SCHEDULE 14C INFORMATION
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Fortis Series Fund, Inc.
(Name of Registrant as Specified in Charter)
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FORTIS SERIES FUND, INC.
500 Bielenberg Drive, Woodbury, Minnesota 55125
November 29, 2000
To Fortis International Stock Series II participants:
As previously communicated in a supplement to the
prospectuses for each of the Fortis variable annuity
and insurance products, T. Rowe Price International,
Inc. ("Price International") has become the sub-adviser
for International Stock Series II (formerly known as
Global Asset Allocation Series)(the "Fund"), a series
of Fortis Series Fund, Inc., effective September 1,
2000. As the owner of a Fortis variable
annuity/insurance product, you participate in this
Fund. Price International, originally established as
Rowe Price-Fleming International in 1979, has become
one of the largest and most successful firms providing
international investment management. As of September
30, 2000, Price International managed about $35.8
billion in assets.
The attached Information Statement provides
information about the new sub-adviser and the Board of
Directors' reasons for approving this change. The Fund
is not required to seek your approval of this change
and you are not being asked to return proxies or to
vote on the change. This change was made in
conjunction with a shift in the Fund's investment
strategy through which it became an international stock
fund. Further information concerning this shift in
investment strategy is included in both a prospectus
supplement that was provided to shareholders previously
and in the Fund's prospectus dated May 1, 2000, as
supplemented September 1, 2000.
As described in the Information Statement, this
change will not result in any change in the fees and
expenses borne by Fund shareholders.
If you have any questions in connection with this
information please call us at 1-800-800-2000, extension
3057 if you are a variable annuity contract owner and
extension 3028 if you are a variable universal life
insurance policyholder. If you are the owner of a
First Fortis variable annuity contract please call 1-
800-745-7100.
Very truly yours,
/s/ Dean C. Kopperud
Dean C. Kopperud
President
INTERNATIONAL STOCK SERIES II,
a series of
FORTIS SERIES FUND, INC.
500 Bielenberg Drive, Woodbury, Minnesota 55125
Mailing Address: P.O. Box 64284, St. Paul, Minnesota
55164
INFORMATION STATEMENT
International Stock Series II (formerly known as
"Global Asset Allocation Series") (the "Fund") is a
series of Fortis Series Fund, Inc. (the "Company").
The Fund issues and sells its shares to Fortis Variable
Account C and Fortis Variable Account D, which are
separate accounts of Fortis Benefits Insurance Company
("FBIC") and First Fortis Life Insurance Company
("FFLIC"). These two separate accounts (the "Separate
Accounts") hold shares which fund benefits under
flexible premium deferred variable annuity contracts
and flexible premium variable life insurance contracts
which are issued by FBIC and FFLIC.
This Information Statement is being provided to
annuity and life insurance contract owners who are
beneficial owners of Fund shares by virtue of their
ownership of such contracts. This Information
Statement is being provided to such persons in lieu of
a proxy statement pursuant to the terms of an exemptive
order (the "Order") which the Company has obtained from
the Securities and Exchange Commission. The Order
permits the Fund's investment adviser to appoint new
sub-advisers for the Fund with the approval of the
Company's Board of Directors but without obtaining
shareholder approval.
The Order requires that when the Fund's investment
adviser appoints a new sub-adviser for the Fund without
shareholder approval, the Fund must provide certain
information to its beneficial owners about the new sub-
adviser and certain other matters. This Information
Statement provides such information about a new sub-
adviser which has been appointed for the Fund and such
other matters.
WE ARE NOT ASKING YOU FOR A PROXY, AND YOU ARE
REQUESTED NOT TO SEND US A PROXY.
Copies of the Company's most recent annual report
and semi-annual report are available by writing the
Company at P.O. Box 64284, St. Paul, Minnesota 55164,
or by calling 1-800-800-2000, extension 4579.
This Information Statement is being mailed on or
about November 29, 2000.
ADVISORY AGREEMENT
Fortis Advisers, Inc. ("Fortis Advisers"), 500
Bielenberg Drive, Woodbury, Minnesota 55125, acts as
investment adviser to the Fund pursuant to an
Investment Advisory and Management Agreement dated
March 3, 2000 (the "Advisory Agreement"). Pursuant to
the Advisory Agreement, Fortis Advisers acts as the
investment adviser for, and manages the affairs,
business and investment of assets of, the Fund, and is
required to create and maintain all required reports,
books and records relating to its activities and
obligations under the Advisory Agreement. Fortis
Advisers, at its own expense, furnishes suitable office
space and all necessary office facilities, equipment
and personnel for servicing the investments of the
Fund. In addition, Fortis Advisers is obligated to
arrange, if requested by the Company, for officers,
employees or other affiliates of Fortis Advisers to
serve without compensation from the Company as
directors, officers, or employees of the Company if
duly elected to such positions by the shareholders or
directors of the Company.
