FORTIS SERIES FUND INC, DEFS14A, 1999-07-21

FORTIS SERIES FUND INC
DEFS14A, 1999-07-21

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<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[ ] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))

[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

Fortis Series Fund, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

(specify)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:

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(2) Form, Schedule or Registration Statement No.:

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(3) Filing Party:

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(4) Date Filed:

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Notes:
<PAGE>

Fortis Series Fund, Inc. July 16, 1999

To Fortis Series Fund participants:

As the owner of a Fortis variable annuity/insurance product and a
participant in one or more Series of Fortis Series Fund, Inc. (the "Fund"), we
request that you complete the enclosed Voting Instructions for the upcoming
meeting of the Fund's shareholders. The meeting will take place on August 12,
1999 at 10:00 a.m. at the offices of the Fund, 500 Bielenberg Drive, Woodbury,
Minnesota.

As explained in the enclosed Proxy Statement, the purpose of the meeting is
to have you approve the proposals listed below. The Fund's Board of Directors
has reviewed and approved these proposals and recommends that you vote FOR each
proposal. The proposals are:

. To set the number of directors at nine and to elect a board of directors
of the Fund. The Bylaws of the Fund provide that the shareholders have the
power to set the number of Directors. The Fund's management recommends
that the number of directors to be elected at the meeting be set at nine.
At the meeting, shareholders will be asked to elect the members of the
Fund's Board of Directors.

. To approve the elimination or modification of certain investment policies.
Each Series has a number of investment policies that are "fundamental,"
which means that they may be changed only with approval of shareholders.
These fundamental policies differ significantly from Series to Series.
This is in part because the Series commenced operations at different times,
and the wording of the Series' fundamental policies has evolved over time.
In addition, some of the older Series have fundamental policies that were
adopted in response to state securities regulations that no longer apply to
mutual funds. Because having different fundamental policies among the
Series presents difficulties from a compliance standpoint, and because
certain fundamental policies, in the opinion of Series management, are
unnecessarily restrictive in light of modern investment practices, Series
management proposed that the Series investment policies be standardized,
and that some policies be eliminated. There is no present intention to
significantly change the investment operations of any of the Series as a
result of the proposed fundamental policy revisions. However, we believe
that it would be in the best interests of the Series and their shareholders
for the Series to have the flexibility to modify certain investment
activities without first having to obtain shareholder approval. You should
note that any changes in the investment strategies of the Series will be
disclosed in the Series' prospectus and statement of additional
information, or in supplements to these documents.

. To approve a proposal to permit Fortis Advisers, Inc. to select and
contract with sub-advisers without obtaining shareholder approval. The
Fund's structure is different from that of many investment companies. In
the case of the Fund, Fortis Advisers, Inc. ("Advisers"), the Fund's
adviser, does not make the day-to-day investment decisions for a number of
the Fund's eighteen Series. Instead, Advisers selects, supervises,
evaluates and, if necessary, terminates sub-advisers which make those day-
to-day investment decisions. Currently, the selection and termination of,
and contracting with, sub-advisers must be approved by the Fund's
shareholders. Management believes that permitting Advisers to perform
these services, without incurring the delay and expense involved with
obtaining shareholder approval of new sub-advisory agreements or material
amendments to existing sub-advisory agreements, is appropriate and in the
best interest of each Series' shareholders and will allow each Series to
operate more efficiently. The proposed changes in sub-advisory
arrangements would not increase the fees paid by a Series for investment
advisory services.
<PAGE>

. To approve an amended investment advisory and management agreement between
the Fund and Advisers. The Fund currently has five different investment
advisory agreements between certain Series of the Fund and Advisers. It is
proposed that the Fund enter into a single new Investment Advisory and
Management Agreement with Advisers relating to all Series. The new
advisory agreement would be identical in all material respects with the
current advisory agreements, except that it would authorize Advisers to
retain one or more sub-advisers for each Series. While Advisers has no
current intention of retaining a sub-adviser for any Series that does not
currently have a sub-adviser, and has no current intention of retaining
additional sub-advisers for the Series that currently have a single sub-
adviser, we believe that it would be in shareholders' best interests for
Advisers to have this flexibility with respect to each Series. This new
advisory agreement would not change the rate of the advisory fee payable by
any Series.

. To ratify the selection of KPMG LLP as the independent public accountants
for the Fund. The Fund's Board of Directors have selected KPMG LLP to be
the Fund's independent public accountants for the fiscal year ending
December 31, 1999. KPMG LLP has served in this capacity for the Fund since
1989.

The Fund's Board of Directors has reviewed and approved each of the above
proposals and recommends that you vote FOR each proposal. The attached Proxy
Statement provides more information on these proposals. Please read it
carefully and return your completed Voting Instructions form in the enclosed,
addressed, postage-paid envelope.

If you have any questions in connection with these materials please call us
at 1-800-800-2000, extension 3057 if you are a variable annuity contract owner
and extension 3028 if you are a variable universal life insurance policyholder.
If you are the owner of a First Fortis variable annuity contract please call
1-800-745-7100.

Very truly yours,

/s/ Dean C. Kopperud
Dean C. Kopperud
President
<PAGE>

FORTIS SERIES FUND, INC.
500 Bielenberg Drive, Woodbury, Minnesota 55125
Mailing Address: P.O. Box 64284, St. Paul, Minnesota 55164

NOTICE OF SPECIAL JOINT MEETING OF SHAREHOLDERS
TO BE HELD ON AUGUST 12, 1999

A special joint meeting of the shareholders of Money Market Series, U. S.
Government Securities Series, Diversified Income Series, Global Bond Series,
High Yield Series, Global Asset Allocation Series, Asset Allocation Series,
Value Series, Growth & Income Series, S&P 500 Index Series, Blue Chip Stock
Series, International Stock Series, Mid Cap Stock Series, Small Cap Value
Series, Global Growth Series, Large Cap Growth Series, Growth Stock Series, and
Aggressive Growth Series (the "Series"), each a series of Fortis Series Fund,
Inc. (the "Company") will be held at the offices of Fortis Advisers, Inc.
("Advisers"), 500 Bielenberg Drive, Woodbury, Minnesota, on Thursday, August 12,
1999, at 10:00 a.m. for the following purposes:

1. To set the number of directors at nine and to elect a Board of
Directors.

2. To approve the elimination or modification of certain investment
policies.

3. To approve a proposal to permit Fortis Advisers, Inc. to select and
contract with sub-advisers without obtaining shareholder approval.
This proposal would not increase investment advisory fees paid by any
Series.

4. To approve an amended investment advisory and management agreement
between the Company and Fortis Advisers, Inc. This proposal would not
increase investment advisory fees paid by any Series.

5. To ratify the selection by the Board of Directors of the Company of
KPMG LLP as independent public accountants for the Company for the
fiscal year ending December 31, 1999.

6. To transact such other business as may properly come before the
meeting.

The Board of Directors has fixed the close of business on June 14, 1999 as
the record date for determining shareholders entitled to notice of, and shares
having voting rights in connection with, the meeting.

Each Series issues and sells its shares to Fortis Variable Account C and
Fortis Variable Account D, which are separate accounts of Fortis Benefits
Insurance Company ("FBIC") and First Fortis Life Insurance Company ("FFLIC").
Fortis Variable Account C and Fortis Variable Account D (together, the "Separate
Accounts") hold shares which fund benefits under flexible premium deferred
variable annuity contracts and flexible premium variable life insurance
contracts which are issued by FBIC and FFLIC. As the owners of the assets held
in the Separate Accounts, FBIC and FFLIC are the sole shareholders of the Series
and are entitled to vote all of the shares of each Series. However, pursuant to
applicable laws, FBIC and FFLIC vote outstanding shares of the Series in
accordance with instructions received from the owners of the annuity and life
insurance contracts. This Notice is being delivered to annuity and life
insurance contract owners who, by virtue of their ownership of the contracts,
beneficially owned shares of one or more of the Series as of the record date, so
that they may instruct FBIC and FFLIC how to vote the shares of the Series
underlying their contracts.

Your attention is directed to the attached Proxy Statement. WHETHER OR NOT
YOU EXPECT TO BE PRESENT AT THE MEETING, PLEASE FILL IN, SIGN, DATE, AND MAIL
THE ENCLOSED VOTING INSTRUCTIONS AS PROMPTLY AS POSSIBLE IN ORDER TO SAVE THE
COMPANY ANY FURTHER SOLICITATION EXPENSE. An addressed envelope for which no
postage is required is enclosed.

Michael J. Radmer
Secretary

Dated: July 16, 1999
<PAGE>

FORTIS SERIES FUND, INC.
500 Bielenberg Drive, Woodbury, Minnesota 55125
Mailing Address: P.O. Box 64284, St. Paul, Minnesota 55164

PROXY STATEMENT

SPECIAL JOINT MEETING OF SHAREHOLDERS--August 12, 1999

The enclosed proxy is solicited by the Board of Directors of Fortis Series
Fund, Inc. (the "Company") in connection with a special joint meeting of
shareholders of Money Market Series, U. S. Government Securities Series,
Diversified Income Series, Global Bond Series, High Yield Series, Global Asset
Allocation Series, Asset Allocation Series, Value Series, Growth & Income
Series, S&P 500 Index Series, Blue Chip Stock Series, International Stock
Series, Mid Cap Stock Series, Small Cap Value Series, Global Growth Series,
Large Cap Growth Series, Growth Stock Series, and Aggressive Growth Series (the
"Series"), to be held August 12, 1999, and at any adjournment of the meeting.
The costs of solicitation, including the cost of preparing and mailing the
Notice of Special Shareholders' Meeting and this Proxy Statement, will be paid
by the Company, and such mailing will take place on approximately July 16, 1999.
Representatives of Fortis Advisers, Inc. ("Advisers"), the investment adviser
and manager of the Company, without cost to the Company, may solicit proxies for
the management of the Company by means of mail, telephone, or personal calls.
The address of Advisers is that of the Company as provided above.

As the owner of the shares held in the Separate Accounts, FBIC and FFLIC
are entitled to vote all of the shares of each Series held in the Separate
Accounts. However, pursuant to applicable laws, FBIC and FFLIC vote outstanding
shares of the Series in accordance with the voting instructions received from
the owners of the annuity and life insurance contracts. This Proxy Notice is
being delivered to annuity and life insurance contract owners who, by virtue of
their ownership of the contracts, beneficially owned shares of one or more of
the Series as of the record date, so that they may instruct FBIC and FFLIC how
to vote the shares of the Series underlying their contracts.

You have the right to instruct FBIC or FFLIC on how to vote the shares held
under your contract. If you execute and return your voting instruction form,
but do not provide voting instructions, FBIC and FFLIC will vote your shares in
favor of each proposal. FBIC and FFLIC will vote any shares for which they do
not receive a voting instruction form, and any shares which they or their
affiliates hold for their own account, in proportionately the same manner as
shares for which they have received voting instructions.

You may revoke your voting instructions by giving written notice to FBIC or
FFLIC prior to the meeting, by executing and returning to FBIC or FFLIC a later
dated form, or by attending the meeting and voting in person. So far as the
Board of Directors is aware, no matters other than those described in this Proxy
Statement will be acted upon at the meeting. Should any other matters properly
come before the meeting calling for a vote, it is the intention of the persons
named as proxies to vote upon such matters according to their best judgment.

Those individuals owning contracts representing shares at the close of
business on June 14, 1999, may vote at the meeting or any adjournments of the
meeting. Common shares represent the only class of securities of each Series.
Each shareholder is entitled to one vote for each share held.

The Company's most recent annual report is available by contacting the
Company at P.O. Box 64284, St. Paul, Minnesota 55164 or calling 1-800-800-2000,
extension 4579. A copy will be sent, without charge, by first class mail within
three business days of your request.

SUMMARY OF PROPOSALS

The Board of Directors of the Company is asking for your vote on the
following proposals. Each proposal is described in detail below.

