<PAGE> 1
1933 Act Registration No. 2-65182
1940 Act Registration No. 811-02943
As filed with the Securities and Exchange Commission on January 31, 2000
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
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Post-Effective Amendment No. 27
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AND/OR
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940
Amendment No.
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(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:
Kathleen L. Prudhomme, Esq.
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402-1498
It is proposed that this filing will become effective (check appropriate box):
immediately upon filing pursuant to paragraph (b) of Rule 485
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x on February 1, 2000 pursuant to paragraph (b) of Rule 485
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75 days after filing pursuant to paragraph (a) of Rule 485
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on (specify date) pursuant to paragraph (a) of Rule 485
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60 days after filing pursuant to paragraph (a) of Rule 485
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[FORTIS Solid partners, flexible solutions(SM) LOGO]
Fortis Money Fund Prospectus
February 1, 2000
As with all mutual funds, the Securities and Exchange Commission has not
approved or disapproved these securities or determined if this prospectus is
truthful or complete. Any statement to the contrary is a criminal offense.
Mailing Address:
P.O. Box 64284
St. Paul, Minnesota 55164-0284
Street Address:
500 Bielenberg Drive
Woodbury, Minnesota 55125-1400
Telephone: (651) 738-4000
Toll Free: (800) 800-2000, extension 3012
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TABLE OF CONTENTS
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<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............................................. 11
More Information on the Fund
Investment Strategies..................................... 11
Financial Highlights........................................ 12
</TABLE>
<PAGE> 4
THE FUND
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This section briefly describes the objective, principal investment strategies
and principal risks of Money Fund (the "Fund"). The Fund is a money market fund
which seeks to maintain a net asset value of $1.00 per share. This section also
provides you with information on Fund expenses and on how the Fund has
performed. For further information, please read the section entitled "More
Information on the Fund." Fortis Advisers, Inc. ("Advisers") is the Fund's
investment adviser.
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.
MONEY FUND
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 in high quality, short-term, U.S.
dollar denominated debt obligations including:
- commercial paper;
- obligations of United States, Canadian-chartered and foreign banks having
total assets in excess of one billion dollars (including certificates of
deposits, letters of credit and bankers' acceptances);
- obligations issued or guaranteed by the United States Government, its
agencies or instrumentalities;
- other corporate debt obligations; and
- repurchase agreements in connection with the above obligations.
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.
Either of these events could cause the value of your investment to decline
below $1.00 per share.
- INTEREST RATE RISK. Although the Fund attempts to maintain the value of
your investment at $1.00 per share, a major rise in interest rates could
cause the value of your investment to decline.
- INCOME RISK. Income risk is the potential for a decline in the Fund's
income due to falling interest rates.
- MANAGEMENT RISK. 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 objective. Due to its active management, the Fund could
underperform other mutual funds with similar investment objectives or the
market generally.
- FOREIGN INVESTMENT RISKS. The Fund's investment in dollar denominated
foreign securities involve dollar denominated risks not typically
associated with U.S. investing. These include political and economic
upheaval, seizure or nationalization of deposits, imposition of taxes or
other restrictions on the payment of principal and interest and less
stringent banking regulations.
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FUND PERFORMANCE
The bar chart and table below provide you with information on Money Fund's
volatility and performance. The bar chart shows 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 December 31 each year
[BAR GRAPH]
<TABLE>
<CAPTION>
%
----
<S> <C>
1990 7.71
1991 5.59
1992 3.06
1993 2.29
1994 3.45
1995 5.17
1996 4.68
1997 4.78
1998 4.82
1999 4.49
</TABLE>
<TABLE>
<S> <C> <C>
BEST QUARTER: 1.89% (Quarter ended June 30, 1990)
WORST QUARTER: 0.54% (Quarter ended September 30, 1993)
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS as of December 31, 1999
<TABLE>
<CAPTION>
SINCE
TEN YEARS INCEPTION*
ONE YEAR FIVE YEARS CLASS A CLASS B, H, C
-------- ---------- --------- -------------
<S> <C> <C> <C> <C>
Class A shares....................................... 4.49% 4.79% 4.59% N/A
Class B shares**..................................... 0.06% 3.73% N/A 3.90%
Class H shares**..................................... 0.05% 3.73% N/A 3.90%
Class C shares**..................................... 2.65% 4.38% N/A 4.39%
</TABLE>
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* Since inception on October 9, 1995 for Class B shares; on March 16, 1995 for
Class H shares; and on June 14, 1995 for Class C shares.
** With CDSC. Assumes redemption on December 31, 1999.
SEVEN-DAY YIELD FOR PERIOD ENDING DECEMBER 31, 1999: 5.12%
You can obtain the Fund's current yield by calling 1-800-800-2000,
extension 3012.
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<PAGE> 6
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 paid directly from your investment. Annual
fund operating expenses are deducted from Fund assets. The figures below are
based on expenses during the fiscal year ended September 30, 1999.
<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........................................... 0.40% 0.40% 0.40%
Distribution and/or service (12b-1) fees.................. 0.20% 1.00% 1.00%
Other expenses............................................ 0.23% 0.23% 0.23%
Total annual fund operating expenses...................... 0.83% 1.63% 1.63%
</TABLE>
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 CLASS B/H SHARES CLASS C
ASSUMING SHARES ASSUMING SHARES
REDEMPTION ASSUMING REDEMPTION ASSUMING
CLASS A AT END OF NO AT END OF NO
SHARES EACH PERIOD REDEMPTION EACH PERIOD REDEMPTION
------- ----------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1 year...................................... $ 85 $ 526 $ 166 $ 266 $ 166
3 years..................................... 265 784 514 514 514
5 years..................................... 460 1,067 887 887 887
10 years.................................... 1,025 1,719 1,719 1,933 1,933
</TABLE>
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SHAREHOLDER INFORMATION
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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 is 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.
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, your order
must be
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<PAGE> 8
received by your broker-dealer prior to the close of the Exchange. Investors
will 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 their net asset value. 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. For
additional information, see "How to Sell Shares--Contingent deferred sales
charge."
<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>
Investors receives the CDSC, in part to defray expenses incurred 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
.25% 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. When 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."
Investors receives the CDSC, 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 of 1.00% of
the amount invested that begins to accrue one year after the shares are sold.
5
<PAGE> 9
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>
These fees are paid out of the Fund's assets on an ongoing basis. Rule 12b-1
fees will increase the cost of your investment and over time 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 invest under the "Systematic Investment Plan," the minimum initial
investment is $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 for the
Pre-Authorized Check Plan) and $500 for investments by wire.
The Fund may reject any purchase order or 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 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.
GIFTS OR TRANSFERS TO MINOR CHILDREN. Adults can make an irrevocable gift or
transfer of Fund shares in an account established for a minor.
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<PAGE> 10
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 the Account Application). Advisers may elect to send
confirmations for purchases made under a Systematic Investment Plan 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 front end 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 of the
other Fortis Fund will be subject to any applicable contingent deferred sales
charge and 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 exchange 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--Redeeming by phone").
Advisers has the right to change, terminate, impose charges on 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 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.
REDEEMING BY MAIL
If you redeem by mail, your redemption price will be based on the next net asset
value of your shares 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 55164-0284.
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.
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<PAGE> 11
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, or
- 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.
