NEW ENGLAND ZENITH FUND, 497, 1995-05-05

NEW ENGLAND ZENITH FUND
497, 1995-05-05

Previous: GIBSON GREETINGS INC, DEF 14A, 1995-05-05

Next: NEW ENGLAND ZENITH FUND, 497, 1995-05-05

<PAGE>

NEW ENGLAND ZENITH FUND

SUPPLEMENT DATED MAY 1, 1995
TO PROSPECTUS DATED MAY 1, 1995

PAST PERFORMANCE OF CERTAIN SUBADVISERS

INVESTMENT ADVISERS' PERFORMANCE DATA

The performance information outlined below relates to all of the accounts,
including mutual funds, managed by the subadvisers of the Alger Equity Growth
Series, Draycott International Equity Series, Loomis Sayles Balanced Series,
Venture Value Series, Salomon Brothers Strategic Bond Opportunities Series and
Salomon Brothers U.S. Government Series that have investment objectives and
policies substantially similar to the respective Series that they manage. THE
FOLLOWING INFORMATION HAS NOT BEEN ADJUSTED TO REFLECT ANY OF THE CHARGES
ASSESSED AGAINST THE INSURANCE COMPANY SEPARATE ACCOUNTS FOR WHICH THE
FOLLOWING SERIES MAY SERVE AS AN INVESTMENT VEHICLE. IF THESE CHARGES WERE
INCLUDED, THE RESULTS WOULD BE LOWER. Each subadviser believes that the
differences between the size of the accounts that it manages and the expected
size of the Series it manages, that has substantially similar investment
objectives and policies as the accounts, do not affect the relevance of the
information shown below to prospective purchasers of insurance contracts for
which the Series may serve as an investment vehicle. The information below
does not represent the performance of the actual Series listed above. THESE
SERIES COMMENCED OPERATIONS ON OCTOBER 31, 1994 AND HAVE NO PERFORMANCE RECORD
OF THEIR OWN FOR PERIODS PRIOR TO THAT DATE. (THESE SERIES' PERFORMANCE FOR
THE PERIOD OCTOBER 31, 1994 TO DECEMBER 31, 1994 IS PRESENTED ABOVE UNDER
"PERFORMANCE INFORMATION."). THE INFORMATION BELOW SHOULD NOT BE CONSIDERED A
PREDICTION OF THE FUTURE PERFORMANCE OF ANY SERIES. THE PERFORMANCE MAY BE
HIGHER OR LOWER THAN THE PERFORMANCE OF A FUND OR ACCOUNT WHICH HAS
SUBSTANTIALLY SIMILAR INVESTMENT OBJECTIVES AND POLICIES.

Alger Accounts

David D. Alger, portfolio manager of the Alger Equity Growth Series, also
serves as the portfolio manager of other accounts that have substantially the
same investment objective and investment policies as the Alger Equity Growth
Series (the "Alger Accounts"). The following table sets forth the dollar
weighted annual total return of the Alger Accounts for each of the last eight
calendar years. Also shown are the number and average period-end net assets of
the Alger Accounts for each period and the dollar weighted average annual
total returns of the Alger Accounts for the one, three and five year periods
ended December 31, 1994. The total return information shown below has been
adjusted to give effect to the higher of the level of the actual expenses of
the Alger Accounts during the periods shown or the anticipated level of
expenses that the Series will bear under the expense deferral arrangement
described under "Management."

PERFORMANCE INFORMATION ABOUT THE ALGER ACCOUNTS

<TABLE>
<CAPTION>
VALUE OF ACCOUNTS AT
YEARS ENDED NUMBER OF PERIOD END
DECEMBER 31, TOTAL RETURN ACCOUNTS EXPENSES* (DOLLARS IN MILLIONS)
------------ ------------ --------- --------- ---------------------
<S> <C> <C> <C> <C>
1987 (0.41)% 1 3.00% $ 5.3
1988 6.40 1 3.01 5.1
1989 35.05 1 3.32 5.8
1990 2.25 2 3.04 7.6
1991 42.82 2 2.47 22.7
1992 11.66 2 1.73 53.5
1993 21.51 2 1.50 116.0
1994 0.13 3 1.33 236.9
</TABLE>
- --------
* In cases where there is more than one account and expense levels of the
accounts differ, the expense levels are averaged on a dollar weighted basis.

AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 1994:

1
<PAGE>

Draycott Accounts

The team of Nicholas D.P. Carn, Timothy S. Griffen, Gregory D. Eckersley and
Nigel Hankin, portfolio managers of the Draycott International Equity Series,
also serve as portfolio managers of other accounts that have substantially the
same investment objective and investment policies as the Draycott
International Equity Series (the "Draycott Accounts"). The following table
sets forth the dollar weighted total return for the period May 1, 1991
(commencement of the operations of the first Draycott Account) through
December 31, 1991 and annual total return for the years ended December 31,
1992 through 1994. Also shown are the average annual total returns of the
Draycott Accounts for the one year and three year periods ended December 31,
1994. The information shown below has been adjusted to give effect to the
higher of the level of the actual expenses of the Draycott Accounts during the
periods shown or the anticipated level of expenses that the Series will bear
under the expense deferral arrangement described under "Management."

PERFORMANCE INFORMATION ABOUT THE DRAYCOTT ACCOUNTS

<TABLE>
<CAPTION>
VALUE OF ACCOUNTS AT
NUMBER OF PERIOD END
TOTAL RETURN ACCOUNTS EXPENSES* (DOLLARS IN MILLIONS)
------------ --------- --------- ---------------------
<S> <C> <C> <C> <C>
May 1, 1991
through
December 31, 1991 (8.48)% 1 1.30% $ 9.2
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------
<S> <C> <C> <C> <C>
1992 (7.41) 1 1.30 13.4
1993 31.14 2 1.30 95.0
1994 8.63 2 1.49 174.4
</TABLE>
- --------
* In cases where there is more than one account and expense levels of the
accounts differ, the expense levels are averaged on a dollar weighted basis.
Expenses for periods of less than one year have been annualized. Mutual fund
expense calculations are based on Class A share expenses.

AVERAGE ANNUAL TOTAL RETURN FOR PERIODS ENDED DECEMBER 31, 1994:

Loomis Sayles Balanced Fund

Douglas D. Ramos and Meri Anne Beck, portfolio managers of the Loomis Sayles
Balanced Series, also serve as portfolio managers of the New England Balanced
Fund, another mutual fund that has substantially the same investment objective
and investment policies as the Loomis Sayles Balanced Series. The following
table sets forth the total return of the New England Balanced Fund Class A
shares for the period March 1, 1990, when the Fund began to be operated as a
balanced fund, through December 31, 1990. (Prior to March 1, 1990, the Fund
had different portfolio managers and was operated as a growth and income
fund.) The table also sets forth the annual total return of the Fund's Class A
shares for the years ended December 31, 1991 through 1994, and the expense
levels of the Class A shares of the Fund for those periods. Also shown are the
average annual total returns for the one and three year periods and the period
from March 1, 1990 through December 31, 1994. All of the expense levels of the
New England Balanced Fund for the periods indicated are higher than the
expense levels anticipated for the Loomis Sayles Balanced Series under the
expense deferral arrangement described under "Management." The information
shown below has been adjusted to give effect to the higher level of expenses
of New England Balanced Fund.

2
<PAGE>

PERFORMANCE INFORMATION ABOUT NEW ENGLAND BALANCED FUND

(CLASS A SHARES)

<TABLE>
<CAPTION>
NET ASSET VALUE
YEARS ENDED AT PERIOD END
DECEMBER 31, TOTAL RETURN EXPENSES** (DOLLARS IN MILLIONS)
------------ ------------ ---------- ---------------------
<S> <C> <C> <C>
1990* (6.8)% 1.58% $ 52.1
1991 29.2 1.53 67.5
1992 13.9 1.48 90.5
1993 14.2 1.40 158.3
1994 (2.7) 1.40 158.3
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS THROUGH DECEMBER 31, 1994:

<TABLE>
<S> <C>
1 Year (2.7)%
3 Year 8.2%
since March 1,
1990* 9.1%
</TABLE>
- --------
* The Fund began pursuing its current investment policies on March 1, 1990.
** Expense for periods of less than one year have been annualized.

New York Venture Accounts

Shelby M.C. Davis, the portfolio manager of the Venture Value Series, also
serves as the portfolio manager of other portfolios that have substantially
the same investment objective and investment policies as the Venture Value
Series ("New York Venture Accounts"). The following table sets forth the
dollar weighted annual total return of the New York Venture Accounts for the
years ended July 31, 1985 through 1994 and the period August 1, 1994 through
December 31, 1994. Also shown are the average annual total returns of the New
York Venture Accounts for the one, three, five and ten year periods ended
December 31, 1994. The information shown below has been adjusted to give
effect to the higher of the actual expenses of the New York Venture Accounts
during the periods shown or the anticipated expense levels that the Venture
Value Series will bear under the expense deferral arrangement described under
"Management".

PERFORMANCE INFORMATION ABOUT NEW YORK VENTURE ACCOUNTS

<TABLE>
<CAPTION>
NET ASSET VALUE
YEAR ENDED NUMBER OF AT YEAR END
JULY 31, TOTAL RETURN ACCOUNTS EXPENSES* (DOLLARS IN MILLIONS)
---------- ------------ --------- --------- ---------------------
<S> <C> <C> <C> <C>
1985 37.83% 1 1.05% $ 122.9
1986 32.95 1 0.99 146.8
1987 25.22 1 0.93 232.1
1988 (3.30) 1 1.01 167.8
1989 33.44 1 0.97 319.1
1990 8.12 1 0.97 344.9
1991 14.29 1 0.97 421.2
1992 18.62 1 0.91 494.2
1993 20.01 2 0.90 762.0
1994 5.89 2 0.90 1,101.1
5 months Ended
December 31, 1994 (2.53) 2 0.90 1,117.4
</TABLE>
- --------
* In cases where there is more than one account and expense levels of the the
accounts differ, the expense levels are averaged on a dollar weighted basis.
Expenses for periods of less than one year have been annualized. Mutual fund
expense calculations are based on Class A share expenses.

3
<PAGE>

AVERAGE ANNUAL TOTAL RETURN THROUGH DECEMBER 31, 1994:

Not to be used after October 31, 1995

4
<PAGE>

NEW ENGLAND ZENITH FUND

501 BOYLSTON STREET
BOSTON, MASSACHUSETTS 02116
(617) 267-6600

PROSPECTUS -- MAY 1, 1995

New England Zenith Fund (the "Fund") offers fourteen investment portfolios,
twelve of which are contained herein: the Back Bay Advisors Money Market
Series, the Back Bay Advisors Bond Income Series, the Capital Growth Series,
the Westpeak Value Growth Series, the Loomis Sayles Avanti Growth Series, the
Westpeak Stock Index Series, the Back Bay Advisors Managed Series, the Loomis
Sayles Small Cap Series, the Loomis Sayles Balanced Series, the Draycott
International Equity Series, the Venture Value Series and the Alger Equity
Growth Series (the "Series") with the following investment objectives:

BACK BAY ADVISORS MONEY MARKET SERIES--the highest possible level of current
income consistent with preservation of capital. MONEY MARKET FUNDS ARE NEITHER
INSURED NOR GUARANTEED BY THE U.S. GOVERNMENT AND THERE CAN BE NO ASSURANCE
THAT THE SERIES WILL MAINTAIN A STABLE NET ASSET VALUE OF $100 PER SHARE.

BACK BAY ADVISORS BOND INCOME SERIES--a high level of current income
consistent with protection of capital and moderate investment risk.

CAPITAL GROWTH SERIES--long-term growth of capital.

WESTPEAK VALUE GROWTH SERIES--long-term total return through investment in
equity securities.

LOOMIS SAYLES AVANTI GROWTH SERIES--long-term growth of capital.

WESTPEAK STOCK INDEX SERIES--investment results that correspond to the
composite price and yield performance of United States publicly traded common
stocks.

BACK BAY ADVISORS MANAGED SERIES--a favorable total return through
investment in a diversified portfolio. The Series' portfolio is expected to
include a mix of (1) common stocks, (2) notes and bonds and (3) money market
instruments.

LOOMIS SAYLES SMALL CAP SERIES--long-term capital growth from investments in
common stocks or their equivalent.

LOOMIS SAYLES BALANCED SERIES--reasonable long-term investment return from a
combination of long-term capital appreciation and moderate current income.

DRAYCOTT INTERNATIONAL EQUITY SERIES--total return from long-term growth of
capital and dividend income, primarily through investment in international
equity securities.

VENTURE VALUE SERIES--growth of capital.

ALGER EQUITY GROWTH SERIES--long-term capital appreciation.

This Prospectus concisely describes the information that prospective
investors ought to know before investing. Please read this Prospectus
carefully and keep it for future reference.

A Statement of Additional Information (the "Statement") dated May 1, 1995,
is available free of charge by writing to New England Securities Corporation
("New England Securities"), 399 Boylston Street, Boston, Massachusetts 02116.
The Statement, which contains more detailed information about the Fund, has
been filed with the Securities and Exchange Commission (the "SEC") and is
incorporated by reference in this Prospectus.

SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY FINANCIAL INSTITUTION AND THE SHARES ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND INVOLVE RISK, INCLUDING THE POSSIBLE LOSS OF
PRINCIPAL.

----------------

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.

B-1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Financial Highlights....................................................... B-3
The Fund................................................................... B-15
Investment Objectives and Policies......................................... B-15
Investment Risks........................................................... B-20
Performance Information.................................................... B-26
Investment Restrictions.................................................... B-27
Management................................................................. B-31
Sale and Redemption of Shares.............................................. B-37
Net Asset Values and Portfolio Valuation................................... B-37
Dividends and Capital Gain Distributions................................... B-37
Taxes...................................................................... B-38
Organization and Capitalization of the Fund................................ B-38
Transfer Agent............................................................. B-38
Voting Rights.............................................................. B-38
</TABLE>

B-2
<PAGE>

FINANCIAL HIGHLIGHTS

These tables have been examined by Coopers & Lybrand LLP, the Fund's
independent accountants, whose reports thereon accompany the financial
statements in the Statement of Additional Information. The tables should be
read in conjunction with the financial statements and notes thereto. For
further performance information about the Fund, please refer to the Fund's
annual report, which is available free of charge.

<TABLE>
<CAPTION>
BACK BAY ADVISORS MONEY MARKET SERIES
----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Year.. $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income From Investment
Operations
Net Investment Income... 7.94 6.58 6.33 7.25 8.85 7.88 6.03 3.73 2.93 3.89
Net Gains or Losses on
Investments (both
realized and
unrealized)............ 0.00 0.00 (0.01) 0.00 0.00 0.00 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total From Investment
Operations............. 7.94 6.58 6.32 7.25 8.85 7.88 6.03 3.73 2.93 3.89
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions
Distributions From Net
Investment Income...... (7.94) (6.58) (6.32) (7.25) (8.85) (7.88) (6.03) (3.73) (2.93) (3.89)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total Distributions.. (7.94) (6.58) (6.32) (7.25) (8.85) (7.88) (6.03) (3.73) (2.93) (3.89)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
the Year............... $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00 $100.00
======= ======= ======= ======= ======= ======= ======= ======= ======= =======
Total return (%)........ 8.2 6.8 6.6 7.4 9.2 8.2 6.2 3.8 3.0 4.0
Ratio of Operating
Expenses to Average Net
Assets (%)............. 0.39 0.39 0.38 0.38 0.38 0.38 0.38 0.38 0.38 0.40
Ratio of Net Investment
Income to Average Net
Assets (%)............. 7.96 6.61 6.37 7.26 8.85 7.87 6.01 3.71 2.93 3.89
Net Assets, End of
Period (000)........... $24,918 $26,794 $33,047 $38,929 $42,678 $60,071 $58,614 $61,607 $59,044 $73,960
</TABLE>

B-3
<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
BACK BAY ADVISORS BOND INCOME SERIES
------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the Year.. $111.94 $119.34 $123.45 $ 95.47 $ 92.75 $ 97.23 $ 97.61 $103.44 $ 103.47 $ 106.14
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Income From Investment
Operations
Net Investment Income... 11.24 10.21 8.97 8.52 8.58 8.49 8.53 7.96 5.70 7.05
Net Gains or Losses on
Investments (both
realized and
unrealized)............ 7.76 6.66 (7.14) (0.54) 2.81 (0.65) 8.90 0.51 7.38 (10.61)
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Total From Investment
Operations............. 19.00 16.87 1.83 7.98 11.39 7.84 17.43 8.47 13.08 (3.56)
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Less Distributions
Distributions From Net
Investment Income...... (11.60) (11.09) (18.71) (10.70) (6.91) (7.46) (9.47) (6.87) (6.20) (7.05)
Distributions In Excess
of Net Investment
Income................. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 (0.05) 0.00
Distributions From Net
Realized Capital Gains. 0.00 (1.67) (11.10) 0.00 0.00 0.00 (2.13) (1.57) (4.16) 0.00
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Total Distributions.. (11.60) (12.76) (29.81) (10.70) (6.91) (7.46) (11.60) (8.44) (10.41) (7.05)
------- ------- ------- ------- ------- ------- ------- ------- -------- --------
Net Asset Value, End of
the Period............. $119.34 $123.45 $ 95.47 $ 92.75 $ 97.23 $ 97.61 $103.44 $103.47 $ 106.14 $ 95.53
======= ======= ======= ======= ======= ======= ======= ======= ======== ========
Total return (%)........ 18.7 15.8 1.4 8.4 12.3 8.1 18.0 8.2 12.6 (3.4)
Ratio of Operating
Expenses to Average Net
Assets (%)............. 0.47 0.50 0.45 0.47 0.45 0.46 0.45 0.44 0.43 0.44
Ratio of Net Investment
Income to Average Net
Assets (%)............. 10.26 8.86 8.65 8.50 8.62 8.57 8.27 7.70 6.47 6.75
Portfolio Turnover Rate
(%) (a)................ 232 303 331 104 69 106 193 71 177 82
Net Assets, End of
Period (000)........... $13,927 $16,379 $17,449 $15,750 $26,156 $40,631 $49,369 $83,057 $131,242 $126,234
</TABLE>
- --------
(a) The portfolio turnover calculations for 1985 exclude transactions in U.S.
Government securities maturing more than one year from the date of
acquisition. Portfolio turnover calculations in subsequent years include
such Government securities transactions.

