<PAGE>
[FORTIS LOGO]
FORTIS
Solid partners, flexible solutions-Service Mark-
Invest for growth opportunities
[PHOTO OF MAN AND BABY]
Fortis Stock Funds
Annual Report
AUGUST 31, 1998
FORTIS FINANCIAL GROUP
[PHOTO OF GIRL ON SWING]
<PAGE>
FORTIS FINANCIAL GROUP'S OTHER PRODUCTS AND SERVICES
MUTUAL Fortis Bond Funds MONEY FUND
FUNDS/PORTFOLIOS U.S. GOVERNMENT
CONVENIENT ACCESS TO SECURITIES FUND
A BROAD RANGE OF TAX-FREE NATIONAL
SECURITIES PORTFOLIO
TAX-FREE MINNESOTA
PORTFOLIO
STRATEGIC INCOME FUND
HIGH YIELD PORTFOLIO
Fortis Stock Funds ASSET ALLOCATION
PORTFOLIO
VALUE FUND
GROWTH & INCOME FUND
CAPITAL FUND
FIDUCIARY FUND
GLOBAL GROWTH PORTFOLIO
GROWTH FUND
INTERNATIONAL EQUITY
PORTFOLIO
CAPITAL APPRECIATION
PORTFOLIO
FIXED AND VARIABLE Fortis Opportunity Fixed FIXED ACCOUNT
ANNUITIES & Variable Annuity MONEY MARKET SUBACCOUNT
TAX-DEFERRED Masters Variable Annuity U.S. GOVERNMENT
INVESTING SECURITIES SUBACCOUNT
Empower Variable DIVERSIFIED INCOME
Annuity SUBACCOUNT
GLOBAL BOND SUBACCOUNT
HIGH YIELD SUBACCOUNT
GLOBAL ASSET ALLOCATION
SUBACCOUNT
ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
INTERNATIONAL STOCK
SUBACCOUNT
MID CAP STOCK SUBACCOUNT
SMALL CAP VALUE
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
LARGE CAP GROWTH
SUBACCOUNT
GROWTH STOCK SUBACCOUNT
AGGRESSIVE GROWTH
SUBACCOUNT
Fortune Fixed Annuities SINGLE PREMIUM ANNUITY
FLEXIBLE PREMIUM ANNUITY
Income Annuities GUARANTEED FOR LIFE
GUARANTEED FOR A
SPECIFIED PERIOD
LIFE Wall Street Series FIXED ACCOUNT
INSURANCE PROTECTION Variable Universal Life MONEY MARKET SUBACCOUNT
AND TAX-DEFERRED Insurance U.S. GOVERNMENT
INVESTMENT SECURITIES SUBACCOUNT
OPPORTUNITY DIVERSIFIED INCOME
SUBACCOUNT
GLOBAL BOND SUBACCOUNT
HIGH YIELD SUBACCOUNT
GLOBAL ASSET ALLOCATION
SUBACCOUNT
ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
INTERNATIONAL STOCK
SUBACCOUNT
MID CAP STOCK SUBACCOUNT
SMALL CAP VALUE
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
LARGE CAP GROWTH
SUBACCOUNT
GROWTH STOCK SUBACCOUNT
AGGRESSIVE GROWTH
SUBACCOUNT
Adaptable Life
Universal Life
FORTIS FINANCIAL GROUP manages and distributes mutual funds, annuities and life
insurance products. The mutual funds, variable life and variable annuity
products are distributed through FORTIS INVESTORS, INC. and managed by FORTIS
ADVISERS, INC. The insurance products are issued by FORTIS BENEFITS INSURANCE
COMPANY, FIRST FORTIS LIFE INSURANCE COMPANY and FORTIS INSURANCE COMPANY.
