FORTIS SERIES FUND INC, 485APOS, 2000-02-16

FORTIS SERIES FUND INC
485APOS, 2000-02-16

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<PAGE> 1

1933 Act Registration No. 33-3920
1940 Act Registration No. 811-4615

As filed with the Securities and Exchange Commission on February 16, 2000

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. ______
Post-Effective Amendment No. __26__

AND/OR

REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No. __26__

(Check appropriate box or boxes)

FORTIS SERIES FUND, INC.
(Exact Name of Registrant as Specified in Charter)

500 Bielenberg Drive
Woodbury, Minnesota 55125
(Address of Principal Executive Offices, Zip Code)

(651) 738-4000
(Registrant's Telephone Number, including Area Code)

Scott R. Plummer, Esq.
500 Bielenberg Drive
Woodbury, Minnesota 55125
(Name and Address of Agent for Service)

COPY TO:
Kathleen L. Prudhomme, Esq.
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402-1498

It is proposed that this filing will become effective (check appropriate box):
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
_____ on (specify date) pursuant to paragraph (b) of Rule 485
_____ 75 days after filing pursuant to paragraph (a) of Rule 485
__x__ on May 1, 2000 pursuant to paragraph (a) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485

<PAGE> 2

[FORTIS Solid partners, flexible solutions(SM) LOGO]

Fortis Series Fund Prospectus

May 1, 2000

As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any statement to the contrary is a criminal offense.

Mailing address:
P.O. Box 64284
St. Paul, Minnesota 55164-0284

Street address:
500 Bielenberg Drive
Woodbury, Minnesota 55125-1400

Telephone: (651) 738-4000
Toll free: (800) 800-2000, extension 3012
<PAGE> 3

TABLE OF CONTENTS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
PAGE
<S> <C>
The Series
Money Market Series....................................... 1
U.S. Government Securities Series......................... 2
Diversified Income Series................................. 3
Multisector Bond Series................................... 4
High Yield Series......................................... 5
Global Asset Allocation Series............................ 6
Asset Allocation Series................................... 8
American Leaders Series................................... 10
Value Series.............................................. 11
Capital Opportunities Series.............................. 12
Growth & Income Series.................................... 13
S&P 500 Index Series...................................... 14
Blue Chip Stock Series.................................... 15
Blue Chip Stock Series II................................. 16
International Stock Series................................ 17
Mid Cap Stock Series...................................... 18
Small Cap Value Series.................................... 19
Global Growth Series...................................... 20
Global Equity Series...................................... 21
Large Cap Growth Series................................... 22
Investors Growth Series................................... 23
Growth Stock Series....................................... 24
Aggressive Growth Series.................................. 25

Shareholder Information
Separate accounts and the contracts....................... 26
Pricing of Series shares.................................. 26
Purchase and redemption of Series shares.................. 26
Transfers among subaccounts............................... 26
Taxation.................................................. 26
Contract owner inquiries.................................. 26

Series Management
Investment adviser........................................ 27
Sub-advisers.............................................. 28

More Information on Series Objectives, Investment Strategies
and Risks
Objectives................................................ 30
Investment strategies..................................... 30
Principal risks........................................... 30

Financial Highlights........................................ 34
</TABLE>

<PAGE> 4

THE SERIES
- --------------------------------------------------------------------------------

This section briefly describes the objectives, principal investment strategies
and principal risks of Money Market Series, U.S. Government Securities Series,
Diversified Income Series, Multisector Bond Series, High Yield Series, Global
Asset Allocation Series, Asset Allocation Series, American Leaders Series, Value
Series, Capital Opportunities Series, Growth & Income Series, S&P 500 Index
Series, Blue Chip Stock Series, Blue Chip Stock Series II, International Stock
Series, Mid Cap Stock Series, Small Cap Value Series, Global Growth Series,
Global Equity Series, Large Cap Growth Series, Investors Growth Series, Growth
Stock Series and Aggressive Growth Series (the "Series"). It also provides you
with information on how the Series have performed. Because of their limited
history of operations, performance information is not provided for Mid Cap Stock
Series, Small Cap Value Series and Large Cap Growth Series. For further
information on a Series, please read the section entitled "More Information on
Series Objectives, Investment Strategies and Risks."

Shares of the Series may be purchased only by the separate accounts of insurance
companies for the purpose of funding variable annuity contracts or variable life
insurance policies. The Series' investment adviser also acts as the investment
adviser to a number of retail mutual funds which have names and investment
objectives and strategies similar to those of certain Series. The Series are not
duplicates of these retail mutual funds and their performance will differ.

An investment in a Series is not a deposit of any bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other government
agency.

MONEY MARKET SERIES

OBJECTIVE

Money Market Series' objectives are high levels of capital stability and
liquidity and, to the extent consistent with these objectives, a high level of
current income.

PRINCIPAL INVESTMENT STRATEGIES

Money Market Series pursues its objective by investing in high quality,
short-term debt obligations, including:

- commercial paper;

- obligations of United States, Canadian-chartered and foreign banks having
total assets in excess of one billion dollars, including certificates of
deposits, letters of credit and bankers' acceptances;

- obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities;

- other corporate debt obligations; and

- repurchase agreements in connection with the above obligations.

The Series' adviser selects securities based on yield relationships among the
various types and maturities of money market securities and the adviser's
interest rate outlook. For example, the adviser may focus on commercial paper if
it offers a yield advantage over other money market instruments. In selecting
commercial paper investments, the adviser may purchase longer-maturity
securities if interest rates are expected to fall. These purchases would be made
to try to preserve the Series' income level, since longer maturity investments
typically have higher yields than those with shorter maturities. Conversely,
shorter maturities may be favored if interest rates are expected to rise.

Unlike a traditional money market mutual fund, the Series does not attempt to
maintain its net asset value at any set price. The Series does, however, attempt
to maintain a high level of capital stability by investing only in U.S.
dollar-denominated securities that mature in 397 days or less, except that
obligations issued by the United States Government, its agencies or
instrumentalities may have maturities of up to 762 days. The Series may invest
in securities with variable or floating interest rates and securities with
demand features. The maturities of these securities are determined according to
regulations which allow the Series to consider some of the securities to have
maturities shorter than their stated maturity dates. Money Market Series will
maintain a dollar-weighted average portfolio maturity of 90 days or less. All of
the Series' investments must be in high quality securities which have been
determined by the Series' adviser to present minimal credit risk.

PRINCIPAL RISKS

Money Market Series' share price and yield will change daily because of changes
in interest rates and other factors. The principal risks of investing in Money
Market Series include:

- INTEREST RATE RISK. Debt obligations in the Series will fluctuate in
value with changes in interest rates. In general, debt securities will
increase in value when interest rates fall and decrease in value when
interest rates rise. Securities with longer maturities generally have more
volatile prices than securities of comparable quality with shorter
maturities.

- INCOME RISK. Income risk is the potential for a decline in the Series'
income due to falling interest rates.

- CREDIT OR DEFAULT RISK. If a bond issuer's credit quality declines or its
credit agency ratings are downgraded, there may be a resulting decline in
the bond's price. If credit quality deteriorates to the point of possible or
actual default (inability to pay interest or repay principal on a timely
basis), the bond's market value could decline precipitously.

- FOREIGN INVESTMENT RISKS. The Series' investment in foreign securities
involves risks not typically associated with U.S. investing. Risks of
foreign investing include limited liquidity and volatile prices of non-U.S.
securities, limited availability of information regarding non-U.S.
companies, investment and repatriation restrictions, and foreign taxation.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Money Market
Series' volatility and performance. The bar chart shows you how performance of
the Series has varied from year to year. The table illustrates the Series'
performance over different time periods. Both the chart and the table assume
that all dividends and distributions have been reinvested. Fees and charges
attributable to variable annuity contracts and variable life insurance policies
are not taken into account in calculating the Series' returns. If they had been,
returns would be lower. Remember, how the Series has performed in the past is
not necessarily an indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*
[FORTIS ANNUAL TOTAL RETURN BAR GRAPH]

<TABLE>
<CAPTION>
MONEY MARKET SERIES
-------------------
<S> <C>
1990 7.87
1991 5.92
1992 3.36
1993 2.77
1994 3.92
1995 5.71
1996 5.17
1997 5.34
1998 5.32
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS
-------- ---------- ---------
<S> <C> <C> <C>
Money Market Series.............. % % %
</TABLE>

1
<PAGE> 5

U.S. GOVERNMENT SECURITIES SERIES

OBJECTIVE

The objective of the U.S. Government Securities Series is to maximize total
return (from income and market value change), while providing you with a high
level of current income consistent with prudent investment risk.

PRINCIPAL INVESTMENT STRATEGIES

U.S. Government Securities Series pursues its objective by investing primarily
in securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities. These securities include both U.S. Treasury obligations and
obligations of U.S. Government agencies and instrumentalities. The Series may
invest a significant portion of its assets in mortgage-backed securities. It is
anticipated that the average effective duration of the Series will be between
three and seven years.

The Series' investments in mortgage-backed securities may include collateralized
mortgage obligations ("CMOs") issued by government agencies or by private
entities. Some types of CMOs, such as interest-only classes ("IOs"),
principal-only classes ("POs"), inverse floaters and accrual bonds, can be
highly volatile in response to changing interest rates. The Series will not
invest more than 5% of its net assets in any one of these types of securities or
more than 10% of its net assets collectively in IOs, POs, inverse floaters and
accrual bonds. In addition, any CMOs issued by private entities must be rated
within the three highest grades assigned by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Rating Services ("S&P"), comparably rated by
another nationally recognized rating organization, or unrated and determined to
be of comparable quality by the Series' adviser.

The Series also may invest in zero coupon obligations of the U.S. Government and
its agencies. Because these obligations do not pay interest currently, their
prices can be highly volatile as interest rates rise and fall.

The Series' portfolio may change based upon factors such as the anticipated
timing and magnitude of changes in interest rates and expectations concerning
the future performance of different asset categories. The decision to purchase a
particular security is based upon a number of factors, the most important of
which are the characteristics of the security (interest rate, term, call
provisions, etc.) and diversification in the Series.

PRINCIPAL RISKS

U.S. Government Securities Series' share price and yield will change daily
because of changes in interest rates and other factors. You may lose money if
you invest in the Series. The principal risks of investing in U.S. Government
Securities Series include:

- INTEREST RATE RISK. Debt securities in the Series will fluctuate in value
with changes in interest rates. In general, debt securities will increase in
value when interest rates fall and decrease in value when interest rates
rise. One measure of interest rate risk is duration. Securities with longer
durations generally have more volatile prices than securities of comparable
quality with shorter durations.

- INCOME RISK. Income risk is the potential for a decline in the Series'
income due to falling interest rates.

- CALL RISK. The Series is subject to the possibility that, under certain
conditions, especially during periods of falling interest rates, a bond
issuer will "call"--or repay--its bonds before their maturity date. The
Series may then be forced to invest the unanticipated proceeds at lower
interest rates, resulting in a decline in the Series' income.

- RISKS OF MORTGAGE-BACKED SECURITIES. Because the Series may invest
significantly in mortgage-backed securities, it is subject to prepayment
risk and extension risk. Similar to call risk, prepayment risk is the risk
that falling interest rates could cause faster than expected prepayments of
the mortgages underlying the Series' mortgage-backed securities. These
prepayments pass through to the Series, which must reinvest them at a time
when interest rates on new mortgage investments are falling, reducing the
Series' income. Extension risk is the risk that rising interest rates could
cause mortgage prepayments to slow, which would lengthen the duration of the
Series' mortgage-backed securities and cause their prices to decline.

SERIES PERFORMANCE

The bar chart and table below provide you with information on U.S. Government
Securities Series' volatility and performance. The bar chart shows you how
performance of the Series has varied from year to year. The table compares the
Series' performance over different time periods to that of a broad measure of
market performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES SERIES
---------------------------------
<S> <C>
1990 7.93
1991 14.36
1992 6.14
1993 9.45
1994 -6.44
1995 18.78
1996 2.21
1997 9.08
1998 8.87
1999 0
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was -1.06%.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS
-------- ---------- ---------
<S> <C> <C> <C>
U.S. Government Series........... % % %
Lehman Brothers Intermediate
Government Bond Index*......... % % %
</TABLE>

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

* An unmanaged index of government bonds with an average maturity of three to
four years.

2
<PAGE> 6

DIVERSIFIED INCOME SERIES

OBJECTIVE

The objective of Diversified Income Series is to maximize total return from
income and market value change.

PRINCIPAL INVESTMENT STRATEGIES

Diversified Income Series pursues its objective by investing primarily in a
diversified portfolio of government securities and investment grade corporate
bonds, including:

- corporate fixed income securities;

- securities issued or guaranteed by the U.S. Government or its agencies or
instrumentalities;

- mortgage-backed securities; and

- asset-backed securities.

The Series may invest up to 30% of its total assets in non-investment grade
corporate bonds (sometimes referred to as "junk bonds" or "high yield"
securities) and unrated corporate bonds. Up to 10% of the Series' assets may be
invested in "non-performing" securities. These are securities rated lower than
Caa by Moody's Investors Service ("Moody's") or CCC by Standard & Poor's Ratings
Service ("S&P"), that are comparably rated by another nationally recognized
rating organization, or that are unrated and determined by the Series' adviser
to be of comparable quality. Non-performing securities are highly speculative
and may be in default or there may be elements of danger with respect to the
payment of principal or interest.

The Series may invest up to 10% of its total assets in securities of foreign
governments and companies.

The Series' portfolio may change based upon factors such as the anticipated
timing and magnitude of changes in interest rates and expectations concerning
the future performance of different asset categories. The decision to purchase a
particular security is based upon many factors, the most important of which are
the characteristics of the security (interest rate, term, call provisions,
etc.), the financial stability and managerial strength of the issuer, and
diversification in the Series. It is anticipated that the average effective
duration of the Series will be between three and seven years.

PRINCIPAL RISKS

Diversified Income Series' share price and yield will change daily because of
changes in interest rates and other factors. You may lose money if you invest in
the Series. The principal risks of investing in Diversified Income Series
include:

- INCOME RISK. Income risk is the potential for a decline in the Series'
income due to falling interest rates.

- RISKS OF MORTGAGE- AND ASSET-BACKED SECURITIES. Because the Series may
invest significantly in mortgage- and asset-backed securities, it is subject
to prepayment risk and extension risk. Similar to call risk, prepayment risk
is the risk that falling interest rates could cause faster than expected
prepayments of the obligations underlying the Series' mortgage- and
asset-backed securities. These prepayments pass through to the Series, which
must reinvest them at a time when interest rates on new investments are
falling, reducing the Series' income. Extension risk is the risk that rising
interest rates could cause prepayments on the obligations to slow, which
would lengthen the duration of the Series' mortgage- and asset-backed
securities and cause their prices to decline.

- RISKS OF HIGH YIELD/HIGH RISK SECURITIES. A significant portion of the
Series' portfolio may consist of non-investment grade fixed income
securities, commonly referred to as "high yield" securities or "junk bonds."
These securities generally have more volatile prices and carry more risk to
principal than investment grade securities.

- RISKS OF FOREIGN INVESTMENT. Investing in foreign securities involves
risks not typically associated with U.S. investing. These investments may
involve increased political and economic risk. In addition, the Series may
experience a decline in net asset value resulting from changes in exchange
rates between the United States dollar and foreign currencies.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Diversified Income
Series' volatility and performance. The bar chart shows you how performance of
the Series has varied from year to year. The table compares the Series'
performance over different time periods to that of a broad measure of market
performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
DIVERSIFIED INCOME SERIES
-------------------------
<S> <C>
1990 8.87
1991 14.67
1992 7.08
1993 12.76
1994 -5.22
1995 17.26
1996 4.15
1997 10.44
1998 6.31
1999 0
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS
-------- ---------- ---------
<S> <C> <C> <C>
Diversified Income Series........ % % %
Lehman Brothers Aggregate
Bond Index*.................... % % %
</TABLE>

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

* An unmanaged index of government, corporate and mortgage-backed securities
with an average maturity of approximately nine years.

3
<PAGE> 7

MULTISECTOR BOND SERIES

From its inception on January 3, 1995 until March 13, 2000, this Series was
managed by a different sub-adviser and was named the Global Bond Series. As the
Global Bond Series, the Series invested principally in high quality U.S. and
foreign government and corporate fixed income securities. As of March 13, 2000,
the Series has been sub-advised by AIM Advisors in the manner described below.

OBJECTIVE

The objective of Multisector Bond Series is to achieve a high level of current
income consistent with reasonable concern for safety of principal.

PRINCIPAL INVESTMENT STRATEGIES

Multisector Bond Series pursues its objective by investing primarily in
fixed-rate corporate debt and U.S. Government obligations.

The Series may invest up to 40% of its total assets in securities of foreign
governments and companies.

The Series may invest up to 35% of its total assets in non-investment grade
corporate bonds (sometimes referred to as "junk bonds" or "high yield"
securities) and unrated corporate bonds deemed by the Series' sub-adviser to be
of comparable quality. The Series may also invest in preferred stock issues and
convertible corporate debt.

The Series' sub-adviser, A I M Advisors, Inc. ("AIM"), focuses on securities
that it believes have favorable prospects for current income, consistent with
its concern for safety of principal. The decision to purchase a particular
security is based upon many factors, the most important of which are the
characteristics of the security (interest rate, term, call provisions, etc.),
the financial stability and managerial strength of the issuer, and
diversification in the Series. AIM considers whether to sell a particular
security when any one of these factors materially changes. It is anticipated
that the average effective duration of the Series will be between and
years.

PRINCIPAL RISKS

Multisector Bond Series' share price and yield will change daily because of
changes in interest rates and other factors. You may lose money if you invest in
the Series. The principal risks of investing in Multisector Bond Series include:

- INCOME RISK. Income risk is the potential for a decline in the Series'
income due to falling interest rates.

- RISKS OF FOREIGN INVESTING. The Series' investment in foreign securities
subject it to risks not typically associated with U.S. investing. Because of
these risks, the Series may be subject to greater volatility than most
mutual funds that invest principally in domestic securities. The Series may
experience a decline in net asset value resulting from changes in exchange
rates between the United States dollar and foreign currencies. Other risks
of foreign investing include limited liquidity and volatile prices of
non-U.S. securities, limited availability of information regarding non-U.S.
companies, investment and repatriation restrictions, and foreign taxation.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Multisector Bond
Series' (formerly Global Bond Series) volatility and performance. The bar chart
shows you how performance of the Series has varied from year to year. The table
compares the Series' performance over different time periods to that of a broad
measure of market performance. Both the chart and the table assume that all
dividends and distributions have been reinvested. Fees and charges attributable
to variable annuity contracts and variable life insurance policies are not taken
into account in calculating the Series' returns. If they had been, returns would
be lower. Remember, how the Series has performed in the past is not necessarily
an indication of how it will perform in the future. The following information
reflects the Series' performance when it was managed as the Global Bond Series.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
MULTISECTOR BOND SERIES
-----------------------
<S> <C>
1995 19.14
1996 3.32
1997 0.14
1998 13.49
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS SINCE INCEPTION*
-------- ---------- ----------------
<S> <C> <C> <C>
Global Bond Series.......... % % %
Salomon Brothers World
Government Bond Index**... % % %
</TABLE>

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

* Inception date was January 3, 1995.

** An unmanaged index of world government bonds with maturities of at least one
year.

4
<PAGE> 8

HIGH YIELD SERIES

OBJECTIVE

The objective of High Yield Series is to maximize return from income and market
value change.

PRINCIPAL INVESTMENT STRATEGIES

High Yield Series pursues its objective by investing primarily in a portfolio of
non-investment grade fixed income securities, also referred to as "high yield"
securities or "junk bonds." It is anticipated that the average effective
duration of the Series will be between three and seven years.

The Series may invest without limitation in securities rated as low as Caa by
Moody's or CCC by S&P, or comparably rated by another nationally recognized
rating organization. In addition, up to 10% of the Series' assets may be
invested in "non-performing" securities rated lower than Caa or CCC.
Non-performing securities are highly speculative and may be in default or there
may be elements of danger with respect to the payment of principal or interest.
The Series may also invest in unrated securities which the Series' adviser
believes are of comparable quality to those rated within the foregoing
categories.

The Series' investments may include payment-in-kind bonds and zero coupon bonds.
The market prices for these securities are affected to a greater extent by
interest rate changes and are more volatile than the market prices of securities
that pay interest periodically and in cash.

The Series also may invest in collateralized mortgage obligations ("CMOs")
issued by government agencies or by private entities. Some types of CMOs, such
as interest-only classes ("IOs"), principal-only classes ("POs") and inverse
floaters can be highly volatile in response to changing interest rates. The
Series will not invest more than 7.5% of its net assets in any one of these
types of securities or more than 15% of its net assets collectively in IOs, POs
and inverse floaters. The Series may also invest up to 25% of its net assets in
accrual bonds and zero coupon bonds.

In considering investments for the Series, the adviser will attempt to identify
high-yielding securities of issuer companies whose financial condition has
improved or is expected to improve in the future. The adviser's analysis focuses
on relative values, based on such factors as interest or dividend coverage,
asset coverage, earnings prospects, and the experience and managerial strength
of issuer companies.

PRINCIPAL RISKS

High Yield Series' share price and yield will change daily because of changes in
interest rates and other factors. You may lose money if you invest in the
Series. The principal risks of investing in High Yield Series include:

- INCOME RISK. Income risk is the potential for a decline in the Series'
income due to falling interest rates.

- RISKS OF HIGH YIELD/HIGH RISK SECURITIES. The Series invests primarily in
non-investment grade fixed income securities, commonly referred to as "high
yield" securities or "junk bonds." These securities generally have more
volatile prices and carry more risk to principal than investment grade
securities.

SERIES PERFORMANCE

The bar chart and table below provide you with information on High Yield Series'
volatility and performance. The bar chart shows you how performance of the
Series has varied from year to year. The table compares the Series' performance
over different time periods to that of a broad measure of market performance.
Both the chart and the table assume that all dividends and distributions have
been reinvested. Fees and charges attributable to variable annuity contracts and
variable life insurance policies are not taken into account in calculating the
Series' returns. If they had been, returns would be lower. Remember, how the
Series has performed in the past is not necessarily an indication of how it will
perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
HIGH YIELD SERIES
-----------------
<S> <C>
1995 12.73
1996 10.52
1997 9.76
1998 0.62
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS SINCE INCEPTION*
-------- ---------- ----------------
<S> <C> <C> <C>
High Yield Series........... % % %
Lehman Brothers High Yield
Index**................... % % %
</TABLE>

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

* Inception date was May 2, 1994.

** An unmanaged index of lower quality, high yield corporate debt securities.

5
<PAGE> 9

GLOBAL ASSET ALLOCATION SERIES

OBJECTIVE

The objective of Global Asset Allocation Series is maximum total return to be
derived primarily from capital appreciation, dividends and interest.

PRINCIPAL INVESTMENT STRATEGIES

Global Asset Allocation Series invests in equity and fixed-income securities of
issuers located throughout the world, including the United States. The Series
pursues its objective by following a flexible asset allocation strategy. This
strategy contemplates increased ownership of global equity securities during
periods when stock market conditions appear favorable and increased ownership of
global fixed-income securities during periods when stock market conditions are
less favorable.

- EQUITY INVESTMENTS. The Series' equity investments may include common
stocks, securities convertible into common stocks and securities having
common stock characteristics, such as rights and warrants to purchase common
stocks. The Series may also invest in American Depositary Receipts, European
Depositary Receipts and other depositary receipts.

- FIXED-INCOME INVESTMENTS. Fixed-income investments in which the Series
invests include securities issued or guaranteed by U.S. and foreign
governments and their agencies and instrumentalities, securities of
supranational entities, Eurobonds and corporate bonds with varying
maturities denominated in various currencies and money market instruments.

In selecting equity securities for the Series, the Series' sub-adviser, Morgan
Stanley Dean Witter Investment Management Limited ("Morgan Stanley"), initially
identifies those securities that it believes to be undervalued in relation to
the issuer's assets, cash flow, earnings and, where appropriate, revenues.
Morgan Stanley then evaluates the future value of these securities by applying a
dividend discount model to the information obtained. Holdings are regularly
reviewed and subjected to fundamental analysis to determine whether they
continue to meet Morgan Stanley's value criteria. Securities that no longer
conform to those criteria are sold. The median market capitalization of the
equity portion of the Series' portfolio was billion as of March 31, 2000.

In selecting fixed-income securities, Morgan Stanley evaluates the currency,
market and individual features of the securities being considered for
investment. The Series seeks to minimize investment risk by investing in
fixed-income securities rated A or better by S&P or Moody's, comparably rated by
another nationally recognized rating agency or, if unrated, determined to be of
comparable quality by Morgan Stanley. Morgan Stanley will attempt to maintain an
average effective duration of two to eight years for the fixed-income securities
portion of the Series' portfolio.

The Series may engage in forward currency exchange contracts and currency
financial futures and options, both to hedge its portfolio against unfavorable
currency movements and to enhance returns.

PRINCIPAL RISKS

Global Asset Allocation Series' share price and yield will change daily because
of changes in stock prices, interest rates and other factors. You may lose money
if you invest in the Series. The principal risks of investing in the Series
include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. As you consider an investment in the
Series, you should take into account your personal tolerance for daily
fluctuations of the stock market.

- RISKS OF VALUE STOCKS. The Series looks for stocks which appear to be
undervalued in relation to the issuer's assets, cash flow, earnings and,
where appropriate, revenues. These stocks can remain undervalued for years.
There is a risk that a stock's price will never reach what the Series'
sub-adviser believes is its true value, or that the stock's price will go
down.

- INCOME RISK. Income risk is the potential for a decline in the Series'
income due to falling interest rates.

- RISKS OF FOREIGN INVESTING. The Series' investments in foreign securities
subject it to risks not typically associated with U.S. investing. Because of
these risks, the Series may be subject to greater volatility than most
mutual funds which invest principally in domestic securities. The Series may
experience a decline in net asset value resulting from changes in exchange
rates between the United States dollar and foreign currencies. Other risks
of foreign investing include limited liquidity and volatile prices of
non-U.S. securities, limited availability of information regarding non-U.S.
companies, investment and repatriation restrictions, and foreign taxation.

- RISKS OF FOREIGN CURRENCY TRANSACTIONS. If the Series uses foreign
currency transactions it will be exposed to additional risks and
transactions costs. Successful use of these derivative instruments depends
on the sub-adviser's ability to forecast correctly the direction of market
movements. The Series' performance could be worse than if the Series had not
used these instruments if the sub-adviser's judgment proves incorrect. In
addition, even if the sub-adviser's forecast is correct, there may be an
imperfect correlation between the price of derivative instruments and
movements in the prices of the currencies being hedged.

- RISKS OF ACTIVE MANAGEMENT. Because the Series may invest in a wide range
of investments and markets, the Series' sub-adviser has substantially more
investment discretion than the advisers of most mutual funds. The
performance of the Series will reflect in part the sub-adviser's ability to
effectively allocate the Series' assets among these investments and markets.

6
<PAGE> 10

SERIES PERFORMANCE

The bar chart and table below provide you with information on Global Asset
Allocation Series' volatility and performance. The bar chart shows you how
performance of the Series has varied from year to year. The table compares the
Series' performance over different time periods to that of a broad measure of
market performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
GLOBAL ASSET ALLOCATION SERIES
------------------------------
<S> <C>
1995 17.47
1996 12.72
1997 13.51
1998 17.27
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % 1998 quarter ended
WORST QUARTER: % 1998 quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS SINCE INCEPTION*
-------- ---------- ----------------
<S> <C> <C> <C>
Global Asset Allocation
Series.................... % % %
Salomon Brothers World
Government Bond Index**... % % %
MSCI World Index***......... % % %
</TABLE>

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

* Inception date was January 3, 1995

** An unmanaged index of world government bonds with maturities of at least one
year.

*** An unmanaged index of the world's major equity markets in U.S. dollars,
weighted by stock market value.

7
<PAGE> 11

ASSET ALLOCATION SERIES

OBJECTIVE

The objective of Asset Allocation Series is maximum total return to be derived
primarily from capital appreciation, dividends and interest.

PRINCIPAL INVESTMENT STRATEGIES

Asset Allocation Series invests primarily in common stocks and fixed-income
securities. The Series pursues its objective by following a flexible asset
allocation strategy. This strategy contemplates increased ownership of common
stocks during periods when stock market conditions appear favorable and
increased ownership of fixed-income securities during periods when stock market
conditions are less favorable. Depending on prevailing economic and market
conditions, the Series may at any given time be primarily comprised of common
stocks, fixed-income securities, short-term money market securities or any
combination of these securities. The Series' investments may include the
following:

- COMMON STOCKS. The Series will generally invest in common stocks which
the Series' adviser believes have superior earnings growth potential.

- U.S. GOVERNMENT SECURITIES. The Series may invest in securities issued or
guaranteed by the United States Government, it agencies or
instrumentalities.

- MORTGAGE-BACKED SECURITIES. The Series may invest in mortgage-backed
securities, including pass-through certificates issued by the Government
National Mortgage Association ("GNMA") and the Federal National Mortgage
Association ("FNMA") and collateralized mortgage obligations ("CMOs"). CMOs
are debt instruments issued by special purpose entities which are secured by
pools of mortgage loans or other mortgage-backed securities.

- ASSET-BACKED SECURITIES. The Series may invest in asset-backed
securities, which are similar to CMOs, but backed by other types of
obligations, such as automobile loans, home equity loans or credit card
receivables.

- ZERO COUPON OBLIGATIONS. The Series may invest in zero coupon obligations
issued by the U.S. Government and its agencies and by corporate issuers.
Because these obligations do not pay interest currently, their prices can be
highly volatile as interest rates rise and fall.

- MUNICIPAL OBLIGATIONS. The Series may invest up to 20% of its total
assets in municipal securities during periods when these securities appear
to offer more attractive returns than taxable securities.

- CORPORATE OBLIGATIONS. The Series may invest in debt securities such as
bonds, debentures and notes issued by corporations.

- BANK OBLIGATIONS. The Series may invest in obligations of United States
banks, and in U.S. dollar denominated obligations of Canadian chartered
banks and United States branches or agencies of foreign banks.

- COMMERCIAL PAPER. The Series may invest in commercial paper rated at the
time of purchase Prime-2 or higher by Moody's, A-2 or higher by Standard &
Poor's, or comparably rated by another nationally recognized rating
organization, or unrated and issued by a corporation with an outstanding
debt issue rated A or better by Moody's or Standard & Poor's or comparably
rated by another nationally recognized rating organization.

The Series may invest without limitation in fixed income securities rated within
the four highest grades at the time of purchase by Moody's or S&P, comparably
rated by another nationally recognized rating organization, or unrated and
determined to be of comparable quality by the Series' adviser. These are
commonly referred to as "investment grade" securities. In addition, the Series
may invest up to 30% of its total assets in fixed income securities rated lower
than investment grade (or unrated and of comparable quality), commonly known as
"junk bonds." The Series will not invest in bonds rated below Caa by Moody's or
CCC by S&P, comparably rated by another nationally recognized rating
organization, or unrated and determined to be of comparable quality by the
Series' adviser.

The Series may invest up to 20% of its total assets in securities of foreign
governments and companies.

In managing the common stock portion of the Series' portfolio, the Series'
adviser generally invests in stocks of companies whose earnings and growth
potential, in its judgment, exceed industry averages. In addition to superior
earnings growth potential, the adviser seeks companies which it believes to be
well managed with above average returns on equity and invested capital, healthy
balance sheets and the potential to gain market shares. Companies of this nature
typically have above average growth potential and a correspondingly higher than
average valuation level as measured by price to earnings, price to cash flow and
price to book value ratios. The adviser uses a "bottom up" investment style in
which stock selection is driven primarily by the merits of the company itself.
The median market capitalization of the common stock portion of the Series'
portfolio was $ billion as of March 31, 2000.

The adviser bases its decision to purchase a particular fixed-income security
upon many factors, the most important of which are the characteristics of the
security (interest rate, term, call provisions, etc.), the financial stability
and managerial strength of the issuer of the security and diversification in the
Series. The Series will attempt to maintain an average effective duration of
three to seven years for the debt securities portion of its portfolio.

PRINCIPAL RISKS

Asset Allocation Series' share price and yield will change daily because of
changes in stock prices, interest rates and other factors. You may lose money if
you invest in the Series. The principal risks of investing in Asset Allocation
Series include:

- RISKS OF GROWTH STOCKS. In investing in common stocks, the Series'
adviser generally invests in companies that it believes have superior
earnings growth potential. If the adviser incorrectly assesses a company's
prospects for earnings growth, or if its judgment about how other investors
will value the company's earnings growth is wrong, then the price of the
company's stock may decrease, or it may not increase to the level that the
Series' adviser had anticipated.

- INCOME RISK. Income risk is the potential for a decline in the Series'
income due to falling interest rates.

- CREDIT OR DEFAULT RISK. If a bond issuer's credit quality declines or its
agency ratings are downgraded, there may be a resulting decline in the
bond's price. If credit quality deteriorates to the point of possible or
actual default (inability to pay interest or repay principal on a timely
basis), the bond's market value could decline precipitously.

- RISKS OF HIGH YIELD/HIGH RISK SECURITIES. A significant portion of the
Series' portfolio may consist of non-investment grade debt securities,
commonly referred to as "high yield" securities or "junk bonds." These
securities generally have more volatile prices and carry more risk to
principal than investment grade securities.

8
<PAGE> 12

- RISKS OF ACTIVE MANAGEMENT. Because the Series may invest in a wide range
of investments, the Series' investment adviser has substantially more
investment discretion than the advisers of most mutual funds. The
performance of the Series will reflect in part the adviser's ability to
effectively allocate the Series' assets among these investments.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Asset Allocation
Series' volatility and performance. The bar chart shows you how performance of
the Series has varied from year to year. The table compares the Series'
performance over different time periods to that of a broad measure of market
performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES
-----------------------
<S> <C>
1990 2.01
1991 27.64
1992 6.95
1993 9.79
1994 -0.31
1995 21.97
1996 12.5
1997 20.24
1998 19.97
1999 0
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS
-------- ---------- ---------
<S> <C> <C> <C>
Asset Allocation Series....... % % %
Lehman Brothers Aggregate Bond
Index*...................... % % %
S&P 500 Index**............... % % %
</TABLE>

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

* An unmanaged index of government, corporate, and mortgage-backed securities
with an average maturity of approximately nine years.

** An unmanaged index of 500 common stocks.

9
<PAGE> 13

AMERICAN LEADERS SERIES

OBJECTIVE

The investment objective of American Leaders Series is long-term growth of
capital. The secondary objective of the Series is to provide income.

PRINCIPAL INVESTMENT STRATEGIES

American Leaders Series invests primarily in equity securities of blue chip
companies. The Series' holdings ordinarily will be in large capitalization
companies that are in the top 25% of their industry sectors in terms of revenues
and, in the opinion of the Series' sub-adviser, Federated Investment Management
Company ("Federated"), are trading at a low valuation in relation to their
history, to their current market value and to their expected future price.

Companies with similar characteristics may be grouped together in broad
categories called sectors. Federated diversifies the Series' investments,
limiting the Series' risk exposure with respect to individual securities and
industry sectors. In determining the amount to invest in a security, and in
order to manage sector risk, Federated attempts to limit the Series' exposure to
each major sector in the Standard & Poor's 500 Index, as a general matter, to
not less than 50% nor more than 200% of the Index's allocation to that sector.

The Series' equity investments principally consist of common stocks, but also
may include American Depositary Receipts ("ADRs"). ADRs represent interests in
underlying securities issued by a foreign company, but are traded in the United
States. The Series invests primarily in ADRs of companies with significant
operations within the United States.

Federated performs traditional fundamental analysis to select securities that
exhibit the most promising long-term value for the Series' portfolio. In
selecting securities, Federated focuses on the current financial condition of
the issuing company, in addition to examining each issuer's business and product
strength, competitive position, and management expertise. Further, Federated
considers current economic, financial market, and industry factors, which may
affect the issuing company. To determine the timing of purchases and sales of
portfolio securities, Federated looks at recent stock price performance and the
direction of current fiscal year earnings estimates of various companies.

PRINCIPAL RISKS

American Leaders Series' share price will change daily because of changes in
stock prices and other factors. You may lose money if you invest in the Series.
The principal risks of investing in the Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, value stocks may underperform
the market as a whole. As you consider an investment in the Series, you
should take into account your personal tolerance for daily fluctuations of
the stock market.

- RISKS OF VALUE STOCKS. The Series' sub-adviser looks for companies whose
stock prices are believed to be undervalued. These stocks can remain
undervalued for years. There is a risk that a stock's price will never reach
what the sub-adviser believes is its true value, or that the stock's price
will go down.

- SECTOR RISK. Because the Series may allocate relatively more of its
assets to one or more industry sectors than to other sectors, the Series'
performance will be more susceptible to any developments which affect the
sectors emphasized by the Series.

- RISKS OF INVESTING IN ADRS. Because the Series may invest in American
Depositary Receipts issued by foreign companies, the Series' share price may
be more affected by foreign economic and political conditions, taxation
policies and accounting and auditing standards than would otherwise be the
case.

SERIES PERFORMANCE

A bar chart and performance table are not provided for the Series because it did
not commence operations until the date of this Prospectus.

10
<PAGE> 14

VALUE SERIES

OBJECTIVE

The objective of Value Series is short and long term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

Value Series invests primarily in common stocks. The Series' adviser uses a
"bottom up" investment style in which stock selection is driven primarily by the
merits of the company itself. The adviser selects stocks based on a concept of
fundamental value, seeking to identify companies whose shares appear inexpensive
relative to anticipated profit and dividend growth. The primary emphasis is
placed on companies expected to experience a significant acceleration in
earnings over the next three to five years. The prices of these stocks typically
do not fully reflect this anticipated improvement. Often such a stock is "out of
favor" and priced low relative to the company's earnings, cash flow and book
value. A second source of "value" stocks is provided by companies expected to
sustain their historic rate of growth but which are selling at a low price to
earnings ratio in relation to this anticipated growth.

Under normal market conditions, it is the Series' intention to maintain a median
market capitalization for its portfolio of over $1 billion--making the Series a
"mid to large cap value fund." The Series' median market capitalization was
$ billion as of March 31, 2000.

PRINCIPAL RISKS

Value Series' share price will change daily because of changes in stock prices
and other factors. You may lose money if you invest in the Series. The principal
risks of investing in Value Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, value stocks and/or stocks of
mid and large capitalization companies may underperform the market as a
whole. As you consider an investment in the Series, you should take into
account your personal tolerance for daily fluctuations of the stock market.

- RISKS OF VALUE STOCKS. The Series looks for companies whose stocks appear
inexpensive relative to anticipated profit and dividend growth. These stocks
can remain undervalued for years. There is a risk that a stock's price will
never reach what the Series' adviser believes is its true value, or that the
stock's price will go down.

- RISKS OF LARGE CAP COMPANIES. In the long run, large company stocks may
produce more modest gains than stocks of smaller companies.

- RISKS OF MID CAP COMPANIES. Mid-sized companies may have somewhat limited
product lines, markets and financial resources and may depend upon a
relatively small management group. Stocks of these companies may therefore
be more vulnerable to adverse developments than those of large companies.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Value Series'
volatility and performance. The bar chart shows you how performance of the
Series has varied from year to year. The table compares the Series' performance
over different time periods to that of a broad measure of market performance.
Both the chart and the table assume that all dividends and distributions have
been reinvested. Fees and charges attributable to variable annuity contracts and
variable life insurance policies are not taken into account in calculating the
Series' returns. If they had been, returns would be lower. Remember, how the
Series has performed in the past is not necessarily an indication of how it will
perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
VALUE SERIES
------------
<S> <C>
1997 25.24
1998 9.64
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION*
-------- ----------------
<S> <C> <C>
Value Series.......................... % %
S&P 500 Index**....................... % %
</TABLE>

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

* Inception date was May 1, 1996.

** An unmanaged index of 500 common stocks.

11
<PAGE> 15

CAPITAL OPPORTUNITIES SERIES

OBJECTIVE

The objective of Capital Opportunities Series is capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

The Series invests primarily in common stocks and equity-related securities,
such as preferred stocks, convertible securities and depositary receipts. The
Series focuses on companies which the Series' sub-adviser, Massachusetts
Financial Service Company ("MFS"), believes have favorable growth prospects and
attractive valuations based on current and expected earnings or cash flow. The
Series' investments may include securities traded in the over-the-counter
markets.

MFS uses a bottom-up, as opposed to a top-down, investment style in managing the
Series. This means that securities are selected based upon fundamental analysis
(such as an analysis of earnings, cash flows, competitive position and
management's abilities) performed by the Series' sub-adviser and its large group
of equity research analysts.

The Series may invest in foreign securities (including emerging market
securities), and may have exposure to foreign currencies through its investment
in these securities, its direct holdings of foreign currencies or through its
use of foreign currency exchange contracts for the purchase or sale of a fixed
quantity of a foreign currency at a future date.

The Series may engage in active and frequent trading to achieve its principal
investment strategies.

PRINCIPAL RISKS

Capital Opportunities Series' share price will change daily because of changes
in stock prices and other factors. You may lose money if you invest in the
Series. The principal risks of investing in the Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, growth stocks may
underperform the market as a whole. As you consider an investment in the
Series, you should take into account your personal tolerance for daily
fluctuations of the stock market.

- RISKS OF GROWTH STOCKS. The Series focuses on companies which the Series'
sub-adviser believes have favorable growth prospects and attractive
valuations based on current and expected earnings or cash flow. If the
sub-adviser incorrectly assesses a company's prospects for earnings growth,
or if its judgment about how other investors will value the company's
earnings growth is wrong, then the price of the company's stock may
decrease, or it may not increase to the level that the sub-adviser had
anticipated.

- OVER-THE-COUNTER RISK. Over-the-counter ("OTC") transactions involve
risks in addition to those associated with transactions in securities traded
on exchanges. OTC listed companies may have limited product lines, markets
or financial resources. Many OTC stocks trade less frequently and in smaller
volume than exchange-listed stocks. The values of these stocks may be more
volatile than exchange-listed stocks, and the Series may experience
difficulty in establishing or closing out positions in these stocks at
prevailing market prices.

- RISKS OF FOREIGN INVESTING. The Series' investments in foreign securities
subject it to risks not typically associated with U.S. investing. These
investments may involve increased political and economic risk. In addition,
the Series may experience a decline in net asset value resulting from
changes in exchange rates between the United States dollar and foreign
currencies.

- RISKS OF EMERGING MARKETS. The risks of foreign investing are
particularly significant in emerging markets. Securities issued by companies
located in emerging markets may exhibit greater price volatility and have
less liquidity than securities issued by companies located in developed
foreign markets.

- RISKS OF FOREIGN CURRENCY TRANSACTIONS. If the Series uses foreign
currency transactions it will be exposed to additional risks and transaction
costs. Successful use of these derivative instruments depends on ability of
the Series' sub-adviser to forecast correctly the direction of market
movements. The Series' performance could be worse than if the Series had not
used these instruments if the sub-adviser's judgment proves incorrect. In
addition, even if the sub-adviser's judgment is correct, there may be an
imperfect correlation between the price of the derivative instruments and
movements in the prices of the currencies being hedged.

- RISKS OF SHORT-TERM TRADING. Due to many factors, the Series may trade
securities frequently and hold securities in its portfolio for one year or
less. Frequent purchases and sales of portfolio securities will increase the
Series' transaction costs. Factors that can lead to short-term trading
include market volatility; a significant positive or negative development
concerning a security; an attempt to maintain the Series' market
capitalization target; and the need to sell a security to meet redemption
activity in the Series.