As of January 1, 1993, the Bond Income Series discontinued the use of
equalization accounting.

B-4
<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
CAPITAL GROWTH SERIES
---------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------
1985 1986 1987 1988 1989 1990(A) 1991 1992 1993 1994
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period................. $107.77 $179.48 $264.48 $231.33 $201.14 $ 260.25 $ 249.04 $ 347.36 $ 322.23 $ 351.63
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Income From Investment
Operations
Net Investment Income... 0.67 0.52 1.05 10.63 1.59 1.78 3.16 4.04 2.12 5.28
Net Gains or Losses on
Investments (both
realized and
unrealized)............ 72.16 131.12 109.33 (30.97) 60.11 (10.88) 130.75 (25.10) 46.21 (30.54)
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Total From Investment
Operations............. 72.83 131.64 110.38 (20.34) 61.70 (9.10) 133.91 (21.06) 48.33 (25.26)
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Less Distributions
Distributions From Net
Investment Income...... (1.12) (0.90) (1.10) (9.55) (2.59) (2.11) (3.22) (4.07) (2.18) (5.15)
Distributions From Net
Realized Capital Gains. 0.00 (45.74) (142.43) (0.30) 0.00 0.00 (31.93) 0.00 (16.75) (8.92)
Distributions From Paid-
In Capital............. 0.00 0.00 0.00 0.00 0.00 0.00 (0.44) 0.00 0.00 0.00
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Total Distributions.. (1.12) (46.64) (143.53) (9.85) (2.59) (2.11) (35.59) (4.07) (18.93) (14.07)
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Net Asset Value, End of
the Period............. $179.48 $264.48 $231.33 $201.14 $260.25 $ 249.04 $ 347.36 $ 322.23 $ 351.63 $ 312.30
======= ======= ======= ======= ======= ======== ======== ======== ======== ========
Total return (%)........ 68.1 95.2 52.7 (8.8) 30.8 (3.5) 54.0 (6.1) 15.0 (7.1)
Ratio of Operating
Expenses to Average Net
Assets (%)............. 0.76 0.83 0.57 0.75 0.72 0.73 0.70 0.70 0.68 0.67
Ratio of Net Investment
Income to Average Net
Assets (%)............. 0.59 0.22 0.75 6.20 1.21 0.93 1.22 1.53 0.67 1.61
Portfolio Turnover Rate
(%)(b)................. 335 527 368 813 269 229 174 207 169 140
Net Assets, End of
Period (000)........... $ 3,130 $ 6,797 $29,626 $42,538 $90,377 $148,254 $343,965 $472,017 $644,384 $667,127
</TABLE>
- --------
(a) On March 1, 1990, the Capital Growth Management Division of Loomis Sayles
& Company, Incorporated was reorganized into Capital Growth Management
Limited Partnership, which assumed management of the Series.

(b) The portfolio turnover calculations for 1985 exclude transactions in U.S.
Government securities maturing more than one year from the date of
acquisition. Portfolio turnover calculations in subsequent years include
such Government securities transactions.

B-5
<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
WESTPEAK STOCK INDEX SERIES
------------------------------------------------------------------------
MAR. 30(A)
TO YEAR ENDED DECEMBER 31,
DEC. 31, -------------------------------------------------------------
1987 1988 1989 1990 1991 1992 1993* 1994
---------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period................. $100.00 $ 84.74 $ 94.36 $117.36 $108.49 $137.39 $ 72.00 $ 76.48
------- ------- ------- ------- ------- ------- ------- -------
Income From Investment
Operations
Net Investment Income... 2.44 3.48 3.55 3.76 3.56 8.35 1.54 1.80
Net Gains or Losses on
Investments (both
realized and
unrealized)............ (15.06) 10.39 24.83 (8.64) 29.29 2.02 5.18 (0.92)
------- ------- ------- ------- ------- ------- ------- -------
Total From Investment
Operations............. (12.62) 13.87 28.38 (4.88) 32.85 10.37 6.72 0.88
------- ------- ------- ------- ------- ------- ------- -------
Less Distributions
Distributions From Net
Investment Income...... (2.23) (3.44) (3.74) (3.82) (3.56) (8.35) (1.36) (1.82)
Distributions In Excess
of Net Investment
Income................. 0.00 0.00 0.00 0.00 0.00 0.00 (0.18) 0.00
Distributions From Net
Realized Capital Gains. (0.41) (0.81) (1.64) 0.00 (0.39) (67.41) (0.55) (0.16)
Distributions In Excess
of Net Realized Capital
Gains.................. 0.00 0.00 0.00 0.00 0.00 0.00 (0.15) 0.00
Distributions From Paid-
In Capital............. 0.00 0.00 0.00 (0.17) 0.00 0.00 0.00 (0.03)
------- ------- ------- ------- ------- ------- ------- -------
Total Distributions.. (2.64) (4.25) (5.38) (3.99) (3.95) (75.76) (2.24) (2.01)
------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value, End of
the Period............. $ 84.74 $ 94.36 $117.36 $108.49 $137.39 $ 72.00 $ 76.48 $ 75.35
======= ======= ======= ======= ======= ======= ======= =======
Total return (%)........ (12.2) 16.3 30.2 (4.1) 30.4 7.3 9.7 1.1
Ratio of Operating
Expenses to Average Net
Assets (%)............. 0.31 0.36 0.34 0.36 0.36 0.35 0.34 0.33
Ratio of Net Investment
Income to Average Net
Assets (%)............. 3.36 3.92 3.31 3.36 2.86 2.63 2.52 2.59
Portfolio Turnover Rate
(%).................... 31 4 52 1 2 17 12 2
Net Assets, End of
Period (000)........... $ 9,002 $11,073 $15,501 $15,122 $20,496 $10,172 $28,817 $37,164
</TABLE>
- --------
(a) Commencement of operations.

* Westpeak Investment Advisers, L.P. assumed responsibility for managing the
Funds' portfolio on August 1, 1993.

B-6
<PAGE>

FINANCIAL HIGHLIGHTS

<TABLE>
<CAPTION>
BACK BAY ADVISORS MANAGED SERIES
-------------------------------------------------------------------------
MAY 1(A)
TO YEAR ENDED DECEMBER 31,
DEC. 31, ---------------------------------------------------------------
1987 1988 1989 1990 1991 1992 1993 1994
-------- ------- ------- ------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
Beginning of the
Period................. $100.00 $ 96.62 $100.17 $114.65 $112.79 $127.87 $ 130.26 $ 137.18
------- ------- ------- ------- ------- ------- -------- --------
Income From Investment
Operations
Net Investment Income... 2.80 5.13 4.31 5.47 6.41 5.14 4.35 5.42
Net Gains or Losses on
Investments (both
realized and
unrealized)............ (3.45) 4.04 14.77 (1.81) 16.23 3.45 9.58 (6.92)
------- ------- ------- ------- ------- ------- -------- --------
Total From Investment
Operations............. (0.65) 9.17 19.08 3.66 22.64 8.59 13.93 (1.50)
------- ------- ------- ------- ------- ------- -------- --------
Less Distributions
Distributions From Net
Investment Income...... (2.73) (5.24) (4.22) (5.38) (6.41) (5.13) (4.36) (5.38)
Distributions From Net
Realized Capital Gains. 0.00 (0.38) (0.38) 0.00 (1.15) (1.07) (2.65) 0.00
Distributions From Paid-
In Capital............. 0.00 0.00 0.00 (0.14) 0.00 0.00 0.00 0.00
------- ------- ------- ------- ------- ------- -------- --------
Total Distributions.. (2.73) (5.62) (4.60) (5.52) (7.56) (6.20) (7.01) (5.38)
------- ------- ------- ------- ------- ------- -------- --------
Net Asset Value, End of
the Period............. $ 96.62 $100.17 $114.65 $112.79 $127.87 $130.26 $ 137.18 $ 130.30
======= ======= ======= ======= ======= ======= ======== ========
Total return (%)........ (0.7) 9.5 19.1 3.2 20.2 6.7 10.7 (1.1)
Ratio of Operating
Expenses to Average Net
Assets (%)............. 0.66 0.64 0.57 0.57 0.55 0.54 0.53 0.54
Ratio of Net Investment
Income to Average Net
Assets (%)............. 4.96 5.88 5.29 5.58 5.45 5.32 3.65 3.98
Portfolio Turnover Rate
(%).................... 1 1 1 1 36 36 22 76
Net Assets, End of
Period (000)........... $ 7,694 $10,806 $23,622 $36,563 $49,995 $77,575 $121,339 $121,877
</TABLE>
- --------
(a) Commencement of operations.

B-7
<PAGE>

FINANCIAL HIGHLIGHTS

LOOMIS SAYLES AVANTI GROWTH SERIES

<TABLE>
<CAPTION>
APRIL 30(A) YEAR
TO ENDED
DEC. 31, 1993 DECEMBER 31, 1994
------------- -----------------
<S> <C> <C>
Net Asset Value, Beginning of the Period.... $100.00 $113.67
------- -------
Income From Investment Operations
Net Investment Income....................... 0.18 0.59
Net Gains or Losses on Investments (both
realized and unrealized)................... 14.56 (0.89)
------- -------
Total From Investment Operations............ 14.74 (0.30)
------- -------
Less Distributions
Distributions From Net Investment Income.... (0.18) (0.60)
Distributions From Net Realized Capital
Gains...................................... (0.67) 0.00
Distributions From Paid-In Capital.......... (0.22) 0.00
------- -------
Total Distributions...................... (1.07) (0.60)
------- -------
Net Asset Value, End of the Period.......... $113.67 $112.77
======= =======
Total return (%)............................ 14.7(b) (0.3)
Ratio of Operating Expenses to Average Net
Assets (%)................................. 0.85(c) 0.84
Ratio of Net Investment Income to Average
Net Assets (%)............................. 0.46(c) 0.67
Portfolio Turnover Rate (%)................. 21(c) 67
Net Assets, End of Period (000)............. $11,972 $25,622
The Ratio of Expenses to Average Net Assets
without giving effect to the voluntary
expense limitation described in Footnote
(d) would have been (%).................... 0.89(c)(d) 0.84
</TABLE>
- --------
(a) Commencement of operations.

(b) Not annualized.

(d) During the periods presented, the Series' adviser voluntarily agreed to
reduce its fees and, if necessary, to assume expenses of the Series in
order to limit the Series' expenses to an annual rate of 0.85% of the
Series' average daily net assets.

B-8
<PAGE>

FINANCIAL HIGHLIGHTS

WESTPEAK VALUE GROWTH SERIES

<TABLE>
<CAPTION>
APRIL 30(A) YEAR
TO ENDED
DEC. 31, 1993 DEC. 31, 1994
------------- -------------
<S> <C> <C>
Net Asset Value, Beginning of the Period........ $100.00 $112.32
------- -------
Income From Investment Operations
Net Investment Income........................... 0.92 1.90
Net Gains or Losses on Investments (both
realized and unrealized)....................... 13.33 (3.25)
------- -------
Total From Investment Operations................ 14.25 (1.35)
------- -------
Less Distributions
Distributions From Net Investment Income........ (0.92) (1.92)
Distributions From Net Realized Capital Gains... (1.00) 0.00
Distributions In Excess of Net Realized Capital
Gains.......................................... (0.01) 0.00
Distributions From Paid In Capital.............. 0.00 (0.02)
------- -------
Total Distributions.......................... (1.93) (1.94)
------- -------
Net Asset Value, End of the Period.............. $112.32 $109.03
======= =======
Total return (%)................................ 14.2(b) (1.2)
Ratio of Operating Expenses to Average Net
Assets (%)..................................... 0.85(c) 0.85
Ratio of Net Investment Income to Average Net
Assets (%)..................................... 2.16(c) 2.30
Portfolio Turnover Rate (%)..................... 49(c) 133
Net Assets, End of Period (000)................. $ 9,082 $22,934
The Ratio of Expenses to Average Net Assets
without giving effect to the voluntary expense
limitation described in Footnote (d) would have
been (%)....................................... 0.94(c)(d) 0.86
</TABLE>
- --------
(a) Commencement of operations.

(b) Not annualized.

B-9
<PAGE>

FINANCIAL HIGHLIGHTS

LOOMIS SAYLES SMALL CAP SERIES

<TABLE>
<CAPTION>
MAY 1(A)
TO
DECEMBER 31, 1994
-----------------
<S> <C>
Net Asset Value, Beginning of Period......................... $100.00
-------
Income From Investment Operations
Net Investment Income........................................ 0.14
Net Gains or Losses on Investments (both realized and
unrealized)................................................. (3.38)
-------
Total From Investment Operations............................. (3.24)
-------
Less Distributions
Distributions From Net Investment Income..................... (0.15)
-------
Total Distributions....................................... (0.15)
-------
Net Asset Value, End of the Period........................... $ 96.61
=======
Total return (%)............................................. (3.23)(b)
Ratio of Operating Expenses to Average Net Assets (%)........ 1.00 (c)
Ratio of Net Investment Income to Average Net Assets (%)..... 0.32 (c)
Portfolio Turnover Rate (%) (a).............................. 80 (c)
Net Assets, End of Period (000).............................. $ 3,105
The Ratio of Expenses to Average Net Assets without giving
effect to the voluntary expense limitation described in
Footnote (d) would have been (%)............................ 2.31 (c)
</TABLE>
- --------
(a) Commencement of operations.

(b) Not annualized.

(d) During the period presented, the Series' adviser voluntarily agreed to
reduce its fees and, if necessary, to assume expenses of the Series in
order to limit the Series' expenses to an annual rate of 1.00% of the
Series' average daily net assets.

B-10
<PAGE>

FINANCIAL HIGHLIGHTS

LOOMIS SAYLES BALANCED SERIES

<TABLE>
<CAPTION>
OCTOBER 31(A)
TO
DECEMBER 31, 1994
-----------------
<S> <C>
Net Asset Value, Beginning of Period......................... $10.00
------
Income From Investment Operations
Net Investment Income........................................ 0.05
Net Gains or Losses on Investments (both realized and
unrealized)................................................. (0.06)
------
Total From Investment Operations............................. (0.01)
------
Less Distributions
Distributions From Net Investment Income..................... (0.05)
Total Distributions....................................... (0.05)
------
Net Asset Value, End of the Period........................... $ 9.94
======
Total return (%)............................................. (0.10)(c)
Ratio of Operating Expenses to Average Net Assets (%)........ 0.85 (b)
Ratio of Net Investment Income to Average Net Assets (%)..... 4.16 (b)
Portfolio Turnover Rate (%) (a).............................. 0 (b)
Net Assets, End of Period (000).............................. $2,722
The Ratio of Expenses to Average Net Assets without giving
effect to the voluntary expense limitation described in
Footnote (d) would have been (%)............................ 3.73 (b)
</TABLE>
- --------
(a) Commencement of operations.

(b) Computed on an annualized basis.

(d) Commencing November 1, 1994, TNE Advisers has agreed to pay operating
expenses of the Series in excess of an annual expense limit of 0.85% of
average assets subject to the obligation of the Series to repay TNE
Advisers such expenses in future years, if any, when the Series' expenses
fall below this stated expense limit; such deferred expenses may be charged
to the Series in a subsequent year to the extent that the charge does not
cause the total expenses in such subsequent year to exceed the 0.85%
expense limit; provided, however, that the Series is not obligated to repay
any expense paid by TNE Advisers more than two years after the end of the
fiscal year in which such expense was incurred.

B-11
<PAGE>

FINANCIAL HIGHLIGHTS

DRAYCOTT INTERNATIONAL EQUITY SERIES

<TABLE>
<CAPTION>
OCTOBER 31(A)
TO
DECEMBER 31, 1994
-----------------
<S> <C>
Net Asset Value, Beginning of Period......................... $10.00
------
Income From Investment Operations
Net Investment Income........................................ 0.03
Net Gains or Losses on Investments (both realized and
unrealized)................................................. 0.23
------
Total From Investment Operations............................. 0.26
------
Less Distributions
Distributions From Net Investment Income..................... (0.02)
Distributions From Paid-In Capital........................... (0.01)
Total Distributions....................................... (0.03)
------
Net Asset Value, End of the Period........................... $10.23
======
Total return (%)............................................. 2.60 (c)
Ratio of Operating Expenses to Average Net Assets (%)........ 1.30 (b)
Ratio of Net Investment Income to Average Net Assets (%)..... 2.56 (b)
Portfolio Turnover Rate (%).................................. 4 (b)
Net Assets, End of Period (000).............................. $2,989
The Ratio of Expenses to Average Net Assets without giving
effect to the voluntary expense limitation described in
Footnote (d) would have been (%)............................ 5.38 (b)
</TABLE>
- --------
(a) Commencement of operations.

