 7 $g $(o %LEY g$ 5a) e,m C cns-5 on 6% Zm cc gE z gm =m r-ca - a0 hz 0 &L zg am5 sg om EO a (d,o; ZOO a)? (d a)y= 5: , 00 ai 2gZ E; gag LO :; &$ z mmp cy c mr EO -c > 0.- .so 3Q z e:"+- z3 - a gE me cy g .gca 0x3 azm - m.i? ,mu E5 * o Q=J -LL e3 aoa sa' 02 zE SwS 55 oa) E:4g 5.- m- .= 0 .E nm ?@ ," Em E2 rs m.N %,&3 .gs 0; ,"% 2 xQ -2 na c .CN ='- 0 3% a)= ._ m3 oe, - .E r .i! 3sg gg 5s or 5 Ecg 22 .- xo- c3 253 $ zCD Y 2 .- C g)g E3° EEg Q F: .mm--, ornn.->m NC 5.go" .eo c go: o e$Eti xz zi.z? $8 a& Ea2 $%.2 ma c a)EE .- %& r 00 e,Q 5m.z LlUW w 5 a,-- cn =,a Fm sg 55: (dm- a' .po Z0-J cY.c(I) 2 2252 $e, 0 0" 0.200 -c z 'KZZm 02 Qgln zz -a coo0 69go .gs -3 so x ur"r"g-- zp ZC-c =-.- xa OIL- ;?E w 5ktC W'C ,my g? aa g e, z .g %o kn a)a,a,v, cn.- c: m .icJo zg _m-c :s C,>.E$ 20 XCZ 3 55 $-g %Oa -a3- 30 ZZg rr or= x- oEg -0vm Qi= ,a)tj -~ za - sa," Zr"> zE55 cg Xcx x, s X&% x.22 0.2SZ u c= -.-- -- o$g Zc% OZk 0;u - $& 53 aou a&,: :E a)-0 a.sr mQx;;; 2e .OgC .c > a .o u .o ? 2 .o -E g =cou Go awe C=E Or? rd e, r""." Q5a %5=> z.g.5 0 zjo 93 3 ;,E ;.z.g &a5 Dm"' h Cn .- 'C ;&E 29 36E 30 z m0u O'E 'GCa) LnQ $3 o QgF sg - k C'-m 69a '=.= 'gg e. K Cx a.2 e z c.=m ox e,- 0 ():$e za) aK.? -.E u.2 8 ake, am x 2 3 $-E k E.? 2% 5z FC.3 %SE v) ::pg $2 :-.-? m, a@ 5u% =hE mmc qL= zzz a.s Qm 643c\l Oo= $e%; 2.g zz ,"&% N-D > E Q >..E% YZ.2 ? g ._ - - p% g.2 kg: QaUO &s ksg kgz 'r a E.G E E* s'G* c - .- azEg qmg 2SE o,E zs.~ Q.2m :'E moa mkQ cos moo mom .- g5E EE QaC zg - @.i CjTi uj =a)? C~L -cg CQo Cam LLa FINANCIAL STATEMENTS ACCOUNTANTS' REPORT The Stockholders and Board of Directors Atna Variable Fund, Inc.: We have examined the statement of assets and liabilities and portfolio of investments of Etna Variable Inc. as of December 31, 1980, and the related statement of operations for the year then ended and state1 of changes in net assets for each of the three years in the period ended December 31,1980. Our examini were made in accordance with generally accepted auditing standards, and accordingly included such te the accounting records and such other auditing procedures as we considered necessary in the circumstc The investments held in custody were confirmed to us by the custodian; as to investments purchased an' but not received or delivered, we requested confirmation from brokers, and, where replies were not reo we carried out other appropriate auditing procedures. In our opinion, the aforementioned financial statements present fairly the financial position of Etna Va Fund, Inc. at December 31, 1980, and the results of its operations for the year then ended and change: net assets for each of the three years in the period ended December 31, 1980, in conformity with ger accepted accounting principles applied on a consistent basis. We have previously made examinations, similar in scope to that indicated above, of the financial stateme Etna Variable Fund, Inc. for each of the two years ended December 31, 1977 and for the eight months g December 31, 1975. We have examined the supplementary information appearing on page 3 ( prospectus under the caption "Per Share Income and Capital Changes" and, in our opinion, it present! the information shown therein. PEAT, MARWICK, MITCHELL q Hartford, Connecticut January 30, 1981 *? : 8'% 5 3 ". u?I * '4 221 6 '01 ;I *. m 0. a m W N r. b3 9i 5) 0 :- r.al ZI?! 4 7 I !.2 1 e, *om wmcu o*m ol*N cu c9 ". '4 Lo. k $2: (0 3 t9 mol* NO *oa N. b- ".I f? 81 =i CDO- ma W "1 z- 1 ETNA VARIABLE FUND, INC. STATEMENT OF OPERATIONS Year Ended December 31, 1980 INVESTMENT INCOME: Dividends ..................... $ 25,419 Interest ..... ..................................................... .................................................... Total income ..................................................... Investment advisory fee (Note 3) .............. ..................................... Net investment income ........................................ Ratio of Operating Expense to Total Investment Income REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Realized gain on sales of investments (excluding short-term investments) (Note 4): Proceeds from sales ..................... ................ $154,855,974 Cost of investments sold ................. ................ 130,923,392 $ 23,932 Realized gain on written options (Note 6) ......... ....................... 1,470 Net realized gain ................................................. 25,403 Unrealized gain on investments: Beginning of year ......................................... 98,680, 858 End of year .............. ................................. 192,692,896 94,012 Beginning of year .................................................. (303,015) Unrealized gain (loss) on written options: End of year .............................................. 31 7,622 620 Net unrealized gain ............................................... 94,632 $ 120,036 Net realized and unrealized gain on investments See Notes to Financial Statements. 7-- N Pd lo 69 6g 0 OK- m %% g]$ E: r :g s1 m a- lo- V r' ~0cu s"- P 2 n! 9 r C9 m-P-m- -Ne 2 gK2 5- -zc Cn-sm- 69 zz 3- v NZ m In $12 ". x Q 61 5 $J $1 , ~ (0 0 il) m L" .. LLE bz 0) Y) ETNA VARIABLE FUND, INC. NOTES TO FINANCIAL STATEMENTS 1. Basis of Presentation b. Federal Income Taxes Etna Variable Fund, Inc. (“Fund”) is a diversi- fied open-end management investment com- pany organized by Etna Life Insurance and Annuity Company (“Company”) to serve as an investment vehicle for substantially all of the Company’s variable annuity accounts (“Ac- counts”). been made. After the close of business on December 31, 1977, Etna Fund, Inc. (“Etna Fund”) was merged into the Fund. Accordingly, Etna Fund The Fund records investment transactio1 transferred its net assets to the Fund and Etna on a trade date basis. Interest income Fund stockholders exchanged their shares for recorded as earned. Dividend income ar Fund shares based on the relative net asset stock splits are recorded on the e value of the shares of each fund. A condensed dividend date. Dividends and distributioi statement of assets and liabilities of Etna Fund to stockholders are recorded on the e as of December 31, 1977 follows: dividend date. 3. Investment Advisory Fee ASSETS: Investments, at market value (cost $35,511,249) ............ $35,712,049 Under a management agreement, the Fu Cash ........................ 88,125 pays the Company (its investment adviser) Other assets ................. 357,449 daily fee which, on an annual basis, is equil Total assets .............. 36,157,623 lent to one-quarter of one percent (.25%) of LIABILITIES .................. 67,926 average net assets. NET ASSETS ................ $36,089,697 Shares outstanding ........... 4,922,664 4- Purchases and Sales Of Investments NET ASSET VALUE per share $ 7.33 Thecost of purchases and proceeds from sale! investments other than short-term investme and U.S. Government obligations aggrega The Company’s Accounts and affiliates held 94% of the Fund’s shares outstanding at De- $1 98,204,911 and $1 54,855,974, respectivc cember 31, 1980. Realized gains and losses from investmi The accompanying financial statements of the transactions are determined on an identif Fund have been prepared in accordance with cost basis which is the same basis the FL generally accepted accounting principles. uses for federal income tax purposes. 1 Fund deems it impracticable to calculate ga Summary of Significant Accounting Policies and losses on the average cost basis sir a. Valuation of Investments such basis is not allowable for federal inco tax purposes. For federal income tax purpos the identified cost of investments owned Investments are stated at market values December 31, 1980 was $53581 9,327. based upon closing sales prices as re- ported on national securities exchanges or closing bid prices as reported by invest- ment dealers, except that during the last Accumulated undistributed net realized tax: sixty days debt investments are held, they gains at December 31, 1980 amounted are amortized to maturity value. $26,002,401. It is the Fund’s policy to distribute substar tially all of its taxable income to its stocl holders and otherwise comply with Interm Revenue Code requirements for ‘‘reg[ lated investment companies”. AccordingF no provision for federal income taxes hi c. Other 2. mbu)mb 0'b.mm m (D7'b.b r- ;z/ , , m-Cdm-,- 0 _- c3 :.q o m- d ". cu-ni a h -7 S - i 9- SI -1 nEn 0-m- 0- mm u) On-=,m-cd 0 N(\I a- lb-3 aqz8 u? (D I a+ bb m ?- - -v S v j I 3 LmCr ,hmm?,gm-Ea .:vgGT ?.$ E? 0) -- s:a,?m ,,,G$t;," SQ E?- 2s - Z~VIoO~p," zz 0 m ,E E ogz K && pz,& p c m $ZGEQUoKQK Dh 032 ma, 0" .- - -L =.s c .- F I 02*oGf-~;cu b=?-m-b* obmmm In 0-m-rn-b-b- 0 -"E-- ETNA VARIABLE FUND, INC. PORTFOLIO OF INVESTMENTS December 31, 1980 Number of Shares Cost Market COMMON STOCKS (90.5%) Air Transport (1 .So/,) Northwest Airlines, Inc.* ........................................... 157,800 3,492,530 3,72 Purolator, Inc. ............. ........................................ 124,100 4,752,574 4,15 9,627,449 9,41 Auto Parts & Accessories (1.0%) Bendix Corp. ........................ ......................... 100,000 5,592,459 5,91 6,634,913 6,94 Automobiles & Trucks (2.4%) 15,195,903 13,53 Paccar Inc ............................... ........................... 60,000 2,272,787 4,24 17,468,690 17,78 Banking & Finance (3.3%) Morgan (J.P.) & Co. .......... ............................... 149,650 6,959,707 7,72 Southwest Bancshares, Inc. ............................................ 180,000 4,370,365 6,66 2,23 Western Bancorporation ..................................... .I 62,000 20,201,564 23,81 Building Materials (2.8%) Black & Decker ......................................... 318,600 6,396,811 5,85 ...................... .... 154,800 2,242,883 3,8: ...................... .... 285,000 5,788,967 5,3: .................................. .... 3,515,531 5,0! 125,050 PPG Industries, Inc. 17,944,192 20,1( Chemicals (1.7%) Dow Chemical Co.* . . .................................. 156,500 5,024,287 5,O: DuPont (El) de Nemours .......... ................... 1 10,858 4,741,374 4,6! 12,064,571 12,6' Delta Air Lines, Inc.. ............................... ........... 26,000 $ 1,382,345 $ 1,53L Echlin Manufacturing Co. ............. ............. .. 74,800 1,042,454 1,02 General Motors Corp. .............................................. 300,000 Pittsburg National Corp. .................................. 50,000 2,225,000 2,22 Wachovia Corp. .................... ......................... 274,518 4,802,446 4,97 1,844,046 Dexter Corp.* ......................................................... 36,000 661,185 1,1! Pennwalt Corp. ............................................ .. 63,600 1,637,725 1,7 Crown Cork & Seal Co., 1nc.t ................................... 245,800 5,781,771 6,9 133,700 2,771,523 7,5: Avon Products, Inc.* 43,200 1,796,688 1,4 Bard (C.R.) Inc. ............ 84,600 1,124,072 1,7: 145,400 3,317,734 4,O Merck & Co., Inc. .... 17,400 1,077,726 1,4 ............. 191,300 5,371,032 499 ............. 153,000 2,362,036 2,7 223,500 7,927,773 991 2,714,843 14,C 175,600 ............................ 169,100 6,272,458 12,: Containers (1.0%) Cosmetic & Health Care (8.2010) 34,735,885 59,~ See Notes to Financial Statements $1 ~OOO~Or. Lnlo0000000l0 01 omm wm.- - WOOONO a3 P-NO00000m Ul mr-N am* L?W" L". (\l-- ** pi c ~~-~.y@; a3hWlnN m-m- a3- me*. b- :l o-m.mrqm--. 0. ulm.m.h--mr-.ma-b. N pW Flz- a3 *-mWN(DmCUm m m1 41 aeIzi cxa m SI - gGgt.=g (D mcut.mmor-mm h r.*t.ooommmw 3 E?: =?% L m-cqa-o-m-q~. --~-qq~?qc?~-m.m- ~n c9m-q N. v. zi gz&%gg$ ?ggZ%%$2?~ z ??kg %E?-% w-o.*fi-cn-m be m-*-b.m-qw-W-m.--- m- 0. w-r-. 0- *.am 7- R~~XC?~~~~ WomoN-m(Dw 2 h 1 $1 m"!"i 2,- .-. m, N ~m c)w w ~--m.-.mdhl-tm d mmm -04- b9 c m ooNoomooom OmO-ONOmmN *.mh~-~o"~"u'.m~.-~ w.mrn~m~m~w~a~m~m~~~ m Nrrmnl-Nn. %?'%%~~%~S%% RZ;"T8Z"m%28 m.o?w.m-fi-cuqalm--. %&%:fc:z$zK? *-Nw-*N-*.*--.mW- (D T 7-m- - v) 9 g r 0 00Nr-O*0000 oowmoooooo mwmmNmwmOO) rW 0 00 m mm 0) .-r *-w.a-m-a-~.o-m-o-~- O O0 m(D 000000 000000000 000000 000000000 mmmowhbc0m 7 N --N- bb ow P-~O~.=i.O~L".O~ m-o.o-o-~-=-o-0-w- 0. 0 om 7- 4 0- N. mm Pp, z--T*-Tru*mm 7,- mulaom$ mm~oWomcum r vr ETNA VARIABLE FUND, INC. PORTFOLIO OF INVESTMENTS December 31, 1980 Number of Shares Cost Market Vi COMMON STOCKS (90.5%) (Continued) Office Equipment (10.0%) Data General Corp.? ................................................... 76,100 4,963,964 5,022,t Digital Equipment Corp.t* .............................................. 180,761 11,239,600 17,172,: International Business Machines Corp. .......... 504,900 29,354,676 34,270,( .... ... 51,000 3,661,233 3,825,( .... ... 83,000 5,382,408 4,969,f 60,324,360 72,753,! Oil (24.6%) Atlantic Richfield Co.* ......................... ............. 14,322,185 26,627,( 41 8,500 ................................................. 184,420 8,439,386 14,868,t Getty Oil Co.* ................... .................................. 142,400 3,351,446 13,083, Kerr-McGee Corp.* .................................... ... 123,600 7,565,089 9,764, Marathon Oil Co.* , . . ............................................. 72,800 1,587,510 5,150, 7,286,682 15,898, 196,884 Murphy Oil Corp. ......................................... .. 123,700 4,084,131 6,185, 263,400 9,743,965 15,474, Shell Oil Co. ............................... 400,000 7,757,474 23,300, Standard Oil Co. (Indiana)* ........................................ 87,816 2,592,090 7,014. Standard Oil Co. (Ohio)* ............................................... 571,466 12,481,984 41,145 79,211,942 178,511, Oil Machinery & Servic Dresser Industries, Inc.* ......................... 152,600 4,467,958 8,164 Halliburton Co.* ....... ... .............. 62,600 3,743,776 5,227 Rollins, Inc. ........... ... .............. 79,700 1,400,457 2,869 9,612,191 16,260 Paper and Forest Products (1.6%) Union Camp Co. ................................................ 4,989,183 5,541 11 0,000 Weyerhaeuser Co.* ................................................ 170,466 5,601,226 5,817 10,590,409 1 1,358 Photography (0.9%) Eastman Kodak Co. ........... .................................... 91,500 5,301,779 6,382 Rails (1.2%) CSX Corp. ........... ....................................... 20,729 483,047 989 Missouri Pacific Corp. ............. ................................ 30,500 1,499,520 3,133 Southern Railway Co. ................................... 61,053 2,592,366 4,914 4,574,933 9,038 Retailers (1 .So/,) Allied Stores Corp. . ........................ 149,220 3,304,346 3,Ilf Giant Food Inc.. ................. ........... 109,674 1,409,577 1,86f K Marl Corp. ...... 300,000 7,970,389 5,362 Safeway Stores, Inc. ............................... 91,900 3,202,579 2,802 15,886,891 13,14f Textiles & Apparel (1.4%) ........................................ 173,250 4,606,656 4,69$ VF Corp.. .......... West Point-Pepperell, ........................................ 125,000 3,891,226 5,31: 8,497,882 10,Ol. Automatic Data Processing, Inc. .............. 151,400 $ 5,722,479 $ 7,494,: Mobil Corp.* ....................... ............................... Phillips Petroleum Co.* ...................................... Tire and Rubber Pr See Notes to Financial Statements Bandag, inc. ...... ............................... ... 347,100 5,118,886 7,332 mmmo In 0. m c'! o! u? * *mc -1 cu 0 %kg$ :g%I ti ZZZ8 :: :. 8 2. z- F 1 g $1 ;I cui mNml-ldjhl or. m -- 33 %G% E:$;%& 7 2% x 2:: %&gZc.i g~ 90. 03 p.0.0. b.o-a!o-m- v- cum mmp. -WN- (D cui ~ B 03 q r- :qq 0- lo' d 2 s! EJ :I zspj '4 d -1 IN1 c" Or. (Dm 000- 7, -0003 0) m- G %~$j %$8,"~ 7; m qrnc Nm mm* -*w-a N 9$/ 8 moocu In 0. 9 -. o w- i'-Y m ?N.W. cu.?9aJ y) 03dOU b 56 % 23% %&$&% g 9; 9 m r.- k. r." E9 a e-90 t4q.ocq y $1 ETNA VARIABLE FUND, INC. PORTFOLIO OF INVESTMENTS December 31, 1980 Principal Amount cost Market SHORT-TERM INVESTMENTS (7.8%) (Continued) Metals & Mining (0.4%) - Inland Steel Co., First Mtge. Bonds, 3.50%, 7/1/81 ........... ....... $2,785,000 $ 2,644,323 $ 2,65( Rails (0.6%) Societe Nationale des Chemins de Fer Francais, Comrn. Paper, 20.125%, Societe Nationale des Chemins de Fer Francais, Comm. Paper, 21.50%, 1,59 1/6/81 ................ .................................... 1,600,000 1/7/81 ..... ............................................. 2,700,000 2,690,325 2,69 4,285,853 4,20 1,595,528 Retailers (0.1%) Garfinckel, Brooks Brothers, Miller & Rhoades, Inc., Comrn. Paper, 21%, 1/19/81 .................................. ............... 1,000,000 989,500 98 Shipping (0.4%) Svenska Varv A.B., Cornm. Paper, 20.75%, 1/ Utilities - Electric (0.7%) Consolidated Gas Electric Light & Power Co. of Baltimore, First Mtge. Bonds, 2,991,354 2,99 3,000,000 Duke Power Co., Comm. Paper, 17.75%, 1/14/81 ........................ 2,000,000 1,987,180 i,gr 2.875%, 4/1/81 ..................................................... 3,367,000 3,232,859 3,2 Total Short-Term Investments 56,008,480 56~: Tax Basis Cost ......................... ............... s35,ai9,327 5,220,039 5,2( TOTAL INVESTMENTS .... ................................... $534,265,546 $726,9! See Notes to Financial Statements ........... 5 2 b- 0- w- m- m- *- -- LD' & o- r; w- m- m- o- o- we 0- N- m- N- o- cu- ti- - 0 N.m w m" w f-. 0 0- gslbti mom wmmti--mtiwmm mtimm-~ g~~E&~~$~R$~~~$o U LD- - 7-v- -m cum m - -- N.* t9 €e LOuo.~w~~mmmr-timcummomm~~ti~cutitimmr.mcui,ti~r.~~m~~~~~m~ ~P.mNm-mwm1OLDcucum-tiOmommwtio~m~-~~mP.m~m-cuw-~wr. . . 3 s .*. 0. -- -. (D ti. cu t 0- -- o 0 (0 9 m cq m. 10. - P.. ti m- *.a. r.. 9 r.. 0- 4 m- ti. - ti 10 m-m- - O, g- - - (O LI) 3 '~'~,moo-motiv)P.mwLDmmmmmtitiwP.mi,wm-cumP.mwwmo-timcuw~cu1O rn m ti o m In- ti u .* w r. m i,-m wpm m w m-a 67 (DO - 01 i, r. h r. w m-m"-*u, m m-N-ti m-~-~- LI) - ---N- ,.- - _o all, -.-cum- -w-r.- -ti - 0 &=It9 c < I 1 t c u (( c K g .$a ~~---r.mmr.r.-f-.b~~.--f-.i,r.~.~----~.r.m----w---~--~~~~ ~~~~~~~~~i~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ m LL t .g E ~~cu~m~m~.0~o~oo~ocu.N.~~~~om~~w.,~~o~o~oo~oo.oo~oo~oo~~o~~~o~w~~~o~ INVESTMENT ADVISER Etna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 061 56 CUSTODIANS The Riggs National Bank of Washington, D.C. P.O. Box 1149 Washington, D.C. 20013 Bradford Trust Company of Boston P.O. Box 712 Boston, Massachusetts 02102 TRANSFER, DIVIDEND DISBURSING AND REDEMPTION AGENT Bradford Trust Company of Boston P.O. Box 712 Boston, Massachusetts 021 02 AUDITORS Peat, Marwick, Mitchell & Co. One Financial Plaza Hartford, Connecticut 06103 m Wtna Life Insurance and Annuity Company One of the ETNA LIFE & CASUALTY companies Atna Income Shares, Inc. 151 Farmington Ave., Hartford, Connecticut 061 56 Telephone: (203) 273-4806 Prospectus Dated May 1,1981 Etna Income Shares, Inc. (“Fund”) is a diversified open-end management investment company, commonly referred to as a mutual fund. Its primary investment objective is to seek as high a level of current income as is consistent with prudent investment risks through investment in a diversified portfolio primarily of debt securities. Capital appreciation is a secondary objective. This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, these curities of Etna Income Shares, Inc. in any jurisdiction in which such sale, offer to sell, or soiicita tion may not be lawfully made. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURI TIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THI ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THF CONTRARY IS A CRIMINAL OFFENSE. Read and retain this prospectus for future reference. c u- CGe, "a,G& K os zam e, :$ .-Eg cc ; roci -52 q." e ,zz ,E'== mk-65 a .-0 - (q .- m L- c 2s3 8 mzq mu 0 U-lc .*A0 -U%o .g gs2 a,+L ra,a,a p En .- seen dsO2 g oo mre, ox&.- 00 y $;@ cuzs 'E 0x2 gs5 $75 K5 oLO-5 z et@ 2Q.k m m.i a, >u a 6zz g "'5 -a0 oa,m &e? €Ea, v) 2:2% '2 gE> 2:s 5 h $2 ma5j.E t @QS mzgG m ._ Kg x# 3.z'za, 22," ?Eo Gz;c0.g ? 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I .- c .- (J5 Ee,P $E$$ n a - s32 .e e,cE 0;s; * 2.2 .Euz - .- Ocn azo zgwo f gr 0 L- 0 .a c 0-0 .s? 0.5 g$ Qa 0- w mu373 &>a v) 0:; oQ # 2 .gQ h.? UJ z m,O :za ca,mo a, ,- E c LO 50.f 35.p$ c -e% 2ag:Vj =a- a E .FF owk m,~, cn 2 X" r g '1,g mu sge, .- mz +-"$ s x Ze,O KCom CaOft gz$z - 2c~ >>aa 5 OEz mEacd m~ c 3 QS 0 c a !=,G m E,!?- a, c 0.2 9pm La o .- 5 .r 4 s zg ,gwL wma,o mcz 0gzE '5 g 3 .'L - K zc '-OD CKfflz - t 2% g%E a05 Koat o 5% Vd 0x0 E.28 .J"as.z vm- 2.gs.g c KcPC KZ &XE $aa3 ag $% a, mz Y 000 )as% sgai Eok aQo U0cy DQE.z ~~ ,".E coooo o%m> z.coa, .- a.- CL- s .v, 5' pmc 2~2~ -2~oZ OK 45 sm aSa 2%; U.%.+g %Em. -c20a, +-,am 2 'a,!? E F> 3 a'-"; QU .- PER SHARE INCOME AND CAPITAL CHANGES (Selected data for each share of capital stock outstanding throughout each period) See accompanying Accountants' Report and Notes to Financial Statements Nine Months Ended Mayii5,I Years Ended December 31 December 31 Years Ended March 31 (date capita 1980 1979 1978 1977* 1977 1976 1975 to March 3: lnvestmentincome . , . , . , . , . , . $ 1.258 $ 1.152 $ 1.103 $ .843 $ 4.098 $ 1.100 $ 1.109 $ .9: ( .1' Expenses ................... ( ,027) ( ,030) ( ,035) ( ,123) ( ,142) ( ,118) ( ,121) ( .7: investmentincome,. ........ (1.194) (1.114) (1.085) ( ,692) ( ,998) (1.025) ( ,946) investments ............... ( ,887) ( ,874) ( .783) ( ,065) ,303 1.299 (1.522) ( .9 investments - - ( ,012) - --_____________- ___ Net investment income . . 1.231 1.122 1.068 ,720 ,956 .982 .988 .8( Dividends from net Net realized and unrealized gain (loss) on Distribution from net realized gain on - - - ............... - - Increase (decrease) in Net asset value: ......... ( ,850) ( ,866) ( .800) ( ,049) ,261 1.256 (1.480) ( .f Beginningofperiod ......... 11.196 12.062 12.862 12.911 12.650 11.394 12.874 ___ Endofperiod .............. $10,346 $11.196 $12.062 $12.862 $12.911 $12.650 $11.394 - $12.1 13.; ppp______-- - ---______-- Ratio of expenses to average net assets ......... .25% .25% 28% .95%** 1 .I 1 Yo 1 .OI0/o I .05O/O .8d Ratio of net investment income to average 5.9 Portfolio turnover . . 132% 11 2% 100% 94%** 1260/6 137% 99% 16 Number of shares outstanding at netassets ................. 11.40% 9.48% 8.64% 5.54%^* 7.48% 8.36% 8.57% endof period., ............. 3,755,119 3,334,826 2,686,463 2,220,598 2,342,694 2,289,151 2,155,925 2,13' *The data for the nine months ended December 31,1977 reflect a change in the Fund's fiscal year-end from March 31 to Decem **Figures are only for the period indicated. TABLE QF CONTENTS Investment Objectives and Policies of the Fund ............................................... InvestmentRestrictions ................................................................... Investment Management .............................. .................... Custodians and Transfer t ........................... Sales and Redemption of Shares .... ........ ....................................... Distributions and Federal Income Tax iderations ..... ................................. Capitalstock ............................................................................ Legal Proceedings . . ................................... ................ OtherConsiderations .................................................................... Directors and Officers of the Fund .......... ............................................ Financial Statements .................................................................... ............................. Experts ................................................................................ L L Om, &kU'&- FJi oig&gzi a,E&% 25s .-a,mo> 5,. 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E m 62 5 ma (0- CU ffiq K.g Q.- "sf's 0 c 2I.L C5ca,mCUs 00 EL3-0.ioa,z.!LI=0 gLLm--, .- 3$U m-C 3 ,.g-S QV! $2 ~3 ~'i ,gmLo<s m0-g- ma, .=s b.g n.05 0 mr 0 E Q, 0 Qa, a,.% $Z r0 a, a, O,~ ~$-f.p a, Qwv) m m.5 a Ku C 0 a, o)= __ .- - m k_mox.m p8 a,)*o$gt 0a,ro,a, kD7J 5; 2-m 22 a,a Q -2 0 O'_r.~~Y:- z .- Lo 3 ~~?=l" a,- a,+ rnDCU Lo Ui E$ gs -5s -= '"'e Q, a, 2 kj ,- E K~JZSS ./ 0.) 3 22 ,2rzn8 LoaE033 a, m Lo Q,G Q mg a, p$u% g.2 @.I e, w!.L 05 a, 4sz ZQC, *gag ~v)~-'Loa,Ki,, D .-- = 0 > -5 -0 % z a, E .E? ,g v) the Fund’s portfolio would be adversely affected. In- vestment by the Fund in restricted securities gener- ally involves additional risks not present in other investments. The Fund may engage in the lending of portfolio securities (not to exceed 15% of its total assets) and in the writing of listed call options and their repur- chase (subject to the 30% limitation described under Investment Restrictions, restriction [121), to the ex- tent that they do not jeopardize its status as a regu- lated investment company for Federal income tax purposes (See “Distributions and Federal Income Tax Considerations”, page 12). The relative size of the Fund’s investments in any grade or type of securities will vary from time to time depending upon a number of factors, including yields, market supply and economic outlook. The value of debt securities may be affected by changes in general interest rates. If interest rates increase, such securities tend to decline in value; if interest rates decline, the value of those securities will nor- mally rise. Also, there is generally a greater risk asso- ciated with higher-yielding, lower grade debt securities. Maximizing current income may increase the risks associated with the preservation of capital. Eurodollar deposits in foreign branches of US. banks are the legal equivalent of domestic deposits, but are not covered by FDIC insurance and may be influenced by future political and economic develop- ments and governmental restrictions. Investments in foreign securities involve certain considerations which are not associated with invest- The Fund engages in trading when it bt ing in American securities. The securities of some the transactions, net of costs (including cc foreign countries are less liquid and more volatile sions, if any), will result in improving its p~ than American securities. In addition, with certain for- income or appreciation potential. Whether a eign countries there is a possibility of expropriation or provement will be realized by trading depend confiscatory taxation, political or social instability or the ability of the Fund to evaluate particular sec diplomatic developments which could affect invest- and anticipate relevant market factors, includ ment in those countries. Individual foreign econo- terest rate trends and variation from such 1 mies may differ favorably or unfavorably from the Such trading places a premium upon the abilit! United States economy in such respects as growth of Fund to obtain relevant information, evali gross national product, rate of inflation, capital rein- promptly and take advantage of its evaluatic vestment, resource self-sufficiency and balance of completing transactions on a favorable basis payments position. Fund’s expectations of changes in interest ri prices or its evaluation of the normal relations tween prices of two securities prove to be inc Portfolio Trading The Fund uses trading as a means of managing the Fund’s income or capital gains may be re its portfolio in seeking its investment objectives of and its potential loss may be increased. high current income and, secondarily, capital i ciation. Trading is used by the Fund primarily in ipation of, or in response to, market developme to take advantage of yield disparities. Exam1 circumstances in which the Fund may employ t are: (a) In anticipation of a rise in interest rat( Fund may shorten the average maturityof its pc so as to minimize depreciation of principal; (b) In anticipation of a decline in interest the Fund may lengthen the average maturio portfolio so as to maximize appreciation of prin (c) When market prices create disparitie vestment values among securities trading at di levels of premiums or discounts, the Func change the average coupon of the portfolio dc curities; (d) When disparities arise in the relative of bonds of differing types or quality, the Fun sell one type or quality (e.g., industrial or AA) ai chase another (e.g., utility or A); (e) When disparities arise in the relative Of bonds Of cornparable qualitydue to marketf the Fund may sell one and purchase another; (f) When disparities arise in the relative of different classes of fixed-income securitie: bonds and preferred stocks) the Fund may s and purchase another. $ioi,uua,.la-;;pL_o~~g ' a-xa,ca,c V)a,,XLL , Gc-c.= E%e N gsz ,E E,s==u ,o % "0 3-cnmoL.,z ziz-g.9- x 0 25 g.g ._xi 0 .E c E" $.psfl I: o 8 ($ p2.g 2% 2% a,Ekum c 0 OZK 9 p-.g:+- L >.-- --~ $Z%(J 3g 32 r_o 3 m 2.2 a,- 0732 5 P me s'.gE~rv,3~ --a,": mar : Ecoo.pmmmr 0 -mua,c SOU&= n-P-m 0 "tj.Q:","S & > 35-0 a, C 3 $2 a,~ u C; -0 +3.?G L. c oc 8 gE2-a: QrnU.2 a, E zg: W$ L..G m v)F gg%Zu.gg;E ;:.K& .- - a, QLLL 33a,E% $.&zEzZQ.?&Uescm-E >e a, UI+ m Q$S ,a, a, :$ a,- Cc.z-z-~.= m.2~ a, x .- u .a,"FZ a, v, ~CuOO,~.~ cmOszz$ 2% CE z6z8s0Ka 3'5 0 e= ~o+-z me-. g $zcgO 0 ma, &:2% m.2.5 m" 5 g a,.% m,= s+- 3 0'- (0 v) a, 0 Q C m 3 n0 a, a, c-'- os @2 Qs c m0a,mz=mm-aoeu~35- $u m- 0 x - g Lg30- _o $)$ ($5 gEu=5E---5 a,g 02 0 m 3 ,o.& 22 _x0 E.? a, 0 szm 6.G ~~~Q~~u m 0 QE Ls ,sit; cn.-sEO xo- ~2 9z ~,~~~3-.c e-,$gL..;L".g z,"',""i 3L.E a, v, g,E%$ yI) L.O c a Q =a 2 0 5 xa,u x.= e a,$ m c in',= ,$a m..'g C aa,o oo~Yw.ccQa,- 3 2 z &&-: $2 -& gZ.2.g- 0 zK+gE 003 0-500 Ll+? cd0 o;,mo,,s; o-z5&; . .Q 0 .a, ,a, koac $3 ;;,g 6-a 0 m 0.ZE.S 0, ma, a,xaa,,o m-a,2?-g,g$ai C.9c 0 .E Eg$;$$$ -pga,2 5 -L -~ y '-5 7 0g'5'5 - - 65.2e;?&b~ $g,Fg.zgg .v, r 3.5 a, 0-m 3 30cnv) 0 cm00 @- 5.n2.E $2 c 0 i$E 5 0- $$ +a c.??&% g-.".^ m G2.Z 6ZU a,.L x I mA 0- mG&; g E &Fa+- > 02 2s g 5 a ?)a2 a 3 -- om $ Pm *A 0c $F,Z ~cE a .e 2 OOQ €322 0 mzz 229 E.S m:Fz 03.z L&? g &.?-gy C= (0 02s m m mg L :HE2m3 L d' $5 SEI" % 8% OP& am$ 8 zg c- a3 8 g% p E$? E %0 v).!g y 3 cg g $S2 2 c'= t; .z a, ($ .- c $;,5,*22 2 g&a,.a,g ou m=2 528 o-,o~ c 8 m C ?.s 0 0'- a, * 0 i v1 X 3 L4- QUI' 0 Cs a,= ;.s +o-a,~ma,~57J)"&Erm.=p mp.0 %E t;3 #SmX0 ,g_n$5 a5- x,= g E a, gm: 3% 2 g .: x3a , 5 g p mz.:.v, g-0" v) 22.ssu.-c c x I a C 00> a, 33-gp 2 0 m a, ~a,*:s:s:g 2$5 Sj % 2 vja,z a 3 5 3ps gz Fg5 m.GkQ L c&--~%n~po.$.$ wm > ,SF 2 g,c, %& cn? 'Zm$ ocm 2gs.Z 0- c--m bzz5 (' 0 5- rk.- 0 m, a g e- zl a, v) p 0.g rl)LL ,m'i .- ,".O,% & 8 am 2.9 so+ > 0.c rn a, m rn5 8% a, n 8 %$ &$.~,"EO g~~.g5~ €,,, .- > ocum x 0 ao.%m C C (II m-5 c s-,g-gs a g o o a,zp "-s$y&m~x a, E-po"..rca,.O - .F 3v)z 0 C3Co 5 ~Zazj m5.5 e ,gfz % 0 C h ~3 c ~ r.~ao~umca,E ,-sa-- a, 8LbpiTg :p.zro .= C m $7 pg- Lx.2-7 a,$-" O 3 > m 0 a, O-c 3-= 'no'O u gmCKe a,-;;.' zi$ -. CE L a,2~c-KC0 .seis$:z g @zoz? -855 a,oa,x g , OErGZ'n.,Or m,5a, 0 cC- c 5 O"u .v, 2 ,3>a -mcu+k c 2.n -2 S& m 0 c in.=o a,-E.--mugdegg&z2E 5: v)o c~---LOO= $:m%GZcg .sL"a.$ cJ)5~~5(lj .- - c 10CF> og._o,u 0 mo>v)UQrn zLLE,O.v, 2" ;=os$$ +.a (D 5 a, 0 c -.;z .g -2 Ci) Q + p2s 2 LO, "-E.$ &g s): rnmq&pv)~"a, mcmE 11 or a, .hv) u OQ $:L.S~ K1.G E 0 O$ F=> Om 21: 0 a, 0 .r z .$ E *.~s 23 52 a))~, a,;5 w g 8 88.g &s bm E," .Ea, quo,- o +.a +-. - ,= ,? & , a, p o.s .g & 5 .e yg a, m v)Fm 00 0 0 0 a, &LL 3c 2 a,ur a 5 $ I $32 m_o F.O-0 nF Qa, 3 a, - .- E Q 0 Xoy- C UQ2 $c ?? ?&E: E+m--, I- 2% x E$a, 6.: 2bF ~~33 & '= 0 3 m cnm C 5 052 Q>y ,"a a,U 5 FE 6%'' L-~~O, EL"' !-L! 8% $ Cxm Q.S .s 8 vj z y 3 0 c x.20 a om.z XU x& Qm-? gu v, gg..'g LLo ZF y'sg <g$z Oc-L 5 c c x, a, 0, v)? C$ Ez.gg :?$ vi 2s 8 5; ;;iOOC 1I a,= - qg Ci 2.g om . cj z 3 Ti -0 65 C a 'E m CIS 2 3 CUP Et. It" +.=L .- - m a, a5 C> 2 $-cg' Ki c= r a, ~a - Q0> a, m.E +.V)-Jr consolidation, acquisition of assets or other reorgani- zation approved by the Fund’s stockholders. 14. Invest more than 5% of the value of its as- sets in the securities of any issuer (except securities issued by the United States of America and agencies thereof), or purchase more than 10% of the outstand- ing voting securities of any issuer. 15. Invest more than 5% of the value of its as- sets in securities which, although not restricted secu- rities, may not be readily marketable, and in securities of companies which together with any predecessors have been continuously operating for less than three years, unless such securities would qualify under categories A(l) or A(3f on page 4. 16. Purchase interests in oil, gas or other min- era1 exploration programs; hoinlever, this limitation will not prohibit the acquisition of securities of com- panies engaged in the production or transmission of oil, gas, or other minerals. The aggregate of investments in restricted secu- rities, limited by Item 4 above, and other not readily marketable securities, limited by Item 15 above, will not exceed 10% of the value of the Fund’s assets. intended that any excess of the actual perce shall not be considered aviolation of such inves restriction unless such excess existed immec aRer the Fund,s acquisition of such SeCUl property and resulted in whole or in part frorr acquisition. The investment objectives of the Fund, ar Fund’s policy regarding concentration, see pc above and restrictions (,) through (16) are f mental policies and may not be changed WithoL vorab(e vote of a ccmajority,j of the Fund3s outsta shares, which, as used in this prospectus, mea lesser of (i) 67% or mOle of the Fund,s shares sented at a meeting of stockholders if the hole more than 50% of the Fund’s outstanding shar present in person or by Proxy, or (ii) more than t the Fund’s outstanding shares. Securities Lending As stated in restriction (7) above, the Fun lend up to 15% of its assets, although it is antic that less than 10% of such assets will be on I anyone time. In the Company’sopinion, iendin folio securities to qualified broker-dealers affoi Fund a means of increasing the yield on its pc without substantial risk. All such loans will be fu lateralized, and the Fund will be entitled eithei ceive a fee from the borrower or to retain somc of the income derived from its investment of ca lateral. The Fund will continue to receive the ir or dividends paid on any securities loant amounts equivalent thereto. The Company h vised the Fund that, althoughvoting rights will F the borrower of securities, whenever a materia affecting the borrowed securities is to be vote will regain or direct the vote upon loaned secu A loan may be terminated by the borro two business days’ notice, or by the Fund in fiv ness days. The primary risk the Fund assul loaning securities is that the borrower may b insolvent on a day on which the loaned sec rapidly advancing in price. In such event, if tl rowerfails to return the loaned securities, the E collateral might be insufficient to purchase bi full amount of stock loaned, and the borrowei be unable to furnish additional collateral. Tt rower would be liable for any shortage; but thl would be an unsecured creditor as to such SI and might not be able to recover all or any of it The Fund may invest up to 40% of the value of its total assets in each of the electric utility and tele- phone industries, and may further invest up to 25% of its total assets, at market value, in securities issued by companies principally engaged in any other indus- try, provided, however, that all finance companies, as a group, will not be considered a single industry for purposes of this limitation. Qebt securities in the electric utility and tele- phone industries tend to have longer maturities than those of industrial issuers, and unlike industrial debt issues, do not typically require partial repayment of the principal through a sinking fund during the life of the securities. As a result, electric utility and tele- phone issues may show more price volatility in pe- riods of changing interest rates than would industrial issues of like quality. The electric utility and tele- phone industries are largely monopolistic and sub- ject to extensive government regulation as to rates and services. Wherever any investment restriction states a maximum percentage of the Fund’s assets which may be invested in any security or other property, it is 'ma, I 5.c~ $) ch.2.k cfjACT2 0, ' .