<PAGE> 1
ARK FUNDS
- --------------------------------------------------------------------------------
SUPPLEMENT DATED JANUARY 1, 1999 TO CLASS A AND CLASS B PROSPECTUS DATED JULY
27, 1998
- --------------------------------------------------------------------------------
This supplement revises information contained in the Prospectus and should
be retained and read in conjunction with such Prospectus.
I. The information under "Alternative Sales Charge Options -- Class A Sales
Charges" on Page 30 of the Prospectus is being deleted. Effective January 1,
1999, the current front-end sales load waivers will be discontinued and the
maximum sales load, 4.50% for fixed income portfolios (except the Short-Term
Treasury Portfolio) and 4.75% for equity portfolios (except the International
Equity Selection Portfolio) will be imposed on all purchases that do not qualify
for the reductions and waivers currently listed in the Prospectus. The sales
charge reductions shown in the table on Page 30 of the Prospectus will no longer
apply and this table is being deleted. See "Alternative Sales Charge
Options -- Class A Sales Charges" on Page 29 of the Prospectus.
In addition, purchases made through the Employee Investment Program will
continue to be no-load.
<PAGE> 2
II. The information for the Equity Index Portfolio under "Fees and
Expenses" was amended as follows:
<TABLE>
<CAPTION>
CLASS A
---------
EQUITY
INDEX
SHAREHOLDER TRANSACTION EXPENSES PORTFOLIO
- -----------------------------------------------------------------------
<S> <C>
Maximum Sales Load Imposed on Purchases (as a percentage of
offering price)........................................... 4.75%
Exchange Fee................................................ None
Redemption Fee.............................................. None
ANNUAL OPERATING EXPENSES
(as a percentage of average net assets)
Advisory Fees (after waiver)(1)............................. 0.05%
12b-1 Fees (after waiver)(2)................................ 0.25%
Shareholder Services Fees (after waivers)(3)................ 0.00%
Other Expenses(after waivers)(4)............................ 0.20%
- -----------------------------------------------------------------------
Total Operating Expenses (after waivers)(5)................. 0.50%
- -----------------------------------------------------------------------
</TABLE>
(1) AIA has agreed to waive, on a voluntary basis, a portion of its fees for the
portfolio and the advisory fees shown reflect this voluntary waiver. AIA
reserves the right to terminate its fee waiver at any time in its sole
discretion. Absent such waiver, the advisory fees for the Equity Index
Portfolio would be 0.20%.
(2) The Distributor has agreed to waive, on a voluntary basis, a portion of its
distribution fees for the portfolio. Absent such waiver, the distribution
fees would be 0.40% for the Equity Index Portfolio.
(3) All of the shareholder service fees are being waived for the portfolio.
Absent such waiver, the shareholder services fees would be 0.15%.
(4) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory, 12b-1 and
shareholder services fees. The Administrator has agreed to waive, on a
voluntary basis, 0.08% of its fee for the Equity Index Portfolio. Absent
such waiver, other expenses for the Equity Index Portfolio would be 0.28%.
(5) Absent the voluntary fee waivers described above, total operating expenses
for Class A shares of the Equity Index Portfolio would be 1.03%.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Class A shares would pay the following expenses on a $1,000
investment assuming (1) 5% annual return, (2) redemption at the end of each time
period and (3) imposition of a 4.75% sales charge:
<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
Equity Index Portfolio.............................. 52 63 74 107
</TABLE>
The example assumes that all dividends and distributions are reinvested and that
the amounts listed under "Total Operating Expenses" remain the same in the years
shown. The example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than shown.
AK1111-1/99
<PAGE> 3
ARK FUNDS
- --------------------------------------------------------------------------------
SUPPLEMENT DATED JANUARY 1, 1999 TO INSTITUTIONAL II CLASS PROSPECTUS DATED JULY
27, 1998
- --------------------------------------------------------------------------------
This supplement provides new and additional information beyond that
contained in the Prospectus and should be retained and read in conjunction with
such Prospectus.