-1-
<PAGE>

<TABLE>
<CAPTION>
Proposal Series Affected
- -------- ---------------
<S> <C>
1. To set the number of directors at nine and to All Series
elect a Board of Directors

2. To approve the elimination or modification
of the following investment policies:

A Modify the policies regarding All Series
borrowing and the issuance of senior
securities

B. Modify the policy regarding All Series
concentration in a particular industry

C. Modify the policy regarding the Global Growth, S&P 500 Index, Mid Cap Stock, Blue
underwriting of securities Chip Stock, Small Cap Value and Large Cap Growth

D. Modify the policy regarding All Series
investments in real estate

E. Modify the policy regarding the All Series
purchase of commodities

F. Modify the policy regarding lending All Series

G. Eliminate the policy restricting the Money Market, U.S. Government Securities,
pledging of assets Diversified Income, Asset Allocation, Growth Stock,
High Yield, Value, Growth & Income, Aggressive
Growth, Global Growth and Large Cap Growth

H. Eliminate the policy prohibiting short Money Market, U.S. Government Securities,
sales of securities Diversified Income, Asset Allocation, Growth Stock,
High Yield, Value, Growth & Income, Aggressive
Growth, Global Growth and Large Cap Growth

I. Eliminate the policy restricting margin High Yield, Value, Growth & Income, Aggressive
purchases Growth, Global Growth and Large Cap Growth

J. Eliminate the policy prohibiting Money Market, U.S. Government Securities,
transactions with affiliates Diversified Income, Asset Allocation and Growth
Stock

K. Eliminate the policy prohibiting Money Market, U.S. Government Securities,
participation in a joint trading account Diversified Income, Asset Allocation and Growth
Stock

L. Eliminate the policy limiting Money Market, U.S. Government Securities,
investment in restricted securities Diversified Income, Asset Allocation and Growth
Stock

M Eliminate the policy prohibiting Money Market, U.S. Government Securities,
options transactions Diversified Income, Asset Allocation, Growth Stock
and Large Cap Growth

N. Eliminate diversification policies Blue Chip Stock, Small Cap Value and Large Cap
Growth

3. To permit Fortis Advisers, Inc. to select and All Series
contract with sub-advisers without obtaining
shareholder approval
</TABLE>

-2-
<PAGE>

<TABLE>
<CAPTION>
Proposal Series Affected
- -------- ---------------
<S> <C>
4. To approve an amended investment All Series
advisory and management agreement between
the Company and Fortis Advisers, Inc.

5. To ratify the selection by the Board of All Series
Directors of the Company of KPMG LLP as
independent public accountants for the
Company for the fiscal year ending December
31, 1999

6. To transact such other business as may All Series
properly come before the meeting
</TABLE>

PROPOSAL ONE
ELECTION OF DIRECTORS

This proposal applies to all Series.

The Bylaws of the Company provide that the shareholders have the power to
set the number of Directors (subject to the authority of the Board of Directors
to increase or decrease the number as permitted by law). The Company's
management recommends that the number of directors to be elected at the meeting
be set at nine. Unless otherwise instructed, the proxies will vote in favor of a
resolution to set the number of directors at nine.

At the meeting, shareholders will be asked to elect the members of the
Company's Board of Directors. It is intended that the enclosed proxy will be
voted for the election of the nine persons named below as directors unless such
authority has been withheld in the proxy. All of the nominees, except Ms.
Shadko, are currently serving as directors of the Company. Ms. Shadko has
served as a director of the one closed-end and seven other open-end investment
companies managed by Advisers since 1996. The term of office of persons elected
will be until the next meeting of the shareholders or until their successors are
elected and shall qualify. Pertinent information regarding each nominee's
principal occupation and business experience during the past five years is set
forth below. Each nominee also serves as a Director of each of the other open-
end investment companies managed by the Adviser and as a Director of Fortis
Securities, Inc.

Allen R. Freedman* 58 Chairman, Chief Executive Officer and President of Fortis, Inc.;
Director since 1987 a Managing Director of Fortis International, N. V.

Dr. Robert M. Gavin 58 President, Cranbrook Education Community; prior to July 1996,
Director since 1986 President, Macalester College, St. Paul, MN.

Jean L. King 54 President, Communi-King, a communications consulting firm,
Director since 1984 St. Paul, MN.

Dean C. Kopperud * 46 Chief Executive Officer and a Director of Advisers, President and
Director since 1995 a Director of Investors, President of Fortis Financial Group, a
Director of Fortis Benefits Insurance Company and a Senior Vice
President of Time Insurance Company.
</TABLE>

-3-
<PAGE>

<TABLE>
<CAPTION>
Principal Occupation/Business
-----------------------------
Name, Term of Office Age Experience During Past 5 years
- -------------------- --- ------------------------------
<S> <C> <C>
Robb L. Prince 57 Financial and Employee Benefit Consultant; prior to July, 1995,
Director since 1982 Vice President and Treasurer, Jostens, Inc., a producer of
products and services for the youth, education, sports award, and
recognition markets, Minneapolis, MN.

Leonard J. Santow 62 Principal, Griggs & Santow, Incorporated, economic and
Director since 1972 financial consultants, New York, NY.

Noel S. Shadko 44 Marketing consultant; prior to 1996, Senior Vice President,
Marketing and Strategic Planning, Rollerblade, Inc.,
Minneapolis, MN.

Joseph M. Wikler 57 Investment consultant and private investor.
Director since 1994
</TABLE>

___________________
* Denotes directors who are considered to be "interested persons" (as defined
under the 1940 Act) of the Company. Mr. Kopperud is an interested person
because he holds certain positions including serving as Chief Executive
Officer and a director of Advisers. Mr. Freedman is an interested person
because he holds certain positions including serving as Chairman and Chief
Executive Officer of Fortis, Inc., the parent company of Advisers, and a
Managing Director of Fortis International, N.V.

The Company has an Audit Committee of the Board of Directors whose members
are selected annually by the full Board of Directors. The Audit Committee
currently consists of Ms. King, Mr. Wikler and Mr. Cutting, who serves as its
chairperson. The Audit Committee met two times during the fiscal year ended
December 31, 1998. The Company does not have a standing compensation committee
or a standing nominating committee of the Board of Directors.

The functions performed by the Audit Committee are to recommend annually to
the Board a firm of independent certified public accountants to audit the books
and records of the Company for the ensuing year; to monitor that firm's
performance; to review with the firm the scope and results of each audit and
determine the need, if any, to extend audit procedures; to confer with the firm
and representatives of the Company on matters concerning the Company's financial
statements and reports, including the appropriateness of its accounting
practices and of its financial controls and procedures; to evaluate the
independence of the firm; to review procedures to safeguard portfolio
securities; to review the purchase by the Company from the firm of nonaudit
services; to review all fees paid to the firm; and to facilitate communications
between the firm and the Company's officers and directors.

During the Company's fiscal year ended December 31, 1998, there were four
meetings of the Board of Directors. No director attended fewer than 75% of the
aggregate of the number of meetings of the Board of Directors and the number of
meetings held by all committees of the Board on which such director served.

No compensation is paid by the Company to any Director or officer who is an
officer or employee of Advisers or Investors or any affiliated company. The
Company pays each director who is not affiliated with Advisers or Investors a
monthly fee of $100 and a fee of $100 for each directors' meeting and each
committee meeting attended. Each director also receives a monthly fee, a
meeting fee and a committee meeting fee from each fund in the Fund Complex for
which they are a director. The following table sets forth the compensation
received by each director from the Company during the fiscal year ended December
31, 1998, as well as the total compensation received by each director from the
Series Complex during the calendar year ended December 31, 1998. Mr. Freedman
and Mr. Kopperud did not receive any such compensation and they are not included
in the table.

-4-
<PAGE>

<TABLE>
<CAPTION>
Compensation Total Compensation
Director from the Company from Fund Complex *
----------------------------- ---------------- --------------------
<S> <C> <C>
Richard W. Cutting $9,000 $31,200
Dr. Robert M. Gavin $9,000 $31,200
Jean L. King $9,000 $31,200
Edward M. Mahoney $9,000 $31,200
Robb L. Prince $9,000 $31,200
Leonard J.Santow $9,000 $30,300
Noel J. Shadko n/a $20,400
Joseph M. Wikler $9,000 $31,300
</TABLE>

* The Fund Complex consists of one closed-end and eight open-end
investment companies managed by Advisers.

Vote Required

The Board of Directors recommends that shareholders set the number of
directors at nine and vote in favor of the above nominees to serve as Directors
of the Company. The vote of a majority of the shares of the Company represented
at the meeting, provided at least a quorum (more than 50% of the outstanding
shares) is represented in person or by proxy, is sufficient for the election of
the above nominees. Unless otherwise instructed, the proxies will vote for the
above nine nominees. All of the nominees listed above have consented to serve
as directors if elected. In the event any of the above nominees are not
candidates for election at the meeting, the proxies may vote for such other
persons as management may designate. Nothing currently indicates that such a
situation will arise.

PROPOSAL TWO
TO APPROVE THE ELIMINATION OR
MODIFICATION OF CERTAIN POLICIES

This proposal applies to all Series.

Each Series has a number of investment policies that are "fundamental,"
which means that they may be changed only with the approval of shareholders.
These fundamental policies differ significantly from Series to Series. This is
in part because the Series commenced operations at different times, and the
wording of the Series' fundamental policies has evolved over time. In addition,
some of the older Series have fundamental policies that were adopted in response
to state securities regulations that no longer apply to mutual funds. Because
having different fundamental policies among the Series presents difficulties
from a compliance standpoint, and because certain fundamental policies, in the
opinion of Series management, are unnecessarily restrictive, Series management
proposed that the Series' investment policies be standardized, and that some
policies be eliminated. The Board of Directors has adopted these proposals,
subject to shareholder approval.

The 1940 Act requires that only certain activities of investment companies
be governed by fundamental policies. The Board of Directors has recommended
that shareholders approve proposed revisions to the fundamental policies of the
Series governing these activities. Each proposed revision is, in general,
intended to provide the Board with the maximum flexibility permitted under the
1940 Act, and to provide uniformity among the Series' policies. The Board of
Directors has also recommended that shareholders approve the elimination of all
fundamental policies that are not required by the 1940 Act.

There is no present intention to significantly change the investment
operations of any of the Series as a result of the proposed fundamental policy
revisions. The Board believes, however, that it would be in the best interests
of the Series and their shareholders for the Series to have the flexibility to
modify certain investment activities without first having to obtain shareholder
approval. As explained below, the proposed revisions to and eliminations of
fundamental policies will provide the Series with this flexibility. You should
note that any changes in the investment strategies of the Series will be
disclosed in the Series' prospectus and statement of additional information, or
in supplements to these documents.

-5-
<PAGE>

Summaries of the fundamental policies currently in place for the Series
appear below. Before voting to modify or delete any policy, however, you should
review the complete list of the fundamental policies currently in place for the
Series, which is set forth in the Appendix.

A. Modify the Policies Regarding Borrowing and the Issuance of Senior
Securities

This proposal applies to all Series.

It is proposed that each Series replace its current policy or policies
regarding borrowing and the issuance of senior securities with the following
policy:

The Series will not borrow money or issue senior securities, except as
permitted under the Investment Company Act of 1940, as amended, and as
interpreted or modified from time to time by any regulatory authority
having jurisdiction.

The Series have various policies regarding borrowing and the issuance of
senior securities. These policies are summarized below, and set out in their
entirety in the Appendix.

Large Cap Growth Series has the most restrictive policy, which provides
that the Series may not borrow money or issue senior securities except for
temporary or emergency purposes in an amount not exceeding 5% of the value of
its total assets.

Money Market Series, U.S. Government Securities Series, Diversified Income
Series, Asset Allocation Series and Growth Stock Series each may borrow an
amount equal to up to 10% of its total assets. These Series have policies
providing that they will not borrow money (including purchasing securities on
margin), or issue senior securities, except that each Series may borrow from a
bank an amount equal to up to 10% of its total assets to facilitate redemptions,
each Series may obtain short term credit to clear securities transactions, and
each Series other than Money Market Series may purchase securities on a when-
issued or delayed delivery basis (which could be considered to involve the
issuance of a senior security). The Series are prohibited from purchasing
investment securities while outstanding borrowings exceed 5% of total assets.

As discussed below, each of the other Series is permitted to borrow an
amount equal to up to one-third of its total assets and to engage in certain
other transactions that might be considered borrowing or issuing a senior
security.

High Yield Series, Value Series, Growth & Income Series and Aggressive
Growth Series have policies providing that the Series will not borrow money or
issue senior securities, except that each Series may borrow from banks for
temporary or emergency purposes an amount equal to up to one third of its total
assets, and each Series may enter into options and futures contracts and
purchase or sell securities on a when issued, delayed delivery or forward
commitment basis. The Series are prohibited from purchasing investment
securities while outstanding borrowings exceed 5% of total assets. The policy
for Global Growth Series is nearly identical, but, in addition to allowing the
Series to purchase securities on a when-issued, delayed delivery or forward
commitment basis, also allows Global Growth Series to enter into "other
transactions ... which may be deemed to constitute borrowing." Each of these
Series is required to reduce its borrowing within three days if the Series'
asset coverage falls below 300%. This is required, however, under the 1940 Act
and therefore does not need to be specified in a Series' fundamental policy on
borrowing.

Global Bond Series, Global Asset Allocation Series and International Stock
Series have similar policies which provide that the Series will not borrow money
(including through the purchase of securities on margin) or issue senior
securities, except that each Series may borrow from a bank an amount not
exceeding one-third of the value of its total assets, and each Series may obtain
short-term credit for the clearance of securities transactions, may purchase
securities on a when-issued, delayed delivery or forward commitment basis, may
enter into options and futures contracts, and may make margin deposits in
connection with dealing in commodities or options thereon. The Series are
prohibited from purchasing investment securities while outstanding borrowings
exceed 5% of total assets and each Series is required to reduce its borrowing
within three days if the Series' asset coverage falls below 300%.

-6-
<PAGE>

S&P 500 Index Series and Mid Cap Stock Series have policies providing that
neither Series will borrow money or issue senior securities as defined in the
1940 Act, except that each Series may borrow money in an amount not exceeding
one-third of its total assets and each Series may purchase and sell futures
contracts and related options.