SERIES PERFORMANCE

A bar chart and performance table are not provided for the Series because it did
not commence operations until the date of this Prospectus.

12
<PAGE> 16

GROWTH & INCOME SERIES

OBJECTIVE

The objectives of Growth & Income Series are capital appreciation and current
income.

PRINCIPAL INVESTMENT STRATEGIES

Growth & Income Series invests primarily in common stocks, with an emphasis on
stocks of companies that have a history of dividend payments. The Series'
adviser uses a "bottom up" investment style in which stock selection is driven
primarily by the merits of the company itself. The adviser may select stocks
using either a "value" or a "growth" philosophy. In looking for growth stocks,
the adviser seeks to identify companies whose earnings and revenue growth
potential exceed industry averages. Value stocks are those which the adviser
believes are inexpensive relative to anticipated profit and dividend growth.

Under normal market conditions, the Series intends to maintain a median market
capitalization for its portfolio of greater than $5 billion making it a "large
cap fund." The Series' median market capitalization was $ billion as of March
31, 2000.

PRINCIPAL RISKS

Growth & Income Series' share price will change daily because of changes in
stock prices and other factors. You may lose money if you invest in the Series.

The principal risk of investing in Growth & Income Series is the risk that
prices of stocks in the Series' portfolio will decline over short or extended
periods of time. Price changes may occur in the market as a whole, or they may
occur in only a particular company, industry or sector of the market. In
addition, stocks of large capitalization companies may underperform the market
as a whole from time to time and, in the long run, may produce more modest gains
than stocks of smaller companies. As you consider an investment in the Series,
you should take into account your personal tolerance for daily fluctuations of
the stock market.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Growth & Income
Series' volatility and performance. The bar chart shows you how performance of
the Series has varied from year to year. The table compares the Series'
performance over different time periods to that of a broad measure of market
performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
GROWTH & INCOME SERIES
----------------------
<S> <C>
1995 29.70
1996 21.51
1997 27.69
1998 13.21
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS SINCE INCEPTION*
-------- ---------- ----------------
<S> <C> <C> <C>
Growth & Income Series...... % % %
S&P 500 Index**............. % % %
</TABLE>

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

* Inception date was May 2, 1994.

** An unmanaged index of 500 common stocks.

13
<PAGE> 17

S&P 500 INDEX SERIES

OBJECTIVE

The objective of S&P 500 Index Series is to replicate the total return of the
Standard & Poor's 500 Composite Stock Price Index (the "Index").

PRINCIPAL INVESTMENT STRATEGIES

S&P 500 Index Series generally invests at least 95% of its total assets in the
common stocks included in the Index. The Series may also use stock index futures
contracts, options on such contracts and options on stock indices as a
substitute for the sale or purchase of securities.

The Index is an unmanaged index of 500 common stocks chosen to reflect the
industries of the U.S. economy and is often considered a proxy for the stock
market in general. Each stock is weighted by its market capitalization, which
means larger companies have greater representation in the index than smaller
ones.

The Series' sub-adviser, The Dreyfus Corporation, utilizes a passive investment
approach, attempting to duplicate the investment performance of the Index
through statistical procedures. The Series expects to invest in all 500 stocks
in the Index in proportion to their weighting in the Index. To the extent that
the size of the Series does not permit it to invest in all 500 stocks in the
Index, the Series will purchase a representative sample of stocks from each
industry sector included in the Index in proportion to that industry's weighting
in the Index.

Because the Series may not always hold all of the stocks included in the Index,
and because the Series has expenses and the Index does not, the Series will not
duplicate the Index's performance precisely. However, the Series' adviser and
sub-adviser believe there should be a close correlation between the Series
performance and that of the Index in both rising and falling markets. The Series
attempts to achieve a correlation between the performance of its investments and
that of the Index of at least 0.95, before deduction of expenses. A correlation
of 1.00 would represent perfect correlation between Series and Index
performance. If the Series fails to achieve an appropriate level of correlation
over time, the Series' Board of Directors will consider alternative strategies
for the Series.

The Series' median market capitalization was $ billion as of March 31, 2000.

"Standard & Poor's(R)," "S&P(R)," "Standard & Poor's 500" and "S&P 500(R)" are
trademarks of The Mcgraw-Hill Companies, Inc., and have been licensed for use by
the Series. The Series is not sponsored, endorsed or sold by Standard & Poor's.
Standard & Poor's makes no representation regarding the advisability of
investing in the Series.

PRINCIPAL RISKS

S&P 500 Index Series' share price will change daily because of changes in stock
prices and other factors. You may lose money if you invest in the Series. The
principal risks of investing in the Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, stocks of the companies in
the Index may underperform the market as a whole. As you consider an
investment in the Series, you should take into account your personal
tolerance for daily fluctuations of the stock market.

- RISKS OF LARGE CAP COMPANIES. The Index is made up of large company
stocks. In the long run, stocks of these companies may produce more modest
gains than stocks of smaller companies.

- FAILURE TO MATCH PERFORMANCE OF THE INDEX. The Series' ability to
replicate the performance of the Index may be affected by, among other
things, changes in securities markets, changes in the composition of the
Index, and the timing of purchases and redemptions of Series shares.

- RISKS OF AN INDEXING STRATEGY. The Series uses an indexing strategy. It
does not attempt to manage market volatility, use defensive strategies or
reduce the effects of any long-term periods of poor stock market
performance.

- RISKS OF FUTURES AND OPTIONS. If the Series uses options and futures
contracts it will be exposed to additional risks such as losses due to
unanticipated market price movements and reduced opportunities for gain.

SERIES PERFORMANCE

The bar chart and table below provide you with information on S&P 500 Index
Series' volatility and performance. The bar chart shows you how performance of
the Series has varied from year to year. The table compares the Series'
performance over different time periods to that of a broad measure of market
performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
S&P 500 INDEX SERIES
--------------------
<S> <C>
1997 32.32
1998 28.11
1999 0
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION
-------- ----------------
<S> <C> <C>
S&P 500 Index Series.................. % %
S&P 500 Index**....................... % %
</TABLE>

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

* Inception date was May 1, 1996.

** An unmanaged index of 500 common stocks.

14
<PAGE> 18

BLUE CHIP STOCK SERIES

OBJECTIVE

The primary objective of Blue Chip Stock Series is long-term growth of capital.
Current income is a secondary objective.

PRINCIPAL INVESTMENT STRATEGIES

Blue Chip Stock Series pursues its objectives by primarily investing in common
stocks of large blue chip companies, as defined by T. Rowe Price Associates,
Inc. ("T. Rowe Price"), the sub-adviser to the Series. These are companies that,
in T. Rowe Price's view, are well established in their industries and have the
potential for above-average earnings growth. The approach of T. Rowe Price
reflects its belief that good company fundamentals combined with a positive
industry outlook will ultimately reward investors with a higher stock price. T.
Rowe Price looks for companies that offer leading market positions, seasoned
management teams, and strong financial fundamentals. Where possible, it seeks
stocks attractively priced relative to their long-term value. The Series' median
market capitalization was $ billion as of March 31, 2000.

While most of the Series' assets will be invested in U.S. common stocks, the
Series may also purchase other types of securities, including foreign
securities, preferred stocks and convertible securities, when they are
considered consistent with the Series' investment objectives. The Series may
also buy and sell futures contracts and options on futures contracts. This may
be done to hedge the value of the Series' portfolio against potential adverse
movements in securities prices, to enhance returns, or to maintain market
exposure.

PRINCIPAL RISKS

Blue Chip Stock Series' share price will change daily because of changes in
stock prices and other factors. You may lose money if you invest in the Series.
The principal risks of investing in the Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, growth stocks or blue chip
stocks may underperform the market as a whole. As you consider an investment
in the Series, you should take into account your personal tolerance for
daily fluctuations of the stock market.

- RISKS OF GROWTH STOCKS. The Series invests primarily in stocks of
companies that the sub-adviser believes have the potential for above-average
earnings growth. If the sub-adviser incorrectly assesses a company's
prospects for earnings growth, or if its judgment about how other investors
will value the company's earnings growth is wrong, then the price of the
company's stock may decrease, or it may not increase to the level that the
sub-adviser had anticipated.

- RISKS OF LARGE CAP COMPANIES. In the long run, large company stocks may
produce more modest gains than stocks of smaller companies.

- RISKS OF FUTURES. If the Series uses futures contracts or options on
futures contracts it will be exposed to additional risks and transactions
costs. Successful use of these derivative instruments depends on the
sub-adviser's ability to forecast correctly the direction of market
movements. The Series' performance could be worse than if the Series had not
used these instruments if the sub-adviser's judgment proves incorrect. In
addition, even if the sub-adviser's forecast is correct, there may be an
imperfect correlation between the price of derivative instruments and
movements in the prices of the securities being hedged.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Blue Chip Stock
Series' volatility and performance. The bar chart shows you how performance of
the Series has varied from year to year. The table compares the Series'
performance over different time periods to that of a broad measure of market
performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
BLUE CHIP STOCK SERIES
----------------------
<S> <C>
1997 27.00
1998 28.07
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION*
-------- ----------------
<S> <C> <C>
Blue Chip Stock Series................ % %
S&P 500 Index**....................... % %
</TABLE>

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

* Inception date was May 1, 1996.

** An unmanaged index of 500 common stocks.

15
<PAGE> 19

BLUE CHIP STOCK SERIES II

OBJECTIVE

The primary objective of Blue Chip Stock Series II is long-term growth of
capital with a secondary objective of current income.

PRINCIPAL INVESTMENT STRATEGIES

Blue Chip Stock Series II pursues its objectives by primarily investing in
common stocks of blue chip companies, as defined by AIM Advisors, Inc. ("AIM"),
the sub-adviser to the Series. These are companies that AIM believes have the
potential for above-average growth in earnings and that are well-established in
their respective industries. AIM considers whether to sell a particular security
when they believe the security no longer has the potential for above-average
growth potential.

When AIM believes securities other than common stocks offer the opportunity for
long-term growth of capital and current income, the Series may invest in U.S.
government securities, convertible securities and high-quality debt securities.
The Series may also invest up to 25% of its total assets in foreign securities.

PRINCIPAL RISKS

Blue Chip Stock Series II's share price will change daily because of changes in
stock prices and other factors. You may lose money if you invest in the Series.
The principal risks of investing in the Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, growth stocks or blue chip
stocks may underperform the market as a whole. As you consider an investment
in the Series, you should take into account your personal tolerance for
daily fluctuations of the stock market.

- RISKS OF LARGE CAP COMPANIES. In the long run, large company stocks may
produce more modest gains than stocks of smaller companies.

SERIES PERFORMANCE

A bar chart and performance table are not provided for the Series because it has
not been in operation for a full calendar year.

16
<PAGE> 20

INTERNATIONAL STOCK SERIES

OBJECTIVE

The objective of International Stock Series is long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

International Stock Series invests primarily in equity securities, principally
common stocks, of relatively large non-United States companies that the Series'
sub-adviser, Lazard Asset Management ("Lazard"), believes are undervalued based
on their earnings, cash flow or asset value. The allocation of the Series'
assets among geographic sectors may shift from time to time based on Lazard's
judgment. However, Lazard currently intends to invest the Series' assets
primarily in companies based in developed markets.

In selecting investments for the Series, Lazard attempts to identify undervalued
securities through traditional measures of value, including low price to
earnings ratios, high yield, unrecognized assets, potential for management
change and the potential to improve profitability. Lazard's global investment
specialists apply both quantitative and qualitative analysis to securities
selection, and focus on individual stock selection rather than on general stock
market trends.

The Series may engage in forward currency exchange contracts to hedge its
portfolio against unfavorable currency movements and to enhance returns.

The Series' median market capitalization was $ billion as of March 31, 2000.

PRINCIPAL RISKS

International Stock Series' share price will change daily because of changes in
stock prices and other factors. You may lose money if you invest in the Series.
The principal risks of investing in International Stock Series include:

- RISKS OF EQUITY SECURITIES. Prices of equity securities in the Series'
portfolio may decline over short or extended periods of time. Price changes
may occur in the market as a whole, or they may occur in only a particular
company, industry or sector of the market. As you consider an investment in
the Series, you should take into account your personal tolerance for daily
fluctuations of the stock market.

- RISKS OF VALUE STOCKS. The Series' sub-adviser looks for companies
worldwide that it believes are undervalued based on their earnings, cash
flow or asset value. These stocks can remain undervalued for years. There is
a risk that a stock's price will never reach what the sub-adviser believes
is its true value, or that the stock's price will go down.

- RISKS OF FOREIGN CURRENCY TRANSACTIONS. If the Series uses foreign
currency hedging transactions it will be exposed to additional risks and
transactions costs. Successful use of these derivative instruments depends
on the sub-adviser's ability to forecast correctly the direction of market
movements. The Series' performance could be worse than if the Series had not
used these instruments if the sub-adviser's judgment proves incorrect. In
addition, even if the sub-adviser's forecast is correct, there may be an
imperfect correlation between the price of derivative instruments and
movements in the prices of the currencies being hedged.

SERIES PERFORMANCE

The bar chart and table below provide you with information on International
Stock Series' volatility and performance. The bar chart shows you how
performance of the Series has varied from year to year. The table compares the
Series' performance over different time periods to that of a broad measure of
market performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
INTERNATIONAL STOCK SERIES
--------------------------
<S> <C>
1995 14.35
1996 14.02
1997 11.99
1998 16.47
1999 0
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: quarter ended
WORST QUARTER: quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS SINCE INCEPTION*
-------- ---------- ----------------
<S> <C> <C> <C>
International Stock
Series.................... % % %
MSCI EAFE Index**........... % % %
</TABLE>

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

* Inception date was January 3, 1995.

** An unmanaged index of stocks of Europe, Australia and the Far East.

17
<PAGE> 21

MID CAP STOCK SERIES

OBJECTIVE

The objective of Mid Cap Stock Series is total investment returns, including
capital appreciation and income, that consistently outperform the Standard &
Poor's 400 MidCap Index ("S&P MidCap").

PRINCIPAL INVESTMENT STRATEGIES

The Mid Cap Stock Series invests primarily in common stocks of medium
capitalization companies that have a market values between $200 million and $5
billion. The Series' median market capitalization was $ billion as of March
31, 2000.

The Series sub-adviser, The Dreyfus Corporation ("Dreyfus"), selects common
stocks so that, in the aggregate, the investment characteristics and risk
profile of the Series are similar to those of the S&P MidCap. However, the
Series seeks to invest in stocks that, in the aggregate, will provide a higher
return than the S&P MidCap. The Series is not an index series and its
investments are not limited to securities of issuers included in the S&P MidCap.

Dreyfus utilizes computer techniques to track and, if possible, outperform the
S&P MidCap. Dreyfus employs valuation models designed to identify common stocks
of companies that are believed to have superior return potential in order to
construct a portfolio that resembles the S&P MidCap but is weighted toward the
stocks that Dreyfus believes are most attractive.

The Series may buy and sell futures and options contracts. This will be done
primarily to hedge the value of the Series' portfolio against potential adverse
movements in securities prices, but may also be done to enhance returns.
PRINCIPAL RISKS

Mid Cap Stock Series' share price will change daily because of changes in stock
prices and other factors. You may lose money if you invest in the Series. The
principal risks of investing in Mid Cap Stock Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, stocks of mid capitalization
companies may underperform the market as a whole. As you consider an
investment in the Series, you should take into account your personal
tolerance for daily fluctuations of the stock market.

- RISKS OF FUTURES AND OPTIONS. If the Series uses options and futures
contracts it will be exposed to additional risks and transactions costs.
Successful use of these derivative instruments depends on the sub-adviser's
ability to forecast correctly the direction of market movements. The Series'
performance could be worse than if the Series had not used these instruments
if the sub-adviser's judgment proves incorrect. In addition, even if the
sub-adviser's forecast is correct, there may be an imperfect correlation
between the price of derivative instruments and movements in the prices of
the securities being hedged.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Mid Cap Stock
Series' volatility and performance. The bar chart is intended to show you how
performance of the Series has varied from year to year. However, because the
Series was not offered until May 1, 1998 only one calendar year of information
is available. The table compares the Series' performance over different time
periods to that of a broad measure of market performance. Both the chart and the
table assume that all dividends and distributions have been reinvested. Fees and
charges attributable to variable annuity contracts and variable life insurance
policies are not taken into account in calculating the Series' returns. If they
had been, returns would be lower. Remember, how the Series has performed in the
past is not necessarily an indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
CAP STOCK SERIES
----------------
<S> <C>
1999 0
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION*
-------- ----------------
<S> <C> <C>
Mid Cap Stock Series.................. % %
Index**.................. % %
</TABLE>

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

* Inception date was .

** An unmanaged index of .

18
<PAGE> 22

SMALL CAP VALUE SERIES

OBJECTIVE

The objective of Small Cap Value Series is capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

Small Cap Value Series primarily invests in the common stocks of small companies
whose stock prices are believed to be undervalued. The Series' securities
selection focuses on companies that are out of favor with markets or have not
yet been discovered by the broader investment community.

The Series is sub-advised by Berger LLC, which has contracted with Perkins,
Wolf, McDonnell & Company (the "Manager") to provide day-to-day investment
management for the Series. In selecting securities for the Series, the Manager
generally looks for companies with:

- a low price relative to their assets, earnings, cash flow or business
franchise;

- products and services that give them a competitive advantage; and

- quality balance sheets and strong management.

The Manager's philosophy is to weigh a security's downside risk before
considering its upside potential, which may help provide an element of capital
preservation.

Under normal circumstances, the Series invests at least 65% of its assets in
common stocks of small companies whose market capitalization, at the time of
initial purchase, is less than the 12-month average of the maximum market
capitalization for companies included in the Russell 2000 Index ($ billion as
of , 2000). This average is updated monthly. The Series' median
market capitalization was $ million as of March 31, 2000.

PRINCIPAL RISKS
Small Cap Value Series' share price will change daily because of changes in
stock prices and other factors. You may lose money if you invest in the Series.
The principal risks of investing in Small Cap Value Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, value stocks and/or stocks of
small capitalization companies may underperform the market as a whole. As
you consider an investment in the Series, you should take into account your
personal tolerance for daily fluctuations of the stock market.

- RISKS OF SMALL CAP COMPANIES. The securities of small capitalization
companies involve greater risk than is customarily associated with
investments in larger companies. Small capitalization companies often have
limited product lines, markets or financial resources and may be dependent
on a small, inexperienced management group. The securities of small
capitalization companies may have limited market stability and may be
subject to more abrupt or erratic market movements than securities of
larger, more established companies or the market averages in general. The
Series' investments are often focused in a small number of business sectors,
which increases the risk should adverse economic developments occur in one
of those sectors. In addition, the Series may invest in certain securities
with unique risks, such as special situations. Special situations are
companies about to undergo a structural, financial or management change
which may significantly affect the value of their securities.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Small Cap Value
Series' volatility and performance. The bar chart is intended to show you how
performance of the Series has varied from year to year. However, because the
Series was not offered until May 1, 1998 only one calendar year of information
is available. The table compares the Series' performance over different time
periods to that of a broad measure of market performance. Both the chart and the
table assume that all dividends and distributions have been reinvested. Fees and
charges attributable to variable annuity contracts and variable life insurance
policies are not taken into account in calculating the Series' returns. If they
had been, returns would be lower. Remember, how the Series has performed in the
past is not necessarily an indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
CAP STOCK SERIES
----------------
<S> <C>
1999 0
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION*
-------- ----------------
<S> <C> <C>
Small Cap Value Series................ % %
Index**.................. % %
</TABLE>

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

* Inception date was .

** An unmanaged index of .

19
<PAGE> 23

GLOBAL GROWTH SERIES

OBJECTIVE

The objective of Global Growth Series is long-term capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

Global Growth Series pursues its objective by investing primarily in common
stocks of issuers located in various developed countries and regions of the
world, including the United States, Canada, the United Kingdom, other Western
European nations, Japan and Australia. The Series focuses primarily on
medium-sized, established growth companies with one of more of the following
characteristics:

- a dominant market position,

- superior growth prospects,

- strong management with a focused growth strategy, and

- the ability to finance future growth.

The Series also may invest in common stocks of U.S. and non-U.S. emerging growth
companies. These companies generally have smaller capitalizations than
established growth companies. In selecting emerging growth companies, the
Series' investment adviser looks for companies that it believes:

- have the potential for earnings growth over time that is above the growth
rate of more established companies, or

- are early in their life cycles and have the potential to become major
enterprises.

Although the Series invests primarily in common stocks of issuers located in
developed countries, the series also may invest in less developed markets of the
world. In selecting emerging market securities, the Series' investment adviser
looks for companies with characteristics similar to those which it looks for in
companies located in developed countries. Emerging market companies, however,
have the potential to benefit from the economic growth of the developing region.

The Series' median market capitalization was $ billion as of March 31, 2000.

PRINCIPAL RISKS

Global Growth Series' share price will change daily because of changes in the
values of the securities held by the Series. You may lose money if you invest in
the Series. The principal risks of investing the Global Growth Series include:

- RISKS OF COMMON STOCKS. Prices of common stocks in the Series' portfolio
may decline over short or extended periods of time. Price changes may occur
in the market as a whole, or they may occur in only a particular company,
industry or sector of the market. As you consider an investment in the
Series, you should take into account your personal tolerance for daily
fluctuations of the stock market.

- RISKS OF GROWTH STOCKS. The Series invests in stocks of both established
and emerging growth companies. If the Series' adviser incorrectly assesses a
company's prospects for earnings growth, or if its judgment about how other
investors will value the company's earnings growth is wrong, then the price
of the company's stock may decrease, or it may not increase to the level
that the Series' adviser anticipated.

- RISKS OF MID AND SMALL CAP COMPANIES. The securities of both U.S. and
non-U.S. medium- and smaller-capitalization companies involve greater risk
than is customarily associated with investments in larger companies. These
companies often have limited product lines, markets or financial resources
and they may be dependent on a small, inexperienced management group. The
securities of medium-and smaller-capitalization companies may have limited
market stability and may be subject to more abrupt or erratic market
movements than securities of larger, more established companies or the
market averages in general.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Global Growth
Series' volatility and performance. The bar chart shows you how performance of
the Series has varied from year to year. The table compares the Series'
performance over different time periods to that of a broad measure of market
performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
GLOBAL GROWTH SERIES
--------------------
<S> <C>
1993 17.92
1994 -2.98
1995 30.49
1996 19.10
1997 6.82
1998 11.36
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS SINCE INCEPTION*
-------- ---------- ----------------
<S> <C> <C> <C>
Global Growth Series........ % % %
MSCI World Index**.......... % % %
</TABLE>

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

* Inception date was May 1, 1992.

** An unmanaged index of the world's major equity markets in U.S. dollars,
weighted by stock market value.

20
<PAGE> 24

GLOBAL EQUITY SERIES

OBJECTIVE

The objective of Global Equity Series is capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES

The Series invests primarily in common stocks and equity-related securities,
such as preferred stocks, convertible securities and depositary receipts, of
U.S. and foreign (including emerging market) issuers. The Series spreads its
investments across these markets and focuses on companies which the Series'
sub-adviser, Massachusetts Financial Service Company ("MFS"), believes have
favorable growth prospects and attractive valuations based on current and
expected earnings or cash flow. Under normal market conditions, the Series
invests in at least three different countries. The Series generally seeks to
purchase securities of companies with relatively large market capitalizations
relative to the market in which they are traded. The Series' investments may
include securities traded in the over-the-counter markets.

A company's principal activities are determined to be located in a particular
country if the company (a) is organized under the laws of, and maintains a
principal office in a country, (b) has its principal securities trading market
in a country, (c) derives 50% of its total revenues from goods or services
performed in the country, or (d) has 50% or more of its assets in the country.

The Series may have exposure to foreign currencies through its investment in
foreign securities, its direct holdings of foreign currencies or through its use
of foreign currency exchange contracts for the purchase or sale of a fixed
quantity of a foreign currency at a future date.

PRINCIPAL RISKS

Global Equity Series' share price will change daily because of changes in stock
prices and other factors. You may lose money if you invest in the Series. The
principal risks of investing in the Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, growth stocks may
underperform the market as a whole. As you consider an investment in the
Series, you should take into account your personal tolerance for daily
fluctuations of the stock market.

- OVER-THE-COUNTER RISK. Over-the-counter (OTC) transactions involve risks
in addition to those associated with transactions in securities traded on
exchanges. OTC listed companies may have limited product lines, markets or
financial resources. Many OTC stocks trade less frequently and in smaller
volume than exchange-listed stocks. The values of these stocks may be more
volatile than exchange-listed stocks, and the Series may experience
difficulty in establishing or closing out positions in these stocks at
prevailing market prices.

- RISKS OF FOREIGN CURRENCY TRANSACTIONS. If the Series uses foreign
currency transactions it will be exposed to additional risks and transaction
costs. Successful use of these derivative instruments depends on the ability
of the Series' sub-adviser to forecast correctly the direction of market
movements. The Series' performance could be worse than if the Series had not
used these instruments if the sub-adviser's judgment proves incorrect. In
addition, even if the sub-adviser's judgment is correct, there may be an
imperfect correlation between the price of the derivative instruments and
movements in the prices of the currencies being hedged.

SERIES PERFORMANCE

A bar chart and performance table are not provided for the Series because it did
not commence operations until the date of this Prospectus.

21
<PAGE> 25

LARGE CAP GROWTH SERIES

OBJECTIVE

The objective of Large Cap Growth Series is long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

Large Cap Growth Series pursues its objective by investing primarily in the
common stocks of a limited number of large, carefully selected, high quality
United States companies whose securities are believed likely to achieve superior
earnings growth. Normally, about 40 to 50 companies will be represented in the
Series' portfolio, with the 25 most highly regarded of these companies usually
constituting approximately 70% of the Series' assets. The Series' focus on a
relatively small number of intensively researched companies is not typical of
most equity mutual funds. The Series is designed for those seeking to accumulate
capital over time with less volatility than that typically associated with
investments in smaller companies.

The sub-adviser of Large Cap Growth Series, Alliance Capital Management L.P.
("Alliance"), relies heavily upon the fundamental analysis and research of its
large internal staff. The Alliance staff generally follows a primary research
universe of more than 600 companies that have strong management, superior
industry positions, excellent balance sheets and superior earnings growth
prospects. An emphasis is placed on identifying companies with substantially
above average prospective earnings growth that is not fully reflected in current
market valuations.

Alliance expects the average market capitalization of companies represented in
the Series' portfolio normally to be in the range, or in excess, of the average
market capitalization of companies comprising the S&P 500. As of March 31, 2000,
the average market capitalization of companies comprising the S&P 500 was $
billion. The Series' average market capitalization as of such date was $
billion.

Although the Series invests primarily in stocks of United States companies, it
may invest up to 15% of its total assets in securities of foreign companies.

PRINCIPAL RISKS

Large Cap Growth Series' share price will change daily because of changes in
stock prices and other factors. You may lose money if you invest in the Series.
The principal risks of investing in Large Cap Growth Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, stocks of large
capitalization companies may underperform the market as a whole. As you
consider an investment in the Series, you should take into account your
personal tolerance for daily fluctuations of the stock market.

- RISKS OF LARGE CAP COMPANIES. In the long run, large company stocks may
produce more modest gains than stocks of smaller companies.

- RISKS OF FOCUSING ON A SMALL NUMBER OF COMPANIES. Because the Series
focuses on a limited number of companies, it may be more significantly
affected by adverse developments in one of those companies than if it had
held a more diverse portfolio of securities.

- RISKS OF GROWTH STOCKS. The Series invests primarily in stocks of
companies that the sub-adviser believes are likely to achieve superior
earnings growth. If the sub-adviser incorrectly assesses a company's
prospects for earnings growth, or if its judgment about how other investors
will value the company's earnings growth is wrong, then the price of the
company's stock may decrease, or it may not increase to the level that the
sub-adviser had anticipated.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Large Cap Growth
Series' volatility and performance. The bar chart is intended to show you how
performance of the Series has varied from year to year. However, because the
Series was not offered until May 1, 1998 only one calendar year of information
is available. The table compares the Series' performance over different time
periods to that of a broad measure of market performance. Both the chart and the
table assume that all dividends and distributions have been reinvested. Fees and
charges attributable to variable annuity contracts and variable life insurance
policies are not taken into account in calculating the Series' returns. If they
had been, returns would be lower. Remember, how the Series has performed in the
past is not necessarily an indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
CAP STOCK SERIES
----------------
<S> <C>
1999 0
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR SINCE INCEPTION*
-------- ----------------
<S> <C> <C>
Large Cap Growth Series............... % %
Index**.................. % %
</TABLE>

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

* Inception date was .

** An unmanaged index of .

22
<PAGE> 26

INVESTORS GROWTH SERIES

OBJECTIVE

The investment objective of Investors Growth Series is to provide long-term
growth of capital and future income rather than current income.

PRINCIPAL INVESTMENT STRATEGIES

The Series invests its assets, except for working cash balances, in the common
stocks and securities convertible into common stocks of companies which the
Series' sub-adviser, Massachusetts Financial Services Company ("MFS"), believes
offer better than average prospects for long-term growth.

In managing the Series, MFS seeks to purchase securities of companies which MFS
considers well-run and poised for growth. MFS looks particularly for companies
which demonstrate:

- a strong franchise, strong cash flows and a recurring revenue stream;

- a strong industry position, where there is

-- potential for high profit margins

-- substantial barriers to new entry in the industry;

- a strong management with a clearly defined strategy;

- new products or services.

Consistent with its investment strategy the Series may invest in foreign
securities through which it may have exposure to foreign currencies.

PRINCIPAL RISKS

Investors Growth Series' share price will change daily because of changes in
stock prices and other factors. You may lose money if you invest in the Series.
The principal risks of investing in the Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, growth stocks may
underperform the market as a whole. As you consider an investment in the
Series, you should take into account your personal tolerance for daily
fluctuations of the stock market.

- RISKS OF GROWTH STOCKS. The Series focuses on companies which the Series'
sub-adviser believes offer better than average prospects for long-term
growth. If the sub-adviser incorrectly assesses a company's prospects for
earnings growth, or if its judgment about how other investors will value the
company's earnings growth is wrong, then the price of the company's stock
may decrease, or it may not increase to the level that the sub-adviser had
anticipated.

SERIES PERFORMANCE

A bar chart and performance table are not provided for the Series because it did
not commence operations until the date of this Prospectus.

23
<PAGE> 27

GROWTH STOCK SERIES

OBJECTIVE

The objective of Growth Stock Series is long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES

Growth Stock Series invests primarily in common stocks. The Series' adviser uses
a "bottom up" investment style in which stock selection is driven primarily by
the merits of the company itself. The adviser generally invests in stocks of
companies whose earnings and growth potential, in its judgment, exceed industry
averages. In addition to superior earnings growth potential, the adviser seeks
companies which it believes to be well managed with above average returns on
equity and invested capital, healthy balance sheets and the potential to gain
market share. Companies of this nature typically have above average growth
potential and a correspondingly higher than average valuation level as measured
by price to earnings, price to cash flow and price to book value ratios.

Under normal market conditions, the Series intends to maintain a median market
capitalization for its portfolio of $1 billion to $5 billion--making it a "mid
cap growth fund." The Series' median market capitalization was $ billion as
of March 31, 2000.

PRINCIPAL RISKS

Growth Stock Series' share price will change daily because of changes in stock
prices and other factors. You may lose money if you invest in the Series. The
principal risks of investing in Growth Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, growth stocks and/or stocks
of mid capitalization companies may underperform the market as a whole. As
you consider an investment in the Series, you should take into account your
personal tolerance for daily fluctuations of the stock market.

- RISKS OF GROWTH STOCKS. The Series invests primarily in stocks of
companies that the adviser believes have superior earnings growth potential.
If the adviser incorrectly assesses a company's prospects for earnings
growth, or if its judgment about how other investors will value the
company's earnings growth is wrong, then the price of the company's stock
may decrease, or it may not increase to the level that the adviser had
anticipated.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Growth Stock
Series' volatility and performance. The bar chart shows you how performance of
the Series has varied from year to year. The table compares the Series'
performance over different time periods to that of a broad measure of market
performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
GROWTH STOCK SERIES
-------------------
<S> <C>
1990 -3.1
1991 53.50
1992 2.94
1993 8.78
1994 -2.82
1995 27.66
1996 16.41
1997 12.42
1998 19.01
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS
-------- ---------- ---------
<S> <C> <C> <C>
Growth Stock Series.............. % % %
S&P 500 Index*................... % % %
</TABLE>

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

* An unmanaged index of 500 common stocks.

24
<PAGE> 28

AGGRESSIVE GROWTH SERIES

OBJECTIVE

The objective of Aggressive Growth Series is maximum long-term capital
appreciation.

PRINCIPAL INVESTMENT STRATEGIES

Aggressive Growth Series invests primarily in common stocks. The Series focuses
on:

- common stocks of small and medium sized companies that are early in their
life cycles, but which the Series' adviser believes have the potential to
become major enterprises (emerging growth companies); and

- common stocks of more established companies whose rates of earnings growth
are expected to accelerate because of special factors such as new products
or services, changes in demand factors, basic changes in the economic
environment or rejuvenated management.

The Series' investments include common stocks purchased in initial public
offerings (IPOs).

The Series selects stocks based upon their growth potential. The Series' adviser
uses a "bottom up" investment style in which stock selection is driven primarily
by the merits of the company itself. Under normal market conditions, the Series
intends to maintain a median market capitalization for its portfolio of less
than $1 billion -- making it a "small cap growth fund." The Series median market
capitalization was $ million as of March 31, 2000.

PRINCIPAL RISKS

Aggressive Growth Series' share price will change daily because of changes in
stock prices and other factors. You may lose money if you invest in the Series.
The principal risks of investing in Aggressive Growth Series include:

- RISKS OF COMMON STOCKS. Prices of stocks in the Series' portfolio may
decline over short or extended periods of time. Price changes may occur in
the market as a whole, or they may occur in only a particular company,
industry or sector of the market. In addition, growth stocks and/or stocks
of small capitalization companies may underperform the market as a whole. As
you consider an investment in the Series, you should take into account your
personal tolerance for daily fluctuations of the stock market.

- RISKS OF INITIAL PUBLIC OFFERINGS. Companies making initial public
offerings of their stock generally have limited operating histories and
prospects for future profitability may be uncertain. Prices of IPOs may also
be unstable due to the absence of a prior public market and the small number
of shares available for trading.

Approximately % of the Series' total return during 1999 was attributable
to its investments in IPOs. The effect of IPOs on the Series' total returns
going forward may not be as significant, either as a result of changes in
the IPO market or growth of the Series' assets which may reduce the Series'
total return.

SERIES PERFORMANCE

The bar chart and table below provide you with information on Aggressive Growth
Series' volatility and performance. The bar chart shows you how performance of
the Series has varied from year to year. The table compares the Series'
performance over different time periods to that of a broad measure of market
performance. Both the chart and the table assume that all dividends and
distributions have been reinvested. Fees and charges attributable to variable
annuity contracts and variable life insurance policies are not taken into
account in calculating the Series' returns. If they had been, returns would be
lower. Remember, how the Series has performed in the past is not necessarily an
indication of how it will perform in the future.

ANNUAL TOTAL RETURN as of December 31 each year (%)*

<TABLE>
<CAPTION>
AGGRESSIVE GROWTH SERIES
------------------------
<S> <C>
1995 29.89
1996 7.64
1997 1.43
1998 21.17
1999 0.00
</TABLE>

* The Series' total return for the period from January 1, 2000 through March 31,
2000 was %.

<TABLE>
<S> <C> <C>
BEST QUARTER: % quarter ended
WORST QUARTER: % quarter ended
</TABLE>

AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999

<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS SINCE INCEPTION*
-------- ---------- ----------------
<S> <C> <C> <C>
Aggressive Growth Series.... % % %
S&P 500 Index**............. % % %
</TABLE>

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

* Inception date was May 2, 1994.

** An unmanaged index of 500 common stocks.

25
<PAGE> 29

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------

SEPARATE ACCOUNTS AND THE CONTRACTS

Shares in the Series are currently sold to separate accounts of Fortis Benefits
Insurance Company ("Fortis Benefits") and First Fortis Life Insurance Company
("First Fortis") which fund benefits under variable life insurance policies and
variable annuity contracts issued by those companies. These variable life
insurance policies and variable annuity contracts are sometimes referred to as
"Contracts." As a Contract owner, you allocate the value of your Contract among
subaccounts of the separate accounts. Each subaccount invests in a different
Series. The rights of the separate accounts as shareholders should be
distinguished from your rights as a Contract owner, which are described in your
variable life insurance policy or variable annuity contract.

PRICING OF SERIES SHARES

The net asset values of the Series' shares are determined as of the primary
closing time of business on the New York Stock Exchange (usually 3 p.m. Central
time) on each day the exchange is open.

Each Series' net asset value per share is determined by dividing the value of
the securities and other assets owned by the Series, less all liabilities, by
the number of the Series' shares outstanding. The securities owned by the Series
are generally valued at market value. However, there are times when market
values are not readily available. In these cases, securities are valued at fair
value as determined in good faith by the Series' adviser under supervision of
the Board of Directors.

A significant portion of certain Series' assets may consist of securities of
foreign issuers that trade on weekends or other days when the Series do not
price their shares. As a result, the net asset value of each such Series' shares
may change on days when the Series is not open for shareholder purchases or
redemptions.

PURCHASE AND REDEMPTION OF SERIES SHARES

Series shares are offered only to the separate accounts. On each day when the
Series value their assets, shares of the Series may be purchased or redeemed by
the separate accounts based upon, among other things, the amounts of net
premiums allocated to the separate accounts, dividends and distributions
reinvested, transfers to and among subaccounts of the separate accounts, policy
loans, loan repayments and benefit payments to be processed on that date. These
purchases and redemptions for the separate accounts are effected at the net
asset value per share for each Series determined as of that same date.

TRANSFERS AMONG SUBACCOUNTS

You may transfer amounts among the subaccounts available, and may change
allocations of premiums as explained in the accompanying prospectus for the
Contracts. These transfers have the effect of changing your participation in the
various Series. Transfers between subaccounts are not taxable to you under
current Federal income tax law.

TAXATION

So long as each Series qualifies as a regulated investment company and meets
certain diversification tests applicable to the segregated asset accounts
underlying variable annuity contracts and variable life insurance policies, you
will not be considered to be an owner of shares of the Series, and income earned
with respect to the Contracts will not be taxed to you.

For the tax consequences of owning a Contract, see the accompanying prospectus
for the Contracts. For more information concerning the taxation of the Series,
see "Taxation" in the Statement of Additional Information.

CONTRACT OWNER INQUIRIES

For further information, please contact Fortis Benefits' office, the address of
which is the same as that of Fortis Series, as set forth on the cover of this
Prospectus. If you are a New York Contract owner, please contact First Fortis'
office: P.O. Box 3209, Syracuse, New York 13220.

26
<PAGE> 30

SERIES MANAGEMENT
- --------------------------------------------------------------------------------

INVESTMENT ADVISER
Fortis Advisers, Inc. ("Advisers") is the investment adviser for the Series, and
also serves as the Series' transfer agent and dividend agent. Advisers has been
managing investment company portfolios since 1949. In addition to providing
investment advice, Advisers is responsible for the management of the Series'
business affairs, subject to the overall authority of the Board of Directors.
Advisers' address is 500 Bielenberg Drive, Woodbury, Minnesota 55125-1400.

Each Series pays Advisers a monthly fee for providing investment advisory
services. Each Series pays Advisers a monthly fee for providing investment
advisory services. The services provided by Advisers include:

- General management of all Series.

- Investment management for those Series that do not have a sub-adviser.

- Ultimate responsibility (subject to oversight by the Fund's Board of
Directors) to oversee any sub-advisers hired to manage all or a portion of
any of the Series and recommend the hiring, termination and replacement of
sub-advisers.

The Fund has received an exemptive order from the Securities and Exchange
Commission under which the Fund uses a "Manager of Managers" structure. This
permits Advisers to appoint new sub-advisers, with approval by the Fund's Board
of Directors and without obtaining approval from those contract holder's that
participate in the applicable Series. Within 90 days after hiring any new
sub-adviser, affected contract holders will receive all information about the
new sub-advisory relationship that would have been included if a proxy statement
had been required. Advisers will not enter into a sub-advisory agreement with an
affiliated sub-adviser unless contract holders approve such agreement.

Advisers has entered into investment sub-advisory agreements on behalf of
Multisector Bond Series, Global Asset Allocation Series, American Leaders
Series, Capital Opportunities Series, International Stock Series, S&P 500 Index
Series, Global Equity Series, Mid Cap Stock Series, Blue Chip Stock Series, Blue
Chip Stock Series II, Small Cap Value Series, Large Cap Growth Series and
Investors Growth Series. For their services, the sub-advisers are paid a fee by
Advisers. During their most recent fiscal year, the Series paid the following
investment advisory fees to Advisers:

<TABLE>
<CAPTION>
ADVISORY FEE
AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS
------------------------
<S> <C>
Money Market Series...................... .30%
U.S. Government Securities Series........ .47%
Diversified Income Series................ .47%
Multisector Bond Series.................. .75%
High Yield Series........................ .50%
Global Asset Allocation Series........... .90%
Asset Allocation Series.................. .47%
American Leaders Series*................. .90%
Value Series............................. .70%
Capital Opportunities Series*............ .90%
Growth & Income Series................... .63%
S&P 500 Index Series..................... .40%
Blue Chip Stock Series................... .89%
Blue Chip Stock Series II*............... .95%
International Stock Series............... .85%
Mid Cap Stock Series..................... .90%
Small Cap Value Series................... .90%
Global Growth Series..................... .70%
Global Equity Series*.................... 1.00%
Large Cap Growth Series.................. .90%
</TABLE>

<TABLE>
<CAPTION>
ADVISORY FEE
AS A PERCENTAGE OF
AVERAGE DAILY NET ASSETS
------------------------
<S> <C>
Investors Growth Series*................. .90%
Growth Stock Series...................... .61%
Aggressive Growth Series................. .68%
</TABLE>

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

* Rate shown is the contractual rate since these Series have just commenced
operations.

Individuals affiliated with Advisers are responsible for the day-to-day
management of Money Market Series, U.S. Government Securities Series,
Diversified Income Series, High Yield Series, Asset Allocation Series, Value
Series, Growth & Income Series, Global Growth Series, Growth Stock Series and
Aggressive Growth Series. Howard G. Hudson supervises the portfolio management
of the fixed income Series, including the fixed income portion of the Asset
Allocation Series. Lucinda S. Mezey supervises the portfolio management of the
equity Series and the equity portion of the Asset Allocation Series. The
individuals responsible for the day-to-day management of the Series are listed
below.

MONEY MARKET SERIES. David C. Greenzang, Maroun M. Hayek and Robert C. Lindberg
have been primarily responsible for the day-to-day management of the Series
since 1995.

U.S. GOVERNMENT SECURITIES SERIES. Mr. Hayek, Christopher J. Pagano and
Christopher J. Woods are primarily responsible for the day-to-day management of
the Series. Messrs. Hayek and Woods have managed the Series since 1995 and Mr.
Pagano since 1996.

DIVERSIFIED INCOME SERIES. Mr. Hayek, Mr. Pagano, Kendall C. Peterson and Mr.
Woods are primarily responsible for the day-to-day management of the Series.
Messrs. Hayek and Woods have managed the Series since 1995, Mr. Pagano since
1996 and Mr. Peterson since 1999.

