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SIGNATURE KAY LYFORD
TITLE SECRETARY
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF ASSETS AND LIABILITIES, STATEMENT OF OPERATIONS AND STATEMENT OF
CHANGES IN NET ASSETS FOUND ON PAGES 4 THREW 6 OF THE SEMI-ANNUAL SHAREHOLDER
REPORT.
</LEGEND>
<CIK> 0000049929
<NAME> FORTIS INCOME PORTFOLIOS INC.
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<NUMBER> 1
<NAME> FORTIS U.S. GOVERNMENT SECURITIES FUND (CLASS A)
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<F2>FEE INCOME FROM SECURITIES LENDING PROGRAM FOR THE SIX-MONTH PERIOD ENDED
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<F3>ANNUALIZED
<F4>FOR THE PERIOD FROM NOVEMBER 14, 1994 (COMMENCEMENT OF OPERATIONS)
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF ASSETS AND LIABILITIES, STATEMENT OF OPERATIONS AND STATEMENT OF
CHANGES IN NET ASSETS FOUND ON PAGES 4 THREW 6 OF THE SEMI-ANNUAL SHAREHOLDER
REPORT.
</LEGEND>
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<F2>FEE INCOME FROM SECURITIES LENDING PROGRAM FOR THE SIX-MONTH PERIOD ENDED
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<F3>ANNUALIZED
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF ASSETS AND LIABILITIES, STATEMENT OF OPERATIONS AND STATEMENT OF
CHANGES IN NET ASSETS FOUND ON PAGES 4 THREW 6 OF THE SEMI-ANNUAL SHAREHOLDER
REPORT.
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<F3>ANNUALIZED
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF ASSETS AND LIABILITIES, STATEMENT OF OPERATIONS AND STATEMENT OF
CHANGES IN NET ASSETS FOUND ON PAGES 4 THREW 6 OF THE SEMI-ANNUAL SHAREHOLDER
REPORT.
</LEGEND>
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<NET-INVESTMENT-INCOME> 19,826
<REALIZED-GAINS-CURRENT> (24,554)
<APPREC-INCREASE-CURRENT> 5,916
<NET-CHANGE-FROM-OPS> 1,188
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (19,938)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2,046
<NUMBER-OF-SHARES-REDEEMED> (8,784)
<SHARES-REINVESTED> 1,510
<NET-CHANGE-IN-ASSETS> (61,156)
<ACCUMULATED-NII-PRIOR> 203
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (26,020)
<GROSS-ADVISORY-FEES> 1,845
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,042
<AVERAGE-NET-ASSETS> 517,712
<PER-SHARE-NAV-BEGIN> 9.03
<PER-SHARE-NII> .34
<PER-SHARE-GAIN-APPREC> (.31)
<PER-SHARE-DIVIDEND> (.34)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.72
<EXPENSE-RATIO> .77<F3>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>AT JANUARY 31, 1995, SECURITIES VALUED AT $234,269,501 WERE ON LOAN TO BROKERS
FROM THE FUND. FOR COLLATERAL, THE FUND'S CUSTODIAN RECEIVED $238,119,218 IN
CASH WHICH IS MAINTAINED IN A SEPARATE ACCOUNT AND INNVESTED BY THE CUSTODIAN
IN SHORT-TERM INVESTMENT VEHICLES.
<F2>FEE INCOME FROM SECURITIES LENDING PROGRAM FOR THE SIX-MONTH PERIOD ENDED
JANUARY 31, 1995.
<F3>ANNUALIZED
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF ASSETS AND LIABILITIES, STATEMENT OF OPERATIONS AND STATEMENT OF
CHANGES IN NET ASSETS FOUND ON PAGES 4 THREW 6 OF THE SEMI-ANNUAL SHAREHOLDER
REPORT.
</LEGEND>
<CIK> 0000049929
<NAME> FORTIS INCOME PORTFOLIOS INC.
