<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __________)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Fortis Growth Fund,Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
(specify)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] $125 per Exchange Act Rules O-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] Fee computed on table below per Exchange Act Rules 14a96(i)(4) and O-11.
(1) Title of each class of securities to which transaction applies:
___________________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
___________________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
___________________________________________________________________________
(4) Proposed maximum aggregate value of transaction :
___________________________________________________________________________
(5) Total fee paid:
___________________________________________________________________________
[ ] Fee paid previously by written preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
___________________________________________________________________________
(2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
(3) Filing Party:
___________________________________________________________________________
(4) Date Filed:
___________________________________________________________________________
<PAGE>
FORTIS GROWTH FUND, INC.
500 Bielenberg Drive, Woodbury, Minnesota 55125
Mailing Address: P.O. Box 64284, St. Paul, Minnesota 55164
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 14, 1999
Fortis Growth Fund, Inc. (the "Fund") will hold a Special Meeting of
Shareholders at the offices of Fortis Advisers, Inc. ("Advisers"), 500
Bielenberg Drive, Woodbury, Minnesota, on Thursday, October 14, 1999, at 10:00
a.m. for the following purposes:
1. To set the number of directors at nine and to elect a Board of
Directors.
2. To approve the elimination or modification of certain investment
policies.
3. To ratify the selection by the Board of Directors of the Fund of KPMG
LLP as independent public accountants for the Fund for the fiscal year
ending August 31, 2000.
4. To transact any other business properly brought before the meeting.
The Fund's Board of Directors unanimously recommends approval of each item
listed on this Notice of Special Meeting of Shareholders.
Only shareholders of record as of the close of business on August 10, 1999
may vote at the meeting or any adjournment(s) of the meeting .
You can vote easily and quickly by toll-free telephone call or by mail.
Just follow the instructions that appear on your enclosed proxy card. Please
help the Fund avoid the cost of a follow-up mailing by voting today.
Michael J. Radmer
Secretary
Dated: September 1, 1999
<PAGE>
FORTIS GROWTH FUND, INC.
500 Bielenberg Drive, Woodbury, Minnesota 55125
Mailing Address: P.O. Box 64284, St. Paul, Minnesota 55164
PROXY STATEMENT
SPECIAL MEETING OF SHAREHOLDERS -- OCTOBER 14, 1999
The Board of Directors of Fortis Growth Fund, Inc. (the "Fund") is
soliciting the enclosed proxy in connection with a special meeting of
shareholders to be held October 14, 1999, and any adjournment of the meeting.
The Fund's investment adviser and manager is Fortis Advisers, Inc.
("Advisers"). Fortis Investors, Inc. ("Investors") is the Fund's principal
underwriter. Both Advisers and Investors are located at 500 Beilenberg Drive,
Woodbury, Minnesota 55125.
The Fund will pay all costs of solicitation, including the cost of
preparing and mailing the Notice of Special Shareholders' Meeting and this Proxy
Statement. Representatives of Advisers, without cost to the Fund, may solicit
proxies by means of mail, telephone, or personal calls. Advisers may also
arrange for an outside firm, Shareholder Communication Services, Inc., to
solicit shareholder votes by telephone on the Fund's behalf. This procedure is
expected to cost the Fund approximately $_____________.
In order for the shareholder meeting to go forward, there must be a quorum.
This means that at least 10% of the Fund's shares must be represented at the
meeting -- either in person or by proxy. All returned proxies count toward a
quorum, regardless of how they are voted. An abstention or a vote withheld will
be counted as shares present at the meeting in determining whether a proposal
has been approved, and will have the same effect as a vote "against" the
proposal. Broker non-votes will not be counted as present in calculating the
vote on any proposal. (Broker non-votes are shares for which (i) the underlying
owner has not voted and (ii) the broker holding the shares does not have
discretionary authority to vote on the particular matter.) If a quorum is not
obtained or if sufficient votes to approve any of the proposals are not
received, the persons named as proxies may propose one or more adjournments of
the meeting to permit further solicitation of proxies. Any adjournment will
require a vote in favor of the adjournment by the holders of a majority of the
shares present in person or by proxy at the meeting (or any adjournment of the
meeting). In the circumstance where sufficient votes to approve a proposal have
not been received, the persons named as proxies will vote all shares that have
voted for the proposal in favor of adjournment; shares voted against the
proposal will be voted against adjournment.
You may revoke your proxy at any time up until voting results are announced
at the shareholder meeting. You can do this by writing to the Fund's Secretary,
or by voting in person at the meeting. In addition, you can revoke a prior proxy
simply by voting again -- using your original proxy card or by toll-free
telephone call. If you return an executed proxy card without instructions, your
shares will be voted "for" each proposal.
Only shareholders of record on August 10, 1999 may vote at the meeting or
any adjournment of the meeting. On that date the Fund had _________ shares of
common stock issued and outstanding. Each shareholder is entitled to one vote
for each share owned on the record date. None of the matters to be presented at
the meeting will entitle any shareholder to cumulative voting or appraisal
rights.
At this point, we know of no other business to be brought before the
shareholder meeting. However, if any other matters do come up, the persons name
as proxies will vote upon these matter according to their best judgment.
The Fund's most recent annual and semiannual reports are available at no
cost. To request a report, please contact the Fund at P.O. Box 64284, St. Paul,
Minnesota 55164 or call 1-800-800-2000, extension 4579 and one will be sent by
first class mail within three business days of your request.
