Notes to Financial Statements
December 31, 1996 (continued)
The Funds had entered into an administrative services agreement (the Agreement) with the Company whereby
the Company was reimbursed for a share of its overhead related to managing the Funds. In addition, the
Company had been paying, and the Funds had been reimbursing the Company for, the Funds' ordinary, recurring
expenses such as legal fees, trustees'/directors' fees, custodial fees and insurance premiums. Effective May 1,
1996, the Agreement was modified to enable each Fund to fix the amount of its costs and expenses. Under the
terms of the new Agreement, the Company will receive a fixed fee in exchange for providing the services
described above, including reimbursement of its overhead related to managing the Funds. The new Agreement
provides for the Company to receive a fixed fee at an annual rate of 0.06% of average daily net assets for
Variable Fund, 0.08% of average daily net assets for each of Advisers Fund and Income Shares and 0.10% of
average daily net assets for Encore Fund.
During June and July, the shareholders of each Fund voted to approve a subadvisory agreement (the Subadvisory
Agreement) among the Funds, the Company and the Company's affiliate, Aeltus Investment Management, Inc.
(Aeltus). Under the terms of the Subadvisory Agreement, Aeltus will supervise the investment and reinvestment of
cash and securities and provide certain related administrative services for each Fund in exchange for fees to be
paid by the Company.
The fees vary by Fund, depending on the Fund's investment objective, and range from 0.15% to 0.30% of a
particular Fund's average daily net assets. For the period ended December 31, 1996, the Company paid Aeltus
$7,750,390, $651,877, $366,655, $1,628,453 for Variable, Income Shares, Encore and Advisers Fund,
respectively, in accordance with the terms of the Subadvisory Agreement.
3. Purchases and Sales of Investments
Purchases and sales of investment securities, excluding short-term investment