REDEEMING 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 on the Fund's records, 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's
procedures 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 on the telephone
redemption privilege. You will receive at least 30 days notice before any such
change is made.
PAYMENT OF REDEMPTION PROCEEDS
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
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 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.
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."
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<PAGE> 12
You may request that the redemption proceeds be wired to the bank 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 appropriate withdrawal information on the Account
Application.
There is currently no charge to you for the wiring of redemption proceeds.
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), those shares must remain in your Fund account for fifteen days prior to
the processing of any checks drawn on your account. Checks written on your
account before the end of this period may result in those checks being returned
to you for insufficient funds. 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.
INVOLUNTARY REDEMPTIONS
The Fund has the right to redeem accounts that fall below $500 as a result of
selling or exchanging shares. 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 the date the notice was mailed, your
account will be redeemed.
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.
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.
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<PAGE> 13
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, or
- 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 you exchange shares subject to a CDSC for shares of a different Fortis Fund,
the transaction will 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 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. Dividends will be reinvested in additional Fund shares of the same
class. However, you may request that dividends 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 another Fortis Fund, processing normally takes one
business day. If you elect cash payment, a check will be mailed within three
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.
10
<PAGE> 14
FUND MANAGEMENT
- --------------------------------------------------------------------------------
INVESTMENT ADVISER
Fortis Advisers, Inc. ("Advisers") is the investment adviser for the Fund.
Advisers 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 .40% of average daily net assets.
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 objective. Of course, there is no
guarantee that the Fund will achieve its objective. You should be aware that the
Fund may also use strategies and invest in securities that are not described in
this prospectus, but are described in the Statement of Additional Information.
The Fund complies with Securities and Exchange Commission regulations that apply
to money market funds. These regulations require that the Fund's investments
mature within 397 days from the date of purchase, and that the average maturity
of the Fund's investments (on a dollar-weighted basis) be 90 days or less. The
Fund may invest in securities with variable or floating interest rates and
securities with demand features. The maturities of these securities are
determined according to regulations which allow the Fund to consider some of
these securities as having maturities shorter than their stated maturity dates.
All of the Fund's investments must be in U.S. dollar-denominated high-quality
securities which have been determined by Advisers to present minimal credit
risks.
11
<PAGE> 15
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 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
----------------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
----------------------------------------------------------------
1999 1998 1997 1996 1995
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year.... $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------
Operations:
Investment income - net............. .04 .05 .05 .05 .05
- --------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net........ (.04) (.05) (.05) (.05) (.05)
- --------------------------------------------------------------------------------------------------------
Net asset value, end of year.......... $1.00 $1.00 $1.00 $1.00 $1.00
- --------------------------------------------------------------------------------------------------------
Total return@......................... 4.40% 4.88% 4.74% 4.74% 5.03%
Net assets end of year (000s
omitted)............................ $168,080 $156,623 $126,547 $120,375 $105,472
Ratio of expenses to average daily net
assets.............................. .83% .86% .88% .91% .91%
Ratio of net investment income to
average daily net assets............ 4.29% 4.77% 4.64% 4.67% 4.91%
- --------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------- -----------------------------------------
CLASS B
-----------------------------------------
YEAR ENDED SEPTEMBER 30,
-----------------------------------------
1999 1998 1997 1996+++
- -------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year.... $1.00 $1.00 $1.00 $1.00
- --------------------------------------
Operations:
Investment income - net............. .04 .04 .04 .04
- --------------------------------------
Distributions to shareholders:
From investment income - net........ (.04) (.04) (.04) (.04)
- --------------------------------------
Net asset value, end of year.......... $1.00 $1.00 $1.00 $1.00
- --------------------------------------
Total return@......................... 3.56% 4.06% 3.97% 4.11%
Net assets end of year (000s
omitted)............................ $1,393 $305 $55 $28
Ratio of expenses to average daily net
assets.............................. 1.63% 1.66% 1.68% 1.71%*
Ratio of net investment income to
average daily net assets............ 3.48% 4.00% 3.94% 3.99%*
- --------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------
CLASS C
-------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-------------------------------------------------------
1999 1998 1997 1996 1995++
- -------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year..................... $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------
Operations:
Investment income - net... .04 .04 .04 .05 .01
- -------------------------------------------------------------------------------------
Distributions to
shareholders:
From investment
income - net............ (.04) (.04) (.04) (.05) (.01)
- -------------------------------------------------------------------------------------
Net asset value, end of
year...................... $1.00 $1.00 $1.00 $1.00 $1.00
- -------------------------------------------------------------------------------------
Total return@............... 3.57% 4.12% 4.45% 4.97% 1.33%
Net assets end of year (000s
omitted).................. $1,531 $714 $10 $1 $9
Ratio of expenses to average
daily net assets.......... 1.63% 1.66% 1.68% 1.46%(a) 1.71%*
Ratio of net investment
income to average daily
net assets................ 3.48% 4.08% 3.98% 4.33%(a) 4.46%*
- -------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------- -----------------------------------------------------
CLASS H
-----------------------------------------------------
YEAR ENDED SEPTEMBER 30,
-----------------------------------------------------
1999 1998 1997 1996 1995+
- ---------------------------- -----------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of year..................... $1.00 $1.00 $1.00 $1.00 $1.00
- ----------------------------
Operations:
Investment income - net... .04 .04 .04 .04 .02
- ----------------------------
Distributions to
shareholders:
From investment
income - net............ (.04) (.04) (.04) (.04) (.02)
- ----------------------------
Net asset value, end of
year...................... $1.00 $1.00 $1.00 $1.00 $1.00
- ----------------------------
Total return@............... 3.55% 4.07% 4.06% 4.04% 2.52%
Net assets end of year (000s
omitted).................. $2,088 $550 $627 $60 $122
Ratio of expenses to average
daily net assets.......... 1.63% 1.66% 1.68% 1.71% 1.71%*
Ratio of net investment
income to average daily
net assets................ 3.51% 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 period 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 reimbursed expenses for 12b-1 fees charged in excess of
National Association of Securities Dealers limitations. For the year ended
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> 16
Fortis Financial Group Mail to:
Fund management offered through Fortis Mutual Funds
Fortis Advisers, Inc. since 1949 CM-9614
Securities offered through St. Paul, MN 55170-9614
Fortis Investors, Inc. member NASD, SIPC
Insurance products offered through Fortis
Benefits Insurance Company & Fortis Insurance Company
P.O. Box 64284, St. Paul, MN 55184-0284 (800) 800-2000
http://www.ffg.ue.fortis.com
[FORTIS LOGO]
FORTIS MONEY FUND
DO NOT USE TO OPEN A FORTIS IRA, SEP, 403(B).
Complete this application to open a new Fortis account or to add services to an
existing Fortis account.
For personal service, please call your investment professional or Fortis
customer service at (800) 800-2000, extension 3012.
NEW DEPOSITS ARE AVAILABLE FOR CLASS A SHARES ONLY.
1. ACCOUNT INFORMATION
Please provide the information requested below:
[ ] INDIVIDUAL: Please print your name, social security number and U.S. citizen
status.
[ ] JOINT TENANT: List all names, one social security number, and one U.S.
citizen status.