- .cmOc Q- ss z .szg $.: zEE* mX$&$$,s~-~~~~ti;~,~~ 0c.L a .!?cZa,?? 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E 2 9 E.- a, F .=mca, Lc3gggkZ22c &Eom ._ * .~v)OLO~v,mv)-a~:~~v)'~-U- Q) t;.e02.- 2 a,z p ?! 0o.r $:&).:@; % XF $="-a, %E a, 2 a-0 a, 3 a,u=g 0 2% L 8 h3, &=t;z 0 a, a, L.- --m&g -E a,, p8m ~'~v,Oo,- z a, a, gz 3 *'E a, 3 OmZQrmap+g~~oJgv-%g @$""$' 2F?? nmCa,oo,> 0 Q) ."ZD v)~~Eo2da,rmg;a,, u) :2 zgg gzu- a, mii a,= o*L=wo :2-"2 $$&."=.Gs 5 o-.r.r x 2,s a, > c mr-r Ox a, a, a,3 3s" zcco ASD =LI- Lrn2%$2 L La .- omFa, CO30._0 a,=.& ,,UkS, -05ro.- OK>>, 3g90,$5~2xa, mrz' .g - ocLa,3a, Eg~~pyhgb ug3aSE ggz v) %-*3 EZ.2 a, o C.5z2 :BE.= 3 C E.- a, g5~ a, C 0 OD * ~bs% >~u (I: c 0 %> v) trim.' v, ,c 3 v) m v) v)yF;z'iTj 3% a c 025 oy m E pz.sc: ~~ 2 gu" c 2." %E 5 * 3 3- >0 a, Ira KG a, a,_o v) c c_o 0 a, v) cng.: g~cq E2 >--.O a ([I C.?? v)-C C.zF.czj-O a,- 0 a, 5 >'= m g)5 v) ._ 2J11- v) a, ,g 2-g I$ c .- 0 0 5 5 m.5 = mv)F*3a,- .= om ah,c r,~a,mma,a,~D.C~-O._OO~~ v) t 0 m.0 c 3 'I c a, g - Q) C. -- OZ 3 a,+ In'= 0 a)--+ zg &,s 'E 0 8 g.2 a, 5 C v) Q- a, 0 a, C $" v.sLl OD gK O'= E 8 gs-" s...tsssgg2 d - & a, mTa, I %22%" $"izsggr,2 3z m'Z ch&L C3 Q cae C ,gzjmxa, ~Ex'OO,~x~OO '~o$g;,o3= aJ 3: a,';qjgD".j ,g v)'c,=o-m v Zg? a= a h* %I fD 0 a,kY E.E&p- a,oz,m v) mc I a,Era, Iu L (I 2 0, C E 85.' ozx 0 c E~3mo~'~~~x~~.~r'iK,o"a,C30 3 3 a,.- D5~LLL~ a,?=EC c" mT a, v) a, 3 $?<% .- o oCC$.K~cl$$2E~~gz--- a, t a, 9 &..&.2 ,.os.[" = c-0 2s;s sz t LL'?8 5s €Sex a, a,T c. c 3 a > 0 v) m Xc C c E $.= % 6% :E g c.-tj.- > i E 5 E oLLLI'O)g.E Oz ,o a- ID *z $p= L a,YX v) m 3 22.G & 2% v, Qc := m a5.5 ZD.Q E XE 2 2 2g 2 a, a, v)'rx 3 v) a,_"nDg o C m 2 g m $ ,o c I- 2 ~-v)f~$~~a,C~a,~?~a, oa,-go >.-= 3u 3 a' 3 3 ~~s~~~.~Z~~~~~~.~~ v) ms.= *?.&a Q ak 8 G ag.Fss5 'E zo- LJo Q s:.i? oi E E-u& E a, v) 2 0.2 0 5 Z.-C ax ,m gzs 2.g 59 O .o c p .%m_o-+- o-arj-m.-= Q.- ...-mg~~.~e~~~~~Z~~~u.s~x,o or :?$pac 3cu 0 05% ~'+v)-c4&~ &; m.g t a, a, 3 c c pfj 0 v, a, sua, 0-6 $g2 a, DE E $""ap 3 a).? - * ficoo.=o a,-a E s Y3 $2 a, a)E Qzg::z; ;g:gg5z$ 3.a.q O'EBPorY a ssg "5s S.'E:nfD a,sgz$a, ~~a,v)m L-a,,&,x &03a,,o- = oo ggq 32EZt" &amv)a,a,a,oa, I =~~~~~~~,~~U)~~K$~~CO=~~~Q E v) $xo," rns,_ogz 0" 8 E (I) E v, Lo2 2 . .& Qv) -J a, .- .- m2 9 o 92 C 6 QP o oos $E< I U ?,E QC 5 6zz Q) v) CLI C a, C-JII.s+' 0 C* Q0-W o.~ Sm L. a 3 a, E 5 ," ~S.~~,~L~~O 3 0 c a, 82 L Q a, C6'DsY.$ 2 Ez.""o ~'~~-xa,%~~OC~.-o,E~~~cuIOa,~ Q ~ a,3Ycg~'co-c CL0 a,c?os- .~'~~ga,.zC~C'i 3.ik-z s3a,~-m~mm~OcQ~"a,c~~p'~.~~~2*k~'~Lo~ 'pv).3u0'-aZL Q) El= ai 0 E FG & a 'E 0 a,'o i C . a, s 3.r- Q) Q) '0.:~ ( 2 c 3c 0 0'= 0.S 2 2c 3 m= L a, 0 m.0 0 62.c $%~~~~.r,_c 8% gm~55ir.c .=a ~5 a, g - C 2 Q, a~E C a, Gj L 0.5.- - a, o.2 pz3s g,s,gs 0 E$ $E bC a,-m ,= v) %_aa, zrSD v)s XLL OZQ v, a0 a,---- v) c Eoa, - -D 0 0 c .- a Qo.22 $F g n,a, a,'L - L 05.2 v) 0-K 0- L 3 C Koso Eu9Z 22 = O.3 C G 3= m _- -u X-0 O g'2'u'=LL E 05 m %&..I. v) E?jSS Q~S a Q,O ssso:, a, x m c c a, a, XD myjjt= gg asset value of Fund shares. Such valuations will be made on an individual basis in light of the particular circumstances affecting each such security, taking into account the market value of the securities, if any, the period of time they must be held before they may be publicly sold without registration and other rele- vant factors. has responsibility for managing the investment ar reinvestment of the Fund’s assets and for administe ing its other affairs, subject to the supervision of tt Fund’s Board of Directors. The Company has agrec that it will invest the Fund’s assets in accordance wi the Fund’s investment policies. The Company will r port to the Fund’s Board of Directors, or to a comm tee of directors acting pursuant to the Boarc authority, at such times as the Board or such comm tee deems appropriate in order for the Board to dete observed. The company will provide office space the Fund and all necessa,,, oflice fac cers and employees available to the Fund withc compensation^ ln addition, the company is obligat to pay all expenses incurred by it or by the Fund connection with the management of the Fund’s t kerage commissions, charges related to securiti lending or option transactions, issue or trans taxes, or other transaction fees chargeable to Fund in connection with the Fund’s securities tra actions. AS compensation for such services the FL will pay to the company a fee deducted from Fund’s daily net asset value at a rate equivalen, 0,250/~ on a annual basis. F~~ the years 1978, 1; and 1980 the Fund paid the Company an investm advisory fee of $69,z1 7, $89,990 and $95,370, spectively, Through ~~~~~b~~ 31, 1977, the F~ vestment advisory contracts which differed from current Management Agreement in significant spects and provided for higher investment advi: fees and a different distribution of expenses, Included among the expenses borne by Company Pursuant to the Management Agreen are charges of the Fund’s custodian, fees and penses of its independent auditors and legal COUn expenses of all meetings of stockholders and di tors, the costs involved in maintaining the registr: of the Fund’s shares with regulatory authoritie: cluding preparing and printing Prospectuses, taxes payable by the Fund, the costs of PrePa printing and mailing reports and proxy materials, the compensation of all directors, officers and ployees of the Fund. The current Management Agreement betv the Company and the Fund wiil remain in effect INVESTMENT MANAGEMENT investment adviser of the Fund, is a Connecticut in- surance corporation with its Home Office located at 06156. The Company’s name was changed from Etna Variable Annuity Life Insurance Company to Etna Life Insurance and Annuity Company on Janu- ary 1, 1980. The Company, a wholly-owned subsidi- Exchange Commission (“Commission”) as an in- Vestment adviser and is responsible for managing the portfolio securities of the Fund, Etna Variable Fund, Inc. (a mutual fund whose Primary investment objective is long-term capital appreciation), Etna Variable Encore Fund, Inc. (a mutual fund whose pri- mary investment objective is current income through investment in money market instruments and other short-term debt securities), the Company’s separate accounts, and its general account, for which it main- tains an investment department of experienced per- predecessor which merged into it at the end of 1976, has engaged in the sale of variable annuity contracts since 1954. Prior to a restructuring in 1975, it was an internally-managed investment company. In 1975, the Company registered as an investment adviser. The Company also manages the two aforemen- tioned mutual funds whose assets, in the aggregate, exceed $800 million, and its own general assets which amount to approximately $955 million. The Company is also the principal underwriter for all vari- able contracts funded by its separate accounts. Reg- istration of the Company and the Fund with the Commission does not involve supervision of man- agement or investment practices or policies by the Commission. Under a Management Agreement executed by ;be Fund and the Company on December 30, 1977 Tpproved by a vote of holders of a majority of the s shares on December 13,1977, the Company Etna Life Insurance and Annuity Company, the mine that the Fund’s investment policies are bei 151 Farmington Avenue, Hartford, Connecticut merit and personnel and has agreed to make its 0 av of Etna, is registered with the Securities and sets or the administration of its affairs, except for b sonnel. The Company, including an Arkansas was managed by affiliates of the Company unde a, a, ' c >&ZZ a% 2 i3.z & &.s,mg.Gss &.? +j $2 'u 3 *.- v) 0 m 0-,- v) 0 - ma, T3 - 0% m.- U)WZ% ..- a, 'J'.~-co.~o L m 9 =& E g $ Q, 0 Cg'irjrz ga &s 5 gz= gg 5 Ess a,7Jz m 3 a, 0 v) (d 0) 20 QG 3 CZW 0 Q a, 3.0 093": 0 a, & 2 mm&o-3.=ca,a, 0 -v) Oc:::~~-a,rna,rna~ij~~ >g?g c+a,a. "I z 2 6C oc a2 g).gc v) 5 0z as.$.? a,Kz.z$ 2 0-2 v) z~~k~~~.~ 0 ~-O-~D v) &$ E-? g ,FLUovc YCOoO) c a OU 5 a,gz 0 CC5m.--n C z5 a a sz 2 5 - W~5~~m~~53,h~$m>.E~~~"~E x @-'CQa, 002a~ >E€ -a-m mu a,x-Xn Ev)a,2.g53Lav) wr%Kz EQm.& Qua, (0 S5.r X 0 a,gsU E E C (d a, a=W gu 0 0 v) C (I: ,-a, Do& DC-a,amammg,r~~.llL+- , ?o 22 8 T5Z.G 0.G. a,.G mKa,v)Lo ma%g,.Li",-&&.$ 3a, 253 .2%.5Zg 5 a gz.Lmcc,g m 2S!.zI! '~a, ,,=5,~ 3-m a, gz a my z 3 F: ..- a '- L 0.N $" I a, azvj -!? g,",~ hE3 ps,m m~zr p 0 ha ' cn.g QT a a--m < c"?$'Z.a)e % hQ.' a Qz gg.gFa,c a, WE - aa,,s L-~a E 0" g.~ a, g a E." o .- C m L - C5 cdLs =-.E = 3 o a Cz >K m%.gs U is 5 i m (TJ gz& a aqs L (d (I:Ze o 2 a, as 2' 0" a,$&$ G > ?%c 0 Q a, 0 3- 3~ c >- 0 0-v) C a,.% gn a, C ~ 05 K a F& gc.G C = g &%," cg~ 0 Esn 0~~5; r=av)EmCOa, "."%.gg$ 2 25 $z 52 Q,V,Z (II v)~ (I C F'cF om 3 5 .- 22.2 (ri o v) alsgg.~," -'% a, 3 ac 0 SX Gm C a L m v) ? *e a, 02 ha,g & v).r C a -E2%!=0 !+-E OD='- >5a,og E%; 3 2 2.gg;gz 2 pgq 8?,-E6&%E.ogZ o C.t'- C Cc ?X L Av)2t a >x a,E'., .- cn ha,-- v) as %Z&-o-m ad +j g Qf .gtr-aa$~iif~~o~~,.oa,*~~m~2 am 2 a, 2-._0.2 $ U)x m 0s a, # 00~,,rv)cr~~~~a~a~, 2 v) za Ooa, 0 Doam v)lL O"E+ C~a-$$o$U5ma,oa, 2Gi $u a, p 0 a.2 c.r 0 ._ % m.z 0 2 (I:SEP zm3 a 4 g a > g (6- v)L a0 cO_O'Z Q, a, a+-.- 0 0 a, L-CcEeKcQ 3 C a.% E 2 m QE EL t m mO--Om E L a, 3 [1: g ?% 5 5 $$: XOEas a3c c v) c .- - a% 0 a, 3 a$ m rhh2EO$a, 5+5 s v): ? ;ii g 11 a,Q E%v) a+- ag:ss @JsmZGoK ?E-- zoPg$ a,ES E ;s a, $$r,2;-o"" 2 m'ouoa, am' e," -- C a a Eg a Q-0 gz a a a, C I.- v) a, % 5 Fgz a, P go, Eo 3 $5 v) g 5 8 25: 56% ;$ (Q SC02zL m? m a 0- >sUl3.gO E.5 8% EO zi55.S g'? E" $ E kG 3 go^ E% 'c 25az C 0 a;< &.??X!+ s- a, s --- oo:=&ijmw6haE. a,LWmK1 I- 2 .= L C 3 -->.- a,v3 k E (I: 0) ~2.5 OO '3 g €5.52 ez 0 0 mu 0 3.c a, 0.2 a g 6s 225 .: g-g; gz E,zeg ? & a,& C- E $2.2 cd .- E-, QD 3 r(l >zaoZz-La)-= a)ggg 11: 2s rn.252 C @,)G X= 0 5,Ov)=v, E 0 a,-,L Fa,$ &G%Z g a,S$c": %E sij.g.3-g 5 x- "L2 0 gn xa,.=c- ;$"c& zO $ no2g" hmgg',O 3h.$gL,E ._ v- >9co 85 a,pz miK -Fur amOC mc.gg-sjcg~,$~a - - v)Z&&(I:.Xmem> CKa, 3a,$-cc&~U$ 5 g,-,.V,s C %gTii 8 p g2.S za," P- e 2 ozsgc ~D0,3m-J.- o v) a 3 .;sf$ g g g 2E a, 0s = F gzg am.? 32 2 0 v) v) 0s a.o 2 >u 9 (I:.~,~Z,&'C~C~.~ $sg,V, gEzn 2 fg2 gg.5 DL a c ,cu a% $ > go, ~pk-&& 0 >E QLLU.Qz c ---~$~&@ a a,o=3 -m > a,>-3= aw a, >E gs % ,p.; c z 5 % 2 g &$ ,:,E g. %@ E 8 m'z E= 2c >f?~~ogpgm?2 2 0.- Em,o%d 3 a, 0 0 20 0 m,z.s 0 --a: x -L .2$;ZE e pJ.42 no, m.?'=- = aa, cz t- ",E xn~o~3 a, E$ g Egg o 3,s D2-C 952 E Y-EG c m.,05mga, 2.c~ ai~ m g ii~ 00~'~,0-- a, m& a, o 0 Q2z mo,-T E& a o L u xuL -.- gg.$.? KD.E OF E a, 55.g' E o D E LT % agg 2 5 a cn.E 55 Eh! a'- m-Q .c a, C= XC..$.%~-< ~ a = O 0.l . :$.g t 2 Daz-z 2g.Z 0 '~2 g 2 o~s~.~ a, aQ mLOL PSaIL .=a,=msCU ncnEn.2 1 .e O-.V,n m- am ; -a)+- v) a2a- mLT05KoO+mcn .om, -3 ,I mmaa, 35?.$?2 La,a&cQz E C C -a ED 0, g?;? D-b C) Q+ - u5 (Doc oa, > c >3 a, 3n a % & a- m 'Z -~,~ mom E~ E g,rn.E.= 0 .~25oU z ?.E% E .E .El. $1 E L > .- tic m'Gh- Q) a, 0 a, >Kc c.- m.2~ g 2% L.O t ' v)Cm a, ~mr m~m,,,+a,-a, .rQ-cr25 k a, >a=,- CL C baa, moo,LLg?a,~~": a,- a, a mE6 2 a': .+XzgS>G5 0- X- QmD>Cq DO5 ;@ hZ,"+3 mc0 av,r 0 ' m.==J a,mc 3- =o:: ',$g %Lrnm08~ a, m m 0 x- a,a,m$o",oz c-Q) E o C- 4-05 ~~(J~07~Ga,'m CQ v)o5'Ez FsFCa, 6 ._ $OgoQmaa, E~LO g95p%2"5--um I= E 5:Cccc-~m~~a, = o,O a).s + g.g FG gz h2 2 Cn- 2,O.Zz 3 cQ.2 >d -- LOO QCOC60 hx'- to the extent the Company has other clients, the Fund and another advisory client of the Company may de- sire to buy or sell the same publicly traded security at or about the same time. In such a case, the pur- chases or sales will normally be allocated as nearly as practicable on a pro rata basis in proportion to the amounts to be purchased or sold by each. In deter- mining the amounts to be purchased and Soid the main factors to be considered are the respective in- vestment objectives of the Fund and the other portfo- lios, the relative size of portfolio holdings of the same or comparable securities, availability of cash for in- vestment by the Fund and the other portfolios, and the size of their respective investment commitments. In some cases, this procedure could have a detri- mental effect on the price and size of a security avail- able to the Fund or the price at which a security may be sold. Total brokerage commissions paid by the Fund in 1978,1979 and 1980 were $23,318, $23,892 and $46,660, respectively. registered holders of those shares. Where 1 cates have been issued, such redemption rc must be accompanied by share certificates enc by all persons in whose names the shares are tered, exactly as their names appear on their cates. In both instances, the signatures mi guaranteed by a commercial bank, trust comp: a member of a national securities exchange. ford will, on request, explain any additional re ments for shares held in the name of a corpor partnership, trustee, guardian or in any other I sentative capacity. However, the right to re Fund shares may be suspended or payment th postponed for any period during which (a) tradi the New York Stock Exchange is restricted as 1 mined by the Commission or such Exchar closed for other than weekends and holidays; emergency exists, as determined by the Coi sion, as a result of which (i) disposal by the F\ securities owned by it is not reasonably practil Or (ii) it is not reasonably practicable for the FL determine fairly the value of its net assets; or (I Commission by order so permits for the protect stockholders of the Fund. Etna Financial is the principal underwrite distributor of the Fund pursuant to a contract (“[ bution Agreement”) between it and the Fund Distribution Agreement will continue in effect year to year if approved annually by the Bo2 Directors of the Fund or by a vote of holders of i jority of the Fund’s shares, and by a vote of a mi of the Fund’s Board of Directors who are not ‘‘ ested persons,” as the term is defined in the lr ment Company Act of 1940 (“Act”), of I Financial, and who are not interested persons c Fund, appearing in person at a meeting called fc purpose of approving such agreement. This a! ment terminates automatically upon assignr and may be terminated at any time on sixty (60) ( written notice by the Fund,s Board of Directors vote of holders of 8 majority of the Fundys st without the payment of any penalty. An open account is automatically set up maintained for each stockholder to facilitate the untary accumulation of Fund shares. The ope1 count system makes unnecessary the issuancc delivery of stock certificates, thereby relieving s holders of the responsibility of safekeeping. 5 certificates representing all or a portion of the w CUSTODIANS AND TRANSFER AGENT All securities, cash and other similar assets of the Fund are held in custody bY The Riggs National Bank of Washington, D.C. (“Riggs”), P.0. BOX 1149, Washington, D.C. 20013 and Bradford Trust Com- pany of Boston (“Bradford”), P.B. BOX 712, Boston, Massashusetts 021 02. Neither Riggs nor Bradford performs any managerial or policy functions for the Fund. Bradford is alSO the Fund2s transfer, dividend disbursing and redemption agent. SALE AND REDEMPTION OF SHARES Shares Of the Fund are ”Id and redeemed at their net asset value next determined after receipt of a purchase or redemption order in acceptable form by Bradford. No sales charge or redemption charge is made. The value of shares redeemed may be more or less than the stockholder’s cost, depending upon the market value of the portfolio securities at the time of redemption. Payment for shares redeemed will be made within seven days after the redemption request 5 received in proper form by Bradford. Where no cer- tificates have been issued, any written request to re- deem shares must bear the signatures of all the 3G+'5"*z3% a,o ,250 Qs5Q5 g a,@j&~O,C$ .$,a,G - abv, ["'> &",2%'&5 mQ 3 €% orQ)a,;>.(" a% x 22 % 5 .G U + "4% ;E$y.";;i;a'- = ["[".(3e a,.s,E% ,cE3g+$- 0?;2.;6mZEp, 002 > 'T ai b.5 0 6% [".,-y = ..- ;..4 55 (d SYJ& &p$ ogg ZS$O, 0 a0 aoa,~-i;~~~5~ %%?S~~mJCE mn~g&um~5 SI a,-J..,-% S"'L52@f %%Q)ZO 3 0 cs $ In9 $5 3&b,C? (d@C 5 % -6 % $ $rj % $4 g 3 5 'ci 5 m'TI a 9 5a,?Jgoa,c [" 0 io,- C~(d-0 a, 0-J s%;5Sa mzqs &lJ ;;Ezp:z-+- _- Q, '--- 7 c x 5 $2 $ z.2 e a, c % m.2 a O'C c 0'- ?c ao_ c,z;c.~~OQ; m a,mz2-.*c3r_p 2 @ 2% 6 "5, gD 0L ?39&& =O :sE.F.a,Qz,,! - ~E+-.cjmo da,-UCC ,-_ :2 as,=ti v, (d >-< 3 2 5.2 5 2 ,a, 2 y 2s 2u-- b, 7 7 + .- -sa-zs; m7,0EGa,o* o.v x *'5 ( >- *-cPL2%[" s.?.$&=.E (d 3 a, 2 0.G [" $;& m a, *a, 3 "zag cg a$!!i3 L.-- a, E= a,g?$!>%& QC 0.3 (d m.5- !.E% dpocjzg; Z'S.55 a!% cn- u mg [" m o$Ey.g Q .- ["'CS ((J3ma-0 P-ca Pa Cv,Lrn@ rxmJL ,$3c~'ci2Glg~~< cnQ'L=aL a,z,50 ,OZLrn-2 50 3as LE%?, z~pJa,.GE~r?,5 a,$p-a c 0 0 bZ ".g$gg.,z. a! a, 3 c; 3 m.+ 5 2 8.5 war u, 0s $>.m oDa,scj o-o=@U)rc03 5 oQ,+ &.??% ma g'scu [".- c ccn ,613 a c-'"s 2 0 7. r 0 .= a,'>'= 0 @+--Cia o.c_m -.K %E.&._* 300c+p: 0 c c.?';r a, ,GZ% c g 2x (092 a,o +-. 0 c3 cj~~~~a%5 3-5 &C &? gze,.$ a, .st- -UF2 ommEO-gmom m '@ fz p$sjEa,$,cj7'5.Q -a,% LL["a,vt)a, a eT3%p c 6 c v,'+-U 2 E g5-C a, , o;, Za,5 a~$~~~zQ 3y, m 3 E%z3 O$sz Qzk Inno a, &,5k a, a, k-t, 3 S) 2 $ b -0 8 0, ?'"?a 0 9.: %'i $ a! 6 $Urn,% 0329 o 5 o 0 a, a, c .= [" a* 0 5 - ooJO=* -1- ,,u,cg+g.& 27 '6 ap mr :% Ga,s'= ["- 2 I glk 2 Cp5s 35.g gq"-: ,% 0 SUI .Lo ,& .$9 - -c, 75 g $0, cc a 3c~.s~0*00oc ["- In'-+ ca,s rOE&hlo'i: m 3 2 a,$ g$ E; :.& (' g a, L2 .o Qcj 9 aEs.-(d ["zz (.,z a, OQ~&~~ -O P .E',? cd 3 a, c ; .- 3 a, -0 IJ J2 -0 Q) c CrOtj$)Z0€ % $ cj2 =& 2 n 0 E$ 58 (d Z5L .1$5 c $2 $26 9 Q, ala,m>BQa,5z a,cccoGa, ED30 gt"o"-d .% % c,% SP. a, $ a, 5 ((J a 3 .G '3 p z ,Z'DCQ3 cj a (d 3 ..- >u cj % 5 c&'@ 0.2 .c_ - c 0 F5 -31 5% g 2 %\ $ l.0 0 a -0 =*$%c c 0, @6cc-O 0 .r_ (dg (d'.gS$ mL%+-,-0c5 g2.3 '3 m .c ;z $&;si '2 = Q) 3 mz.5 c 0 ~" x m ," 52 % 2 z E ,Z$SX $+ 0 ((J 0 Q a, v) aca,E.QO$'i a,o%.(., v;a.sp< 25 [" ca, a, SZS $5 2 0-c .'" 0 E % (d = 9 E e ;% 5 % $ EI 6 L c % g 5 3 2 c 0 3 O-D5+% a, ma, a, _.I-- 5-0 ["$)*DE cn 7.5 ~~~~a,o3;,ODoa 352 $-.- 2 +a '7i.G>r.cpz:m.: 5 m.r_ c.a, c 5 3.. o.aO,j 02 .gc ["aGz S%% @2!o Eo3 g% $z z a >u y cm cj ((J3'T.GQ = $+.-; (0 [" 5 5 &,, .z a, .Et- 2.5 8 c 54 cj m -0 c& $ a, Lc=o c 0 p%.p7ma)cjl *SW[" 3'- 0 6g.g- a,.- p- c a -a*)ema3$ 0 (i, 5 -m ,s :s c 3 0 >,g a, a76 m -=w3~~ 'ci2c b,o [" m.Q-Go 5pG*%e SLi=<6G>. '3>Y,5.5 cd2 &~d.--o~Q~>€50 .- c =Go aoa,pc--m y~ cg $23 Q 5 5 mo+- ~ooG%~~~ $E-,:% ou -30s,00~9(da::~.~.5Q E, 62 FP,zz:g u@a,,o? gQ8-e @a,gl.gQg% $ *cjCD~$v,v,3 --c c: 0 02 0 %=&Q cjc-5m@ g,G2z mQ cn^ % z: X ,z $ $2 (I) c * -0 .D I c cm $? 2 m 5 c '5 0 c E p .~ 0 5 0.3 % o E c .- z g E $2'2 .s p '5 c Eza F$ ".&;'E$ $ ~o3~allS.s~~ ~~ ce- J&y~."gs~ (d E.22 7 5z.2$%$!2% ,Ylj). ul?.G95 a, ca 0 2~ E%%% e ["* 3cm.E. 5 09 a, 0 a,x 9 a,g3 Gb"75cj LL1gsc x-0.- 0-[> QG a,% cd 0 '- 0 ma, %.-Zz mu",% .& a~ C,".(.,Y,$sg 22 Ezz$ & gzs% a, c o--,m,Q 6% cszzU 3E,a,DGca%&E a)~~Q~~~y~~~$~ a, ~.~~'v~ 3c7a, Llj aQ .a,'5 -PQCU- ~~$~uou ((Jss 5: Q9Z'%Ta,'%2 f ~c,U.?L?(i, ma,> o a $2 X C, .T E a, .& 2 % v, .k aG 5 a, Z 6 o a, o 5 Dp m55 c3 g % ZL 0aaQc c 0 5 a,% 0 L g5g: Lo .= (I_ r .- c c .z ? (d 0 6 9 e 8 0s c .& vi 0 D % 3 a%s a) :":@ s+gs s.L?,[":".;pL m>Q)@J--- .,[" a%sccQ)? a,2 gLa .- pzcj= a, 0G s["~2%~~5~.%?:% ec %~~~~s~~5>ccjco =m["*o mZ-5 v, pmQ) a, O'SU '= (d- e.-?[" LD 2 ,sgfg a- DC3 cc!s a a 55 *% E.5-C >c 0 *-D-- 5 2.2% cmma L- v &.- a (d 0 a~ 8 0 0 .-. 2: 0 a3 '- reinvested automatically, unless Bradford is other- wise notified in writing prior to any record date for such distributions. The Fund intends to conduct all of its investment activities in away which will insure that all income not qualifying under Section 851 (b) (2) of the Code will be less than the 10% limit established by that Section for the Fund to qualify under Subchapter M. Under the Tax Reform Act of 1976 premium income re- ceived from lapsed option contracts or net premium income from a closed option contract is short-term capital gain. Qualification of the Fund as a Subchap- ter M company will limit gains from the sale or other disposition of securities held for less than three months to less than 30% of its annual gross income. Distributions of investment income and net short-term capital gains are treated by stockholders as ordinary income for Federal income tax purposes whether reinvested in Fund shares or received in cash. CAPITAL STOCK loss carryovers approximating $6,198,000. Until these loss carryovers expire or can be offset by real- ized capital gains, the Fund does not intend to make capital gains distributions. Approximately $584,000 of this loss expires in 1985, $1,954,000 in 1986, $755,000 in 1987, and $2,905,000 in 1988, unless applied to capital gains by those dates. expected to arise from interest rather than dividends, only a small part of its distributions to stockholders is expected to qualify for the $1 00 dividends-received exclusion for individuals or the 85% dividends- received deduction for corporations. In 1980, 2.51% of the dividends paid by the Fund were eligible for such treatment. Distributions of any net long-term capital gains, however, do not qualify for such treat- ment. Distributions of any net long-term capital gains whether reinvested in Fund shares or received in cash will be taxable to stockholders as net long-term capital gains when received, regardless of the time Fund shares have been held. The Federal tax status of each year’s distribu- tions will be reported to stockholders. The foregoing discussion relates only to Federal income taxes on distributions by the Fund, which distributions may also be subject to state and local taxation. Stock- holders are urged to consult their own counsel adviser regarding Federal, state and local tax ( quences applicable to them. Distributions made by the Fund to the Cor are taxable, if at all, to the Company; distributio not taxable to variable annuity contract owners erally, distributions of net investment income : taxed, whether or not reinvested by the ComF Fund shares. The tax treatment of net capital whether or not reinvested in Fund shares, dt on the tax status of the variable annuity con connection with which Fund shares are held Company. The Federal tax consequences, if such distributions on purchasers of the Cow variable annuity contracts registered under iht rities Act of 1933 are described in the prospec plicab,e to such contracts. At December 31,1980 the Fund had net capital The Fund has authorized capitalizs 25,000,000 shares of common stock, $1 value, of which 3,904,235 were outstandif- March 31, 1981. Approximately 51 o/o of the stock is owned by the Company, a Connecti poration, and is held in the Company’s sepa counts to fund the Company’s obligation variable annuity contracts. The Company I variable annuity contract owners the right the extent required by law. An additjonal 5.1 Fund,s stock is owned by affiliates of the c, The Company maintains its principal oflice Farmington Avenue Hartford, Connecticud A,, shares are of the iame class with equal r: privileges. Each full share is entit,ed to one, each fractiona, share is entitled to a prop fractional vote, on all matters submitted to stockholders, All shares, full and fractions pate proportionately in any dividends an gains distributions and, in the event of liqui the Fund,s net assets remaining afier satis outstanding liabilities. When issued, each fully paid and non-assessable and stockhol no preemptive or conversion rights. Fur have non-cumulative voting rights, which IT holders of more than 50% of the shares vot election of directors can elect 100% of the ( Since the greatest part Of the Fund’s income is the voting of Fund shares at stockholder me6 they choose to do so,and in such event the holders of the remaining shares so voting will not be able to elect any directors. LEGAL PROCEEDINGS In the opinion of counsel,there are no material legal proceedings pending to which the Fund is a party or which would materially affect the Fund. EXPERTS The financial statements included in this pro- spectus have been included herein in reliance upon the report of Peat,Marwick,Mitchell &Co.,indepen- dent certified public accountants,and upon the authority of such firm as experts. OTHER CONSIDERATIONS The following services are available to the stock- holders of the Fund: Exchanges Stockholders have the right to exchange shares of the Fund which have been outstanding for not less than six months for shares of .LEtna Variable Fund, Inc.on the basis of net asset value per share of each Fund at the time of exchange.The investment objec- tives and policies of ,LEtnaVariable Fund,Inc.,which are described in its prospectus,differ from those of the Fund.A stockholder should consider these objec- tives and policies carefully before an exchange.The total value of the shares being exchanged must be at least $500.The only charge in connection with any such exchange is a service charge of $5,which is re- tained by JEtna Financial.Such an exchange is,for Federal income tax purposes,a sale on which the stockholder will realize a capital gain or loss depend- ing upon whether the net asset value at the time of exchange is more or less than his cost.This ex- change privilege may be terminated or amended at any time by the Board of Directors of the Fund. Any Fund stockholder desiring to exchange shares of the Fund for shares of IEtna Variable Fund,Inc.may obtain the necessary information from JEtna Financial.An JEtna Variable Fund,Inc. prospectus may be obtained by writing to JEtna Financial Services,Inc.,151 Farmington Avenue, Hartford,Connecticut 06156. 14 Reinvestment Privilege A stockholder who has redeemed Fund shares may reinvest the proceeds of such redemption or may exercise his exchange privilege (and be as- sessed a $5 service charge)provided the following conditions are met: (a)the reinvestment must not exceed the amount of the redemption proceeds; (b)the reinvestment must be effected within thirty (30)days after such redemption (the redemp- tion date is the date on which the price per share is determined);and (c)a stockholder may exercise this privilege only once with respect to Fund shares. No compensation,with the exception of the ex- change privilege service charge described above, will be received by IEtna Financial in connection with this reinvestment.If the redemption produced a capi- tal loss,the reinvestment will normally make that cap- ital loss unavailable as a possible offset against capital gains or ordinary income.Stockholders are urged to consult their own counsel regarding the tax consequences of such transactions. Systematic Withdrawals If your holdings of Fund shares have a net asset value of $5,000 or more,you may establish a Sys- tematic Withdrawal Program,whereby monthly, quarterly,or semi-annual payments (as you choose) may be made to you,or to others as you designate.A minimum withdrawal of $25 per month is required. This is not a recommended amount.Any certificates held by you for shares which are to be applied under the Systematic Withdrawal Program must be depos- ited with Bradford.While the Systematic Withdrawal Program is in effect,any dividends and capital gains distributions will be reinvested automatically at net asset value on the ex-dividend date of such divi- dends and distributions.Withdrawal payments must be made through the liquidation of shares.Such liqui- dations are taxable transactions.The reinvestment of dividends and capital gains distributions,or any in- crease in the net asset value of shares,may to some extent offset the effect of continued liquidation of shares.You should understand,however,that oper- ation of a withdrawal plan may exhaust your entire in- vestment, particularly in the event of a decline in net asset value. The Fund may amend the Withdrawal Program on thirty (30) days’ written notice to partici- pating stockholders. Any participating stockholder may amend his Withdrawal Program on thirty (30) days’ written notice to the Fund. Cask Distributions Dividends are paid monthly and net realized long-term capital gains, if any, will be distributed an- nually. Distributions to each stockholder are aL matically reinvested in additional Fund shares at net asset value thereof unless that stockholder L notified Bradford in writing that such distributions to be paid in cash. Such instructions will be effec for the first distribution record date following recc by Bradford, of the stockholder’s notification. - c 0 v) m m m 2 *s a, h $ .- 9 0 5 *v il .- L - m a al nL 5 0 I- c 3 .- L s .- nu z? 3 .g wa g I2 r-8 LLZi 0 .a g .E .- wh n' 0 .!= kG 07 am 2Zu a5 a'L az ez gr um .- a, .- a, c as az .- - a, 3 0 a, a, U C m .- - E t? '0- 0 U L CT) - .^ mL _- A$ .- 2: m $ Q, EE SGd? q 8 -J$$ .res 50 5 a, $$ 5 S m .- nL '-a)= 265 .- $<2 mza, En" g a .r E s C cou G $54 2 gs ms s5 0 $8 rcJs a,QD g %a 2. r; 65 q & 65 .^ 252 55:- =I c om Ksa az.2 j g2 a)<" z LC6 2 $0 "0 a, 0 m m @; G iiOs-- a, 0 2 0 52 a,. sa -2 ."Z L- c onm EGO$ E a, ii '3 5 52: 0;oc gm 0'3 0 R 5 - C TI .I: 2 Ls -0c " cm 9 " .g,o 0 2 u-'6 (5 .g T .s .- 4 z "5 ;j m.5: fi 0 L2 9-7 c 0.SZ - 0 - 2u C := a 7 c ?X, Eli -a2m ,x 0 8 <a, o,k .- m mc x 5: 2 C'G $5 a e iimz Om r:u m.g2 202: r a,& u"." - a, $tug 9% 2 e -EL as= 2 2:F 24.2 %'Em2 2 8. m a =: 25 o!! rz zz 5 0" sa, 0.c g: E a)>m g3cm .E amg 52 5 a, U c m 5% 0 z$gixv--f c om- =a > .g mQ 2Q2 ZGm;, m- S 35% 5s f cl-gt--(JzK 8 &@% Eo e a) CLL r, P: $2; goo %.GE-- 8- 0 2g p a,% 3 $5 $5 .$ 2 -& 5 .- a,>; Fg$ C&$g.g sgg gg r/) Q . 2- &r sx .E55 p-YU gg ,;"'- m a)o lJ7 a,: 52 E gc :E CZD 258% cog @hJ $2 0 f:! :\ F? 8: 3: gF 2: a, 2 & Qi ${ 3 c3 pry ZZ' w ( c 0 0 9.9 GZ.2 2.i $L .- - $2 9.2 29s r x m uv)m y a L 0 0 C @ k: 5 t m D m a, .&. C 0.0 v)c 0 CQ a, - 0 m 0 C m >c a- a0 KO ._ L Q L - a, @ /fygg -5gg 5 :; 8 c f: - - - 0 -- - m,o 0 .- .- a) t 0 v) 0 OC crm u- c mc ou E5.C Fg;g cj, 2 KL m c m .& a, 3 v) 0- C VZ ;; .- >c mo 2 o.-o QO a a, $5 wo $;rs 0m&E 20 Cna": 5& 5 5@ 0- F 0 hT - 0: - ijc - - c 56 c@ 0' - L. x: m E: c c a, a, 72 - m c m wnb, v) 0 0 5 2 0 m $ % 8 co I- CL c u.2 2z a 5 n 3 m .- %G a) .- 0 E g .i a, 2 L b L 2 .- 2 an c; a 0- 0 > 5 5 5 I- 5 - 0 - 0 a, a,< D .- $2 E s7 sc a' 0.: .- OD cnm a Y S a, Q, .- 0 3 3 c ts C3 ". c- m .- S L. ma, a3 5s ,.pg ,..o 7.-m m u25 4: 5 r rnI$:z ,=-X$ o ~z.0 .+ <z 'bzg 260 .24'ij BESCRlPTlON OF Baa AND BBB CORPORATE BOND RATBNGS Bonds rated Baa by Moody’s Investors Service, Inc. are considered as medium grade obligation they are neither highly protected nor poorly secured. Interest payments and principal security appear adc for the present but certain protective elements may be lacking or may be characteristically unreliable ov great length of time. Such bonds lack outstanding investment characteristics and in fact have speculatiw acteristics as well. Bonds rated BBB by Standard 8. Poor’s Corporation are regarded as borderline between definitely obligations and those where the speculative element begins to predominate. These bonds have adequatc coverage and normally are protected by satisfactory earnings. Their susceptibility to changing conditions, ularly to depressions, necessitates constant watching. Marketwise, these bonds are more responsive tc ness and trade conditions than to interest rates. A bond in this category is the lowest which qualifi commercial bank investment. EXAMPLES OF OPTION WRITING By writing a call option, the Fund limits the appreciation potential of the underlying stock to the ex1 price plus the net premium received. The Fund generates additional income by the short term investment premium in money market securities. The following examples are based upon hypothetical values which a necessarily indicative of the values in any actual transaction. Assume the Fund has purchased 100 shares of XYZ stock at $50 per share (plus commissions) ar written a six-month call option covering those shares at an exercise price of $50 for a premium of $50C commissions). 