HIGH YIELD SERIES. Mr. Peterson, Mr. Hayek and Mr. Lindberg are primarily
responsible for the day-to-day management of the Series. Messrs. Hayek and
Lindberg have managed the Series since 1995 and Mr. Peterson since 1999.

ASSET ALLOCATION SERIES. Charles L. Mehlhouse has been primarily responsible
for the day-to-day management of the equity portion of the Series since 1996.
Messrs. Hayek, Pagano, Peterson and Woods are primarily responsible for the
day-to-day management of the fixed-income portion of the Series. Messrs. Hayek
and Woods have managed the Series since 1995, Mr. Pagano since 1996 and Mr.
Peterson since 1999.

VALUE SERIES. Nicholas M. De Peyster has been primarily responsible for the
day-to-day management of the Series since its inception.

GROWTH & INCOME SERIES. Mr. Mehlhouse has been primarily responsible for the
day-to-day management of the Series since 1996.

GLOBAL GROWTH SERIES. James S. Byrd and Diane M. Gotham are primarily
responsible for the day-to-day management of the Series. Mr. Byrd has managed
the Series since its inception, Ms. Gotham since 1998.

GROWTH STOCK SERIES. Michael J. Romanowski has been primarily responsible for
the day-to-day management of the Series since 1998.

AGGRESSIVE GROWTH SERIES. Laura E. Granger has been primarily responsible for
the day-to-day management of the Series since 1998.

Additional information about these investment supervisors and portfolio managers
is set forth below.

- Mr. Hudson, an Executive Vice President of Advisers and Head of Fixed
Income Investments of Advisers since 1991, has been managing fixed income
securities for Fortis, Inc. since 1991.

27
<PAGE> 31

- Mr. Greenzang, a Money Market Portfolio Officer, has been involved in
management of debt securities for Fortis, Inc. since 1992.

- Mr. Hayek, a Vice President of Advisers since 1995, has been managing debt
securities for Fortis, Inc. since 1987.

- Mr. Lindberg, a Vice President of Advisers since 1993, has been managing
debt securities for Advisers since that time.

- Mr. Pagano, a Vice President of Advisers since 1996, has been managing
debt securities for Advisers since that time. Prior to joining Advisers,
Mr. Pagano was a Government Strategist for Merrill Lynch, New York, New
York.

- Mr. Peterson, a Vice President of Advisers, has been managing
non-investment grade fixed income securities for Advisers since July 1999.
Prior to that, Mr. Peterson was a Vice President and portfolio manager at
Prudential Insurance Company of America in Newark, New Jersey.

- Mr. Woods, a Vice President of Advisers since 1995, has been managing debt
securities for Fortis, Inc. since 1993.

- Ms. Mezey, an Executive Vice President of Advisers and Head of Equity
Investments of Advisers since October 1997, manages equity securities for
Advisers. From 1995 to October 1997, she was Chief Investment Officer,
Alex Brown Capital Advisory and Trust Co., Baltimore, MD. From 1970 to
1995 she was employed by PNC Bank, Philadelphia, Pennsylvania with her
last position being Senior Vice President and Head of Equity Investments.

- Mr. Byrd has been an Executive Vice President of Advisers since 1995,
prior to which he was a Vice President of Advisers.

- Mr. De Peyster, a Vice President of Advisers since 1995, has managed
equity securities for Advisers since 1991.

- Ms. Granger, a Vice President of Advisers since 1998, manages equity
securities for Advisers. From July 1993 to July 1998, she was portfolio
manager for General Motors Investment Management in New York, New York.

- Ms. Gotham has been a Vice President of Advisers since 1998. From 1994 to
1998 she was a securities analyst for Advisers.

- Mr. Mehlhouse, a Vice President of Advisers, has managed equity securities
for Advisers since 1996. From 1993 to 1996, he was a portfolio manager for
Marshall & IIsley Bank Corp., Milwaukee, Wisconsin.

- Mr. Romanowski, a Vice President of Advisers since 1998, was a portfolio
manager for Value Line, New York, NY from October 1995 to March 1998,
prior to which he was a securities analyst for Conning & Co. in Hartford,
CT from 1992 to 1995.

SUB-ADVISERS

Multisector Bond Series, Global Asset Allocation Series, American Leaders
Series, Capital Opportunities Series, S&P 500 Index Series, Blue Chip Stock
Series, Blue Chip Stock Series II, International Stock Series, Mid Cap Stock
Series, Small Cap Value Series, Global Equity Series, Large Cap Growth Series
and Investors Growth Series each has a sub-adviser. The sub-advisers provide
investment research, advice and supervision and furnish and conduct the
management investment programs for the Series, subject to the general control of
Advisers and the Series' Board of Directors. The sub-adviser of each Series is
also responsible for the selection of brokers and dealers to effect securities
transactions and the negotiation of brokerage commissions, if any.

GLOBAL ASSET ALLOCATION SERIES. Morgan Stanley Dean Witter Investment
Management Limited ("Morgan Stanley"), 25 Cabot Square, Canary Wharf, London,
E14 4QA, England, is the sub-adviser of the Global Asset Allocation Series.
Morgan Stanley is a wholly owned subsidiary of Morgan Stanley Dean Witter & Co.,
a global financial services firm that maintains major market positions in each
of its three primary businesses--securities, asset management and credit
services. Morgan Stanley provides a broad range of portfolio management services
to customers in the United States and abroad and as of December 31, 1999,
together with its affiliated institutional investment managers, managed
investments totaling approximately $ billion.

Portfolio responsibility for the Global Asset Allocation Series is split between
Morgan Stanley's equity team led by Frances Campion and a team of fixed income
portfolio managers with respect to fixed income securities. Frances Campion, a
Managing Director of Morgan Stanley, joined Morgan Stanley in 1990 and her
responsibilities have included the day-to-day management of the global equity
portion of the Series since the Series' inception. The investment strategy and
allocation of the fixed income portion is set by a team of portfolio managers,
the primary members of which are David Germany, Michael Kushma and David
Stanley. These individuals have been managing the Series since 1997, 1995 and
1995, respectively. David Germany joined Morgan Stanley in 1997 and is a
Managing Director. He was previously a partner and portfolio manager at Miller
Anderson & Sherrerd, LLP. Michael Kushma joined Morgan Stanley & Co.
Incorporated in 1987, became a Principal in 1996, and moved to Morgan Stanley in
1998. David Stanley joined Morgan Stanley in 1994 and became a Vice President in
1997.

INTERNATIONAL STOCK SERIES. Lazard Asset Management ("Lazard"), 30 Rockefeller
Plaza, New York, New York 10112, is the sub-adviser of the International Stock
Series. Lazard is a division of Lazard Freres & Co. LLC ("Lazard Freres"), a New
York limited liability company. Lazard Freres provides its clients with a wide
variety of investment banking, brokerage and related services. Lazard provides
investment management services to client discretionary accounts with assets as
of March 31, 2000 totaling approximately $ billion. Its clients are both
individuals and institutions, some of whose accounts have investment policies
similar to those of the Series.

Herbert W. Gullquist is Chief Investment Officer of Lazard and a Vice Chairman
and Managing Director of Lazard Freres. Mr. Gullquist is responsible for
monitoring all investment activity to ensure adherence to Lazard's investment
philosophy and guidelines. John R. Reinsberg is a Managing Director of Lazard
Freres responsible for international/global equity management and overseeing the
day-to-day operations of Lazard's international equity investment team. Mr.
Gullquist and Mr. Reinsberg have been primarily responsible for the day-to-day
management of International Stock Series since its inception.

S&P 500 INDEX SERIES AND MID CAP STOCK SERIES. The Dreyfus Corporation
("Dreyfus"), 200 Park Avenue, New York, New York 10166, is the sub-adviser to
the S&P 500 Index Series and the Mid Cap Stock Series. Dreyfus was formed in
1947. Dreyfus is a wholly-owned subsidiary of Mellon Bank, N.A., which is a
wholly-owned subsidiary of Mellon Bank Corporation ("Mellon"). As of December
31, 1999, Dreyfus managed or administered approximately $ billion in assets
for approximately million investor accounts nationwide. Through its
subsidiaries, including Dreyfus, Mellon managed more than $ billion in assets
as of December 31, 1999, including approximately $ billion in proprietary
mutual fund assets. As of December 31, 1999, Mellon, through various
subsidiaries, provided non-investment services, such as custodial or
administration services, for more than $ trillion in assets, including
approximately $ billion in mutual fund assets.

Steven A. Falci has been primarily responsible for the day-to-day management of
Mid Cap Stock Series since its inception. He has been employed by the Mellon
organization since 1994.

BLUE CHIP STOCK SERIES. T. Rowe Price Associates, Inc. ("T. Rowe Price"), 100
East Pratt Street, Baltimore, MD 21202, is the sub-adviser of the Blue Chip
Stock Series. T. Rowe Price was founded in 1937 and, together with its
affiliates, managed over $ billion for over seven million individual and
institutional investor accounts as of March 31, 2000. Some of T. Rowe Price's
accounts have investment policies similar to those of the Series.

The Series has an investment advisory committee composed of the following
members: Larry J. Puglia, chairman, Brian W. H. Berghuis,

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Seema R. Hingorani, Thomas J. Huber, Robert W. Sharps, Robert W. Smith and
William J. Stromberg. Mr. Puglia has had the day-to-day responsibilities of
managing the Series since 1996 and has been managing investments since joining
T. Rowe Price in 1990.

SMALL CAP VALUE SERIES. Berger LLC ("Berger"), 210 University Boulevard,
Denver, Colorado 80206, the sub-adviser of the Small Cap Value Series, has
entered into an agreement with Perkins, Wolf, McDonnell & Company (the
"Manager") under which Berger Associates will pay the Manager a fee to provide
the day-to-day investment management for the Series.

Robert H. Perkins has been primarily responsible for the day-to-day management
of Small Cap Value Series since its inception. Mr. Perkins is President and a
Director of the Manager and has been an investment manager since 1970.

LARGE CAP GROWTH SERIES. Alliance Capital Management L.P. ("Alliance"), a
Delaware limited partnership with principal offices at 1345 Avenue of the
Americas, New York, New York 10105, is the sub-adviser of the Large Cap Growth
Series. Alliance is an international investment manager supervising client
accounts with assets as of December 31, 1999 totaling more than $ billion (of
which approximately $ billion represented the assets of investment
companies). Alliance's clients are primarily major corporate employee benefit
funds, public employee retirement systems, investment companies, foundations and
endowment funds. The 54 registered investment companies managed by Alliance
comprising 118 separate investment portfolios currently have over 3.5 million
shareholders.

Alliance Capital Management Corporation ("ACMC"), the sole general partner of,
and owner of a 1% general partnership interest in, Alliance, is an indirect
wholly-owned subsidiary of The Equitable Life Assurance Society of the United
States ("Equitable"), which is a wholly-owned subsidiary of The Equitable
Companies Incorporated, a holding company controlled by AXA, a French insurance
holding company.

James G. Reilly, an Executive Vice President of Alliance, has been primarily
responsible for the day-to-day management of Large Cap Growth Series since its
inception. Mr. Reilly joined Alliance in 1984 and has been a portfolio manager
on the U.S. Large Cap team since 1988. Mr. Reilly has 16 years investment
experience.

MULTISECTOR BOND SERIES AND BLUE CHIP STOCK SERIES II. A I M Advisors, Inc.
("AIM"), 11 Greenway Plaza, Suite 100, Houston, Texas, 77046, is the sub-adviser
to the Multisector Bond Series and the Blue Chip Stock Series II. AIM has acted
as an investment adviser since its organization in 1976. As of December 31,
1999, AIM, together with its subsidiaries, advises or manages approximately
$ billion in assets for over 125 investment portfolios.

AIM uses a team approach to investment management for both the Multisector Bond
Series and Blue Chip Stock Series II. The individual members of the team who are
primarily responsible for the day-to-day management of the Multisector Bond
Series are Robert G. Alley, Jan H. Friedli, Carolyn L. Gibbs and John L.
Pessarra. Mr. Alley, Senior Portfolio Manager, has been associated with AIM
and/or its affiliates since 1992. Mr. Friedli, Portfolio Manager, has been
associated with AIM and/or its affiliates since 1999. From 1997 to 1999, Mr.
Friedli was global fixed-income portfolio manager for Nicholas-Applegate Capital
Management and, from 1994 to 1997, he was international fixed-income trader and
analyst for Strong Capital Management. Ms. Gibbs, Senior Portfolio Manager, has
been associated with AIM and/or its affiliates since 1992. Mr. Pessarra, Senior
Portfolio Manager, has been associated with AIM and/or its affiliates since
1990.

The individual members of the team who are primarily responsible for the
day-to-day management of the Blue Chip Stock Series II are Monika H. Degan, Joel
E. Dobberpuhl and Jonathan C. Schoolar. Ms. Degan, Senior Portfolio Manager, has
been associated with AIM and/or its affiliates since 1995, prior to which she
was a Senior Financial Analyst for Shell Oil Co. Pension Trust. Mr. Dobberpuhl,
Senior Portfolio Manager, has been associated with AIM and/or its affiliates
since 1990. Mr. Schoolar, Senior Portfolio Manager, has been associated with AIM
and/or its affiliates since 1986.

CAPITAL OPPORTUNITIES SERIES, GLOBAL EQUITY SERIES AND INVESTORS GROWTH
SERIES. Massachusetts Financial Services Company ("MFS"), 500 Boylston Street,
Boston, Massachusetts 02116, is the sub-adviser of Capital Opportunities Series,
Global Equity Series and Investors Growth Series. MFS is America's oldest mutual
fund organization. MFS and its predecessor organizations have a history of money
management dating from 1924 and the founding of the first mutual fund,
Massachusetts Investors Trust. Net assets under management of the MFS
organization were approximately $136.72 billion on behalf of approximately 4.2
million investor accounts as of December 31, 1999. As of such date, the MFS
organization managed approximately $109.5 billion of net assets in equity funds
and equity portfolios. Approximately $10.7 billion of the assets managed by MFS
are invested in securities of foreign issuers and foreign denominated securities
of U.S. issuers.

Maura A. Shaughnessy, a Senior Vice President of MFS, is the portfolio manager
of Capital Opportunities Series. Ms. Shaughnessy has been employed as a
portfolio manager by MFS since 1991. David R. Mannheim, a Senior Vice President
of MFS, is the portfolio manager of Global Equity Series. Mr. Mannheim has been
employed as a portfolio manager by MFS since 1988. Stephen Pesek, a Vice
President of MFS, is the portfolio manager of Investors Growth Series. Mr. Pesek
has been employed as a portfolio manager by MFS since 1994.

AMERICAN LEADERS SERIES. Federated Investment Management Company ("Federated"),
Federated Investors Tower, 1001 Liberty Avenue, Pittsburgh, Pennsylvania
15222-3779, is the sub-adviser to the American Leaders Series. Federated is a
subsidiary of Federated Investors, Inc. Federated and other subsidiaries of
Federated Investors, Inc. advise approximately mutual funds and
separate accounts, which total approximately $124 billion in assets as of
January 31, 2000. Federated Investors, Inc. was established in 1955 and is one
of the largest mutual fund investment managers in the United States with
approximately 1,900 employees.

Michael P. Donnelly and Arthur J. Barry are portfolio managers of American
Leaders Series. Mr. Donnelly joined Federated Investors, Inc. in 1989 as an
investment analyst and has been a portfolio manager since 1994. Mr. Donnelly has
been a Senior Vice President of Federated since May 1999 and is a Chartered
Financial Analyst and received his M.B.A. from the University of Virginia. Mr.
Barry joined Federated Investors, Inc. in 1994 as an investment analyst. He
served as an Assistant Vice President of Federated from 1997 through June 1998
and has been a Vice President of Federated since July 1998. Mr. Barry is a
Chartered Financial Analyst. He earned his M.S.I.A. with concentrations in
finance and accounting from Carnegie Mellon University.

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MORE INFORMATION ON SERIES OBJECTIVES, INVESTMENT STRATEGIES AND RISKS
- --------------------------------------------------------------------------------

OBJECTIVES

The Series' objectives, which are described above under "The Series," may be
changed without shareholder approval.

INVESTMENT STRATEGIES

The principal investment strategies of each Series are described above under
"The Series." These are the strategies that Advisers and the respective
sub-advisers believe are most likely to be important in trying to achieve each
Series' objective. Of course, there is no guarantee that any Series will achieve
its objectives. You should be aware that a Series may also use strategies and
invest in securities that are not described below, but are described in the
Statement of Additional Information.

SECURITIES LENDING

To generate additional income, U.S. Government Securities Series, Diversified
Income Series, Asset Allocation Series, Value Series, Growth & Income Series,
S&P 500 Index Series, Blue Chip Stock Series, Global Growth Series, Growth Stock
Series and Aggressive Growth Series currently lend their portfolio securities.
While currently not the case, the other Series may also lend their portfolio
securities.

TEMPORARY DEFENSIVE MEASURES

In an attempt to respond to adverse market, economic, political or other
conditions, a Series may invest its assets for temporary defensive purposes,
without limit, in the following manner:

- High Yield Series, Asset Allocation Series, Value Series, Growth & Income
Series, Small Cap Value Series, Large Cap Growth Series, Growth Stock
Series, Aggressive Growth Series and Global Asset Allocation Series may
invest in high grade preferred stocks, bonds, other fixed income
securities, short-term money market instruments, commercial paper,
obligations of banks or the U.S. Government, other high quality short-term
debt instruments, or cash.

- Blue Chip Stock Series may invest in U.S. and foreign dollar-denominated
money market securities, including repurchase agreements, which are in the
two highest rating categories and mature in one year or less. In addition,
the Series may invest in shares of the Reserve Investment Fund, a money
market fund managed by T. Rowe Price, the Series' sub-adviser.

- International Stock Series may invest in the equity securities of U.S.
companies or short-term money market instruments or hold its assets in
cash.

- Global Growth Series may invest in high-quality debt securities of U.S.
and non-U.S. issuers, may hold cash (U.S. dollars, foreign currencies, or
multinational currency units) and/or high-quality money market
instruments.

- Multisector Bond Series and Blue Chip Stock Series II may invest in cash,
money market instruments, bonds or other debt securities.

- Capital Opportunities Series, Investors Growth Series and Global Equity
Series may invest in cash (including foreign currency) or cash
equivalents, including, but not limited to, obligations of banks
(including certificates of deposit, bankers' acceptances, time deposits
and repurchase agreements), commercial paper, short-term notes, U.S.
Government securities and related repurchase agreements.

- American Leaders Series may invest in cash, cash items, and shorter-term,
higher quality debt securities and similar obligations.

During periods when a Series assumes a temporary defensive position, the Series
will not be pursuing its investment objective. S&P 500 Index Series and Mid Cap
Stock Series do not intend to take temporary defensive positions that are
inconsistent with their principal investment strategies.

PORTFOLIO TURNOVER

Before investing in a Series you should review its portfolio turnover rate for
an indication of the potential effect of transaction costs on the Series' future
returns. In general, the greater the volume of buying and selling by the Series,
the greater the impact that brokerage commissions and other transaction costs
will have on its return.

The Series, while they generally do not invest or trade for short-term profits,
are actively managed and the portfolio managers may trade securities frequently.
As a result, each Series may, from time to time, have an annual portfolio
turnover rate of over 100%. Factors contributing to a Series' higher turnover
rate may include general market volatility, significant positive or negative
developments concerning particular security holdings, an attempt to maintain the
Series' market capitalization target and the need to sell holdings to meet
redemption activity in the Series. For the fiscal year ended December 31, 1999
Series had portfolio turnover rates in excess of 100% and Series had
portfolio turnover rates in excess of 200% ( % and % respectively). While
higher turnover rates may result in increased transaction costs, the Series'
managers attempt to have the benefits of these transactions outweigh the costs,
although this cannot be assured. The "Financial Highlights" section of this
Prospectus shows each Series' historical portfolio turnover rate.

DURATION

As discussed above under "The Series," certain Series attempt to maintain the
average effective durations of their portfolios within specified ranges.
Effective duration, one measure of interest rate risk, measures how much the
value of a security is expected to change with a given change in interest rates.
The longer a security's effective duration, the more sensitive its price to
changes in interest rates. For example, if interest rates were to increase by
one percentage point, the market value of a bond with an effective duration of
five years would decrease by 5%, with all other factors being constant.
Effective duration is based on assumptions and subject to a number of
limitations. It is most useful when interest rate changes are small, rapid and
occur equally in short-term and long-term securities. In addition, it is
difficult to calculate precisely for bonds with prepayment options, such as
mortgage-backed securities, because the calculation requires assumptions about
prepayment rates.

PRINCIPAL RISKS

The principal risks of investing in the Series are summarized above under "The
Series." More information about Series risks is presented below. Please
remember, you may lose money if you invest in a Series.

Money Market Series, U.S. Government Securities Series, Diversified Income
Series, Multisector Bond Series and High Yield Series are sometimes referred to
in this section as the "Fixed Income Series" and American Leaders Series, Value
Series, Capital Opportunities Series, Growth & Income Series, S&P 500 Index
Series, Blue Chip Stock Series, Blue Chip Stock Series II, International Stock
Series, Mid Cap Stock

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Series, Small Cap Value Series, Global Growth Series, Global Equity Series,
Large Cap Growth Series, Investors Growth Series, Growth Stock Series and
Aggressive Growth Series are sometimes referred to as the "Equity Series."

- INTEREST RATE RISK. The Fixed Income Series, Global Asset Allocation
Series and Asset Allocation Series are subject to interest rate risk. Debt
securities in the Series will fluctuate in value with changes in interest
rates. In general, debt securities will increase in value when interest
rates fall and decrease in value when interest rates rise. Longer term debt
securities are generally more sensitive to interest rate changes. In
addition, investments made by certain Series may be highly volatile in
response to changing interest rates. These investments include IOs, POs,
inverse floaters, accrual bonds, payment-in-kind bonds and zero-coupon
obligations.

- CREDIT OR DEFAULT RISK. The Fixed Income Series, Global Asset Allocation
Series and Asset Allocation Series are subject to credit or default risk.
This is the risk that the issuers of debt securities held by the Series will
not make payments on the securities, or that the other party to a contract
(such as a securities lending agreement or repurchase agreement) will
default on its obligations. There is also the risk that an issuer could
suffer adverse changes in financial condition that could lower the credit
quality of a security. This could lead to greater volatility in the price of
the security and in shares of the Series. Also, a change in the credit
quality rating of a bond can affect the bond's liquidity and make it more
difficult for the Series to sell. When a Series purchases unrated
securities, it will depend on the adviser's or sub-adviser's analysis of
credit risk more heavily than usual.

- RISKS OF HIGH YIELD/HIGH RISK SECURITIES. High Yield Series invests
primarily in non-investment grade fixed income obligations, and a
significant portion of the portfolios of Multisector Bond Series,
Diversified Income Series and Asset Allocation Series may consist of such
obligations. Non-investment grade obligations are commonly referred to as
"high yield" securities or "junk bonds." Although these securities usually
offer higher yields than investment grade securities, they also involve more
risk. High yield bonds may be more susceptible to real or perceived adverse
economic conditions than investment grade bonds. In addition, the secondary
trading market may be less liquid. High yield securities generally have more
volatile prices and carry more risk to principal than investment grade
securities. Multisector Bond Series may invest up to 35% of its total
assets, and Diversified Income Series and Asset Allocation Series may invest
up to 30% of their total assets in securities rated as low as Caa by
Moody's, CCC by Standard & Poor's or comparably rated by another rating
agency. High Yield Portfolio may invest without limitation in these
securities, and may invest up to 10% of its total assets in "non-performing"
securities rated lower than Caa or CCC. Securities in the Caa/CCC rating
category are considered to be of poor standing and are predominantly
speculative. "Non-performing" securities may be in default, or there may be
present elements of danger with respect to the payment of principal or
interest. These securities are highly speculative.

- CALL RISK. U.S. Government Securities Series, Diversified Income Series,
Multisector Bond Series, High Yield Series, Global Asset Allocation Series
and Asset Allocation Series are subject to call risk. Many corporate bonds
may be redeemed ("called") at the option of the issuer before their stated
maturity date. In general, an issuer will call its bonds if they can be
refinanced by issuing new bonds which bear a lower interest rate. The Series
are subject to the possibility that during periods of falling interest
rates, a bond issuer will call its high-yielding bonds. A Series would then
be forced to invest the unanticipated proceeds at lower interest rates,
resulting in a decline in the Series's income.

- RISKS OF MORTGAGE- AND ASSET-BACKED SECURITIES. U.S. Government
Securities Series, Diversified Income Series and Asset Allocation Series are
subject to both prepayment and extension risk in connection with their
investments in mortgage-backed and/or asset-backed securities.

Prepayment risk. Mortgage-backed securities are secured by and payable
from pools of mortgage loans. Similarly, asset-backed securities are
supported by obligations such as automobile loans or home equity loans.
These mortgages and other obligations generally can be prepaid at any
time. As a result, mortgage- and asset-backed securities are subject to
prepayment risk, which is the risk that falling interest rates could
cause prepayments of the securities to occur more quickly than
expected. This occurs because, as interest rates fall, more homeowners
refinance the mortgages underlying mortgage-backed securities or prepay
the debt obligations underlying asset-backed securities. A Series
holding these securities must reinvest the prepayments at a time when
interest rates on new investments are falling, reducing the income of
the Series. In addition, when interest rates fall, prices on mortgage-
and asset-backed securities may not rise as much as for other types of
comparable debt securities because investors may anticipate an increase
in prepayments.

Extension risk. Mortgage- and asset-backed securities are also subject
to extension risk, which is the risk that rising interest rates could
cause mortgages or other obligations underlying the securities to be
prepaid more slowly than expected, resulting in slower prepayments of
securities. This would, in effect, convert a short- or medium-duration
mortgage-or asset-backed security into a longer-duration security,
increasing its sensitivity to interest rate changes and causing its
price to decline.

- INCOME RISK. The Fixed Income Series, Global Asset Allocation Series and
Asset Allocation Series are subject to income risk, which is the potential
for a decline in the Series' income due to falling interest rates.

- RISKS OF COMMON STOCKS. Because of their investments in common stocks,
the Equity Series, Global Asset Allocation Series and Asset Allocation
Series are subject to the following risks:

Market risk. All stocks are subject to price movements due to changes
in general economic conditions, changes in the level of prevailing
interest rates, changes in investor perceptions of the market, or the
outlook for overall corporate profitability.

Company risk. Individual stocks can perform differently than the
overall market. This may be a result of specific factors such as
changes in corporate profitability due to the success or failure of
specific products or management strategies, or it may be due to changes
in investor perceptions regarding a company.

Sector risk. The stocks of companies within specific industries or
sectors of the economy can periodically perform differently than the
overall market. This can be due to changes in such things as the
regulatory or competitive environment or to changes in investor
perceptions of a particular industry or sector.

- RISKS OF GROWTH STOCKS. Asset Allocation Series, Capital Opportunities
Series, Blue Chip Stock Series, Blue Chip Stock Series II, Global Growth
Series, Global Equity Series, Large Cap Growth Series, Investors Growth
Series, Growth Series and Aggressive Growth Series focus on stocks which
Advisers, or a Series' sub-adviser, believes have the potential for superior
earnings growth. Growth & Income Series may also use this approach. If
Advisers or a Series' sub-adviser incorrectly assesses a company's prospects
for earnings growth, or if Advisers' or the sub-adviser's judgment about how
other investors will value the company's earnings growth is wrong, then the
price of the company's stock may decrease, or it may not increase to the
level that Advisers or the sub-adviser had anticipated.

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- RISKS OF VALUE STOCKS. American Leaders Series, Value Series, Small Cap
Value Series, Global Asset Allocation Series and International Stock Series
focus on stocks of companies whose shares appear to be undervalued. Growth &
Income Series may also use this approach. These "value stocks" can remain
undervalued for years. There is the risk that a value stock may never reach
what Advisers, or a Series' sub-adviser, believes is its full value, or that
the stock's price will go down.

- RISKS OF SMALL CAP COMPANIES. Small Cap Value Series, Global Growth
Series and Aggressive Growth Series are subject to the risks of investing in
smaller-capitalization companies. Smaller-capitalization companies often
have limited product lines, markets or financial resources, and they may be
dependent on a small, inexperienced management group. The securities of
smaller-capitalization companies may have limited market stability and may
be subject to more abrupt or erratic market movements than securities of
larger, more established companies or the market averages in general. The
equity securities of smaller-capitalization companies frequently have
experienced greater price volatility in the past than those of
larger-capitalization companies, and they may be expected to do so in the
future.

- RISKS OF MID CAP COMPANIES. Mid Cap Stock Series, Global Growth Series
and Growth Stock Series are subject to the risks of investing in mid-sized
companies. Mid-sized companies may have somewhat limited product lines,
markets and financial resources and may depend upon a relatively small
management group. Stocks of these companies may therefore be more vulnerable
to adverse developments than those of larger companies.

- RISKS OF LARGE CAP COMPANIES. Each Equity Series, Asset Allocation Series
and Global Asset Allocation Series may invest in stocks of
large-capitalization companies, and American Leaders Series, Value Series,
Growth & Income Series, S&P 500 Index Series, Blue Chip Stock Series, Blue
Chip Stock Series II and Large Cap Growth Series focus on such stocks. Large
company stocks historically have tended to be less volatile than stocks of
smaller companies. In the long run, however, large company stocks may
produce more modest gains than stocks of smaller companies as a trade-off
for this potentially lower risk.

- RISKS OF FOREIGN INVESTING. Money Market Series, Diversified Income
Series, Multisector Bond Series, Global Asset Allocation Series, Asset
Allocation Series, American Leaders Series, Capital Opportunities Series,
Blue Chip Stock Series, Blue Chip Stock Series II, International Stock
Series, Global Growth Series, Global Equity Series, Large Cap Growth Series
and Investors Growth Series may invest in foreign securities as a principal
investment strategy. A Series' investment in foreign securities subjects it
to risks not typically associated with U.S. investing. Because of these
risks, the Series may be subject to greater volatility than most mutual
funds which invest principally in domestic securities. These risks include:

Currency risk. Because the Series invest in securities denominated in
currencies other than the U.S. dollar, and because the Series may hold
foreign currencies, the Series may be affected favorably or unfavorably
by changes in currency exchange rates. Changes in exchange rates will
affect a Series' net asset value, the value of dividends and interest
earned, and gains and losses realized on the sale of securities. This
risk factor does not apply to Money Market Series, which invests only
in U.S. dollar denominated obligations.

Information risk. There may be less publicly available information
about foreign securities and issuers than is available about domestic
securities and issuers. In addition, foreign companies are not subject
to uniform accounting, auditing and financial reporting standards,
practices and requirements comparable to those which apply to domestic
companies.

Foreign securities market risk. Securities of some foreign companies
are less liquid than securities of comparable domestic companies, and
their prices may be more volatile. In addition, there may be delays in
the settlement of foreign securities transactions. Trading volume on
foreign stock exchanges is substantially less than that on the New York
Stock Exchange. Securities traded on foreign exchanges may be subject
to further risks due to the possibility of permanent or temporary
termination of trading, and greater spreads between bid and asked
prices for securities. In addition, there is generally less
governmental supervision and regulation of foreign stock exchanges.
Stock markets in emerging markets can be more volatile during periods
of investment uncertainty than established major exchanges.

Political and economic risk. International investing is subject to the
risk of political, social or economic instability in the country of the
issuer of a security, the difficulty of predicting international trade
patterns, the possibility of the imposition of exchange controls,
expropriation, limits on removal of currency or other assets and
nationalization of assets.

- RISKS OF EMERGING MARKETS. Multisector Bond Series, American Leader
Series, Capital Opportunities Series, Global Growth Series and Global Equity
Series may invest in emerging markets as a principal investment strategy.
The other Series that invest in foreign securities may invest in emerging
markets to a more limited extent. Emerging markets tend to be in the less
economically developed regions of the world. The risks of foreign investing
are of greater concern in the case of investments in emerging markets, which
may exhibit greater price volatility and have less liquidity. Risks of
investing in securities issued by companies in emerging market countries
include, among other things, greater social, political and economic
instability, lack of liquidity and greater price volatility due to small
market size and low trading volume, certain national policies that restrict
investment opportunities and the lack of a developed judicial system.

- RISKS OF FORWARD CURRENCY EXCHANGE CONTRACTS, FUTURES AND OPTIONS
TRANSACTIONS. Capital Opportunities Series, Multisector Bond Series, Global
Asset Allocation Series, S&P 500 Index Series, Blue Chip Stock Series, Blue
Chip Stock Series II, International Stock Series, Mid Cap Stock Series,
Global Equity Series and Large Cap Growth Series may engage in forward
currency exchange contracts and/or futures and options transactions as a
principal investment strategy. The use of these derivative instruments
exposes the Series to additional investment risks and transaction costs.
Risks inherent in the use of derivative instruments include:

the risk that interest rates, securities prices or currency markets
will not move in the direction that Advisers or a Series' sub-adviser
anticipates;

an imperfect correlation between the price of derivative instruments
and movements in the prices of the securities, interest rates or
currencies being hedged;

the possible absence of a liquid secondary market for any particular
instrument and possible exchange-imposed price fluctuation limits,
either of which may make it difficult or impossible to close out a
position when desired;

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

particularly in the case of privately negotiated instruments, the risk
that the counterparty will fail to perform its obligations, which could
leave the Series worse off than if it had not entered into the
position.

If a Series uses derivative instruments and if Advisers' or the Series'
sub-adviser's judgment proves incorrect, the Series' performance could be
worse than if it had not used these instruments.

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- RISKS OF SECURITIES LENDING. Each Series may lend up to 33 1/3% of the
value of its total assets. When a Series loans its portfolio securities, it
will receive cash collateral equal to at least 100% of the value of the
loaned securities. Nevertheless, the Series risks a delay in the recovery of
the loaned securities, or even the loss of rights in the collateral
deposited by the borrower if the borrower should fail financially. In
addition, each Series invests the cash collateral in high grade money market
securities, which are subject to credit or default risk.

- MANAGEMENT RISK. All Series, with the exception of S&P 500 Index Series,
are actively managed by professionals with extensive money management
experience and expertise. The performance of a Series will reflect in part
the ability of Advisers or the Series' sub-adviser to select securities
which are suited to achieving the Series' investment objectives. Due to
their active management, the Series could underperform other mutual funds
with similar investment objectives or the market generally.

- INFLATION RISK. Even if the principal value of your investment in a
Series, or your income from that investment, remains constant or increases,
their real value may be less in the future because of inflation. Thus, as
inflation occurs, the purchasing power of your Series shares and
distributions may decline, even if their value in dollars increases.

- EURO CONVERSION. On January 1, 1999, the European Monetary Union ("EMU")
introduced a single currency, the Euro, which was adopted as the common
legal currency for participating member countries. Existing sovereign
currencies of the participating countries will remain legal tender in those
countries, as denominations of the Euro, until January 1, 2002. Countries
participating in the EMU are Austria, Belgium, Finland, France, Germany,
Ireland, Italy, Luxembourg, the Netherlands, Portugal and Spain.

Whether the Euro conversion will materially affect the performance of Series
investing in foreign securities is uncertain. A Series may be affected by
the Euro's impact on the business or financial condition of European issuers
held by that Series. The ongoing process of establishing the Euro may result
in market volatility. In addition, the transition to the Euro and the
elimination of currency risk among EMU countries may change the economic
environment and behavior of investors, particularly in European markets. To
the extent the Series hold non-U.S. dollar (Euro or other) denominated
securities, they will still be exposed to currency risk due to fluctuations
in those currencies versus the U.S. dollar.

33
<PAGE> 37

FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The tables that follow present performance information about the shares of each
Series. This information is intended to help you understand each Series'
financial performance for the past five years or, if shorter, the period of the
Series' operations. Some of this information reflects financial results for a
single Series share. The total returns in the tables represent the rate that you
would have earned or lost on an investment in a Series, assuming you reinvested
all of your dividends and distributions. Information is not presented for
American Leaders Series, Capital Opportunities Series, Blue Chip Stock Series
II, Global Equity Series and Investors Growth Series, because they had not
commenced operations during the years presented.

This information has been audited by KPMG LLP, independent auditors, whose
report, along with the Series' financial statements, is included in the Series'
annual report, which is available upon request.

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

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
MONEY MARKET SERIES 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $11.03 $10.94 $10.83 $10.63
- ----------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .57 .58 .57 .60
Net realized and unrealized gain (loss) on investments.... -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------
Total from operations....................................... .57 .58 .57 .60
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.54) (.49) (.46) (.40)
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year................................ $11.06 $11.03 $10.94 $10.83
- ----------------------------------------------------------------------------------------------------------------------------
Total return@............................................... 5.32% 5.34% 5.17% 5.71 %
Net assets end of year (000s omitted)....................... $ 77,097 $ 57,009 $ 61,906 $ 41,807
Ratio of expenses to average daily net assets............... .35% .38% .38% .40 %
Ratio of net investment income to average daily net
assets.................................................... 5.18% 5.19% 5.14% 5.44 %
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------
U.S. GOVERNMENT SECURITIES SERIES 1999 1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $10.68 $10.57 $11.16 $9.40
- ----------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .60 .80 .67 .70
Net realized and unrealized gain (loss) on investments.... .34 .12 (.51) 1.06
- ----------------------------------------------------------------------------------------------------------------------------
Total from operations....................................... .94 .92 .16 1.76
- ----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.69) (.81) (.75) --
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year................................ $10.93 $10.68 $10.57 $11.16
- ----------------------------------------------------------------------------------------------------------------------------
Total return@............................................... 8.87% 9.08% 2.21% 18.78%
Net assets end of year (000s omitted)....................... $152,672 $142,070 $161,678 $182,687
Ratio of expenses to average daily net assets............... .51% .54% .53% .53 %
Ratio of net investment income to average daily net
assets.................................................... 5.53% 6.03% 6.17% 6.78 %
Portfolio turnover rate..................................... 114% 148% 176% 115 %
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

34
<PAGE> 38

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
DIVERSIFIED INCOME SERIES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $11.98 $11.70 $12.20 $10.40
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net......................... .73 .91 .82 .88
Net realized and unrealized gain (loss) on
investments................................... .01 .26 (.40) .92
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations............................. .74 1.17 .42 1.80
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.................... (.81) (.89) (.91) --
Excess distributions of net realized gains...... -- -- (.01) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders............... (.81) (.89) (.92) --
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year...................... $11.91 $11.98 $11.70 $12.20
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@..................................... 6.31% 10.44% 4.15% 17.26 %
Net assets end of year (000s omitted)............. $115,182 $105,200 $105,831 $109,120
Ratio of expenses to average daily net assets..... .52% .55% .55% .55 %
Ratio of net investment income to average daily
net assets...................................... 6.56% 7.11% 6.86% 7.78 %
Portfolio turnover rate........................... 96% 166% 171% 139 %
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ------------------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------
MULTISECTOR BOND SERIES (FORMERLY GLOBAL BOND SERIES) 1999 1998 1997 1996 1995+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year....... $10.65 $11.11 $11.30 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net................ .30 .46 .57 .54
Net realized and unrealized gain (loss) on
investments and foreign currency transactions... 1.13 (.45) (.13) 1.52
- ------------------------------------------------------------------------------------------------------------------------------------
Total from operations.................... 1.43 .01 .44 2.06
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net......... (.19) (.37) (.43) (.54)
From net realized gains.............. (.33) (.10) (.20) (.22)
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders...... (.52) (.47) (.63) (.76)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year............. $11.56 $10.65 $11.11 $11.30
- ------------------------------------------------------------------------------------------------------------------------------------
Total return@............................ 13.49% 0.14% 3.32% 19.14%
Net assets end of year (000s omitted).... $24,659 $20,692 $20,228 $13,187
Ratio of expenses to average daily net assets... .88% 1.10% 1.02% 1.28 %*
Ratio of net investment income to average daily net
assets................................. 4.19% 4.41% 5.07% 5.01 %*
Portfolio turnover rate.................. 190% 168% 129% 184 %
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized.
+ For the period January 3, 1995 (commencement of operations) to December 31,
1995. The Series' inception was December 14, 1994, when it was initially
capitalized. However, the Series' shares did not become effectively
registered under the Securities Act of 1933 until January 3, 1995.
Information is not presented for the period from December 14, 1994, through
January 3, 1995, as the Series' shares were not registered during that
period.
@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

35
<PAGE> 39

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
HIGH YIELD SERIES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $10.77 $9.83 $9.74 $9.47
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .75 .96 1.04 1.15
Net realized and unrealized gain (loss) on investments.... (.71) -- .13 .30
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations....................................... .04 .96 1.17 1.45
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.83) (.02) (1.03) (1.14)
From net realized gains................................... (.07) -- -- --
Excess distributions of net realized gains................ -- -- (.05) (.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................... (.90) (.02) (1.08) (1.18)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year................................ $9.91 $10.77 $9.83 $9.74
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@............................................... .62% 9.76% 10.52% 12.73 %
Net assets end of year (000s omitted)....................... $70,983 $59,228 $42,578 $28,129
Ratio of expenses to average daily net assets............... .56% .62% .63% .63 %
Ratio of net investment income to average daily net
assets.................................................... 9.39% 10.31% 10.22% 11.30 %
Portfolio turnover rate..................................... 120% 353% 235% 130 %
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized.

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------
GLOBAL ASSET ALLOCATION SERIES 1999 1998 1997 1996 1995+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $13.29 $12.34 $11.42 $10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .28 .28 .36 .35
Net realized and unrealized gain on investments and
foreign currency transactions........................... 1.81 1.39 1.19 1.55
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations....................................... 2.09 1.67 1.55 1.90
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.31) (.26) (.38) (.34)
From net realized gains................................... (.75) (.46) (.25) (.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................... (1.06) (.72) (.63) (.48)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year................................ $14.32 $13.29 $12.34 $11.42
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@............................................... 17.27% 13.51% 12.72% 17.47 %
Net assets end of year (000s omitted)....................... $69,086 $52,482 $37,307 $20,080
Ratio of expenses to average daily net assets............... 1.01% 1.16% 1.20% 1.28 %
Ratio of net investment income to average daily net
assets.................................................... 2.13% 2.42% 3.01% 3.26 %
Portfolio turnover rate..................................... 69% 51% 46% 44%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

36
<PAGE> 40

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
ASSET ALLOCATION SERIES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..................... $17.62 $16.99 $15.90 $13.56
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net.............................. .49 .59 .61 .65
Net realized and unrealized gain (loss) on
investments........................................ 3.02 2.82 1.38 2.35
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations.................................. 3.51 3.41 1.99 3.00
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net......................... (.01) (.59) (.61) (.64)
From net realized gains.............................. (.03) (2.19) (.28) (.02)
Excess distributions of net realized gains........... -- -- (.01) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders.................... (.04) (2.78) (.90) (.66)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year........................... $21.09 $17.62 $16.99 $15.90
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@.......................................... 19.97% 20.24% 12.50% 21.9 %
Net assets end of year (000s omitted).................. $593,878 $482,280 $397,712 $341,511
Ratio of expenses to average daily net assets.......... .51% .53% .54% .55 %
Ratio of net investment income to average daily net
assets............................................... 2.64% 3.16% 3.66% 4.25 %
Portfolio turnover rate................................ 114% 113% 115% 98 %
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- -----------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------
VALUE SERIES 1999 1998 1997 1996+
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $13.42 $11.38 $10.27
- -----------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .16 .12 .14
Net realized and unrealized gain on investments........... 1.13 2.75 1.10
- -----------------------------------------------------------------------------------------------------------------------
Total from operations....................................... 1.29 2.87 1.24
- -----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.16) (.13) (.13)
From net realized gains................................... (.17) (.70) --
- -----------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................... (.33) (.83) (.13)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year................................ $14.38 $13.42 $11.38
- -----------------------------------------------------------------------------------------------------------------------
Total return@............................................... 9.64% 25.24% 11.49 %
Net assets end of year (000s omitted)....................... $87,604 $55,058 $13,951
Ratio of expenses to average daily net assets............... .76% .83% .87 %*
Ratio of net investment income to average daily net
assets.................................................... 1.26% 1.41% 1.72 %*
Portfolio turnover rate..................................... 332% 121% 36 %
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized
+ For the period May 1, 1996 (commencement of operations) to December 31, 1996.
The Series' inception was March 28, 1996, when it was initially capitalized.
However, the Series' shares did not become effectively registered under the
Securities Act of 1933 until May 1, 1996. Information is not presented for
the period from March 28, 1996, through May 1, 1996, as the Series' shares
were not registered during that period.
@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

37
<PAGE> 41

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
GROWTH & INCOME SERIES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year...................... $18.76 $15.16 $12.83 $10.07
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net............................... .48 .40 .34 .33
Net realized and unrealized gain on investments....... 2.00 3.80 2.54 2.76
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations................................... 2.48 4.20 2.88 3.09
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.......................... -- (.39) (.34) (.33 )
From net realized gains............................... (.01) (.21) (.21) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders..................... (.01) (.60) (.55) (.33 )
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year............................ $21.23 $18.76 $15.16 $12.83
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@........................................... 13.21% 27.69% 21.51% 29.70 %
Net assets end of year (000s omitted)................... $312,939 $244,970 $134,932 $59,533
Ratio of expenses to average daily net assets........... .67% .70% .76% .80 %
Ratio of net investment income to average daily net
assets................................................ 2.45% 2.63% 2.38% 2.86 %
Portfolio turnover rate................................. 30% 11% 20% 17 %
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized.