(b) Computed on an annualized basis.

(d) Commencing November 1, 1994, TNE Advisers has agreed to pay operating
expenses of the Series in excess of an annual expense limit of 1.30% of
average assets subject to the obligation of the Series to repay TNE
Advisers such expenses in future years, if any, when the Series' expenses
fall below this stated expense limit; such deferred expenses may be charged
to the Series in a subsequent year to the extent that the charge does not
cause the total expenses in such subsequent year to exceed the 1.30%
expense limit; provided, however, that the Series is not obligated to repay
any expense paid by TNE Advisers more than two years after the end of the
fiscal year in which such expense was incurred.

B-12
<PAGE>

FINANCIAL HIGHLIGHTS

VENTURE VALUE SERIES

<TABLE>
<CAPTION>
OCTOBER 31(A)
TO
DECEMBER 31, 1994
-----------------
<S> <C>
Net Asset Value, Beginning of Period......................... $10.00
------
Income From Investment Operations
Net Investment Income........................................ 0.03
Net Gains or Losses on Investments (both realized and
unrealized)................................................. (0.38)
------
Total From Investment Operations............................. (0.35)
------
Less Distributions
Distributions From Net Investment Income..................... (0.03)
Total Distributions....................................... (0.03)
------
Net Asset Value, End of the Period........................... $ 9.62
======
Total return (%)............................................. (3.50)(b)
Ratio of Operating Expenses to Average Net Assets (%)........ 0.90 (c)
Ratio of Net Investment Income to Average Net Assets (%)..... 2.54 (c)
Portfolio Turnover Rate (%) (a).............................. 1 (c)
Net Assets, End of Period (000).............................. $3,371
The Ratio of Expenses to Average Net Assets without giving
effect to the voluntary expense limitation described in
Footnote (d) would have been (%)............................ 3.97 (c)
</TABLE>
- --------
(a) Commencement of operations.

(b) Not computed on an annualized basis.

(d) Commencing November 1, 1994, TNE Advisers has agreed to pay operating
expenses of the Series in excess of an annual expense limit of 0.90% of
average assets subject to the obligation of the Series to repay TNE
Advisers such expenses in future years, if any, when the Series' expenses
fall below this stated expense limit; such deferred expenses may be charged
to the Series in a subsequent year to the extent that the charge does not
cause the total expenses in such subsequent year to exceed the 0.90%
expense limit; provided, however, that the Series is not obligated to repay
any expense paid by TNE Advisers more than two years after the end of the
fiscal year in which such expense was incurred.

B-13
<PAGE>

FINANCIAL HIGHLIGHTS

ALGER EQUITY GROWTH SERIES

<TABLE>
<CAPTION>
OCTOBER 31(A)
TO
DECEMBER 31, 1994
-----------------
<S> <C>
Net Asset Value, Beginning of Period......................... $10.00
------
Income From Investment Operations
Net Investment Income........................................ 0.02
Net Gains or Losses on Investments (both realized and
unrealized)................................................. (0.44)
------
Total From Investment Operations............................. (0.42)
------
Less Distributions
Distributions From Net Investment Income..................... (0.02)
Total Distributions....................................... (0.02)
------
Net Asset Value, End of the Period........................... $ 9.56
======
Total return (%)............................................. (4.20)(b)
Ratio of Operating Expenses to Average Net Assets (%)........ 0.85 (c)
Ratio of Net Investment Income to Average Net Assets (%)..... 1.07 (c)
Portfolio Turnover Rate (%) (a).............................. 32 (c)
Net Assets, End of Period (000).............................. $1,917
The Ratio of Expenses to Average Net Assets without giving
effect to the voluntary expense limitation described in
Footnote (d) would have been (%)............................ 2.74 (c)
</TABLE>
- --------
(a) Commencement of operations.

(b) Not computed on an annualized basis.

B-14
<PAGE>

THE FUND

The Fund is a diversified, open-end management investment company organized
in 1987 as a Massachusetts business trust under the laws of Massachusetts. The
Fund is a series type company with fourteen investment portfolios, twelve of
which are contained herein: the Back Bay Advisors Money Market Series, the
Back Bay Advisors Bond Income Series, the Capital Growth Series, the Westpeak
Value Growth Series, the Loomis Sayles Avanti Growth Series, the Westpeak
Stock Index Series, the Back Bay Advisors Managed Series, the Loomis Sayles
Small Cap Series, the Loomis Sayles Balanced Series, the Draycott
International Equity Series, the Venture Value Series and the Alger Equity
Growth Series.

Shares in the Fund are not offered directly to the general public and,
currently, are available only to separate accounts established by New England
Variable Life Insurance Company ("NEVLICO"), New England Mutual Life Insurance
Company ("The New England") or subsidiaries of The New England as an
investment vehicle for variable life insurance or variable annuity products,
although not all Series may be available to all separate accounts. In the
future, however, such shares may be offered to separate accounts of insurance
companies unaffiliated with NEVLICO or The New England.

INVESTMENT OBJECTIVES AND POLICIES

BACK BAY ADVISORS MONEY MARKET SERIES

The Back Bay Advisors Money Market Series seeks the highest possible level
of current income consistent with preservation of capital through investment
in a managed portfolio of high quality money market instruments including:

. obligations backed by the full faith and credit of the United States
Government, such as bills, notes and bonds issued by the U.S.
Treasury or by such government agencies as the Farmers' Home
Administration or the Small Business Administration;

. other obligations issued or guaranteed by the United States
Government or its agencies, authorities or instrumentalities, such
as obligations of the Tennessee Valley Authority, Federal Land Banks
and the Federal National Mortgage Association ("FNMA") (together
with full faith and credit obligations, "U.S. Government
Securities");

. obligations of banks or savings and loan associations (such as
bankers' acceptances and certificates of deposit, including
Eurodollar obligations of foreign branches of U.S. banks and dollar
denominated obligations of U.S. and United Kingdom branches of
foreign banks) whose net assets exceed $100,000,000;

. commercial paper and other corporate debt obligations rated in the
highest rating category by Standard & Poor's Corporation ("Standard
& Poor's" or "S&P") or Moody's Investors Service, Inc. ("Moody's")
or, if unrated, of comparable quality as determined by Back Bay
Advisors, L.P. ("Back Bay Advisors"), the Series' investment
subadviser, under guidelines approved by the Fund's Trustees; and

. repurchase agreements relating to any of the above.

The Back Bay Advisors Money Market Series may invest up to 100% of its
assets in certificates of deposit, bankers' acceptances and other bank
obligations.

All the Back Bay Advisors Money Market Series' money market instruments
mature in less than 397 days and its dollar-weighted average portfolio
maturity is 90 days or less. The Series calculates the maturity of repurchase
agreements by reference to the repurchase date, not by reference to the
maturity of the underlying security.

By investing only in high quality, short-term securities, the Back Bay
Advisors Money Market Series seeks to minimize credit risk and market risk.
Credit risk is the risk that the obligor will default in the payment of
principal and/or interest. In a repurchase agreement transaction, credit risk
relates to the performance by the other party of its obligation to repurchase
the underlying security from the Fund. If the other party defaults on that
obligation, the Fund may face various delays and risks of loss. Market risk is
the risk that the market value of the securities will change as a result of
changes in market rates of interest. The Fund expects that those changes will
be minimal and that the Back Bay Advisors Money Market Series will be able to
maintain the net asset value of its shares at a constant of $100, although
this cannot be assured.

B-15
<PAGE>

The Eurodollar obligations of foreign branches of U.S. banks and U.S. and
United Kingdom branches of foreign banks in which the Back Bay Advisors Money
Market Series may invest may be subject to certain risks which do not apply to
obligations of domestic branches of U.S. banks. These risks may relate to
foreign economic, political and legal developments and to the fact that
foreign banks and foreign branches of U.S. banks may be subject to different
regulatory requirements.

BACK BAY ADVISORS BOND INCOME SERIES

The investment objective of the Back Bay Advisors Bond Income Series is to
provide a high level of current income consistent with protection of capital
and moderate investment risk through investment primarily in U.S. Government
and corporate bonds. In general, fixed-income securities, such as the bonds in
which the Series may invest, are subject to credit risk (the risk that the
obligor will default in the payment of principal and/or interest) and to
market risk (the risk that the market value of the securities will change as a
result of changes in market rates of interest).

At least 80% of the Series' assets will consist of securities rated AAA, AA,
A or BBB by S&P or Aaa, Aa, A or Baa by Moody's or unrated but determined by
Back Bay Advisors, the Series' subadviser, to be of comparable quality to
securities in those rating categories. The Series may not invest more than 10%
of its total net assets in obligations of foreign issuers. Investments in
foreign securities will subject the Series to special considerations related
to political, economic and legal conditions outside of the U.S. These
considerations include the possibility of unfavorable currency exchange rates,
exchange control regulations (including currency blockage), expropriation,
nationalization, withholding taxes on income and difficulties in enforcing
judgments. Foreign securities may be less liquid and more volatile than
comparable U.S. securities. Some foreign issuers are subject to less
comprehensive accounting and disclosure requirements than similar U.S.
issuers. Transactions in foreign securities include currency conversion costs.
Brokerage and custodial costs for foreign securities may be higher than for
U.S. securities. The Series will invest in these securities only when Back Bay
Advisors believes the associated risks are minimal.

Up to 20% of the Series' assets may be invested in securities rated BB or Ba
or lower (or in unrated securities that Back Bay Advisors determines to be of
comparable quality). During the fiscal year ended December 31, 1994, 11.33% of
the average month-end net assets of the Back Bay Advisors Bond Income Series
was invested in fixed-income securities rated in the rating category (BB or
Ba) just below investment grade and no assets were invested in fixed-income
securities rated below this level. Securities rated BB or lower by S&P or Ba
or lower by Moody's (or unrated but determined to be of comparable quality by
Back Bay Advisors) are considered high yield, high risk securities and are
commonly known as "junk bonds". The Series will acquire no security rated
below BB or Ba (or unrated but determined to be of comparable quality by Back
Bay Advisors). If a security held by the Series is downgraded below BB or Ba,
Back Bay Advisors will determine at that time whether the Series will continue
to hold the security, taking into account the current conditions.

The average maturity of the Back Bay Advisors Bond Income Series' portfolio
will usually be between five and fifteen years.

CAPITAL GROWTH SERIES

The Capital Growth Series, which is advised by Capital Growth Management,
Limited Partnership ("CGM"), seeks long-term growth of capital through
investment primarily in equity securities of companies whose earnings are
expected to grow at a faster rate than the United States economy. Most of the
Series' investments are normally in common stocks, although the Series may
invest in any type of equity securities. Equity securities are common stocks
and securities convertible into common stocks. The Series does not consider
current income as a significant factor in selecting its investments. Equity
securities are volatile investments, subject to price declines as well as
advances, and involve greater risks than some other investment media.

WESTPEAK VALUE GROWTH SERIES

The Westpeak Value Growth Series seeks long-term total return (capital
appreciation and dividend income) through investment in equity securities.
Emphasis will be given to both undervalued securities ("value" style) and
securities of companies with growth potential ("growth" style). The Westpeak
Value Growth Series will ordinarily invest substantially all its assets in
equity securities.

The assets of the Westpeak Value Growth Series that are not invested in
equity securities will be held in cash or invested in repurchase agreements,
short-term U.S. Government securities or commercial paper or other corporate
money market securities rated A-2 or higher by Moody's or P-2 or higher by
Standard & Poor's (or unrated but considered to be of comparable quality by
the Series' subadviser, Westpeak Investment Advisors, L.P. ["Westpeak"]).

B-16
<PAGE>

The Westpeak Value Growth Series may engage in transactions in futures
contracts solely for the purpose of maintaining full exposure of the portfolio
to the movements of broad equity markets at times when the Series holds a cash
position pending investment in stocks or in anticipation of redemptions. See
"Futures and Other Hedging Transactions" under "Investment Risks" below and
"Futures" in the Statement of Additional Information.

LOOMIS SAYLES AVANTI GROWTH SERIES

The Loomis Sayles Avanti Growth Series seeks long-term growth of capital.
The Series ordinarily invests substantially all of its assets in equity
securities. Investments are selected based on their growth potential; current
income is not a consideration. The Series normally will invest primarily in
equity securities of companies with medium and large capitalization
(capitalization of $1 billion to $5 billion and over $5 billion,
respectively), but will also invest a portion of its assets in equity
securities of companies with relatively small market capitalization (under $1
billion). The Series may invest a limited portion of its assets in securities
of foreign issuers.

Loomis, Sayles & Company, L.P. ("Loomis Sayles"), the Series' subadviser,
selects investments based upon fundamental research and analysis of individual
companies and industries. The subadviser selects investments for the Series
based on qualitative and quantitative criteria including, among others,
industry dominance and competitive position, consistent earnings growth, a
history of high profitability, the subadviser's expectation of continued high
profitability and overall financial strength, although not every investment
will have all of these characteristics.

The Series may invest in convertible securities, including corporate bonds,
notes or preferred stocks that can be converted into common stocks or other
equity securities.

WESTPEAK STOCK INDEX SERIES

The Westpeak Stock Index Series seeks to provide investment results that
correspond to the composite price and yield performance of United States
publicly traded common stocks. The Westpeak Stock Index Series seeks to
achieve this investment objective by attempting to duplicate the composite
price and yield performance of the Standard & Poor's 500 Composite Stock Price
Index (the "S&P 500 Index").

The S&P 500 Index fluctuates with changes in the market value of the stocks
included in the Index. An investment in the Westpeak Stock Index Series
involves risks similar to the risks of investing directly in the stocks
included in the S&P 500 Index.

The Westpeak Stock Index Series seeks to duplicate the composite price and
yield performance of the S&P 500 Index at lower cost without investing in all
of the 500 stocks included in the Index by selecting stocks having a
combination of characteristics similar to the omitted stocks and, in order to
minimize "tracking error," adjusting the proportions of the stocks included in
the Series' portfolio relative to each stock's weighting in the S&P 500 Index.
("Tracking error" is a statistical measure of the difference between the
investment results of the Series, before taking into account the Series'
expenses, and the investment results of the S&P 500 Index.)

Westpeak, the Series' subadviser, currently expects that, depending on its
size, the Westpeak Stock Index Series will ordinarily invest in approximately
300 of the 500 stocks included in the S&P 500 Index. From time to time and
over any period of time, this number may be significantly higher or lower,
depending on the size of the Series and on Westpeak's judgment as to the
appropriate number of stocks in which to invest in order to approximate the
composite price and yield performance of the S&P 500 Index. In the future,
however, the Westpeak Stock Index Series may, without shareholder approval,
select a stock index other than the S&P 500 Index as the standard of
comparison for the Westpeak Stock Index Series' common stock investments, or
discontinue the practice of using a stock index as the standard of comparison
for the common stock portion of the Westpeak Stock Index Series' portfolio.
The Series may also engage in futures transactions to reduce tracking error.
See "Futures and Other Hedging Transactions" under "Investment Risks" below
and "Futures" in the Statement of Additional Information.

BACK BAY ADVISORS MANAGED SERIES

The investment objective of the Back Bay Advisors Managed Series is to
provide a favorable total investment return through investment in a
diversified portfolio. The Series' portfolio is expected to include (1) common
stocks, (2) notes and bonds and (3) money market instruments. These
investments will be made in proportions that Back Bay Advisors, subadviser to
the Back Bay Advisors Managed Series, deems appropriate for an investor who
wishes to invest in a portfolio containing a diversified mix of assets.

B-17
<PAGE>

It is expected that more often than not the investment portfolio of the Back
Bay Advisors Managed Series will contain a higher proportion of common stocks
than of notes and bonds, and a higher proportion of notes and bonds than of
money market instruments. However, Back Bay Advisors will make variations in
the proportions of each investment category in accordance with its assessment
of the outlook for the economy and the financial markets and its judgment
about the relative attractiveness of each asset type in light of economic
conditions. It is expected that under normal market conditions the Back Bay
Advisors Managed Series' portfolio will have some of its assets invested in
each of the three categories listed above. The Series may also engage in
futures transactions to manage its portfolio exposure to the risks of
investment in common stocks or notes and bonds. The Series will engage in
futures transactions only to the extent allowed by state law and regulations.
See "Futures and Other Hedging Transactions" under "Investment Risks" below
and "Futures" in the Statement of Additional Information.

The investment practices of the Back Bay Advisors Managed Series with
respect to the common stock portion of its portfolio will be substantially
similar to the investment practices of the Westpeak Stock Index Series, and
the risks associated with the common stock portion of the Back Bay Advisors
Managed Series' portfolio are similar to those associated with the Westpeak
Stock Index Series. See "Westpeak Stock Index Series" above. These investment
practices include seeking to duplicate the composite price and yield
performance of the S&P 500 Index. In the future, however, the Back Bay
Advisors Managed Series may, without shareholder approval, select a stock
index other than the S&P 500 Index as the standard of comparison for the Back
Bay Advisors Managed Series' common stock investments, or discontinue the
practice of using a stock index as the standard of comparison for the common
stock portion of the Back Bay Advisors Managed Series' portfolio. The Series
may invest a limited portion of its assets in securities of foreign issuers.

The bond portion of the Back Bay Advisors Managed Series' portfolio will be
invested in bonds of the types in which the Back Bay Advisors Bond Income
Series is permitted to invest. See "Back Bay Advisors Bond Income Series"
above for a description of these types of investments and some possible risks
associated with them.

