<PAGE>
1933 Act Registration No. 2-65182
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 3, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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. 25
-------
AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No.
-------
(Check appropriate box or boxes)
FORTIS MONEY PORTFOLIOS, 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:
Michael J. Radmer, 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 February 1, 1999 pursuant to paragraph (a) of Rule 485
------
60 days after filing pursuant to paragraph (a) of Rule 485
------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
[LOGO]
FORTIS
Solid partners, flexible solutions-SM-
Fortis Money Fund Prospectus
Dated February 1, 1999
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>
TABLE OF CONTENTS
- -------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE
<S> <C>
The Fund................................................................................................. 1
Shareholder Information
Choosing a Share Class................................................................................. 4
Determining Your Purchase Price........................................................................ 4
How to Buy Shares...................................................................................... 6
How to Sell Shares..................................................................................... 7
Dividend Distributions................................................................................... 10
Tax Considerations....................................................................................... 10
Shareholder Inquiries.................................................................................... 10
Fund Management.......................................................................................... 10
More Information on the Fund............................................................................. 11
Investment Strategies.................................................................................. 11
Year 2000 Issues....................................................................................... 11
Financial Highlights..................................................................................... 12
</TABLE>
<PAGE>
THE FUND
- -------------------------------------------------------------------
This section briefly describes the objective, principal investment strategies
and principal risks of Money Fund (the "Fund"). It also provides you with
information on how the Fund has performed and on Fund expenses. For further
information on the Fund, please read the section entitled "More Information on
the Fund."
MONEY FUND
INVESTMENT OBJECTIVE
Money Fund's objective is to maximize current income to the extent consistent
with stability of principal.
PRINCIPAL INVESTMENT STRATEGIES
Money Fund pursues its objective by investing exclusively in the following types
of money market instruments which mature in 397 days or less:
- U.S. GOVERNMENT OBLIGATIONS. The Fund invests in obligations issued or
guaranteed by the United States Government, its agencies or
instrumentalities.
- BANK OBLIGATIONS. The Fund invests in obligations of United States,
Canadian-chartered and foreign banks having total assets in excess of one
billion dollars. Such obligations include certificates of deposits, letters
of credit and bankers' acceptances.
- OBLIGATIONS OF OTHER U.S. ISSUERS. The Fund invests in obligations of
domestic issuers, such as commercial paper and other short-term debt
obligations. The Fund invests in obligations that both present minimal
credit risk, as determined by the Fund's investment adviser ("Advisers"),
and are rated A-1 or A-2 by Standard & Poor's Corporation or P-1 or P-2 by
Moody's Investors Service, Inc. or comparably rated by another nationally
recognized rating organization.
- REPURCHASE AGREEMENTS. The Fund invests in repurchase agreements in
connection with the above obligations.
The Fund may purchase obligations other than those listed above if the
obligation is guaranteed as to principal and interest by a bank or other issuer
whose certificates of deposit or debt obligations may be purchased by the Fund.
These obligations and guarantees must be due within 397 days or less from the
date of purchase by the Fund.
In seeking to attain its investment objective, the Fund will have at least 25%
of its total assets invested collectively in U.S. dollar-denominated obligations
of foreign branches of domestic banks, domestic branches of foreign banks,
foreign banks, foreign branches of foreign banks, and other foreign issuers,
except when a more defensive position is deemed warranted. No more than 49% of
the Fund's total assets will be invested in these obligations.
The Fund will maintain a dollar weighted average portfolio maturity of 90 days
or less.
PRINCIPAL RISKS
Money Fund's yield will change daily because of changes in interest rates and
other factors. The principal risks of investing in Money Fund include:
- 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 Fund's investment in foreign securities
involves risks not typically associated with U.S. investing. The Fund may
experience a decline in net asset value resulting from changes in exchange
rates between the U.S. 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.
1
<PAGE>
- INTEREST RATE RISK. Debt securities in the Fund 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 than are the shorter term debt securities held by the Fund.
- MANAGEMENT RISK. The Fund is actively managed by professionals with
extensive money management experience and expertise. The performance of the
Fund will reflect in part the ability of Advisers to select securities which
are suited to achieving the Fund's investment objectives. Due to its active
management, the Fund could underperform other mutual funds with similar
investment objectives or the market generally.
AN INVESTMENT IN THE FUND IS NOT A DEPOSIT OF ANY BANK AND IS NOT INSURED OR
GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENT
AGENCY. ALTHOUGH THE FUND SEEKS TO PRESERVE THE VALUE OF YOUR INVESTMENT AT
$1.00 PER SHARE, IT IS POSSIBLE TO LOSE MONEY BY INVESTING IN THE FUND.
FUND PERFORMANCE
The bar chart and table below provide you with information on Money Fund's
volatility and performance. The bar charts show you how performance of the
Fund's Class A shares has varied from year to year. The performance of other
classes of shares will differ due to differences in expenses. Remember, how the
Fund has performed in the past is not necessarily an indication of how it will
perform in the future.
ANNUAL TOTAL RETURNS AS OF 12/31 EACH YEAR (%)*
[GRAPH TO COME]
* The Funds total return for the period from January 1, 1998 through
September 30, 1998 was %.
<TABLE>
<S> <C> <C>
BEST QUARTER: % (Quarter ending , 199 )
WORST QUARTER: -3.60% (Quarter ending , 199 )
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS AS OF 12/31/97
<TABLE>
<CAPTION>
ONE YEAR FIVE YEARS TEN YEARS
----------- ------------- -------------
<S> <C> <C> <C>
Class A Shares..................................................................... % % %
Class B Shares..................................................................... % % %
Class H Shares..................................................................... % % %
Class C Shares..................................................................... % % %
</TABLE>
SEVEN DAY YIELD FOR PERIOD ENDING 12/31/98*: %
-------------------------------
* You can obtain the Fund's current yield by calling 1-800-800-2000,
extension 3012.
2
<PAGE>
FEES AND EXPENSES
As an investor, you pay certain fees and expenses if you buy and hold shares of
Money Fund. Shareholder fees are fees you pay directly when buying or selling
shares. Annual fund operating expenses are deducted from Fund assets. The
figures below are based on expenses during the fiscal year ended September 30,
1998.
<TABLE>
<CAPTION>
CLASS B
CLASS A AND H CLASS C
SHARES SHARES SHARES
----------- ----------- -----------
<S> <C> <C> <C>
SHAREHOLDER FEES
Maximum Sales Charge (Load)
Imposed on Purchases (as a
percentage of offering price)... None None None
Maximum Deferred Sales Charge
(Load) (as a percentage of
original purchase price or
redemption proceeds, whichever
is less)........................ None 4.00 % 1.00 %
ANNUAL FUND OPERATING EXPENSES
(as a % of average net assets)
Management Fees.................. % % %
Distribution and/or Service
(12b-1) Fees.................... 0.25 % 1.00 % 1.00 %
Other Expenses................... % % %
Total Annual Fund Operating
Expenses........................ % % %
</TABLE>
EXPENSE EXAMPLE. This example is intended to help you compare the cost of
investing in the different share classes of Money Fund with the cost of
investing in other mutual funds. It assumes that you invest $10,000 in the Fund
for the time periods indicated, that your investment has a 5% return each year
and that the Fund's operating expenses remain the same. Although your actual
costs may be higher or lower, based on these assumptions your costs would be:
<TABLE>
<CAPTION>
CLASS B/H CLASS C
SHARES SHARES
ASSUMING CLASS B/H ASSUMING CLASS C
REDEMPTION SHARES REDEMPTION SHARES
CLASS A AT END OF ASSUMING NO AT END OF ASSUMING NO
SHARES EACH PERIOD REDEMPTION EACH PERIOD REDEMPTION
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1 year............................. $ $ $ $ $
3 years............................
5 years............................
10 years...........................
</TABLE>
3
<PAGE>
SHAREHOLDER INFORMATION
- -------------------------------------------------------------------
CHOOSING A SHARE CLASS
The Fund offers you a choice among multiple classes of shares with different
sales charges and expenses. Any new purchases you make must be made into Class
A. Class B, Class H and Class C shares are available only in exchange for the
same class of shares of another Fortis Fund. Here is a brief summary of the
different share classes offered by the Fund:
CLASS A SHARES
- Your purchase of shares in Money Fund must be made into Class A.
- There is no sales charge when you purchase or redeem your shares.
- Shares are subject to an annual Rule 12b-1 fee equal to .20% of the Fund's
average daily net assets.
- Because Rule 12b-1 fees for Class A shares are lower than the Rule 12b-1
fees for the other classes, Class A shares have lower expenses and pay
higher dividends than Class B, Class H or Class C shares.
CLASS B AND CLASS H SHARES--EXCHANGES FROM OTHER FORTIS FUNDS' CLASS B OR H
SHARES
- You do not pay a sales charge at the time of the exchange from another
Fortis fund.
- Shares are subject to a contingent deferred sales charge (CDSC) if
redeemed within six years of the date you purchased the original Fortis
Fund shares. The CDSC is 4% during the first two years after purchase, and
declines thereafter to as low as 1% during the sixth year after purchase.
Shares are not subject to a CDSC after the sixth year.
- Shares are subject to an annual Rule 12b-1 fee equal to 1.00% of average
daily net assets.
- Eight years after your purchase of the original Fortis Fund shares, Money
Fund shares automatically convert to Class A shares at no charge to you,
resulting in a lower Rule 12b-1 fee thereafter.
- Shares in these classes have a higher expense ratio and pay lower
dividends than Class A shares due to the higher Rule 12b-1 fee.
- The only difference between Class B and Class H shares is the amount of
the concession paid to dealers. This difference does not affect you in any
way.
CLASS C SHARES--EXCHANGES FROM OTHER FORTIS FUNDS' CLASS C SHARES
- You do not pay any sales charge at the time of the exchange from another
Fortis Fund.
- Shares are subject to a contingent deferred sales charge of 1.00% if
redeemed within one year of the date you purchased the original Fortis
Fund shares.
- Shares are subject to an annual Rule 12b-1 fee of 1.00% of average daily
net assets.
- Shares do not convert to Class A shares. However, the shares are subject
to a lower contingent deferred sales charge than Class B or Class H shares
and do not have to be held for as long a time (one year vs. six years) to
avoid paying a contingent deferred sales charge.
- Shares in this class have a higher expense ratio and pay lower dividends
than Class A shares due to the higher Rule 12b-1 fee.
DETERMINING YOUR PURCHASE PRICE
NET ASSET VALUE OF FUND SHARES
Your purchase price will be equal to the Fund's net asset value per share. The
Fund's net asset value per share is determined as of the primary closing time
for business on the New York Stock Exchange (the "Exchange") on each day the
Exchange is open.
4
<PAGE>
Your purchase price will be the next net asset value per share of the Fund
calculated after your purchase order is accepted by Fortis Investors
("Investors' ), the Fund's underwriter. Orders generally must be received by
Investors prior to the close of the Exchange to receive that day's price. If you
purchase Fund shares through a broker-dealer other than Investors, however, your
order must be received by your broker-dealer prior to the close of the Exchange.
Investors will then apply that day's price to the order if the broker-dealer
places the order with Investors by the end of Investors' business day.
The Fund's net asset value per share is determined by dividing the value of the
securities and other assets owned by the Fund, less all liabilities, by the
number of the Fund's shares outstanding. The Fund expects that the net asset
value per share will ordinarily be $1.00. The Fund's total assets are determined
by valuing the portfolio securities at amortized cost. While this method
provides certainty in valuation, it may result in periods during which value, as
determined by amortized cost, is higher or lower than the price the Fund would
receive if it sold its portfolio.
CLASS A SHARES--NEW PURCHASES OR EXCHANGES FROM OTHER FORTIS FUNDS' CLASS A
SHARES
The purchase price of Class A shares is equal to the next net asset value per
share calculated after receipt of your purchase order.
CLASS B AND H SHARES--EXCHANGES FROM OTHER FORTIS FUNDS' CLASS B OR H SHARES
Class B and Class H shares are available only in exchange for Class B or Class H
shares of another Fortis Fund. As with Class A shares, the purchase price of
Class B and Class H shares is the net asset value of the Fund's shares. If you
redeem shares within six years of the date you purchased the original Fortis
Fund shares, a contingent deferred sales charge will be imposed at the following
rates:
<TABLE>
<CAPTION>
YEAR SINCE PURCHASE
OF ORIGINAL FORTIS CONTINGENT DEFERRED
FUND SHARES SALES CHARGE
- -------------------- --------------------
<S> <C>
First............... 4.00%
Second.............. 4.00%
Third............... 3.00%
Fourth.............. 3.00%
Fifth............... 2.00%
Sixth............... 1.00%
Seventh............. None
Eighth.............. None
</TABLE>
For additional information, see "How to Sell Shares--Contingent Deferred Sales
Charge."
Proceeds from the CDSC are paid to Investors, in part to defray expenses
incurred by Investors in selling Class B and Class H shares. Investors pays
broker-dealers who sell Class B shares a concession equal to 4.00% of the amount
invested and an annual fee of % of the average daily net assets of the Fund
attributable to such shares. Broker-dealers who sell Class H shares are paid a
concession of between 5.25% and 5.50% of the amount invested.
CONVERSION TO CLASS A SHARES. Class B and Class H shares (except for those
purchased by reinvestment of dividends and other distributions) will
automatically convert to Class A shares eight years after your purchase of the
original Fortis Fund shares. Each time any of these shares convert to Class A, a
proportionate amount of Class B and H shares in your account that were purchased
through the reinvestment of dividends and other distributions will also convert
to Class A.
CLASS C SHARES--EXCHANGES FROM OTHER FORTIS FUNDS' CLASS C SHARES
Class C shares are available only in exchange for Class C shares of another
Fortis Fund. The purchase price of Class C shares is their net asset value. A
CDSC of 1% will be imposed if you redeem your shares within one year of the date
you purchased the original Fortis Fund shares. For additional information, see
"How to Sell Shares--Contingent Deferred Sales Charge."
Proceeds from the CDSC are paid to Investors, in part to defray expenses
incurred by Investors in selling Class C shares. Investors pays broker-dealers
who sell Class C shares a concession equal to 1.00% of the amount invested and
an annual fee, which begins to accrue one year after the shares are sold, equal
to 1.00% of the amount invested.