FOR MORE COMPLETE INFORMATION, INCLUDING CHARGES AND EXPENSES, SEND FOR A
PROSPECTUS. WRITE TO: FORTIS INVESTORS, INC., P.O. BOX 64284, ST. PAUL, MN
55164. READ IT CAREFULLY BEFORE INVESTING OR SENDING MONEY.
<PAGE>
CONTENTS
LETTER TO SHAREHOLDERS 3
SCHEDULES OF INVESTMENTS
FORTIS ASSET ALLOCATION PORTFOLIO 11
FORTIS VALUE FUND 17
FORTIS GROWTH & INCOME FUND 19
FORTIS CAPITAL FUND 22
FORTIS FIDUCIARY FUND 24
FORTIS GROWTH FUND 26
FORTIS CAPITAL APPRECIATION PORTFOLIO 28
STATEMENTS OF ASSETS AND LIABILITIES 30
STATEMENTS OF OPERATIONS 32
STATEMENTS OF CHANGES IN NET ASSETS
FORTIS ASSET ALLOCATION PORTFOLIO 34
FORTIS VALUE FUND 35
FORTIS GROWTH & INCOME FUND 36
FORTIS CAPITAL FUND 37
FORTIS FIDUCIARY FUND 38
FORTIS GROWTH FUND 39
FORTIS CAPITAL APPRECIATION PORTFOLIO 40
NOTES TO FINANCIAL STATEMENTS 41
INDEPENDENT AUDITORS' REPORT 55
FEDERAL TAX INFORMATION 56
BOARD OF DIRECTORS AND OFFICERS 57
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FOR MORE INFORMATION ABOUT FORTIS FINANCIAL GROUP'S FAMILY OF PRODUCTS, CALL
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TO ORDER PROSPECTUSES OR SALES LITERATURE FOR ANY FORTIS PRODUCT, CALL (800)
800-2000, EXT. 4579.
HIGHLIGHTS
FOR THE YEAR ENDED AUGUST 31, 1998
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS H CLASS Z
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
FORTIS ASSET ALLOCATION PORTFOLIO
NET ASSET VALUE PER SHARE:
Beginning of year.......................... $ 18.98 $ 18.87 $ 18.81 $ 18.86
End of year................................ $ 16.91 $ 16.80 $ 16.74 $ 16.79
DISTRIBUTIONS PER SHARE:
From net investment income................. $ 0.412 $ 0.308 $ 0.308 $ 0.308
From net realized gains on investments..... $ 2.18 $ 2.18 $ 2.18 $ 2.18
FORTIS VALUE FUND
NET ASSET VALUE PER SHARE:
Beginning of year.......................... $ 13.51 $ 13.39 $ 13.39 $ 13.39
End of year................................ $ 11.85 $ 11.71 $ 11.72 $ 11.72
DISTRIBUTIONS PER SHARE:
From net investment income................. $ 0.086 -- -- --
From net realized gains on investments..... $ 1.36 $ 1.36 $ 1.36 $ 1.36
FORTIS GROWTH & INCOME FUND
NET ASSET VALUE PER SHARE:
Beginning of year.......................... $ 13.06 $ 13.03 $ 13.03 $ 13.03
End of year................................ $ 13.20 $ 13.16 $ 13.16 $ 13.16
DISTRIBUTIONS PER SHARE:
From net investment income................. $ 0.235 $ 0.131 $ 0.131 $ 0.131
From net realized gains on investments..... $ 0.0088 $ 0.0088 $ 0.0088 $ 0.0088
FORTIS CAPITAL FUND
NET ASSET VALUE PER SHARE:
Beginning of year.......................... $ 26.13 $ 25.67 $ 25.68 $ 25.68
End of year................................ $ 22.37 $ 21.73 $ 21.73 $ 21.74
DISTRIBUTIONS PER SHARE:
From net realized gains on investments..... $ 4.06 $ 4.06 $ 4.06 $ 4.06
FORTIS FIDUCIARY FUND
NET ASSET VALUE PER SHARE:
Beginning of year.......................... $ 46.15 $ 45.15 $ 45.17 $ 45.16
End of year................................ $ 40.94 $ 39.64 $ 39.66 $ 39.64
DISTRIBUTIONS PER SHARE:
From net realized gains on investments..... $ 5.94 $ 5.94 $ 5.94 $ 5.94
FORTIS GROWTH FUND
NET ASSET VALUE PER SHARE:
Beginning of year.......................... $ 37.32 $ 36.53 $ 36.52 $ 36.54 $ 37.47
End of year................................ $ 29.78 $ 28.85 $ 28.85 $ 28.86 $ 30.00
DISTRIBUTIONS PER SHARE:
From net realized gains on investments..... $ 3.84 $ 3.84 $ 3.84 $ 3.84 $ 3.84
FORTIS CAPITAL APPRECIATION PORTFOLIO
NET ASSET VALUE PER SHARE:
Beginning of year.......................... $ 30.60 $ 30.16 $ 30.18 $ 30.18
End of year................................ $ 26.42 $ 25.90 $ 25.92 $ 25.92
</TABLE>
1
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HOW TO USE THIS REPORT
For a quick overview of each fund's performance during the past year, refer to
the Financial Highlights. The letters from the portfolio managers and president
provide a more detailed analysis of the funds and financial markets.