I. Effective January 1, 1999, the information under "Fees and Expenses" is
amended as follows:
FEES AND EXPENSES
- --------------------------------------------------------------------------------
The expense summary format below was developed for use by all mutual funds
to help investors make their investment decisions. Investors should consider
this expense information along with other important information, including each
portfolio's investment objectives, performance and financial highlights.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL II CLASS
-----------------------------------------------------------
U.S. TREASURY U.S. GOVERNMENT MONEY TAX-FREE
MONEY MARKET MONEY MARKET MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- --------------- --------- ------------
<S> <C> <C> <C> <C>
Advisory Fees (after waivers)(1).... 0.19% 0.14% 0.11% 0.09%
12b-1 Fees.......................... 0.15% 0.15% 0.15% 0.15%
Other Expenses(2)................... 0.19% 0.17% 0.17% 0.19%
----- ----- ----- -----
Total Operating Expenses (after
waivers)(3)....................... 0.53% 0.46% 0.43% 0.43%
===== ===== ===== =====
</TABLE>
(1) AIA has agreed to waive, on a voluntary basis, a portion of its fees for
each portfolio and the advisory fees shown reflect those voluntary waivers.
AIA reserves the right to terminate its fee waivers at any time in its sole
discretion. Absent such waivers, the advisory fee for each portfolio would
be .25%.
(2) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and 12b-1 fees.
(3) Absent the voluntary fee waivers described above, total operating expenses
for Institutional II Class shares of the U.S. Treasury Money Market
Portfolio, U.S. Government Money Market Portfolio, Money Market Portfolio
and Tax-Free Money Market Portfolio would be 0.59%, 0.57%, 0.57% and 0.59%,
respectively.
<PAGE> 4
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional II Class shares would pay the following
expenses on a $1,000 investment assuming (1) 5% annual return and (2) redemption
at the end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
----- ------ ------ -------
<S> <C> <C> <C> <C>
U.S. Treasury Money Market Portfolio...... 5 17 30 66
U.S. Government Money Market Portfolio.... 5 15 26 58
Money Market Portfolio.................... 4 14 24 54
Tax-Free Money Market Portfolio........... 4 14 24 54
</TABLE>
The example assumes that all dividends and distributions are reinvested and that
the amounts listed under "Total Operating Expenses" remain the same in the years
shown. The example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than shown.
II. The information under "Distribution of Shares" on Page 15 of the
Prospectus is revised to reflect the fact that the Board has approved the fee
rate of 0.15% of the average net assets of the Institutional II Class of each
portfolio. All or any portion of the fee for a portfolio may be waived at any
time. Any such voluntary waiver, which can be discontinued at any time, will
increase the portfolio's yield for the period during which it is in effect.
AK3200-1/99
<PAGE> 5
ARK FUNDS
- --------------------------------------------------------------------------------
SUPPLEMENT DATED JANUARY 1, 1999 TO INSTITUTIONAL CLASS PROSPECTUS DATED JULY
27, 1998
- --------------------------------------------------------------------------------
This supplement provides new and additional information beyond that
contained in the Prospectus and should be retained and read in conjunction with
such Prospectus.
I. The information in the Prospectus under "Fees and Expenses" for the U.S.
Treasury Money Market, U.S. Government Money Market, Money Market, Tax-Free
Money Market, U.S. Government Bond, Intermediate Fixed Income, Income, Maryland
Tax-Free, Pennsylvania Tax-Free, Balanced, Equity Income, Blue Chip Equity,
Mid-Cap Equity, Value Equity, Capital Growth, Small-Cap Equity and International
Equity Selection Portfolios is revised as follows:
FEES AND EXPENSES
- --------------------------------------------------------------------------------
The expense summary format below was developed for use by all mutual funds
to help investors make their investment decisions. Investors should consider
this expense information along with other important information, including each
portfolio's investment objectives, performance (if any) and financial
highlights.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
---------------------------------------------------------
U.S.
TREASURY
MONEY U.S. GOVERNMENT MONEY TAX-FREE
MARKET MONEY MARKET MARKET MONEY MARKET
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ --------------- --------- ------------
<S> <C> <C> <C> <C>
Advisory Fees (after waivers)(1)..... 0.19% 0.14% 0.11% 0.09%
Shareholder Services Fees (after
waivers)(2)........................ 0.08% 0.08% 0.08% 0.08%
Other Expenses(3).................... 0.19% 0.17% 0.17% 0.19%
----- ----- ----- -----
Total Operating Expenses (after
waivers)(4)........................ 0.46% 0.39% 0.36% 0.36%
===== ===== ===== =====
</TABLE>
(1) AIA has agreed to waive, on a voluntary basis, a portion of its fees for
each portfolio and the advisory fees shown reflect those voluntary waivers.