5
<PAGE>
RULE 12B-1 FEES
The Fund pays Investors Rule 12b-1 fees for the distribution and sale of its
shares and for services provided to shareholders. These fees differ by class, as
follows:
<TABLE>
<CAPTION>
RULE 12b-1 FEE
SHARE CLASS (AS A % OF AVERAGE NET ASSETS)
- ------------------------------ ------------------------------
<S> <C>
Class A....................... 0.20%
Class B and Class H........... 1.00%
Class C....................... 1.00%
</TABLE>
Because these fees are paid out of the Fund's assets on an ongoing basis, over
time they will increase the cost of your investment and may cost you more than
paying other types of sales charges.
HOW TO BUY SHARES
You may become a shareholder in the Fund with an initial investment of $500 or
more. If you are investing under the "Systematic Investment Plan," this minimum
initial investment is reduced to $25 for the "Pre-Authorized Check Plan" and $50
for any other Systematic Investment Plan (except for telephone or wire orders).
The minimum subsequent investment is $50 for investments by mail ($25 per month
for the Pre-Authorized Check Plan) and $500 for other investments by telephone
or investments by wire.
The Fund has the right to reject any purchase order or to restrict purchases at
any time.
INVESTING BY WIRE
If you have an account with a commercial bank that is a member of the Federal
Reserve System, you may purchase shares ($500 minimum) by requesting your bank
to transmit immediately available funds (Federal Funds) by wire to:
U.S. Bank National Association
ABA #091000022, credit account no: 1-702-2514-1341
Fortis Funds Purchase Account
For further credit to: (your name)
Fortis Account NBR (your account number)
Before making an initial investment by wire, your broker-dealer must first
telephone Investors at the number on the cover page of this Prospectus to open
your account and obtain your account number. You must promptly send your Account
Application which accompanies this Prospectus to Investors at "CM-9614, St.
Paul, MN 55170-9614." You may make additional investments by wire at any time
even if your initial investment was by mail. Your bank should transmit Federal
Funds using the instructions above.
INVESTING BY MAIL
You should complete and sign the Account Application which accompanies this
Prospectus. Please make your check or other negotiable bank draft payable to
Fortis Funds and mail it with your Application to "CM-9614, St. Paul, MN
55170-9614."
You may make additional purchases at any time by mailing a check or other
negotiable bank draft along with your confirmation stub. Be sure to identify the
account to which any such purchase is to be credited by specifying the name(s)
of the registered owner(s) and the account number.
SPECIAL PURCHASE PLANS
TAX SHELTERED RETIREMENT PLANS. Individual Retirement Accounts ("IRAs"),
Self-Employed, Pension, Profit Sharing, and 403(b) accounts are available.
6
<PAGE>
GIFTS OR TRANSFERS TO MINOR CHILDREN. Adults can make an irrevocable gift or
transfer of Fund shares in an account established for a minor.
SYSTEMATIC INVESTMENT PLAN. You may have $25 or more automatically withdrawn
each month from your checking account (see the Systematic Investment Plan
Authorization Agreement in Account Applications). Advisers may elect to send
confirmations for purchases made under a Systematic Investment Plan to you
quarterly, rather than following each transaction.
EXCHANGE PRIVILEGE
Class A shares of the Fund may be exchanged for shares of any class of another
Fortis fund, unless your Class A Fund shares were originally issued in exchange
for shares of a Fortis fund that were subject to a sales charge. In that case,
your Fund shares may be exchanged only for Class A shares of the other Fortis
fund, and the exchange will not be subject to a sales charge. In all other
cases, if you exchange your Class A Fund shares for Class A shares of another
Fortis fund, that fund's sales charge must be paid. If you exchange your Class A
Fund shares for another class of another Fortis fund, the shares cannot later be
exchanged back into Class A shares of the Fund. Class B, H and C Fund shares may
be exchanged for shares of the same class of other Fortis funds. Shareholders of
other Fortis funds may transfer their shares for Fund shares of the same class.
However, the shares of the Fund will remain subject to any contingent deferred
sales charge that applied to the shares of the original Fortis fund.
You may initiate an exchange by writing to or telephoning your broker-dealer,
sales representative or the Fund. You may also use the automated Fortis
Information Line for exchanges of $100 - $100,000. You may make a telephone
exchange only if you have completed and returned the Telephone Exchange section
of the Account Application. During times of chaotic economic or market
circumstances, you may have difficulty reaching your broker-dealer, sales
representative or the Fund by telephone. A telephone exchange may be difficult
to implement at those times. (See "How to Sell Shares--By Phone").
Advisers has the right to change, terminate, impose charges or restrict the
frequency of exchanges. You will receive at least 30 days notice before any such
change is made.
HOW TO SELL SHARES
You may sell your shares on any day when the New York Stock Exchange is open.
Your redemption price will be the net asset value of your shares, less any
contingent deferred sales charge.
Employees of certain Texas public educational institutions who direct investment
in Fund shares under their State of Texas Optional Retirement Plan generally
must obtain the prior written consent of their authorized employer
representative in order to redeem.
BY MAIL
If your redeem by mail, your redemption price will be based on the next net
asset value per share which is determined after the Fund receives your written
redemption request in proper form (and a properly endorsed stock certificate if
one has been issued).
To redeem by mail, send a written request to Fortis Funds, P.O. Box 64284, St.
Paul, MN 55164.
Your request should include the following information:
- Name of Fund
- Account number
- Dollar amount or number of shares to be redeemed
- Name on the account
- Signatures of all registered account owners
If you hold certificates for your shares, they must be included with your
request. You should send your certificates by certified mail. These certificates
(and any stock powers included with your redemption request) must be endorsed
and executed exactly as the Fund shares are registered.
7
<PAGE>
No signature guarantee is required if you are the registered holder and the
redemption proceeds are sent to your address on the Fund's records. A written
redemption request requires a signature guarantee if:
- The Fund does not have the signature of the registered holder on file and
the redemption proceeds are greater than $25,000.
- The redemption proceeds are paid to someone other than the registered
holder.
- The redemption proceeds are sent to an address other than the address on
the Fund's records.
You may obtain a signature guarantee from a bank, broker-dealer, credit union,
national securities exchange, registered securities association, clearing
agency, or savings association. A signature guarantee assures that a signature
is genuine and protects you from unauthorized account transfers.
BY PHONE
Your broker-dealer may place a redemption order by phone if it has a selling
agreement with Investors. The proceeds will be released after the Fund receives
appropriate written materials. If your broker-dealer receives your order prior
to the close of the Exchange and places the order with Investors by the end of
the business day, you will receive that day's price on the order. Some
broker-dealers may charge a fee to process redemptions.
You may also redeem up to $25,000 by calling the Fund at (800) 800-2000, ext.
3012, provided that:
- Your account is not a tax-qualified plan,
- The check is sent to the address of record, and
- You have not changed your address on the Fund's records for at least 30
days.
In addition, you may use the automated Fortis Information Line for redemptions
of $500 - $25,000 on non-tax qualified accounts.
The telephone redemption procedure is automatically available. The Fund will
employ reasonable procedures to confirm that telephone instructions are genuine.
The Fund will not be responsible for any losses that may result from acting on
telephone instructions that it reasonably believes to be genuine. The Fund will
verify your address and social security number, tape record the telephone call
and provide written confirmation of the transaction. The security measures for
automated telephone redemptions using the Fortis Information Line involve use of
a personal identification number and providing written confirmation of the
transaction.
You may have difficulty reaching your broker-dealer, sales representative or the
Fund by telephone during times of chaotic economic or market circumstances. If
you are unable to reach the Fund or its agents by telephone, written
instructions should be sent.
Advisers has the right to change, terminate or impose charges upon the telephone
redemption privilege. You will receive at least 30 days notice before any such
change is made.
BY WIRE
You may request that the redemption proceeds be wired to the bank (or registered
broker-dealer) designated on your account application, if:
- Your account is not a tax-qualified plan,
- You redeem at least $1,000, and
- You have completed the "Telephone Redemption" section on the Account
Application.
There is currently no charge to you for the wiring of redemption proceeds.
PAYMENT OF REDEMPTION PROCEEDS
If you redeem by wire and your redemption request is received before 3:00 p.m.
Central Time, the redemption proceeds will be wired on the next business day.
Otherwise the proceeds will be wired on the second business day following
receipt of your redemption request. If you request that the redemption proceeds
be wired to a bank that is not a member of the Federal Reserve System, be aware
that this will cause a delay in your bank's receipt of the proceeds. Similarly
if you redeem by telephone and your redemption request is received
8
<PAGE>
before 3:00 p.m. Central Time, a check will be mailed on the next business day.
Otherwise a check will be mailed on the second business day following the
telephone redemption. In all other cases, your redemption proceeds generally
will be paid as soon as possible, but not later than three business days after
receipt of a proper redemption request.
If your shares were recently purchased with non-guaranteed funds, such as a
personal check, the mailing or wiring of your redemption check may be delayed by
up to fifteen days. If you wish to avoid this delay, you should consider the
wire purchase method described under "How to Buy Shares."
CHECK WITHDRAWAL OPTION
If your Money Fund account is not a tax-qualified plan, you may appoint the
Fund, Advisers and U.S. Bank, National Association ("the Bank") as your agents,
and may request on your Account Application that the Fund provide you with
checks payable through the Bank. These checks may be made payable to the order
of any person in any amount of $100 or more. You must sign each check as
designated on the Account Application signature card. When a check is presented
to the Bank for payment, the number of full and fractional shares required to
cover the amount of the check will be redeemed from your account. You are
entitled to distributions paid on your shares up to the time the check is
presented to the Bank for payment.
If you recently purchased your shares with non-guaranteed funds (e.g., personal
check), the processing of your check drawn on your Fund account may be delayed
by up to fifteen days. You may not write a check for the entire value of your
account or close your account by writing a check.
If the amount of the check is greater than the value of your Fund account,
Advisers will return your check for insufficient funds and your account will be
charged a $20 service fee.
SYSTEMATIC WITHDRAWAL PLAN
The Fund has a Systematic Withdrawal Plan, which provides for voluntary
automatic withdrawals of at least $50 monthly, quarterly, semiannually or
annually. Deferred sales charges may apply to monthly redemptions. Confirmations
for redemptions made under the Systematic Withdrawal Plan may be sent to you
quarterly, rather than after each transaction. For further information about the
Systematic Withdrawal Plan, contact your broker-dealer or sales representative.
INVOLUNTARY REDEMPTIONS
The Fund has the right to redeem accounts with a current value of less than
$500. If you actively participate in the Fund's Systematic Investment Plan your
account will not be redeemed. Before redeeming your account, the Fund will mail
you a notice of its intention to redeem and give you an opportunity to make an
additional investment. If you do not make an additional investment within 60
days from date the notice was mailed, your account will be redeemed.
REINVESTMENT PRIVILEGE
If you redeem your shares, you may reinvest the proceeds within 60 days without
payment of an additional sales charge. If the shares you redeemed were subject
to a CDSC, that charge will be credited to your account. The reinvested shares
will be subject to the same CDSC that would have applied to the original shares.
For further information, contact your broker-dealer or sales representative.
CONTINGENT DEFERRED SALES CHARGES
If you redeem shares subject to a CDSC, your CDSC will be based on the value of
your original Fortis Fund shares when they were purchased or on the value of
your Fund at the time of sale, whichever is less. The CDSC does not apply to
shares acquired by reinvesting income dividends or capital gain distributions.
Unless instructed otherwise, the Fund will redeem shares in the following order:
- Shares not subject to a CDSC and having a higher Rule 12b-1 fee will be
redeemed first.
- Shares not subject to a CDSC and having a lower Rule 12b-1 fee will be
redeemed next.
- Shares subject to a CDSC then will be redeemed in the order purchased.
9
<PAGE>
A CDSC is not imposed:
- When the Fund exercises its right to liquidate accounts which are less
than the minimum account size.
- When shares are redeemed because of a shareholder's death or disability,
as defined in Section 72(m)(7) of the Internal Revenue Code (if
satisfactory evidence is provided to the Fund).
- With respect to Class B and H shares only, to an amount that represents,
on an annual (non-cumulative) basis, up to 10% of the amount (at the time
of the investment) of the shareholder's purchases.
- With respect to Class B, H, and C shares, to qualified plan benefit
distributions due to the participant's separation from service, loans or
financial hardship (excluding IRAs, SEPs, and 403(b), 457, and Fortis KEY
plans) upon the Fund's receipt from the plan's administrator or trustee of
written instructions detailing the reason for the distribution.
If a you exchange shares subject to a CDSC for shares of a different Fortis
Fund, the transaction is not be subject to a CDSC. However, when you redeem the
shares acquired through the exchange, you will be treated as if no exchange took
place for the purpose of determining the CDSC.
DIVIDEND DISTRIBUTIONS
On each day the New York Stock Exchange (the "Exchange") is open, the Fund
declares a dividend of all its net income to shareholders of record as of 3:00
p.m., Central Time, the preceding business day. The dividends will be reinvested
in additional Fund shares of the same class unless you send the Fund a written
request that they be sent to you in cash or reinvested (at net asset value) in
shares of the same class of another Fortis fund.
Dividends begin to accrue the next business day after you become a shareholder.
Dividends are reinvested monthly on the last business day of each month. If your
dividends are reinvested in other Fortis Funds, processing normally takes one
business days. If you elect cash payment, a check will be mailed within five
business days after the end of the month. If you withdraw your entire account,
all dividends accrued will be paid at that time.
If you receive dividends in cash, you will receive a monthly confirmation
statement. If your dividends are reinvested, you will receive a quarterly
confirmation statement.
TAX CONSIDERATIONS
Dividends generally are taxable to you as ordinary income, whether you are paid
in cash or reinvest the dividends. However, because everyone's tax situation is
unique, be sure to consult with your tax adviser.
Information about the tax status of each year's distributions will be mailed
annually.
SHAREHOLDER INQUIRIES
You should direct your inquiries to your broker-dealer or sales representative
or to the Fund at the telephone number or mailing address listed on the cover of
this Prospectus. A $10 fee will be charged for copies of Annual Account
Summaries older than the preceding year.