Please be sure to read the entire proxy statement before casting your vote.
This proxy statement and proxy cards were first mailed to shareholders on or
about September 1, 1999.
-1-
<PAGE>
PROPOSAL ONE
ELECTION OF DIRECTORS
At the meeting, you will be asked to elect the nominees listed below to the
Fund's Board of Directors, and to thereby set the number of Directors at nine.
The Bylaws of the Fund provide that the shareholders have the power to set the
number of Directors (subject to the authority of the Board of Directors to
increase or decrease the number as permitted by law).
Each person elected will serve until the next meeting of the shareholders
or until his or her successor is elected. Information regarding each nominee's
principal occupation and business experience during the past five years is set
forth below. Unless otherwise indicated, all positions have been held more than
five years. Each nominee also serves as a Director of each of the other open-end
investment companies managed by Advisers and as a Director of Fortis Securities,
Inc., a closed-end investment company managed by Advisers.
<TABLE>
<CAPTION>
Principal Occupation/Business
Name, Term of Office Age Experience During Past 5 years
- -------------------- --- ------------------------------
<S> <C> <C>
Richard W. Cutting 67 Certified public accountant and financial consultant.
Director since 1993
Allen R. Freedman* 58 Chairman, Chief Executive Officer and President of Fortis, Inc.; a
Director since 1987 Managing Director of Fortis International, N. V.
Dr. Robert M. Gavin 58 President, Cranbrook Education Community; prior to July 1996,
Director since 1986 President, Macalester College, St. Paul, MN.
Jean L. King 54 President, Communi-King, a communications consulting firm, St.
Director since 1984 Paul, MN.
Dean C. Kopperud * 46 Chief Executive Officer and a Director of Advisers, President and
Director since 1995 a Director of Investors, President of Fortis Financial Group, a
Director of Fortis Benefits Insurance Company and a Senior Vice
President of Time Insurance Company.
Robb L. Prince 57 Financial and Employee Benefit Consultant; prior to July, 1995,
Director since 1982 Vice President and Treasurer, Jostens, Inc., a producer of
products and services for the youth,
education, sports award, and
recognition markets, Minneapolis, MN.
Leonard J. Santow 62 Principal, Griggs & Santow, Incorporated, economic and financial
Director since 1972 consultants, New York, NY.
Noel S. Shadko 44 Marketing consultant; prior to 1996, Senior Vice President,
Director since 1996 Marketing and Strategic Planning, Rollerblade, Inc., Minneapolis,
MN.
Joseph M. Wikler 57 Investment consultant and private investor.
Director since 1994
</TABLE>
- -------------------
* Denotes directors who are considered to be "interested persons" (as defined
under the 1940 Act) of the Fund. Mr. Kopperud is an interested person
because he holds certain positions including serving as Chief Executive
Officer and a director of Advisers. Mr. Freedman is an interested person
because he holds certain positions including serving as Chairman and Chief
Executive Officer of Fortis, Inc., the parent company of Advisers, and a
Managing Director of Fortis International, N.V.
The Fund has an Audit Committee of the Board of Directors whose members are
selected annually by the full Board of Directors. The Audit Committee currently
consists of Ms. King, Mr. Wikler and Mr. Cutting, who serves as its chairperson.
The Audit Committee met ___ times during the fiscal year ended August 31, 1999.
The
-2-
<PAGE>
Fund does not have a standing compensation committee or a standing nominating
committee of the Board of Directors.
The functions performed by the Audit Committee are to recommend annually to
the Board a firm of independent certified public accountants to audit the books
and records of the Fund for the ensuing year; to monitor that firm's
performance; to review with the firm the scope and results of each audit and
determine the need, if any, to extend audit procedures; to confer with the firm
and representatives of the Fund on matters concerning the Fund's financial
statements and reports, including the appropriateness of its accounting
practices and of its financial controls and procedures; to evaluate the
independence of the firm; to review procedures to safeguard portfolio
securities; to review the purchase by the Fund from the firm of nonaudit
services; to review all fees paid to the firm; and to facilitate communications
between the firm and the Fund's officers and directors.
During the Fund's fiscal year ended August 31, 1999, there were ______
meetings of the Board of Directors. No director attended fewer than 75% of the
aggregate of the number of meetings of the Board of Directors and the number of
meetings held by all committees of the Board on which such director served.
No compensation is paid by the Fund to any Director or officer who is an
officer or employee of Advisers or Investors or any affiliated company. The Fund
pays each Director who is not affiliated with Advisers or Investors a monthly
fee of $100 and a fee of $100 for each Directors' meeting and each committee
meeting attended. Each Director also receives a monthly fee, a meeting fee and a
committee meeting fee from each fund in the Fund Complex for which they are a
Director. The following table sets forth the compensation received by each
director from the Fund during the fiscal year ended August 31, 1999, as well as
the total compensation received by each director from the Fund Complex during
the calendar year ended December 31, 1998. Mr. Freedman and Mr. Kopperud did not
receive any such compensation and they are not included in the table.
Compensation Total Compensation
Director from the Fund from Fund Complex*
------------------- ------------- -------------------
Richard W. Cutting $ $31,200
Dr. Robert M. Gavin $ $31,200
Jean L. King $ $31,200
Edward M. Mahoney $ $31,200
Robb L. Prince $ $31,200
Leonard J.Santow $ $30,300
Noel J. Shadko $ $20,400
Joseph M. Wikler $ $31,300
* The Fund Complex consists of one closed-end and eight open-end
investment companies managed by Advisers.