Blue Chip Stock Series and Small Cap Value Series have policies providing
that neither Series will issue senior securities, except in compliance with the
1940 Act, and neither Series will borrow money, except that each Series may
borrow for non-leveraging, temporary or emergency purposes, and engage in other
transactions which may involve a borrowing, such as reverse repurchase
agreements, in an amount not exceeding, in the aggregate, one-third of the
Series' total assets (including the amount borrowed) less liabilities (other
than borrowings) or such other percentage permitted by law. The Series are not
restricted to borrowing from banks, but may borrow from other persons to the
extent permitted by applicable law.

The proposed policy would permit each Series to engage in borrowing in a
manner and to the full extent permitted by applicable law. The 1940 Act
requires borrowings to have 300% asset coverage, which means, in effect, that a
Series would be permitted to borrow up to an amount equal to 50% of its total
assets under the proposed borrowing policy. Additionally, under the proposed
policy, each Series would not be limited to borrowing for temporary or emergency
purposes, could borrow for leverage, and could purchase securities for
investment while borrowings are outstanding. However, the Board has no current
intention of authorizing any of these practices. If the Board authorized a
Series to borrow for leverage, such borrowings would increase the Series'
volatility and the risk of loss in a declining market.

The proposed policy also permits each Series to issue senior securities to
the extent permitted by applicable law. Generally, a senior security is an
obligation of a Series that takes priority over the claims of the Series'
shareholders. The 1940 Act prohibits the Series from issuing most types of
senior securities, but permits them, if specified conditions are met, to enter
into certain transactions that might be considered to involve the issuance of
senior securities. For example, a Series may enter into a transaction that
obligates it to pay money at a future date if cash or liquid securities are set
aside to cover the obligation.

B. Modify the Policy Regarding Concentration in a Particular Industry

This proposal applies to all Series.

It is proposed that each Series replace its current policy regarding
concentration with the following policy:

The Series will not concentrate its investments in a particular industry,
as that term is used in the Investment Company Act of 1940, as amended, and
as interpreted or modified from time to time by any regulatory authority
having jurisdiction. For purposes of this limitation, the U.S. Government,
and state or municipal governments and their political subdivisions, are
not considered members of any industry. In addition, for Money Market
Series only, this limitation does not apply to investments in domestic
banks.

The 1940 Act requires that a Series state its position regarding
concentration in an industry. While the 1940 Act does not define what
constitutes "concentration," the staff of the Commission takes the position that
investment of more than 25% of a Series' assets in an industry constitutes
concentration. If a Series concentrates in an industry, it must at all times
have more than 25% of its assets invested in that industry, and if its policy is
not to concentrate, as is the case with each of the Series, it may not invest
more than 25% of its assets in the applicable industry, unless, in either case,
the Series discloses the specific conditions under which it will change from
concentrating to not concentrating or vice versa.

The Series' policies regarding concentration are set out in their entirety
in the Appendix. Each Series' current policy prohibits the purchase of
securities if it would result in more than 25% of the Series' total assets being
invested in the same industry. Some Series have exceptions for U.S. Government
securities, obligations of domestic commercial banks and/or obligations of state
and municipal governments. In some cases, what constitutes an industry for the
purposes of this policy is included in the policy itself. A Series is permitted
to adopt reasonable definitions of what constitutes an industry, or it may use
standard classifications recognized by the SEC, or some

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combination thereof. Because a Series may create its own reasonable industry
classifications, management believes that it is not necessary to include such
matters in the fundamental policies of the Series.

C. Modify the Policy Regarding the Underwriting of Securities

This proposal applies to Global Growth Series, S&P 500 Index Series, Mid Cap
Stock Series, Blue Chip Stock Series, Small Cap Value Series and Large Cap
Growth Series.

It is proposed that each of the foregoing Series replace its current policy
regarding the underwriting of securities with the following:

The Series will not act as an underwriter of securities of other issuers,
except to the extent that, in connection with the disposition of portfolio
securities, it may be deemed an underwriter under applicable laws.

The Series not being asked to vote on this proposal already have the fundamental
policy set forth above in place.

The proposed policy is merely a re-wording of the policies currently in
place for S&P 500 Index Series, Mid Cap Stock Series, Blue Chip Stock Series and
Small Cap Value Series. Global Growth Series and Large Cap Growth Series
currently have policies in place which clarify that, although the Series will
not act as an underwriter of securities of other issuers, they may acquire
restricted securities. An underwriter of securities is a person who purchases
securities from an issuer with a view to distributing the securities. The
policies of Global Growth Series and Large Cap Growth Series were designed to
clarify that a Series will not be deemed to be an underwriter of securities
merely because it purchases and then later resells restricted securities. This
situation will be encompassed, however, by the more general language in the
proposed policy stating that a Series will not underwrite securities except to
the extent that it may be considered an underwriter when selling portfolio
securities.

D. Modify the Policy Regarding Investments in Real Estate

This proposal applies to all Series.

It is proposed that each Series replace its current policy regarding the
investments in real estate with the following:

The Series will not purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments, but this shall not
prevent the Series from investing in securities or other instruments backed
by real estate or interests therein or in securities of companies that deal
in real estate or mortgages.

The proposed policy does not make any material changes to the policies
currently in place for the Series, which are set forth in the Appendix. The
proposal is intended to standardize the Series' policies concerning investments
in real estate and to clarify the fact that, although none of the Series intends
to invest directly in real estate, they are not prohibited from making other
investments which are backed by real estate or issued by companies in the real
estate business.

E. Modify the Policy Regarding the Purchase of Commodities

This proposal applies to all Series.

It is proposed that each Series replace its current policy regarding the
purchase of commodities with the following:

The Series will not purchase physical commodities or contracts relating to
physical commodities.

The current policies for Money Market Series, U.S. Government Securities
Series, Diversified Income Series, Asset Allocation Series and Growth Stock
Series prohibit investments in commodities or commodity contracts. These
policies would arguably prohibit the Series from investing in financial
instruments, such as futures

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<PAGE>

contracts, that might be deemed commodities. The policy for Large Cap Growth
Series prohibits investments in commodity contracts, other than stock index
futures contracts. For the other Series, the proposed policy does not represent
a material change from the current policies. S&P 500 Index Series and Mid Cap
Stock Series have policies prohibiting the purchase or sale of commodities, but
excepting out futures contracts and related options, forward currency contracts
and other similar instruments. High Yield Series, Value Series, Growth & Income
Series, Aggressive Growth Series, Global Bond Series, Global Asset Allocation
Series and International Stock Series have policies prohibiting the purchase and
sale of physical commodities and futures and options contracts on physical
commodities, but clarifying that the Series may purchase or sell financial
instruments or contracts that might be deemed commodities. Blue Chip Stock
Series and Small Cap Value Series have policies prohibiting the purchase and
sale of physical commodities, and clarifying that the Series may enter into
futures contracts and options thereon. Global Growth Series has a policy
providing that the Series will not buy or sell commodities or commodity
contracts, including futures contracts, other than within the limitations set
forth in the Series' Prospectus and Statement of Additional Information. Each of
the foregoing policies is set out in its entirety in the Appendix.

The 1940 Act requires a mutual fund to state as a fundamental investment
policy the extent to which it may engage in the purchase and sale of
commodities. At the time the 1940 Act was enacted, the term "commodities" was
understood to refer principally to physical commodities such as agricultural
products, precious and base metals, oil and gas, and the like. In recent years,
however, a variety of new financial contracts and instruments, such as interest
rate, currency and stock index futures contracts, have been created which may be
considered to be "commodities" for regulatory purposes. The purpose of the
proposed change is to standardize the Series' policies regarding investments in
commodities, to clarify that the Series are not permitted to invest in physical
commodities or contracts relating to physical commodities, to provide Money
Market Series, U.S. Government Securities Series, Diversified Income Series,
Asset Allocation Series and Growth Stock Series with the flexibility of
investing in financial contracts and instruments that might be categorized as
commodities, and to provide the other Series that currently specify which types
of financial instruments or contracts are permissible with greater flexibility.
Although none of the Series intends to use futures contracts, options on futures
contracts or similar instruments as a principal investment strategy, management
believes that it would be in shareholders best interests for the Series to have
the maximum flexibility regarding the use of these instruments going forward.

Futures contracts are standardized, exchange-traded contracts that require
delivery of the underlying financial instrument (such as a bond, currency or
stock index) at a specified price, on a specified future date. The buyer of the
futures contract agrees to buy the underlying financial instruments from the
seller at a fixed purchase price upon the expiration of the contract. The seller
of the futures contract agrees to sell the underlying financial instrument to
the buyer at expiration at the fixed sales price. In most cases, delivery never
takes place. Instead, both the buyer and the seller, acting independently of
each other, usually liquidate their long and short positions before the contract
expires; the buyer sells futures and the seller buys futures.

Futures may be used for hedging (i.e., to protect against adverse future
price movements in a Series' portfolio securities, or in securities the Series
intends to purchase). For example, a bond Series manager who thinks that
interest rates might rise could sell Treasury futures to safeguard the Series'
portfolio. If interest rates increase as anticipated, the value of debt
securities in the portfolio would decrease, but the value of the Series' futures
contracts would increase. Futures contracts may also be used to speculate on the
market. For example, a Series manager might buy S&P 500 futures on the
expectation that the value of the S&P 500 Index will rise. Using futures for
speculation, however, involves significant risk since futures contracts are
highly leveraged instruments. When Series managers enter into a futures
contracts, they only need to put up a small fraction of the value of the
underlying contract as collateral, yet gains or losses will be based on the full
value of the contract.

The use of futures contracts, options on futures contracts and similar
instruments would expose the Series to additional investment risks and
transaction costs. Risks include: the risk that interest rates, securities
prices or currency markets will not move in the direction that the investment
adviser anticipates; an imperfect correlation between the price of the
instrument and movements in the prices of any securities or currencies being
hedged; the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits; leverage
risk, which is the risk that adverse price movements in an instrument can result
in a loss substantially greater than the Series' initial investment in that
instrument; and the risk that the counterparty to an instrument will fail to
perform its obligations.

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<PAGE>

F. Modify the Policy Regarding Lending

This proposal applies to all Series.

It is proposed that each Series replace its current policy regarding
lending with the following policy:

The Series may not make loans except as permitted under the Investment
Company Act of 1940, as amended, and as interpreted or modified from time
to time by any regulatory authority having jurisdiction.

Each Series' current lending policy prohibits making loans to others, but
contains exceptions to this prohibition. For example, each Series other than
Money Market Series, U.S. Government Securities Series, Diversified Income
Series, Asset Allocation Series and Growth Stock Series is permitted to lend its
portfolio securities. The Series' policies also contain exceptions to the
prohibition on lending to the extent that certain transactions, such as the
entry into repurchase agreements or the purchase of debt securities might be
deemed loans. The Series' current lending policies are set forth in their
entirety in the Appendix.

Unlike the current policies, the proposed policy does not specify the
particular types of lending in which each Series is permitted to engage.
Instead, the proposed policy permits each Series to lend in a manner and to the
extent permitted by applicable law. The proposed change would, therefore,
permit each Series, subject to Board approval, to lend its securities. It would
also permit the Series, subject to the receipt of any necessary regulatory
approval and Board authorization, to enter into other lending arrangements,
including lending agreements under which the Series could for temporary purposes
lend money directly to and borrow money directly from each other (and other
Series advised by Advisers) through a credit facility. Although none of the
Series intends to use lending as a principal investment strategy, management
believes that it would be in shareholders best interests for the Series to have
the maximum flexibility regarding the use of lending. Each of the Series
believes that the flexibility provided by this policy change could possibly
reduce the Series' borrowing costs and enhance its ability to earn higher rates
of interest on short-term lendings in the event that the Board determines that
such arrangements are warranted in light of the Series' particular
circumstances.

G. Eliminate the Policy Restricting the Pledging of Assets

This proposal applies to Money Market Series, U.S. Government Securities Series,
Diversified Income Series, Asset Allocation Series, Growth Stock Series, High
Yield Series, Value Series, Growth & Income Series, Aggressive Growth Series,
Global Growth Series and Large Cap Growth Series.

The foregoing Series have fundamental policies restricting their ability to
pledge, mortgage or hypothecate their assets. It is proposed that these
policies be eliminated.

Money Market Series, U.S. Government Securities Series, Diversified Income
Series, Asset Allocation Series and Growth Stock Series have a policy
prohibiting them from pledging, mortgaging or hypothecating their assets, except
that each Series may do so in an amount up to 10% of the value of its total
assets to secure borrowing. The other Series are allowed to pledge, mortgage or
hypothecate their assets to an unlimited extent to secure borrowings, in
connection with the writing of call options in the case of Large Cap Growth
Series, and in connection with collateral arrangements related to permissible
activities for High Yield Series, Value Series, Growth & Income Series,
Aggressive Growth Series and Global Growth Series. Each of the foregoing
policies is set out in its entirety in the Appendix.