FUND MANAGEMENT
- -------------------------------------------------------------------
INVESTMENT ADVISER
Fortis Advisers, Inc. ("Advisers") is the investment adviser for the Fund, and
also serves as the Fund's transfer agent and dividend agent. Advisers has been
managing investment company portfolios since 1949. In addition to providing
investment advice, Advisers is responsible for managing the Fund's business
affairs, subject to the overall authority of the Board of Directors. Advisers'
address is that of the Fund.
The Fund pays Advisers a monthly fee for providing investment advisory services.
During its most recent fiscal year, the Fund paid Advisers a monthly fee at an
annual rate of % of average daily net assets.
10
<PAGE>
MORE INFORMATION ON THE FUND
- -------------------------------------------------------------------
INVESTMENT STRATEGIES
The principal investment strategies of the Fund are described above under "The
Fund." These are the strategies that Advisers believes are most likely to be
important in trying to achieve the Fund's goals. Of course, there is no
guarantee that the Fund will achieve its goal. You should be aware that the Fund
may also use strategies and invest in securities that are not described below,
but are described in the Statement of Additional Information.
The Fund may attempt to maximize the total return on its portfolio by trading to
take advantage of changing money market conditions and trends. The Fund may also
trade to take advantage of what are believed to be disparities in yield
relationships between different money market instruments. This procedure may
increase or decrease the portfolio yield, depending upon management's ability to
correctly time and execute such transactions. Since the Fund's assets will be
invested in securities with short maturities and the Fund will manage its
portfolio as described above, the Fund's portfolio of money market instruments
will turn over several times a year. However, this does not generally increase
the Fund's brokerage costs, because brokerage commissions as such are not
usually paid in connection with the purchase or sale of the instruments in which
the Fund invests. Since securities with maturities of less than one year are
excluded from required portfolio turnover rate calculations, the Fund's
portfolio turnover rate for reporting purposes will be zero.
YEAR 2000 ISSUES
Like other mutual funds and financial and business organizations around the
world, the Fund could be adversely affected if the computer systems used by
Fortis Funds, Advisers and other service providers and entities with computer
systems that are linked to Fortis Funds' records do not properly process and
calculate date-related information and data from and after January 1, 2000. The
Fund and Advisers and its affiliates are taking steps that they believe are
reasonably designed to address year 2000 issues with respect to the computer
systems they use and to obtain satisfactory assurances that comparable steps are
being taken by the Fund's other major service providers. However, there can be
no assurance that these steps will be sufficient to avoid any adverse impact on
the Fund.
11
<PAGE>
FINANCIAL HIGHLIGHTS
- -------------------------------------------------------------------
The tables that follow present performance information about each class of
shares of the Fund. This information is intended to help you understand the
Fund's financial performance for the past five years or, if shorter, the period
of the Fund's operations. Some of this information reflects financial results
for a single Fund share. The total returns in the tables represent the rate that
you would have earned or lost on an investment in a class of the Fund, assuming
you reinvested all of your dividends and distributions.
This information has been audited by KPMG Peat Marwick LLP, independent
auditors, whose report, along with the Fund's financial statements, is included
in the Fund's annual report, which is available upon request.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
CLASS A CLASS B
------------------------------------------------ -----------------------
YEAR ENDED SEPTEMBER 30,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------
1998 1997 1996 1995 1994 1998 1997 1996+++
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net......................... .05 .05 .05 .05 .03 .04 .04 .04
- -----------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.................... (.05) (.05) (.05) (.05) (.03) (.04) (.04) (.04)
- -----------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period.................... $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------------
Total return @.................................... 4.88% 4.74% 4.74% 5.03% 2.92% 4.06% 3.97% 4.11%
- -----------------------------------------------------------------------------------------------------------------------------
Net assets end of period (000s omitted)........... $156,623 $126,547 $120,375 $105,472 $105,659 $ 305 $ 55 $ 28
Ratio of expenses to average daily net assets..... .86% .88% .91% .91% .88% 1.66% 1.68% 1.71%*
Ratio of net investment income to average daily
net assets....................................... 4.77% 4.64% 4.67% 4.91% 2.92% 4.00% 3.94% 3.99%*
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CLASS C CLASS H
--------------------------------- -------------------------------
YEAR ENDED SEPTEMBER 30,
<S> <C> <C> <C> <C> <C> <C> <C> <C>
-------------------------------------------------------------------
1998 1997 1996 1995++ 1998 1997 1996 1995+
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.............. $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
- -----------------------------------------------------------------------------------------------------------------------
Operations:
Investment income - net......................... .04 .04 .05 .01 .04 .04 .04 .02
- -----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.................... (.04) (.04) (.05) (.01) (.04) (.04) (.04) (.02)
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period.................... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- -----------------------------------------------------------------------------------------------------------------------
Total return @.................................... 4.12% 4.45% 4.97% 1.33% 4.07% 4.06% 4.04% 2.52%
- -----------------------------------------------------------------------------------------------------------------------
Net assets end of period (000s omitted)........... $ 714 $ 10 $ 1 $ 9 $ 550 $ 627 $ 60 $ 122
Ratio of expenses to average daily net assets..... 1.66% 1.68% 1.46%* 1.71%* 1.66% 1.68% 1.71% 1.71%*
Ratio of net investment income to average daily
net assets....................................... 4.08% 3.98% 4.33%* 4.46%* 3.96% 4.02% 4.03% 4.43%*
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Annualized.
+ For the period from March 16, 1995 (date of first investment) to September
30, 1995.
++ For the period from June 14, 1995 (date of first investment) to September
30, 1995.
+++ For the perod from October 9, 1995 (date of first investment) to September
30, 1996.
@ These are the portfolio's total returns during the periods, including
reinvestment of all distributions.
(a) Advisers has reimbured expenses for 12b-1 fees charged in excess of
National Association of Securities Dealers limitations. For the year ending
September 30, 1996, had the reimbursement not been made, ratios of expenses
and net investment income to average daily net assets would have been 1.71%
and 4.08% respectively, for Class C.
12
<PAGE>
FORTIS-SM-
ACCOUNT APPLICATION
Complete this application to open a new Fortis
account or to add services to an existing Fortis
Mail to: account. For personal service, please call your
FORTIS MUTUAL FUNDS investment professional or Fortis customer service
CM-9614 at 1-800-800-2000, ext. 3012. Submission of an
St. Paul, MN 55170-9614 incomplete application may cause processing delays.
DO NOT USE TO OPEN A FORTIS IRA, SEP, 403(B) OR
FORTIS MONEY FUND ACCOUNT.
________________________________________________________________________________
1 ACCOUNT INFORMATION
________________________________________________________________________________
Please provide the information requested below:
/ /INDIVIDUAL: Please print your name, Social Security number, U.S. citizen
status.
/ /JOINT TENANT: List all names, one Social Security number, one U.S. citizen
status.
/ /UNIFORM GIFT/TRANSFER TO MINORS: Provide name of custodian (ONLY ONE) and
minor, minor's Social Security number, minor's U.S. citizen status and date
of birth of minor.
/ /TRUST: List trustee and trust title, including trust date, trust's Taxpayer
ID number; also include a photocopy of the first and last page of the trust
agreement.
/ /CORPORATION, ASSOCIATION, PARTNERSHIP: Include full name, Taxpayer ID number.
/ /FORTIS KEY PLAN: Include Social Security number.
/ /QUALIFIED PLAN: Include name of Plan and trustee, Plan's Taxpayer ID number.
/ / OTHER: _____________________________________________________________________
- ---------------------------------------------------------------
Owner (Individual, 1st Joint Tenant, Custodian, Trustee) (Please print)
- ------------------------------------------------------------------------
Owner (2nd Joint Tenant, Minor, Trust Name) (Please print)
- ------------------------------------------------------------------------
Additional information, if needed
- ------------------------------------------------------------------------
Street address
- ------------------------------------------------------------------------
City State Zip
- ------------------------------------------------------------------------
Social Security number (Taxpayer ID)
( )
- ---------------------------------------------------------------
Daytime phone Date of birth
(Uniform Gift/Transfer to Minors)
Date of Trust (if applicable) __________________________________________________
Are you a U.S. citizen? / / Yes / / No
If no, country of permanent residence __________________________________________
95749 (11/98)
________________________________________________________________________________
2 TRANSFER ON DEATH
________________________________________________________________________________
Please indicate the Primary Beneficiary with "PB" after the beneficiary(ies)
name(s). Indicate Contingent Beneficiary with "CB." Indicate Lineal Descendant
Per Stirpes with "LDPS" if you want ownership to pass to the legal heirs of the
primary beneficiary in the event a designated beneficiary dies before the
account owner.
TOD IS ONLY AVAILABLE FOR INDIVIDUAL AND JOINT TENANTS (JTWROS) ACCOUNTS.
BENEFICIARY(IES):
Name _____________________________ SS# _________________________________________
Name _____________________________ SS# _________________________________________
Name _____________________________ SS# _________________________________________
________________________________________________________________________________
3 INVESTMENT ACCOUNT
________________________________________________________________________________
A. PHONE ORDERS
Was order previously phoned in? If yes, date ___________________________________
Confirmation # ___________________________ Account # ___________________________
FOR PHONE ORDERS, CHECK MUST BE MADE PAYABLE TO FORTIS INVESTORS
B. MAIL-IN ORDERS
Check enclosed for $____________________________. (MADE PAYABLE TO FORTIS FUNDS)
MUST INDICATE CLASS
<TABLE>
<C> <S> <C> <C>
1) --------- $ ----------- A / / B / / C / / H / /
Fund Name Amount or % Class
2) $ A / / B / / C / / H / /
--------- -----------
Fund Name Amount or % Class
3) $ A / / B / / C / / H / /
--------- -----------
Fund Name Amount or % Class
4) $ A / / B / / C / / H / /
--------- -----------
Fund Name Amount or % Class
5) $ A / / B / / C / / H / /
--------- -----------
Fund Name Amount or % Class
</TABLE>
________________________________________________________________________________
4 EXEMPTION FROM SALES CHARGE
________________________________________________________________________________
CHECK IF APPLICABLE (for net asset value purchases):
/ / I am a member of one of the categories of persons who are exempt from the
sales charge. I qualify for exemption from the sales charge because _______.
/ / I was (within the past 60 days) the owner of a fixed annuity contract not
deemed a security or a shareholder of an unrelated mutual fund with a
front-end and/or deferred sales charge. I have attached the mutual
fund/insurance check (or copy of the redemption confirmation/surrender
form).
The Fortis logo and Fortis-SM- are servicemarks of Fortis AMEV and Fortis AG
<PAGE>
________________________________________________________________________________
5 SIGNATURE & CERTIFICATION
________________________________________________________________________________
I have received and read each appropriate fund prospectus and understand that
its terms are incorporated by reference into this application. I am of legal age
and legal capacity.
I understand that this application is subject to acceptance by Fortis Investors,
Inc.
I CERTIFY, UNDER PENALTIES OF PERJURY, THAT:
(1) THE SOCIAL SECURITY NUMBER OR TAXPAYER ID NUMBER PROVIDED IS CORRECT; AND
(CROSS OUT THE FOLLOWING IF NOT TRUE)
(2) THAT THE IRS HAS NEVER NOTIFIED ME THAT I AM SUBJECT TO 31% BACKUP
WITHHOLDING, OR HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO SUCH BACKUP
WITHHOLDING.
Each person signing on behalf of any entity represents that his or her actions
are authorized. It is agreed that all Fortis Funds, Fortis Investors, Fortis
Advisers and their officers, directors, agents and employees will not be liable
for any loss, liability, damage or expense for relying upon this application or
any instruction believed genuine.
IF YOU ARE NOT SIGNING AS AN INDIVIDUAL, STATE YOUR TITLE OR CAPACITY (INCLUDE
APPROPRIATE DOCUMENTS VERIFYING YOUR CAPACITY).
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
AUTHORIZED SIGNATURE(S)
X
- ---------------------------------------------------------------
Owner, Custodian, Trustee Date
X
- ---------------------------------------------------------------
Joint Owner, Trustee Date
________________________________________________________________________________
6 DEALER/REPRESENTATIVE INFORMATION
________________________________________________________________________________
- --------------------------------------------------
Representative's name (please print)
- ------------------------------------------------------------------------
Name of Broker/Dealer
- ------------------------------------------------------------------------
Branch Office address
- ------------------------------------------------------------------------
Representative's signature
( )
- ------------------------------------------------------------------------
Representative's number Representative's Phone Number
- ------------------------------------------------------------------------
AUTHORIZED SIGNATURE OF BROKER/DEALER
________________________________________________________________________________
7 DISTRIBUTION OPTIONS
________________________________________________________________________________
If no option is selected, all distributions will be reinvested in the same
Fortis fund(s) selected above. Please note that distributions can only be
reinvested in the SAME CLASS.
/ / Reinvest dividends and capital gains
/ / Dividends in cash and reinvest capital gains (See Section 9 for payment
options.)
/ / Dividends and capital gains in cash (See Section 9 for payment options.)
/ / Distributions into another Fortis fund (must be SAME CLASS).
____________________________________________________________________________
Fund Name Fund/Account # (if existing account)
________________________________________________________________________________
8 SYSTEMATIC EXCHANGE PROGRAM
________________________________________________________________________________
Fortis' Systematic Transfer Program allows you to transfer money from any Fortis
fund, in which you have a current balance of at least $1,000, into any other
Fortis fund (maximum of three), on a monthly basis. The minimum amount for each
transfer is $50. Generally, transfers between funds must be within the SAME
CLASS. See prospectus for details.
- ------------------------------------------------------------------------
Fund from which shares will be exchanged: Effective Date
FUND(S) TO RECEIVE INVESTMENT(S):
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Fund Amount to invest monthly
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
________________________________________________________________________________
9 WITHDRAWAL OPTIONS
________________________________________________________________________________
A. CASH DIVIDENDS
PLEASE FORWARD THE PAYMENT TO:
<TABLE>
<S> <C>
/ / My Bank. (Please complete Bank Information in
Section D, and choose one option below. Payment
will be sent via U.S. Mail if neither option is
checked.)
/ / Via U.S. Mail
/ / Via ACH (electronic transfer)
/ / My address of record.
</TABLE>
B. SYSTEMATIC WITHDRAWAL PLAN
Please consult your financial or tax adviser before electing a Systematic
Withdrawal Plan.