[ ] UNIFORM GIFT/TRANSFER TO MINORS: Provide name of custodian (one only) 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, and trust's
taxpayer ID number. Also include photocopy of the first and last page of the
trust document.
[ ] CORPORATION, ASSOCIATION, PARTNERSHIP: Include full name and taxpayer ID
number. Also include a photocopy of articles of incorporation, partnership
agreement, etc.
[ ] FORTIS KEY PLAN: Include social security number.
[ ] QUALIFIED PLAN: Include name of plan, trustee, and plan's taxpayer ID
number.
[ ] OTHER:
--------------------------------------------------------------
- -------------------------------------------------------------------------
Owner (individual, first joint tenant, custodian, trustee) (please print)
- -------------------------------------------------------------------------
Owner (second joint tenant, minor, trust name) (please print)
- -------------------------------------------------------------------------
Additional information, if needed
- -------------------------------------------------------------------------
Street address
- -------------------------------------------------------------------------
City State Zip
- -------------------------------------------------------------------------
Social security number (taxpayer ID)
Date of trust (if applicable)
-------------------------------------------
- ------------------------------- -------------------------------------
Daytime phone Date of birth
(Uniform gift/transfer to minors)
Are you a U.S. citizen? [ ] yes [ ] no
If no, country of permanent residence
-----------------------------------
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 Social security number
- ------------------------------------------ ----------------------
Name Social security number
- ------------------------------------------ ----------------------
Name Social security number
3. INVESTMENT ACCOUNT
[ ] By mail: Attached is a check for $ payable to "Fortis Funds."
-------------
[ ] By wire: An initial purchase of $
-------------
was wired on
--------------------------------------
Date
by
------------------------------------------------
Name of your bank
to
------------------------------------------------
Bank account number
Before making an initial investment by wire, you must be assigned an account
number by calling the telephone number on the cover page of this prospectus.
Then have your local bank wire your funds to: US Bank National Association/ABA
#091000022, credit account number 1-702-2514-1341 Fortis Funds Purchase Account,
for further credit to (your name), Fortis account number (Your account number).
The Fortis brandmark and Fortis(R) are service marks of Fortis (B) and
Fortis (NL).
97841 (c) Fortis, Inc. 2/99
<PAGE> 17
FORTIS MONEY FUND continued
4. Signature and certification
I have received and read the Fortis Money 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. Cross
out the following if not true.
(2) that the IRS has never notified me that I am subject to thirty-one percent
backup withholding, or has notified me 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 expertise 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).
Authorized signature(s)
X
- ------------------------------------------------------------------
Owner, custodian, trustee Date
X
- ------------------------------------------------------------------
Joint owner, trustee Date
5. 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
6. DISTRIBUTION OPTIONS
If no option is selected, all distributions will be reinvested in the Fortis
Money Fund.
[ ] Dividends reinvested
[ ] Dividends in cash (See Section 8 for payment options.)
[ ] Distributions into another Fortis fund. (Class A shares only)
- ------------------------------------------------------------------
Name of fund
- ------------------------------------------------------------------
Account number (if existing account)
7. CHECK WITHDRAWAL OPTIONS
[ ] I (we) hereby elect redemption by special check drawn against my (our)
Fortis Money Fund Account. Please send forms of checks (minimum check:
$100). Note: When electing check withdrawal, be sure to sign the Money
Fund signature card. Checks are not available for non-corporate tax
qualified plans.
Checking account signature card
Please complete and sign -------------------------
for redemption Date
- ------------------------------------------------------------------
Name(s) of registered owner(s) of shares of Fortis Money Fund.
- ------------------------------------------------------------------
All registered owner(s) of Fortis Money Fund shares named above must
sign below. By signing this card the signatory(ies) agree(s) to all of
the terms and conditions set forth below.
- --------------------------------- ------------------------------
Signature Social security or tax ID
number
- --------------------------------- ------------------------------
- --------------------------------- ------------------------------
[ ] Check here if only one signature is required on checks.
Terms and conditions of signature card
1. Redemption authorization: The signatory(ies) whose signature(s) appear above,
intending to be legally bound, hereby agree each with the other and with Fortis
Money Fund, Inc. ("the Fund"), Fortis Advisers, Inc. ("Advisers"), and First
Bank, National Association ("the Bank") that the Fund, Advisers and the Bank are
appointed agents for such person(s) and, as such agents, are directed to redeem
shares of the Fund, registered in the name of such signatory(ies) upon receipt
of, and in the amount of, checks drawn. The Fund or Advisers shall deposit the
proceeds of such redemptions in said account or otherwise arrange for
application of such proceeds to payments of said checks. Advisers is expressly
authorized to commingle such proceeds in this account with the proceeds of the
redemption of shares of other stockholders of the Fund. The signatory(ies)
understand the Advisers must also act as an agent for the Fund.
The Fund is expressly authorized to honor checks as redemption instructions
hereunder without requiring signature guarantees, and Advisers, the Fund, and
the Bank shall not be liable for any loss or liability resulting from the
absence of any such guarantee, or from forgery and/or fraud. In this regard, I
(we) understand and agree that Advisers, the Fund, and the Bank can take only
reasonable steps to prevent losses to me (us) due to forgery and/or any form of
fraud and in no event will Advisers, the Fund, and/or the Bank incur any
liability for honoring or effecting redemptions reasonably believed to be
genuine, or for returning or not paying checks which have not been accepted for
any reason.
2. Check payment: The signatory(ies) authorizes and directs the Bank to pay each
check presented hereunder, subject to all laws and relevant rules and
regulations pertaining to checking accounts, including those of the Bank, the
Fund, and/or Advisers. In addition the signatory(ies) agree(s) that:
Terms and conditions of signature card continued on next page
97841 (c) Fortis, Inc. 2/99
<PAGE> 18
Fortis Money Fund continued
(a) No check shall be issued or honored, or any redemption effected, in an
amount less than $100.
(b) No check shall be issued or honored, or redemption effected, for any
amounts represented by shares for which certificates have been issued.
(c) No check shall be issued or honored, or redemption effected, if the amount
of the check is greater than the value of the shares held in the
shareholder's account. Also, if shares in the account were recently
purchased with non-guaranteed funds (e.g., personal check), the processing
of the check may be delayed by fifteen days.
(d) No check shall be honored unless the Fund has provided the Bank from the
proceeds of redemption or otherwise, collected funds for the payment of
such check.
(e) Checks issued hereunder cannot be cashed over the counter at the Bank; and
(f) Checks shall be subject to any further limitations set forth in the
prospectus issued by the Fund including without limitation any additions,
amendments and supplements thereto.
3. DUAL OWNERSHIP: If more than one person is indicated as a registered owner of
the shares of the Fund, as by joint ownership, ownership in common, or tenants
by the entireties, then (a) each registered owner must sign this signature card,
(b) each registered owner must sign each check issued hereunder unless the
parties have indicated on the face of this card that only one need sign, in
which case the Bank is authorized to act upon such signature, and (c) each
signatory guarantees to Bank the genuineness and accuracy of the signature of
the other signatory(ies).
4. CHARGES: Bank is authorized to redeem sufficient Fund shares from time to
time, to cover the prevailing applicable charges on this account.
5. TERMINATION: The Bank, the Fund, and/or Advisers may at any time terminate
this account, related share redemption service and Bank's agency for the
signatory(ies) hereto without prior notice by Bank to any of the signatory(ies).