The Series adopted these fundamental investment policies in order to comply
with state securities laws that no longer apply. Management believes that these
policies are unnecessary since, even if the Series are not restricted in their
ability to pledge assets, they are limited in their ability to borrow by the
1940 Act.

H. Eliminate the Policy Prohibiting Short Sales of Securities

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<PAGE>

The foregoing Series have fundamental policies prohibiting short sales of
securities. For each Series other than Large Cap Growth Series, the policy has
an exception for sales "against the box." It is proposed that these policies be
eliminated.

The Series adopted these policies in order to comply with state securities
laws that no longer apply. Series management believes that these policies are
not necessary because the Series will be restricted in their ability to sell
securities short by the restrictions on the issuance of senior securities
imposed by the 1940 Act. A short sale is made by selling a security the Series
does not own. A short sale is "against the box" if the Series contemporaneously
owns, or has the right to obtain at no added cost, securities identical to those
sold short. The Commission staff has taken the position that a short sale,
other than a short sale against the box, involves the creation of a senior
security, and violates the 1940 Act prohibition on the issuance of senior
securities unless a Series sets aside cash or liquid securities in an amount
equal to the current value of the securities sold short.

I. Eliminate the Policy Restricting Margin Purchases

This proposal applies to High Yield Series, Value Series, Growth & Income
Series, Aggressive Growth Series, Global Growth Series and Large Cap Growth
Series.

The foregoing Series have policies, separate and apart from their borrowing
policies, prohibiting them from purchasing securities on margin. It is proposed
that these policies be eliminated.

The policies for High Yield Series, Value Series, Growth & Income Series,
Aggressive Growth Series and Global Growth Series provide that the Series will
not purchase securities on margin, except that they may purchase securities on a
when-issued, delayed delivery or forward commitment basis, may obtain such
short-term credit as they need for the clearance of securities transactions and
may make margin deposits in connection with futures contracts. The policy for
Global Growth Series provides that the Series will not purchase securities on
margin except for such short-term credits as may be necessary for the clearance
of transactions.

These policies are not required to be fundamental by the 1940 Act. Even if
eliminated, however, each Series' potential use of margin transactions beyond
transaction in futures and options and for the clearance of purchases and sales
of securities, including the use of margin in ordinary securities transactions,
will generally be limited by the current position taken by the staff of the
Commission that margin transactions with respect to securities are prohibited
under the 1940 Act because they create senior securities. "Margin transactions"
involve the purchase of securities with money borrowed from a broker, with cash
or eligible securities being used as collateral against the loan. Each Series'
ability to engage in margin transactions is also limited by the restrictions on
borrowing imposed by the 1940 Act.

A number of Series have restrictions on purchasing securities on margin
that are included in their borrowing policies. These restrictions will be
eliminated if shareholders approve the modifications of the borrowing policies
for these Series proposed above under "Modify the Policies Regarding Borrowing
and the Issuance of Senior Securities."

J. Eliminate the Policy Prohibiting Transactions with Affiliates

This proposal applies to Money Market Series, U.S. Government Securities Series,
Diversified Income Series, Asset Allocation Series and Growth Stock Series.

It is proposed that the fundamental policies of the foregoing Series
prohibiting transactions with affiliates be eliminated.

Each of the foregoing Series has a fundamental policy providing that it may
not purchase portfolio securities from, or sell portfolio securities to, the
Series' adviser, the Series' underwriter, any officer, director or employee of
the Series, or any officer or director of the Series' underwriter or adviser.
These transactions are prohibited by the 1940 Act and therefore the policy is
not necessary.

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<PAGE>

K. Eliminate the Policy Prohibiting Participation in a Joint Trading Account

This proposal applies to Money Market Series, U.S. Government Securities Series,
Diversified Income Series, Asset Allocation Series and Growth Stock Series.

Each of the foregoing Series has a fundamental policy providing that it may
not participate in a joint trading account. It is proposed that these policies
be eliminated.

Management believes that the Series' policies regarding joint trading
accounts are unnecessary, since participation by a mutual fund in a joint
trading account is governed by the 1940 Act. Section 12(a)(2) of the 1940 Act
provides that it is unlawful for a fund to participate in a joint trading
account in securities "in contravention of such rules and regulations or orders
as the Commission may prescribe as necessary or appropriate in the public
interest or for the protection of investors." The fund would currently have to
apply for an exemptive order from the Commission in order to participate in a
joint securities trading account, and they have no current intention of doing
so.

L. Eliminate the Policy Limiting Investments in Restricted Securities

This proposal applies to Money Market Series, U.S. Government Securities Series,
Diversified Income Series, Asset Allocation Series and Growth Stock Series.

Each of the foregoing Series has a fundamental policy providing that it may
not invest more than 5% of the value of its assets in restricted securities. It
is proposed that these policies be eliminated.

The Series' policy regarding investments in restricted securities was
designed to assure that each Series' portfolio would consist primarily of
securities that are readily marketable, and that each Series would therefore be
able to make timely payment for redeemed shares. However, the policy is more
restrictive than the Commission's current policy, which permits money market
mutual funds to invest up to 10% and other mutual funds to invest up to 15% of
their net assets in illiquid securities. The Commission determined that these
standards should satisfactorily assure that mutual funds will be able to make
timely payment for redeemed shares. In addition, "restricted" securities are no
longer necessarily illiquid, and may in fact be readily marketable. Therefore,
the Board of Directors has determined that there should be no limitation imposed
upon the total value of restricted securities purchased by a fund. Rather, each
fund should be limited only with respect to the percentage of its net assets
invested in securities deemed to be illiquid, regardless of whether such
securities are restricted. A non-fundamental policy has been adopted for each
Series providing that it may invest up to 15% of its net assets in illiquid
securities (10% in the case of Money Market Series).

M. Eliminate the Policy Prohibiting Options Transactions

This proposal applies to Money Market Series, U.S. Government Securities Series,
Diversified Income Series, Asset Allocation Series, Growth Stock Series and
Large Cap Growth Series.

Money Market Series, U.S. Government Securities Series, Diversified Income
Series, Asset Allocation Series and Growth Stock Series have policies providing
that they may not write, purchase or sell puts, calls or combinations thereof.
Large Cap Growth Series has a policy providing that it may not write put
options. It is proposed that these policies be eliminated.

A put option gives the purchaser the right to sell a security or other
instrument to the writer of the option at a stated price during the term of the
option. A call option gives the purchaser the right to purchase a security or
other instrument from the writer of the option at a stated price during the term
of the option. Thus, if a Series writes a call option on a security, it becomes
obligated during the term of the option to deliver the security underlying the
option upon payment of the exercise price. If a Series writes a put option, it
becomes obligated during the term of the option to purchase the security
underlying the option at the exercise price if the option is exercised.

The Series may use put and call options for a variety of purposes. For
example, if a portfolio manager wishes to hedge a security a Series owns against
a decline in price, the manager may purchase a put option on the underlying
security; i.e., purchase the right to sell the security to a third party at a
stated price. If the underlying

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security then declines in price, the manager can exercise the put option, thus
limiting the amount of loss resulting from the decline in price. Similarly, if
the manager intends to purchase a security at some date in the future, the
manager may purchase a call option on the security today in order to hedge
against an increase in its price before the intended purchase date. Put and call
options also can be used for speculative purposes. For example, if a portfolio
manager believes that the price of stocks generally is going to rise, the
manager may purchase a call option on a stock index, the components of which are
unrelated to the stocks held or intended to be purchased. Finally, a portfolio
manager may write options on securities owned in order to realize additional
income. The Series would receive premiums from writing call or put options,
which they would retain whether or not the options were exercised. By writing a
call option, a Series might lose the potential for gain on the underlying
security while the option is open, and by writing a put option a Series might
become obligated to purchase the underlying security for more than its current
market price upon exercise. If a Series purchases a put or call option, any loss
to the Series is limited to the premium paid for, and transaction costs paid in
connection with, the option.

If the Series enter into options transactions, their risk will be limited
to a certain extent by the provisions of the 1940 Act that prohibit mutual funds
from issuing senior securities. Certain options transactions could be deemed to
result in a prohibited issuance of senior securities, since they may obligate a
fund to pay money to a third party at some time in the future. However, the
Commission staff has taken the position that a fund may engage in these options
transactions if it takes certain steps designed to limit risk to the Series.
These steps typically involve either "covering" the transaction with an
offsetting transaction or segregating cash or liquid securities in an amount
sufficient to cover the Series' exposure under the option transaction. Although
these steps will not protect a Series from loss on these transactions, they
assure that the Series will have the securities or liquid assets required to
meet its obligations thereunder, and they prevent the Series from effectively
"leveraging" its portfolio.

Given these staff positions, management believes that it is appropriate to
eliminate the fundamental investment restrictions discussed above. The
elimination of these restrictions would provide the Board of Directors with the
flexibility to determine, without shareholder vote, whether and to what extent
it would be appropriate for the Series to enter into options transactions, given
their different investment objectives.

N. Eliminate Diversification Policies

This proposal applies to Blue Chip Stock Series, Small Cap Value Series and
Large Cap Growth Series

Each of the foregoing Series has one or more policies related to
diversification. It is proposed that these policies be eliminated.

Blue Chip Stock Series and Small Cap Value Series have policies providing
that neither Series will purchase a security if, as a result, with respect to
75% of the value of its total assets, more than 5% of the value of its total
assets would be invested in the securities of a single issuer. The restriction
does not apply to securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities ("U.S. Government Securities"). Blue Chip Stock
Series and Small Cap Value Series also have policies providing that neither
Series will purchase a security if, as a result, with respect to 75% of the
value of its total assets, more than 10% of the outstanding voting securities of
any issuer would be held by the Series. Once again, the restriction does not
apply to U.S. Government Securities. Large Cap Growth Series has a policy
providing that the Series will not purchase more than 10% of the outstanding
voting securities of any one issuer.

Management believes that it is appropriate to eliminate each of these
investment policies. Blue Chip Stock Series, Small Cap Value Series and Large
Cap Growth Series have each elected, as a fundamental policy that may not be
changed without shareholder vote, to operate as a "diversified" investment
company as defined under the 1940 Act. Section 5(b)(1) of the 1940 Act
currently defines a diversified investment company as one that meets the
following requirements:

At least 75% of the value of its total assets is represented by cash and
cash items (including receivables), Government securities, securities of
other investment companies, and other securities for the purposes of this
calculation limited in respect of any one issuer to an amount not greater
in value than 5 per centum of the value of the total assets of such
management company and to not more than 10 per centum of the outstanding
voting securities of such issuer.

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This definition is nearly identical to the diversification policies currently in
place for Blue Chip Stock Series and Small Cap Value Series, and management
therefore feels that these diversification policies are redundant and
unnecessary. The policy currently in place for Large Cap Growth Series is more
restrictive than is required for the Series to operate as a diversified Series,
since it applies to 100% of the Series' assets and does not have an exception
for U.S. Government Securities. Management believes that the policy is
unnecessarily restrictive and should be eliminated.

Vote Required

The Board of Directors recommends that the shareholders of each Series vote
to approve the proposed changes to that Series' investment policies. The
changes must be approved by a majority of the outstanding shares of the Series,
as defined in the 1940 Act, which means the lesser of the vote of (a) 67% of the
shares of the Series present at a meeting where more than 50% of the outstanding
shares are present in person or by proxy, or (b) more than 50% of the
outstanding shares of the Series. Unless otherwise instructed, the proxies will
vote for the approval of the proposed investment policy changes.

PROPOSAL THREE
TO PERMIT ADVISERS TO SELECT AND CONTRACT WITH
SUB-ADVISERS WITHOUT OBTAINING SHAREHOLDER APPROVAL

This proposal applies to all Series.

Under the 1940 Act, Advisers cannot select a sub-adviser for a Series, and
enter into a sub-advisory agreement with that sub-adviser, without obtaining
shareholder approval. Similarly, shareholders must approve any material
amendment to an existing sub-advisory agreement between Advisers and a sub-
adviser. On June 23, 1998, the Board of Directors authorized the Company to file
an application for an order of the Securities and Exchange Commission (the
"Commission") granting relief from the provisions of the 1940 Act that require
shareholder approval in these cases.

The Company's structure is different from that of many investment
companies. Under a traditional investment company structure, the investment
adviser is a single entity that employs one or more individuals internally as
portfolio managers to make investment decisions. The adviser is free to retain
or terminate those portfolio managers without board or shareholder approval. In
the case of the Company, however, Advisers does not make the day-to-day
investment decisions for a number of Series. Instead, Advisers selects,
supervises, evaluates and, if necessary, terminates sub-advisers which make
those day-to-day investment decisions. Management believes that permitting
Advisers to perform these services, without incurring the delay and expense
involved with obtaining shareholder approval of new sub-advisory agreements or
material amendments to existing sub-advisory agreements, is appropriate and in
the best interest of each Series' shareholders and will allow each Series to
operate more efficiently.