The money market portion of the Back Bay Advisors Managed Series' portfolio
will be invested in money market instruments and related repurchase agreements
of the types in which the Back Bay Advisors Money Market Series is permitted
to invest. See "Back Bay Advisors Money Market Series" above for a description
of these types of investments and of the possible risks associated with them.

LOOMIS SAYLES SMALL CAP SERIES

The Loomis Sayles Small Cap Series' investment objective is long-term
capital growth from investments in common stocks or their equivalent.

The Series, for which Loomis Sayles acts as subadviser, seeks to achieve its
objective by giving emphasis to both undervalued securities and securities of
companies with significant growth potential. The Series will normally invest
at least 65% of its total assets in companies with market capitalization of
less than $500 million and may invest up to 35% of its assets in larger
companies. Current income is not a consideration in selecting the Series'
investments. The Series may invest a limited portion of its assets in
securities of foreign issuers. See "Investment Risks--Foreign Securities"
below.

LOOMIS SAYLES BALANCED SERIES

The Loomis Sayles Balanced Series' investment objective is reasonable long-
term investment return from a combination of long-term capital appreciation
and moderate current income.

The Series, for which Loomis Sayles acts as subadviser, is "flexibly
managed" in that sometimes it invests more heavily in equity securities and at
other times it invests more heavily in fixed-income securities, depending on
its subadviser's view of the economic and investment outlook. Most of the
Series' investments are normally in dividend-paying common stocks of
recognized investment quality that are expected to achieve growth in earnings
and dividends over the long term. Fixed-income securities include notes,
bonds, non-convertible preferred stock and money market instruments. The
Series may invest in adjustable rate mortgage securities, asset-backed
securities, STRIPS and inverse floaters, subject to a limit of 5% of the
Series' assets for each of these instruments. The Series invests at least 25%
of its assets in fixed-income senior securities and, under normal market
conditions, more than 50% of its assets in equity securities. The Series also
may invest in foreign securities.

B-18
<PAGE>

DRAYCOTT INTERNATIONAL EQUITY SERIES

The Draycott International Equity Series seeks total return from long-term
growth of capital and dividend income, primarily through investment in
international equity securities.

The Draycott International Equity Series seeks to achieve its objective by
investing primarily in common stocks, although the Series may invest in any
type of equity securities. Normally the Series will invest at least 65% of its
total assets in equity securities of issuers headquartered outside the United
States, and substantially all of its assets (other than cash and short-term
investments) in such equity securities or equity securities of issuers
(including closed-end investment companies) that derive a substantial part of
their revenues or profits from countries outside the United States. Under
normal conditions, the Series' portfolio will contain equity securities of
issuers from at least three countries outside the United States.

The Series' subadviser, Draycott Partners, Ltd. ("Draycott"), will make
investment decisions on behalf of the Series by, first, selecting countries
where it anticipates sustainable growth that will exceed current market
expectations. Within the selected countries, the subadviser will identify
economic sectors that appear to present the most potential for risk-adjusted
growth and, finally, within the chosen economic sectors, the subadviser will
select securities that are expected to offer the best value.

VENTURE VALUE SERIES

The Venture Value Series' investment objective is growth of capital and is
subadvised by Selected/Venture Advisers, L.P.

The Series will primarily invest in domestic common stocks (and securities
convertible into common stock) that the Series' subadviser believes have
capital growth potential due to factors such as undervalued assets or earnings
potential, product development and demand, favorable operating ratios,
resources for expansion, management abilities, reasonableness of market price,
and favorable overall business prospects. The Series will generally invest
predominantly in equity securities of companies with market capitalizations of
at least $250 million. It may also invest in issues with smaller
capitalizations.

The Series may invest in foreign securities, and may hedge currency
fluctuation risks related thereto. The Series may invest in U.S. registered
investment companies that primarily invest in foreign securities, provided
that no such investment may cause more than 10% of the Series' total assets to
be invested in such companies. The Series may invest in restricted securities
which may include Rule 144A securities.

The Series may write covered call options on its portfolio securities, but
currently intends to invest in such options only to the extent that less than
5% of its net assets would be subject to the options.

The Series may lend securities it owns so long as such loans do not exceed
5% of the Series' net assets.

ALGER EQUITY GROWTH SERIES

The Alger Equity Growth Series' investment objective is to seek long-term
capital appreciation. The Series' assets will be invested primarily in a
diversified, actively managed portfolio of equity securities, primarily of
companies having a total market capitalization of $1 billion or greater. These
companies may still be in the developmental stage, may be older companies that
appear to be entering a new stage of growth progress, or may be companies
providing products or services with a high unit volume growth rate.

The Series' subadviser, Fred Alger Asset Management, Inc., seeks to achieve
its objective by investing in equity securities, such as common or preferred
stocks or securities convertible into or exchangeable for equity securities,
including warrants and rights. Except during temporary defensive periods, the
Series invests at least 85% of its net assets in equity securities and at
least 65% of its total assets in equity securities of companies that, at the
time of purchase of the securities, have total market capitalization of $1
billion or greater; the Series may invest up to 35% of its total assets in
equity securities of companies that, at the time of purchase, have total
market capitalization of less than $1 billion. The Series anticipates that it
will invest primarily in companies whose securities are traded on domestic
stock exchanges or in the over-the-counter market.

The Series may invest in bank and thrift obligations, obligations issued or
guaranteed by the U.S. Government or by its agencies or instrumentalities,
foreign bank obligations and obligations of foreign branches of domestic
banks, and variable rate master demand notes.

B-19
<PAGE>

The Series may also hold up to 15% of its net assets in money market
instruments and repurchase agreements, purchase restricted securities
(including Rule 144A securities) and enter into "short sales against the box."

The Series may lend securities it owns so long as such loans do not exceed
33 1/3% of the Series' total assets.

ADDITIONAL INFORMATION

Equity securities are securities that represent an ownership interest (or
the right to acquire such an interest) in a company, and include common and
preferred stocks and securities exercisable for or convertible into common or
preferred stocks (such as warrants, convertible debt securities and
convertible preferred stock).

The Capital Growth Series, Westpeak Value Growth Series, Loomis Sayles
Avanti Growth Series, Westpeak Stock Index Series, Loomis Sayles Small Cap
Series, Draycott International Equity Series, Venture Value Series and Alger
Equity Growth Series seek to attain their objectives by normally investing
their assets primarily in equity securities. When the particular Series'
adviser or subadviser deems it appropriate, however, any of these Series may,
for temporary defensive purposes, hold all or a substantial portion of its
assets in cash or fixed-income investments, including U.S. Government
obligations, investment grade (and comparable unrated) corporate bonds or
notes, money market instruments, bankers acceptances and repurchase
agreements. In addition, the Draycott International Equity Series may invest
temporarily in foreign government, agency or corporate debt obligations. No
estimate can be made as to when or for how long the Series will employ these
defensive strategies.

INVESTMENT RISKS

. EQUITY SECURITIES (CAPITAL GROWTH, WESTPEAK VALUE GROWTH, LOOMIS SAYLES
AVANTI GROWTH, WESTPEAK STOCK INDEX, BACK BAY ADVISORS MANAGED, LOOMIS
SAYLES SMALL CAP, LOOMIS SAYLES BALANCED, DRAYCOTT INTERNATIONAL EQUITY,
VENTURE VALUE AND ALGER EQUITY GROWTH SERIES)

Equity securities are more volatile and more risky than some other forms of
investment. Therefore, the value of your investment in a Series may sometimes
decrease instead of increase. Investments in companies with relatively small
capitalization may involve greater risk than is usually associated with more
established companies. These companies often have sales and earnings growth
rates which exceed those of companies with larger capitalization. Such growth
rates may in turn be reflected in more rapid share price appreciation.
However, companies with smaller capitalization often have limited product
lines, markets or financial resources and they may be dependent upon a
relatively small management group. The securities may have limited
marketability and may be subject to more abrupt or erratic movements in price
than securities of companies with larger capitalization or the market averages
in general. The net asset value of a Series that invests in companies with
smaller capitalization, therefore, may fluctuate more widely than market
averages.

. CONVERTIBLE SECURITIES (CAPITAL GROWTH, LOOMIS SAYLES AVANTI GROWTH, LOOMIS
SAYLES BALANCED, DRAYCOTT INTERNATIONAL EQUITY, VENTURE VALUE AND ALGER
EQUITY SERIES)

Convertible securities include debt securities or preferred stock that are
convertible into stock as well as other securities, such as warrants, that
provide an opportunity for equity participation. Because convertible
securities can be converted into equity securities, their values will normally
vary in some proportion with those of the underlying equity securities.
Convertible debt and preferred stock usually provide a higher yield than the
underlying equity securities, however, so that the price decline of a
convertible security may sometimes be less substantial than that of the
underlying equity securities. The value of convertible securities that pay
dividends or interest, like the value of all fixed-income securities,
generally fluctuates inversely with changes in interest rates. Warrants have
no voting rights, pay no dividends and have no rights with respect to the
assets of the corporation issuing them. They do not represent ownership of the
securities for which they are exercisable, but only the right to buy such
securities at a particular price. The Loomis Sayles Avanti Growth Series will
not purchase any convertible debt security or convertible preferred stock that
has not been rated at the time of acquisition investment grade by one major
rating agency or that is not rated but is determined to be of comparable
quality by the Series' adviser.

. FIXED-INCOME SECURITIES (ALL SERIES)

Because interest rates vary, it is impossible to predict the income of a
Series for any particular period. The net asset value will vary as a result of
changes in the value of the bonds and other securities in the Series'
portfolio.

Fixed-income securities are subject to market and credit risk. Market risk
relates to changes in a security's value as a result of changes in interest
rates generally. Generally, rising interest rates correlate with falling share
values. Credit risk relates to the

B-20
<PAGE>

ability of the issuer to make payments of principal and interest. U.S.
Government Securities generally do not involve the credit risks associated
with other types of fixed-income securities, although, as a result, the yields
available from U.S. Government Securities are generally lower than the yields
available from corporate fixed-income securities.

. LOWER RATED FIXED-INCOME SECURITIES (BACK BAY ADVISORS BOND INCOME, BACK BAY
ADVISORS MANAGED AND LOOMIS SAYLES BALANCED SERIES)

Lower rated fixed-income securities (also known as "junk bonds") and corporate
fixed-income securities generally provide higher yields than U.S. Government
and many foreign government securities, but are subject to greater credit and
market risk than higher quality fixed-income securities. Lower rated fixed-
income securities are considered predominantly speculative with respect to the
ability of the issuer to meet principal and interest payments. Achievement of
the investment objective of a Series investing in lower rated fixed-income
securities may be more dependent on the Series' subadviser's own credit
analysis than is the case for higher quality bonds. The market for lower rated
fixed-income securities may be more severely affected than some other
financial markets by economic recession or substantial interest rate
increases, by changing public perceptions of this market or by legislation
that limits the ability of certain categories of financial institutions to
invest in these securities. In addition, the secondary market may be less
liquid for lower rated fixed-income securities. This lack of liquidity at
certain times may affect the valuation of these securities and may make the
valuation and sale of these securities more difficult.

. MORTGAGE-RELATED SECURITIES (BACK BAY ADVISORS BOND INCOME, BACK BAY
ADVISORS MANAGED AND LOOMIS SAYLES BALANCED SERIES)

Mortgage-related securities, such as GNMA or FNMA certificates, differ from
traditional debt securities. Among the major differences are that interest and
principal payments are made more frequently, usually monthly, and that
principal may be prepaid at any time because the underlying mortgage loans
generally may be prepaid at any time. As a result, if a Series purchases these
assets at a premium, a faster-than-expected prepayment rate will reduce yield
to maturity, and a slower-than-expected prepayment rate will have the opposite
effect of increasing yield to maturity. If a Series purchases mortgage-related
securities at a discount, faster-than-expected prepayments will increase, and
slower-than-expected prepayments will reduce, yield to maturity. Prepayments,
and resulting amounts available for reinvestment by the Series, are likely to
be greater during a period of declining interest rates and, as a result, are
likely to be reinvested at lower interest rates. Accelerated prepayments on
securities purchased at a premium may result in a loss of principal if the
premium has not been fully amortized at the time of prepayment. Although these
securities will decrease in value as a result of increases in interest rates
generally, they are likely to appreciate less than other fixed-income
securities when interest rates decline because of the risk of prepayments.

. COLLATERALIZED MORTGAGE OBLIGATIONS (BACK BAY ADVISORS BOND INCOME, BACK BAY
ADVISORS MANAGED AND LOOMIS SAYLES BALANCED SERIES)

A collateralized mortgage obligation ("CMO") is a security backed by a
portfolio of mortgages or mortgage securities held under an indenture. The
underlying mortgages or mortgage securities are issued or guaranteed by the
U.S. Government or an agency or instrumentality thereof, but the obligations
purchased by a Series will in many cases not be so issued or guaranteed. The
issuer's obligation to make interest and principal payments is secured by the
underlying portfolio of mortgages or mortgage securities. CMOs are issued with
a number of classes or series which have different maturities and which may
represent interests in some or all of the interest or principal on the
underlying collateral or a combination thereof. In the event of sufficient
early prepayments on such mortgages, the class or series of CMO first to
mature generally will be retired prior to its maturity. The early retirement
of a particular class or series of CMO held by a Series would have the same
effect as the prepayment of mortgages underlying a mortgage pass-through
security.

. ADJUSTABLE RATE MORTGAGE SECURITIES (LOOMIS SAYLES BALANCED SERIES)

An adjustable rate mortgage security ("ARM"), like a traditional mortgage
security, is an interest in a pool of mortgage loans that provides investors
with payments consisting of both principal and interest as mortgage loans in
the underlying mortgage pool are paid off by the borrowers. ARMs have interest
rates that are reset at periodic intervals, usually by reference to some
interest rate index or market interest rate. Although the rate adjustment
feature may act as a buffer to reduce sharp changes in the value of adjustable
rate securities, these securities are still subject to changes in value based
on changes in market interest rates or changes in the issuer's
creditworthiness. Because the interest rates are reset only periodically,
changes in the interest rate on ARMs may lag changes in prevailing market
interest rates. Also, some ARMs (or the underlying mortgages) are subject to
caps or floors that limit the maximum change in interest rate during a
specified period or over the life of the security. As a result, changes in the
interest rate on an ARM may not fully reflect changes in prevailing market
interest rates during certain periods.

B-21
<PAGE>

Because of the resetting of interest rates, ARMs are less likely than non-
adjustable rate securities of comparable quality and maturity to increase
significantly in value when market interest rates fall.

. ASSET BACKED SECURITIES (LOOMIS SAYLES BALANCED SERIES)

The securitization techniques used to develop mortgage securities are also
being applied to a broad range of other assets. Through the use of trusts and
special purpose corporations, automobile and credit card receivables are being
securitized in pass-through structures similar to mortgage pass-through
structures or in a pay-through structure similar to the CMO structure.
Generally the issuers of asset backed bonds, notes or pass-through
certificates are special purpose entities and do not have any significant
assets other than the receivables securing such obligations. In general, the
collateral supporting asset backed securities is of shorter maturity than
mortgage loans. Instruments backed by pools of receivables are similar to
mortgage-backed securities in that they are subject to unscheduled prepayments
of principal prior to maturity. When the obligations are prepaid, the Series
will ordinarily reinvest the prepaid amounts in securities the yields of which
reflect interest rates prevailing at the time. Therefore, a Series' ability to
maintain a portfolio which includes high-yielding asset backed securities will
be adversely affected to the extent that prepayments of principal must be
reinvested in securities which have lower yields than the prepaid obligations.
Moreover, prepayments of securities purchased at a premium could result in a
realized loss. A Series will only invest in asset backed securities rated, at
the time of purchase, AA or better by S&P or Aa or better by Moody's or which,
in the opinion of the investment subadviser, are of comparable quality.

. INVERSE FLOATERS (LOOMIS SAYLES BALANCED SERIES)

The Series listed above may invest in inverse floaters, which are derivative
mortgage securities. Inverse floaters are structured as a class of security
that receives distributions on a pool of mortgage assets and whose yields move
in the opposite direction of short-term interest rates, sometimes, at an
accelerated rate. Inverse floaters may be issued by agencies or
instrumentalities of the U.S. Government, or by private issuers, including
savings and loan associations, mortgage banks, commercial banks, investment
banks and special purpose subsidiaries of the foregoing. Inverse floaters have
greater volatility than other types of mortgage securities in which the Series
invest (with the exception of stripped mortgage securities). Although inverse
floaters are purchased and sold by institutional investors through several
investment banking firms acting as brokers or dealers, the market for such
securities has not yet been fully developed. Accordingly, inverse floaters are
generally illiquid.

. REPURCHASE AGREEMENTS (ALL SERIES)

In repurchase agreements, a Series buys securities from a seller, usually a
bank or brokerage firm, with the understanding that the seller will repurchase
the securities at a higher price at a later date. Such transactions afford an
opportunity for a Series to earn a return on available cash at minimal market
risk, although the Series may be subject to various delays and risks of loss
if the seller is unable to meet its obligation to repurchase.

. OPTIONS (DRAYCOTT INTERNATIONAL EQUITY AND VENTURE VALUE SERIES)

A Series may seek to increase its current return by writing covered call
options and covered put options, with respect to securities it holds or
intends to buy, through the facilities of options exchanges and directly with
market makers in the over-the-counter market. A Series receives a premium from
writing a call or put option, which increases the Series' current return if
the option expires unexercised or is closed out at a net profit.