AIA reserves the right to terminate its fee waivers at any time in its sole
discretion. Absent such waivers, the advisory fee for each portfolio would
be 0.25%.
(2) A portion of the shareholder services fees is being waived for each
portfolio. Absent such waivers, the shareholder services fees would be
0.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees.
(4) Absent the voluntary fee waivers described above, total operating expenses
for Institutional Class shares of the U.S. Treasury Money Market Portfolio,
U.S. Government Money Market Portfolio, Money Market Portfolio and Tax-Free
Money Market Portfolio would be 0.59%, 0.57%, 0.57% and 0.59%, respectively.
<PAGE> 6
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional Class shares would pay the following expenses
on a $1,000 investment assuming (1) 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
U.S. Treasury Money Market Portfolio................. 5 15 26 58
U.S. Government Money Market Portfolio............... 4 13 22 49
Money Market Portfolio............................... 4 12 20 46
Tax-Free Money Market Portfolio...................... 4 12 20 46
</TABLE>
The example assumes that all dividends and distributions are reinvested and that
the amounts listed under "Total Operating Expenses" remain the same in the years
shown. The example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than shown.
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
------------------------------------------
U.S. GOVERNMENT INTERMEDIATE
BOND FIXED INCOME INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
--------------- ------------ ---------
<S> <C> <C> <C>
Advisory Fees (after waivers)(1)................... 0.66% 0.49% 0.51%
Shareholder Services Fees (after waivers)(2)....... 0.11% 0.11% 0.12%
Other Expenses(3).................................. 0.19% 0.20% 0.19%
----- ----- -----
Total Operating Expenses (after waivers)(4)........ 0.96% 0.80% 0.82%
===== ===== =====
</TABLE>
(1) AIA has agreed to waive, on a voluntary basis, a portion of its fees for the
U.S. Government Bond Portfolio, Intermediate Fixed Income Portfolio and
Income Portfolio and the advisory fees shown reflect those voluntary
waivers. AIA reserves the right to terminate its fee waivers at any time in
its sole discretion. Absent such waivers, the advisory fees for the U.S.
Government Bond Portfolio, Intermediate Fixed Income Portfolio and Income
Portfolio would be 0.75%, 0.60% and 0.60%, respectively.
(2) A portion of the shareholder services fees is being waived for each
portfolio. Absent such waivers, the shareholder services fees would be
0.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees.
(4) Absent the voluntary fee waivers described above, the total operating
expenses for Institutional Class shares of the U.S. Government Bond
Portfolio, Intermediate Fixed Income Portfolio and Income Portfolio would be
1.09%, 0.95% and 0.94%, respectively.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional Class shares would pay the following expenses
on a $1,000 investment assuming (1) 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
U.S. Government Bond Portfolio................ 10 31 53 118
Intermediate Fixed Income Portfolio........... 8 26 44 99
Income Portfolio.............................. 8 26 46 101
</TABLE>
The example assumes that all dividends and distributions are reinvested and that
the amounts listed under "Total Operating Expenses" remain the same in the years
shown. The example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than shown.
<PAGE> 7
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARYLAND PENNSYLVANIA
TAX-FREE TAX-FREE
PORTFOLIO PORTFOLIO
--------- ------------
<S> <C> <C>
Advisory Fees (after waivers)(1)............................ 0.49% 0.65%
Shareholder Services Fees (after waiver)(2)................. 0.12% 0.11%
Other Expenses(3)........................................... 0.19% 0.20%
----- -----
Total Operating Expenses (after waivers)(4)................. 0.80% 0.96%
===== =====
</TABLE>
(1) AIA has agreed to waive, on a voluntary basis, a portion of its fees for the
Maryland Tax-Free Portfolio and the advisory fees shown reflect this
voluntary waiver. AIA reserves the right to terminate its fee waivers at any
time in its sole discretion. Absent such waiver, the advisory fees for the
Maryland Tax-Free Portfolio would be 0.65%.
