11
[Fortis logo]
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 or 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
[Fortis logo]
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" or 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 (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," 25 Cabot
Square, Canary Wharf, London, E14 4QA, England, served as sub-
adviser for the fund pursuant to a sub-advisory agreement between
Fortis 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," 100 East Pratt
Street, Baltimore, MD 21202, 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 Fortis 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 1) by a majority
of the company's board of directors on 60 days' written notice to
Fortis Advisers and Morgan Stanley; 2) 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 3)
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
investment advisory and management fees calculated as follows:
Average daily net assets Investment advisory and
management fee
For the first $100 0.90%
million
For assets over $100 0.85%
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 the following:
Average daily net assets Sub-advisory fee paid to
Morgan Stanley
For the first $100 0.50%
million
For assets over $100 0.40%
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 the following:
Average daily net assets Sub-advisory fee paid to Price
International
For the first $20 0.75%
million
Between $20 million and 0.60%
$50 million
Between $50 million and 0.50%
$200 million
For assets over $200 0.50%
million*
* 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 1) that is an affiliated person of the fund; 2)
that is an affiliated person of any affiliated person of the
fund; or 3) 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:
<TABLE>
<CAPTION>
Name and address Principal occupation
<C> <C>
David J.L. Warren Chief Executive Officer, President and
25 Copthall Avenue Director, Price International;Managing
London, EC2R 7DR England Director, T. Rowe Price Associates,Inc.
M. David Testa Director, Price International; Vice
100 East Pratt Street Chairman of the Board, Chief Invest-
Baltimore, Maryland 21202 ment Officer and Managing Director,
T. Rowe Price Associates, Inc.
James S. Riepe Director, Price International; Vice
100 East Pratt Street Chairman of the Board, Director and
Baltimore, Maryland 21202 Managing Director, T.Rowe Price
Associates, Inc.
George A. Roche Director, Price International;
100 East Pratt Street Chairman of the Board, President and
Baltimore, Maryland 21202 Chief Executive Officer, T. Rowe
Price Associates,Inc.
Martin G. Wade Chairman of the Board, Price
25 Copthall Avenue International; Director and Managing
London, EC2R 7DR England Director, T.Rowe Price Associates, Inc.
</TABLE>
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.
<TABLE>
<CAPTION>
Current advisory fee Net assets at
Fund (as percentage of net December 31, 1999
assets)
<S> <C> <C>
T. Rowe Price Int'l Funds,Inc. Fund fee: 0.35% $12,673,960,640
T. Rowe Price Int'l Stock Fund(1) Group fee: 0.32%
T. Rowe Price Int'l Series, Inc. 1.05% $707,329,644
T. Rowe Price Int'l Stock
Portfolio
American Skandia Trust 0.75% on the first $516,385,447
$20 million
T. Rowe Price International 0.60% on the next
$30 million
Equity Portfolio (2) 0.50% thereafter
American Skandia Advisor Funds 0.75% on the first $50,035,973
$20 million
T. Rowe Price Int'l Equity 0.60% on the next
Fund (3) $30 million
0.50% thereafter
The Commerce Funds 0.75% on the first $179,399,111
$20 million
The Int'l Equity Fund (3) 0.60% on the next
$30 million
0.50% thereafter
Endeavor Series Trust 0.75% on the first $227,665,089
$20 million
T.Rowe Price Int'l Stock 0.60% on the next
$30 million
0.50% thereafter
EQ Advisors Trust 0.75% on the first $213,957,761
$20 million
T.Rowe Price Int'l Stock 0.60% on the next
Portfolio(3) $30million
0.50% thereafter
JNL Series Trust 0.75% on the first $105,152,077
$20 million
T.Rowe Price/JNL Int'l Equity 0.60% on the next
Series (3) $30 million
0.50% thereafter
John Hancock Var.Series Trust I 0.75% on the first $ 79,576,467
$20 million
Int'l Opportunities Port. (3) 0.60% on the next
$30 million
0.50% thereafter
LB Series Fund, Inc. 0.75% on the first $548,721,446
$20 million
World Growth Portfolio (4) 0.60% on the next
$30 million
0.50% above $50 million
0.50% on all assets once assets
exceed $200 million
Luth.Brotherhood Family of Funds 0.75% on the first $133,197,736
$20 million
Luth.Brotherhood World Growth 0.60% on the next
Fund (4) $30 million
0.50% above $50 million
0.50% on all assets once
assets exceed $200 million
Manufacturers Investment Trust 0.75% on the first $227,995,991
$50 million
Int'l Stock Trust (4) 0.50% on the next
$150 million
0.50% on all assets once
assets exceed $200 million
SunAmerica Style Select 0.75% on the first $56,265,155
Series, Inc. $20 million
0.60% on the next
$30 million
Int'l Equity Portfolio (3) 0.50% thereafter
The Vantagepoint Funds Int'l 0.75% on the first $105,132,243
Fund (3) $20 million
0.60% on the next
$30 million
0.50% thereafter
</TABLE>
(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 director's 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.
[Fortis logo]
Fortis Series Fund, Inc.
P.O. Box 64284
St. Paul, MN 55164-0284
FIRST CLASS
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Permit No. 3794
Minneapolis, MN
[Fortis logo]
Fortis Financial Group
Fund management offered through Fortis Advisers, Inc. since 1949
Securities offered through Fortis Investors., member NASD, SIPC
Insurance products issued by Fortis Benefits Insurance
Company & Fortis Insurance Company
P.O. Box 64284, St. Paul, MN 55164-0284, (800) 800-2000
www.ffg.us.fortis.com
101054 (c)Fortis, Inc. 11/00
The Fortis brandmark and Fortis are servicemarks of Fortis (B)
and Fortis (NL).