6. HEIRS AND ASSIGNS: These terms and conditions shall bind the respective
heirs, executors, administrators and assigns of the Signatory(ies).
7. CHANGES AND MODIFICATIONS: The above rules and regulations may be changed,
modified, or terminated at any time upon notification mailed to the
shareholder's address contained in the Fund's records.
8. WITHDRAWAL OPTIONS
A. CASH DIVIDENDS
PLEASE SEND THE PAYMENTS TO:
[ ] My bank (Please complete bank information, section D, this page.)
[ ] My address of record.
B. SYSTEMATIC WITHDRAWAL PLAN
Please consult your financial or tax advisor before electing a systematic
withdrawal plan.
Please redeem shares from my Fortis fund.
account number _____________ in the amount of $ _____________________________
Effective payment date _______________________________________________________
Month Day
8. WITHDRAWAL OPTIONS, Continued
Frequency: [ ] monthly [ ] semiannually
[ ] quarterly [ ] annually
PLEASE SEND THE PAYMENT TO:
[ ] My bank (Please complete bank information in Section D.)
[ ] My address of record. (If bank option is not chosen,
check will be processed on the 15th of every month.)
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 (NOT AVAILABLE FOR QUALIFIED PLANS) If you have not
changed your address in the past sixty days, you are eligible for this
service. This option allows all authorized signatures in section 5 (or your
registered representative with shareholder consent) to redeem.
PLEASE SEND THE PAYMENT TO:
[ ] My bank, (Please complete bank information in section D.)
[ ] My address of record.
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
9. 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.
Other special instructions:
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
_______________________________________________________________________
97841 (c) Fortis, Inc. 2/99
<PAGE> 19
(This page has been left blank intentionally.)
<PAGE> 20
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
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 [FORTIS LOGO]
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, FIRST JOINT TENANT, CUSTODIAN, TRUSTEE)
- ------------------------------------------------------------------
OWNER (SECOND JOINT TENANT, MINOR, TRUST NAME)
- ------------------------------------------------------------------
ADDITIONAL INFORMATION, IF NEEDED
- ------------------------------------------------------------------
STREET ADDRESS
- ------------------------------------------------------------------
CITY STATE ZIP
- -------------------------------- --------------------------------
SOCIAL SECURITY NUMBER (TAXPAYER I.D.) DAYTIME PHONE
2 BANK/FINANCIAL INSTITUTION INFORMATION
<TABLE>
<S> <C> <C>
Plan type: [ ] NEW PLAN [ ] BANK CHANGE
Account type: [ ] CHECKING [ ] SAVINGS
(MUST ATTACH A VOIDED (MUST ATTACH A DEPOSIT
CHECK) SLIP)
</TABLE>
- ------------------------------------------------------------------
Transit number
- ------------------------------------------------------------------
Bank account number
- ------------------------------------------------------------------
Account owner(s) (please print)
- ------------------------------------------------------------------
Depositor's daytime phone
Clearly print the bank/financial institution's name and address below:
- ------------------------------------------------------------------
- ------------------------------------------------------------------
- ------------------------------------------------------------------
SIGNATURE OF DEPOSITOR DATE
- ------------------------------------------------------------------
SIGNATURE OF JOINT-DEPOSITOR DATE
3 INVESTMENT OPTION(S)
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 30 DAYS FOR COLLECTED FUNDS TO
BE AVAILABLE IN YOUR FORTIS ACCOUNT.
<TABLE>
<S> <C> <C>
A. [ ] INVEST BY FORTIS INFORMATION LINE BY PHONE
(MINIMUM $100, MAXIMUM $150,000)
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
BEGINNING DRAFT DATE:
---------------------------------------
ACCOUNT NUMBER: ------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS AMOUNT
FUND A B C H $25.00 PER FUND MINIMUM
<S> <C> <C>
[ ] N N N
- --------------------------------- --------------------
[ ] N N N
- --------------------------------- --------------------
[ ] N N N
- --------------------------------- --------------------
[ ] N N N
- --------------------------------- --------------------
</TABLE>
4 WITHDRAWAL OPTION(S)
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.)
<TABLE>
<S> <C> <C>
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
BEGINNING WITHDRAWAL DATE: ---------------------------------
ACCOUNT NUMBER: ------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
CLASS AMOUNT
FUND A B C H $25.00 PER FUND MINIMUM
<S> <C> <C>
[ ] N N N
- --------------------------------- --------------------
[ ] N N N
- --------------------------------- --------------------
[ ] N N N
- --------------------------------- --------------------
[ ] N N N
- --------------------------------- --------------------
</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 (NL)N.V. AND
FORTIS (B)
98049 (11/99)
<PAGE> 21
[FORTIS(SM) LOGO]
FORTIS FINANCIAL GROUP:
P.O. Box 64284
St. Paul, Minnesota 55164-0284
BULK RATE
U.S. POSTAGE
PAID
Permit No, 3794
Minneapolis, MN
Prospectus
February 1, 2000
- - Money Fund
SEC file numbers: 811-02943
[FORTIS(SM) LOGO]
FORTIS FINANCIAL GROUP
Fortis Advisers, Inc. (fund management since 1949)
Fortis Investors, Inc. (principal underwriter; member NASD, SIPC)
Fortis Benefits Insurance Company & Fortis Insurance Company
(issuers of FFG's insurance products)
P.O. Box 64284 - St. Paul, MN 55164-0284 - (800) 800-2000
http://www.ffg.us.fortis.com
95197 (C)Fortis 2/00
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 the 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.
The Fortis logo and Fortis(SM) are servicemarks of Fortis (NL) N.V. and
Fortis (B).
<PAGE> 22
FORTIS MONEY FUND
A SERIES OF FORTIS MONEY PORTFOLIOS, INC.
STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 1, 2000
This Statement of Additional Information is NOT a prospectus. This
Statement of Additional Information relates to a prospectus for Fortis Money
Fund (the "Fund") dated February 1, 2000 and should be read in conjunction
therewith. The financial statements included as a part of the Fund's Annual
Report to Shareholders for the fiscal year ended September 30, 1999 are
incorporated by reference to this Statement of Additional Information. Copies of
the Fund's Prospectus and/or Annual Report are available, without charge, by
writing or calling Fortis Investors, Inc. ("Investors") at P.O. Box 64284, St.
Paul, Minnesota 55164. Telephone: (651) 738-4000. Toll Free (800) 800-2000.
<PAGE> 23
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Fund History 1
Description of the Fund 1
Investment Restrictions 1
Investment Strategies and Risk Considerations 3
Management of the Fund 7
Principal Holders of Securities 12
Investment Advisory and Other Services 12
Brokerage Allocation and Other Practices 15
Capital Stock 16
Pricing of Shares 17
Purchase of Shares 19
Redemption of Shares 20
Taxation 20
Underwriter and Distribution of Shares 21
Yield Information 21
Financial Statements 22
Other Service Providers 22
Limitation of Director Liability 22
Additional Information 23
Appendix A
Glossary of Terms 24
Appendix B
Commercial Paper and Corporate Bond Ratings 25
</TABLE>
<PAGE> 24
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. The Fund commenced operations on November 2, 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
management investment company. Fortis Money currently consists of one investment
portfolio. As a fundamental policy, 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 without shareholder
approval, each corresponding to a distinct investment portfolio and a distinct
series of its common stock.