If the requested relief is granted, when a new sub-adviser for a Series is
retained by Advisers, shareholders will not be required to approve the sub-
advisory agreement between Advisers and that sub-adviser. Similarly, if an
existing sub-advisory agreement is amended in any material respect, approval by
the shareholders of the affected Series will not be required. Moreover, the
Company will be able to continue relations with an existing sub-adviser whose
sub-advisory agreement has been "assigned" as a result of a change of control of
the sub-adviser, without obtaining shareholder approval. The 1940 Act requires
automatic termination of an advisory contract in the event of such an
assignment. The requested relief will allow Advisers to enter into a new sub-
advisory agreement with the existing sub-adviser without obtaining shareholder
approval. The Board of Directors (including a majority of the Directors who are
not parties to the contract or interested persons of any such party) will
continue to approve new contracts between the Adviser and a sub-adviser as well
as changes to existing contracts. The requested relief will not apply to the
advisory agreements between Advisers and the Company, and material changes to
those agreements will continue to require approval of shareholders. In
addition, Advisers will not enter into a sub-advisory agreement with a sub-
adviser that is an "affiliated person," as defined in the 1940 Act, of the
Company or Advisers, other than by reason of serving as a sub-adviser to one or
more of the Series (an "Affiliated Sub-Adviser"),without that sub-advisory
agreement being approved by the applicable Series' shareholders.

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<PAGE>

If the requested relief is granted, the Company will also be permitted, in
a situation where there is more than one sub-adviser to a Series, to disclose in
its prospectus, statement of additional information, financial statements and
certain other documents only (i) fees paid to Advisers and any Affiliated Sub-
Advisers by that Series, (ii) aggregate fees paid by Advisers to sub-advisers of
that Series, other than Affiliated Sub-Advisers, and (iii) fees paid by Advisers
to any Affiliated Sub-Adviser. Therefore, in such a situation the Company would
not have to disclose separately the fees paid by Advisers to a particular sub-
adviser, other than an Affiliated Sub-Adviser.

The application was recently filed with the Commission. While there can be
no assurance that the SEC will grant the requested relief, if it does, one of
the conditions to such relief is expected to be that this change also be
approved by shareholders of a Series prior to being effected for that Series.
Therefore, shareholders of each Series are being asked to vote on this proposal.
If the requested relief is granted, the Company and Advisers will be required to
agree to conditions imposed by the Commission in connection with the relief.
Such conditions are expected to include, but may not be limited to, the
following requirements:

(1) Before a Series may rely on the requested order, this proposal
must be approved by a majority of the outstanding voting securities of the
Series (or, if the Series serves as a funding medium for any sub-account of
a registered separate account, pursuant to voting instructions provided by
the unitholders of the sub-account (the Unitholders")), as defined in the
1940 Act.

(2) Any Series relying on the requested relief must disclose in its
prospectus the existence, substance and effect of any order granted by the
SEC. The prospectus must prominently disclose that Advisers has ultimate
responsibility (subject to oversight by the Board of Directors) to oversee
the sub-advisers and recommend their hiring, termination and replacement.

(3) Within 90 days of the hiring of any new sub-adviser, shareholders
or Unitholders will be furnished all information about the new sub-adviser
or sub-advisory agreement that would be included in a proxy statement,
except that the fee disclosure will be as noted above in the case of Series
with more than one sub-adviser.

(4) Advisers will not enter into a sub-advisory agreement with any
Affiliated Sub-Adviser without that sub-advisory agreement, including the
compensation to be paid thereunder, being approved by the Series'
shareholders (or pursuant to voting instructions provided by the
Unitholders).

(5) At all times, a majority of the Board of Directors will be
persons who are not "interested persons" of the Company (as defined in
Section 2(a)(19) of the 1940 Act) (the "Independent Directors"), and the
nomination of new or additional Independent Directors will be at the
discretion of the then-existing Independent Directors.

(6) When a sub-adviser change is proposed for a Series with an
Affiliated Sub-Adviser, the Board of Directors, including a majority of the
Independent Directors, will make a separate finding, reflected in the Board
of Directors' minutes, that the change is in the best interests of the
Series and its shareholders or Unitholders and does not involve a conflict
of interest from which Advisers or the Affiliated Sub-Adviser derives an
inappropriate advantage.

(7) Advisers will provide general management services to the Company
and the Series, including overall supervisory responsibility for the
general management and investment of each Series, and, subject to review
and approval by the Board of Directors, will (a) set each Series' overall
investment strategies; (b) evaluate, select and recommend sub-advisers to
manage all or a part of a Series' assets; (c) when appropriate, allocate
and reallocate a Series' assets among multiple sub-advisers; (d) monitor
and evaluate the investment performance of sub-advisers; and (e) implement
procedures reasonably designed to ensure that the sub-advisers comply with
the relevant Series' investment objective, policies and restrictions.

(8) No director or officer of the Company or Advisers will own
directly or indirectly (other than through a pooled investment vehicle that
is not controlled by such person) any interest in any sub-adviser except
for (a) ownership of assets in Advisers or any entity that controls, is
controlled by or is under common control with Advisers; or (b) ownership of
less than 1% of the outstanding securities of any class

-15-
<PAGE>

of equity or debt of a publicly-traded company that is either a sub-adviser
or an entity that controls, is controlled by or is under common control
with a sub-adviser.

(9) The Series will disclose in its registration statement the
modified fee disclosure discussed above.

If the requested relief is granted by the Commission and shareholders of
the Series approve this proposal, Advisers will have the ability, subject to the
approval of the Board of Directors, to hire and terminate sub-advisers to the
Series and to change materially the terms of the sub-advisory agreements,
including the compensation paid to the sub-advisers, without the approval of the
shareholders of the Series. Such changes in sub-advisory arrangements would not
increase the fees paid by a Series for investment advisory services since sub-
advisory fees are paid by Advisers out of its advisory fee and are not
additional charges to a Series.

While Advisers expects its relationship with the sub-advisers to the Series
to be long-term and stable over time, approval of this proposal will permit
Advisers to act quickly in situations where Advisers and the Board of Directors
believe that a change in sub-advisers or to a sub-advisory agreement, including
any fee paid to a sub-adviser, is warranted. This proposal will eliminate the
delay of convening a meeting of shareholders to approve certain sub-advisory
changes.

This Proposal will become effective with respect to a Series upon the
latest of (i) approval of the proposal by the shareholders of the Series, (ii)
receipt by Advisers and the Company of the exemptive relief described above, and
(iii) disclosure in the Series' prospectus of the existence, substance and
effect of the exemptive relief.

Vote Required

The Board of Directors of the Company recommends that the shareholders of
each Series vote to approve this proposal. Adoption of the proposal by a Series
requires the favorable vote of a majority of the outstanding shares of the
Series, as defined in the 1940 Act, which means the lesser of the vote of (a)
67% of the shares of the Series present at a meeting where more than 50% of the
outstanding shares are present in person or by proxy, or (b) more than 50% of
the outstanding shares of the Series. Unless otherwise instructed, the proxies
will vote for the approval of the proposal.

PROPOSAL FOUR
TO APPROVE AN AMENDED INVESTMENT
ADVISORY AND MANAGEMENT AGREEMENT BETWEEN
THE COMPANY AND FORTIS ADVISERS, INC.

This proposal applies to all Series.

The Proposed Amendment

The Company has entered into the following Investment Advisory and
Management Agreements with Advisers (the "Current Advisory Agreements"):

. an agreement dated May 1, 1992 on behalf of Growth Stock Series, U.S.
Government Securities Series, Diversified Income Series, Money Market
Series, Asset Allocation Series and Global Growth Series;

. an agreement dated May 1, 1994 on behalf of High Yield Series, Growth &
Income Series and Aggressive Growth Series;

. an agreement dated December 8, 1994 on behalf of International Stock
Series, Global Bond Series and Global Asset Allocation Series;

. an agreement dated March 22, 1996 on behalf of Value Series, S&P 500
Index Series and Blue Chip Stock Series; and

-16-
<PAGE>

. an agreement dated April 2, 1998 on behalf of Small Cap Value Series, Mid
Cap Stock Series and Large Cap Growth Series.

It is proposed that the Company enter into a single new Investment Advisory
and Management Agreement with Advisers relating to all the Series (the "New
Advisory Agreement"). The New Advisory Agreement would be identical in all
material respects to the Current Advisory Agreements, except that it would
authorize Advisers to retain one or more sub-advisers for each Series. The New
Advisory Agreement would not change the rate of the advisory fee payable by any
Series.

The first two Current Advisory Agreements listed above do not contain a
specific provision authorizing Advisers to retain one or more sub-advisers for
each Series to which the Agreements relate. The other Current Advisory
Agreements allow Advisers to appoint a sub-adviser for each Series, but do not
provide for the possibility of Advisers' appointing multiple sub-advisers for a
single Series. The Board of Directors has approved, and recommends that
shareholders approve, the New Advisory Agreement, which will contain the
following provision authorizing Advisers, at its option and expense, to retain a
sub-adviser or sub-advisers for each Series:

Advisers may, at its option and expense, with respect to each Series,
appoint a sub-adviser or sub-advisers, which shall assume such
responsibilities and obligations of Advisers pursuant to this Investment
Advisory and Management Agreement as shall be delegated to the sub-adviser
or sub-advisers; provided, however, that any discretionary investment
decisions made by a sub-adviser on behalf of any of the Series shall be
subject to approval or ratification by Advisers, and, not withstanding any
delegation of responsibilities and obligations to a sub-adviser, Advisers
shall retain the right, in its discretion, to make investment decisions for
the Series. Any appointment of a sub-adviser and assumption of
responsibilities and obligations of Advisers by such sub-adviser shall be
subject to approval by the Board of Directors of the Company and, to the
extent (if any) required by law, by the shareholders of the Series. Any
appointment of a sub-adviser for a Series pursuant hereto shall in no way
limit or diminish Advisers' obligations and responsibilities under this
Investment Advisory and Management Agreement, and Advisers shall be
responsible for monitoring compliance by the sub-adviser(s) with the
investment policies, restrictions, and limitations of the Series, and will
also be responsible for ensuring that the Series are managed in a way so
that: (1) they meet the requirements of Subchapter M of the Internal
Revenue Code to be taxed as a regulated investment company; and (2) they
comply with the provisions of Section 817(h) of the Internal Revenue Code,
and the regulations promulgated thereunder.

Advisers has no current intention of retaining a sub-adviser for any Series
that does not currently have a sub-adviser, and has no current intention of
retaining additional sub-advisers for the Series that currently have a single
sub-adviser. The Board of Directors believes, however, that it would be in the
shareholders' best interests for Advisers to have this flexibility with respect
to each Series. For this reason, the New Advisory Agreement was approved by the
Board of Directors at a meeting held June 23, 1998, subject to the approval of
Series shareholders.

General Information Concerning the New and Current Advisory Agreements

None of the Current Advisory Agreements has been submitted to a shareholder
vote for any reason, except that each Current Advisory Agreement was approved by
the respective Series' initial shareholder. Pursuant to both the New Advisory
Agreement and the Current Advisory Agreements, Advisers acts as the investment
adviser for, and manages the affairs, business and the investment of the assets
of the respective Series, and is required to create and maintain all required
reports, books and records relating to its activities and obligations under the
Agreements. Advisers, at its own expense, furnishes suitable office space and
all necessary office facilities, equipment and personnel for servicing the
investments of the Series. In addition, Advisers is obligated to arrange, if
requested by the Company, for officers, employees or other affiliates of
Advisers to serve without compensation from the Company as directors, officers,
or employees of the Company if duly elected to such positions by the
shareholders or directors of the Company. Advisers receives investment advisory
and management fees under the New and Current Advisory Agreements at the rates
set forth below:

-17-
<PAGE>

<TABLE>
<CAPTION>
Annual Investment Advisory
Series Average Net Assets and Management Fee
- -------------------------- -------------------------- --------------------------
<S> <C> <C>
Money Market For the first $500 million .30%
For assets over $500 million .25%
U.S. Government Securities For the first $50 million .50%
For assets over $50 million .45%
Diversified Income For the first $50 million .50%
For assets over $50 million .45%
Global Bond For the first $100 million .75%
For assets over $100 million .65%
High Yield For the first $250 million .50%
For assets over $250 million .45%
Global Asset Allocation For the first $100 million .90%
For assets over $100 million .85%
Asset Allocation For the first $250 million .50%
For assets over $250 million .45%
Value For the first $100 million .70%
For assets over $100 million .60%
Growth & Income For the first $100 million .70%
For assets over $100 million .60%
S&P 500 Index All levels of assets .40%
Blue Chip Stock For the first $100 million .90%
For assets over $100 million .85%
International Stock For the first $100 million .85%
For assets over $100 million .80%
Mid Cap Stock For the first $100 million .90%
For the next $150 million .85%
For assets over $250 million .80%
Small Cap Value For the first $50 million .90%
For assets over $50 million .85%
Global Growth For the first $500 million .70%
For assets over $500 million .60%
Large Cap Growth For the first $100 million .90%
For the next $100 million .85%
For assets over $200 million .80%
Growth Stock For the first $100 million .70%
For assets over $100 million .60%
Aggressive Growth For the first $100 million .70%
For assets over $100 million .60%
</TABLE>

-18-
<PAGE>

The following table sets forth investment advisory and management fees paid
by the Series to Advisers during the fiscal year ended December 31, 1998, as
well as sub-advisory fees which were in turn paid by Advisers to the sub-
advisers of certain Series.