<SERIES>
<NUMBER> 1
<NAME> FORTIS U.S. GOVERNMENT SECURITIES FUND (CLASS H)
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUL-31-1995
<PERIOD-START> AUG-01-1995
<PERIOD-END> JAN-31-1995
<INVESTMENTS-AT-COST> 511,139
<INVESTMENTS-AT-VALUE> 727,186<F1>
<RECEIVABLES> 7,308
<ASSETS-OTHER> 116
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 734,609
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 240,490<F1>
<TOTAL-LIABILITIES> 240,490
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 566,696
<SHARES-COMMON-STOCK> 70
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 69
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> (50,574)
<ACCUM-APPREC-OR-DEPREC> (22,072)
<NET-ASSETS> 494,119
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 21,674
<OTHER-INCOME> 173<F2>
<EXPENSES-NET> (2,021)
<NET-INVESTMENT-INCOME> 19,826
<REALIZED-GAINS-CURRENT> (24,554)
<APPREC-INCREASE-CURRENT> 5,916
<NET-CHANGE-FROM-OPS> 1,188
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (10)
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 169
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> (61,156)
<ACCUMULATED-NII-PRIOR> 203
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> (26,020)
<GROSS-ADVISORY-FEES> 1,845
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 2,042
<AVERAGE-NET-ASSETS> 517,712
<PER-SHARE-NAV-BEGIN> 8.63<F4>
<PER-SHARE-NII> .13
<PER-SHARE-GAIN-APPREC> .09
<PER-SHARE-DIVIDEND> (.13)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.72
<EXPENSE-RATIO> 1.77<F3>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>AT JANUARY 31, 1995, SECURITIES VALUED AT $234,269,501 WERE ON LOAN TO BROKERS
FROM THE FUND. FOR COLLATERAL, THE FUND'S CUSTODIAN RECEIVED $238,119,218 IN
CASH WHICH IS MAINTAINED IN A SEPARATE ACCOUNT AND INNVESTED BY THE CUSTODIAN
IN SHORT-TERM INVESTMENT VEHICLES.
<F2>FEE INCOME FROM SECURITIES LENDING PROGRAM FOR THE SIX-MONTH PERIOD ENDED
JANUARY 31, 1995.
<F3>ANNUALIZED
<F4>FOR THE PERIOD FROM NOVEMBER 14, 1994 (COMMENCEMENT OF OPERATIONS)
</FN>
</TABLE>
APPROVAL OR DISAPPROVAL OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
Summary
On April 14, 1994, the Board of Directors approved,
and recommended that the Fund's
shareholders approve, Amended and Restated Articles of
Incorporation (the "Amended
Articles"), which will (a) permit Fortis Income to issue
multiple classes of shares within a
series of Fortis Income in addition to the shares of the
Fund, which would remain basically
the same as they are now, and (b) increase the authorized
capital of Fortis Income. If the
Amended Articles are approved, all classes of shares in
a series of Fortis Income will have
identical voting, dividend, liquidation, and other rights
of any other shares of the series,
except that the shares of each class may be subject to
different charges and expenses such
as sales charges and expenses under Rule 12b-l plans.
This would permit Fortis Income to
better tailor its methods of marketing, administering,
and distributing shares of each class
to the needs of particular investors. This proposal is
not intended to have any effect upon
the current applicable sales charges or to impose any
Rule 12b-l distribution fee on current
shareholders. The following paragraphs summarize
material provisions contained in the
Amended Articles, and the material differences between
the Amended Articles and Fortis
Income's current Articles of Incorporation (as previously
amended and restated, the "Current
Articles"), and are qualified in their entirety by
reference to the form of Amended Articles
appended to this Proxy Statement as Exhibit A.
Ability to Issue Multiple Classes of Shares in Addition
to Your Shares
Fortis Income is organized as a Minnesota
corporation and is currently organized as a
"series" fund, which enables Fortis Income's Board of
Directors, by resolution and without
further shareholder approval, to designate and issue
shares of Fortis Income's common
shares in multiple series, each series of common shares
to represent a separate and distinct
portfolio of assets and liabilities with its own separate
investment objectives, policies, and
restrictions (in essence, economically, a separate mutual
fund). Fortis Income currently has
designated only one series of its shares, which series is
represented by the Fund.