The charts alongside the letters are useful because they provide more
information about your investments. The top holdings chart shows the types of
securities in which the fund invests, and the pie chart shows a breakdown of the
fund's assets by sector. The portfolio changes show the investment decisions
your fund manager has made over the period in response to changing market
conditions.
The performance charts graphically compare the funds' total return performance
with a selected investment index. Remember, however, that an index may reflect
the performance of securities the fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your fund does. Individuals cannot buy an unmanaged index fund without incurring
some charges and expenses.
This report is just one of several tools you can use to learn more about your
investment in the Fortis Family of Mutual Funds. Your investment representative,
who understands your personal financial situation, can best explain the features
of your investment and how it's designed to help you meet your financial goals.
<TABLE>
<C> <S>
ASSET ALLOCATION PORTFOLIO
Stocks, bonds and cash blended to
[ASSET ALLOCATION PORTFOLIO PHOTO] smooth out the highs and lows.
VALUE FUND
Quality stocks, inexpensively
[VALUE FUND PHOTO] priced.
GROWTH & INCOME FUND
Conservative growth with
[GROWTH & INCOME FUND PHOTO] quarterly dividends.
CAPITAL FUND
Long-term growth through larger,
[CAPITAL FUND PHOTO] established companies.
FIDUCIARY FUND
[FIDUCIARY FUND PHOTO] A medley of growth stocks.
GROWTH FUND
Medium-sized companies poised to
[GROWTH FUND PHOTO] be tomorrow's leaders.
CAPITAL APPRECIATION PORTFOLIO
Opportunity through America's
[CAPITAL APPRECIATION PORTFOLIO PHOTO] entrepreneurs.
</TABLE>
2
<PAGE>
[LOGO]
DEAR SHAREHOLDER:
During the fiscal year of the Fortis equity funds which extended from September
1, 1997, to August 31, 1998, the equity markets experienced both boom and bust
times. For most of the year, the equity markets performed strongly reflecting
the continuing growth of the U.S. economy and the resulting good environment for
jobs and growth in consumer income which has enabled corporations to record
solid gains in profits. Investors were pleased with this environment and
continued to invest heavily in stocks which resulted in sizable gains and
historically-high valuations. This situation was all the more remarkable given
the dire and deteriorating situation which has been unfolding in Asia.
Last fall, the Asian economies began to decline. As the first half of 1998
unfolded, the Asian crisis deepened causing economic deterioration, banking
system woes, significant debt burdens and pressure on Asian stock and bond
markets and currencies. The impact on the U.S. economy intensified resulting in
a deteriorating balance of trade, a meaningful slackening of demand for U.S.
produced-goods, and greater competitive pressure for U.S. corporations.
Initially, the Asian problem was confined to certain areas of the U.S. economy
such as capital goods and technology companies. However, in the past two months
it has become apparent that the Asian problems are now negatively impacting our
economy more broadly and are resulting in a slowing of economic growth and
corporate earnings.