At times when a Series has written call options on a substantial portion of
its portfolio, the Series' ability to profit and its risk of loss from changes
in market prices of portfolio securities will be limited. Appreciation in
securities covering the options would likely be partially or wholly offset by
losses on the options. The termination of options positions under such
conditions would generally result in the realization of short-term capital
losses, which would reduce the Series' current return. Accordingly, a Series
may seek to realize capital gains to offset realized losses by selling
securities.

As described in the Statement, over-the-counter options involve certain
special risks (including liquidity and credit risks) not necessarily present
with exchange-listed options. A Series will treat as illiquid any over-the-
counter options and assets maintained as "cover" for over-the-counter options
that the Series has written.

The options markets of foreign countries are small compared to those of the
United States and consequently are characterized in most cases by less
liquidity than are the U.S. markets. In addition, foreign markets may be
subject to less detailed reporting requirements and regulatory controls than
U.S. markets. See "Foreign Securities" below.

B-22
<PAGE>

. FUTURES AND OTHER HEDGING TRANSACTIONS (WESTPEAK VALUE GROWTH, WESTPEAK
STOCK INDEX, BACK BAY ADVISORS MANAGED, LOOMIS SAYLES BALANCED, DRAYCOTT
INTERNATIONAL EQUITY AND VENTURE VALUE SERIES)

Futures contracts are exchange-traded obligations to buy or sell a particular
security on a specified future date (or to pay or receive amounts based on the
value of a securities index or currency on that date).

The use of futures transactions entails certain special risks. In particular,
the variable degree of correlation between price movements of futures
contracts and price movements in the related securities or currency position
of a Series could create the possibility that losses on the futures contracts
are greater than gains in the value of the Series' position. In addition,
futures markets could be illiquid in some circumstances. As a result, in
certain markets, a Series might not be able to close out a transaction without
incurring substantial losses. Although a Series' use of futures transactions
for hedging should tend to minimize the risk of loss due to a decline in the
value of the hedged position, at the same time it will tend to limit any
potential gain to a Series that might result from an increase in value of the
position. The daily variation margin requirements for futures contracts create
a greater ongoing potential financial risk than would purchases of options, in
which case the exposure is limited to the cost of the initial premium.

Each of these Series may, at the discretion of its subadviser, engage in
foreign currency exchange transactions, in connection with the purchase and
sale of portfolio securities, to protect the value of specific portfolio
positions or in anticipation of changes in relative values of currencies in
which current or future Series' portfolio holdings are denominated or quoted.

For hedging purposes, each of these Series may also buy put or call options on
securities that it holds or intends to buy. In addition to engaging in options
transactions on established exchanges, a Series may purchase over-the-counter
options from brokerage firms and other financial institutions.

Each of these Series may invest in options and futures contracts on various
securities indices to hedge against changes in the value of securities it
holds or expects to acquire. These Series may also invest in options on index
futures.

No Series will invest more than 5% of its net assets in futures or premiums
for options on futures that are traded on a U.S. commodities exchange.

Certain asset segregation requirements apply when a Series becomes obligated
under a hedging instrument. There is no assurance that a Series' hedging
strategies will be effective. These strategies involve costs and the risk of
loss to the Series. See Part II of the Statement for more information.

. FOREIGN SECURITIES (BACK BAY ADVISORS BOND INCOME, LOOMIS SAYLES AVANTI
GROWTH, BACK BAY ADVISORS MANAGED, LOOMIS SAYLES SMALL CAP, LOOMIS SAYLES
BALANCED, DRAYCOTT INTERNATIONAL EQUITY, VENTURE VALUE AND ALGER EQUITY
GROWTH SERIES)

Each of these Series may invest in securities of issuers organized or
headquartered outside the United States or primarily traded outside the United
States ("foreign securities"). In the case of the Loomis Sayles Small Cap,
Back Bay Advisors Bond Income and Loomis Sayles Avanti Growth Series, the
Series will not purchase a foreign security if, as a result, the Series'
holdings of foreign securities would exceed 20% (10% in the case of the Back
Bay Advisors Bond Income Series) of the Series' total assets.

Although investing in foreign securities may increase a Series'
diversification and reduce portfolio volatility, foreign securities may
present risks not associated with investments in comparable securities of U.S.
issuers. There may be less information publicly available about a foreign
corporate or government issuer than about a U.S. issuer, and foreign corporate
issuers are not generally subject to accounting, auditing and financial
reporting standards and practices comparable to those in the United States.
The securities of some foreign issuers are less liquid and at times more
volatile than securities of comparable U.S. issuers. Foreign brokerage
commissions and securities custody costs are often higher than in the United
States. With respect to certain foreign countries, there is a possibility of
governmental expropriation of assets, confiscatory taxation, political or
financial instability and diplomatic developments that could affect the value
of investments in those countries. A Series' receipt of interest on foreign
government securities may depend on the availability of tax or other revenues
to satisfy the issuer's obligations.

A Series' investments in foreign securities may include investments in
countries whose economies or securities markets are not yet highly developed.
Special considerations associated with these investments (in addition to the
considerations regarding foreign investments generally) may include, among
others, greater political uncertainties, an economy's dependence on revenues
from particular commodities or on international aid or development assistance,
currency transfer restrictions, highly limited numbers of potential buyers for
such securities and delays and disruptions in securities settlement
procedures.

B-23
<PAGE>

Since most foreign securities are denominated in foreign currencies or trade
primarily in securities markets in which settlements are made in foreign
currencies, the value of these investments and the net investment income
available for distribution to shareholders of a Series investing in these
securities may be affected favorably or unfavorably by changes in currency
exchange rates or exchange control regulations. Changes in the value relative
to the U.S. dollar of a foreign currency in which a Series' holdings are
denominated will result in a change in the U.S. dollar value of the Series'
assets and the Series' income available for distribution.

In addition, although part of a Series' income may be received or realized in
foreign currencies, the Series will be required to compute and distribute its
income in U.S. dollars. Therefore, if the value of a currency relative to the
U.S. dollar declines after a Series' income has been earned in that currency,
translated into U.S. dollars and declared as a dividend, but before payment of
the dividend, the Series could be required to liquidate portfolio securities
to pay the dividend. Similarly, if the value of a currency relative to the
U.S. dollar declines between the time a Series accrues expenses in U.S.
dollars and the time such expenses are paid, the amount of such currency
required to be converted into U.S. dollars will be greater than the equivalent
amount in such currency of such expenses at the time they were incurred.

. WHEN-ISSUED SECURITIES (DRAYCOTT INTERNATIONAL EQUITY, VENTURE VALUE AND
ALGER EQUITY GROWTH SERIES)

If the value of a "when-issued" security being purchased falls between the
time a Series commits to buy it and the payment date, the Series may sustain a
loss. The risk of this loss is in addition to the Series' risk of loss on the
securities actually in its portfolio at the time. In addition, when the Series
buys a security on a when-issued basis, it is subject to the risk that market
rates of interest will increase before the time the security is delivered,
with the result that the yield on the security delivered to the Series may be
lower than the yield available on other, comparable securities at the time of
delivery. The Series will maintain cash or liquid high grade assets in a
segregated account in an amount sufficient to satisfy its outstanding
obligations to buy securities on a "when-issued" basis.

. INVESTMENT COMPANY SECURITIES (CAPITAL GROWTH, WESTPEAK VALUE GROWTH, LOOMIS
SAYLES AVANTI GROWTH, WESTPEAK STOCK INDEX, BACK BAY ADVISORS MANAGED,
DRAYCOTT INTERNATIONAL EQUITY, VENTURE VALUE AND ALGER EQUITY GROWTH SERIES)

Each of these Series may invest up to 10% of its assets in securities of
investment companies. As a shareholder of an investment company, each Series
may indirectly bear investment management fees and other expenses of that
investment company, which are in addition to the management fees the Series
pays its adviser and other expenses the Series incurs directly. The Venture
Value Series may only invest in securities of investment companies investing
primarily in foreign securities.

. LENDING OF PORTFOLIO SECURITIES (BACK BAY ADVISORS BOND INCOME, CAPITAL
GROWTH SERIES, WESTPEAK STOCK INDEX SERIES, BACK BAY ADVISORS MANAGED,
VENTURE VALUE AND ALGER EQUITY GROWTH SERIES)

To the extent that any of the above Series lend that Series' portfolio
securities, such lending must be fully collateralized by cash, letters of
credit or U.S. Government Securities at all times, but involves some credit
risk to the Series if the other party should default on its obligations and
the Series is delayed in or prevented from recovering the collateral.

. "SHORT SALES AGAINST THE BOX" (ALGER EQUITY GROWTH SERIES)

The Alger Equity Growth Series may sell securities "short against the box."
While a short sale is the sale of a security the Series does not own, it is
"against the box" if at all times when the short position is open the Series
owns an equal amount of the securities sold short (or securities convertible
into, or exchangeable without further consideration for, securities of the
same issue as the securities sold short).

. ILLIQUID SECURITIES (ALL SERIES)

Each Series may invest up to 15% of its assets (10% in the case of the Back
Bay Advisors Money Market Series) in "illiquid securities," that is,
securities which are not readily resaleable, including securities whose
disposition is restricted by federal securities laws. The Series may purchase
"Rule 144A securities." These are privately offered securities that can be
resold only to certain qualified institutional buyers. Rule 144A securities
are treated as illiquid, unless the Series' subadviser has determined, under
guidelines established by the Fund's trustees, that the particular issue of
Rule 144A securities is liquid.

B-24
<PAGE>

. ZERO COUPON SECURITIES (BACK BAY ADVISORS BOND INCOME, BACK BAY ADVISORS
MANAGED AND LOOMIS SAYLES BALANCED SERIES)

Zero coupon securities involve special risk considerations. Zero coupon
securities are debt securities that pay no cash income but are sold at
substantial discounts from their value at maturity. When a zero coupon
security is held to maturity, its entire return, which consists of the
amortization of discount, comes from the difference between its purchase price
and its maturity value. The difference is known at the time of purchase, so
that investors holding zero coupon securities until maturity know at the time
of their investment what the return on their investment will be. Certain zero
coupon securities also are sold at substantial discounts from their maturity
value and provide for the commencement of regular interest payments at a
deferred date.

Zero coupon securities tend to be subject to greater price fluctuations in
response to changes in interest rates than are ordinary interest-paying debt
securities with similar maturities. The value of zero coupon securities
appreciates more during periods of declining interest rates and depreciates
more during periods of rising interest rates. Zero coupon securities may be
issued by a wide variety of corporate and governmental issuers. Although zero
coupon securities are generally not traded on a national securities exchange,
many such securities are widely traded by brokers and dealers and, if so, will
not be considered illiquid.

Current federal income tax law requires the holder of a zero coupon security
(as well as the holders of other securities, such as Brady Bonds, which may be
acquired at a discount) to accrue income with respect to these securities
prior to the receipt of cash payments. To maintain its qualification as a
regulated investment company and avoid liability for federal income and excise
taxes, the Series may be required to distribute income accrued with respect to
these securities and may have to dispose of portfolio securities under
disadvantageous circumstances in order to generate cash to satisfy these
distribution requirements.

Note: Except for the investment objective of the Back Bay Advisors Money
Market, Back Bay Advisors Bond Income, Capital Growth, Westpeak Value Growth,
Loomis Sayles Avanti Growth, Westpeak Stock Index, Back Bay Advisors Managed
and Loomis Sayles Small Cap Series, or except as otherwise explicitly stated
in this Prospectus or the Statement, each Series' investment policies may be
changed at any time without shareholder approval.

PORTFOLIO TURNOVER

Portfolio turnover is not a limiting factor with respect to investment
decisions for any Series. For example, although the Capital Growth Series'
objective is long-term capital growth, it frequently sells securities to
reflect changes in market, industry or individual company conditions or
outlook, even though it may only have held those securities for a short
period. High portfolio turnover involves correspondingly greater brokerage
commissions and other transaction costs, which will be borne directly by the
relevant Series. For additional information about such costs see "Taxes" and
"Management" below, and "Portfolio Transactions and Brokerage" in the
Statement. For information about the past portfolio turnover rates of all the
Series (other than the Back Bay Advisors Money Market Series), see "Financial
Highlights." Although it is not possible to predict the portfolio turnover
rates with certainty, the subadvisers of the following Series (all of which
unless otherwise noted commenced operations on October 31, 1994) expect that
such Series' portfolio turnover rate will usually not exceed the following
annual rates: Loomis Sayles Small Cap Series (which commenced operations on
May 1, 1994), 300%; Loomis Sayles Balanced Series, 75%; Draycott International
Equity Series, 300%; Venture Value Series, 50%; Alger Equity Growth Series,
100%. Turnover in excess of 100% involves higher levels of brokerage
commissions and possibly increased realization of taxable gains, as compared
to many mutual funds.

RESOLVING MATERIAL CONFLICTS

Currently, shares in the Fund are available only to separate accounts
established by NEVLICO, The New England or subsidiaries of The New England as
an investment vehicle for variable life insurance or variable annuity
products. In the future, however, such shares may be offered to separate
accounts of insurance companies unaffiliated with NEVLICO or The New England.

A potential for certain conflicts of interest exists between the interests
of variable life insurance contract owners and variable annuity contract
owners. Pursuant to conditions imposed in connection with related regulatory
relief granted by the SEC, the Fund's board of trustees (the "Board of
Trustees") has an obligation to monitor events to identify conflicts that may
arise from the sale of shares to both variable life insurance and variable
annuity separate accounts or to separate accounts of insurance companies not
affiliated with The New England. Such events might include changes in state
insurance law or federal income tax law, changes in investment management of
any portfolio of the Fund, or differences between voting instructions given by
variable life insurance and variable annuity contract owners. Insurance
companies investing in the Fund will be responsible for proposing and
executing any necessary remedial action and the Board of Trustees has an
obligation to determine whether such proposed action adequately remedies any
such conflicts.

B-25
<PAGE>

PERFORMANCE INFORMATION

Information about the performance of the Series is set forth below and, from
time to time, the Fund may use this information in advertisements. Performance
-----------
information about a Series is based on that Series' past performance and is
- ---------------------------------------------------------------------------
not intended to indicate future performance. The Fund serves as the underlying
- --------------------------------------------
investment vehicle for variable life insurance or variable annuity products
and its shares cannot be purchased directly. Therefore, such performance
information does not reflect any of the charges assessed against the insurance
company separate accounts or the variable life insurance or variable annuity
products for which the Fund serves as an investment vehicle. Where relevant,
performance information about those variable life insurance or variable
annuity products is contained in the prospectus applicable to those products.

Each Series may include its total return in advertisements or other written
material. Total return is measured by comparing the value of a hypothetical
$1,000 investment in the Series at the beginning of the relevant period to the
value of the investment at the end of the period (assuming immediate
reinvestment of any dividends or capital gains distributions). Total return
reflects the bearing of certain expenses by The New England and its affiliates
pursuant to various arrangements that are described below under "Management."
If these arrangements had not been in effect, each Series' total return would
have been lower.