1. Should the price of XYZ stock rise to $60 per share at the expiration date of the option, the call will prc be exercised (costing the Fund an additional commission), and it will have foregone the $1,000 unre profit on the underlying stock forthe $500 premium received. Should the price of XYZ fall to $40 per share at expiration, the option will probably not be exercised, ai Fund will have suffered an unrealized loss of $1,000 in its stock position, offset partially by the premium received. Should the price of XYZ stock at expiration be unchanged at $50 per share, the option will probably I exercised, and the Fund will have earned the $500 premium. Should the price of XYZ stock fall to $48 after three months, the option value may decline by $250 sin option is out-of-the-money. The Fund could close out its option position for a $250 profit (less two COI sions), offset partially by a $200 unrealized loss on the underlying stock. Should the price of XYZ stock rise to $52 after three months, the option may still sell for $500 (or mor1 cause the option is in the money. A closing transaction by the Fund would then result in a $208 unre# gain on the stock offset by the two options commissions. 2. 3. 4. 5. - am0 62 2% vjs-zy E .s =x OCC C v)--m L$s a,mcE K mr 8 +- moa, K.5: a, d ?? s.02 0 v) > ," €753 (L "O'Z mz.ggsK0 $ L '- m >?L Q5 E+j Eo OW a,v) PZK 05 - ma,a,2 m??a,m c) = IUU'UC 2 sm,a, 0 7525 .- m=ogz-,g C m'E g5 zg 2 5gbo-Q ._ ou I m 0-c L Q po.'." v) % ._ -a0 mol, .E L 5 a, a" .$ x- a,%3: L - X?Z:'=n - or-.0S a ;z7-=m a p - 0$ahC Q .s : .G - C-m.E %g a,- -m3 2 :ki;gg?& 250 2 kg gg";- 5 q 8 i=.c 3 c I) ma5 I-" 5 '- 9. -" m r.-r 5 c a a, a, mpU- z5 0U 0 a,- 55* uk 2 &.E n %$n mr? "'4 .= 2 I) .- 07 =,E "62sr a F$u 0.- a, 2.0 c 2 0-gz ,"mE U"S22 SL -=a rza,ua,- 0 us322 c a,+-a,.Z .g 0 ' .- - Q*-,.E gg.2- v) 0 E m~n2 zfkaa, KG) v)'mao ggsa +- og;[lg' E;- kg v) a,.-??>C v) -OF ,a, a,+g xu 3a.g .-a, vj z.2 &g 1.2 z Z=E.G~~%Z~ E%D'~ g$z m 6-0 "g.f E 0: - P a, (0 -5 g%?? $7+Ilm0v).5 aU.--o GESC a$zZL 2 n .c zGLo a)g 2 u2 g m 5E 'zFD.i,- 0 I a,o$:a, c ,$X, 'Gpda,O ca,cm~ a, a or 0,"S.Z .g? $ g z t~ *. E 0- g .C 2 ,O dQ GG5,G ~2&;(60 0; 0 go-n CZZU c U rui Lo a,75g:.Gzm -v) I-u tQF -c~v)g'Ei120a, UL %gorn E% 4? <a a,o+j.g 1.?*;: !- 22 $x:g&2'0g &Ea= -?)a x-cm.f% gz "2 .O"Z,, E? OcCCa,,>o g2&j0 >~O~~ 0 .5 0- % a,Eazc "$ $5 x0 00 -au3ma,a ma-E-00 'E5SU kg? a," g= ?E~D~o~,L.= 06%~ YfQE- 22 mm~E~,~~% 5g~0z cc wS~ om e= om:: a, !?a 6) 25 ao;"ba2?a, go LLQ +& 3L7535F.03 Lis?% %!am" 0.r E a pa Oa, -I -1 I 0 F Eag33a,z q r c +.$Eg W ma2 e - 2: 8 LIc+Ka, $ ua,ma r ._ aKUmK 2- mu 1.'; m -zCm - (dzQFmf* v) our05 .- ._ ._ m$??ogg,&z gg.$C KGu%g -s(UgQuz0 Crrxa8 .L m m.p") m EC ma e 0 0 &!?g0.=.&u azzsm .' Z'" a' 5 'V, 0 a, a,= .- 2 m - Oa,E KKWa, :?;:,$ CK UmUQ,a,oo ZmQ - E QL gk as $j%::~;~g -7- 'Oaa EL~K ma,'.= UC a6-5.r -._ c Kc cnr v, - -L- (dLkcL3 t- E x 0 ._ c v,k Om .EEag-2~ -I2 =E Qa 5 L-.- E a, 02 $$ *, Cffi.~fSffi c0 n C c~,Cms C a c 'i 0 Q.E ma 17 ETNA INCOME SHARES, INC. STATEMENT OF ASSETS AND LIABILITIES December 31, 1980 ASSETS: Investments, at market value (Notes 2 and 4): Common stock (cost $2,498,745) ..................................... Long-term debt investments (cost $38,657,512) ........................ Short-term investments ................... 1,162,533 $38,550,4 .... 1 ............................ Cash ......................... .................................. Receivable for: .................................................................. 1,088,690 Interest Investments sold 4,440 Fund shares sold ........................ ............................ .......................................................... 1,550 1,094,f Total assets 39,645,: ...................................................... LIABILITIES: Payable for: Investments purchased 435,315 Fund shares redeemed ................................. .................................................... 6,471 441 ,: $274,349) (Note 6) 351 ,: 792,: $38,852,: 10 Deferred premiums on written options (premiums received .......................................................... Total liabilities .................................................... NET ASSETS applicable to 3,755,119 shares outstanding, par value $1 .OO (25,000,000 shares authorized) ............................... NET ASSET VALUE per share ............ ................................ $L.-- See Notes to Financial Statements. $Z ? 0. z 'Or- &e - - 0 --- 5;NS 6- m wwm w 20 w w-w? d '" t E ". Pial m. N. 811 c-4 mt-w 9 wlm. 7 m- 2- 51: IT /I 63 a gi: I@ am r- mm m ".'$, "q .. 6.3 ... k t-- -- w. "c, .. a? .-a .... wm wm a F- .. ,. wc\i mw .. t.- ?- ma 63 .. .. .. ffm^ -. (9 s L *a ow ETNA INCOME SHARES, INC. STATEMENTS OF CHANGES IN NET ASSETS Years Ended December 31 1980 1979 1978 - - FROM INVESTMENT ACTIVITIES: Net investment income ............................................ $ 4,337,204 $ 3,413,846 $ 2,458,: Dividends to stockholders ($1.194; $1.1 14 and $1.085 per share) (Note 5) ........................................................ (4,176,394) (3,356,777) (2,475 ,( Increase (decrease) in undistributed net investment income .... 160,810 57,069 (16,’ Net realized loss on investments ................................... (2,980,363) (1,918, Net unrealized gain (loss) on investments (505,896) (2,194,931) 89, activities ........................................... (3,325,449) (2,779,853) (1,845, (641,991) ........... Decrease in net assets from investme FROM CAPITAL SHARE TRANSACTIONS: Proceeds from shares sold (1,004,521; 842,128 and 679,489 shares) ............................................. 10,997,639 9,981,508 8,330, Net asset value of shares issued to stockholders upon reinvestment of dividends and distribution (268,346; 174,328 and 88,326 shares) ... ........... 2,870,046 2,047,108 1,088 301,950 shares) ...................................... (9,027,959) (4.3 1 4,070) (3,732 share transactions .......................................... 4,839,726 7,714,546 5,686 Increase in net assets ................ ..... 1,514,277 4,934,693 3,840 NET ASSETS: Beginning of year ............................................ 37,338,060 32,403,367 28,562 End of year (including undistributed net investment Cost of shares redeemed (852,574; 368,093 and Increase in net assets from capital income of $338,161; $177,351 and $120,282) ....... .... $38,852,337 $37,338,060 $32,40: See Notes to Financial Statements. -a-O CnGOa, C mmu I m 1 (I)- ' ' mv;73sznou' ._ m mma,322 k m $8 g FZ tj 'E I-i- z 1 8 g +$& a,$ zg 2 E, (I) ti- G?,a-.Z& a, a, a, mu, 5 3;z y 2.2 g s.&o C &%.em g &EO nmcr,2 .O .g E E .- 2 2 -m on --- E- [I: .e - g W€m.SE, Em%g, r 0 m.Fa, 5 QL E ??m @ g s*s2 v) a,g$2" 5" el g&gSk- 0 a,ss$mF pn (I)-2 a > o mEmm5a%(I) ZSF? v) v) g aa,ma, 8 g2.E-g E €*",DE 2.1 3 E 0 m &$j a,~EgFg a, &>.,a z m m'maa,am x: 0 E KSF o 0, >'V, a,@ a, m.fEa, 0 amE-pg8$.Gm_ml v) 2s $)? za ab10 E Q a,, :$zznp $sa $%$ .s o Exmz. a,eCLs 3 v) z5,om-,v;3-%.eo! aura ~~m~~~~ < gEo3m E $y'Oo-$mm2u- C m, a: L( a)z$;u s2:muxo - Or?..- a- ? m(3 a g 32; d -;"F="mZF$ $u-?y&8& s EO302 a, ogg"~~;G;=~o,.(o$I z 3 t":g8&G00- a,.z>mm0m -r;&$O'S mo~7J~o > E" maa,&a, 2 zgg&$cum$e~z; 65 2.2mooaegg O+OLtj,,0, z ,5200, '0 g>mo5; :~mn-r P$.2 9 & g $Q c, a, a).g c 25 C'V, K Q, K'- K 2 C x .Q a, m .Q a, 3 L.-- 2 E gQ8.9 m > E' x$; La30 'ic~a E 6 (I) 3 0.- a, a,z 0 E (I) c mo2. c 3 E m .tiEa,,.sa, L ..- ,S C 2 0 -c? ONo 0 a 2'- C vl 2: a, a, %-E ..-(I)": 23.2 0 o% Ea .zmd'sa, LL a,E 22.5 a, 2 z 80 m m ggoz c.5 %E mnga,.> 2 2 z.ixc al (I)L a,N QSEi 01 L mmm-m 6 $X;{: a coQ556Fm e.-( K. a EoCL C5.Y m vj O a', (I) c n E 2 ;8 E 2 L Q& :* 0 0 Q .- .- a, $m.,"=$ > C$%C> 2 $~~z~~x~ c ma,- ESm"m g5 gL u 5 r>nusm n +ooo~-a,,tff2~~~i L"'; UF am IJ c) d m5 w% $ "- Qv, L F cz+$ L 52 ma, -="z,z >maCm$ 3 aaa, a, z "E 5 g.g; gg-,lnn C '- - ~2s n z,,mh~g m.SF ?!.E x m~noz~"~$~q~ Cm.G cn acn- s,.5;ya 0 -P E8.F g $.g&m-- p,OSQ) 0 ~ LO 0 ..- x.c .2 5% g u 'I, g 3 mrLeaj ..-Eas$g c v) 5.GCcOzS~+p Gam 0 $?zssg+ .EO€$ ,o c UF t"q 0 a, CL 0 5 u 8.s 2 m mm g -00 o,guE=cr,.z Lig -a) ZU cZm5 C CDE m, .Gn 5 Trn> m30 5 a ..-cm E2.E g? .ga'-=s% .v, s fa, m3mFF&; a, m.-- ""zpgz 0 mmz$z$ EQg$a -0 .- O -%00>mm>S5 ggg .g > m&m C - 'oo.Fa,a,E m .- 0 g mzo 8 L S maarm ES a momm-m Fag z c ,-=oh: - 2 mc,,,,2:--q; g%g + 0 0,gnmog - u- %2-=7 0 = E=m 0-oo.N aa, 2 a,zpzZ.aE .?E c 0 ~Dcj~~~nm~C~ E z ge [I: o o~p~-~-v, E g$& a a ' s a)a,a,"- a,am.cc Ea, - Q > mrm+z m 02 Q) 2€ ;%&?$., 2, .E m O ~mg.32 a= . %c~ E >soQoEom u-r.F;cK.zao n= g zo zz$$ p.$$F ELo OFF E m Q~S~QL~Q~~UO-~ +urn m ~d Q ci .-L'o%'a,(I)ma,a,~g c3r (0 m'L ;;:u 0 v) ~g;+ccmSc (3 err a, :go$Z? mIoCaCm ._ o..- ma,- m zskz -1 .- 0- .a cr,z zJ).v, ii d 3 C .- mma)>w oii ."go e (I) Q-0 0 22 o a, >zegmcmg~g, x.5 ,m 0 'F ,o S~Q C Ena,a,.'a, .- 0) --c3~,ka,zC z.-- 0 3 ' 6 E a, 2.gz.g "J5.5" C K a, o 2 5 z ,$ %-- x x 22 $.g.g: - g-gmuoo C UOK a 4- S a, '€~$bLeo&mg mmg~%~~&&o P .- C C' Qc en ~~CzQ~~~ 0 c.Yuo 0 ag c ~~C~~-~ - Q3 mr 30 302% c3a, 7 7 4 was $2,980,363. Had the average cost basis 6. Options been used for financial statement purposes during the year, realized losses would have been increased and unrealized losses de- creased by $71,453. At December 31,1980 the Fund had net capital loss carryovers approxi- The following reflects the Fund's call ( activity for the year ending December 31, Number Option Con mating $6,198,000. Until these loss carryovers Outstanding Jan. 1 .......... 51 E expire or can be offset by realized capital gains, Written ...................... 2847 the Fund does not intend to make capital gains Cancelled ................... (1 55; distributions. Approximately $584,000 of this Exercised ................... (1 41 t loss expires in 1985, $1,954,000 in 1986, Outstanding Dec. 31 - ~ 39t __ ......... Deferred $755,000 in 1987 and $2,905,000 in 1988, unless applied to capital gains by those dates. Premiums Realiz Received Gail 5. Dividends ~ Balance Jan. 1 ... $ 161,591 $ - The Board of Directors of the Fund declared Written ........... 1,417,930 - Cancelled: monthly dividends from net investment income for 1980, 1979 and 1978 totaling annual Premium ....... (704,822) 704,8 amounts of $1.194, $1.1 14 and $1.085, respec- cost ........... - (641,5 Balance Dec. 31 . . $ 274,349 $663,6 tively, per share. Exercised ........ (600,350) 600,3 - - f Q I" ; omm P-1000NV) mom! m o cng kt.0 m-m ~ornc0-t~ 2gg 6 g 3-z- d bNb NU7 ~0m-W. -m* r r- m'- ?&8 el Nr.0 $8 6 5 8 m - 3 &-. 8 o(D(D cor-om-N 0- m. m '4 *. 9 4 a. o? m bcnw ~a-him.- r -N r ?-! 0' 000 01 ocncn c9 9 ". - *(DO r- hiwm c $1 In Phi& 69 r. (0 0 -mm mmo -1 0 wm -hi 0 mm .--a- 0. N. 0. cnm omm ?I; % 11 c/ m r, T 0) m- cn CUm0mNU-J mmmaou t 9 m. *- m f r-- *ormhiCO -IN^ oomm-tn Nu, PN-U 222 :I $1 22 r I1 u) E G v- cj =p - 5 65 2 6 mmo - 00 000 0000 0 m.3 mc-cn 0000 00 000 (Dm0 0" 9 0. 0" 9 9 rn 9 m 0- 9 -* - 0- P 8 E8 -00 %g!.4 WNO 00 mo .E E C?U 7 N- 69 .z5l 0. 9 0 ". 9 9 9 .... ETNA INCOME SHARES, INC. PORTFOLIO OF INVESTMENTS December 31, 1980 Principal Amount cost Market Value LONG-TERM DEBT INVESTMENTS (90.20/o) (Continued) Canadian Government (4.0%) Hydro-Quebec, Deb., 11.25%, 10/15/09 ................................. $1,700,000 $ 1,670,072 $ 1,556,571 Banking 8 Finance (14.2%) American Investment Co., Sr. Note, 9.75%, 2/1/84 . . .......... 350,000 350,000 309,750 Bank of America N.T. & S.A., Mortgage-backed Certific 1,018,384 1,011,222 738,328 Bank of America N.T. & S.A., Mortgage-backed Certificates, 9%, "8-3", 4/5/08 441,725 41 3,595 320,250 ................ 1,485,000 1,339,695 General Motors Acceptance Corp., S.F. Deb., 12%, 6/1/05 U.S. Bancorp., S.F. Deb., 12.50%, 5/1/10 ............................... 1,500,000 1,543,125 1,406,250 .......... 1,500,000 1,359,825 Western Bancorporation, S.F. Deb., 11.375%, 5/15/90 5,474,098 Chemicals (2.3%) Industrial (18.4%) 1,302,982 Arnerada Hess Corp., S.F. Deb., 6.75%, 3/15/96 2,058,000 1,477,326 Ford Motor Co., Notes, 14.25%, 4/1/90 ................................. 1,000,000 1,077,250 927,630 .... 1,000,000 880,000 Gulf Oil Corp., Deb., 12.75%, 6/1/09 1,000,000 Halliburton Co., S.F. Deb., 9.25%, 4/1/00 1,000,000 1,052,293 776,250 Mapco, Inc., S.F. Deb., 10.75%, 4/15/99 ................................ 1,900,000 1,910,803 1,434,500 Sohio BP Trans Alaska Pipeline Capital Inc., S.F. Deb., 10.625%, 1/1/93 . . 1,881,950 1,774,816 8,399,622 7,096,178 Metals (1.2%) lnco Ltd., Deb., 12.375%, 7/15/10 ...... ............... 500,000 500,000 449,375 Utilities - Electric (21.5%) Carolina Power & Light Co., First Mtge. Bonds, 14.125%. 4/1/87 .......... 1,850,000 2,040,375 1,896,250 ..................... 1,679,070 1,518,225 Commonwealth Edison Go., Deb., 14.875%, 3/15/87 1,500,000 Duke Power Co., First Mtge. Bonds, 14.375%, 3/1/87 .......... 1,300,000 1,444,125 1,339,000 Florida Power Corp., First Mtge. Bonds, 13.625%, 4/1/87 1,400,000 1,531,222 1,414,000 Texas Electric Service Co., First Mtge. Bonds, 14.125O/0, 3 1,000,000 1,042,500 1,000,000 Texas Power & Light Co., First Mtge. Bonds, 10.125%, 10/1/04 . 1,400,000 1,484,326 1,105,132 9,221,618 8,272,607 Total Non-Convertible Bonds .......................................... 36,918,817 33,058,883 Total Long-Term Debt Investments .................................... 38,657,512 34,775,036 __ 1,500,000 1,500,000 6,302,942 International Minerals & Chemicals Corp., S.F. Deb., 11.875%, 5/1/05 ..... 1,000,000 985,000 898,750 1,960,365 SHORT-TERM DEBT INVESTMENTS (3.0%) Salomon Brothers, Repurchase, 16.50%, 1/2/81 (collateralized by U.S. Treasury Bills, 6/25/8 1,162,000 1,162,533 1,162,533 Total Short-Term Debt ............. 1,162,533 1,162,533 TOTAL INVESTMENTS ................................................ $ 42,318,790 $ 38,550,494 Tax Basis Cost ...... See Notes to Financial Statements $ 42,439,045 2 c ma, Y 3 2; bomomt.m~l mlncummmt. (D N. '4 Ne m. * m N- ~.WDO)WZN~ 0 c 5 - - g ww ..----r-.- ~a)mmmo3mmm m+\\\\\\\ pkk&% ,,\\\-.\ -T--rn.-.-N WLLZ ?z c a r or, ; rooo~om~o~o gmmr.,*ra INVESTMENT ADVISER Etna Life Insurance and Annuity Company 151 Farmington Avenue Hartford, Connecticut 06156 CUSTODIANS The Riggs National Bank of Washington, D.C. P.O. Box 1149 Washington, D.C. 20013 Bradford Trust Company of Boston P.O. Box 712 Boston, Massachusetts 021 02 TRANSFER, DIVIDEND DISBURSING AND REDEMPTION AGENT Bradford Trust Company of Boston P.O. Box 712 Boston, Massachusetts 02102 AUDITORS Peat, Marwick, Mitchell 8, Co. One Financial Plaza Hartford, Connecticut 061 03 I Ea Xtna Life Insurance and Annuity Company m One of the ETNA LIFE & CASUALTY companles Atna Variable Encore Fund, Inc. 151 Farmington Ave., Hartford, Connecticut 06156 Telephone: (203) 2734806 Prospectus Dated May 1,1981 Etna Variable Encore Fund, Inc. (“Encore Fund” or “Encore”) is a diversified open-en management investment company, commonly referred to as a mutual fund. The investmer objective of Encore Fund is to seek as high a level of current income as can reasonably b achieved consistent with the preservation of capital, principally through investment in money mal ket instruments and other debt issues maturing not more than thirty months from the date ( This prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, th securities of Etna Variable Encore Fund, Inc. in any jurisdiction in which such sale, offer to sel or solicitation may not be lawfully made. THESESECURITIESHAVENOTBEENAPPROVEDORDISAPPROVEDBYTHESECUR TIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED ON THE AC CURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THI CONTRARY IS A CRIMINAL OFFENSE. Read and retain this prospectus for future reference. &% EkUm Ua,Z$ 22;E! C a,$ CEO m m- C $)% ,a,C.LC cc f Cm E&m3a, mF-5 Q .5 .g + 8 +- g g: .cgs -,02 a, 8 r--0 a, :- 2 0 0 %XL? SD 20% 2 ma, ma,? ;5%z 0.2:: 52 E?& ._ + mC &:: CkX2 ,omc $2 or moa, m oc2 ggz$D am5 pz.? --m om 9"WC : gzc a,c 2g2 &a, $ .-&e rmg:,g ?-.w_.: (I &En d,z a,y 2 ,a, ow: T3 o>s pzp 3.2' cmg :: 2.EQ c -.Gm~omo _or72 UoCi$$ a&:? m,o p- 9:s I=] : > ama, 3e ffl a,.&Zoz ?".& Q-'- no, 52 $sg 2 4 22- %&z.g 3&g% osm s..a 32 $2: g:: w F ?mm-o a, oga r g mco *.GE sgm-xtti maom - ?.$% a)L S.G.;; 0 8 %.:E '5,",go >'%& - -5.sF g2: a,? =Fj 3 C g--.$og a,% -$.Egg oaa 50 :L?c $E 0 c-65 gzy35 oly== 3ms 2t Sr- nm LL st o5g 2: .os h2 a,LX hz smc - " 8?-2g3CE QZEE yog mn a,.-v, cs > a K- ;.& LU~~~~_O~~ 0g.g ---T,,-a, 02%~ - m~s 5; ggm g .G 2 6-0 a, .E$cr,Ezi ,&+?&2 osm a Ls .zu --a u.k.Eka c=, ,w zgmg EgP E: 5x0 Z v~E z~.$)cD ccu gm." gr 1.28 UCiE gt(j 5-z I- UP ==m - gooUS: a--5~ CYLL =r" $52 %Ez&i p.s g "07 3 rn m h'v, a)SE L oU gzz Og23" Qzgg z%g .%Q- a 'dgE Q a,oo m>nms 2mmc g2L- .?o= ">'o 02F -0, 8.Gm g$?z gZ5 -' $2 3""5 'OL a.q2a - a)p .G-oZ .- Q *F&?.E Egpc .m8 2;s 5 2 h.5 x a)mm,g LC g.$z"c& >E''$ , m-hi zs5 .-e5 '3'5%: ooc~~ moQc* Q)cc $Fg 2 05: a, ." c 5:s) ma, .G2a $2 C a) EEaj,"wa[rx a,0 @$2% C73U-l C Q 5 %go = +mp0 =zzF Oo0 mC$ a$ ~> :g,g z 073 - - 2 ggz ycL gbmg >E" z.5n a,% QmC cm5a ?Eg2 m>g 2: 958 Ez msg $2&E rza,g gp2 ov, mm.o gw 0.2Z "=SF: a226 2nal mgo 2: -w - on w w $ 8 2%; uom ;%.E;, m,.&m8 Q=a gswm 50 z5s C 2 E$ 3 .z g 5 3 L s &="& (d Qc sEk$& s.&pz 0 2n-o ?g 2a)C 13 3 m u_ kc2 z?_occ a a, 9.20 mE L woe::- $+5G %Sa, c3 E ?& Cmg ';yL.-.- - o-c]- gzmC 82m nm zE% Cam 0.; mZm - a,.'& Z$z _Om 030 mdmQ -DE'' QSa og +ma mea) : cmoa,@J a)a)m> 2F.&Z a,Em c%m oma, &a,mUomQ 0 m= 2.G E.-- L u.= 09 - QE F3 ala))' o3m C0-2:: sgg Ex gcch sea6 CmL'% - wLGa k!~~~~ mEE. <;: w2E.E L-m @: +SE OZEE an.--? OOQ a mi? Tjga ZEZ3 00% gg a89 EO 55 m.& CmQW .&Qg$ UUQE moo &&a a) Qc Ws 5 0.50 >E 0 PER SHARE INCOME AND CAPITAL CHANGES (Selected data for each share of capital stock outstanding throughout each period) See accompanying Accountants' Report and Notes to Financial Statements Five Years Ended December 31 E Decs 1976 1' - ~ - ~~ 1980' 1979* - 1978' 1977 Investment income ............................ .... $ 1.532 $ 1.293 $4 ,878 $ ,516 $ ,363 $ Expense Net investment income ........................ 1.501 1.265 .852 ,493 ,348 Dividends from net investment income ........... (.716) (.438) (.488) (.366) (.066) Net realized and unrealized gain (loss) on ............................. (.056) (.011) .001 ,042 ,325 Increase in net asset value . ......... ,729 ,816 ,365 .I69 ,607 Net asset value: ............................. (.031) (.028) (.026) (.023) (.015) ( ~~___~~- ~~~~___- investments Beginningofperiod .................................. 12.227 11.411 11.046 10.877 10.270 10 Endofperiod ........................................ $12.956 $12.227 $11.411 $11.046 $10.877 $10 ~~~~~- ~~___~~- ~~___~~- Ratio of expense to average net assets .......... .25% .%Yo .25% .25% .25% Ratio of net investment income to average net asset 11.98% 11.07% 7.72% 5.28% 5.75% 2 Number of shares outstanding at end of period .... 6,268,665 2,823,419 964,137 480,583 397,607 7E *In 1980,1979 and 1978 the weighted average method was used to calculate per share data. This method differs from the indust? used in prior years in order to present more meaningful information. "Initial period of operations is from August 1, 1975. YIELD QUOTATION The annualized yield for the seven day period ending December 31, 1980 was 17.41 %. The yield is mined by dividing the average daily net income (accrued interest income plus or minus amortized purchE count or premium, less all accrued expenses) per share earned by Encore during a seven calendar day by Encore's average daily net asset value over the same period and multiplying the result by 365. The yield will fluctuate daily, so a yield quotation will not be a representation of future rates. TABLE OF CONTENTS Investment Objective and Policies of Encore Fund .............................................. InvestmentManagement .................................................................... Custodian and Transfer Agent ............................................................... Sale and Redemption of Shares .............................................................. Distributions and Federal Income Tax Considerations Capital Stock .............................................................................. Legal Proceedings ......................................................................... Experts ................................................................................... Directors and Officers of Encore Fund ........................................................ Glossary .................................................................................. Financial Statements ....................................................................... InvestmentRestrictions ..................................................................... ........................................... ' 2-h.L a,pG;;;.a,E UZOa,? p&~$ga$&z?&a.%o-n - - .LO,,Xa,&? > 0y7$gzF-ru m a 0 3 32 > v) ul gag x-0 5 a, 5 g.g or o) 0 g<ie m~ a,c;, 2 E !$ E-OSC % 2.G 22~ a, 0 mi-- Dl> ? >$O ?.-= s,og- 2.G E-2 ?+ r300 a,=--- -rJ mu zha,a,;$- a,0F+~u>+-opm9 sgzo-3 am - E02EQ- a,E82 C a c$!.ga "czE$gS,m ma zc ? o a~ a, CC 2:; > 8 2 v) $,E $2 an'G v) Im ??a, 2crn g 2 gg? ~OEE~=J.-~= 9; $cn._o a,.= > a, gs €2 g - C Q.% x C2p mL- - rv).EEa,0 a,+ E=j% 0 2 B 5% a)-a,s mu25 z5 .E 2.GQ ,o 0 =&.c3C4,a 5% 0 .G.&+ > a ale- E g$ B E Z2.G E E @JF- o ,o g$C9 E 5 2q W&Dlazrn ca,m - oo~.~"-go=a,=+-$,5a,~9,o~~$$ otncommm - O ," %&-EZ=- am +-I^ ma, man I= v, 3z 5 &sq~ $3&"- c a,2 &%$?; 3 gGza,a,c.s a ~ zo,i! a<r G.G-O .g.~ $2 z c a,% v) ~%5(1;ggs -a SEE Q) L~ m%9 2 I a, a,zsX&-$ 3 a a, 0 z5.S p$s % EX 0 2'Z.gu E 2.2 aZZ 0 >.&p a, + t;s2,g.ys 0 o C aa,z t;5 EG $529 a,+ pz i a, g E z7f+ v)5 m = ,= xoE am 3.g p E a? 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L ::> Crz a,.- g a 5 C a, L a, a, u1 y c E % s < 5 5 5 E : :E 2 5 a, 2 PZ r a $ pnz+U3i g.1 $zC.2ma, a,3 (d L- C 3 au E', Cn a, k.&Uz E'- a v) O)C.?'G-0 L E 5 22% 0 2-g a,.Fu E E- a, x,&% 0)- a> mT2 .= t 050 3-.?- '1 E 2 00 25 $: xu+- $- mzt;a,-FcyL.G-z Ea,O -o.kur a.2 v) C E 2 k0 2 f $2 y- v, a, F v) E €73 cad p EPm CCC- ,o m, a,a Ca,.SQz:$ a 03 .- Cokg$EF$g2 +a,U a,2 8 rr.s3 h C 0.E 0.eZ.G (I) a m.- m x,,, 0 & CcQ gU 2 2 $ gzC.S.$ L- a.a,E 0 Lo m'- m.- 8EcL z:gu- - > c c 3 m 3 C.- E- o a, v) 5.g a 3 €5 5 E mzjlL v azn cLc m.z a a,~ UQ9W t +"'- C2 gL9.Z 8 K.- a3L.G m- 3303-h Qa,oa, - Qv,Eaa,.-az'-O- a,OLC-Km a,z:=aa,a,aIm xcc a,a,30f goC3C;i ~~2.z OW t; 8 b a, a v) 0 gS Fa or n E->uU: t;(/jgS,8g:EL ~Ezga,~~~m)d E:a,x 0.5 yjjzsz ~m'-*aFEz ._ E - zw w E E ,"E zz r3.E LI) 9 0 QQ-3 a.5 E& QU-,.- >' C 0 a a a, 0 Q gq 5.G a 5 2 '3 a, a, a, 05- axac a Qm LZ C-cf 3- @J= g$ 2 5- 0 8%2g C x 5 .&.@ 2 gp;>% a a,-2 Ebzcz a, r%jr c ~0.5 m a, a, 3 a, o a SZ Vj 3 a, ww zg.$'E.b?Z C ab S-g.g0 muo.- v, r .- moo n-r 2s a 3 Eo.Z m e%zz E 5z.c-S 5.: f- EA zr a,'- a,r fz U 3 C= ?$ t; uJgs E g.@z8 E E, 9 % 3 QC l2 gg ~.pn~~,~ma, om- n='Ev)r m,3,ga,o~~,, LLmgZ 0~'- 0 > C $ >g.z.%"- o 0 C E-,u a, arc: a, > E 5:; 5 3 0 @ Ea 13 WQ ow o~g>o.p~zja, +c~uFJ~or-, 5 $2 =+ a= 0 m-zz 2 $8 a, L--u t oL-.Lr W'i m pgGEp;j s v)= 2 2 E -og 2.s as E$ v) a2 2 E sz m~ EZ aarz a, op>KIxO 33-0- mmz2.5$$5g 0.2up -a,L C 8F3 9 + C a, a, 5 'G U a, E a 03 o :: : L- C xEi'z5 5.2 - o 0 0 a, cTj o aC'- L=m a,- m v) a, a, C 0 U 3 t a, Q) 0 m v) L- > E E v 3 So.& E% azx amn m o a >u v) a oG;t a+.~eg scr INVESTMENT RESTRICTIONS above 25% limitation, and each of these groi shall not be considered a single industry for purpose of the above 25% limitation; 6. Underwrite securities issued by other F sons; 7. Borrow money other than (a) from banks temporary or emergency purposes in amounts no excess of 5% of the value of Encore’s total ass€ and (b) pursuant to reverse repurchase agreemei under which Encore is pledging assets as collate for cash, and then not in excess of 10% of the valuc its total assets. Encore’s current income would crease or decrease depending upon whether mor so borrowed or received is invested to yield mOre purchase agreements; 8. Make loans, except to the extent that the p chase of publicly traded debt instruments Encore,s investment objective and policies, or t (either of which may be done wjthout limit) may I deemed to be loans; 9. Invest in securities of other investment cot panies, except as they may be acquired as part 01 merger, consolidation or acquisition of assets invol ing investment companies with similar investme objectives and restrictions; 10. Purchase or retain securities of any issue1 5% of its securities are owned in the aggregate I those officers and directors of Encore or its inve: ment adviser who own individually more than on half of one percent of its securities; 11. Purchase from or sell to any of its office1 and directors Or from Or to its irtVeStment adviser ar Encore Fund will not: 1. Purchase securities of any issuer with less than three years’ continuous operation, including predecessors (other than investments in obligations issued or guaranteed by the U. S. Government or any agency or instrumentality thereof), if such purchase would cause Encore’s investments in all such issuers (taken at cost) to exceed 5% of Encore’s total assets taken at market value; 2. Purchase (a) commoditiesi Or commodity contracts, (b) common stocks or other voting securi- ties, (c) securities with legal or contractual restric- reverse repurchase agreements, or (d) real estate, except for short-term debt securities issued by com- panies which invest in real estate or interests therein; 3. Purchase the securities of any one issuer Government or its agencies or instrumentalities) if such purchase would cause: (a) more than 5% of its total assets taken at market value to be invested in the securities of such issuer; or (b) more than 10% of any class of securities of any one issuer (for this pur- pose all indebtedness of an issuer shall be deemed a single class and all preferred stock of an issuer shall be deemed a single class) to be held by Encore; 4. Purchase repurchase agreements, unless from banks and unless such agreements do not exceed seven days in duration; 5. Purchase any securities which would cause more than 25% of the market value of its total assets at the time of such purchase to be invested in the se- business activities in the same industry, except that: (a) Investments in obligations issued or guaranteed by the U. S. Government or its agencies or instrumentalities, or repurchase agreements for government securities, or in cer- tificates of deposit or bankers’ acceptances shall not be subject to the above 25% limitation; and (b) Purchases of securities in all finance companies as a group, all banks and all bank holding companies as a group and all utility com- panies as a group shall not be subject to the tionson resale, other than repurchase agreements or less than the assets will yield under the reverse (except obligations issued Or guaranteed by the u. S. lending of cash pursuant to repurchase agreemen curities of one or more issuers having their principal securities other than Encore Fund shares; 12. Purchase securities on margin or mak short sales except where, because of the ownershi of other securities, it has the right to obtain securitic equivalent in kind and amount to those sold; 13. Purchase or sell any put or call options ( combinations thereof; 14. Invest in interests in oil, gas or other miner; exploration or development programs, but such rc strictions shall not prevent investment in readily ma ketable securities of issuers which invest in suc C b " "~CIQ)WK~,.L I &L.L.LFt oum "*K ._ 3 cs)L Qm L m.$ ma, mat a?"'. :%~a,ammoLL0)2t2 ~~P:,~~g-'oz.m~.'zpd 'a)''& ,"- K X C XGiz% 2:s :$aQa)s 50 r.2 E-tj.Z'o € EC m---- € m.- -0.Q V) 3 3 5-m €72 (0 "-"~E~~~~~~8,E5m-;CT)~2~~~~sLa,~ am g'm m 8-o c! 0 3 v) a, Orno 5 'a-.c >,O2xmmmgo a C u 8.g Oa,2~?ErOm::rEPc;,~X='.~_a 07 a,0 m m c.- a,- a,% m 0 01 :E2,-pz%m 2062E 0 oY--~~cn; a,,g:s-m- a, E'o>hmm-Lp;E$gg z~ mz m-;g+ 2 v;b- m 0: e 0-m a, m.5 L ggGij3= o- (II KO$% C E L.-uj cn a,- za Q, 2 5:m+L;a, m-b'K cnfn 2 >L 3.5.g m L xz E- $ m v;.g-" 0 30 0 (1) m:.nxg 8 $2 8 m'u 0 52F.S mauz zm-o,,-rmz;v,~pQ-o, o=.E+ Lon $ p$zEz L a, oz fflL!2- L 20~%~$ztj~c e moa,a,x~ -a,2nm0)m~e m ~26~ $ ~2 5: %G 7 m nzh o cncL 3c no'- (0- 0 6.9 5 2 gez.$g st;mt; 0 .g ms a '- J C oms cEa,z'a, xug 2sC ~~a~~~~S~~~xgas~~~:~E,~ 0 c ouam.;;,,c%ia,mmg,gk @E m5 a, gn3 0 Q) a, a, ?8°-o~.c2 m k+a, aog E z E 5 2 s-cn c Q m €h, v).- =a, ' 2.' E m.f'=s a, ak2.s.g~+- a,c o a, xc 9 am 325 0 a, c,o0s,g0 0-, o 00 mO w t mLL C 3 G L gc ,Ea,E,5w ma00 o > > Cc 2 z o zz no 0 LWLi,&-;%e, -- m5.2 g)E>8C z m=.bEEEa, > 23pg.5.22 -0xam~bcm a, L a,z,5cnC~~y z m .~$~-~.-~t. -9g.cp FE';'.Z;;&5-m 0 + EO-OK 00 "020" $g 2 ST3 ;ija c. ,?-m b 'za,3Q m 0- o M .iD- +Cmzasb$o ogoa, P - Qm am0 %="E5 ''0 03 %Fsz-zmc a,3~_ooogi"T $:".+-$Eac mu I &.?O@,gE? .- 2 .imzl 3cu-x-o 020" m-7 8: :koa,ca, 0 =-m-b%2: cu m.=-ae (3 =<gg3fO,,O E" ,"$P&$a,-o .- 0,s gCxoEs.zL J_agss?a,om8 = +-qy5S 0 .- a,r L- c! aa,07Jcnme,cm >SCCLcnL I- z pJ3:-:3Fg as- 0 -m>o C>Q 22 pmp)"m'-FZ E $:.gqSsao 6 .- --o %im-m$.Eemm 0 m W.'u .sa, &E%~CQ~P mY)3 ga,ow~o~~~ E250 3 ~.~ooo ma, Io.-,, r" >&%zg$a,0 >~~ c 8 $ s > Lc" m,=u'G~~~= 30- m-, e! - &$z,., =,a,... KLO LC mXa,Q'QJ $ E ,"2~g.t c O E m 6.G L 3';~~.~&g 2 Zg&P C-Ok 0 a, c m..$& g g -,z 3.$22=C.g L a,.- I- 0 cnh U 5@ a c a, KT K 8.a ~D,E.& g 2% ~~~~y, &5=- 3s &.c 02, -'- a, $2mh a, DarnL C 3 no 5 '0 a5 a, 3 2.2 0 o < mzZ5 m m E go -5 ma Q 5) g.K 2 02 3 2 22 cn>.c 2 cn K CCT) a ma.? Q$,~m-Im->E0)~3E5u'fI-:!~~~x a L m a, g5g m c L Q,Q 1x5 63 u 2? m a, E;= a 8-K X K O.= gE"..&g a, c 3ww C'JZ 0 m- mu a)<u ,f a 0 0)- K ?:z 0 "2'5;5 m 9'mL Q) E K~ 02 m a, 5 0,5+ c a, o a, ,=.- a, C m,s~5 g ,c.g._o D m- L m a, 2 a ~~oLC~~ti~Om'--Kr~o~-XC~~~~~~me, - m 5 cl 2 3 cn g g--.s -'i2sma,mm~EwL a,-,"n>v a.2 - xUUQ~K a, v) - o w a, x-o 9 g E fa g a .= m 2 b c" 9 LO m E.%'GD E.? 0- ge -a, "2% > gV'gsgQL @go.? v) 0 "2 m a g E~~I)~~ a, 6~ a, a, a, E .- -w gw PES a, E (1: g 2 8 c..K:'a -e ~,czmE ~a,Ez LI) 3 E%$ 5,s,2z3 ~2 0 0s C Qtj3- m,y-z O.%o.z ou.r?O a,x xo a,'- 3F,Gc m,s f9 a,.c 0 Qo ELL'mE $z.v)g g Po? C C'E':e 3 2 c,3--UC~~h%mCa,uE Q,".am%?P -Q (d k$mD,"&EE$m.-, ~C-Z~G o Q&$g$$ a, mK E .- a, 0.- c E' 9 mE > g 9 -"% 0) o$ a, C a,a,ooL 0.- m5Ea,zEaE ~-o~g~&?%Z8~~p~ L tZ"..GS m- L I a,ZZSE,03.L 5 .-O.sg KS 0 xLL.-C 0 K.5 m-U$ gz iT) ~,~'~~8u," Q C 0% OU m7% $ mr.Y"ma,a, 0 w,: ub.G:02 m g%&%zzg mxo3= m ~D0mra,Z~ s7j a, 0- ,Xm m L 0 c5?L-o'-- m 3a,- L> c m.~%% m E 2 no a3 mc v c a,nsm nKoc,E n 5 omg oa,a3 a ..=cC~= w '5 mom oa g &Eu$zsQz .--o 22 $~Jfflv)"~9.c mwgm'5x'5% tjmnt,,mogm a)zc!.&agc(dK 2 mgzg~3as xm- g 32 6.s Q-o .SE 0- c mo< sm C a c~xG~w&~ a g.F- m W.-- o>~~~~~o a .- oL~m~ a 22s maK Cm f o-Ja,zs>.v)a, >mz$Gmz mU _os,msam~ w -K>C.-m€ b (O'FKE<go a, :$Zmc$aL 00 ca,Xs-oc m ,Eo.g$z';;g mL CzCA%Wk- -ga m C'- c'- v) C 2 3E2P50 > 22 9so.D 5= L z I,mg.Ea,g& c Q, 0 2+ 22% E8 @$ p6':- 5 2.PZ L o m mm'J)mZ$oD ?cdOcnEmUQm Q) x7z: g-" &'E ama,m,oz,om I) E E,zz 9% kg 0-C =EL- c xm >(om(g++- .c .c 7 0 & & 2 Q $g~~~UE~ m :Ec .gQ 3 5 gZ.g-1: :$ a c a, EL.-- 22 g ;ij , 0 QO a, o Lr 0 Ow+- 0 0WO.c 0-3 to pay all expenses incurred by it or by Encore Fund in connection with the management of Encore’s as- sets or the administration of its affairs, except for bro- kerage commissions, issue or transfer taxes, or other transaction fees chargeable to Encore Fund in con- nection with Encore’s Securities transactions. As to the Company a fee deducted from Encore’s daily annual basis. For the years 1978,1979 and 1980 En- core Fund paid the Company an investment advisory fee of $18,847, $56,895 and $1 48,600, respectively. Included among the expenses borne by the Company pursuant to the Management Agreement are charges of any custodian or safekeeping agent of Encore Fund’s securities, fees and expenses of its in- dependent auditors and legal counsel, expenses of all meetings of stockholders and directors, the costs involved in maintaining the registration of Encore Fund’s shares with regulatory authorities including preparing and printing prospectuses, any taxes pay- able by Encore Fund, the costs of preparing, printing and mailing reports and proxy materials, and the compensation of directors, officers and employees of Encore Fund. The current Management Agreement between the Company and Encore Fund will remain in effect fmn Year to Year if approved annually (i) by the Board of Directors of Encore Fund or by the vote of a major- ity of the outstanding voting securities of Encore Fund, and (ii) by the vote of a majority of the directors who are not “interested persons” of Encore Fund or the Company, as that term is defined in the Invest- ment Company Act of 1940, cast in person at a meet- ing called for the purpose of voting on such approval. The agreement may be terminated without penalty at any time on sixty days’ written notice (i) by the Board of Directors of Encore Fund, (ii) by vote of a majority of the outstanding voting securities of Encore Fund, or (iii) by the Company. The agreement terminates automatically in the event of assignment. The service mark of Encore Fund and the name “Etna” have been adopted by Encore with the per- mission of Etna Life and Casualty Company, and their continued use is subject to the right of Etna Life and Casualty Company to withdraw this permission in the event the Company or another subsidiary or affiliated corporation of Etna Life and Casualty Company should not be the investment a Encore Fund. Brokerage Purchases and sales of portfolio secu result in the paymentof no brokerage comm be purchased directly from Or sold to the iss underwriter Or market maker for these Secu’ The primary criterion used in the allo purchase transactions is the availability of i which best meets the requirements of Encoi portfolio strategy. This determination is basc safety, liquidity, yield and maturity of the sc relation to other money market instrume available. The primary criterion used in the i of sale transactions will be that of obtaining price and execution of such transactions L circumstances then prevailing. compensation for such services Encore Fund will pay net asset value at a rate equivalent to 0.25% on an usually be made in principal transactionsi v such transactionsl Portfolio securities will CUSTODIAN AND TRANSFER AGE All securities, cash and other similar I Encore Fund are held in custody by Tt National Bank of Washington, D.C. (“Rigg BOX 11 49, Washington, D.C. 2001 3. Riggs no managerial or policy functions for Encort The Company acts as the transfer i Encore Fund. SALE AND REDEMPTION OF SHAF Shares of Encore Fund are sold and rt at their net assel value next determined aft‘ Of a purchase Or redemption Order by the c No sales charge Or redemption charge is m value Of shares redeemed may be more Or the stockholder’s cost, depending Won th value of the portfolio securities at the time of tion. Payment for shares redeemed will be the Company by Encore Fund within se\ after the redemption request is received by’ pany acting as transfer agent for Encore F right of redemption may be suspended and postponed during any period when the Cor determines that an emergency exists, mz posal of Encore Fund shares or the compi ? &ha"a,~;v,&Ur.L- 0 su E c-as,g 2: 2 gssgg gg.2Egg.g - 0 m LC ox.52 & & py ,go m 3 CXl c-l 0 cl x ,o g a,.