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
S&P 500 INDEX SERIES 1999 1998 1997 1996+
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $14.93 $11.47 $10.09
- ----------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .16 .12 .10
Net realized and unrealized gain on investments........... 4.03 3.58 1.37
- ----------------------------------------------------------------------------------------------------------------------
Total from operations....................................... 4.19 3.70 1.47
- ----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.16) (.12) (.09)
From net realized gains................................... (.13) (.12) --
- ----------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................... (.29) (.24) (.09)
- ----------------------------------------------------------------------------------------------------------------------
Net asset value, end of year................................ $18.83 $14.93 $11.47
- ----------------------------------------------------------------------------------------------------------------------
Total return@............................................... 28.11% 32.32% 14.29 %
Net assets end of year (000s omitted)....................... $252,832 $109,572 $21,979
Ratio of expenses to average daily net assets............... .46% .51% .79 %*
Ratio of net investment income to average daily net
assets.................................................... 1.17% 1.41% 1.47 %*
Portfolio turnover rate..................................... 3% 5% 6 %
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized.
+ For the period May 1, 1996 (commencement of operations) to December 31, 1996.
The Series' inception was March 28, 1996, when it was initially capitalized.
However, the Series' shares did not become effectively registered under the
Securities Act of 1933 until May 1, 1996. Supplementary information is not
presented for the period from March 28, 1996, through May 1, 1996, as the
Series' shares were not registered during that period.
@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

38
<PAGE> 42

<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------
BLUE CHIP STOCK SERIES 1999 1998 1997 1996+
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $14.76 $11.67 $10.07
- ------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .05 .07 .07
Net realized and unrealized gain on investments and
foreign currency transactions........................... 4.09 3.08 1.60
- ------------------------------------------------------------------------------------------------------------------
Total from operations....................................... 4.14 3.15 1.67
- ------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.06) (.06) (.07)
From net realized gains................................... (.26) -- --
- ------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................... (.32) (.06) (.07)
- ------------------------------------------------------------------------------------------------------------------
Net asset value, end of year................................ $18.58 $14.76 $11.67
- ------------------------------------------------------------------------------------------------------------------
Total return@............................................... 28.07% 27.00% 16.24%
Net assets end of year (000s omitted)....................... $182,921 $78,729 $17,606
Ratio of expenses to average daily net assets............... .94% 1.02% 1.13%*
Ratio of net investment income to average daily net
assets.................................................... .41% .75% .82%*
Portfolio turnover rate..................................... 34% 24% 17%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized.
+ For the period May 1, 1996 (commencement of operations) to December 31,
1996. The Series' inception was March 28, 1996, when it was initially
capitalized. However, the Series' shares did not become effectively
registered under the Securities Act of 1933 until May 1, 1996. Supplementary
information is not presented for the period from March 28, 1996, through May
1, 1996, as the Series' shares were not registered during that period.
@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------
INTERNATIONAL STOCK SERIES 1999 1998 1997 1996 1995+
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year.......................... $13.36 $12.44 $11.27 $10.00
- --------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .15 .13 .20 .14
Net realized and unrealized gain on investments and
foreign currency transactions........................... 2.03 1.35 1.48 1.38
- --------------------------------------------------------------------------------------------------------------------------------
Total from operations....................................... 2.18 1.48 1.68 1.52
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.26) (.15) (.21) (.09)
From net realized gains................................... (.80) (.41) (.30) (.16)
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders......................... (1.06) (.56) (.51) (.25)
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year................................ $14.48 $13.36 $12.44 $11.27
- --------------------------------------------------------------------------------------------------------------------------------
Total return@............................................... 16.47% 11.99% 14.02% 14.35%
Net assets end of year (000s omitted)....................... $103,056 $79,142 $52,331 $21,327
Ratio of expenses to average daily net assets............... .94% 1.08% 1.15% 1.14%*
Ratio of net investment income to average daily net
assets.................................................... 1.20% 1.10% 1.71% 1.41%*
Portfolio turnover rate..................................... 44% 30% 27% 39%
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>

39
<PAGE> 43

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------
HIGH YIELD SERIES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..................... $10.77 $9.83 $9.74 $9.47
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net.............................. .75 .96 1.04 1.15
Net realized and unrealized gain (loss) on
investments........................................ (.71) -- .13 .30
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations.................................. .04 .96 1.17 1.45
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net......................... (.83) (.02) (1.03) (1.14)
From net realized gains.............................. (.07) -- -- --
Excess distributions of net realized gains........... -- -- (.05) (.04)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders.................... (.90) (.02) (1.08) (1.18)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year........................... $9.91 $10.77 $9.83 $9.74
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@.......................................... .62% 9.76% 10.52% 12.73 %
Net assets end of year (000s omitted).................. $70,983 $59,228 $42,578 $28,129
Ratio of expenses to average daily net assets.......... .56% .62% .63% .63 %
Ratio of net investment income to average daily net
assets............................................... 9.39% 10.31% 10.22% 11.30 %
Portfolio turnover rate................................ 120% 353% 235% 130 %
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized.

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------
GLOBAL ASSET ALLOCATION SERIES 1999 1998 1997 1996 1995+
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..................... $13.29 $12.34 $11.42 $10.00
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net.............................. .28 .28 .36 .35
Net realized and unrealized gain on investments and
foreign currency transactions...................... 1.81 1.39 1.19 1.55
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations.................................. 2.09 1.67 1.55 1.90
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net......................... (.31) (.26) (.38) (.34)
From net realized gains.............................. (.75) (.46) (.25) (.14)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders.................... (1.06) (.72) (.63) (.48)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year........................... $14.32 $13.29 $12.34 $11.42
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@.......................................... 17.27% 13.51% 12.72% 17.47 %
Net assets end of year (000s omitted).................. $69,086 $52,482 $37,307 $20,080
Ratio of expenses to average daily net assets.......... 1.01% 1.16% 1.20% 1.28 %*
Ratio of net investment income to average daily net
assets............................................... 2.13% 2.42% 3.01% 3.26 %*
Portfolio turnover rate................................ 69% 51% 46% 44 %
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

40
<PAGE> 44

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
MID CAP STOCK SERIES 1999 1998+
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $9.94
- --------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .02
Net realized and unrealized gain (loss) on investments.... (.30)
- --------------------------------------------------------------------------------------
Total from operations....................................... (.28)
- --------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.02)
- --------------------------------------------------------------------------------------
Net asset value, end of period.............................. $9.64
- --------------------------------------------------------------------------------------
Total return@............................................... (2.89%)
Net assets end of period (000s omitted)..................... $12,995
Ratio of expenses to average daily net assets(a)............ 1.25%*
Ratio of net investment income to average daily net
assets(a)................................................. .19%*
Portfolio turnover rate..................................... 66%
- --------------------------------------------------------------------------------------
</TABLE>

* Annualized.
+ For the period May 1, 1998 (commencement of operations) to December 31, 1998.
The Series' inception was March 25, 1998, when it was initially capitalized.
However, the Series' shares did not become effectively registered under the
Securities Act of 1933 until May 1, 1998. Information is not presented for
the period from March 25, 1998, through May 1, 1998, as the Series' shares
were not registered during that period.
@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.
(a) For the period presented, Advisers voluntarily limited annual expenses for
Mid Cap Stock Series (exclusive of interest, taxes, brokerage commissions
and non-recurring extraordinary charges and expenses) to 1.25% of the
average net assets. Had this waiver and reimbursement of expenses not been
in effect, the ratios of expenses and net investment income to average daily
net assets would have been 1.40% and .04%, respectively.

<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
SMALL CAP VALUE SERIES 1999 1998+
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $9.96
- --------------------------------------------------------------------------------------
Operations:
Investment income - net................................... .07
Net realized and unrealized gain (loss) on investments.... (.62)
- --------------------------------------------------------------------------------------
Total from operations....................................... (.55)
- --------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.............................. (.07)
From net realized gains................................... (.06)
- --------------------------------------------------------------------------------------
Total distributions to shareholders......................... (.13)
- --------------------------------------------------------------------------------------
Net asset value, end of period.............................. $9.28
- --------------------------------------------------------------------------------------
Total return@............................................... (5.48%)
Net assets end of period (000s omitted)..................... $16,503
Ratio of expenses to average daily net assets............... 1.24%*
Ratio of net investment income to average daily net
assets.................................................... 1.56%*
Portfolio turnover rate..................................... 57%
- --------------------------------------------------------------------------------------
</TABLE>

41
<PAGE> 45

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
GLOBAL GROWTH SERIES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..................... $20.29 $19.00 $15.97 $12.31
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net.............................. .03 .02 .03 .09
Net realized and unrealized gain (loss) on
investments and foreign currency transactions...... 2.27 1.27 3.03 3.66
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations.................................. 2.30 1.29 3.06 3.75
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net......................... (.02) -- (.03) (.09)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year........................... $22.57 $20.29 $19.00 $15.97
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@.......................................... 11.36% 6.82% 19.10% 30.49%
Net assets end of year (000s omitted).................. $351,476 $353,255 $319,831 $207,913
Ratio of expenses to average daily net assets.......... .75% .79% .79% .80%
Ratio of net investment income to average daily net
assets............................................... .12% .12% .15% .64%
Portfolio turnover rate................................ 32% 35% 14% 29%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
LARGE CAP GROWTH SERIES 1998+
- ---------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period........................ $10.16
- ---------------------------------------------------------------------------
Operations:
Investment income - net................................... --
Net realized and unrealized gain (loss) on investments.... 1.88
- ---------------------------------------------------------------------------
Total from operations....................................... 1.88
- ---------------------------------------------------------------------------
Net asset value, end of period.............................. $12.04
- ---------------------------------------------------------------------------
Total return@............................................... 18.61%
Net assets end of period (000s omitted)..................... $19,121
Ratio of expenses to average daily net assets(a)............ 1.25%*
Ratio of net investment income to average daily net
assets(a)................................................. .03%*
Portfolio turnover rate..................................... 36%
- ---------------------------------------------------------------------------
</TABLE>

* Annualized.
+ For the period May 1, 1998 (commencement of operations) to December 31, 1998.
The Series' inception was March 25, 1998, when it was initially capitalized.
However, the Series' shares did not become effectively registered under the
Securities Act of 1933 until May 1, 1998. Information is not presented for
the period from March 25, 1998, through May 1, 1998, as the Series' shares
were not registered during that period.
@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.
(a) For the period presented, Advisers voluntarily limited annual expenses for
Large Cap Growth Series (exclusive of interest, taxes, brokerage commissions
and non-recurring extraordinary charges and expenses) to 1.25% of the
average net assets. Had this waiver and reimbursement of expenses not been
in effect, the ratios of expenses and net investment income to average daily
net assets would have been 1.27% and .01%, respectively.

42
<PAGE> 46

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
GROWTH STOCK SERIES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $36.64 $32.59 $28.09 $22.11
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net......................... .09 .12 .12 .13
Net realized and unrealized gain (loss) on
investments................................... 6.40 3.93 4.50 5.98
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations............................. 6.49 4.05 4.62 6.11
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.................... (.13) -- (.12) (.13)
From net realized gains on investments.......... (1.91) -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders............... (2.04) -- (.12) (.13)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year...................... $41.09 $36.64 $32.59 $28.09
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@..................................... 19.01% 12.42% 16.41% 27.66 %
Net assets end of year (000s omitted)............. $762,354 $707,155 $661,217 $530,945
Ratio of expenses to average daily net assets..... .65% .66% .67% .67 %
Ratio of net investment income to average daily
net assets...................................... .21% .33% .39% .51 %
Portfolio turnover rate........................... 106% 19% 30% 20 %
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------
AGGRESSIVE GROWTH SERIES 1999 1998 1997 1996 1995
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year................ $13.81 $13.62 $12.68 $9.80
- ---------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net......................... .01 .03 .03 .07
Net realized and unrealized gain (loss) on
investments................................... 2.91 .16 .94 2.88
- ---------------------------------------------------------------------------------------------------------------------------------
Total from operations............................. 2.92 .19 .97 2.95
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.................... (.03) -- (.03) (.07)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year...................... $16.70 $13.81 $13.62 $12.68
- ---------------------------------------------------------------------------------------------------------------------------------
Total return@..................................... 21.17% 1.43% 7.64% 29.89 %
Net assets end of year (000s omitted)............. $149,860 $122,455 $96,931 $46,943
Ratio of expenses to average daily net assets..... .72% .76% .78% .81 %
Ratio of net investment income to average daily
net assets...................................... .06% .24% .22% .58 %
Portfolio turnover rate........................... 135% 25% 22% 21 %
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>

* Annualized.

@ These are the Series' total returns during the period, including reinvestment
of all dividend and capital gains distributions.

43
<PAGE> 47

[FORTIS(SM) LOGO]

FORTIS FINANCIAL GROUP
P.O. Box 64284
St. Paul, Minnesota 55164-0284

Prospectus

May 1, 2000

- - Series Fund

SEC file numbers: 811-04615

[FORTIS(SM) LOGO]
FORTIS FINANCIAL GROUP
Fortis Advisers, Inc. (fund management since 1949)
Fortis Investors, Inc. (principal underwriter; member NASD, SIPC)
Fortis Benefits Insurance Company & Fortis Insurance Company
(issuers of FFG's insurance products)
P.O. Box 64284 - St. Paul, MN 55164-0284 - (800) 800-2000
http://www.ffg.us.fortis.com

This prospectus is intended for use in connection with variable life insurance
policies and variable annuity contracts issued by Fortis Benefits and First
Fortis.

More information about the Fund is available in the Series' Statement of
Additional Information (SAI) and annual and semiannual reports.

- - STATEMENT OF ADDITIONAL INFORMATION. The SAI provides more details about the
Series and their policies. A current SAI is on file with the Securities and
Exchange Commission (SEC) and is incorporated into this Prospectus by
reference, which means that it is legally considered part of this Prospectus.

- - ANNUAL AND SEMIANNUAL REPORTS. Additional information about Series'
investments is available in the Series' annual and semiannual reports to
shareholders. In the Series' annual report, you will find a discussion of the
market conditions and investment strategies that significantly affected the
Series' performance during their last fiscal year.

You can obtain a free copy of the Series' SAI and/or free copies of the Series'
most recent annual or semiannual reports by calling (800) 800-2000, extension
3012. The material you request will be sent by first-class mail, or other means
designed to ensure equally prompt delivery, within three business days of
receipt of request.

You can also obtain copies by visiting the SEC's public reference room in
Washington DC, or by sending your request and a duplicating fee to the SEC's
Public Reference Section, Washington DC 20549-6009. For more information, call
(800) SEC-0330.

Information about the Series is available on the Internet. Text-only versions of
the Series documents can be viewed online or downloaded from the SEC's Internet
site at http://www.sec.gov.

The Fortis logo and Fortis(SM) are servicemarks of Fortis (NL) N.V. and Fortis
(B).
<PAGE> 48

MONEY MARKET SERIES
U.S. GOVERNMENT SECURITIES SERIES
DIVERSIFIED INCOME SERIES
MULTISECTOR BOND SERIES
HIGH YIELD SERIES
GLOBAL ASSET ALLOCATION SERIES
ASSET ALLOCATION SERIES
AMERICAN LEADERS SERIES
VALUE SERIES
CAPITAL OPPORTUNITIES SERIES
GROWTH & INCOME SERIES
S&P 500 INDEX SERIES
BLUE CHIP STOCK SERIES
BLUE CHIP STOCK SERIES II
INTERNATIONAL STOCK SERIES
MID CAP STOCK SERIES
SMALL CAP VALUE SERIES
GLOBAL GROWTH SERIES
GLOBAL EQUITY SERIES
LARGE CAP GROWTH SERIES
INVESTORS GROWTH SERIES
GROWTH STOCK SERIES
AGGRESSIVE GROWTH SERIES
EACH A SERIES OF FORTIS SERIES FUND, INC.

STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------

DATED MAY 1, 2000

This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to a Prospectus for the Series
listed above (individually, a "Fund" and collectively, the "Funds") dated May 1,
2000, and should be read in conjunction therewith. The financial statements
included as a part of the Funds' Annual Report to Shareholders for the fiscal
year ended December 31, 1999 are incorporated by reference into this Statement
of Additional Information. Copies of the Funds' Prospectus and/or Annual Report
are available, without charge, by writing or calling the Funds, P.O. Box 64284,
St. Paul, Minnesota 55164 (telephone: (651) 738-4000 or (800) 800-2000).

<PAGE> 49

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----

<S> <C>
Fund History......................................................................................................1
Investment Strategies and Risk Considerations.....................................................................1
Investment Restrictions..........................................................................................33
Management of the Funds..........................................................................................36
Principal Holders of Securities..................................................................................40
Investment Advisory and Other Services...........................................................................41
Brokerage Allocation and Other Practices.........................................................................47
Capital Stock....................................................................................................52
Pricing of Shares................................................................................................52
Redemption of Shares.............................................................................................54
Taxation.........................................................................................................54
Underwriter......................................................................................................56
Performance Information..........................................................................................56
Other Service Providers..........................................................................................60
Limitation of Director Liability.................................................................................60
Additional Information...........................................................................................60
Financial Statements.............................................................................................61
Appendix A - Description of Futures, Options and Forward Contracts...............................................62
Appendix B - Commercial Paper, Corporate Bond and Preferred Stock Ratings........................................67
</TABLE>

<PAGE> 50

FUND HISTORY

Each Fund is a series of Fortis Series Fund, Inc. ("Fortis Series"),
which was incorporated in Minnesota in 1986. Fortis Series is registered with
the Securities and Exchange Commission under the Investment Company Act of 1940,
as amended (the "1940 Act") as an open-end management investment company. The
Funds are advised by Fortis Advisers, Inc. ("Advisers"). For certain Funds,
Advisers has retained the services of a sub-adviser. See "Investment Advisory
and Other Services - Sub-Advisory Agreements."

Shares of the Funds are currently sold to separate accounts (the
"Separate Accounts") of Fortis Benefits Insurance Company ("Fortis Benefits")
and First Fortis Life Insurance Company ("First Fortis"), which are the funding
vehicles for benefits under variable life insurance policies and variable
annuity contracts issued by Fortis Benefits and First Fortis. The Separate
Accounts invest in shares of the Funds through subaccounts that correspond to
the different Funds.

INVESTMENT STRATEGIES AND RISK CONSIDERATIONS

This section of the Statement of Additional Information contains more
information on the types of securities in which the Funds may invest and the
investment strategies that the Funds may use, including securities and
strategies not discussed in the Prospectus. Unless, otherwise noted, investment
strategies used by the Funds may be changed without the approval of
shareholders.

MONEY MARKET SERIES

Although Money Market Series does not attempt to maintain its net asset
value at any set price, it is nevertheless subject to certain investment
restrictions of Rule 2a-7 under the 1940 Act, in addition to the other policies
and restrictions discussed herein and in the Prospectus. Rule 2a-7 requires that
the Fund invest exclusively in securities that mature within 397 days from the
date of purchase and that it maintain an average dollar weighted maturity of not
more than 90 days. Under Rule 2a-7, securities which are subject to specified
types of demand or put features may be deemed to mature at the next demand or
put date although they have a longer stated maturity. Rule 2a-7 also requires
that all investments by the Fund be limited to United States dollar-denominated
investments that (a) present "minimal credit risk" and (b) are at the time of
acquisition "Eligible Securities." Eligible Securities include, among others,
securities that are rated by two Nationally Recognized Statistical Rating
Organizations ("NRSROs") in one of the two highest categories for short-term
debt obligations, such as A-1 or A-2 by Standard & Poor's Rating Services, a
division of The McGraw-Hill Companies, Inc. ("S&P"), or Prime-1 or Prime-2 by
Moody's Investors Service, Inc. ("Moody's"). It is the responsibility of
Advisers to determine that the Fund's investments present only "minimal credit
risks" and are Eligible Securities, pursuant to the oversight of, and written
guidelines and procedures established by, the Fund's Board of Directors.

Rule 2a-7 requires that the Fund may not invest more than 5% of its
total assets in the securities of a single issuer, other than United States
"Government Securities" (as defined in the 1940 Act), provided that the Fund may
invest in First Tier Securities (as defined in Rule 2a-7) in excess of that
limitation for a period of up to three business days after the purchase thereof,
but the Fund may not make more than one such investment at any time. Rule 2a-7
also requires that (1) 95% of the assets of the Fund be invested in Eligible
Securities that are deemed First Tier Securities, which include, among others,
securities rated by two NRSROs in the highest category (such as A-1 and P-1),
(2) the Fund may not invest more than 5% of its total assets in Second Tier
Securities (i.e., Eligible Securities that are not First Tier Securities) and
(3) the Fund's investment in Second Tier Securities of a single issuer may not
exceed the greater of 1% of the Fund's total assets or $1,000,000.

1
<PAGE> 51

As noted in the Prospectus, Money Market Series' investments in U.S.
dollar-denominated foreign securities may include obligations of foreign banks
having total assets in excess of one billion dollars, and obligations of foreign
branches of domestic banks which have total assets in excess of one billion
dollars. In addition, Money Market Series may invest in U.S. dollar-denominated
securities of, or guaranteed by, the government of Canada or a province of
Canada or any instrumentality or political subdivision thereof, such securities
not to exceed 25% of Money Market Series' total assets, and U.S.
dollar-denominated securities of foreign companies (which do not include
domestic branches of foreign banks and foreign branches of domestic banks), such
securities not to exceed 15% of Money Market Series' total assets. No more than
49% of Money Market Series' total assets may be invested collectively foreign
securities.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

Money Market Series may invest in obligations other than those listed
in this Statement of Additional Information or in the Prospectus if the
obligation is accompanied by a guarantee of principal and interest, provided
that the guarantee is that of a bank or corporation whose certificates of
deposit or commercial paper may otherwise be purchased by Money Market Fund.

Money Market Series (i) may enter into repurchase agreements and (ii)
sell securities short against the box. For information about these investment
strategies, restrictions on their use and certain associated risks, see related
headings under "More Information on Certain Investments and Investment
Strategies."

U.S. GOVERNMENT SECURITIES SERIES

At least 65% of U.S. Government Securities Series' total assets will be
invested in securities issued or guaranteed by the United States government or
its agencies or instrumentalities, and in repurchase agreements pertaining to
such securities.

Up to 35% of U.S. Government Securities Series' total assets may
consist of:

(1) Marketable non-convertible debt securities which are rated at the
time of purchase within the three highest grades assigned by Moody's (Aaa, Aa or
A) or S&P (AAA, AA or A), or comparably rated by another nationally recognized
rating agency. See Appendix B for a discussion of S&P and Moody's ratings;

(2) Marketable securities (payable in U.S. dollars) of, or guaranteed
by, the government of Canada or a province of Canada or any instrumentality or
political subdivision thereof (such securities not to exceed 25% of the Fund's
total assets);

(3) Obligations of, or guaranteed by, U.S. banks, which obligations,
although not rated as a matter of policy by either Moody's or S&P, are
considered by Advisers to have investment quality comparable to securities which
may be purchased under item (1) above (such securities not to exceed 25% of the
Fund's total assets);

(4) Commercial paper obligations rated Prime-1 by Moody's or A-1 by
S&P, or comparably rated by another nationally recognized rating agency; and

(5) Cash, other non-securities assets such as accrued interest,
receivables from investment securities sold, prepaid expenses, as well as other
high-quality short-term interest bearing debt securities not discussed above.

<PAGE> 52

The Fund's investments may include mortgage-backed securities. There is
no percentage limitation on the Fund's purchase of mortgage-backed securities
issued or guaranteed by the United States government or its agencies or
instrumentalities. The Fund may also invest in mortgage-backed securities issued
and insured by private organizations if such securities fall within the
investment restrictions for marketable non-convertible debt securities set forth
above.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) enter into dollar
roll transactions; and (iv) sell securities short against the box. For more
information about these investment strategies, restrictions on their use and
certain associated risks, see the related headings under "More Information on
Certain Investments and Investment Strategies."

DIVERSIFIED INCOME SERIES

Under normal circumstances, Diversified Income Series invests at least
70% of its total assets in (a) corporate fixed income securities rated within
one of the four highest grades assigned by Moody's (Aaa, Aa, A and Baa) or S&P
(AAA, AA, A and BBB), or comparably rated by another nationally recognized
rating agency; (b) securities issued or guaranteed by the U.S. Government or its
agencies or instrumentalities; (c) mortgage-backed securities in which U.S.
Government Securities Series may invest; (d) repurchase agreements pertaining to
such securities; (e) commercial paper of companies having, at the time of
purchase, an issue of outstanding debt securities rated Baa or above by Moody's
or BBB or above by S&P, or comparably rate by another nationally recognized
rating agency, or commercial paper rated P-1 or P-2 by Moody's or A-1 or A-2 by
S&P, or comparably rated by another nationally recognized rating agency; and (f)
cash and income producing cash equivalents.

The Fund may also invest in common and preferred stocks, convertible
securities and dollar denominated foreign securities. Under normal
circumstances, up to 30% of Diversified Income Series' total assets may be
invested in any combination of (a) common and preferred stocks and convertible
securities; (b) dollar denominated foreign securities (provided that such
investments in foreign securities will be limited to 10% of the Fund's total
assets); and (c) non-investment grade bonds (sometimes referred to as "junk
bonds") and non-rated corporate bonds.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

MULTISECTOR BOND SERIES

Multisector Bond Series generally acquires bonds in new offerings or in
principal trades with broker-dealers. Ordinarily, the Series does not purchase
securities with the intention of engaging in short-term trading. However, any
particular security will be sold, and the proceeds reinvested, whenever such
action is deemed prudent from the viewpoint of the Series' investment objective,
regardless of the holding period of that security.

<PAGE> 53

A portion of the Series' assets may be held in cash and high quality,
short-term money market instruments such as certificates of deposit, commercial
paper, bankers' acceptances, short-term U.S. Government obligations, taxable
municipal securities, master notes, and repurchase agreements, pending
investment in portfolio securities, to meet anticipated short-term cash needs
such as dividend payments or redemptions of shares, or for temporary defensive
purposes.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) enter into
reverse repurchase agreements; (iii) purchase securities on a "when-issued" or
delayed delivery basis; (iv) enter into dollar roll transactions; (v) engage in
the lending of portfolio securities; (vi) enter into futures contracts and
options thereon; (vii) purchase, write or sell options on securities or
financial indices; (viii) purchase or sell foreign currency forward exchange
contracts; (ix) purchase and write put and call options on foreign currencies;
and (x) sell securities short against the box. For more information about these
investment strategies, restrictions on their use and certain associated risks,
see the related headings under "More Information on Certain Investments and
Investment Strategies."

HIGH YIELD SERIES

High Yield Series invests at least 65% of its total assets in a
diversified portfolio of high-yield, high-risk, fixed income securities
(sometimes referred to as "junk bonds"). The Fund may also invest in investment
grade fixed income instruments, convertible securities, common and preferred
stocks, other equity securities and cash or cash equivalents.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) enter into dollar
roll transactions; (iv) engage in the lending of portfolio securities; (v) enter
into futures contracts and options thereon; (vi) write call options and purchase
put and call options on securities; (vii) purchase or sell foreign currency
forward exchange contracts; (viii) purchase and write put and call options on
foreign currencies; and (ix) sell securities short against the box. For more
information about these investment strategies, restrictions on their use and
certain associated risks, see the related headings under "More Information on
Certain Investments and Investment Strategies."

GLOBAL ASSET ALLOCATION SERIES

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."
In addition, the Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) enter into dollar
roll transactions; (iv) engage in the lending of portfolio securities; (v) enter
into futures contracts and options thereon; (vi) purchase, write or sell options
on securities or financial indices; (vii) purchase or sell foreign currency
forward exchange contracts; (viii) purchase and write put and call options on
foreign currencies; and (ix) sell securities short against the box. For more
information about these investment strategies, restrictions on their use and
certain associated risks, see the related headings under "More Information on
Certain Investments and Investment Strategies."

4
<PAGE> 54

ASSET ALLOCATION SERIES

As noted in the Prospectus, Asset Allocation Series may invest up to
20% of its total assets in foreign securities. However, no more than 15% of the
Fund's total assets may be invested in foreign securities that are not traded on
national foreign securities exchanges or traded in the United States.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) enter into dollar
roll transactions; (iv) engage in the lending of portfolio securities; and (v)
sell securities short against the box. For more information about these
investment strategies, restrictions on their use and certain associated risks,
see the related headings under "More Information on Certain Investments and
Investment Strategies."

AMERICAN LEADERS SERIES

American Leaders Series invests at least 65% of its assets in
equity securities issued by blue chip companies. These equity securities may
include common stocks, preferred stocks, securities of limited liability
companies, business trusts and companies organized outside the United States
that are comparable to common or preferred stock, real estate investment trusts,
warrants, convertible securities and American Depositary Receipts. The Fund may
also invest in certain fixed income securities.

For more information on the types of securities in which the
Fund may invest, see "More Information on Certain Investments and Investment
Strategies."

The Fund may (i) enter into repurchase agreements; (ii) enter into
reverse repurchase agreements; (iii) purchase securities on a "when-issued" or
delayed delivery basis; (iv) enter into dollar roll transactions; (v) engage in
the lending of portfolio securities; (vi) enter into futures contracts and
options thereon; (vii) purchase, write or sell options on securities or
financial indices; and (viii) sell securities short against the box. For more
information about these investment strategies, restrictions on their use and
certain associated risks, see the related headings under "More Information on
Certain Investments and Investment Strategies."

VALUE SERIES

Value Series invests primarily in common stocks. The Fund may also
invest in securities convertible into common stocks, and may occasionally invest
limited amounts in other types of securities (such as nonconvertible preferred
stock and debt securities). Value Series may invest in both listed and unlisted
securities. The Fund may invest up to 10% of its total assets in foreign
securities.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) enter into dollar
roll transactions; (iv) engage in the lending of portfolio securities; (v) enter
into futures contracts and options thereon; (vi) write call options and purchase
put and call options on securities; (vii) purchase or sell foreign currency
forward exchange contracts; and (viii) sell securities short against the box.
For more information about these investment strategies, restrictions on their
use and certain associated risks, see the related headings under "More
Information on Certain Investments and Investment Strategies."

<PAGE> 55

CAPITAL OPPORTUNITIES SERIES

Capital Opportunities Series invests, under normal market
conditions, at least 65% of its total assets in common stocks and equity-related
securities, such as preferred stocks, convertible securities and depositary
receipts. Up to 15% of the Fund's net assets may be invested in fixed income
securities that are rated Ba or lower by Moody's, BB or lower by S&P, comparably
rated by another nationally recognized rating agency, or are unrated and
determined to be of comparable quality by the Fund's sub-adviser. See "- More
Information on Certain Investments and Investment Strategies -
High-Yield/High-Risk Securities." Up to 35% of the Fund's net assets may be
invested in foreign securities, including securities of issuers located in
emerging markets. See "- More Information on Certain Investments and Investment
Strategies - Securities of Foreign Issuers" and "- More Information on Certain
Investments and Investment Strategies - Emerging Markets."

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) engage in the
lending of portfolio securities; (iv) enter into futures contracts and options
thereon; (v) purchase, write or sell options on securities or financial indices;
(vi) purchase or sell foreign currency forward exchange contracts; (vii)
purchase and write put and call options on foreign currencies; and (viii) sell
securities short against the box. For more information about these investment
strategies, restrictions on their use and certain associated risks, see the
related headings under "More Information on Certain Investments and Investment
Strategies."

GROWTH & INCOME SERIES

Growth & Income Series invests primarily in common stocks. The Fund may
also invest in securities convertible into common stocks, and may occasionally
invest limited amounts in other types of securities (such as nonconvertible
preferred stock and debt securities). Growth & Income Series may invest in both
listed and unlisted securities. The Fund may invest up to 10% of its total
assets in foreign securities.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) enter into dollar
roll transactions; (iv) engage in the lending of portfolio securities; (v) enter
into futures contracts and options thereon; (vi) write call options and purchase
put and call options on securities; (vii) purchase or sell foreign currency
forward exchange contracts; and (viii) sell securities short against the box.
For more information about these investment strategies, restrictions on their
use and certain associated risks, see the related headings under "More
Information on Certain Investments and Investment Strategies."

S & P 500 INDEX SERIES

Under normal circumstances, S&P 500 Index Series invests at least 95%
of its total assets in the common stocks included in the S&P 500 Index. To
maintain liquidity, the Fund also may invest in U.S. Government securities,
commercial paper, bank certificates of deposit and bank demand and time
deposits.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

<PAGE> 56

The Fund may (i) enter into repurchase agreements; (ii) enter into
reverse repurchase agreements; (iii) purchase securities on a "when-issued" or
delayed delivery basis; (iv) enter into dollar roll transactions; (iv) engage in
the lending of portfolio securities; (v) enter into stock index futures
contracts and options thereon; (vi) purchase and sell options on stock indexes;
and (vii) sell securities short against the box. For more information about
these investment strategies, restrictions on their use and certain associated
risks, see the related headings under "More Information on Certain Investments
and Investment Strategies."

Standard & Poor's (R), "S&P (R)," "S&P 500 (R)," "Standard & Poor's
500," and "500" are trademarks of McGraw-Hill, Inc. and have been licensed for
use by Fortis Series. The Fund is not sponsored, endorsed, sold or promoted by
S&P and S&P makes no representation regarding the advisability of investing in
the Fund. S&P makes no representation or warranty, express or implied, to the
owners of the Fund or any member of the public regarding the advisability of
investing in securities generally or in the Fund particularly or the ability of
the S&P 500 Index to track general stock market performance. S&P's only
relationship to Fortis Series is the licensing of certain trademarks and trade
names of S&P and of the S&P 500 Index which is determined, composed and
calculated by S&P without regard to Fortis Series or the Fund. S&P has no
obligation to take the needs of Fortis Series or the owners of the Fund into
consideration in determining, composing or calculating the S&P 500 Index. S&P is
not responsible for and has not participated in the determination of the prices
and amount of the Fund or the timing of the issuance or sale of the Fund or in
the determination or calculation of the equation by which the Fund is to be
converted into cash. S&P has no obligation or liability in connection with the
administration, marketing or trading of the Fund.

S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P
500 INDEX OR ANY DATA INCLUDED THEREIN AND S&P SHALL HAVE NO LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE FUND, OWNERS OF THE FUND OR ANY
OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA INCLUDED
THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE WITH
RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY SPECIAL,
PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF
NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.

BLUE CHIP STOCK SERIES

Blue Chip Stock Series will invest at least 65% of its total assets in
the common stocks of large and medium-sized blue chip companies, as defined by
the Fund's sub-adviser. The Fund may also purchase other types of securities,
such as preferred stocks, convertible stocks and bonds, and warrants, when
considered consistent with the Fund's investment objectives. The Fund may invest
in fixed income securities of any type without regard to quality or rating. Such
securities would be purchased in companies which meet the investment criteria
for the Fund. However, the Fund will not purchase a non-investment grade fixed
income security if, immediately after such purchase, the Fund would have more
than 5% of its total assets invested in such securities. Investments in
convertible securities, preferred stocks and fixed income securities are limited
to 25% of total assets.

The Fund may also invest in hybrid instruments (a type of potentially
high-risk derivative) that can combine the characteristics of securities,
futures and options. For example, the principal amount, redemption or conversion
terms of a security could be related to the market price of some commodity,
currency or securities index. Such securities may bear interest or pay dividends
at below market (or even

<PAGE> 57

relatively nominal) rates. Under certain conditions, the redemption value of
such an investment could be zero. The Fund may invest up to 10% of its total
assets in hybrid instruments.

The Fund will hold a certain portion of its assets in U.S. and foreign
dollar-denominated money market securities, including repurchase agreements, in
the two highest rating categories, maturing in one year or less. This reserve
position provides flexibility in meeting redemptions, expenses, and the timing
of new investments, and serves as a short-term defense during periods of unusual
market volatility. During periods when the Fund assumes a temporary defensive
position, it will not be pursuing its investment objective.

The Fund may invest up to 20% of its total assets (excluding reserves)
in foreign securities, including securities from emerging markets. These include
non-dollar-denominated securities traded outside of the U.S. and
dollar-denominated securities traded in the U.S. (such as ADRs).

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) enter into
reverse repurchase agreements; (iii) purchase securities on a "when-issued" or
delayed delivery basis; (iv) enter into dollar roll transactions; (v) engage in
the lending of portfolio securities; (vi) enter into futures contracts and
options thereon; (vii) purchase, write or sell options on securities or
financial indices; (viii) purchase or sell foreign currency forward exchange
contracts; and (ix) purchase and write put and call options on foreign
currencies. For more information about these investment strategies, restrictions
on their use and certain associated risks, see the related headings under "More
Information on Certain Investments and Investment Strategies."

BLUE CHIP STOCK SERIES II

Blue Chip Series' primary investment objective is long-term growth of
capital with a secondary objective of current income. It is anticipated that the
major portion of Blue Chip's portfolio will ordinarily be invested in common
stocks, convertible securities and bonds of blue chip companies (i.e., companies
with leading market positions and which possess strong financial
characteristics, as described below). While current income is a secondary
objective, most of the stocks in the Series' portfolio are expected to pay
dividends. The Series will generally invest in large and medium sized companies
listed in the United States) which possess the following characteristics:

- - MARKET CHARACTERISTICS - Blue Chip companies are those which occupy (or in
AIM's judgment have the potential to occupy) leading market positions that
are expected to be maintained or enhanced over time. Strong market
positions, particularly in growing industries can give a company pricing
flexibility as well as the potential for strong unit sales. These factors
can in turn lead to higher earnings growth and greater share appreciation.
Market leaders can be identified within an industry as those companies
which have (i) superior growth prospects compared with other companies in
the same industry; (ii) possession of proprietary technology with the
potential to bring about major changes within an industry; and/or (iii)
leading sales within an industry, or the potential to become a market
leader.

- - FINANCIAL CHARACTERISTICS - A blue chip company possesses at least one of
the following attributes: (i) faster earnings growth than its competitors
and the market in general; (ii) higher profit margins relative to its
competitors; (iii) strong cash flow relative to its competitors; and/or a
balance sheet with relatively low debt and a high return on equity relative
to its competitors.

<PAGE> 58

The Series will diversify among industries and therefore will not
invest 25% or more of its total assets in any one industry. Under normal market
conditions, Blue Chip's portfolio will be diversified among industries in a
manner similar to the industry diversification of broad market indices.

The Series will not invest in non-convertible corporate debt securities
rated below investment grade by Standard and Poor's Rating Services ("S&P") and
Moody's Investors Service ("Moody's") or in unrated non-convertible corporate
debt securities believed by the Fund's investment adviser to be below investment
grade quality. For information on ratings of fixed income securities see
Appendix A.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

INTERNATIONAL STOCK SERIES

International Stock Series invests primarily in the equity securities
of non-U.S. companies (i.e., incorporated or organized outside the United
States). However, the Fund may have substantial investments in American
Depositary Receipts and in convertible bonds and other convertible securities.
The Fund may invest up to 20% of the value of its total assets in fixed income
securities and short-term money market instruments. International Stock Series'
fixed income investments will be limited to those rated A or better by S&P or
Moody's or comparably rated by another nationally recognized rating agency, or,
if unrated, determined by the Fund's sub-adviser to be of comparable quality.
See Appendix B for a description of the ratings of fixed income securities.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) enter into dollar
roll transactions; (iv) engage in the lending of portfolio securities; (v) enter
into futures contracts and options thereon; (vi) purchase, write or sell options
on securities or financial indices; (vii) purchase or sell foreign currency
forward exchange contracts; (viii) purchase and write put and call options on
foreign currencies; and (ix) sell securities short against the box. For more
information about these investment strategies, restrictions on their use and
certain associated risks, see the related headings under "More Information on
Certain Investments and Investment Strategies."

MID CAP STOCK SERIES

Under normal circumstances, at least 65% of Mid Cap Stock Series' total
assets will be invested in common stocks. The Fund may also invest in: (1)
obligations issued or guaranteed as to interest and principal by the U.S.
government or its agencies or instrumentalities; (2) instruments of U.S. and
foreign banks, including certificates of deposit (including Eurodollar and
Yankee certificates of deposit), banker's acceptances and time deposits
(including Eurodollar time deposits); (3) corporate obligations rated at least
Baa by Moody's or BBB by S&P or, if unrated, of comparable quality as determined
by Fund's sub-

<PAGE> 59

adviser; (4) Eurodollar bonds and notes; (5) securities of foreign
companies evidenced by American Depository Receipts; and (6) commercial paper.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

SMALL CAP VALUE SERIES

Small Cap Value Series invests at least 65% of its total assets in
common stocks of companies whose market capitalization, at the time of initial
purchase, is less than the 12-month average of the maximum market capitalization
for companies included in the Russell 2000 Index. Market capitalization is
defined as total current market value of a company's outstanding common stock.
The Fund may also invest in common stocks of companies with market
capitalizations in excess of such 12-month average; equity securities other than
common stocks, such as convertible securities, preferred stocks, warrants and
rights; government securities; short-term investments; or other securities. In
addition, Small Cap Value Series may invest in certain securities with unique
risks, such as special situations and securities of unseasoned issuers. The Fund
may also invest in foreign securities.

Special Situations. The Fund may invest in special situations, that is,
in common stocks of companies that have recently experienced or are anticipated
to experience a significant change in structure, management, products or
services. Examples of special situations are companies being reorganized or
merged, companies having unusual new products, or which enjoy particular tax
advantages, or companies that are run by new management or may be probable
takeover candidates. The opportunity to invest in special situations, however,
is limited and depends in part on the market's assessment of these issuers and
their circumstances. In addition, stocks of companies in special situations may
be more volatile, since the market value of these stocks may decline if an
anticipated event or benefit does not materialize.