TOTAL RETURN

<TABLE>
<CAPTION>
AVERAGE ANNUAL
AVERAGE ANNUAL TOTAL RETURN
TOTAL RETURN FOR THE FIVE
FOR THE TEN YEARS
YEARS ENDING ENDING
PERIOD RETURN 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 12/31/94 12/31/94
- ------------- ---- ---- ----- ---- ---- ---- ---- ---- ---- ---- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth
Series 68.1% 95.2% 52.7 % (8.8)% 30.8% (3.5)% 54.0% (6.1)% 15.0% (7.1)% 24.5% 8.3%
Back Bay
Advisors Bond
Income Series 18.7% 15.8% 1.4 % 8.4 % 12.3% 8.1 % 18.0% 8.2 % 12.6% (3.4)% 9.8% 8.5%
Back Bay
Advisors Money
Market Series 8.2% 6.8% 6.6 % 7.4 % 9.2% 8.2 % 6.2% 3.8 % 3.0% 4.0 % 6.3% 5.0%
Back Bay
Advisors
Managed Series -- -- (0.7)%(2) 9.5 % 19.1% 3.2 % 20.2% 6.7 % 10.7% (1.1)% -- 7.7%
Westpeak Stock
Index Series(3) -- -- (12.2)%(2) 16.3 % 30.2% (4.1)% 30.4% 7.3 % 9.7% 1.1 % -- 8.3%
Westpeak Value
Growth
Series(4) -- -- -- -- -- -- -- -- 14.2%(4) (1.2)% -- --
Loomis Sayles
Avanti Growth
Series(5) -- -- -- -- -- -- -- -- 14.7%(5) (0.3)% -- --
Loomis Sayles
Small Cap
Series(6) -- -- -- -- -- -- -- -- -- (3.2)%(6) -- --
Loomis Sayles
Balanced Series -- -- -- -- -- -- -- -- -- (0.1)%(7) -- --
Draycott
International
Equity Series -- -- -- -- -- -- -- -- -- (2.6)%(7) -- --
Venture Value
Series -- -- -- -- -- -- -- -- -- (3.5)%(7) -- --
Alger Equity
Growth Series -- -- -- -- -- -- -- -- -- (4.2)%(7) -- --
S&P 500(8) 31.6% 18.6% 5.2 % 16.5 % 31.6% (3.1)% 30.3% 7.6 % 10.1% 1.3 % 14.4% 8.7%
Lehman
Intermediate
Government/
Corporate Bond
Index(9) 18.1% 13.1% 3.7 % 6.8 % 12.8% 9.2 % 14.6% 7.2 % 8.8% (2.0)% 9.1% 7.4%
Consumer Price
Index(10) 3.8% 1.1% 4.4 % 4.4 % 4.7% 6.1 % 3.1% 2.9 % 2.8% 2.8 % 3.6% 3.5%
Dow Jones
Industrial
Average(11) 33.6% 27.1% 5.5 % 16.1 % 32.2% (1.0)% 24.2% 7.4 % 16.9% 5.1 % 16.2% 10.3%
<CAPTION>
AVERAGE ANNUAL
TOTAL RETURN
SINCE
COMMENCEMENT
OF OFFERING
PERIOD RETURN THROUGH 12/31/94
- ------------- ----------------
<S> <C>
Capital Growth
Series 22.1 %(1)
Back Bay
Advisors Bond
Income Series 10.0 %(1)
Back Bay
Advisors Money
Market Series 6.8 %(1)
Back Bay
Advisors
Managed Series 8.5 %(2)
Westpeak Stock
Index Series(3) 9.3 %(2)
Westpeak Value
Growth
Series(4) 7.5 %(4)
Loomis Sayles
Avanti Growth
Series(5) 8.4 %(5)
Loomis Sayles
Small Cap
Series(6) (3.2)%(6)
Loomis Sayles
Balanced Series (0.1)%(7)
Draycott
International
Equity Series 2.6 %(7)
Venture Value
Series (3.5)%(7)
Alger Equity
Growth Series (4.2)%(7)
S&P 500(8) 13.4 %
Lehman
Intermediate
Government/
Corporate Bond
Index(9) 9.7 %
Consumer Price
Index(10) 3.6 %
Dow Jones
Industrial
Average(11) 14.9 %
</TABLE>
- --------
(1) The Capital Growth Series, Back Bay Advisors Bond Income Series and Back
Bay Advisors Money Market Series commenced operations on August 26, 1983
and their Average Annual Total Returns From Commencement of Offering have
been calculated for the period beginning with that date. These returns
would not change if they had been calculated for the period beginning
with September 1, 1983, which is the period for which the Average Annual
Total Returns Since Commencement of Offering have been calculated for the
S&P 500, Lehman Intermediate Government/Corporate Bond Index, Consumer
Price Index and Dow Jones Industrial Average (unless otherwise
indicated).
(2) For the period beginning May 1, 1987 when the Back Bay Advisors Managed
Series and Westpeak Stock Index Series became publicly available.

B-26
<PAGE>

(3) Operations commenced on March 30, 1987, but the Westpeak Stock Index
Series did not become publicly available until May 1, 1987.
(4) For the period beginning April 30, 1993, when the Westpeak Value Growth
Series became publicly available.
(5) For the period beginning April 30, 1993, when the Loomis Sayles Avanti
Growth Series became publicly available.
(6) For the period beginning May 2, 1994, when the Loomis Sayles Small Cap
Series commenced operations, but did not become publicly available.
Average annual total return for the period May 2, 1994 through December
31, 1994 is presented on an unannualized basis.
(7) Represents unannualized total return for the period beginning October 31,
1994 when the Loomis Sayles Balanced, Draycott International Equity,
Venture Value and Alger Equity Growth Series commenced operations.
(8) The S&P 500 Stock Index is an unmanaged weighted index of the stock
performance of 500 industrial, transportation, utility and financial
companies. Investment results shown assume the reinvestment of dividends.
(9) The Lehman Intermediate Government/Corporate Bond Index is a subset of
the Lehman Government/Corporate Bond Index covering all issues with
maturities between 1 and 10 years which is composed of taxable, publicly-
issued, non-convertible debt obligations issued or guaranteed by the U.S.
Government or its agencies and another Lehman index that is composed of
taxable, fixed rate publicly-issued, investment grade non-convertible
corporate debt obligations.
(10) The Consumer Price Index, published by the U.S. Bureau of Labor
Statistics, is a statistical measure of changes, over time, in the prices
of goods and services.
(11) The Dow Jones Industrial Average is a market value-weighted and unmanaged
index of 30 large industrial stocks traded on the New York Stock
Exchange.

From time to time, articles about a Series regarding performance, rankings
and other Series characteristics may appear in national publications
including, but not limited to, The Wall Street Journal, Forbes, Fortune, CDA
Investment Technologies and Money Magazine. In particular, some or all of
these publications may publish their own rankings or performance reviews of
mutual funds, including the Fund. References to or reprints or portions of
reprints of such articles, which may include rankings that list the names of
other funds and their performance, may be used as Fund or variable contract
sales literature or advertising material.

YIELD

BACK BAY ADVISORS MONEY MARKET SERIES

The Back Bay Advisors Money Market Series may advertise its yield and
"effective" (or "compound") yield (and its total return). The yield of the
Back Bay Advisors Money Market Series is the income earned by the Series over
a seven-day period on an annualized basis, i.e. the income earned in the
period is assumed to be earned every seven days over a 52-week period and is
stated as a percentage of the investment. "Effective" (or "compound") yield is
calculated similarly but, when annualized, the income earned by the investment
is assumed to be reinvested in the Series' shares and thus compounded in the
course of a 52-week period. The effective yield will be higher than the yield
because of the compounding effect of this assumed reinvestment.

For the seven-day period ended December 31, 1994, the yield for the Back Bay
Advisors Money Market Series was 5.34%. The effective yield for the same
period was 5.34%.

BACK BAY ADVISORS BOND INCOME AND LOOMIS SAYLES BALANCED SERIES

Each of these Series may advertise its yield in addition to its total
return. The yield will be computed in accordance with the SEC's standardized
formula by dividing the net investment income per share earned during a recent
30-day period by the net asset value of a Series share (reduced by any earned
income expected to be declared shortly as a dividend) on the last trading day
of the period. Yield calculations will reflect any waiver of fees and/or
bearing of expenses by The New England and its affiliates.

INVESTMENT RESTRICTIONS

The following is a description of restrictions on the investments to be made
by the twelve Series. Except as specifically listed below, and except for
restrictions marked with an asterisk, these restrictions may not be changed
without the approval of a majority of the outstanding voting securities of the
relevant Series.

B-27
<PAGE>

INVESTMENT RESTRICTIONS APPLICABLE TO THE BACK BAY ADVISORS MONEY MARKET, BACK
BAY ADVISORS BOND INCOME, CAPITAL GROWTH, WESTPEAK STOCK INDEX AND BACK BAY
ADVISORS MANAGED SERIES

Each of the Series listed above will not:

(1) Purchase any securities (other than U.S. Government Securities) if,
as a result, more than 5% of the Series' total assets (taken at current
value) would be invested in securities of a single issuer; provided,
however, that the Westpeak Stock Index Series and the Back Bay Advisors
Managed Series may each invest more than 5% (but not more than 25%) of its
total assets (taken at current value) in the securities of a single issuer
if securities of any such issuer represent more than 5%, capitalization
weighted, of the stock index that the Series attempts to track.

(2) Purchase any security (other than U.S. Government Securities) if, as
a result, more than 25% of the Series' total assets (taken at current
value) would be invested in any one industry. For purposes of this
restriction, telephone, gas and electric public utilities are each regarded
as separate industries and finance companies whose financing activities are
related primarily to the activities of their parent companies are
classified in the industry of their parents. For the purposes of the Back
Bay Advisors Money Market Series and Back Bay Advisors Managed Series, this
restriction does not apply to bank obligations.

(3) Purchase securities on margin (but it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities); or make short sales, except where, by virtue of ownership of
other securities, it has the right to obtain, without payment of further
consideration, securities equivalent in kind and amount to those sold, and
no Series will deposit or pledge more than 10% of its total assets (taken
at current value) as collateral for such sales. (Any deposit or payment by
the Westpeak Stock Index or Back Bay Advisors Managed Series of initial or
maintenance margin in connection with futures contracts shall not be
considered the purchase of a security on margin for the purposes of this
restriction.)

(4) Acquire more than 10% of the total value of any class of the
outstanding securities of an issuer (taking all preferred stock issues of
an issuer as a single class and debt issues of an issuer as a single class)
or acquire more than 10% of the outstanding voting securities of an issuer.

(5) Borrow money, except as a temporary measure for extraordinary or
emergency purposes (but not for the purpose of investment) up to an amount
not in excess of 10% of its total assets (taken at cost), or 5% of its
total assets (taken at current value), whichever is lower; provided,
however, that the Back Bay Advisors Bond Income Series, the Capital Growth
Series and the Back Bay Advisors Managed Series may loan their portfolio
securities. (See "Loans of Portfolio Securities" above.)

(6) Invest more than 5% of its total assets (taken at current value) in
securities of businesses (including predecessors) less than three years
old.

(7) Purchase or retain securities of any issuer if, to the knowledge of
the Fund, officers and trustees of the Fund or officers and directors of
any investment adviser of the Fund who individually own beneficially more
than 1/2 of 1% of the securities of that company, together own beneficially
more than 5%.

(8) Act as underwriter except to the extent that, in connection with the
disposition of portfolio securities, it may be deemed to be an underwriter
under the federal securities laws; or purchase any security restricted as
to disposition under the federal securities laws; provided, however, that,
subject to the Fund's limitation on illiquid investments stated below, each
of the Back Bay Advisors Bond Income, Capital Growth and Back Bay Advisors
Managed Series may invest up to 10% of its total assets (taken at current
value) in such restricted securities.

(9) Make investments for the purpose of exercising control or management.

(10) Participate on a joint or joint and several basis in any trading
account in securities. (The "bunching" of orders for the purchase or sale
of portfolio securities with The New England, Back Bay Advisors, Capital
Growth Management Limited Partnership ("CGM"), Westpeak or accounts under
their management to reduce acquisition costs, to average prices among such
accounts to facilitate such transactions, is not considered participating
in a trading account in securities.)

(11) Invest in the securities of other investment companies, except in
connection with a merger, consolidation or similar transaction, and except
that the Back Bay Advisors Bond Income Series, the Capital Growth Series,
the Westpeak Stock Index Series and the Back Bay Advisors Managed Series
may invest in securities of other investment companies by purchases in the
open market involving only customary broker's commissions. (Under the
Investment Company Act of 1940 (the "1940 Act") each Series generally may
not (a) invest more than 10% of its total assets (taken at current value)
in the

B-28
<PAGE>

securities of other investment companies, (b) own securities of any one
investment company having a value in excess of 5% of that Series' total
assets (taken at current value), or (c) own more than 3% of the outstanding
voting stock of any one investment company.)

(12) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, commodities or commodity contracts (except that each of the
Westpeak Stock Index Series and the Back Bay Advisors Managed Series may
buy or sell futures contracts on stock indexes and the Back Bay Advisors
Managed Series may buy or sell interest rate futures contracts) or real
estate. This restriction does not prevent any Series from purchasing
securities of companies investing in real estate or of companies which are
not principally engaged in the business of buying or selling such leases,
rights or contracts.

(13) Pledge, mortgage or hypothecate more than 15% of its total assets
(taken at cost).

Restrictions (1) and (2) apply to securities subject to repurchase
agreements but not to the repurchase agreements themselves.

Each of the Series listed above will not purchase any illiquid security if,
as a result, more than 15% (10% in the case of the Back Bay Advisors Money
Market Series) of its net assets (taken at current value) would be invested in
such securities.

INVESTMENT RESTRICTIONS APPLICABLE TO INDIVIDUAL SERIES

In addition to the foregoing investment restrictions, the following
investment restrictions are applicable to individual Series as noted below.

BACK BAY ADVISORS MONEY MARKET SERIES

The Back Bay Advisors Money Market Series will not:

(1) Make loans, except by purchase of debt obligations in which the Back
Bay Advisors Money Market Series may invest consistent with its objective
and investment policies. This restriction does not apply to repurchase
agreements.

(2) Write or purchase puts, calls or combinations thereof.

BACK BAY ADVISORS BOND INCOME SERIES

The Back Bay Advisors Bond Income Series will not:

(1) Make loans, except by purchase of bonds, debentures, commercial
paper, corporate notes and similar evidences of indebtedness, which are
part of an issue to the public or to financial institutions, by entering
into repurchase agreements or by lending portfolio securities to the extent
set forth above under "Loans of Portfolio Securities" above.

(2) Write or purchase puts, calls or a combination thereof except that
the Back Bay Advisors Bond Income Series may purchase warrants or other
rights to subscribe to securities of companies issuing such warrants or
rights, or of parents or subsidiaries of such companies, provided that such
warrants or other rights to subscribe are attached to, or a part of, a unit
offering involving other securities.

In order to comply with certain state requirements applicable to restriction
(13) above, as a matter of operating policy subject to change without
shareholder approval, the Back Bay Advisors Bond Income Series will not pledge
more than 2% of its assets.

CAPITAL GROWTH SERIES; WESTPEAK STOCK INDEX SERIES

Neither the Capital Growth Series nor the Westpeak Stock Index Series will:

(1) Make loans, except by purchase of bonds, debentures, commercial
paper, corporate notes, and similar evidences of indebtedness, which are a
part of an issue to the public or to financial institutions, by entering
into repurchase agreements or by lending portfolio securities to the extent
set forth under "Loans of Portfolio Securities" above.

(2) Purchase options or warrants if, as a result, more than 1% of its
total assets (taken at current value) would be invested in such securities.

(3) Write options or warrants.

As a matter of operating policy subject to change without shareholder
approval, the Capital Growth Series will not make loans of its portfolio
securities. In order to comply with certain state requirements applicable to
restriction (13) above, as a matter

B-29
<PAGE>

of operating policy subject to change without shareholder approval, neither
the Capital Growth Series nor the Westpeak Stock Index Series will pledge more
than 2% of its assets.

BACK BAY ADVISORS MANAGED SERIES

The Back Bay Advisors Managed Series will not:

(1) Make loans, except by purchase of bonds, debentures, commercial
paper, corporate notes and similar evidences of indebtedness, which are a
part of an issue to the public or to financial institutions, by entering
into repurchase agreements, or by lending portfolio securities to the
extent set forth under "Loans of Portfolio Securities" above.

(2) Purchase options or warrants if, as a result, more than 1% of its
total assets (taken at current value) would be invested in such securities;
provided, however, that the Back Bay Advisors Managed Series may, without
regard to the foregoing percentage limit, purchase warrants or other rights
to subscribe to securities of companies issuing such warrants or rights, or
of parents or subsidiaries of such companies, provided that such warrants
or other rights to subscribe are attached to, or a part of a unit offering
involving, other securities.

In order to comply with certain state requirements applicable to restriction
(13) above, as a matter of operating policy subject to change without
shareholder approval, the Back Bay Advisors Managed Series will not pledge
more than 2% of its assets.

INVESTMENT RESTRICTIONS APPLICABLE TO THE WESTPEAK VALUE GROWTH, LOOMIS SAYLES
AVANTI GROWTH, LOOMIS SAYLES SMALL CAP, LOOMIS SAYLES BALANCED, DRAYCOTT
INTERNATIONAL EQUITY, VENTURE VALUE AND ALGER EQUITY GROWTH SERIES

Each of the Series listed above will not:

*(1) With respect to 75% of the Series' total assets, purchase any
security (other than U.S. Government obligations) if, as a result, more
than 5% of the Series' total assets (taken at current value) would then be
invested in securities of a single issuer and, with respect to the Series'
total assets, purchase any security (other than U.S. Government
obligations) if, as a result, more than 10% of such assets would then be
invested in securities of a single issuer;

(2) Purchase any security (other than U.S. Government Securities) if, as
a result, more than 25% of the Series' total assets (taken at current
value) would be invested in any one industry (in the utilities category,
gas, electric, water and telephone companies will be considered as being in
separate industries, and each foreign country's government (together with
subdivisions thereof) will be considered to be a separate industry);

*(3) Purchase securities on margin (but it may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities), or make short sales except where, by virtue of ownership of
other securities, it has the right to obtain, without payment of further
consideration, securities equivalent in kind and amount to those sold, and
the Series will not deposit or pledge more than 10% of its total assets
(taken at current value) as collateral for such sales. (For this purpose,
the deposit or payment by the Series of initial or variation margin in
connection with futures contracts or related options transactions is not
considered the purchase of a security on margin);

*(4) Acquire more than 10% of any class of securities of an issuer
(taking all preferred stock issues of an issuer as a single class and all
debt issues of an issuer as a single class) or acquire more than 10% of the
outstanding voting securities of an issuer;

(5) Borrow money in excess of 10% of its total assets (taken at cost) or
5% of its total assets (taken at current value), whichever is lower, and
then only as a temporary measure for extraordinary or emergency purposes;

*(6) Pledge more than 15% of its total assets (taken at cost). (For the
purpose of this restriction, collateral arrangements with respect to
options, futures contracts and options on futures contracts and with
respect to initial and variation margin are not deemed to be a pledge of
assets);

*(7) Invest more than 5% of its total assets (taken at current value) in
securities of businesses (including predecessors) less than three years
old;

*(8) Purchase or retain securities of any issuer if officers and trustees
of the Fund or officers and directors of any investment adviser of the Fund
who individually own more than 1/2 of 1% of the shares or securities of
that issuer, together own more than 5%;

(9) Make loans, except by entering into repurchase agreements (including
reverse repurchase agreements) or by purchase of bonds, debentures,
commercial paper, corporate notes and similar evidences of indebtedness,
which are a

B-30
<PAGE>

part of an issue to the public or to financial institutions, or through the
lending of the Series' portfolio securities to the extent set forth under
"Loans of Portfolio Securities" above;

(10) Buy or sell oil, gas or other mineral leases, rights or royalty
contracts, real estate or commodities or commodity contracts, except that
the Series may buy and sell futures contracts and related options. (This
restriction does not prevent the Series from purchasing securities of
companies investing in the foregoing);

(11) Act as underwriter, except to the extent that, in connection with
the disposition of portfolio securities, it may be deemed to be an
underwriter under certain federal securities laws;

*(12) Make investments for the purpose of exercising control or
management;

*(13) Participate on a joint or joint and several basis in any trading
account in securities. (The "bunching" of orders for the purchase or sale
of portfolio securities for a Series with that Series' adviser or
subadviser or accounts under their management to reduce brokerage
commissions, to average prices among them or to facilitate such
transactions is not considered a trading account in securities for purposes
of this restriction);

*(14) Write, purchase or sell options or warrants or, in the case of the
Loomis Sayles Small Cap Series, combinations of both, except that the
Series may (a) acquire warrants or rights to subscribe to securities of
companies issuing such warrants or rights, or of parents or subsidiaries of
such companies, (b) write, purchase and sell put and call options on
securities or securities indices, and (c) enter into currency forward
contracts;

*(15) Purchase any illiquid security if, as a result, more than 15% of
its net assets (taken at current value) would be invested in such
securities;

*(16) Invest in the securities of other investment companies, except by
purchases in the open market involving only customary brokers' commissions.
Under the 1940 Act, the Series may not (a) invest more than 10% of its
total assets (taken at current value) in such securities, (b) own
securities of any one investment company having a value in excess of 5% of
the total assets of the Series (taken at current value), or (c) own more
than 3% of the outstanding voting stock of any one investment company; or

(17) Issue senior securities. (For the purpose of this restriction none
of the following is deemed to be a senior security: any pledge or other
encumbrance of assets permitted by restriction (6) above; any borrowing
permitted by restriction (5) above; any collateral arrangements with
respect to options, futures contracts and options on futures contracts and
with respect to initial and variation margin; the purchase or sale of
options, forward contracts, futures contracts or options on futures
contracts; and the issuance of shares of beneficial interest permitted from
time to time by the provisions of the Trust's Declaration of Trust and by
the 1940 Act, the rules thereunder, or any exemption therefrom.)