Vote Required
The Board of Directors recommends that shareholders set the number of
directors at nine and vote in favor of the above nominees to serve as Directors
of the Fund. The vote of a majority of the shares of the Fund represented at the
meeting, provided at least a quorum is represented in person or by proxy, is
sufficient for the election of the above nominees. Unless otherwise instructed,
the proxies will vote for the above nine nominees. All of the nominees listed
above have consented to serve as Directors if elected. In the event any of the
above nominees are not candidates for election at the meeting, the proxies may
vote for such other persons as management may designate. Nothing currently
indicates that such a situation will arise.
-3-
<PAGE>
PROPOSAL TWO
THE ELIMINATION OR MODIFICATION
OF FUNDAMENTAL INVESTMENT POLICIES
The Fund has a number of investment policies that are "fundamental," which
means that they may be changed only with the approval of shareholders. Since the
Fund began operations in 1958, there have been substantial changes in the
securities markets and in the Federal and state securities laws applicable to
investment companies. The Fund currently has certain fundamental investment
policies that are not required under current law and others that are more
restrictive than required. Because these policies preclude the Fund from taking
full advantage of the investment opportunities available to it, the Board of
Directors is proposing that they be revised or eliminated.
The 1940 Act requires all mutual funds to have fundamental policies
regarding certain activities, such as borrowing money or issuing senior
securities. The Board of Directors has proposed that these required policies be
revised to provide the Board with the maximum flexibility permitted under the
1940 Act. The Board of Directors has also recommended that shareholders approve
the elimination of all fundamental policies that are not required by the 1940
Act.
There is no present intention to significantly change the investment
operations of the Fund as a result of the proposed fundamental policy revisions.
The Board believes, however, that it would be in the best interests of the Fund
and its shareholders for the Fund to have the flexibility to modify certain
investment activities without first having to obtain shareholder approval. As
explained below, the proposed revisions to and eliminations of fundamental
policies will provide the Fund with this flexibility. You should note that any
changes in the investment strategies of the Fund will be disclosed in the Fund's
prospectus and statement of additional information, or in supplements to those
documents.
A. Modify the Policy Regarding Borrowing
It is proposed that the Fund replace its current policy regarding borrowing
with the following policy:
The Fund will not borrow money or issue senior securities, except as
permitted under the Investment Company Act of 1940, as amended, and as
interpreted or modified from time to time by any regulatory authority
having jurisdiction.
The Fund's current policy provides that the Fund may not borrow money or
issue debt securities. The Board believes that this policy is unnecessarily
restrictive and could be disadvantageous to shareholders. The addition of
borrowing power will provide the Fund with greater flexibility to respond to
sudden needs for cash that may arise and that cannot be anticipated. Ordinarily,
the Fund would expect to be able to meet needs for cash to facilitate
redemptions by using current cash flow arising from new investments, investment
income, and liquidations of securities in the ordinary course of business.
However, there may be instances when these sources of cash flow are not
sufficient to meet current cash needs, in which case the ability to borrow money
may be advantageous to the Fund.
The proposed policy would permit the Fund to engage in borrowing in a
manner and to the full extent permitted by applicable law. The 1940 Act requires
borrowings to have 300% asset coverage, which means, in effect, that the Fund
would be permitted to borrow up to an amount equal to 50% of its total assets
under the proposed borrowing policy. The Board has no current intention of
authorizing the Fund to borrow other than for temporary or emergency purposes.
However, under the proposed policy, the Fund also could borrow for leverage.
Borrowing for leverage would increase the Fund's volatility and the risk of loss
in a declining market.
The proposed policy also permits the Fund to issue senior securities to the
extent permitted by applicable law. Generally, a senior security is an
obligation of a fund that takes priority over the claims of the fund's
shareholders. The 1940 Act prohibits open-end funds from issuing most types of
senior securities, but permits them, if specified conditions are met, to enter
into certain transactions that might be considered to involve the issuance of
senior securities. For example, a fund may enter into a transaction that
obligates it to pay money at a future date if cash or liquid securities are set
aside to cover the obligation.
-4-
<PAGE>
B. Modify the Policy Regarding Concentration in a Particular Industry
It is proposed that the Fund replace its current policy regarding
concentration with the following policy:
The Fund will not concentrate its investments in a particular industry, as
that term is used in the Investment Company Act of 1940, as amended, and as
interpreted or modified from time to time by any regulatory authority
having jurisdiction. For purposes of this limitation, the U.S. Government,
and state or municipal governments and their political subdivisions, are
not considered members of any industry.
The 1940 Act requires that the Fund state its position regarding
concentration in an industry. While the 1940 Act does not define what
constitutes "concentration," the staff of the Securities and Exchange Commission
(the "Commission") takes the position that investment of more than 25% of a
fund's assets in an industry constitutes concentration. If a fund concentrates
in an industry, it must at all times have more than 25% of its assets invested
in that industry, and if its policy is not to concentrate, as is the case with
the Fund, it may not invest more than 25% of its assets in the applicable
industry, unless, in either case, the fund discloses the specific conditions
under which it will change from concentrating to not concentrating or vice
versa.
The Fund's current policy provides that the Fund will not "concentrate its
investments, that is, invest more than 25% of the value of its assets in any
particular area." The proposed policy does not materially change the Fund's
current policy. However, rather than defining concentration, as the current
policy does, the proposed policy states that the Fund will not concentrate in
any industry, as the term "concentration" is interpreted from time to time. This
will provide the Fund with more flexibility should the staff of the Commission
reinterpret the term "concentration." The proposed policy also clarifies that
U.S., state and local governments are not considered members of any industry.