<TABLE>
<CAPTION>
Investment Advisory Sub-Advisory Fees
Series and Management Fee Paid by Advisers
- ------------------------- ---------------------- ------------------------
<S> <C> <C>
Money Market $ 194,182 --
U.S. Government Securities 673,637 --
Diversified Income 521,148 --
Global Bond 163,906 $ 76,489
High Yield 338,252 --
Global Asset Allocation 546,257 303,415
Asset Allocation 2,471,163 --
Value 531,886 --
Growth & Income 1,816,200 --
S&P 500 Index 707,922 300,867
Blue Chip Stock 1,131,224 551,946
International Stock 782,792 414,873
Mid Cap Stock 49,482 26,668
Small Cap Value 61,548 34,193
Global Growth 2,487,275 --
Large Cap Growth 63,457 35,254
Growth Stock 4,378,864 --
Aggressive Growth 871,318 --
</TABLE>

The New Advisory Agreement and each Current Advisory Agreement will
terminate automatically in the event of its assignment. In addition, each such
agreement is terminable at any time, without penalty, by the Board of Directors
or, with respect to any particular Series, by vote of a majority of the
outstanding voting securities of such Series, on not more than 60 days' written
notice to Advisers, and by Advisers on 60 days' notice to the Company. Unless
sooner terminated, the New Advisory Agreement and each Current Advisory
Agreement shall continue in effect for more than two years after its execution
only so long as such continuance is specifically approved at least annually by
either the Board of Directors or, with respect to any particular Series, by vote
of a majority of the outstanding voting securities of such Series, provided that
in either event such continuance is also approved by the vote of a majority of
the directors who are not parties to such agreement, or interested persons of
such parties, cast in person at a meeting called for the purpose of voting on
such approval.

Vote Required

The Board of Directors recommends that the shareholders of each Series vote
to approve the proposed New Advisory Agreement. Adoption of the proposal by a
Series requires the favorable vote of a majority of the outstanding shares of
the Series, as defined in the 1940 Act, which means the lesser of the vote of
(a) 67% of the shares of the Series present at a meeting where more than 50% of
the outstanding shares are present in person or by proxy, or (b) more than 50%
of the outstanding shares of the Series. Unless otherwise instructed, the
proxies will vote for the approval of the proposed New Advisory Agreement.

-19-
<PAGE>

PROPOSAL FIVE
RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS

This proposal applies to all Series.

The 1940 Act provides that every registered investment company shall be
audited at least once each year by independent public accountants selected by a
majority of the directors of the investment company who are not interested
persons of the investment company or of its investment adviser. The 1940 Act
provides that the selection be submitted for ratification or rejection by the
shareholders.

The Company's Board of Directors, including a majority of the directors
who are not interested persons of Advisers or the Company, upon the
recommendation of the Company's Audit Committee, have selected KPMG LLP to be
the Company's independent public accountants for the fiscal year ending December
31, 1999. KPMG LLP has no direct or material indirect financial interest in the
Company or in Advisers, other than receipt of fees for services to the Company.
KPMG LLP has served as the independent public accountants of the Company since
1989. KPMG LLP also serves as independent public accountants for each of the
other investment companies managed by Advisers.

Representatives of KPMG LLP are expected to be present at the meeting.
Such representatives will be given the opportunity to make a statement to the
shareholders if they desire to do so and are expected to be available to respond
to any questions which may be raised at the meeting.

Vote Required

The Board of Directors recommends that shareholders vote in favor of
the ratification of KPMG LLP as the independent public accountants for the
Company. The affirmative vote of a majority of the shares of the Company
represented at the meeting, provided at least a quorum (more than 50% of the
outstanding shares) is represented in person or by proxy, is sufficient for the
ratification of the selection of the independent public accountants. Unless
otherwise instructed, the proxies will vote for the ratification of the
selection of KPMG LLP as the Company's independent public accountants.

EXECUTIVE OFFICERS OF THE COMPANY

Information about each executive officer's position and term of office
with the Company and business experience during the past five years is set forth
below. Unless otherwise indicated, all positions have been held more than five
years. No executive officer receives any compensation from the Company.

Gary N. Yalen (56) Vice President since 1995 President and Chief Investment Officer of Advisers
(since 1995) and Senior Vice President, Investments,
of Fortis, Inc.; prior to 1996, President and Chief
Investment Officer, Fortis Asset Management, a
former division of Fortis, Inc.
Howard G. Hudson (61) Vice President since 1995 Executive Vice President and Head of Fixed Income
Investments of Advisers since 1995; prior to 1996,
Senior Vice President, Fixed Income, Fortis Asset
Management.
Lucinda S. Mezey (51) Vice President since 1997 Executive Vice President and Head of Equity
Investments of Advisers since October 1997; from
1995 to October 1997, Chief Investment Officer, Alex
Brown Capital Advisory and Trust Co., Baltimore, MD;
prior to 1995, Senior Vice President and Head of
Equity Investments, PNC Bank, Philadelphia, PA.
</TABLE>

-20-
<PAGE>

<TABLE>
<CAPTION>
Name and (Age) Position/Term of Office Business Experience During Past Five Years
- -------------- ----------------------- ------------------------------------------
<S> <C> <C>
James S. Byrd (47) Vice President since 1991 Executive Vice President of Advisers since 1995;
prior to 1995, Vice President of Advisers and of
Investors.
Nicholas L.M. dePeyster (32) Vice President since 1995 Vice President of Advisers since 1995; prior
to 1996, Vice President, Equities, Fortis Asset
Management.
Diane M. Gotham (40) Vice President since 1998 Vice President of Advisers since 1998; from 1994 to
1998, securities analyst for Advisers.
Laura E. Granger (37) Vice President since 1998 Vice President of Advisers since 1998; from 1993 to
1998, portfolio manager, General Motors Investment
Management, New York, NY.
Maroun M. Hayek (50) Vice President since 1995 Vice President of Advisers since 1995; prior to 1996,
Vice President, Fixed Income, Fortis Asset Management.
Robert C. Lindberg (46) Vice President since 1993 Vice President of Advisers since 1993.

Charles L. Mehlhouse (56) Vice President since 1996 Vice President of Advisers since 1996; prior to 1996,
Portfolio Manager, Marshall & Ilsley Bank Corporation,
Milwaukee, WI.
Kevin J. Michels (47) Vice President since 1995 Vice President of Advisers since 1995; prior to 1996,
Vice President, Administration, Fortis Asset Management.
Christopher J. Pagano (35) Vice President since 1996 Vice President of Advisers since 1996; prior to 1996,
government strategist, Merrill Lynch, New York, NY.
Stephen M. Rickert (55) Vice President since 1995 Vice President of Advisers since 1995; from 1994 to 1996,
Corporate Bond Analyst, Fortis Asset Management.
Michael J. Romanowski (47) Vice President since 1998 Vice President of Advisers since 1988; from 1995 to
1998, portfolio manager, Value Line, New York, NY;
prior to 1995, securities analyst, Conning & Co.,
Hartford, CT.
Christopher J. Woods (38) Vice President since 1995 Vice President of Advisers since 1995; prior to 1996
Vice President, Fixed Income, Fortis Asset Management.
Robert W. Beltz, Jr. (49) Vice President since 1993 Vice President, Securities Operations, of Advisers and
of Investors.
Peggy E. Ettestad (41) Vice President since 1997 Senior Vice President, Operations, of Advisers since
March 1997; prior to March 1997, Vice President, G.E.
Capital Fleet Services, Minneapolis, MN.
Tamara L. Fagely (40) Treasurer since 1993 and Vice President of Advisers and Investors since 1998;
Vice President since 1996 prior thereto, Second Vice
President of Advisers and of Investors from 1995 to 1998.
Dickson W. Lewis (49) Vice President since 1997 Senior Vice President, Marketing and Sales, of Advisors
since July 1997; from 1993 to July 1997, President and
Chief Executive Officer, Hedstrom/Blessing, Inc.,
Minneapolis, MN.
David A. Peterson (56) Vice President since 1991 Vice President and Assistant General Counsel, Fortis
Benefits Insurance Company.
Scott R. Plummer (39) Vice President since 1996 Vice President and Associate General Counsel of
Advisers since 1998; Assistant Secretary of Advisers
since 1994; prior thereto, Second Vice President and
Corporate Counsel of Advisers from 1994 to 1998.
</TABLE>

-21-
<PAGE>

<TABLE>
<CAPTION>
Name and (Age) Position/Term of Office Business Experience During Past Five Years
- -------------- ----------------------- ------------------------------------------
<S> <C> <C>
Rhonda J. Schwartz (41) Vice President since 1996 Senior Vice President and General Counsel of
Advisers, Senior Vice President and General
Counsel, Life and Investment Products, of Fortis
Benefits Insurance Company and Vice President and
General Counsel, Life and Investment Products, of
Time Insurance Company since 1996; from 1993 to 1996,
Vice President and General Counsel, Fortis, Inc.
Melinda S. Urion (45) Vice President since 1997 Senior Vice President and Chief Financial Officer
of Advisers since December 1997; from 1995 to 1997,
Senior Vice President of Finance and Chief Financial
Officer, American Express Financial Corporation;
prior to March 1995, Corporate Controller, American
Express Financial Corporation.
Michael J. Radmer (54) Secretary since 1978 Partner, Dorsey & Whitney LLP, the Company's
General Counsel.
</TABLE>

ADDITIONAL INFORMATION ABOUT THE COMPANY

As of June 30, 1999, all directors and officers as a group owned less
than 1% of the outstanding shares of each Series of the Company. As of this
date, each Series had the following issued and outstanding common shares and, to
the knowledge of Company management, FBIC was an owner of more than 5% of the
voting shares of each Series. The number and percentage of shares owned by FBIC
as of this date is provided below. The address of FBIC is 500 Bielenberg Drive,
Woodbury, MN 55125.

<TABLE>
<CAPTION>
Shares Owned Percent Owned
Series Outstanding Shares by FBIC by FBIC
- ------ ------------------ ------------ -------------
<S> <C> <C> <C>
Money Market 7,525,132 7,431,467 98.76
U. S. Government Securities 13,869,569 13,726,104 98.97
Diversified Income 9,399,771 9,270,298 98.62
Global Bond 2,417,123 1,872,900 98.95
High Yield 7,272,334 7,075,056 97.29
Global Asset Allocation 4,913,635 4,496,750 97.61
Asset Allocation 28,206,862 28,053,674 99.46
Value 6,051,906 5,873,657 97.06
Growth & Income 14,222,183 13,827,766 97.23
S&P 500 Index 16,763,126 16,252,031 96.95
Blue Chip Stock 11,978,008 11,186,813 97.42
International Stock 7,453,913 7,294,526 97.86
Mid Cap Stock 1,881,672 1,357,487 98.72
Small Cap Value 2,672,503 2,130,525 98.43
Global Growth 14,002,007 13,930,983 99.49
Large Cap Growth 3,669,133 2,996,058 95.28
Growth Stock 17,345,680 17,296,931 99.72
Aggressive Growth 8,773,702 8,678,801 98.92
</TABLE>

ADDITIONAL INFORMATION ABOUT THE ADVISER

Fortis, Inc. ("Fortis") owns 100% of the outstanding voting securities
of Advisers. Fortis, whose address is One Chase Manhattan Plaza, New York, New
York, is a financial services company which is part of a worldwide group of
companies active in the fields of insurance, banking and investments. Fortis is
50% owned by Fortis (NL) N.V. of The Netherlands and 50% owned by Fortis (B) of
Belgium. The address of Fortis (NL) N.V. is Archimedeslaan 10, 3584 BA Utrecht,
The Netherlands. The address of Fortis (B) is Boulevard Emile Jacqanin 53, 1000
Brussels, Belgium.

-22-
<PAGE>

The name, address and principal occupation of the principal executive
officer and each director of Advisers are set forth below.