Please redeem shares from my Fortis ______________________________________ Fund,
account number _______________________ in the amount of $______________________.
Effective Withdrawal Date __________________
<TABLE>
<S> <C> <C> <C>
FREQUENCY: / / Monthly / / Semi-Annually
/ / Quarterly / / Annually
</TABLE>
PLEASE FORWARD THE PAYMENT TO:
<TABLE>
<S> <C>
/ / My Bank. (Please complete Bank Information in
Section D, and choose one option below. Payment
will be sent via U.S. Mail if neither option is
checked.)
/ / Via U.S. Mail
/ / Via ACH (electronic transfer)
/ / My address of record.
</TABLE>
C. TELEPHONE OPTIONS
/ / TELEPHONE EXCHANGE. All exchanges must be into accounts having the identical
registration-ownership. All authorized signatures listed in Section 5 (or
your registered representative with shareholder consent) can make telephone
transfers.
/ / TELEPHONE REDEMPTION ($25,000 LIMIT AND NOT AVAILABLE FOR QUALIFIED PLANS).
This option allows all authorized signatures in Section 5 (or your
registered representative with shareholder consent) to redeem up to $25,000
from your Fortis account.
PLEASE FORWARD THE PAYMENT TO:
<TABLE>
<S> <C>
/ / My Bank. (Please complete Bank Information in
Section D, and choose one option below. Payment
will be sent via U.S. Mail if neither option is
checked.)
/ / Via U.S. Mail
/ / Via ACH (electronic transfer)
/ / My address of record.
</TABLE>
<PAGE>
(WITHDRAWAL OPTIONS, CONTINUED)
D. BANK INFORMATION
I request Fortis Financial Group (FFG) to pay sums due me by crediting my bank
account in the form of electronic entries. This authorization will remain in
effect until I notify FFG.
TYPE OF ACCOUNT: / / Checking / / Savings
Bank name ______________________________________________________________________
Address ________________________________________________________________________
City, State, Zip _______________________________________________________________
Name of bank account ___________________________________________________________
Bank account number ____________________________________________________________
Bank transit number ____________________________________________________________
Bank phone number ______________________________________________________________
ATTACH A VOIDED CHECK FROM YOUR BANK CHECKING ACCOUNT
________________________________________________________________________________
10 REDUCED FRONT-END SALES CHARGES
________________________________________________________________________________
A. RIGHT OF ACCUMULATION
/ / I own shares of more than one fund in the Fortis Family of Funds, which may
entitle me to a reduced sales charge.
- --------------------------------------------------------------------------------
Name on account Account number
- --------------------------------------------------------------------------------
Name on account Account number
- --------------------------------------------------------------------------------
Name on account Account number
B. STATEMENT OF INTENT
I agree to invest $_________ over a 13-month period beginning ____________ (not
more than 90 days prior to this application). I understand that an additional
sales charge must be paid if I do not complete my purchase.
________________________________________________________________________________
11 PRIVILEGED ACCOUNT SERVICE
________________________________________________________________________________
Fortis' Privileged Account Service systematically rebalances your funds back to
your original specifications ($10,000 minimum per account). All funds must be
within the SAME CLASS.
Frequency: / / quarterly / / semi-annually / / annually
<TABLE>
<S> <C> <C>
Fund Selected Percentage
(up to 5) (whole %)
1)
------------------------- ---------------
2)
------------------------- ---------------
3)
------------------------- ---------------
4)
------------------------- ---------------
5)
------------------------- ---------------
</TABLE>
________________________________________________________________________________
12 SUITABILITY
________________________________________________________________________________
NOTE: Must be completed with each fund application unless you provide
suitability information to your broker/dealer on a different form.
State In Which Application Was Signed ______________________________________
- --------------------------------------------------------------------------------
Employer
- --------------------------------------------------------------------------------
Business Address
- --------------------------------------------------------------------------------
City, State, ZIP
- --------------------------------------------------------------------------------
Occupation Age (optional)
Is customer associated with or employed by another
NASD member? / / Yes / / No
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
Please mark one box under ESTIMATED
ESTIMATED ANNUAL INCOME ESTIMATED NET
and one box under ANNUAL WORTH
ESTIMATED NET WORTH INCOME (Exclusive of
(All Sources) Family Residence)
- --------------------------------------------------------------------------------
under $10,000
- --------------------------------------------------------------------------------
$10,000 - $25,000
- --------------------------------------------------------------------------------
$25,000 - $50,000
- --------------------------------------------------------------------------------
$50,000 - $100,000
- --------------------------------------------------------------------------------
$100,000 - $500,000
- --------------------------------------------------------------------------------
$500,000 - $1,000,000
- --------------------------------------------------------------------------------
Over $1,000,000
- --------------------------------------------------------------------------------
Declined
- --------------------------------------------------------------------------------
</TABLE>
Source of Funds
- --------------------------------------------------------------------------------
ESTIMATED FEDERAL TAX BRACKET
/ / 15% / / 28% / / 31% / / 33% / / Declined
INVESTMENT OBJECTIVES
/ / Growth (long-term capital appreciation)
/ / Income (cash generating)
/ / Tax-free Income
/ / Diversification
/ / Other (please specify) _________________________________________
Did you use a Fortis Asset Allocation model? / / Yes / / No
________________________________________________________________________________
13 SYSTEMATIC INVESTMENT PLAN
________________________________________________________________________________
Complete the Automated Clearing House (ACH) Authorization Agreement Form in the
prospectus and attach a VOIDED check from your bank checking account. These
plans may be established for as little as $25.
________________________________________________________________________________
14 OTHER SPECIAL INSTRUCTIONS
________________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
FORTIS FINANCIAL GROUP FORTIS-SM-
Fortis Advisers, Inc. (fund management since 1949)
Fortis Investors, Inc. (principal underwriter, member NASD, SIPC)
Fortis Benefits Insurance Company & Fortis Insurance Company
P.O. Box 64284 St. Paul, MN 55164-0284 (800) 800-2000
http://www.ffg.us.fortis.com
FORTIS MUTUAL FUND
AUTOMATED CLEARING HOUSE (ACH) AUTHORIZATION AGREEMENT
Please complete each section below to establish ACH capability to your
Fortis Mutual Fund Account.
For personal service, please call your investment professional or
Fortis at (800) 800-2000, extension 3012.
For investment options, complete sections 1, 2, 3. For withdrawal,
complete sections 1, 2, 4, 5.
________________________________________________________________________________
1 FORTIS ACCOUNT INFORMATION
________________________________________________________________________________
Account Registration:
________________________________________________________________________________
Owner (Individual, 1st Joint Tenant, Custodian, Trustee)
________________________________________________________________________________
Owner (2nd Joint Tenant, Minor, Trust Name)
________________________________________________________________________________
Additional Information, if needed
________________________________________________________________________________
Street address
________________________________________________________________________________
City State Zip
________________________________________ _______________________________________
Social Security number (Taxpayer I.D.) Daytime phone number
________________________________________________________________________________
2 BANK/FINANCIAL INSTITUTION INFORMATION
________________________________________________________________________________
<TABLE>
<S> <C> <C>
PLAN TYPE: / / New Plan / / Bank Change
ACCOUNT TYPE: / / Checking / / Savings
(must attach a (must attach a
voided check) deposit slip)
</TABLE>
________________________________________________________________________________
Transit Number
________________________________________________________________________________
Bank Account Number
________________________________________________________________________________
Account Owner(s) (Please Print)
________________________________________________________________________________
Depositor's Daytime Phone Number
CLEARLY PRINT THE BANK/FINANCIAL INSTITUTION'S NAME AND ADDRESS BELOW:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Signature of Depositor Date
________________________________________________________________________________
Signature of Joint-Depositor Date
________________________________________________________________________________
3 INVESTMENT OPTION(S)
________________________________________________________________________________
<TABLE>
<S> <C> <C>
I request Fortis Financial Group (FFG) to obtain payment of sums becoming due the
company by charging my account in the form of electronic debit entries. I request
and authorize the financial institution named to accept, honor and charge those
entries to my account. Please allow THIRTY days for collected funds to be
available in your Fortis account.
A. / / Invest by phone
(minimum $25, maximum $10,000)
Please allow up to four business days for deposits into
Fortis Funds. Transactions after 3:00 p.m. (CST) will be
processed the following business day.
*Not available on tax-qualified accounts such as IRA, SEP,
SARSEP and KEY plans.
B. / / Systematic Investment Plan: / / New Plan / / Change Plan
C. / / Starting Draft Date:
D. / / Account Number:
</TABLE>
<TABLE>
<CAPTION>
Class Amount
Fund (Circle One) $25.00 per fund minimum
- ------------------------------------------------------ -------------- -----------------------------
<S> <C> <C>
A B C H
A B C H
A B C H
A B C H
</TABLE>
98049 (11/98)
________________________________________________________________________________
4 WITHDRAWAL OPTION(S)
________________________________________________________________________________
<TABLE>
<S> <C> <C>
I request Fortis Financial Group (FFG) to pay sums due me by crediting
my bank account in the form of electronic entries. I request and
authorize the financial institution to accept, honor and credit those
entries to my account. Withdrawal from Fortis Fund(s) requires account
owner(s) signature(s) - see Section 5
(Please consult your financial or tax adviser before electing a
systematic withdrawal plan. For Tax Qualified accounts, additional forms
are required for distribution.)
A. / / Cash Dividends
B. / / Redeem via FORTIS INFORMATION LINE by phone
(minimum $100, maximum $25,000)
Please allow up to four business days for withdrawal to
credit your bank account. Transactions after 3:00 p.m. (CST)
will be processed the following business day.
*Not available on tax qualified accounts such as IRA, SEP,
SARSEP and Key plans.
C. / / Systematic Withdrawal Plan: / / New Plan / / Change Plan
D. / / Beginning Withdrawal Date:
E. / / Account Number:
</TABLE>
<TABLE>
<CAPTION>
Class Amount
Fund (Circle One) $25.00 per fund minimum
- ------------------------------------------------------ -------------- -----------------------------
<S> <C> <C>
A B C H
A B C H
A B C H
A B C H
</TABLE>
________________________________________________________________________________
5 SIGNATURES
________________________________________________________________________________
Each person signing on behalf of any entity represents that his or her actions
are authorized. It is agreed that all Fortis Funds, Fortis Investors, Fortis
Advisers and their officers, directors, agents and employees will not be liable
for any loss, liability, damage or expense for relying upon this application or
any instruction believed genuine.
This authorization will remain in effect until I notify FFG. I hereby terminate
any prior authorization of FFG to initiate charges to this account. I understand
that any returned item or redemption of the entire account may result in
termination of my Automated Clearing House agreement. This authorization will
become effective upon acceptance by FFG at its home office.
Authorized Signature(s)
X ______________________________________________________________________________
Owner, Custodian, Trustee Date
X ______________________________________________________________________________
Joint Owner, Trustee Date
The Fortis logo and Fortis-SM- are servicemarks of Fortis AMEV and Fortis AG
<PAGE>
[LOGO] BULK RATE
FORTIS-SM- U.S. POSTAGE
PAID
FORTIS FINANCIAL GROUP: Permit No, 3794
P.O. Box 64284 Minneapolis, MN
St. Paul, Minnesota 55164-0284
Prospectus
Dated February 1, 1999
More information about the Fund is available in the Fund's Statement of
Additional Information (SAI) and annual and semiannual reports.
- - STATEMENT OF ADDITIONAL INFORMATION. The SAI provides more details about the
Fund and its 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 Fund's
investments is available in the Fund's annual and semiannual reports to
shareholders.
You can obtain a free copy of the Fund's SAI and/or free copies of the Fund's
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 Fund is available on the Internet. Text-only versions of
the Fund documents can be viewed online or downloaded from the SEC's Internet
site at http://www.sec.gov.
SEC file numbers: 811-02943
[LOGO] FORTIS-SM-
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
98301 -C-Fortis 11/98 The Fortis logo and Fortis-SM- are servicemarks of
Fortis AMEV and Fortis AG.
<PAGE>
FORTIS MONEY FUND
A SERIES OF FORTIS MONEY PORTFOLIOS, INC.
STATEMENT OF ADDITIONAL INFORMATION
-----------------------------------
DATED FEBRUARY 1, 1999
This Statement of Additional Information is NOT a prospectus. Information
from the prospectus of Fortis Money Fund (the "Fund") dated February 1, 1999 is
incorporated by reference into this Statement of Additional Information. A copy
of that prospectus may be obtained from your broker-dealer or sales
representative. The address of Fortis Investors, Inc. ("Investors") is P.O. Box
64284, St. Paul, Minnesota 55164. Telephone: (651) 738-4000. Toll Free
(800) 800-2000.
No broker-dealer, sales representative, or other person has been authorized
to give any information or to make any representations other than those
contained in this Statement of Additional Information, and if given or made,
such information or representations must not be relied upon as having been
authorized by the Fund or Investors. This Statement of Additional Information
does not constitute an offer or solicitation by anyone in any state in which
such offer or solicitation is not authorized, or in which the person making such
offer or solicitation is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation.
<PAGE>
TABLE OF CONTENTS
Page
Fund History. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Description of the Fund . . . . . . . . . . . . . . . . . . . . . 1
Investment Policies and Restrictions. . . . . . . . . . . . . . . 1
Investment Practices and Risk Considerations. . . . . . . . . . . 4
Management of the Fund. . . . . . . . . . . . . . . . . . . . . . 8
Principal Holders of Securities . . . . . . . . . . . . . . . . . 13
Investment Advisory and Other Services. . . . . . . . . . . . . . 13
Brokerage Allocation and Other Practices. . . . . . . . . . . . . 17
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Pricing of Shares . . . . . . . . . . . . . . . . . . . . . . . . 20
Purchase of Shares. . . . . . . . . . . . . . . . . . . . . . . . 22
Redemption of Shares. . . . . . . . . . . . . . . . . . . . . . . 23
Taxation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Yield Information . . . . . . . . . . . . . . . . . . . . . . . . 24
Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 25
Other Service Providers . . . . . . . . . . . . . . . . . . . . . 25
Limitation of Director Liability. . . . . . . . . . . . . . . . . 25
Additional Information. . . . . . . . . . . . . . . . . . . . . . 26
Appendix A
Glossary of Terms. . . . . . . . . . . . . . . . . . . . . . 27
Appendix B
Commercial Paper and Corporate Bond Ratings. . . . . . . . . 28
<PAGE>
FUND HISTORY
Fortis Money Fund is currently the only series (portfolio) of Fortis Money
Portfolios, Inc. ("Fortis Money") which was incorporated in Minnesota in 1979.