For purposes of restriction (5), reverse repurchase agreements are not
considered borrowings.

VARIABLE CONTRACT RELATED INVESTMENT RESTRICTIONS

Separate accounts supporting variable life insurance and variable annuity
contracts are subject to certain diversification requirements imposed by
regulations adopted under the Internal Revenue Code. Because the Fund is
intended as an investment vehicle for variable life insurance and variable
annuity separate accounts, Section 817(h) of the Internal Revenue Code
requires that the Fund's investments, and accordingly the investments of each
Series, be "adequately diversified" in accordance with Treasury Regulations.
Failure to do so means the variable life insurance and variable annuity
contracts would cease to qualify as life insurance and annuities for federal
tax purposes. Regulations specifying the diversification requirements have
been issued by the Department of Treasury. The Fund intends to comply with
these requirements.

MANAGEMENT

The Fund's Board of Trustees supervises the affairs of the Fund as conducted
by the Series' advisers. Pursuant to separate advisory agreements, and subject
in each case to the supervision of the Fund's Board of Trustees, TNE Advisers,
Inc. is the investment adviser of each of the Series except the Capital Growth
Series, for which CGM serves as adviser.

B-31
<PAGE>

SERIES ADVISED BY TNE ADVISERS, INC.

The subadviser of each Series for which TNE advisers, Inc. serves as adviser
is:

<TABLE>
<CAPTION>
SERIES SUBADVISER
------ ----------
<S> <C>
Back Bay Advisors Money Market Series............................. Back Bay Advisors
Back Bay Advisors Bond Income Series.............................. Back Bay Advisors
Westpeak Value Growth Series...................................... Westpeak
Loomis Sayles Avanti Growth Series................................ Loomis Sayles
Westpeak Stock Index Series....................................... Westpeak
Back Bay Advisors Managed Series.................................. Back Bay Advisors
Loomis Sayles Small Cap Series.................................... Loomis Sayles
Loomis Sayles Balanced Series..................................... Loomis Sayles
Draycott International Equity Series.............................. Draycott
Venture Value Series.............................................. Selected/Venture Advisers, L.P.
Alger Equity Growth Series........................................ Fred Alger Management, Inc.
</TABLE>

TNE ADVISERS, INC., 501 Boylston Street, Boston, MA 02116, was organized in
1994. It is a wholly-owned subsidiary of The New England. TNE Advisers, Inc.
oversees, evaluates and monitors the subadvisers' provision of investment
advisory services to the Series and provides general business management and
administration to the Series. TNE Advisers, Inc. has contracted with New
England Funds, L.P. to provide certain administrative services to support the
Series.

Subject to the supervision of TNE Advisers, Inc., each subadviser manages
its Series in accordance with the Series' investment objective and policies,
makes investment decisions for that Series, places orders to purchase and sell
securities for that Series and employs professional advisers and securities
analysts who provide research services to that Series. The Series advised by
TNE Advisers, Inc. pay no direct fees to any of the subadvisers described
below.

Back Bay Advisors, Westpeak, Loomis Sayles and Draycott are each
independently-operated subsidiaries, and CGM is an independently-operated
affiliate, of New England Investment Companies, L.P. ("NEIC"). The general
partners of each of Back Bay Advisors, Westpeak and Loomis Sayles are special
purpose corporations which are indirect wholly-owned subsidiaries of NEIC.
NEIC's sole general partner, New England Investment Companies, Inc., is a
wholly-owned subsidiary of The New England.

BACK BAY ADVISORS, 399 Boylston Street, Boston, Massachusetts 02116,
subadviser to the Back Bay Advisors Money Market, Back Bay Advisors Bond
Income and Back Bay Advisors Managed Series, provides discretionary investment
management services to mutual funds and other institutional investors. The New
England itself served as adviser to the Back Bay Advisors Money Market Series
and the Back Bay Advisors Bond Income Series until September 10, 1986, when it
transferred these advisory functions to Back Bay Advisors, incident to a
reorganization effected in order to maintain The New England's investment
advisory activities in a separate corporate entity for administrative and
regulatory purposes. Catherine L. Bunting, Senior Vice President of Back Bay
Advisors and Vice President of the Fund, has served as the Back Bay Advisors
Bond Income Series' portfolio manager since January 1989. Peter Palfrey, Vice
President of Back Bay Advisors and Vice President of the Fund, has served as
the Back Bay Advisors Managed Series' portfolio manager since January 1994.
Ms. Bunting has been employed by Back Bay Advisors for more than five years.
Mr. Palfrey, prior to joining Back Bay Advisors in 1993, was Investment Vice
President with Mutual of New York.

WESTPEAK, 1050 Walnut Street, Boulder, CO 80302, subadviser to the Westpeak
Value Growth and Westpeak Stock Index Series, was organized in 1991. Gerald H.
Scriver, President and Chief Executive Officer of Westpeak and Senior Vice
President of the Fund, and Philip J. Cooper, CFA, Senior Vice President of
portfolio management of Westpeak and Vice President of the Fund, have served
as the portfolio managers of the Westpeak Value Growth Series since its
inception in 1993 and as the portfolio managers of the Westpeak Stock Index
Series since August 1, 1993. Both Mr. Scriver and Mr. Cooper have been with
Westpeak since its inception in 1991. Prior to joining Westpeak in 1991, Mr.
Scriver was Director of Quantitative Strategies of INVESCO and Mr. Cooper was
Portfolio Manager of United Asset Management Services.

LOOMIS SAYLES, One Financial Center, Boston, MA 02111, subadviser to the
Loomis Sayles Avanti Growth, Loomis Sayles Small Cap and Loomis Sayles
Balanced Series, was founded in 1926 and is one of the country's oldest and
largest investment firms. Richard W. Hurckes, Vice President of Loomis Sayles
and Vice President of the Fund, and Scott Pape, Vice President of Loomis
Sayles and Vice President of the Fund, have served as the portfolio managers
of the Loomis Sayles Avanti Growth Series

B-32
<PAGE>

since its inception in 1993. Mr. Hurckes has been employed by Loomis Sayles
for more than five years. Prior to the time he joined Loomis Sayles in 1991,
Mr. Pape was Equity Portfolio Manager of the Illinois State Board of
Investment.

Barbara C. Friedman and Jeffrey C. Petherick, who are Vice Presidents of
Loomis Sayles and the Fund, have served as portfolio managers of the Loomis
Sayles Small Cap Series since its inception in May, 1994. Ms. Friedman was a
partner and portfolio manager at Harvard Management Company prior to joining
Loomis Sayles in 1990. Mr. Petherick was an analyst at Masco Corporation prior
to joining Loomis Sayles in 1990.

Douglas D. Ramos and Meri Anne Beck, who are Vice Presidents of the Fund and
Loomis Sayles, serve as portfolio managers for the Loomis Sayles Balanced
Series. Both Mr. Ramos and Ms. Beck have been employed by Loomis Sayles for
more than five years.

DRAYCOTT PARTNERS, LTD. ("Draycott"), 8 City Road, London EC2Y 1HE, England
subadvises the Draycott International Equity Series. Draycott was organized in
1991 to provide investment advice and management services to institutional
investors' accounts and to mutual funds distributed both to institutional and
retail customers. Draycott regulated by the Investment Management Regulatory
Organisation Limited ("IMRO") in the conduct of Investment Business. IMRO is
the United Kingdom regulator of investment advisers. In addition to the
Series, Draycott currently manages two other mutual funds and three separate
investment accounts of The New England that invest substantially all of their
assets in international equity securities. Nicholas D.P. Carn, Chief
Investment Officer, President and Chief Executive Officer of Draycott, Timothy
S. Griffen, Senior Portfolio Manager and Pacific Rim Specialist of Draycott,
Gregory D. Eckersley, Portfolio Manager and United Kingdom Specialist of
Draycott, and Nigel Hankin, Portfolio Manager and European Specialist of
Draycott, serves as the portfolio managers of the Draycott International
Equity Series. Prior to Draycott's organization in 1991, Mr. Carn was Managing
Director, International Equities Group, Mr. Griffen was a Vice President and
Portfolio Manager and Mr. Hankin was European Fund Manager, all at CIGNA
International Investment Advisors, Ltd. and Mr. Eckersley was an Investment
Manager at Century Asset Management, London.

Short-term U.S. cash management services for the Draycott International
Equity Series are provided by Back Bay Advisors as subadviser to Draycott. For
these services, Draycott has agreed to compensate Back Bay Advisors at the
annual rate of 0.08% of the value of the Series' average daily net assets.

SELECTED/VENTURE ADVISERS, L.P. ("Selected/Venture"), 124 East Marcy Street,
Santa Fe, New Mexico 87501, subadvises the Venture Value Series. Venture
Advisers, Inc. is the sole general partner of Selected/Venture, which, in
turn, is controlled by Shelby M. C. Davis (as of May 1, 1994).
Selected/Venture provides advisory services to other investment companies and
institutions. Since 1968, Mr. Davis has been a director of Venture Advisers,
Inc. He is also a director and officer of all investment companies managed by
Selected/Venture.

FRED ALGER MANAGEMENT, INC. ("Alger Management"), 75 Maiden Lane, New York,
New York 10038, subadvises the Alger Equity Growth Series. Alger Management is
a wholly-owned subsidiary of Fred Alger & Company, Incorporated which in turn
is a wholly-owned subsidiary of Alger Associates, Inc., a financial services
holding company. Fred M. Alger III and his brother, David D. Alger, are the
majority shareholders of Alger Associates, Inc. and may be deemed to control
that company and its subsidiaries. David D. Alger, President of Alger
Management, is primarily responsible for the day-to-day management of the
Alger Equity Growth Series. He has been employed by Alger Management as
Executive Vice President and Director of Research since 1971, as President
since 1995 and he serves as portfolio manager for other mutual funds and
investment accounts managed by Alger Management.

B-33
<PAGE>

Fees and Expenses. TNE Advisers, Inc. is paid a management fee from the
Series it manages as follows:

<TABLE>
<CAPTION>
MANAGEMENT FEE PAID BY SERIES TO
TNE ADVISERS, INC.
SERIES (% OF AVERAGE NET ASSETS)
------ --------------------------------------
<S> <C>
Back Bay Advisors Money Market Series....................... .35% the first $500 million
.30% the next $500 million
.25% amounts in excess of $1 billion
Back Bay Advisors Bond Income Series........................ .40% the first $400 million
.35% the next $300 million
.30% the next $300 million
.25% amounts in excess of $1 billion
Westpeak Value Growth Series................................ .70% the first $200 million
.65% the next $300 million
.60% amounts in excess of $500 million
Loomis Sayles Avanti Growth Series.......................... .70% the first $200 million
.65% the next $300 million
.60% amounts in excess of $500 million
Westpeak Stock Index Series................................. .25% all assets
Back Bay Advisors Managed Series............................ .50% all assets
Loomis Sayles Small Cap Series.............................. 1.00% all assets
Loomis Sayles Balanced...................................... .70% all assets
Draycott International Equity............................... .90% all assets
Venture Value............................................... .75% all assets
Alger Equity Growth......................................... .70% all assets
</TABLE>

TNE Advisers, Inc. pays each subadviser at the following rates for providing
advisory services to the Series: for the Back Bay Advisors Money Market
Series, TNE Advisers, Inc. pays Back Bay Advisors at the annual rate of 0.15%
of the first $100 million of average net assets and 0.10% of such assets in
excess of $100 million; for the Back Bay Advisors Bond Income Series, TNE
Advisers, Inc. pays Back Bay Advisors at the annual rate of 0.25% of the first
$50 million of average net assets, 0.20% of the next $200 million of such
assets and 0.15% of such assets in excess of $250 million; for the Westpeak
Value Growth Series, TNE Advisers, Inc. pays Westpeak at the annual rate of
0.50% of the first $25 million of average net assets, 0.40% of the next $75
million of such assets, 0.35% of the next $100 million of such assets and
0.30% of such assets in excess of $200 million; for the Loomis Sayles Avanti
Growth Series, TNE Advisers, Inc. pays Loomis Sayles at the annual rate of
0.50% of the first $25 million of average net assets, 0.40% of the next $75
million of such assets, 0.35% of the next $100 million of such assets and
0.30% of such assets in excess of $200 million; for the Westpeak Stock Index
Series, TNE Advisers, Inc. pays Westpeak at the annual rate of 0.10% of
average net assets; for the Back Bay Advisors Managed Series, TNE Advisers,
Inc. pays Back Bay Advisors at the annual rate of 0.25% of the first $50
million of average net assets and 0.20% of such assets in excess of $50
million; for the Loomis Sayles Small Cap Series, TNE Advisers, Inc. pays
Loomis Sayles at the annual rate of 0.55% of the first $25 million of average
net assets, 0.50% of the next $75 million of such assets, 0.45% of the next
$100 million of such assets and 0.40% of such assets in excess of $200
million; for the Loomis Sayles Balanced Series, TNE Advisers, Inc. pays Loomis
Sayles at the annual rate of 0.50% of the first $25 million of average net
assets, 0.40% of the next $75 million of such assets and 0.30% of such assets
in excess of $100 million; for the Draycott International Equity Series, TNE
Advisers, Inc. pays Draycott at the annual rate of 0.75% of the first $10
million of average net assets, 0.60% of the next $40 million of such assets
and 0.45% of such assets in excess of $50 million; for the Venture Value
Series, TNE Advisers, Inc. pays Selected/Venture at the annual rate of 0.45%
of the first $100 million of average net assets, 0.40% on the next $400
million of average net assets and 0.35% of such assets in excess of $500
million; for the Alger Equity Growth Series, TNE Advisers, Inc. pays Alger
Management at the annual rate of 0.45% of the first $10 million of average net
assets, 0.40% of the next $90 million of such assets, 0.35% of the next $150
million of such assets, 0.30% of the next $250 million of such assets and
0.25% of such assets in excess of $500 million.

ADVISER OF THE CAPITAL GROWTH SERIES

CGM, One International Place, Boston, MA 02110, adviser to the Capital
Growth Series, is an investment advisory firm organized in 1989 which manages
seven mutual fund portfolios and advisory accounts for other clients. The sole
general partner

B-34
<PAGE>

of CGM is a corporation owned in equal shares by Robert L. Kemp and G. Kenneth
Heebner, who are officers of the Fund. Mr. Heebner, Senior Portfolio Manager
of CGM and Senior Vice President of the Fund, has served as portfolio manager
of the Capital Growth Series since August of 1983. Until 1990, Mr. Heebner was
an officer and employee of Loomis Sayles, which served as adviser to the
Capital Growth Series through February of that year.

The Capital Growth Series pays its adviser, CGM, a management fee at an
annual rate of 0.70% of the first $200 million of average net assets, 0.65% of
the next $300 million of such assets and 0.60% of such assets in excess of
$500 million. For advisory services rendered during the fiscal year ended
December 31, 1994, CGM was paid 0.65% of the Capital Growth Series' average
net assets.