Initially last fall, the U.S. capital markets responded favorably to the Asian
crisis expecting that inflation would decline further, a positive backdrop for
financial assets. Further, the bond market benefitted from increased interest in
U.S. Treasury obligations which were perceived to be a safe haven, particularly
for foreign investors, in light of the uncertainty developing in Asia. However,
in the past two months, the stock market has focused on the negative results of
the Asian problem. Lower demand, lack of pricing power, margin contraction, and
disappointing earnings have resulted in a market correction. For many small and
mid-sized companies, the correction to date has been severe, approximating 30
percent. For the 12 month period ended August 31, the S&P 500 is up 9.15
percent, the S&P Mid Cap Index is off 10.47 percent and the Russell 2000 Small
Cap Index is down 19.22 percent.
The Fortis equity funds have fared extremely well this year versus our
competitors. The vast majority of our funds have been in the top 40th percent of
their respective competitive universes. We attribute this relatively strong
performance to our disciplined investment processes, our commitment to broad
diversification to mitigate risk and volatility, and our rigorous analysis of
the companies in which we invest.
As we look forward, we believe that most of the correction is now behind us.
Although the market is likely to remain around current levels for several more
quarters and that volatility will continue to be high, we see this correction as
healthy and indeed normal. As investors evaluate the prospects for next year, it
is likely that they will again focus on the positive trends of better earnings
growth and low inflation which will enable the markets to resume an upward
course, albeit at a more subdued pace.
<TABLE>
<S> <C> <C>
/s/ Dean C. Kopperud /s/ Lucinda S. Mezey /s/ Howard H. Hudson
Dean C. Kopperud Lucinda S. Mezey Howard H. Hudson
President Vice President, Equities Vice President
Fixed Income
</TABLE>
August 31, 1998
3
<PAGE>
PORTFOLIO COMPOSITION BY SECTOR AS OF 8/31/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C>
Common Stocks 58.9%
U.S. Government Securities 13.0%
Asset Backed Securities 9.4%
Corporate Bonds-Investment Grade 7.8%
Corporate Bonds-Non-Investment Grade 5.6%
Cash Equivalents/Receivables 5.3%
</TABLE>
TOP 10 HOLDINGS AS OF 8/31/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. American International Group, Inc. 1.8%
2. Warner-Lambert Co. 1.6%
3. Time Warner, Inc. 1.5%
4. Microsoft Corp. 1.5%
5. Groupe Danone ADR 1.5%
6. Philip Morris Companies, Inc. 1.4%
7. Frontier Corp. 1.3%
<CAPTION>
Bonds
- -------------------------------------------------------------------
<C> <S> <C>
1. U.S. Treasury Note (6.375%) 2000 2.5%
2. U.S. Treasury Bond (6.125%) 2027 1.9%
3. FNMA (6.50%) 2028 1.6%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B shares(Diamond) +2.14% +12.58%
Class B shares(Diamond)(Diamond) -1.46% +12.07%
Class C shares(Diamond) +2.15% +12.50%
Class C shares(Diamond)(Diamond) +1.15% +12.50%
Class H shares(Diamond) +2.15% +12.57%
Class H shares(Diamond)(Diamond) -1.45% +12.05%
</TABLE>
Past performance is not indicative of future performance. Total returns include
reinvestment of all dividend and capital gains distributions. The performance of
the separate classes (A, B, C, and H) will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Class A has a maximum sales charge of 4.75%, Class B and H
have a CDSC of 4.00% if redeemed within two years or 3.00% if redeemed in year
three or four (with a waiver of 10% of the amount invested). Class C has a CDSC
of 1.00% if redeemed within one year of purchase.
(Diamond) Without CDSC.