C. Modify the Policy Regarding the Underwriting of Securities
It is proposed that the Fund replace its current policy regarding the
underwriting of securities with the following:
The Fund will not act as an underwriter of securities of other issuers,
except to the extent that, in connection with the disposition of portfolio
securities, it may be deemed an underwriter under applicable laws.
The Fund's current policy provides that the Fund may not "act as an
underwriter of securities of other issuers, except that the Fund may invest up
to 5% of the value of its assets (at the time of investment) in portfolio
securities which the Fund might not be free to sell to the public without
registration of such securities under the Securities Act of 1933." An
underwriter of securities is a person who purchases securities from an issuer
with a view to distributing the securities. The Fund's current policy was
designed to clarify that the Fund will not be deemed to be an underwriter of
securities merely because it purchases unregistered securities in a private
placement ("restricted securities") and then later resells these securities.
This situation will be encompassed, however, by the more general language in the
proposed policy stating that the Fund will not underwrite securities except to
the extent that it may be considered an underwriter when selling portfolio
securities.
The current policy also was designed to limit the Fund's investments in
illiquid securities, since restricted securities historically were considered
illiquid. However, a fairly liquid and efficient institutional resale market for
restricted securities has developed in recent years, and restricted securities
are no longer necessarily illiquid. Therefore, the Board has determined that
there should be no limitation imposed upon the total value of restricted
securities purchased by the Fund. As discussed below in Section J, the Board
believes that the Fund and its shareholders are adequately protected by the
Commission's current policy which restricts the Fund's investments in illiquid
securities to 15% of its net assets.
-5-
<PAGE>
D. Modify the Policy Regarding Investments in Real Estate
It is proposed that the Fund replace its current policy regarding
investments in real estate with the following:
The Fund will not purchase or sell real estate unless acquired as a result
of ownership of securities or other instruments, but this shall not prevent
the Fund from investing in securities or other instruments backed by real
estate or interests therein or in securities of companies that deal in real
estate or mortgages.
The Fund's current policy states that the Fund may not "purchase or sell
real estate or other interests in real estate, or interests in real estate
investment trusts." The primary difference between the current and proposed
policy is that investments in real estate investment trusts are permissible
under the proposed policy and prohibited under the Fund's current policy. The
Fund has no current intention of investing in real estate investment trusts.
Under both the current and the proposed policy, direct investments in real
estate are prohibited. The proposed policy goes on to elaborate that investments
in securities backed by real estate or issued by companies that deal in real
estate are permissible.
E. Modify the Policy Regarding the Purchase of Commodities
It is proposed that the Fund replace its current policy regarding the
purchase of commodities with the following:
The Fund will not purchase physical commodities or contracts relating to
physical commodities.
The Fund's current policy prohibits investments in commodities or commodity
contracts. The 1940 Act requires a mutual fund to state as a fundamental
investment policy the extent to which it may engage in the purchase and sale of
commodities. At the time the 1940 Act was enacted, the term "commodities" was
understood to refer principally to physical commodities such as agricultural
products, precious and base metals, oil and gas, and the like. In recent years,
however, a variety of new financial contracts and instruments, such as interest
rate, currency and stock index futures contracts, have been created which may be
considered to be "commodities" for regulatory purposes. The Fund's current
policy could be interpreted as prohibiting the Fund from investing in these
instruments. The purpose of the proposed change is to clarify that the Fund is
not permitted to invest in physical commodities or contracts relating to
physical commodities and to provide the Fund with the flexibility of investing
in financial contracts and instruments that might be categorized as commodities.
Although the Fund does not intend to use futures contracts, options on futures
contracts or similar instruments as a principal investment strategy, the Board
believes that it would be in shareholders best interests for the Fund to have
the maximum flexibility regarding the use of these instruments going forward.
Futures contracts are standardized, exchange-traded contracts that require
delivery of the underlying financial instrument (such as a bond, currency or
stock index) at a specified price, on a specified future date. The buyer of the
futures contract agrees to buy the underlying financial instruments from the
seller at a fixed purchase price upon the expiration of the contract. The seller
of the futures contract agrees to sell the underlying financial instrument to
the buyer at expiration at the fixed sales price. In most cases, delivery never
takes place. Instead, both the buyer and the seller, acting independently of
each other, usually liquidate their long and short positions before the contract
expires; the buyer sells futures and the seller buys futures.
Futures may be used for hedging (i.e., to protect against adverse future
price movements in the Fund's portfolio securities, or in securities the Fund
intends to purchase). For example, a portfolio manager who thinks that the stock
market might decline could sell stock index futures to safeguard the Fund's
portfolio. If the market declines as anticipated, the value of stocks in the
Fund's portfolio would decrease, but the value of the Fund's futures contracts
would increase. Futures contracts may also be used to speculate on the market.
For example, a portfolio manager might buy stock index futures on the
expectation that the value of the particular index will rise, even though the
stocks comprising the index are unrelated to stocks held or intended to be
purchased by the Fund. Using futures for speculation, however, involves
significant risk since futures contracts are highly leveraged instruments. When
a portfolio manager enters into a futures contract, the manager needs to put up
only a small
-6-
<PAGE>
fraction of the value of the underlying contract as collateral, yet gains or
losses will be based on the full value of the contract.