<TABLE>
<CAPTION>
Name Address Principal Occupation
- ---- ------- --------------------
<S> <C> <C>
Dean C. Kopperud 500 Bielenberg Dr. Chief Executive Officer of Advisers.
Woodbury, MN See Proposal One for additional information.
Gary N. Yalen One Chase Manhattan Plaza Director of Advisers. See "Executive Officers
New York, NY of the Company" above.
James S. Byrd 90 South 7/th/Street, #5030 Director of Advisers. See "Executive Officers
Minneapolis, MN of the Company" above.
</TABLE>

The following officers and directors of the Company are also officers,
directors or employees of Advisers:

<TABLE>
<CAPTION>
Name Position with Company Position with Advisers
- ---- --------------------- ----------------------
<S> <C> <C>
Dean C. Kopperud Director Chief Executive Officer
Gary N. Yalen Vice President President/Chief Investment Officer
Howard G. Hudson Vice President Executive Vice President
Lucinda S. Mezey Vice President Executive Vice President
James S. Byrd Vice President Executive Vice President
Nicholas L.M. dePeyster Vice President Vice President
Diane M. Gotham Vice President Vice President
Laura E. Granger Vice President Vice President
Maroun M. Hayek Vice President Vice President
Robert C. Lindberg Vice President Vice President
Charles L. Mehlhouse Vice President Vice President
Kevin J. Michels Vice President Vice President
Christopher J. Pagano Vice President Vice President
Stephen M. Rickert Vice President Vice President
Michael J. Romanowski Vice President Vice President
Christopher J. Woods Vice President Vice President
Robert W. Beltz, Jr. Vice President Vice President
Peggy L. Ettestad Vice President Senior Vice President
Tamara L. Fagely Vice President/Treasurer Vice President
Dickson Lewis Vice President Senior Vice President
Scott R. Plummer Vice President Vice President/Associate General
Counsel/Assistant Secretary
Rhonda J. Schwartz Vice President Senior Vice President/General Counsel
Melinda S. Urion Vice President Senior Vice President/Chief
Financial Officer
</TABLE>

In addition to acting as the investment adviser for the Series,
Advisers also serves as investment adviser to one closed-end and seven other
open-end investment companies. Advisers serves as the investment adviser to the
following investment company portfolios which have investment objectives similar
to those of one or more of the Series. Advisers is entitled to receive advisory
fees from such portfolios as set forth below. Advisers has not waived, reduced
or otherwise agreed to reduce its advisory fees for any of the portfolios in the
table.

<TABLE>
<CAPTION>
Net Assets as of Rate of Compensation per
Fund June 30, 1999 Average Daily Net Assets
- ---- ---------------- --------------------------------
<S> <C> <C>
Money Fund $ 167,005,792 .60% of assets up to $500 million
.55% of assets in excess of $500 million
U.S. Government Securities Fund $ 329,602,328 .80% of assets up to $50 million
.70% of assets in excess of $50 million
Strategic Income Fund $ 24,243,177 .80% of assets up to $50 million
.70% of assets in excess of $50 million
High Yield Portfolio $ 198,329,328 .80% of assets up to $50 million
.70% of assets in excess of $50 million
</TABLE>

-23-
<PAGE>

<TABLE>
<CAPTION>
Net Assets as of Rate of Compensation per
Fund June 30, 1999 Average Daily Net Assets
- ---- ---------------- --------------------------------
<S> <C> <C>
Asset Allocation Portfolio $ 247,186,602 1.00% of assets up to $100 million
.80% for the next $150 million
.70% of assets in excess of $250 million
Value Fund $ 54,342,824 1.00% of assets up to $100 million
.80% for the next $150 million
.70% of assets in excess of $250 million
Growth & Income Fund $ 46,311,928 1.00% of assets up to $100 million
.80% for the next $150 million
.70% of assets in excess of $250 million
International Equity Portfolio $ 6,967,998 1.00% of assets up to $100 million
.90% of assets in excess of $500 million
Global Growth Portfolio $ 165,039,004 1.00% of assets up to $100 million
.90% of assets in excess of $500 million
Capital Fund $ 656,796,528 1.00% of assets up to $100 million
.80% for the next $150 million
.70% of assets in excess of $250 million
Growth Fund $ 949,598,535 1.00% of assets up to $100 million
.80% for the next $150 million
.70% of assets in excess of $250 million
Capital Appreciation Portfolio $ 177,432,148 1.00% of assets up to $100 million
.80% for the next $150 million
.70% of assets in excess of $250 million
</TABLE>

None of the Series paid any brokerage commissions to Fortis Investors,
Inc., an affiliate of Advisers, in connection with purchases and sales of
portfolio securities during each Series' most recent fiscal year.

SHAREHOLDER PROPOSALS

The Company is not required to hold annual shareholder meetings. Since
the Company does not hold regular meetings of shareholders, the anticipated date
of the next shareholder meeting cannot be provided. Any shareholder proposal
which may properly be included in the proxy solicitation material for a
shareholder meeting must be received by the Series no later than four months
prior to the date proxy statements are mailed to shareholders.

Dated: July 16, 1999 Michael J. Radmer, Secretary

-24-
<PAGE>

Appendix

Fundamental Investment Policies

Money Market Series, U.S. Government Securities Series, Diversified Income
Series, Asset Allocation Series and Growth Stock Series

No Series will:

(1) Purchase securities on margin or otherwise borrow money or issue senior
securities, except that U.S. Government Securities Series, Diversified
Income Series and Asset Allocation Series, in accordance with their
investment objectives and policies, may purchase securities on a when-
issued and delayed delivery basis, within the limitations set forth in the
Prospectus and Statement of Additional Information. Fortis Series may also
obtain such short-term credit as it needs for the clearance of securities
transactions, and may borrow from a bank, for the account of Money Market
Series, U.S. Government Securities Series, Diversified Income Series, Asset
Allocation Series and Growth Stock Series, as a temporary measure to
facilitate redemptions (but not for leveraging or investment) in an amount
that does not exceed 10% of the value of such Series' total assets.
Investment securities will not be purchased for a Series while outstanding
bank borrowings exceed 5% of the value of such Series' total assets.
(2) Write, purchase or sell puts, calls or combinations thereof.
(3) Mortgage, pledge or hypothecate its assets, except in an amount not
exceeding 10% of the value of its total assets to secure temporary or
emergency borrowing.
(4) Invest in commodities or commodity contracts.
(5) Act as an underwriter of securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities, Fortis
Series may be deemed an underwriter under applicable laws.
(6) Participate on a joint, or a joint and several, basis in any securities
trading account.
(7) Invest in real estate, except a Series may invest in securities issued by
companies owning real estate or interests therein.
(8) Makes loans to other persons. Repurchase agreements and the purchase of
publicly traded debt obligations are not considered to be "loans" for this
purpose and may be entered into or purchased by a Series in accordance with
its investment objectives and policies.
(9) Concentrate its investments in any particular industry, except that (i) it
may invest up to 25% of the value of its total assets in any particular
industry, and (ii) there is no limitation with respect to investments in
obligations issued or guaranteed by the United States Government or its
agencies and instrumentalities, or obligations of domestic commercial
banks. As to utility companies, gas, electric, water and telephone
companies will be considered as separate industries. As to finance
companies, the following categories will be considered as separate
industries: (a) captive automobile finance, such as General Motors
Acceptance Corp. and Ford Motor Credit Corp.; (b) captive equipment finance
companies, such as Honeywell Finance Corporation and General Electric
Credit Corp.; (c) captive retail finance companies, such as Macy Credit
Corp. and Sears Roebuck Acceptance Corp.; (d) consumer loan companies, such
as Beneficial Finance Corporation and Household Finance Corporation; (e)
diversified finance companies such as CIT Financial Corp., Commercial
Credit Corporation and Borg Warner Acceptance Corp.; and (f) captive oil
finance companies, such as Shell Credit, Inc., Mobil Oil Credit Corp. and
Texaco Financial Services, Inc. [For purposes of this restriction,
securities of each foreign government will be considered a separate
"industry".]
(10) Purchase from or sell to any officer, director, or employee of Fortis
Series, or its adviser or underwriter, or any of their officers or
directors, any securities other than shares of Fortis Series' common stock.
(11) Make short sales, except for sales "against the box." While a short sale is
made by selling a security the Series does not own, a short sale is
"against the box" to the extent that the Series contemporaneously owns or
has the right to obtain securities identical to those sold short at no
added cost.
(12) Invest more than 5% of the value of its assets in restricted securities.

A-1
<PAGE>

High Yield Series, Value Series, Growth & Income Series and Aggressive Growth
Series

No Series will:

(1) Concentrate its investments in any particular industry, except that (i) it
may invest up to 25% of the value of its total assets in any particular
industry, and (ii) there is no limitation with respect to investments in
obligations issued or guaranteed by the United States Government or its
agencies and instrumentalities, or obligations of domestic commercial
banks. As to utility companies, gas, electric, water and telephone
companies will be considered as separate industries. As to finance
companies, the following categories will be considered as separate
industries: (a) captive automobile finance, such as General Motors
Acceptance Corp. and Ford Motor Credit Corp.; (b) captive equipment
finance companies, such as Honeywell Finance Corporation and General
Electric Credit Corp.; (c) captive retail finance companies, such as Macy
Credit Corp. and Sears Roebuck Acceptance Corp.; (d) consumer loan
companies, such as Beneficial Finance Corporation and Household Finance
Corporation; (e) diversified finance companies such as CIT Financial Corp.,
Commercial Credit Corporation and Borg Warner Acceptance Corp.; and (f)
captive oil finance companies, such as Shell Credit, Inc., Mobil Oil Credit
Corp. and Texaco Financial Services, Inc.
(2) Purchase or sell physical commodities (such as grains, livestock, etc.) or
futures or options contracts thereon. However, it may purchase or sell any
forms of financial instruments or contracts that might be deemed
commodities.
(3) Invest directly in real estate or interests in real estate; however, the
Series may invest in interests in real estate investment trusts, debt
securities secured by real estate or interests therein, or debt or equity
securities issued by companies which invest in real estate or interests
therein.
(4) Mortgage, pledge, hypothecate, or in any manner transfer, as security for
indebtedness, any securities owned or held by the Series, provided that
this restriction shall not apply to the transfer of securities in
connection with any permissible borrowing or to collateral arrangements
in connection with permissible activities.
(5) Act as an underwriter of securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities, the
Series may be deemed an underwriter under applicable laws.
(6) Purchase securities on margin, except that the Series, in accordance with
its investment objectives and policies, may purchase securities on a
when-issued, delayed delivery or forward commitment basis. The Series may
also obtain such short-term credit as it needs for the clearance of
securities transactions and may make margin deposits in connection with
futures contracts.
(7) Make short sales, except for sales "against the box."
(8) Make loans to other persons, except: (i) each Series may lend its portfolio
securities in an amount not to exceed 33 1/3% of the value of its total
assets if such loans are secured by collateral equal to at least the market
value of the securities lent, provided that such collateral shall be
limited to cash, securities issued or guaranteed by the U.S. Government or
its agencies or instrumentalities, certificates of deposit or other high-
grade, short-term obligations or interest-bearing cash equivalents; and
(ii) it may purchase debt securities through private placements (restricted
securities) in accordance with the Series' investment objectives and
policies.
(9) Issue senior securities (as defined in the 1940 Act) other than as set
forth in restriction #10 below and except to the extent that using options
and futures contracts or purchasing or selling securities on a when issued,
delayed delivery or forward commitment basis (including the entering into
of roll transactions) may be deemed to constitute issuing a senior
security.
(10) Borrow money except from banks for temporary or emergency purposes not in
excess of 33 1/3% of the value of the Series' total assets. The Series
will not purchase securities while borrowings (including roll transactions)
in excess of 5% of total assets are outstanding. In the event that the
asset coverage for the Series' borrowings falls below 300%, the Series will
reduce, within three days (excluding Sundays and holidays), the amount of
its borrowings in order to provide for 300% asset coverage.

Global Growth Series

Global Growth Series will not:

(1) Concentrate its investments, that is, invest 25% or more of its total
assets in any particular industry.

A-2
<PAGE>

(2) Buy or sell commodities or commodity contracts, including futures
contracts, other than within the limitations set forth in the Prospectus
and Statement of Additional Information.
(3) Purchase or sell real estate or other interests in real estate, or
interests in real estate investment trusts; however, Global Growth Series
may invest in debt securities secured by real estate or interests therein
or issued by corporations which invest in real estate or interests therein.
(4) Mortgage, pledge, hypothecate, or in any manner transfer, as security for
indebtedness, any securities owned or held by Global Growth Series,
provided that this restriction shall not apply to the transfer of
securities in connection with any permissible borrowing or to collateral
arrangements in connection with permissible activities.
(5) Act as an underwriter of securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities, Global
Growth Series may be deemed an underwriter under applicable laws and except
that Global Growth Series may invest up to 10% of the value of its assets
in portfolio securities which are not registered under the applicable
securities laws of the country in which such securities are traded and for
which no alternative market is readily available (such securities are
referred to herein as "restricted securities").
(6) Purchase securities on margin, except that Global Growth Series, in
accordance with its investment objectives and policies, may purchase
securities on a when-issued, delayed delivery or forward commitment basis,
within the limitations set forth in the Prospectus and Statement of
Additional Information. Global Growth Series may also obtain such short-
term credit as it needs for the clearance of securities transactions and
may make margin deposits in connection with futures contracts.
(7) Make short sales, except for sales "against the box."
(8) Make loans to other persons, except that it may purchase readily marketable
bonds, debentures, or other debt securities, whether or not publicly
distributed, enter into repurchase agreements, and make loans of portfolio
securities to an aggregate of 30% of the value of its total assets,
measured at the time any such loan is made.
(9) Issue senior securities, except that Global Growth Series may purchase
securities on a when-issued, delayed delivery or forward commitment basis
and enter into roll transactions and other transactions within the
limitations set forth in the Prospectus and Statement of Additional
Information which may be deemed to constitute borrowing.
(10) Borrow money except from banks for temporary or emergency purposes not in
excess of 33 1/3% of the value of the Series' total assets. Global Growth
Series will not purchase securities while borrowings (including roll
transactions) in excess of 5% of total assets are outstanding. In the
event that the asset coverage for the Series' borrowings falls below 300%,
Global Growth Series will reduce, within three days (excluding Sundays and
holidays), the amount of its borrowings in order to provide for 300% asset
coverage.