(2) A portion of the shareholder services fees is being waived for each
portfolio. Absent such waivers, the shareholder services fees would be
0.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees.
(4) Absent the voluntary fee waivers described above, the total operating
expenses for Institutional Class shares of the Maryland Tax-Free Portfolio
and Pennsylvania Tax-Free Portfolio would be 0.99% and 1.00%, respectively.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional Class shares would pay the following expenses
on a $1,000 investment assuming (1) 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
Maryland Tax-Free Portfolio................... 8 26 44 99
Pennsylvania Tax-Free Portfolio............... 10 31 53 118
</TABLE>
The example assumes that all dividends and distributions are reinvested and that
the amounts listed under "Total Operating Expenses" remain the same in the years
shown. The example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than shown.
<PAGE> 8
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
---------------------------------
EQUITY BLUE CHIP
BALANCED INCOME EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- ---------
<S> <C> <C> <C>
Advisory Fees (after waivers)(1)............................ 0.56% 0.64% 0.60%
Shareholder Services Fees (after waivers)(2)................ 0.14% 0.14% 0.14%
Other Expenses (after waivers)(3)........................... 0.20% 0.17% 0.22%
----- ----- -----
Total Operating Expenses (after waivers)(4)................. 0.90% 0.95% 0.96%
===== ===== =====
</TABLE>
(1) AIA has agreed to waive, on a voluntary basis, a portion of its fees for the
Balanced Portfolio, Equity Income Portfolio, and Blue Chip Equity Portfolio
and the advisory fees shown reflect those voluntary waivers. AIA reserves
the right to terminate its fee waivers at any time in its sole discretion.
Absent such waivers, the advisory fees for the Balanced Portfolio, Equity
Income Portfolio and Blue Chip Equity Portfolio would be 0.65%, 0.70% and
0.70%, respectively.
(2) A portion or all of the shareholder services fees is being waived for each
portfolio. Absent such waivers, the shareholder services fees would be
0.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees.
(4) Absent the voluntary fee waivers described above, total operating expenses
for Institutional Class shares of the Balanced Portfolio, Equity Income
Portfolio and Blue Chip Equity Portfolio would be 1.00%, 1.02% and 1.07%,
respectively.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional Class shares would pay the following expenses
on a $1,000 investment assuming (1) 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
Balanced Portfolio................................... 9 29 50 111
Equity Income Portfolio.............................. 10 30 53 117
Blue Chip Equity Portfolio........................... 10 31 53 118
</TABLE>
The example assumes that all dividends and distributions are reinvested and that
the amounts listed under "Total Operating Expenses" remain the same in the years
shown. The example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than shown.
<PAGE> 9
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
--------------------------------------------------------------
INTERNATIONAL
MID-CAP VALUE CAPITAL SMALL-CAP EQUITY
EQUITY EQUITY GROWTH EQUITY SELECTION
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO* PORTFOLIO
--------- --------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Advisory Fees (after waivers)(1)....... 0.74% 0.87% 0.65% 0.79% 0.55%
Shareholder Services Fees (after
waivers)(2).......................... 0.14% 0.14% 0.14% 0.14% 0.14%
Other Expenses(3)...................... 0.23% 0.19% 0.21% 0.30% 0.24%
----- ----- ----- ----- -----
Total Operating Expenses (after
waivers)(4).......................... 1.11% 1.20% 1.00% 1.23% 0.93%
===== ===== ===== ===== =====
</TABLE>
* Formerly Special Equity Portfolio.
(1) AIA has agreed to waive, on a voluntary basis, a portion of its fees for the
Mid-Cap Equity Portfolio, Value Equity Portfolio, Capital Growth Portfolio,
Small-Cap Equity Portfolio and International Equity Selection Portfolio and
the advisory fees shown reflect those voluntary waivers. AIA reserves the
right to terminate its fee waivers at any time in its sole discretion.
Absent such waivers, the advisory fees for the Mid-Cap Equity Portfolio,
Value Equity Portfolio, Capital Growth Portfolio, Small-Cap Equity Portfolio
and International Equity Selection Portfolio would be 0.80%, 1.00%, 0.70%,
0.80% and 0.65%, respectively.