- m 3 It!&.&& S=&- amm m vo 00 "=,x,&& a, a,L 2g g$;$gggzpuk D a, C a, C m ULL.~JJ+- (II 3 m K %e% o.= .- nx" m 0 ,m 22 m m ps 00 gE WF .G~~~,~JJ~~~z~ CS~,S~+- a a,v)m mo~Zo5~lu.E. - u VI 07 8 g.2.2 a,g m>c.Psoo55; F..o 2Eu5 2q p- h a, c g 3+- m (d g5 a, 05 0 .poa,LL3a,> a, -O $2 Lbu BO D.E&,E3cC --+-a 0.-.e m 05uo z 55 aL K.- m a,liJ * v) w&zzgG v).? €.-os E ; 5ga &zLa,aa,L g3:ss $5 zg a0 z(J 33Jr'a,Q-qs ~m;aaa,+.v)z~? QU,ZaU$Z'3051t!6 q moNgz ,ox v) It! 0- c S m.$>.;2 ncszv)x~~g~z~g a,h-€gbv)-!3rO+la, k s'i;2wommn+c Q=POz g5 2~ CQ: ~m~K.%h$?.C~ om - a-0 v)- % g g8 $$$.c % 82% $2 4 x v)O- rGO?& m K.- C >.Ex 00 hz mu -a m a,= c moz ha c 0) E,g.G.gz It!; Eau v)u 0 73 Fa3-3 -m 2 m.- 0 -3 Ez 3,E3s.++cm=3& v) E'5U-g ,~Q~-~t-+-ro~co~ SZCT- . xnm~Gz C E= E gL? I-0 LLcmax 0- .K L Q) Ui'5.S v) v)ga, ea,cgo 'ssy~aa, c~no~~~~ Dz e- Q)- go oz It!ZgWJ.E,-.ECO~ o D3 25 g- o m..o g a +2;sz 3cm :8Lo,cIt!oB, o ;ij o as a,o 37"g;"p & g s '5 gpqo ."=a- 3JJ: .z--: v) zs &;3Z m 0'- 29OmO5$S2 CU ~a&e~~~~~gzZ n~~~~~D~g;;@~ O -~:a,ca ow c 3-D Q-=Q-Cv) -,>'=aKa, wQ $52 +:, c C c 2 m 0 m m.5 0 v) 3-c 3Jz a, or- E6 rn>2LICOkkLL 22 oa, m ha522 m Laa,v)L'-Oc a,.- L-cS xcJ),u. It! 05 mc, (0 E E'-m L$ "%E ._ z 0 zc,g a, & (/J' ps.g 3=E m a, 3 0 3 '-5 ga,a,coc mk- a,Ez a, c 22% 0 Kc v) >g 3 3 2 3 v)s.e Sa, It! &)~~$~gugzs 52g.c 0 v) 3 gq &E 62 $ a,p-a.e_m $.$%E g ""2 g. iim a, -a,ma,>.aj (I) +- $,k 0 0 a,z-.g G'i;$ z =--sS m-w 2s s x: 0io.c a,z a, v) (I) 3 6gd > 8c 5 a, 6 E.EF m 2% G a, L-'L,c v)?5a-a, It!Dc$& mu 2 .$ a, '-OE?Jm$?s 0$.oG30uo->$d v)O~~a,%--~$~~ 0: h% 3 a)?.- v)C-.- $c ha,-,& a, C m a,+" 0 s 82.T." 0 m r C nvj ",2m. 0 a,-m>x,-.- rzi.,: $ > % 0 It! a, 0 r'o v) aj0.., p.g g 55 0 w $5 8; 2 QFw~n~g? 0 I AO-g-2 0 g.2 a+ U'S$ 2'FZL, e.+ 22 Q ~ 27j>'y om' UC a, ,gS QfZ $-z"'~~.32 9% Q.-c 9 g ;E E It! as -OUa,~ 5m 5: >!J- taa,rg 2as%gE$E%.s~ m-8 826 8.g v) ? &? 2: 8 ai c% a,o v- o +-aG%E&3m %r.'aoOua, -dBEmL7ymm.L z+a,c~.Gh-Ka,Gg ri 5s c.22 2D-c * m (1: m-cv $ a,.& g g g,"w':E 1 9: .- - 5 aS?.G..;z g5 &zr 2.$g c - ._ d&5 2.g a, o,5Ze Lc 3.g ;50.-_m.-E o A%s 8- x.- a, k 0 a,-! a, .E ;; 2 ;I2 mc- m~ v) E a,u--z zu on a, L 0%~ "2E-j a';W? x=--6j>~p>e3.0 ua, ^- 5 cL"v) v)&F m v)E amp v) 3-O 0 $2 c +_x0 00, gz,E 5 C0'Za,>v)- * k2 95'; 3 02 $G.am-- La,a,zL)p I_""It!2%-)LL a)= mom $ $a, t-"F.-u 2 A0-qPE 111: a gE.a+ cma a30 8" z%s~Q)a,= a E a= (d a,.= o $ & c .Q 3 .P- Ca,m ?a,$$ 8 o no OD 3 m-m m 0, % m.5 x 0's m CL E c C nm Cn-Oo 0% 0 2 CuL) m x xu m -cw?ZC m s z.Es K U," 02 LC J(fJ .g03-a,It!m s E! E o LZ z>m 3% $ $ g $ 0.e.eD t hnCz a, o gggg .- *&ex t.(nC'33-Q) 0s KC 05 - $ c 0.i; c s 09 3-m FOOO 9 % Kr $2 ; gz ,EW g 5% gz i= g? a, g? F>c= a, > oa,.~+' 0 . x 0 €5 $(n .!?z,nwv,~ a yz ++-zud V) c v)sz O"su~~w%,~g.~a CT 3.G + OE~~,~%L~)GE e .- c +m v)L--c3 3LL LL m.Oc0 m bo,- om 'z 3 m+ 0 Q'E 0U.C m -9.0 3LL 3- 0 m 0 m 0 v)Z Lo- a,* - m S E." @ v) a, m=UU +%% d, &,q L AT c a, I LL av) CZ m o'-s 2 'E& C c' m .- .- .- -a c L '0 Eo *- a,-o E2;r0;20 E'% 0 '3 v) a$ 6% 8 * Ql K a> 3Q 3s,g% KE s C mm ._ 01 -cJ a= C 35.5 c >'E - G azx'Ej ui%E 2ud E &&:g' o 0?g 0 E-'r mo a, a, $Ea3 $g 00 9 5 $ & 5:zGz m .03.- c mu v) x U 0 L 0 C L mu-.- +-' LK.-Qu~.z p s ag ES-$j m o m m.5 Q, ma,n&51Luz s'=a,a,ozv)ga,." z ,g.s 2q.i g$~-~'=~~ m-05 0 '"$Z.' 5% 2 25 gz6&3t.-sz L a,~'-.g e E 2.E; v) 9 '5 g zggs :& g 2 a, mL)$ AJr's m.gzF o $325 2.9 "z a,: K 2 a c a,-O.< - - ad a,L a C mu m +-5s +-' -CL;;jcr,+-SE ;;jz,gv) CUE c 0) E 2 CCJ 0 u 8 a, m'-.-L a- L L 0) m c (I) c E'z k.= m E 3 Eo3m ._ ._ ,- 0 v) OS 3 v)~ G 0 E Q: fractional, participate proportionately in any divi- dends and capital gains distributions and, in the event of liquidation, in Encore Fund's net assets remaining after satisfaction of outstanding liabilities. When issued, each share is fully paid and non- assessable and stockholders have no preemptive or conversion rights. Encore Fund shares have non- cumulative voting rights, which means that holders of more than 50% of the shares Voting for the election Of directors can elect 100% of the directors if they choose to do SO, and in such event the holders Of the remaining shares so voting will not be able to elect any directors. LEGAL PROCEEDINGS In the opinion of counsel, there are no materii ,ega, proceedings pending to which Encore Fund is paw or which would materially affect Encore Fund, EXPERTS The financial statements included in this prc spectus have been included herein in reliance upc the report of Peat, Mawick, Mitchell & Co., indepet dent certified public accountants, and upon the ai thority of such firm as experts. m m e f 2 !.L E r a, ._ - ..- v, m a, a 5 L 3 C -0 m ._ .- c3a =I 'Z w= 25 LLz .- 'I8 8% z .a 8 - w: coE h 8 v h;o a,$v; suim ._ oa, x C ,o 322 mza, $ g 0. 6 .- -a,$ @ a, 0 ?%E m !zz C E, ,2$% -E25 a; 2 a,%? 5 ."C E, m g [s)> 6 .- P.z hv) i&u- z a, -- g a, G m- wm Q25 9Z.S - gg 53 " f QF t COzz a, ZKz3 c Kcrj .O = E," E.S a, G5m m 3 .E g 6 -'Q iiscn 3-0 - 0 "$6 g$ 5 52--.g3 5 2 0 t-yg 5&0g g 1 ao 0 0 . 0 L- 0-.E O 5 m m 2 E ,d c = a,U $?% @ 0.G Fg 00 2 co La, :G "ggr o 5;'; ;,E 6 . " 028 -3Q)Cv-J h a, 26 * a,Zk O.kma, .e g5m "k a's - 0 rco CSL" ma, c CU g~~ snkn- 2 smz om 7 c 2 a, .I? m ;$ F E 8- rn$$ ?&-KG ,> u- 0 2% p$ gv L? C P -.E &-, 6 00 m m .L O 00 2 Fokk zg :F ci, XL E" Q $g2 5 $a- g~22 .g ""I '3s m a, U L '- co 0 m,cf)- .- C - m t m ._ 5 Fg 04 Q 't wc3 13 C m x L C Q 0 5 CJ)K cn m 0 t ._ C ii - c .- 0 m z Q)CK 0cl) % - - a< - 60%- Lo- mo 13-00 L= c 0- - a a, -3v) aL ov)~ 0.G 5 ca %! - 6e a, C'ij $5 m u.go ---0 c -E& ,2 5 ,E m 0 --.G c XE O'mC 3 a, UT ECLL - >a, uu ma C 'G m C m Om- Ea, > 'ij QZ na 0: Ee .- 55 er om L 0- >a0 c 6 f :" ob LE - C L $;g c t a, a, v) zc c c $9 Q, sa 2s CL c 0 (I) I $E 3 ~n m Eo a, 0 02 0 .- o 2 a, .L E E 2 L L L c ma, v) 0 0 0 0 v) 2 m + 0 0 c U 2 fiIg 5 m - 0 L= F G Lo 2 - - 2%: zmo ~m~ n5E 5: 25: 25g 29 5 8 '0 0'0 .'fJ =.Eo m.to ' m a,- "DO 6,.<. %% 'g 6Z$v) 2 u.sF rzz $2; c%P as? moll. 3 - m c 'r ocIo 2 g.-% v)nrc m r n r ~-r m r '7; oza m5.E ornm r;;m 0;;m 1mm c;;m $="a, nyx 20-1 4Zm 0x5 n?x 1-1 0-1 c-x cn-x 0-1: ._ mg '" UT% ycn'G C c r ccba, .zak &,go" 3's " i'E " Z'E - &E - cE - !i'E") c ULLS ckS PC-. E a, o5 Z.&b'Z. sab L-0 220 yEc 0,ES Ea,g CkS Eks T GLOSSARY This glossary describes some of the securities in which Encore Fund may invest in pursuing its i ment objective. U. S. Government Direct Obligations - issued by the Treasury Department and include bills, note: bonds. 8 Treasury bills are issued with maturities of any period up to one year. They are issued in bearer form aL sold on a discount basis to pay face amount at maturity. The income for the investor is the difference bel the purchase price and the maturity value (or the sale price if sold prior to maturity). @ Treasury notes are interest bearing obligations with original maturities of one to seven years. * Treasury bonds are longer term interest bearing obligations with original maturities from five to thirty ye $1. S. Government Agencies Securities - Federal agencies have been established as instrumentalities ! United States Government to supervise and finance certain types of activities. These agencies includ Banks for Cooperatives, Federal Land Banks, Federal Intermediate Credit Banks, Federal Home Loan B Federal National Mortgage Association, Government National Mortgage Association, Export-Import Bank Tennessee Valley Authority. Issues of these agencies while not direct obligations of the United States Go ment are either backed by the full faith and credit of the United States or are guaranteed by the Treasury 01 ported by the issuing agencies’ right to borrow from the Treasury. Bankers’ Acceptances - A bankers’ acceptance is a bill of exchange or time draft drawn on and acceptec commercial bank. It is generally used by corporations to finance the shipment and storage of goods. Whel draft is accepted by a bank, the bank unconditionally guarantees to pay the face value of the instrument ( maturity date. An investor can purchase a bankers’ acceptance in the secondary market at the going rate o count for a specific maturity. Maturities of the instrument are generally six months or less. Certificates of DepQsit - A certificate of deposit is a receipt issued by a bank or savings and loan associatic exchange for the deposit of funds. It earns a specified rate of return over a definite period of time. Normally a tificate can be traded in a secondary market prior to maturity. Eurodollar certificates of deposit are dc denominated deposits in banks outside the United States. The bank may be a foreign bank or a foreign branc a United States bank. Yankee certificates of deposit are United States dollar-denominated deposits issued payable by United States branches of foreign banks. Commercial Paper - Commercial paper is the term used to designate unsecured short-term promissory nc issued by corporations and finance companies. Maturities on these issues vary from a few days to nine mor Yankee commercial paper is issued by foreign institutions in the United States markets and payable in Ur States dollars. Repurchase Agreement - A repurchase agreement is a contractual agreement whereby the seller of seL ties (U. S. Government or other money market securities) agrees to repurchase the same security, in our c from Encore Fund, at a specified price on a future date determined by negotiations. The maturity of the rei chase agreement is generally a few days. Under a reverse repurchase agreement, Encore Fund would in ef sell portfolio securities to another entity, with an agreement to repurchase at a specified future date. The rei chase price under any type of repurchase agreement reflects an agreed upon interest rate for the period of I chase, which tends to reflect current interest rates in the market and not the original issue rate on the securi a, - % ..!. g I 13 0 9 sc Eg3yo L has g .& S""2 3U-- d 2 '5 a, Q - - FZZ- m EZD ~ - 2 g ,$ &&4 g I : ?jg x $5 F,;3 E co g2 sz E Em i? 2g) 0)s m 32 8 a!? bg ma 2 2 .g .e ZE rS 2% % m Eo0 z$g 0 ma, b $ x% ,08 EX gs &@E= .- alc a,m m+-- m.2 g & a, >,' 4 co 06 sa - $e22 v) zrmm om " g:z a, 25s G z? 'Z& gi $& 8a 5 a.l &5+ os.mm I: Q 2 + 2 os=.= Q 0 .E& KCOScU E' T3 O&ZU msa, E a, E ,& 2 .E c .o -(I a, cas=? a,.=€ a, ;E8,ms c o!s3 5 n E F 0 DO(Im Q 3.- ar3m m.- L! 0 8gSg .- FEzg; %E u0)o m $ "2 G?a,3g g%:g$ u$? 9.g a-- 5% a 0 eggo "p$-$? >a,, Ea g ~LcK cL-s%s p 3 5 ._ mu k CrJ 5Z.E 4 wsam ggg3: c 0 * SQmX QCOuQ& c k? Z*a,ZE t."$ E 2 .- c 4 0)-ha, ;; 9: am +-am=a, a, a," 5 ?z) a, mc I z ,x?.%: E:: 3 0)- &.-.I% o) 5;; 22- - 0 2P %'EE2 .- cK> s3 a, 9 m sp$ oaz?." E% EOPEq gap s," % 8 z gua+l: 2.5 a= g L- 05 I 00):3y - L mBgr.r .?= xg - %?Z;&,z .G?m u> 5 a: 0% .- m - D .~c a, 5 .E g 2% K% x 5.2- ._ zE ma,a,o $ a": m: uou: $2 a, &p$Z = 0 mg-2 5 2 ci.2 - ._ -m=.cs z 33 m LS D zcf ?g;g&E x 3m Q€mE.Ea, - m (J .g-- L& m wa,ro3 :i 225. VJ -L-u a, c 0 .- c maqijgZG8 .- - y zT ,: .= 2; sg.& 3 0) - ._ ?&+e -35 e 0 O om." -0 L.9 ,0 om @ga,a, .y (I '3 G'Z3 a, SCy p I?a, &% .t 1 J F- m k-L i- %-- .E -1 -1 I- 0 F I- .E I- -I 2% c?s .F F mz- 0 u -c\jpj+uj cd.s-4~,c\io c +hu,c\i& a + LTu. m '5 ?pixF" -$j - rnC3Lc S.P%?2 5 - LIB 5 p $ - - a, x 3 Q a, - a -07 0 .- PA ss m c B-X 0 mm 3 U $5 L 2; - L a, c .- - ._ m 0 '5 ._ P L-m '13)YOOr (I (IC EF KZ& C U € m c -u .- 6 v, a," u- L .- 0: ma, c m ma 5 - 2% e2 L >> .- L ED m 0 m.V, ~n 0 cc x- L '3.E 0) $(IC 0)c m - a'r ,r g gE.E (I vj C 0 m 0 m .- c L OC.5) K >E mz.os3 5% D & .g 5 'G 2 0 d,.g..i(!a,sm U."a, a3 > - om 0 .- ,.rg OK 0 0l-o a, rno.=o a- 0 c 0.gmgu 0 a.l c m.E 05 a, 0 0 E $'. % 3 ma,czm= zzz-+-n m ?Lorm a, 'E 0'- E K b v)(IV)v) ma m'r a,$m a oa,m0)a, xu. ,_ oa,a,>mx oa,a,,s c c m=a,-cc 3 m oa, 8.Q rQ+Z 2 '3 -Kn m %a$ E c 0 03 c % . c.r $ KFb- F=g m 6 m,gmm.v, -z 5 m(I .- 5 ma, 2 g.E: a, ; a.l K.SE @scEs m.go-5=mhu= F< m.FO>QL-5= Or0 +- c. -3 m-cu.-- % COMMERCIAL PAPER RATINGS Moody’s Inwestors Services, Bmc. The criteria used by Moody’s for rating commercial paper under this graded system include, but are not limii to, the following factors: 1. 2. 3. 4. Liquidity Evaluation of the management of the issuer. Economic evaluation of the issuer’s industry or industries and an appraisal of speculative type ri: which may be inherent to certain areas. Evaluation of the issuer’s products in relation to competition and customer acceptance. a) From a current viewpoint, which would enable the issuer to pay commercial paper noted E other short-term obligations at maturity. b) As measured by various industry operating ratios. c) Cash flow. d) Existence of other forms of immediately available short-term financing, such as bank lines credit which, in most instances, should be sufficient to cover outstanding commercial pal notes. 5. 6. 7. 8. Amount and quality of long-term debt. Trend of earnings over a period of ten years. Financial strength of a parent company and the relationship which exists with the issuer. Recognition by management of obligations which may be present or may arise as a result of put interest questions and preparation to meet such obligations. Relative differences in strength and weaknesses in respect to these criteria would establish a rating in one three classifications: Prime - 1 ; Prime - 2; or Prime - 3. The fourth classification - “Not Rated” - would apply to a company which did not meet normal standard: respect to a disproportionate number of these criteria. a)uc -v)mx g - o-c,=s pu fU a, s 0%; ggo$& .- am3 KIoO2.f Ua, k % .2 mCL s>oa c U.2 CJC D$ W 5 a,-".$$ v: a, E& 2 3s S.Y 5 5 .f 050 m La g., K cr- mc- Ogomcnt; om- ab a0 v) cx Qfr- &b Q -m a2 +-Lo,-Oo - 0- mo soc)uo m Lm a)-= L - sa)= 3 ,OLZU t-- 3 .- zpoaa =.a$ a)% 0.u5 mz E 5 a K C .$!? K-CG 4 .$j.E$ >=E EEmZ _1 -I >&$Fa, & 5G.f 0" @$? "%&I).. $20- mu r.9 -Q)Q)sgo k! 0-OQ-c :E?% ;F m $'E $ Ev)rmQ)E 'E-"$ -c K 5j F; .9 -" g.Ousv)x ??E _ooc~oo .~-go$ - .- msFF ?jogs 00 0 YE:.- OQ) - c -m2? .G733z gar",,! $5;"" - a73 a)o oEm-,D,'E v) '- o'v) 5 cET3 r2?%a,.Go aZZS $v?@! 2g&m ma) '=zGg, a, s Ed2 qq Ca,O,cG zmxn 25sg * :&&?= ''&= v) - a0-gv) a)m ._ Eqf 2 v)m,Q),'- ca-ca, m-a,Q G$Z$ E.. (do v, -sol.Jq rma, .G -_ -&'G 5 a) a)c rci --,%.$!?a 733z.E ;;;om L >cn OE - pTC s-z z I- U &-j c--v) Q) m8p$ 0 gs gzp .-cia)? z $55. =Ea,g Em&3,.$ WI- 05 ccrg fps &5&2& mu. 75gr'--+-& 0 a)Z+E& I 2 Y- 4.- .- C = s-- s oc Q 3 -ba,ag$ 0E:gq GZOZ +x-." ZE~:~ ZZZa, .Sa,&cua,'=> -I.+pz pgg $SF= '- c, Q a, a, c a mzQ)g%o &iQo S?gm 3 cua).Eo OEiQ)F?U '0 I a): E am ._ - E 0 Q)ca)3Ior 'Om mc ..a 4- u) zg ;E.-U=> gnso ZU-?~ z' a,$mo.s 0 a,o 0s Flu o "go,~gQ) ~Zza E?,zu~ QU JZ c 2 0 mo u? xgmsg .- t-- $2 zosgcor a6m-g - +T- c-ra,a)+ r-.fZi,C, $s&$m E% *r pa a) 1.c 0 m Q.E 0 fA ld o$ gg x m so0 .Or.- O& a, 'S.GWS GX.5 52 aaE 2% 02 g, ~~$ZZG aU-v)> $>"no z=) 2- E.ES E 0 Q) a).% as e= v)m 'g$ELx 58P& 2aQ.G 2s a)2ax3.' moo ozac ';"Oa, SE I-q 3LLt;a,v)o swro% 2$5&5 I7 0 n;"K c go .-oos:r $wzv):$ s-ehg '5SEro K- x .- *a -0 UQ ETNA VARIABLE ENCORE FUND, INC. STATEMENT OF ASSETS AND LIABILITIES December 31, 1980 ASSETS: Investments (Note 2): U.S. Government obligations (cost $5,912,066) .................................... .$ 5,736,10( Corporate obligations (cost $74,879,556) ......................................................... 75,056,35: Total investments . ............................................... 80,792,45' Cash ............................................................................................. 89! Interest receivable .............. ..................................... 421,48( NET ASSETS applicable to 6,268,665 shares outstanding, par value $1.00 (30,000,000 shares authorized) .................................................. $ 81,214,831 NET ASSET VALUE per share ............................ .......... $ 12.91 STATEMENT OF OPERATIONS Year Ended December 31, 1980 INVESTMENT INCOME: Interest income ............... ........................................... $ 7,265,33! Net investment income ................ .................................... $ 7,116,731 Investment advisory fee (Note 3) .................................................................... (148,601 Ratio of Operating Expense to Total Investment Income ..................................... 2 REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Realized loss on sales of investments (Note 4): ................................................... Proceeds from sales ... $1,250,344,20 ....... 1,250,625,71 Net realized loss ........... ........................................... (281,501 Beginning of year ...................................................................... (1 6,71 End of year ................................. ................................. 83 Net realized and unrealized loss on investments ..................................... $ (263,95! See Notes to Financial Statements. Cost of investments sold ..................................... Unrealized gain (loss) on investments: Net unrealized gain ............................................. .......... 17,54 L l- F) m Q @ c'p I= zw 2 m)j riz =4i kz 0" -0 z kz 0) 32 0) 0 SOP ct PO ". N 0. m r.- 0- t us ** Cu z m '4 m 9 r. st. t.9 0 0,003 ? 88 + 03.- 00 v)ln In7 E; $j cttctl z me P iYG% v) r E" I* t9 k"! 2 2 5 z. ?I I3 0- 9 9 0" P. m- 0- 7 e 7 PI f- q r;, g- $1 ?- 49 ON 8 3% GN 0 o 0 cool 0 000, r.w 62 =Jl N T-Y-IK% o3 ln r.-0 0-1 ". 'Ds - 0). z g g 2. 9 "* E- m -* NN -0 m N N ? 49 0 2% 9 0- 9 0- ". 0- 03- 10 g 21nN 9.0, 22 k m- 0,- l-? '9 0- N @J ~NcD Pr LD slnst.w o 0 sow m Orn0bt.l 0 oor. b. 0. ". ". ". t.- a "--r.r. N o, P P bb 003 =* 49 t9 ETNA VARIABLE ENCORE FUND, INC. NOTES TO FINANCIAL STATEMENTS 1. Basis of Presentation c. Other Etna Variable Encore Fund, Inc. (“Fund”) was The Fund records investment transactior organized by Etna Life Insurance and Annuity on a trade date basis. Interest income Company (“Company”) to serve as an invest- recorded as earned. Dividends and distr ment vehicle for substantially all of the butions to stockholders are recorded c Company’s variable annuity accounts (“Ac- the ex-dividend date. ates held 100% of the Fund’s shares outstanding at December 31, 1980. The accompanying financial statements of the Fund have been prepared in accordance with generally accepted accounting principles. a. Valuation of Investments COUntS”). The company’s Accounts and aff ih- 3. Investment Advisory Fee Under a management agreement, the Fur pays the Company (its investment adviser) daily fee which, on an annual basis, is equiv lent to one-quarter of one percent (.25%) of average net assets. The net realized loss on the sale of investmer for the year ended December 31, 1980 wq $281,506. Had the average cost been used f financial statement purposes during the yei realized losses would have been increased I $2,252. The $281,506 net capital loss expir in 1988 unless applied to offset realized capi gains by that date. During 1980, 1979 and 1978, the Board Directors of the Fund declared dividends frc undistributed 1979, 1978 and 1977 net inve ment income of $0.716, $0.438 and $0.4t respectively, per share. All years’ dividends their entirety were reinvested in shares of t 2. Summary of Significant Accounting Policies 4. Sales of lnvestments Substantially all investments are short- term and stated at amortized cost, plus accrued interest if applicable, which ap- proximates market value. Other invest- ments are stated at market values based upon closing bid prices as reported by investment dealers, except that during the last sixty days they are held, they are 5. Dividends amortized to maturity value. It is the Fund’s policy to distribute substan- tially all of its taxable income to its stock- holders and otherwise comply with Internal Revenue Code requirements for “regu- lated investment companies”. Accordingly, Fund. no provision for federal income taxes has been made. b. Federal Income Taxes 2 - s" I 0 f 2 000 ~r.ao-mmmar-o~~o~oaoomoooo~m mNau) m m *~00@l~~-@l-~--r-r.or.ommoomoo~ 0d-o~ 0) m a! @l*r-r.mm~m*omm~mmo~om~oo~o~~ r.a-~ (Or-m ;-:-!:-I or-.mm-~d--N-N-~dmd~m*-~ddN-~~r..~~ < <GW nj 2 o m r-- r.. ~sr~~s~-~%~a~a8.s~%sxs~~~.~.~ 2- ?%? 21 z- s -// m 7. N m * v), -- --- -NNr -7-T-N Nm- a P.m *- w w1 ~~88~R~~6$~8~~~89~6~6~s~~~ c 0 r-. 0. "*.r--r.-"~-~mwO~oN-Nm-~O-m-~--o-a-m-~.w~ *- or-mmmm--mdr.oo~md*mm*-~~-oNm * 0 * 0. 9 ~~a--m.a~m-m.*-eo-q@l-o.mm*-m0)-m-0)m.~o.~- ?I -- --- -N@l- - 7-T Nmrr(D LoO-~-~mem0)mNmOr-m~mNmmmoN 0 tA g1 ? al g2:g g 2 b-w-- +a6 5 2 0 am?* 0) 0, *m c\! N. q cq -W m ETNA VARIABLE ENCORE FUND, INC. PORTFOLIO OF INVESTMENTS December 311, 1980 Principal Amount cost Market Value - -_ CORPORATE OBLIGATIONS (92.9%) (Continued) Petroleum (1 6.8%) Shell Pipeline Corp., Cornrn. Paper, 19.625%, 1/5/81 ...... ...... $ 700,000 $ 698,474 $ 698,474 Pembroke Capital Co., Inc., Cornrn. Paper, 18%, 1/8/81 , 3,110,000 3,099,115 3,099,115 Explorers Pipeline Co., Comrn. Paper, 19.25%, 1/14/81 1,000,000 993,048 993,048 Alyeska Equipment Corp., Cornrn. Paper, 19.625%, 1/21 585,000 578,622 578,622 Shell Pipeline Corp., Comm. Paper, 19.625%, 1/21/81 . 500,000 494,549 494,549 Colonial Pipeline Co., Cornrn. Paper, 20%, 1/22/81 ... 1,700,000 1,680,167 1,680,167 Mobil Fairfax, Inc., Cornm. Paper, l8%, 1/22/81 ................... 3,100,000 3,067,450 3,067,450 Mobil Fairfax, Inc., Cornm. Paper, l8%, 1/22/81 ....................... 1,000,000 989,500 989,500 Explorers Pipeline Co., Cornrn. Paper, 20.05%, 1/28/81 2,000,000 1,969,925 Retailers (3.7%) Garfinckel, Brooks Brothers, Miller & Rhoades, Inc., Cornrn. Paper, 20%, .................. 1,969,925 13,570,850 13,570,850 1/23/81 ............................................................. 3,000,000 2,963,333 2,963,333 Reynolds (R.J.) Industries, Inc., Comm. Paper, 10.375%, 5/21/81 ..... 2,000,000 2,000,000 1,920,000 -- Tobacco (2.4%) Utilities - Electric (1.3%) Public Service Co. of Oklahoma, First Mtge. Bonds, 3.125%, 4/1/81 . . 1,125,000 1,080,079 1,094,062 Utilities - Gas Pipeline (3.7%) Northwest Natural Gas Co., Cornrn. Paper, 18%, 1/19/81 . . 1,000,000 991,000 991,000 ................. 1,981,000 1,981,000 Northwest Natural Gas Co., Cornrn. Paper, 18%, 1/20/81 2,000,000 New York Telephone Co. Program Note, Comm. Paper, 19.75%, 1/6/81 2,972,000 2,972,000 Utilities - Telephone (3.30/0) 1,994,514 1,994,514 New York Telephone Co. Program Note, Cornm. Paper, 19.625%, 1/8/81 . . 650,000 647,519 647,519 2,642,033 2,642,033 ... 2,000,000 Total Corporate Obligations ....... 74,879,556 75,056,357 TOTAL INVESTMENTS ................................................ $ 80,791,622 $ 80,792,457 Tax Basis Cost .... ....... $ 81,151,518 See Notes to Financial Statements 19 W em cc Ln 7 Y 4: - -0 a 2 &55 50 OJ 2Ng 4 "0.32 F2 0 ' a3 zg5 c w 0 m" 2 sg 0 %Gx-O 0 ma - 0 p'o" t 25F 5 $=E I- ~8mg 0 v) a OaF w mKV' z @5ZI 0 l-%;a3 u a01 b 3E%* > 5u-m r 3 2309 3 arm Btna Life Insurance and Annuity Company 151 Farmington Avenue, Hartford, Connecticut 061 56 m One of the ETNA LIFE & CASUALTY companies SPS 752.00.3-3 • ... fEtna Life Insurance and The Group Variable Retirement Annuity Contracts described in this prospectus ("Contracts")are designed for (1)annuity purchase plans ("Section 403(b)Plans")adopted by public school systems and certain tax- exempt organizations for their employees and which qualify for tax-deferred treatment under Section 403(b)of the Internal Revenue Code ("Code");and (2)deferred compensation plans ("Deferred Compensation Plans") adopted by state and local governments for their employees or independent contractors,or both,where such Plans are eligible for tax-deferred treatment under Section 457 of the Code. The Contracts are offered primarily for Plans where individual solicitation of each Participant is required or where annual Aggregate Purchase Payments are expected to be less than $100,000.A single master group Contract is issued to cover all present and future Participants.The Contract will be owned by the employer or other obligor under the Plan and,for Deferred Compensation Plans,will be a part of the Contract Owner's gen- eral assets,which are subject to the claims of general creditors.Benefits available to Participants will be gov- erned exclusively by the provisions of the Plan and,for Deferred Compensation Plans,will be backed only by the general assets of the Contract Owner. Both variable and fixed accumulation and annuity options are offered under the Contracts (see "The Con- tracts",page 6).The basic purpose of the variable annuity is to provide a retired Participant with lifetime variable annuity payments which will reflect the investment experience of one or more open-end management invest- ment companies ("Funds")selected by the Contract Owner or Participant.The investment objectives of the Funds which are available for this purpose are described on page 7 of this prospectus,under "The Funds".Con- tract Owners and Participants should refer to the accompanying prospectuses of the Funds for more complete information about their investment policies and restrictions.tEtna Life Insurance and Annuity Company ("Com- pany")acts as investment adviser to the Funds,and charges each Fund an advisory fee which is accrued daily at an annual rate of 0.25%of its current net asset value. To the extent that the fixed accumulation or annuity option is elected by the Contract Owner or Participant, assets of an Individual Account become a part of the Company's General Account used to provide fixed annuity benefits.Except where the fixed accumulation or annuity option is specifically mentioned,this prospectus de- scribes only the variable accumulation and variable payment aspects of the Contracts. THIS PROSPECTUS IS VALID ONLY WHEN ACCOMPANIED BY THE CURRENT PROSPECTUSES OF JETNA VARIABLE FUND,INC.,JETNA INCOME SHARES,INC.AND JETNA VARIABLE ENCORE FUND,INC.ALL PROSPECTUSES SHOULD BE RETAINED FOR FUTURE REFERENCE. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. Dated:June 20,1980 DEDUCTIONS APPLICABLE TO THE GROUP VARIABLE RETIREMENT ANNUITY CONTRACTS No deductions are made from Purchase Payments for sales or administrative expenses. However, if all or any portion of the value of an Individual Account(s) or Contract is withdrawn during the Accumulation Period, a deferred sales charge will be deducted from such amount ("Amount Redeemed") in determining the amount to be paid ("Redemption Payment") on such withdrawal. For an example of the operation of the deferred sales charge see "Redemption Payments; Deductions for Deferred Sales Charges" on pages 13-14. For installment purchase payment Contracts, the deduction for the deferred sales charge will constitute the following percentage of the Amount Redeemed: Purchase Payment Deferred Sales Charge Periods (see page 4) Deduction Less than 5 5% 5 or more but less than 7 4 yo 7 or more but less than 9 3 YQ 9 or more 2% The deduction forthe deferred sales charge will not exceed 9% of the Purchase Payments made pursuant to the Contract. Separate single purchase payment Contracts are issued for Transferred Amounts. Lump-sum transfers to the Company of amounts accumulated under a pre-existing plan not involving at least $75,000 and an average Purchase Payment of $1 0,000 per Participant will be applied to installment purchase payment Contracts. Under Contracts issued for Transferred Amounts, the deduction for the deferred sales charge will constitute the following percentage of the Amount Redeemed: Deferred Sales Charge Contract Years Deduction Less than 5 5 % 5 or more but less than 6 4% 7 or more but less than 8 2% 8 or more but less than 9 1 Yo 9 or more 0% 6 or more but less than 7 3 yo The deduction for the deferred sales charge will not exceed 9% of the Purchase Payment made pursuant to the Contract. No deferred sales charge will be deducted from any amounts paid due to the death of a Participant. The deferred sales charge, when applicable, is deducted so that the Company may recover expenses re- lated to the sale of the Contracts. In addition, for installment purchase payment Contracts, the Company deducts an annual maintenance charge of $20 from each Individual Account on the Individual Account anniversary. Any premium tax assessed by the applicable jurisdiction will be deducted either from Purchase Payments or from Individual Account values at the annuity commencement date, based upon the Company's determination of when such tax IS due. However, the Company reserves the right to deduct a premium tax at any time such tax becomes due. Where-applicable, premium tax rates currently range from 0.5% to 4% (see "Appendix"). 2 The Company makes adaily deduction from the current value of the variable portion of each Contract whic is equivalent to 1.25% on an annual basis. This deduction is for the annuity mortality risk and for the contractu promise that the Company cannot increase the deductions for sales and administrative expenses. The 1.25% in addition to the 0.25% annual deduction for the investment advisory fee charged to each Fund. EXPERIENCE RATING CREDITS The Company, in its discretion, may provide experience rating credits on (i) installment purchase payme Contracts for which at least $50,000 of Aggregate Purchase Payments have been received in the previous months, and (ii) the variable portion of Transferred Amounts Contracts. Any experience rating credits will be E plied to the Contracts in the form of additional Accumulation Units. MINIMUM AND MAXIMUM PURCHASE PAYMENTS For Deferred Compensation Plans and public school system Section 403(b) Plans, installment Purcha Payments on behalf of a Participant must be at least $50 per month ($600 annually). For 501 (c)(3) organizati Section 403(b) Plans, installment Purchase Payments on behalf of a Participant must be at least $85 per mol ($1,000 annually). Installment Purchase Payments on behalf of a Participant may not be less than $25 per p ment. Where a combination of investment media is elected by the Contract Owner or Participant, no allocatior any one medium may be less than $1 0 (see “Selection of Investment Media”, page 6). The Code imposes a limit on the maximum annual Purchase Payments which may be excluded fror Participant’s gross income for federal income tax purposes. Under Section 403(b) Plans, such limit (referrec as an “exclusion allowance”) must be calculated with respect to each Participant in accordance with Sectic 403(b)(2) and 41 5 of the Code. Under Deferred Compensation Plans, the limit is generally the lesser of $7,501 331/3/3% of the Participant’s includible compensation (25% of gross compensation). Not later than the tenth day following the date on which the Contract is delivered to the Contr Owner, the Contract Owner may, by giving written notice to the Company, elect to cancel the Contt and receive a full refund of any Purchase Payments made to that time. GLOSSARY OF SPECIALTERMS As used in this prospectus, the following terms have the meanings shown: Accumulation Period: The period before the commencement of annuity payments, during which Purck Payments are made on behalf of Participants and Net Purchase Payments are accumulated for the benefit o Participants. Accumulation Unit: A measure of the net investment results of each appropriate investment medium. Tt Units are used to calculate the value of the Contract during the Accumulation Period. Aggregate Purchase Payment: The sum of Purchase Payments made on behalf of all Participants Contract. Amount Redeemed: The total value of the Accumulation Units cancelled upon the termination of an lndivi Account or a partial surrender of the Individual Account. Annuitant: A retired Participant or beneficiary who receives annuity payments. Annuity: A series of payments for a definite period; or for a definite payment amount with an indefinite perk for life; or for life with a minimum number of payments certain; or for the joint lifetime of the Annuitant and i ond person and thereafter during the remaining lifetime of the survivor. Annuity Period: The period following the commencement of annuity payments. (continued) Annuity Unit: A measure of the net investment results of Etna Variable Fund, Inc. or Etna Income Shares, Inc. during the Annuity Period, which includes an adjustment for the assumed net investment rate. These Units are used to calculate the amount of the variable annuity payments. Contract Owner: The entity to which the Contract is issued, usually the employer. Also referred to as the Owner. Contract Year: The period of 12 months measured from the Contract's effective date or any anniversary of such effective date. Fund: Etna Variable Fund, Inc., Etna Income Shares, Inc. orEtna Variable Encore Fund, Inc. Each Fund is an open-end management investment company (commonly referred to as a mutual fund) which may be selected by the Contract Owner or Participant, as provided by the Plan, as an investment medium. Individual Account: The record established during the Accumulation Period for each Participant of the Con- tract values accumulated on that Participant's behalf for payment of future annuity benefits. Net Purchase Payments: Purchase Payments less premium taxes, if applicable. Participant: An eligible person participating in a Plan for whom an Individual Account is established under a Contract. Plan: An annuity purchase plan, either a Section 403(b) Plan or a Deferred Compensation Plan, entitled to tax- deferred treatment under the Code and under which benefits are to be provided by the Contract. Purchase Payments: Gross payments made to the Company on behalf of a Participant. Purchase Payment Period: The period of time in which a Contract Owner completes the annual number of Purchase Payments agreed upon at the time the Contract was applied for; e.g., if a Contract Owner determines that the Purchase Payment Period will consist of 12 payments per year and only makes 11 payments, the Pur- chase Payment Period is not completed until the twelfth Purchase Payment is made. When a Contract Owner in- dicates that a particular remittance is intended to include more than one regular Purchase Payment, the Company will credit the number of Purchase Payments represented by such remittance as directed by the Con- tract Owner in determining the Purchase Payment Period. Redemption Payment: The amount paid to the Contract Owner or Participant upon a redemption request, be- ing the Amount Redeemed less any applicable deferred sales charge. Transferred Amount: A specified amount of $75,000 or more, involving an average Purchase Payment of $1 0,000 or more per Participant, transferred by the Contract Owner to the Company. Valuation Period: The period of time from the end of one business day of the New York Stock Exchange to the end of the next such day. Valuation Reserve: A reserve, established pursuant to the insurance laws of Connecticut. which measures the voting rights, or the value of a commutation right under the Second or Third Options under the Contract, during the Annuity Period. Variable Annuity Account C: Pursuant to the insurance laws of Connecticut, assets attributable to the vari- able portions of Contracts are segregated from other assets of the Company and are held in Variable Annuity Ac- count C of Etna Life Insurance and Annuity Company, which is referred to in this prospectus as Variable Annuity Account C. Assets of Variable Annuity Account C are invested in shares of the Funds in accordance with the election of the Contract Owner or, if permitted by the Plan, the Participant. Variable Annuity Contract: An annuity contract which provides retirement payments which vary in dollar amount with investment results. 