Global Bond Series, Global Asset Allocation Series and International Stock
Series

No Series will:

(1) Concentrate its investments in any particular industry, except that (i) a
Series may invest up to 25% of the value of its total assets in any
particular industry, and (ii) there is no limitation with respect to
investments in obligations issued or guaranteed by the United States
government or its agencies and instrumentalities, or obligations of
domestic commercial banks. As to utility companies, gas, electric, water
and telephone companies will be considered as separate industries. As to
finance companies, the following categories will be considered as separate
industries: (a) captive automobile finance, such as General Motors
Acceptance Corp. and Ford Motor Credit Corp.; (b) captive equipment finance
companies, such as Honeywell Finance Corporation and General Electric
Credit Corp.; (c) captive retail finance companies, such as Macy Credit
Corp. and Sears Roebuck Acceptance Corp.; (d) consumer loan companies,
such as Beneficial Finance Corporation and Household Finance Corporation;
(e) diversified finance companies, such as CIT Financial Corp., Commercial
Credit Corporation and Borg Warner Acceptance Corp.; and (f) captive oil
finance companies, such as Shell Credit, Inc., Mobil Oil Credit Corp. and
Texaco Financial Services, Inc. [For purposes of this restriction,
securities of each foreign government or agency thereof will be
considered separate "industries".]
(2) Purchase or sell physical commodities (such as grains, livestock, etc.) or
futures or options contracts thereon; however, a Series may purchase or
sell any forms of financial instruments or contracts that might be deemed
commodities.

A-3
<PAGE>

(3) Invest directly in real estate or interests in real estate; however, a
Series may invest in interests in real estate investment trusts, debt
securities secured by real estate or interests therein, or debt or equity
securities issued by companies that invest in real estate or interests
therein.
(4) Act as an underwriter of securities of other issuers, except to the extent
that, in connection with the disposition of portfolio securities, a Series
may be deemed an underwriter under applicable laws.
(5) Purchase securities on margin or otherwise borrow money, except that a
Series, in accordance with its investment objectives and policies, may
purchase securities on a when-issued, delayed delivery or forward
commitment basis, and may make margin deposits in connection with dealing
in commodities or options thereon. A Series also may obtain such short-
term credit as it needs for the clearance of securities transactions, and
may borrow from a bank an amount that does not exceed 33 1/3% of the value
of a Series' total assets. A Series will not purchase investment
securities while outstanding bank borrowings (including "roll"
transactions) in excess of 5% of its total assets are outstanding. In the
event that the asset coverage for a Series' borrowings falls below 300%,
such Series will reduce, within three days (excluding Sundays and
holidays), the amount of its borrowings in order to provide for 300% asset
coverage.
(6) Make loans to other persons, except that a Series may lend its portfolio
securities in an amount not to exceed 33 1/3% of the value of its total
assets (including the amount lent as well as the collateral securing such
loans), if such loans are secured by collateral at least equal to the
market value of the securities lent, provided that such collateral shall be
limited to cash, government securities, certificates of deposit or other
high-grade, short-term obligations or interest-bearing cash equivalents
(including repurchase agreements pertaining to such securities or
obligations). Loans shall not be deemed to include repurchase agreements
or the purchase or acquisition of a portion of an issue of notes, bonds,
debentures or other debt securities, whether or not such purchase or
acquisition is made upon the original issuance of the securities.
(7) Issue senior securities (as defined in the 1940 Act) other than as set
forth in restriction 5 concerning borrowing and except to the extent that
using options and futures contracts or purchasing or selling securities on
a when-issued, delayed delivery or forward commitment basis (including the
entering into of roll transactions) may be deemed to constitute issuing a
senior security.

S&P 500 Index Series and Mid Cap Stock Series

Neither Series will:

(1) Purchase any securities which would cause more than 25% of the value of the
Series' total assets at the time of such purchase to be invested in the
securities of one or more issuers conducting their principal activities in
the same industry. (For purposes of this limitation, U.S. Government
securities, and state or municipal governments and their political
subdivisions, are not considered members of any industry. In addition,
this limitation does not apply to investments in domestic banks, including
U.S. branches of foreign banks and foreign branches of U.S. banks).
(2) Borrow money or issue senior securities as defined in the 1940 Act except
that a Series may borrow money in an amount not exceeding one-third of the
Series' total assets at the time of such borrowings. The purchase or sale
of futures contracts and related options shall not be considered to involve
the borrowing of money or issuance of senior securities.
(3) Make loans or lend securities, if as a result thereof more than one-third
of the Series' total assets would be subject to all such loans. For
purposes of this limitation debt instruments and repurchase agreements
shall not be treated as loans.
(4) Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Series from
investing in securities or other instruments backed by real estate,
including mortgage loans, or securities of companies that engage in real
estate business or invest or deal in real estate or interests therein).
(5) Underwrite securities issued by any other person, except to the extent that
the purchase of securities and later disposition of such securities in
accordance with the Series' investment program may be deemed an
underwriting.
(6) Purchase or sell commodities except that the Series may enter into futures
contracts and related options, forward currency contracts and other similar
instruments.

A-4
<PAGE>

Blue Chip Stock Series and Small Cap Value Series

Neither Series will:

(1) Borrow money except that the Series may (i) borrow for non-leveraging,
temporary or emergency purposes and (ii) engage in reverse repurchase
agreements and make other investments or engage in other transactions,
which may involve a borrowing, in a manner consistent with the Series'
investment objective and program, provided that the combination of (i) and
(ii) shall not exceed 33 1/3% of the value of the Series' total assets
(including the amount borrowed) less liabilities (other than borrowings) or
such other percentage permitted by law. Any borrowings which come to
exceed this amount will be reduced in accordance with applicable laws. The
Series may borrow from banks or other persons to the extent permitted by
applicable law.
(2) Purchase or sell physical commodities; except that it may enter into
futures contracts and options thereon.
(3) Purchase the securities of any issuer if, as a result, more than 25% of the
value of the Series' total assets would be invested in the securities of
issuers having their principal business activities in the same industry.
(4) Make loans, although the Series may (i) lend portfolio securities provided
that no such loan may be made if, as a result, the aggregate of such loans
would exceed 33 1/3% of the value of the Series' total assets; (ii)
purchase money market securities and enter into repurchase agreements; and
(iii) acquire publicly-distributed or privately-placed debt securities and
purchase debt.
(5) Purchase a security if, as a result, with respect to 75% of the value of
its total assets, more than 5% of the value of the Series' total assets
would be invested in the securities of a single issuer, except securities
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities.
(6) Purchase a security if, as a result, with respect to 75% of the value of
the Series' total assets, more than 10% of the outstanding voting
securities of any issuer would be held by the Series (other than
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities).
(7) Purchase or sell real estate unless acquired as a result of ownership of
securities or other instruments (but this shall not prevent the Series from
investing in securities or other instruments backed by real estate or in
securities of companies engaged in the real estate business).
(8) Issue senior securities except in compliance with the 1940 Act.

(9) Underwrite securities issued by other persons, except to the extent that
the Series may be deemed to be an underwriter within the meaning of the
Securities Act of 1933 in connection with the purchase and sale of its
portfolio securities in the ordinary course of pursuing its investment
program.

Large Cap Growth Series

The Series will not:

(1) Purchase more than 10% of the outstanding voting securities of any one
issuer.
(2) Invest 25% or more of the value of its total assets in the same industry
except that this restriction does not apply to securities issued or
guaranteed by the United States Government, its agencies and
instrumentalities.
(3) Borrow money or issue senior securities except for temporary or emergency
purposes in an amount not exceeding 5% of the value of its total assets at
the time the borrowing is made.
(4) Pledge, mortgage, hypothecate or otherwise encumber any of its assets
except in connection with the writing of call options and except to secure
permitted borrowings.
(5) Make loans except through the purchase of debt obligations, lending
portfolio securities and entering into repurchase agreements.
(6) Write put options.
(7) (a) Purchase or sell real estate except that it may purchase and sell
securities of companies that deal in real estate or interests therein; (b)
purchase or sell commodities or commodity contracts (other than stock index
futures contracts), (c) make short sales of securities or purchase
securities on margin except for such short-term credits as may be necessary
for the clearance of transactions, or (d) act as an underwriter of
securities, except that the Large Cap Growth Series may acquire restricted
securities or securities in private placements under circumstances in
which, if such securities were sold, the Large Cap Growth Series might be
deemed to be an underwriter within the meaning of the Securities Act of
1933.

A-5
<PAGE>

<TABLE>
<S> <C>
Receipt of Notice of Special FORTIS SERIES FUND, INC.
Shareholders' Meeting and Proxy
Statement is acknowledged by your VOTING INSTRUCTIONS FOR
execution of these voting SPECIAL SHAREHOLDERS' MEETING
instructions. Mark, sign, date, and TO BE HELD AUGUST 12, 1999
return these instructions in the THESE VOTING INSTRUCTIONS ARE SOLICITED ON BEHALF OF
addressed envelope--no postage FORTIS BENEFITS INSURANCE COMPANY AND
required. Please mail promptly to FIRST FORTIS LIFE INSURANCE COMPANY
save the Company further solicitation
expenses. The undersigned hereby instructs Fortis Benefits Insurance Company and
First Fortis Life Insurance Company to represent and vote the number of shares of
Fortis Series Fund, Inc. represented by the number of votes attributable to the
FORTIS SERIES FUND, INC. undersigned's variable annuity contract or variable insurance contract at the
PROXY SERVICE Special Shareholders' Meeting to be held on Thursday, August 12, 1999, at 10:00
POST OFFICE BOX 9148 a.m. and at any adjournment thereof, upon the matters below as set forth in the
FARMINGDALE, NY 11735-9855 Notice of Special Shareholders' Meeting and Proxy Statement.

VOTES OF CONTRACT AND POLICY OWNERS FOR WHICH NO VOTING INSTRUCTIONS ARE
RECEIVED WILL BE VOTED IN THE SAME PROPORTION AS THE VOTES OF CONTRACT AND POLICY
OWNERS FOR WHICH VOTING INSTRUCTIONS ARE RECEIVED.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [_][_] KEEP THIS PORTION FOR YOUR RECORDS.
- ---------------------------------------------------------------------------------------------------------------------------
FORTIS SERIES Fund, INC. DETACH AND RETURN THIS PORTION ONLY.
VOTE ON DIRECTORS

FOR OR WITH- OR FOR 1. TO SET THE NUMBER OF DIRECTORS AT NINE AND TO ELECT THE FOLLOWING NOMINEES:
ALL HOLD ALL 01) R.W. CUTTING, 02) A.R. FREEDMAN, 03) R.M. GAVIN, 04) J.L. KING, 05) D.C.
ALL EXCEPT KOPPERUD, 06) R.L. PRINCE, 07) L.J. SANTOW, 08) N.S. SHADKO, 09) J.M. WIKLER.
[_] [_] [_] TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S) WRITE THAT
NOMINEE(S) NUMBER ON THE LINE PROVIDED BELOW.
- ---------------------------------------------------------------------------------------------------------------------------

FOR AGAINST ABSTAIN EXCEPTION
ALL ALL ALL 2. TO APPROVE THE ELIMINATION OR MODIFICATION OF CERTAIN INVESTMENT POLICIES
[_] [_] [_] [_] EXCEPT THOSE SPECIFICALLY LISTED BY LETTER ON THE LINE BELOW.
A. Senior securities H. Short Sales
B. Industry concentration I. Margin purchases
C. Underwriting of securities J. Transactions with affiliates
D. Real Estate K. Joint trading account
E. Commodities L. Restricted securities
F. Lending M. Options transactions
G. Pledging assets N. Diversification policies

If you wish to vote against or abstain on a particular investment policy applicable
to your Series, write the letter of the sub-proposal on the line below. Tell us
whether you are voting against or abstaining on the proposals listed.

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

[_] [_] [_] 3. TO APPROVE A PROPOSAL TO PERMIT FORTIS ADVISERS, INC. TO SELECT AND CONTRACT
FOR AGAINST ABSTAIN WITH SUB-ADVISERS WITHOUT OBTAINING SHAREHOLDER APPROVAL.

[_] [_] [_]
FOR AGAINST ABSTAIN 4. TO APPROVE AN AMENDED INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT BETWEEN
THE COMPANY AND FORTIS ADVISERS, INC.

- ---------------------------------------------------------------------------------------------------------------------------
[_] [_] [_] 5. PROPOSAL TO RATIFY THE SELECTION OF KPMG PEAT MARWICK LLP AS THE INDEPENDENT
FOR AGAINST ABSTAIN PUBLIC ACCOUNTANTS FOR THE COMPANY.

-------------------------------------------- ------------------------------------------
(Please sign name(s) exactly as registered) (If there are co-owners, both should sign)

-----------------
(Date)
</TABLE>