The use of futures contracts, options on futures contracts and similar
instruments would expose the Fund to additional investment risks and transaction
costs. Risks include: the risk that interest rates, securities prices or
currency markets will not move in the direction that the investment adviser
anticipates; an imperfect correlation between the price of the instrument and
movements in the prices of any securities or currencies being hedged; the
possible absence of a liquid secondary market for any particular instrument and
possible exchange-imposed price fluctuation limits; leverage risk, which is the
risk that adverse price movements in an instrument can result in a loss
substantially greater than the Fund's initial investment in that instrument; and
the risk that the counterparty to an instrument will fail to perform its
obligations.
F. Modify the Policy Regarding Lending
It is proposed that the Fund replace its current policy regarding lending
with the following policy:
The Fund may not make loans except as permitted under the Investment
Company Act of 1940, as amended, and as interpreted or modified from time
to time by any regulatory authority having jurisdiction.
The Fund's current lending policy prohibits making loans to others, but
provides that the fund may purchase bonds, debentures or other det securities
that are not publicly distributed in an amount not to exceed 5% of its total
assets. The current policy goes on to state that the purchase of a portion of an
issue of publicly distributed bonds, debentures or other debt securities does
not constitute the making of a loan.
The proposed policy permits the Fund to lend in a manner and to the extent
permitted by applicable law. The proposed policy does not contain any
restriction on the Fund's investments in bonds, debentures or other debt
securities that are not publicly distributed. The current policy limiting such
investments was designed to limit the Fund's investments in illiquid securities.
The Board believes, however, that Fund shareholders are adequately protected in
that regard by the Commission's current restriction on investments in illiquid
securities discussed below in Section J. The proposed change would permit the
Fund, subject to Board approval, to lend its securities. It would also permit
the Fund, subject to the receipt of any necessary regulatory approval and Board
authorization, to enter into other lending arrangements, including lending
agreements under which the Fund could for temporary purposes lend money directly
to and borrow money directly from other funds advised by Advisers through a
credit facility. Although the Fund does not intend to use lending as a principal
investment strategy, the Board believes that it would be in shareholders' best
interests for the Fund to have the maximum flexibility regarding the use of
lending. The Fund believes that the flexibility provided by this policy change
could possibly reduce the Fund's borrowing costs and enhance its ability to earn
higher rates of interest on short-term lendings in the event that the Board
determines that such arrangements are warranted in light of the Fund's
particular circumstances.
G. Eliminate the Policy Prohibiting the Pledging of Assets
The Fund has a fundamental policy which provides that the fund may not
"mortgage, pledge, hypothecate, or in any manner transfer, as security for
indebtedness, any securities owned or held by the Fund." It is proposed that
this policy be eliminated.
The Fund adopted this fundamental investment policy as a counterpart to its
fundamental policy prohibiting borrowing. As discussed above in the proposal
regarding borrowing, the Board believes that it is in the Fund's best interests
to have the ability to borrow. Similarly, the Board believes that it is in the
Fund's best interest to be able to pledge assets to the extent necessary to
secure such borrowing. The Board further believes that limitations on the Fund's
ability to pledge its assets are unnecessary since, even if the Fund is not
restricted in its ability to pledge assets, it is limited in its ability to
borrow by the 1940 Act.
-7-
<PAGE>
H. Eliminate the Policy Prohibiting Short Sales of Securities
The Fund has a fundamental policy prohibiting short sales of securities. It
is proposed that this policy be eliminated.
The Fund adopted this policy in order to comply with state securities
laws that no longer apply. The Board believes that this policy is not necessary
because the Fund will be limited in its ability to sell securities short by the
restrictions on the issuance of senior securities imposed by the 1940 Act. A
short sale is made by selling a security the Fund does not own. A short sale is
"against the box" if the Fund contemporaneously owns, or has the right to obtain
at no added cost, securities identical to those sold short. The Commission staff
has taken the position that a short sale, other than a short sale against the
box, involves the creation of a senior security, and violates the 1940 Act
prohibition on the issuance of senior securities unless a fund sets aside cash
or liquid securities in an amount equal to the current value of the securities
sold short.
I. Eliminate the Policy Prohibiting Margin Purchases
The Fund has a fundamental policy prohibiting it from purchasing securities
on margin. It is proposed that this policy be eliminated.
"Margin transactions" involve the purchase of securities with money
borrowed from a broker, with cash or eligible securities being used as
collateral against the loan. The Board believes that the Fund's fundamental
policy prohibiting the purchase of securities on margin is not necessary since
the Fund's ability to engage in margin transactions is limited by the 1940 Act.
The Fund's potential use of margin transactions beyond transactions in futures
and options and for the clearance of purchases and sales of securities,
including the use of margin in ordinary securities transactions, will generally
be limited by the current position taken by the staff of the Commission that
margin transactions with respect to securities are prohibited under the 1940 Act
because they create senior securities. The Fund's ability to engage in margin
transactions is also limited by the restrictions on borrowing imposed by the
1940 Act.
J. Eliminate the Policy Limiting Investments in Restricted Securities
The Fund has a fundamental policy providing that it may not "invest more
than 5% of its net assets in each of (i) restricted securities and (ii) bonds,
debentures or other debt securities which are not publicly distributed." It is
proposed that this policy be eliminated.