INVESTMENT RESTRICTIONS
The Fund is subject to certain investment restrictions that are set
forth below. Any investment restriction that is deemed as "fundamental" 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.
Any investment policy or restriction in the Prospectus or this
Statement of Additional Information which involves a maximum percentage of
securities or assets, except those dealing with borrowing, shall not be
considered to be violated unless an excess over the percentage occurs
immediately after an acquisition of securities or utilization of assets and such
excess results therefrom.
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,
1
<PAGE> 25
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) Invest more than 5% of the Fund's total assets in securities of issuers
which with their predecessors have a record of less than three years
continuous operation. (Securities of such issuers will not be deemed to
fall within this limitation if they are guaranteed by an entity in
continuous operation for more than three years.)
(4) Make loans to others (except through the purchase of money market
instruments referred to under "Investment Objectives and Policies").
(5) 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 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.
(6) 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.
(7) Write, purchase or sell puts, calls or combinations thereof.
(8) Purchase or retain the securities of any issuer if any of the officers or
directors of the Fund or its investment adviser owns beneficially more than
1/2 of 1% of the securities of such issuer and together own more than 5% of
the securities of such issuer.
(9) Invest for the purpose of exercising control or management of another
issuer.
(10) 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.
(11) Invest in interest in oil, gas or other mineral exploration or development
programs, although it may invest in the securities of issuers which invest
in or sponsor such programs.
(12) 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.
(13) 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.
2
<PAGE> 26
An investment restriction which may be changed without shareholder
approval is that the Fund will not invest more than 10% of its net assets in
illiquid securities.
INVESTMENT STRATEGIES AND RISK CONSIDERATIONS
This section of the Statement of Additional Information contains more
information on the types of securities in which the Fund may invest and the
investment strategies that the Fund may use, including securities and strategies
not discussed in the Prospectus. Unless otherwise noted, investment strategies
used by the Fund may be changed with the approval of shareholders.
The Fund pursues its objective of maximum current income to the extent
consistent with 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 charted 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, as a
fundamental policy, no more than 49% of the Fund's total assets may be
invested in foreign branches of domestic banks, 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.
(6) As a fundamental policy, 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.
See Appendix A for a further description of the money market instruments in
which the Fund invests.
3
<PAGE> 27
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 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, and domestic and foreign economic
and political conditions.
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
Fortis Advisers, Inc. ("Advisers"), the Fund's investment adviser, and oversees
Advisers' determination that the Fund's portfolio securities present only
minimal credit risks and are Eligible Securities. Under Rule 2a-7, 95% of the
assets 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 fund'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
Fund'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.
4
<PAGE> 28
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 and (ii) 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 the 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.
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.
5
<PAGE> 29
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements. A repurchase agreement is
an instrument under which securities are purchased from a bank or securities
dealer with an agreement by the seller to repurchase the securities at a
mutually agreed upon date, interest rate, and price. Generally, repurchase
agreements are of short duration usually less than a week, but on occasion for
longer periods.
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 Fund's 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
The Fund may invest in variable amount master demand notes. These
instruments are short-term, unsecured promissory notes issued by corporations to
finance short-term credit needs. 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
6
<PAGE> 30
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.
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 the company and with the care an ordinarily prudent
person would exercise in similar circumstances. This management may not be
delegated. The Articles of Incorporation limit the liability of directors to the
fullest extent permitted by law.
The names, addresses, principal occupations and other affiliations of
directors and executive officers of Fortis 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"). 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 68 Director Certified public accountant and financial consultant.
137 Chapin Parkway
Buffalo, New York
</TABLE>
7
<PAGE> 31
<TABLE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS AGE THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- ----------------- -----------------------------------------
<S> <C> <C> <C>
Allen R. Freedman * 59 Director Chairman and Chief Executive Officer of Fortis, Inc.;
One Chase Manhattan Plaza a Managing Director of Fortis International, N.V.;
New York, New York director of Systems and Computer Technology
Corporation.
Dr. Robert M. Gavin 59 Director President, Cranbrook Education Community; prior to
380 Lone Pine Road July 1996, President, Macalester College, St. Paul,
Bloomfield, Michigan MN.
Jean L. King 55 Director President, Communi-King, a communications consulting
12 Evergreen Lane firm, St. Paul, MN.
St. Paul, Minnesota
Dean C. Kopperud* 47 President and Chief Executive Officer and a Director of Advisers;
500 Bielenberg Drive Director President and a Director of Investors; President of
Woodbury, Minnesota Fortis Financial Group; a Director of Fortis Benefits
Insurance Company and Senior Vice President of Fortis
Insurance Company.
Robb L. Prince 58 Director Financial and employee benefit consultant; prior to
5108 Duggan Plaza July 1995, Vice President and Treasurer, Jostens,
Edina, Minnesota Inc., a producer of products and services for youth,
education, sports award, and recognition markets;
director of Analysts International Corporation.
Leonard J. Santow 63 Director Principal, Griggs & Santow, Inc., economic and
75 Wall Street 21st Floor financial consultants
New York, New York
Noel Schenker Shadko 45 Director Marketing consultant; prior to 1996, Senior Vice
1908 W. 49th Street President, Marketing and Strategic Planning,
Minneapolis, Minnesota Rollerblade, Inc.
Joseph M. Wikler 57 Director Investment consultant and private investor; prior to
12520 Davan Drive 1994, Director of Research, Chief Investment Officer,
Silver Spring, Maryland Principal and a Director, The Rothschild Co., and
investment adviser, Baltimore, MD.
Gary N. Yalen 57 Vice President President and Chief Investment Officer of Advisers
One Chase Manhattan Plaza (since 1995) and Senior Vice President, Investments,
New York, New York of Fortis, Inc.; prior to 1996, President and Chief
Investment Officer, Fortis Asset Management, a former
division of Fortis, Inc.
Howard G. Hudson 62 Vice President Executive Vice President and Head of Fixed Income
One Chase Manhattan Plaza Investments of Advisers since 1995; prior to 1996,
New York, New York Senior Vice President, Fixed Income, Fortis Asset
Management.
</TABLE>
8
<PAGE> 32
<TABLE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS AGE THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- ----------------- -----------------------------------------
<S> <C> <C> <C>
Lucinda S. Mezey 52 Vice President Executive Vice President and Head of Equity
One Chase Manhattan Plaza Investments of Advisers since October 1997; from 1995
New York, New York to October 1997, Chief Investment Officer, Alex Brown
Capital Advisory and Trust Co., Baltimore, MD; prior
to 1995, Senior Vice President and Head of Equity
Investments, PNC Bank, Philadelphia, PA.
James S. Byrd 48 Vice President Executive Vice President of Advisers since 1995;
90 South 7th Street prior to 1995, Vice President of Advisers and of
Minneapolis, Minnesota Investors.
Nicholas L.M. de Peyster 33 Vice President Vice President of Advisers since 1995; prior to 1995,
One Chase Manhattan Plaza Vice President, Equities, Fortis Asset Management.
