<PAGE>
File No. 33-39906
FISCAL YEAR END - October 31
Registrant proposes that this amendment will become effective:
60 days after filing
-----
As of the filing date
-----
As of March 1, 1997 X
------------- -----
Pursuant to Rule 485:
paragraph (a)
-----
paragraph (b) X
-----
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
-----
Post-Effective Amendment Number 9
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
-----
FORTIS WORLDWIDE PORTFOLIOS, INC.
(Exact Name of Registrant as Specified in Charter)
500 Bielenberg Drive, Woodbury, Minnesota 55125
(Address of Principal Executive Offices)
Registrant's Telephone Number: (612) 738-4000
Scott R. Plummer, Esq., Asst. Secretary
(Same address as above)
(Name and Address of Agent for Service)
Copy to:
Michael J. Radmer, Esq.
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, MN 55402
Pursuant to Section 270.24f-2 of the Investment Company Act of 1940, the
Registrant has registered an indefinite amount of securities under the
Securities Act of 1933. The Rule 24f-2 Notice for the Registrant's most recent
fiscal year was filed on December 20, 1996.
<PAGE>
FORTIS WORLDWIDE PORTFOLIOS, INC.
Registration Statement on Form N-1A
CROSS REFERENCE SHEET
Pursuant to Rule 481(a) and Instruction F1 of Form N-1A
N-1A
Item No. PROSPECTUS HEADING
- -------- ------------------
PART A (PROSPECTUS)
1. Cover Page...............................COVER PAGE (no caption)
2. Synopsis (optional)......................SUMMARY OF PORTFOLIO EXPENSES
3. Condensed Financial Information..........FINANCIAL HIGHLIGHTS
4. General Description of Registrant........ORGANIZATION AND CLASSIFICATION;
INVESTMENT OBJECTIVES AND POLICIES
5. Management of the Fund...................MANAGEMENT
6. Capital Stock and Other Securities.......CAPITAL STOCK; SHAREHOLDER
INQUIRIES; DIVIDENDS AND CAPITAL
GAINS DISTRIBUTIONS; TAXATION
7. Purchase of Securities Being Offered.....HOW TO BUY PORTFOLIO SHARES;
VALUATION OF SECURITIES
8. Redemption or Repurchase.................REDEMPTION
9. Pending Legal Proceedings................None
PART B (STATEMENT OF ADDITIONAL INFORMATION) STMT OF ADDITIONAL INFO HEADING
- ----------------------------------------------------------------------------
10. Cover Page .........................COVER PAGE (no caption)
11. Table of Contents.......................TABLE OF CONTENTS
12. General Information and History.........ORGANIZATION AND CLASSIFICATION
13. Investment Objectives and Policies......INVESTMENT OBJECTIVES AND POLICIES
14. Management of the Fund..................DIRECTORS AND EXECUTIVE OFFICERS
15. Control Persons and Principal
Holders of Securities...................CAPITAL STOCK
16. Investment Advisory and Other Services..INVESTMENT ADVISORY AND OTHER
SERVICES
17. Brokerage Allocation....................PORTFOLIO TRANSACTIONS AND
ALLOCATION OF BROKERAGE
18. Capital Stock and Other Securities......CAPITAL STOCK
19. Purchase, Redemption, and Pricing of
Securities Being Offered................COMPUTATION OF NET ASSET VALUE
AND PRICING; SPECIAL PURCHASE
PLANS; REDEMPTION
20. Tax Status..............................TAXATION
21. Underwriters............................UNDERWRITER
22. Calculations of Performance Data........PERFORMANCE
23. Financial Statements....................FINANCIAL STATEMENTS
<PAGE>
MAILING ADDRESS:
P.O. Box 64284
St. Paul
Minnesota 55164
STREET ADDRESS:
500 Bielenberg Drive
Woodbury
Minnesota 55125
Telephone: (612) 738-4000
Toll Free: (800) 800-2638, Ext. 3012
- ---------------------------------------------------------
FORTIS GLOBAL
GROWTH PORTFOLIO
PROSPECTUS
DATED MARCH 1, 1997
THIS PROSPECTUS CONCISELY SETS FORTH THE INFORMATION A PROSPECTIVE INVESTOR
SHOULD KNOW ABOUT THE PORTFOLIO BEFORE INVESTING. INVESTORS SHOULD RETAIN THIS
PROSPECTUS FOR FUTURE REFERENCE. THE PORTFOLIO HAS FILED A STATEMENT OF
ADDITIONAL INFORMATION (ALSO DATED MARCH 1, 1997) WITH THE SECURITIES AND
EXCHANGE COMMISSION. THE STATEMENT OF ADDITIONAL INFORMATION IS AVAILABLE FREE
OF CHARGE FROM FORTIS INVESTORS, INC. ("INVESTORS") AT THE ABOVE MAILING ADDRESS
OF THE PORTFOLIO, AND IS INCORPORATED BY REFERENCE INTO THIS PROSPECTUS IN
ACCORDANCE WITH THE COMMISSION'S RULES.
SHARES IN THE PORTFOLIO ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK; ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY; AND
INVOLVE INVESTMENT RISKS, INCLUDING THE POSSIBLE LOSS OF PRINCIPAL. SEE "RISK
FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
FORTIS-REGISTERED TRADEMARK-
AND FORTIS-REGISTERED TRADEMARK- ARE FORTIS
REGISTERED SERVICEMARKS OF FORTIS SOLID ANSWERS FOR A CHANGING
AMEV AND FORTIS AG. WORLD-REGISTERED TRADEMARK-
<PAGE>
RISK FACTORS
Investments in stock funds expose investors to potential declines in the price
of the stocks contained in the funds' portfolios, which may result in a decline
in the price of the shares of such funds. In addition, the Portfolio's
significant foreign investment activities present certain additional risks. The
price of the Portfolio's shares will fluctuate and there is no assurance that
investors will be able to redeem their Portfolio shares for more than they paid
for them.
For more information on the risks associated with investing in the Portfolio see
"Investment Objectives and Policies; Risk Considerations."
SUMMARY OF INVESTMENT OBJECTIVES
Fortis Global Growth Portfolio (the "Portfolio") is a non-diversified series of
Fortis Worldwide Portfolios, Inc. ("Fortis Worldwide"). The Portfolio's primary
investment objective is long-term capital appreciation. Current income is a
secondary objective. The Portfolio seeks its objectives primarily by investing
in a global portfolio of equity securities, allocated among the markets of the
U.S and other, possibly diverse, countries and regions of the world.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Risk Factors.............................................................. 2
Summary of Investment Objectives.......................................... 2
Class Shares.............................................................. 2
Summary of Portfolio Expenses............................................. 3
Financial Highlights...................................................... 4
Organization and Classification........................................... 5
Investment Objectives and Policies; Risk Considerations................... 5
Management................................................................ 10
- Board of Directors.................................................. 10
- The Investment Adviser/Transfer Agent/Dividend Agent................ 10
- The Underwriter and Distribution Expenses........................... 10
- Portfolio Expenses.................................................. 11
- Brokerage Allocation................................................ 11
Valuation of Securities................................................... 11
Capital Stock............................................................. 12
Dividends and Capital Gains Distributions................................. 12
Taxation.................................................................. 12
How to Buy Portfolio Shares............................................... 13
- General Purchase Information........................................ 13
- Alternative Purchase Arrangements................................... 13
- Class A Shares--Initial Sales Charge Alternative.................... 13
- Class B and H Shares--Contingent Deferred Sales Charge
Alternatives...................................................... 15
- Class C Shares--Level Sales Charge Alternative...................... 15
Redemption................................................................ 16
- Contingent Deferred Sales Charge.................................... 17
Shareholder Inquiries..................................................... 18
Account Application....................................................... 19
Automated Clearing House (ACH) Agreement.................................. 22
</TABLE>
No broker-dealer, sales representative, or other person has been authorized to
give any information or to make any representations other than those contained
in this Prospectus, and if given or made, such information or representations
must not be relied upon as having been authorized by the Portfolio or Investors.
This Prospectus does not constitute an offer or solicitation by anyone in any
state in which such offer or solicitation is not authorized, or in which the
person making such offer or solicitation is not qualified to do so, or to any
person to whom it is unlawful to make such offer or solicitation.
CLASS SHARES
The Portfolio offers investors the choice of four classes of shares with
different sales charges and expenses. These alternatives permit choosing the
most beneficial method of purchasing shares given the amount of the purchase,
the length of time the investor expects to hold the shares, and other
circumstances.
CLASS A SHARES. Generally, an investor who purchases Class A shares pays a sales
charge at the time of purchase. As a result, Class A shares are not subject to
any charges when they are redeemed (except for sales at net asset value in
excess of $1 million which may be subject to a contingent deferred sales
charge). The initial sales charge may be reduced or waived for certain
purchases. Class A shares are subject to an annual Rule 12b-1 fee of .25% of
average daily net assets attributable to Class A shares. This fee is lower than
the other classes and therefore Class A shares have lower expenses and pay
higher dividends. See "How to Buy Portfolio Shares--Class A Shares."
CLASS B AND H SHARES. The only difference between Class B and H shares is the
percentage of dealer concession paid to dealers. This difference does not in any
way affect the charges on an investor's shares. Class B and H shares both are
sold without an initial sales charge, but are subject to a contingent deferred
sales charge of 4% if redeemed within two years of purchase, with declining
charges for redemptions thereafter up to six years after purchase. Class B and H
shares are also subject to a higher annual Rule 12b-1 fee than Class A shares--
1.00% of the Fund's average daily net assets attributable to Class B or H
shares, as applicable. However, after eight years, Class B and H shares
automatically will be converted to Class A shares at no charge to the investor,
resulting in a lower Rule 12b-1 fee thereafter. Class B and H shares provide the
benefit of putting all dollars to work from the time of investment, but will
have a higher expense ratio and pay lower dividends than Class A shares due to
the higher Rule 12b-1 fee and any other class specific expenses. See "How to Buy
Portfolio Shares--Class B and H Shares."
CLASS C SHARES. Class C shares: 1) are sold without an initial sales charge, but
are subject to a contingent deferred sales charge; 2) are subject to an annual
Rule 12b-1 fee of 1.00% of the Portfolio's average daily net assets attributable
to Class C shares; and 3) provide the benefit of putting all dollars to work
from the time of investment, but will have a higher expense ratio and pay lower
dividends than Class A shares due to the higher Rule 12b-1 fee and any other
class specific expenses. While Class C shares do not convert to Class A shares,
they are subject to a lower contingent deferred sales charge (1%) than Class B
or H shares and do not have to be held for as long a time (one year) to avoid
paying the contingent deferred sales charge. See "How to Buy Portfolio
Shares--Class C Shares."
2
<PAGE>
IN SELECTING WHICH CLASS OF SHARES TO PURCHASE, YOU SHOULD CONSIDER, AMONG OTHER
THINGS, (1) the length of time you expect to hold your investment, (2) the
amount of any applicable sales charge (whether imposed at the time of purchase
or redemption) and Rule 12b-1 fees, as noted above, (3) whether you qualify for
any reduction or waiver of any applicable sales charge (e.g., if you are exempt
from the sales charge, you must invest in Class A shares), (4) the various
exchange privileges among the different classes of shares and (5) the fact that
Class B and H shares automatically convert to Class A shares eight years after
purchase.
SUMMARY OF PORTFOLIO EXPENSES
The Portfolio's front-end and asset-based sales charges are within the
limitations imposed by the NASD. Such charges are shown below:
SHAREHOLDER TRANSACTION EXPENSES
<TABLE>
<CAPTION>
CLASS B AND H CLASS C
CLASS A SHARES SHARES SHARES
-------------- ------------- -------------
<S> <C> <C> <C>
Maximum Sales Charge Imposed on
Purchases (as a percentage of offering
price)................................. 4.75%* 0.00%** 0.00%**
Maximum Deferred Sales Charge (as a
percentage of original purchase price
or redemption proceeds, as
applicable)............................ *** 4.00% 1.00%
</TABLE>
- ------------------------
*Since the Portfolio also pays an asset based sales charge, long-term
shareholders may pay more than the economic equivalent of the maximum
front-end sales charge permitted by NASD rules.
**Class B, H and C shares are sold without a front end sales charge, but their
contingent deferred sales charge and Rule 12b-1 fees may cause long-term
shareholders to pay more than the economic equivalent of the maximum
permitted front end sales charges.
***A contingent deferred sales charge of 1.00% is imposed on certain redemptions
of Class A shares that were purchased without an initial sales charge as part
of an investment of $1 million or more. See "How to Buy Portfolio
Shares--Class A Shares."
ANNUAL PORTFOLIO OPERATING EXPENSES (AS A % OF AVERAGE NET ASSETS)
<TABLE>
<CAPTION>
CLASS A CLASS B AND CLASS C
SHARES H SHARES SHARES
------------ ------------ ------------
<S> <C> <C> <C>
Management Fees......................... 1.00% 1.00% 1.00%
12b-1 fees.............................. .25% 1.00% 1.00%
Other Expenses.......................... .26% .26% .26%
--- --- ---
TOTAL PORTFOLIO OPERATING EXPENSES.... 1.51% 2.26% 2.26%
--- --- ---
</TABLE>
The purpose of these tables is to assist the investor in understanding the
various costs and expenses that an investor in the Portfolio will bear, whether
directly or indirectly. For a more complete description of the various costs and
expenses, see "Management" and "How to Buy Portfolio Shares." The information
set forth in the table reflects actual expenses incurred during fiscal 1996.
EXAMPLE
You would pay the following expenses on a $1,000 investment over various time
periods assuming: (1) 5% annual return; and (2) redemption at the end of each
time period. This example includes conversion of Class B and H shares to Class A
shares after eight years and a waiver of deferred sales charges on Class B and H
shares of 10% of the amount invested. See "Contingent Deferred Sales
Charge--Class B, H, and C Shares."
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class A Shares.......................... $62 $ 93 $126 $219
Class B and H Shares.................... $59 $ 98 $139 $241
Class C Shares.......................... $33 $ 71 $121 $260
</TABLE>
Assuming no redemption, the Class B, H, and C expenses on the same investment
would be as follows:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Class B and H Shares.................... $23 $ 71 $121 $241
Class C Shares.......................... $23 $ 71 $121 $260
</TABLE>
THE ABOVE EXAMPLE USES FISCAL YEAR 1996 HISTORICAL DATA AS A BASIS FOR THE
ESTIMATED EXPENSES OF THE TIME PERIODS INDICATED AND SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES OR PERFORMANCE. ACTUAL EXPENSES MAY BE
GREATER OR LESS THAN THOSE SHOWN.
3
<PAGE>
FINANCIAL HIGHLIGHTS
(For a share outstanding throughout the period)
The information below has been derived from audited financial statements and
should be read in conjunction with the financial statements of the Portfolio and
the independent auditors' report of KPMG Peat Marwick LLP found in the
Portfolio's 1996 Annual Report to Shareholders, which may be obtained without
charge.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
FOR THE PERIOD JULY
CLASS A 8, 1991***
YEAR ENDED OCTOBER 31, (COMMENCEMENT OF
----------------------------------------------------- OPERATIONS) THROUGH
1996 1995 1994 1993 1992 OCTOBER 31, 1991
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 18.24 $ 14.78 $ 14.42 $ 11.52 $ 10.87 $ 10.05
- --------------------------------------------------------------------------------------------------------------------------------
Operations:
Investment income (loss) - net.................. (.06) (.09) (.04) (.12) -- --
Net realized and unrealized gains (losses) on
investments.................................... 3.10 3.55 .40 3.02 .68 .82
- --------------------------------------------------------------------------------------------------------------------------------
Total from operations............................. 3.04 3.46 .36 2.90 .68 .82
- --------------------------------------------------------------------------------------------------------------------------------
Distributions to shareholders:
From investment income - net.................... -- -- -- -- (.02) --
From net realized gains......................... -- -- -- -- (.01) --
- --------------------------------------------------------------------------------------------------------------------------------
Total distributions to shareholders............... -- -- -- -- (.03) --
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period.................... $ 21.28 $ 18.24 $ 14.78 $ 14.42 $ 11.52 $ 10.87
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Total Return@..................................... 16.67% 23.41% 2.50% 25.17% 6.24% 8.16%
- --------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted).......... $107,607 $68,302 $55,214 $28,226 $10,727 $ 6,249
Ratio of expenses to average daily net assets..... 1.51% 1.73% 1.72% 2.19% 2.25% 2.25%*
Ratio of net investment income (loss) to average
daily net assets................................. (.33)% (.55)% (.35)% (1.01)% (.04)% .30%*
Portfolio turnover rate........................... 18% 27% 21% 37% 31% 8%
Average commission rate paid**.................... $ .0272 -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
CLASS B CLASS C CLASS H
------------------- ------------------- ---------------------
1996 1995+ 1996 1995+ 1996 1995+
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 18.12 $ 14.60 $ 18.13 $ 14.60 $ 18.12 $ 14.60
- -----------------------------------------------------------------------------------------------------------------------
Operations:
Investment income (loss) - net.................. (.24) (.09) (.23) (.09) (.23) (.09)
Net realized and unrealized gains (losses) on
investments.................................... 3.10 3.61 3.10 3.62 3.10 3.61
- -----------------------------------------------------------------------------------------------------------------------
Total from operations............................. 2.86 3.52 2.87 3.53 2.87 3.52
- -----------------------------------------------------------------------------------------------------------------------
Distributions to shareholders..................... -- -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------------
Net asset value, end of period.................... $ 20.98 $ 18.12 $ 21.00 $ 18.13 $ 20.99 $ 18.12
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
Total Return@..................................... 15.78% 24.11% 15.83% 24.18% 15.84% 24.11%
- -----------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted).......... $ 5,735 $ 991 $ 3,087 $ 434 $10,765 $ 2,141
Ratio of expenses to average daily net assets..... 2.26% 2.48%* 2.26% 2.48%* 2.26% 2.48%*
Ratio of net investment income (loss) to average
daily net assets................................. (.99)% (1.42)%* (.99)% (1.55)%* (1.02)% (1.46)%*
Portfolio turnover rate........................... 18% 27% 18% 27% 18% 27%
Average commission rate paid**.................... $ .0272 -- $ .0272 -- $ .0272 --
</TABLE>
* ANNUALIZED.
** IN ACCORDANCE WITH RULES ADOPTED BY THE SECURITIES AND EXCHANGE COMMISSION,
DISCLOSURE OF AVERAGE COMMISION RATE PAID IS REQUIRED BEGINNING WITH FISCAL
YEAR 1996. THE AMOUNT REPRESENTS TOTAL BROKERAGE COMMISSION PAID ON
APPLICABLE PURCHASES AND SALES OF SECURITIES FOR THE PERIOD DIVIDED BY THE
TOTAL NUMBER OF RELATED SHARES PURCHASED AND SOLD. THE COMPARABILITY OF THIS
INFORMATION MAY BE AFFECTED BY THE FACT THAT COMMISSION RATES PER SHARE VARY
SIGNIFICANTLY AMONG FOREIGN COUNTRIES.
*** THE PORTFOLIO'S INCEPTION WAS MARCH 25, 1991, WHEN IT WAS INITIALLY
CAPITALIZED. HOWEVER, THE PORTFOLIO'S SHARES DID NOT BECOME EFFECTIVELY
REGISTERED UNDER THE SECURITIES ACT OF 1933 UNTIL JULY 8, 1991.
SUPPLEMENTARY INFORMATION IS NOT PRESENTED FOR THE PERIOD FROM MARCH 25,
1991 THROUGH JULY 7, 1991 AS THE PORTFOLIO'S SHARES WERE NOT REGISTERED
DURING THAT PERIOD.
@ THESE ARE THE PORTFOLIO'S TOTAL RETURNS DURING THE PERIOD, INCLUDING
REINVESTMENT OF ALL DIVIDEND AND CAPITAL GAINS DISTRIBUTIONS WITHOUT
ADJUSTMENTS FOR SALES CHARGE.
+ FOR THE PERIOD FROM NOVEMBER 14, 1994 (COMMENCEMENT OF OPERATIONS) THROUGH
OCTOBER 31, 1995.
4
<PAGE>
The Portfolio may advertise its "cumulative total return," "average annual total
return," "systematic investment plan cumulative total return," and "systematic
investment plan average annual total return," and may compare such figures to
recognized indices. Performance figures are calculated separately for each class
of shares, and figures for each class will be presented. The Portfolio may
advertise its relative performance as compiled by outside organizations such as
Lipper Analytical or Wiesenberger, or refer to publications which have mentioned
the Portfolio, Fortis Advisers, or their personnel, and also may advertise other
performance items as set forth in the Statement of Additional Information. The
performance discussion required by the Securities and Exchange Commission is
found in the Portfolio's Annual Report to Shareholders and will be made
available without charge upon request.
ORGANIZATION AND CLASSIFICATION
The Portfolio is the only established series of Fortis Worldwide. Fortis
Worldwide was incorporated under Minnesota law in 1991 and is registered with
the Securities and Exchange Commission under the Investment Company Act of 1940
(the "1940 Act") as a "nondiversified, open-end management investment company".
Although the Portfolio is classified as a nondiversified investment company
under the 1940 Act, it is still required to meet certain diversification
requirements in order to qualify as a "regulated investment company" for Federal
income tax purposes under the Internal Revenue Code of 1986, as amended (the
"Code"). To so qualify, the Portfolio must diversify its holdings so that, at
the close of each quarter of its taxable year, (a) at least 50% of the value of
its total assets is represented by cash, cash items, securities issued by the
U.S. Government, its agencies and instrumentalities, the securities of other
regulated investment companies, and other securities limited generally with
respect to any one issuer to an amount not more than 5% of the total assets of
the Portfolio and not more than 10% of the outstanding voting securities of such
issuer, and (b) not more than 25% of the value of its total assets is invested
in the securities of any issuer (other than securities issued by the U.S.
Government, its agencies or instrumentalities, or the securities of other
regulated investment companies), or in two or more issuers that the Portfolio
controls and that are engaged in the same or similar trades or businesses.
INVESTMENT OBJECTIVES AND POLICIES; RISK CONSIDERATIONS
The Portfolio's primary investment objective is long-term capital appreciation.
Current income is a secondary objective. The Portfolio seeks its objectives
primarily by investing in a global portfolio of equity securities, allocated
among the markets of the U.S. and other, possibly diverse, countries and regions
of the world. The Portfolio is designed for investors who wish to accept the
risks entailed in such investments, which are different from those associated
with a portfolio consisting entirely of U.S. securities. There is no assurance
that the Portfolio's investment objectives will be achieved. The Portfolio's
investment objectives could be changed without shareholder approval. While no
such change is contemplated, such a change could result in the Portfolio's
objectives differing from those deemed appropriate by an investor at the time of
investment.
The Portfolio is not required to maintain any particular geographic or currency
mix of its investments, nor is it required to maintain any particular proportion
of stocks, bonds or other securities in its portfolio. The Portfolio however, in
view of its investment objectives, currently expects to invest its assets
primarily in common stocks of U.S. and non-U.S. issuers. Under normal market
conditions, the Portfolio invests approximately 55 to 65% (exclusive of
collateral in connection with securities lending) of its total assets in equity
securities of established growth companies which have achieved a record of
operating earnings over the past five-year period. Such companies would usually
be located in the United States, Canada, the United Kingdom, Japan, Australia,
and other Western European nations. These companies will also have paid or have
the ability to pay a dividend. Established growth companies typically have less
sensitivity to general economic trends, tend to generate above average returns
on invested capital, and have leadership positions in their respective
industries. When selecting securities of non-U.S. issuers, Advisers considers
additional factors related to the country of the non-U.S. issuer, including
foreign currency exchange, the political stability of the country of such
non-U.S. issuer, foreign regulations, and settlement practices.
In addition, the Portfolio may invest up to 35 to 45% of its total assets in
equity securities in U.S. and non-U.S. emerging growth companies and in global
emerging markets. Emerging growth companies are smaller-sized companies that
Advisers believes have a potential for earnings growth over time that is above
the growth rate of more established companies or are early in their life cycles
and have the potential to become major enterprises. The Portfolio has no minimum
size requirements for the emerging growth companies in which it will invest. As
used in this Prospectus, global emerging markets are countries categorized as
emerging markets by the International Finance Corporation, the World Bank's
private sector division. Such countries may be located in various regions of the
world, such as the Far East, Asia, Central Europe and Latin America, and may
include but are not limited to Indonesia, Malaysia, China, India, Mexico,
Argentina, Chile, Brazil, Peru, Hungary, Poland and the Czech Republic. Such
markets tend to be in the less economically developed regions of the world.
General characteristics of emerging market countries also include lower degrees
of political stability, a high demand for capital investment, a high dependence
on export markets for their major industries, a need to develop basic economic
infrastructures, and rapid economic growth. The Portfolio may invest in any kind
of equity security including common stocks, preferred stocks, and warrants. The
above investments involve certain risks.
For investment purposes, an issuer is typically considered as domiciled in a
particular country if it is incorporated under the laws of that country, at
least 50% of the value of its assets are located in that country, and it
normally derives at least 50% of its income from operations or sales in that
country. For issuers which
5
<PAGE>
do not meet this criteria, Advisers will consider where an issuer has its
principal activities and interests, taking into account such factors as the
location of the issuer's assets, personnel, sales and earnings in determining
the country of an issuer.
The Portfolio may invest substantially or primarily in investment grade debt
securities of U.S. and non-U.S. issuers when the total return available from
investments in such securities may equal or exceed the total return available
from investments in equity securities. The Portfolio may invest substantially
all of its assets in high quality debt securities of U.S. and non-U.S. issuers
when the Portfolio is temporarily in a defensive position. "High quality" debt
securities are securities rated within one of the two highest ratings categories
of Moody's Investors Service, Inc. ("Moody's") (Aaa and Aa) or of Standard &
Poor's Ratings Services ("S&P") (AAA and AA), or comparably rated by another
nationally recognized rating agency, or, if unrated, determined to be of
comparable quality by Advisers. During periods of extreme market volatility or
uncertainty, cash will be utilized to preserve the Portfolio's assets.
Utilization of cash will occur during periods of excessive speculation in the
global markets or when management determines that common stock valuations have
reached unacceptable levels. Moreover, should extraordinary market conditions
warrant, the Portfolio may temporarily be invested primarily in securities of
U.S. issuers. To enable the Portfolio to respond to general economic changes and
market conditions around the world, the Portfolio is authorized to invest up to
100% of its assets in either equity securities or in debt securities.
The debt obligations in which the Portfolio may invest include a variety of
government bonds and corporate debt obligations. Government bonds the Portfolio
may purchase include debt obligations issued or guaranteed by the United States
or foreign governments (including foreign states, provinces, or municipalities)
or their agencies, authorities, or instrumentalities and also may include debt
obligations issued by supranational entities, which entities are organized or
supported by several national governments, such as the World Bank and the Asian
Development Bank. Other debt obligations held by the Portfolio may include
corporate bonds of U.S. and non-U.S. issuers and debt obligations convertible
into equity securities or having attached warrants or rights to purchase equity
securities.
The Portfolio will limit its purchases of debt securities to investment grade
obligations. "Investment grade" debt includes those securities rated within one
of the four highest ratings categories of Moody's (Aaa, Aa, A, and Baa) or of
S&P (AAA, AA, A, and BBB), or comparably rated by another nationally recognized
rating agency, or, if unrated, determined to be of comparable quality by
Advisers.
The Portfolio expects that a large portion of the debt investments held by the
Portfolio will be government or corporate bonds rated (at the time of the
Portfolio's investment) within one of the two highest ratings categories of
Moody's (Aaa and Aa) or of S&P (AAA and AA), or comparably rated by another
nationally recognized rating agency, or, if unrated, determined by Advisers to
be of comparable quality. Securities rated Baa or BBB have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than is the case with higher grade securities. The Portfolio may retain
a portfolio security whose rating has changed if the security otherwise meets
the Portfolio's investment objectives and investment criteria, provided that no
more than 5% of the Portfolio's net assets may be invested in a debt security
rated lower than Baa or BBB, or comparably rated by another nationally
recognized rating agency. A description of the Moody's and S&P ratings is
included as an appendix to the Statement of Additional Information.
The Portfolio currently contemplates that it will consider investments in a
number of the major stock markets worldwide, including the United States, and in
several emerging markets. The Portfolio intends to maintain a diversified global
portfolio during most periods of time. The Portfolio normally invests at least
65% of its total assets (exclusive of collateral in connection with securities
lending) in issues of not less than three different countries. Issues of any one
country other than the United States and Japan will represent no more than 25%
of the Portfolio's total assets under normal market conditions. The Portfolio
may purchase securities that are issued by the government or a corporation or
financial institution of one nation but denominated in the currency of another
nation (or a multinational currency unit).
As discussed above, the Portfolio may from time to time concentrate more than
25% of its total assets in companies located in Japan. Such companies generally
do not provide all of the disclosures required by U.S. law and accounting
practice, and their disclosures may be less timely than required by such laws
and practices.
Japan has a democratic form of government and has a population of approximately
122 million. The Japanese economy is heavily industrial and export-oriented.
Although Japan is dependent upon foreign countries for raw materials, its
balance of payment in recent years has been strong and positive.
Japan has eight stock exchanges, but over 80% of all trading is conducted on the
Tokyo Stock Exchange. Prices of stocks listed on the stock exchange are quoted
continuously during regular business hours. Trading commissions are at fixed
scale rates which vary by the type and the value of the transaction, but can be
negotiable for large transactions.
Securities in Japan are denominated and quoted in its currency, the yen. Yen are
fully convertible and transferable based on floating exchange rates into all
currencies, without administrative or legal restrictions, for both nonresidents
and residents of Japan.
Advisers evaluates currencies on the basis of fundamental economic criteria
(e.g., relative inflation and interest rate levels and trends, growth rate
forecasts, balance of payments status, and economic policies) as well as
technical and political data. If the currency in which a security is denominated
appreciates against the U.S. dollar, the dollar value of the security will
increase.
6
<PAGE>
Conversely, a decline in the exchange rate of the currency would adversely
affect the value of the security expressed in dollars. However, the Portfolio
may seek to protect itself against such negative currency movements through the
use of hedging techniques. See "Investment Objectives and Policies--Options,
Futures, and Currency Strategies."
DELAYED DELIVERY TRANSACTIONS. The Portfolio may purchase or sell portfolio
securities on a when-issued or delayed delivery basis. When-issued or delayed
delivery transactions arise when securities are purchased by the Portfolio with
payment and delivery to take place in the future in order to secure what is
considered to be an advantageous price and yield to the Portfolio at the time of
entering into the transaction. The value of fixed income securities to be
delivered in the future will fluctuate as interest rates vary. Because the
Portfolio must set aside cash or any security that is not considered restricted
or illiquid in a segregated account to satisfy its commitments to purchase
when-issued or delayed delivery securities, management of the Portfolio's
investments may be limited by commitments to purchase when-issued or delayed
delivery securities.
To the extent the Portfolio engages in when-issued or delayed transactions, it
will do so for the purpose of acquiring portfolio securities consistent with the
Portfolio's investment objectives and policies and not for the purpose of
investment leverage or to speculate in interest rate changes. The Portfolio will
only make commitments to purchase securities on a when-issued or delayed
delivery basis with the intention of actually acquiring the securities. The
Portfolio reserves the right to sell these securities before the settlement date
if deemed advisable.
The purchase of securities on a when-issued, delayed delivery, or forward
commitment basis exposes the Portfolio to risk because the securities may
decrease in value prior to their delivery. Purchasing securities on a
when-issued, delayed delivery, or forward commitment basis involves the
additional risk that the return available in the market when the delivery takes
place will be higher than that obtained in the transaction itself. These risks
could result in increased volatility of the Portfolio's net asset value to the
extent that the Portfolio purchases securities on a when-issued, delayed
delivery, or forward commitment basis while remaining substantially fully
invested.
INVESTMENT IN MONEY MARKET INVESTMENTS. The Portfolio retains the flexibility to
respond promptly to changes in market and economic conditions. Accordingly, in
the interest of preserving shareholder's capital and consistent with the
Portfolio's investment objectives, Advisers may employ a temporary defensive
investment strategy if it determines such a strategy to be warranted. Under a
temporary defensive strategy, pending investment of proceeds from new sales of
Portfolio shares, or to meet ordinary daily cash needs, the Portfolio may hold
cash (U.S. dollars, foreign currencies, or multinational currency units) and/or
invest any portion or all of its assets in high quality money market
instruments. It is impossible to predict when or for how long the Portfolio will
employ temporary defensive strategies.