4 TABLE OF CONTENTS Page Page I NTRODUCTI ON 17 18 A. The Contracts .... ................ 6 4. Value of an Annuity Unit ........ 5. Amounts of Second and Subsequ B. Selection of Investment Media 1. Accumulation Period Elec Monthly Annuity Payments. 2. The Funds. ............ ...... 7 DIRECTORS AND OFFICERS OF THE COMPANY. 19 3. Annuity Period Elections. .................. LEGAL PROCEEDINGS ............. 21 DESCRIPTION OF THE COMPANY AND VARIABLE ANNUITYACCOUNT C FEDERALTAX STATUS OF THE FEDERALTAX STATUS OF OWNERS AND PARTICIPANTS. ...................... 21 RESTRICTIONS UNDER THE TEXAS OPTIONAL RETI REM ENT PROGRAM ........ 2 1 1. Types of Contracts. ............ . 10 OTHER VARIABLE ANNUITY 2. Mortality and Expense Risks . . lo CONTRACTS.. . ..................... 21 ANNUITY CONTRACTS .................... 21 5. Voting Rights .............. RECORDS AND ACCOUNTS.. .............. 22 6. Transfer of Ownership ; Assi g n EXPERTS ................................. 22 FIDELITY BOND ........... 22 1. Crediting Accumulation Units. ........ 11 ........... .......... A, Organization ofthe Company 9 COMPANY. " " ". '. " " " ". 21 B. Variable Annuity Account C ............. 9 DESCRIPTION OF GROUP VARIABLE RETIREMENT ANNUITY CONTRACTS A. General DISTRIBUTION OF VARIABLE 3. Modification of the Contract . . 4. Minimum and Maximum Purch Pay men ts ................. ... 10 B. Accumulation Period ........... 2. Transfers Between Investment Media . 12 3. Value of an Individual Account. 12 4. Value of an Accumulation Unit. 13 5. Net Investment Factor for Each Valuation Period. ............... 6. Death Proceeds Before Retirement . . , 13 7. Redemption Payments; Deductions for Deferred Sales Charges. ...... 13 HYPOTHETICALTABLES ....... A. Etna Variable Fund - Hypothetical Periodic Accumulation Values and B. Etna Income Shares - Hypothetical Periodic Accumulation Values and C. Etna Variable Encore Fund - ....... Annuity Payments, .................... 21 Annuity Payments. .................... 2' I Periodic Accumulation C. Annuity Period 1. Optional Annuity Period Elections. .... 15 2. Optional Annuity Forms ............. 15 .......................... 3 Monthly Annuity Payment. ...... l7 FINANCIAL STATEMENTS. ................. 2 3. Determination of Amount of the First NO PERSON IS AUTHORIZED BY THE COMPANY TO GIVE INFORMATION OR TO MAKE ANY REP SENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION WITH ' OFFERS CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFF ING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. I NTRO D U CTlON A. THE CONTRACTS cumulation and annuity options under these Con- tracts, which are similar in many respects. Both provide that the Net Purchase Payments made on behalf of a Participant prior to the selected retirement date will be accumulated by the Company and that after the retirement date the Company will make an- nuity payments (usually on a monthly basis) gener- ally for at least as long as the Participant lives. In both cases, the Company assumes the annuity mortality risk and expense risk (described on page 10) under the Contracts, for which it receives certain amounts. The significant difference is that under a fixed accu- mulation or annuity option, the Company assumes the risk of investment gain or loss in that it guarantees be the Company itself. Each Net Purchase Payment, to the extent it is to be accumulated on a variable credited to the Contract, The assets of Variable Annuity Account C attrib- utable to the Contract are invested in shares of one or more of the Funds, as elected by the Contract Owner or Participant, as provided by the Plan. Shares of the Funds are purchased and redeemed for Variable Annuity Account C at their net asset value next deter- mined after receipt by the Funds of a purchase order or redemption request from the Company. The Funds' investments fluctuate in value daily and are subject to the risks of changing economic conditions as well as the risks inherent in the ability of in economic conditions. There is no assurance that the value of the Contract or the aggregate amount of the variable annuity payments made under the Con- tract will equal or exceed the Purchase Payments made for the Contract. B. SELECTION OF INVESTMENT MEDIA 1. Accumulation Period Elections As to each Individual Account, the Owner or Par- ticipant may elect to have Net Purchase Payments accumulated (a) on a fully variable basis invested in shares of one or more of the Funds; (b) on afully fixed basis which reflects a compound interest rate cred- ited by the Company; or (c) in a combination of any of the available investment media, if a combination of investment media is elected, purchase payments ments of 5% (five percent), provided that no alloca- tion to any one medium would be less than $10. The Owner or Participant may from time to time elect to change the allocation of future Purchase Payments to any mode of allocation described above, provided that such change would not be ef- fective less than 90 days after the date the Individual Account was established or after the date of a prior change of allocation under the Individual Account. In addition, the Contract Owner or Participant may elect The Company Offers both variable and fixed ac- basis, is placed in Variable Annuity Account C and Net Purchase Payment values and promises aspeci- fied interest rate and annuity payment; whereas un- management to anticipate the changes in such in- vestments which may be necessary to meet changes der a variable option, there is no promise of a specified interest rate or an annuity payment of a fixed amount. Thus, under a variable annuity, the Contract Owner or (if a Plan so provides) the Partici- pant assumes the risk of investment gain or loss in that the value of the Contract (before retirement) and the annuity payments (after retirement) will vary with the investment performance of the Fund or Funds in which Contract values are invested. The options and elections available under these Contracts may be limited by the Plan adopted by the employer. Generally, for Section 403(b) Planss elec- tions may be made by Participants; for Deferred Compensation Plans, elections must be tmde by the Contract Owner. References to the rights of Contract Owners or Participants to make various elections are thereof. Participants should consult their employer concerning the extent of any such limitations. contingent upon the type of Plan and the provisions may be allocated to the respective media in incre- The Group Variable Retirement Annuity Con- tracts described in this prospectus provide variable annuity payments commencing on a selected future annuity date. Various optional forms of annuity pay- ments are available (see "Annuity Period"). Purchase Payments are forwarded to the Corn- pany through a registered broker-dealer, which may 6 during the Accumulation Period to transfer Individual correspondingly greater potential for long-te Account assets between any of the Funds or from any of the Funds to the fixed medium, subject to con- ditions described in this prospectus under “Transfers a fixed basis may not be transferred to another in- vestment medium, except at retirement (see “Annu- ity Period Elections”). investment growth. As its primary investment objective, Rtna a level of current income as is consistent with prud investment risks. Capital appreciation is a second objective. In pursuing its objectives, Income Sha will invest primarily in a diversified portfolio of d securities. The investment experience of a dive 2. TheFunds fied portfolio of debt securities should be expectec In directing the investment of Individual Account reflect the interest earnings and changes in the n values into one or more of the Funds, the Contract ket value of such securities in general. During Owner or Participant will be determining the invest- riods when yields on new debt securities ment objective(s) for each Individual Account. Since generally increasing, the value of a portfolio alre the investment policies of the respective Funds will invested at lower yields would be expected to differ fundamentally at all times, their respective in- cline. Conversely, during periods when yields on I vestment results are likely to differ as well. In addi- debt securities are generally declining, the value tion, each Fund may be affected differently by portfolio already invested at higher yields woulc changes in general economic conditions. The Com- expected to rise. There are also other factors wb pany does not offer advice to Contract Owners or can affect the value of a portfolio of debt secur Participants as to how the Funds should be utilized, and, as to each such security, there is a risk of de nor does it monitor such investment decisions for of principal and interest. Because of these uncerl appropriateness in light of economic conditions. ties there can be no assurance that Income Shz Therefore, Contract Owners or Participants should objectives will be achieved. carefully consider, on a continuing basis during the Atna Variable Encore Fund, Inc. (“En1 Accumulation Period and on a final basis before an- nuity payments commence, which Fund or combina- Fund”) may be e1ected a’ an investment mec tion of F~~~~ is best suited to their long-term during the Accumulation Period only. The sole in\ ment objective of Encore Fund is to seek as hi investment objectives. level of current income as can reasonabll The primary investment objective of Etna Vari- achieved consistent with the preservation of ca! able Fund, Inc. (“Variable Fund”) is long-term capi- It will pursue this objective principally through in1 tal appreciation. Realization of current investment ment in short-term fixed-income debt secu income is a secondary objective. Variable Fund will (“money market securities”). Investment in ml pursue these objectives by investing primarily in a di- market securities can reasonably be expected I versified portfolio of equity securities (common ford relative stability of capital; however, histori stocks and securities convertible into common stock) such securities have not exhibited a significap which can reasonably be expected to share in the tential for capital appreciation, nor have they g growth of the nation’s economy over an extended pe- ally, over long periods of time, provided 5 riod of time. Though the investment results of Vari- comparable to those on debt securities with I( able Fund cannot be predicted, historically the value maturities (such as those in which Income Share of a diversified portfolio of equity securities held for a invest). In addition, the yields on money market I long period of time has tended to rise during periods rities may fluctuate substantially over short peric of inflation and growth. There has been no exact cor- time. Therefore, utilization of Encore Fund I relation, however, and during some periods the op- appropriately be viewed as a short-term alterr posiie has occurred. Contract Owners or Participants (a) during periods when the Contract Owner of who elect to utilize Variable Fund will be assuming a ticipant expects that its relative stability of cap greater risk of investment volatility than that associ- current yields could provide advantages over ii ated with either of the other Funds, in return for a ment in Variable Fund or Income Shares; or between Investment Media”. Assets accumulated on cOrneShares, Incm (“Income Shares”) seeks as h times when the Contract Owner or Participant may be uncertain as to whether to utilize the fixed invest- ment medium, from which Individual Account values may not be transferred other than at retirement. Of course, as with all variable investment media, there will be attained at any particular time. Contract Owners and Participants should refer to the accompanying prospectuses of the Funds for more complete information about their investment policies and restrictions. A substitution of any other underlying fund would require approval of the Securi- ties and Exchange Commission ("Commission") and would be effected only if deemed necessary to ac- complish the purposes of Variable Annuity Account C. If a substitution were deemed necessary, the Company would seek to substitute a fund with funda- mental investment objectives reasonably similar to those of the Fund(s) for which the substitution was made. 3. Annuity Period Elections Unless provided otherwise by the Plan, the Con- cumulated value of an Individual Account at the retirement date, regardless of how accumulated, ap- plied to provide an Annuity with payments (a) on a variable basis reflecting the investment experience of Variable Fund; (b) on a variable basis reflecting the investment experience of Income Shares; (c) on a fixed basis reflecting a compound interest rate prom- ised by the Company; or (d) in any combination of the above, provided that the first payment would be at least $20 and that total yearly payments be at least $100. Encore Fund cannot be used as an investment medium during the Annuity Period. can be no assurance that Encore Fund's objective tract owner or participant may elect to have the ac- 8 DESCRIPTION OF THE COMPANY AND VARIABLE ANNUITYACCOUNT C A. ORGANIZATION OF THE COMPANY It is also registered as a broker-dealer undc Securities Exchange Act of 1934. Etna Life Insurance and Annuity Company is a stock life insurance company organized in 1976 un- As of April 30, 1975, Variable Fund SUCCE der the insurance laws of Connecticut. The to the assets of the Company’s former Variabl Company’s name was changed from Etna Variable nuity Account B (“former Account B”) pursuar Annuity Life Insurance Company to Etna Life Insur- realignment program undertaken to conforr: ance and Annuity Company on January 1, 1980. Its Company’s mode of registration under the Ir Home Office is located at 151 Farmington Avenue, ment Company Act of 1940 (“1 940 Act”) with th; Hartford, Connecticut 061 56. The Company is the lowed by other issuers of Variable Annuity Coni successor (by virtue of merger) to Etna Variable An- subject to 1940 Act regulation. Encore Fund ar nuity Life Insurance Company, a company organized come Shares became available as investment n in 1954 under the insurance laws of Arkansas. (Ref- under the Contracts on August 29, 1975 and M erences hereinafter to the Company prior to Decem- 1978, respectively. ber 31,1976 mean the Company’s predecessor.) On B. VARIABLE A”U~TYACCOUNT c October 21,1954, the Company issued the first Vari- able Annuity Contract ever offered in the United Variable Annuity Account C was establish States by a commercial insurance firm to the general 1974 pursuant to a resolution of the Board of C public. tors of the Company. Under Connecticut insut law the income, gains or losses of Variable Ar The Company is a wholly-owned subsidiary of Account C are credited to or charged against tt- Etna Life and Casualty Company. Organized in sets of Variable Annuity Account C without reg; 1967, Etna Life and Casualty Company is publicly the other income, gains or losses of the Com held, and to the best of its knowledge, no single per- These assets are held for the Contracts and son or entity beneficially owns as much as 10% of the other Variable Annuity Contracts as may be is outstanding shares of its capital stock. by the Company and designated by it as particir in Variable Annuity Account C. Although the a! The Company is licensed to do business in all maintained in Variable ~~~~i~~ ~~~~~~t c will n fifty states, the District of Columbia, the Virgin charged with any liabilities arising out of any , Islands, Guam and Puerto Rico and is further sub- business conducted by the company, all obliga ject to regulation by the Insurance Department of arising under the Variable Annuity Contracts, in each such jurisdiction. Regulation by the Connecticut ing the promise to make annuity payments, are ments includes periodic examination to determine distributions made by the Funds with respe the Company’s contract liabilities and reserves so shares held by Variable Annuity Account c will t that the Insurance Commissioner may certify that invested in additional shares at net asset value these items are correct. Such regulation does not in- ductions and surrenders from Variable A~ volve supervision of the investment management or Account c will be made by surrendering shares ( policies of the Company. Funds at net asset value. Shares of the Funds hi Variable Annuity Account C are held by the Com tained in this prospectus are to be considered only as necessary the issuance and delivery of stock c bearing upon the ability of the Company to meet its cates. obligations under the Variable Annuity Contracts, which include its assumption of the mortality and ex- Variable Annuity Account C is registered pense risks. the Securities and Exchange Commission as a investment trust under the 1940 Act. Such reg; The Company is registered as an investment ad- tion does not involve supervision of the Acco viser under the Investment Advisers Act of 1940 and, management, investment practices or policies b as such, serves as investment adviser to the Funds. Commission. Insurance Department and other Insurance Depart- era1 corporate liabilities of the Company. Any ai The financial statements of the Company con- through an open account system, which make DESCRIPTION OF GROUP VARIABLE RETIREMENT ANNUITY CONTRACTS vance of the effective date of such modification, except that A. GENERAL 1. Types of Contracts The Group Variable Retirement Annuity Con- tracts provide for installment purchase payments and annuity payments beginning at a future date. Sepa- rate Contracts are issued for Transferred Amounts. (a) the annuity options, (b) the contractual promise that no deduction will be made from Purchase Payments for sales or administrative expenses, (c) the deductions for the mortality and ex- pense risks and the advisory fee, (d) the annual deduction for the Individual Ac- (e) the deferred sales charges 2. Mortality and Expense Risks The Company assumes two risks under the Contracts: an annuity mortality risk and an expense risk. count maintenance charge, and The annuity mortality risk is the Company's promise to continue making annuity payments, de- termined in accordance with the annuity tables and other provisions contained in the Contract, to individ- ual Annuitants regardless of how long they live and regardless of how long all Annuitants as a group live (see "Annuity period"), This promise assures Annui- tants that neither their own longevity nor an improve- merit in life expectancy generally will have any adverse effect on the monthly annuity payments they ,,,,ill receive under the Contract and relieves them of the risk that they will outlive the amounts which have been accumulated for their retirement. The promise is based on the Company's actuarial determination of expected mortality rates among Annuitants. If future experience proves that this actuarial determination was erroneous because, as a group, the longevity of Annuitants is longer than the Company anticipated, the Company must provide amounts from its General Account to fulfill its contractual obligation. In that event, a loss will fall on the Company. Conversely, if longevity among Annuitants is equal to or shorter than anticipated, a gain will result to the Company. The Company also assumes the risk that the A,.<...."..& u51G1 lcu sales chaige deduction and the individuai Account maintenance charges (if applicable) for sales and administrative expenses may be insuffi- cient to cover the actual cost of such items. If so, a loss will fall on the Company. which are applicable at the time a Participant's Individual Account is established will continue to be applicable to that Individual Account, The Contract will be suspended automatically On the effective date Of any modification if the Con- tract Owner fails to assent to such modification of the Contract initiated by the Company. Effective with suspension, no new Participants may enter the Plan but further Purchase Payments On behalf Of Partici- pants then covered by the Plan maY continue to be made. No modification may affect any Annuity corn- mencing prior to the effective date Of such modifica- tion unleSS deemed necessarY for the Plan Or Contract to comply with the requirements of the Code 01 other laws and regulations affecting the Plan or Contract. 4. Minimum and Maximum Purchase For Deferred Compensation Plans and public school system Section 403(b) Plans, installment Pur- cha-se Payments on hshalf of a Participant must be at least $50 per month ($600 annually). For 501 (c)(3) organization Section 403(b) Plans, installment Pur- chase Payments on behalf of a Participant must be at least $85 per month ($1,000 annually). Installment Purchase Payments on behalf of a Participant may not be less than $25 per payment. Where a combina- tion of investment media is elected by or on behalf of a Participant, no allocation to any one medium may be less than $10. Payments 3. Modification of the Contract The Company may modify the Contract by noti- fying the Contract Owner in writing 30 days in ad- $0 The Code imposes a limit on the maximum an- nual Purchase Payments which may be excluded from a Participant’s gross income for federal income tax purposes. Under Section 403(b) Plans, such limit or “exclusion allowance” must be calculated with re- spect to each Participant in accordance with Sec- tions 403(b)(2) and 41 5 of the Code. Under Deferred Compensation Plans, the limit is generally the lesser of $7,500 or 33%% of the Participant’s includible compensation (25% of gross compensation). Separate sing’e purchase payment Contracts are issued for Transferred Amounts. Lump-sum transfers to the Company of amounts accumulated under a pre-existing plan not involving at least $75,000 and an average Purchase Payment of $1 0,000 per Participant will be applied to installment purchase payment Contracts. the right to instruct the Contract Owner with respc to the number of votes attributable to their Individt Accounts or Valuation Reserves. Votes attributat to those Participants and Annuitants who do not struct the Contract Owner will be cast by the Cc pany, at the direction of the Contract Owner, for against each proposal to be voted upon in the sa proportion as votes for which instructions have br received by the Contract Owner. Votes attributablt Contract Owners who do not direct the Company be cast by the Company in the same proportion the votes for which directions have been received the Company. Participants and Annuitants entitled to instr the casting of votes will receive a notice of e meeting of shareholders, together with any proxy licitation materials, and a statement of the numbc votes attributable to their participation under the C tract and stating the right to instruct the Cont Owner how such votes shall be cast. 5. Voting Rights Each Contract Owner will be entitled to direct the Company (which is the record owner of the shares of the Funds held in Variable Annuity Account C) as to the voting of shares at meetings of the shareholders of the appropriate Fund or Funds. With respect to a particular Fund, the number of votes as to which each Contract Owner may give directions is determined as follows: (a) for each Participant during the Accumula- tion Period, the number of votes is equal to (i) the por- tion of the current value of the Participant’s Individual Account attributable to that Fund, divided by (ii) the net asset value of one share of that Fund; and (b) for each Annuitant, the number of votes is equal to (i) the portion of the Valuation Reserve attributable to that Fund divided by (ii) the Fund’s net asset value per share. In determining the number of votes, fractional votes will be recognized. Where the value of the Indi- vidual Account or Valuation Reserve relates to more than one Fund, the calculation of votes will be per- formed separately for each such Fund. The number of votes as to which each Contract Owner may give directions will be determined as of a date not more than 40 days prior to the date of the meeting of shareholders. otherwise by the Plan, Participants and Annuitants have a fully (1 OOo/o) vested interest in the benefits provided for them under the Contract and shall have 6. Transfer of Ownership; Assignment Unless contrary to applicable law, assignmei the Contract or of a Participant’s Individual Accou prohibited. B. ACCUMULATlON PERlOD 1. Crediting Accumulation Units No deductions are made from Purchase I merits for sales or administrative expenses, k ever, if all or any portion of an lndividual Account( Contract is withdrawn during the Accumulation riod, a deferred sales charge will be deducted the Amount Redeemed in determining the Redc tion Payment (see ‘cRedemption Payments; DE tions for Deferred Sales Charges,,). Any premium tax assessed by the applicab risdiction will be deducted either from Purchase merits o1 from lndividual Account values a. annuity cornmencement date, based upon Company’s determination of when such tax is For Section 403(b) Plans, unless provided However, the Company reserves the right to dec premium tax at any time such tax becomes Where applicable, premium tax rates currently r from 0.5% to 4% (see “Appendix”). Each Net Purchase Payment is credited to the later than 30 days before the commencement of an- Participant’s Individual Account in the form of Accu- nuity payments. The amount to be transferred may mulation Units as of the date on which the Purchase not be less than $500. If the transfer of the amount re- Payment is received at the Company’s Home Office. quested would result in an invested balance of assets The number of Accumulation Units credited is deter- in any Fund of less than $500, the Company may mined by dividing the Net Purchase Payment by the transfer the total amount invested in such Fund to the value of an Accumulation Unit next computed follow- designated investment medium. Assets accumulat- ing receipt of the Purchase Payment by the Company ing on a fixed basis may not be transferred to any at its Home Office. Accumulation Units are valued other investment medium for the purpose of accumu- separately for each investment medium, so a Con- lation. Owners and Participants who contemplate the tract Owner or Participant who has elected to have transfer of assets should consider the risk inherent in assets of Variable Annuity Account C attributable to a shift from one investment medium to another. In an Individual Account invested in acombination of in- general, frequent transfers based on short-term ex- vestment media will have Accumulation Units cred- pectations will tend to accentuate the danger that a ited to the Individual Account from more than one transfer will be made at an inopportune time. source. For information on the value of an Accumula- By giving notice to the Company at its Home Of- tion Unit and how it is determined, see “Value of an fice prior to 3o days before the cornmencement of an- Accumulation Unit”. nuity payments, the Contract Owner or Participant For installment purchase payment Contracts, may elect to have amounts which have been accu- the Company deducts an annual maintenance mulating on a variable basis transferred to the Gen- charge of $20 from each Individual Account on the eral Account of the Company to provide fixed annuity Individual Account anniversary. payments; or to have assets accumulating on a fixed basis transferred to Variable Fund or Income Shares, perience rating credits on (i) installment purchase payment Contracts for which at least $50,000 of Ag- gregate Purchase Payments have been received in the previous 12 months, and (ii) the variable portion rating credits will be applied to the Contracts in the form of additional Accumulation Units. The Company, in its discretion, may provide ex- or both, to provide variable annuity payments, 3. Value of an Individual Account The number of Accumulation Units credited to sequent change in the value of an Accumulation Unit, but the dollar value of an Accumulation Unit may vary from Valuation Period to Valuation Period to reflect the investment experience of the appropriate invest- ment medium. The value of an Individual Account at any time prior to the commencement of the Annuity Period can be determined by (a) multiplying the total number of Accumulation Units credited to the Individ- ual Account for each investment medium, respec- tively, by the appropriate current Accumulation Unit value; and (b) if the Contract Owner or Participant has elected a combination of investment media, to- taling the resulting values for each portion of the Indi- vidual Account. There is no assurance that the value of the Individual Account will equal or exceed the Pur- chase Payments made. The Contract Owner will be advised at least annually as to the number of Accu- mulation Units which remain credited to each Individ- ual Account, the current Accumulation Unit value(s), and the value of each Individual Account. Of Transferfed Amounts Contracts’ Any experience an Individual Account wil[ not be changed by any sub- 2. Transfers Between Investment Media Subject to the following conditions, the Contract Owner or Participant may elect during the Accumula- tion Period that assets of an Individual Account held in Variable Annuity Account C be transferred be- tween any of the Funds or be transferred from any of the Funds to the General Account of the Company to accumulate on a fixed basis which reflects a com- pound interest rate credited by the Company. Any such transfer will result in the crediting and cancel- lation of Accumulation Units on the basis of Accumu- iation Unit values next determined after receipt of a written request for transfer by the Company at its Home Office. Such a transfer cannot be elected until 90 days after the Individual Account is established. Thereafter, such a transfer cannot be elected less than 90 days after the date of any prior transfer, nor I2 4. Value of an Accumulation Unit Accumulation Units are valued On each busi- ness day of the New York Stock Exchange. AValua- tion Period is the period of time from the end of one such business day to the end of the next. The value of an Accumulation Unit for any Valuation Period is de- Unit for the immediately preceding Valuation Period by the net investment factor for the current period for the appropriate Fund. factor may be less than 1 .OOOOOOO, and the valuc an Accumulation Unit for a Valuation Period may less than the value at the end of the previous Val tion Period. EXAMPLE: The following hypothetical example illustrz mulation Unit value assuming that Variable Ann Account c had investments in onlyone Fund. Sh( the Account invest in more than one Fund, the ca lation would be repeated with respect to each FUI Assume that the value of an Accumulation was $12.000000 on April 30th. Assume further From the gross investment rate of .ooo, 5oo the I ation Period deduction of .oooo343 is subtractec investment rate is added to l ~ooooooo, resulting net investment factor for the period of 1 .oool The preceding Valuation Period va,ue of an A mulation Unit of ~12~oooooo is multiplied b), net investment factor (1 .oool 1 57) resulting i Accumulation Unit value on the Valuation p ending May 1 st of $1 2.001 388. The value of thE tion of an Individual Account attributable to that would thus be $1 2.001 388 multiplied by the nu of Accumulation Units of that Fund credited to th dividual Account. termined by multip1ying the value Of an Accumulation the calculation of the net investment factor and A< 5. Net Investment Factor for Each Valuation Period For each Valuation Period a gross investment the gross investment rate for May 1 st was .0001 rate is determined for each Fund in which Variable Annuity Account C assets are invested. Such rate is the Valuation Period plus capital gains and minus capital losses for the period, whether realized or un- realized, minus (b) the investment advisory fee ac- crued by the Fund for each day of the Valuation Period, currently 0.25% on an annual basis, divided by (c) the net asset value of the Fund at the beginning of the Valuation Period. The gross investment rate may be positive or negative. The net investment rate with respect to each Fund is then determined. Such rate is equal to the gross investment rate for