The Fund's policy regarding investments in restricted securities and debt
securities which are not publicly distributed was designed to assure that the
Fund's portfolio would consist primarily of securities that are readily
marketable, and that the Fund would therefore be able to make timely payment for
redeemed shares. However, the policy is more restrictive than the Commission's
current policy, which permits mutual funds to invest up to 15% of their net
assets in illiquid securities (10% for money market funds). The Commission
determined that these standards should satisfactorily assure that mutual funds
will be able to make timely payment for redeemed shares. In addition,
"restricted" securities are no longer necessarily illiquid, and may in fact be
readily marketable. Therefore, the Board of Directors has determined that there
should be no limitation imposed upon the total value of restricted securities
purchased by the Fund. Rather, the Fund should be limited only with respect to
the percentage of its net assets invested in securities deemed to be illiquid,
regardless of whether such securities are restricted. A non-fundamental policy
has been adopted for the Fund providing that it may invest up to 15% of its net
assets in illiquid securities.
K. Eliminate the Policy Prohibiting Options Transactions
The Fund has a fundamental policy providing that it may not write, purchase
or sell puts, calls or combinations thereof. It is proposed that this policy be
eliminated.
A put option gives the purchaser the right to sell a security or other
instrument to the writer of the option at a stated price during the term of the
option. A call option gives the purchaser the right to purchase a security or
other instrument from the writer of the option at a stated price during the term
of the option. Thus, if the Fund writes a call option on a security, it becomes
obligated during the term of the option to deliver the security
-8-
<PAGE>
underlying the option upon payment of the exercise price. If the Fund writes a
put option, it becomes obligated during the term of the option to purchase the
security underlying the option at the exercise price if the option is exercised.
The Fund may use put and call options for a variety of purposes. For
example, if a portfolio manager wishes to hedge a security the Fund owns against
a decline in price, the manager may purchase a put option on the underlying
security; i.e., purchase the right to sell the security to a third party at a
stated price. If the underlying security then declines in price, the manager can
exercise the put option, thus limiting the amount of loss resulting from the
decline in price. Similarly, if the manager intends to purchase a security at
some date in the future, the manager may purchase a call option on the security
today in order to hedge against an increase in its price before the intended
purchase date. Put and call options also can be used for speculative purposes.
For example, if a portfolio manager believes that the price of stocks generally
is going to rise, the manager may purchase a call option on a stock index, the
components of which are unrelated to the stocks held or intended to be
purchased. Finally, a portfolio manager may write options on securities owned in
order to realize additional income. The Fund would receive premiums from writing
call or put options, which it would retain whether or not the options were
exercised. By writing a call option, the Fund might lose the potential for gain
on the underlying security while the option is open, and by writing a put option
the Fund might become obligated to purchase the underlying security for more
than its current market price upon exercise. If the Fund purchases a put or call
option, any loss to the Fund is limited to the premium paid for, and transaction
costs paid in connection with, the option.
If the Fund enters into options transactions, its risk will be limited to a
certain extent by the provisions of the 1940 Act that prohibit mutual funds from
issuing senior securities. Certain options transactions could be deemed to
result in a prohibited issuance of senior securities, since they may obligate a
fund to pay money to a third party at some time in the future. However, the
Commission staff has taken the position that a fund may engage in these options
transactions if it takes certain steps designed to limit risk to the fund. These
steps typically involve either "covering" the transaction with an offsetting
transaction or segregating cash or liquid securities in an amount sufficient to
cover the fund's exposure under the option transaction. Although these steps
will not protect a fund from loss on these transactions, they assure that the
fund will have the securities or liquid assets required to meet its obligations
thereunder, and they prevent the fund from effectively "leveraging" its
portfolio.
Given these staff positions, the Board of Directors believes that it is
appropriate to eliminate the fundamental investment restriction discussed above.
The elimination of this restriction would provide the Board with the flexibility
to determine, without shareholder vote, whether and to what extent it would be
appropriate for the Fund to enter into options transactions.
Vote Required
The Board of Directors recommends that Fund shareholders vote to approve
each of the proposed changes to the Fund's investment policies. Each change must
be approved by a majority of the outstanding shares of the Fund, as defined in
the 1940 Act, which means the lesser of the vote of (a) 67% of the shares of the
Fund present at a meeting where more than 50% of the outstanding shares are
present in person or by proxy, or (b) more than 50% of the outstanding shares of
the Fund. Unless otherwise instructed, the proxies will vote for the approval of
the proposed investment policy changes.
PROPOSAL THREE
RATIFICATION OF
INDEPENDENT PUBLIC ACCOUNTANTS
The 1940 Act provides that every registered investment company shall be
audited at least once each year by independent public accountants selected by a
majority of the directors of the investment company who are not interested
persons of the investment company or of its investment adviser. The 1940 Act
provides that the selection be submitted for ratification or rejection by the
shareholders.
The Fund's Board of Directors, including a majority of the Directors who
are not interested persons of Advisers or the Fund, upon the recommendation of
the Fund's Audit Committee, have selected KPMG LLP to be the Fund's independent
public accountants for the fiscal year ending August 31, 2000. KPMG LLP has no
direct or material indirect financial interest in the Fund or in Advisers, other
than receipt of fees for services to the Fund.
-9-
<PAGE>
KPMG LLP has served as the independent public accountants of the Fund since .
KPMG LLP also serves as independent public accountants for each of the other
investment companies managed by Advisers.
Representatives of KPMG LLP are expected to be present at the meeting. Such
representatives will be given the opportunity to make a statement to the
shareholders if they desire to do so and are expected to be available to respond
to any questions which may be raised at the meeting.