New York, New York
Diane M. Gotham 41 Vice President Vice President of Advisers since 1998; from 1994 to
90 South 7th Street 1998, securities analyst for Advisers.
Minneapolis, Minnesota
Laura E. Granger 38 Vice President Vice President of Advisers since 1998; from
One Chase Manhattan Plaza 1993-1998, portfolio manager, General Motors
New York, New York Investment Management, New York, NY.
Maroun M. Hayek 51 Vice President Vice President of Advisers since 1995; prior to 1996,
One Chase Manhattan Plaza Vice President, Fixed Income, Fortis Asset Management.
New York, New York
Robert C. Lindberg 43 Vice President Vice President of Advisers since 1993.
One Chase Manhattan Plaza
New York, New York
Charles L. Mehlhouse 57 Vice President Vice President of Advisers; prior to March 1996,
One Chase Manhattan Plaza portfolio manager, Marshall & Ilsley Bank
New York, New York Corporation, Milwaukee, WI.
Kevin J. Michels 48 Vice President Vice President of Advisers since 1995; prior to 1996,
One Chase Manhattan Plaza Vice President, Administration, Fortis Asset
New York, New York Management.
Christopher J. Pagano 36 Vice President Vice President of Advisers since 1996; prior to March
One Chase Manhattan Plaza 1996, government strategist, Merrill Lynch, New York,
New York, New York NY.
Kendall C. Peterson 43 Vice President Vice President of Advisers since August 1999; prior
One Chase Manhattan Plaza to August 1999, Vice President and portfolio manager
New York, New York at Prudential Insurance Company of America, Newark,
NJ.
</TABLE>
9
<PAGE> 33
<TABLE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS AGE THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- ----------------- -----------------------------------------
<S> <C> <C> <C>
Stephen M. Rickert 56 Vice President Vice President of Advisers since 1995; from 1994 to
One Chase Manhattan Plaza 1996, Corporate Bond Analyst, Fortis Asset Management.
New York, New York
Michael J. Romanowski 48 Vice President Vice President of Advisers since 1998; from October
One Chase Manhattan Plaza 1995 to March 1998, portfolio manager, Value Line,
New York, New York New York, NY; prior to October 1995, securities
analyst, Conning & Co., Hartford, CT.
Christopher J. Woods 39 Vice President Vice President of Advisers since 1995; prior to 1996
One Chase Manhattan Plaza Vice President, Fixed Income, Fortis Asset Management.
New York, New York
Robert W. Beltz, Jr. 50 Vice President Vice President-Securities Operations of Advisers and
500 Bielenberg Drive of Investors.
Woodbury, Minnesota
Peggy L. Ettestad 42 Vice President Senior Vice President, Operations of Advisers since
500 Bielenberg Drive March 1997; prior to March 1997, Vice President, G.E.
Woodbury, Minnesota Capital Fleet Services, Minneapolis, MN.
Tamara L. Fagely 41 Vice President Vice President of Advisers and of Investors since
500 Bielenberg Drive and Treasurer 1998; prior to 1998, Second Vice President of
Woodbury, Minnesota Advisers and Investors.
Dickson W. Lewis 50 Vice President Senior Vice President, Marketing and Sales of
500 Bielenberg Drive Advisers and of Investors since July 1997; from 1993
Woodbury, Minnesota to July 1997, President and Chief Executive Officer,
Hedstrom/Blessing, Inc., Minneapolis, MN.
David A. Peterson 57 Vice President Vice President and Assistant General Counsel, Fortis
500 Bielenberg Drive Benefits Insurance Company.
Woodbury, Minnesota
Scott R. Plummer 40 Vice President Vice President, Associate General Counsel and
500 Bielenberg Drive Assistant Secretary of Advisers.
Woodbury, Minnesota
Rhonda J. Schwartz 41 Vice President Since January 1996, Senior Vice President and General
500 Bielenberg Drive Counsel of Advisers, Vice President and General
Woodbury, Minnesota Counsel, Life and Investment Products of Fortis
Insurance Company and Senior Vice President and
General Counsel of Fortis Benefits Insurance Company,
FFG Division; from 1994 to January 1996, Vice
President, General Counsel and Secretary of Fortis, Inc.
Melinda S. Urion 46 Vice President Senior Vice President and Chief Financial Officer of
500 Bielenberg Drive Advisers since 1997; from 1995 to 1997, Senior Vice
Woodbury, Minnesota President of Finance and Chief Financial Officer,
</TABLE>
10
<PAGE> 34
<TABLE>
<CAPTION>
POSITION WITH
NAME AND ADDRESS AGE THE FUNDS PRINCIPAL OCCUPATIONS DURING PAST 5 YEARS
- ---------------- --- ----------------- -----------------------------------------
<S> <C> <C> <C>
American Express Financial Corporation; prior
to March 1995, corporate controller, American Express
Financial Corporation and prior to 1994, controller and
treasurer, IDS Life Insurance Company,
Minneapolis, MN.
Michael J. Radmer 54 Secretary Partner, Dorsey & Whitney LLP, the Company"s General
220 South Sixth Street Counsel.
Minneapolis, Minnesota
</TABLE>
--------------------------------------------
*Mr. Kopperud is an "interested person" (as defined under the 1940 Act) of
Advisers and Fortis Money because he holds certain positions including serving
as Chief Executive Officer and a director of Advisers. Mr. Freedman is an
"interested person" of Advisers and Fortis Money because he holds certain
positions including serving as Chairman and Chief Executive Officer of Fortis,
Inc., the parent company of Advisers.
Each director who is not affiliated with Advisers or Investors receives a
monthly fee of $100 from the Fund, $100 per meeting attended from the Fund, and
$100 per committee meeting attended from the Fund (and reimbursement of travel
expenses to attend meetings). Each such director also receives a monthly fee, a
meeting fee and a committee meeting fee from each fund in the Fund Complex for
which they are a director. The following table sets forth the aggregate
compensation received by each director from Fortis Money during the fiscal year
ended September 30, 1999, 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, 1999. Mr. Freedman and
Mr.Kopperud, who are affiliated with Advisers and Investors, did not receive any
compensation. No executive officer receives any compensation from the Funds.
During the fiscal year ended September 30, 1999, the Fund paid $17,093 in legal
fees and expenses to a law firm of which the Fund's Secretary is a partner.
<TABLE>
<CAPTION>
Compensation Total Compensation
Director from Fortis Money from Fund Complex*
- -------- ----------------- -----------------
<S> <C> <C>
Richard W. Cutting $1,800 $31,250
Dr. Robert M. Gavin $1,800 $31,250
Benjamin S. Jaffray** $1,800 $20,450
Jean L. King $1,600 $29,250
Edward M. Mahoney** $1,800 $31,250
Robb L. Prince $1,800 $31,250
Leonard J. Santow $1,781 $33,850
Noel Schenker Shadko $1,800 $26,150
Joseph M. Wikler $1,900 $34,750
</TABLE>
*The Fund Complex consists of one closed-end and eight open-end investment
companies managed by Advisers.
11
<PAGE> 35
**Messrs. Jaffray and Mahoney retired from the Board of directors effective
January 1, 2000.
Directors Gavin, Kopperud, Prince and Schenker Shadko are members of the
Executive Committee of the Board of Directors. While the Executive Committee is
authorized to act in the intervals between regular board meetings with full
capacity and authority of the full Board of Directors, except as limited by law,
it is expected that the Committee will meet at least twice a year.