Unseasoned Issuers. The Fund may invest in securities of unseasoned
issuers. Unseasoned issuers are companies with a record of less than three
years' continuous operation, including the operations of any predecessors and
parents. Investment decisions for these securities may place a greater emphasis
on current or planned product lines and the reputation and experience of the
company's management and less emphasis on fundamental valuation factors than
would be the case for more mature growth companies. In addition, many unseasoned
issuers may be small companies and involve the risks and price volatility
associated with smaller companies.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

<PAGE> 60

more information about these investment strategies, restrictions on their use
and certain associated risks, see the related headings under "More Information
on Certain Investments and Investment Strategies."

GLOBAL GROWTH SERIES

Global Growth Series invests primarily in common stocks. The Fund may
also invest in other types of equity securities, such as preferred stocks and
warrants, and in debt obligations. The debt obligations in which the Fund may
invest include a variety of government bonds and corporate debt obligations.
Global Growth Series expects that a large portion of its debt investments will
be high quality government or corporate bonds. High quality debt securities are
securities rated within one of the two highest categories of Moody's (Aaa and
Aa) or of S&P (AAA and AA), or comparably rated by another nationally recognized
rating agency, or, if unrated, determined to be of comparable quality by the
Advisers. Government bonds which the Fund may purchase include debt obligations
issued or guaranteed by the U.S. government or foreign governments (including
foreign states, provinces, or municipalities) or their agencies, authorities or
instrumentalities and also include debt obligations issued by supranational
entities, which entities are organized or supported by several national
governments, such as the World Bank and the Asian Development Bank. Other debt
obligations which the Fund may purchase include corporate bonds and debt
obligations convertible into equity securities or having attached warrants or
rights to purchase equity securities. The Fund may also purchase securities that
are issued by the government or a corporation or financial institution of one
nation but denominated in the currency of another nation (or a multinational
currency unit). No more than 5% of the Fund's net assets may be invested in debt
securities rated lower than Baa or BBB. A description of the Moody's and S&P
ratings is included in Appendix B.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

GLOBAL EQUITY SERIES

Global Equity Series invests, under normal market conditions,
at least 65% of its total assets in common stocks and equity-related securities,
such as preferred stocks, convertible securities and depositary receipts, of
U.S. and foreign (including emerging market) issuers. Up to 100% of the Fund's
net assets may be invested in foreign securities. See " - More Information on
Certain Investments and Investment Strategies - Securities of Foreign Issuers"
and " - More Information on Certain Investments and Investment Strategies -
Emerging Markets."

For more information on the types of securities in which the
Fund may invest, see "More Information on Certain Investments and Investment
Strategies."

The Fund may (i) enter into repurchase agreements; (ii)
purchase securities on a "when-issued" or delayed delivery basis; (iii) engage
in the lending of portfolio securities; (iv) enter into futures contracts and
options thereon; (v) purchase, write or sell options on securities or financial
indices; (vi) purchase or sell foreign currency forward exchange contracts; and
(vii) purchase and write put and call options on foreign currencies. For more
information about these investment strategies, restrictions on their use and

<PAGE> 61

certain associated risks, see the related headings under "More Information on
Certain Investments and Investment Strategies."

LARGE CAP GROWTH SERIES

Large Cap Growth Series invests primarily in the common stocks of a
limited number of large U.S. companies. The Fund normally invests at least 85%
of its total assets in the equity securities of U.S. companies. These are
companies (i) organized under United States law that have their principal office
in the United States, and (ii) the equity securities of which are traded
principally in the United States.

Large Cap Growth Series may also: (1) invest up to 20% of its net
assets in convertible securities of companies whose common stocks are eligible
for purchase; (2) invest up to 5% of its net assets in rights or warrants; (3)
invest up to 15% of its total assets in securities of foreign issuers whose
common stocks are eligible for purchase.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) enter into dollar
roll transactions; (iv) engage in the lending of portfolio securities; (v) enter
into futures contracts and options thereon; (vi) write call options on
securities and purchase and sell put and call options on securities and
financial indices; and (vii) purchase or sell foreign currency forward exchange
contracts. For more information about these investment strategies, restrictions
on their use and certain associated risks, see the related headings under "More
Information on Certain Investments and Investment Strategies."

INVESTORS GROWTH SERIES

Investors Growth Series invests its assets, except for working
cash balances, in the common stocks and securities convertible into common
stocks of companies which the Fund's sub-adviser believes offer better than
average prospects for long-term growth. Up to 35% of the Fund's net assets may
be invested in foreign securities, including securities of issuers located in
emerging markets. See " - More Information on Certain Investments and Investment
Strategies - Securities of Foreign Issuers" and " - More Information on Certain
Investments and Investment Strategies - Emerging Markets."

For more information on the types of securities in which the
Fund may invest, see "More Information on Certain Investments and Investment
Strategies."

The Fund may (i) enter into repurchase agreements; (ii)
purchase securities on a "when-issued" or delayed delivery basis; (iii) engage
in the lending of portfolio securities; (iv) enter into futures contracts and
options thereon; (v) purchase, write or sell options on securities or financial
indices; (vi) purchase or sell foreign currency forward exchange contracts; and
(vii) purchase and write put and call options on foreign currencies. For more
information about these investment strategies, restrictions on their use and
certain associated risks, see the related headings under "More Information on
Certain Investments and Investment Strategies."

GROWTH STOCK SERIES

Growth Stock Series invests primarily in common stocks. The Fund may
also invest in securities convertible into common stocks, and may occasionally
invest limited amounts in other types of securities (such as nonconvertible
preferred and debt securities). Growth Stock Series may invest in both listed
and unlisted securities. The Fund may also invest up to 10% of its total assets
in foreign securities.

<PAGE> 62

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements and (ii) sell
securities short against the box. For information about this investment
strategy, restrictions on its use and certain associated risks, see "More
Information on Certain Investments and Investment Strategies."

AGGRESSIVE GROWTH SERIES

Aggressive Growth Series invests at least 65% of its total assets in
common stocks of emerging growth companies and more established companies whose
rates of earnings growth are expected to accelerate because of special factors.
The Fund may, to a limited extent, seek appreciation in other types of
securities such as convertible securities and warrants when relative values make
such purchases appear attractive. Aggressive Growth Series may invest up to 10%
of its total assets in foreign securities.

For more information on the types of securities in which the Fund may
invest, see "More Information on Certain Investments and Investment Strategies."

The Fund may (i) enter into repurchase agreements; (ii) purchase
securities on a "when-issued" or delayed delivery basis; (iii) enter into dollar
roll transactions; (iv) engage in the lending of portfolio securities; (v) enter
into futures contracts and options thereon; (vi) purchase, write or sell options
on securities or financial indices; and (vii) purchase or sell foreign currency
forward exchange contracts; (viii) purchase and write put and call options on
foreign currencies; and (ix) sell securities short against the box. For more
information about these investment strategies, restrictions on their use and
certain associated risks, see the related headings under "More Information on
Certain Investments and Investment Strategies."

MORE INFORMATION ON CERTAIN INVESTMENTS AND INVESTMENT STRATEGIES

COMMON AND PREFERRED STOCKS. Each Fund other than Money Market Series
and U.S. Government Securities Series may invest in common and preferred stocks
(except that Multisector Bond Series does not invest in common stock and S&P 500
Index Series does not invest in preferred stocks). Stocks represent shares of
ownership in a company. Generally, preferred stock has a specified dividend and
ranks after bonds and before common stocks in its claim on income for dividend
payments and on assets should the company be liquidated. After other claims are
satisfied, common stockholders participate in company profits on a pro rata
basis; profits may be paid out in dividends or reinvested in the company to help
it grow. Increases and decreases in earnings are usually reflected in a
company's stock price, so common stocks generally have the greatest appreciation
and depreciation potential of all corporate securities.

CONVERTIBLE SECURITIES. Each Fund other than Money Market Series, U.S.
Government Securities Series and S&P 500 Index Series may invest in debt or
preferred stock convertible into or exchangeable for common stock.
Traditionally, convertible securities have paid dividends or interest at rates
higher than common stocks but lower than non-convertible securities. They
generally participate in the appreciation or depreciation of the underlying
stock into which they are convertible, but to a lesser degree. In recent years,
convertibles have been developed which combine higher or lower current income
with options and other features.

WARRANTS OR RIGHTS. Warrants or rights may be acquired by each Fund
(except Investors Growth Series) in connection with other securities or
separately. Warrants are options to buy a stated number of shares of common
stock at a specified price any time during the life of the warrants (generally
two or more years).

<PAGE> 63

SECURITIES OF OTHER INVESTMENT COMPANIES. The Funds may purchase the
securities of open-end or closed-end investment companies if such purchases are
in compliance with the 1940 Act. If a Fund invests in securities of other
investment companies, the return on any such investments will be reduced by the
operating expenses, including investment advisory and administrative fees, of
such investment companies. (Such Fund indirectly absorbs its pro rata share of
the other investment companies' expenses.) However, Advisers and the
sub-advisers believe that at times the return and liquidity features of these
securities will be more beneficial than other types of securities.

SHORT-TERM MONEY MARKET INSTRUMENTS. Each Fund may at any time invest
funds awaiting investment or held as reserves for the purposes of satisfying
redemption requests, payment of dividends or making other distributions to
shareholders, in cash and short-term money market instruments. Short-term money
market instruments in which each Fund may invest include (i) short-term U.S.
government securities and short-term obligations of foreign sovereign
governments and their agencies and instrumentalities, (ii) interest bearing
savings deposits on, and certificates of deposit and bankers' acceptances of,
United States and foreign banks, (iii) commercial paper of U.S. or foreign
issuers rated A-1 or higher by S&P or Prime-1 by Moody's or comparably rated by
another nationally recognized rating agency, or, if not rated, determined by
Advisers (or a Fund's sub-adviser, if applicable) to be of comparable quality
and (iv) repurchase agreements relating to the foregoing.

CERTIFICATES OF DEPOSIT AND BANKERS' ACCEPTANCES. Each Fund may invest
in certificates of deposit. Certificates of deposit are receipts issued by a
bank in exchange for the deposit of funds. The issuer agrees to pay the amount
deposited plus interest to the bearer of the receipt on the date specified on
the certificate. The certificate usually can be traded in the secondary market
prior to maturity. Bankers' acceptances typically arise from short-term credit
arrangements designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most acceptances have maturities of six months or less.

LETTERS OF CREDIT. Commercial paper and other short-term obligations
may be backed by irrevocable letters of credit issued by banks that assume the
obligation for payment of principal and interest in the event of default by an
issuer. Only banks, the securities of which, in the opinion of Advisers (or a
Fund's sub-adviser, if applicable), are of investment quality comparable to
other permitted investments of such Fund, may be used for letter of
credit-backed investments.

EXTENDIBLE NOTES. Money Market Series, Diversified Income Series,
Multisector Bond Series, High Yield Series, Global Asset Allocation Series and
Asset Allocation Series each are permitted to invest up to 25% of the value of
their total assets in extendible notes. An extendible note is a debt arrangement
under which the holder, at its option, may require the issuer, typically a
financial or an industrial concern, to repurchase the note for a predetermined
fixed price at one or more times prior to the ultimate maturity date of the
note. Typically, an extendible note is issued at an interest rate that can be
adjusted at fixed times throughout its term. At the same time as the interest
rate is adjusted by the issuer, the holder of the note is typically given the
option to "put" the note back to the issuer at a predetermined price, e.g., at
100% of the outstanding principal amount plus unpaid accrued interest, if the
extended interest rate is undesirable to the holder. This option to put the note
back to the issuer, i.e., to require the issuer to repurchase the note, provides
the holder with an optional maturity date that is shorter than the actual
maturity date of the note.

Extendible notes are typically issued with maturity dates in excess of
397 days from the date of issuance. If such extendible notes provide for an
optional maturity date of 397 days or less, however,

14
<PAGE> 64

then such notes are deemed by the Funds to have been issued for the shorter
optional maturity date. Accordingly, investment in such extendible notes would
not be in contravention of the investment policy of Money Market Series not to
invest in securities having a maturity date in excess of 397 days from the date
of acquisition. Investment in extendible notes is not expected to have a
material impact on the effective portfolio maturities of the Funds.

An investment in an extendible note is liquid, and the note may be
resold to another investor prior to its optional maturity date at its market
value. The market value of an extendible note with a given optional maturity
date is determined and fluctuates in a similar manner to the market value of a
fixed maturity note with a maturity equivalent to the optional maturity of the
extendible note. Compared to fixed-term notes of the same issuer, however,
extendible notes with equivalent optional maturities generally yield higher
returns without a material increase in risk to the Fund buying them.

The creditworthiness of the issuers of the extendible notes is
monitored and rated by Moody's and by S&P, and investments by the Funds in such
extendible notes are restricted to notes with the same investment ratings as are
acceptable to the Funds with respect to other forms of investment. The
creditworthiness of such issuers is also monitored by Advisers (or the
sub-advisers for Multisector Bond Series and Global Asset Allocation Series).

FLOATING AND VARIABLE RATE INSTRUMENTS. Certain of the debt obligations
that the Funds (except Global Equity Series) may purchase have floating or
variable rates of interest. Such obligations bear interest at rates that are not
fixed, but vary with changes in specified market rates or indices, such as the
prime rate, and at specified intervals. Certain of these obligations may carry a
demand feature that would permit the holder to tender them back to the issuer at
par value prior to maturity. Each Fund limits its purchases of floating and
variable rate obligations to those of the same quality as it otherwise is
allowed to purchase. Advisers (or a Fund's sub-adviser, if applicable) monitors
on an ongoing basis the ability of an issuer of a demand instrument to pay
principal and interest on demand. A Fund's right to obtain payment at par on a
demand instrument can be affected by events occurring between the date such Fund
elects to demand payment and the date payment is due that may affect the ability
of the issuer of the instrument to make payment when due, except when such
demand instruments permit same-day settlement. To facilitate settlement, these
same-day demand instruments may be held in book entry form at a bank other than
the Fund's custodian, subject to a subcustodian agreement approved by the Fund
between the bank and the Fund's custodian.

The floating and variable rate obligations that the Funds may purchase
include certificates of participation in obligations purchased from banks. A
certificate of participation gives the Fund an undivided interest in the
underlying obligations in the proportion that such Fund's interest bears to the
total principal amount of such obligations. Certain of such certificates of
participation may carry a demand feature that would permit the holder to tender
them back to the issuer prior to maturity. To the extent that floating and
variable rate instruments without demand features are not readily marketable,
they will be subject to the investment restrictions pertaining to investments in
illiquid securities.

VARIABLE AMOUNT MASTER DEMAND NOTES. Each Fund may invest in variable
amount master demand notes. These instruments are short-term, unsecured
promissory notes issued by corporations to finance short-term credit needs. They
allow the investment of fluctuating amounts by a Fund at varying market rates of
interest pursuant to arrangements between the Fund, as lender, and the borrower.
Variable amount master demand notes permit a series of short-term borrowings
under a single note. Both the lender and the borrower have the right to reduce
the amount of outstanding indebtedness at any time. Such notes provide that the
interest rate on the amount outstanding varies on a daily basis depending upon a
stated short-term interest rate barometer. Advisers (or a Fund's sub-adviser, if
applicable) will monitor the creditworthiness of the borrower throughout the
term of the variable master demand note. It is not generally contemplated that
such instruments will be traded and there is no secondary market for the notes.
Typically, agreements relating to such notes provide that the lender shall not
sell or otherwise

<PAGE> 65

transfer the note without the borrower's consent. Thus, variable amount master
demand notes may under certain circumstances be deemed illiquid assets. However,
such notes will not be considered illiquid where the Fund has a "same day
withdrawal option," i.e., where it has the unconditional right to demand and
receive payment in full of the principal amount then outstanding together with
interest to the date of payment.

U.S. GOVERNMENT SECURITIES. Each Fund (except Investors Growth Series)
may invest in U.S. government securities, which include: (i) the following U.S.
Treasury obligations: U.S. Treasury bills (initial maturities of one year or
less), U.S. Treasury notes (initial maturities of one to 10 years), and U.S.
Treasury bonds (generally initial maturities of greater than 10 years), all of
which are backed by the full faith and credit of the United States; and (ii)
obligations issued or guaranteed by U.S. government agencies or
instrumentalities, including government guaranteed mortgage-backed securities,
some of which are backed by the full faith and credit of the U.S. Treasury,
e.g., direct pass-through certificates of the Government National Mortgage
Association; some of which are supported by the right of the issuer to borrow
from the U.S. government, e.g., obligations of Federal Home Loan Banks; and some
of which are backed only by the credit of the issuer itself, e.g., obligations
of the Student Loan Marketing Association. U.S. government securities are backed
by the full faith and credit of the U.S. government or guaranteed by the issuing
agency or instrumentality and, therefore, there is generally considered to be
little or no risk as to the issuer's capacity to pay interest and repay
principal. Nevertheless, due to fluctuations in interest rates, there is no
guarantee as to the market value of U.S. government securities.

U.S. government securities in which the Funds may invest include U.S.
Treasury inflation-protection securities. Inflation-protection securities are
new types of marketable book-entry securities issued by the United States
Department of Treasury ("Treasury") with a nominal return linked to the
inflation rate in prices. Inflation-protection securities are auctioned and
issued on a quarterly basis on the 15th of January, April, July, and October.
Initially, they will be issued as 10-year notes, with other maturities added
thereafter. The index used to measure inflation will be the non-seasonally
adjusted U.S. City Average All Items Consumer Price Index for All Urban
Consumers ("CPI-U").

The value of the principal will be adjusted for inflation, and every
six months the security will pay interest, which will be an amount equal to a
fixed percentage of the inflation-adjusted value of the principal. The final
payment of principal of the security will not be less than the original par
amount of the security at issuance.

The principal of the inflation-protection security will be indexed to
the non-seasonally adjusted CPI-U. To calculate the inflation-adjusted principal
value for a particular valuation date, the value of the principal at issuance is
multiplied by the index ratio applicable to that valuation date. The index ratio
for any date is the ratio of the reference CPI applicable to such date to the
reference CPI applicable to the original issue date. Semiannual coupon interest
is determined by multiplying the inflation-adjusted principal amount by one-half
of the stated rate of interest on each interest payment date.

Inflation-adjusted principal or the original par amount, whichever is
larger, will be paid on the maturity date as specified in the applicable
offering announcement. If at maturity the inflation-adjusted principal is less
than the original principal value of the security, an additional amount will be
paid at maturity so that the additional amount plus the inflation-adjusted
principal equals the original principal amount. Some inflation-protection
securities may be stripped into principal and interest components. In the case
of a stripped security, the holder of the stripped principal would receive this
additional amount. The final interest payment, however, will be based on the
final inflation-adjusted principal value, not the original par amount.

The reference CPI for the first day of any calendar month is the CPI-U
for the third preceding calendar month. (For example, the reference CPI for
December 1 is the CPI-U reported for September of

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<PAGE> 66

the same year, which is released in October.) The reference CPI for any other
day of the month is calculated by a linear interpolation between the reference
CPI applicable to the first day of the month and the reference CPI applicable to
the first day of the following month.

Any revisions the Bureau of Labor Statistics (or successor agency)
makes to any CPI-U number that has been previously released will not be used in
calculations of the value of outstanding inflation-protection securities. In the
case that the CPI-U for a particular month is not reported by the last day of
the following month, the Treasury will announce an index number based on the
last year-over-year CPI-U inflation rate available. Any calculations of the
Treasury's payment obligations on the inflation-protection security that need
that month's CPI-U number will be based on the index number that the Treasury
has announced. If the CPI-U is rebased to a different year, the Treasury will
continue to use the CPI-U series based on the base reference period in effect
when the security was first issued as long as that series continues to be
published. If the CPI-U is discontinued during the period the
inflation-protection security is outstanding, the Treasury will, in consultation
with the Bureau of Labor Statistics (or successor agency), determine an
appropriate substitute index and methodology for linking the discontinued series
with the new price index series. Determinations of the Secretary of the Treasury
in this regard are final.

Inflation-protection securities will be held and transferred in either
of two book-entry systems: the commercial book-entry system (TRADES) and
TREASURY DIRECT. The securities will be maintained and transferred at their
original par amount, i.e., not at their inflation-adjusted value. STRIPS
components will be maintained and transferred in TRADES at their value based on
the original par amount of the fully constituted security.

ZERO COUPON OBLIGATIONS. U.S. Government Securities Series, Diversified
Income Series, Multisector Bond Series, High Yield Series, Global Asset
Allocation Series, Asset Allocation Series, American Leaders Series, Capital
Opportunities Series, International Stock Series and Global Growth Series may
invest in zero coupon obligations of government and corporate issuers, including
rights to "stripped" coupon and principal payments. Certain obligations are
"stripped" of their coupons, and the rights to receive each coupon payment and
the principal payment are sold as separate securities. Once separated, each
coupon as well as the principal amount represents a different single-payment
claim due from the issuer of the security. Each single-payment claim (coupon or
principal) is equivalent to a zero coupon bond. A zero coupon security pays no
interest to its holder during its life, and its value consists of the difference
between its face value at maturity (the coupon or principal amount), if held to
maturity, or its market price on the date of sale, if sold prior to maturity,
and its acquisition price (the discounted "present value" of the payment to be
received).

Certain zero coupon obligations represent direct obligations of the
issuer of the "stripped" coupon and principal payments. Other zero coupon
obligations are securities issued by financial institutions which constitute a
proportionate ownership of an underlying pool of stripped coupon or principal
payments. The Funds may invest in either type of zero coupon obligation. A
Fund's investment policies and restrictions applicable to corporate and
government securities shall apply equally to such Fund's investments in zero
coupon securities (including, for example, minimum corporate bond ratings).

PAYMENT-IN-KIND DEBENTURES. U.S. Government Securities Series,
Diversified Income Series, Multisector Bond Series, High Yield Series, Global
Asset Allocation Series, Asset Allocation Series, American Leaders Series,
Capital Opportunities Series and International Stock Series may invest in
debentures the interest on which may be paid in other securities rather than
cash ("PIKs"). Typically, during a specified term prior to the debenture's
maturity, the issuer of a PIK may provide for the option or the obligation to
make interest payments in debentures, common stock or other instruments (i.e.,
"in kind" rather than in cash). The type of instrument in which interest may or
will be paid would be known by the Fund at the time of the investment. A Fund's
investment restrictions regarding corporate bond quality are applicable to
investments in PIKs by such Fund as well as to the securities which may
constitute interest payments on PIKs. While PIKs generate income for generally
accepted accounting standards purposes,

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<PAGE> 67

they do not generate cash flow and thus could cause a Fund to be forced to
liquidate securities at an inopportune time in order to distribute cash, as
required by the Internal Revenue Code.

MORTGAGE-BACKED SECURITIES. Each Fund other than Capital Opportunities
Series, Global Equity Series, Investors Growth Series and Aggressive Growth
Series may invest in certain types of mortgage-backed securities. One type of
mortgage-backed security includes certificates which represent pools of mortgage
loans assembled for sale to investors by various governmental and private
organizations. These securities provide a monthly payment, which consists of
both an interest and a principal payment, which is in effect a "pass-through" of
the monthly payment made by each individual borrower on his or her residential
mortgage loan, net of any fees paid to the issuer or guarantor of such
securities. Additional payments are caused by repayments of principal resulting
from the sale of the underlying residential property, refinancing or
foreclosure, net of fees or costs which may be incurred. Some certificates (such
as those issued by the Government National Mortgage Association) are described
as "modified pass-through." These securities entitle the holder to receive all
interest and principal payments owed on the mortgage pool, net of certain fees,
regardless of whether the mortgagor actually makes the payment.

U.S. Government Pass-Through Securities. A major governmental guarantor
of pass-through certificates is the Government National Mortgage Association
("GNMA"). GNMA guarantees, with the full faith and credit of the United States
government, the timely payments of principal and interest on securities issued
by institutions approved by GNMA (such as savings and loan institutions,
commercial banks and mortgage bankers) and backed by pools of FHA-insured or
VA-guaranteed mortgages. Other governmental guarantors (but not backed by the
full faith and credit of the United States Government) include the Federal
National Mortgage Association ("FNMA") and the Federal Home Loan Mortgage
Corporation ("FHLMC"). FNMA purchases residential mortgages from a list of
approved seller/servicers which include state and federally-chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. Information on the mortgage-backed securities issued by
these entities is set forth below.

(i) GNMA CERTIFICATES. Certificates of the GNMA ("GNMA
Certificates") evidence an undivided interest in a pool of mortgage
loans. GNMA Certificates differ from bonds in that principal is paid
back monthly as payments of principal, including prepayments, on the
mortgages in the underlying pool are passed through to holders of the
GNMA Certificates representing interests in the pool, rather than
returned in a lump sum at maturity. "Modified pass-through" GNMA
Certificates entitle the holder to receive a share of all interest and
principal payments paid or owed to the mortgage pool, net of fees paid
or due to the "issuer" and GNMA, regardless of whether or not the
mortgagor actually makes the payment.

(ii) GNMA GUARANTEE. The National Housing Act authorizes GNMA
to guarantee the timely payment of principal and interest on securities
backed by a pool of mortgages insured by the Federal Housing
Administration ("FHA") or the Farmers' Home Administration ("FmHA"), or
guaranteed by the Veterans Administration ("VA"). GNMA is also
empowered to borrow without limitation from the U.S. Treasury, if
necessary, to make any payments required under its guarantee.

(iii) LIFE OF GNMA CERTIFICATES. The average life of a GNMA
Certificate is likely to be substantially less than the stated maturity
of the mortgages underlying the securities. Prepayments of principal by
mortgagors and mortgage foreclosures will usually result in the return
of the greater part of principal investment long before the maturity of
the mortgages in the pool. Foreclosures impose no risk of loss of the
principal balance of a Certificate, because of the GNMA guarantee, but
foreclosure may impact the yield to shareholders because of the need to
reinvest proceeds of foreclosure.

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<PAGE> 68

As prepayment rates of individual mortgage pools vary widely,
it is not possible to predict accurately the average life of a
particular issue of GNMA Certificates. However, statistics published by
the FHA indicate that the average life of single family dwelling
mortgages with 25- to 30-year maturities, the type of mortgages backing
the vast majority of GNMA Certificates, is approximately 12 years.
Prepayments are likely to increase in periods of falling interest
rates. It is customary to treat GNMA Certificates as 30-year
mortgage-backed securities which prepay fully in the twelfth year.

(iv) YIELD CHARACTERISTICS OF GNMA CERTIFICATES. The coupon
rate of interest of GNMA Certificates is lower than the interest rate
paid on the VA-guaranteed or FHA-insured mortgages underlying the
certificates, by the amount of the fees paid to GNMA and the issuer.

The coupon rate by itself, however, does not indicate the
yield which will be earned on GNMA Certificates. First, GNMA
Certificates may be issued at a premium or discount, rather than at
par, and, after issuance, GNMA Certificates may trade in the secondary
market at a premium or discount. Second, interest is earned monthly,
rather than semi-annually as with traditional bonds; monthly
compounding raises the effective yield earned. Finally, the actual
yield of a GNMA Certificate is influenced by the prepayment experience
of the mortgage pool underlying it. For example, if interest rates
decline, prepayments may occur faster than had been originally
projected and the yield to maturity and investment income would be
reduced.

(v) FHLMC SECURITIES. "FHLMC" is a federally chartered
corporation created in 1970 through enactment of Title III of the
Emergency Home Finance Act of 1970. Its purpose is to promote
development of a nationwide secondary market in conventional
residential mortgages.

The FHLMC issues two types of mortgage pass-through
securities, mortgage participation certificates ("PCs") and guaranteed
mortgage certificates ("GMCs"). PCs resemble GNMA Certificates in that
each PC represents a pro rata share of all interest and principal
payments made or owed on the underlying pool. The FHLMC guarantees
timely payment of interest on PCs and the ultimate payment of
principal. Like GNMA Certificates, PCs are assumed to be prepaid fully
in their twelfth year.

GMCs also represent a pro rata interest in a pool of
mortgages. However, these instruments pay interest semi-annually and
return principal once a year in guaranteed minimum payments. The
expected average life of these securities is approximately ten years.

(vi) FNMA SECURITIES. "FNMA" is a federally chartered and
privately owned corporation which was established in 1938 to create a
secondary market in mortgages insured by the FHA. It was originally
established as a government agency and was transformed into a private
corporation in 1968.

FNMA issues guaranteed mortgage pass-through certificates
("FNMA Certificates"). FNMA Certificates resemble GNMA Certificates in
that each FNMA Certificate represents a pro rata share of all interest
and principal payments made or owed on the underlying pool. FNMA
guarantees timely payment of interest on FNMA certificates and the full
return of principal. Like GNMA Certificates, FNMA Certificates are
assumed to be prepaid fully in their twelfth year.

Private Pass-Through Securities. Commercial banks, savings and loan
institutions, private mortgage insurance companies, mortgage bankers, and other
secondary market issuers also create pass-through pools of conventional
residential mortgage loans. Such issuers may in addition be the originators of
the underlying mortgage loans as well as the guarantors of the pass-through
certificates. Pools created by such non-governmental issuers generally offer a
higher rate of interest than governmental pools because there are no direct or
indirect governmental guarantees of payments in the former pools.

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<PAGE> 69

However, timely payment of interest and principal of these pools may be
supported by various forms of insurance or guarantees, including individual
loan, title, pool, and hazard insurance. The insurance and guarantees are issued
by government entities, private insurers, and the mortgage poolers.

Fortis Series expects that governmental or private entities may create
mortgage loan pools offering pass-through investments in addition to those
described above. As new types of pass-through securities are developed and
offered to investors, the Funds may, consistent with their investment
objectives, policies and restrictions, consider making investments in such new
types of securities.

CMOs, Multi-Class Pass-Through Securities and Other Types of
Mortgage-Backed Securities. Other types of mortgage-backed securities include
debt securities which are secured, directly or indirectly, by mortgages on
commercial real estate or residential rental properties, or by first liens on
residential manufactured homes (as defined in section 603(6) of the National
Manufactured Housing Construction and Safety Standards Act of 1974), whether
such manufactured homes are considered real or personal property under the laws
of the states in which they are located.

Securities in this investment category include, among others, standard
mortgage-related bonds, collateralized mortgage obligations (CMOs) and
multi-class pass-through securities. Mortgage-related bonds are secured by pools
of mortgages, but, unlike pass-through securities, payments to bondholders are
not determined by payments on the mortgages. The bonds consist of a single
class, with interest payable monthly and principal payable on the stated date of
maturity.

U.S. Government Securities Series, Diversified Income Series,
Multisector Bond Series, High Yield Series, Global Asset Allocation Series,
Asset Allocation Series and International Stock Series may invest in CMOs and
multi-class pass-through securities. CMOs are debt instruments issued by special
purpose entities which are secured by pools of mortgage loans or other
mortgage-backed securities. Multi-class pass-through securities are interests in
a trust composed of mortgage loans or other mortgage-backed securities. Payments
of principal and interest on underlying collateral provide the funds to pay debt
service on the CMO or make scheduled distributions on the multi-class
pass-through security. Multi-class pass-through securities, CMOs, and classes
thereof (including those discussed below) are examples of the types of financial
instruments commonly referred to as derivatives.

In a CMO, a series of bonds or certificates is issued in multiple
classes. Each class of CMOs, often referred to as a "tranche," is issued at a
specified coupon rate and has a stated maturity or final distribution date.
Principal prepayments on collateral underlying a CMO may cause it to be retired
substantially earlier than the stated maturities or final distribution dates.
Interest is paid or accrues on all classes of a CMO on a monthly, quarterly or
semiannual basis. The principal and interest on the underlying mortgages may be
allocated among the several classes of a series of a CMO in many ways. In a
common structure, payments of principal, including any principal prepayments, on
the underlying mortgages are applied according to scheduled cash flow priorities
to classes of the series of a CMO. CMOs are secured by pools of mortgages,
typically in the form of "guaranteed" pass-through certificates such as GNMA,
FNMA, or FHLMC securities. The payments on the collateral securities determine
the payments to the bondholders, but there is not a direct "pass-through" of
payments. CMO's are structured into multiple classes, each bearing a different
date of maturity. Monthly payments of principal received from the pool of
underlying mortgages, including prepayments, is first returned to investors
holding the shortest maturity class. Investors holding the longest maturity
classes receive principal only after the shorter maturity classes have been
retired.

There are many classes of CMOs. There are "IOs," which entitle the
holder to receive distributions consisting solely or primarily of all or a
portion of the interest in an underlying pool of mortgage loans or
mortgage-backed securities ("Mortgage Assets"). There are also "POs," which
entitle the holder to receive distributions consisting solely or primarily of
all or a portion of the principal of the underlying pool of Mortgage Assets. In
addition, there are "inverse floaters," which have a coupon rate

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that moves in the reverse direction to an applicable index, and accrual (or "Z")
bonds, which are described below.

As to IOs, POs, inverse floaters, and accrual bonds, not more than 5%
of the net assets of each of U.S. Government Securities Series, Diversified
Income Series, Multisector Bond Series, High Yield Series, Global Asset
Allocation Series, Asset Allocation Series and International Stock Series will
be invested in any one of these items at any one time, and no more than 10% of
the net assets of each of such Fund will be invested in all such obligations at
any one time. Not more than 5% of the Global Growth Series' net assets
collectively will be invested in such obligations at any time.

Inverse floating CMOs are typically more volatile than fixed or
adjustable rate tranches of CMOs. Investments in inverse floating CMOs would be
purchased by a Fund to attempt to protect against a reduction in the income
earned on such Fund's investments due to a decline in interest rates. The Fund
would be adversely affected by the purchase of such CMOs in the event of an
increase in interest rates since the coupon rate thereon will decrease as
interest rates increase, and, like other mortgage-backed securities, the value
will decrease as interest rates increase.

The cash flows and yields on IO and PO classes are extremely sensitive
to the rate of principal payments (including prepayments) on the related
Mortgage Assets. For example, a rapid or slow rate of principal payments may
have a material adverse effect on the yield to maturity of IOs or POs,
respectively. If the underlying Mortgage Assets experience greater than
anticipated prepayments of principal, the holder of an IO may incur substantial
losses, even if the IO class is rated AAA. Conversely, if the underlying
Mortgage Assets experience slower than anticipated prepayments of principal, the
yield and market value for the holder of a PO will be affected more severely
than would be the case with a traditional mortgage-backed security.

However, if interest rates were expected to rise, the value of an IO
might increase and may partially offset other bond value declines, and if rates
were expected to fall, the inclusion of POs could balance lower reinvestment
rates.

An accrual or "Z" bond holder is not entitled to receive cash payments
until one or more other classes of the CMO have been paid in full from payments
on the mortgage loans underlying the CMO. During the period in which cash
payments are not being made on the Z tranche, interest accrues on the Z tranche
at a stated rate, and this accrued interest is added to the amount of principal
which is due to the holder of the Z tranche. After the other classes have been
paid in full, cash payments are made on the Z tranche until its principal
(including previously accrued interest which was added to principal, as
described above) and accrued interest at the stated rate have been paid in full.
Generally, the date upon which cash payments begin to be made on a Z tranche
depends on the rate at which the mortgage loans underlying the CMO are prepaid,
with a faster prepayment rate resulting in an earlier commencement of cash
payments on the Z tranche. Like a zero coupon bond, during its accrual period
the Z tranche of a CMO has the advantage of eliminating the risk of reinvesting
interest payments at lower rates during a period of declining market interest
rates. At the same time, however, and also like a zero coupon bond, the market
value of a Z tranche can be expected to fluctuate more widely with changes in
market interest rates than would the market value of a tranche which pays
interest currently. Changes in market interest rates also can be expected to
influence prepayment rates on the mortgage loans underlying the CMO of which a Z
tranche is a part. As noted above, such changes in prepayment rates will affect
the date at which cash payments begin to be made on a Z tranche, and therefore
also will influence its market value.

Investments in mortgage-backed securities involve certain risks. In
periods of declining interest rates, prices of fixed income securities tend to
rise. However, during such periods, the rate of prepayment of mortgages
underlying mortgage-backed securities tends to increase, with the result that
such prepayments must be reinvested by the issuer at lower rates. In addition,
the value of such securities may fluctuate in response to the market's
perception of the creditworthiness of the issuers of mortgage-backed

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securities owned by a Fund. Because investments in mortgage-backed securities
are interest sensitive, the ability of the issuer to reinvest or to reinvest
favorably in underlying mortgages may be limited by government regulation or tax
policy. For example, action by the Board of Governors of the Federal Reserve
System to limit the growth of the nation's money supply may cause interest rates
to rise and thereby reduce the volume of new residential mortgages.
Additionally, although mortgages and mortgage-backed securities are generally
supported by some form of government or private guarantees and/or insurance,
there is no assurance that private guarantors or insurers will be able to meet
their obligations.

REAL ESTATE OR REAL ESTATE INVESTMENT TRUSTS. Diversified Income
Series, Multisector Bond Series, Asset Allocation Series, American Leaders
Series, Value Series, Growth & Income Series, Blue Chip Stock Series II and
Small Cap Value Series may invest in real estate investment trusts ("REITs"),
real estate development and real estate operating companies and other real
estate related businesses. A REIT may focus on particular projects, such as
apartment complexes or shopping centers, or geographic regions, such as the
Southeastern United States, or both. In addition, Value Series may invest up to
10% of its total assets in REITs, but will invest only in REITs that are
publicly distributed. Growth & Income Series and Value Series currently intend
to make any REIT investments primarily in equity REITs, which are trusts that
sell shares to investors and use the proceeds to invest in real estate or
interests in real estate. Debt REITs invest in obligations secured by mortgages
on real property or interests in real property.

The Funds' investments in real estate securities may be subject to
certain of the same risks associated with the direct ownership of real estate.
These risks include: declines in the value of real estate; risks related to
general and local economic conditions; overbuilding and competition; increases
in property taxes and operating expenses; and variations in rental income. In
addition, REITs may not be diversified. REITs are subject to the possibility of
failing to qualify for tax-free pass-through of income under the Internal
Revenue Code and failing to maintain exemption from the 1940 Act. Also, REITs
may be dependent upon management skill and may be subject to the risks of
obtaining adequate financing for projects on favorable terms.

MUNICIPAL SECURITIES. U.S. Government Securities Series, Diversified
Income Series and Asset Allocation Series each may invest not more than 20% of
their total assets in municipal securities during periods when such securities
appear to offer more attractive returns than taxable securities.

HIGH-YIELD/ HIGH-RISK SECURITIES. Diversified Income Series,
Multisector Bond Series, High Yield Series, Asset Allocation Series, American
Leaders Series and Capital Opportunities Series may invest in securities rated
lower than investment grade (commonly known as "high yield" or "junk" bonds).
Participation in lower-rated securities transactions generally involves greater
returns in the form of higher average yields. However, participation in such
transactions involves greater risks, often related to sensitivity to interest
rates, economic changes, solvency, and relative liquidity in the secondary
trading market. Yields on high yield securities will fluctuate over time. The
prices of high-yielding securities have been found to be less sensitive to
interest rate changes than higher-rated investments, but more sensitive to
adverse economic changes or individual corporate developments. Also, during an
economic downturn or substantial period of rising interest rates highly
leveraged issuers may experience financial stress which would adversely affect
their ability to service their principal and interest payment obligations, to
meet projected business goals, and to obtain additional financing. If the issuer
of a security held by a Fund defaulted, such Fund might incur additional
expenses to seek recovery. In addition, periods of economic uncertainty and
changes can be expected to result in increased volatility of market prices of
high-yielding securities and in the net asset values of Funds investing in such
securities. Furthermore, in the case of high-yielding securities structured as
zero coupon or payment in kind securities ("PIKs"), their market prices are
affected to a greater extent by interest rate changes and thereby tend to be
more volatile than securities which pay interest periodically and in cash.

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<PAGE> 72

High-yielding securities present risks based on payment expectations.
For example, high-yielding securities may contain redemption or call provisions.
If an issuer exercises these provisions in a declining interest rate market, a
Fund holding the security likely would have to replace it with a lower-yielding
security, resulting in a decreased return for investors. Conversely, a
high-yielding security's value will decrease in a rising interest rate market,
as will the net asset value of a Fund holding such security. If the Funds
experience unexpected net redemptions, this may force them to sell their
high-yielding securities, without regard to their investment merits, thereby
decreasing the asset base upon which the Funds' expenses can be spread and
possibly reducing the rate of return.

To the extent that there is no established secondary market, there may
be thin trading of high-yielding securities. This may adversely affect the
ability of the Board of Directors to accurately value high-yielding securities
and a Fund's ability to dispose of such securities. Securities valuation becomes
more difficult and judgment plays a greater role in valuation because there is
less reliable, objective data available. Adverse publicity and investor
perceptions, whether or not based on fundamental analysis, may decrease the
values and liquidity of high-yielding securities, especially in a thinly traded
market. Illiquid or restricted high-yielding securities purchased by the Funds
may involve special registration responsibilities, liabilities and costs, and
liquidity and valuation difficulties.

New laws and proposed new laws could have an adverse impact on the
market for such securities. As examples, recent legislation requires
federally-insured savings and loan associations to divest their investments in
high-yielding securities and pending proposals are designed to limit the use, or
tax and other advantages of high-yielding securities. The new legislation and
the proposals, if enacted, could have an adverse effect on the Funds' net asset
values and investment practices, with the extent of the impact depending upon
the composition of such Funds at that time.

Certain risks are associated with applying credit ratings as a method
for evaluating high-yielding securities. For example, credit ratings evaluate
the safety of principal and interest payments, not market value risk of
high-yielding securities. Since credit rating agencies may fail to timely change
the credit ratings to reflect subsequent events, Advisers (or a Fund's
sub-adviser, if applicable) continuously monitors the issuers of high-yielding
securities held by these Funds to determine if the issuers will have sufficient
cash flow and profits to meet required principal and interest payments, and to
assure the securities' liquidity so such Funds can meet redemption requests. The
achievement of the investment objectives of such Funds may be more dependent
upon the Advisers' or a sub-adviser's own credit analysis than is the case for
higher quality bonds.

SECURITIES OF FOREIGN ISSUERS. Multisector Bond Series, Global Asset
Allocation Series, International Stock Series, Global Growth Series and Global
Equity Series invest significantly in securities of foreign issuers. Global
Equity Series may not invest more than 50% of its net assets in U.S. and/or
Canadian issuers. Money Market Series and U.S. Government Securities Series each
may invest in securities of, or guaranteed by, the Government of Canada, a
Province of Canada, or any instrumentality or political subdivision thereof in
an amount not exceeding 25% of the value of its total assets. Money Market
Series also may invest in obligations of foreign banks and foreign branches of
domestic and foreign banks, provided such banks have total assets in excess of
$1 billion, and it may invest up to 15% of its total assets in securities of
foreign companies. However, Money Market Series may not invest more than 49% of
the value of its total assets collectively in: (i) securities of, or guaranteed
by, the Government of Canada, a Province of Canada, or any instrumentality or
political subdivision thereof; (ii) securities of foreign companies; and (iii)
securities of foreign banks and their branches and securities of foreign
branches of domestic banks. Multisector Bond Series may invest up to 40% of its
total assets in securities of foreign governments or companies. Investors Growth
Series may invest up to 30% of its net assets in foreign securities. Capital
Opportunities Series may invest up to 35% of its net assets in foreign
securities. Asset Allocation Series may invest up to 20% of its total asset in
foreign securities, provided that no more than 15% of its total assets may be
invested in foreign securities that are not traded on national foreign
securities exchanges or traded in the United States. Blue Chip Stock Series II
may invest

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up to 25% of its total assets in foreign securities. Blue Chip Stock Series may
invest up to 20% of its total assets (excluding reserves) in foreign securities.
Large Cap Growth Series may invest up to 15% of its total assets in foreign
securities. High Yield Series, Value Series, Growth & Income Series, Growth
Stock Series, and Aggressive Growth Series each may invest up to 10% of total
assets in securities of foreign governments and companies. Small Cap Value
Series may invest in foreign securities without limitation. Investments in
foreign securities by American Leaders Series are limited to American Depositary
Receipts (see " - Depositary Receipts" below).