(2) A portion of the shareholder services fees is being waived for each
portfolio. Absent such waivers, the shareholder services fees would be
0.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees.
(4) Absent the voluntary fee waivers described above, the total operating
expenses for Institutional Class shares of the Mid-Cap Equity Portfolio,
Value Equity Portfolio, Capital Growth Portfolio, Small-Cap Equity Portfolio
and International Equity Selection Portfolio would be 1.18%, 1.34%, 1.06%,
1.25% and 1.04%, respectively.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional Class shares would pay the following expenses
on a $1,000 investment assuming (1) 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
Mid-Cap Equity Portfolio............................. 11 35 61 135
Value Equity Portfolio............................... 12 38 66 145
Capital Growth Portfolio............................. 10 32 55 122
Small-Cap Equity Portfolio........................... 13 39 68 149
International Equity Selection Portfolio............. 9 30 51 114
</TABLE>
The example assumes that all dividends and distributions are reinvested and that
the amounts listed under "Total Operating Expenses" remain the same in the years
shown. The example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than shown.
II. The information under "Distribution and Shareholder Services" on Page
38 of the Prospectus is revised to reflect the fact that the Board of Trustees
has approved an annual shareholder servicing fee rate of: .08% of the average
daily net assets of the Institutional Class shares of the U.S. Treasury Money
Market, U.S. Government Money Market, Money Market, and Tax-Free Money Market
Portfolios; .11% of the average daily net assets of the Institutional Class
shares of the U.S. Government Bond, Intermediate Fixed Income and Pennsylvania
Tax-Free Portfolios; .12% of the average daily net assets of the Institutional
Class shares of the Income and Maryland Tax-Free Portfolios; and .14% of the
average daily
<PAGE> 10
net assets of the Institutional Class shares of the Balanced, Equity Income,
Blue Chip, Equity, Mid-Cap Equity, Value Equity, Capital Growth, Small-Cap
Equity and International Equity Selection Portfolios.
III. The information for the Equity Index Portfolio under "Fees and
Expenses" was amended as follows:
ANNUAL OPERATING EXPENSES (as a percentage of average net assets)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INSTITUTIONAL CLASS
-------------------
EQUITY
INDEX
PORTFOLIO
-------------------
<S> <C>
Advisory Fees (after waiver)(1)............................. 0.05%
Shareholder Services Fees (after waiver)(2)................. 0.00%
Other Expenses (after waiver)(3)............................ 0.20%
-----
Total Operating Expenses (after waivers)(4)................. 0.25%
=====
</TABLE>
(1) AIA has agreed to waive, on a voluntary basis, a portion of its fees for the
Equity Index Portfolio and the advisory fees shown reflect this voluntary
waiver. AIA reserves the right to terminate its fee waiver at any time in
its sole discretion. Absent such waiver, the advisory fees for the Equity
Index Portfolio would be 0.20%.
(2) All of the shareholder services fees are being waived for the portfolio.
Absent such waiver, the shareholder services fees would be 0.15%.
(3) Other expenses are estimated based on amounts incurred during the previous
fiscal year and include all expenses except nonrecurring account fees,
brokerage commissions and other capital items, and advisory and shareholder
services fees. The Fund's administrator has agreed to waive, on a voluntary
basis, 0.08% of its fee for the Equity Index Portfolio. Absent such waiver,
other expenses for the Equity Index Portfolio would be 0.28%.
(4) Absent the voluntary fee waivers described above, total operating expenses
for Institutional Class shares of the Equity Index Portfolio would be 0.63%.
EXAMPLE
- --------------------------------------------------------------------------------
An investor in Institutional Class shares would pay the following expenses
on a $1,000 investment assuming (1) 5% annual return and (2) redemption at the
end of each time period:
<TABLE>
<CAPTION>
1 YR 3 YRS 5 YRS 10 YRS
---- ----- ----- ------
<S> <C> <C> <C> <C>
Equity Index Portfolio.............................. 3 8 14 32
</TABLE>
The example assumes that all dividends and distributions are reinvested and that
the amounts listed under "Total Operating Expenses" remain the same in the years
shown. The example should not be considered a representation of past or future
expenses and actual expenses may be greater or less than shown.
AK2222-1/99