DESCRIPTION OF THE FUND
Fortis Money is registered with the Securities and Exchange Commission
under the Investment Company Act of 1940 (the "1940 Act") as an open-end
diversified management investment company. Fortis Money currently consists of
one investment portfolio. The 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.
Fortis Money may establish other portfolios, each corresponding to a
distinct investment portfolio and a distinct series of their common stock.
INVESTMENT POLICIES AND RESTRICTIONS
The Fund's investment objective and, except as otherwise noted, the
policies by which the Fund seeks to achieve its objective, may be changed
without the approval of shareholders. No changes are contemplated at this time,
but a change in investment objective or policies could result in the Fund no
longer being appropriate for an investor.
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 and illiquid securities, 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.
Some investment policies and restrictions are fundamental and may be
changed only by the approval of a majority of the 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.
-1-
<PAGE>
INVESTMENT POLICIES
The Fund pursues its objective of maximum income and stability of principal
by investing exclusively in the following types of money market instruments
which mature in 397 days or less:
(1) Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities.
(2) Obligations of: (a) domestic or Canadian chartered banks having total
assets in excess of one billion dollars; and (b) foreign branches of
domestic banks, and domestic branches of foreign banks, where the parent
bank has total assets in excess of $1,000,000,000, or in foreign banks (or
foreign branches of foreign banks) where such banks have total assets in
excess of $1,000,000,000, or in other foreign issuers; provided, that no
more than 49% of the Fund's total assets may be invested in foreign
branches of domestic banks and domestic branches of foreign banks, foreign
banks, foreign branches of foreign banks, and other foreign issuers,
collectively. Such obligations may include, but are not limited to,
certificates of deposit, letters of credit, and bankers' acceptances. For
this purpose, "bank" includes commercial banks, savings banks, and savings
and loan associations.
(3) Obligations of other domestic issuers (which include, for example,
commercial paper and other debt obligations) which meet the quality and
other standards of Rule 2a-7 (or successors thereto) under the 1940 Act.
(4) Repurchase agreements in connection with obligations which are
suitable for investment under the categories set forth above.
(5) The Fund may purchase obligations other than those listed above if the
obligation is accompanied by a guarantee of principal and interest provided
that the guarantee is that of a bank or other issuer whose certificates of
deposit or debt obligations may be otherwise purchased by the Fund; such
obligations and guarantees must be due within 397 days or less from the
date of purchase.
In seeking to attain its investment objective, the Fund will have at least
25% of its total assets invested collectively in obligations of foreign branches
of domestic banks, domestic branches of foreign banks, foreign banks, foreign
branches of foreign banks, and other foreign issuers, except when a more
defensive position is deemed warranted.
The above are fundamental policies, which may not be changed without
shareholder approval.
The Fund may attempt to maximize the total return on its portfolio by
trading to take advantage of changing money market conditions and trends. The
Fund may also trade to take advantage of what are believed to be disparities in
yield relationships between different money market instruments. This procedure
may increase or decrease the portfolio yield, depending upon management's
ability to correctly time and execute such transactions. Since the Fund's
assets
-2-
<PAGE>
will be invested in securities with short maturities and the Fund will manage
its portfolio as described above, the Fund's portfolio of money market
instruments will turn over several times a year. However, this does not
generally increase the Fund's brokerage costs because brokerage commissions are
not usually paid in connection with the purchase or sale of the instruments in
which the Fund invests. Securities with maturities of less than one year are
excluded from required portfolio turnover rate calculations so the Fund s
portfolio turnover rate for reporting purposes will be zero. There are risks
associated with investing in instruments in which the Fund will invest,
including but not limited to, the possibility of price fluctuations due to
changes in interest rates, credit-worthiness, domestic and foreign economic and
political conditions.
INVESTMENT RESTRICTIONS
The following investment restrictions are fundamental and may be changed
only by the approval of shareholders. The Fund will not:
(1) Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds or industrial revenue bonds
(except through the purchase of debt obligations).
(2) Concentrate more than 25% of the value of its assets in any one
industry; provided, however, that there is no limitation with respect
to investments in obligations issued or guaranteed by the U.S.
Government or its agencies and instrumentalities, or obligations of
domestic commercial banks. As to utility companies, gas, electric,
water and telephone companies will be considered as separate
industries. As to finance companies, the following categories will be
considered as separate industries: (a) captive automobile finance,
such as General Motors Acceptance Corp. and Ford Motor Credit Corp.;
(b) captive equipment finance companies, such as Honeywell Finance
Corporation and General Electric Credit Corp.; (c) captive retail
finance companies, such as Macy Credit Corp. and Sears Roebuck
Acceptance Corp.; (d) consumer loan companies, such as Beneficial
Finance Corporation and Household Finance Corporation; (e) diversified
finance companies, such as CIT Financial Corp., Commercial Credit
Corporation, and Borg Warner Acceptance Corp.; and (f) captive oil
finance companies, such as Shell Credit Inc., Mobil Oil Credit Corp.,
and Texaco Financial Services, Inc.
(3) Make loans to others (except through the purchase of money market
instruments referred to under "Investment Objectives and Policies").
(4) Borrow money, except as a temporary measure for extraordinary or
emergency purposes, and then only in an amount up to one-third of the
value of its total assets, in order to meet redemption requests
without immediately selling any money market instruments (any such
borrowings under this section will not be collateralized). If, for
any reason, the current value of the Fund's total assets falls below
an amount equal to three times the amount of its indebtedness from
money borrowed, the Fund will, within three business days, reduce its
indebtedness to the
-3-
<PAGE>
extent necessary. To do this the Fund may have to sell a portion of
its investments at a time when it may be disadvantageous to do so.
Interest paid on borrowed funds would decrease the net earnings of the
Fund. The Fund will not borrow for leverage purposes.
(5) Make short sales of securities, or purchase any securities on margin
except to obtain such short-term credits as may be necessary for the
clearance of transactions.
(6) Write, purchase or sell puts, calls or combinations thereof.
(7) Invest for the purpose of exercising control or management of another
issuer.
(8) Invest in commodities or commodity futures contracts or in real
estate, although it may invest in securities which are secured by real
estate and securities of issuers which invest or deal in real estate.
(9) Invest more than 5% of the value of its total assets in securities of
other investment companies, except in connection with a merger,
consolidation, acquisition or reorganization.
(10) Underwrite securities issued by others, except to the extent the Fund
may be deemed to be an underwriter, under the federal securities laws,
in connection with the disposition of portfolio securities.
The following investment restrictions may be changed without shareholder
approval. The Fund will not:
(1) Invest more than 10% of its net assets in illiquid securities.
(2) Invest in real estate limited partnerships or in oil, gas, and other
mineral leases.
(3) Invest more than 5% of its assets in savings banks.
(4) Invest more than 10% of its assets in savings and loan associations.
(5) Invest more than 10% of its assets in obligations of Canadian
chartered banks.
INVESTMENT PRACTICES AND RISK CONSIDERATIONS
RULE 2a-7
The Fund is subject to the requirements of Rule 2a-7 under the 1940 Act.
Rule 2a-7 requires that all investments by the Fund be limited to U.S.
dollar-denominated investments that: (1) present "minimal credit risks," and (2)
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 Ratings
Services ("Standard & Poor's") or P-1 or P-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. The
Fund's Board of Directors has established written guidelines and procedures for
Advisers and oversees Advisers' determination that the Fun''s portfolio
securities present only minimal credit risks and are Eligible Securities. Under
Rule 2a-7, 95% of the assets
-4-
<PAGE>
of the Fund must 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). Rule 2a-7 requires that (1) a 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 (2) a fund's
investment in Second Tier Securities of a single issuer may not exceed the
greater of 1% of the fun''s total assets or $1,000,000.
Pursuant to Rule 2a-7, the Board of Directors has adopted certain
"Investment Procedures and Standards." These impose certain additional
limitations on permissible Fund investments, including, among others: (a) no
obligations of banks will be purchased unless such banks have capital, surplus
and undivided profits over $100 million, unless the Board expressly allows such
investments; (b) no more than 10% of the Fund's total assets may be invested in
obligations of Canadian chartered banks; (c) no more than 5% and 10% of the
Fun''s total assets may be invested in savings banks and savings and loan
associations, respectively; (d) bank repurchase agreements will only be entered
into with banks meeting certain criteria. These additional limitations may be
modified at any time by the Board of Directors or its Executive Committee, when
suitable investments are available which are considered to be consistent with
the Fund's investment objective and policies and the conditions of Rule 2a-7
referred to above.
ILLIQUID SECURITIES
The Fund may invest in illiquid securities, including "restricted"
securities. For this purpose illiquid securities include, among others,
(i) securities that are illiquid by virtue of the absence of a readily available
market or legal or contractual restrictions on resale, (ii) options purchased
over-the-counter and the cover for options written over-the-counter, and
(iii) repurchase agreements not terminable within seven days. Commercial paper
issued pursuant to the private placement exemption of Section 4(2) of the
Securities Act of 1933 (the "1933 Act") and securities that are eligible for
resale under Rule 144A under the 1933 Act that have legal or contractual
restrictions on resale but have a readily available market are not deemed
illiquid securities for this purpose. A restricted security is one which was
originally sold in a private placement and was not registered with the
Commission under the Securities Act of 1933 (the "1933 Act") and which is not
free to be resold unless it is registered with the Commission or its sale is
exempt from registration.
The staff of the Securities and Exchange Commission has taken the position
that the liquidity of securities in the portfolio of a fund offering redeemable
securities is a question of fact for a board of directors of such a fund to
determine, based upon a consideration by such board of the readily available
trading markets and a review of any contractual restrictions. The SEC staff also
acknowledges that, while such a board retains ultimate responsibility, it may
delegate this function to the fund's investment adviser. Securities that have
been determined to be liquid by the Board of Directors of Fortis Money, or by
Advisers subject to the oversight of such Board of Directors, will not be
subject to this limitation.
-5-
<PAGE>
The Board of Directors of Fortis Money has adopted procedures to determine
the liquidity of certain securities, including commercial paper issued pursuant
to the private placement exemption of Section 4(2) of the 1933 Act and
securities that are eligible for resale to qualified institutional buyers
pursuant to Rule 144A under the 1933 Act. 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).
Section 4(2) commercial paper or a Rule 144A security that when
purchased enjoyed a fair degree of marketability may subsequently become
illiquid, thereby adversely affecting the liquidity of the Fund. With
respect to Rule 144A securities, investing in such securities could have the
effect of increasing the level of Fund illiquidity to the extent that
qualified institutional buyers become, for a time, uninterested in purchasing
these securities.
Illiquid securities may offer a higher yield than securities that are
more readily marketable. The sale of illiquid securities, however, often
requires more time and results in higher brokerage charges or dealer
discounts or other selling expenses than does the sale of securities eligible
for trading on national securities exchanges or in the over-the-counter
markets. The Fund may also be restricted in its ability to sell such
securities at a time when it is advisable to do so. Illiquid securities
often sell at a price lower than similar securities that are not subject to
restrictions on resale.
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.
In investing in repurchase agreements, the 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, however, 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'
-6-
<PAGE>
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 the repurchase agreement (including any accrued
interest), the Fund will promptly receive additional collateral (so the total
collateral is in an amount at least equal to the repurchase price plus accrued
interest)
VARIABLE AMOUNT MASTER DEMAND NOTES
These instruments are short-term, unsecured promissory notes issued by
corporations to finance short-term credit needs. Variable amount master demand
notes allow the investment of fluctuating amounts by the Fund at varying market
rates of interest pursuant to arrangements between the Fund and a financial
institution which has lent money to a 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 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 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.
FOREIGN SECURITIES
The Fund's portfolio may contain securities issued by foreign governments,
or any of their political subdivisions, agencies, or instrumentalities, and by
foreign branches of domestic banks, foreign subsidiaries of domestic banks,
domestic and foreign branches of foreign banks, and commercial paper and other
obligations issued by foreign issuers. As a result, the Fund will be subject to
additional investment risks with respect to such securities. The Fund will give
appropriate consideration to the following factors, among others.
Foreign securities markets generally are not as developed or efficient as
those in the United States. Volume and liquidity in foreign securities markets
can be less than in the United States and, at times, volatility of price can be
greater than in the United States. The issuers of some of these securities,
such as bank obligations, may be subject to less stringent or different
regulation than are U.S. issuers. In addition, there may be less publicly
available information about a non-U.S. issuer, and non-U.S. issuers generally
are not subject to uniform accounting and financial reporting standards,
practices, and requirements comparable to those applicable to U.S. issuers.
-7-
<PAGE>
Because evidences of ownership of such securities usually are held outside
the United States, the Fund will be subject to additional risks which include
possible adverse political and economic developments, possible seizure or
nationalization of foreign deposits, and possible adoption of governmental
restrictions which might adversely affect the payment of principal and interest
on the foreign securities or might restrict the payment of principal and
interest to investors located outside the country of the issuer, whether from
currency blockage or otherwise.
Furthermore, some of these securities are subject to brokerage taxes levied
by foreign governments, which have the effect of increasing the cost of such
investment. Income earned or received by the Fund from sources within foreign
countries may be reduced by withholding and other taxes imposed by such
countries. Advisers will attempt to minimize such taxes by timing of
transactions and other strategies, but there can be no assurance that such
efforts will be successful. All such taxes paid by the Fund will reduce its net
income available for distribution to shareholders. Advisers will consider
available yields, net of any required taxes, in selecting foreign securities.
MANAGEMENT OF THE FUND
Under Minnesota law, the Board of Directors of Fortis Money has overall
responsibility for managing it in good faith, in a manner reasonably believed to
be in the best interests of each 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 Money 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"), with the exception of Mr.
Jaffray and Ms. Shadko who are not directors of Fortis Series Fund, Inc. The
Fund Complex currently consists of one closed-end and eight open-end investment
companies.