Investing in foreign securities may result in greater risk than that
incurred by investing in domestic securities due to the potential political and
economic instability of certain countries and risks of expropriation,
nationalization, confiscation, or the imposition of restrictions on foreign
investment and on repatriation of capital invested. In the event of such
expropriation, nationalization, or other confiscation, by any country, a Fund
could lose its entire investment in any such country. Certain countries prohibit
or impose substantial restrictions on investments in their capital markets,
particularly their equity markets, by foreign entities such as the Funds. As
illustrations, certain countries require governmental approval prior to
investments by foreign persons, or limit the amount of investment by foreign
persons in a particular company, or limit the investment by foreign persons to
only a specific class of securities of a company that may have less advantageous
terms than securities of the company available for purchase by nationals.
Moreover, the national policies of certain countries may restrict investment
opportunities in issuers or industries deemed sensitive to national interests.
In addition, some countries require governmental approval for the repatriation
of investment income, capital, or the proceeds of securities sales by foreign
investors. A Fund, particularly Multisector Bond Series, Global Asset Allocation
Series, International Stock Series, Global Growth Series and Global Equity
Series, could be adversely affected by delays in, or a refusal to grant, any
required governmental approval for repatriation, as well as by the application
to it of other restrictions on investments.

Foreign companies are not generally subject to uniform accounting,
auditing, and financial reporting standards or to other regulatory requirements
comparable to those applicable to U.S. companies. A significant portion of the
securities held by the Multisector Bond Series, Global Asset Allocation Series,
International Stock Series, Global Growth Series and Global Equity Series will
not be registered with the Securities and Exchange Commission ("SEC") or
regulators of any foreign country, nor will the issuers thereof be subject to
the SEC's reporting requirements. Thus, there will be less available information
concerning foreign issuers of securities held by these Funds than is available
concerning U.S. issuers. In instances where the financial statements of an
issuer are not deemed to reflect accurately the financial situation of the
issuer, the Funds will take appropriate steps to evaluate the proposed
investment, which may include on-site inspection of the issuer, interviews with
its management and consultations with accountants, bankers and other
specialists.

Because Multisector Bond Series, Global Asset Allocation Series,
International Stock Series, Global Growth Series and Global Equity Series will
each invest significantly in the securities of foreign issuers which are
denominated in foreign currencies, the strength or weakness of the U.S. dollar
against such foreign currencies may account for part of each such Fund's
investment performance. A decline in the value of any particular currency
against the U.S. dollar will cause a decline in the U.S. dollar value of a
Fund's holdings of securities denominated in such currency and, therefore, will
cause an overall decline in that Fund's net asset value and any net investment
income and capital gains to be distributed in U.S. dollars to shareholders of
that Fund.

The rate of exchange between the U.S. dollar and other currencies is
determined by several factors including the supply and demand for particular
currencies, central bank efforts to support particular currencies, the movement
of interest rates, the pace of business activity in certain other countries, and
the U.S., and other economic and financial conditions affecting the world
economy.

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Although Multisector Bond Series, Global Asset Allocation Series,
International Stock Series, Global Growth Series and Global Equity Series each
values its assets daily in terms of U.S. dollars, each such Fund does not intend
to convert its holdings of foreign currencies into U.S. dollars on a daily
basis. These Funds will do so from time to time, and investors should be aware
of the costs of currency conversion. Although foreign exchange dealers do not
charge a fee for conversion, they do realize a profit based on the difference
(the "spread") between the prices at which they are buying and selling various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at one
rate, while offering a lesser rate of exchange should the Fund desire to sell
that currency to the dealer.

Securities of many foreign issuers may be less liquid and their prices
more volatile than securities of comparable U.S. issuers. In addition, foreign
securities exchanges and brokers are generally subject to less governmental
supervision and regulation than in the U.S., and foreign securities exchange
transactions are usually subject to fixed commissions, which are generally
higher than negotiated commissions on U.S. transactions. In addition, foreign
securities exchange transactions may be subject to difficulties associated with
the settlement of such transactions. Delays in settlement could result in
temporary periods when assets of a Fund are uninvested and no return is earned
thereon. The inability of a Fund to make intended security purchases due to
settlement problems could cause the Fund to miss attractive opportunities.
Inability to dispose of a portfolio security due to settlement problems either
could result in losses to a Fund due to subsequent declines in value of the
portfolio security or, if the Fund has entered into a contract to sell the
security, could result in possible liability to the purchaser. Each Fund will
consider such difficulties when determining the allocation of its assets,
although the Funds do not believe that such difficulties will have a material
adverse effect on their portfolio trading activities.

A Fund's net investment income from foreign issuers may be subject to
non-U.S. withholding taxes, thereby reducing the Fund's net investment income.

There are risks associated with investments in obligations of foreign
branches of domestic banks and domestic branches of foreign banks that do not
accompany investments in obligations of domestic banks generally. Domestic banks
are required to maintain specified levels of reserves, are limited in the
amounts they can loan to a single borrower, and are subject to other regulations
designed to promote financial soundness. Not all of such laws and regulations
apply to foreign branches of domestic banks. In addition, obligations of foreign
branches of domestic banks and domestic branches of foreign banks are not
insured by the Federal Deposit Insurance Corporation. Such investments are also
subject to the risk of investing in foreign securities generally, as discussed
above.

EMERGING MARKETS. Each Fund that may invest in foreign securities may
invest in emerging market countries, with the exception of U.S. Government
Securities Series. Global Growth Series is limited to investing up to 45% of its
total assets in emerging market countries. Many emerging market countries have
experienced substantial or, in some periods, extremely high rates of inflation
for many years. Inflation and rapid fluctuations in inflation rates have had and
may continue to have adverse effects on the economies and securities markets of
certain of these countries. In an attempt to control inflation, wage and price
controls have been imposed in certain countries. In many cases, emerging market
countries are among the world's largest debtors to commercial banks, foreign
governments, international financial organizations and other financial
institutions. In recent years, the governments of some of these countries have
encountered difficulties in servicing their external debt obligations, which has
led to defaults on certain obligations and the restructuring of certain
indebtedness.

Emerging markets are countries categorized as emerging markets by the
International Financial Corporation, the World Bank's private sector division.
Such countries may include but are not limited to Singapore, Indonesia, China,
India and certain Latin American countries such as Mexico, Argentina, Chile and
Brazil. Such markets tend to be in the less economically developed regions of
the world. General characteristics of emerging market countries also include
lower degrees of political stability, a

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<PAGE> 75

high demand for capital investment, a high dependence on export markets for
their major industries, a need to develop basic economic infrastructures, and
rapid economic growth.

DEPOSITARY RECEIPTS. The Funds which may invest in foreign securities
may hold equity securities of foreign issuers in the form of American Depositary
Receipts ("ADRs"), Global Depositary Receipts ("GDRs") or other securities
convertible into securities of eligible European or Far Eastern Issuers. These
securities may not necessarily be denominated in the same currency as the
securities for which they may be exchanged. ADRs are receipts typically issued
by an American bank or trust company that evidence ownership of underlying
securities issued by a foreign corporation. Generally, ADRs in registered form
are designed for use in the United States securities markets. For purposes of
the Funds' investment policies, the Funds' investments in ADRs and GDRs will be
deemed to be investments in the equity securities representing securities of
foreign issuers into which they may be converted.

OPTIONS. Multisector Bond Series, High Yield Series, Global Asset
Allocation Series, American Leaders Series, Value Series, Capital Opportunities
Series, Growth & Income Series, Blue Chip Stock Series, Blue Chip Stock Series
II, International Stock Series, Mid Cap Stock Series, Small Cap Value Series,
Global Growth Series, Global Equity Series, Large Cap Growth Series, Investors
Growth Series and Aggressive Growth Series may write (i.e., sell) covered call
and secured put options (except that Large Cap Growth Series may not write put
options), and purchase and sell put and call options on securities written by
others. Multisector Bond Series, Global Asset Allocation Series, American
Leaders Series, Capital Opportunities Series, Blue Chip Stock Series, Blue Chip
Stock Series II, Mid Cap Stock Series, Global Equity Series, Large Cap Growth
Series, Investors Growth Series, Aggressive Growth Series and S&P 500 Index
Series may also purchase and write put and call options on financial indices. A
Fund generally enters into an option transaction to hedge against the risk of
fluctuations in the prices of (a) securities held by such Fund or (b) securities
which Advisers or a Fund's sub-adviser intends to include in such Fund. However,
Multisector Bond Series, Global Asset Allocation Series, American Leaders
Series, Blue Chip Stock Series, Blue Chip Stock Series II, Mid Cap Stock Series,
International Stock Series and Aggressive Growth Series may enter into such
transactions for other than hedging purposes, which involves greater risk. For
Blue Chip Stock Series, in connection with options on securities, the total
market value of securities against which the Fund has written call or put
options may not exceed 25% of its total assets. In addition, Blue Chip Stock
Series will not commit more than 5% of its total assets to premiums when
purchasing call or put options. Large Cap Growth Series may write covered call
option on its securities of up to 15% of its total assets, and may purchase and
sell call and put options on common stocks written by others of up to, for all
options, 10% of its total assets.

All options purchased or written by S&P 500 Index Series and Mid Cap
Stock Series must be listed on a national securities or futures exchange or
traded in the over-the-counter ("OTC") market. These Funds will not purchase or
write an OTC option if, as a result of such transaction, the sum of (i) the
market value of outstanding OTC options purchased by the Fund, (ii) the market
value of the underlying securities covered by outstanding OTC call options
written by the Fund, and (iii) the market value of all other assets of the Fund
that are illiquid or are not otherwise readily marketable, would exceed 15% of
the net assets of the Fund, taken at market value. However, if an OTC option is
sold by the Fund to a primary U.S. Government securities dealer recognized by
the Federal Reserve Bank of New York and the Fund has the unconditional
contractual right to repurchase such OTC option from the dealer at a
predetermined price, then the Fund will treat as illiquid such amount of the
underlying securities as is equal to the repurchase price less the amount by
which the option is "in-the-money" (the difference between current market value
of the underlying security and the option's strike price). The repurchase price
with primary dealers is typically a formula price which is generally based on a
multiple of the premium received for the option plus the amount by which the
option is "in-the-money." S&P 500 Index Series and Mid Cap Stock Series will not
purchase puts, calls, straddles, spreads or any combination thereof, if as a
result of such purchase the value of a Fund's aggregate investment in such
securities would exceed 5% of the Fund's total assets.

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<PAGE> 76

Options give the investor the right, but not the obligation, to buy or
sell an asset at a predetermined price in the future. Where a Fund writes an
option which expires unexercised or is closed out by the Fund at a profit, it
will retain all or a portion of the premium received for the option, which will
increase its gross income and will offset in part the reduced value of any
securities held by the Fund underlying the option, or the increased cost of
securities to be acquired by the Fund. In contrast, however, if the price of the
underlying security moves adversely to the Fund's position, the option may be
exercised and the Fund will be required to purchase or sell the underlying
security at a disadvantageous price, which may only be partially offset by the
amount of the premium received by the Fund, if at all. Each Fund may also write
combinations of put and call options on the same security, known as "straddles."
Such transactions can generate additional premium income but also present
increased risk.

The Funds may write only covered options. A call option is covered if
the Fund owns the underlying security or a call option on the same security with
a lower strike price. A put option is covered if the Fund segregates cash and/or
short-term debt securities in an amount necessary to pay the strike price of the
option or purchases a put option on the same underlying security with a higher
strike price.

Each of the above Funds may also purchase and sell put or call options
written by others in anticipation of market fluctuations which may adversely
affect the value of its portfolio or the prices of securities that the Fund
wants to purchase at a later date. In the event that the expected market
fluctuations occur, a Fund may be able to offset the resulting adverse effect on
its portfolio, in whole or in part, through the options purchased. The premium
paid for a put or call option plus any transaction costs will reduce the
benefit, if any, realized by the Fund upon exercise or liquidation of the
option, and, unless the price of the underlying security changes sufficiently,
the option may expire without value to the Fund.

Additional information regarding options transactions appears in
Appendix A to this Statement of Additional Information.

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS.

Futures Contracts. Multisector Bond Series, High Yield Series, Global
Asset Allocation Series, American Leaders Series, Capital Opportunities Series,
Global Equity Series and Investors Growth Series may enter into interest rate
futures contracts. Global Asset Allocation Series, American Leaders Series,
Capital Opportunities Series, Value Series, Growth & Income Series, S&P 500
Index Series, Blue Chip Stock Series, Blue Chip Stock Series II, International
Stock Series, Mid Cap Stock Series, Small Cap Value Series, Global Growth
Series, Global Equity Series, Large Cap Growth Series, Investors Growth Series
and Aggressive Growth Series may enter into stock index futures contracts.
Multisector Bond Series, High Yield Series, Global Asset Allocation Series,
Capital Opportunities Series, Blue Chip Stock Series, Blue Chip Stock Series II,
International Stock Series, Mid Cap Stock Series, Small Cap Value Series, Global
Growth Series, Global Equity Series, Large Cap Growth Series, Investors Growth
Series and Aggressive Growth Series may also enter into foreign currency futures
contracts.

A "purchase" of a futures contract means the undertaking of a
contractual obligation to acquire the securities called for by the contract at a
specified price on a specified date. The purchaser of a futures contract on an
index agrees to take or make delivery of an amount of cash equal to the
difference between a specified dollar multiple of the value of the index on the
expiration date of the contract ("current contract value") and the price at
which the contract was originally struck. No physical delivery of the securities
underlying the index is made.

Purchases or sales of stock index futures contracts are used to attempt
to protect a Fund's current or intended stock investments from broad
fluctuations in stock prices. Interest rate and foreign currency futures
contracts are purchased or sold to attempt to hedge against the effects of
interest or exchange rate changes on a Fund's current or intended investments in
fixed income or foreign securities. In the event

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that an anticipated decrease in the value of a Fund's securities occurs as a
result of a general stock market decline, a general increase in interest rates,
or a decline in the dollar value of foreign currencies in which portfolio
securities are denominated, the adverse effects of such changes may be offset,
in whole or in part, by gains on the sale of futures contracts. Conversely, the
increased cost of a Fund's securities to be acquired, caused by a general rise
in the stock market, a general decline in interest rates, or a rise in the
dollar value of foreign currencies, may be offset, in whole or in part, by gains
on futures contracts purchased by such Fund. A Fund will incur brokerage fees
when it purchases and sells futures contracts, and it will be required to make
and maintain margin deposits.

Options on Futures Contracts. Each Fund that may enter into futures
contracts may also purchase and write put and call options on such contracts.
The Funds may use such options on futures contracts in connection with their
hedging strategies in lieu of purchasing and writing options directly on the
underlying securities or purchasing and selling the underlying futures
contracts.

Purchases of options on futures contracts may present less risk in
hedging than the purchase or sale of the underlying futures contracts since the
potential loss is limited to the amount of the premium plus related transaction
costs. The writing of such options, however, does not present less risk than the
trading of futures contracts. The writing of a call option on a futures contract
generates a premium which may partially offset a decline in the value of the
Fund's portfolio assets. By writing a call option, a Fund becomes obligated to
sell a futures contract, which may have a value higher than the exercise price.
Conversely, the writing of a put option on a futures contract generates a
premium, but the Fund becomes obligated to purchase a futures contract, which
may have a lower value than the exercise price. Thus, the loss incurred by a
Fund in writing options on futures contracts may exceed the amount of the
premium received.

For more information of futures contracts and options thereon, see
Appendix A to this Statement of Additional Information.

FOREIGN CURRENCY FORWARD EXCHANGE CONTRACTS. Multisector Bond Series,
High Yield Series, Global Asset Allocation Series, Value Series, Capital
Opportunities Series, Growth & Income Series, Blue Chip Stock Series, Blue Chip
Stock Series II, International Stock Series, Mid Cap Stock Series, Small Cap
Value Series, Global Growth Series, Global Equity Series, Large Cap Growth
Series, Investors Growth Series and Aggressive Growth Series may purchase or
sell foreign currency forward exchange contracts ("forward contracts") to
attempt to minimize the risk from adverse changes in the relationship between
the various currencies in which each Fund invests. A forward contract is an
obligation to purchase or sell a specific currency for an agreed price at a
future date. The contract is individually negotiated and privately traded by
currency traders and their customers. Each Fund may enter into a forward
contract, for example, when it enters into a contract for the purchase or sale
of a security denominated in a foreign currency in order to "lock in" the price
of the security ("transaction hedge") in a particular currency. Additionally,
when a Fund believes that a foreign currency (for example, the British pound)
may suffer a decline against any other currency or currencies in the Fund (for
example, the U.S. dollar), it may enter into a forward sale contract to sell an
amount of the foreign currency expected to decline (the British pound) that
approximates the value of some or all of the Fund's investment securities
denominated in such foreign currency (the British pound) (a "position hedge").
In such cases, a Fund also may enter into a forward sale contract to sell a
foreign currency for a fixed amount in another currency (other than the U.S.
dollar) where the Fund believes that the value of the currency to be sold
pursuant to the forward sale contract will fall whenever there is a decline in
the value of the currency (other than the U.S. dollar) in which certain
portfolio securities of the Fund are denominated (a "cross-hedge").

Under certain conditions, Securities and Exchange Commission (the
"Commission") guidelines require investment companies to set aside cash or any
security that is not considered illiquid in a segregated account to cover
forward contracts. As required by Commission guidelines, any Fund that has the
ability to enter into a forward contract for an essentially speculative purpose
will, upon entering into

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such a transaction, segregate assets to cover such forward contracts. At the
present time, only the Global Asset Allocation Series and International Stock
Series may enter into speculative forward contracts. A speculative forward
contract is one which, unlike the hedging situations defined above, does not
have an underlying position in a security or securities. The Funds will not
segregate assets to cover forward contracts entered into for hedging purposes.

Although forward contracts will be used primarily to protect the Funds
from adverse currency movements, they also involve the risk that anticipated
currency movements would not be accurately predicted.

OPTIONS ON FOREIGN CURRENCIES. Multisector Bond Series, High Yield
Series, Global Asset Allocation Series, Capital Opportunities Series, Blue Chip
Stock Series, Blue Chip Stock Series II, International Stock Series, Mid Cap
Stock Series, Global Growth Series, Global Equity Series, Investors Growth
Series and Aggressive Growth Series may purchase and write put and call options
on foreign currencies for the purpose of protecting against declines in the
dollar value of foreign portfolio securities and against increases in the dollar
cost of foreign securities to be acquired. As in the case of other types of
options, however, the writing of an option on foreign currency will constitute
only a partial hedge, up to the amount of the premium received, and these Funds
could be required to purchase or sell foreign currencies at disadvantageous
exchange rates, thereby incurring losses. The purchase of an option on foreign
currency may constitute an effective hedge against fluctuations in exchange
rates, although, in the event of rate movements adverse to such a Fund's
position, it may forfeit the entire amount of the premium plus related
transaction costs. Options on foreign currencies to be written or purchased by a
Fund are traded on U.S. and foreign exchanges or over-the-counter.

LIMITATIONS ON INVESTMENTS IN OPTIONS, FUTURES CONTRACTS AND FORWARD
CONTRACTS. Multisector Bond Series, Global Asset Allocation Series, Blue Chip
Stock Series II, International Stock Series, High Yield Series, Value Series,
Growth & Income Series, Global Growth Series and Aggressive Growth Series will
not enter into any options, futures or forward contract transactions if
immediately thereafter the amount of premiums paid for all options, initial
margin deposits on all futures contracts and/or options on futures contracts,
and collateral deposited with respect to forward contracts held by or entered
into by a Fund would exceed 5% of the value of such Fund's total assets. In
addition, for High Yield Series, Value Series, Growth & Income Series, Global
Growth Series and Aggressive Growth Series, the aggregate value of a Fund's
assets covering, subject to, or committed to all options, futures, and forward
contracts will not exceed 20% of the value of the total assets of the Fund.
These two restrictions do not apply to securities purchased on a when-issued,
delayed delivery, or forward commitment basis as described under "Delayed
Delivery Transactions." However, each such Fund intends to limit its investment
in futures during the coming year so that the aggregate value of the Fund's
assets subject to futures contracts will not exceed 5% of the value of its net
assets.

S&P 500 Index Series will not enter into futures contracts to the
extent that its outstanding obligations under these contracts would exceed 10%
of the Fund's total assets.

To the extent that any Fund enters into futures contracts and options
on futures contracts that are not for bona fide hedging purposes (as defined by
the Commodity Futures Trading Commission), the aggregate initial margin and
premiums on these positions (excluding the amount by which options are
"in-the-money") may not exceed 5% of the Fund's net assets.

RISKS OF TRANSACTIONS IN OPTIONS, FUTURES CONTRACTS AND FORWARD
CONTRACTS. The use of options, futures contracts and forward contracts involves
certain risks. For example, a lack of correlation between the index or
instrument underlying an option or futures contract and the assets being hedged
or unexpected adverse price movements, could render a Fund's hedging strategy
unsuccessful and could result in losses. The use of these transactions for other
than hedging purposes involves greater risk. In addition, there can be no
assurance that a liquid secondary market will exist for any contract purchased
or

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sold, and a Fund may be required to maintain a position until exercise or
expiration, which could result in losses.

Transactions in options, futures contracts, options on futures
contracts, and currency contracts may be entered into on United States exchanges
regulated by the SEC or the Commodity Futures Trading Commission, as well as in
the over-the-counter market and on foreign exchanges. In addition, the
securities underlying options and futures contracts may include domestic as well
as foreign securities. Investors should recognize that transactions involving
foreign securities or foreign currencies, and transactions entered into in
foreign countries, may involve considerations and risks not typically associated
with investing in U.S. markets.

REPURCHASE AGREEMENTS. Each Fund may invest in repurchase agreements. A
repurchase agreement is an instrument under which securities are purchased from
a bank or securities dealer with an agreement by the seller to repurchase the
securities at a mutually agreed upon date, interest rate, and price. Generally,
repurchase agreements are of short duration, usually less than a week, but on
occasion for longer periods. Fund investments in repurchase agreements with a
maturity of more than seven days are subject to the Funds' limitations regarding
restricted and illiquid securities. In investing in repurchase agreements, a
Fund's risk is limited to the ability of such bank or securities dealer to pay
the agreed upon amount at the maturity of the repurchase agreement. In the
opinion of management, such risk is not material; if the other party defaults,
the underlying security constitutes collateral for the obligation to pay --
although the Fund may incur certain delays in obtaining direct ownership of the
collateral, plus costs in liquidating the collateral. In the event a bank or
securities dealer defaults on the repurchase agreement, management believes
that, barring extraordinary circumstances, the Fund will be entitled to sell the
underlying securities or otherwise receive adequate protection (as defined in
the federal Bankruptcy Code) for its interest in such securities. To the extent
that proceeds from any sale upon a default were less than the repurchase price,
the Fund could suffer a loss. If the Fund owns underlying securities following a
default on the repurchase agreement, the Fund will be subject to risk associated
with changes in the market value of such securities. The Funds' custodian will
hold the securities underlying any repurchase agreement or such securities may
be part of the Federal Reserve Book Entry System. The market value of the
collateral underlying the repurchase agreement will be determined on each
business day. If at any time the market value of the collateral falls below the
repurchase price of a repurchase agreement (including any accrued interest), the
respective Fund will promptly receive additional collateral (so the total
collateral is in an amount at least equal to the repurchase price plus accrued
interest). U.S. Government Securities Series will only execute repurchase
agreements in which the underlying security meets the criteria of such Fund's
investment policies. U.S. Government Securities Series will limit transactions
involving repurchase agreements to domestic commercial banks and/or recognized
dealers in United States government securities believed by Advisers to present
minimum credit risks.

REVERSE REPURCHASE AGREEMENTS. Multisector Bond Series, American
Leaders Series, S&P 500 Index Series, Blue Chip Stock Series, Blue Chip Stock
Series II and Mid Cap Stock Series each may enter into reverse repurchase
agreements to meet redemption requests where the liquidation of portfolio
securities is deemed to be inconvenient or disadvantageous, although Blue Chip
Stock Series does not currently intend to make such investments. Reverse
repurchase agreements are ordinary repurchase agreements in which a Fund is the
seller of, rather than the investor in, securities, and agrees to repurchase
them at an agreed upon time and price. Use of a reverse repurchase agreement may
be preferable to a regular sale and later repurchase of the securities because
it avoids certain market risks and transaction costs. A reverse repurchase
agreement may be viewed as a type of borrowing by a Fund.

DELAYED DELIVERY TRANSACTIONS. All Funds except Money Market Series and
Growth Stock Series may purchase securities on a "when-issued" or delayed
delivery basis and purchase or sell securities on a "forward commitment" basis.
When such transactions are negotiated, the price is fixed at the time the
commitment is made, but delivery and payment for the securities take place at a
later date. Normally, the settlement date occurs within two months after the
transaction, but delayed settlements

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beyond two months may be negotiated. At the time a Fund enters into a
transaction on a when-issued or forward commitment basis, a segregated account
consisting of cash or any security that is not considered restricted or
illiquid, equal to the value of the when-issued or forward commitment securities
will be established and maintained with the custodian and will be marked to the
market daily. During the period between a commitment and settlement, no payment
is made for the securities and, thus, no interest accrues to the purchaser from
the transaction. If a Fund disposes of the right to acquire a when-issued
security prior to its acquisition or disposes of its right to deliver or receive
against a forward commitment, it can incur a gain or loss due to market
fluctuation. The use of when-issued transactions and forward commitments enables
the Funds to hedge against anticipated changes in interest rates and prices.

The purchase of securities on a when-issued, delayed delivery, or
forward commitment basis exposes the Funds to risk because the securities may
decrease in value prior to their delivery. Purchasing securities on a
when-issued, delayed delivery, or forward commitment basis involves the
additional risk that the return available in the market when the delivery takes
place will be higher than that obtained in the transaction itself. These risks
could result in increased volatility of a Fund's net asset value to the extent
that the Fund purchases securities on a when-issued, delayed delivery, or
forward commitment basis while remaining substantially fully invested. There is
also a risk that the securities may not be delivered or that a Fund may incur a
loss or will have lost the opportunity to invest the amount set aside for such
transaction in the segregated asset account. As to each Fund, no more than 20%
of its net assets may be invested in when-issued, delayed delivery, or forward
commitment transactions, and of such 20%, no more than one-half (i.e., 10% of
its net assets) may be invested in when-issued, delayed delivery, or forward
commitment transactions without the intention of actually acquiring securities
(i.e., dollar rolls).

DOLLAR ROLLS. In connection with their ability to purchase securities
on a when-issued or forward commitment basis, each Fund other than Money Market
Series, Capital Opportunities Series, Global Equity Series, Investors Growth
Stock Series and Growth Stock Series may enter into "dollar rolls" in which a
Fund sells securities for delivery in the current month and simultaneously
contracts with the same counterparty to repurchase similar (same type, coupon
and maturity) but not identical securities on a specified future date. Each Fund
gives up the right to receive principal and interest paid on the securities
sold. However, each Fund would benefit to the extent of any difference between
the price received for the securities sold and the lower forward price for the
future purchase plus any fee income received. Unless such benefits exceed the
income and capital appreciation that would have been realized on the securities
sold as part of the dollar roll, the use of this technique will diminish the
investment performance of each Fund compared with what such performance would
have been without the use of dollar rolls. Each Fund will hold and maintain in a
segregated account until the settlement date cash or any security that is not
considered restricted or illiquid in an amount equal to the value of the
when-issued or forward commitment securities. The benefits derived from the use
of dollar rolls may depend, among other things, upon Adviser's (or the
sub-adviser's) ability to predict interest rates correctly. There is no
assurance that dollar rolls can be successfully employed. In addition, the use
of dollar rolls by a Fund while remaining substantially fully invested increases
the amount of the Fund's assets that are subject to market risk to an amount
that is greater than the Fund's net asset value, which could result in increased
volatility of the price of the Fund's shares.

LENDING OF PORTFOLIO SECURITIES. Consistent with applicable regulatory
requirements, all Series may lend their portfolio securities. Currently, U.S.
Government Series, Diversified Income Series, Asset Allocation Series, Value
Series, Growth & Income Series, S&P 500 Index Series, Blue Chip Stock Series,
Global Growth Series, Global Growth Series and Aggressive Growth Series are
doing so. Such loans, which will be made principally to broker-dealers, are
callable at any time and are continuously secured by collateral (cash, U.S.
government securities, certificates of deposit, or other high-grade, short-term
obligations or interest-bearing cash equivalents) equal to no less than the
market value, determined daily, of the securities loaned. Such Funds will
receive amounts equal to dividends or interest on the securities loaned. These
Funds will also earn income for having made the loan. Currently applicable
regulatory requirements limit such lending to not more than 33 1/3% of the value
of each such Fund's total assets

31
<PAGE> 81

(for each such Fund, total assets include the amount lent as well as the
collateral securing such loans). Where voting or consent rights with respect to
loaned securities pass to the borrower, management will follow the policy of
calling the loan, in whole or in part as may be appropriate, to permit the
exercise of such voting or consent rights if the issues involved have a material
effect on such Fund's investment in the securities loaned.

The risks in lending portfolio securities, as with other extensions of
secured credit, consist of possible delay in receiving additional collateral or
in the recovery of the securities or possible loss of rights in the collateral
should the borrower fail financially. Loans will only be made to firms deemed by
Advisers (or the sub-adviser, if there is one for the Fund) to be of good
standing and will not be made unless, in the judgment of Advisers (or the
sub-adviser), the consideration to be earned from such loans would justify the
risk.

RESTRICTED AND ILLIQUID SECURITIES. Each Fund may invest up to 15% of
its net assets in illiquid securities, except Money Market Series which can
invest 10% of its net assets in such securities. A security is considered
illiquid if it cannot be sold in the ordinary course of business within seven
days at approximately the price at which it is valued. Illiquid securities may
offer a higher yield than securities which are more readily marketable, but they
may not always be marketable on advantageous terms.

The sale of illiquid securities often requires more time and results in
higher brokerage charges or dealer discounts and other selling expenses than
does the sale of securities eligible for trading on national securities
exchanges or in the over-the-counter markets. A Fund may be restricted in its
ability to sell such securities at a time when Advisers or a sub-adviser deems
it advisable to do so. In addition, in order to meet redemption requests, a Fund
may have to sell other assets, rather than such illiquid securities, at a time
which is not advantageous.

Restricted securities are securities which were originally sold in
private placements and which have not been registered under the Securities Act
of 1933 (the "1933 Act"). Such securities generally have been considered
illiquid, since they may be resold only subject to statutory restrictions and
delays or if registered under the 1933 Act. In 1990, however, the SEC adopted
Rule 144A under the 1933 Act, which provides a safe harbor exemption from the
registration requirements of the 1933 Act for resales of restricted securities
to "qualified institutional buyers," as defined in the rule. The result of this
rule has been the development of a more liquid and efficient institutional
resale market for restricted securities. Thus, restricted securities are no
longer necessarily illiquid. The Funds may therefore invest in Rule 144A
securities and treat them as liquid when they have been determined to be liquid
by the Board of Directors or its delegate subject to the oversight of and
pursuant to procedures adopted by the Board of Directors. Under these
procedures, factors taken into account in determining the liquidity of a
security include: (a) the frequency of trades and quotes for the security; (b)
the number of dealers willing to purchase or sell the security and the number of
other potential purchasers; (c) dealer undertakings to make a market in the
security; and (d) the nature of the security and the nature of the marketplace
trades (e.g., the time needed to dispose of the security, the method of
soliciting offers and the mechanics of transfer). Similar determinations may be
made with respect to commercial paper issued in reliance on the so-called
"private placement" exemption from registration under Section 4(2) of the 1933
Act and interest-only and principal-only classes of mortgage-related securities
issued by the U.S. government or its agencies or instrumentalities.

BORROWINGS. Each Fund may borrow money to the extent set forth below
under "Investment Restrictions." None of the Funds will borrow for leverage
purposes. Interest paid on borrowings will decrease the net earnings of a Fund
and will not be available for investment.

SEGREGATED ACCOUNTS. To comply with the 1940 Act, a Fund engaging in
certain transactions involving options, futures, reverse repurchase agreements,
delayed delivery and forward contracts on foreign currencies will "cover" its
positions by establishing a segregated account. These segregated

32
<PAGE> 82

accounts will be established and maintained with the Fortis Series' custodian
and will contain only liquid assets such as cash, or any security that is not
considered restricted or illiquid.

SHORT SALES AGAINST THE BOX. Each Fund (except Global Equity Series and
Investors Growth Series) may sell a security short to the extent such Fund
contemporaneously owns or has the right to obtain securities identical to those
sold short without payment of any additional consideration. Such a short sale is
referred to as a short sale "against the box."

RATINGS. After purchase by any Fund, a security may cease to be rated
or its rating may be reduced below the minimum required for purchase by such
Fund. Neither event will require a sale of such security by a Fund. To the
extent the ratings may change as a result of changes in the rating organizations
or the rating systems, each Fund will attempt to use comparable ratings as
standards for investments in accordance with the investment policies contained
in the Prospectus and the Statement of Additional Information. The ratings of
Standard & Poor's Ratings Services and Moody's Investors Service, Inc. are
described in Appendix B attached hereto.

PORTFOLIO TURNOVER

A Fund's portfolio turnover rate is calculated by dividing the lesser
of purchases or sales of portfolio securities for the particular fiscal year by
the monthly average of the value of portfolio securities owned by the Fund
during the same fiscal year. "Portfolio securities" for purposes of this
calculation do not include securities with a maturity date of less than twelve
months from the date of investment. A 100% portfolio turnover rate would occur,
for example, if the lesser of the value of purchases or sales of portfolio
securities for a particular year were equal to the average monthly value of the
portfolio securities owned during such year.

The following Funds had portfolio turnover rates during the fiscal year
ended December 31, 1999 that were significantly different from their portfolio
turnover rates during the fiscal year ended December 31, 1998.
[TO BE PROVIDED.]

1998 Portfolio 1999 Portfolio
-------------- --------------
Fund Turnover Rate Turnover Rate
<S> <C> <C>

% %
</TABLE>

The differences in portfolio turnover rates for ___________ primarily
the result of ________.

INVESTMENT RESTRICTIONS

Each Fund is subject to certain investment restrictions, which are set
forth below. Any investment restriction which is denoted as "fundamental" may be
changed only by the approval of a majority of a Fund's shareholders. In this
situation, majority means the lesser of (i) 67% of the Fund's outstanding shares
present at a meeting of the holders if more than 50% of the outstanding shares
are present in person or by proxy or (ii) more than 50% of the Fund's
outstanding shares. The insurance laws and regulations of various states as well
as the Internal Revenue Code of 1986 and the regulations thereunder may from
time to time impose additional restrictions on the Funds' investments.

Any investment policy or restriction in the Prospectus or this
Statement of Additional Information which involves a maximum percentage of
securities or assets, except those dealing with borrowing, shall not be
considered to be violated unless an excess over the percentage occurs
immediately after an acquisition of securities or utilization of assets and
results therefrom.

DIVERSIFICATION

<PAGE> 83

As a fundamental policy, each Fund operates as a "diversified"
investment company as defined under the 1940 Act, which means that it must meet
the following requirements:

At least 75% of the value of the Fund's total assets will be
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% of the value
of the total assets of the Fund and to not more than 10% of the
outstanding voting securities of such issuer.

The insurance laws and regulations of various states impose additional
diversification requirements on the Funds. One such restriction currently
prohibits the Separate Accounts from acquiring the voting securities of any
issuer if, as a result of the acquisition, the Separate Accounts and Fortis
Benefits, in the aggregate, will own more than 10% of the total issued and
outstanding voting securities of the issuer. Another restriction currently
prohibits each Fund from acquiring the securities of any issuer, other than
securities issued or guaranteed as to principal and interest by the United
States Government, if immediately after such acquisition, the value of the
investment together with prior investments in the security would exceed 10% of
the value of the Fund's total assets.

FUNDAMENTAL INVESTMENT RESTRICTIONS - APPLICABLE TO EACH SERIES

The following investment restrictions are fundamental and may be
changed only by the approval of shareholders. No Fund will:

(1) 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.

(2) 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.

(3) 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.

(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
or interests therein or in securities of companies that deal in real estate or
mortgages.

(5) Purchase physical commodities or contracts relating to physical
commodities.

(6) 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.

NONFUNDAMENTAL INVESTMENT RESTRICTIONS--APPLICABLE TO EACH SERIES UNLESS
OTHERWISE NOTED

The following investment restriction may be changed without shareholder
approval. No Fund will:

<PAGE> 84

ILLIQUID SECURITIES

(1) Invest more than 15% of their net assets (10% for Money Market
Series) in illiquid securities.

OPTIONS, FUTURES AND FORWARD CONTRACTS

(2) High Yield Series, Value Series, Growth & Income Series, Aggressive
Growth Series and Global Growth Series will not enter into any options, futures,
or forward contract transactions if immediately thereafter (a) the amount of
premiums paid for all options, initial margin deposits on all futures contracts
and/or options on futures contracts, and collateral deposited with respect to
forward contracts held by or entered into by the Fund would exceed 5% of the
value of the total assets of the Fund or (b) the Fund's assets covering, subject
to, or committed to all options, futures, and forward contracts would exceed 20%
of the value of the total assets of the Fund. (This restriction does not apply
to securities purchases on a when-issued, delayed delivery, or forward
commitment basis.)

(3) Global Asset Allocation Series and International Stock Series will
not enter into any options, futures or forward contract transactions if
immediately thereafter the amount of premiums paid for all options, initial
margin deposits on all futures contracts and/or options on futures contracts,
and collateral deposited with respect to forward contracts held by or entered
into by such Fund would exceed 5% of the value of the total assets of such Fund.
(This restriction does not apply to securities purchases on a when-issued,
delayed delivery or forward commitment basis.)

(4) S&P 500 Index Series and Mid Cap Stock Series will not purchase
puts, calls, straddles, spreads and any combination thereof if by reason thereof
the value of its aggregate investment in such classes of securities would exceed
5% of its total assets except that: (a) this limitation shall not apply to
standby commitments, and (b) this limitation shall not apply to the Fund's
transactions in futures contracts and related options.

(5) Blue Chip Stock Series and Small Cap Value Series will not purchase
a futures contract or an option thereon if, with respect to positions in futures
or options on futures which do not represent bona fide hedging, the aggregate
initial margin and premiums on such options would exceed 5% of the Fund's net
asset value.

(6) Large Cap Growth Series will not sell a call option written by it
if, as a result of the sale, the aggregate of the Fund's portfolio securities
subject to outstanding call options (valued at the lower of the option price or
market value of such securities) would exceed 15% of the value of the Fund's
total assets.

(7) Large Cap Growth Series will not invest more than 10% of its total
assets in put and call options (including options on market indices).

(8) Large Cap Growth Series will not purchase or sell options on stock
index futures contracts.

(9) Large Cap Growth Series will not purchase or sell a stock index
future if, immediately thereafter, more than 30% of its total assets would be
hedged by stock index futures.

CONVERTIBLE SECURITIES

(10) Large Cap Growth Series will not invest more than 20% of the value
of its total assets in convertible securities.

<PAGE> 85

RIGHTS AND WARRANTS

(11) Large Cap Growth Series will not invest more than 5% of the value
of its total assets in rights or warrants that entitle the holder to buy equity
securities.

FOREIGN SECURITIES

(12) Large Cap Growth Series will not invest more than 15% of the value
of its total assets in securities of foreign issuers.

MANAGEMENT OF THE FUNDS

Under Minnesota law, the Board of Directors of Fortis Series has
overall responsibility for managing Fortis Series in good faith, in a manner
reasonably believed to be in the best interests of the company and with the care
an ordinarily prudent person would exercise in similar circumstances. This
management may not be delegated. The Articles of Incorporation limit the
liability of directors to the fullest extent permitted by law.

The names, addresses, principal occupations and other affiliations of
directors and executive officers of Fortis Series are listed below. Unless
stated otherwise, all positions have been held at least five years. Each
director and officer also serves as a director or officer of all investment
companies managed by Advisers (the "Fund Complex"). The Fund Complex currently
consists of one closed-end and eight open-end investment companies.

NAME AND ADDRESS AGE POSITION WITH PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- -------------- -----------------------------------------
THE FUNDS
---------
<S> <C> <C> <C>
Richard W. Cutting 68 Director Certified public accountant and financial consultant.
137 Chapin Parkway
Buffalo, New York

Allen R. Freedman * 59 Director Chairman and Chief Executive Officer of Fortis, Inc.;
One Chase Manhattan a Managing Director of Fortis International, N.V.;
Plaza New York, New York director of Systems and Computer Technology
Corporation.

Dr. Robert M. Gavin 59 Director President, Cranbrook Education Community; prior to
380 Lone Pine Road July 1996, President, Macalester College, St. Paul,
Bloomfield, Michigan MN.

Jean L. King 55 Director President, Communi-King, a communications consulting
12 Evergreen Lane firm St. Paul, MN.
St. Paul, Minnesota

Dean C. Kopperud* 47 President and Chief Executive Officer and a Director of Advisers;
500 Bielenberg Drive Director President and a Director of Investors; President of
Woodbury, Minnesota Fortis Financial Group; a Director of Fortis Benefits
Insurance Company and Senior Vice President of Fortis
Insurance Company.
</TABLE>

<PAGE> 86

NAME AND ADDRESS AGE POSITION WITH PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- -------------- -----------------------------------------
THE FUNDS
---------
<S> <C> <C> <C>
Robb L. Prince 58 Director Financial and employee benefit consultant; prior to
5108 Duggan Plaza July 1995, Vice President and Treasurer, Jostens,
Edina, Minnesota Inc., a producer of products and services for youth,
education, sports award, and recognition markets;
director of Analysts International Corporation.

Leonard J. Santow 63 Director Principal, Griggs & Santow, Inc., economic and
75 Wall Street 21st Floor financial consultants
New York, New York

Noel Schenker Shadko 45 Director Marketing consultant; prior to 1996, Senior Vice
1908 W. 49th Street President, Marketing and Strategic Planning,
Minneapolis, Minnesota Rollerblade, Inc.

Joseph M. Wikler 57 Director Investment consultant and private investor; prior to
12520 Davan Drive 1994, Director of Research, Chief Investment Officer,
Silver Spring, Maryland Principal and a Director, The Rothschild Co., and
investment adviser, Baltimore, MD.

Gary N. Yalen 57 Vice President President and Chief Investment Officer of Advisers
One Chase Manhattan Plaza (since 1995) and Senior Vice President, Investments,
New York, New York of Fortis, Inc.; prior to 1996, President and Chief
Investment Officer, Fortis Asset Management, a former
division of Fortis, Inc.

Howard G. Hudson 62 Vice President Executive Vice President and Head of Fixed Income
One Chase Manhattan Plaza Investments of Advisers since 1995; prior to 1996,
New York, New York Senior Vice President, Fixed Income, Fortis Asset
Management.

Lucinda S. Mezey 52 Vice President Executive Vice President and Head of Equity
One Chase Manhattan Plaza Investments of Advisers since October 1997; from 1995
New York, New York 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.