the Fund minus .0000343 (1.25% on an annual basis) for each day of the Valua- tion Period and plus or minus an adjustment for any taxes or a reserve for such taxes attributable to the operation of Variable Annuity Account C (presently none). The Company makes the 1.25% deduction for its annuity mortality and expense risks. The net investment factors for Variable Annuity Account C for the Valuation Period are then calcu- lated with respect to each Fund. Each such factor is equal to 1 .OOOOOOO plus the net investment rate for the period. The net investment rate with respect to a particu- lar Fund may be negative if, with the amount of any applicable tax adjustment (presently none), the com- bined realized and unrealized capital losses, if any, the investment advisory fee accrued by the Fund, and the amount of the Valuation Period deduction ex- teed investment income plus realized and unreal- ized capital gains, if any. Thus, the net investment equal to (a) the investment income for the Fund for suiting in a net investment rate of ,0001 157. Thi: 6. Death Proceeds Before Retirement Should a Participant die before annuity merits commence, the Company will pay to the ficiary the value of the lndividual Account, , mined as of the Valuation Period in which pr death acceptable to the Company is received 1 Company at its Home Office. In lieu of a luml Payment, the death Proceeds may be applied any Of the annuity options available in the co and in accordance with the terms of the Plan. 7. Redemption Payments; Deductions for Deferred Sales Charges The Contracts permit the Contract Owner minate the Contract at any time. The Redel Payment for the Contract will be the value of t ticipants' Individual Accounts thereunder, le applicable deferred sales charge. For installment purchase payment Contracts, the deduction for the deferred sales charge will be as follows: EXAMPLES: (1) Termination of Contract or Full Surrender of an Individual Account within the first five Purchase Purchase Payment Deferred Sales Charge Payment Periods: Value of Contract Periods Deduction . or Individual Account Deferred Sales Redemption Less than 5 5 Yo 5 or more but less than 7 4 Yo (Amount Redeemed) Charge Payment 7 or more but less than 9 3 9/0 9 or more 2% $1,000 5% ($50) $950 (2) Partial Surrender of an Individual Account within the first five Purchase Payment Periods: For Transferred Amounts Contracts, the deduc- Amount Amount Deferred Sales Redemption Requested Redeemed Charge Payment Deferred Sales Charge $1,000 $1,052.63 5% ($52.63) $1,000 tion for the deferred sales charge will be as follows: Contract Years Deduction Less than 5 The Amount Redeemed is calculated by dividing 5 or more but less than 6 the amount requested ($1,000) by a number equal to 6 or more but less than 7 one minus the applicable deferred sales charge 7 or more but less than 8 (5%), or .95, which yields $1,052.63. The deferred 8 or more but less than 9 sales charge is calculated by multiplying the Amount 9 or more 0% Redeemed ($1,052.63) by the applicable percentage charge (5%), or $52.63, producing a Redemption Payment of $1,000, 5 Yo 4 yo 3 a/o 2% 1 '/a For both types of Contracts, the deduction for the deferred sales charge will not exceed 9% of the Purchase Payment(s) made pursuant to the Con- tract. If permitted by the Plan, the Contract Owner or a Participant may surrender an Individual Account (ei- ther partially or fully) at any time. When an Individual Account is fully surrendered, the Redemption Pay- ment will be the value of the Individual Account sur- rendered less the applicable deferred sales charge. In the Case Of a partial surrender, where the Con- tract Owner or Participant requests a specific amount, sufficient Accumulation Units will be can- celled to cover both the amount requested and the applicable deferred sales charge. The deferred sales charge will be assessed as a percentage of the Amount Redeemed. The Amount Redeemed will be plus the amount of the deferred sales charge. The Participant, Amount Redeemed is calculated by dividing the amount requested by a number equal to one minus Redemption Payments will normally be made the applicable percentage deferred sales charge. within seven calendar days after a written request for The deferred sales charge is calculated by multiply- termination or surrender is received at the Home Of- ing the Amount Redeemed by the applicable fice of the Company. However, payment may be sub- percentage for the deferred sales charge. ject to postponement: (a) for any period during which The value of the Accumulation Units redeemed for a Redemption Payment for the Contract or an In- dividual Account will be determined as of the end of the Valuation Period in which the Contract Owner's or Participant's written request for full or partial surren- der is received by the company at its Home Office or on such later date as is specified in the request. Where an Individual Account is partially surren- deed, unless RXluested otherwise by the Contract Owner or Participant, the Amount Redeemed will be withdrawn from the respective investment media in the same proportions as their respective values have to the total value of the Individual ~~~~~~t, Surrender request forms are available from the Company and its local representatives. There is no deferred sales charge for surrender- the amount requested by the Owner Or Participant ing an Individual Account due to the death of the 14 the New York Stock Exchange is closed (other than customary weekend and holiday closings) or during which trading on the Exchange is restricted; (b) for any period during which an emergency exists as a result of which (i) disposal of securities held by the Funds is not reasonably practicable or (iij it is not rea- sonably practicable for the value of the assets of the Funds to be fairly determined; or (c) for such other periods as the Commission may by order permit for the protection of Contract Owners and Participants. The conditions under which trading shall be deemed to be restricted or an emergency shall be deemed to exist shall be determined by the rules and regulations of the Commission. C. ANNUITY PERIOD of the expected payments to the Participant annuity commencement date, shall be mor 50% of the present value of the total payment made to the Participant and his or her bene and (b) in no event shall the sum of the guar; period for payments plus the age of the Particil the annuity commencement date exceed 95 yl Prior to the commencement of annuit! merits! an ‘ndividua1 Account may be terminat’ the value thereof received in a lump sum (se demption Payments; Deductions for Deferred Charges”). Once annuity payments have menced, the Annuitant cannot surrender the E benefit and receive a lump-sum settlement I thereof, except as permitted under the Secon Third Options below. 1. Optional Annuity Period Elections The retirement date and the annuity options are normally established by the terms of the Plan. Up to 30 days prior to the Commencement of an- nuity payments, the Contract Owner or Participant may elect (if permitted by the Plan) to have assets which have been accumulated on a variable basis transferred between investment media, subject to the conditions described under “Transfers Between Investment Media”. Thereafter, no such election may be made. Plan, may, by giving written notice to the Company at least 30 days prior to the commencement of annuity payments, elect to change (a) the date on which an- nuity payments are to commence to any date prior to the Participant’s 75th birthday, (b) the annuity option to any of the available optional annuity forms and (c) the manner in which the value of the Individual Account (regardjess of how accumulated) is to be ap- plied to provide annuity payments (i.e., on a fixed basis, on a variable basis reflecting the investment any combination of the foregoing). 2. Optional Annuity Forms First Option- Interest Income This option is available only (i) on a fixed basis, and (ii) for settlement of the proceeds p~ on the death of the Participant before annuit) ments commence. The value of the Contract is deposit with the Company and interest is thereon at the Company’s current rate for this 01 with interest payments being made annually, annually, quarterly, or monthly, as requested balance on deposit can be withdrawn at any tii below. Second Option - Payments of a Spec Dollar Amount Equal annual, semi-annual, quarterly or mc payments Of a designated dol1ar amount (no’ than $60 per annum per $’ iooo Of va1ue appli this option, nor more than an amount which woul haust the amount applied in less than 3 years) vestment experience, is exhausted. The Owner Or Participantl if permitted by the applied under any of the annuity options des( experience of Variable Fund or Income Shares, or in the valueof theamountapplied, adjusted to refle To the extent that this option is elected on a payment period e1ect that any remaining payme’ which the Annuitant is entitled be commuted and in one sum. However, any lump sum elected pr the completion of three years of payments unde option will be treated as though it had been No election may be made that would result in a result in total yearly annuity payments of less than $1 00. For Section 403(b) Plans, if the Second, Third, Fourth or Fifth Option is elected, (a) the present value first annuity payment of less than $20 or that would ab1e basis$ the Annuitant may at any time durinc drawn during the Accumulation Period, and any ap- with Contract provisions, pay to the Owner plicable deferred sales charge will be assessed. or to the estate of the beneficiary, as appro- priate, in a lump sum the present value, computed as of the date of death, of the Should the Annuitant die before the Valuation number of certain annuity payments re- Reserve has been exhausted, the remaining value maining after such date, computed on the will be paid to the beneficiary. Third Option- Payments for a Specified Period basis of the assumed net investment rate used in determining the first monthly pay- ment (see “Determination of Amount of the Annual, semi-annual, quarterly or monthly pay- First Monthly Annuity Payment”), com- ments for the number of years selected, which may pounded annually, less the amount of any be from three to thirty years. To the extent that this option is elected on a vari- payments made after the date of death. The able basis, the Annuitant may at any time during the Annuity Unit value next computed after the payment period elect that any remaining payments to date of death will be used for the purpose of which the Annuitant is entitled be commuted and paid determining the lump-sum payment. Because it provides a specified minimum in one sum. However, any lump sum elected prior to number of annuity payments, this option re- the completion of three years of payments under this sults in somewhat lower payments per option will be treated as though it had been with- month than the Life Annuity. drawn during the Accumulation Period, and any ap- plicable deferred sales charge will be assessed. Should the Annuitant die before the Valuation Fifth Option - Joint and Last Survivor Life Reserve has been exhausted, the remaining value Annuity will be paid to the beneficiary. An Annuity payable monthly during the joint life- Fourth Option- Life Annuity or Life Annuity with time of the Annuitant and a designated second per- 60, 120, 180 or 240 Monthly Payments Certain son with the option of electing (a) payments at 1 OO%, (b) payments reduced to 66*h%, or (c) payments re- (a) Life Annuity - an Annuity payable monthly duced to 50% of the original payments, during the during the lifetime of the Annuitant and ter- remaining lifetime of the survivor. minating with the last monthly payment pre- ceding the death of the Annuitant. It would If payments of 100% of the original payments be possible under this option to receive only are to continue to the survivor, this option may also one annuity payment if the Annuitant died be elected with 120 monthly payments certain. If at prior to the due date of the second annuity the death of the survivor, payments have been made payment, two if the Annuitant died before for less than 120 months, annuity payments will be the third annuity payment date, etc. continued during the remainder of such period to the beneficiary or beneficiaries designated by the Con- (b) Life Annuity with 60, 120, 180 or 240 tract Owner or Participant. If no beneficiary is desig- Monthly Payments Certain - an Annuity nated or if a beneficiary dies while receiving annuity payable monthly during the lifetime of the payments, the Company will, in accordance with Annuitant with the provision that if, at the Contract provisions, pay to the Owner or to the estate death of the Annuitant, payments have of the beneficiary, as appropriate, in a lump sum the been made for less than 60,120,180 or 240 present value, computed as of the date of death, of months, as elected, annuity payments will the number of certain annuity payments remaining be continued during the remainder of such after such date, computed on the basis of the as- period to the beneficiary or beneficiaries sumed net investment rate used in determining the designated by the Contract Owner or Par- first monthly payment (see “Determination of ticipant. If no beneficiary is designated or if Amount of the First Monthly Annuity Payment”), a beneficiary dies while receiving annuity compounded annually, less the amount of any pay- payments, the Company will, in accordance ments made after the date of death. The Annuity Unit 16 value next computed after the date of death will be used for the purpose of determining the lump-sum payment . election of the Second or Third Option on a variable basis are cautioned that the Internal Revenue Ser- vice may view any such election as resulting in the Contract Owner or Participant being considered, for federal income tax purposes, to have received the entire accumulated value of the Individual Account in a lump sum at the time of such election. Such a deter- mination by the Internal Revenue Service would be a consequence of the fact that, under the Second or Third Option, the Contract Owner or Annuitant may at any time elect to receive the commuted value of any remaining variable annuity payments in a lump sum. Therefore, Contract Owners or Participants should consult a qualified tax adviser before electing either the Second or Third Option on a variable basis. For further information regarding the federal tax status of amounts received under the annuity options such duration. described above, see “Federal Tax Status of Owners and Participants.” sumed net investment rate is 31/2% per annum, bu assumed net investment rate of 5% per annum r be elected prior to the commencement of ann1 payments. The total first monthly annuity paymer by $, ,ooo) by the amount of the first monthly p merit per $1 ,ooo of value (as provided in the table The assumed net investment rates built into annuity tables affect both the amount of the 1 variable annuity payment and the extent to wt- subsequent payments may increase or decrea Selection of a 5% rate, rather than the standard 33 rate, would result in a higher initial payment, but SI sequent payments would increase more SIOI during periods when Annuity Unit values are risi and decrease more rapidly during periods when / nuity Unit values are declining. If the actual net vestment rate were to equal the assumed rate dur any two or more successive payment periods, ’ variable annuity payments would remain level ‘Ontract Owners Or Participants conternplating determined by multiplying the value applied (divic 4. Value of an Annuity Unit At the commencement of the Annuity Period, t Annuitant is credited with Annuity Units for each vestment medium on which variable annuity pz ments are to be based (i.e., Variable Fund or lncor Shares, or both). With respect to a particular inve ment medium, the number of Annuity Units to credited is determined by dividing (i) the amount the first monthly annuity payment on that basis by the corresponding Annuity Unit value for the cum, Valuation Period. The number of Annuity Units : credited remains unchanged throughout the Annul Period and serves as the basis for determining tl amount of the second and subsequent annuity pa ments. The Annuity Unit value is determined for ea( Valuation Period and is equal to the Annuity Ut value determined as of the preceding Valuation P riod multiplied by the product of (i) the net investme factor for the appropriate Fund (see “Net lnvestmei Factor for Each Valuation Period”) for the tenth prc ceding Valuation Period and (ii) .9999058 for eac day of the Valuation Period (a factor to neutralize th 31/~% per annum assumed net investment rate, di: cussed above. For a 5% assumed net investmei rate, the factor is ,9998663). 3. Determination of Amount of the First Monthly Annuity Payment When annuity payments commence, the value of the Individual Account is determined as the total of the product(s) of (a) the value of an Accumulation Unit for each appropriate investment medium for the tenth Valuation Period immediately preceding the Valuation Period in which the first annuity payment is due and (b) the total number of Accumulation Units credited to the Individual Account with respect to each such investment medium as of the date the An- nuity is to commence. Such value, less any applica- ble deduction for premium tax (see “Appendix”) if it has not been previously made, is then applied to pro- vide lifetime variable annuity payments in accor- dance with the option elected. The Contract contains tables indicating the dol- lar amount of the first monthly payment under each optional form of Annuity for each $1,000 of value ap- plied. The first monthly payment varies according to the form of Annuity selected (see “Optional Annuity Forms”), the sex and age of the Annuitant, and the assumed net investment rate. The standard as- 1 5. Amounts of Second and Subsequent If payments are to be based fully on the invest- ment experience of one Fund, the amounts of the second and subsequent variable annuity payments are determined by multiplying the number of Annuity Units credited with respect to that Fund by the value of one such unit as of the Valuation Period in which the payment is due. If payments are to be based on the investment experience of both Variable Fund and Income Shares, the same calculation would be per- results would be combined to determine the total payment. EXAMPLE: a first monthly variable annuity payment of $6.68 per $1,000 of value applied; the Annuitant's first monthly payment would thus be 40.950 multiplied by $6.68, or $273,55, Assume then that the Annuity Unit value for the Valuation Period in which the first payment was due was $13.400000. When this is divided into the first monthly payment, the number of Annuity Units is de- termined to be 20.414. The value of this number of Annuity Units will be paid in each subsequent month. If the net investment factor with respect to the tion Period preceding the due date of the second monthly payment, multiplying this factor by .9999058* (to neutralize the assumed net investment rate of 3l/2% per annum built into the number of Annu- ity Units determined above) produces a result of Monthly Annuity Payments formed separate1y with respect to each Fund and the appropriate Fund is 1,001 5000 as of the tenth Valua- The determination of the amounts of the first and subsequent variable annuity payments can be ilJus- trated by the following hypothetica1 examp1e. The ex- on the investment experience Of Only One Fund. If 1.001 4057. This is then multiplied by the Annuity Unit value for the Valuation Period immediately preceding value to be $13.504376) to produce an Annuity Unit ample aSSumeS that the payments are to be based payments were to be based On the investment expe- rience of both Variable Fund and Income Shares, the same procedures would be applicable to the portion of the payments attributable to each Fund. Assume that at the date of retirement there are 3,000 Accumulation Units credited under a particular Individual Account and that the value of an Accumu- lation Unit for the tenth Valuation Period prior to re- tirement was $1 3.650000; this produces a total value for the Individual Account of $40,950. Assume also that no premium tax is payable and that the annuity table in the Contract provides, for the option elected, the due date of the second payment (assume such value of $13.523359 for the Valuation Period in which the second payment is due, The second monthly payment is then deter- mined by multiplying the number of Annuity Units by the current Annuity Unit value or 20,414 times $1 3,523359, which produces a pAyment of $276,0,, "If an assumed net investment rate of 5% is elected, the appropriate factor to neutralize such assumed net investment rate would be ,9998663. 18 DIRECTORS AND OFFICERS OF THE COMPANY Positions and Offices with the Company Name and Address Principal Occupation During Past Five Years* William 0. Bailey 151 Farmington Avenue Hartford, Connecticut Executive Committee Donald G. Conrad 151 Farmington Avenue Hartford, Connecticut Director, President and Member of President of the Company; President and D tor, Etna Life and Casualty Company. Director and Chairman of Investment Committee Executive Vice President and Director, Etna and Casualty Company; President and Directc Etna Income Shares, Inc., Etna Variable FI Inc. and Etna Variable Encore Fund, Inc. Vice President - Annuity Products of the C pany; Vice President and Director of Etna Fir cia1 Services, Inc.; Vice President of Etna Incc Shares, Inc., Etna Variable Fund, Inc., and A Variable Encore Fund, Inc. Joseph F. Crowe, FSA 151 Farmington Avenue Hartford, Connecticut Director, Vice President - Annuity Products and Member of Investment and Executive Committees Charles N. Dawkins, CFA Director, Vice Vice President - Investments of the Comp, 151 Farmington Avenue President - Investments Vice President of Etna Income Shares, Inc., A Hartford, Connecticut and Member of Variable Fund, Inc. and Etna Variable Enc Investment Committee Fund, Inc. William B. Lusk Director and Vice President - Life Division Marketing 151 Farmington Avenue Hartford, Connecticut Vice President - Life Division Marketing Agencies of the Company and Etna Life In. ance Company; Vice President of Etna Finar and Agencies Services, Inc. Kenneth P. Veit, FSA 151 Farmington Avenue Hartford, Connecticut Member of Director, Vice President - Vice President - Life Products of the Comp Life Products and and Etna Life Insurance Company. Investment Committee Director, Senior Vice President and Chairman of Executive Committee Dean E. Wolcott, CLU 151 Farmington Avenue Hartford, Connecticut Senior Vice President of the Company and A Life and Casualty Company; President and Di tor of Etna Financial Services, Inc.; Vice Pr dent and Director of Etna Income Shares, I Etna Variable Fund, Inc. and Etna Varii Encore Fund, Inc. *Where an individual has held more than one position with the same organization during the five year perioc last held position has been given. DIRECTORS AND OFFICERS OF THE COMPANY (Continued) Positions and Offices with the Company Principal Occupation During Past Five Years" ___ Nameand Address Joseph R. Galko, FSA 151 Farrnington Avenue Health Products and Etna Life Insurance Company. Hartford, Connecticut Sherwood G. House, FSA 151 Farrnington Avenue Products Hartford, Connecticut Robert G. Maxon, FSA 151 Farrnington Avenue Hartford, Connecticut Vice President - Vice President - Health Products of the Company Actuary, Annuity Actuary, Annuity Products of the Company. Vice President and Corporate Comptroller Vice President and Corporate Comptroller of the Company and Etna Life and Casualty Company; Vice President of Etna Income Shares, Inc., Etna Variable Fund, Inc. and Etna Variable Encore Fund, Inc. General Counsel and Secretary of the Company and Etna Life and Casualty Company; Secretary of Etna Financial Services, Inc., Etna Income Shares, Inc., Etna Variable Fund, Inc. and Etna Variable Encore Fund, Inc. Vice President and Corporate Actuary of the Com- pany and Etna Life and Casualty Company. Stephen B. Middlebrook 151 Farmington Avenue Hartford, Connecticut General Counsel and Secretary Robert A. Miller Ill, FSA 151 Farrnington Avenue Hartford, Connecticut Chester C. Montgomery, CLU 151 Farrnington Avenue Hartford, Connecticut Vice President and Corporate Actuary Vice President - Pension Products Vice President - Pension Products of the Com- pany and Atna Life Insurance Company; Vice President and Director of Etna Financial Ser- vices, Inc. Treasurer of the Company, Etna Financial Ser- vices, Inc., Etna Income Shares, Inc., Etna Vari- able Fund, Inc., and Etna Variable Encore Fund, Inc. Prior to 1976, tax manager with Coopers 8, Lybrand (Certified Public Accountants). Charles F. Reis, CPA 151 Farmington Avenue Hartford, Connecticut Treasurer *Where an individual has held more than one position with the same organization during the five year period the last held position has been given. 20 LEGAL PROCEEDINGS may be in a lower tax bracket after retire lower income, greater deductions, or bott In the opinion of counsel, there are no material ipant elects to receive the value of an In legal proceedings pending to which Variable Annuity count in a lump sum in lieu of annuity pa Account C is a party or which would materially affect full amount received will generally be ta: Variable Annuity Account C. nary income in that year, subject to possi resulting from the income averaging prov FEDERAL TAX STATUS OF THE COMPANY Code. In the final analysis, the actual ta: The Company is taxed as a life insurance corn- be determined by the provisions Of the PI RESTRlCTlONS UNDER THE TE pany in accordance with the Life Insurance Company OPTIONAL RETIREMENT PROG Income Tax Act of 1959. It is intended that the Funds will continue to comply with the provisions of Section 851 of the Internal Revenue Code and, accordingly, A Participant in the Texas Optional will be taxed as “regulated investment companies” Program may not elect to receive any form under Subchapter M of the Code. For federal income tion from an Individual Account prior to tax purposes the operations of Variable Annuity Ac- except upon becoming totally disabled or count C form a part of the Company’s total operations employment in the Texas public institutioi and are not taxed separately, although operations of learning. These restrictions limit the condi Variable Annuity Account C are treated separately which a Participant may exercise the folj for accounting and financial statement purposes. tractual rights described in this prospectu Both investment income and realized capital (a) the right to surrender an Individual gains of Variable Annuity Account C attributable to whole or in part, described under “F the Contracts (i.e., income and capital gains distrib- Payments; Deductions for Defer uted to the Account by the Funds) are reinvested Charges” and (b) the right to advance the date on wt- without tax since the Code presently imposes no ap- payments are to commence, descr plicable tax. However, the Company reserves the “Optional Annuity Period Elections”. right to make a deduction for taxes should they be im- posed with respect to such items in the future. These restrictions are imposed by rf FEDERAL TAX STATUS OF OWNERS opinion of the Texas Attorney General AND PARTICIPANT§ applicable Texas law. OTHER VARIABLE ANNUITY CONI In addition to these Contracts, the C fers individual and other group Variable A tracts, some of which are also funded Annuity Account C. It should be recognized that the following de- scription of the federal income tax status of amounts received under the Contracts is not exhaustive and is not intended to cover all situations. Contract Owners and Participants should seek advice from their tax advisers as to the application of federal (and, where applicable, state and local) tax laws to amounts re- ceived by them and by their beneficiaries under the Contracts. ANNUITY CONTRACTS The investment results of Variable Annuity Ac- count C credited to the value of the Contract are not taxable until distributed either in the form of annuity payments or in a lump sum. When annuity payments commence, they are taxable under Section 72 of the Code and the full amount received will usually be tax- able as ordinary income. However, the Participant DlSTRlBUTlON OF VARIABLI The Company offers the Contracts ’ insurance salesmen and certain Home ( employees. Such persons are registered the Company, as a registered broker-dc other registered broker-dealers. The Cor be deemed to be an underwriter for purp federal securities laws. Application forms are completed by the prospec- tive Contract Owner and forwarded to the Company for acceptance. Upon acceptance, the Contract is prepared, executed by duly authorized officers of the Company, and forwarded to the Contract Owner. The Contracts will be offered for sale in all fifty states, the District of Columbia, Guam and the Virgin Islands. formation required to be given will be provided by the Company. EXPERTS The financial statements included in this pro- spectus have been included herein in reliance upon the reports of Peat, Marwick, Mitchell & Co., indepen- dent certified public accountants, and upon the au- thority of such firm as experts. RECORDS AND ACCOUNTS FIDELITY BOND All records and accounts relating to Variable An- nuity Account C and the Funds will be maintained by the Company. All reports required to be made and in- The Company has in force a fidelity bond in the amount of $25,000,000, which covers all of its offi- cers, employees and sales representatives. 