<TABLE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS AGE THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- ------------- -----------------------------------------
<S> <C> <C> <C>
Richard W. Cutting 67 Director Certified public accountant and financial consultant.
137 Chapin Parkway
Buffalo, New York
Allen R. Freedman* 58 Director Chairman, Chief Executive Officer and President of Fortis,
One Chase Manhattan Plaza Inc.; a Managing Director of Fortis International, N. V.
New York, New York
Dr. Robert M. Gavin 58 Director President, Cranbrook Education Community, Prior to July
380 Lone Pine Road 1996, President Macalester College, St. Paul, MN.
Bloomfield Hills, Michigan
-8-
<PAGE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS AGE THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- ------------- -----------------------------------------
Benjamin S. Jaffray 68 Director Chairman of the Sheffield Group, Ltd., a financial consulting
4040 IDS Center group, Minneapolis, MN.
Minneapolis, Minnesota
Jean L. King 54 Director President, Communi-King, a communications consulting
12 Evergreen Lane firm, St. Paul, MN.
St. Paul, Minnesota
Dean C. Kopperud * 46 President and Chief Executive Officer and a Director of Advisors,
500 Bielenberg Drive Director President and a Director of Investors, President of Fortis
Woodbury, Minnesota Financial Group, a Director of Fortis Benefits Insurance
Company and a Senior Vice President of Time Insurance Company.
Edward M. Mahoney 68 Director Retired; prior to December, 1994, Chairman and Chief
2760 Pheasant Road Excelsior, Executive Officer and a Director of Advisers and Investors,
Minnesota Senior Vice President and a Director of Fortis Benefits
Insurance Company, and Senior Vice President of Time
Insurance Company.
Robb L. Prince 57 Director Financial and Employee Benefit Consultant; prior to July,
5108 Duggan Plaza 1995, Vice President and Treasurer, Jostens, Inc., a producer
Edina, Minnesota of products and services for the youth, education, sports award, and
recognition markets, Minneapolis, MN.
Leonard J. Santow 62 Director Principal, Griggs & Santow, Incorporated, economic and financial
75 Wall Street consultants, New York, NY.
21st Floor
New York, New York
Noel S. Shadko 44 Director Marketing Consultant; prior to May 1996, Senior Vice President of
1908 W. 49th Street Marketing & Strategic Planning, Rollerblade, Inc., Minneapolis, MN.
Minneapolis, Minnesota
Joseph M. Wikler 57 Director Investment consultant and private investor.
12520 Davan Drive
Silver Spring, Maryland
Gary N. Yalen 56 Vice President President and Chief Investment Officer of Advisers (since 1995) New
One Chase Manhattan Plaza York, NY, and Senior Vice President, Investments, Fortis, Inc.; prior
New York, New York to 1996, President and Chief Investment Officer, Fortis Asset
Management, a former division of Fortis, Inc.
Howard G. Hudson 61 Vice President Executive Vice President and Head of Fixed Income Investments of
One Chase Manhattan Plaza Advisers since 1995; prior to 1996, Senior Vice President, Fixed
New York, New York Income, Fortis Asset Management.
-9-
<PAGE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS AGE THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- ------------- -----------------------------------------
Lucinda S. Mezey 51 Vice President Executive Vice President and Head of Equity Investments of Advisers
One Chase Manhattan Plaza since October 1997; from 1995 to October 1997, Chief Investment
New York, New York Officer, Alex Brown Capital Advisory and Trust Co., Baltimore, MD; and
prior to 1995, Senior Vice President and Head of Equity Investments,
PNC Bank, Philadelphia, PA.
James S. Byrd 47 Vice President Executive Vice President of Advisers; prior to 1995, Vice President of
5500 Wayzata Boulevard Advisers and Investors.
Golden Valley, Minnesota
Nicholas L. M. de Peyster 32 Vice President Vice President of Advisers since August 1995; prior to1996, Vice
One Chase Manhattan Plaza President, Equities, Fortis Asset Management.
New York, New York
Diane M. Gotham 40 Vice President Vice President of Advisers since 1998; from 1994 to 1998, securities
500 Bielenberg Drive analyst for Advisers.
Woodbury, Minnesota
Laura E. Granger 37 Vice President Vice President of Advisers since 1998; from 1993 to 1998, portfolio
One Chase Manhattan Plaza manager, General Motors Investment Management, New York, NY.
New York, New York
Maroun M. Hayek 50 Vice President Vice President of Advisers; prior to August 1996, Vice President,
One Chase Manhattan Plaza Fixed Income, Fortis Asset Management.
New York, New York
Robert C. Lindberg 46 Vice President Vice President of Advisers since 1993.
One Chase Manhattan Plaza
New York, New York
Charles L. Mehlhouse 56 Vice President Vice President of Advisers; prior to March 1996, Portfolio Manager to
One Chase Manhattan Plaza Marshall & Ilsley Bank Corporation, Milwaukee, WI.
New York, New York
Kevin J. Michels 47 Vice President Vice President of Advisers since 1995. Prior to 1996, Vice President,
One Chase Manhattan Plaza Administration, Fortis Asset Management.
New York, New York
Christopher J. Pagano 35 Vice President Vice President of Advisers since 1996; prior to March 1996, Government
One Chase Manhattan Plaza Strategist for Merrill Lynch, New York, N.Y.
New York, New York
-10-
<PAGE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS AGE THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- ------------- -----------------------------------------
Stephen M. Rickert 55 Vice President Vice President of Advisers since 1995; from 1994 to 1996, Corporate
One Chase Manhattan Plaza Bond Analyst, Fortis Asset Management.
New York, New York
Michael J. Romanowski 47 Vice President Vice President of Advisers since 1998; from October 1995 to March
One Chase Manhattan Plaza 1998, Portfolio Manager, Value Line, New York, NY; prior to October
New York, New York 1995, securities analyst, Conning & Co., Hartford, CT.
Ho Wang 51 Vice President Vice President of Advisers since 1998; from 1995 to 1998, senior
One Chase Manhattan Plaza securities analyst, Lord, Abbett & Co., New York, NY; prior to 1995,
New York, New York portfolio manager, New York Life, New York, NY.
Christopher J. Woods 38 Vice President Vice President of Advisers since 1995; prior to 1996, Vice President,
One Chase Manhattan Plaza Fixed Income, Fortis Asset Management.
New York, New York
Robert W. Beltz, Jr. 49 Vice President Vice President - Securities Operations of Advisers and Investors.
500 Bielenberg Drive
Woodbury, Minnesota
David A. Peterson 56 Vice President Vice President and Assistant General Counsel, Fortis Benefits
500 Bielenberg Drive Insurance Company.
Woodbury, Minnesota
Rhonda J. Schwartz 40 Vice President Senior Vice President and General Counsel of Advisers; Senior Vice
500 Bielenberg Drive President and General Counsel, Life and Investment Products, Fortis
Woodbury, Minnesota Benefits Insurance Company and Vice President and General Counsel,
Life and Investment Products, Time Insurance Company; from 1993 to
January 1996, Vice President, General Counsel, Fortis, Inc.
Scott R. Plummer 39 Vice President Second Vice President, Corporate Counsel and Assistant Secretary of
500 Bielenberg Drive Advisers.
Woodbury, Minnesota
Peggy E. Ettestad 41 Vice President Senior Vice President, Operations of Advisers; prior to March 1997,
500 Bielenberg Drive Vice President G.E. Capital Fleet Services, Minneapolis, MN.
Woodbury, Minnesota
Dickson Lewis 49 Vice President Senior Vice President, Marketing and Sales of Advisers; from 1993 to
500 Bielenberg Drive July 1997, President and Chief Executive Officer Hedstrom/Blessing,
Woodbury, Minnesota Inc., a marketing communications company, Minneapolis, MN.
Tamara L. Fagely 40 Treasurer Second Vice President of Advisers and Investors.
500 Bielenberg Drive
Woodbury, Minnesota
-11-
<PAGE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS AGE THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- ------------- -----------------------------------------
Melinda S. Urion 45 Vice President Since December 1997, Senior Vice President and Chief Financial Officer
500 Bielenberg Drive of Advisers. Prior to December 1997, Senior Vice President of Finance
Woodbury, Minnesota and Chief Financial Officer, American Express Financial Corporation;
prior to 1995, Corporate Controller, American Express Financial
Corporation.
Michael J. Radmer 53 Secretary Partner, Dorsey & Whitney LLP, the Fund's General Counsel.
220 South Sixth Street
Minneapolis, Minnesota
</TABLE>
- -------------------
* Mr. Kopperud is an "interested person" (as defined under the 1940 Act) of
Advisers, Fortis Income and Fortis Advantage because he holds certain positions
including serving as Chief Executive Officer and a director of Advisers. Mr.
Freedman is an "interested person" of Advisers, Fortis Income and Fortis
Advantage because he holds certain positions including serving as Chairman and
Chief Executive Officer of Fortis, Inc., the parent company of Advisers, and as
a Managing Director of Fortis International, N.V., the parent company of Fortis,
Inc.
Each director who is not affiliated with Advisers or Investors receives
fees of $100 per month, $100 per meeting attended, and $100 per committee
meeting attended (and reimbursement of travel expenses to attend meetings) for
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 Money during the fiscal year ended September 30, 1998, as well as the
total compensation received by each director from the Fund and all other
registered investment companies managed by Advisers during the calendar year
ended December 31, 1997. 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. During the fiscal year ended
September 30, 1998, the Fund paid $ in legal fees and expenses to
a law firm of which the Funds' Secretary is a partner.
<TABLE>
<CAPTION>
COMPENSATION FROM TOTAL COMPENSATION
DIRECTOR FORTIS MONEY FROM FUND COMPLEX*
-------- ------------ ------------------
<S> <C> <C>
Richard W. Cutting $ $31,200
Dr. Robert M. Gavin $ $31,200
Benjamin S. Jaffray $ $24,300
Jean L. King $ $32,200
Edward M. Mahoney $ $31,200
Robb L. Prince $ $33,200
Leonard J. Santow $ $30,200
Noel S. Shadko $ $22,200
Joseph M. Wikler $ $31,200
</TABLE>
- -----------
* The Fund Complex consists of one closed-end and eight open-end investment
companies managed by Advisers.
-12-
<PAGE>
Directors Gavin, Jaffray, Kopperud, Mahoney, Prince and 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 _______________, 1999, no person owned of record or, to the Fund's
knowledge, beneficially as much as 5% of the outstanding shares of any Class of
Fund shares, except as follows:
.
As of _______________, 199, the directors and executive officers as a group
beneficially owned less than 1% of the outstanding shares of each class of each
Fund.
INVESTMENT ADVISORY AND OTHER SERVICES
GENERAL
Fortis Advisers, Inc. ("Advisers") has been the investment adviser and
manager of the Fund since it began operations in 1979. Fortis Investors, Inc.
("Investors") acts as the Fund's underwriter. Each acts pursuant to written
agreements periodically approved by the directors or shareholders. The address
of each is that of the Fund. As of January 1, 1999, Advisers managed
thirty-three investment company portfolios with combined net assets of
approximately $ billion.
CONTROL AND MANAGEMENT OF ADVISERS AND INVESTORS
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, Inc. is a part of Fortis, a worldwide group of companies active in the
fields of insurance, banking and investments. Fortis is jointly owned by Fortis
AMEV of The Netherlands and Fortis AG of Belgium.
Fortis AMEV is a diversified financial services company headquartered in
Utrecht, The Netherlands, where its insurance operations began in 1847. Fortis
AG is a diversified financial services company headquartered in Brussels,
Belgium, where it insurance operations began in 1824. Fortis AMEV and Fortis AG
own a group of companies (of which AMEV/VSB 1990 is
-13-
<PAGE>
one) 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 AGREEMENTS
Advisers act as investment adviser and manager of the Fund an Investment
Advisory and Management Agreement (the "Agreement"). The Agreement will
terminate automatically in the event of its assignment. In addition, the
Agreement is terminable at any time, without penalty, by the Board of Directors
or, by vote of a majority of the Fund's outstanding voting securities, on not
more than 60 days' written notice to Advisers, and by Advisers on 60 days'
notice to the Fund. Unless sooner terminated, the Agreement continues in effect
only so long as such continuance is specifically approved at least annually by
either the Board of Directors or by a vote of a majority of the outstanding
voting securities of the Fund; provided that, in either event, such continuance
is also approved by the vote of the 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 Agreement provides for a monthly investment advisory and management fee
to be paid by the Fund at an annual rate of .60% on average daily net assets up
to $500 million and .55% on average daily net assets in excess of $500 million.
The Agreement requires the Fund to pay all its expenses which are not
assumed by Advisers and/or Investors. These expenses include, by way of
example, but not by way of limitation, the fees and expenses of directors and
officers who are not "affiliated persons" of Advisers, interest expenses, taxes,
brokerage fees and commissions, fees and expenses of registering and qualifying
the Fund and its shares for distribution under Federal and state securities
laws, expenses of preparing prospectuses and of printing and distributing
prospectuses annually to existing shareholders, custodian charges, auditing and
legal expenses, insurance expenses, association membership dues, and the expense
of reports to shareholders, shareholders' meetings and proxy solicitations.
Although investment decisions for the Fund are made independently from
those of the other funds or private accounts managed by Advisers, sometimes the
same security is suitable for more than one fund or account. If and when two or
more funds or 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 account. The simultaneous purchase or
sale of the same securities by a Fund and other funds or accounts 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.
-14-
<PAGE>
The Fund paid advisory and management fees of $724,040 for the fiscal year
ended September 30, 1996, $772,701 for the fiscal year ended September 30, 1997
and $_______________ for the fiscal year ended September 30, 1998.
EXPENSES
Advisers bears the costs of acting as the Fund's transfer agent, registrar
and dividend agent. Advisers also furnishes each Fund with all required
management services, facilities, equipment, and personnel. Advisers or
Investors also shall bear all promotional expenses in connection with the
distribution of Fund shares, including paying for prospectuses and shareholder
reports for new shareholders and the costs of sales literature.
DISTRIBUTION PLAN
The Fund has adopted a plan pursuant to Rule 12b-1 under the 1940 Act.