James S. Byrd 48 Vice President Executive Vice President of Advisers since 1995;
90 South 7th Street prior to 1995, Vice President of Advisers and of Investors.
Minneapolis, Minnesota

Nicholas L.M. de Peyster 33 Vice President Vice President of Advisers since 1995; prior to 1995,
One Chase Manhattan Plaza Vice President, Equities, Fortis Asset Management.
New York, New York

Diane M. Gotham 41 Vice President Vice President of Advisers since 1998; from 1994 to
90 South 7th Street 1998, securities analyst for Advisers.
Minneapolis, Minnesota
</TABLE>

<PAGE> 87

NAME AND ADDRESS AGE POSITION WITH PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- -------------- -----------------------------------------
THE FUNDS
---------
<S> <C> <C> <C>
Laura E. Granger 38 Vice President Vice President of Advisers since 1998; from
One Chase Manhattan Plaza 1993-1998, portfolio manager, General Motors
New York, New York Investment Management, New York, NY.

Maroun M. Hayek 51 Vice President Vice President of Advisers since 1995; prior to 1996,
One Chase Manhattan Plaza Vice President, Fixed Income, Fortis Asset Management.
New York, New York

Robert C. Lindberg 43 Vice President Vice President of Advisers since 1993.
One Chase Manhattan Plaza
New York, New York

Charles L. Mehlhouse 57 Vice President Vice President of Advisers; prior to March 1996,
One Chase Manhattan Plaza portfolio manager, Marshall & Ilsley Bank
New York, New York Corporation, Milwaukee, WI.

Kevin J. Michels 48 Vice President Vice President of Advisers since 1995; prior to 1996,
One Chase Manhattan Plaza Vice President, Administration, Fortis Asset
New York, New York Management.

Christopher J. Pagano 36 Vice President Senior Vice President of Advisers since January 2000;
One Chase Manhattan Plaza from March 1996 until 2000, Vice President of
New York, New York Advisers; prior to March 1996, government strategist,
Merrill Lynch, New York, NY.

Kendall C. Peterson 43 Vice President Vice President of Advisers since August 1999; prior
One Chase Manhattan Plaza to August 1999, Vice President and portfolio manager
New York, New York at Prudential Insurance Company of America, Newark, NJ.

Stephen M. Rickert 56 Vice President Vice President of Advisers since 1995; from 1994 to
One Chase Manhattan Plaza 1996, Corporate Bond Analyst, Fortis Asset Management.
New York, New York

Michael J. Romanowski 48 Vice President Vice President of Advisers since 1998; from October
One Chase Manhattan Plaza 1995 to March 1998, portfolio manager, Value Line,
New York, New York New York, NY; prior to October 1995, securities
analyst, Conning & Co., Hartford, CT.

Christopher J. Woods 39 Vice President Vice President of Advisers since 1995; prior to 1996
One Chase Manhattan Plaza Vice President, Fixed Income, Fortis Asset Management.
New York, New York

Robert W. Beltz, Jr. 50 Vice President Vice President-Securities Operations of Advisers and
500 Bielenberg Drive of Investors.
Woodbury, Minnesota
</TABLE>

<PAGE> 88

NAME AND ADDRESS AGE POSITION WITH PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- -------------- -----------------------------------------
THE FUNDS
---------
<S> <C> <C> <C>
Peggy L. Ettestad 42 Vice President Senior Vice President, Operations of Advisers since
500 Bielenberg Drive March 1997; prior to March 1997, Vice President, G.E.
Woodbury, Minnesota Capital Fleet Services, Minneapolis, MN.

Tamara L. Fagely 41 Vice President Vice President of Advisers and of Investors since
500 Bielenberg Drive and Treasurer 1998; prior to 1998, Second Vice President of
Woodbury, Minnesota Advisers and Investors.

Dickson W. Lewis 50 Vice President Senior Vice President, Marketing and Sales of
500 Bielenberg Drive Advisers and of Investors since July 1997; from 1993
Woodbury, Minnesota to July 1997, President and Chief Executive Officer,
Hedstrom/Blessing, Inc., Minneapolis, MN.

David A. Peterson 57 Vice President Vice President and Assistant General Counsel, Fortis
500 Bielenberg Drive Benefits Insurance Company.
Woodbury, Minnesota

Scott R. Plummer 40 Vice President Vice President, Associate General Counsel and
500 Bielenberg Drive Assistant Secretary of Advisers.
Woodbury, Minnesota

Rhonda J. Schwartz 41 Vice President Since January 1996, Senior Vice President and General
500 Bielenberg Drive Counsel of Advisers, Vice President and General
Woodbury, Minnesota Counsel, Life and Investment Products of Fortis
Insurance Company and Senior Vice President and
General Counsel of Fortis Benefits Insurance Company,
FFG Division; from 1994 to January 1996, Vice
President, General Counsel and Secretary of Fortis, Inc.

Melinda S. Urion 46 Vice President Senior Vice President and Chief Financial Officer of
500 Bielenberg Drive Advisers since 1997; from 1995 to 1997, Senior Vice
Woodbury, Minnesota President of Finance and Chief Financial Officer,
American Express Financial Corporation; prior to
March 1995, corporate controller, American Express
Financial Corporation and prior to 1994, controller
and treasurer, IDS Life Insurance Company,
Minneapolis, MN.

Michael J. Radmer 54 Secretary Partner, Dorsey & Whitney LLP, the Company's General
220 South Sixth Street Counsel.
Minneapolis, Minnesota
</TABLE>

- -------------------
* Mr. Kopperud is an "interested person" (as defined under the 1940 Act) of
Advisers and Fortis Series because he holds certain positions including
serving as Chief Executive Officer and a director of Advisers. Mr. Freedman
is an "interested person" of Advisers and Fortis Series because he holds
certain positions including serving as Chairman and Chief Executive Officer
of Fortis, Inc., the parent company of Advisers.

<PAGE> 89

Each director who is not affiliated with Advisers or Investors receives
a monthly fee of $700 from Fortis Series, $100 per meeting attended from Fortis
Series, and $100 per committee meeting attended from Fortis Series (and
reimbursement of travel expenses to attend meetings). Each such 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 aggregate compensation received by each director from Fortis Series
during the fiscal year ended December 31, 1999, as well as the total
compensation received by each director from the Fund Complex during the calendar
year ended December 31, 1999. Mr. Freedman and Mr. Kopperud, who are affiliated
with Advisers and Investors, did not receive any compensation. No executive
officer receives any compensation from the Funds.

Aggregate
Compensation Total Compensation
from from
Director Fortis Series Fund Complex*
-------- ------------- ------------------
<S> <C> <C>
Richard W. Cutting $ $
Dr. Robert M. Gavin $ $
Jean L. King $ $
Edward M. Mahoney** $ $
Robb L. Prince $ $
Leonard J. Santow $ $
Noel Schenker Shadko $ $
Joseph M. Wikler $ $
</TABLE>

- -----------
* The Fund Complex consists of one closed-end and eight open-end investment
companies managed by Advisers.
** Mr. Mahoney retired from the Board effective January 1, 2000.

During the fiscal year ended December 31, 1999, Fortis Series paid
$____________ in legal fees and expenses to a law firm of which the Funds'
Secretary is a partner.

Directors Gavin, Kopperud, Prince and Noel Schenker Shadko are members
of the Executive Committee of the Board of Directors. While the Executive
Committee is authorized to act in the intervals between regular board meetings
with full capacity and authority of the full Board of Directors, except as
limited by law, it is expected that the Committee will meet at least twice a
year.

PRINCIPAL HOLDERS OF SECURITIES

As of April _____, 2000, less than 1% of the outstanding shares of
Fortis Series were attributable to contracts owned of record or beneficially by
the directors and executive officers as a group. The directors and executive
officers otherwise do not own any of the outstanding shares of Fortis Series.

As of April _____, 2000, no person was a record holder or, to the
knowledge of Fortis Series, a beneficial owner of more than 5% of the
outstanding shares of any Fund, except as set forth below:

Percent of
Number of Outstanding
Fund Name and Address of Shareholder Shares Shares
- ----------------------------------- ----------------------------------------- ----------- ------------------
<S> <C> <C> <C>
</TABLE>

<PAGE> 90

<TABLE>

<S> <C>
Diversified Income Series Fortis Benefits Life Insurance Company
500 Bielenberg Drive
Woodbury, MN 55125 ("FBIC")
Growth Stock Series FBIC
Asset Allocation Series FBIC
Money Market Series FBIC
U.S. Government Series FBIC
Global Growth Series FBIC
Aggressive Growth Series FBIC
Growth & Income Series FBIC
High Yield Series FBIC
Global Asset Allocation Series FBIC
International Stock Series FBIC
Value Series FBIC
S&P 500 Index Series FBIC
Blue Chip Stock Series FBIC
Mid Cap Stock Series FBIC
Large Cap Growth Series FBIC
Small Cap Value Series FBIC
</TABLE>

INVESTMENT ADVISORY AND OTHER SERVICES

GENERAL

Fortis Advisers, Inc. ("Advisers") has been the investment adviser and
manager of Fortis Series since its inception. Fortis Investors, Inc.
("Investors") acts as the Funds' underwriter. Each acts pursuant to written
agreements periodically approved by the directors or shareholders. The address
of each is that of the Funds. As of December 31, 1999, Advisers managed
thirty-three investment company portfolios with combined net assets of
approximately $8.2 billion.

Each Series pays Advisers a monthly fee for providing investment
advisory services. The services provided by Advisers include:

- - General management of all Series.
- - Investment management for those Series that do not have a sub-adviser.
- - Ultimate responsibility (subject to oversight by the Fund's Board of
Directors) to oversee any sub-advisers hired to manage all or a portion
of any of the Series and recommend the hiring, termination and
replacement of sub-advisers. In this role Advisers acts as a "Manager
of Managers."

The Fund has received an exemptive order from the Securities and
Exchange Commission that permits Advisers to appoint new sub-advisers, with
approval by the Fund's Board of Directors and without obtaining approval from
those contract holder's that participate in the applicable Series. Within 90
days after hiring any new sub-adviser, affected contract holders will receive
all information about the new sub-advisory relationship that would have been
included if a proxy statement had been required. Advisers will not enter into a
sub-advisory agreement with an affiliated sub-adviser unless contract holders
approve such agreement.

<PAGE> 91

The specific conditions of the exemptive order are as follows:

1. Before the Fund may rely on the exemptive order, the operation of the Fund
under a Manager of Managers structure must be approved by a majority of the
outstanding voting securities. This approval was received in a shareholder
meeting held August 12, 1999.

2. The Fund must disclose in its prospectus the existence, substance and
effect of the exemptive order. In addition, the Fund must hold itself out
to the public as employing the Manager of Managers structure. The
prospectus will 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 ninety (90) days of the hiring of any new sub-adviser, the contract
holders participating in the relevant Fund will be furnished all
information about the new sub-adviser that would be included in a proxy
statement, except as modified by the order to permit Aggregate Fee
Disclosure. This information will include Aggregate Fee Disclosure and any
change in such disclosure caused by the addition of a new sub-adviser.
Advisers will meet this condition by providing contract holders with an
information statement meeting the requirements of Regulation 14C, Schedule
14C, and Item 22 of Schedule 14A under the 1934 Act, except as modified by
the order to permit Aggregate Fee Disclosure.

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 contract holders.

5. At all times, a majority of the Board of Directors of Fortis Series will be
directors who are not "interested persons," as that term is defined in
Section 2(a)(19) of the 1940 Act, of the company ("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 Fund 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 Fund
and the contract holders participating in that Fund 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 Fortis Series and the
Funds, including overall supervisory responsibility for the general
management and investment of each Fund's securities portfolio, and, subject
to review and approval by the Board of Directors, will: (a) set each Fund's
overall investment strategies; (b) evaluate, select and recommend
sub-advisers to manage all or a part of a Fund's assets; (c) allocate and,
when appropriate, reallocate a Fund's 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 Fund's investment objective, policies
and restrictions.

8. No director or officer of Fortis Series or directors or officers of
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 (i) ownership of interests in Advisers or any
entity that controls, is controlled by or is under common control with
Advisers; or (ii) ownership of less than 1% of the outstanding securities
of any class of equity or debt of a publicly-traded company that is either
a sub-adviser or any entity that controls, is controlled by or is under
common control with a sub-adviser.

<PAGE> 92

9. Fortis Series will include in its registration statement the Aggregate Fee
Disclosure.

10. Independent counsel knowledgeable about the 1940 Act and the duties of
Independent Directors will be engaged to represent the Independent
Directors of the Fund. The selection of such counsel will be within the
discretion of the then-existing Independent Directors.

11. Advisers will provide the Board of Directors, no less than often than
quarterly, with information about Advisers' profitability on a per-Fund
basis. Such information will reflect the impact on profitability of the
hiring or termination of any sub-adviser during the applicable quarter.

12. When a sub-adviser is hired or terminated, Advisers will provide the Board
of Directors with information showing the expected impact on Advisers'
profitability.

CONTROL AND MANAGEMENT OF ADVISERS AND INVESTORS

Fortis, Inc. ("Fortis") owns 100% of the outstanding voting securities
of Advisers, and Advisers owns all of the outstanding voting securities of
Investors.

Fortis, located in New York, New York, is a financial services company
that provides specialty insurance and investment products to individuals,
businesses, associations and other financial services organizations in the
United States. Fortis is a part of a worldwide group of companies active in the
fields of insurance, banking and investments. Fortis is jointly owned by Fortis
(NL) N.V. of The Netherlands and Fortis (B) of Belgium.

Fortis (NL) N.V. is a diversified financial services company
headquartered in Utrecht, The Netherlands, where its insurance operations began
in 1847. Fortis (B) is a diversified financial services company headquartered in
Brussels, Belgium, where its insurance operations began in 1824. Fortis (NL)
N.V. and Fortis (B) own a group of companies active in insurance, banking and
financial services, and real estate development in The Netherlands, Belgium, the
United States, Western Europe, and the Pacific Rim.

INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT

Advisers acts as investment adviser and manager of each Fund under
separate Investment Advisory and Management Agreements. These agreements are
individually referred to as an "Agreement" and collectively referred to as
"Agreements." The Agreements will terminate automatically in the event of their
assignment. In addition, the Agreements are terminable at any time, without
penalty, by the Board of Directors or, with respect to any particular Fund, by
vote of a majority of the outstanding voting securities of such Fund, on not
more than 60 days' written notice to Advisers, and by Advisers on 60 days'
notice to Fortis Series. Unless sooner terminated, each 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 Fund, by vote of a majority of the
outstanding voting securities of such Fund, 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.

The Agreements provide for the payment of investment advisory and
management fees by the Funds calculated as described in the following table.

Investment
Advisory and
Fund Average Net Assets Management Fee
- ---- ------------------ --------------
<S> <C> <C>
Money Market Series For the first $500 million .30%
</TABLE>

<PAGE> 93

<TABLE>
<S> <C> <C>
For assets over $500 million .25%
U.S. Government Securities Series For the first $50 million .50%
For assets over $50 million .45%
Diversified Income Series For the first $50 million .50%
For assets over $50 million .45%
Multisector Bond Series For the first $100 million .75%
For assets over $100 .65%
High Yield Series For the first $250 million .50%
For assets over $250 million .45%
Global Asset Allocation Series For the first $100 million .90%
For assets over $100 million .85%
Asset Allocation Series For the first $250 million .50%
For assets over $250 million .45%
American Leaders Series For the first $35 million .90%
$35 million - $100 million .75%
For assets over $100 million .65%
Value Series For the first $100 million .70%
For assets over $100 million .60%
Capital Opportunities Series For the first $200 million .90%
$200 million - $500 million .85%
For assets over $500 million .80%
Growth & Income Series For the first $100 million .70%
For assets over $100 million .60%
S&P 500 Index Series All levels of assets .40%
Blue Chip Stock Series For the first $100 million .90%
For assets over $100 million .85%
Blue Chip Stock Series II For the first $200 million .95%
For assets over $200 million .90%
International Stock Series For the first $100 million .85%
For assets over $100 million .80%
Mid Cap Stock Series For the first $100 million .90%
For the next $150 million .85%
For assets over $250 million .80%
Small Cap Value Series For the first $50 million .90%
For assets over $50 million .85%
Global Growth Series For the first $500 million .70%
For assets over $500 million .60%
Global Equity Series For the first $200 million 1.00%
$200 million - $500 million .95%
For assets over $500 million .90%
Large Cap Growth Series For the first $100 million .90%
$100 million - $200 million .85%
For assets over $200 million .80%
Investors Growth Series For the first $200 million .90%
$200 million - $500 million .85%
For assets over $500 million .80%
Growth Stock Series For the first $100 million .70%
For assets over $100 million .60%
Aggressive Growth Series For the first $100 million .70%
For assets over $100 million .60%
</TABLE>

44
<PAGE> 94

During the fiscal years ended December 31, 1997, 1998 and 1999, the
Funds paid the following investment advisory and management fees to Advisers.

Fund 1997 1998 1999
---- ---- ---- ----
<S> <C> <C> <C>
Money Market $ 191,433 $ 194,182 $
U.S. Government Securities 687,529 673,637
Diversified Income 488,855 521,184
Multisector Bond 149,694 163,906
High Yield 258,195 338,252
Global Asset Allocation 406,583 546,257
Asset Allocation 2,102,625 2,471,163
American Leaders * * *
Value 230,143 531,886
Capital Opportunities * * *
Growth & Income 1,250,461 1,816,200
S&P 500 Index 251,081 707,922
Blue Chip Stock 407,113 1,131,224
Blue Chip Stock II * * *
International Stock 571,117 782,792
Mid Cap Stock(1) * 49,482
Small Cap Value(1) * 61,548
Global Growth 416,410 2,487,275
Global Equity * * *
Large Cap Growth(1) * 63,457
Investors Growth * * *
Growth Stock 4,268,503 4,378,864
Aggressive Growth 735,430 871,318
</TABLE>

- ----------------------
* Not in existence during this period.
(1) Inception date: May 1, 1998.

Advisers, at its own expense, furnishes suitable office space,
facilities, equipment, administrative services, and clerical and other personnel
as may be required for the management of the affairs and business of Fortis
Series, and acts as Fortis Series' registrar, transfer agent, and dividend
disbursing agent. Fortis Series pays all its expenses which are not expressly
assumed by Advisers or Investors. These expenses include, among others, the
investment advisory and management fee, the fees and expenses of directors and
officers of Fortis Series who are not "affiliated persons" of Advisers, interest
expenses, taxes, brokerage fees and commissions, fees and expenses of
registering and qualifying Fortis Series and its shares for distribution under
Federal securities laws, expenses of preparing prospectuses and of printing and
distributing prospectuses annually to existing contract owners, custodian
charges, auditing and legal expenses, insurance expenses, association membership
dues, and the expense of reports to shareholders and contract owners,
shareholders' meetings, and proxy solicitations. Fortis Series is also liable
for such nonrecurring expenses as may arise, including litigation to which it
may be a party. Fortis Series may have an obligation to indemnify its directors
and officers with respect to such litigation.

SUB-ADVISORY AGREEMENTS

<PAGE> 95

Cap Growth Series and Investors Growth Series have retained sub-advisers under
investment sub-advisory agreements and for Small Cap Value Series the
sub-adviser has entered into a sub-management agreement with a manager (such
agreements are collectively referred to as the "Sub-Advisory Agreements"). Each
Sub-Advisory Agreement will terminate automatically upon the termination of the
Investment Advisory and Management Agreement between Fortis Series and Advisers,
and in the event of its assignment. In addition, the Sub-Advisory Agreements are
terminable at any time, without penalty, by the Board of Directors, by Advisers
or by a vote of the majority of the applicable Fund's outstanding voting
securities on 60 days' written notice to such Fund's sub-adviser and by a
sub-adviser on 60 days' written notice to Advisers. Unless sooner terminated,
the Sub-Advisory Agreements shall continue in effect from year to year if
approved at least annually by the Board of Directors of Fortis Series or by a
vote of a majority of the outstanding voting securities of the applicable Fund,
provided that in either event such continuance is also approved by the vote of a
majority of the directors who are not interested persons of any party to the
Sub-Advisory Agreements, cast in person at a meeting called for the purpose of
voting on such approval.

For their services, the sub-advisers receive a fee from Advisers (such
amounts are payable out of the advisory fees received by Advisers for the same
period and are not in addition to such amounts). From its advisory fee, Advisers
pays fees to each of the sub-advisers calculated as described below:

Fund Sub-adviser Annual Average Net Assets Sub-Advisory Fee
- ---- ----------- ------------------------- ----------------
<S> <C> <C> <C>
Multisector Bond Series AIM For the first $100 million .450%
For assets over $ .400%
Global Asset Allocation Morgan Stanley For the first $100 million .500%
Series For assets over $100 million .400%
American Leaders Series Federated For the first $35 million .500%
$35 million - $100 million .350%
For assets over $100 million .250%
Capital Opportunities MFS For the first $200 million .500%
Series $200 - $500 million .450%
For assets over $500 million .400%
S&P 500 Index Series Dreyfus All levels of assets .170%
Blue Chip Stock Series T. Rowe Price For the first $100 million .500%
$100 million - $200 million .450%
Blue Chip Stock Series II Lazard AIM For the first $100 million .550%
For assets over $100 million .500%
International Stock Series Lazard For the first $100 million .450%
For assets over $100 million .375%
Mid Cap Stock Series Dreyfus For the first $100 million .500%
For the next $150 million .450%
For assets over $250 million .400%
Small Cap Value Series Berger Associates For the first $50 million .500%
For assets over $50 million .450%
Global Equity Series MFS For the first $200 million .600%
$200 - $500 million .550%
For assets over $500 million .500%
Large Cap Growth Series Alliance For the first $100 million .500%
For the next $100 million .450%
For assets over $200 million .400%
Investors Growth Series MFS For the first $200 million .500%
$200 - $500 million .450%
For assets over $500 million .400%
</TABLE>

<PAGE> 96

For the Small Cap Value Series, Berger LLC pays Perkins, Wolf,
McDonnell & Company (the "Manager") an amount equal to .25 of 1% of the Fund's
first $50 million of average daily net assets and .225 of 1% of the Fund's net
assets in excess of $50 million.

During the fiscal years ended December 31, 1997, 1998 and 1999,
Advisers paid advisory fees to the sub-advisers of the following Funds in the
amounts set forth below. American Leaders Series, Capital Opportunities Series,
Blue Chip Stock Series II, Global Equity Series and Investors Growth Series were
not in existence during such periods.

Fund 1997 1998 1999
- ---- ---- ---- ----
<S> <C> <C> <C>
Multisector Bond $69,898 $76,489 $
Global Asset Allocation 225,590 303,415
S&P 500 Index 105,647 300,867
Blue Chip Stock 209,455 551,946
International Stock 302,356 414,873
Mid Cap Stock(1) * 26,668
Small Cap Value(1) * 34,193
Large Cap Growth(1) * 35,254
</TABLE>

- ----------------------
* Not in existence during this period.
(1) Inception date: May 1, 1996.

EXPENSES

Expenses that relate exclusively to a particular Fund, such as
custodian charges and registration fees for shares, are charged to that Fund.
Other expenses of Fortis Series are allocated between the Funds in an equitable
manner as determined by officers of Fortis Series under the supervision of the
Board of Directors, usually on the basis of net assets or number of contract
holders.

Advisers bears the costs of acting as Fortis Series' transfer agent,
registrar, and dividend agent. Investors has agreed to pay all expenses of
distributing Fortis Series' shares, including, but not limited to, costs of
printing and distributing prospectuses to new contract owners. Pursuant to a
separate Distribution Agreement between Fortis Benefits and Investors, Fortis
Benefits reimburses Investors for these costs and expenses with respect to
variable life insurance policies issued by Fortis Benefits or pays them on
Investors' behalf.

Advisers reserves the right, but shall not be obligated, to institute
voluntary expense reimbursement programs which, if instituted, shall be in such
amounts and based on such terms and conditions as Advisers, in its sole and
absolute discretion, determines. Furthermore, Advisers reserves the absolute
right to discontinue any of such reimbursement programs at any time without
notice to Fortis Series.

BROKERAGE ALLOCATION AND OTHER PRACTICES

Advisers or, where applicable, a Fund's sub-adviser, selects and (where
applicable) negotiates commissions with broker-dealers who execute trades for
the Funds. In selecting a broker-dealer to execute an equity trade, Advisers or
the sub-adviser primarily considers whether the broker-dealer can provide best
execution on the trade including best price for a security. Other factors that
Advisers or the sub-adviser considers when selecting a broker-dealer for an
equity trade include:

- - competitive commissions commensurate with the value of research
products and services provided to Advisers or the sub-adviser;

<PAGE> 97

- - consistently good service quality;
- - adequate capital position;
- - broad market coverage;
- - continuous flow of information concerning bids and offers;
- - the ability to complete, clear and settle trades in a timely and
efficient manner;
- - capital usage;
- - specialized expertise;
- - access to new issues; and
- - the ability to handle large blocks of stock discreetly.

For a Fund exclusively composed of debt, rather than equity securities,
portfolio transactions are effected with dealers without the payment of
brokerage commissions, but at net prices which usually include a spread or
markup. The volume of business done with a broker-dealer for fixed income trades
is based to a large extent on the availability and competitive price of the
fixed income securities that fit the strategy of the fixed income portfolio.
Best execution, the quality of research, making of secondary markets and other
services are also determining factors for the allocation of business when buying
and selling fixed income securities. If a broker-dealer charging a higher
commission or offering a larger spread is more reliable or provides better
execution than a broker-dealer charging a lower commission or offering a smaller
spread, then Advisers or the sub-adviser may select the broker-dealer charging a
higher commission or offering a larger spread for a particular equity or fixed
income trade.

Advisers or the sub-adviser may direct orders to broker-dealers who
furnish research products and services to Advisers or the sub-adviser as long as
the broker-dealers meet the selection criteria outlined above. The research
products and services supplement Advisers' or the sub-adviser's own research and
enable Advisers or the sub-adviser to obtain the views and information of others
prior to making investment decisions for the Funds. The following table sets
forth the amount and percentage of commissions paid by certain Funds during the
fiscal year ended December 31, 1999 to broker-dealers who provided research
products and services to Advisers or the Fund's sub-adviser. Funds not listed
did not pay any such commissions. [TO BE PROVIDED.]

Amount of Commissions Paid
to Broker-Dealers Providing
Fund Research
---------------- ---------------------------

Advisers and the sub-advisers believe that most research services
obtained by them generally benefit several or all of the investment companies,
insurance company accounts and private accounts which they manage, as opposed to
solely benefitting one specific managed fund or account. Such research services
include advice, both directly and in writing, as to the value of the securities;
the advisability of investing in, purchasing, or selling securities; the
availability of securities, or purchasers or sellers of securities; and analysis
and reports concerning issues, industries, securities, economic factors and
trends, portfolio strategy, and the performance of accounts. Examples of some of
the research products and services that were furnished to Advisers in 1999
include:

<PAGE> 98

- - hard copy securities research services; securities research software
- - database services; electronic securities trading networks; and
- - statistical services useful to mutual fund directors and account
- - representatives in evaluating the relative performance of mutual fund
- - portfolios.

If a broker-dealer furnishes Advisers or a sub-adviser with
non-research products and services, Advisers or the sub-adviser will pay the
broker-dealer for such products and services. No client brokerage will be used
to pay for non-research products and services.

Advisers or the respective sub-adviser will authorize a Fund to pay an
amount of commission for effecting a securities transaction in excess of the
amount of commission another broker-dealer would have charged only if Advisers
or such sub-adviser determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker-dealer, viewed in terms of either that particular
transaction or Adviser's or the sub-adviser's overall responsibilities with
respect to the accounts to which Advisers or the sub-adviser exercises
investment discretion. In 1999, the Funds generally paid higher commissions than
those obtainable from other broker-dealers in return for research products and
services. Morgan Stanley has agreements in place with several broker-dealers
that relate to equity trades directed by Morgan Stanley. Berger LLC has informal
agreements in place with several broker-dealers that relate to equity trades
directed by Berger LLC. Under these agreements, the brokers pay for services
which assist the investment manager (Morgan Stanley and Berger LLC) in making
investment decisions. The brokers are obligated to achieve best execution and
the commission rates charged by the brokers are comparable to those charged by
brokers with which there is no such agreement. Advisers and the sub-advisers
have not entered and will not enter into any agreement with a broker-dealer that
would prevent Advisers or the sub-advisers from obtaining best execution on a
trade.

The Funds paid brokerage commissions during the periods and in the
amounts listed below:

Fiscal year Fiscal year Fiscal year
Fund ended 12/31/97 ended 12/31/98 ended 12/31/99
- ---- -------------- -------------- --------------
<S> <C> <C> <C>
Global Asset Allocation $ 47,973 $ 79,680 $
Asset Allocation 311,739 688,253
Value 119,158 490,162
Growth & Income 114,941 222,420
S&P 500 Index 60,463 61,675
Blue Chip Stock 46,609 99,364
International Stock 145,900 192,277
Mid Cap Stock * 17,763 (1)
Small Cap Value * 47,894 (1)
Global Growth 485,715 475,037
Large Cap Growth Stock * 16,464 (1)
Growth Stock 311,310 1,178,542
Aggressive Growth 47,456 130,650
</TABLE>

- ------------------------------
* Not in existence during this period.
(1) Inception date: May 1, 1998.

Money Market Series, U.S. Government Securities Series, Diversified
Income Series, Multisector Bond Series and High Yield Series did not pay any
brokerage commissions for the fiscal years ended December 31, 1997, 1998 or
1999.

<PAGE> 99

The Funds will not effect any brokerage transactions in their portfolio
securities with any broker-dealer affiliated directly or indirectly with
Advisers or any sub-adviser, unless such transactions, including the frequency
thereof, the receipt of commissions payable in connection therewith, and the
selection of the affiliated broker-dealer effecting such transactions are not
unfair or unreasonable to the shareholders of the Funds. No commissions were
paid by any Fund to any affiliate of Advisers or a sub-adviser during the fiscal
years ended December 31, 1997, 1998 and 1999.

From time to time, the Funds may acquire the securities of their
regular brokers or dealers or parent companies of such brokers or dealers. The
Funds acquired the following securities of their regular brokers or dealers or
parent companies of such brokers or dealers during the fiscal year ended
December 31, 1999: [TO BE PROVIDED]

Value of Value of
Securities Securities
Owned at Owned at
Name of Issuer Year End Name of Issuer Year End
- -------------- -------- -------------- --------
<S> <C> <C> <C>
MONEY MARKET SERIES GROWTH & INCOME SERIES
American Express Credit Corp. $ U.S. Bank (N.A.) $
Chevron Oil USA, Inc.
CIT Group Holdings, Inc. S&P 500 INDEX SERIES
Commercial Credit Corp. Bear Stearns & Co.
John Deere Capital Corp. J.P. Morgan & Co.
Merrill Lynch & Co., Inc. Lehman Brothers, Inc.
Morgan Stanley Dean Witter Corp. Merrill Lynch & Co., Inc.
Texaco, Inc. Morgan Stanley Dean Witter Corp.
U.S. Bank (N.A.) U.S. Bank (N.A.)

U.S. GOVERNMENT SECURITIES SERIES BLUE CHIP STOCK SERIES
U.S. Bank (N.A.) Chase Manhattan Corp.
Morgan Stanley Dean Witter Corp.
DIVERSIFIED INCOME SERIES U.S. Bank (N.A.)
Bear Stearns & Co.
Donaldson, Lufkin & Jenrette INTERNATIONAL STOCK SERIES
Securities
J.P. Morgan & Co. U.S. Bank (N.A.)
Lehman Brothers, Inc.
Merrill Lynch & Co., Inc. MID CAP STOCK SERIES
Salomon Smith Barney U.S. Bank (N.A.)
U.S. Bank (N.A.)
SMALL CAP VALUE SERIES
MULTISECTOR BOND SERIES
U.S. Bank (N.A.) Morgan Stanley Dean Witter Corp.

U.S. Bank (N.A.)
</TABLE>

<PAGE> 100

<TABLE>

<S> <C>
HIGH YIELD SERIES GLOBAL GROWTH SERIES
U.S. Bank (N.A.) U.S. Bank (N.A.)

GLOBAL ASSET ALLOCATION SERIES LARGE CAP GROWTH SERIES
ABN Bank Morgan Stanley Dean Witter Corp.
Merrill Lynch & Co., Inc. U.S. Bank (N.A.)
U.S. Bank (N.A.)
GROWTH STOCK SERIES
ASSET ALLOCATION SERIES U.S. Bank (N.A.)
Bear Stearns & Co.
Donaldson, Lufkin & Jenrette AGGRESSIVE GROWTH SERIES
Securities
J.P. Morgan & Co. U.S. Bank (N.A.)
Lehman Brothers, Inc.
Merrill Lynch & Co., Inc.
Salomon Smith Barney
U.S. Bank (N.A.)

VALUE SERIES
J.P. Morgan & Co.
Merrill Lynch & Co., Inc.
Morgan Stanley Dean Witter Corp.
U.S. Bank (N.A.)
</TABLE>

Although investment decisions for each Fund are made independently from
those of the other Funds or those of other funds or private accounts managed by
Advisers, sometimes the same security is suitable for more than one fund or
private account. If and when two or more funds or private accounts
simultaneously purchase or sell the same security, the transactions will be
allocated as to price and amount in accordance with arrangements equitable to
each fund or private account. The simultaneous purchase or sale of the same
securities by a Fund and another fund or account may have a detrimental effect
on the Fund, as this may affect the price paid or received by the Fund or the
size of the position obtainable by the Fund.

Advisers has developed written trade allocation procedures for its
management of the securities trading activities of its clients. Advisers manages
multiple portfolios, both public (mutual funds) and private. The purpose of the
trade allocation procedures is to treat the portfolios fairly and reasonably in
situations where the amount of a security that is available is insufficient to
satisfy the volume or price requirements of each portfolio that is interested in
purchasing that security. Generally, when the amount of securities available in
a public offering or the secondary market is insufficient to satisfy the
requirements for the interested portfolios, the procedures require a pro rata
allocation based upon the amounts initially requested by each portfolio manager.
In allocating trades made on combined basis, each participating portfolio will
receive the same average price for the securities purchased or sold.

Because a pro rata allocation may not always adequately accommodate all
facts and circumstances, the procedures provide for exceptions to allocate
trades on a basis other than pro rata. Adjustments may be made, for example, as
a result of: (i) the cash position of the portfolios involved in

51
<PAGE> 101

the transaction; or (ii) the relative importance of the security to a portfolio
in seeking to achieve its investment objective.

CAPITAL STOCK

Fortis Series' shares have a par value of $.01 per share and equal
rights to share in dividends and assets. The shares possess no preemptive or
conversion rights.

Fortis Series currently has twenty-three Funds, each constituting a
separate series of shares. Under Fortis Series' Articles of Incorporation, the
Board of Directors is authorized to create new series in addition to those
already existing without the approval of the shareholders of Fortis Series. Each
share of stock will have a pro-rata interest in the assets of the Fund to which
the stock of that series relates and will have no interest in the assets of any
other Fund. In the event of liquidation, each share of a Fund would have the
same rights to dividends and assets as every other share of that Fund.

Each share of a Fund has one vote (with proportionate voting for
fractional shares) irrespective of the relative net asset value of the Funds'
shares. On some issues, such as the election of directors, all shares of Fortis
Series vote together as one series. Cumulative voting is not authorized. This
means that the holders of more than 50% of the shares voting for the election of
directors can elect 100% of the directors if they choose to do so, and, in such
event, the holders of the remaining shares will be unable to elect any
directors.

On an issue affecting only a particular Fund, the shares of the
affected Fund vote as a separate series. An example of such an issue would be a
fundamental investment restriction pertaining to only one Fund.

Fortis Series is not required under Minnesota law to hold annual or
periodically scheduled regular meetings of shareholders. Minnesota corporation
law provides for the Board of Directors to convene shareholder meetings when it
deems appropriate. In addition, if a regular meeting of shareholders has not
been held during the immediately preceding fifteen months, a shareholder or
shareholders holding three percent or more of the voting shares of Fortis Series
may demand a regular meeting of shareholders by written notice of demand given
to the chief executive officer or the chief financial officer of Fortis Series.
Within ninety days after receipt of the demand, a regular meeting of
shareholders must be held at Fortis Series' expense. Additionally, the 1940 Act
requires shareholder votes for all amendments to fundamental investment policies
and restrictions and for all investment advisory contracts and amendments
thereto.

PRICING OF SHARES

On December 31, 1999, each Fund's net asset value per share was
calculated as shown below. Net asset values are not shown for American Leaders
Series, Capital Opportunities Series, Blue Chip Stock Series II, Global Equity
Series and Investors Growth Series, which had not yet commenced operations as of
such date.

MONEY MARKET SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------
Shares Outstanding ( )

U. S. GOVERNMENT SECURITIES SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------
Shares Outstanding ( )

DIVERSIFIED INCOME SERIES

52
<PAGE> 102
<TABLE>
<S> <C>
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

MULTISECTOR BOND SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

HIGH YIELD SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

GLOBAL ASSET ALLOCATION SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

ASSET ALLOCATION SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

VALUE SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

GROWTH & INCOME SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

S&P 500 INDEX SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

BLUE CHIP STOCK SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

INTERNATIONAL STOCK SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

MID CAP STOCK SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

SMALL CAP VALUE SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

GLOBAL GROWTH SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

LARGE CAP GROWTH
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
</TABLE>

53
<PAGE> 103

<TABLE>
<S> <C>
Shares Outstanding ( )

GROWTH STOCK SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )

AGGRESSIVE GROWTH SERIES
Net Assets ($ ) = Net Asset Value per Share ($ )
-----------------------------------------
Shares Outstanding ( )
</TABLE>

The offering price for purchase orders received in the office of Fortis
Series after the beginning of each day the New York Stock Exchange (the
"Exchange") is open for trading is based on net asset value determined as of the
close of regular trading (currently 3:00 P.M. Central Time) on the Exchange that
day; the price in effect for orders received after such close is based on the
net asset value as of such close of the Exchange on the next day the Exchange is
open for trading. Generally, the net asset value of each Fund's shares is
determined on each day on which the Exchange is open for business. The Exchange
is not open for business on the following holidays (nor on the nearest Monday or
Friday if the holiday falls on a weekend): New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day, and Christmas Day. Additionally, net asset value need not
be determined for a Fund (i) on days on which changes in the value of the Fund's
portfolio securities will not materially affect the current net asset value of
the Fund's shares; or (ii) on days during which no shares of the Fund are
tendered for redemption and no orders to purchase or sell shares of the Fund are
received by Fortis Series.

REDEMPTION OF SHARES

Redemption of shares, or payment, may be suspended at times (a) when
the Exchange is closed for other than customary weekend or holiday closings, (b)
when trading on the Exchange is restricted, (c) when an emergency exists, as a
result of which disposal by Fortis Series of securities owned by it is not
reasonably practicable, or it is not reasonably practicable for Fortis Series
fairly to determine the value of its net assets, or during any other period when
the Securities and Exchange Commission, by order, so permits; provided that
applicable rules and regulations of the Securities and Exchange Commission shall
govern as to whether the conditions prescribed in (b) or (c) exist.

TAXATION

The Funds have qualified and intend to continue to qualify as regulated
investment companies under the Internal Revenue Code of 1986, as amended (the
"Code"). As long as each Fund so qualifies, it is not taxed on the income it
distributes to shareholders. Generally, in order to qualify as a regulated
investment company, a Fund must derive at least 90% of its gross income from
dividends, interest, and gains from the sale or other disposition of stock or
securities or other income derived with respect to its investing in such stock
or securities. Being qualified as a regulated investment company does not mean
that the Internal Revenue Service supervises Fortis Series or approves its
policies.

Under the Code, each Fund will generally be treated as a separate
entity for federal tax purposes. Therefore, each Fund will be treated separately
in determining whether it qualifies as a regulated investment company and in
determining the net ordinary income (or loss), net realized capital gains (or
losses) and distributions necessary to relieve the Fund of any federal income
tax liability.

Pursuant to the Code, each Fund will be subject to a nondeductible
excise tax for each calendar year equal to 4% of the excess, if any, of the
amount required to be distributed over the amount distributed. However, the
excise tax does not apply to any income on which a Fund pays income tax. In

54
<PAGE> 104

order to avoid the imposition of this excise tax, each Fund generally must
declare dividends by the end of a calendar year representing 98% of the Fund's
ordinary income for the calendar year and 98% of its capital gain net income
(both long-term and short-term capital gains) for the twelve-month period ending
October 31 of the calendar year.

The Code imposes certain diversification requirements on the
investments of segregated asset accounts underlying variable annuity and life
insurance contracts. Treasury Regulations interpret those requirements. Under
the Code and the Regulations, if a variable contract is based in part or in
whole on a segregated asset account that fails to meet the diversification
standards, the variable contract will not be treated as an annuity or life
insurance contract for federal income tax purposes. As a consequence, the income
on the contract for any taxable year, whether or not distributed, will be
treated as ordinary income received by the contract owner during such year.

As a general rule, each Fund may invest not more than 55% of the value
of its total assets in the securities of a single issuer, not more than 70% of
the value of its total assets in the securities of any two issuers, not more
than 80% of the value of its total assets in the securities of any three
issuers, and not more than 90% of the value of its total assets in the
securities of any four issuers. Under the Code and the Regulations, for purposes
of the diversification tests, the securities of each agency or instrumentality
of the U.S. government are considered the securities of a separate issuer. Each
Fund intends to satisfy either the diversification test described above or an
alternative diversification test provided by the Code, so that the variable
contracts invested in each Fund will be treated as variable contracts under the
Code and the income earned with respect to the contracts will not be currently
taxable to the contract owners.

If a Fund invests in zero coupon obligations upon their issuance, such
obligations will have original issue discount in the hands of such Fund.
Generally, original issue discount equals the difference between the "stated
redemption price at maturity" of the obligation and its "issue price" as those
terms are defined in the Code. If a Fund acquires an already issued zero coupon
bond from another holder, the bond will have original issue discount in the
Fund's hands, equal to the difference between the "adjusted issue price" of the
bond at the time the Fund acquires it (that is, the original issue price of the
bond plus the amount of original issue discount accrued to date) and its stated
redemption price at maturity. In each case, a Fund is required to accrue as
ordinary interest income a portion of such original issue discount even though
such Fund receives no cash currently as interest payments on the obligation.
Similarly, in the case of PIKs, the Funds are required to recognize interest
income in the amount of the fair market value of the securities received as
interest payments on the PIKs, even though they receive no cash.

Because each Fund is required to distribute substantially all of its
net investment income (including accrued original issue discount and interest
income attributable to PIKs) in order to be taxed as a regulated investment
company, a Fund having such income may be required to distribute an amount
greater than the total cash income the Fund actually receives. Accordingly, in
order to make the required distribution, the Fund may be required to borrow or
liquidate securities.

For Federal income tax purposes the Funds had the following capital
loss carryovers at December 31, 1999, which, if not offset by subsequent capital
gains, will expire in 2000 through 2007. It is unlikely the Board of Directors
will authorize a distribution of any net realized gains until the available
capital loss carryovers have been offset or expired.

Money Market Series $
U.S. Government Securities Series
Diversified Income Series
High Yield Series
International Stock Series
Mid Cap Stock Series
Large Cap Growth Series

55
<PAGE> 105

UNDERWRITER

Investors has entered into an Underwriting Agreement for the sale and
distribution of the Funds' shares. This Underwriting Agreement may be terminated
by Fortis Series or Investors at any time by the giving of 60 days' written
notice, and terminates automatically in the event of its assignment. Unless
sooner terminated, the Underwriting Agreement shall continue in effect for more
than two years after its execution only so long as such continuance is also
approved by the vote of a majority of the directors who are not parties to such
Underwriting Agreement, or interested persons of such parties, cast in person at
a meeting called for the purpose of voting on such approval.