22 HYPOTHETICAL TABLES Tables I,II and Ill (“Variable Fund Tables”) below changes in contracts have been made from ti present, on a pro forma basis, hypothetical periodic time, and contracts previously offered differ accumulation values and annuity payments that those described in this prospectus. According would have resulted under a Contract described in results shown in the Variable Fund Tables are this prospectus, had such values and payments been thetical only, but reflect the actual investment F based exclusively on the investment experience of mance of the Company’s former separate acc Variable Fund and its predecessors as funding vehi- during the periods they were used to fund cor cles for the Contract during the periods shown. Ta- offered to the public, and of Variable Fund therl bles IV, V and VI (“Income Shares Tables”) below The results shown in the Income Shares Tab1 present, on a pro forma basis, hypothetical periodic hypothetical only, but reflect the actual inver accumulation values and annuity payments that performance of Income Shares as though it would have resulted under a Contract described in have been used to fund the Contracts since it f, this prospectus, had such values and payments been came publicly available and as though its pres based exclusively on the investment experience of vestment advisory contract with the Compar Income Shares had it been used as afunding vehicle been in effect. The results shown in the Encori for the Contract during the periods shown. Tables VI1 Tables are hypothetical only, but reflect the ac and Vlll (“Encore Fund Tables”) below present, on a vestment performance of Encore Fund. pro forma basis, hypothetical periodic accumulation Prior Deve,opments values that would have resulted under a Contract de- scribed in this prospectus, had such values been Although the Contracts described in th based exclusively on the investment experience of spectus participate in Variable Annuity Accou Encore Fund as a funding vehicle for the Contract registered unit investment trust investing in sh during the periods shown. Variable Fund (or, if so elected, Income Sh: Encore Fund), Tables I, II and Ill are also base Since the Contracts are designed to fund vari- the investment performance of former Act, able retirement benefits primarily through long-term and to the extent applicable, Variable l investment, Contracts kept in force will on the aver- Accbunt A (‘,Account A”). age involve a long relationship between the Com- pany and the Owner or Participant during both the From October 1954, when the Company Accumulation Period and the Annuity Period. Ac- variable annuity operations, until May 1966, cordingly, to assist the prospective purchaser in un- able contracts issued by the Company were derstanding the operation of the Contracts, the in Account A. In 1963 the Company registere Variable Fund Tables present accumulation values investment company under the 1940 Act and and annuity payments for the period since late 1954 1966 it commenced sale of Variable Annuii when Variable Annuity Contracts were first publicly tracts which had been registered under the offered by the Company, as well as the shorter period ties Act of 1933. By May 1966 the Compa since April 1970. The Income Shares Tables present established former Account B, which succeec accumulation values and annuity payments for the count A as the funding medium for all contri period since mid-1973 when Income Shares became fered to the public until May 1975. As notec publicly available. However, Income Shares did not “Organization of the Company”, page become available as a funding medium for Variable Company’s realignment program resulted in Annuity Contracts until May 1, 1978. The Encore sets of former Account B being transferred Fund Tables present accumulation values for the pe- able Fund in exchange for shares of thai riod since September 1975. Encore Fund became assets of Account A have remained in Accoui The principal investment objective of Acr available as a funding medium for Variable Annuity former Account 8, and Variable Fund has bel Contracts on August 29, 1975. Since 1954 contracts issued by the Company term capital appreciation through investment have participated in different separate accounts, ily in common stocks. However, specific polic investment restrictions (such as those now set forth d. For each Variable Fund Table, where applica- in the accompanying Variable Fund prospectus) ble, the investment performance was determined on were first established in connection with the Com- a quarterly basis through June 30, 1966, on a weekly pany's registration under the 1940 Act. basis from then through June 30,1969, and on a daily basis thereafter. Purchasers contemplating allocation of some or all of their Net Purchase Payments to Income e. In Table I Purchase Payments through June Shares or Encore Fund should recognize that their 30, 1969 were applied as of the end of the week in basic investment objectives and investment perfor- which received and thereafter at the end of the Valua- mance will differ from each other and from those of tion Period in which received. Through June 30, Account A, former Account B, and Variable Fund. 1966, quarterly investment results were prorated on a weekly basis for purposes of determining the value at the end of each year of cumulative Net Purchase Payments. Procedures and Pro Forma Adjustments As noted, since 1954 changes have been made in contracts offered by the Company and contracts What the Tab,es l,lustrate previously offered differ from those described in this prospectus. In view of such facts and the noted shifts Subject to the foregoing procedures and adjust- between separate accounts used to fund publicly of- ments, Tables I, IV and VI1 below present on a pro fered contracts, the following procedures have been forma basis, for the periods shown, the hypothetical followed in developing the figures presented in the periodic accumulation values which would have Variable Fund Tables, Income Share Tables and En- resulted at yearly intervals in a Participant's Individ- core Fund Tables below. ual Account under an installment purchase payment Contract described in this prospectus, where Pur- a. " each Table pro forma adiustments have chase Payments of $1 200 were made each year in been made to reflect the provisions of the Contracts twelve equal monthly i&tallments, described herein with respect to asset charges, treat- ment of taxes and reinvestment of dividends. These For Table I it is assumed the Contract had been provisions differ in one or more respects from those purchased from the Company in April 1970, after the of other contracts offered during the periods covered Company's former Account €3 operations had begun, by the Tables. In this connection, the Tables assume or in October 1954 when the Company began vari- that deductions under the Contracts described able annuity operations. For Table IV it is assumed herein have been made at an annual rate of 1.25% the Contract had been purchased from the Company for mortality and expense risks and 25% for invest- in June 1973, when Income Shares commenced op- ment advisory services. erations. For Table VI1 it is assumed the Contract had been purchased from the Company in September b. In Tables I, IV and VI1 the provisions of the in- 1975 immediately after Encore Fund became avail- stallment purchase payment Contracts described able As a funding medium, herein have been applied pro forma with respect to deductions for the deferred sales charge and the an- The Tables indicate for an Individual Account nual Individual Account maintenance charge. No de- under such Contract the Purchase Payments, de- ductions have been made for premium taxes. ductions for the annual Individual Account mainte- nance charge, the accumulation value and the c. The accumulation values shown in Tables I deferred sales charge and Redemption Payment beginning in 1970 reflect the investment perfor- such Individual Account, based on the investment mance of former Account B through April 30, 1975, performance of the applicable funding medium, and Variable Fund thereafter. Such values and pay- ments beginning in 1954 also reflect the investment Subject to the foregoing procedures and adjust- performance of Account A from October 1954 to ments, Tables II, V and Vlll present on apro forma June 30,1966. basis, for the periods shown, the hypothetical peri- and I' and the annuity payments shown in Table 'I' which would have resulted upon a full surrender of 24 odic accumulation values which would have resulted at quarterly intervals from asingle Net Purchase Pay- ment of $100 made in April 1970 or October 1954 (Table II), June 1973 (Table V) or September 1975 (Table VIII), and based on the investment perfor- mance of the applicable funding medium. Similarly, subject to applicable Procedures and adjustments described above, Tables Ill and VI indi- cate on apro forma basis, at quarterly intervals, hy- pothetical monthly variable annuity payments which would have been received by an Annuitant, assum- ing that an initial annuity payment of $1 00 was re- ceived in the month and year indicated in the respective Tables. Caution The Variable Fund Tables, Income Shi Tab1esv and Encore Fund Tables below do not rel sent actual operating results of the Contracts scribed in this prospectus, and are qualified by i should be read with the foregoing introductory mi rial. The results shown should not be considere representation of the future. A program of this typi lustrated in the Tables does not assure a profit or F tect against depreciation in declining markets. 2 A . ATNA VARIABLE FUND . HYPOTHETICAL PERIODIC ACCUMULATION VALUES AND AN NUlTY PAYMENTS TABLE 1 . Accumulation Period . Hypothetical Accumulation Values' A: Contract Issued April 1970 Cumulative Accumulation Redemption Contract Cumulative Account Value on Deferred Payment on March 31 of Year Purchase Maintenance March 31 of Sales Payments Charges Following Year Charge Following Year Commencing Monthly Purchase Payment . $100.00 April 1970 .................... $ 1,200.00 $ 20.00 $ 1,431.16 $ 71.56 $ 1,359.60 April 1971 .. , ..... , . , ..... , , ... 2,400.00 40.00 2,888.46 144.42 2,744.04 April 1972 .................... 3,600.00 60.00 3,846.49 192.32 3,654.1 7 April 1973 ............ , ....... 4,800.00 80.00 4,613.08 230.65 4,382.43 April 1974 .................. , . 6,000.00 100.00 5,823.01 232.92 5,590.09 April 1975 ..... , ... , ...... , .... 7,200.00 120.00 8,639.60 345.58 8,294.02 April 1976 ............. , ....... 8,400.00 140.00 10,083.71 302.51 9,781.20 April 1977 ........... , ...... , .. 9,600.00 160.00 11,299.10 338.97 10,960.1 3 April 1979 ............. , .... 12,000.00 200.00 16,879.64 337.59 16,542.05 ................... 14,239.84 April 1978 10,800.00 180.00 14,530.45 290.61 6: Contract Issued October 1954 Cumulative Accumulation Redemption Contract Cumulative Account Value on Deferred Payment on Year Purchase Maintenance Sept . 30 of Sales Sept . 30 of Commencing Payments Charges Following Year Charge Following Year Monthly Purchase Payment - $100.00 Oct . 1954 .. , .. , ........... $ 1,200.00 $ 20.00 $ 1,252.09 $ 62.60 $ 1.189.49 Oct . 1 955 ..... , .... , .......... 2,400.00 40.00 2,536.70 126.84 Oct . 1956 .. , .................. 3,600.00 60.00 3,275.92 163.80 3,112.12 Oct . 1957 .................. , .. 4,800.00 80.00 5,482.42 274.12 Oct . 1958 ............ 100.00 7,602.66 304.1 1 7,298.55 Oct . 1959 ..................... 7,200.00 120.00 8,273.58 330.94 7,942.64 Oct . 1960 ................. , ... 8,400.00 140.00 1 1,383.1 3 341.49 11,041.64 Oct . 1961 ..................... 9,600.00 160.00 11,431.87 342.96 1 1,088.91 Oct.1962 10,800.00 180.00 16,299.20 325.98 Oct . 1963 ............... , .... 12,000.00 200.00 22,334.34 446.69 21,887.65 Oct . 1964 .................. , . 13,200.00 220.00 27,856.79 557.14 27,299.65 Oct . 1965 ................... 14,400.00 240.00 27,952.76 559.06 27,393.70 Oct . 1966 ............... , , .. 15,600.00 260.00 39,544.10 790.88 38,753.22 Oct . 1967 .............. , . , .. 16,800.00 280.00 44,937.32 898.75 44,038.57 . ................. 849.29 41,615.03 Oct 1968 18,000.00 300.00 42,464.32 Oct . 1969 ................. 19,200.00 320.00 38,039.68 760.79 37,278.89 Oct . 1970 ................ 20,400.00 340.00 48,211.59 964.23 47,247.36 Oct . 1971 .......... , ..... , , .. 21,600.00 360.00 53,594.48 1,071.89 52,522.59 Oct . 1972 ................. 22,800.00 380.00 53,237.47 1,064.75 52,172.72 Oct . 1973 , ................... 24,000.00 400.00 36,400.79 728.02 35,672.77 Oct . 1974 ........ , ....... 25,200.00 420.00 50,298.26 1,005.97 49,292.29 Oct . 1975 ............... , 26,400.00 440.00 65,286.65 1,305.73 63,980.92 Oct . 1976 ................ , 27,600.00 460.00 56,057.30 i . 327 . 16 64,736.74 Oct . 1977 ................... 28,800.00 480.00 77,718.58 1.554.37 76,164.21 Oct . 1978 .............. , , . 30,000.00 500.00 88,552.77 1,771.06 86,781.71 2,409.86 5,208.30 .................... 15,973.22 . .................. . 94,350.98'* 1,887.02*" 92.463.96"* Oct 1979 , 30,800.00"' 500.00** *The amounts shown under heading "A' are based on the investment performance of former Account B through April 30, 1975, and Variable Fund thereafter; the amounts shown under heading "B' are based on the investment performance of Account A through June 30, 1966, of former Account B from July 1, 1966 through April 30, 1975 and Variable Fund thereafter . All amounts reflect the provisions of the installment pur- chase payment Contracts described in this prospectus . See text preceding these Tables . ""Through May 31, 1980 . 26 TABLE II - Accumulation Period Accumulation Value at Quarterly Intervals of Hypothetical $1 00 Net Purchase Payment* A: Payment Made April 1970 Accumi Accumulation As at End Accumulation As at End Val Initial Value, June 1973 .$109.37 Dec. 1976 .$14E Mar. 1977 ................ 137 ................ 79.89 131 June ................ 94.60 Mar. 1974 109.24 Sept. Sept. Dec. ................ 82.07 Mar. 1971 113.81 Sept. ................ ................ 115.83 Dec. ................ 91.32 June June Sept. Dec. ............ 121.52 ................ Sept. Dec. 134.68 June ................ As at End Value of Month Value of Month of Month ............... ............... April 1970 ................ $1 00.00 Sept. ................ 123.10 Dec. ................ 111.78 June ................ 14: ................ 104.18 June ................ 99.57 Dec. 14’ Mar. 1975 ................ 106.78 Sept. ................ June ................ 121.67 Dec. 15 . Mar. 1972 ................ 127.37 Sept. ................ 110.54 Dec. ................ 118.00 June ................ 16 Mar. 1976 ................ 133.65 Sept. ................ 18 Mar. 1973 ................ 120.65 Sept. 140.60 ................ ................ ................ Mar. 1978 ................ 13 ................ 14 16 ............ 116.71 Mar. 1979 16 I June ................ 124.79 ................ 126.79 ................ 137.60 Dec. 18 Mar. 1980 17 ................ ................ ................ ................ 6: Payment Made October 1954 Accun As at End Accumulation As at End Accumulation As at End Vi of Month Value of Month Value Initial Value, Mar. 1963 $216.36 Dec. 1971 ..$5: Mar. 1972 ................ 5! Oct. 1954 ............... .$lOO.OO June ................ 230.52 June ................ 51 ............. 114.75 Sept. ................ 232.79 Dec. ................ 241.26 Sept. ................ 5! ................ ................ 5( ............. 125.85 Mar. 1964 265.33 Dec. Mar. 1973 ................ 5: ................ 123.79 June ................ 273.76 Sept. ................ 299.40 June 4’ ................ 300.50 Sept. ................ Mar. 1956 ................ 140.95 Dec. Mar. 1965 ................ 326.16 Dec. ................ June 4 Dec. ................ 141.27 Sept. 355.49 ................ 402.54 Sept. ................ 2 Mar. 1957 ................ 136.05 Dec. Mar. 1966 ................ 412.08 Dec. ................ c June ................ 139.92 Mar. 1975 ................ f ................ 118.50 ................ 375.62 Sept. ................ ................. Dec. ................ 103.85 Sept. 343.19 June Sept. Mar. 1958 115.16 Dec. L ................ ................. L June ................ 129.00 Mar. 1967 401.28 Dec. Mar. 1976 ................ E 162.65 Sept. ................ 468.04 June f Sept. f Dec. ................ 464.18 Sept. ................ Mar. 1959 ................ 173.94 Dec. Mar. 1968 ................ 429.61 Dec. ................ f June ................ 181.98 Sept. Dec. Mar. 1960 ................ 163.37 Dec. Mar. 1969 ................ 532.58 Dec. ................ t June ................ 160.76 Sept. ................ June ................ f Sept. Dec. ................ 168.21 Mar. 1961 ................ 189.91 ................ ................ ................ f June Sept. Dec. Mar. 1971 ................ 496.83 Dec. ................ I ................ 177.13 June June ................ 505.62 ................. Sept. ................ 177.60 *The amounts shown under heading “A’ are based on the investment performance of former Account B th April 30, 1975, and Variable Fund thereafter; the amounts shown under heading “B” are based on the i ment performance of Account A through June30,1966, of former Account B from July 1,1966 through AI 1975 and Variable Fund thereafter. All amounts reflect the provisions of the Contracts described in th spectus. See text preceding these Tables. of Month ................ .............. ............. 120.00 ................ 131.71 5: 41 ................ 132.78 ................ 133.61 June ................ Mar. 1974 ................ 4’ 312.33 Sept. Dec. June Sept. ................ . . , . . , , . , . . , . . , . ................ June F ................ . , . . , . , , . , . , , , . . 352.58 ...... .. , . . 145.51 June ................ 429.90 ................ . , . , , . . , . , , . , , . . ................ Mar. 1977 ................ t June c Mar. 1978 ................ f 192.99 Mar. 1970 436.54 Dec. ................. ................ 169.98 June ................ 476.34 ................ ................ 180.85 Sept. ................ 516.17 f ................ 557.36 Sept. ................ ................ 159.81 June ................ 502.37 475.61 Dec. . , , . , . . , . . , . . , . . 452.60 Sept. ................ Mar. 1979 ................ 195.15 June ................ 348.74 June ................ 209.78 Sept. ................ 412.95 ................ Mar. 1980 ................ Mar. 1962 ................ 209.56 Dec. ................ 454.79 Sept. Dec. ................ 198.90 Sept. ................ 509.48 TABLE 111 - Annuity Period Hypothetical Monthly Variable Annuity Payments at Quarterly Intervals following at Initial Payment of $1 aa* A: Beginning April 1970 Payment Payment Payment Month For Month Month for Monlh Month for Month Apr. 1970 ............. .$100.00 Ocl. 1973 .............. .$109.13 Apr. 1977 .............. .$108.22 July ............... 79.20 Jan. 1974 ............... 98.26 July ................ 112.03 OCl. ................ 92.98 Apr. 95.19 Oct. ................ 107.95 Jan. 797) ............... 101.53 July ............... 86.03 Jan. 1978 108.52 Apr. .............. 109.96 Oct ................ 70.30 Apr. ................ 104.99 July ............... 110.95 Jan. 1975 ................ 77.55 July ................ 112.57 Jan. 1972 .............. 114.42 July .............. 101.57 Jan. 1979 ................ 113.57 Apr. ................ 118.91 Ocl. 91.48 Apr. ................ 119.20 July ............. 115.50 Jan. 1976 ............... 96.82 July Jan. 1973 ........... 122.52 July ................ 110.98 Jan. 1980 ............... 131.63 July ................ 97.81 Jan. 1977 ................ 115.33 B: Beginning November 1954 Payment Payment Payment Month for Month Month for Month Month for Month Nov. 1954 ............... .$lOO.OO May 1963 ............... .$161.50 Nov. 1971 ............... .$283.48 Feb. 1955 ................ 113.77 Aug. ................ 170.60 Feb. 1972 ................ 299.06 ................ 117.56 Nov. ................ 170.81 May ................ 315.00 Aug. Nov. ................ 119.60 May ................ 191.36 Nov. ................ 290.60 ............... ................ ............. 120.61 Oci 110.64 Apr. ............... 89.90 Oct. ............... ............... 122.98 OCt. .......... 116.34 Apr. 108.73 Oct. ............... 130.79 Apr. ............... 108.62 Oct. 112.42 Apr. ................ 124.38 ............... ................ ................ ................ 122.65 Feb. 1564 ................ 175.50 Aug. ................ 291.45 May Feb. 1956 ................ 126.16 Aug. ................ 195.75 Feb. 1973 ................ 307.57 ............... 133.86 Nov. ................ 212.25 May ................ 276.57 Aug. ................ 125.02 Feb. 1965 ................ 211.21 Aug. ................ 258.83 May Feb. 1957 ................ 130.75 Aug. ................ 215.78 Feb. 1974 ................ 249.20 .............. 124.84 Nov. ................ 243.49 May ................ 244.37 Aug. .............. 127.29 Feb. 1966 ............... 273.36 Aug. ................ 214.69 VaY Nov. ............. 106.88 May ............... 277.44 Nov. ................ 200.95 ................ 102.10 Nov. ............... 223.27 May ................ 238.83 ................ 113.39 Feb. 1967 .............. 250.34 Aug. ................ 259.33 May 4ug. Nov. ............... 126.80 May ................ 263.1 1 Nov. ................ 245.70 May ................ 148.99 Nov. ............... 285.20 May ................ 273.73 Aug. ................ 154.54 Feb. 1968 ................ 295.80 Aug. Nov. ................ 143.12 May ................ 286.69 Nov. ...... : ......... 281.08 Feb. 1960 ................ 150.97 Aug. ................ 303.54 Feb. 1977 ............... 291.55 Aug. ................ .l31.91 Feb. 1969 ................ 337.66 Aug. .............. 290.81 uov. ................ 130.01 May ................ 325.60 Nov. ................ 275.74 .............. 151.85 Nov. .............. 290.01 May ............... 153.00 Feb. 1970 ............... 257.92 Aug. ................ 296.6: May Jkg. Nov. ........... 153.38 May ............... 245.60 Nov. 305.80 ............. 161.90 Nov. .............. 235.65 May ................ 310.40 May Aug. Nov. ... 13487 May ....... 289.82 Nov. ................ 325.87 ................ 287.96 Nov. ............... 124.73 May 227.28 Nov. ................ Feb. 1958 ............. 92 86 Aug. ................ 250.70 Feb. 1975 ................ 205.53 Feb. 1959 .............. 140.52 Aug. ............... 286.54 Feb. 1976 ................ 267.28 200.32 ................ .............. 285.76 May 135.21 Nov. ................ 327.09 May Feb. 1961 ................ 135.66 Aug. ................ 295.52 Feb. 1978 ................ 270.94 ................ 285.90 ................ ................ Feb. 1962 ................ 163.47 Aug. .............. 216.30 Feb. 1979 ................ 304.33 ................ .............. ............. 135.67 Feb. 1971 265.22 Aug. 316.05 Feb. 1963 .............. 149.76 Aug. ............ 284.16 Feb. 1980 ................ 348.33 ................ 318.49 *The amounts shown under heading "A' are based on the investment performance of former Account B through April 30, 1975, and Variable Fund thereafter; the amounts shown under heading "6" are based on the invest- ment performance of Account A through June 30,1966, of former Account B from July 1,1966 through April 30, 1975 and Variable Fund thereafter. A11 amounts reflect the provisions of the Contracts described in this pro- spectus, including annuity tabies based on the standard assumed riet investment rate of 31/2'/0 per annum. See text preceding these Tables. May 6. ETNA INCOME SHARES - HYPOTHETICAL PERIODIC ACCUMULATION VALUES AND ANN UlTY PAYMENTS TABLE IV - Accumulation Period - Hypothetical Accumulation Values* Contract Issued June 1973 Cumulative Accumulation Redemptii Contract Cumulative Account Value on Deferred Paymenl c Year Purchase Maintenance May 31 of Sales May 31 o Payments Charges Following Year Charge Following Y June 1973.. ................... $1,200.00 $ 20.00 $ 1,134.39 $ 56.72 $ 1,077.6 June 1974. .................... 2,400.00 40.00 2,420.98 121.05 2,299.9 June 1975 ... .... 3,600.00 60.00 4,157.51 207.88 3,949.6 June 1976.. ................... 4,800.00 80.00 5,880.34 294.02 5,586.3 .................... 289.39 6,945.4 June 1977. 6,000.00 June 1978. .................... 7,200.00 120.00 8,778.22 351.13 8,427.0 June 1979.. ................... 8,400.00 140.00 10,329.50 309.89 10,019.6 Commencing Monthly Purchase Payment - $1 00.00 100.00 7,234.80 *Income Shares became available as an alternative investment medium on May 1, 1978. TABLE V - Accumulation Period Accumulation Value at Quarterly Intervals of Hypothetical $1 00 Net Purchase Payment Made June 1973 As at End Accumulation As at End Accumulation As at End Accu of Month Value of Month Value of Month \i Initial Value, Aug. 1975 ............... .$100.59 Feb. 1978 .............. ,.$I June 1973 ................ $100.00 Nov. ................ 102.78 May ................ 1 Aug. ................ 99.40 Feb. 1976 ................ 113.18 Aug. ................ 1 Nov. ................ 101.23 May ................ 115.60 Nov. ................ 1 May Nov. ................ 90.98 May ................ 129.07 Nov. ................ 1 Feb. 1975 ................ 97.29 Aug. ................ 133.85 ................ 97.96 Nov. ................ 134.32 May ................ 1 M aY ................ ..... Feb. 1974 100.99 Aug. 120.56 Feb. 1979 .. Aug. ................ 96.01 Nov. ..... 125.23 May ..... ................ 127.14 Aug. 86.42 Feb. 1977 TABLE VI - Annuity Period Hypothetical Monthly Variable Annuity Payments at Quarterly Intervals following at Initial Payment of $100 Beginning July 1973* Payment Payment P? Month for Month Month for Month Month for July 1973 ................ $100.00 Jan. 1976 ................ $ 97.64 July 1978 ................ $1 Oct. ................ 101.85 Apr. ................ 105.01 Oct. ................ 1 ................ Jan. 1979 ................ 1 Jan. 1974 98.75 July ................ 105.42 Apr. ................ 96.68 Oct. ................ 109.74 Apr. ................ 1 July ................ 89.37 Jan. 1977 ................ 114.01 July ................ 1 ...... ...... Oct. ................ 1 Oct. 82.43 Apr. ................ 111.92 Jan. 1975 ...... 84.48 July 114.34 Jan. 1980 11 Apr. ............ 89.68 Oct. ................ 1 July ............ 94.20 Jan. 1978 Oct. ................ 91.68 Apr. ................ 113.73 ................ ...... ................ *All amounts reflect the provisions of the Contracts described in this prospectus, including annuity tables b: on the standard assumed net investment rate of 31/z% per annum. See text preceding these Tables. C. RTNAVARIABLE ENCORE FUND - HYPOTHETICAL PERIODIC ACCUMULATION VALUES TABLE VI1 - Accumulation Period - Hypothetical Accumulation Values* Contract Issued September 1975 Cumulative Accumulation Redemption Contract Cumulative Account Value on Deferred Payment on Year Purchase Maintenance Aug. 31 of Sales Aug. 31 of Commencing Payments Charges Following Year Charge Following Year Monthly Purchase Payment - $100.00 Sept. 1975 .......... $1,200.00 $20.00 $1,209.53 $ 60.48 $1,149.05 ........... 123.18 2,340.40 Sept. 1976 2,400.00 40.00 2.463.58 Sept. 1977 ............... 3,600.00 60.00 3,818.42 190.92 3,627.50 Sept. 1978 ................ 4,800.00 80.00 5,376.47 268.82 5,107.65 Sept. 1979.. ............... 5,700.00** 80.00** 6,858.34"* 342.92" 6,515.42" *Encore Fund became available as an alternative investment accumulation medium on August 29, 1975. **Through May 31,1980. TABLE Vlll - Accumulation Period Accumulation Value at Quarterly Intervals of Hypothetical $100 Net Purchase Payment Made September 1975 As at End Accumulation As at End Accumulation As at End Accumulation of Month Value of Month Value of Month Value Initial Value, Feb. 1977 .............. $107.12 Nov. 1978 ............... $1 17.24 Sept. 1975 ............. $100.00 May 108.11 Feb. 1979 ................ 119.64 Nov. .............. 101.03 Aug. ................ 109.15 May ................ 122.26 Feb. 1976 ................ 102.83 Nov. ................ 110.39 Aug ................ 124.96 .............. 103.52 Feb. 1978 .............. 112.00 Nov. ............... 128.33 Aug. ............... 104.78 May ............... 113.46 Feb. 1980 ............... 132.08 May Nov. ................ 106.42 Aug. 115.24 May ................ 137.27 .............. ................ 30 APPENDIX Premium Tax The deduction for premium tax, if any, is determined by the applicable jurisdiction. As of Decem Deferred Defer Section 403(b) Compensation Section 403(b) Comper Plans Plans Plat Alabama 1 .OO% 1 .OO% Mississippi - 2.0c California .50% 2.35% Missouri - 2.0c District of Columbia 2.00% 2.00% Nebraska - 2.0( Florida 1 .OO%* 1 .OO%* Nevada - 2.0( Georgia 1.50%** 1 .50°/o** North Carolina - 2.5( Guam 4.00% 4.00% South Dakota - 1.2! Iowa - 2.00% Tennessee - 1.5( Kansas - 2.00% Virgin Islands 2.00% 2.0( Kentucky 2.00% 2.00% West Virginia 1 .OO% 1 .O( Louisiana 1.70% 1.70% Wyoming - 1 .O( 1979, the following jurisdictions imposed premium taxes at the rates indicated: ~___ Plans Maine - 2 .OO% *Eliminated as of July 1, 1980. **Reduced to .75% on January 1, 1981 and eliminated as of January 1, 1982. FINANCIAL STATEMENTS A C C 0 U N TA NTS ’ R E P 0 R T The Board of Directors of Etna Life Insurance and Annuity Company and the Contract Owners of Variable Annuity Account C: We have examined the statement of assets and liabilities of Etna Life Insurance and Annuity Company Variable Annuity Account C as of December 31, 1979 and the related statements of operations and changes in net assets for each of the three years in the period ended December 31,1979. Our examinations were made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the aforementioned financial statements present fairly the financial position of Etna Life Insurance and Annuity Company Variable Annuity Account C at December 31, 1979 and the results of its operations and changes in its net assets for each of the three years in the period ended December 31, 1979, in conformity with generally accepted accounting principles applied on a consistent basis. PEAT, MARWICK, MITCHELL & CO. Hartford, Connecticut February 1, 1980 32 ETNA LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT C STATEMENT OF ASSETS AND LIABILITIES December 31, 1979 ASSETS: Investment in 27,931,588 shares of Etna Variable Fund, Inc. at net asset value of Investment in 780,096 shares of Etna Income Shares, Inc. at net asset value of Investment in 1,491,860 shares of Etna Variable Encore Fund, Inc. at net asset value of Cash ..................................................................................................... Prepaid annuity benefits .............................................. ...................... Receivable from the Company .............................................................................. NET ASSETS ................. ........................................... $425,: Net Assets represented by: $14.28 per share (cost $292,348,013) (Note 2) ............................................................ $398,f $11.20 per share (cost $9.368,494) (Note 2) ............................................................... 8.; $12.23 per share (cost $16,951,908) (Note 2) ............................................................. 18,; - ......... __ - Contracts in accumulation period: Unit Units Value Etna Variable Fund, Inc.: Qualified I (Individual issued prior to May 1, 1975 and Group issued prior to October 1, 1978) ................................. 12,735,246.1 $21.297 ............... $271,2 Qualified II (Group - owner-administered) .............. 85,697.4 22.009 ............... 1,8 October 1, 1978) ................................. 7,194,378.4 16.389 ............... 117,9 Qualified I ............................................ 290,636.2 10.223 ............... 2,9 Qualified 111 ........................................... 557,081.3 10.214 ............... 5,6 Qualified I ............................................ 630,210.6 12.965 ............... 8.1 Qualified I1 5,573.5 11.861 ............... ( Qualified 111 ........................................... 789,424.5 12.921 ............... 10,2( 7,8- $425,91 Qualified 111 (Individual issued from May 1, 1975 and Group issued from Etna Income Shares, Inc.: Etna Variable Encore Fund, Inc.: ........................................... Reserves for annuity contracts in payment period ...................................... ._ .................. See Notes to Financial Statements. ETNA LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT C STATEMENTS OF CHANGES IN NET ASSETS Years Ended December 31 1979 1978 1977 FROM INVESTMENT ACTIVITIES: Net investment income (loss) (Note 5) .............................. $ 17,532,916 $ (4,281,553) $ 37,963,828 Net realized and unrealized gain (loss) on investments .............. 53,274,151 34,722,741 (48,142,627) Increase (decrease) in net assets from investment activities . . 70,807,067 30,441,188 (10,178,799) FROM UNIT TRANSACTIONS: Variable annuity contract purchase payments ....................... 47,498,652 52,113,442 60,888,018 Net variable annuity contract purchase payments ................ 43,433,722 46,746,040 54,242,086 guarantee adjustments ................................... 67,782 55,758 91,519 Transfer to the Company for fixed annuity benefits ................ (18,897,018) (20,941,033) (1 8,326,077) Sales and administrative charges deducted by the Company ......... (4,064,930) (5,367,402) (6,645,932) Transfer from the Company for mortality Redemptions by Contract Owners .................... (46,419,680) (37,263,264) (34,471,834) Annuity payments ................................... (765,722) (722,038) (634,736) Transfer of certain pension contracts to the Company's Variable Annuity Account D ...................... (509,367) (4,999,630) (21,983,493) Other .............................................. (84,990) (86,206) 37,475 Decrease in net assets from unit transactions .................. (23,175,273) (17,210,373) (21,045,060) Increase (decrease) in net assets .............................. 47,631,794 13,230,815 (31,223,859) NET ASSETS: Beginning of year ......................................... 378,352,391 365,121,576 396,345,435 End of year ................................................ $425,984,185 $378,352,391 $365,121,576 - See Notes to Financial Statements. 34 ETNA LIFE INSURANCE AND ANNUITY COMPANY VARIABLE ANNUITY ACCOUNT C STATEMENTS OF OPERATIONS Years Ended December 31 l! I 1979 1978 INVESTMENT INCOME: Dividend distributions (Note 5): ....................................... 99,321 654,732 Etna Income Shares, Inc.. Etna Variable Encore Fund, Inc.. ................................. 307,072 147,317 Etna Variable Fund, Inc.. ........................................ $ 21,422,962 $ - $ 42,C - Total income .............................................. 22,384.766 246,638 42.4 ................................ Valuation period deductions (Note 4) (4,851,850) (4,528,191) __ (4.4 Net investment income (loss) ....................................... $ 17,532,916 $ (4,281,553) $37,E REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS: Realized gain on sales of investments: - __ Proceeds from sales.. ........................................... $ 44,444,583 $ 31,563.347 $ 36,4 Cost of investments sold.. ....................................... 35,207,498 28,026,307 36,: Net realized gain .......................................... 9,237,085 3,537,040 1 ............................................... 80,l Beginning of year. 63,076,803 31,891,102 End of year.. ................................................... 107,113,869 63,076,803 31 ,E Net unrealized gain (loss) . 44,037,066 31,185,701 (48,> - - Unrealized gain (loss) on investments: __ ............................. - Net realized and unrealized gain (loss) on investments (Note 5). ............................................ $ 53,274,151 $ 34,722,741 $(48,1 - __ NOTES TO FINANCIAL STATEMENTS 1. Basis of Presentation Variable Annuity Account C (“Account”) was established by Etna Life Insurance and Annuity C formerly Etna Variable Annuity Life Insurance Company, (‘Company”) to serve as a VE maintaining the contractual reserves for variable annuity contracts with qualified tax status c Internal Revenue Code. The Account invests exclusively in shares of Etna Variable Fund, Ir Income Shares, Inc. and Etna Variable Encore Fund, Inc. (“Funds”), which are manage Company. 2. Summary of Significant Accounting Policies a. Valuation of Investments The investments in Funds shares are stated at the closing net asset values per share as determined by the Funds on December 31, 1979. b. Other Investment transactions are accounted for on a trade date basis and dividend income is recorded on the ex-dividend date. Cost of investments sold is determined by the identified cost method. 3. Federal Income Taxes The operations of the Account form a part of, and are taxed with, the total operations of the Company, which is taxed as a life insurance company under the Life Insurance Company Income Tax Act of 1959. Under existing federal income tax law, investment income and capital gains attributable to the Account are not taxable except under conditions which managemect considers to be remote. Deductions by the Account for mortality and expense risk charges are made in accordance with the terms of the contracts and are paid to the Company. The Account recorded as income the following dividend distributions from the Funds: 4. Valuation Period Deductions 5. Dividend Income Atna Variable Fund, Inc. Atna Income Atna Variable Net invest- Realized capi- net invest- net investment Shares, Inc. Encore Fund, Inc. ment income tal gains ment income income Year ended December 31, 1979: March 15, 1979 (from 1978 net investment income/realized Monthly dividends paid subsequent to January 14, 1979 capital gains). .................................... $17,694.685 $ 3,728,277 $ - $307,072 (from 1978 and 1979 net investment income). - - 654,732 - .......... $17,694,685 $ 3.728,277 $654,732 $307,072 Year ended December 31, 1978. February 24, 1978 (from 1977 net investment income). ....... $ - $- s- $147.317 Monthly dividends paid subsequent to June 15, 1978 (from 1978 net investment income). - 99,321 - .................... - $- $- S 99,321 $147,317 Year ended December 31, 1977: February 23, 1977 (from 1976 net investment incomehealized capital gains). ........................... $14,269,596 $12,804,641 $ - $ 95.151 $29,528,527 $12,804,641 $ - $ 95,151 December 29. 