Vote Required
The Board of Directors recommends that shareholders vote in favor of the
ratification of KPMG LLP as the independent public accountants for the Fund. The
affirmative vote of a majority of the shares of the Fund represented at the
meeting, provided at least a quorum is represented in person or by proxy, is
sufficient for the ratification of the selection of the independent public
accountants. Unless otherwise instructed, the proxies will vote for the
ratification of the selection of KPMG LLP as the Fund's independent public
accountants.
EXECUTIVE OFFICERS OF THE FUND
Information about each executive officer's position and term of office with
the Fund and business experience during the past five years is set forth below.
Unless otherwise indicated, all positions have been held more than five years.
No executive officer receives any compensation from the Fund.
<TABLE>
<CAPTION>
Name and (Age) Position/Term of Office Business Experience During Past Five Years
- -------------- ----------------------- ------------------------------------------
<S> <C> <C>
Dean C. Kopperud (46) President since 1995 See biographical information in Proposal One.
Gary N. Yalen (56) Vice President since 1995 President and Chief Investment Officer of Advisers
(since 1995) and Senior Vice President, Investments,
of Fortis, Inc.; prior to 1996, President and Chief
Investment Officer, Fortis Asset Management, a
former division of Fortis, Inc.
Howard G. Hudson (61) Vice President since 1995 Executive Vice President and Head of Fixed Income
Investments of Advisers since 1995; prior to 1996,
Senior Vice President, Fixed Income, Fortis Asset
Management.
Lucinda S. Mezey (51) Vice President since 1997 Executive Vice President and Head of Equity
Investments of Advisers since October 1997; from
1995 to October 1997, Chief Investment Officer, Alex
Brown Capital Advisory and Trust Co., Baltimore,
MD; prior to 1995, Senior Vice President and Head of
Equity Investments, PNC Bank, Philadelphia, PA.
James S. Byrd (47) Vice President since 1991 Executive Vice President of Advisers since 1995;
prior to 1995, Vice President of Advisers and of
Investors.
Nicholas L.M. dePeyster (32) Vice President since 1995 Vice President of Advisers since 1995; prior
to 1996, Vice President, Equities, Fortis Asset
Management.
Diane M. Gotham (40) Vice President since 1998 Vice President of Advisers since 1998; from 1994 to
1998, securities analyst for Advisers.
Laura E. Granger (37) Vice President since 1998 Vice President of Advisers since 1998; from 1993 to
1998, portfolio manager, General Motors Investment
Management, New York, NY.
</TABLE>
-10-
<PAGE>
<TABLE>
<CAPTION>
Name and (Age) Position/Term of Office Business Experience During Past Five Years
- -------------- ----------------------- ------------------------------------------
<S> <C> <C>
Maroun M. Hayek (50) Vice President since 1995 Vice President of Advisers since 1995; prior to 1996,
Vice President, Fixed Income, Fortis Asset
Management.
Robert C. Lindberg (46) Vice President since 1993 Vice President of Advisers since 1993.
Charles L. Mehlhouse (56) Vice President since 1996 Vice President of Advisers since 1996; prior to 1996,
Portfolio Manager, Marshall & Ilsley Bank
Corporation, Milwaukee, WI.
Kevin J. Michels (47) Vice President since 1995 Vice President of Advisers since 1995; prior to 1996,
Vice President, Administration, Fortis Asset
Management.
Christopher J. Pagano (35) Vice President since 1996 Vice President of Advisers since 1996; prior to 1996,
government strategist, Merrill Lynch, New York, NY.
Stephen M. Rickert (55) Vice President since 1995 Vice President of Advisers since 1995; from 1994 to
1996, Corporate Bond Analyst, Fortis Asset
Management.
Michael J. Romanowski (47) Vice President since 1998 Vice President of Advisers since 1988; from 1995 to
1998, portfolio manager, Value Line, New York, NY;
prior to 1995, securities analyst, Conning & Co.,
Hartford, CT.
Christopher J. Woods (38) Vice President since 1995 Vice President of Advisers since 1995; prior to 1996
Vice President, Fixed Income, Fortis Asset
Management.
Robert W. Beltz, Jr. (49) Vice President since 1993 Vice President, Securities Operations, of Advisers and
of Investors.
Peggy E. Ettestad (41) Vice President since 1997 Senior Vice President, Operations, of Advisers since
March 1997; prior to March 1997, Vice President,
G.E. Capital Fleet Services, Minneapolis, MN.
Tamara L. Fagely (40) Treasurer since 1993 and Vice President of Advisers and Investors since 1998;
Vice President since 1996 prior thereto, Second Vice President of Advisers and
of Investors from 1995 to 1998.
Dickson W. Lewis (49) Vice President since 1997 Senior Vice President, Marketing and Sales, of
Advisers since July 1997; from 1993 to July 1997,
President and Chief Executive Officer, Hedstrom/
Blessing, Inc., Minneapolis, MN.
David A. Peterson (56) Vice President since 1991 Vice President and Assistant General Counsel, Fortis
Benefits Insurance Company.
Scott R. Plummer (39) Vice President since 1996 Vice President and Associate General Counsel of
Advisers since 1998; Assistant Secretary of Advisers
since 1994; prior thereto, Second Vice President and
Corporate Counsel of Advisers from 1994 to 1998.