Rule 12b-1 provides that any payments made by the Fund in connection with
financing the distribution of its shares may only be made pursuant to a written
plan describing all aspects of the proposed financing of distribution, and also
requires that all agreements with any person relating to the implementation of
the plan must be in writing. In addition, Rule 12b-1(b)(1) requires that such
plan be approved by a majority of the Fund's outstanding shares, and
Rule 12b-1(b)(2) requires that such plan, together with any related agreements,
be approved by a vote of the Board of Directors who are not interested persons
of the Fund and have no direct or indirect interest in the operation of the plan
or in the agreements related to the plan, cast in person at a meeting called for
the purpose of voting on such plan or agreement. Rule 12b-1(b)(3) requires that
the plan or agreement provide, in substance:
(i) That it shall continue in effect for a period of more than
one year from the date of its execution or adoption only so long as such
continuance is specifically approved at least annually in the manner
described in paragraph (b)(2) of Rule 12b-1:
(ii) That any person authorized to direct the disposition of
monies paid or payable by the Fund pursuant to the plan or any related
agreement shall provide to the Board of Directors, and the directors
shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made; and
(iii) In the case of a plan, that it may be terminated at any time
by vote of a majority of the members of the Board of Directors who are
not interested persons of the Fund and have no direct or indirect
financial interest in the operation of the plan or in any agreements
related to the plan or by vote of a majority of the outstanding voting
securities of the Fund.
Rule 12b-1 (b)(4) requires that such plans may not be amended to increase
materially the amount to be spent for distribution without shareholder approval
and that all material amendments of the plan must be approved in the manner
described in paragraph (b)(2) of Rule 12b-1.
-15-
<PAGE>
Rule 12b-1 (c) provides that the Fund may rely on Rule 12b-1 (b) only if
the selection and nomination of the Fund's disinterested directors are committed
to discretion of such disinterested directors. Rule 12b-1 (e) provides that the
Fund may implement or continue a plan pursuant to Rule 12b-1 (b) only if the
directors who vote to approve such implementation or continuation conclude, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law, and under Sections 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that the plan will benefit the Fund and its
shareholders.
Pursuant to the provisions of the Distribution Plan (and out of its
advisory fee), Advisers pays Investors on a monthly basis a fee of .20% of the
average daily net assets of the Fund. In addition, with respect to Class B,
Class C and Class H shares, the Fund pays Investors on a monthly basis a fee of
.80% of the average daily net assets of each such class. Such fees are paid in
connection with servicing of the Fund's shareholder accounts and in connection
with distribution-related services provided with respect to the Fund.
A portion of the Fund's total fee is paid as a distribution fee and will be
used by Investors to cover expenses that are primarily intended to result in, or
that are primarily attributable to, the sale of shares of the Fund
("Distribution Fees"), and the remaining portion of the fee is paid as a
shareholder servicing fee and will be used by Investors to provide compensation
for ongoing servicing and/or maintenance of shareholder accounts ("Shareholder
Servicing Fees"). For the Class A shares, the entire fee of .20% is designated
as a Distribution Fee. For the Class B, Class C and Class H shares, Investors
receives a total fee of 1.00% of the average daily net assets of each such
class, of which .75% is designated as a Distribution Fee and .25% is designated
as a Shareholder Servicing Fee.
Distribution Fees under the Plan include, but are not limited to, initial
and ongoing sales compensation (in addition to sales charges) paid to registered
representatives of Investors and to other broker-dealers; expenses incurred in
the printing of prospectuses, statements of additional information and reports
used for sales purposes; expenses of preparation and distribution of sales
literature; expenses of advertising of any type; an allocation of Investors'
overhead; and payments to and expenses of persons who provide support services
in connection with the distribution of Fund shares. Shareholder Servicing Fees
include all expenses of Investors incurred in connection with providing
administrative or accounting services to shareholders, including, but not
limited to, an allocation of Investors' overhead and payments made to persons,
including employees of Investors, who respond to inquiries of shareholders of
the Fund regarding their ownership of shares or their accounts with the Fund, or
who provide other administrative or accounting services not otherwise required
to be provided by Advisers.
From its advisory fee, the Fund paid Investors a distribution fee of
$ _______________ for the fiscal year ended September 30, 1998. The additional
distribution fee paid by the Class B, Class C and Class H shares totaled
$_______________. Listed below are the total distribution fees paid by the Fund
and how those fees were used by Investors for the fiscal year ended
September 30, 1998.
-16-
<PAGE>
<TABLE>
<S> <C>
Advertising $
Printing and Mailing of Prospectuses to
Other than Current Shareholders
Compensation to Underwriters
Compensation to Dealers
Compensation to Sales Personnel
Interest, Carrying or Other Financing Charges
Other (distribution-related compensation, sales
literature, supplies, postage, toll-free phone) ---------
TOTAL $
</TABLE>
UNDERWRITING AND DISTRIBUTION OF SHARES
Pursuant to the Underwriting and Distribution Agreement, Investors has
agreed to act as the principal underwriter for the Fund in the sale and
distribution to the public of shares of the Fund, either through dealers or
otherwise. Investors has agreed to offer such shares for sale at all times when
such shares are available for sale and may lawfully be offered for sale and
sold. As compensation for its services, in addition to receiving its
distribution fees pursuant to the Distribution Plan discussed above, the
Distributor receives the contingent deferred sales load on sales of Fund shares
set forth in the Prospectus.
The Distributor did not receive any underwriting commissions for the fiscal
years ended September 30, 1996, 1997 and 1998.
BROKERAGE ALLOCATION AND OTHER PRACTICES
Because the Fund's portfolio is composed exclusively of debt (rather than
equity) securities, most of the Fund's portfolio transactions are effected with
dealers without the payment of brokerage commissions, but at net prices which
usually include a spread or markup. In effecting such portfolio transactions on
behalf of the Fund, Advisers seeks the most favorable net price consistent with
the best execution. However, frequently Advisers selects a dealer to effect a
particular transaction without contacting all dealers who might be able to
effect such transaction, because of the volatility of the money market and the
desire of Advisers to accept a particular price for a security because the price
offered by the dealer meets its guidelines for profit, yield, or both.
Decisions with respect to placement of the Fund's portfolio transactions
are made by Advisers. The primary consideration in making these decisions is
efficiency in the execution of orders and obtaining the most favorable net
prices for the Fund. Most Fund transactions are with the issuer, or with major
dealers acting for their own account and not as brokers. When consistent with
these objectives, business may be placed with broker-dealers who furnish
investment research services to Advisers. Such research services include
advice, both directly and in writing, as to the value of securities; the
advisability of investing in, purchasing, or selling securities; and the
availability of securities, or purchasers or sellers of securities; as well as
-17-
<PAGE>
analyses and reports concerning issues, industries, securities, economic factors
and trends, portfolio strategy, and the performance of accounts. This allows
Advisers to supplement its own investment research activities and enables
Advisers to obtain the views and information of individuals and research staffs
of many different securities firms prior to making investment decisions for the
Fund. To the extent portfolio transactions are effected with broker-dealers who
furnish research services to it. Advisers receives a benefit which is not
capable of evaluation in dollar amounts, without providing any direct monetary
benefit to the Fund from these transactions. Advisers believes that most
research services obtained by it generally benefit several or all of the
investment companies and private accounts which it manages, as opposed to solely
benefiting one specific managed fund or account. Normally, research services
obtained through managed funds and accounts investing in common stock would
primarily benefit those funds and accounts managed by Advisers which invest in
common stock; similarly, services obtained from transactions in fixed income
securities would normally be of greater benefit to the managed funds and
accounts which invest in debt securities.
Advisers has not entered into any formal or informal agreements with any
broker-dealers, nor does it maintain any "formula" which must be followed in
connection with the placement of Fund portfolio transactions in exchange for
research services provided Advisers, except as noted below. However, Advisers
does maintain an informal list of broker-dealers, which is used from time to
time as a general guide in the placement of Fund business, in order to encourage
certain broker-dealers to provide Advisers with research services which Advisers
anticipates will be useful to it. Because the list is merely a general guide,
which is to be used only after the primary criterion for the selection of
broker-dealers (discussed above) has been met, substantial deviations from the
list are permissible and may be expected to occur. Advisers will authorize the
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 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 Advisers' overall responsibilities with respect to the accounts
as to which Advisers exercises investment discretion.
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.
-18-
<PAGE>
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. Examples of where adjustments may be
made include: (i) the cash position of the portfolios involved in the
transaction; and (ii) the relative importance of the security to a portfolio in
seeking to achieve its investment objective.
The Fund will not effect any brokerage transactions in its portfolio
securities with any broker-dealer affiliated directly or indirectly with
Advisers, 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 Fund. No commissions were paid to any
affiliate of Advisers during the fiscal years ended September 30, 1996, 1997 and
1998 for the Fund.
From time to time, the Funds may acquire the securities of their regular
brokers or dealers or parent companies of such brokers or dealers. During the
fiscal year ended September 30, 1998, the Fund acquired the following securities
of its regular brokers or dealers or parent companies of such brokers or
dealers:
CAPITAL STOCK
The Fund's 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.
The Fund currently offers its shares in four classes, each with different
sales arrangements and bearing different expenses. Under Fortis Money's
Articles of Incorporation, the Board of Directors is authorized to create new
portfolios, each issuing its own series of shares, in addition to the Fund
without the approval of the shareholders of the Fund. Each share of stock will
have a pro rata interest in the assets of the Fortis Money portfolios to which
the stock of that series relates, and will have no interest in the assets of any
other Fortis Money portfolio. In the event of liquidation, each share of a
Fortis Money portfolio would have the same rights to dividends and assets as
every other share of that Fortis Money portfolio, except that, in the case of a
series with more than one class of shares, such distributions will be adjusted
to appropriately reflect any charges and expenses borne by each individual
class.
Fortis Money 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 Money
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 Money.
Within ninety days after receipt of the demand, a regular meeting of
shareholders must be held at Fortis Money's expense. Additionally, the 1940 Act
requires shareholder votes for all amendments to fundamental
-19-
<PAGE>
investment policies and restrictions and for all investment advisory contracts
and amendments thereto.
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.
PRICING OF SHARES
The Fund values its portfolio securities at amortized cost in accordance
with Rule 2a-7 under the 1940 Act. This method involves valuing an instrument
at its cost and thereafter assuming a constant amortization to maturity of any
discount or premium, regardless of the impact of fluctuations in interest rates
on the market value of the instrument and regardless of any unrealized capital
gains or losses. While this method provides certainty in valuation, it may
result in periods during which value, as determined by amortized cost, is higher
or lower than the price the Fund would receive if it sold the instrument.
During periods of declining interest rates, the daily yield on shares of the
Fund computed by dividing the annualized daily income of the Fund by the net
asset value computed as described above may tend to be higher than a like
computation made by the Fund with identical investments utilizing a method of
valuation based upon market prices and estimates of market prices for all of its
securities.
Pursuant to Rule 2a-7, the Board of Directors has determined, in good faith
based upon a full consideration of all material factors, that it is in the best
interests of the Fund and its shareholders to maintain a stable net asset value
per share by virtue of the amortized cost method of valuation. The Fund will
continue to use this method only so long as the Board of Directors believed that
it fairly reflects the market-based net asset value per share. In accordance
with Rule 2a-7, the Board of Directors has undertaken, as a particular
responsibility within the overall duty of care owed to the Fund's shareholders,
to establish procedures reasonably designed, taking into account current market
conditions and the Fund's investment objectives, to stabilize the Fund's net
asset value per share at a single value. These procedures include the periodic
determination of any deviation of current net asset value per share, calculated
using available market quotations, from the Fund's amortized cost price per
share, the periodic review by the Board of the amount of any such deviation and
the method used to calculate any such deviation, the maintenance of records of
such determinations and the Board's review thereof, the prompt consideration by
the Board if any such deviation exceeds 1/2 of 1%, and the taking of such
remedial action by the Board as it deems appropriate where it believes the
extent of any such deviation may result in material dilution or other unfair
results to investors or existing shareholders. Such remedial action may include
redemptions in kind, shortening the average portfolio maturity, withholding
dividends or utilizing a net asset value per share as determined by using
available market quotations. The Fund will, in further compliance with
Rule 2a-7, maintain a dollar-weighted average portfolio maturity appropriate to
its objective of maintaining a stable net asset value and not exceeding 90 days,
will not purchase any instrument with a remaining maturity of greater than one
year, will limit its portfolio investments to those U.S.
-20-
<PAGE>
dollar-denominated instruments which the Board determines present minimal credit
risks and which are of high quality, and will record, maintain and preserve a
written copy of the above-described procedures and a written record of the
Board's considerations and actions taken in connection with the discharge of its
above-described responsibilities.
On September 30, 1998, the Fund's net asset values per share were calculated as
follows:
CLASS A
Net Assets ( ) = Net Asset Value per Share ($1.00)
-------------------------
Shares Outstanding ( )
-------------
CLASS B
Net Assets ( ) = Net Asset Value per Share ($1.00)
-------------------------
Shares Outstanding ( )
-------------
CLASS H
Net Assets ( ) = Net Asset Value per Share ($1.00)
-------------------------
Shares Outstanding ( )
-------------
CLASS C
Net Assets ( ) = Net Asset Value per Share ($1.00)
-------------------------
Shares Outstanding ( )
-------------
The primary close of trading of the New York Stock Exchange (the
"Exchange") currently is 3:00 P.M. (Central Time), but this time may be changed.
The offering price for purchase orders received in the office of the Fund after
the beginning of each day the Exchange is open for trading is based on net asset
value determined as of the primary closing time for business 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. Net asset value is the value of the securities
owned by the Fund, plus cash or other assets, less liabilities, divided by the
number of Fund shares outstanding.
Generally, the net asset value of the 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 (or 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 (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 Fund shares are tendered for redemption
and no orders to purchase or sell Fund shares are received by the Fund.
-21-
<PAGE>
PURCHASE OF SHARES
SPECIAL PURCHASE PLANS
RETIREMENT PLANS. Individual taxpayers can defer taxes on current income
by investing in tax qualified retirement plans established by their employer,
such as a pension plan, profit-sharing plan and Section 403(b)plans, or in
Individual Retirement Accounts (IRAs), including a traditional IRA, Roth IRA and
Education IRA. If you are interested in a retirement plan account, you should
contact Investors. Investing in a retirement plan involves a long-term
commitment of assets and is subject to legal and tax requirements and
restrictions. You should consult with your attorney or tax adviser prior to
establishing such a plan.