The Advisory Agreement authorizes Fortis Advisers,
at its option and expense, to appoint one or more sub-
advisers for the Fund, subject to approval by the
Company's Board of Directors. The Advisory Agreement
provides that if Fortis Advisers appoints such a sub-
adviser, the appointment shall not limit or diminish
Fortis Advisers' obligations and responsibilities under
the Advisory Agreement. It also provides that Fortis
Advisers remains responsible for monitoring compliance
by each sub-adviser with the investment policies,
restrictions, and limitations of the Fund.
The Advisory Agreement was most recently approved
by the Company's Board of Directors on December 16,
1999, and by Fund shareholders on August 12, 1999. The
Advisory Agreement took effect on March 3, 2000,
replacing a prior advisory agreement between Fortis
Advisers and the Fund. The same investment advisory
and management fees are payable under the Advisory
Agreement as under its predecessor agreement, and
Fortis Advisers' duties are the same under both
agreements. Information concerning the fees payable to
Fortis Advisers under the Advisory Agreement is set
forth below under the caption "Advisory and Sub-
Advisory Fees."
SUB-ADVISORY AGREEMENTS
From January 3, 1995 through August 31, 2000,
Morgan Stanley Dean Witter Investment Management Ltd.
("Morgan Stanley") served as sub-adviser for the Fund
pursuant to a sub-advisory agreement between Advisers
and Morgan Stanley dated December 29, 1994 (the "Prior
Sub-Advisory Agreement"). The Prior Sub-Advisory
Agreement was most recently approved by Fund
shareholders on June 30, 1998.
At a meeting held on June 20, 2000, the Company's
Board of Directors approved Fortis Advisers'
recommendation that T. Rowe Price International, Inc.
("Price International") should replace Morgan Stanley
as sub-adviser for the Fund. The Board's reasons for
this decision are summarized below under the caption
"Board of Directors' Considerations." Accordingly,
effective September 1, 2000, Price International
replaced Morgan Stanley as sub-adviser for the Fund
pursuant to a new sub-advisory agreement between
Advisers and Price International dated as of August 30,
2000 (the "New Sub-Advisory Agreement"), which was
approved at the Board's June 20, 2000 meeting.
Information concerning the fees payable by Fortis
Advisers to Morgan Stanley under the Prior Sub-Advisory
Agreement and to Price International under the New Sub-
Advisory Agreement is set forth below under the caption
"Advisory and Sub-Advisory Fees." The other terms of
the New Sub-Advisory Agreement and the Prior Sub-
Advisory Agreement are summarized in the following two
subsections.
New Sub-Advisory Agreement
Under the New Sub-Advisory Agreement, Price
International is required to conduct a continual
program of investment, evaluation and, if appropriate
in Price International's view, sale and reinvestment of
the Fund's assets, subject to the supervision,
direction and approval of the Fund's Board and Fortis
Advisers. In this regard, Price International is
authorized, in its sole discretion and without prior
consultation with Fortis Advisers, to manage the Fund's
assets in accordance with the Fund's investment
objectives and policies; make investment decisions for
the Fund; place purchase and sale orders for portfolio
transactions on behalf of the Fund; and employ
professional portfolio managers and securities analysts
who provide research services to the Fund. Price
International agrees to bear all expenses incurred by
it in connection with the performances of its services
under the agreement. The Company remains responsible
for the Fund's administrative and other expenses.
Under the New Sub-Advisory Agreement, Price
International is not liable for any error of judgment
or mistake of law or for any loss suffered by the Fund,
any shareholder, or Fortis Advisers in connection with
the matters to which the agreement relates, provided
that nothing in the agreement protects Price
International against any liability to the Fund, its
shareholders, or Fortis Advisers to which Price
International would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence on
its part in the performance of its duties or by reason
of its reckless disregard of its obligations and duties
under the agreement.
The New Sub-Advisory Agreement is terminable
without penalty on 60 days' written notice by the
Fund's Board or by vote of holders of a majority of the
outstanding voting securities of the Fund (as such term
in defined in the Investment Company Act of 1940) or
upon 60 days' written notice by Price International.