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
Name and (Age) Position/Term of Office Business Experience During Past Five Years
- -------------- ----------------------- ------------------------------------------
<S> <C> <C>
Rhonda J. Schwartz (41) Vice President since 1996 Senior Vice President and General Counsel of
Advisers, Senior Vice President and General Counsel,
Life and Investment Products, of Fortis Benefits
Insurance Company and Vice President and General
Counsel, Life and Investment Products, of Time
Insurance Company since 1996; from 1993 to 1996,
Vice President and General Counsel, Fortis, Inc.
Melinda S. Urion (45) Vice President since 1997 Senior Vice President and Chief Financial Officer of
Advisers since December 1997; from 1995 to 1997,
Senior Vice President of Finance and Chief Financial
Officer, American Express Financial Corporation;
prior to March 1995, Corporate Controller, American
Express Financial Corporation.
Michael J. Radmer (54) Secretary since 1978 Partner, Dorsey & Whitney LLP, the Fund's General
Counsel.
</TABLE>
ADDITIONAL INFORMATION ABOUT THE FUND
As of _________________, 1999, all Fund Directors and officers as a group
owned less than 1% of the outstanding shares of the Fund and no person, to the
knowledge of Fund management, was the beneficial owner of more than 5% of any
class of voting shares of the Fund, except as follows:
<TABLE>
<CAPTION>
Name and Address of
Beneficial Owner Number of Fund Shares Owned Percent of Fund Shares Owned
- ------------------- --------------------------- ----------------------------
<S> <C> <C>
</TABLE>
SHAREHOLDER PROPOSALS
The Fund is not required to hold annual shareholder meetings. Since the
Fund does not hold regular meetings of shareholders, the anticipated date of the
next shareholder meeting cannot be provided. Any shareholder proposal which may
properly be included in the proxy solicitation material for a shareholder
meeting must be received by the Fund no later than four months prior to the date
proxy statements are mailed to shareholders.
Dated: September 1, 1999
Michael J. Radmer, Secretary
<PAGE>
Receipt of Notice of Special Shareholders' Meeting and Proxy Statement is
acknowledged by your execution of this proxy. Mark, sign, date, and return this
proxy in the addressed envelope--no postage required. Please mail promptly to
save the Fund further solicitation expenses.
FORTIS GROWTH FUND, INC.
PROXY SERVICE
POST OFFICE BOX 9148
FARMINGDALE, NY 11735-9855
FORTIS GROWTH FUND, INC.
PROXY FOR SPECIAL SHAREHOLDERS' MEETING
TO BE HELD OCTOBER 14, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned appoints Scott R. Plummer and Tamara L. Fagely, or each of
them with power to act without the other and with the right of substitution in
each, the proxies of the undersigned to vote all shares of Fortis Growth Fund,
Inc. (the "Fund") held by the undersigned on August 10, 1999, at a Special
Shareholders' Meeting of the Fund, to be held at the offices of Fortis Advisers,
Inc. ("Advisers"), 500 Bielenberg Drive, Woodbury, Minnesota, on Thursday,
October 14, 1999, at 10:00 a.m. and at any adjournment thereof, with all powers
the undersigned would possess if present in person. All previous proxies given
with respect to the meeting are revoked.
THIS PROXY WILL BE VOTED AS INSTRUCTED ON THE MATTERS SET FORTH BELOW. IT
IS UNDERSTOOD THAT IF NO CHOICE IS SPECIFIED, THIS PROXY WILL BE VOTED "FOR" ALL
ITEMS. UPON ALL OTHER MATTERS THE PROXIES SHALL VOTE AS THEY DEEM IN THE BEST
INTERESTS OF THE COMPANY.
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [_] [_]
KEEP THIS PORTION FOR YOUR RECORDS.
- -------------------------------------------------------------------------------
FORTIS GROWTH FUND, INC. DETACH AND RETURN THIS PORTION ONLY.
VOTE ON DIRECTORS
FOR OR WITH- OR FOR
ALL HOLD ALL
ALL EXCEPT
[_] [_] [_]
1. TO SET THE NUMBER OF DIRECTORS AT NINE AND TO ELECT THE FOLLOWING NOMINEES:
01) R.W. CUTTING, 02) A.R. FREEDMAN, 03) R.M. GAVIN, 04) J.L. KING, 05)
D.C. KOPPERUD, 06) R.L. PRINCE, 07) L.J. SANTOW, 08) N.S. SHADKO, 09) J.M.
WIKLER. TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S) WRITE
THAT NOMINEE(S) NUMBER ON THE LINE PROVIDED BELOW.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
ALL ALL ALL
[_] [_] [_]
EXCEPTION [_]
2. TO APPROVE THE ELIMINATION OR MODIFICATION OF CERTAIN INVESTMENT POLICIES
EXCEPT THOSE SPECIFICALLY LISTED BY LETTER ON THE LINE BELOW.
A. Borrowing/senior securities G. Pledging assets
B. Industry concentration H. Short sales
C. Underwriting of securities I. Margin purchases
D. Real estate J. Restricted securities
E. Commodities K. Options transaction
F. Lending
If you wish to vote against or abstain on a particular investment policy, write
the letter of the sub-proposal on the line below. Tell us whether you are voting
against or abstaining on the proposals listed.
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
[_] [_] [_]
3. PROPOSAL TO RATIFY THE SELECTION OF KPMG LLP AS THE INDEPENDENT PUBLIC
ACCOUNTANTS FOR THE COMPANY.
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENTS OR POSTPONEMENTS
THEREOF.
- --------------------------------------------------------------------------------
(Please sign name(s) exactly as registered)
- ----------------------------------------------------------- ------------------
(If there are co-owners, both should sign) (Date)