VOLUNTARY EXPENSE AGREEMENT

Pursuant to a voluntary expense agreement relating to the Back Bay Advisors
Money Market, Back Bay Advisors Bond Income, Back Bay Advisors Managed,
Westpeak Stock Index, Loomis Sayles Avanti Growth and Westpeak Value Growth
Series, TNE Advisers, Inc. bears the expenses (other than the advisory fees
and any brokerage costs, interest, taxes or extraordinary expenses) of the
Series in excess of 0.15% of the respective Series' average daily net assets.
In the case of the Loomis Sayles Small Cap Series, TNE Advisers Inc. bears all
the expenses (other than any brokerage costs, interest, taxes or extraordinary
expenses) of the Series in excess of 1.00% of the Series' average daily net
assets. Similar voluntary expense agreements with The New England have been in
effect with respect to the Capital Growth Series since November 1, 1994 and
were in effect with respect to the Back Bay Advisors Money Market, Back Bay
Advisors Bond Income, Back Advisors Managed and Westpeak Stock Index Series
from November 1, 1994 through April 30, 1995 and with respect to the Loomis
Sayles Small Cap, Loomis Sayles Avanti Growth and Westpeak Value Growth Series
from December 1, 1994 through April 30, 1995. As a result of the current
voluntary expense agreements (and assuming the Series incur the same level of
advisory fees as in 1994 and no taxes, interest or extraordinary expenses),
the Series' expense ratios during the continuation of the voluntary expense
agreement are expected to be:

<TABLE>
<CAPTION>
TOTAL EXPENSE RATIO
UNDER CURRENT VOLUNTARY
SERIES EXPENSE AGREEMENT
------ -----------------------
<S> <C>
Capital Growth Series.................................. 0.70%
Back Bay Advisors Money Market Series.................. 0.50%
Back Bay Advisors Bond Income Series................... 0.54%
Back Bay Advisors Managed Series....................... 0.64%
Westpeak Value Growth Series........................... 0.85%
Westpeak Stock Index Series............................ 0.40%
Loomis Sayles Small Cap Series......................... 1.00%
Loomis Sayles Avanti Growth Series..................... 0.85%
</TABLE>

TNE Advisers Inc. may terminate these expense agreements at any time. If
these expense agreements were terminated, the expense ratios would be higher.

Prior to November 1, 1994, The New England had agreed to pay the charges and
expenses of preparing, printing and distributing prospectuses and reports to
shareholders, custodial and transfer agent charges and expenses, auditing,
accounting and legal fees and certain other expenses in connection with the
affairs of the Fund and the expenses of shareholders' and trustees' meetings.

EXPENSE DEFERRAL ARRANGEMENT

Pursuant to an expense deferral arrangement in effect beginning November 1,
1994, relating to the Loomis Sayles Balanced Series, the Draycott
International Equity Series, the Venture Value Series and the Alger Equity
Growth Series, which TNE Advisers, Inc. may terminate at any time, TNE
Advisers, Inc. has agreed to pay the expenses of the Series' operations
(exclusive of any brokerage costs, interest, taxes, or extraordinary expenses)
in excess of stated expense limits, which limits vary from Series to Series,
subject to the obligation of the Series to repay TNE Advisers, Inc. such
expenses in future years, if any, when a Series' expenses fall below the
stated expense limit that pertains to that Series; such deferred expenses may
be charged to a Series in a subsequent year to the extent that the charge does
not cause the total expenses in such subsequent year to exceed the Series'
stated expense limit; provided, however, that no Series is obligated to repay
any expense paid by TNE Advisers, Inc. more than two years after the end of
the fiscal year in which such expense was incurred. For the Loomis Sayles
Balanced Series,

B-35
<PAGE>

TNE Advisers, Inc. has agreed to defer such expenses in excess of 0.85% of net
assets until a subsequent year, if any, when total expenses are less than
0.85% of net assets; for the Draycott International Equity Series, TNE
Advisers, Inc. has agreed to defer such expenses in excess of 1.30% of net
assets until a subsequent year, if any, when total expenses are less than
1.30% of net assets; for the Venture Value Series, TNE Advisers, Inc. has
agreed to defer such expenses in excess of 0.90% of net assets until a
subsequent year, if any, when total expenses are less than 0.90% of net
assets; for the Alger Equity Growth Series, TNE Advisers, Inc. has agreed to
defer such expenses in excess of 0.85% of net assets until a subsequent year,
if any, when total expenses are less than 0.85% of net assets. These expense
limits can be prospectively discontinued by TNE Advisers, Inc. but any
expenses that were deferred while a Series' expense limit was in place can
never be charged to that Series unless that Series' expenses fall below the
limit.

ADDITIONAL INFORMATION ABOUT EXPENSES

The Series pay all expenses not borne by TNE Advisers, Inc., the
subadvisers, CGM or the Distributor, including, but not limited to, the
charges and expenses of the respective Series' custodian, independent auditors
and legal counsel, all brokerage commissions and transfer taxes in connection
with portfolio transactions, all taxes and filing fees, the fees and expenses
for registration or qualification of its shares under federal or state
securities laws, all expenses of shareholders' and trustees' meetings and
preparing, printing and mailing prospectuses and reports to shareholders and
the compensation of trustees of the Fund who are not directors, officers or
employees of The New England or its affiliates, other than affiliated
registered investment companies.

The Fund incurred total expenses during the one-year period ended December
31, 1994 as follows: 0.44% of the Back Bay Advisors Bond Income Series'
average net assets, 0.33% of the Westpeak Stock Index Series' average net
assets, 0.54% of the Back Bay Advisors Managed Series' average net assets,
0.67% of the Capital Growth Series' average net assets, 0.40% of the Back Bay
Advisors Money Market Series' average net assets, 0.84% of the Loomis Sayles
Avanti Growth Series' average net assets and 0.85% of the Westpeak Value
Growth Series average net assets. The Fund incurred total expenses for the
period May 1, 1994 to December 31, 1994 for the Loomis Sayles Small Cap Series
of 1.00% of the Series' average net assets. The Fund incurred total expenses
for the period October 31, 1994 to December 31, 1994 as follows: on an
annualized basis, these expenses equaled 0.85% of the Loomis Sayles Balanced
Series' average net assets, 1.30% of the Draycott International Equity Series'
average net assets, 0.90% of the Venture Value Series' average net assets and
0.85% of the Alger Equity Growth Series' average net assets during such
period. If the voluntary expense agreement and expense deferral arrangement
described above had not been in effect, the Series' expenses for the periods
referenced above (annualized in the case of the Loomis Sayles Balanced,
Draycott International Equity, Venture Value and Alger Equity Growth Series)
would have been: 0.44% of the Back Bay Advisors Bond Income Series' average
net assets, 0.33% of the Westpeak Stock Index Series' average net assets,
0.54% of the Back Bay Advisors Managed Series average net assets, 0.67% of the
Capital Growth Series' average net assets, 0.40% of the Back Bay Advisors
Money Market Series' average net assets, 0.84% of the Loomis Sayles Avanti
Growth Series' average net assets, 0.86% of the Westpeak Value Growth Series'
average net assets, 2.31% of the Loomis Sayles Small Cap Series' average net
assets, 3.73% of the Loomis Sayles Balanced Series' average net assets, 5.38%
of the Draycott International Equity Series' average net assets, 3.97% of the
Venture Value Series' average net assets and 2.74% of the Alger Equity Growth
Series' average net assets. These expense figures do not include portfolio
brokerage commissions, which are not deducted from the Series' assets in the
same manner as other charges and expenses; rather, brokerage commissions are
part of the purchase price paid for portfolio securities and reduce the
proceeds received on the sale of portfolio securities. For the one-year period
ended December 31, 1994, the Capital Growth Series paid a total of $ 2,659,378
in brokerage commissions, the Westpeak Stock Index Series paid a total of
$10,918 in brokerage commissions; the Back Bay Advisors Managed Series paid a
total of $21,159 in brokerage commissions on its common stock portfolio
transactions, the Loomis Sayles Avanti Growth Series paid a total of $67,095
in brokerage commissions, the Westpeak Value Growth Series paid a total of
$54,751 in brokerage commissions; for the period May 1, 1994 to December 31,
1994, the Loomis Sayles Small Cap Series paid $7,395 in brokerage commissions
and, for the period October 31, 1994 to December 31, 1994, the Loomis Sayles
Balanced Series paid $ 2,515 in brokerage commissions, the Draycott
International Equity Series paid $4,714 in brokerage commissions, the Venture
Value Series paid $6,084 in brokerage commissions and the Alger Equity Growth
Series paid $2,452 in brokerage commissions. These brokerage commissions
equaled 0.38% of the Capital Growth Series' average net assets, 0.03% of the
Westpeak Stock Index Series' average net assets 0.02% of the Back Bay Advisors
Managed Series' average net assets, 0.34% of the Loomis Sayles Avanti Growth
Series' average net assets, 0.32% of the Westpeak Value Growth Series' average
net assets, 0.35% of the Loomis Sayles Small Cap Series' average net assets,
0.14% of the Loomis Sayles Balanced Series' average net assets, 0.26% of the
Draycott International Equity Series' average net assets, 0.31% of the Venture
Value Series' average net assets and 0.13% of

B-36
<PAGE>

the Alger Equity Growth Series' average net assets. Portfolio transactions of
the Back Bay Advisors Money Market Series, Back Bay Advisors Bond Income
Series and portfolio transactions of the Back Bay Advisors Managed and the
Loomis Sayles Balanced Series in bonds, notes and money market instruments are
generally on a net basis without a stated commission.

MISCELLANEOUS ARRANGEMENTS

The Series' adviser has contracted with New England Funds, L.P. to provide
executive and other personnel for the administration of Fund affairs. Subject
to procedures adopted by the Fund's trustees, Fund brokerage transactions may
be executed by brokers that are affiliated with any adviser or subadviser.

Fund shares are offered through New England Securities, 399 Boylston Street,
Boston, Massachusetts 02116, the principal underwriter for the Fund. New
England Securities is a wholly-owned subsidiary of The New England.

SALE AND REDEMPTION OF SHARES

Shares of each Series are purchased or redeemed depending, among other
things, on the amount of premium payments invested and the surrender and
transfer requests effected on any given day pursuant to the variable life
insurance and variable annuity contracts supported by the Fund. Such
transactions can be made only on those days during which the New York Stock
Exchange is open for trading. Purchases and redemptions of Fund shares are
effected at the net asset value per share determined as of the close of
regular trading on the New York Stock Exchange on the day such purchase order
or redemption request is received.

The Fund may suspend the right of redemption for any Series and may postpone
payment for any period when the New York Stock Exchange is closed for other
than weekends or holidays, or, if permitted by the rules of the SEC, during
periods when trading on the New York Stock Exchange is restricted or during an
emergency which makes it impracticable for a Series to dispose of securities
or fairly to determine the value of its net assets, or during any other period
permitted by the SEC for the protection of investors.

NET ASSET VALUES AND PORTFOLIO VALUATION

Back Bay Advisors, CGM, Westpeak, Loomis Sayles, Draycott, Selected/Venture
and Alger Management, under the direction of the Board of Trustees, determine
the value of each Series' securities under the direction of the Fund's Board
of Trustees. The net asset value of each Series' shares is determined as of
the close of regular trading on the New York Stock Exchange each day it is
open. Each Series' total net assets are divided by the number of outstanding
shares of that Series to determine the net asset value per share for that
Series.

The Back Bay Advisors Money Market Series' investment portfolio, and any
fixed-income securities with remaining maturities of 60 days or less held by
any other Series, are valued at amortized cost. Other portfolio securities of
each Series (other than the Back Bay Advisors Money Market Series) are valued
at market value where current market quotations are readily available and
otherwise are taken at fair value as determined in good faith by the Board of
Trustees, although the actual calculations may be made by persons acting
pursuant to the direction of the Board.

The Back Bay Advisors Money Market Series seeks to maintain a constant net
asset value per share of $100, although this cannot be assured. The net asset
value per share for the other Series will vary depending on the value of each
Series' investment portfolio.

DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS

BACK BAY ADVISORS MONEY MARKET SERIES

The net investment income of the Back Bay Advisors Money Market Series is
declared daily and paid monthly as a dividend. Although the Back Bay Advisors
Money Market Series does not expect to realize any long-term capital gains, if
such gains are realized they will be distributed once a year.

B-37
<PAGE>

OTHER SERIES

It is the policy of each Series other than the Back Bay Advisors Money
Market Series to pay annually as dividends substantially all net investment
income and to distribute annually all net realized capital gains, if any,
after offsetting any capital loss carryovers. See "Taxes." Dividends from net
investment income may be paid more or less often if the Board of Trustees
deems it appropriate.

Federal income tax law requires each Series to distribute prior to calendar
year end virtually all of its ordinary income for such year and virtually all
of the capital gain net income realized by the Series in the one-year period
ending October 31 (or December 31, if the Series so elects) of such year and
not previously distributed.

Dividends and distributions of each Series are automatically reinvested in
shares of the respective Series.

TAXES

Each Series is treated as a separate taxable entity for federal income tax
purposes and intends to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended. So long as a Series distributes all
of its net investment income and net capital gains to its shareholders, the
Series itself does not pay any federal income tax. Dividends from net
investment income of each of the Series and distributions of each Series' net
short-term gains, if any, are ordinary income to its shareholders.
Distributions of any Series' net realized long-term capital gains, if any, are
long-term capital gains to its shareholders. Whether or not taxes must be paid
by the shareholders of a Series on distributions received from that Series
will depend on the tax status of NEVLICO's or The New England's separate
accounts and the tax status of any other shareholders. For the purposes of the
foregoing, each Series' shareholders are the separate accounts investing
directly in the Fund and are not the owners of the variable life insurance or
variable annuity contracts for which the Fund serves as an investment vehicle.
For a description of the tax consequences for such contract owners, see the
relevant prospectus applicable to such contracts.

ORGANIZATION AND CAPITALIZATION OF THE FUND

The Fund was originally organized in 1983 as a Massachusetts corporation and
was reorganized into a Massachusetts business trust on February 27, 1987. The
Fund is registered as a diversified, open-end management company under the
1940 Act and is authorized to issue an unlimited number of shares of each
Series. Shareholders may address inquiries about the Fund to New England
Securities, 399 Boylston Street, Boston, Massachusetts 02116.

As of the date of this prospectus, all of the outstanding voting securities
of the Fund are owned by separate accounts of The New England and/or NEVLICO,
or, in the case of certain series, by those separate accounts and the general
account of The New England. Therefore, The New England and NEVLICO are
presumed to be in control (as that term is defined in the 1940 Act) of the
Fund. However, the staff of the SEC is presently of the view that The New
England and NEVLICO are each required to vote their Fund shares that are held
in a separate account in the same proportion as the voting instructions
received from the variable life insurance or variable annuity contracts issued
by the separate account, and that The New England is required to vote any
shares held in its general account in the same proportion as all other Fund
shares are voted. The New England and NEVLICO currently intend to vote their
shares in a manner consistent with this view.

The Fund does not generally hold annual meetings of shareholders and will
hold shareholders meetings only when required by law. Shareholders may remove
trustees from office by votes cast at a shareholder meeting or by written
consent.

TRANSFER AGENT

The transfer agent and the dividend paying agent for the Fund is The New
England, 501 Boylston Street, Boston, Massachusetts 02116.

VOTING RIGHTS

NEVLICO and The New England will vote shares attributable to the variable
life insurance and variable annuity contracts investing in the Fund in
accordance with instructions received from the owners of those contracts in
the manner set forth in the prospectus applicable to such contracts. Fund
shareholders are entitled to one vote for each full share held (with
fractional votes for fractional shares held).

B-38
<PAGE>

APPENDIX A

RATINGS OF SECURITIES

DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS:

Aaa, Aa, A -- Bonds which are rated AAA or Aa are judged to be of high
quality by all standards and are generally known as high grade bonds. Bonds
rated Aa are rated lower than Aaa securities because margins of protection may
not be as large as in the latter or fluctuation of protective elements may be
of greater amplitude or there may be other elements present which make the
long-term risks appear somewhat larger than in Aaa securities. Bonds which are
rated A possess many favorable investment attributes and are to be considered
as upper medium grade obligations. Factors giving security to principal and
interest are considered adequate, but elements may be present which suggest a
susceptibility to impairment sometime in the future.

Baa -- Bonds which are rated Baa are considered medium grade obligations,
i.e., they are neither higher protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.

Ba -- Bonds which are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

B -- Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.

Caa -- Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.

Ca -- Bonds which are rated Ca represent obligations which are speculative
in high degree. Such issues are often in default or have other marked
shortcomings.

C -- Bonds which are rated C are the lowest rated class of bonds and can be
regarded as having extremely poor prospects of ever attaining any real
investment standing.

DESCRIPTION OF STANDARD & POOR'S CORPORATION CORPORATE BOND RATINGS:

AAA, AA, A -- Bonds rated AAA have the highest rating assigned by Standard &
Poor's to a debt obligation. Capacity to pay interest and repay principal is
extremely strong. Bonds rated AA have a very strong capacity to pay interest
and repay principal and differ from the highest rated issues only in small
degree. Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in high rated
categories.

BBB -- Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate
protection parameters, adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to repay principal and pay
interest for bonds in this category than for bonds in higher rated categories.

BB-B-CCC-CC -- Bonds rated BB, B, CCC and CC are regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal in accordance with the terms of the obligation.
BB indicates the lowest degree of speculation and CC the highest degree of
speculation. While such bonds will likely have some quality and protective
characteristics, these are outweighed by large uncertainties or major risk
exposures to adverse conditions.

CI -- The rating CI is reserved for income bonds on which no income is being
paid.

D -- Bonds rated D are in default, and payment of interest and/or repayment
of principal is in arrears.

B-39