The agreement also will terminate automatically in the
event of its assignment, as that term is defined in the
Investment Company Act of 1940.
Prior Sub-Advisory Agreement
Under the Prior Sub-Advisory Agreement, Morgan
Stanley had day-to-day responsibility for making
discretionary investment decisions and placing purchase
and sale orders on behalf of the Fund, subject to
oversight by Fortis Advisers. In this regard, Morgan
Stanley was required to formulate and implement a
continuing program for the management of the Fund's
assets and to amend and update the program from time to
time as financial and other economic conditions
warranted. Morgan Stanley agreed to bear all its
personnel and other expenses associated with the
performance of its services under the agreement. The
Company remained responsible for the Fund's
administrative and other direct expenses.
Under the Prior Sub-Advisory Agreement, Morgan
Stanley was not to be liable for any error of judgment
or mistake of law or for any loss suffered by the Fund,
its shareholders, or owners of annuity contracts or
life insurance contracts invested in the Fund in
connection with the performance of its duties under the
agreement, except for loss resulting from its willful
misfeasance, bad faith or negligence in performing its
duties or from its reckless disregard of its duties
under the agreement.
The Prior Sub-Advisory Agreement was terminable
(i) by a majority of the Company's Board of Directors
on 60 days' written notice to Fortis Advisers and
Morgan Stanley; (ii) by vote of the holders of a
majority of the outstanding voting securities of the
Fund (as such term is defined in the Investment Company
Act of 1940); or (iii) by Morgan Stanley on 60 days'
written notice to Fortis Advisers and the Company. The
agreement also would terminate automatically in the
event of its assignment, as that term is defined in the
Investment Company Act of 1940.
ADVISORY AND SUB-ADVISORY FEES
Under the Advisory Agreement, the Fund pays Fortis
Advisers an investment advisory and management fee
equal to 0.90% of the Fund's average net assets for the
first $100 million of net assets and equal to 0.85% of
the Fund's average net assets for net assets exceeding
$100 million. During the year ended December 31, 1999,
the Fund paid Fortis Advisers investment advisory and
management fees that totaled $614,231, or 0.90% of the
Fund's average daily net assets. At December 31, 1999,
the Fund had net assets of $66,066,698.
The Fund does not pay any fees directly to any sub-
adviser that is appointed by Fortis Advisers. Instead,
Fortis Advisers pays any such sub-advisory fees out of
the amounts paid to Fortis Advisers by the Fund under
the Advisory Agreement.
Under the Prior Sub-Advisory Agreement, Fortis
Advisers paid Morgan Stanley a sub-advisory fee equal
to 0.50% of the Fund's average net assets for the first
$100 million of net assets and equal to 0.40% of the
Fund's average net assets for net assets exceeding $100
million. During the year ended December 31, 1999,
Fortis Advisers paid Morgan Stanley sub-advisory fees
which totaled $341,160, or 0.50% of the Fund's average
daily net assets.
Under the New Sub-Advisory Agreement, Fortis
Advisers pays Price International a sub-advisory fee
equal to 0.75% of the Fund's average net assets for the
first $20 million of average daily net assets; 0.60% of
the Fund's average daily net assets between $20 million
and $50 million; 0.50% of the Fund's average daily net
assets between $50 million and $200 million; and, once
the Fund exceeds $200 million in average daily net
assets, the entire fee will become an annual rate of
0.50% of the Fund's average daily net assets. If the
New Sub-Advisory Agreement had been in effect during
the year ended December 31, 1999, Fortis Advisers would
have paid Price International sub-advisory fees
totaling $421,160, or 0.75% of the Fund's first $20
million in average daily net assets, 0.60% for average
daily net assets between $20 million and $50 million
and 0.50% for average daily net assets in excess of $50
million, during this period. Thus, Fortis Advisers
would have paid Price International $80,000 more in sub-
advisory fees under the New Sub-Advisory Agreement than
it paid Morgan Stanley under the Prior Sub-Advisory
Agreement (an increase of 23.5%), and it would have
retained $80,000 less out of its advisory fees after
paying sub-advisory fees (a decrease of 29.3%).
However, the advisory fees borne by shareholders would
have remained unchanged.
During the year ended December 31, 1999, neither
Morgan Stanley or any affiliated person of Morgan
Stanley, nor any affiliated person of any such
affiliated person, received any fees other than those
described above from the Fund for services provided to
the Fund. During the same period, there were no other
material payments by the Fund to Morgan Stanley or any
affiliated person of Morgan Stanley, or to any
affiliated person of any such affiliated person.
The Fund does not presently propose to make any
material payments to Price International or any
affiliated person of Price International, or to any
affiliated person of any such affiliated person, other
than the sub-advisory fees which are indirectly paid by
the Fund through Fortis Advisers.
During the year ended December 31, 1999, no
commissions were paid to any broker (i) that is an
affiliated person of the Fund; (ii) that is an
affiliated person of any affiliated person of the Fund;
or (iii) an affiliated person of which is an affiliated
person of the Fund, Fortis Advisers, Morgan Stanley,
Price International or the Fund's principal
underwriter.
INFORMATION REGARDING PRICE INTERNATIONAL
General
Price International, previously known as Rowe
Price-Fleming International, Inc., was incorporated in
1979 as a joint venture between T. Rowe Price
Associates, Inc. ("T. Rowe Price") and Robert Fleming
Holdings Limited ("Fleming"). T. Rowe Price acquired
Fleming's joint venture interest in August 2000, and
now Price International is a wholly-owned subsidiary of
T. Rowe Price. Price International managed over $35.8
billion as of September 30, 2000.
T. Rowe Price was founded in 1937 and, together
with its affiliates, managed over $179.6 billion for
over eight million individual and institutional
investor accounts as of September 30, 2000.
No officer, employee, director or shareholder of
Price International is an officer or director of the
Company. The names, addresses, and principal
occupations of the principal executive officer and each
director of Price International are as follows:
Name and Address Principal
Occupation
David J.L. Warren Chief
Executive Officer,
25 Copthall Avenue
President and Director,
London, EC2R 7DR England Price
International; Managing
Director,
T. Rowe Price Associates, Inc
.
M. David Testa Director, Price
International;
100 East Pratt Street Vice
Chairman of the Board,
Baltimore, Maryland
21202 of the Board, Chief
Invest-ment Officer and Managing
Director, T. Rowe Price
Associates, Inc.
James S. Riepe Director, Price
International;
100 East Pratt Street Vice
Chairman of the Board, Baltimore, Maryland 21202 Director
and Managing
Director, T. Rowe
Price
Associates, Inc.
George A Roche Director, Price
International;
100 East Pratt Street Chairman
of the Board,
Baltimore, Maryland
21202 President and Chief
Executive Officer, T. Rowe Price
Associates, Inc.
Martin G. Wade Chairman of the
Board, Price 25 Copthall Avenue International;
Director and
London, EC2R 7DR England Managing
Director, T. Rowe
Price Associates,
Inc.
Advisory Fee Schedules for Similar Funds Advised by
Price International and/or its Affiliates
Price International and/or its affiliates also act
as investment adviser or sub-adviser for fourteen other
funds that have investment objectives similar to those
of the Fund. The following table sets forth the
current advisory fee schedules for the fund and the net
assets of the fund at December 31, 1999. In the table,
advisory fees are expressed as a percentage of the
funds' average daily net assets.
Current advisory fee Net assets at
Fund (as percentage of net December 31,
assets) 1999
T. Rowe Price Fund fee: $12,673,960,6
International Funds, 0.35% 40
Inc. Group fee:
T. Rowe Price 0.32%
International Stock
Fund (1)
T. Rowe Price 1.05% $
International Series, 707,329,644
Inc.