Money market instruments in which the Portfolio may invest include, but are not
limited to, the following instruments of U.S. or foreign issuers: government
securities, commercial paper, bank certificates of deposit, bankers'
acceptances, and repurchase agreements relating to any of the foregoing. For
temporary defensive reasons, such as during times of international political or
economic uncertainty, most or all of the Portfolio's investments may be made in
the United States and denominated in U.S. dollars.
REPURCHASE AGREEMENTS. The Portfolio may invest in repurchase agreements.
RESTRICTED SECURITIES. The Portfolio may invest up to 5% of the value of its
total assets (at the time of investment) in securities which are not registered
under the applicable securities laws of the country in which such securities are
traded and for which no alternative market is readily available (such securities
are referred to herein as "restricted securities"). This policy is restricted by
a further nonfundamental policy that prohibits more than an aggregate of 10% of
the Portfolio's assets from being invested in: (a) restricted securities (both
debt and equity) or in equity securities of any issuer which are not readily
marketable; (b) repurchase agreements with a maturity of more than seven days;
and (c) over-the-counter option and futures contracts.
BORROWINGS. The Portfolio may borrow from banks for temporary or emergency
purposes. The Portfolio also may engage in "roll" transactions which involve the
sale of securities together with a commitment (for which the Portfolio may
receive a fee) to purchase similar, but not identical, securities at a future
date. The Portfolio will maintain in a segregated account with its custodian
cash, or any security that is not considered restricted or illiquid in an amount
sufficient to cover its obligations under "roll" transactions.
The Portfolio's borrowings through banks and roll transactions will not exceed
33 1/3% of its total assets, i.e., the Portfolio's total assets at all times
will equal at least 300% of the amount of outstanding borrowings. The Portfolio
will not purchase securities while borrowings (including "roll" transactions) in
excess of 5% of its total assets are outstanding. If market fluctuations in the
value of the portfolio holdings of the Portfolio or other factors cause the
ratio of the Portfolio's total assets to outstanding borrowings to fall below
300%, within three days (excluding Sundays and holidays) of such event the
Portfolio may be required to sell portfolio securities to restore the 300% asset
coverage, even though from an investment standpoint such sales might be
disadvantageous.
SECURITIES LENDING. The Portfolio is authorized to make loans of its portfolio
securities to broker-dealers or to other institutional investors. The borrower
must maintain with the Portfolio's custodian collateral consisting of cash, U.S.
government securities or other liquid, high-grade debt securities equal to at
least 100% of the value of the borrowed securities, plus any accrued interest.
The Portfolio will receive any interest paid on the loaned securities and a fee
and/or a portion of the interest earned on the collateral.
7
<PAGE>
The Portfolio will limit its loans of portfolio securities to an aggregate of
30% of the value of its total assets, measured at the time any such loan is
made. ("Total assets" of the Portfolio includes the amount lent as well as the
collateral securing such loans.)
OPTIONS, FUTURES, AND CURRENCY STRATEGIES. To attempt to increase return, the
Portfolio may write covered call options on securities it holds; this strategy
will be employed only when, in the opinion of Advisers, the size of the premium
the Portfolio receives for writing the option is adequate to compensate the
Portfolio against the risk that appreciation in the underlying security may not
be fully realized if the option is exercised. The Portfolio also is authorized
to write covered put options to attempt to enhance return.
The Portfolio may use forward currency contracts and certain options and futures
strategies to attempt to hedge its portfolio, i.e., reduce the overall level of
investment risk normally associated with the Portfolio. There can be no
assurance that such efforts will succeed.
To attempt to hedge against adverse movements in exchange rates between
currencies, the Portfolio may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date. Such
contracts may involve the purchase or sale of a foreign currency against the
U.S. dollar or may involve two foreign currencies. The Portfolio may enter into
forward currency contracts either with respect to specific transactions or with
respect to the portfolio positions of the Portfolio. For example, when the
Portfolio anticipates making a purchase or sale of a security, it may enter into
a forward currency contract in order to set the rate (either relative to the
U.S. dollar or another currency) at which a currency exchange transaction
related to the purchase or sale will be made. Further, when Advisers believes
that a particular currency may decline compared to the U.S. dollar or another
currency, the Portfolio may enter into a forward contract to sell the currency
Advisers expects to decline in an amount approximating the value of some or all
of the portfolio securities of the Portfolio denominated in that currency.
Although forward contracts will be used primarily to protect the Portfolio from
adverse currency movements, they also involve the risk that anticipated currency
movements will not be accurately predicted. The Portfolio also may write covered
call options and purchase put and call options on currencies to hedge against
movements in exchange rates.
The Portfolio may write covered call options and purchase put and call options
on equity and debt securities to hedge against the risk of fluctuations in the
prices of securities held by the Portfolio or which Advisers intends to include
in the Portfolio. The Portfolio may use stock index futures contracts and
options thereon to hedge all or part of the equity portion of its portfolio
against negative stock market movements. Similarly, the Portfolio may use
interest rate futures contracts and options thereon to hedge the debt portion of
its portfolio against changes in the general level of interest rates.
The Portfolio may write only "covered" call options. An option written on a
security or currency is "covered" when, so long as the Portfolio is obligated
under the option, it owns the underlying security or currency. The Portfolio
will "cover" options on futures contracts it writes by maintaining in a
segregated account either marketable securities which, in Advisers' judgment,
correlate to the underlying futures contract or an amount of cash, or any
security that is not considered restricted or illiquid securities or other
liquid, high quality debt securities equal in the amount the Portfolio would be
required to pay were the option exercised.
The Portfolio has adopted two nonfundamental investment restrictions on the use
of options, futures, and forward contracts. The first restriction is that the
Portfolio will not enter into any options, futures, or forward contract
transactions if immediately thereafter the amount of premiums paid for all
options, initial margin deposits on all futures contracts and/or options on
futures contracts, and collateral deposited with respect to forward contracts
held by or entered into by the Portfolio would exceed 5% of the value of the
total assets of the Portfolio. The second restriction is that the aggregate
value of the Portfolio's assets covering, subject to, or committed to all
options, futures, and forward contracts will not exceed 20% of the value of the
total assets of the Portfolio. However, the Portfolio intends to limit its
investment in futures during the coming year so that the aggregate value of the
Portfolio's assets subject to futures contracts will not exceed 5% of the value
of its net assets. In addition, investments in options are further restricted by
a nonfundamental investment restriction that prohibits the Portfolio from
investing more than an aggregate of 10% of the value of its total assets in: (a)
restricted securities (both debt and equity) or in equity securities of any
issuer which are not readily marketable; (b) repurchase agreements with a
maturity of more than seven days; and (c) over-the-counter option contracts.
ZERO COUPON OBLIGATIONS. The Portfolio may invest in zero coupon obligations of
the government and corporate issuers, including rights to "stripped" coupon and
principal payments. Certain obligations are "stripped" of their coupons, and the
rights to receive each coupon payment and the principal payment are sold as
separate securities. Once separated, each coupon as well as the principal amount
represents a different single-payment claim due from the issuer of the security.
Each single-payment claim (coupon or principal) is equivalent to a zero coupon
bond. A zero coupon security pays no interest to its holder during its life, and
its value consists of the difference between its face value at maturity (the
coupon or principal amount), if held to maturity, or its market price on the
date of sale, if sold prior to maturity, and its acquisition price (the
discounted "present value" of the payment to be received).
Certain zero coupon obligations represent direct obligations of the issuer of
the "stripped" coupon and principal payments. Other zero coupon obligations are
securities issued by financial institutions which constitute a proportionate
ownership of an underlying pool of stripped coupon or principal payments. The
Portfolio may invest in either type of zero coupon obligation. The investment
policies and restrictions applicable to corporate and government securities in
the Portfolio shall apply equally to the Portfolio's investments in zero coupon
securities (including, for example, minimum corporate bond ratings).
8
<PAGE>
VARIABLE AMOUNT MASTER DEMAND NOTES. The Portfolio may invest in variable amount
master demand notes. These instruments are short-term, unsecured promissory
notes issued by corporations to finance short-term credit needs.
DEPOSITORY RECEIPTS. The Portfolio may hold equity securities of foreign issuers
in the form of American Depository Receipts ("ADRs") and the European Depository
Receipts ("EDRs," which are sometimes referred to as Continental Depository
Receipts or "CDRs") or other securities convertible into securities of eligible
European or Far Eastern issuers. These securities may not necessarily be
denominated in the same currency as the securities for which they may be
exchanged. ADRs are receipts typically issued by an American bank or trust
company which evidence ownership of underlying securities issued by a foreign
corporation. EDRs are receipts issued in Europe typically by foreign banks and
trust companies that evidence ownership of either foreign or domestic
securities. Generally, ADRs in registered form are designed for use in the
United States securities markets and EDRs in bearer form are designed for use in
European securities markets. For purposes of the Portfolio's investment
policies, the Portfolio's investments in ADRs and EDRs will be deemed to be
investments in the equity securities representing securities of foreign issuers
into which they may be converted.
WARRANTS OR RIGHTS. Warrants or rights may be acquired by the Portfolio in
connection with other securities or separately and provide the Portfolio with
the right to purchase at a later date other securities of the issuer. As a
condition of its continuing registration in a state, the Portfolio has
undertaken that its investments in warrants or rights, valued at the lower of
cost or market, will not exceed 5% of the value of its net assets and not more
than 2% of such assets will be invested in warrants and rights which are not
listed on established stock exchanges, such as the London, Tokyo, or New York
Stock Exchanges. Warrants or rights acquired by the Portfolio in units or
attached to securities will be deemed to be without value for purpose of this
restriction. These limits may be changed by the Board of Directors without
shareholder approval.
SHORT SALES AGAINST THE BOX. The Portfolio may sell a security to the extent the
Portfolio contemporaneously owns or has the right to obtain securities identical
to those sold short without payment of any additional consideration. Such a
short sale is referred to as a short sale "against the box." The aggregate
market value of the underlying securities subject to all outstanding short sales
may not exceed 5% of the net assets of the Portfolio.
RISK CONSIDERATIONS. The Portfolio's net asset value will fluctuate, reflecting
fluctuations in the market value of its portfolio positions. The Portfolio
normally will invest in a substantial number of issuers; however, the Portfolio
will operate as a "nondiversified" mutual fund to enable the Portfolio to invest
more than 5% of its assets in the securities of single issuers. Since, as a
"nondiversified" fund, the Portfolio is permitted to invest a greater proportion
of its assets in the securities of a smaller number of issuers, the Portfolio
may be subject to greater investor risk with respect to its individual portfolio
than an investment company which is more broadly diversified.
According to Advisers, as of December 31, 1996, approximately 60% of the total
equity market capitalization worldwide was represented by non-U.S. equity
securities. Moreover, from time to time the equity and debt securities of
issuers located outside the U.S. have substantially outperformed the equity and
debt securities of U.S. issuers. Accordingly, Advisers believes that the
Portfolio's policy of investing in equity and debt securities of issuers
throughout the world may enable the achievement of results superior to those
produced by mutual funds with similar objectives to those of the Portfolio that
invest solely in U.S. equity and debt securities.
Nonetheless, foreign investing does entail certain risks. The securities of
non-U.S. issuers generally will not be registered with, nor the issuers thereof
be subject to, the reporting requirements of the U.S. Securities and Exchange
Commission. Accordingly, there may be less publicly available information about
foreign securities and issuers than is available about domestic securities and
issuers. Foreign companies are not subject to uniform accounting, auditing and
financial reporting standards, practices, and requirements comparable to those
applicable to domestic companies. Securities of some foreign companies are less
liquid and their prices may be more volatile than securities of comparable
domestic companies. Settlement periods for foreign securities, which are
sometimes longer than those for securities of U.S. issuers, may affect portfolio
liquidity. These different settlement practices may cause missed purchasing
opportunities and/or the loss of interest on money market and debt investments
pending further equity or long-term debt investments.
Investing in both U.S. and non-U.S. emerging growth companies involves certain
special risks. Emerging growth companies may have limited product lines,
markets, or financial resources, and they may be dependent on a limited
management group. The securities of emerging growth companies may have limited
market stability and may be subject to more abrupt or erratic market movements
than securities of larger, more established companies or the market averages in
general.
The risks of foreign investing are of greater concern in the case of investments
in emerging markets which may exhibit greater price volatility and have less
liquidity. Further, the economies of emerging market countries generally are
heavily dependent upon international trade and, accordingly, have been and may
continue to be adversely affected by trade barriers, managed adjustments in
relative currency values, and other protectionist measures imposed or negotiated
by the countries with which they trade. These emerging market economies also
have been and may continue to be adversely affected by economic conditions in
the countries with which they trade.
In addition, with respect to some foreign countries, there is the possibility of
expropriation or confiscatory taxation, limitations on the removal of funds or
other assets of the Portfolio, political, or
9
<PAGE>
social instability, or diplomatic or economic developments which could affect
the Portfolio's investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the United States economy in
such respects as growth of gross national product, rate of inflation, rate of
savings and capital reinvestment, resource self-sufficiency and balance of
payments positions. It is anticipated that substantially all of the equities
purchased by the Portfolio will be listed on foreign exchanges. Trading volume
on foreign and emerging market stock exchanges is substantially less than that
on the New York Stock Exchange. They also have further risks due to permanent or
temporary termination of trading and greater spreads between bid and asked
prices for securities in such markets. In addition, there is generally less
government supervision and regulation of foreign stock exchanges. Furthermore,
stock markets in emerging markets, such as nations in the Far East, while
offering opportunities for substantial returns, can be more volatile during
periods of investment uncertainty than established major exchanges. Shares of
the Portfolio, therefore, are subject to greater fluctuation in value than
shares of a conservative equity fund or of a growth fund which invests entirely
in more established markets. The Portfolio may incur additional costs because of
generally higher foreign brokerage commissions and the additional custodial
costs associated with maintaining securities. Advisers will rely on its
worldwide financial and investment expertise to attempt to limit these risks.
Since the Portfolio may invest substantially in securities denominated in
currencies other than the U.S. dollar, and since the Portfolio may hold foreign
currencies, the Portfolio may be affected favorably or unfavorably by exchange
control regulations or changes in the exchange rates between such currencies and
the U.S. dollar. Changes in currency exchange rates will influence the value of
dividends and interest earned by the Portfolio and gains and losses realized by
the Portfolio. Exchange rates are determined by the forces of supply and demand
in the foreign exchange markets. These forces are affected by the international
balance of payments and other economic and financial conditions, government
intervention, speculation, and other factors. In addition, the Portfolio may
incur costs associated with currency hedging and the conversion of foreign
currency into U.S. dollars and may be adversely affected by restriction on the
conversion or transfer of foreign currency.
The Portfolio's use of forward currency contracts and options and futures
strategies would also involve certain investment risks and transaction costs to
which the Portfolio might not otherwise be subject. These risks include:
dependence on Advisers' ability to predict movements in the prices of individual
securities, fluctuations in the general securities markets and movements in
interest rates and currency markets; imperfect correlation between movements in
the price of currency, options, futures contracts, or options thereon and
movements in the price of the currency or security hedged or used for cover; the
fact that skills and techniques needed to trade options, futures contracts and
options thereon or to use forward currency contracts are different from those
needed to select the securities in which the Portfolio invests; lack of
assurance that a liquid secondary market will exist for any particular option,
futures contract or option thereon at any particular time; and the possible need
to defer closing out certain options, futures contracts and options thereon in
order to continue to qualify for the beneficial tax treatment afforded
"regulated investment companies" under the Code. See "Taxation."
PORTFOLIO TURNOVER. Although the Portfolio does not intend generally to trade
for short-term profits, the Portfolio may dispose of a security without regard
to the time such security has been held, when such action appears advisable to
Advisers.
MANAGEMENT
BOARD OF DIRECTORS
Under Minnesota law, the Board of Directors of Fortis Worldwide (the "Board of
Directors") has overall responsibility for managing Fortis Worldwide in good
faith, in a manner reasonably believed to be in the best interests of Fortis
Worldwide, and with the care an ordinarily prudent person would exercise in
similar circumstances. However, this management may be delegated.
The Articles of Incorporation of Fortis Worldwide limit the liability of
directors to the fullest extent permitted by law.
THE INVESTMENT ADVISER/TRANSFER AGENT/DIVIDEND AGENT
Fortis Advisers, Inc. ("Advisers") is the investment adviser, transfer agent,
and dividend agent for the Portfolio. Advisers has been managing investment
company portfolios since 1949, and is indirectly owned 50% by Fortis AMEV and
50% by Fortis AG, diversified financial services companies. In addition to
providing investment advice, Advisers is responsible for management of Fortis
Worldwide's business affairs, subject to the overall authority of the Board of
Directors. Advisers' address is that of the Portfolio. James S. Byrd and Stephen
M. Poling (Executive Vice Presidents of Advisers) have managed the Portfolio,
along with other equity portfolios of Advisers, since its inception in 1991.
THE UNDERWRITER AND DISTRIBUTION EXPENSES
Fortis Investors, Inc. ("Investors"), a subsidiary of Advisers, is Fortis
Worldwide's underwriter. Investors' address is that of the Portfolio. The
following persons are affiliated with both Investors and Fortis Worldwide: Dean
C. Kopperud is a director and officer of both; Robert W. Beltz, Jr., Tamara L.
Fagely, and Carol M. Houghtby are officers of both Investors and the Funds;
James S. Byrd, Robert C. Lindberg, Keith R. Thomson, Rhonda J. Schwartz, John E.
Hite, Scott R. Plummer and Stephen M. Poling are officers of the Funds. Thomas
D. Gualdoni is an officer of Investors.
Pursuant to a Plan of Distribution adopted by the Portfolio under Rule 12b-1
under the 1940 Act, the Portfolio is obligated to pay Investors an annual fee of
.25% of average net assets attributable to the Portfolio's Class A shares and
1.00% of average net assets attributable to Class B, H, and C shares. While all
of Class A's Rule 12b-1 fee constitutes a "distribution fee", only 75% of Class
B, H, and C's fees constitute distribution fees.
10
<PAGE>
The higher distribution fee attributable to Class B, H, and C shares is designed
to permit an investor to purchase such shares through registered representatives
of Investors and other broker-dealers without the assessment of an initial sales
charge and at the same time to permit Investors to compensate its registered
representatives and other broker-dealers in connection with the sale of such
shares. The distribution fee for all classes may be used by Investors for the
purpose of financing any activity which is primarily intended to result in the
sale of shares of the Portfolio. For example, such distribution fee may be used
by Investors: (a) to compensate broker-dealers, including Investors and its
registered representatives, for their sale of Portfolio shares, including the
implementation of various incentive programs with respect to broker-dealers,
banks, and other financial institutions, and (b) to pay other advertising and
promotional expenses in connection with the distribution of Portfolio shares.
These advertising and promotional expenses include, by way of example but not by
way of limitation, costs of prospectuses for other than current shareholders;
preparation and distribution of sales literature; advertising of any type;
expenses of branch offices provided jointly by Investors and affiliated
insurance companies; and compensation paid to and expenses incurred by officers,
employees or representatives of Investors or of other broker-dealers, banks, or
other financial institutions, including travel, entertainment, and telephone
expenses.
A portion of the Rule 12b-1 fee equal to .25% of the average net assets of the
Portfolio attributable to the Class B, H, and C shares constitutes a shareholder
servicing fee designed to compensate Investors for the provision of certain
services to shareholders. The services provided may include personal services
provided to shareholders, such as answering shareholder inquiries regarding the
Portfolio and providing reports and other information, and services related to
the maintenance of shareholder accounts. Investors may use the Rule 12b-1 fee to
make payments to qualifying broker-dealers and financial institutions that
provide such services.
Investors may also enter into sales or servicing agreements with certain
institutions such as banks ("Service Organizations") which have purchased shares
of the Portfolio for the accounts of their clients, or which have made Portfolio
shares available for purchase by their clients, and/or which provide continuing
service to such clients. The Glass-Steagall Act and other applicable laws
prohibit certain banks from engaging in the business of underwriting securities.
In such circumstances, Investors, if so requested, will engage such banks as
Service Organizations only to perform administrative and shareholder servicing
functions, but at the same fees and other terms applicable to dealers. (If a
bank were prohibited from acting as a Service Organization, its shareholder
clients would be permitted to remain Portfolio shareholders and alternative
means for continuing servicing of such shareholders would be sought.) In such
event changes in the operation of the Portfolio might occur and a shareholder
serviced by such bank might no longer be able to avail itself of any automatic
investment or other services then being provided by the Bank. (State securities
laws on this issue may differ from the interpretations of Federal law expressed
above and banks and other financial institutions may be required to register as
dealers pursuant to state law.)
PORTFOLIO EXPENSES
For the most recent fiscal year, the annualized ratio of the Portfolio's total
operating expenses (including the distribution fees and in the case of Class B,
H and C, the shareholder servicing fees referred to under "Management--The
Underwriter and Distribution Expenses") and its advisory fees (which are
included in operating expense), both as a percentage of average daily net assets
were as follows:
<TABLE>
<CAPTION>
TOTAL OPERATING EXPENSES
--------------------------
CLASS B,
CLASS A H AND C ADVISORY FEE
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Global Growth Portfolio.......... 1.51% 2.26% 1.00%
</TABLE>
While the Portfolio's advisory fee is higher than that paid by many other
investment companies, it is partially offset by the added costs which Advisers
pays (which other investment companies pay), such as acting as the Portfolio's
registrar, transfer agent, and dividend agent.
BROKERAGE ALLOCATION
Advisers may consider sales of shares of the Portfolio, and of other funds
advised by Advisers as a factor in the selection of broker-dealers to execute
Portfolio securities transactions when it is believed that this can be done
without causing the Portfolio to pay more in brokerage commissions than it would
otherwise.
VALUATION OF SECURITIES
The Portfolio's net asset value per share is determined by dividing the value of
the securities owned by the Portfolio, plus any cash or other assets, less all
liabilities, by the number of the Portfolio's shares outstanding. The portfolio
securities in which the Portfolio invests fluctuate in value, and hence the net
asset value per share of the Portfolio also fluctuates. The net asset value of
the Portfolio's shares is determined as of the primary closing time for business
on the New York Stock Exchange (the "Exchange") on each day on which the
Exchange is open. If shares are purchased through another broker-dealer who
receives the order prior to the close of the Exchange, then Investors will apply
that day's price to the order as long as the broker-dealer places the order with
Investors by the end of the day.
Securities are generally valued at market value. A security listed or traded on
the exchange is valued at its last sale price on the exchange where it is
principally traded on the day of valuation. Lacking any sales on the exchange
where it is principally traded on the day of valuation, prior to the time as of
which assets are valued, the security generally is valued at the previous day's
last sale price on that exchange. A security listed or traded on the NASDAQ
National Market System is valued at its last sale price that day, and lacking
any sales that day on the NASDAQ National
11
<PAGE>
Market System, the security generally is valued at the last bid price. Options
will be valued at market value or fair value, as determined in good faith by the
Board of Directors, if no market exists. Futures contracts will be valued in a
like manner except that open futures contracts sales will be valued using the
closing settlement price or, in the absence of such a price, the most recent
quoted asked price.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed well before the close of the
business day in New York. An outside pricing service may be utilized to provide
valuations of debt securities. The pricing service may employ electronic data
processing techniques and/or a matrix system to determine valuations using
methods which include consideration of yields or prices of bonds of comparable
quality, type of issue, coupon, maturity and rating; indications as to value
from dealers; and general market conditions. When market quotations are not
readily available, or when illiquid securities or other assets are being valued,
such securities or other assets are valued at fair value as determined in good
faith by management under supervision of the Portfolio's Board of Directors.
Short-term investments in debt securities with maturities of less than 60 days
when acquired, or which subsequently are within 60 days of maturity, are valued
at amortized cost. Purchases and sales by the Portfolio after 2:00 P.M. Central
Time normally are not recorded until the following day.
Any assets or liabilities initially expressed in terms of foreign currencies are
translated into U.S. dollars at the official exchange rate or, alternatively, at
the mean of the current bid and asked prices of such currencies against the U.S.
dollar last quoted by a major bank that is a regular participant in the foreign
exchange market or on the basis of a pricing service that takes into account the
quotes provided by a number of such major banks. If neither of these
alternatives is available or both are deemed not to provide a suitable
methodology for converting a foreign currency into U.S. dollars, the Board of
Directors in good faith will establish a conversion rate for such currency.
European or Far Eastern securities trading may not take place on all days on
which the Exchange is open. Further, trading takes place in Japanese markets on
certain Saturdays and in various foreign markets on days on which the Exchange
is not open and therefore the Portfolio's net asset value is not calculated. The
calculation of the Portfolio's net asset value therefore may not take place
contemporaneously with the determination of the prices of securities held by the
Portfolio. Events affecting the values of portfolio securities that occur
between the time their prices are determined and the close of the Exchange will
not be reflected in the Portfolio's net asset value unless management, under the
supervision of the Board of Directors, determines that the particular event
would materially affect net asset value. As a result, the Portfolio's net asset
value may be significantly affected by such trading on days when the Portfolio
is not open for shareholder purchases and redemptions.
CAPITAL STOCK
The Portfolio currently offers its shares in four classes, each with different
sales arrangements and bearing differing expenses. Class A, B, H, and C shares
each represent interests in the assets of the Portfolio and have identical
voting, dividend, liquidation, and other rights on the same terms and conditions
except that expenses related to the distribution of each class are borne solely
by such class and each class of shares has exclusive voting rights with respect
to provisions of the Portfolio's Rule 12b-1 distribution plan which pertain to
that particular class and other matters for which separate class voting is
appropriate under applicable law. The Portfolio may offer additional classes of
shares.
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Portfolio's policy is to pay dividends from net investment income and make
distributions of any realized capital gains annually. Distributions paid by the
Portfolio with respect to all classes of shares will be calculated in the same
manner, at the same time, on the same day, and will be in the same amount,
except that the higher Rule 12b-1 fees applicable to Class B, H, and C shares
will be borne exclusively by such shares. The per share dividends on Class B, H,
and C shares will be lower than those on Class A shares as a result of the
higher Rule 12b-1 fees applicable to Class B, H, and C shares.
Both dividends and capital gains distributions will be made in the form of
additional Portfolio shares of the same class (at net asset value) unless the
shareholder sends the Portfolio a written request that either or both be sent to
the shareholder or reinvested (at net asset value) in shares of the same class
of another Fortis fund. If dividends and capital gains distributions are
automatically reinvested in the Portfolio, such reinvestment takes place on the
dividend record date. If they are to be reinvested in the other funds,
processing normally takes up to three business days.
TAXATION
The Portfolio will distribute substantially all of its net income and capital
gains to its shareholders. Distributions from the Portfolio are taxable to
shareholders, whether paid in cash or reinvested. Dividends paid from the net
income of the Portfolio must be treated as ordinary income by its shareholders.
Dividends paid from the Portfolio's net capital gains and designated in the
shareholder's Annual Account Summary as long-term capital gain distributions are
treated as long-term capital gains by shareholders, regardless of the length of
time for which they have held their shares in the Portfolio.
Information about the tax status of each year's dividends and distributions will
be mailed annually.
Prior to purchasing shares of the Portfolio, prospective shareholders (except
for tax qualified retirement plans) should consider the impact of dividends or
capital gains distributions which are expected to be announced, or have been
announced but not paid.
12
<PAGE>
Any such dividends or capital gains distributions paid shortly after a purchase
of shares by an investor prior to the record date will have the effect of
reducing the per share net asset value by the amount of the dividends or
distributions. All or a portion of such dividends or distributions, although in
effect a return of capital, are subject to taxation. As of October 31, 1996,
approximately 26% of the Portfolio's net assets represented unrealized
appreciation, undistributed net investment income, and accumulated net realized
gains or losses.
HOW TO BUY PORTFOLIO SHARES
GENERAL PURCHASE INFORMATION
MINIMUM AND MAXIMUM INVESTMENTS
A minimum initial investment of $500 normally is required. An exception to this
minimum (except on telephone or wire orders) is the "Systematic Investment Plan"
($25 per month by "Pre-authorized Check Plan" or $50 per month on any other
basis). The minimum subsequent investment normally is $50, again subject to the
above exception.
While Class A shares have no maximum order, Class B and H shares have a $500,000
maximum and Class C shares have a $1,000,000 maximum. Orders greater than these
limits will be treated as orders for Class A shares.
INVESTING BY TELEPHONE
Your registered representative may make your purchase ($500 minimum) by
telephoning the number on the cover page of this Prospectus. In addition, your
check and the Account Application which accompanies this Prospectus must be
promptly forwarded, so that Investors receives your check within three business
days. Please make your check payable to Fortis Investors, Inc. and mail it with
your Application to "CM-9651, St. Paul, MN 55170-9651". If you have a bank
account authorization form on file, you may purchase $100 - $10,000 worth of
Portfolio shares via telephone through the automated Fortis Information Line.
INVESTING BY WIRE
A shareholder having an account with a commercial bank that is a member of the
Federal Reserve System may purchase shares ($500 minimum) by requesting their
banks to transmit immediately available funds (Federal Funds) by wire to:
First Bank National Association
ABA #091000022, credit account no: 1-702-2514-1341
Fortis Funds Purchase Account
For further credit to __________________________________________________________
(name of client)
Fortis Account NBR _____________________________________________________________
Before making an initial investment by wire, your broker-dealer must first
telephone Investors at the number on the cover page of this Prospectus to open
your account and obtain your account number. In addition, the Account
Application which accompanies this Prospectus must be promptly forwarded to
Investors at the mailing address in the "Investing by Mail" section of this
Prospectus. Additional investments may be made at any time by having your bank
wire Federal Funds to the above address for credit to your account. Such
investments may be made by wire even if the initial investment was by mail.
INVESTING BY MAIL (ADDRESS: CM-9614, ST. PAUL, MN 55170-9614)
The Account Application which accompanies this Prospectus must be completed,
signed, and sent with a check or other negotiable bank draft, payable to "Fortis
Funds." Additional purchases may be made at any time by mailing a check or other
negotiable bank draft along with your confirmation stub. The account to which
the subsequent purchase is to be credited should be identified as to the name(s)
of the registered owner(s) and by account number.
ALTERNATIVE PURCHASE ARRANGEMENTS
The Portfolio offers investors the choice between four classes of shares which
offer differing sales charges and bear different expenses. These alternatives
permit an investor to choose the more beneficial method of purchasing shares
given the amount of the purchase, the length of time the investor expects to
hold the shares, and other circumstances. The inside front cover of the
Prospectus contains a summary of these alternative purchase arrangements. A
broker-dealer may receive different levels of compensation depending on which
class of shares is sold. Investors may also provide additional cash compensation
to dealers, and the dealers may use the cash compensation for their own company-
sponsored sales programs. Non-cash compensation will be provided to dealers and
includes payment or reimbursement for educational and training conferences or
programs for their employees. None of the aforementioned additional compensation
is paid for by the Portfolio or its shareholders.
CLASS A SHARES--INITIAL SALES CHARGE ALTERNATIVE
The public offering price of Class A Portfolio shares is determined once daily,
by adding a sales charge to the net asset value per share of the shares next
calculated after receipt of the purchase order. The sales charges and
broker-dealer concessions, which vary with the size of the purchase, are shown
in the following table. Additional compensation (as a percentage of sales
charge) will be paid to a broker-dealer when its annual sales of Fortis funds
having a sales charge exceed $10,000,000 (2%), $25,000,000 (4%), and $50,000,000
(5%).
<TABLE>
<CAPTION>
SALES CHARGE
SALES CHARGE AS
AS PERCENTAGE PERCENTAGE
OF THE OF THE BROKER-
OFFERING NET AMOUNT DEALER
AMOUNT OF SALE PRICE INVESTED CONCESSION
<S> <C> <C> <C>
Less than $100,000 4.750% 4.987% 4.00%
$100,000 but less than $250,000 3.500% 3.627% 3.00%
$250,000 but less than $500,000 2.500% 2.564% 2.25%
$500,000 but less than $1,000,000 2.000% 2.041% 1.75%
$1,000,000 or more* -0- -0- 1.00%
</TABLE>
- ------------------------
* The Portfolio imposes a contingent deferred sales charge in connection with
certain purchases of Class A shares of $1,000,000 or more. See
"Redemption--Contingent Deferred Sales Charge."