The Amended Articles will enable Fortis Income, upon
the authorization of the Board
of Directors and without further shareholder action, to
create and issue one or more classes
of common shares within each series of the common shares
of Fortis Income. New Sections
5(a) and 5(b) have been added to the Amended Articles to
permit the Board of Directors to
create and issue multiple classes of shares, and other
conforming changes have been made
to Sections 6, 7, and 8 to reflect the Board's ability to
create such multiple classes. The
purpose of this amendment is to provide Fortis Income
with the flexibility to better tailor its
methods of marketing, administering, and distributing
shares of each class of Fortis Income
to the needs of particular investors. Expenses related
to such classes would be allocated to
the particular class incurring such expenses. All
classes of shares will represent the same
interest in a series of Fortis Income and have identical
voting, dividend, liquidation, and
other rights of any other shares of the series of Fortis
Income, except that the shares of each
class may be subject to differing charges and expenses
(including, but not limited to,
front-end and deferred sales charges, expenses under Rule
12b-l plans, administration plans,
service plans, or other plans or arrangements, however
designated) as may be adopted from
time to time by the Board of Directors of Fortis Income,
and, if required by the 1940 Act
or other applicable law, the shareholders of the affected
classes. The charges and expenses
applicable to each class of shares may differ from those
applicable to another class within
the series of Fortis Income. Additionally, the Board of
Directors (subject to the requirements
of the 1940 Act) would retain the authority to amend or
terminate such charges and
expenses with respect to any class of common shares
without approval by the shareholders
of such class or any other class or series of Fortis
Income.
The Fund currently imposes a sales charge in
connection with the purchase of its shares.
The maximum sales charge is equal to 4.50% of the public
offering price of the shares
purchased. The Fund has no present intention to change
the current maximum sales charge
or to propose to Fund shareholders that they approve any
Rule 12b.1 distribution fee for the
current class of shares, which will be designated Class
E shares.
The Fund does have a current intention, however, of
issuing multiple classes
of shares if the Amended Articles are approved by
shareholders. The Board of
Directors believes that the added flexibility provided by
the proposed amendment
to permit multiple classes of common shares may create a
marketing opportunity
for Fortis Income, which may attract more investment
dollars, resulting in
greater investment opportunities for each class of the
series of Fortis Income.
Under current law, in order to create more than one
class of shares within
any series, Fortis Income must apply to the Securities
and Exchange Commission
(the "SEC") for an order exempting Fortis Income from
certain provisions of the
1940 Act. Fortis Income has applied for and has received
such an order from the
SEC.
The relative rights and preferences among the series
and classes thereof of
Fortis Income are summarized in the following paragraphs.
This summary is
qualified in its entirety by reference to Exhibit A.
Voting Rights. On any matter submitted to a vote of
shareholders of Fortis
Income, all shares of Fortis Income then issued and
outstanding and entitled to
vote, irrespective of series or class, will be voted in
the aggregate and not by
series or class, except when otherwise required by
Minnesota law or the 1940 Act
(in which case shares will be voted by individual series
or class, as required)
or when the matter affects only a particular series or
class (in which case only
the affected series or class will vote).
Dividends and Distributions. The Board of Directors
may, to the extent
permitted by Minnesota law, declare and pay dividends or
distributions in shares,
cash, or other property on any or all series (or classes
thereof), the amount of
such dividends and the payment thereof being wholly in
the discretion of the
Board of Directors.
Exchanges. With the approval of a majority of the
shareholders of each
series present in person or by proxy at a meeting called
for such purpose
(provided that at least 10% of the issued and outstanding
shares of the affected
series is present or represented at the meeting) the
Board of Directors may
transfer the assets of any series to any other series.