PRINCIPAL HOLDERS OF SECURITIES
As of January 12, 2000, 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:
CLASS B - Lynda G. Barber, Leadville Rd., Newport Center, VT (7%); Susan P.
Decklever, 418 N 13th St., Osage, IA (5%); The Shaw Family Foundation, 1041
Lecuyer Dr., Stillwater, MN (6%); Salomon Smith Barney, Inc., 333 W 34th St.,
New York, NY (8%). CLASS H - A. G. Edwards & Sons Custodian for Mario G.
Pachano, 3008 E Las Flores, Arcadia, CA (13%). CLASS C - Gloria R. Montalvo, 442
FM 6550, Roma, TX (6%).
As of January 12, 2000, 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 inception. 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 December 31, 1999, Advisers managed thirty-three investment company
portfolios with combined net assets of approximately $8.2 billion.
CONTROL AND MANAGEMENT OF ADVISERS AND INVESTORS
Fortis, Inc. ("Fortis") owns 100% of the outstanding voting securities of
Advisers, and Advisers owns all of the outstanding voting securities of
Investors.
Fortis, located in New York, New York, is a financial services company that
provides specialty insurance and investment products to individuals, businesses,
associations and other financial services organizations in the United States.
Fortis is a part of a worldwide group of companies active in the fields of
insurance, banking and investments. Fortis is jointly owned by Fortis (NL) N.V.
of The Netherlands and Fortis (B) of Belgium.
Fortis (NL) N.V. is a diversified financial services company headquartered
in Utrecht, The Netherlands, where its insurance operations began in 1847.
Fortis (B) is a diversified financial services company headquartered in
Brussels, Belgium, where it insurance operations began in 1824. Fortis (NL) N.V.
and Fortis (B) own a group of companies active in insurance,
12
<PAGE> 36
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 under 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. From the advisory fee, Advisers pays Investors on a monthly basis a
distribution fee of .20% of the average daily net assets of the Fund. For more
information, see "Distribution Plan" below.
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.
The Fund paid advisory and management fees of $772,701 for the fiscal
year ended September 30, 1997, $853,729 for the fiscal year ended September 30,
1998,and $1,006,853 for the fiscal year ended September 30, 1999.
EXPENSES
Advisers bears the costs of acting as the Fund's transfer agent,
registrar and dividend agent. Advisers also furnishes the 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
13
<PAGE> 37
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.
Pursuant to the provisions of the Distribution Plan and pursuant to the
terms of the Investment Advisory and Management Agreement, a portion of the
Fund's advisory fee is paid by Advisers to Investors to compensate Investors for
its expenses in connection with the sale and distribution of Fund shares and for
ongoing servicing of accounts. From the advisory fee, Advisers pays Investors on
a monthly basis a fee of .20% of the average daily net assets of the Fund. With
respect to Class B, Class C and Class H shares, an additional .80% of the
average daily net assets of each such class is paid by each such class to
Investors on a monthly basis. Payments made under the Distribution Plan are not
tied to actual expenses incurred by Investors and may exceed such expenses.
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, Advisers paid Investors a distribution fee for
Class A shares of $330,293 for the fiscal year ended September 30, 1999. The
additional distribution fee paid by the Class B, Class C and Class H shares
totaled $21,293. Listed below are the total distribution fees paid by the Fund
(including fees paid through Advisers) and how those fees were used by Investors
for the fiscal year ended September 30, 1999.
<TABLE>
<S> <C>
Advertising $ -0-
Printing and Mailing of Prospectuses to
Other than Current Shareholders 27,599
Compensation to Underwriters 209,932
</TABLE>
14
<PAGE> 38
<TABLE>
<S> <C>
Compensation to Dealers -0-
Compensation to Sales Personnel -0-
Interest, Carrying or Other Financing Charges -0-
Other (distribution-related compensation, sales
literature, supplies, postage, toll-free phone) 114,055
-------
TOTAL $351,586
</TABLE>
BROKERAGE ALLOCATION AND OTHER PRACTICES
Because the Fund is exclusively composed of debt securities, portfolio
transactions are effected with dealers without the payment of brokerage
commissions, but at net prices which usually include a spread or markup. The
volume of business done with a broker-dealer for fixed income trades is based to
a large extent on the availability and competitive price of the fixed income
securities that fit the strategy of the fixed income portfolio. Best execution,
the quality of research, making of secondary markets and other services are also
determining factors for the allocation of business when buying and selling fixed
income securities. If a broker-dealer offering a larger spread is more reliable
or provides better execution than a broker-dealer offering a smaller spread,
then Advisers may select the broker-dealer offering a larger spread for a
particular trade.
Advisers may direct orders to broker-dealers who furnish research
products and services to Advisers as long as the broker-dealers meet the
selection criteria outlined above. The research products and services
supplements Advisers' own research and enables Advisers to obtain the views and
information of others prior to making investment decisions for the Funds. During
fiscal year ended September 30, 1999, the Fund did not pay any commissions to
broker-dealers who provided research products and services to Advisers. Advisers
has not entered and will not enter into any agreement with a broker-dealer that
would prevent Advisers from obtaining best execution on a trade.
Advisers believes that most research services obtained by it generally
benefit several or all of the investment companies, insurance company accounts
and private accounts which it manages, as opposed to solely benefiting one
specific managed fund or account. Such research services include advice, both
directly and in writing, as to the value of the securities; the advisability of
investing in, purchasing, or selling securities; the availability of securities,
or purchasers or sellers of securities; and analysis and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy,
and the performance of accounts. Examples of some of the research products and
services that may be furnished to Advisers include:
o hard copy securities research services;
o securities research software database services;
o electronic securities trading networks; and
o statistical services useful to mutual fund directors and account
o representatives in evaluating the relative performance of mutual fund
o portfolios.
If a broker-dealer furnishes Advisers with non-research products and
services, Advisers will pay the broker-dealer for such products and services. No
client brokerage will be used to pay for non-research product and services.
15
<PAGE> 39
The Fund did not pay any brokerage commissions for the fiscal years
ended September 30, 1997, 1998 or 1999.
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, 1997, 1998 and
1999 for the Fund.
From time to time, the Fund may acquire the securities of its regular
brokers or dealers or parent companies of such brokers or dealers. During the
fiscal year ended September 30, 1999, the Fund acquired the following securities
of its regular brokers or dealers or parent companies of such brokers or
dealers:
<TABLE>
<CAPTION>
Value of Securities
Name of Issuer Owned at Year End
- -------------- -------------------
<S> <C>
American Express Credit Corp $ 7,961,280
CIT Holdings, Inc. 7,994,233
Household Finance Corp. 7,995,160
Chevron Oil Finance 7,970,667
American General Finance Corp. 7,967,562
Merrill Lynch & Co., Inc 7,977,664
U.S. Bank (N.A.) 4,645,947
</TABLE>
Advisers has developed written trade allocation procedures for its
management of the securities trading activities of its clients. Advisers manages
multiple portfolios, both public (mutual funds) and private. The purpose of the
trade allocation procedures is to treat the portfolios fairly and reasonably in
situations where the amount of a security that is available is insufficient to
satisfy the volume or price requirements of each portfolio that is interested in
purchasing that security. Generally, when the amount of securities available in
a public offering or the secondary market is insufficient to satisfy the
requirements for the interested portfolios, the procedures require a pro rata
allocation based upon the amounts initially requested by each portfolio manager.