SYSTEMATIC INVESTMENT PLAN. The Systematic Investment Plan enables you to
make regular purchases in amounts less than normally required.
You have no obligation to invest regularly or to continue the Plan, which
you may terminate at any time without penalty. Under the Plan, any
distributions of income and realized capital gains will be reinvested in
additional shares at net asset value unless you instruct Investors in writing to
pay distributions in cash. Investors reserves the right to increase or decrease
the amount required to open and continue a Plan, and to terminate any Plan after
one year if the value of the amount invested is less than the amount indicated.
EXCHANGE PRIVILEGE. Generally, you may exchange your shares for shares of
any class of another Fortis Fund, subject to that Fund's sales charge. There is
no exchange fee. The amount exchanged must meet the minimum purchase amount of
the Fund being purchased. You should consider the investment objectives and
policies of the other fund prior to making such exchange.
For Federal tax purposes, except where the transferring shareholder is a
tax qualified plan, an exchange between funds is a taxable event that may result
in a capital gain or loss. If you exchange your shares within 90 days of
purchase, the sales charge on that purchase cannot be taken into account for
determining your gain or loss on the sale of those shares to the extent that the
sales charge that would have been applicable to the purchase of the
later-acquired shares in the other fund is reduced because of the exchange
privilege. However, the amount of the sales charge that may not be taken into
account in determining your gain or loss on the sale of the first-acquired
shares may be taken into account in determining gain or loss on the eventual
sale or exchange of the later-acquired shares.
GIFTS OR TRANSFERS TO MINOR CHILDREN. You may purchase Fund shares in an
account established for a minor. This gift or transfer is registered in the
name of the custodian for a minor under the Uniform Transfers to Minors Act (in
some states the Uniform Gifts to Minors Act). Control of the Fund shares passes
to the child upon reaching a specified age (either 18 or 21 years in most
states).
-22-
<PAGE>
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 said Exchange is restricted, (c) when an emergency exists,
as a result of which disposal by the Fund of securities owned by it is not
reasonably practicable, or it is not reasonably practicable for the Fund 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.
There is no charge for redeeming shares. In the event a charge is
established, it would apply only to persons who became shareholders after the
charge was implemented, and it would not, in any event, exceed 1% of the net
asset value of the shares redeemed. Should further public sales ever be
discontinued, the Funds may deduct a proportionate share of the cost of
liquidating assets from the asset value of the shares being redeemed, in order
to protect the equity of the other shareholders.
SYSTEMATIC WITHDRAWAL PLAN
You may open a "Systematic Withdrawal Plan" providing for withdrawals of
$50 or more monthly, quarterly, semiannually or annually if the value of your
shares is at least $4,000 ($10,000 if you elect monthly withdrawals).
These withdrawals may constitute return of capital. The redemption of Fund
shares pursuant to the Plan is a taxable event to you. The withdrawals do not
represent a yield or a return on your investment and they may deplete or
eliminate your investment. You have no assurance of receiving payment for any
specific period because payments will terminate when all shares have been
redeemed. The number of such payments will depend on the amount and frequency
of each payment and the increase (or decrease) in value of the remaining shares.
Distributions of income and realized capital gains will continue to be
reinvested at net asset value. Additions to your account in which an election
has been made to receive systematic withdrawals will be accepted only if each
additional purchase is equal to at least one year's scheduled withdrawals or
$1,200, whichever is greater. You may not have a "Systematic Withdrawal Plan"
and a "Systematic Investment Plan" in effect at the same time.
The Systematic Withdrawal Plan is voluntary, flexible and under your
control and direction at all times, and does not limit or alter your right to
redeem shares. You or the Fund may terminate the Plan at any time by written
notification. Advisers bears the cost of operating the Plan.
TAXATION
-23-
<PAGE>
The Fund qualified in its last fiscal year and intends to continue to
qualify, as a regulated investment company under the Internal Revenue Code of
1986, as amended (the "Code"). If so qualified the Fund is not taxed on the
income it distributes to its shareholders.
Under the Code, the Fund is subject to a nondeductible excise tax for each
calendar year equal to 4 percent 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 the Fund pays income tax. In order to avoid the
imposition of the excise tax, the Fund generally must declare dividends by the
end of a calendar year representing at least 98 percent of the Fund's ordinary
income for the calendar year.
Under the Code, the Fund is required to withhold and remit to the U.S.
Treasury 31% of dividend income on the accounts of certain shareholders who fail
to provide a correct tax identification number, fail to certify that they are
not subject to backup withholding, or are subject to backup withholding for some
other reason.
The foregoing is a general discussion of the Federal income tax
consequences of an investment in the Fund as of the date of this Statement of
Additional Information. Distributions from net investment income may also be
subject to state and local taxes. Shareholders are urged to consult their own
tax advisers regarding specific questions as to Federal, state, or local taxes.
YIELD INFORMATION
The Fund may from time to time include its current yield in advertisements
or in sales or other materials furnished to current or prospective shareholders.
The Fund's 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:
365/7
Effective Yield = [(Base Period Return + 1) to the power of (365/7) ] - 1
The Fund also may quote annual yield figures, calculated similarly to the
above methods.
-24-
<PAGE>
For the seven-day period ended September 30, 1998, the Fund's annualized
and effective yields for each class of shares were as follows:
<TABLE>
<CAPTION>
Annualized Yield Effective Yield
---------------- ---------------
<S> <C> <C>
Class A Shares % %
Class B Shares
Class C Shares
Class H Shares
</TABLE>
FINANCIAL STATEMENTS
The audited financial statements as of September30, 1998, as set forth in
the Fund's Annual Report to Shareholders, are incorporated herein by reference.
The audited financial statements are provided in reliance on the report of KPMG
Peat Marwick LLP, 4200 Norwest Center, Minneapolis, MN 55402, independent
auditors of the Fund, and given on the authority of such firm as experts in
accounting and auditing.
OTHER SERVICE PROVIDERS
U.S. Bank National Association, 601 Second Avenue South, Minneapolis, MN
55480 acts as custodian of the Fund's assets and portfolio securities. Dorsey &
Whitney LLP, 220 South Sixth Street, Minneapolis, MN 55402, is the independent
General Counsel for the Fund. Advisers bears the costs of serving as the
transfer agent and dividend-paying agent for the Fund.
LIMITATION OF DIRECTOR LIABILITY
Under Minnesota law, each director of Fortis Money owes certain fiduciary
duties to it 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
-25-
<PAGE>
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 Money 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 rescissionary 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 Fund has 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.
-26-
<PAGE>
APPENDIX A
----------
GLOSSARY OF TERMS
Some of the terms used in this Statement of Additional Information are
described below.
Obligations of or guaranteed by, the U.S. Government, its agencies or
instrumentalities. Securities issued or guaranteed as to principal and interest
by the U.S. Government include a variety of Treasury securities which differ
only in their interest rates, maturities, and times of issuance. Treasury bills
have a maturity of one year or less. Treasury notes generally have maturities of
one to ten years, and Treasury bonds generally have maturities of more than ten
years. Agencies of the U.S. Government which issue obligations include, among
others, Farmers Home Administration, Federal Housing Administration, Government
National Mortgage Association, Export-Import Bank of the United States, and the
Tennessee Valley Authority. Obligations of instrumentalities of the U.S.
Government include, among others, securities issued by the Farm Credit System,
Federal Home Loan Mortgage Corporation, Federal Home Loan Banks, and Federal
National Mortgage Association. Some of these securities are supported by the
full faith and credit of the U.S. Treasury, some are supported only by the
credit of the issuer, while others are supported only by the right of the issuer
to borrow from the Treasury.
Certificates of deposit are certificates evidencing the indebtedness of a
commercial bank to repay funds deposited with it for a definite period of time
(usually from 30 days to one year). Eurodollar C/Ds are issued by foreign
branches of domestic banks, while Yankee C/Ds are issued by domestic branches of
foreign banks.
Letters of Credit are issued by banks to businesses that use them to
"support" their own notes that are sold to raise funds. The purpose of issuing
the letter of credit is to assist the bank's customers in borrowing money, and
the bank must pay under the letter of credit only if the customer defaults in
repaying the borrowed money.
Bankers' acceptances are credit instruments evidencing the obligation of a
bank to pay a draft which has been drawn on it by a customer. These instruments
reflect the obligation both of the bank and of the drawer to pay the face amount
of the instrument upon maturity.
Commercial paper consists of short-term (usually 1 to 270 days) unsecured
promissory notes issued by corporations in order to finance their current
operations.
Corporate obligations are bonds and notes issued by corporations and other
business organizations, in order to finance their long-term credit needs.
-27-
<PAGE>
APPENDIX B
----------
COMMERCIAL PAPER AND CORPORATE BOND RATINGS
COMMERCIAL PAPER RATINGS
STANDARD & POOR'S RATINGS SERVICES. Commercial paper ratings are graded
into four categories, ranging from "A" for the highest quality obligations to
"D" for the lowest. Issues assigned the A rating are regarded as having the
greatest capacity for timely payment. Issues in this category are further
refined with the designation 1, 2, and 3 to indicate the relative degree of
safety. The Fund does not purchase commercial paper rated lower than "A-1."
The "A-1" designation indicates that the degree of safety regarding timely
payment is very strong. The "A-1+" rating is assigned to issues which meet
either of the following criteria:
1) The direct credit support of an issuer or guarantor that possesses
excellent long-term financial operating and financial strengths combined
with strong liquidity characteristics. Typically, such issuers or
guarantors would display credit quality characteristics which would warrant
a senior bond rating of "AA" - or higher; or
2) The direct credit support of an issuer or guarantor that possesses
above-average long-term fundamental operating and financial strengths
combined with ongoing excellent liquidity characteristics.
MOODY'S INVESTORS SERVICE, INC. Moody's commercial paper ratings are
opinions of the ability of the issuers to repay punctually promissory
obligations not having an original maturity in excess of nine months. 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 Highest quality
Prime-2 Higher quality
Prime-3 High quality
CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS SERVICES. Its ratings for corporate bonds include
the following:
Bonds rated "AAA" have the highest rating assigned by Standard & Poor's to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
-28-
<PAGE>
Bonds rated "AA" have a very strong capacity to pay interest and repay
principal and differ from the highest-rated issues only in small degree.
MOODY'S INVESTORS SERVICE, INC. Its ratings for corporate bonds include the
following:
Bonds 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 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 risks appear somewhat larger than the Aaa
securities.
-29-
<PAGE>
PART C
Money Fund
a series of
Fortis Income Portfolios, Inc.
OTHER INFORMATION
Item 23. Exhibits
- -------- --------
THE FUND IS FILING OR INCORPORATING BY REFERENCE THE FOLLOWING EXHIBITS:
(a).1 Articles of Amendment dated 9/8/94 and Amended and Restated
Articles of Incorporation dated as of 9/9/94 *
(a).2 Certification of Designation of Classes A, B, C & H dated
10/31/94 *
(b) Amended and Restated Bylaws dated 1/31/92 *
(c) Instruments Defining Rights of Security Holders - not applicable
(d) Investment Advisory and Management Agreement dated 1/31/92 *
(e) Underwriting and Distribution Agreement dated 11/14/94 *
(e).2 Dealer Sales Agreement (1)
(e).3 Mutual Fund Supplement to Dealer Sales Agreement (1)
(f) Bonus or Profit Sharing Contracts -not applicable
(g) Custody Agreement dated 3/21/92 *
(h) Other Material Contracts - not applicable
(i) Legal Opinion - not applicable
(j) Consent of KPMG Peat Marwick LLP *
(k) Omitted Financial Statements - not applicable
(l) Initial Capital Agreements - not applicable
(m) Rule 12b-1 Plan (2)
(n) Financial Data Schedule - not applicable
(o) Rule 18f-3 Plan (3)
- ----------------------------
(1) 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.
(2) Incorporated by reference to Post-Effective Amendment No. 11 to the
Registration Statement of Fortis Worldwide Portfolios, Inc. on Form N-1A
filed with the Commission on February 26, 1998.
(3) Incorporated by reference to Post-Effective Amendment No. 23 to the
Registrant's Registration Statement on Form N-1A filed with the Commission
in January 1997.
* To be filed by amendment.
<PAGE>
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 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).
<PAGE>
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
- ---- --------------------- ---------------------
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.
<PAGE>
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 Income Portfolios,
Inc., Fortis Tax Free Portfolios, Inc., Fortis Securities, Inc., Fortis Series
Fund, Inc., Fortis Worldwide Portfolios, Inc., 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.
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Fund
- ------------------ --------------------- ---------------------
Carol M. Houghtby Director, Vice President & None
Treasurer
Roger W. Arnold Senior Vice President None
Peter M. Delehanty Senior Vice President None
John E. Hite Vice President & Secretary None
(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 3la-1 to 3la-3 promulgated thereunder is maintained by the Registrant
at Fortis Advisers, Inc., 500 Bielenberg Drive, Woodbury, MN 55125.
ITEM 29. MANAGEMENT SERVICES
<PAGE>
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.
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.
(b) Each recipient of a prospectus of any series of the Registrant may request
the latest Annual Report of such series, and such Annual Report will be
furnished by the Registrant without charge.
(c) Registrant represents that it is relying on a No-Action Letter (IDS
Financial Services, June 20, 1986) and that it has complied with the
provisions of paragraphs (a) - (d) of such No-Action Letter.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement on Form N-1A to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Woodbury and State of Minnesota on the 3rd day
of December 1998.
FORTIS MONEY PORTFOLIOS, 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:
/s/ Dean C. Kopperud President (principal December 3, 1998
- ------------------------- executive officer)
Dean C. Kopperud
/s/ Tamara L. Fagely Treasurer (principal financial December 3, 1998
- ------------------------- and accounting officer)
Tamara L. Fagely
Richard W. Cutting* Director
Allen R. Freedman* Director
Robert M. Gavin* Director
Benjamin S. Jaffray* Director
Jean L. King* Director
Edward M. Mahoney* Director
Robb L. Prince* Director
Leonard J. Santow* Director
Noel S. Shadko Director
Joseph M. Wikler* Director
*By /s/ Dean C. Kopperud December 3, 1998
-----------------------
Dean C. Kopperud, Attorney-in-Fact