13
<PAGE>
The above scale applies to purchases of Class A shares by the following:
(1) Any individual, his or her spouse, and their children under the age of
21, and any of such persons' tax-qualified plans (provided there is only one
participant);
(2) A trustee or fiduciary of a single trust estate or single fiduciary
account; and
(3) Any organized group which has been in existence for more than six
months, provided that it is not organized for the purpose of buying
redeemable securities of a registered investment company, and provided that
the purchase is made by means which result in economy of sales effort or
expense, whether the purchase is made through a central administration,
through a single broker-dealer, or by other means. An organized group does
not include a group of individuals whose sole organizational connection is
participation as credit cardholders of a company, policyholders of an
insurance company, customers of either a bank or broker-dealer, or clients
of an investment adviser.
SPECIAL PURCHASE PLANS FOR CLASS A SHARES
For information on any of the following special purchase or exchange plans
applicable to Class A shares, see the Statement of Additional Information or
contact your broker-dealer or sales representative. It is the purchaser's
obligation to notify his or her broker-dealer or sales representative about the
purchaser's eligibility for any of the following special purchase or exchange
plans. Any plan involving systematic purchases may, at Advisers' option, result
in transactions under such plan being confirmed to the investor quarterly,
rather than as a separate notice following the transaction.
- RIGHT OF ACCUMULATION The preceding table's sales charge discount applies
to the current purchase plus the net asset value of shares already owned
of any Fortis fund having a sales charge.
- STATEMENT OF INTENTION The preceding table's sales charge discount
applies to an initial purchase of at least $1,000, with an intention to
purchase the balance needed to qualify within 13 months--excluding shares
purchased by reinvesting dividends or capital gains.
- REINVESTED DIVIDEND/CAPITAL GAINS DISTRIBUTIONS BETWEEN THE FORTIS
FUNDS Shareholders of any fund may reinvest their dividend and/or capital
gains distributions in any of such funds at net asset value.
- CONVERSION FROM CLASS B OR H SHARES Class B or H shares will
automatically be converted to Class A shares (at net asset value) after
eight years.
EXEMPTIONS FROM SALES CHARGE:
- Fortis, Inc. or its subsidiaries, and the following persons associated
with such companies, if all account owners fit this description; (1)
officers and directors; (2) employees; (3) spouses of any such persons; or
(4) any of such persons' children, grandchildren, parents, grandparents,
or siblings--or spouses of any of these persons. (All such persons may
continue to add to their account even after their company relationships
have ended);
- Fortis Worldwide directors, officers, or their spouses (or such persons'
children, grandchildren, parents, or grandparents--or spouses of any such
persons), if all account owners fit this description;
- Representatives or employees (or their spouses) of Investors (including
agencies) or of other broker-dealers having a sales agreement with
Investors (or such persons' children, grandchildren, parents, or
grandparents--or spouses of any such persons), if all account owners fit
this description;
- Pension, profit-sharing, and other retirement plans of directors,
officers, employees, representatives, and other relatives and affiliates
(as set forth in the preceding three paragraphs) of Fortis Worldwide,
Fortis, Inc., and broker-dealers (and certain affiliated companies) having
a sales agreement with Investors and purchases with the proceeds from such
plans upon the retirement or employment termination of such persons;
- Registered investment companies;
- Shareholders of unrelated mutual funds with front-end and/or deferred
sales loads, to the extent that the purchase price of such Portfolio
shares is funded by the proceeds from the redemption of shares of any such
unrelated mutual fund (within 60 days of the purchase of Portfolio
shares), provided that the shareholder's application so specifies and is
accompanied either by the redemption check of such unrelated mutual fund
(or a copy of the check) or a copy of the confirmation statement showing
the redemption. Similarly, anyone who is or has been the owner of a fixed
annuity contract not deemed a security under the securities laws who
wishes to surrender such contract and invest the proceeds in the
Portfolio, to the extent that the purchase price of such Portfolio shares
is funded by the proceeds from the surrender of the contract (within 60
days of the purchase of Portfolio shares), provided that such owner's
application so specifies and is accompanied either by the insurance
company's check (or a copy of the check) or a copy of the insurance
company surrender form. From time to time, Investors may pay commissions
to broker-dealers and registered representatives on transfers from mutual
funds or annuities as described above;
- Purchases by employees (including their spouses and dependent children) of
banks and other financial institutions that provide referral and
administrative services related to order placement and payment to
facilitate transactions in shares of the Portfolio for their clients
pursuant to a sales or servicing agreement with Investors; provided,
however, that only those employees of such banks and
14
<PAGE>
other firms who as a part of their usual duties provide such services
related to such transactions in Portfolio shares shall qualify.
- Commercial banks offering self directed 401(k) programs containing both
pooled and individual investment options may purchase Portfolio shares for
such programs at a reduced sales charge of 2.5% on sales of less than
$500,000. For sales of $500,000 or more, normal sales charges apply.
- Registered investment advisers, trust companies, and bank trust
departments exercising discretionary investment authority or using a money
management/mutual fund "wrap" program with respect to the money to be
invested in the Portfolio, provided that the investment adviser, trust
company or trust department provides Advisers with evidence of such
authority or the existence of such a wrap program with respect to the
money invested.
RULE 12B-1 FEES
Class A shares are subject to a Rule 12b-1 fee payable at an annual rate of .25%
of the average daily net assets of the Portfolio attributable to such shares.
For additional information, see "Management--The Underwriter and Distribution
Expenses."
DEFERRED SALES CHARGES
Although there is no initial sales charge on purchases of Class A shares of
$1,000,000 or more, Investors pays broker-dealers out of its own assets, a fee
of up to 1% of the offering price of such shares. If these shares are redeemed
within two years, the redemption proceeds will be reduced by 1%. For additional
information, see "Redemption--Contingent Deferred Sales Charge."
CLASS B AND H SHARES--CONTINGENT DEFERRED SALES CHARGE ALTERNATIVES
The public offering price of Class B and H shares is the net asset value of the
Portfolio's shares. Such shares are sold without an initial sales charge so that
the Portfolio receives the full amount of the investor's purchase. However, a
contingent deferred sales charge ("CDSC") of 4% will be imposed if shares are
redeemed within two years of purchase, with lower CDSCs as follows if
redemptions occur later:
<TABLE>
<S> <C> <C>
3 years -- 3%
4 years -- 3%
5 years -- 2%
6 years -- 1%
</TABLE>
For additional information, see "Redemption--Contingent Deferred Sales Charge."
In addition, Class B and H shares are subject to higher annual Rule 12b-1 fees
as described below.
Proceeds from the CDSC are paid to Investors and are used to defray its expenses
related to providing distribution-related services to the Portfolio in
connection with the sale of Class B and H shares, such as the payment of
compensation to selected broker-dealers, and for selling such shares. The
combination of the CDSC and the Rule 12b-1 fee enables the Portfolio to sell
such shares without deduction of a sales charge at the time of purchase.
Although such shares are sold without an initial sales charge, Investors pays a
dealer concession equal to: (1) 4.00% of the amount invested to broker-dealers
who sell Class B shares at the time the shares are sold and an annual fee of
.25% of the average daily net assets of the Portfolio attributable to such
shares; or (2) 5.25% of the amount invested to broker-dealers who sell Class H
shares at the time the shares are sold (with no annual fee.) Under alternative
(2), from time to time the dealer concession paid to broker-dealers who sell
Class H shares may be increased up to 5.50%.
RULE 12B-1 FEES
Class B and H shares are subject to a Rule 12b-1 fee payable at an annual rate
of 1.00% of the average daily net assets of the Portfolio attributable to such
shares. The higher Rule 12b-1 fee will cause Class B and H shares to have a
higher expense ratio and to pay lower dividends than Class A shares. For
additional information about this fee, see "Management--The Underwriter and
Distribution Expenses."
CONVERSION TO CLASS A SHARES
Class B and H shares (except for those purchased by reinvestment of dividends
and other distributions) will automatically convert to Class A shares after
eight years. Each time any such shares in the shareholder's account convert to
Class A, a proportionate amount of the Class B and H shares purchased through
the reinvestment of dividends and other distributions paid on such shares will
also convert to Class A.
CLASS C SHARES--LEVEL SALES CHARGE ALTERNATIVE
The public offering price of Class C shares is the net asset value of such
shares. Class C shares are sold without an initial sales charge so that the
Portfolio receives the full amount of the investor's purchase. However, a CDSC
of 1% will be imposed if shares are redeemed within one year of purchase. For
additional information, see "Redemption--Contingent Deferred Sales Charge." In
addition, Class C shares are subject to higher annual Rule 12b-1 fees as
described below.
Proceeds from the CDSC are paid to Investors and are used to defray its expenses
related to providing distribution-related services to the Portfolio in
connection with the sale of Class C shares, such as the payment of compensation
to selected broker-dealers, and for selling Class C shares. The combination of
the CDSC and the Rule 12b-1 fee enables the Portfolio to sell the Class C shares
without deduction of a sales charge at the time of purchase. Although Class C
shares are sold without an initial sales charge, Investors pays a dealer
concession equal to 1.00% of the amount invested to broker-dealers who sell
Class C shares at the time the shares are sold and an annual fee of 1.00% of the
amount invested that begins to accrue one year after the shares are sold.
15
<PAGE>
RULE 12B-1 FEES
Class C shares are subject to a Rule 12b-1 fee payable at an annual rate of
1.00% of the average daily net assets of the Portfolio attributable to such
shares. The higher Rule 12b-1 fee will cause Class C shares to have a higher
expense ratio and to pay lower dividends than Class A shares. For additional
information about this fee, see "Management--The Underwriter and Distribution
Expenses."
SPECIAL PURCHASE PLANS FOR ALL CLASSES
- TAX SHELTERED RETIREMENT PLANS Individual Retirement Accounts ("IRAs"),
Keogh, Pension, Profit Sharing, and 403(b) accounts are available.
- GIFTS OR TRANSFERS TO MINOR CHILDREN Adults can make an irrevocable gift
or transfer of up to $10,000 annually per child ($20,000 for married
couples) to as many children as they choose without having to file a
Federal gift tax return.
- SYSTEMATIC INVESTMENT PLAN Voluntary $25 or more per month purchases by
automatic financial institution transfers (see Systematic Investment Plan
Authorization Agreement in this Prospectus) or $50 or more per month by
any other means enable an investor to lower his or her average cost per
share through the principle of "dollar cost averaging;"
- EXCHANGE PRIVILEGE Portfolio shares may be exchanged among other funds of
the same class managed by Advisers without payment of an exchange fee or
additional sales charge. Similarly, shareholders of other Fortis funds may
exchange their shares for Portfolio shares of the same class (at net asset
value if the shares to be exchanged have already been subject to a sales
charge). Also, holders of Class E shares of Fortis Tax-Free Portfolios and
Fortis Income Portfolios (which also have a front-end sales charge) may
exchange their shares for Class A Portfolio shares and holders of Fortis
Money Fund Class A shares may exchange their shares for any class of
Portfolio shares (at net asset value and only into Class A if the shares
have already incurred a sales charge). A shareholder initiates an exchange
by writing to or telephoning his or her broker-dealer, sales
representative, or the Portfolio regarding the shares to be exchanged.
Telephone exchanges will be permitted only if the shareholder completes
and returns the Telephone Exchange section of the Account Application.
During times of chaotic economic or market circumstances, a shareholder
may have difficulty reaching his or her broker-dealer, sales
representative, or the Portfolio by telephone. Consequently, a telephone
exchange may be difficult to implement at those times. (See "Redemption".)
An exchange of shares of one fund for those of another fund pursuant to
the exchange privilege is considered to be a sale for federal income tax
purposes, and may result in a taxable capital gain or loss.
Advisers reserves the right to restrict the frequency of--or otherwise modify,
condition, terminate, or impose charges upon--the exchange and/or telephone
transfer privileges, all with 30 days notice to shareholders. Investors reserves
the right to reject any purchase order.
REDEMPTION
Registered holders of Portfolio shares may redeem their shares without any
charge (except any applicable contingent deferred sales charge) at the per share
net asset value next determined following receipt by the Portfolio of a written
redemption request in proper form (and a properly endorsed stock certificate if
one has been issued). However, if shares are redeemed through another
broker-dealer who receives the order prior to the close of the Exchange, then
Investors will apply that day's price to the order as long as the broker-dealer
places the order with Investors by the end of the day. Some broker-dealers may
charge a fee to process redemptions.
Any certificates should be sent to the Portfolio by certified mail. Share
certificates and/or stock powers, if any, tendered in redemption must be
endorsed and executed exactly as the Portfolio shares are registered. If the
redemption proceeds are to be paid to the registered holder and sent to the
address of record, normally no signature guarantee is required unless Advisers
does not have the shareholder's signature on file and the redemption proceeds
are greater than $25,000. However, for example, if the redemption proceeds are
to be paid to someone other than the registered holder, sent to a different
address, or the shares are to be transferred, the owner's signature must be
guaranteed by a bank, broker (including government or municipal), dealer
(including government or municipal), credit union, national securities exchange,
registered securities association, clearing agency, or savings association.
Class A shares may be registered in broker-dealer "street name accounts" only if
the broker-dealer has a selling agreement with Investors. In such cases,
instructions from the broker-dealer are required to redeem shares or transfer
ownership. Transfer to another broker-dealer also requires the new broker-dealer
to also have a selling agreement with Investors. If the proposed new
broker-dealer does not have a selling agreement with Investors, the shareholder
can leave the shares under the original street name account or have the
broker-dealer transfer ownership to the shareholder's name.
Broker-dealers having a sales agreement with Investors may orally place a
redemption order, but proceeds will not be released until the appropriate
written materials are received.
An individual shareholder (or in the case of multiple owners, any shareholder)
may orally redeem up to $25,000 worth of his or her shares, provided that the
account is not a tax-qualified plan, the check will be sent to the address of
record, and the address of record has not changed for at least 30 days. During
times of chaotic economic or market circumstances, a shareholder may have
difficulty reaching his or her broker-dealer, sales representative, or the
Portfolio by telephone. Consequently, a telephone
16
<PAGE>
redemption may be difficult to implement at those times. If a shareholder is
unable to reach the Portfolio by telephone, written instructions should be sent.
Advisers reserves the right to modify, condition, terminate, or impose charges
upon this telephone redemption privilege, with 30 days notice to shareholders.
Advisers, Investors, and Fortis Worldwide will not be responsible for, and the
shareholder will bear the risk of loss from, oral instructions, including
fraudulent instructions, which are reasonably believed to be genuine. The
telephone redemption procedure is automatically available to shareholders.
Fortis Worldwide will employ reasonable procedures to confirm that telephone
instructions are genuine, but if such procedures are not deemed reasonable, it
may be liable for any losses due to unauthorized or fraudulent instructions.
Fortis Worldwide's procedures are to verify address and social security number,
tape record the telephone call, and provide written confirmation of the
transaction.
Payment will be made as soon as possible, but not later than three days after
receipt of a proper redemption request. However, if shares subject to the
redemption request were recently purchased with non-guaranteed funds (e.g.,
personal check), the mailing of your redemption check may be delayed by up to
fifteen days. A shareholder wishing to avoid these delays should consider the
wire purchase method described under "How to Buy Portfolio Shares."
Employees of certain Texas public educational institutions who direct investment
in Portfolio shares under their State of Texas Optional Retirement Plan
generally must obtain the prior written consent of their authorized employer
representative in order to redeem.
The Portfolio has the right to redeem accounts with a current value of less than
$500 unless the original purchase price of the remaining shares (including sales
commissions) was at least $500. Portfolio shareholders actively participating in
the Portfolio's Systematic Investment Plan or Group Systematic Investment Plan
will not have their accounts redeemed. Before redeeming an account, the
Portfolio will mail to the shareholder a notice of its intention to redeem,
which will give the shareholder an opportunity to make an additional investment.
If no additional investment is received by the Portfolio within 60 days of the
date the notice was mailed, the shareholder's account will be redeemed. Any
redemption in an account established with the minimum initial investment of $500
may trigger this redemption procedure.
The Portfolio has a "Systematic Withdrawal Plan," which provides for voluntary
automatic withdrawals of at least $50 monthly, quarterly, semiannually, or
annually. Deferred sales charges may apply to monthly redemptions.
There is also a "Reinvestment Privilege," which is a one-time opportunity to
reinvest sums redeemed within the prior 60 days without payment of an additional
sales charge. For further information about these plans, contact your
broker-dealer or sales representative.
CONTINGENT DEFERRED SALES CHARGE
CLASS A SHARES
The Portfolio imposes a contingent deferred sales charge ("CDSC") on Class A
shares in certain circumstances. Under the CDSC arrangement, for sales of shares
of $1,000,000 or more (including right of accumulation and statements of
intention (see "How to Buy Portfolio Shares--Special Purchase Plans")), the
front-end sales charge ("FESC"), will not be imposed (although Investors intends
to pay its registered representatives and other dealers that sell Portfolio
shares, out of its own assets, a fee of up to 1% of the offering price of such
sales except on purchases exempt from the FESC). However, if such shares are
redeemed within two years after their purchase date (the "CDSC Period"), the
redemption proceeds will be reduced by the 1.00% CDSC.
The CDSC will be applied to the lesser of (a) the net asset value of shares
subject to the CDSC at the time of purchase, or (b) the net asset value of such
shares at the time of redemption. No charge will be imposed on amounts
representing an increase in share value due to capital appreciation. The CDSC
will not be applied to shares acquired through reinvestment of income dividends
or capital gain distributions or shares held for longer than the applicable CDSC
Period. In determining which shares to redeem, unless instructed otherwise,
shares that are not subject to the CDSC and having a higher Rule 12b-1 fee will
be redeemed first, shares not subject to the CDSC having a lower Rule 12b-1 fee
will be redeemed next, and shares subject to the CDSC then will be redeemed in
the order purchased.
The Portfolio will waive the CDSC in the event of the shareholder's death or
disability, as defined in Section 72(m)(7) of the Code (if satisfactory evidence
is provided to the Fund), and for tax-qualified retirement plans (excluding
IRAs, SEPS, 403(b) plans, and 457 plans) and each class of transaction that
qualifies for exemption from the Portfolio's FESC (see "How to Buy Portfolio
Shares--Special Purchase Plans"). Shares of the Portfolio that are acquired in
exchange for shares of another Fortis fund that were subject to a CDSC will
remain subject to the CDSC that applied to the shares of the other Fortis fund.
Additionally, the CDSC will not be imposed at the time that Portfolio shares
subject to the CDSC are exchanged for shares of Fortis Money Fund or at the time
such Fortis Money Fund shares are reexchanged for shares of any Fortis fund
subject to a CDSC; provided, however, that, in each such case, the shares
acquired will remain subject to the CDSC if redeemed within the CDSC Period.
Investors, upon notification, will provide a PRO RATA refund of any CDSC paid in
connection with a redemption of shares of any Fortis fund (by crediting such
refunded CDSC to such shareholder's account) if, within 60 days of such
redemption, all or any portion of the redemption proceeds are reinvested in
shares of the Portfolio. Any reinvestment within 60 days of a redemption on
which the CDSC was paid will be made without the imposition of a FESC. Such
reinvestment will be subject to the same CDSC to which such amount was subject
prior to the redemption, but the CDSC Period will run from the original
investment date.
17
<PAGE>
CLASS B, H, AND C SHARES
The CDSC on Class B, H, and C shares will be calculated on an amount equal to
the lesser of the net asset value of the shares at the time of purchase or their
net asset value at the time of redemption. No charge will be imposed on amounts
representing an increase in share value due to capital appreciation. In
addition, no charge will be assessed on shares derived from reinvestment of
dividends or capital gains distributions or on shares held for longer than the
applicable CDSC Period.
Upon any request for redemption of shares of any class of shares that imposes a
CDSC, it will be assumed, unless otherwise requested, that shares subject to no
CDSC will be redeemed first in the order purchased and all remaining shares that
are subject to a CDSC will be redeemed in the order purchased. With respect to
the redemption of shares subject to no CDSC where the shareholder owns more than
one class of shares, those shares with the highest Rule 12b-1 fee will be
redeemed in full prior to any redemption of shares with a lower Rule 12b-1 fee.
The CDSC does not apply to: (1) redemption of shares when the Portfolio
exercises its right to liquidate accounts which are less than the minimum
account size; (2) death or disability, as defined in Section 72(m)(7) of the
Code (if satisfactory evidence is provided to the Portfolio); (3) with respect
to Class B and H shares only, an amount that represents, on an annual
(non-cumulative) basis, up to 10% of the amount (at the time of the investment)
of the shareholder's purchases; and (4) with respect to Class B, H, and C
shares, qualified plan benefit distributions due to participant's separation
from service, loans or financial hardship (excluding IRAs, SEPs, and 403(b),
457, and Fortis KEY plans) upon the Portfolio's receipt from the plan's
administrator or trustee of a signature guarantee and written instructions
detailing the reason for the distribution.
As an illustration of CDSC calculations, assume that Shareholder X purchases on
Year 1/Day 1 100 shares at $10 per share. Assume further that, on Year 2/Day 1,
Shareholder X purchased an additional 100 shares at $12 per share. Finally,
assume that, on Year 3/Day 1, Shareholder X wishes to redeem shares worth
$1,300, and that the net asset value per share as of the close of business on
such day is $13. To effect Shareholder X's redemption request, 100 shares at $13
per share (totaling $1,300) would be redeemed. The CDSC would be waived in
connection with the redemption of that number of shares equal in value (at the
time of redemption) to $220 (10% of $1,000--the purchase amount of the shares
purchased by Shareholder X on Year 1/Day 1--plus 10% of $1,200--the purchase
amount of the shares purchased by Shareholder X on Year 2/Day 1.) In addition,
no CDSC would apply to the $400 in capital appreciation on Shareholder X's
shares ($2,600 Year 3 value minus $2,200 purchase cost of shares).
If a shareholder exchanges shares subject to a CDSC for Class B, H, or C shares
of a different Fortis Fund, the transaction will not be subject to a CDSC.
However, when shares acquired through the exchange are redeemed, the shareholder
will be treated as if no exchange took place for the purpose of determining the
CDSC Period and applying the CDSC.
Investors, upon notification, will provide, out of its own assets, a PRO RATA
refund of any CDSC paid in connection with a redemption of Class B, H, or C
shares of any Fund (by crediting such refunded CDSC to such shareholder's
account) if, within 60 days of such redemption, all or any portion of the
redemption proceeds are reinvested in shares of the same class in any of the
Fortis Funds. Any reinvestment within 60 days of a redemption to which the CDSC
was paid will be made without the imposition of a front-end sales charge but
will be subject to the same CDSC to which such amount was subject prior to the
redemption. The CDSC Period will run from the original investment date.
SHAREHOLDER INQUIRIES
Inquiries should be directed to your broker-dealer or sales representative, or
to the Portfolio at the telephone number or mailing address listed on the cover
of this Prospectus. A $10 fee will be charged for copies of Annual Account
Summaries older than the preceding year.
18
<PAGE>
FORTIS-Registered Trademark-
--------------------------------------------------------
ACCOUNT APPLICATION
Complete this application to open a new Fortis
account or to add services to an existing Fortis
account. For personal service, please call your
investment professional or Fortis customer service at
Mail to: 1-800-800-2638, ext. 3012. Submission of an
FORTIS MUTUAL FUNDS incomplete application may cause processing delays.
CM-9614 DO NOT USE TO OPEN A FORTIS IRA, SEP, 403(B) OR
St. Paul, MN 55170-9614 FORTIS MONEY FUND ACCOUNT.
________________________________________________________________________________
1 ACCOUNT INFORMATION
________________________________________________________________________________
Please provide the information requested below:
/ /INDIVIDUAL: Please print your name, Social Security number, U.S. citizen
status.
/ /JOINT TENANT: List all names, one Social Security number, one U.S. citizen
status.
/ /UNIFORM GIFT/TRANSFER TO MINORS: Provide name of custodian (ONLY ONE) and
minor, minor's Social Security number, minor's U.S. citizen status and date
of birth of minor.
/ /TRUST: List trustee and trust title, including trust date, trust's Taxpayer
ID number; also include a photocopy of first page of the trust agreement.
/ /CORPORATION, ASSOCIATION, PARTNERSHIP: Include full name, Taxpayer ID number.
/ /FORTIS KEY PLAN: Include Social Security number.
/ /QUALIFIED PLAN: Include name of Plan and trustee, Plan's Taxpayer ID number.
/ / OTHER: _____________________________________________________________________
- ---------------------------------------------------------------
Owner (Individual, 1st Joint Tenant, Custodian, Trustee) (Please print)
- ------------------------------------------------------------------------
Owner (2nd Joint Tenant, Minor, Trust Name) (Please print)
- ------------------------------------------------------------------------
Additional information, if needed
- ------------------------------------------------------------------------
Street address
- ------------------------------------------------------------------------
City State Zip
- ------------------------------------------------------------------------
Social Security number (Taxpayer ID)
( )
- ---------------------------------------------------------------
Daytime phone Date of birth
(Uniform Gift/Transfer to Minors)
Date of Trust (if applicable) __________________________________________________
Are you a U.S. citizen? / / Yes / / No
If no, country of permanent residence __________________________________________
95749 (12/96)
________________________________________________________________________________
2 TRANSFER ON DEATH
________________________________________________________________________________
Please indicate the Primary Beneficiary with "PB" after the beneficiary(ies)
name(s). Indicate Contingent Beneficiary with "CB." Indicate Lineal Descendant
Per Stirpes with "LDPS" if you want ownership to pass to the legal heirs of the
primary beneficiary in the event a designated beneficiary dies before the
account owner.
TOD IS ONLY AVAILABLE FOR INDIVIDUAL AND JOINT TENANTS (JTWROS) ACCOUNTS.
BENEFICIARY(IES):
Name _____________________________ SS# _________________________________________
Name _____________________________ SS# _________________________________________
Name _____________________________ SS# _________________________________________
________________________________________________________________________________
3 INVESTMENT ACCOUNT
________________________________________________________________________________
A. PHONE ORDERS
Was order previously phoned in? If yes, date ___________________________________
Confirmation # ___________________________ Account # ___________________________
FOR PHONE ORDERS, CHECK MUST BE MADE PAYABLE TO FORTIS INVESTORS
B. MAIL-IN ORDERS
Check enclosed for $____________________________. (MADE PAYABLE TO FORTIS FUNDS)
MUST INDICATE CLASS
<TABLE>
<C> <S> <C> <C>
1) ---------- $ ----------- A / / B / / C / / H / /
Fund Name Amount or % Class
2) $ A / / B / / C / / H / /
---------- -----------
Fund Name Amount or % Class
3) $ A / / B / / C / / H / /
---------- -----------
Fund Name Amount or % Class
4) $ A / / B / / C / / H / /
---------- -----------
Fund Name Amount or % Class
5) $ A / / B / / C / / H / /
---------- -----------
Fund Name Amount or % Class
</TABLE>
________________________________________________________________________________
4 EXEMPTION FROM SALES CHARGE
________________________________________________________________________________
CHECK IF APPLICABLE (for net asset value purchases):
/ / I am a member of one of the categories of persons listed under "Exemptions
from Sales Charge" in the prospectus. I qualify for exemption from the sales
charge because ____________________________________________________________.
/ / I was (within the past 60 days) the owner of a fixed annuity contract not
deemed a security or a shareholder of an unrelated mutual fund with a
front-end and/or deferred sales charge. I have attached the mutual
fund/insurance check (or copy of the redemption confirmation/surrender
form).
<PAGE>
________________________________________________________________________________
5 SIGNATURE & CERTIFICATION
________________________________________________________________________________
I have received and read each appropriate fund prospectus and understand that
its terms are incorporated by reference into this application. I am of legal age
and legal capacity.
I understand that this application is subject to acceptance by Fortis Investors,
Inc.
I CERTIFY, UNDER PENALTIES OF PERJURY, THAT:
(1) THE SOCIAL SECURITY NUMBER OR TAXPAYER ID NUMBER PROVIDED IS CORRECT; AND
(CROSS OUT THE FOLLOWING IF NOT TRUE)
(2) THAT THE IRS HAS NEVER NOTIFIED ME THAT I AM SUBJECT TO 31% BACKUP
WITHHOLDING, OR HAS NOTIFIED ME THAT I AM NO LONGER SUBJECT TO SUCH BACKUP
WITHHOLDING.
Each person signing on behalf of any entity represents that his or her actions
are authorized. It is agreed that all Fortis Funds, Fortis Investors, Fortis
Advisers and their officers, directors, agents and employees will not be liable
for any loss, liability, damage or expense for relying upon this application or
any instruction believed genuine.
IF YOU ARE NOT SIGNING AS AN INDIVIDUAL, STATE YOUR TITLE OR CAPACITY (INCLUDE
APPROPRIATE DOCUMENTS VERIFYING YOUR CAPACITY).
THE INTERNAL REVENUE SERVICE DOES NOT REQUIRE YOUR CONSENT TO ANY PROVISION OF
THIS DOCUMENT OTHER THAN THE CERTIFICATIONS REQUIRED TO AVOID BACKUP
WITHHOLDING.
AUTHORIZED SIGNATURE(S)
X
- ------------------------------------------------------------------------
Owner, Custodian, Trustee Date
X
- ------------------------------------------------------------------------
Joint Owner, Trustee Date
________________________________________________________________________________
6 DEALER/REPRESENTATIVE INFORMATION
________________________________________________________________________________
- --------------------------------------------------
Representative's name (please print)
- ------------------------------------------------------------------------
Name of Broker/Dealer
- ------------------------------------------------------------------------
Branch Office address
- ------------------------------------------------------------------------
Representative's signature
( )
- ------------------------------------------------------------------------
Representative's number Representative's Phone Number
- ------------------------------------------------------------------------
AUTHORIZED SIGNATURE OF BROKER/DEALER
________________________________________________________________________________
7 DISTRIBUTION OPTIONS
________________________________________________________________________________
If no option is selected, all distributions will be reinvested in the same
Fortis fund(s) selected above. Please note that distributions can only be
reinvested in the SAME CLASS.
/ / Reinvest dividends and capital gains
/ / Dividends in cash and reinvest capital gains (See Section 9 for payment
options.)
/ / Dividends and capital gains in cash (See Section 9 for payment options.)
/ / Distributions into another Fortis fund (must be SAME CLASS).
____________________________________________________________________________
Fund Name Fund/Account # (if existing account)
________________________________________________________________________________
8 SYSTEMATIC EXCHANGE PROGRAM
________________________________________________________________________________
Fortis' Systematic Transfer Program allows you to transfer money from any Fortis
fund, in which you have a current balance of at least $1,000, into any other
Fortis fund, on a monthly basis. The minimum amount for each transfer is $50.
Generally, transfers between funds must be within the SAME CLASS. See prospectus
for details.
- ------------------------------------------------------------------------
Fund from which shares will be exchanged: Effective Date
FUND(S) TO RECEIVE INVESTMENT(S):
<TABLE>
<S> <C>
- --------------------------------------------------------------------------------
Fund Amount to invest monthly
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
________________________________________________________________________________
9 WITHDRAWAL OPTIONS
________________________________________________________________________________
A. CASH DIVIDENDS
PLEASE FOWARD THE PAYMENT TO:
<TABLE>
<S> <C>
/ / My Bank. (Please complete Bank Information in
Section D, and choose one option below. Payment
will be sent via U.S. Mail if neither option is
checked.)
/ / Via U.S. Mail
/ / Via ACH (electronic transfer)
/ / My address of record.
</TABLE>
B. SYSTEMATIC WITHDRAWAL PLAN
Please consult your financial or tax adviser before electing a Systematic
Withdrawal Plan.
Please redeem shares from my Fortis ______________________________________ Fund,
account number _______________________ in the amount of $______________________.
Effective Withdrawal Date___________________________ __________________________
Month Day
<TABLE>
<S> <C> <C> <C>
FREQUENCY: / / Monthly / / Semi-Annually
/ / Quarterly / / Annually
</TABLE>
PLEASE FOWARD THE PAYMENT TO:
<TABLE>
<S> <C>
/ / My Bank. (Please complete Bank Information in
Section D, and choose one option below. Payment
will be sent via U.S. Mail if neither option is
checked.)
/ / Via U.S. Mail
/ / Via ACH (electronic transfer)
/ / My address of record.
</TABLE>
C. TELEPHONE OPTIONS
/ / TELEPHONE EXCHANGE. All exchanges must be into accounts having the identical
registration-ownership. All authorized signatures listed in Section 5 (or
your registered representative with shareholder consent) can make telephone
transfers.
/ / TELEPHONE REDEMPTION ($25,000 LIMIT AND NOT AVAILABLE FOR QUALIFIED PLANS)
If you have not changed your address in the past 60 days, you are eligible
for this service. This option allows all authorized signatures in Section 5
(or your registered representative with shareholder consent) to redeem up to
$25,000 from your Fortis account.
PLEASE FORWARD THE PAYMENT TO:
<TABLE>
<S> <C>
/ / My Bank. (Please complete Bank Information in
Section D, and choose one option below. Payment
will be sent via U.S. Mail if neither option is
checked.)
/ / Via U.S. Mail
/ / Via ACH (electronic transfer)
/ / My address of record.
</TABLE>
<PAGE>
(WITHDRAWAL OPTIONS, CONTINUED)
D. BANK INFORMATION
I request Fortis Financial Group (FFG) to pay sums due me by crediting my bank
account in the form of electronic entries. This authorization will remain in
effect until I notify FFG.
TYPE OF ACCOUNT: / / Checking / / Savings
Bank name ______________________________________________________________________
Address ________________________________________________________________________
City, State, Zip _______________________________________________________________
Name of bank account ___________________________________________________________
Bank account number ____________________________________________________________
Bank transit number ____________________________________________________________
Bank phone number ______________________________________________________________
ATTACH A VOIDED CHECK FROM YOUR BANK CHECKING ACCOUNT
________________________________________________________________________________
10 REDUCED FRONT-END SALES CHARGES
________________________________________________________________________________
A. RIGHT OF ACCUMULATION
/ / I own shares of more than one fund in the Fortis Family of Funds, which may
entitle me to a reduced sales charge.
- --------------------------------------------------------------------------------
Name on account Account number
- --------------------------------------------------------------------------------
Name on account Account number
- --------------------------------------------------------------------------------
Name on account Account number
B. STATEMENT OF INTENT
I agree to invest $_________ over a 13-month period beginning __________, 19__
(not more than 90 days prior to this application). I understand that an
additional sales charge must be paid if I do not complete my purchase.
________________________________________________________________________________
11 PRIVILEGED ACCOUNT SERVICE
________________________________________________________________________________
Fortis' Privileged Account Service systematically rebalances your funds back to
your original specifications ($10,000 minimum per account). All funds must be
within the SAME CLASS.
Frequency: / / quarterly / / semi-annually / / annually
<TABLE>
<S> <C> <C>
Fund Selected Percentage
(up to 5) (whole %)
1)
------------------------- ---------------
2)
------------------------- ---------------
3)
------------------------- ---------------
4)
------------------------- ---------------
5)
------------------------- ---------------
</TABLE>
________________________________________________________________________________
12 SUITABILITY
________________________________________________________________________________
NOTE: Must be completed with each fund application unless you provide
suitability information to your broker/dealer on a different form.
State In Which Application Was Signed ______________________________________
- --------------------------------------------------------------------------------
Employer
- --------------------------------------------------------------------------------
Business Address
- --------------------------------------------------------------------------------
City, State, ZIP
- --------------------------------------------------------------------------------
Occupation Age (optional)
Is customer associated with or employed by another
NASD member? / / Yes / / No
<TABLE>
<S> <C> <C>
- --------------------------------------------------------------------------------
Please mark one box under ESTIMATED
ESTIMATED ANNUAL INCOME ESTIMATED NET
and one box under ANNUAL WORTH
ESTIMATED NET WORTH INCOME (Exclusive of
(All Sources) Family Residence)
- --------------------------------------------------------------------------------
under $10,000
- --------------------------------------------------------------------------------
$10,000 - $25,000
- --------------------------------------------------------------------------------
$25,000 - $50,000
- --------------------------------------------------------------------------------
$50,000 - $100,000
- --------------------------------------------------------------------------------
$100,000 - $500,000
- --------------------------------------------------------------------------------
$500,000 - $1,000,000
- --------------------------------------------------------------------------------
Over $1,000,000
- --------------------------------------------------------------------------------
Declined
- --------------------------------------------------------------------------------
</TABLE>
Source of Funds
- --------------------------------------------------------------------------------
ESTIMATED FEDERAL TAX BRACKET
/ / 15% / / 28% / / 31% / / 36% / / 39.6% / / Declined
INVESTMENT OBJECTIVES
/ / Growth (long-term capital appreciation)
/ / Income (cash generating)
/ / Tax-free Income
/ / Diversification
/ / Other (please specify) _________________________________________
Did you use a Fortis Asset Allocation model? / / Yes / / No
________________________________________________________________________________
13 SYSTEMATIC INVESTMENT PLAN
________________________________________________________________________________
Complete the Automated Clearing House (ACH) Authorization Agreement Form in the
prospectus and attach a VOIDED check from your bank checking account. These
plans may be established for as little as $25.
________________________________________________________________________________
14 OTHER SPECIAL INSTRUCTIONS
________________________________________________________________________________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
<TABLE>
<S> <C>
FORTIS MUTUAL FUND FORTIS-Registered Trademark-
AUTOMATED CLEARING HOUSE (ACH) AUTHORIZATION
AGREEMENT
Mail to:FORTIS MUTUAL FUNDS
Please complete each section below to P.O. Box 64284
establish ACH capability to your Fortis St. Paul, MN 55164
Mutual Fund Account.
For personal service, please call your
investment professional or Fortis at (800)
800-2638, Ext. 3012.
For investment options, complete sections
(1)(2)(3). For withdrawal, complete sections
(1)(2)(4)(5).
</TABLE>
________________________________________________________________________________
1 FORTIS ACCOUNT INFORMATION
________________________________________________________________________________
Account Registration:
________________________________________________________________________________
Owner (Individual, 1st Joint Tenant, Custodian, Trustee)
________________________________________________________________________________
Owner (2nd Joint Tenant, Minor, Trust Name)
________________________________________________________________________________
Additional Information, if needed
________________________________________________________________________________
Street address
________________________________________________________________________________
City State Zip
________________________________________ _______________________________________
Social Security number (Taxpayer I.D.) Day Time Phone
________________________________________________________________________________
2 BANK/FINANCIAL INSTITUTION INFORMATION
________________________________________________________________________________
<TABLE>
<S> <C> <C>
PLAN TYPE: / / New Plan / / Bank Change
ACCOUNT TYPE: / / Checking / / Savings
(must attach a (must attach a
voided check) deposit slip)
</TABLE>
________________________________________________________________________________
Transit Number
________________________________________________________________________________
Bank Account Number
________________________________________________________________________________
Account Owner(s) (Please Print)
________________________________________________________________________________
Depositor's Daytime Phone Number
CLEARLY PRINT THE BANK/FINANCIAL INSTITUTION'S NAME AND ADDRESS BELOW:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Signature of Depositor Date
________________________________________________________________________________
Signature of Joint-Depositor Date
________________________________________________________________________________
3 INVESTMENT OPTION(S)
________________________________________________________________________________
I request Fortis Financial Group (FFG) to obtain payment of sums becoming
due the company by charging my account in the form of electronic debit
entries. I request and authorize the financial institution named to accept,
honor and charge those entries to my account. Please allow 30 days for
collected funds to be available in your Fortis account.
A. / / Invest via FORTIS INFORMATION LINE by phone
(minimum $25, maximum $10,000)
Please allow up to four business days for deposit into Fortis
Funds. Transactions after 3:00 p.m. (CST) will be processed the
following business day.
*Not available on tax qualified accounts such as IRA, SEP, SARSEP
and Key plans.
B. / / Systematic Investment Plan: / / New Plan / / Change Plan
C. / / Starting Draft Date:
D. / / Account Number:
Class Amount
Fund (Circle One) $25.00 per fund minimum
- ---------------------------------------- ------------ ------------------------
A B C H
A B C H
A B C H
A B C H
________________________________________________________________________________
4 WITHDRAWAL OPTION(S)
________________________________________________________________________________
I request Fortis Financial Group (FFG) to pay sums due me by crediting my
bank account in the form of electronic entries. I request and authorize the
financial institution to accept, honor and credit those entries to my
account. Withdrawal from Fortis Fund(s) requires account owner(s)
signature(s) - see Section 5
(Please consult your financial or tax adviser before electing a systematic
withdrawal plan. For Tax Qualified accounts, additional forms are required
for distribution.)
A. / / Cash Dividends
B. / / Redeem via FORTIS INFORMATION LINE by phone
(minimum $100, maximum $25,000)
Please allow up to four business days for withdrawal to credit
your bank account. Transactions after 3:00 p.m. (CST) will be
processed the following business day.
*Not available on tax qualified accounts such as IRA, SEP, SARSEP
and Key plans.
C. / / Systematic Withdrawal Plan: / / New Plan / / Change Plan
D. / / Beginning Withdrawal Date:
E. / / Account Number:
Class Amount
Fund (Circle One) $25.00 per fund minimum
- ---------------------------------------- ------------ ------------------------
A B C H
A B C H
A B C H
A B C H
________________________________________________________________________________
5 SIGNATURES
________________________________________________________________________________
Each person signing on behalf of any entity represents that his or her actions
are authorized. It is agreed that all Fortis Funds, Fortis Investors, Fortis
Advisers and their officers, directors, agents and employees will not be liable
for any loss, liability, damage or expense for relying upon this application or
any instruction believed genuine.
This authorization will remain in effect until I notify FFG. I hereby terminate
any prior Authorization of FFG to initiate charges to this account. I understand
that any returned item or redemption of the entire account may result in
termination of my Automated Clearing House agreement. This authorization will
become effective upon acceptance by FFG at its home office.
Authorized Signature(s)
X ______________________________________________________________________________
Owner, Custodian, Trustee Date
X ______________________________________________________________________________
Joint Owner, Trustee Date
FORTIS-Registered Trademark-
FORTIS FINANCIAL GROUP
Fortis Advisers, Inc. (fund management since 1949)
Fortis Investors, Inc. (principal underwriter; member SIPC)
P.O. Box 64284
St. Paul, MN 55164
(800) 800-2638
98049(8/96)
<PAGE>
PROSPECTUS
MARCH 1, 1997
FORTIS GLOBAL GROWTH PORTFOLIO
LONG TERM CAPITAL
APPRECIATION WITH INCOME
SECONDARY
96020 (REV. 3/97)
FORTIS-Registered Trademark-
FORTIS FINANCIAL GROUP
P.O. BOX 64284
ST. PAUL, MN 55164
BULK RATE
U.S. POSTAGE
PAID
PERMIT NO. 3794
MINNEAPOLIS, MN
<PAGE>
FORTIS GLOBAL GROWTH PORTFOLIO
STATEMENT OF ADDITIONAL INFORMATION
DATED MARCH 1, 1997
Fortis Global Growth Portfolio ("the Portfolio") is a portfolio of Fortis
Worldwide Portfolios, Inc. ("Fortis Worldwide") (prior to January 31, 1992,
known as AMEV Worldwide Portfolios, Inc.). This Statement of Additional
Information is NOT a prospectus, but should be read in conjunction with the
Portfolio Prospectus dated March 1, 1997. A copy of that prospectus may be
obtained from your broker-dealer or sales representative. The address of Fortis
Investors, Inc. ("Investors") is P.O. Box 64284, St. Paul, Minnesota 55164.
Telephone: (612) 738-4000. Toll Free 1-(800) 800-2638.
No broker-dealer, sales representative, or other person has been authorized to
give any information or to make any representations other than those contained
in this Statement of Additional Information, and if given or made, such
information or representations must not be relied upon as having been authorized
by the Portfolio or Investors. This Statement of Additional Information does not
constitute an offer or solicitation by anyone in any state in which such offer
or solicitation is not authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any person to whom it is unlawful
to make such offer or solicitation.
24
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ORGANIZATION AND CLASSIFICATION............. 26
INVESTMENT OBJECTIVES AND POLICIES.......... 26
- Investment Objectives................. 26
- Investment Restrictions............... 26
- General............................... 27
- Repurchase Agreements and Variable
Amount Master Demand Notes............ 27
- Lending of Portfolio Securities....... 28
- Portfolio Trading..................... 28
- Commercial Bank Obligations........... 28
- "Roll" Transactions................... 28
- Options............................... 28
- Futures Contracts and Options on
Futures Contracts..................... 29
- Forward Foreign Currency Exchange
Contracts............................. 29
- Risks of Transactions in Options,
Futures Contracts, and Forward
Contracts............................. 29
- Delayed Delivery Transactions......... 30
- Risk Factors.......................... 30
DIRECTORS AND EXECUTIVE OFFICERS............ 34
INVESTMENT ADVISORY AND OTHER SERVICES...... 36
- General............................... 36
- Control and Management of Advisers and
Investors............................. 37
- Investment Advisory and Management
Agreement............................. 37
PORTFOLIO TRANSACTIONS AND ALLOCATION OF
BROKERAGE.................................. 38
CAPITAL STOCK............................... 39
COMPUTATION OF NET ASSET VALUE AND PRICING.. 40
SPECIAL PURCHASE PLANS...................... 40
- Statement of Intention................ 40
- Tax Sheltered Retirement Plans........ 41
- Gifts or Transfers to Minor
Children............................... 42
- Systematic Investment Plan............ 42
- Exchange Privilege.................... 43
- Reinvested Dividend/Capital Gains
Distributions between Fortis Funds.... 43
<CAPTION>
PAGE
<S> <C>
- Purchases by Fortis, Inc. (or its
Subsidiaries) or Associated Persons... 43
- Purchases by Fortis Worldwide
Directors or Officers................. 43
- Purchases by Representatives or
Employees of Broker-Dealers........... 43
- Purchases by Certain Retirement
Plans................................. 43
- Purchases by Registered Investment
Companies............................. 43
- Purchases with Proceeds from
Redemption of Unrelated Mutual Fund
Shares or Surrender of Certain Fixed
Annuity Contracts..................... 43
- Purchases by Employees of Certain
Banks and Other Financial Services
Firms................................. 43
- Purchases by Commercial Banks Offering
Self-Directed 401(k) Programs
Containing both Pooled and Individual
Investment Options.................... 43
- Purchases by Investment Advisers,
Trust Companies, and Bank Trust
Departments Exercising Discretionary
Investment Authority or Using a Money
Management Mutual Fund "Wrap"
Program............................... 43
REDEMPTION.................................. 43
- Systematic Withdrawal Plan............ 44
- Reinvestment Privilege................ 44
TAXATION.................................... 44
UNDERWRITER................................. 46
PLAN OF DISTRIBUTION........................ 46
PERFORMANCE................................. 47
FINANCIAL STATEMENTS........................ 52
CUSTODIAN; COUNSEL; ACCOUNTANTS............. 52
LIMITATION OF DIRECTOR LIABILITY............ 52
ADDITIONAL INFORMATION...................... 52
CORPORATE BOND, PREFERRED STOCK, AND
COMMERCIAL PAPER RATINGS.....................Appendix A
DESCRIPTION OF FUTURES, OPTIONS, AND FORWARD
CONTRACTS.....................................Appendix B
</TABLE>
25
<PAGE>
ORGANIZATION AND CLASSIFICATION
Fortis Worldwide may establish other portfolios, each corresponding to a
distinct investment portfolio and a distinct series of Fortis Worldwide's common
shares.
An investment company is an arrangement by which a number of persons invest in a
company that in turn invests in securities of other companies. The Portfolio
operates as an "open-end" investment company because it generally must redeem an
investor's shares upon request.
INVESTMENT OBJECTIVES AND POLICIES
INVESTMENT OBJECTIVES
The Portfolio's primary investment objective is long-term capital appreciation.
Current income is a secondary objective. The Portfolio seeks its objectives
primarily by investing in a global portfolio of equity securities, allocated
among diverse international markets.
INVESTMENT RESTRICTIONS
The following investment restrictions are deemed fundamental policies. They may
be changed only by the vote of a "majority" of the Portfolio's outstanding
shares, which as used in this Statement of Additional Information, means the
lesser of (i) 67% of the Portfolio's outstanding shares present at a meeting of
the holders if more than 50% of the outstanding shares are present in person or
by proxy or (ii) more than 50% of the Portfolio's outstanding shares.
The Portfolio will not:
(1) Concentrate its investments, that is, invest 25% or more of its total
assets in any particular industry.
(2) Buy or sell commodities or commodity contracts, including futures
contracts, other than within the limitations set forth in the Prospectus and
Statement of Additional Information.
(3) Purchase or sell real estate or other interests in real estate, or
interests in real estate investment trusts; however, the Portfolio may invest in
debt securities secured by real estate or interests therein or issued by
corporations which invest in real estate or interests therein.
(4) Mortgage, pledge, hypothecate, or in any manner transfer, as security for
indebtedness, any securities owned or held by the Portfolio, provided that this
restriction shall not apply to the transfer of securities in connection with any
permissible borrowing or to collateral arrangements in connection with
permissible activities.
(5) Act as an underwriter of securities of other issuers, except to the
extent that, in connection with the disposition of portfolio securities, the
Portfolio may be deemed an underwriter under applicable laws and except that the
Portfolio may invest up to 10% of the value of its assets (at time of
investment) in portfolio securities which are not registered under the
applicable securities laws of the country in which such securities are traded
and for which no alternative market is readily available (such securities are
referred to herein as "restricted securities").
(6) Purchase securities on margin, except that the Portfolio, in accordance
with its investment objectives and policies, may purchase securities on a
when-issued and delayed delivery basis, within the limitations set forth in the
Prospectus and Statement of Additional Information. The Portfolio may also
obtain such short-term credit as it needs for the clearance of securities
transactions and may make margin deposits in connection with futures contracts.
(7) Make short sales, except for sales "against the box." While a short sale
is made by selling a security the Portfolio does not own, a short sale is
"against the box" to the extent the Portfolio contemporaneously owns or has the
right to obtain securities identical to those sold short without payment of any
additional consideration.
(8) Make loans to other persons, except that it may purchase readily
marketable bonds, debentures, or other debt securities, whether or not publicly
distributed, enter into repurchase agreements, and make loans of portfolio
securities to an aggregate of 30% of the value of its total assets, measured at
the time any such loan is made.
(9) Issue senior securities, except that the Portfolio may purchase
securities on a when-issued and delayed delivery basis and enter into roll
transactions and other transactions within the limitations set forth in the
Prospectus and Statement of Additional Information which may be deemed to
constitute borrowing.
(10) Borrow money except from banks for temporary or emergency purposes not in
excess of 33 1/3% of the value of the Portfolio's total assets. The Portfolio
will not purchase securities while borrowings (including "roll" transactions) in
excess of 5% of total assets are outstanding. In the event that the asset
coverage for the Portfolio's borrowings falls below 300%, the Portfolio will
reduce, within three days (excluding Sundays and holidays), the amount of its
borrowings in order to provide for 300% asset coverage.
The following investment restrictions may be changed by the Board of Directors
of Fortis Worldwide (the "Board of Directors") without shareholder approval.
The Portfolio will not:
(1) Invest more than 5% of the value of its total assets in securities of
other investment companies, except in connection with a merger, consolidation,
acquisition, or reorganization; provided that the Portfolio shall not purchase
or otherwise acquire more than 3% of the total outstanding voting stock of any
other investment company.
(2) Invest in a company for the purposes of exercising control or management.
26
<PAGE>
(3) Invest in interests (including partnership interests or leases) in oil,
gas, or other mineral exploration or development programs, except the Portfolio
may purchase or sell securities issued by corporations engaging in oil, gas, or
other mineral exploration or development business.
(4) Purchase or retain the securities of any issuer if those officers and
directors of Fortis Worldwide or its investment adviser owning (including
beneficial ownership) individually more than 1/2 of 1% of the securities of such
issuer together own (including beneficial ownership) more than 5% of the
securities of such issuer.
(5) Invest more than an aggregate of 10% of the value of its total assets in
(a) restricted securities (both debt and equity) or in debt or equity securities
of any issuer which are not readily marketable; (b) repurchase agreements with a
maturity of more than seven days; and (c) over-the-counter option and futures
contracts; provided further, that the Portfolio will not invest more than 5% of
its total assets in restricted securities. (Securities sold under Section 4(2)
of the Securities Act of 1933 that are eligible for resale pursuant to rule 144A
under the 1933 Act that have been determined to be liquid by the Board of
Directors of Fortis Worldwide or Advisers subject to the oversight of such Board
of Directors will not be considered to be "restricted securities" and will not
be subject to this limitation on investing in restricted or nonreadily
marketable securities.)
(6) Enter into any options, futures, or forward contract transactions if
immediately thereafter (a) the amount of premiums paid for all options, initial
margin deposits on all futures contracts and/or options on futures contracts,
and collateral deposited with respect to forward contracts held by or entered
into by the Portfolio would exceed 5% of the value of the total assets of the
Portfolio or (b) the Portfolio's assets covering, subject to, or committed to
all options, futures, and forward contracts would exceed 20% of the value of the
total assets of the Portfolio.
(7) Invest in real estate limited partnership interests.
(8) Purchase the securities of any issuer if such purchase at the time
thereof would cause more than 10% of the voting securities of any issuer to be
held by the Portfolio.
(9) Invest more than 5% of its total assets in warrants, nor invest more than
2% of its total assets in warrants not traded on the New York Stock Exchange or
the American Stock Exchange.
Any investment policy or restriction which involves a maximum percentage of
securities or assets, except those dealing with borrowing and illiquid
securities, shall not be considered to be violated unless an excess over the
percentage occurs immediately after an acquisition of securities or utilization
of assets and results therefrom.
GENERAL
In certain countries, governmental restrictions and other limitations on
investment may affect the maximum percentage of equity ownership in any one
company by the Portfolio. In some instances only special classes of securities
may be purchased by foreigners, and the market prices, liquidity, and rights
with respect to those securities may vary from shares owned by nationals.
Advisers is not aware at this time of the existence of any investment or
exchange control regulations which might substantially impair the operations of
the Portfolio as described in the Prospectus and this Statement of Additional
Information. Although restrictions may in the future make it undesirable to
invest in certain countries, Advisers does not believe that any current
repatriation restrictions would affect its decisions to invest in the countries
eligible for investment by the Portfolio. It should be noted, however, that this
situation could change at any time. The Portfolio has no present intention of
making any significant investment in any country or stock market where the
political or economic situation might be considered by Advisers to be at risk of
substantial or total loss because of such political or economic situation.
As of October 31, 1996, 82% of the Portfolio's net assets were invested in
common stock.
REPURCHASE AGREEMENTS AND VARIABLE AMOUNT MASTER DEMAND NOTES
As noted in the Prospectus, the Portfolio may invest in repurchase agreements
("repos") and variable amount master demand notes.
Repos are short-term instruments under which securities are purchased from a
bank or a securities dealer with an agreement by the seller to repurchase the
securities at a mutually agreeable date, interest rate, and price. Generally,
repos are of short duration--usually less than a week, but on occasion for
longer periods. The Portfolio will limit its investment in repos with a maturity
of more than seven days to 10% of its net assets (subject to the collective 10%
limitation regarding restricted and other illiquid securities set forth below).
Variable amount master demand notes allow the investment of fluctuating amounts
by the Portfolio at varying market rates of interest pursuant to arrangements
between the Portfolio and a financial institution which has lent money to a
borrower. Variable amount master demand notes permit a series of short-term
borrowings under a single note. Both the lender and the borrower have the right
to reduce the amount of outstanding indebtedness at any time. Such notes provide
that the interest rate on the amount outstanding varies on a daily basis
depending upon a stated short-term interest rate barometer. Advisers will
monitor the creditworthiness of the borrower throughout the term of the variable
master demand note. It is not generally contemplated that such instruments will
be traded and there is no secondary market for the notes. Typically, agreements
relating to such notes provide that the lender shall not sell or otherwise
transfer the note without the borrower's consent. Thus, variable amount master
demand notes may under certain circumstances be deemed illiquid assets. However,
such notes will not be considered illiquid where the Portfolio has a "same day
withdrawal option," I.E., where it has the
27
<PAGE>
unconditional right to demand and receive payment in full of the principal
amount then outstanding together with interest to the date of payment.
LENDING OF PORTFOLIO SECURITIES
For the purpose of realizing additional income, the Portfolio may make secured
loans of portfolio securities amounting to not more than 30% of its total
assets. ("Total Assets" of the Portfolio includes the amount lent as well as the
collateral securing such loans.) Securities loans are made to broker-dealers or
institutional investors pursuant to agreements requiring that the loans be
continuously secured by collateral at least equal at all times to the value of
the securities lent "marked to market" on a daily basis. The collateral received
will consist of cash, U.S. short-term government securities, bank letters of
credit or such other collateral as may be permitted under the Portfolio's
investment program and by regulatory agencies and approved by the Board of
Directors of Fortis Worldwide (the "Board of Directors"). While the securities
loan is outstanding, the Portfolio will continue to receive the equivalent of
the interest or dividends paid by the issuer on the securities, as well as
interest on the investment of the collateral or a fee from the borrower. The
Portfolio has a right to call each loan and obtain the securities on five
business days' notice. The Portfolio will not have the right to vote equity
securities while they are being lent, but it will call in a loan in anticipation
of any important vote. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially. Loans will only be made to
firms deemed by the Portfolio to be of good standing and will not be made
unless, in the judgment of the Portfolio, the consideration to be earned from
such loans would justify the risk.
PORTFOLIO TRADING
The Portfolio intends to engage in portfolio trading when it is believed that
the sale of a security owned by the Portfolio and/or the purchase of another
security of better value can enhance principal and/or increase income. A
security may be sold to avoid any prospective decline in market value, or a
security may be purchased in anticipation of a market rise. Although the
Portfolio does not intend generally to trade for short-term profits, the
securities in the portfolio of the Portfolio will be sold whenever management
believes it is appropriate to do so, without regard to the length of time a
particular security may have been held.
COMMERCIAL BANK OBLIGATIONS
For the purposes of the Portfolio's investment policies with respect to bank
obligations, obligations of foreign branches of U.S. banks and of foreign banks
may be obligations of the parent bank in addition to the issuing bank, or may be
limited by the terms of a specific obligation and by government regulation. As
with investment in non-U.S. securities in general, investments in the
obligations of foreign branches of U.S. banks and of foreign banks may subject
the Portfolio to investment risks that are different in some respects from those
of investments in obligations of domestic issuers. Although the Portfolio will
typically acquire obligations issued and supported by the credit of U.S. or
foreign banks having total assets at the time of purchase in excess of $1
billion, this $1 billion figure is not a fundamental investment policy or
restriction of the Portfolio. For the purposes of calculation with respect to
the $1 billion figure, the assets of a bank will be deemed to include the assets
of its U.S. and non-U.S. branches.
"ROLL" TRANSACTIONS
The Portfolio may engage in "roll" transactions which involve the sale of
Government National Mortgage Association ("GNMA") certificates or other
securities together with a commitment (for which the Portfolio may receive a
fee) to purchase similar, but not identical, securities at a future date. The
Portfolio will maintain in a segregated account with a custodian cash, or any
security that is not considered restricted or illiquid in an amount sufficient
to cover its obligations under "roll" transactions.
OPTIONS
As provided below, in order to protect against declines in the value of
Portfolio securities or increases in the costs of securities to be acquired and
in order to increase the gross income of the Portfolio, the Portfolio may enter
into transactions in options on a variety of instruments and indices. The types
of instruments to be purchased and sold are further described in the Appendix of
this Statement of Additional Information, which should be read in conjunction
with the following sections.
OPTIONS ON SECURITIES. The Portfolio may write (sell) covered call and covered
put options and purchase call and put options on securities. Where the Portfolio
writes an option which expires unexercised or is closed out by the Portfolio at
a profit, it will retain all or a portion of the premium received for the
option, which will increase its gross income and will offset in part the reduced
value of any Portfolio security underlying the option, or the increased cost of
Portfolio securities to be acquired. In contrast, however, if the price of the
underlying security moves adversely to the Portfolio's position, the option may
be exercised and the Portfolio will be required to purchase or sell the
underlying security at a disadvantageous price, which may only be partially
offset by the amount of the premium, if at all. The Portfolio may also write
combinations of put and call options on the same security, known as "straddles."
Such transactions can generate additional premium income but also present
increased risk.
The Portfolio may also purchase put or call options in anticipation of market
fluctuations which may adversely affect the value of its portfolio or the prices
of securities that the Portfolio wants to purchase at a later date. In the event
that the expected market fluctuations occur, the Portfolio may be able to offset
the resulting adverse effect on its Portfolio, in whole or in part, through the
options purchased. The premium paid for a put or call option plus any
transaction costs will reduce the benefit, if any, realized by the
28
<PAGE>
Portfolio upon exercise or liquidation of the option, and, unless the price of
the underlying security changes sufficiently, the option may expire without
value to the Portfolio.
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
FUTURES CONTRACTS. The Portfolio may enter into interest rate futures contracts
and stock index futures contracts for hedging purposes. The Portfolio may also
enter into foreign currency futures contracts. (Unless otherwise specified,
interest rate futures contracts, stock index futures contracts and foreign
currency futures contracts are collectively referred to as "Futures Contracts.")
Purchases or sales of stock index futures contracts are used to attempt to
protect the Portfolio's current or intended stock investments from broad
fluctuations in stock prices. Interest rate and foreign currency futures
contracts are purchased or sold to attempt to hedge against the effects of
interest or exchange rate changes on the Portfolio's current or intended
investments in fixed income or foreign securities. In the event that an
anticipated decrease in the value of Portfolio securities occurs as a result of
a general stock market decline, a general increase in interest rates, or a
decline in the dollar value of foreign currencies in which portfolio securities
are denominated, the adverse effects of such changes may be offset, in whole or
in part, by gains on the sale of Futures Contracts. Conversely, the increased
cost of Portfolio securities to be acquired, caused by a general rise in the
stock market, a general decline in interest rates, or a rise in the dollar value
of foreign currencies, may be offset, in whole or in part, by gains on Futures
Contracts purchased by the Portfolio. The Portfolio will incur brokerage fees
when it purchases and sells Futures Contracts, and it will be required to make
and maintain margin deposits.
OPTIONS ON FUTURES CONTRACTS. The Portfolio may purchase and write options to
buy or sell interest rate futures contracts. In addition, the Portfolio may
purchase and write options on stock index futures contracts, and the Portfolio
may purchase and write options on foreign currency futures contracts. (Unless
otherwise specified, options on interest rate futures contracts, options on
stock index futures contracts, and options on foreign currency futures contracts
are collectively referred to as "Options on Futures Contracts.") Such investment
strategies will be used as a hedge and not for speculation.
Put and call Options on Futures Contracts may be traded by the Portfolio in
order to protect against declines in the values of Portfolio securities or
against increases in the cost of securities to be acquired. Purchases of Options
on Futures Contracts may present less risk in hedging than the purchase or sale
of the underlying futures contracts since the potential loss is limited to the
amount of the premium plus related transaction costs. The writing of such
options, however, does not present less risk than the trading of futures
contracts and will constitute only a partial hedge, up to the amount of the
premium received, and, if an option is exercised, the Portfolio may suffer a
loss on the transaction.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
The Portfolio may enter into contracts for the purchase or sale of a specific
currency at a future date at a price set at the time of the contract (a
"Currency Contract"). The Portfolio will enter into Currency Contracts for
hedging purposes only, in a manner similar to the Portfolio's use of foreign
currency futures contracts. These transactions will include forward purchases or
sales of foreign currencies for the purpose of protecting the dollar value of
securities denominated in a foreign currency or protecting the dollar equivalent
of interest or dividends to be paid on such securities. By entering into such
transactions, however, the Portfolio may be required to forego the benefits of
advantageous changes in exchange rates. Currency Contracts are traded
over-the-counter, and not on organized commodities or securities exchanges. As a
result, such contracts operate in a manner distinct from exchange-traded
instruments, and their use involves certain risks beyond those associated with
transactions in the futures and option contracts described above.
OPTIONS ON FOREIGN CURRENCIES. The Portfolio may purchase and write put and call
options on foreign currencies for the purpose of protecting against declines in
the dollar value of foreign portfolio securities and against increases in the
dollar cost of foreign securities to be acquired. As in the case of other types
of options, however, the writing of an option on foreign currency will
constitute only a partial hedge, up to the amount of the premium received, and
the Portfolio could be required to purchase or sell foreign currencies at
disadvantageous exchange rates, thereby incurring losses. The purchase of an
option on foreign currency may constitute an effective hedge against
fluctuations in exchange rates, although, in the event of rate movements adverse
to the Portfolio's position, it may forfeit the entire amount of the premium
plus related transaction costs. As in the case of Currency Contracts, certain
options on foreign currencies are traded over-the-counter and involve risks
which may not be present in the case of exchange-traded instruments.
RISKS OF TRANSACTIONS IN OPTIONS, FUTURES CONTRACTS, AND FORWARD CONTRACTS
The Portfolio will enter into transactions in Futures Contracts, Options on
Futures Contracts, Currency Contracts, and certain options solely for hedging
purposes. Their use involves certain risks. For example, a lack of correlation
between the index or instrument underlying an option or Futures Contract and the
assets being hedged or unexpected adverse price movements, could render the
Portfolio's hedging strategy unsuccessful and could result in losses. The
Portfolio also may enter into transactions in options on securities and indexes
of securities for other than hedging purposes, which involves greater risk. In
addition, there can be no assurance that a liquid secondary market will exist
29
<PAGE>
for any contract purchased or sold, and the Portfolio may be required to
maintain a position until exercise or expiration, which could result in losses.
Transactions in options, Futures Contracts, Options on Futures Contracts, and
Currency Contracts may be entered into on United States exchanges regulated by
the SEC or the Commodity Futures Trading Commission, as well as in the
over-the-counter market and on foreign exchanges. In addition, the securities
underlying options and Futures Contracts traded by the Portfolio may include
domestic as well as foreign securities. Investors should recognize that
transactions involving foreign securities or foreign currencies, and
transactions entered into in foreign countries, may involve considerations and
risks not typically associated with investing in U.S. markets.
DELAYED DELIVERY TRANSACTIONS
The Portfolio may purchase or sell portfolio securities on a when-issued or
delayed delivery basis. When-issued or delayed delivery transactions arise when
securities are purchased by the Portfolio with payment and delivery to take
place in the future in order to secure what is considered to be an advantageous
price and yield to the Portfolio at the time of entering into the transaction.
When the Portfolio enters into a delayed delivery transaction it becomes
obligated to purchase securities and it has all the rights and risks attendant
to ownership of a security, although delivery and payment occur at a later date.
The value of fixed income securities to be delivered in the future will
fluctuate as interest rates vary. The Portfolio generally has the ability to
close out a purchase obligation on or before the settlement date, rather than
purchase the security.
To the extent the Portfolio engages in when-issued or delayed delivery
transactions, it will do so for the purpose of acquiring portfolio securities
consistent with the Portfolio's investment objectives and policies and not for
the purpose of investment leverage or to speculate in interest rate changes. The
Portfolio will only make commitments to purchase securities on a when-issued or
delayed delivery basis with the intention of actually acquiring the securities,
but the Portfolio reserves the right to sell these securities before the
settlement date if deemed advisable.
RISK FACTORS
POLITICAL AND ECONOMIC RISKS. Investing in securities of non-U.S. companies may
entail additional risks due to the potential political and economic instability
of certain countries and risks of expropriation, nationalization, confiscation,
or the imposition of restrictions on foreign investment and on repatriation of
capital invested. In the event of such expropriation, nationalization, or other
confiscation, by any country, the Portfolio could lose its entire investment in
any such country.
ILLIQUID SECURITIES. The Portfolio may invest up to 10% of its total assets in
securities the disposition of which may be subject to legal or contractual
restrictions or the markets for which may be illiquid. See "Investment
Limitations." The sale of restricted or illiquid securities often requires more
time and results in higher brokerage charges or dealer discounts and other
selling expenses than does the sale of securities eligible for trading on
national securities exchanges or in the over-the-counter markets. Illiquid
securities often sell at a price lower than similar securities that are not
subject to restrictions on resale.
FOREIGN INVESTMENT RESTRICTIONS. Certain countries prohibit or impose
substantial restrictions on investments in their capital markets, particularly
their equity markets, by foreign entities such as the Portfolio. As
illustrations, certain countries require governmental approval prior to
investments by foreign persons, or limit the amount of investment by foreign
persons in a particular company, or limit the investment by foreign persons to
only a specific class of securities of a company that may have less advantageous
terms than securities of the company available for purchase by nationals.
Moreover, the national policies of certain countries may restrict investment
opportunities in issuers or industries deemed sensitive to national interests.
In addition, some countries require governmental approval for the repatriation
of investment income, capital, or the proceeds of securities sales by foreign
investors. The Portfolio could be adversely affected by delays in, or a refusal
to grant, any required governmental approval for repatriation, as well as by the
application to it of other restrictions on investments.
NONUNIFORM CORPORATE DISCLOSURE STANDARDS AND GOVERNMENTAL REGULATION. Foreign
companies are not generally subject to uniform accounting, auditing, and
financial reporting standards or to other regulatory requirements comparable to
those applicable to U.S. companies. Most of the securities held by the Portfolio
will not be registered with the SEC or regulators of any foreign country, nor
will the issuers thereof be subject to the SEC's reporting requirements. Thus,
there will be less available information concerning foreign issuers of
securities held by the Portfolio than is available concerning U.S. issuers. In
instances where the financial statements of an issuer are not deemed to reflect
accurately the financial situation of the issuer, the Portfolio will take
appropriate steps to evaluate the proposed investment, which may include on-site
inspection of the issuer, interviews with its management and consultations with
accountants, bankers, and other specialists.
CURRENCY FLUCTUATIONS. Because the Portfolio under normal circumstances will
invest at least a majority of its total assets in the securities of foreign
issuers which are denominated in foreign currencies, the strength or weakness of
the U.S. dollar against such foreign currencies may account for part of the
Portfolio's investment performance. A decline in the value of any particular
currency against the U.S. dollar will cause a decline in the U.S. dollar value
of the Portfolio's holdings of securities denominated in such currency and,
therefore, will cause an overall decline in the Portfolio's net asset value and
any net investment income and capital gains to be distributed in U.S. dollars to
shareholders of the Portfolio.
30
<PAGE>
The rate of exchange between the U.S. dollar and other currencies is determined
by several factors including the supply and demand for particular currencies,
central bank efforts to support particular currencies, the movement of interest
rates, the pace of business activity in certain other countries, and the U.S.,
and other economic and financial conditions affecting the world economy.
Although the Portfolio values its assets daily in terms of U.S. dollars, the
Portfolio does not intend to convert its holdings of foreign currencies into
U.S. dollars on a daily basis. The Portfolio will do so from time to time, and
investors should be aware of the costs of currency conversion. Although foreign
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to the Portfolio at one rate, while offering a lesser rate of
exchange should the Portfolio desire to sell that currency to the dealer.
ADVERSE MARKET CHARACTERISTICS. Securities of many foreign issuers may be less
liquid and their prices more volatile than securities of comparable U.S.
issuers. In addition, foreign securities exchanges and brokers are generally
subject to less governmental supervision and regulation than in the U.S., and
foreign securities exchange transactions are usually subject to fixed
commissions, which are generally higher than negotiated commissions on U.S.
transactions. In addition, foreign securities exchange transactions may be
subject to difficulties associated with the settlement of such transactions.
Delays in settlement could result in temporary periods when assets of the
Portfolio are uninvested and no return is earned thereon. The inability of the
Portfolio to make intended security purchases due to settlement problems could
cause the Portfolio to miss attractive opportunities. Inability to dispose of a
portfolio security due to settlement problems either could result in losses to
the Portfolio due to subsequent declines in value of the portfolio security or,
if the Portfolio has entered into a contract to sell the security, could result
in possible liability to the purchaser. Advisers will consider such difficulties
when determining the allocation of the Portfolio's assets, although Advisers
does not believe that such difficulties will have a material adverse effect on
the portfolio trading activities.
NON-U.S. WITHHOLDING TAXES. The Portfolio's net investment income from foreign
issuers may be subject to non-U.S. withholding taxes, thereby reducing the
Portfolio's net investment income. See "Taxation" in the Prospectus.
SUBCUSTODIAN BANKS. Pursuant to Rule 17f-5 under the 1940 Act, the Board of
Directors approved the use of the following subcustodian banks to maintain
foreign securities in or near the market in which they are principally traded
and to maintain cash in amounts reasonably necessary to effect foreign
securities transactions in such locations. The Board of Directors may from time
to time approve other countries and subcustodian banks pursuant to Rule 17f-5.
31
<PAGE>
<TABLE>
<CAPTION>
COUNTRY SUB-CUSTODIAN DEPOSITORY
- ------------------ ------------------------------------------------------- -------------------------------------------------------
<S> <C> <C>
Argentina Citibank, N.A. (Buenos Aires Branch) Caja De Valores (CDV)
Australia Australia and New Zealand Banking Group, Ltd. (ANZ) Austraclear Ltd
Pendal Nominees Pty. Limited
The Reserve Bank Information and Transfer System
Austria Creditanstalt Bankverein Osteneichische Kontrollebank (OCKB)
Belgium Generale Bank Caisse Interprofessionelle de Depots et de Virements de
Titres S.A., (CIK)
Brazil Citibank, N.A. (Sao Paulo Branch) Bolsa de Valores de Sao Paulo (BOVESPA)
Canada The Toronto-Dominion Bank Canadian Depository for Securities Ltd (CDS)
Royal Bank of Canada
Chile Citibank, N.A. (Santiago Branch)
China Standard Chartered Bank (Shanghai and Shenzhen) Shanghai Securities Central Clearing and Registration
Corp.
Colombia Cititrust Colombia, S.A. Deposito Central de Valores (DLV)
DECEVAL
Czech Republic Ceskuslovenska Obchodi Banka, A.S. Stredisko Cennych Papiru (SCP)
Czech National Bank
Denmark Den Danske Bank Vaerdipapircentralen (Danish Securities Centre)
Finland Merita Bank Limited The Central Share Register of Finland
France Banque Paribas Societe Interprofessionelle de Compensation des Valeurs
Mobilieres (SICOVAM)
Banque de France
Germany Dresdner Bank, AG Deutscher Kassenverein A.G. (Kassenverein)
Greece National Bank of Greece S.A. Apothetirio Titlon, A.E.
Hong Kong Standard Chartered Bank Central Clearing and Securities System (CCASS)
Hungary Citibank Budapest Rt. The Central Depository and Clearinghouse (Budapest)
Ltd.
India The Hong Kong and Shanghai Banking Corporation Limited Deutsche Bank AG
(HSBC)
Indonesia Standard Chartered Bank Standard Chartered Bank
Ireland Allied Irish Bank The Gilt Settlement Office
The CREST System
Israel Bank Lueumi-Le Israel The Clearing House of the Tel Aviv Stock Exchange
Italy Citibank, N.A. (Milan Branch) Monte Titoli S.P.A.
Banca d'Italia
Japan The Bank of Tokyo-Mitsubishi, Ltd. Japan Securities Depository Center (JASDEC)
The Sumitomo Bank, Ltd. The Bank of Japan
Luxembourg Cedel Bank Societe Anonyme (Cedel)
Malaysia Chung Khiaw Bank (Malaysia) Malaysia Central Depository, Sdn Bhd (MCD)
Mexico Bancomer S.A., Institution De Banca Multiple, Grupo Instituto para el Deposito de Valores (S.D. Indeval)
Financiero (equity securities only)
Banco de Mexico
Netherlands ABN-AMRO Bank N.V. Nederlands Central Institut Voor Giraal Effectenverkeer
B.V. (NECIGEF)
New Zealand Australia & New Zealand Banking Group Limited (ANZ New Zealand Central Depository Limited
Banking)
Norway Euroclear
Pakistan Standard Chartered Bank
Peru Citibank, N.A. (Lima Branch) Caja de Valores (CAVAL)
Philippines Standard Chartered Bank
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
COUNTRY SUB-CUSTODIAN DEPOSITORY
- ------------------ ------------------------------------------------------- -------------------------------------------------------
Poland Citibank, S.A. (Poland) The National Depository of Securities
The National Bank of Poland
<S> <C> <C>
Portugal Banco Espirito Santo E Comercial De Lisboa, S.A. Central de Valores Mobiliares (CVM)
(BESCL)
Singapore United Overseas Bank, Ltd. The Central Securities Depository (PTE) Ltd. (CDP)
Slovakia Ceskoslovenska Obchodva Banka, A.S. Stredisko Cennych Papierov
National Bank of the Slovak Republic
South Africa ASBA Bank Limited The Central Depository (Pte) Ltd.
South Korea Standard Chartered Bank, Seoul The Korean Securities Depository
Spain Banco Santanden Servicio de Compensacion y Liquidacion de Valores
(SCLV)
Sri Lanka Standard Chartered Bank The Central Depository System (Pvt)
Sweden Svenska Handeslbanken Vardepappers centralen, The Swedish Securities Register
Center (VPC)
Switzerland Swiss Bank Corporation Schweizerische EffektenGiro AG (SEGA)
Taiwan Central Trust of China-Taipai The Taiwan Securities Central Depository Company Ltd.
Thailand Standard Chartered Bank The Taiwan Securities Central Depository Company Ltd.
Turkey Osmanli Bankasi A.S. Takasbank Central Bank of Turkey
(Ottoman Bank)
United Kingdom Bankers Trust Company (London) Central Gilts Office
The CREST System
Venezuela Citibank, N.A. (Caracas Branch)
Transnational CEDEL
Depositories (Luxembourg)
Euroclear
(Brussels)
</TABLE>
33
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS
The names, addresses, principal occupations, and other affiliations of directors
and executive officers of Fortis Worldwide are given below:
<TABLE>
<CAPTION>
POSITION WITH
FORTIS PRINCIPAL OCCUPATION AND AFFILIATIONS WITH
NAME & ADDRESS AGE WORLDWIDE "AFFILIATED PERSONS" OR INVESTORS (PAST 5 YEARS)
- ------------------------------ --- --------------- ------------------------------------------------------------
<S> <C> <C> <C>
Richard W. Cutting 65 Director Certified public accountant and financial consultant.
137 Chapin Parkway
Buffalo, New York
Allen R. Freedman* 56 Director Chairman and Chief Executive Officer of Fortis, Inc.; a
One Chase Manhattan Plaza Managing Director of Fortis International, N. V.
New York, New York
Dr. Robert M. Gavin 56 Director Interim President, Haverford College. Prior to July 1996,
Office of the President President, Macalester College.
370 Lancaster Ave
Haverford, Pennsylvania
Benjamin S. Jaffray 66 Director Chairman of the Sheffield Group, Ltd., a financial
4040 IDS Center consulting group.
Minneapolis, Minnesota
Jean L. King 52 Director President, Communi-King, a communications consulting firm.
12 Evergreen Lane
St. Paul, Minnesota
Dean C. Kopperud* 44 President and Chief Executive Officer and a Director of Advisers,
500 Bielenberg Drive Director President and a Director of Investors, and Senior Vice
Woodbury, Minnesota President and a Director of Fortis Benefits Insurance
Company and Time Insurance Company.
Edward M. Mahoney 66 Director Retired; prior to December, 1994, Chairman and Chief
2760 Pheasant Road Executive Officer and a Director of Advisers and Investors,
Excelsior, Minnesota Senior Vice President and a Director of Fortis Benefits
Insurance Company, and Senior Vice President of Time
Insurance Company.
Robb L. Prince 55 Director Financial and Employee Benefit Consultant; prior to July,
5108 Duggan Plaza 1995, Vice President and Treasurer, Jostens, Inc., a
Edina, Minnesota producer of products and services for the youth, education,
sports award, and recognition markets.
Leonard J. Santow 60 Director Principal, Griggs & Santow, Incorporated, economic and
75 Wall Street financial consultant.
21st Floor
New York, New York
Noel S. Shadko 42 Director Marketing Consultant; prior to May 1996, Senior Vice
1908 W. 49th St. President of Marketing & Strategic Planning, Rollerblade,
Minneapolis, Minnesota Inc.
Joseph M. Wikler 55 Director Investment consultant and private investor; prior to
12520 Davan Drive January, 1994, Director of Research, Chief Investment
Silver Spring, Maryland Officer, Principal, and a Director, the Rothschild Co.,
Baltimore, Maryland. The Rothschild Co. is an investment
advisory firm.
Gary N. Yalen 54 Vice President President and Chief Investment Officer of Advisers (since
One Chase Manhattan Plaza August, 1995) and Fortis Asset Management, a division of
New York, New York Fortis, Inc., New York, NY, and Senior Vice President,
Investments, Fortis, Inc.
James S. Byrd 45 Vice President Executive Vice President of Advisers.
5500 Wayzata Boulevard
Golden Valley, Minnesota
Howard G. Hudson 59 Vice President Executive Vice President of Advisers (since August, 1995)
One Chase Manhattan Plaza and Senior Vice President, Fixed Income, Fortis Asset
New York, New York Management.
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
FORTIS PRINCIPAL OCCUPATION AND AFFILIATIONS WITH
NAME & ADDRESS AGE WORLDWIDE "AFFILIATED PERSONS" OR INVESTORS (PAST 5 YEARS)
- ------------------------------ --- --------------- ------------------------------------------------------------
<S> <C> <C> <C>
Stephen M. Poling 65 Vice President Executive Vice President and Director of Advisers.
5500 Wayzata Boulevard
Golden Valley, Minnesota
Nicholas L. M. de Peyster 30 Vice President Vice President of Advisers (since August, 1995) and Vice
41st Floor President, Equities, Fortis Asset Management.
One Chase Manhattan Plaza
New York, New York
Charles J. Dudley 37 Vice President Vice President of Advisers and Fortis Asset Management;
One Chase Manhattan Plaza prior to August, 1995, Senior Vice President, Sun America
New York, New York Asset Management, Los Angeles, CA
Maroun M. Hayek 48 Vice President Vice President of Advisers (since August, 1995) and Vice
One Chase Manhattan Plaza President, Fixed Income, Fortis Asset Management.
New York, New York
Robert C. Lindberg 43 Vice President Vice President of Advisers; prior to July, 1993, Vice
One Chase Manhattan Plaza President, Portfolio Manager, and Chief Securities Trader,
New York, New York COMERICA, Inc., Detroit, Michigan. COMERICA, Inc. is a bank.
Charles L. Mehlhouse 54 Vice President Vice President of Advisers; prior to March 1996 Portfolio
5500 Wayzata Boulevard Manager to Marshall & Ilsley Bank Corporation.
Golden Valley, Minnesota
Kevin J. Michels 45 Vice President Vice President of Advisers (since August, 1995) and Vice
One Chase Manhattan Plaza President, Administration, Fortis Asset Management.
New York, New York
Christopher J. Pagano 33 Vice President Vice President of Advisers; prior to March 1996, Government
One Chase Manhattan Plaza Strategist for Merrill Lynch, New York, N.Y.
New York, New York
Stephen M. Rickert 53 Vice President Vice President of Advisers (since August, 1995) and
One Chase Manhattan Plaza Corporate Bond Analyst, Fortis Asset Management; from
New York, New York August, 1993 to April, 1994, Corporate Bond Analyst, Dillon,
Read & Co., Inc., New York, NY; prior to June, 1992,
Corporate Bond Analyst, Western Asset Management, Los
Angeles, CA.
Keith R. Thomson 59 Vice President Vice President of Advisers.
5500 Wayzata Boulevard
Golden Valley, Minnesota
Christopher J. Woods 36 Vice President Vice President of Advisers (since August, 1995) and Vice
One Chase Manhattan Plaza President, Fixed Income, Fortis Asset Management; prior to
New York, New York November, 1992, Head of Fixed Income, The Police and
Firemen's Disability and Pension Fund of Ohio, Columbus, OH.
Robert W. Beltz, Jr. 47 Vice President Vice President--Mutual Fund Operations of Advisers and
500 Bielenberg Drive Investors.
Woodbury, Minnesota
Tamara L. Fagely 38 Vice President Second Vice President of Advisers and Investors.
500 Bielenberg Drive and Treasurer
Woodbury, Minnesota
David A. Peterson 54 Vice President Vice President and Assistant General Counsel, Fortis
500 Bielenberg Drive Benefits Insurance Company.
Woodbury, Minnesota
Scott R. Plummer 37 Vice President Second Vice President, Corporate Counsel and Assistant
500 Bielenberg Dr. Secretary to Advisers; prior to September 1993, Attorney,
Woodbury, Minnesota Zelle & Larson, Minneapolis, MN
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
FORTIS PRINCIPAL OCCUPATION AND AFFILIATIONS WITH
NAME & ADDRESS AGE WORLDWIDE "AFFILIATED PERSONS" OR INVESTORS (PAST 5 YEARS)
- ------------------------------ --- --------------- ------------------------------------------------------------
<S> <C> <C> <C>
Rhonda J. Schwartz 39 Vice President Senior Vice President, General Counsel, and Secretary of
500 Bielenberg Drive Advisers; Senior Vice President and General Counsel--Life
Woodbury, Minnesota and Investment Products, Fortis Benefits Insurance Company
and Vice President and General Counsel, Life and Investment
Products, Time Insurance Company; from 1993 to January 1996,
Vice President, General Counsel, Fortis, Inc.; prior to
1993, Attorney, Norris, McLaughlin & Marcus, Somerville, NJ.
Michael J. Radmer 51 Secretary Partner, Dorsey & Whitney LLP, the Fund's General Counsel.
220 South Sixth Street
Minneapolis, Minnesota
</TABLE>
- -------------------------------------------
*Mr. Kopperud is an "interested person" (as defined under the 1940 Act) of
Fortis Worldwide, Advisers, and Investors primarily because he is an officer
and a director of each. Mr. Freedman is an "interested person" of Fortis
Worldwide, Advisers, and Investors because he is Chairman and Chief Executive
Officer of Fortis, Inc. ("Fortis"), the parent company of Advisers and indirect
parent company of Investors, and a Managing Director of Fortis International,
N. V., the parent company of Fortis.
- -------------------------------------------
The following table sets forth the aggregate compensation received by each
director during the fiscal year ended October 31, 1996, as well as the total
compensation received by each director from Fortis Worldwide and all other
open-end investment companies managed by Advisers during the fiscal year ended
October 31, 1996. Neither Mr. Freedman, who is an officer of the parent company
of Advisers, nor Mr. Kopperud, who is an officer of Advisers and Investors,
received any such compensation and they are not included in the table. No
executive officer of Fortis Worldwide received compensation from Fortis
Worldwide during the fiscal year ended October 31, 1996.
<TABLE>
<CAPTION>
PENSION OR
RETIREMENT TOTAL
BENEFITS ESTIMATED COMPENSATION
AGGREGATE ACCRUED AS ANNUAL FROM FUND
COMPENSATION PART OF BENEFITS COMPLEX PAID
FROM THE FUND UPON TO DIRECTOR
DIRECTOR FUND EXPENSES RETIREMENT (1)
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------
Richard W. Cutting $1,800 -- -- $ 30,750
Dr. Robert M. Gavin $1,700 -- -- $ 30,850
Benjamin S. Jaffray $1,700 -- -- $ 28,650
Jean L. King $1,800 -- -- $ 30,750
Edward M. Mahoney $1,700 -- -- $ 30,850
Thomas R. Pellett (2) $400 -- -- $ 6,150
Robb L. Prince $1,700 -- -- $ 30,850
Leonard J. Santow $1,721 -- -- $ 29,900
Noel S. Shadko $400 -- -- $ 5,100
Joseph M. Wikler $1,800 -- -- $ 30,750
</TABLE>
- ------------------------------
(1) Includes aggregate compensation paid by Fortis Worldwide and all 9 Other
Fortis Funds paid to the director.
(2) Mr. Pellett resigned as a director of the Fortis Funds effective December 7,
1995.
As of January 31, 1997, the directors and executive officers beneficially owned
less than 1% of the outstanding shares of Fortis Worldwide. Directors Kopperud,
Mahoney, Prince, Gavin, Shadko and Jaffray are members of the Executive
Committee of the Board of Directors. While the Executive Committee is authorized
to act in the intervals between regular board meetings with full capacity and
authority of the full Board of Directors, except as limited by law, it is
expected that the Committee will meet at least twice a year.
INVESTMENT ADVISORY AND OTHER
SERVICES
GENERAL
Fortis Advisers, Inc. ("Advisers") has been the investment adviser and manager
of the Portfolio since the Portfolio began business in 1991. Investors acts as
the Portfolio's underwriter. Both act as such pursuant to written agreements
periodically approved by the directors or shareholders of Fortis Worldwide. The
address of both is that of the Portfolio.
As of October 31, 1996, Advisers managed thirty investment company portfolios
with combined net assets of approximately $4,749,709,000, and one private
account with net assets of approximately $19,469,000. As of the same date, the
investment company portfolios had an aggregate of 253,980 shareholders,
including 24,136 shareholders of the Portfolio.
During the past three fiscal years ended October 31, 1996, and 1995 and 1994,
Advisers received $979,766, $595,572, and $437,639, respectively, as its
compensation for acting as the investment adviser and manager of the Portfolio.
Investors received $731,047, $368,850, and $683,511, during the fiscal years
ended October 31, 1996, 1995, and 1994, respectively, for underwriting the
Portfolio's shares, out of which commissions of sales representatives and
allowances to dealers approximating $593,960, $284,996, and $543,961,
respectively, were paid by Investors.
During the fiscal year ended October 31, 1996, Investors received $319,860
pursuant to the Plan of Distribution (see "Plan of Distribution"). Investors
paid $691,693 to broker-dealers and
36
<PAGE>
registered representatives, and, in addition to such amount, Advisers and
Investors together spent $361,708 on activities related to the distribution of
the Portfolio's shares.
CONTROL AND MANAGEMENT OF ADVISERS AND INVESTORS
Fortis owns 100% of the outstanding voting securities of Advisers, and Advisers
owns all of the outstanding voting securities of Investors.
Fortis, located in New York, New York, is a wholly owned subsidiary of Fortis
International, N.V., which has approximately $100 billion in assets worldwide
and is in turn a wholly owned subsidiary of AMEV/VSB 1990 N.V. ("AMEV/VSB
1990").
AMEV/VSB 1990 is a corporation organized under the laws of The Netherlands to
serve as the holding company for all U.S. operations and is owned 50% by Fortis
AMEV and 50% by Fortis AG. AMEV/VSB 1990 owns a group of companies active in
insurance, banking and financial services, and real estate development in The
Netherlands, the United States, Western Europe, Australia, and New Zealand.
Fortis AMEV is a diversified financial services company headquartered in
Utrecht, The Netherlands, where its insurance operations began in 1847. Fortis
AG is a diversified financial services company headquartered in Brussels,
Belgium, where its insurance operations began in 1824. Fortis AMEV and Fortis AG
own a group of companies (of which AMEV/VSB 1990 is one) active in insurance,
banking and financial services, and real estate development in The Netherlands,
Belgium, the United States, Western Europe, and the Pacific Rim.
Dean C. Kopperud is Chief Executive Officer of Advisers and President of
Investors; Gary N. Yalen is President and Chief Investment Officer of Advisers;
James S. Byrd and Stephen M. Poling are Executive Vice Presidents of Advisers;
Howard G. Hudson is Executive Vice President of Advisers; Debra L. Foss, Jon H.
Nicholson, and Dennis M. Ott are Senior Vice Presidents of Advisers; Rhonda J.
Schwartz is Senior Vice President, General Counsel, and Secretary of Advisers;
Robert W. Beltz, Jr., Thomas D. Gualdoni, Robert C. Lindberg, and Keith R.
Thomson are Vice Presidents of Advisers and Investors; Richard P. Roche,
Nicholas L. M. De Peyster, Charles J. Dudley, Maroun M. Hayek; Kevin J. Michels,
Chris Pagano, Stephen M. Rickert, and Christopher J. Woods are Vice Presidents
of Advisers; John E. Hite and Scott R. Plummer are 2nd Vice Presidents and
Assistant Secretaries of Advisers; Carol M. Houghtby is 2nd Vice President and
Treasurer of Advisers and Investors; Tamara L. Fagely is 2nd Vice President of
Advisers and Investors; Barbara W. Kirby is 2nd Vice President of Advisers;
David C. Greenzang is Money Market Portfolio Officer of Advisers; Michael D.
O'Connor is qualified Plan Officer of Advisors; Barbara J. Wolf is 2nd Vice
President and Trading Officer of Advisers; Joanne M. Herron is Assistant
Treasurer of Advisers and Investors and Sharon R. Jibben is Assistant Secretary
of Advisers.
Messrs. Kopperud, Yalen, and Poling are the Directors of Advisers.
All of the above persons reside or have offices in the Minneapolis/ St. Paul
area, except Messrs. Yalen, Hudson, de Peyster, Dudley, Hayek, Lindberg,
Michels, Pagano, Rickert, Woods and Greenzang, who are located in New York City.
INVESTMENT ADVISORY AND MANAGEMENT AGREEMENT
Advisers acts as investment adviser and manager of the Portfolio under an
Investment Advisory and Management Agreement (the "Agreement") dated March 26,
1991, which became effective the same date and was last approved by the Board of
Directors (including a majority of the directors who are not parties to such
contract or interested persons of any such party) on December 5, 1996. The
Agreement was approved by shareholders on January 28, 1992. The Agreement will
terminate automatically in the event of its assignment. In addition, the
Agreement is terminable at any time, without penalty, by the Board of Directors
or, with respect to any particular portfolio, by vote of a majority of the
outstanding voting securities of the applicable portfolio, on not more than 60
days' written notice to Advisers, and by Advisers on 60 days' notice to Fortis
Worldwide. Unless sooner terminated, the Agreement shall continue in effect for
more than two years after its execution only so long as such continuance is
specifically approved at least annually by either the Board of Directors or,
with respect to any particular portfolio, by vote of a majority of the
outstanding voting securities of the applicable portfolio, provided that in
either event such continuance is also approved by the vote of a majority of the
directors who are not parties to the Agreement, or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on such
approval.
The Agreement provides for an investment advisory and management fee paid by the
Portfolio calculated as described in the following table. As you can see from
the table, this fee decreases (as a percentage of Portfolio net assets) as the
Portfolio grows. As of January 31, 1997, the Portfolio had net assets of
approximately $143,767,000.
<TABLE>
<CAPTION>
ANNUAL INVESTMENT
ADVISORY AND
AVERAGE NET ASSETS MANAGEMENT FEE
<S> <C>
For the first $500 million 1.0%
For assets over $500 million .9%
</TABLE>
The Agreement requires the Portfolio to pay all of its expenses that are not
expressly assumed by Advisers or Investors. These expenses include, among
others, the investment advisory and management fee, the fees and expenses of
directors and officers of Fortis Worldwide who are not "affiliated persons" of
Advisers, Plan of Distribution fees, interest expense, taxes, brokerage fees and
commissions, fees and expenses of registering and qualifying Fortis Worldwide
and its shares for distribution under Federal and state securities laws,
expenses of preparing prospectuses and of
37
<PAGE>
printing and distributing prospectuses annually to existing shareholders,
custodian charges, auditing and legal expenses, insurance expenses, association
membership dues, and the expense of reports to shareholders, shareholders
meetings, and proxy solicitations. Fortis Worldwide is also liable for such
nonrecurring expenses as may arise, including litigation to which it may be a
party. Fortis Worldwide may have an obligation to indemnify its directors and
officers with respect to such litigation.
Advisers bears the costs of acting as the Portfolio's transfer agent, registrar,
and dividend agent.
Advisers reserves the right, but shall not be obligated, to institute voluntary
expense reimbursement programs which, if instituted, shall be in such amounts
and based on such terms and conditions as Advisers, in its sole and absolute
discretion, determines. Furthermore, Advisers reserves the absolute right to
discontinue any of such reimbursement programs at any time without notice to the
Portfolio.
Under the Agreement, Advisers, as investment adviser to the Portfolio, has the
sole authority and responsibility to make and execute investment decisions for
the Portfolio within the framework of the Portfolio's investment policies,
subject to review by the Board of Directors. Advisers also furnishes the
Portfolio with all required management services, facilities, equipment, and
personnel.
Although investment decisions for the Portfolio are made independently from
those of the other portfolios, funds, or private accounts managed by Advisers,
sometimes the same security is suitable for more than one portfolio, fund, or
account. If and when two or more portfolios, funds, or accounts simultaneously
purchase or sell the same security, the transactions will be allocated as to
price and amount in accordance with arrangements deemed equitable by Advisers to
each portfolio, fund, or account. The simultaneous purchase or sale of the same
securities by the Portfolio and another portfolio, fund, or account may have a
detrimental effect on the Portfolio as this may affect the price paid or
received by the Portfolio or the size of the position obtainable by the
Portfolio.
PORTFOLIO TRANSACTIONS AND
ALLOCATION OF BROKERAGE
Transactions on a stock exchange in equity securities will be executed primarily
through brokers that will receive a commission paid by the Portfolio. Fixed
income securities, as well as equity securities traded in the over-the-counter
market, are generally traded on a "net" basis with dealers acting as principals
for their own accounts without a stated commission, although the price of the
security usually includes a profit to the dealer. In underwritten offerings,
securities are purchased at a fixed price that includes an amount of
compensation to the underwriter, generally referred to as the underwriter's
concession or discount. Certain of these securities may also be purchased
directly from the issuer, in which case neither commissions nor discounts are
paid.
During the fiscal years ended October 31, 1996, 1995, and 1994, brokerage
commissions totaled $102,005, $97,159, and $73,069, respectively, amounting to
.10%, .16%, and .17%, respectively, of the Portfolio's average net assets and
resulting in average commission rates of .30%, .43%, and .34%, respectively
(calculated by dividing the total dollar amount of transactions into the total
dollar amount of commissions paid). Transactions having an aggregate dollar
value of approximately $22,899,000 (excluding short-term securities) were traded
at net prices including a spread or markup during the fiscal year ended October
31, 1996.
Advisers selects and (where applicable) negotiates commissions with the
broker-dealers who execute the transactions for the Portfolio. The primary
criterion for the selection of a broker-dealer is the ability of the
broker-dealer, in the opinion of Advisers, to secure prompt execution of the
transactions on favorable terms, including the reasonableness of the commission
and considering the state of the market at the time. When consistent with these
objectives, business may be placed with broker-dealers who furnish investment
research or services to Advisers. Such research or services include advice, both
directly and in writing, as to the value of securities; the advisability of
investing in, purchasing or selling securities; and the availability of
securities, or purchasers or sellers of securities; as well as analyses and
reports concerning issues, industries, securities, economic factors and trends,
portfolio strategy, and the performance of accounts. This allows Advisers to
supplement its own investment research activities and enables Advisers to obtain
the views and information of individuals and research staffs of many different
securities firms prior to making investment decisions for the Portfolio. To the
extent portfolio transactions are effected with broker-dealers who furnish
research services to Advisers, Advisers receives a benefit, not capable of
valuation in dollar amounts, without providing any direct monetary benefit to
the Portfolio from these transactions. Advisers believes that most research
services obtained by it generally benefit several or all of the investment
companies and private accounts which it manages, as opposed to solely benefiting
one specific managed fund or account. Normally, research services obtained
through managed funds or accounts investing in common stocks would primarily
benefit the managed funds or accounts which invest in common stock; similarly,
services obtained from transactions in fixed income securities would normally be
of greater benefit to the managed funds or accounts which invest in debt
securities.
Advisers has not entered into any formal or informal agreements with any
broker-dealers, nor does it maintain any "formula" which must be followed in
connection with the placement of portfolio transactions of the Portfolio in
exchange for research services provided Advisers, except as noted below.
However, Advisers does maintain an informal list of broker-dealers, which is
used from time to time as a general guide in the placement of Portfolio
38
<PAGE>
business, in order to encourage certain broker-dealers to provide Advisers with
research services which Advisers anticipates will be useful to it. Because the
list is merely a general guide, which is to be used only after the primary
criterion for the selection of broker-dealers (discussed above) has been met,
substantial deviations from the list are permissible and may be expected to
occur. Advisers will authorize the Portfolio to pay an amount of commission for
effecting a securities transaction in excess of the amount of commission another
broker-dealer would have charged only if Advisers determines in good faith that
such amount of commission is reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer, viewed in terms
of either that particular transaction or Advisers' overall responsibilities with
respect to the accounts as to which it exercises investment discretion.
Generally, the Portfolio pays higher than the lowest commission rates available.
The Portfolio contemplates purchasing most foreign equity securities in
over-the-counter markets or stock exchanges located in the countries in which
the respective principal offices of the issuers of the various securities are
located, if that is the best available market. The fixed commissions paid in
connection with most such foreign stock transactions generally are higher than
negotiated commissions on United States transactions. There generally is less
government supervision and regulation of foreign stock exchanges and brokers
than in the United States. Foreign security settlements may in some instances be
subject to delays and related administrative uncertainties.
Foreign equity securities may be held by the Portfolio in the form of American
Depository Receipts ("ADRs"), European Depository Receipts ("EDRs," which are
sometimes referred to as Continental Depository Receipts or "CDRs"), or
securities convertible into foreign equity securities. ADRs or EDRs may be
listed on stock exchanges, or traded in the over-the-counter markets in the
United States or Europe, as the case may be. ADRs, like other securities traded
in the United States, will be subject to negotiated commission rates. The
foreign and domestic debt securities and money market instruments in which the
Funds may invest are generally traded in the over-the-counter markets.
During the fiscal year ended October 31, 1996, virtually all of the $102,005
paid by the Portfolio in connection with transactions having an aggregate dollar
value of approximately $33,469,000 was paid to broker-dealers who furnished
investment research to Advisers, as outlined above.
The Portfolio will not effect any brokerage transactions in its portfolio
securities with any broker-dealer affiliated directly or indirectly with
Advisers, unless such transactions, including the frequency thereof, the receipt
of commissions payable in connection therewith, and the selection of the
affiliated broker-dealer effecting such transactions are not unfair or
unreasonable to the shareholders of the Portfolio. No commissions were paid to
any affiliate of Advisers during the fiscal years ended October 31, 1996, 1995,
and 1994.
The Portfolio's acquisition during the fiscal year ended October 31, 1996, of
securities of its regular brokers or dealers or of the parent of those brokers
or dealers that derive more than fifteen percent of their gross revenue from
securities-related activities is presented below:
<TABLE>
<CAPTION>
VALUE OF
SECURITIES OWNED
NAME OF ISSUER AT END OF PERIOD
- -------------------------------------------- ----------------
<S> <C>
First Bank (N.A.)........................... $ 3,189,000
</TABLE>
Advisers has developed written trade allocation procedures for its management of
the securities trading activities of its clients. Advisers manages multiple
portfolios, both public (mutual funds) and private. The purpose of the trade
allocation procedures is to treat the portfolios fairly and reasonably in
situations where the amount of a security that is available is insufficient to
satisfy the volume or price requirements of each portfolio that is interested in
purchasing that security.
Generally, when the amount of securities available in a public offering or the
secondary market is insufficient to satisfy the requirements for the interested
portfolios, the procedures require a pro rata allocation based upon the amounts
initially requested by each portfolio manager. In allocating trades made on
combined basis, Advisers seeks to achieve the average price of the securities
for each participating portfolio.
Because a pro rata allocation may not always adequately accommodate all facts
and circumstances, the procedures provide for exceptions to allocate trades on a
basis other than pro rata. Examples of where adjustments may be made include:
(i) the cash position of the portfolios involved in the transaction; and (ii)
the relative importance of the security to a portfolio in seeking to achieve its
investment objective.
CAPITAL STOCK
The Portfolio's shares have a par value of $.01 per share and equal rights to
share in dividends and assets. The shares possess no preemptive or conversion
rights.
On January 31, 1997, the Portfolio had outstanding 5,330,444 Class A shares,
366,220 Class B shares, 153,754 Class C shares, and 619,422 Class H shares. On
that date, no person owned of record or, to Fortis Worldwide's knowledge,
beneficially as much as 5% of the outstanding shares of any Class of the
Portfolio.
The Portfolio currently offers its shares in four classes, each with different
sales arrangements and bearing different expenses. Under Fortis Worldwide's
Articles of Incorporation, the Board of Directors is authorized to create new
portfolios or classes without the approval of the shareholders of the Portfolio.
Each share will have a pro rata interest in the assets of the Fortis Worldwide
portfolios to which the shares of that series relate and will have no interest
in the assets of any other Fortis Worldwide portfolio. In the event of
liquidation, each share of a Fortis Worldwide portfolio
39
<PAGE>
would have the same rights to dividends and assets as every other share of that
Fortis Worldwide portfolio, 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.
Cumulative voting is not authorized. This means that the holders of more than
50% of the shares voting for the election of directors can elect 100% of the
directors if they choose to do so, and in such event the holders of the
remaining shares will be unable to elect any directors.
Minnesota corporation law provides for the Board of Directors to convene
shareholder meetings when it deems appropriate. Therefore, Fortis Worldwide is
not required to hold annual or periodically scheduled regular shareholder
meetings. In addition, if a regular meeting of shareholders has not been held
during the immediately preceding fifteen months, a shareholder or shareholders
holding three percent or more of the voting shares of Fortis Worldwide may
demand a regular meeting of shareholders by written notice of demand given to
the chief executive officer or the chief financial officer of Fortis Worldwide.
Within ninety days after receipt of the demand, a regular meeting of
shareholders must be held at Fortis Worldwide's expense. Additionally, the 1940
Act requires shareholder votes for all amendments to fundamental investment
policies and restrictions and for all investment advisory contracts and
amendments thereto.
COMPUTATION OF NET ASSET VALUE AND PRICING
On October 31, 1996, the Portfolio's net asset value was calculated as follows:
CLASS A
Net Assets ($107,607,438)
- ------------------------ = Net Asset Value Per Share ($21.28)
Shares Outstanding (5,057,401)
To obtain the public offering price per share for Class A shares, the 4.75%
sales charge had to be added to the net asset value obtained above:
$21.28
---- = Public Offering Price Per Share ($22.34)
.9525
CLASS B
Net Assets ($5,735,043)
- ------------------------ = Net Asset Value Per Share ($20.98)
Shares Outstanding (273,294)
CLASS H
Net Assets ($10,765,079)
- ------------------------ = Net Asset Value Per Share ($20.99)
Shares Outstanding (512,844)
CLASS C
Net Assets ($3,087,155)
- ------------------------ = Net Asset Value Per Share ($21.00)
Shares Outstanding (147,001)
The primary close of trading of the New York Stock Exchange (the "Exchange")
currently is 3:00 P.M. (Central Time), but this time may be changed. The
offering price for purchase orders received in the office of the Portfolio after
the beginning of each day the Exchange is open for trading is based on net asset
value determined as of the primary closing time for business on the Exchange
that day; the price in effect for orders received after such close is based on
the net asset value as of such close of the Exchange on the next day the
Exchange is open for trading.
Generally, the net asset value of the Portfolio's shares is determined on each
day on which the Exchange is open for business. The Exchange is not open for
business on the following holidays (or on the nearest Monday or Friday if the
holiday falls on a weekend): New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and Christmas Day.
Additionally, the net asset value of the Portfolio's shares need not be
determined (i) on days on which changes in the value of the portfolio securities
of the Portfolio will not materially affect the current net asset value of the
Portfolio's shares or (ii) on days during which no shares of the Portfolio are
tendered for redemption and no orders to purchase or sell the Portfolio's shares
are received by the Portfolio.
SPECIAL PURCHASE PLANS
The Portfolio offers several special purchase plans, described in the
Prospectus, which allow reduction or elimination of the sales charge for Class A
shares under certain circumstances. Additional information regarding some of the
plans is as follows:
STATEMENT OF INTENTION
The 13-month period is measured from the date the letter of intent is approved
by Investors, or at the purchaser's option it may be made retroactive 90 days,
in which case Investors will make appropriate adjustments on purchases during
the 90-day period.
In computing the total amount purchased for purposes of determining the
applicable sales commission, the public offering price (at the time they were
purchased) of shares currently held in the Fortis Funds having a sales charge
and purchased within the past 90 days may be used as a credit toward Portfolio
shares to be purchased under the Statement of Intention. Any such shares
purchased during the remainder of the 13-month period also may be included as
purchases made under the Statement of Intention.
The Statement of Intention includes a provision for payment of additional
applicable sales charges at the end of the period in the event the investor
fails to purchase the amount indicated. This is accomplished by holding in
escrow the number of shares represented by the sales charge discount. If the
investor's purchases equal those specified in the Statement of Intention, the
escrow is released. If the purchases do not equal those specified in the
Statement of Intention, the shareholder may remit to Investors an amount equal
to the difference between the dollar amount of sales
40
<PAGE>
charges actually paid and the amount of sales charges that would have been paid
on the aggregate purchases if the total of such purchases had been made at a
single time. If the purchaser does not remit this sum to Investors on a timely
basis, Investors will redeem the escrowed shares. The Statement of Intention is
not a binding obligation on the part of the investor to purchase, or the
Portfolio to sell, the full amount indicated. Nevertheless, the Statement of
Intention should be read carefully before it is signed.
TAX SHELTERED RETIREMENT PLANS
IRAS AND TAX QUALIFIED RETIREMENT PLANS. Individual taxpayers can defer taxes on
current income by investing in certain tax qualified retirement plans
established by their employers or Individual Retirement Accounts (IRAs) for
retirement. lRAs may be opened by anyone who has earned compensation for
services rendered. Certain reductions in sales charges set forth under "How to
Buy Portfolio Shares" in the Prospectus are available to any organized group of
individuals desiring to establish IRAs for the benefit of its members. If you
are interested in one of these accounts, contact Investors for copies of our
plans. You should check with your tax adviser before investing.
Under current Federal tax law, IRA depositors generally may contribute 100% of
their earned income up to a maximum of $2,000 (including sales charge).
Contributions up to $2,000 (including sales charge) can be made to IRA accounts
for both an individual and a nonemployed spouse. All shareholders who, along
with their spouse, are not active participants in an employer sponsored
retirement plan or who have adjusted gross income below a specified level can
deduct such contributions (there is a partial deduction for higher income levels
up to a specified amount) from taxable income so that taxes are put off until
retirement, when reduced overall income and added deductions may result in a
lower tax rate. There are penalty taxes for withdrawing this retirement money
before reaching age 59 1/2 (unless the investor dies, is disabled, or withdraws
equal installments over a lifetime). In addition, there are penalties on
insufficient payouts after age 70 1/2, excess contributions, and excess
distributions.
The Portfolio may advertise the number or percentage of its shareholders, or the
amount or percentage of its assets, which are invested in retirement accounts or
in any particular type of retirement account. Such figures also may be given on
an aggregate basis for all of the funds managed by Advisers. Any retirement plan
numbers may be compared to appropriate industry averages.
TAX SAVINGS AND YOUR IRA--A FULLY TAXABLE INVESTMENT COMPARED TO AN INVESTMENT
THROUGH AN IRA
THE FOLLOWING TABLE SHOWS THE YIELD ON AN INVESTMENT OF $2,000 MADE AT THE
BEGINNING OF EACH YEAR FOR A PERIOD OF 10 YEARS AND A PERIOD OF 20 YEARS. FOR
ILLUSTRATIVE PURPOSES ONLY, THE TABLE ASSUMES AN ANNUAL RATE OF RETURN OF 8%.
<TABLE>
<CAPTION>
FULLY FULLY PARTIALLY
TAXABLE DEDUCTIBLE DEDUCTIBLE NON-DEDUCTIBLE
INVESTMENT IRA* IRA** IRA***
----------- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
10 years - 15% $ 24,799 $ 31,291 $ 28,944 $ 26,597
Federal tax bracket
10 years - 28% $ 19,785 $ 31,291 $ 26,910 $ 22,530
Federal tax bracket
10 years - 31% $ 18,702 $ 31,291 $ 26,441 $ 21,591
Federal tax bracket
10 years - 36% $ 16,957 $ 31,291 $ 25,659 $ 20,026
Federal tax bracket
10 years - 39.6% $ 15,744 $ 31,291 $ 25,095 $ 18,900
Federal tax bracket
20 years - 15% $ 72,515 $ 98,846 $ 91,432 $ 84,019
Federal tax bracket
20 years - 28% $ 54,236 $ 98,846 $ 85,007 $ 71,169
Federal tax bracket
20 years - 31% $ 50,526 $ 98,846 $ 83,525 $ 68,204
Federal tax bracket
20 years - 36% $ 44,722 $ 98,846 $ 81,054 $ 63,261
Federal tax bracket
20 years - 39.6% $ 40,820 $ 98,846 $ 79,274 $ 59,703
Federal tax bracket
</TABLE>
- ------------------------
* This column assumes that the entire $2,000 contribution each year is tax
deductible. Tax on income earned on the IRA is deferred.
** This column assumes that only $1,000 of the $2,000 contribution each year is
tax deductible. Tax on income earned in the IRA is deferred.
*** This column assumes that none of the $2,000 contribution each year is tax
deductible. Tax on income earned in the IRA is deferred.
The 15% Federal income tax rate applies to taxable income up to and including
$41,200 for married couples filing jointly and $24,650 for unmarried
individuals. The 28% Federal income tax rate applies to taxable income from
$41,200 to $99,600 for married couples filing jointly and to taxable income from
$24,650 to $59,750 for unmarried individuals. The 31% Federal income tax rate
applies to taxable income from $99,600 to $151,750 for married couples filing
jointly and to taxable income from $59,750 to $121,300 for unmarried
individuals. The 36% Federal income tax rate applies to taxable income from
$151,750 to $271,050 for married couples filing jointly and to taxable income
from $124,650 to $271,050 for unmarried individuals. The 39.6% Federal income
tax rate applies to taxable income above $271,050 for married couples filing
jointly and to taxable income above $271,050 for
41
<PAGE>
unmarried individuals. (Although the above table reflects the nominal Federal
tax rates, the effective Federal tax rates exceed those rates for certain
taxpayers because of the phase-out of personal exemptions and the partial
disallowance of itemized deductions for taxpayers above certain income levels.)
The table reflects only Federal income tax rates for 1997, and not any state or
local income taxes.
- -------------------------------------------------
If you change your mind about opening your IRA, you generally have seven days
after receipt of notification within which to cancel your account. To do this,
you must send a written cancellation to Investors (at its mailing address listed
on the cover page) within that seven day period. If you cancel within seven
days, any amounts invested in the Portfolio will be returned to you, together
with any sales charge. If your investment has declined, Investors will make up
the difference so that you receive the full amount invested.
PENSION; PROFIT-SHARING; IRA; 403(B). Tax qualified retirement plans also are
available, including pension and profit-sharing plans, IRA's, and Section 403(b)
salary reduction arrangements. The Section 403(b) salary reduction arrangement
is principally for employees of state and municipal school systems and employees
of many types of tax-exempt or nonprofit organizations. Persons desiring
information about such Plans, including their availability, should contact
Investors. All the Retirement Plans summarized above involve a long-term
commitment of assets and are subject to various legal requirements and
restrictions. The legal and tax implications may vary according to the
circumstances of the individual investor. Therefore, the investor is urged to
consult with an attorney or tax adviser prior to establishing such a plan.
TAX-QUALIFIED PLAN CUSTODIANS AND TRUSTEES. Current fees: IRA and 403(b)--$10
annually; self-employed or small group corporate plan--$15 initial fee plus $30
annually (plus $5 annually per participant account and a per participant account
termination fee of $25). First Trust National Association is the Custodian under
the IRA and 403(b) plans. If a shareholder pays custodial fees by separate
check, they will not be deducted from his or her account and will not constitute
excess contributions. First Trust National Association also acts as Trustee
under the self-employed and small group corporate plans. The bank reserves the
right to change its fees on 30 days' prior written notice.
WITHHOLDING. Generally, distributions from accounts for tax qualified plans are
subject to either mandatory 20% Federal tax withholding or optional Federal
income tax withholding. Mandatory income tax withholding will not apply if the
payee elects to directly roll his or her distribution to either an IRA or
another qualified retirement plan. Any payee entitled to optional Federal income
tax withholding electing to have no withholding must do so in writing, and must
do so at or before the time that payment is made. A payee is not permitted to
elect no withholding if he or she is subject to mandatory backup withholding
under Federal law for failure to provide his or her tax identification number or
for failure to report all dividend or interest payments. Payees from 403(b) and
tax qualifed plans also are not permitted to elect out of withholding except as
regards systematic partial withdrawals extending over 10 or more years.
For IRAs, the withholding amount is 10% of the amount withdrawn.
Withholding for non-resident aliens is subject to special rules. When payment is
made to a plan trustee, Advisers assumes no responsibility for withholding.
Subsequent payment by the trustee to other payees may require withholding. Such
withholding is the responsibility of the plan trustee or of the plan
administrator.
Any amounts withheld may be applied as a credit against Federal tax subsequently
due.
GIFTS OR TRANSFERS TO MINOR CHILDREN
This gift or transfer is registered in the name of the custodian for a minor
under the Uniform Transfers to Minors Act (in some states the Uniform Gifts to
Minors Act). Dividends or capital gains distributions are taxed to the child,
whose tax bracket is usually lower than the adult's. However, if the child is
under 14 years old and his or her unearned income is more than $1,300 per year,
then that portion of the child's income which exceeds $1,300 per year will be
taxed to the child at the parents' top rate. Control of the shares passes to the
child upon reaching a specified adult age (either 18 or 21 years in most
states).
SYSTEMATIC INVESTMENT PLAN
The Portfolio provides a convenient, voluntary method of purchasing shares in
the Portfolio through its "Systematic Investment Plan."
The principal purposes of the Plan are to encourage thrift by enabling you to
make regular purchases in amounts less than normally required, and to employ the
principle of dollar cost averaging, described below.
By acquiring Portfolio shares on a regular basis pursuant to a Systematic
Investment Plan, or investing regularly on any other systematic plan, the
investor takes advantage of the principle of dollar cost averaging. Under dollar
cost averaging, if a constant amount is invested at regular intervals at varying
price levels, the average cost of all the shares will be lower than the average
of the price levels. This is because the same fixed number of dollars buys more
shares when price levels are low and fewer shares when price levels are high. It
is essential that the investor consider his or her financial ability to continue
this investment program during times of market decline as well as market rise.
The principle of dollar cost averaging will not protect against loss in a
declining market, as a loss will result if the plan is discontinued when the
market value is less than cost.
An investor has no obligation to invest regularly or to continue the Plan, which
may be terminated by the investor at any time without
42
<PAGE>
penalty. Under the Plan, any distributions of income and realized capital gains
will be reinvested in additional shares at net asset value unless a shareholder
instructs Investors in writing to pay them in cash. Investors reserves the right
to increase or decrease the amount required to open and continue a Plan, and to
terminate any Plan after one year if the value of the amount invested is less
than the amount indicated.
EXCHANGE PRIVILEGE
The amount to be exchanged must meet the minimum purchase amount of the fund
being purchased.
Shareholders should consider the differing investment objectives and policies of
these other funds prior to making such exchange.
For Federal tax purposes, except where the transferring shareholder is a tax
qualified plan, a transfer between funds is a taxable event that probably will
give rise to a capital gain or loss. Furthermore, if a shareholder carries out
the exchange within 90 days of purchasing the shares in the Portfolio, the sales
charge incurred on that purchase cannot be taken into account for determining
the shareholder's gain or loss on the sale of those shares to the extent that
the sales charge that would have been applicable to the purchase of the
later-acquired shares in the other fund is reduced because of the exchange
privilege. However, the amount of the sales charge that may not be taken into
account in determining the shareholder's gain or loss on the sale of the
first-acquired shares may be taken into account in determining gain or loss on
the eventual sale or exchange of the later-acquired shares.
REINVESTED DIVIDEND/CAPITAL GAINS DISTRIBUTIONS BETWEEN FORTIS FUNDS
This privilege is based upon the fact that such orders are generally unsolicited
and the resulting lack of sales effort and expense.
PURCHASES BY FORTIS, INC. (OR ITS SUBSIDIARIES) OR ASSOCIATED PERSONS
This privilege is based upon the relationship of such persons to the Portfolio
and the resulting economies of sales effort and expense.
PURCHASES BY FORTIS WORLDWIDE DIRECTORS OR OFFICERS
This privilege is based upon their familiarity with the Portfolio and the
resulting lack of sales effort and expense.
PURCHASES BY REPRESENTATIVES OR EMPLOYEES OF
BROKER-DEALERS
This privilege is based upon the presumed knowledge such persons have about the
Portfolio as a result of their working for a company selling the Portfolio's
shares and resulting economies of sales effort and expense.
PURCHASES BY CERTAIN RETIREMENT PLANS
This privilege is based upon the familiarity of such investors with the
Portfolio and the resulting lack of sales effort and expense.
PURCHASES BY REGISTERED INVESTMENT COMPANIES
This privilege is based upon the generally unsolicited nature of such purchases
and the resulting lack of sales effort and expense.
PURCHASES WITH PROCEEDS FROM REDEMPTION OF UNRELATED MUTUAL FUND SHARES OR
SURRENDER OF CERTAIN FIXED ANNUITY CONTRACTS
SHAREHOLDERS OF UNRELATED MUTUAL FUNDS WITH SALES LOADS--This privilege is based
upon the existing relationship of such persons with their broker-dealer or
registered representative and/or the familiarity of such shareholders with
mutual funds as an investment concept, with resulting economies of sales effort
and expense.
OWNERS OF A FIXED ANNUITY CONTRACT NOT DEEMED A SECURITY UNDER THE SECURITIES
LAWS--This privilege is based upon the existing relationship of such persons
with their broker-dealer or registered representative and/or the lower
acquisition costs associated with such sale, with resulting economies of sales
effort and expense.
PURCHASES BY EMPLOYEES OF CERTAIN BANKS AND OTHER FINANCIAL SERVICES FIRMS
This privilege is based upon the familiarity of such investors with the
Portfolio and the resulting lack of sales effort and expense.
PURCHASES BY COMMERCIAL BANKS OFFERING SELF DIRECTED 401(K) PROGRAMS CONTAINING
BOTH POOLED AND INDIVIDUAL INVESTMENT OPTIONS
This privilege is based upon the existing relationship of such persons with
their broker-dealer or registered representative and/ or the lower acquisition
costs associated with such sale, with resulting economies of sales effort and
expense.
PURCHASES BY INVESTMENT ADVISERS, TRUST COMPANIES, AND BANK TRUST DEPARTMENTS
EXERCISING DISCRETIONARY INVESTMENT AUTHORITY OR USING A MONEY MANAGEMENT MUTUAL
FUND "WRAP" PROGRAM
This privilege is based upon the familiarity of such investors with the
Portfolio and the resulting lack of sales effort and expense.
REDEMPTION
The obligation of the Portfolio to redeem its shares when called upon to do so
by the shareholder is mandatory with certain exceptions. The Portfolio will pay
in cash all redemption requests by a shareholder of record, limited in amount
during any 90-day period to the lesser of $250,000 or 1% of the net asset value
of the Portfolio at the beginning of such period. When redemption requests
exceed such amount, however, the Portfolio reserves the
43
<PAGE>
right to make part or all of the payment in the form of readily marketable
securities or other assets of the Portfolio. An example of when this might be
done is in case of emergency, such as in those situations enumerated in the
following paragraph, or at any time a cash distribution would impair the
liquidity of the Portfolio to the detriment of the existing shareholders. Any
securities being so distributed would be valued in the same manner as the
Portfolio is valued. If the recipient sold such securities, he or she probably
would incur brokerage charges.
Redemption of shares, or payment, may be suspended at times (a) when the
Exchange is closed for other than customary weekend or holiday closings, (b)
when trading on said Exchange is restricted, (c) when an emergency exists, as a
result of which disposal by the Portfolio of securities owned by it is not
reasonably practicable, or it is not reasonably practicable for the Portfolio
fairly to determine the value of its net assets, or during any other period when
the Securities and Exchange Commission, by order, so permits; provided that
applicable rules and regulations of the Securities and Exchange Commission shall
govern as to whether the conditions prescribed in (b) or (c) exist. The Exchange
is not open for business on the following holidays (nor on the nearest Monday or
Friday if the holiday falls on a weekend), on which the Fund will not redeem
shares: New Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day, Labor Day, Thanksgiving Day, and Christmas Day.
There is no charge for redemption, nor does the Portfolio contemplate
establishing a charge, although it has the right to do so. In the event a charge
were established, it would apply only to persons who became shareholders after
such charge was implemented, and it would not, in any event, exceed 1% of the
net asset value of the shares redeemed. Should further public sales ever be
discontinued, the Portfolio may deduct a proportionate share of the cost of
liquidating assets from the asset value of the shares being redeemed, in order
to protect the equity of the other shareholders.
SYSTEMATIC WITHDRAWAL PLAN
An investor may open a "Systematic Withdrawal Plan" providing for withdrawals of
$50 or more per quarter, semiannually, or annually if he or she has made a
minimum investment in Portfolio shares of $4,000 ($50 or more per month if at
least $10,000 has been invested), or has acquired and deposited shares having
either an original cost, or current value computed on the basis of the offering
price, equal to the appropriate amount. The minimum amount which may be
withdrawn of $50 per month is a minimum only, and should not be considered a
recommendation.
These payments may constitute return of capital, and it should be understood
that they do not represent a yield or return on investment and that they may
deplete or eliminate the investment. The shareholder cannot be assured of
receiving payment for any specific period because payments will terminate when
all shares have been redeemed. The number of such payments will depend on the
amount of each payment, the frequency of each payment, and the increase (or
decrease) in value of the remaining shares.
Under this Plan, any distributions of income and realized capital gains are
reinvested at net asset value. If a shareholder wishes to purchase additional
shares of the Portfolio under this Plan, other than by reinvestment of
distributions, it should be understood that he or she would be paying a sales
commission on such purchases, while liquidations effected under the Plan would
be at net asset value. Additions to a shareholder account in which an election
has been made to receive systematic withdrawals will be accepted only if each
such addition is equal to at least one year's scheduled withdrawals or $1,200,
whichever is greater. A shareholder may not have a "Systematic Withdrawal Plan"
and a "Systematic Investment Plan" in effect simultaneously, as it is not, as
explained above, advantageous to do so.
The Plan is voluntary, flexible, and under the shareholder's control and
direction at all times, and does not limit or alter his or her right to redeem
shares. The Plan may be terminated in writing at any time by either the
shareholder or the Portfolio. The cost of operating the Plan is borne by
Advisers. The redemption of Portfolio shares pursuant to the Plan is a taxable
event to the shareholder.
REINVESTMENT PRIVILEGE
In order to allow investors who have redeemed Portfolio shares an opportunity to
reinvest, without additional cost, a one-time privilege is offered whereby an
investor may reinvest in the Portfolio, or in any other fund underwritten by
Investors and available to the public, without a sales charge. The reinvestment
privilege must be exercised in an amount not exceeding the proceeds of
redemption; must be exercised within 60 days of redemption; and only may be
exercised once with respect to the Portfolio.
The purchase price for Portfolio shares will be based upon net asset value at
the time of reinvestment, and may be more or less than the redemption value.
Should an investor utilize the reinvestment privilege within 30 days following a
redemption which resulted in a loss, all or a portion of that loss may not be
currently deductible for Federal income tax purposes. Exercising the
reinvestment privilege would not alter any capital gains taxes payable on a
realized gain. Furthermore, if a shareholder redeems within 90 days of
purchasing the shares in the Portfolio, the sales charge incurred on that
purchase cannot be taken into account for determining the shareholder's gain or
loss on the sale of those shares.
TAXATION
The Portfolio qualified in the fiscal year ended October 31, 1996, and intends
to continue to qualify, as a regulated investment company under the Internal
Revenue Code of 1986, as amended (the "Code"). As long as the Portfolio so
qualifies, the Portfolio is not taxed on the income it distributes to its
shareholders.
44
<PAGE>
For individuals in taxable year 1997, long-term capital gains are subject to a
maximum tax rate of 28% while ordinary income is subject to a maximum rate of
39.6% (for taxable income in excess of $271,050). (The maximum effective tax
rate may be in excess of 39.6%, resulting from a combination of the nominal tax
rate and a phase-out of personal exemptions and a partial disallowance of
itemized deductions for individuals with taxable incomes above certain levels.)
Gain or loss realized upon the sale of shares in the Portfolio will be treated
as capital gain or loss, provided that the shares represented a capital asset in
the hands of the shareholder. Such gain or loss will be long-term capital gain
or loss if the shares were held for more than one year.
Under the Code, the Portfolio is subject to a nondeductible excise tax for each
calendar year equal to 4 percent of the excess, if any, of the amount required
to be distributed over the amount distributed. However, the excise tax does not
apply to any income on which the Portfolio pays income tax. In order to avoid
the imposition of the excise tax, the Portfolio generally must declare dividends
by the end of a calendar year representing at least 98 percent of the
Portfolio's ordinary income for the calendar year and 98 percent of its capital
gain net income (both long-term and short-term capital gains) for the 12-month
period ending October 31 of the calendar year.
The marked-to-market rules of the Code may require the Portfolio to recognize
gains and losses on certain options and futures held by the Portfolio at the end
of the fiscal year. Under the marked-to-market rules, 60% of any net capital
gain or loss recognized is treated as long-term and 40% as short-term. In
addition, the straddle rules of the Code would require deferral of certain
losses realized on positions of a straddle to the extent that the Portfolio had
unrealized gains in offsetting positions at year end.
If the Portfolio invests in zero coupon obligations upon their issuance, such
obligations will have original issue discount in the hands of the Portfolio.
Generally, the original issue discount equals the difference between the "stated
redemption price at maturity" of the obligation and its "issue price" as those
terms are defined in the Code. If the Portfolio acquires an already issued zero
coupon bond from another holder, the bond will have original issue discount in
the Portfolio's hands, equal to the difference between the "adjusted issue
price" of the bond at the time the Portfolio acquires it (that is, the original
issue price of the bond plus the amount of original issue discount accrued to
date) and its stated redemption price at maturity. In each case, the Portfolio
is required to accrue as ordinary interest income a portion of such original
issue discount even though the Portfolio receives no cash currently as interest
payment on the obligation.
Because the Portfolio is required to distribute substantially all of its net
investment income (including accrued original issue discount) in order to
qualify as a regulated investment company, the Portfolio may be required to
distribute an amount greater than the total cash income the Portfolio actually
receives. Accordingly, in order to make the required distribution, the Portfolio
may be required to borrow or to liquidate securities. The extent to which the
Portfolio may liquidate securities at a gain may be limited by the requirement
that generally less than 30% of the Portfolio's gross income (on an annual
basis) consists of gains from the sale of securities held for less than three
months.
Under Section 988 of the Code, all or a portion of gains and losses from certain
transactions is treated as ordinary income or loss. These rules generally apply
to transactions in certain securities denominated in foreign currencies, forward
contracts in foreign currencies, futures contracts in foreign currencies that
are not "regulated futures contracts," certain unlisted options and foreign
currency swaps. The rules under Section 988 may also affect the timing of income
recognized by the Portfolio.
Pursuant to a special provision in the Code, if Portfolio shares with respect to
which a long-term capital gain distribution has been made are held for six
months or less, any loss on the sale or other disposition of such shares will be
a long-term capital loss to the extent of such long-term capital gain
distribution, unless such sale or other disposition is pursuant to a Systematic
Withdrawal Plan.
To the extent paid from "qualifying dividends" paid by a domestic corporation,
distributions to corporate shareholders will qualify for the 70% dividends
received deduction.
Under the Code, the Portfolio is required to withhold and remit to the U.S.
Treasury 31% of dividend and capital gain income on the accounts of certain
shareholders who fail to provide a correct tax identification number, fail to
certify that they are not subject to backup withholding, or are subject to
backup withholding for some other reason.
If more than 50% of the Portfolio's total assets at the close of its fiscal year
consist of securities of foreign corporations, it will be eligible to, and may,
file an election with the Internal Revenue Service pursuant to which
shareholders will be required to include their pro rata portions of foreign
taxes paid by the Portfolio as income received by them. Shareholders may then
either deduct such pro rata portions in computing their taxable income or use
them as foreign tax credits against their United States income taxes. If it
makes such an election, the Portfolio will report annually to each shareholder
the amount of foreign taxes to be included in income and then either deducted or
credited.
Alternatively, if the amount of foreign taxes paid by the Portfolio is not large
enough to warrant its making the election described above, the Portfolio may
claim the amount of foreign taxes paid as a deduction against its own gross
income. In that case, shareholders would not be required to include any amount
of foreign taxes paid by the Portfolio in their income and would not be
permitted either to deduct any portion of foreign taxes from their own income or
to claim any amount of foreign tax credit for taxes paid by the Portfolio.
45
<PAGE>
For Federal income tax purposes, the Portfolio had a capital loss carryover of
$5,036,773 at October 31, 1996, which, if not offset by subsequent capital
gains, will expire as follows:
<TABLE>
<S> <C>
2000...................... $ 483,191
2001...................... $ 125,453
2002...................... $1,054,200
2003...................... $3,202,055
2004...................... $ 171,874
</TABLE>
It is unlikely the Board of Directors will authorize a distribution of any net
realized gains until the available capital loss carryover has been offset or
expired.
The foregoing is a general discussion of the Federal income tax consequences of
an investment in the Portfolio as of the date of this Statement of Additional
Information. Distributions from net investment income and from net realized
capital gains may also be subject to state and local taxes. Shareholders are
urged to consult their own tax advisers regarding specific questions as to
Federal, state, or local taxes.
UNDERWRITER
On December 5, 1996, the Board of Directors (including a majority of the
directors who are not parties to the contract, or interested persons of any such
party) last approved a new Underwriting Agreement with Investors dated November
14, 1994, which became effective November 14, 1994. This Underwriting Agreement
may be terminated by Fortis Worldwide or Investors at any time by the giving of
60 days' written notice, and terminates automatically in the event of its
assignment. Unless sooner terminated, the Underwriting Agreement shall continue
in effect for more than two years after its execution only so long as such
continuance is also approved by the vote of a majority of the directors who are
not parties to such Underwriting Agreement, or interested persons of such
parties, cast in person at a meeting called for the purpose of voting on such
approval.
The Underwriting Agreement requires Investors or Advisers to pay all promotional
expenses in connection with the distribution of the Portfolio's shares,
including paying for printing and distributing prospectuses and shareholder
reports to new shareholders, and the costs of sales literature. See "Plan of
Distribution," below, regarding fees paid to Investors to be used to compensate
those who sell Portfolio shares and to pay certain other expenses of selling
Portfolio shares.
In the Underwriting Agreement, Investors undertakes to indemnify Fortis
Worldwide against all costs of litigation and other legal proceedings, and
against any liability incurred by or imposed upon Fortis Worldwide in any way
arising out of or in connection with the sale or distribution of the Portfolio's
shares, except to the extent that such liability is the result of information
which was obtainable by Investors only from persons affiliated with Fortis
Worldwide but not with Investors.
PLAN OF DISTRIBUTION
The policy of having the Portfolio compensate those who sell Portfolio shares
has been adopted pursuant to Rule 12b-1 under the Investment Company Act of
1940. Rule 12b-1(b) provides that any payments made by the Portfolio in
connection with financing the distribution of its shares may only be made
pursuant to a written plan describing all aspects of the proposed financing of
distribution, and also requires that all agreements with any person relating to
the implementation of the plan must be in writing. In addition, Rule 12b-1(b)(1)
requires that such plan be approved by a majority of the Portfolio's outstanding
shares, and Rule 12b-1(b)(1) requires that such plan, together with any related
agreements, be approved by a vote of the Board of Directors who are not
interested persons of the Portfolio and have no direct or indirect interest in
the operation of the plan or in the agreements related to the plan, cast in
person at a meeting called for the purpose of voting on such plan or agreement.
Rule 12b-1(b)(3) requires that the plan or agreement provide in substance:
(i) That it shall continue in effect for a period of more than one year from
the date of its execution or adoption only so long as such continuance is
specifically approved at least annually in the manner described in paragraph
(b)(2) of Rule 12b-1;
(ii) That any person authorized to direct the disposition of monies paid or
payable by the Portfolio pursuant to the plan or any related agreement shall
provide to the Board of Directors, and the directors shall review, at least
quarterly, a written report of the amounts so expended and the purpose for which
such expenditures were made; and
(iii) In the case of a plan, that it may be terminated at any time by vote of
a majority of the members of the Board of Directors who are not interested
persons of the Portfolio and have no direct or indirect financial interest in
the operation of the plan, or in any agreements related to the plan or by vote
of a majority of the outstanding voting securities of the Portfolio.
Rule 12b-1(b)(4) requires that such plans may not be amended to increase
materially the amount to be spent for distribution without shareholder approval
and that all material amendments of the plan must be approved in the manner
described in paragraph (b)(2) of Rule 12b-1.
Rule 12b-1(c) provides that the Portfolio may rely on Rule 12b-1(b) only if the
selection and nomination of the disinterested directors of Fortis Worldwide are
committed to the discretion of such disinterested directors. Rule 12b-1(e)
provides that the Portfolio may implement or continue a plan pursuant to Rule
12b-1(b) only if the directors who vote to approve such implementation or
continuation conclude, in the exercise of reasonable business judgment and in
light of their fiduciary duties under state law, and under Section 26(a) and (b)
of the Investment Company Act of 1940, that there is a reasonable likelihood
that the plan will benefit the Portfolio and its shareholders. The Board of
Directors has made such conclusion.
The Board of Directors last approved the plan on December 5, 1996.
46
<PAGE>
PERFORMANCE
$1,000 SINGLE INVESTMENT
<TABLE>
<CAPTION>
VALUE OF WORLDWIDE GLOBAL GROWTH CLASS A
INITIAL REINVESTED
YEAR $1,000 CAPITAL GAINS REINVESTED TOTAL
ENDED INVEST- DISTRI- INCOME CUMULATIVE % YEARLY
OCTOBER 31, MENT($) + BUTIONS($) + DIVIDENDS($) = VALUE($) CHANGE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
91* 1,030 0 0 1,030 3.0%
92 1,092 1 2 1,095 6.3%
93 1,367 1 2 1,370 25.1%
94 1,401 1 2 1,404 2.5%
95 1,729 1 3 1,733 23.4%
96 2,017 1 4 2,022 16.7%
5 yr 90.1%
CUMULATIVE TOTAL RETURN Life of Class 102.2%
<CAPTION>
S&P 500 DJIA MSCI WORLD
YEAR TOTAL TOTAL TOTAL
ENDED CUMULATIVE % YEARLY CUMULATIVE % YEARLY CUMULATIVE % YEARLY
OCTOBER 31, VALUE($) CHANGE VALUE($) CHANGE VALUE($) CHANGE
<S> <C> <C> <C> <C> <C> <C>
91* 1,068 6.8% 1,067 6.7% 1,090 9.0%
92 1,174 9.9% 1,156 8.3% 1,041 -4.5%
93 1,349 14.9% 1,357 17.4% 1,331 27.9%
94 1,402 3.9% 1,480 9.1% 1,439 8.1%
95 1,772 26.4% 1,854 25.3% 1,584 10.1%
96 2,188 23.5% 2,422 30.6% 1,850 16.8%
-- -- -- 107.7% -- -- -- 131.5% -- -- -- 72.6 %
-- -- -- 118.8% -- -- -- 142.2% -- -- -- 85.0 %
</TABLE>
$1,000 SINGLE INVESTMENT
<TABLE>
<CAPTION>
VALUE OF WORLDWIDE GLOBAL GROWTH CLASS B
INITIAL REINVESTED
$1,000 CAPITAL GAINS REINVESTED TOTAL
YEAR ENDED INVEST- DISTRI- INCOME CUMULATIVE % YEARLY
OCTOBER 31, MENT($) + BUTIONS($) + DIVIDENDS($) = VALUE($) CHANGE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
95** 1,241 0 0 1,241 24.1%
96 1,437 0 0 1,437 15.8%
CUMULATIVE TOTAL RETURN Life of Class 43.7%
<CAPTION>
S&P 500 DJIA MSCI WORLD
TOTAL TOTAL TOTAL
YEAR ENDED CUMULATIVE % YEARLY CUMULATIVE % YEARLY CUMULATIVE % YEARLY
OCTOBER 31, VALUE($) CHANGE VALUE($) CHANGE VALUE($) CHANGE
<S> <C> <C> <C> <C> <C> <C>
95** 1,264 26.4% 1,253 25.3% 1,100 10.0%
96 1,561 23.5% 1,636 30.6% 1,286 16.9%
-- -- -- 56.1% -- -- -- 63.6% -- -- -- 28.6 %
</TABLE>
$1,000 SINGLE INVESTMENT
<TABLE>
<CAPTION>
VALUE OF WORLDWIDE GLOBAL GROWTH CLASS C
INITIAL REINVESTED
$1,000 CAPITAL GAINS REINVESTED TOTAL
YEAR ENDED INVEST- DISTRI- INCOME CUMULATIVE % YEARLY
OCTOBER 31, MENT($) + BUTIONS($) + DIVIDENDS($) = VALUE($) CHANGE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
95** 1,242 0 0 1,242 24.2%
96 1,438 0 0 1,438 15.8%
CUMULATIVE TOTAL RETURN Life of Class 43.8%
<CAPTION>
S&P 500 DJIA MSCI WORLD
TOTAL TOTAL TOTAL
YEAR ENDED CUMULATIVE % YEARLY CUMULATIVE % YEARLY CUMULATIVE % YEARLY
OCTOBER 31, VALUE($) CHANGE VALUE($) CHANGE VALUE($) CHANGE
<S> <C> <C> <C> <C> <C> <C>
95** 1,264 26.4% 1,253 25.3% 1,100 10.0%
96 1,561 23.5% 1,636 30.6% 1,286 16.9%
-- -- -- 56.1% -- -- -- 63.6% -- -- -- 28.6 %
</TABLE>
$1,000 SINGLE INVESTMENT
<TABLE>
<CAPTION>
VALUE OF WORLDWIDE GLOBAL GROWTH CLASS H
INITIAL REINVESTED
$1,000 CAPITAL GAINS REINVESTED TOTAL
YEAR ENDED INVEST- DISTRI- INCOME CUMULATIVE % YEARLY
OCTOBER 31, MENT($) + BUTIONS($) + DIVIDENDS($) = VALUE($) CHANGE
<S> <C> <C> <C> <C> <C> <C> <C> <C>
95** 1,241 0 0 1,241 24.1%
96 1,438 0 0 1,438 15.9%
CUMULATIVE TOTAL RETURN Life of Class 43.8%
<CAPTION>
S&P 500 DJIA MSCI WORLD
TOTAL TOTAL TOTAL
YEAR ENDED CUMULATIVE % YEARLY CUMULATIVE % YEARLY CUMULATIVE % YEARLY
OCTOBER 31, VALUE($) CHANGE VALUE($) CHANGE VALUE($) CHANGE
<S> <C> <C> <C> <C> <C> <C>
95** 1,264 26.4% 1,253 25.3% 1,100 10.0%
96 1,561 23.5% 1,636 30.6% 1,286 16.9%
-- -- -- 56.1% -- -- -- 63.6% -- -- -- 28.6 %
</TABLE>
47
<PAGE>
AVERAGE ANNUAL TOTAL RETURN
(Percentages based upon the above hypothetical investment)
<TABLE>
<CAPTION>
LIFE OF
1 YEARS 2 YEARS 3 YEARS 4 YEARS 5 YEARS CLASS*
<S> <C> <C> <C> <C> <C> <C>
Worldwide Global Growth Class A 11.13% 17.11% 12.02% 15.17% 13.33% 14.15%
S&P 500 23.52% 24.95% 17.51% 16.85% 15.43% 15.81%
DJIA 30.62% 27.91% 21.29% 20.32% 17.81% 18.04%
MSCI World 16.84% 13.38% 11.62% 15.46% 11.16% 12.22%
</TABLE>
<TABLE>
<CAPTION>
LIFE OF
1 YEARS CLASS**
<S> <C> <C> <C> <C> <C> <C>
Worldwide Global Growth Class B (without CDSC) 15.78% 20.27%
Worldwide Global Growth Class B (with CDSC)*** 12.18% 18.72%
Worldwide Global Growth Class C (without CDSC) 15.83% 20.33%
Worldwide Global Growth Class C (with CDSC)*** 14.83% 20.33%
Worldwide Global Growth Class H (without CDSC) 15.84% 20.30%
Worldwide Global Growth Class H (with CDSC)*** 12.24% 18.76%
S&P 500 23.52% 24.94%
DIJA 30.62% 27.91%
MSCI World 16.84% 13.40%
</TABLE>
Cumulative total return is the increase in value of a hypothetical $1,000
investment made at the beginning of the advertised period. It may be expressed
in terms of dollars or percentage. Average annual return is the average annual
compounded rate of return based upon the same hypothetical investment. The above
tables each include reduction due to the maximum 4.75% sales charge and assume
quarterly reinvestment of all dividend and capital gains distributions (for the
Standard & Poor's 500 Stock Index ("S&P 500"), Dow Jones Industrial Average
("DJIA"), and MSCI World Index ("MSCI World") as well as the Portfolio). Both
indices consist of unmanaged groups of common stock. Had dividends and capital
gains distributions been taken in cash, with no shares being acquired through
reinvestment, the cash payments for Classes A, B, C, and H, for the period would
have been $1, $0, $0, and $0, respectively, for capital gains distributions and
$2, $0, $0, and $0, respectively, for income dividends, and the value of the
shares as of October 31, 1996, would have been $2,017, $1,437, $1,438, and
$1,438, respectively.
All figures are based upon historical earnings and are not intended to indicate
future performance. Investment return and share value fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. No adjustments has been made for a shareholder's income tax liability on
dividends or capital gains.
- ------------------------------
* Since July 8, 1991, inception.
** Since November 14, 1994, date shares were first offered to the public.
*** Assumes redemption on October 31, 1996.
48
<PAGE>
Cumulative total return is computed by finding the cumulative compounded rate of
return over the period indicated in the advertisement that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
ERV-P
CTR = ( ----- ) 100
P
Where: CTR = Cumulative total return
ERV = ending redeemable value at the end of
the period of a hypothetical $1,000
payment made at the beginning of such
period; and
P = initial payment of $1,000
This calculation assumes all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the Prospectus and includes all recurring fees, such as investment advisory
and management fees, charged to all shareholder accounts.
Average annual total return figures are computed by finding the average annual
compounded rates of return over the periods indicated in the advertisement that
would equate the initial amount invested to the ending redeemable value,
according to the following formula:
P(1+T)n = ERV
<TABLE>
<S> <C> <C> <C>
Where: P = a hypothetical initial payment of $1,000
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of
the period of a hypothetical $1,000
payment made at the beginning of such
period.
</TABLE>
This calculation deducts the maximum sales charge from the initial hypothetical
$1,000 investment, assumes all dividends and capital gains distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the Prospectus, and includes all recurring fees, such as investment advisory
and management fees, charged to all shareholder accounts.
As noted in the Prospectus, the Portfolio may advertise its relative performance
as compiled by outside organizations or refer to publications which have
mentioned its performance.
The Portfolio may from time to time compare the Portfolio with the following:
(1) The Salomon Brothers Non-U.S. Dollars Indices, which are measures of the
total return performance of high-quality non-U.S. dollar denominated securities
in major sectors of the worldwide bond markets.
(2) The Shearson Lehman Government/Corporate Bond Index, which is a
comprehensive measure of all public obligations of the U.S. Treasury (excluding
flower bonds and foreign targeted issues), all publicly issued debt of agencies
of the U.S. Government (excluding mortgage-backed securities), and all public,
fixed rate, nonconvertible investment grade domestic corporate debt rated at
least Baa by Moody's Investors Service, Inc. or BBB by Standard & Poor's Ratings
Services, or, in the case of nonrated bonds, BBB by Fitch Investors Service
(excluding Collateralized Mortgage Obligations).
(3) Average of Savings Accounts, which is a measure of all kinds of savings
deposits, including longer-term certificates (based on figures supplied by the
U.S. League of Savings Institutions). Savings accounts offer a guaranteed rate
of return on principal, but no opportunity for capital growth. During a portion
of the period, the maximum rates paid on some savings deposits were fixed by
law.
(4) The Consumer Price Index, which is a measure of the average change in
prices over time in a fixed market basket of goods and services (e.g., food,
clothing, shelter, fuels, transportation fares, charges for doctors' and
dentists' services, prescription medicines, and other goods and services that
people buy for day-to-day living).
(5) Bear Stearns Foreign Bond Index, which provides simple average returns
for individual countries and GNP-weighted index, beginning in 1975. The returns
are broken down by local market and currency.
(6) Ibbottson Associates International Bond Index, which provides a detailed
breakdown of local market and currency returns since 1960.
(7) Standard & Poor's "500" Index ("S&P 500") which is a widely recognized
index composed of the capitalization-weighted average of the price of 500 of the
largest publicly traded stocks in the United States.
(8) Salomon Brothers Broad Investment Grade Index which is a widely used
index composed of U.S. domestic government, corporate and mortgage-backed fixed
income securities.
(9) Dow Jones Industrial Average.
(10) Financial News Composite Index.
(11) Morgan Stanley Capital International World Indices, including, among
others, the Morgan Stanley World Index ("MSCI World") and the Morgan Stanley
Capital International Europe, Australia, Far East Index ("EAFE Index"). The EAFE
index is an unmanaged index of more than 800 companies of Europe, Australia, and
the Far East.
Indices prepared by the research departments of such financial organizations as
Salomon Brothers, Inc.; Merrill Lynch, Pierce, Fenner & Smith, Inc.; Bear
Stearns & Co., Inc.; Morgan Stanley; and Ibbottson Associates may be used, as
well as information provided by the Federal Reserve Board.
49
<PAGE>
Following is a list of ratings services which may be referred to, along with the
category in which the Portfolio is included. Because some of these services do
not take into account sales charges, their ratings may sometimes be different
than had they done so:
<TABLE>
<CAPTION>
RATINGS SERVICE CATEGORY
- --------------------------------- --------------------
<S> <C>
Lipper Analytical Services, Inc. Global fund
Wiesenberger Investment Companies
Services International equity
Morningstar Publications, Inc. World stock
Johnson's Charts International fund
CDA Technologies, Inc. International equity
</TABLE>
Following is a list of the publications whose articles may be referred to:
AMERICAN BANKER (The)
AP-DOW Jones News Service
ASSOCIATED PRESS (The)
BARRON'S
BETTER INVESTING
BOARDROOM REPORTS
BOND BUYER & CREDIT MARKETS (The)
BOND BUYER (The)
BONDWEEK
BUSINESS MONTH
BUSINESS WEEK
CABLE NEWS NETWORK
CASHFLOW MAGAZINE
CFO
CHICAGO TRIBUNE (The)
CHRISTIAN SCIENCE MONITOR
CITY BUSINESS/CORPORATE REPORT
CITYBUSINESS PUBLICATIONS
COMMERCIAL & FINANCIAL CHRONICLE
CONSUMER GUIDE
CORPORATE FINANCE
DALLAS MORNING NEWS
DOLLARS & SENSE
DOW-JONES NEWS SERVICE
ECONOMIST (The)
EQUITY INTERNATIONAL
EUROMONEY
FINANCIAL EXECUTIVE
FINANCIAL PLANNING
FINANCIAL SERVICES WEEK
FINANCIAL TIMES
FINANCIAL WORLD
FORBES
FORTUNE
FUTURES
GLOBAL FINANCE
GLOBAL INVESTOR
INDUSTRY WEEK
INSTITUTIONAL INVESTOR
INTERNATIONAL HERALD TRIBUNE
INVESTMENT DEALER'S DIGEST
INVESTOR'S BUSINESS DAILY
KIPLINGER PERSONAL FINANCE
KIPLINGER CALIF. LETTER (The)
KIPLINGER FLORIDA LETTER
KIPLINGER TEXAS LETTER
KIPLINGER WASHINGTON LETTER (The)
KNIGHT/RIDDER FINANCIAL
LA TIMES
LIPPER ANALYTICAL SERVICES
MARKET CHRONICLE
MINNEAPOLIS STAR TRIBUNE
MONEY
MONEY MANAGEMENT LETTER
MOODY'S INVESTORS SERVICE, INC.
NATIONAL THRIFT NEWS
NATIONAL UNDERWRITER
NELSON'S RESEARCH MONTHLY
NEW YORK DAILY NEWS
NEW YORK NEWSDAY
NEW YORK TIMES (The)
NEWSWEEK
NIGHTLY BUSINESS REPORT (The)
PENSION WORLD
PENSIONS & INVESTMENT AGE
PERSONAL INVESTOR
PORTFOLIO LETTER
REGISTERED REPRESENTATIVE
RUETERS
SECURITIES PRODUCT NEWS
SECURITIES WEEK
SECURITY TRADERS HANDBOOK
SAINT PAUL PIONEER PRESS
STANDARD & POOR'S CORPORATION
STANGER'S INVESTMENT ADVISOR
STANGER'S SELLING MUTUAL FUNDS
STOCK MARKET MAGAZINE (The)
TIME
TRUSTS & ESTATES
U.S. NEWS & WORLD REPORT
UNITED PRESS INTERNATIONAL
USA TODAY
WALL STREET JOURNAL (The)
WASHINGTON POST (The)
FORTIS BENEFITS INSURANCE COMPANY
WOODBURY BULLETIN
WIESENBERGER INVESTMENT COMPANIES
SERVICES
50
<PAGE>
FINANCIAL STATEMENTS
The financial statements included as part of the Portfolio's 1996 Annual Report
to Shareholders, filed with the Securities and Exchange Commission in December,
1996, are incorporated herein by reference. The Annual Report accompanies this
Statement of Additional Information.
CUSTODIAN; COUNSEL; ACCOUNTANTS
First Bank National Association, 200 South Sixth Street, Minneapolis, Minnesota
55402 acts as custodian of the Portfolio's assets and portfolio securities;
Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402, is
the independent General Counsel for the Portfolio; and KPMG Peat Marwick LLP,
4200 Norwest Center, Minneapolis, Minnesota 55402, acts as the Portfolio's
independent accountants.
LIMITATION OF DIRECTOR LIABILITY
Under Minnesota law, each director of Fortis Worldwide owes certain fiduciary
duties to it and to its shareholders. Minnesota law provides that a director
"shall discharge the duties of the position of director in good faith, in a
manner the director reasonably believes to be in the best interest of the
corporation, and with the care an ordinarily prudent person in a like position
would exercise under similar circumstances." Fiduciary duties of a director of a
Minnesota corporation include, therefore, both a duty of "loyalty" (to act in
good faith and act in a manner reasonably believed to be in the best interests
of the corporation) and a duty of "care" (to act with the care an ordinarily
prudent person in a like position would exercise under similar circumstances).
Minnesota law authorizes corporations to eliminate or limit the personal
liability of a director to the corporation or its shareholders for monetary
damages for breach of the fiduciary duty of "care." Minnesota law does not,
however, permit a corporation to eliminate or limit the liability of a director
(i) for any breach of the directors' duty of "loyalty" to the corporation or its
shareholders, (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) for authorizing a
dividend, stock repurchase or redemption or other
distribution in violation of Minnesota law or for violation of certain
provisions of Minnesota securities laws, or (iv) for any transaction from which
the director derived an improper personal benefit. The Articles of Incorporation
of Fortis Worldwide limit the liability of directors to the fullest extent
permitted by Minnesota statutes, except to the extent that such liability cannot
be limited as provided in the Investment Company Act of 1940 (which Act
prohibits any provisions which purport to limit the liability of directors
arising from such directors' willful misfeasance, bad faith, gross negligence,
or reckless disregard of the duties involved in the conduct of their role as
directors).
Minnesota law does not eliminate the duty of "care" imposed upon a director. It
only authorizes a corporation to eliminate monetary liability for violations of
that duty. Minnesota law, further, does not permit elimination or limitation of
liability of "officers" to the corporation for breach of their duties as
officers (including the liability of directors who serve as officers for breach
of their duties as officers). Minnesota law does not permit elimination or
limitation of the availability of equitable relief, such as injunctive or
rescissionary relief. Further, Minnesota law does not permit elimination or
limitation of a director's liability under the Securities Act of 1933 or the
Securities Exchange Act of 1934, and it is uncertain whether and to what extent
the elimination of monetary liability would extend to violations of duties
imposed on directors by the Investment Company Act of 1940 and the rules and
regulations adopted under such Act.
ADDITIONAL INFORMATION
Fortis Worldwide has filed with the Securities and Exchange Commission,
Washington, D.C. 20549, a Registration Statement under the Securities Act of
1933, as amended, with respect to the common shares offered hereby. The
Prospectus and this Statement of Additional Information do not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with Rules and Regulations of the Commission. The
Registration Statement may be inspected at the principal office of the
Commission at 450 Fifth Street, N.W., Washington, D.C., and copies thereof may
be obtained from the Commission at prescribed rates.
51
<PAGE>
APPENDIX A
CORPORATE BOND, PREFERRED STOCK, AND COMMERCIAL PAPER RATINGS
COMMERCIAL PAPER RATINGS
STANDARD & POOR'S RATINGS SERVICES. Commercial paper ratings are graded into
four categories, ranging from "A" for the highest quality obligations to "D" for
the lowest. Issues assigned the A rating are regarded as having the greatest
capacity for timely payment. Issues in this category are further refined with
designation 1, 2, and 3 to indicate the relative degree of safety. The "A-1"
designation indicates that the degree of safety regarding timely payment is very
strong. Those issues determined to possess overwhelming safety characteristics
will be denoted with a plus (+) sign designation. The "A-2" designation
indicates that the capacity for timely payment on issues with this designation
is strong. However, the relative degree of safety is not as high as for issues
designated "A-1." Issues carrying the "A-3" designation have a satisfactory
capacity for timely payment. They are, however, somewhat more vulnerable to the
adverse effects of changes in circumstances than obligations carrying the higher
designations.
MOODY'S INVESTORS SERVICE, INC. Moody's commercial paper ratings are opinions of
the ability of the issuers to repay punctually promissory obligations not having
an original maturity in excess of nine months. Moody's makes no representations
that such obligations are exempt from registration under the Securities Act of
1933, nor does it represent that any specific note is a valid obligation of a
rated issuer or issued in conformity with any applicable law. Moody's employs
the following three designations, all judged to be investment grade, to indicate
the relative repayment capacity of rated issuers:
<TABLE>
<S> <C>
Prime-1 Superior capacity for repayment of
short-term promissory obligations.
Prime-2 Strong capacity for repayment of
short-term promissory obligations.
Prime-3 Acceptable capacity for repayment of
short-term promissory obligations.
</TABLE>
CORPORATE BOND RATINGS
STANDARD & POOR'S RATINGS SERVICES. Its ratings for corporate bonds have the
following definitions:
Debt rated "AAA" has the highest rating assigned by Standard & Poor's. Capacity
to pay interest and repay principal is extremely strong.
Debt rated "AA" has a very strong capacity to pay interest and repay principal
and differs from the higher rated issues only in a small degree.
Debt rated "A" has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
Debt rated "BBB" is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher rated categories.
BOND INVESTMENT QUALITY STANDARDS. Under present commercial bank regulations
issued by the Comptroller of the Currency, bonds rated in the top four
categories (AAA, AAA, A and BBB, commonly known as "Investment Grade" ratings)
are generally regarded as eligible for bank investment. In addition, the Legal
Investment Laws of various states impose certain rating or other standards for
obligations eligible for investment by savings banks, trust companies, insurance
companies, and fiduciaries generally.
MOODY'S INVESTORS SERVICE, INC. Its ratings for corporate bonds include the
following:
Bonds which are rated "Aaa" are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt edge."
Interest payments are protected by a large or by an exceptionally stable margin
and principal is secure. While the various protective elements are likely to
change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Bonds which are rated "Aa" are judged to be of high quality by all standards.
Together with the Aaa group, they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risk appear somewhat larger than in Aaa securities.
Bonds which are rated "A" possess many favorable attributes and are to be
considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Bonds which are rated "Baa" are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
52
<PAGE>
PREFERRED STOCK RATING
STANDARD & POOR'S RATINGS SERVICES. Its ratings for preferred stock have the
following definitions:
An issue rated "AAA" has the highest rating that may be assigned by Standard &
Poor's to a preferred stock issue and indicates an extremely strong capacity to
pay the preferred stock obligations.
A preferred stock issue rated "AA" also qualifies as a high-quality fixed income
security. The capacity to pay preferred stock obligations is very strong,
although not as overwhelming as for issues rated "AAA".
An issue rated "A" is backed by a sound capacity to pay the preferred stock
obligations, although it is somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions.
An issue rated "BBB" is regarded as backed by an adequate capacity to pay the
preferred stock obligations. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions, or changing circumstances are more
likely to lead to a weakened capacity to make payments for a preferred stock in
this category than for issues in the "A" category.
MOODY'S INVESTORS SERVICE, INC. Its ratings for preferred stock include the
following:
An issue which is rated "Aaa" is considered to be a top-quality preferred stock.
This rating indicates good asset protection and the least risk of dividend
impairment within the universe of preferred stocks.
An issue which is rated "Aa" is considered a high-grade preferred stock. This
rating indicates that there is reasonable assurance that earnings and asset
protection will remain relatively well maintained in the foreseeable future.
An issue which is rated "A" is considered to be an upper-medium grade preferred
stock. While risks are judged to be somewhat greater than in the "Aaa" and "Aa"
classifications, earnings and asset protection are nevertheless expected to be
maintained at adequate levels.
An issue which is rated "Baa" is considered to be medium grade, neither highly
protected nor poorly secured. Earnings and asset protection appear adequate at
present but may be questionable over any great length of time.
APPENDIX B
DESCRIPTION OF FUTURES, OPTIONS AND FORWARD CONTRACTS
OPTIONS ON SECURITIES
An option on a security provides the purchaser, or "holder," with the right, but
not the obligation, to purchase, in the case of a "call" option, or sell, in the
case of a "put" option, the security or securities underlying the option, for a
fixed exercise price up to a stated expiration date or, in the case of certain
options, on such date. The holder pays a nonrefundable purchase price for the
option, known as the "premium." The maximum amount of risk the purchaser of the
option assumes is equal to the premium plus related transaction costs, although
this entire amount may be lost. The risk of the seller, or "writer," however, is
potentially unlimited, unless the option is "covered." A call option written by
the Portfolio is "covered" if the Portfolio owns the underlying security covered
by the call or has an absolute and immediate right to acquire that security
without additional cash consideration (or for additional cash consideration held
in a segregated account by its custodian) upon conversion or exchange of other
securities held in its portfolio. A call option is also covered if the Portfolio
holds a call on the same security and in the same principal amount as the call
written where the exercise price of the call held (a) is equal to or less than
the exercise price of the call written or (b) is greater than the exercise price
of the call written if the difference is maintained by the Portfolio in cash and
high grade government securities in a segregated account with its custodian. A
put option written by the Portfolio is "covered" if the Portfolio maintains cash
and high grade government securities with a value equal to the exercise price in
a segregated account with its custodian, or else holds a put on the same
security and in the same principal amount as the put written where the exercise
price of the put held is equal to or greater than the exercise price of the put
written. If the writer's obligation is not so covered, it is subject to the risk
of the full change in value of the underlying security from the time the option
is written until exercise.
Upon exercise of the option, the holder is required to pay the purchase price of
the underlying security, in the case of a call option, or to deliver the
security in return for the purchase price in the case of a put option.
Conversely, the writer is required to deliver the security, in the case of a
call option, or to purchase the security, in the case of a put option. Options
on securities which have been purchased or written may be closed out prior to
exercise or expiration by entering into an offsetting transaction on the
exchange on which the initial position was established, subject to the
availability of a liquid secondary market.
Options on securities and options on indexes of securities, discussed below, are
traded on national securities exchanges, such as the Chicago Board Options
Exchange and the New York Stock Exchange, which are regulated by the SEC. The
Options Clearing Corporation guarantees the performance of each party to an
exchange-traded option, by in effect taking the opposite side of
53
<PAGE>
each such option. A holder or writer may engage in transactions in
exchange-traded options on securities and options on indexes of securities only
through a registered broker-dealer which is a member of the exchange on which
the option is traded.
In addition, options on securities and options on indexes of securities may be
traded on exchanges located outside the United States and over-the-counter
through financial institutions dealing in such options as well as the underlying
instruments. The particular risks of transactions on foreign exchanges and
over-the-counter transactions are set forth more fully in the Statement of
Additional Information.
OPTIONS ON STOCK INDEXES
In contrast to an option on a security, an option on a stock index provides the
holder with the right to make or receive a cash settlement upon exercise of the
option, rather than the right to purchase or sell a security. The amount of this
settlement is equal to (a) the amount, if any, by which the fixed exercise price
of the option exceeds (in the case of a call) or is below (in the case of a put)
the closing value of the underlying index on the date of exercise, multiplied by
(b) a fixed "index multiplier." The purchaser of the option receives this cash
settlement amount if the closing level of the stock index on the day of exercise
is greater than, in the case of a call, or less than, in the case of a put, the
exercise price of the option. The writer of the option is obligated, in return
for the premium received, to make delivery of this amount if the option is
exercised. As in the case of options on securities, the writer or holder may
liquidate positions in stock index options prior to exercise or expiration by
entering into closing transactions on the exchange on which such positions were
established, subject to the availability of a liquid secondary market.
The Portfolio will cover all options on stock indexes by owning securities whose
price changes, in the opinion of Advisers, are expected to be similar to those
of the index, or in such other manner as may be in accordance with the rules of
the exchange on which the option is traded and applicable laws and regulations.
Nevertheless, where the Portfolio covers a call option on a stock index through
ownership of securities, such securities may not match the composition of the
index. In that event, the Portfolio will not be fully covered and could be
subject to risk of loss in the event of adverse changes in the value of the
index. The Portfolio will secure put options on stock indexes by segregating
assets equal to the option's exercise price, or in such other manner as may be
in accordance with the rules of the exchange on which the option is traded and
applicable laws and regulations.
The index underlying a stock option index may be a "broad-based" index, such as
the Standard & Poor's 500 Index or the New York Stock Exchange Composite Index,
the changes in value of which ordinarily will reflect movements in the stock
market in general. In contrast, certain options may be based upon narrower
market indexes, such as the Standard & Poor's 100 Index, or on indexes of
securities of particular industry groups, such as those of oil and gas or
technology companies. A stock index assigns relative values to the stocks
included in the index and the index fluctuates with changes in the market values
of the stocks so included.
FUTURES CONTRACTS ON FIXED INCOME SECURITIES, STOCK INDEXES AND FOREIGN
CURRENCIES
A Futures Contract is a bilateral agreement providing for the purchase and sale
of a specified type and amount of a financial instrument or foreign currency, or
for the making and acceptance of a cash settlement, at a stated time in the
future for a fixed price. By its terms, a Futures Contract provides for a
specified settlement date on which, in the case of the majority of interest rate
and foreign currency futures contracts, the fixed income securities or currency
underlying the contract are delivered by the seller and paid for by the
purchaser, or on which, in the case of stock index futures contracts and certain
interest rate and foreign currency futures contracts, the difference between the
price at which the contract was entered into and the contract's closing value is
settled between the purchaser and the seller in cash. Futures Contracts differ
from options in that they are bilateral agreements, with both the purchaser and
the seller equally obligated to complete the transaction. Futures Contracts call
for settlement only on the expiration date, and cannot be "exercised" at any
other time during their term.
The purchase or sale of a Futures Contract differs from the purchase or sale of
a security or the purchase of an option in that no purchase price is paid or
received. Instead, an amount of cash or cash equivalents, which varies but may
be as low as 5% or less of the value of the contract, must be deposited with the
broker as "initial margin." Subsequent payments to and from the broker, referred
to as "variation margin," are made on a daily basis as the value of the index or
instrument underlying the Futures Contract fluctuates, making positions in the
Futures Contracts more or less valuable, a process known as "marking to the
market."
U.S. Futures Contracts may be purchased or sold only on an exchange, known as a
"contract market," designated by the CFTC for the trading of such contract, and
only through a registered futures commission merchant which is a member of such
contract market. A commission must be paid on each completed purchase and sale
transaction. The contract market clearing house guarantees the performance of
each party to a Futures Contract, by in effect taking the opposite side of such
contract. At any time prior to the expiration of a Futures Contract, a trader
may elect to close out its position by taking an opposite position on the
contract market on which the position was entered into, subject to the
availability of a secondary market, which will operate to terminate the initial
position. At that time, a final determination of variation margin is made and
any loss experienced by the trader is required to be paid to the contract market
clearing house while any profit due to the trader must be delivered to it.
Futures Contracts may also be traded on foreign exchanges.
Interest rate Futures Contracts currently are traded on a variety of fixed
income securities, including long-term U.S. Treasury Bonds,
54
<PAGE>
Treasury Notes, Government National Mortgage Association modified pass-through
mortgage-backed securities, and U.S. Treasury Bills. In addition, interest rate
Futures Contracts include contracts on indexes of municipal securities. Foreign
currency Futures Contracts currently are traded on the British pound, Canadian
dollar, Japanese yen, Swiss franc, West German mark, and on Eurodollar deposits.
A stock index or Eurodollar Futures Contract provides for the making and
acceptance of a cash settlement in much the same manner as the settlement of an
option on a stock index. The types of indexes underlying stock index futures
contracts are essentially the same as those underlying stock index options, as
described above. The index underlying a municipal bond index futures contract is
a broad-based index of municipal securities designed to reflect movements in the
municipal securities market as a whole. The index assigns weighted values to the
securities included in the index and its composition is changed periodically.
OPTIONS ON FUTURES CONTRACTS
An Option on a Futures Contract provides the holder with the right to enter into
a "long" position in the underlying Futures Contract, in the case of a call
option, or a "short" position in the underlying Futures Contract, in the case of
a put option, at a fixed exercise price up to a stated expiration date or, in
the case of certain options, on such date. Upon exercise of the option by the
holder, the contract market clearing house establishes a corresponding short
position for the writer of the option, in the case of a call option, or a
corresponding long position, in the case of a put option. In the event that an
option is exercised, the parties will be subject to all the risks associated
with the trading of Futures Contracts, such as payment of variation margin
deposits. In addition, the writer of an Option on a Futures Contract, unlike the
holder, is subject to initial and variation margin requirements on the option
position.
A position in an Option on a Futures Contract may be terminated by the purchaser
or the seller prior to expiration by affecting a closing purchase or sale
transaction, subject to the availability of a liquid secondary market, which is
the purchase or sale of an option of the same series (i.e., the same exercise
price and expiration date) as the option previously purchased or sold. The
difference between the premiums paid and received represents the trader's profit
or loss on the transaction.
Options on Futures Contracts that are written or purchased by the Portfolio on
United States exchanges are traded on the same contract market as the underlying
Futures Contract and, like Futures Contracts, are subject to regulation by the
CFTC and the performance guarantee of the exchange clearing house. In addition,
Options on Futures Contracts may be traded on foreign exchanges.
An option, whether based on a Futures Contract, a stock index, or security,
becomes worthless to the holder when it expires. Upon exercise of an option, the
exchange or contract market clearing house assigns exercise notices on a random
basis to those of its members which have written options of the same series and
with the same expiration date. A brokerage firm receiving such notices then
assigns them on a random basis to those of its customers which have written
options of the same series and expiration date. A writer therefore has no
control over whether an option will be exercised against it, nor over the timing
of such exercise.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
A Currency Contract is a contractual obligation to purchase or sell a specific
quantity of a given foreign currency for a fixed exchange rate at a future date.
Currency Contracts are individually negotiated and are traded through the
"interbank currency market," an informal network of banks and brokerage firms
which operates around the clock and throughout the world. Transactions in the
interbank market may be executed only through financial institutions acting as
market-makers in the interbank market, or through brokers exercising purchases
and sales through such institutions. Market-makers in the interbank market
generally act as principals in taking the opposite side of their customers'
positions in Currency Contracts, and ordinarily charge a mark-up commission
which may be included in the cost of the Contract. In addition, market-makers
may require their customers to deposit collateral upon entering into a Currency
Contract, as security for the customer's obligation to make or receive delivery
of currency, and to deposit additional collateral if exchange rates move
adversely to the customer's position. Such deposits may function in a manner
similar to the margining of Futures Contracts, described above.
Prior to the stated maturity date of a Currency Contract, it may be possible to
liquidate the transaction by entering into an offsetting contract. In order to
do so, however, a customer may be required to maintain both contracts as open
positions until maturity and to make or receive a settlement of the difference
owed to or from the market-maker or broker at that time.
OPTIONS ON FUTURES CONTRACTS
Options on foreign currencies are traded in a manner substantially similar to
options on securities. In particular, an option on foreign currency provides the
holder with the right to purchase, in the case of a call option, or to sell, in
the case of a put option, a stated quantity of a particular currency for a fixed
price up to a stated expiration date or, in the case of certain options, on such
date. The writer of the option undertakes the obligation to deliver, in the case
of a call option, or to purchase, in the case of a put option, the quantity of
the currency called for in the option, upon exercise of the option by the
holder.
As in the case of other types of options, the holder of an option on foreign
currency is required to pay a one-time, nonrefundable premium, which represents
the cost of purchasing the option. The holder can lose the entire amount of this
premium, as well as related transaction costs, but not more than this amount.
The writer of the option, in contract, generally is required to make initial and
variation margin payments, similar to margin deposits required in the trading of
Futures Contracts and the writing of
55
<PAGE>
other types of options. The writer is therefore subject to risk of loss beyond
the amount originally invested and above the value of the option at the time it
is entered into.
Certain options on foreign currencies, like Currency Contracts, are traded
over-the-counter through financial institutions acting as market-makers in such
options and the underlying currencies. Such transactions therefore involve risks
not generally associated with exchange-traded instruments, which are discussed
below. Options on foreign currencies may also be traded on national securities
exchanges regulated by the SEC and on exchanges located in foreign countries.
Over-the-counter transactions can only be entered into with a financial
institution willing to take the opposite side, as principal, of the Portfolio's
position, unless the institution acts as broker and is able to find another
counterparty willing to enter into the transaction with the Portfolio. Where no
such counterparty is available, it will not be possible to enter into a desired
transaction. There also may be no liquid secondary market in the trading of
over-the-counter contracts, and the Portfolio could be required to retain
options purchased or written until exercise, expiration or maturity. This in
turn could limit the Portfolio's ability to profit from open positions or to
reduce losses experienced, and could result in greater losses.
Further, over-the-counter transactions are not subject to the guarantee of an
exchange clearing house, and the Portfolio will therefore be subject to the risk
of default by, or the bankruptcy of, the financial institution serving as its
counterparty. One or more of such institutions also may decide to discontinue
their role as market-makers in a particular currency or security, thereby
restricting the Portfolio's ability to enter into desired hedging transactions.
The Portfolio will enter into an over-the-counter transaction only with parties
whose creditworthiness has been reviewed and found satisfactory by Advisers.
- ---------
96682 (Rev. 3/97)
56
<PAGE>
Part C - OTHER INFORMATION
- --------------------------
ITEM 24. (a) FINANCIAL STATEMENTS:
The following financial statements are included in the registration
statement:
Financial Statements included in Part A:
Financial Highlights
Financial Statements included in Part B:
All financial statements required by Part B were incorporated
therein by reference to Registrant's 1996 Annual Report to
Shareholders.
ITEM 24.(B) EXHIBITS:
(1) Copy of the charter as now in effect;
****
(2) Copies of the existing by-laws or instruments corresponding thereto;
*
(3) Copies of any voting trust agreement with respect to more than 5
percent of any class of equity securities of the Registrant;
Inapplicable
(4) Copies of all instruments defining the rights of holders of the
securities being registered including, where applicable, a relevant
portion of the articles of incorporation or by-laws of the Registrant;
See Item 24(b)(1)
(5) Copies of all investment advisory contracts relating to the management
of the assets of the Registrant;
**
(6) Copies of each underwriting or distribution contract between the
Registrant and a principal underwriter, and specimens or copies of all
agreements between principal underwriters and dealers;
a) Underwriting Agreement -- ****
b) Dealer Sales Agreement -- ****
<PAGE>
(7) Copies of all bonus, profit sharing, pension or other similar
contracts or arrangements wholly or partly for the benefit of
directors or officers of the Registrant in their capacity as such; if
any such plan is not set forth in a formal document, furnish a
reasonably detailed description thereof;
Inapplicable
(8) Copies of all custodian agreements, and depository contracts under
Section 17(f) of the 1940 Act, with respect to securities and similar
investments of the Registrant, including the schedule of remuneration;
*
(9) Copies of all other material contracts not made in the ordinary course
of business which are to be performed in whole or in part at or after
the date of filing the Registration Statement;
Inapplicable
(10) An opinion and consent of counsel as to the legality of the securities
being registered, indicating whether they will when sold be legally
issued, fully paid and non-assessable;
**
(11) Copies of any other opinions, appraisals or rulings and consents to
the use thereof relied on in the preparation of this Registration
Statement and required by Section 7 of the 1933 Act;
Accountants' consent - attached
(12) All financial statements omitted from Item 23;
Inapplicable
(13) Copies of any agreements or understandings made in consideration for
providing the initial capital between or among the Registrant, the
underwriter, adviser, promoter or initial stockholders and written
assurances from promoters or initial stockholders that their purchases
were made for investment purposes without any present intention of
redeeming or reselling;
**
(14) Copies of the model plan used in the establishment of any retirement
plan in conjunction with which Registrant offers its securities, any
instructions thereto and any other documents making up the model plan.
Such form(s) should disclose the costs and fees charged in connection
therewith;
*** and Incorporated by reference to Fortis Equity Portfolios
<PAGE>
Post-Effective Amendment #72 (November, 1993) SEC file #2-11387
(15) Copies of any plan entered into by Registrant pursuant to rule 12b-1
under the 1940 Act, which describes all material aspects of the
financing of distribution of Registrant's shares, and any agreements
with any person relating to implementation of such plan.
Incorporated by reference to registrant's Post-Effective
Amendment #8 filed with the Securities and Exchange Commission
in February 1996.
(16) Schedule for computation of each performance quotation provided in the
Registration Statement in response to Item 22 (which need not be
audited).
****
(17) A Financial Data Schedule meeting the requirements of Rule 483 under
the Securities Act of 1933.
Attached
(18) Copies of any plan entered into by Registrant pursuant to Rule 18f-3
under the 1940 Act, any agreement with any person relating to the
implementation of a plan, any amendment to a plan or agreement, and a
copy of the portion of the minutes of a meeting of the Registrant's
directors describing any action taken to revoke a plan.
Incorporated by reference to registrant's Post-Effective
Amendment #8 filed with the Securities and Exchange Commission
in February 1996.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Furnish a list or diagram of all persons directly or indirectly controlled by or
under common control with the Registrant and as to each person indicate (1) if a
company, the state or other sovereign power under the laws of which it is
organized, and (2) the percentage of voting securities owned or other basis of
control by the person, if any, immediately controlling it.
Inapplicable
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
State in substantially the tabular form indicated, as of a specified date within
90 days prior to the date of filing, the number of record holders of each class
of securities of the Registrant:
Title of Class Number of Record Holders
-------------- ------------------------
Series A Common Shares, Class A: 20,133; B: 2,189; C: 543;
par value $.01 per share Class H: 3,446 (1/31/97)
<PAGE>
ITEM 27. INDEMNIFICATION
State the general effect of any contract, arrangement or statute under which any
director, officer, underwriter or affiliated person of the Registrant is insured
or indemnified in any manner against any liability which may be incurred in such
capacity, other than insurance provided by any director, officer, affiliated
person or underwriter for their own protection.
**
__________________________________________
*Incorporated by reference to registrant's Post-Effective Amendment #2 filed
with the Securities and Exchange Commission in July, 1992.
** Incorporated by reference to registrant's Pre-Effective Amendment filed with
the Securities and Exchange Commission in June, 1991.
***Incorporated by reference to Part C of Post-Effective Amendment Number 51 to
Fortis Growth Fund, Inc.'s registration statement, filed with the Securities and
exchange Commission in December, 1991.
****Incorporated by reference to registrant's Post-Effective Amendment #5 filed
with the Securities and Exchange Commission in September, 1994.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Describe any other business, profession, vocation, or employment of a
substantial nature in which each investment adviser of the Registrant, and each
director, officer, or partner of any such investment adviser, is or has been, at
any time during the past two fiscal years, engaged for his own account or in the
capacity of director, officer, employee, partner, or trustee.
In addition to those listed in the Statement of Additional Information:
<TABLE>
<CAPTION>
Other business
professions, vocations,
or employments of a
Current Position substantial nature
Name With Advisers during past two years
- ---- ---------------- -----------------------
<S> <C> <C>
Michael D. O'Connor Qualified Plan Officer Qualified Plan Officer
of Fortis Benefits
Insurance Company
David C. Greenzang Money Market Portfolio Officer Debt Securities Manager
with Fortis, Inc.
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Furnish the name of each investment company (other than the Registrant) for
which each principal underwriter currently distributing securities of the
<PAGE>
Registrant also acts as a principal underwriter, depositor, or investment
adviser.
Fortis Advantage Portfolios, Inc.
Fortis Equity Portfolios, Inc.
Fortis Fiduciary Fund, Inc.
Fortis Growth Fund, Inc.
Fortis Income Portfolios, Inc.
Fortis Money Portfolios, Inc.
Fortis Securities, Inc.
Fortis Series Fund, Inc.
Fortis Tax-Free Portfolios, Inc.
Variable Account C of Fortis Benefits Insurance Company
Variable Account D of Fortis Benefits Insurance Company
(b) Furnish the information required by the following table with respect to
each director, officer, or partner of each principal underwriter named in the
answer to Item 21:
In addition to those listed in the Statement of Additional Information:
Name and Principal Positions and Offices Positions and Offices
Business Address with Underwriter with Registrant
- ------------------ --------------------- ---------------------
Carol M. Houghtby* Second Vice President & Accounting Officer
Treasurer
_______________________
*The business address of these persons is 500 Bielenberg Drive, Woodbury, MN
55125
(c) Furnish the information required by the following table with respect to all
commissions and other compensation received by each principal underwriter who is
not an affiliated person of the Registrant or an affiliated person of such an
affiliated person, directly or indirectly, from the Registrant during the
Registrant's last fiscal year.
Inapplicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
With respect to each account, book or other document required to be maintained
by Section 31(a) of the 1940 Act and the Rules (17 CFR 270, 31a-1 to 31a-3)
promulgated thereunder, furnish the name and address of each person maintaining
physical possession of each such account, book or other document.
Fortis Advisers, Inc., 500 Bielenberg Drive, Woodbury, Minnesota 55125
ITEM 31. MANAGEMENT SERVICES
Furnish a summary of the substantive provisions of any management-related
service contract not discussed in Part I of this Form (because the contract
<PAGE>
was not believe to be material to a purchaser of securities of the
Registrant) under which services are provided to the Registrant, indicating
the parties to the contract, the total dollars paid and by whom, for the last
three fiscal years.
Inapplicable
ITEM 32. UNDERTAKINGS
Furnish the following undertakings in substantially the following form in all
initial Registration Statements filed under the 1933 Act:
(a) An undertaking to file an amendment to the Registration Statement with
certified financial statement showing the initial capital received before
accepting subscriptions from any persons in excess of 25 if Registrant proposes
to raise its initial capital pursuant to Section 14(a)(3) of the 1940 Act;
Inapplicable
(b) An undertaking to file a post-effective amendment, using financial
statements which need not be certified, within four to six months form the
effective date of Registrant's 1933 act Registration Statement.
Inapplicable
(c) If the information called for by Item 5A is contained in the latest
annual report to shareholders, an undertaking to furnish each person to whom a
prospectus is delivered with a copy of the Registrant's latest annual report to
shareholders, upon request and without charge.
We undertake to furnish each person to whom a prospectus is delivered with
a copy of the Registrant's latest annual report to shareholders, upon request
and without charge.<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it meets all of the requirements for effectiveness of this
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Woodbury, State of Minnesota, on February 28, 1997.
Fortis Worldwide Portfolios, Inc.
By: /s/
------------------------------------
Dean C. Kopperud, President
Pursuant to the requirements of the Securities Act of 1933, this Post-Effective
Amendment to Registration Statement has been signed below by the following
persons in the capacities and on the dates shown.
Signature and Title
- -------------------
/s/ Dated February 28, 1997
- ---------------------------------
Dean C. Kopperud, President
(principal executive officer)
/s/ Dated February 28, 1997
- ---------------------------------
Tamara L. Fagely, Treasurer
(principal financial and accounting officer)
Richard W. Cutting*
Director
Allen R. Freedman*
Director
Robert M. Gavin*
Director
Benjamin S. Jaffray*
Director
Jean L. King*
Director
Edward M. Mahoney*
Director
Thomas R. Pellett*
Director
/s/
-------------------------------
Robb L. Prince* Dean C. Kopperud, Pro-Se
Director and Attorney-in-Fact
Dated: February 28, 1997
Leonard J. Santow*
Director
Joseph M. Wikler*
Director
*Registrant's directors executing Power of Attorney dated
March 21, 1996
<PAGE>
[KPMG PEAT MARWICK LLP LETTERHEAD]
INDEPENDENT AUDITORS' CONSENT
-----------------------------
The Board of Directors
Fortis Worldwide Portfolios, Inc.
We consent to the use of our report incorporated herein by reference and the
references to our Firm under the headings "Financial Highlights" in Part A and
"Custodian; Counsel; Accountants" in Part B of the Registration Statement.
/s/
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 28, 1997
<TABLE> <S> <C>
<PAGE>
<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 9 THROUGH 14 OF THE ANNUAL SHAREHOLDER
REPORT.
</LEGEND>
<CIK> 0000874211
<NAME> FORTIS WORLDWIDE PORTFOLIOS, INC.
<SERIES>
<NUMBER> 011
<NAME> FORTIS GLOBAL GROWTH PORTFOLIO (CLASS A)
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 89,459,426
<INVESTMENTS-AT-VALUE> 128,088,594
<RECEIVABLES> 255,133
<ASSETS-OTHER> 31,142,891<F1>
<OTHER-ITEMS-ASSETS> 129,479
<TOTAL-ASSETS> 159,616,097
<PAYABLE-FOR-SECURITIES> 1,136,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31,285,132<F1>
<TOTAL-LIABILITIES> 32,421,382
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,602,576
<SHARES-COMMON-STOCK> 5,057,401
<SHARES-COMMON-PRIOR> 3,745,223
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,036,773)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38,628,912
<NET-ASSETS> 127,194,715
<DIVIDEND-INCOME> 531,689
<INTEREST-INCOME> 596,960
<OTHER-INCOME> 28,954<F2>
<EXPENSES-NET> (1,547,915)
<NET-INVESTMENT-INCOME> (390,312)
<REALIZED-GAINS-CURRENT> (176,450)
<APPREC-INCREASE-CURRENT> 14,138,592
<NET-CHANGE-FROM-OPS> 13,571,830
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,940,549
<NUMBER-OF-SHARES-REDEEMED> (628,371)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 55,326,089
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,864,899)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 979,766
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,547,915
<AVERAGE-NET-ASSETS> 98,105,000
<PER-SHARE-NAV-BEGIN> 18.24
<PER-SHARE-NII> (0.06)
<PER-SHARE-GAIN-APPREC> 3.10
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.28
<EXPENSE-RATIO> 1.51
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>SECURITIES VALUED AT $29,372,500 WERE ON LOAN TO BROKERS FROM THE PORTFOLIO.
FOR COLLATERAL, THE PORTFOLIO'S CUSTODIAN RECEIVED $31,142,891 IN CASH.
<F2>SECURITY LENDING INCOME THROUGH OCTOBER 31, 1996.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<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 9 THROUGH 14 OF THE ANNUAL SHAREHOLDER
REPORT.
</LEGEND>
<CIK> 0000874211
<NAME> FORTIS WORLDWIDE PORTFOLIOS, INC.
<SERIES>
<NUMBER> 012
<NAME> FORTIS GLOBAL GROWTH PORTFOLIO (CLASS B)
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 89,459,426
<INVESTMENTS-AT-VALUE> 128,088,594
<RECEIVABLES> 255,133
<ASSETS-OTHER> 31,142,891<F1>
<OTHER-ITEMS-ASSETS> 129,479
<TOTAL-ASSETS> 159,616,097
<PAYABLE-FOR-SECURITIES> 1,136,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31,285,132<F1>
<TOTAL-LIABILITIES> 32,421,382
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,602,576
<SHARES-COMMON-STOCK> 273,294
<SHARES-COMMON-PRIOR> 54,717
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,036,773)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38,628,912
<NET-ASSETS> 127,194,715
<DIVIDEND-INCOME> 531,689
<INTEREST-INCOME> 596,960
<OTHER-INCOME> 28,954<F2>
<EXPENSES-NET> (1,547,915)
<NET-INVESTMENT-INCOME> (390,312)
<REALIZED-GAINS-CURRENT> (176,450)
<APPREC-INCREASE-CURRENT> 14,138,592
<NET-CHANGE-FROM-OPS> 13,571,830
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 230,772
<NUMBER-OF-SHARES-REDEEMED> (12,195)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 55,326,089
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,864,899)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 979,766
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,547,915
<AVERAGE-NET-ASSETS> 98,105,000
<PER-SHARE-NAV-BEGIN> 18.12
<PER-SHARE-NII> (0.24)
<PER-SHARE-GAIN-APPREC> 3.10
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.98
<EXPENSE-RATIO> 2.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>SECURITIES VALUED AT $29,372,500 WERE ON LOAN TO BROKERS FROM THE PORTFOLIO.
FOR COLLATERAL, THE PORTFOLIO'S CUSTODIAN RECEIVED $31,142,891 IN CASH.
<F2>SECURITY LENDING INCOME THROUGH OCTOBER 31, 1996.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<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 9 THROUGH 14 OF THE ANNUAL SHAREHOLDER
REPORT.
</LEGEND>
<CIK> 0000874211
<NAME> FORTIS WORLDWIDE PORTFOLIOS, INC.
<SERIES>
<NUMBER> 013
<NAME> FORTIS GLOBAL GROWTH PORTFOLIO (CLASS C)
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 89,459,426
<INVESTMENTS-AT-VALUE> 128,088,594
<RECEIVABLES> 255,133
<ASSETS-OTHER> 31,142,891<F1>
<OTHER-ITEMS-ASSETS> 129,479
<TOTAL-ASSETS> 159,616,097
<PAYABLE-FOR-SECURITIES> 1,136,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31,285,132<F1>
<TOTAL-LIABILITIES> 32,421,382
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,602,576
<SHARES-COMMON-STOCK> 147,001
<SHARES-COMMON-PRIOR> 23,956
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,036,773)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38,628,912
<NET-ASSETS> 127,194,715
<DIVIDEND-INCOME> 531,689
<INTEREST-INCOME> 596,960
<OTHER-INCOME> 28,954<F2>
<EXPENSES-NET> (1,547,915)
<NET-INVESTMENT-INCOME> (390,312)
<REALIZED-GAINS-CURRENT> (176,450)
<APPREC-INCREASE-CURRENT> 14,138,592
<NET-CHANGE-FROM-OPS> 13,571,830
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 128,086
<NUMBER-OF-SHARES-REDEEMED> (5,041)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 55,326,089
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,864,899)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 979,766
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,547,915
<AVERAGE-NET-ASSETS> 98,105,000
<PER-SHARE-NAV-BEGIN> 18.13
<PER-SHARE-NII> (0.23)
<PER-SHARE-GAIN-APPREC> 3.10
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 21.00
<EXPENSE-RATIO> 2.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>SECURITIES VALUED AT $29,372,500 WERE ON LOAN TO BROKERS FROM THE PORTFOLIO.
FOR COLLATERAL, THE PORTFOLIO'S CUSTODIAN RECEIVED $31,142,891 IN CASH.
<F2>SECURITY LENDING INCOME THROUGH OCTOBER 31, 1996.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<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 9 THROUGH 14 OF THE ANNUAL SHAREHOLDER
REPORT.
</LEGEND>
<CIK> 0000874211
<NAME> FORTIS WORLDWIDE PORTFOLIOS, INC.
<SERIES>
<NUMBER> 014
<NAME> FORTIS GLOBAL GROWTH PORTFOLIO (CLASS H)
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<INVESTMENTS-AT-COST> 89,459,426
<INVESTMENTS-AT-VALUE> 128,088,594
<RECEIVABLES> 255,133
<ASSETS-OTHER> 31,142,891<F1>
<OTHER-ITEMS-ASSETS> 129,479
<TOTAL-ASSETS> 159,616,097
<PAYABLE-FOR-SECURITIES> 1,136,250
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 31,285,132<F1>
<TOTAL-LIABILITIES> 32,421,382
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 93,602,576
<SHARES-COMMON-STOCK> 512,844
<SHARES-COMMON-PRIOR> 118,134
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (5,036,773)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38,628,912
<NET-ASSETS> 127,194,715
<DIVIDEND-INCOME> 531,689
<INTEREST-INCOME> 596,960
<OTHER-INCOME> 28,954<F2>
<EXPENSES-NET> (1,547,915)
<NET-INVESTMENT-INCOME> (390,312)
<REALIZED-GAINS-CURRENT> (176,450)
<APPREC-INCREASE-CURRENT> 14,138,592
<NET-CHANGE-FROM-OPS> 13,571,830
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 426,029
<NUMBER-OF-SHARES-REDEEMED> (31,319)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 55,326,089
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (4,864,899)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 979,766
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1,547,915
<AVERAGE-NET-ASSETS> 98,105,000
<PER-SHARE-NAV-BEGIN> 18.12
<PER-SHARE-NII> (0.23)
<PER-SHARE-GAIN-APPREC> 3.10
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.99
<EXPENSE-RATIO> 2.26
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<FN>
<F1>SECURITIES VALUED AT $29,372,500 WERE ON LOAN TO BROKERS FROM THE PORTFOLIO.
FOR COLLATERAL, THE PORTFOLIO'S CUSTODIAN RECEIVED $31,142,891 IN CASH.
<F2>SECURITY LENDING INCOME THROUGH OCTOBER 31, 1996.
</FN>
</TABLE>