The Underwriting Agreement requires Investors to pay all promotional
expenses in connection with the distribution of the Fortis Series' shares,
including printing and distributing prospectuses and shareholder reports to new
policy owners and the costs of sales literature. Pursuant to a separate
distribution agreement between Fortis Benefits and Investors, Fortis Benefits
reimburses Investors for these expenses or pays them on Investors' behalf, to
the extent they involve shares issued to fund variable life insurance policies
issued by Fortis Benefits.

In the Underwriting Agreement, Investors undertakes to indemnify Fortis
Series against all costs of litigation and other legal proceedings, and against
any liability incurred by or imposed upon Fortis Series in any way arising out
of or in connection with the sale or distribution of the Fortis Series' shares,
except to the extent that such liability is the result of information which was
obtainable by Investors only from persons affiliated with Fortis Series but not
with Investors.

PERFORMANCE INFORMATION

The Funds may refer to or advertise average annual total returns and
cumulative returns, and may compare such figures to recognized indices. Certain
Funds may provide yield calculations. Any advertisement of a Fund's performance
will be accompanied by performance of the Separate Account being advertised. All
such yield and total return quotations are based on historical earnings and are
not intended to indicate future performance. The return on and principal value
of an investment in any Fund will fluctuate, so that shares when redeemed may be
worth more or less than their original cost.

Cumulative total return is computed by finding the cumulative
compounded rate of return over the period indicated in the advertisement that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:

CTR = ( ERV - P ) 100
------
P

Where: CTR = Cumulative total return
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of
such period; and
P = initial payment of $1,000

This calculation assumes all dividends and capital gain distributions
are reinvested at net asset value on the appropriate reinvestment dates as
described in the Prospectus and includes all recurring fees, such as investment
advisory and management fees, charged to all shareholder accounts.

56
<PAGE> 106

The following table sets forth the cumulative total return of each Fund
(other than American Leaders Series, Capital Opportunities Series, Blue Chip
Stock Series II, Global Equity Series and Investors Growth Series, which had not
commenced operations prior to the date of this Statement of Additional
Information) for the period from inception through December 31, 1999.

<TABLE>
<CAPTION>
Cumulative
Fund Total Return
<S> <C>
Money Market Series (1) %
U. S. Government Securities Series (1) %
Diversified Income Series (3) %
Multisector Bond Series(6) %
High Yield Series(5) %
Global Asset Allocation Series(6) %
Asset Allocation Series(2) %
Value Series (7) %
Growth & Income Series (5) %
S&P 500 Index Series (7) %
Blue Chip Stock Series (7) %
International Stock Series (6) %
Mid Cap Stock Series (8) %
Small Cap Value Series (8) %
Global Growth Series (4) %
Large Cap Growth Series (8) %
Growth Stock Series(1) %
Aggressive Growth Series (5) %
</TABLE>

----------------------
(1) Inception date: March 24, 1987.
(2) Inception date: April 1, 1987.
(3) Inception date: May 2, 1988.
(4) Inception date: May 1, 1992.
(5) Inception date: May 2, 1994.
(6) Inception date: January 3, 1995.
(7) Inception date: May 1, 1996.
(8) Inception date: May 1, 1998.

Average annual total return is the average annual compounded rate of
return on a hypothetical $1,000 investment made at the beginning of the
advertised period. Average annual total return figures are computed according to
the following formula:
n
P(1+T) = ERV

Where: P = a hypothetical initial payment of $1,000
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of
such period.

57
<PAGE> 107

This calculation assumes all dividends and capital gains distributions
are reinvested at net asset value on the appropriate reinvestment dates, and
includes all recurring fees, such as investment advisory and management fees,
charged to all shareholder accounts.

The following tables set forth the average annual total returns for
each Fund (other than American Leaders Series, Capital Opportunities Series,
Blue Chip Stock Series II, Global Equity Series and Investors Growth Series,
which had not commenced operations prior to the date of this Statement of
Additional Information) for one year, five years and since inception (10 years
with respect to Money Market Series, U.S. Government Securities Series, Asset
Allocation Series and Growth Stock Series) for the period ending December 31,
1999.

<TABLE>
<CAPTION>
Average Annual Total Returns
----------------------------
10 Years/Since
--------------
Fund 1 Year 5 Years Inception
---- ------ ------- ---------
<S> <C> <C> <C>
Money Market Series % % %
U. S. Government Securities Series % % %
Diversified Income Series % % %
High Yield Series (2) % * %
Global Asset Allocation Series (3) % * %
Asset Allocation Series % % %
Value Series (4) % * %
Growth & Income Series (2) % * %
S&P 500 Index Series (4) % * %
Blue Chip Stock Series (4) % * %
International Stock Series (3) % * %
Mid Cap Stock Series (5) * * %
Small Cap Value Series (5) * * %
Global Growth Series (1) % % %
Large Cap Growth Series (5) * * %
Growth Stock Series % % %
Aggressive Growth Series (2) % * %
</TABLE>

---------------------------
* Not applicable.
(1) Inception date: May 1, 1992.
(2) Inception date: May 2, 1994.
(3) Inception date: January 3, 1995.
(4) Inception date: May 1, 1996.
(5) Inception date: May 1, 1998.

U.S. Government Securities Series, Diversified Income Series,
Multisector Bond Series, High Yield Series, Global Asset Allocation Series and
Asset Allocation Series may quote 30-day yield figures. A Fund's 30-day yield
refers to the income generated by an investment over a 30-day (or one month)
period. It is calculated by dividing the net investment income per share (as
defined under Securities and Exchange Commission rules) earned during the
computation period by the maximum offering price per share on the last day of
the period, according to the following formula. The result is then annualized
using a formula that provides for semiannual compounding of income.

58
<PAGE> 108
6
Yield = 2 [(a-b + 1) - 1]
--
cd

Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of reimbursements);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of
the period.

The Funds' yields for the 30-day period ended December 31, 1999, were:

<TABLE>
<CAPTION>
Fund Yield
----------------------------------------- -----
<S> <C>
U.S. Government Securities Series %
Diversified Income Series %
Multisector Bond Series *
High Yield Series %
Global Asset Allocation Series %
Asset Allocation Series %
</TABLE>

Money Market Series may quote its current and effective yields for a
seven-day period. Current yield (calculated over a seven-day period) is a
percentage computed by determining the net change, exclusive of capital changes,
in the value of a hypothetical preexisting account having a balance of one share
at the beginning of the period, subtracting a hypothetical charge reflecting
deductions from shareholder accounts, and dividing the difference by the value
of the account at the beginning of the base period to obtain the base period
return, and then multiplying the base period return by (365/7) with the
resulting figure carried to at least the nearest hundredth of one percent.

Effective yield (calculated over a seven-day period) is computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical preexisting account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:

Effective Yield = [(Base Period Return +1) power of 365/7] -1

Money Market Series' yield and effective yield for the seven days ended
December 31, 1999, were ________% and _________%, respectively.

The Funds also may quote annual yield figures, calculated similarly to
the above methods.

Current yield information is useful in reviewing performance, but
because current yield will fluctuate, such information may not provide a basis
for comparison with bank deposits or other investments which pay a fixed yield
for a stated period of time and may be insured and the current yield is not
necessarily representative of future results.

Comparative performance information also may be used from time to time
in advertising. Advertisements may compare the Funds' performance to that of
various unmanaged market indices, or may include performance data compiled by
outside organizations such as Lipper Analytical Services, Inc.,

59
<PAGE> 109

CDA/Wiesenberger, other entities or organizations or publications which track
the performance of investment companies.

OTHER SERVICE PROVIDERS

U.S. Bank National Association, 601 Second Avenue South, Minneapolis,
MN 55480 acts as custodian of each Fund's assets and portfolio securities.
Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, MN 55402, is the
independent General Counsel for the Funds.

LIMITATION OF DIRECTOR LIABILITY

Under Minnesota law, each director of Fortis Series owes certain
fiduciary duties to Fortis Series and to its shareholders. Minnesota law
provides that a director "shall discharge the duties of the position of director
in good faith, in a manner the director reasonably believes to be in the best
interest of the corporation, and with the care an ordinarily prudent person in a
like position would exercise under similar circumstances." Fiduciary duties of
a director of a Minnesota corporation include, therefore, both a duty of
"loyalty" (to act in good faith and act in a manner reasonably believed to be in
the best interests of the corporation) and a duty of "care" (to act with the
care an ordinarily prudent person in a like position would exercise under
similar circumstances). Minnesota law authorizes corporations to eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of the fiduciary duty of "care."
Minnesota law does not, however, permit a corporation to eliminate or limit the
liability of a director (i) for any breach of the director's duty of "loyalty"
to the corporation or its shareholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) for authorizing a dividend, stock repurchase or redemption or other
distribution in violation of Minnesota law or for violation of certain
provisions of Minnesota securities laws, or (iv) for any transaction from which
the director derived an improper personal benefit. The Articles of Incorporation
of Fortis Series limit the liability of directors to the fullest extent
permitted by Minnesota statutes, except to the extent that such a liability
cannot be limited as provided in the 1940 Act (which act prohibits any
provisions which purport to limit the liability of directors arising from such
directors' willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of their role as directors).

Minnesota law does not eliminate the duty of "care" imposed upon a
director. It only authorizes a corporation to eliminate monetary liability for
violations of that duty. Minnesota law, further, does not permit elimination or
limitation of liability of "officers" to the corporation for breach of their
duties as officers (including the liability of directors who serve as officers
for breach of their duties as officers). Minnesota law does not permit
elimination or limitation of the availability of equitable relief, such as
injunctive or recessionary relief. Further, Minnesota law does not permit
elimination or limitation of a director's liability under the Securities Act of
1933 or the Securities Exchange Act of 1934, and it is uncertain whether and to
what extent the elimination of monetary liability would extend to violations of
duties imposed on directors by the 1940 Act and the rules and regulations
adopted under such act.

ADDITIONAL INFORMATION

The Funds have filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement under the Securities Act of
1933, as amended, with respect to the common stock offered hereby. The
Prospectus and this Statement of Additional Information do not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with Rules and Regulations of the Commission. The
Registration Statement may be inspected at the principal office of the
Commission at 450 Fifth Street, N.W., Washington, D.C., and copies thereof may
be obtained from the Commission at prescribed rates.

60
<PAGE> 110

FINANCIAL STATEMENTS

The audited financial statements as of December 31, 1999, as set forth
in Fortis Series' 1999 Annual Report to Shareholders, are incorporated herein by
reference. The audited financial statements are provided in reliance on the
report of KPMG LLP, 4200 Norwest Center, Minneapolis, Minnesota 55402,
independent auditors of Fortis Series, and given on the authority of such firm
as experts in accounting and auditing.

61
<PAGE> 111

Appendix A

DESCRIPTION OF FUTURES, OPTIONS AND FORWARD CONTRACTS

OPTIONS ON SECURITIES

An option on a security provides the purchaser, or "holder," with the
right, but not the obligation, to purchase, in the case of a "call" option, or
sell, in the case of a "put" option, the security or securities underlying the
option, for a fixed exercise price up to a stated expiration date or, in the
case of certain options, on such date. The holder pays a nonrefundable purchase
price for the option, known as the "premium." The maximum amount of risk the
purchaser of the option assumes is equal to the premium plus related transaction
costs, although this entire amount may be lost. The risk of the seller, or
"writer," however, is potentially unlimited, unless the option is "covered." A
call option written by a Fund is "covered" if the Fund owns the underlying
security covered by the call or has an absolute and immediate right to acquire
that security without additional cash consideration (or for additional cash
consideration held in a segregated account by its custodian) upon conversion or
exchange of other securities held in its portfolio. A call option is also
covered if the Fund holds a call on the same security and in the same principal
amount as the call written where the exercise price of the call held (a) is
equal to or less than the exercise price of the call written or (b) is greater
than the exercise price of the call written if the difference is maintained by
the Fund in cash and high grade government securities in a segregated account
with its custodian. A put option written by a Fund is "covered" if the Fund
maintains cash and high grade government securities with a value equal to the
exercise price in a segregated account with its custodian, or else holds a put
on the same security and in the same principal amount as the put written where
the exercise price of the put held is equal to or greater than the exercise
price of the put written. If the writer's obligation is not so covered, it is
subject to the risk of the full change in value of the underlying security from
the time the option is written until exercise.

Upon exercise of the option, the holder is required to pay the purchase
price of the underlying security, in the case of a call option, or to deliver
the security in return for the purchase price in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.

Options on securities and options on indexes of securities, discussed
below, are traded on national securities exchanges, such as the Chicago Board
Options Exchange and the New York Stock Exchange, which are regulated by the
SEC. The Options Clearing Corporation guarantees the performance of each party
to an exchange-traded option, by in effect taking the opposite side of each such
option. A holder or writer may engage in transactions in exchange-traded options
on securities and options on indexes of securities only through a registered
broker-dealer which is a member of the exchange on which the option is traded.

In addition, options on securities and options on indexes of securities
may be traded on exchanges located outside the United States and
over-the-counter through financial institutions dealing in such options as well
as the underlying instruments. The particular risks of transactions on foreign
exchanges and over-the-counter transactions are set forth more fully in the
Statement of Additional Information.

OPTIONS ON STOCK INDEXES

In contrast to an option on a security, an option on a stock index
provides the holder with the right to make or receive a cash settlement upon
exercise of the option, rather than the right to purchase or

62
<PAGE> 112

sell a security. The amount of this settlement is equal to (a) the amount, if
any, by which the fixed exercise price of the option exceeds (in the case of a
call) or is below (in the case of a put) the closing value of the underlying
index on the date of exercise, multiplied by (b) a fixed "index multiplier." The
purchaser of the option receives this cash settlement amount if the closing
level of the stock index on the day of exercise is greater than, in the case of
a call, or less than, in the case of a put, the exercise price of the option.
The writer of the option is obligated, in return for the premium received, to
make delivery of this amount if the option is exercised. As in the case of
options on securities, the writer or holder may liquidate positions in stock
index options prior to exercise or expiration by entering into closing
transactions on the exchange on which such positions were established, subject
to the availability of a liquid secondary market.

The Funds will cover all options on stock indexes by owning securities
whose price changes, in the opinion of Advisers (or a sub-adviser, if
applicable), are expected to be similar to those of the index, or in such other
manner as may be in accordance with the rules of the exchange on which the
option is traded and applicable laws and regulations. Nevertheless, where a Fund
covers a call option on a stock index through ownership of securities, such
securities may not match the composition of the index. In that event, the Fund
will not be fully covered and could be subject to risk of loss in the event of
adverse changes in the value of the index. The Funds will secure put options on
stock indexes by segregating assets equal to the option's exercise price, or in
such other manner as may be in accordance with the rules of the exchange on
which the option is traded and applicable laws and regulations.

The index underlying a stock option index may be a "broad-based" index,
such as the Standard & Poor's 500 Index or the New York Stock Exchange Composite
Index, the changes in value of which ordinarily will reflect movements in the
stock market in general. In contrast, certain options may be based upon narrower
market indexes, such as the Standard & Poor's 100 Index, or on indexes of
securities of particular industry groups, such as those of oil and gas or
technology companies. A stock index assigns relative values to the stocks
included in the index and the index fluctuates with changes in the market values
of the stocks so included.

FUTURES CONTRACTS ON FIXED INCOME SECURITIES, STOCK INDEXES AND FOREIGN
CURRENCIES

A futures contract is a bilateral agreement providing for the purchase
and sale of a specified type and amount of a financial instrument or foreign
currency, or for the making and acceptance of a cash settlement, at a stated
time in the future for a fixed price. By its terms, a futures contract provides
for a specified settlement date on which, in the case of the majority of
interest rate and foreign currency futures contracts, the fixed income
securities or currency underlying the contract are delivered by the seller and
paid for by the purchaser, or on which, in the case of stock index futures
contracts and certain interest rate and foreign currency futures contracts, the
difference between the price at which the contract was entered into and the
contract's closing value is settled between the purchaser and the seller in
cash. Futures contracts differ from options in that they are bilateral
agreements, with both the purchaser and the seller equally obligated to complete
the transaction. Futures contracts call for settlement only on the expiration
date, and cannot be "exercised" at any other time during their term.

The purchase or sale of a futures contract differs from the purchase or
sale of a security or the purchase of an option in that no purchase price is
paid or received. Instead, an amount of cash or cash equivalents, which varies
but maybe as low as 5% or less of the value of the contract, must be deposited
with the broker as "initial margin." Subsequent payments to and from the
broker, referred to as "variation margin," are made on a daily basis as the
value of the index or instrument underlying the Futures contract fluctuates,
making positions in the futures contracts more or less valuable, a process known
as "marking to the market."

63
<PAGE> 113

U.S. futures contracts may be purchased or sold only on an exchange,
known as a "contract market," designated by the Commodities Futures Trading
Commission ("CFTC") for the trading of such contract, and only through a
registered futures commission merchant which is a member of such contract
market. A commission must be paid on each completed purchase and sale
transaction. The contract market clearing house guarantees the performance of
each party to a futures contract by in effect taking the opposite side of such
contract. At any time prior to the expiration of a futures contract, a trader
may elect to close out its position by taking an opposite position on the
contract market on which the position was entered into, subject to the
availability of a secondary market, which will operate to terminate the initial
position. At that time, a final determination of variation margin is made and
any loss experienced by the trader is required to be paid to the contract market
clearing house while any profit due to the trader must be delivered to it.
Futures contracts may also be traded on foreign exchanges.

Interest rate futures contracts currently are traded on a variety of
fixed income securities, including long-term U.S. Treasury Bonds, Treasury
Notes, Government National Mortgage Association modified pass-through
mortgage-backed securities, and U.S. Treasury Bills. In addition, interest rate
futures contracts include contracts on indexes of municipal securities. Foreign
currency futures contracts currently are traded on the British pound, Canadian
dollar, Japanese yen, Swiss franc, West German mark, and on Eurodollar deposits.

A stock index or Eurodollar futures contract provides for the making
and acceptance of a cash settlement in much the same manner as the settlement of
an option on a stock index. The types of indexes underlying stock index futures
contracts are essentially the same as those underlying stock index options, as
described above. The index underlying a municipal bond index futures contract is
a broad-based index of municipal securities designed to reflect movements in the
municipal securities market as a whole. The index assigns weighted values to the
securities included in the index and its composition is changed periodically.

OPTIONS ON FUTURES CONTRACTS

An option on a futures contract provides the holder with the right to
enter into a "long" position in the underlying futures contract, in the case of
a call option, or a "short" position in the underlying futures contract, in the
case of a put option, at a fixed exercise price up to a stated expiration date
or, in the case of certain options, on such date. Upon exercise of the option by
the holder, the contract market clearing house establishes a corresponding short
position for the writer of the option, in the case of a call option, or a
corresponding long position, in the case of a put option. In the event that an
option is exercised, the parties will be subject to all the risks associated
with the trading of futures contracts, such as payment of variation margin
deposits. In addition, the writer of an option on a futures contract, unlike the
holder, is subject to initial and variation margin requirements on the option
position. A position in an option on a futures contract may be terminated by the
purchaser or the seller prior to expiration by effecting a closing purchase or
sale transaction, subject to the availability of a liquid secondary market,
which is the purchase or sale of an option of the same series (i.e., the same
exercise price and expiration date) as the option previously purchased or sold.
The difference between the premiums paid and received represents the trader's
profit or loss on the transaction.

Options on futures contracts that are written or purchased by the Funds
on United States exchanges are traded on the same contract market as the
underlying futures contract and, like futures contracts, are subject to
regulation by the CFTC and the performance guarantee of the exchange clearing
house. In addition, options on futures contracts may be traded on foreign
exchanges.

An option, whether based on a futures contract, a stock index, or
security, becomes worthless to the holder when it expires. Upon exercise of an
option, the exchange or contract market clearing house assigns exercise notices
on a random basis to those of its members which have written options of the

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same series and with the same expiration date. A brokerage firm receiving such
notices then assigns them on a random basis to those of its customers which have
written options of the same series and expiration date. A writer therefore has
no control over whether an option will be exercised against it, nor over the
timing of such exercise.

FOREIGN CURRENCY FORWARD EXCHANGE CONTRACTS

A foreign currency forward exchange contract (a "forward contract") is
a contractual obligation to purchase or sell a specific quantity of a given
foreign currency for a fixed exchange rate at a future date. Forward contracts
are individually negotiated and are traded through the "interbank currency
market," an informal network of banks and brokerage firms which operates around
the clock and throughout the world. Transactions in the interbank market may be
executed only through financial institutions acting as market-makers in the
interbank market, or through brokers exercising purchases and sales through such
institutions. Market-makers in the interbank market generally act as principals
in taking the opposite side of their customers' positions in forward contracts,
and ordinarily charge a mark-up commission which may be included in the cost of
the forward contract. In addition, market-makers may require their customers to
deposit collateral upon entering into a forward contract, as security for the
customer's obligation to make or receive delivery of currency, and to deposit
additional collateral if exchange rates move adversely to the customer's
position. Such deposits may function in a manner similar to the margining of
futures contracts, described above.

Prior to the stated maturity date of a forward contract, it may be
possible to liquidate the transaction by entering into an offsetting contract.
In order to do so, however, a customer may be required to maintain both
contracts as open positions until maturity and to make or receive a settlement
of the difference owed to or from the market-maker or broker at that time.

OPTIONS ON FOREIGN CURRENCIES

Options on foreign currencies are traded in a manner substantially
similar to options on securities. In particular, an option on foreign currency
provides the holder with the right to purchase, in the case of a call option, or
to sell, in the case of a put option, a stated quantity of a particular currency
for a fixed price up to a stated expiration date or, in the case of certain
options, on such date. The writer of the option undertakes the obligation to
deliver, in the case of a call option, or to purchase, in the case of a put
option, the quantity of the currency called for in the option, upon exercise of
the option by the holder.

As in the case of other types of options, the holder of an option on
foreign currency is required to pay a one-time, nonrefundable premium, which
represents the cost of purchasing the option. The holder can lose the entire
amount of this premium, as well as related transaction costs, but not more than
this amount. The writer of the option, in contract, generally is required to
make initial and variation margin payments, similar to margin deposits required
in the trading of futures contracts and the writing of other types of options.
The writer is therefore subject to risk of loss beyond the amount originally
invested and above the value of the option at the time it is entered into.

Certain options on foreign currencies, like currency contracts, are
traded over-the-counter through financial institutions acting as market-makers
in such options and the underlying currencies. Such transactions therefore
involve risks not generally associated with exchange-traded instruments, which
are discussed below. Options on foreign currencies may also be traded on
national securities exchanges regulated by the SEC and on exchanges located in
foreign countries.

Over-the-counter transactions can only be entered into with a financial
institution willing to take the opposite side, as principal, of a Fund's
position, unless the institution acts as broker and is able to find another
counter party willing to enter into the transaction with the Fund. Where no such
counter party is

65
<PAGE> 115

available, it will not be possible to enter into a desired transaction. There
also may be no liquid secondary market in the trading of over-the-counter
contracts, and a Fund could be required to retain options purchased or written
until exercise, expiration or maturity. This in turn could limit the Fund's
ability to profit from open positions or to reduce losses experienced, and could
result in greater losses.

Further, over-the-counter transactions are not subject to the guarantee
of an exchange clearing house, and the Funds will therefore be subject to the
risk of default by, or the bankruptcy of, the financial institution serving as
its counterparty. One or more of such institutions also may decide to
discontinue their role as market-makers in a particular currency or security,
thereby restricting the Funds' ability to enter into desired hedging
transactions. The Funds will enter into an over-the-counter transaction only
with parties whose creditworthiness has been reviewed and found satisfactory by
Advisers or, if applicable, the Fund's sub-adviser.

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<PAGE> 116
APPENDIX B

COMMERCIAL PAPER, CORPORATE BOND
AND PREFERRED STOCK RATINGS

COMMERCIAL PAPER RATINGS

Standard & Poor's Rating Services. A Standard & Poor's commercial paper
rating is a current assessment of the likelihood of timely payment of debt
having an original maturity of no more than 365 days. Ratings are graded into
categories ranging from "A" for the highest quality obligations to "D" for the
lowest.

"A" Issues assigned this highest rating are regarded as having the
greatest capacity for timely payment. Issues in this category are delineated
with the numbers 1, 2 and 3 to indicate the relative degree of safety.

"A-1" This designation indicates that the degree of safety regarding
timely payment is either overwhelming or very strong. Those issues determined to
possess overwhelming safety characteristics are denoted with a (+) sign
designation.

"A-2" Capacity for timely payment on issues with this designation is
strong. However, the relative degree of safety is not as high as for issues
designated "A-1."

"A-3" Issues carrying this designation have a satisfactory capacity for
timely payment. They are, however, somewhat more vulnerable to the adverse
effects of changes in circumstances than obligations carrying the higher
designations.

The commercial paper rating is not a recommendation to purchase or sell
a security. The ratings are based on current information furnished to Standard &
Poor's by the issuer or obtained from other sources it considers reliable. The
ratings may be changed, suspended, or withdrawn as a result of changes in or
unavailability of such information.

Moody's Investors Service, Inc. Moody's short-term debt ratings are
opinions of the ability of the issuers to repay punctually senior debt
obligations which have an original maturity not exceeding one year. Moody's
makes no representation that such obligations are exempt from registration under
the Securities Act of 1933, nor does it represent that any specific note is a
valid obligation of a rated issuer or issued in conformity with any applicable
law. Moody's employs the following three designations, all judged to be
investment grade, to indicate the relative repayment capacity of rated issuers:

"Prime-1" Superior ability for repayment of senior short-term debt
obligations.

"Prime-2" Strong ability for repayment of senior short-term debt
obligations.

"Prime-3" Acceptable ability for repayment of senior short-term debt
obligations.

CORPORATE BOND RATINGS

Note: Standard & Poor's Ratings Services ratings from "AA" to "CCC" may
be modified by the addition of a plus or minus sign to show relative standing
within the major rating categories. Moody's Investors Service, Inc. applies
numerical modifiers 1, 2 and 3 in each generic rating classification from "Aa"
to "B." The modifier "1" indicates that the applicable company ranks in the
higher end of its generic

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rating category; the modifier "2" indicates a mid-range ranking; and the
modifier "3" indicates that the applicable company ranks in the lower end of its
generic rating category.

Standard & Poor's Ratings Services. Its ratings for corporate bonds
have the following definitions:

Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in a small degree.

Debt rated "A" has a strong capacity to pay interest and repay
principal, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than debt in higher rated
categories.

Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.

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

Debt rated "BB" has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure to
adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The
"BB"rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied "BBB-" rating.

Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-"rating.

Debt rated "CCC" has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The "CCC" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "B" or "B-" rating.

The rating "CC" is typically applied to debt subordinated to senior
debt that is assigned an actual or implied "CCC" rating.

The rating "C" is typically applied to debt subordinated to senior debt
which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

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

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Debt rated "D" is in payment default. The "D" rating category is used
when interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless Standard & Poor's
believes that such payments will be made during such grace period. The "D"
rating also will be used upon the filing of a bankruptcy petition if debt
service payments are jeopardized.

"NO" indicates that no rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy.

Moody's Investors Service, Inc. Its ratings for corporate bonds include
the following:

Bonds which are rated "Aaa" are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.

Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.

Bonds which are rated "A" possess many favorable attributes and are to
be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.

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

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

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

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

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

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

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Bond Investment Quality Standards: Under present commercial bank
regulations issued by the Comptroller of the Currency, bonds rated in the top
four categories (Moody's ratings Aaa, Aa, A and Baa, and Standard & Poor's
ratings AAA, AA, A and BBB, commonly known as "Investment Grade" ratings) are
generally regarded as eligible for bank investment. In addition, the Legal
Investment Laws of various states impose certain rating or other standards for
obligations eligible for investment by savings banks, trust companies, insurance
companies and fiduciaries generally.

PREFERRED STOCK RATINGS

Note: Standard & Poor's Corporation ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major rating categories. Moody's Investors Service, Inc. applies
numerical modifiers 1, 2 and 3 in each generic rating classification from "Aa"
to "B." The modifier "1" indicates that the applicable company ranks in the
higher end of its generic rating category; the modifier "2" indicates a
mid-range ranking; and the modifier "3" indicates that the applicable company
ranks in the lower end of its generic rating category.

Standard & Poor's Ratings Services. Its ratings for preferred stock
have the following definitions:

An issue rated "AAA" has the highest rating that may be assigned by
Standard & Poor's to a preferred stock issue and indicates an extremely strong
capacity to pay the preferred stock obligations.

A preferred stock issue rated "AA" also qualifies as a high-quality
fixed income security. The capacity to pay preferred stock obligations is very
strong, although not as overwhelming as for issues rated "AAA."

An issue rated "A" is backed by a sound capacity to pay the preferred
stock obligations, although it is somewhat more susceptible to the adverse
effects of changes in circumstances and economic conditions.

An issue rated "BBB" is regarded as backed by an adequate capacity to
pay the preferred stock obligations. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions, or changing circumstances
are more likely to lead to a weakened capacity to make payments for a preferred
stock in this category than for issues in the "A" category.

Moody's Investors Service, Inc. Its ratings for preferred stock include
the following:

An issue which is rated "Aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.

An issue which is rated "Aa" is considered a high-grade preferred
stock. This rating indicates that there is reasonable assurance that earnings
and asset protection will remain relatively well maintained in the foreseeable
future.

An issue which is rated "A" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the "AAA"
and "AA"classifications, earnings and asset protection are nevertheless expected
to be maintained at adequate levels.

An issue which is rated "Baa" is considered to be medium grade, neither
highly protected nor poorly secured. Earnings and asset protection appear
adequate at present but may be questionable over any great length of time.

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PART C

Fortis Series Fund, Inc.

OTHER INFORMATION

Item 23. Exhibits
- -------- --------

The Fund Is Filing Or Incorporating By Reference The Following Exhibits:
<TABLE>
<S> <C>
(a).1 Amended and Restated Articles of Incorporation (1)
(a).2 Certification of Designation of Series G Common Shares, Series
H Common Shares and Series I dated 4/20/94 (1)
(a).3 Certification of Designation of Series J Common Shares, Series K Common Shares and L Common
Shares 10/3/94 (1)
(a).4 Certification of Designation of Series M Common Shares, Series N Common
Shares and Series O Common Shares dated 4/11/96 (2)
(a).5 Certification of Designation of Series P Common Shares, Series Q Common
Shares and Series R Common Shares dated 4/13/98 (3)
(a).6 Certification of Designation of Series S Common Shares, Series
T Common Shares, Series U Common Shares and Series V Common
Shares to be filed.
(b) Amended and Restated Bylaws (amended 3/19/98) (3) (amendment
for Series S Common Shares, Series T Common Shares, Series U
Common Shares and Series V Common Shares to be filed)
(c) Instruments Defining Rights of Security Holders - not applicable
(d).1 Investment Advisory and Management Agreement between the
Registrant and Fortis Advisers, Inc. (on behalf of Growth
Stock Series, U.S. Government Securities Series, Diversified
Income Series, Money Market Series, Asset Allocation Series
and Global Growth Series) dated 5/1/92 (6)
(d).2 Investment Advisory and Management Agreement between the Registrant and
Fortis Advisers, Inc. (on behalf of High Yield Series, Growth & Income Series
and Aggressive Growth Series) dated 5/1/94 (6)
(d).3 Investment Advisory and Management Agreement between the Registrant and
Fortis Advisers, Inc. (on behalf of International Stock Series, Global Bond Series
and Global Asset Allocation Series) dated 12/8/94 (6)
(d).4 Investment Advisory and Management Agreement between the Registrant and
Fortis Advisers, Inc. (on behalf of Small Cap Value Series, Mid Cap Stock Series
and Large Cap Growth Series) dated 4/2/98 (3)
(d).5 Investment Advisory and Management Agreement between the Registrant and
Fortis Advisers, Inc. (on behalf of Value Series, S&P 500 Index Series and Blue
Chip Stock Series) dated 3/22/96 (6)
(d).6 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
Inc. and Lazard Freres Asset Management (on behalf of International Stock
Series) dated 12/27/94 (6)
(d).7 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
Inc. and Morgan Stanley Asset Management Limited (on behalf of Global Asset
Allocation Series) dated 12/29/94 (6)
(d).8 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
Inc. and The Dreyfus Corporation (on behalf of S&P 500 Index Series) dated
3/22/96 (2)
(d).9 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
</TABLE>

1
<PAGE> 121

<TABLE>
<S> <C>
Inc. and T. Rowe Price Associates, Inc. (on behalf of Blue Chip Stock Series)
dated 3/22/96 (2)
(d).10 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
Inc. and The Dreyfus Corporation (on behalf of Mid Cap Stock Series) dated
4/3/98 (3)
(d).11 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
Inc. and Berger Associates, Inc. (on behalf of Small Cap Value Series) dated
4/2/98 (3)
(d).12 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
Inc. and Alliance Capital Management L.P. (on behalf of Large Cap Growth
Series) dated 4/2/98 (3)
(d).13 Sub-Management Agreement between Berger Associates, Inc. and Perkins, Wolf,
McDonnell & Company (on behalf of Small Cap Value Series) dated 4/2/98 (3)
(d).14 Investment Advisory and Management Agreement between the Registrant and
Fortis Advisers, Inc. (on behalf of each Series to be filed)
(d).15 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
Inc. and AIM Advisors, Inc. (on behalf of Multisector Bond Series and Blue Chip Stock Series
II) to be filed
(d).16 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
Inc. and Massachusetts Financial Services Company (on behalf of Capital Opportunities Series,
Global Equity Series and Investors Growth Series) to be filed
(d).17 Investment Sub-Advisory and Management Agreement between Fortis Advisers,
Inc. and Federated Investment Management Company (on behalf of American Leaders Series) to be
filed
(e).1 Form of Underwriting and Distribution Agreement (1)
(e).2 Dealer Sales Agreement (5)
(f) Bonus or Profit Sharing Contracts - not applicable
(g).1 Custody Agreement dated 3/21/92 (2)
(g).2 Exhibit A amended 4/2/98 to Custody Agreement (3)
(g).3 Custody Agreement for Global Growth Series, International Stock Series, Global
Bond Series, Global Asset Allocation Series and Blue Chip Stock Series dated
3/27/96 (2)
(g).4 Amendment to Custody Agreement for Multisector Bond Series, American Leaders Series, Capital
Opportunities Series, Blue Chip Stock Series II, Global Equity Series and Investors Growth
Series to be filed
(h) Other Material Contracts - not applicable
(i).1 Opinion and Consent of Dorsey & Whitney LLP for Series J,
Series K and Series L Common Shares (5)
(i).2 Opinion and Consent of Dorsey & Whitney LLP for Series M,
Series N and Series O Common Shares (2)
(i).3 Opinion and Consent of Dorsey & Whitney LLP for Series P,
Series Q and Series R Common Shares (3)
(i).4 Opinion and Consent of Dorsey & Whitney LLP for Series S,
Series T, Series U and Series R Common Shares (3)
(j) Consent of KPMG LLP -not applicable
(k) Omitted Financial Statements - not applicable
(l) Initial Capital Agreements - not applicable
(m) Rule 12b-1 Plan - not applicable
(n) Financial Data Schedule - not applicable
(o) Rule 18f-3 Plan - not applicable
</TABLE>

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

2
<PAGE> 122

(1) Incorporated by reference to Post-Effective Amendment No. 18 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on February 16, 1996.
(2) Incorporated by reference to Post-Effective Amendment No. 19 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on April 30, 1996.
(3) Incorporated by reference to Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on May 1, 1998.
(4) Incorporated by reference to Post-Effective Amendment No. 45 to the
Registration Statement of Fortis Income Portfolios, Inc. on Form N-1A
filed with the Commission on December 1, 1998.
(5) Incorporated by reference to Post-Effective Amendment No. 14 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission in October 1994.
(6) Incorporated by reference to Post-Effective Amendment No. 25 to the
Registrant's Registration Statement on Form N-1A filed with the
Commission on April 30, 1999.

Item 24. Persons Controlled By Or Under Common Control With The Fund

The following is a list of all persons directly or indirectly
controlled by or under common control with the fund:

No person is directly or indirectly controlled by or under common
control with the Registrant.

Item 25. Indemnification

State the general effect of any contract, arrangements or statute under
which any director, officer, underwriter or affiliated person of the fund is
insured or indemnified against any liability incurred in their official
capacity, other than insurance provided by any director, officer, affiliated
person, or underwriter for their own protection.

Paragraph 8(d) of the Registrant's Articles of Incorporation provides
that the Registrant shall indemnify such person for such expenses and
liabilities, in such manner, under such circumstances, and to the full extent
permitted by Section 302A.521 of the Minnesota Statutes, as now enacted or
hereafter amended; provided, however, that no such indemnification may be made
if it would be in violation of Section 17(h) of the Investment Company Act of
1940, as now enacted or hereinafter amended, and any rules, regulations, or
releases promulgated thereunder.

The Registrant may indemnify its officers and directors and other
"persons" acting in an "official capacity" (as such terms are defined in Section
302A.521) pursuant to a determination by the board of directors or shareholders
of the Registrant as set forth in Section 302A.521, by special legal counsel
selected by the board or a committee thereof for the purpose of making such a
determination, or by a Minnesota court upon application of the person seeking
indemnification. If a director is seeking indemnification for conduct in the
capacity of director or officer of the Registrant, then such director generally
may not be counted for the purposes of determining either the presence of a
quorum or such director's eligibility to be indemnified.

In any case, indemnification is proper only if the eligibility
determining body decides that the person seeking indemnification:

(a) has not received indemnification for the same conduct from any
other party or organization;
(b) acted in good faith;
(c) received no improper personal benefit;
(d) in the case of criminal proceedings, has no reasonable cause
to believe the conduct was

<PAGE> 123
unlawful;
(e) reasonably believed that the conduct was in the best
interest of the Registrant, or in certain contexts, was not
opposed to the best interest of the Registrant; and
(f) had not otherwise engaged in conduct which precludes
indemnification under either Minnesota or Federal law
(including, without limitation, conduct constituting willful
misfeasance, bad faith, gross negligence, or reckless
disregard of duties as set forth in Section 17(h) and (i) of
the Investment Company Act of 1940).

Advances. If a person is made or threatened to be made a party to a
proceeding, the person is entitled, upon written request to the Registrant, to
payment or reimbursement by the Registrant of reasonable expenses, including
attorneys fees and disbursements, incurred by the person in advance of the final
disposition of the proceeding, (a) upon receipt by the Registrant of a written
affirmation by the person of a good faith belief that the criteria for
indemnification set forth in Section 302A.521 have been satisfied and a written
undertaking by the person to repay all amounts so paid or reimbursed by the
Registrant, if it is ultimately determined that the criteria for indemnification
have been satisfied, and (b) after a determination that the facts then known to
those making the determination would not preclude indemnification under
302A.521. The written undertaking required by clause (a) is an unlimited general
obligation of the person making it, but need not be secured and shall be
accepted without reference to financial ability to make the repayment.

Undertaking. The Registrant undertakes that insofar as indemnification
for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the Registrant pursuant to the
foregoing provision, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless, in the opinion of its counsel, the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

Item 26. Business and Other Connections of the Investment Adviser

Describe any other business, profession, vocation or employment of a
substantial nature that each investment adviser, and each director, officer or
partner of the adviser, is or has been engaged within the last two fiscal years
for his or her own account or in the capacity of director, officer, employee,
partner or trustee.

Information on the business of the Adviser, its directors and officers
is described in the Statement of Additional Information. The following officers
are not listed in the Statement of Additional Information:

OTHER
BUSINESS/EMPLOYMENT
NAME POSITION WITH ADVISER DURING PAST TWO YEARS
- ---- --------------------- ---------------------
<S> <C> <C>
Michael D. O'Connor Qualified Plan Officer Qualified Plan Officer of Fortis
Benefits Insurance Company

David C. Greenzang Money Market Portfolio Debt securities manager with
Officer Fortis, Inc.

</TABLE>

<PAGE> 124

Item 27. Principal Underwriters

(a) State the name of each investment company (other than the fund) for
which each principal underwriter currently distributing the fund's securities
also acts as a principal underwriter, depositor, or investment adviser.

Investors also acts as the principal underwriter for: Fortis Advantage
Portfolios, Inc., Fortis Equity Portfolios, Inc., Fortis Money Portfolios, Inc.,
Fortis Income Portfolios, Inc., Fortis Securities, Inc., Fortis Tax-Free
Portfolios, Inc., Fortis Worldwide Portfolios, Fortis Growth Fund, Inc.,
Variable Account C of Fortis Benefits Insurance Company and Variable Account D
of Fortis Benefits Insurance Company.

(b) Provide the information required by the following table for each
director, Officer, or partner of each principal underwriter named in response
to item 20.

In addition to those listed in the Statement of Additional Information
with respect to Investors, the following are also officers of Investors. The
principal business address of each individual is 500 Bielenberg Drive, Woodbury,
Minnesota 55125.

<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER WITH FUND
- ---------------- ---------------- ---------
<S> <C> <C>
Carol M. Houghtby Director, Vice President & None
Treasurer
Roger W. Arnold Senior Vice President None
John E. Hite Vice President & Secretary None
</TABLE>

(c) Provide the information required by the following table for all
commissions and other compensation received, directly or indirectly, from the
fund during The last fiscal year by each principal underwriter who is not an
affiliated Person of the fund or any affiliated person of an affiliated person.

Not applicable.

Item 28. Location of Accounts and Records

State the name and address of each person maintaining physical
possession of each account, book, or other document required to be maintained by
section 31(a) and the rules under that section.

The physical possession of the accounts, books, and other documents
required to be maintained by Section 31(a) of the Investment Company Act of 1940
and Rules 31a-1 to 31a-3 promulgated thereunder is maintained by the Registrant
at Fortis Advisers, Inc., 500 Bielenberg Drive, Woodbury, MN 55125.

Item 29. Management Services

Provide A Summary Of The Substantive Provisions Of Any
Management-Related Service Contract Not Discussed In Part A Or B, Disclosing The
Parties To The Contract And The Total Amount Paid And By Whom For The Fund For
The Last Three Fiscal Years.

<PAGE> 125

All contracts were discussed in Part A or B.

Item 30. Undertakings

(a) In initial registration statements filed under the securities act,
provide an undertaking to file an amendment to the registration statement with
certified financial statements showing the initial capital received before
accepting subscriptions from more than 25 persons if the fund intends to raise
its initial capital under section 14(a)(3).

Not applicable.

6
<PAGE> 126

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and
the Investment Company Act of 1940, the Registrant certifies that it meets all
of the requirements for effectiveness of this Registration Statement on Form
N-1A pursuant to Rule 485(a) under the Securities Act of 1933 and has duly
caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Woodbury and State of
Minnesota on February 15, 2000.

FORTIS SERIES FUND, INC.
(Registrant)

By /s/ Dean C. Kopperud
-----------------------------
Dean C. Kopperud, President

Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:

<TABLE>
<S> <C> <C>
/s/ Dean C. Kopperud President (principal February 15, 2000
- -------------------------------------- executive officer)
Dean C. Kopperud

/s/ Tamara L. Fagely Treasurer (principal February 15, 2000
- ---------------------------------------- financial and
Tamara L. Fagely accounting officer)

Richard W. Cutting* Director

Allen R. Freedman* Director

Robert M. Gavin* Director

Jean L. King* Director

Edward M. Mahoney* Director

Robb L. Prince* Director

Leonard J. Santow* Director

Joseph M. Wikler* Director

*By /s/ Dean C. Kopperud February 15, 2000
------------------------------
Dean C. Kopperud, Attorney-in-Fact
(Pursuant to a Power of Attorney dated March 21, 1996)
</TABLE>