1977 jirom 1977 net invesrmeni income) ..... i5,258.Y31" - - - -__ *Paid on January 3, 1978. The Funds intend to distribute substantially all of their 1979 taxable income and realized capital gains (if any) to their shareholders. Distributions paid to the Account are automatically reinvested in shares of the Funds. The Account's proportionate share of anticipated future distributions is included in net realized and unrealized gain (loss) on investments in the financial statements. 36 ACCOUNTANTS’ REPORT The Board of Directors Atna Life Insurance and Annuity Company: We have examined the balance sheet of Etna Life Insurance and Annuity Company, formerly Variable Annuity Life Insurance Company, as of December 31, 1979 and the related statements of incorr retained earnings and changes in financial position for the year then ended. Our examination was mi accordance with generally accepted auditing standards, and accordingly included such tests of the accol records and such other auditing procedures as we considered necessary in the circumstances. In our opinion, the aforementioned financial statements present fairly the financial position of Etn Insurance and Annuity Company at December 31,1979 and the results of its operations and the changes financial position for the year then ended, in conformity with generally accepted accounting principles ai on a basis consistent with that of the preceding year. PEAT, MARWICK, MITCHELL & Hartford, Connecticut February 12, 1980 F L ETNA LiFE INSURANCE AND ANNUITY COMPANY BALANCE SHEET December 31. 1979 ASSETS Investments: Bonds ...................................................................... 5282 715.275. Preferred stocks .... ............................................................. 4.400. 000 Mortgage loans ..................................................................... 31.219. 956 Total investments .................................................................. 750.895. 238 Cash ...................................................................................... 3,047.730 Invested cash .......................................................................... 45.354. 172 Policy loans ........................................................................... 2.258. 337 Accrued investment income ........................................................................ 10.684. 681 Deferred acquisition expense ................................................................ 88.781. 666 Other assets ............................................................................... 966. 314 Separate Account assets .......................................................................... 604.422. 163 Total assets ...... .................................................................... $1.506.410. 301 LIABILITIES AND SHAREHOLDER'S EQUITY Liabilities: Future policy benefits ................................................................................. $092 599.643. Other policyholders' funds ......................................................................... 13.733. 714 Other liabilities (includes 51.867. 827 due affiliate) ......................................................... 10.537. 197 Deferred federal income taxes (Note 2) ........................................................ 7.327. 496 Separata Account liabilities ....................................................................... 604.422. 163 Total liabilities ........................................................................ 1.235.663. 662 Shareholder's equity (Notes 4 and 5): Capital stock [par value $20; 100. 000 shares authorized; 55. 000 issued and outstanding) ...................................................................... 1.100. 000 Paid-in surplus ................................................................................. 235.752. 684 Retained earnings ................................................................................. 33.893. 955 270.746. 639 Total liabilities and shareholder's equity ......................................................... $1.506.410. 301 Total shareholder's equity ........................................................................ See Notes to Financial Statements . TSR ETNA LIFE INSURANCE AND ANNUITY COMPANY STATEMENT OF INCOME AND RETAINED EARNINGS Year ended December 31, 1979 Revenue: ............................................................ Premiums ....................... $199,E Separate Accounts ...................... ....................................................... (69,s annuity benefits ............... ............................................................. 251 of $1,198,646) ............. ............................................................. 66,E 8,L Total revenue ...................................................................................... 230,4 Transfer of net variable annuity considerations to Transfers from Separate Accounts for fixed Investment income (net of inves Other income (Note 4) .......................................... ..................................... Benefits and Expenses: Surrender, death and other benefits . ............................................................ 45,c Increase in future policy benefits ................................... ................................ 134,s Other operating expenses ................................... ................................... 22,E Current (: Deferred .............................................................................................. Amortization of deferred acquisition expense ............................................................... 3,; Federal income taxes (credits) (Note 2): .................................. ..................................................... 9,1 Total benefits and expenses ........................................................................ 214,E Operating earnings ....................................................................................... 15,E Net realized gains on investments, net of taxes (Note 2). Extraordinary tax credit (Note 2) ...................... ....................... Income before extraordinary item .......................................................................... 16,i ............................................................... 2 Net income ................................................................... .................... 18.C Unrealized depreciation of investments ..................................................................... Retained earnings, beginning of year ....................................................... 15,E Retained earnings, end of year ........................................................................... $ 33.E - See Notes to Financial Statements. ETNA LIFE INSURANCE AND ANNUITY COMPANY STATEMENT OF CHANGES IN FINANCIAL POSITION Year ended December 31, 1979 SOURCES OF FUNDS: income before extraordinary item .................................................. $ 16,203,521 Change in items not requiring (p:oviding) funds: Fulure policy benefits ............. ............................... 134,944,228 Deferred acquisition expense ........................ .............................. (4,346,669) Deferred federal income taxes .............................. ................... 9,143,371 Other, net .... ........................................................... (4,784,042) Funds provided from operations ................................................................. 151,160,409 Cost of bonds sold .......................................................................... 92,847,845 Mortgage loan repayments ............................................................. 1,218,072 Capital contribution from Atna .............................................................. 140,000,000 Total sources of funds ............................. ......................... 385,226,326 USES OF FUNDS: Cost of bonds purchased ...................................................................... 356,395,628 Cost of mortgage loans purchased ............................................................... 20,444,295 Total uses oi funds ............................................................... 376,839,923 Net increase in funds ................................................................ 8,386,403 Cash and invested cash at beginning of year ........................................................ 40,015,499 ......................... Cash and invested cash at end of year ........................... ti 4a,401,902 See Notes to financial Statements. 40 ETNA LIFE INSURANCE AND ANNUITY COMPANY NOTES TO FINANCIAL STATEMENTS 1. Mortgage loans are carried at the aggregate c unpaid principal balances less unamortized count. a. Basis of Presentation The accompanying financial statements of Etna The identified cost method is used to determin a wholly owned subsidiary of Etna Life and Casu- realized capital gains and losses, alty Company (“Etna”), have been prepared in conformity with generally accepted accounting prin- C. Deferred Acquisition Expense ciples. The Company’s Articles of Incorporation Certain costs of acquiring new business have were amendedi effective Janua’Y ’’ ’ 9803 to deferred. These costs, all of which vary with an Annuity Life Insurance Company to Etna Life Insur- consist principally of commissions, expenses ~ lines of business to be written by the Company expenses, Such costs are being amortized interest against the revenues estimated to bt prospectively. The Company offers annuity contracts that allow ceived over the accumulation period of the re1 variable and fixed annuity options in both the accu- contracts. mulation and annuity periods. Under a fixed annuity, d, Future policy Benefits the Company assumes the risk of mortality, ex- penses and investment gain or loss in that it prom- The majority of the Company’s liabilities art ises a specified interest rate and a specified annuity future policy benefits related to fixed annuity payment. Under a variable annuity, the Company tracts in the accumulation period. This lia assumes the risks of mortality and expenses while equals the cumulative net premiums received the Contract Owner assumes the risk of investment interest thereon at rates historically credited by gain or loss in the value of the contract during both Company. During the first three months of 197: the accumulation and annuity payment period. Con- credited interest rate was 7.50%. On April 1, 1 tract Owner assets under variable annuity contracts the rates pertaining to the majority of the contr are segregated in Separate Accounts and are in- were increased to 8.00% with certain contr vested, as designated by the Contract Owner, in being increased to 8.25%. Single premium contr shares of either Etna Variable Fund, Inc., Etna introduced on April 1, 1979 had a credited ink Income Shares, Inc. or Etna Variable Encore Fund, rate of 8.50%. PanY. the annuity period and for future amounts due UI b. Valuation of Investments settlement options are computed actuarially u the Progressive Annuity Table (modified), the 1 Bonds are generally carried at amortized cost. At individual Annuity Mortality Table and the 1 obtained from independent investment dealers, was rates from 3,50,0 to 7,70,0, $624,129,999. Included in bonds at amortized cost at December 31, 1979 are private placements ag- e. Premiums, Benefits and Expenses marketable and have been valued at fair values Re,ated benefits and expenses are associated premiums so that profits are recognized over aggregating $181,252,639. Preferred stocks are carried at cost as they are expected lives of the contracts by providing expected to be retired as a result of regular sinking liabilities for future benefits and expenses and dt fund payments by the issuer. ring certain acquisition expenses. Summary of Significant Accounting Policies Life Insurance and Annuity Company (‘iCompany”)~ cost of investments sold for purposes of calcul change the Company’s name from Etna Variable primarily related to the production of new busil ante and Annuity Company to reflect new major suing contracts and certain agency and mark, In‘’ (“Funds”)T which are managed by the Corn- Future policy benefits for fixed annuity contrac December 31, 1979 the market value of bonds, as Group Annuity Mortality Table, at assumed inte yegating $205?2487352 which may not be readily Premiums are recorded as revenue when recei, 2. Federai Income Taxes The Company files its federal income tax return under the provisions of the Life Insurance Company Income Tax Act of 1959. Federal income tax returns have been examined by the Internal Revenue Ser- vice through 1968. Components of income tax expense were as fol- lows: Current taxes (credits): For tax return purposes, the Company had operat- ing loss carryforwards at December 31, 1979 of $29,219,000 expiring in 1980 through 1985. Due to timing differences, there are no operating loss carry- forwards for financial statement purposes. 3. Non-Contributory Pension Plan The Company, in conjunction with Etna, has a noncontributory pension plan covering substantially all employees and certain agents. As a matter of policy, pension costs are funded as they are ac- trued and vested benefits are fully funded. The provision for pension costs in 1979 was $1,282,612. On operating earnings ......... $ On realized capital gains ....... (273,441) 273,441 $- Deferred taxes (credits): On operating earnings ......... $ 9,143,371 Extraordinary tax credit ........ (1,815,875) 4. Related Party Transactions $ 7,327,496 The Company is compensated by the Separate Accounts for bearing mortality and expense risks per?aining to variable annuity contracts. The Com- pany alSO receiveS fees from the Funds for serving as investment adviser. Under the management agreement, the Funds pay the Company a daily fee which on an annual basis is equivalent to one quark3 of one Percent (.2So/q of their average net assets. The amount of compensation and fees re- benefits ...................... 71 4,382 wived from the Separate Accounts and Funds Etna and its affiliates provide and are reimbursed for the cost of marketing and administrative services Total ....................... $ 7,327,496 and facilities furnished to the Company, including costs covered under the field office expense-sharing agreement, Such reimbursement made by the Corn- pany amounted to $15,647,000 in 1979. On January 31, 1979, Etna made a $140,000,000 capital contribution in cash to the Company. Deferred federal income taxes result from the re- porting of various revenues and expenses in differ- ent periods for financial statement and federal “corne tax purposes and were generated by the following timing differences: Deferred acquisition expense ..... $ 1,999,468 Adjustment to future policy Operating loss carryforwards ..... 6,556,269 amounted to $8v407,456 in ’gig, Extraordinary tax credit .......... (1,815,875) Other, net ...................... (1 26,748) Total iflCOme tax expense Was leSS than the amount computed by applying the federal income tax rate of 46% to income before taxes for the following rea- sons: Application of the tax rate ........ $ 11,659,570 Excludable dividends ............ (2,478,888) 5- Reconciiiation of Net income and Extraordinary tax credit .......... (1,815,875) Shareholder’s Equity Other, net ...................... (37,3: 1) Actual income tax expense . . , $ 7,327,496 The following reconciles net income and share- holder’s equity determined in accordance with ac- counting practices prescribed or permitted by the Insurance Department of the State of Connecticut 42 (statutory basis) and such amounts determined in Shareho!der’s equity: conformity with generally accepted accounting prin- Statutory amount ................ $1 80,73 ciples. Adjustment to future policy benefits ...................... 4,66 Net income: Statutory amount ................ $ 19,357,378 Deferred acquisition expense ..... 88!78 Adjustment to future policy Mandatory securities valuation reserve ....................... 3,49 Nonadmitted assets ............. 39 Increase in deferred acquisition Deferred federal income taxes .... (7,32 Deferred federal income taxes .... (9,143,371) $270,741 Adjustment to accrual of bond Net realized gains on benefits ...................... 1,553,004 expense ...................... 4,346,669 discounts ..................... (275,540) Extraordinary tax credit .......... 1,815,875 investments ................... 365,381 $ 18,019,396 This Page Left Blank Intentionally 44 This Page Left Blank Intentionally This Page Left Blank Intentionally 46 Birth Date Account Effective Date Payment Frc Sex Retirement Age Social Security Number Payment Amount $ S Date First Salary %duction Not Made NO Of Payments Skwed, Payment Will Change To Effectlve Ch, K I $ P For Single Premium (Non-Installment) Accounts, Indicate 0 Deferred or 0 Immediate For Single Premium Immediate Accounts The Contract Owner (Participant For TDA) Must Appropriate Sections Of The Election Of Retirement Annuity Form (AVA7OO-C) Primary Name Relation Birth Date Investment Allocation Rtna Variable Fund, Inc. Oh Atna Income Shares, Inc % Atna Variable Encore Fund, Inc. % oh General Account (fixed) Total 100% Contingent Name Relation Bi Is your participation in this contract intended to re existing insurance or annuity contracts, includi issued by Etna Life & Casualty? If “yes”, please pr following information. Company Name Policy or Contract Number Plan Name Amount Contract Termination Date FINANCIAL DATA Securities and Exchange Commission rules require that the Sales Representative have reasonable grounds to believe that the sale is not unsuitable for the client, based on information provided by the client as shown on this form and on information known by the Sales Representative. Please complete all sections. Citizenship Place of Birth Number of Dependents ~ Occupation Number of Years With Current Employer Objectives (if applicable, check more than one) o Retirement Income 0 Conservation of Principal 0 Long-term Growth D Income Total Income of Immediate Family Other Future Annual Retirement Income Salary (All Sources) (Including Social Security) $ 0 up to $1 1,999 0 up to $1 1,999 0 $12,000 to $16,999 0 12,000 to $16,999 0 $17,000 to $26,999 0 $27,000 to $50,000 0 Over $50,000 0 $17,000 to $26,999 0 $27,000 to $50,000 0 Over $50,000 If Other Retirement Income is shown, what is the major source? Source of Purchase Funds: 0 Salary or Fee Reduction; 0 Other Your Life Insurance: 0 None; 0 Up to $15,000; 0 Over $15,000 Spouse’s Life Insurance: 0 None; 0 Up to $15,000; 0 Over $15,000 Estimated Net Worth of Immediate Family Are liquid savings and/or health and disability coverage (including Social Security, Workmen’s Compensation, etc.) adequate to meet emergencies: 0 Yes 0 No $0 - $10,000 - $5 ,000 - $100,000 - $200,000 - over $200,000 \/\9 0 0 \/ 0 \/ 0 0 PRODUCER’S REPORT General Agent .Agency ,AL!P.C Code - Life CGdZ Producer’s Obtaining This Enrollment Form A I I ocat ion % % % Name ALIAC Code No. Name ALIAC Code No. Name ALIAC Code No. Special I nst ruct ions: 100% 7~:-'~~....~_'."-~",--.-.,:,~·~."'7~~'·~~~:.,:'.~~~,' ENRo.llMENTFORM -....JEtna Life I'nsurance and Annuity Company VARIABlEANNUIT,Y,iAGCOUNTF '..151 Farmington Avenue'puent EMPldYE.E~t~}:ri~;?E:·::/E"':,·5~~i:;-.'>".:'>~~Hartford,Connecticut 06156 DEF.ERRED COMP.ENSATIONPLA~Sor:::·:-·<'.One of the kTNA LIFE &CASUALTY companiesTAXDEF.ERRED ANNUITY P.LANSff::;·,,'·~,;;i;:'·:';: Contract Owner (School System,Employer,Trustee,Ete.)Billing Group Number _ o Deferred Compensation o Public School 0 Other _ Participant's Name (last,first,middle initial) Participant's Address (TDA only)Street City State Zip Code If There Is An Imtlal One Time Contribution To An Installment Account,Please Indicate the Amount Birth Date SexRetirementAge Isocial Security Number Payment AmountPaymentFrequency $AccountEffectiveDale S DateirstSalaryReductionNotMadeNo.ort-'aymentsSkippedPaymentWillChangeToEffectiveChangeDateKII $P.. $ For Singie Premium (Non-Installment)Accounts,ForSinglePremiumImmediateAccounts,TheContractOwner(ParticipantForTDA)MuslAlsoComplete Indicate 0 Deferred or 0 Immediate AppropriateSectionsOfTheEiectionOfRetirementAnnuityForm(AVA700-C) Beneficiary Information (Leave Blank For Deferred Compensation -Contract Owner Is The Beneficiary) Primary ContingentNameRelationBirthDateName Relation Birth Date Is your participation in this contract intended to replace any existing insurance or annuity contracts,including those issued by JEtna Life &Casualty?If "yes",please provide the following information: Company Name Policy or Contract Number _ Plan Name Amount Contract Termination Date _ -------_% -------_% -------_% -------_% Total General Account (fixed) Investment Allocation JEtna Variable Fund,Inc. ktna Income Shares,Inc. ktna Variable Encore Fund,Inc. 100% ··PLEASE READ CAREFULLY·· ~Variable Annuity Contracts should be purchased for long-term retirement purposes. ~Variable Benefits cannot be predicted or guaranteed as to dollar amounts. ~A periodic deduction is made from the variable portion of the contract values for investment management expenses and the contract guarantees. ~An annual maintenance charge will be deducted from the account value for installment contracts. ~There may be Deferred Sales Charges if an account is surrendered in part or in full. ~Once annuity payments begin,annuity benefits cannot be terminated unless otherwise provided for in the contract. NOTE -For Deferred Compensation only:Participant's signature on this form in no way implies ownership.All Deferred Compensation contracts are owned by the employer. I hereby acknowledge receipt of: (1)a prospectus dated June 20,1980,covering group vari- able retirement annuity contracts (GROUP-DC/TDA)for public employee deferred compensation plans and "tax- deferred"annuity plans issued by ktna Life Insurance and Annuity Company;and (2)prospectuses dated May 1,1980, for ktna Variable Fund,Inc.;ktna Income Shares,Inc.;and ktna Variable Encore Fund,Inc. Si"gnature of Participant City and State Where Signed Date Please Complete The FINANCIAL DATA Questionnaire On The Back Of This Form FINANCIAL DATA Securities and Exchange Cornmission rules require that the Sales Representative have reasonable grounds to believe that the sale is not unsuitable for the client. based on information provided by the client as shown on this form and on information known by the Sales Representative Please complete all sections Citizenship Place of Birth Number of Dependents ___ Occupation Number of Years With Current Employer Oblectives (if applicable. check more than one) 0 Retirement income Long-term Growth 0 Income 0 Conservation of Principal Total Income of Immediate Family Other Future Annual Retirement Income Salary (All Sources) (Including Sooal Security) $ 0 up to $1 1,999 0 up to $1 1,999 0 $12,000 to $16,999 0 $17,000 to $26,999 0 $27,000 to $50,000 0 Over $50,000 0 12,000 to $16,999 0 $1 7,000 to $26,999 0 $27.000 to $50,000 0 Over $50,000 If Other Retirement Income is shown, what IS the major source? Source of Purchase Funds Your Life Insurance 0 None, 0 Up to $15,000, 0 Over $15,000 Spouse’s Life Insurance 0 None, 0 Up to $15,000. 0 Over $15,000 Estimated Net Worth of $0 - $10 000 - $5 000 - $100,000 - $200,000 - over $200,000 Immediate Fami ly Are liquid savings and/or health and disability coverage (including Social Security, Workmen‘s Compensation, etc ) adequate to meet emergencies 0 Yes 0 No 0 Salary or Fee Reduction, 0 Other \/,\/”,\/ 0 0 0 \/ 0 0 PRODUCER’S REPORT Gene:,! Agent Agency ALiAC Code - Life Code Producer’s Obtaining This Enrollment Form AI I ocat i on Qh % Q/O Name ALIAC Code No Name ALIAC Code No Name ALIAC Code No Special Instructions lOO~/O This Page Left Blank Intentionally DIRECTORS William 0 Bailey* Donald G Conrad- Joseph F Crowe, FSA*I Charles N Dawkins, CFA; William B Lusk Kenneth P Veit, FSAS Dean E Wolcott, CLU* PRINCIPAL OFFICERS COMPENSATION PLANS William 0 Bailey* Joseph F Crowe, FSA*t Charles N Dawkins, CFA- Joseph R Galko, FSA Sherwood G House, FSA William B Lusk Vice President - Life Division Marketing and Agencies Robert G. Maxon, FSA Vice President and Corporate Comptroller Stephen B Middlebrook General Counsel and Secretary Robert A Miller Ill, FSA Vice President and Corporate Actuary Chester C Montgomery, CLU Vice President - Pension Products Charles F Reis, CPA Treasurer Kenneth P Veit, FSAS Vice President - Life Products Dean E Wolcott, CLU* Senior Vice President Chairman Investment Committee GROUP VARIABLE RETIREMENT ANNUITY CONTRACTS FOR PUBLIC EMPLOYEE DEFERRED Chairman, Executive Committee AND "TAX- DEFERRED' ANNUITY PLANS President Vice President - Annuity Products Vice President - Investments DATED JUNE 20, 1980 Vice President - Health Products -2 - Actuary, Annuity Products , - - 1 *Member, Executive Committee :Member, Investment Committee HOME OFFICE: 151 Farmington Avenue Hartford, Connecticut 06156 TeleDhone 203-273-4808 I hereby acknowledge receipt of: (1) aprospectus dated June 20,1980, cover- zng group variable retirement annuity contrucb GROUP-DC/TDA) for public em- poyee dejerred compensation plans and tax-deferred annuity plans issued by Btna Li$e Insurance and Annui pany; and (2) prospectuses dateci?M??- 1980, for Ztna Variable Fund, Inc.; dni Income Shares, Inc.; and Btna Variable Encore Fund, Inc. B Etna Life Insurance and Annuity Companj 8 One of the ETNA LIFE & CASUALTY companies Cox mu I Ow\m i SKAA I I i?i COP 7-c nn tl - ??=---- . %yk/ Q i-.L v- 3 DEFERREC bui.ir iii~n I iVi4 Fz ADMINISTRATIVE AGREEMENT This Agreement, made and entered into this . . day’of nLov ’. 9 19 , by and between the City of Carlsbad (hereinafter c City) and Aetna Life Insurance and Annuity Company (hereinafter called Company) q RECITALS . The City authorizss the establishment of a Deferrsd Cornpensation Plan a an Agreement with the Company to administer and underwrite such plan on behalf of the City. This plan is described in the attached prospectus, June 20, 1980 and May 1, 1931, and the contract as attached to this - Agreement. .. It is the desire of the City to contract for the services of the Compan to perform for the City certain functtons in the implementation and continuing operation of the Deferred Compensation .Plan; to aid the City the enrollment of employees and the development .and implementation of administrative procedures relating to the collection and disbursement o deferred amounts; and to assist the City in the drafting of amendments the Plan and/or attendant agreements necessary thereto so .that said doc meet appl i cable regulatory requirements. .. . It is the desire of the Company to provide the above servicss subject t terms and cor;ditions of this agreement. AG RE EM E NT . 1. PERFORMANCE OF SERVICES. Notwithstanding any other provision to th contrary, the Company agrees that it shall be solely responsible to m w i. #d the City for any and all services performed by it or its employees under this agreement. 2. REVIEW DEFERREO COMPENSATION PLAN. The Company agrees to review th approved Deferred Compensation Plan and to assist in the preparatio and submission of any attendant agreements such as joinder agreemen necessary for the implementation to the Plan or the performance of duties under the Plan. Suck agreements will be preDared in accord; with the rules and regulatbns of the Internal Revenue Service. Tf I Company agrees, from time io time, to advise the City of any changt in Federal or State rules and regulations that may affect the va’ljc or feasibility of the Deferred Compensation Plan or its dutl’er; hen the Company shall not be 1 isble, hcwever, for the effect of any sui changes in Federal or State rules and regulations on the Deferred Cornpensation Plan. _- 3. ENROLLMENT SERVICES. The Company agrees to assist the City in the enrollment(s) of all employees who elect to participate in the Def Compensation Plan. The Company agrees to design and prepare a Corn educational and merehadising program for distribution to the eiiiplo The Company agrees not to distribl;te the program until it has been by the City. The Company agrees to assist in conducting group presentations for City employees to explain in the Dsferred Compensation program. 1 Company agrees that the personnel responsible for assisting the Ci enrol 1 ing employees into the Deferred Compensation P1 an wi 11 possc whatever ’licenses are required by law, both Federal and State. Tt / i. a * licensed persofinel shall have extensive experience in communicating kinds of investment vehicles offered under the Plan. The Company hi insure that qualified personnel are retained on a continuing basis provide experienced f i nanci a1 assistance on a 1 oca1 bas'i s throughou term of this agreement so that participants or potential participan receive personal counsel i ng. The Company agrees that in performing the services provided fcr her by itself or thrwgh a designee that it will conduct itself at -all with due regard to rules and regulations of the Cfty, e h .._ 4. COLLECTION.AND DISBURSEMENT. The Company agrees to accept payments Clty and to insure the timely and proper investment and allocation prscessable payments in accordance with all applicable Federal , Sta and Securities rsgulations. - 5. RECORD KEEPING AND REPORTS. The Company 3grees to furnish the suff information to enable ft to maintain records for each participating employee including, but not lirni3ed to, Social Security number, the specific amount of the participant's contribution, the allocation o the contribution to one oP' more funds'ng media, an3 othw pertinent necessary for the efficient administration of each participant's ac . 6. RESPONSIBILITIES OF THE CITY A. The City agrees to setting up timetables for and providing fazi for group meetings of employees for distributing iriformation ab the plan, and completion of enrollment cards. / I a- e ‘I Bo The City agrees to provide facilities to be used for counselins enrollment of employees. #* Co The City agrees tG transmit on a timely basis any relevant fnfc requested by tbe Company relating to each participating empl oyc entry into the program, and further agrees to provide on a tfmc basis any information relating to changes in an individual pari .account, - D. The City agrees to transmit on a tfmely basis any relevant info of a participant’s withdrawal, termination or request for dcistr under the Plan including the method and timing of any distribut E. The City agrees to provide payrGll reduction procedures and fac F. The City agrees to provide information requested by the Company timely basis. Thz City agrees to use its best efforts to assur accuracy and completeness of a11 information provided, 7. COMPENSATION. The Company shall not charge .for’the services perfor under this Agreement. An-y cospensation for the performance of serv under this Agreement shall be borne out of the products provided by Company into which deferred amounts may be invested. .e 8. BROKER OF RECORD. Pursuant to instructions from the City the Compa be responsible to appoint such individual(s) as Broker of Record wh its best judgment will insure maximum benefit and satisfaction of t 9 0 a + responsibilities attzndant to such designation. Nothing herein will the City from exercising its right to make such designatim of Brokt Record or to change such designation in the future. ’. 9. AMENDMENT AND TERMINATION, This Agreement shafl remain in effect fc $jeriod of five (5) years from the date of execution of this Agreemer, will be renewed annually thereafter subject to termination upon writ notice ninety (90) days prior to the next annual renewal date. Th-is Agreement may be modified or amended in writing but only if signed b both parties hereto. IO. CIRCUYSTANCES EXCUSING PERFORMANCE. Piefther the City nor the Cornpars: be la’able to the other fcr any delays or damages of any failure to ac occasioned, or caused by reason of restrictions imposed by any goveri or government agency, acts of God, strikes, labor disputes, action of elements, or causes beyond the control of the parties affected theret or defaul ts by participants or employers. If. OWNERSHIP OF RECORDS. programs shall be the property of Company. The City agrees that all computer tapes, discs 12. CONFIDENTIALITY. A17 information supplfed to, and all work processed completed by the Company (including outside processing, if any) will 1 held to be confidentizl and private and will not be disclosed to any ( other than the ,City or those persons, corporations or government agenc who have right to such information under the terms of the Deferred Compensa ti on PI an o - * 0 .. .. 13. PARTIES BfrUND. This Agreement and the provisions thereof shall be binding upon the respective parties and shall insure to the benefi. the same. ‘I 14* APPLICABLE LAM, laws of the State of California. This Agreement shall be construed in accordance w‘ ’95. UNLAWFUL PROVISIONS. In the event any provision of this Agreement be held or invalid for any reasons said illegality of invalidity st. not affect the remajns’rg parts of the Agreement, but the same shall construed and enforced as if said s’l’legality or s’nvalfd provisfuns never been inserted herein or therein. Notwithstanding anything cc herein to the contrary, no party ts’this Agreement will be requirec perform or render any services hereunder, the performance or rendit sf which would’be violative of any laws, rules or; regulations relat thereto D IN WITNESS WHEREOF, the wfthin parties have hereunto set their hand seals the day and year fdrst above written:: f BY : 2d &A -- . BY: BY: