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
June 5, 2000
To Fortis Multisector Bond Series participants:
I am very pleased to inform you that A I M Capital
Management, Inc. ("AIM") has become the sub-adviser for
Multisector Bond Series (formerly known as Global Bond
Series), a series of Fortis Series Fund, Inc. (the
"Fund"), effective March 17, 2000. As the owner of a
Fortis variable annuity/insurance product, you
participate in this Fund. AIM is a well-regarded
investment advisory organization which, together with
its affiliates, manages over 125 investment portfolios
with a broad range of investment objectives.
The attached Information Statement provides
information about the new sub-adviser and the Board of
Directors' reasons for approving this change. Pursuant
to an exemptive order issued by the Securities and
Exchange Commission, the Fund is not required to seek
your approval of this change. Accordingly, you are not
being asked to return proxies or to vote on the change.
As described in the Information Statement, this
change will not result in any change in the fees and
expenses borne by Fund shareholders.
This change was made in conjunction with a shift
in the Fund's investment strategy pursuant to which it
became a "multisector" bond fund. 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.
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,
Dean C. Kopperud
President
MULTISECTOR BOND SERIES,
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
Multisector Bond Series (formerly known as "Global
Bond 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 June 5, 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 to March 14, 2000, Mercury Asset
Management International Ltd. ("Mercury International") served as
sub-adviser for the Fund pursuant to a sub-advisory agreement
between Advisers and Mercury International dated January 12, 1998
(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 December 16, 1999, the Company's Board
of Directors approved Fortis Advisers' recommendation that A I M
Capital Management, Inc. ("AIM") should replace Mercury
International 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 March 17,
2000, AIM replaced Mercury International as sub-adviser for the
Fund pursuant to a new sub-advisory agreement between Advisers
and AIM dated as of March 17, 2000 (the "New Sub-Advisory
Agreement"), which was approved at the Board's December 16, 1999
meeting.
Information concerning the fees payable by Fortis Advisers
to Mercury International under the Prior Sub-Advisory Agreement
and to AIM 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, AIM is required to
conduct a continual program of investment, evaluation and, if
appropriate in AIM'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, AIM 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. AIM 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, AIM 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 AIM against any liability to
the Fund, its shareholders, or Fortis Advisers to which AIM 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 AIM. 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, Mercury
International 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, Mercury International 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. Mercury International 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, Mercury
International 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 Mercury International; (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 Mercury International 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 0.75% of the
Fund's average net assets for the first $100 million of net
assets and equal to 0.65% 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 which totaled $191,654, or 0.75% of
the Fund's average daily net assets. At December 31, 1999, the
Fund had net assets of $24,925,576.
The Fund does not pay any fees directly to any sub-adviser
which 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
Mercury International a sub-advisory fee equal to 0.35% of the
Fund's average net assets for the first $100 million of net
assets and equal to 0.225% of the Fund's average net assets for
net assets exceeding $100 million. During the year ended
December 31, 1999, Fortis Advisers paid Mercury International sub-
advisory fees which totaled $89,439, or 0.35% of the Fund's
average daily net assets.
Under the New Sub-Advisory Agreement, Fortis Advisers pays
AIM a sub-advisory fee equal to 0.45% of the Fund's average net
assets for the first $200 million of net assets and equal to
0.40% of the Fund's average net assets for net assets exceeding
$200 million. If the New Sub-Advisory Agreement had been in
effect during the year ended December 31, 1999, Fortis Advisers
would have paid AIM sub-advisory fees totaling $114,992, or 0.45%
of the Fund's average daily net assets, during this period.
Thus, Fortis Advisers would have paid AIM $25,553 more in sub-
advisory fees under the New Sub-Advisory Agreement than it paid
Mercury International under the Prior Sub-Advisory Agreement (an
increase of 28.6%), and it would have retained $25,553 less out
of its advisory fees after paying sub-advisory fees (a decrease
of 25.0%). However, the advisory fees borne by shareholders
would have remained unchanged.
During the year ended December 31, 1999, neither Mercury
International or any affiliated person of Mercury International,
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 Mercury
International or any affiliated person of Mercury International,
or to any affiliated person of any such affiliated person.
The Fund does not presently propose to make any material
payments to AIM or any affiliated person of AIM , 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, Mercury International, AIM
or the Fund's principal underwriter.
INFORMATION REGARDING AIM
General
AIM has acted as an investment advisor since its
organization in 1986. Today, AIM, together with its affiliates,
advises or manages over 125 investment portfolios, including the
Fund, encompassing a broad range of investment objectives. The
address of AIM is 11 Greenway Plaza, Suite 100, Houston, Texas
77046-1173.
AIM is an indirect wholly owned subsidiary of A I M
Management Group Inc. ("AIM Management"), a holding company that
has been engaged in the financial services business since 1976.
AIM Management is an indirect wholly owned subsidiary of AMVESCAP
PLC, 11 Devonshire Square, London EC2M 4YR, United Kingdom.
AMVESCAP PLC and its subsidiaries are an independent investment
management group engaged in institutional investment management
and retail mutual fund businesses in the United States, Europe
and the Pacific Region.
No officer, employee, director or shareholder of AIM is an
officer or director of the Company. The names, addresses, and
principal occupations of the principal executive officer and each
director of AIM are as follows:
Name and Address Principal Occupation
Charles Theodore Bauer Chairman and Director,
AIM
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Gary Thomas Crum President and Director,
AIM
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Robert Hart Graham Senior Vice President and
Director, AIM
11 Greenway Plaza, Suite 100
Houston, Texas 77046
Advisory Fee Schedules for Similar Funds Advised by AIM and/or
its Affiliates
AIM and/or its affiliates also act as investment adviser or
sub-adviser for two other funds that have investment objectives
similar to those of the Fund. The following table sets forth the
current advisory fee schedules for each such fund and the net
assets of each such 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
AIM Income Fund 0.50% on first $200 $663,699,299
million
0.40% on next $300 million
0.35% on next $500 million
0.30% on assets exceeding
$1 billion
AIM Global Income 0.70% on first $1 billion $ 81,952,650
Fund 0.65% on assets exceeding
$1 billion
BOARD OF DIRECTORS' CONSIDERATIONS
In deciding to approve Fortis Advisers' recommendation that
AIM should replace Mercury International 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 a "multisector" global bond fund.
Under this shift in investment strategy, the Fund invests
in bonds with a wider range of credit quality and from a
broader range of countries. (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.)
In conjunction with this recommendation, Fortis Advisers
also recommended that AIM 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 AIM to review AIM's global fixed
income investment and credit analysis processes,
personnel, and experience. In addition, the Committee
and the full Board reviewed written materials provided by
AIM concerning these matters. Based on these reviews,
the Board of Directors concluded that AIM 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 the new
sub-adviser will be responsible for investing in
securities with a wider range of credit quality and from
a broader range of countries, and 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 AIM 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 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.