In allocating trades made on combined basis, each participating portfolio will
receive the same average price for the securities purchased or sold.
Because a pro rata allocation may not always adequately accommodate all
facts and circumstances, the procedures provide for exceptions to allocate
trades on a basis other than pro rata. 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.
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.
16
<PAGE> 40
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 portfolio 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 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 believes
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,
17
<PAGE> 41
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. 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, 1999, the Fund's net asset values per share were
calculated as follows:
CLASS A
Net Assets ($168,080,159) = Net Asset Value per Share ($1.00)
-------------------------
Shares Outstanding (168,080,159)
CLASS B
Net Assets ($1,393,024) = Net Asset Value per Share ($1.00)
-------------------------
Shares Outstanding (1,393,024)
CLASS C
Net Assets ($1,530,982) = Net Asset Value per Share ($1.00)
-------------------------
Shares Outstanding (1,530,982)
CLASS H
Net Assets ($2,087,711) = Net Asset Value per Share ($1.00)
-------------------------
Shares Outstanding (2,087,711)
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 the 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,
18
<PAGE> 42
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.
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).
19
<PAGE> 43
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 to fairly
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.
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
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% 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.
20
<PAGE> 44
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.
UNDERWRITER 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, Investors
receives any contingent deferred sales charges on redemptions of Class B, Class
C and Class H shares of the Fund, as set forth in the Prospectus. There is no
initial sales charge paid by any class of Fund shares. The following tables set
forth the amount of underwriting commissions paid by the Fund and the amount of
such commissions retained by Investors.
TOTAL UNDERWRITING COMMISSIONS
<TABLE>
<CAPTION>
Fiscal year ended Fiscal year ended Fiscal year ended
September 30, 1997 September 30, 1998 September 30, 1999
------------------ ------------------ ------------------
<S> <C> <C> <C>
Money Fund $7,928 $28,739 $78,352
</TABLE>
UNDERWRITING COMMISSIONS RETAINED BY INVESTORS
<TABLE>
<CAPTION>
Fiscal year ended Fiscal year ended Fiscal year ended
September 30, 1997 September 30, 1998 September 30, 1999
------------------ ------------------ ------------------
<S> <C> <C> <C>
Money Fund $7,928 $28,739 $78,352
</TABLE>
Investors received the following compensation from each Fund during its
most recent fiscal year.
<TABLE>
<CAPTION>
Net Underwriting Compensation on
Discounts and Redemptions and Brokerage Other
Commissions Repurchases Commissions Compensation
---------------- --------------- ----------- ------------
<S> <C> <C> <C> <C>
Money Fund $ 0 $78,352 $ 0 $ 0
</TABLE>
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
21
<PAGE> 45
percent. Effective yield (calculated over a seven-day period) is computed by
determining the net change, exclusive of capital changes, in the value of a
hypothetical preexisting account having a balance of one share at the beginning
of the period, subtracting a hypothetical charge reflecting deductions from
shareholder accounts, and dividing the difference by the value of the account at
the beginning of the base period to obtain the base period return, and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:
Effective Yield = [(Base Period Return + 1) power of 365/7] - 1
The Fund also may quote annualized yield figures, calculated similarly
to the above methods.
For the seven-day period ended September 30, 1999, 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 4.55% 4.66%
Class B Shares 3.86% 3.94%
Class C Shares 3.76% 3.84%
Class H Shares 3.76% 3.84%
</TABLE>
FINANCIAL STATEMENTS
The audited financial statements as of September 30, 1999, 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 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
22
<PAGE> 46
of a director (i) for any breach of the director's duty of "loyalty" to the
corporation or its shareholders, (ii) for acts or omissions not in good faith or
that involve intentional misconduct or a knowing violation of law, (iii) for
authorizing a dividend, stock repurchase or redemption or other distribution in
violation of Minnesota law or for violation of certain provisions of Minnesota
securities laws, or (iv) for any transaction from which the director derived an
improper personal benefit. The Articles of Incorporation of Fortis 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.
23
<PAGE> 47
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.
24
<PAGE> 48
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:
o Prime-1 Highest quality
o Prime-2 Higher quality
o Prime-3 High quality
CORPORATE BOND RATINGS
Standard & Poor's Ratings Services. Its ratings for corporate bonds include
the following:
o 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.
o 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:
o 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
25
<PAGE> 49
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.
o 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.
26
<PAGE> 50
Part C
Money Fund
a series of
Fortis Money 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 (4)
(a).2 Certification of Designation of Classes A, B, C & H dated 10/31/94
(4)
(b) Amended and Restated Bylaws dated 1/31/92 (4)
(c) Instruments Defining Rights of Security Holders - not applicable
(d) Investment Advisory and Management Agreement dated 1/31/92 (4)
(e)1.Underwriting and Distribution Agreement dated 11/14/94 (4)
(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 (4)
(h) Other Material Contracts - not applicable
(i) Legal Opinion - not applicable
(j) Consent of KPMG 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. 22 to the
Registrant's Registration Statement on Form N-1A filed with the Commission
on January 31, 1996.
(4) Incorporated by reference to Post-Effective Amendment No. 26 to the
Registrant's Registration on Form N-1A filed with the Commission on
February 1, 1999.
* Filed herewith.
1
<PAGE> 51
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).
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
2
<PAGE> 52
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:
<TABLE>
<CAPTION>
Other
Business/Employment
Name Position with Adviser During Past Two Years
- ---- --------------------- ---------------------
<S> <C> <C>
Michael D. O'Connor Qualified Plan Officer Qualified Plan Officer of Fortis
Benefits Insurance Company
David C. Greenzang Money Market Portfolio Debt securities manager with
Officer Fortis, Inc.
</TABLE>
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.
3
<PAGE> 53
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
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
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.
4
<PAGE> 54
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.
5
<PAGE> 55
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement on Form N-1A
pursuant to Rule 485(b) under the Securities Act of 1933 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Woodbury and State of Minnesota on the
31st day of January 2000.
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 January 31, 2000
- -------------------- (principal executive officer)
Dean C. Kopperud
/s/ Tamara L. Fagely Treasurer January 31, 2000
- -------------------- (principal financial and
Tamara L. Fagely accounting officer)
Richard D. Cutting* Director
Allen R. Freedman* Director
Robert M. Gavin* Director
Jean L. King* Director
Robb L. Prince* Director
Leonard J. Santow* Director
Noel Schenker Shadko* Director
Joseph M. Wikler* Director
*By /s/ Dean C. Kopperud January 31, 2000
---------------------
Dean C. Kopperud, Attorney-in-Fact
<PAGE> 1
EXHIBIT (J)
[KPMG letterhead]
Independent Auditors' Consent
The Board of Directors
Fortis Money Portfolios, Inc.
We consent to the use of our report incorporated herein by reference and the
references to our Firm under the headings "Financial Highlights" in Part A and
"Financial Statements" in Part B of the Registration Statement.
/s/ KPMG LLP
KPMG LLP
Minneapolis, Minnesota
January 28, 2000