T. Rowe Price
International Stock
Portfolio
American Skandia Trust 0.75% on the first $20 $
T. Rowe Price million 516,385,447
International 0.60% on the next $30
Equity Portfolio (2) million
0.50% thereafter
American Skandia 0.75% on the first $20 $
Advisor Funds million 50,035,973
T. Rowe Price 0.60% on the next $30
International Equity million
Fund (3) 0.50% thereafter
The Commerce Funds 0.75% on the first $20 $
The International million 179,399,111
Equity 0.60% on the next $30
Fund (3) million
0.50% thereafter
Endeavor Series Trust 0.75% on the first $20 $
T. Rowe Price million 227,665,089
International Stock 0.60% on the next $30
Portfolio (3) million
0.50% thereafter
EQ Advisors Trust 0.75% on the first $20 $
T. Rowe Price million 213,957,761
International Stock 0.60% on the next $30
Portfolio (3) million
0.50% thereafter
JNL Series Trust 0.75% on the first $20 $
T. Rowe Price/JNL million 105,152,077
International Equity 0.60% on the next $30
Series (3) million
0.50% thereafter
John Hancock Variable 0.75% on the first $20 $
Series Trust I million 79,576,467
International 0.60% on the next $30
Opportunities million
Portfolio (3) 0.50% thereafter
LB Series Fund, Inc. 0.75% on the first $20 $
World Growth Portfolio million 548,721,446
(4) 0.60% on the next $30
million
0.50% above $50 million
0.50% on all assets once
assets exceed $200 million
Lutheran Brotherhood 0.75% on the first $20 $
Family of Funds million 133,197,736
Lutheran Brotherhood 0.60% on the next $30
World Growth Fund (4) million
0.50% above $50 million
0.50% on all assets once
assets exceed $200 million
Manufacturers 0.75% on the first $50 $
Investment Trust million 227,995,991
International Stock 0.50% on the next $150
Trust (4) million
0.50% on all assets once
assets exceed $200 million
SunAmerica Style 0.75% on the first $20 $
Select million 56,265,155
Series, Inc. 0.60% on the next $30
International Equity million
Portfolio (3) 0.50% thereafter
The Vantagepoint Funds 0.75% on the first $20 $
International Fund (3) million 105,132,243
0.60% on the next $30
million
0.50% thereafter
(1) The advisory fee has two parts--an "individual
fund fee, " which reflects a fund's particular
characteristics, and a "group fee." The group fee is
designed to reflect the benefits of the shared
resources of the T. Rowe Price investment management
complex and is calculated daily based on the combined
net assets of all T. Rowe Price funds (except Spectrum
Funds, and any institutional, index or private label
funds).
(2) Price International has agreed to waive a portion
of its fee equal to 0.25% of the portion of average
daily net assets not in excess of $20 million and 0.10%
of the portion of the net assets over $20 million, but
not in excess of $50 million, so long as the
portfolio's average daily net assets equal or exceed
$200 million.
(3) Price International has agreed to waive its fees
so that at $200 million, the fee would be 0.50% on all
assets.
(4) Price International has agreed to waive its fees
so that at $500 million the fee would be 0.45% on all
assets.
BOARD OF DIRECTORS' CONSIDERATIONS
In deciding to approve Fortis Advisers'
recommendation that Price International should replace
Morgan Stanley as sub-adviser for the Fund, the Board
of Directors considered the following material factors:
- Fortis Advisers recommended that, in its
opinion, the Fund's performance and appeal to
investors could be improved if it became an
international stock fund. Under this shift in
investment strategy, the Fund primarily invests
in common stocks of well-established, non-U.S.
companies and diversifies broadly among
developed and emerging countries throughout the
world. (Further information concerning this
shift in investment strategy is included in
both a prospectus supplement which was provided
to shareholders previously and in the Fund's
prospectus dated May 1, 2000, as supplemented
September 1, 2000.)
- In conjunction with this recommendation, Fortis
Advisers also recommended that Price
International would be well-qualified to
implement the shift in investment strategy and
could be instrumental in attracting new
investors to the Fund.
- The Sub-Adviser Committee of the Board of
Directors met with representatives of Price
International to review Price International's
international equity investment processes,
personnel, and experience. In addition, the
Committee and the full Board reviewed written
materials provided by Price International
concerning these matters. Based on these
reviews, the Board of Directors concluded that
Price International is well-qualified to sub-
advise the Fund in the implementation of its
revised investment strategy.
- The Board of Directors compared the sub-
advisory fees payable under the Prior Sub-
Advisory Agreement and the New Sub-Advisory
Agreement, noting that Fortis Advisers will pay
higher sub-advisory fees under the new
agreement. In this regard, the Board noted
that Fund shareholders will not experience
increased expenses as a result of the change.
As required by the Order which permits the Fund
to change sub-advisers without shareholder
approval, the Board of Directors also reviewed
information provided to it by Fortis Advisers
showing the expected impact of the change on
Fortis Advisers' profitability.
- The Board of Directors also reviewed the other
terms of the New Sub-Advisory Agreement and
concluded that they are not materially less
favorable to the Fund than those of the Prior
Sub-Advisory Agreement.
Based on the foregoing factors, the Board of Directors
concluded that the retention of Price International as
sub-adviser to the Fund is in the best interests of the
Fund and its shareholders.
ADDITIONAL INFORMATION
The Fund's principal underwriter is Fortis
Investors, Inc., 500 Bielenberg Drive, Woodbury,
Minnesota 55125.
The Company is not required to hold annual
shareholder meetings. Since the Company does not hold
regular meetings of shareholders, the anticipated date
of the next shareholder meeting cannot be provided.
Any shareholder proposal that 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.