New Section 8(b) has been
added to the Amended Articles to provide that shares of
any series, or class
thereof, which are redeemed, exchanged, or otherwise
acquired by Fortis Income
shall return to the status of authorized and unissued
shares of such series or
class.
Assets Belonging to a Series. All consideration
received by Fortis Income
for the issue or sale of shares of the series, together
with all assets, income,
earnings, profits, and proceeds derived therefrom will
become part of the assets
of the series to which the shares of that series relate,
for all purposes,
subject only to the rights of creditors. Such assets,
income, earnings, profits,
and proceeds are referred to as "assets belonging to"
such series of Fortis
Income common shares. New Section 8(a)(8) has been added
to the Amended Articles
to provide that the Board of Directors is expressly
authorized to determine what
constitutes net income, total assets, and the net asset
value of the shares of
each series (or class thereof) of Fortis Income. Any
such determination made by
the Board of Directors in good faith shall be final and
conclusive.
Allocation of General Assets. Assets of Fortis
Income not belonging to any
particular series are referred to as "General Assets."
Normally, General Assets
will be allocated to each series in proportion to the
respective net assets
belonging to such series. The determination of the Board
of Directors will be
conclusive as to the amount of assets, as to the
characterization of assets as
those belonging to a series or as General Assets, and as
to the allocation of
General Assets.
Allocation of Liabilities. The assets belonging to
a particular series will
be charged with the liabilities incurred specifically on
behalf of such series
("Special Liabilities"). Such assets shall also be
charged with a share of the
general liabilities of Fortis Income ("General
Liabilities") in proportion to the
respective net assets belonging to such series. The
Board of Directors'
determination will be conclusive as to the amount of
liabilities, including
accrued expenses and reserves, as to the characterization
of any liability as a
Special Liability or General Liability, and as to the
allocation of General
Liabilities among series.
Rights in Liquidation. In the event of Fortis
Income's liquidation or
dissolution, holders of the shares of any series will
have priority over the
holders of any other series with respect to, and shall be
entitled to receive,
out of the assets of Fortis Income available for
distribution to holders of
common shares, the assets belonging to such series and
the General Assets
allocated to such series, and the assets so distributable
to the holders of the
common shares of any series will be distributed among
such holders in proportion
to the number of shares of such series held by each such
shareholder and recorded
on the books of Fortis Income, 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.
Increase in Authorized Shares
Section 5 of the Current Articles provides that the
total authorized number
of common shares of Fortis Income is 10 billion. Section
5 of the Amended
Articles would increase the total authorized number of
shares to 100 billion,
with the number allocated to Series E (Fortis Income's
current series) to be
increased from two billion to 10 billion. The Amended
Articles would likely
assure that a sufficient number of authorized shares
would be available for
allocation to each series (or class thereof) of shares
which Fortis Income may
issue. However, the proposed increase in authorized
shares will enable Fortis
Income to issue substantially more shares to the public
(without further
shareholder approval) than Fortis Income currently is
authorized to issue.
Whenever a mutual fund issues additional shares and a
shareholder does not
purchase additional shares to maintain the same
proportionate ownership of the
fund's shares, the shareholder's voting power will be
diluted. Accordingly, the
Amended Articles may result in dilution of the current
shareholders' voting power
on matters affecting Fortis Income, including without
limitation the election of
directors, ratification of independent public accountants
of Fortis Income, and
approval of amendments (if any) to the Fund's investment
advisory agreements and
fundamental investment policies.
Shareholder Approval
If approved, the Amended Articles would become
effective on or about October
3, 1994, or such later date as may be determined by Fund
management. The
affirmative vote of a majority of the Fund's shares
represented at the meeting,
provided at least a quorum (10% of the outstanding
shares) is represented in
person or by proxy, is required to approve the
amendments. Unless otherwise
instructed, the persons named as proxies will vote for
approval of the
amendments.
FORTIS INCOME'S BOARD OF DIRECTORS RECOMMENDS THAT
SHAREHOLDERS APPROVE THE
PROPOSED AMENDED AND RESTATED ARTICLES OF INCORPORATION.