(Diamond)(Diamond) With CDSC. Assumes redemption on August 31, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public
FORTIS ASSET ALLOCATION PORTFOLIO
YOUR ASSET ALLOCATION PORTFOLIO
STOCKS, BONDS AND CASH BLENDED TO SMOOTH OUT THE HIGHS AND LOWS
During this twelve month reporting period, ended August 31, 1998, the Asset
Allocation Class A shares with no sales charge produced a total return of 2.71
percent. The S&P 500 returned 9.15 percent over the same time period. The S&P
500 Index is the weighted average of 500 of the largest U.S. companies, as
calculated by Standard & Poor's. The portfolio currently has 36 percent of its
assets in bonds. There are no bonds in the S&P 500 Index.
Presently, the equity portion of the portfolio is most heavily weighted in the
pharmaceuticals and retail sectors. Some of the most well-known names in the
portfolio carried the portfolio's equity performance during the first half of
1998. These names include: Wal-Mart, McDonalds, Home Depot, Microsoft and
Medtronic. Also during the first half of 1998, we've lowered the portfolio's
energy and utilities sector weightings and increased the health care sector
weighting. These changes have helped the performance of the portfolio.
In the bond portion of this portfolio, we increased our position in U.S.
government securities and reduced our weighting of investment-grade corporates
and high-yield bonds. This shift was done as we feared that the continued
weakness in Asia would negatively impact corporate profits and would cause a
flight to quality. It did not take long for our fears to materialize. Flight to
quality continued and it was followed by a widening of quality spreads. As a
result, U.S. government securities and higher quality bonds outperformed issues
of lower quality.
Currently, the economic crises in Asia, Russia, and Latin America have become a
major factor in defining the direction of the U.S. economy and of interest
rates. Our investment strategy will remain unchanged as the difficulties abroad
appear to have begun to impede U.S. growth as well. Low inflation and slower
growth should keep monetary policy on hold, with an easing bias perhaps, for the
remaining part of the year.
Looking forward, we have positioned the equity portion of the portfolio for
growth by spreading out our holdings in some well-defined market sectors such as
health care. We'll also boost our technology weighting to better position
ourselves. We will not greatly overweight equity sectors relative to the equity
benchmark but will continue to focus on stock selection.
Looking ahead, we anticipate a slowing in earnings growth for the S&P 500
stocks. At the same time, we continue to feel the economy will experience low
interest and inflation rates. This outlook should be good for the Asset
Allocation Portfolio relative to the S&P 500 in the months ahead.
VALUE OF $10,000 INVESTED SEPTEMBER 1, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS FORTIS ASSET
AGGREGATE ALLOCATION PORTFOLIO
BOND INDEX*** S&P 500**** CLASS A
<S> <C> <C> <C> <C>
9/01/88 $10,000 $10,000 $9,525
89 $11,320 $13,902 $11,849
90 $12,139 $13,209 $11,530
91 $13,914 $16,761 $14,036
92 $15,791 $18,092 $15,695
93 $17,524 $20,831 $17,473
94 $17,258 $21,967 $18,127
95 $19,227 $26,677 $21,601
96 $19,894 $31,532 $22,623
97 $21,889 $44,364 $28,194
98 $24,201 $48,424 $28,958
Fortis Asset Allocation Portfolio
Average Annual Total Return
1 Year 5 Year 10 Year
Class A* -2.17% + 9.56% + 11.22%
Class A** + 2.71% + 10.63% + 11.76%
</TABLE>
Annual period ended August 31
Past performance is not indicative of future performance. Investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions and the reduction due to the maximum sales
charge of 4.75%.
Prior to January 1, 1996, the portfolio had a sales charge of 4.50%, and
therefore, these figures do not represent actual performance that would
have been achieved by investing as described above.
** These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
*** An unmanaged index of government, corporate, and mortgage-backed
securities with an average maturity of approximately nine years.
**** This is an unmanaged index of 500 common stocks.
TEN LARGEST STOCK PORTFOLIO CHANGES FOR THE YEAR ENDED 8/31/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
American Express Co. Archer-Daniels-Midland Co.
Eastman Kodak Co. Boston Scientific Corp.
Enron Corp. Centocor, Inc.
Exxon Corp. Ericsson (L.M.) Telephone Co. Class B ADR
Frontier Corp. Intel Corp.
Groupe Danone ADR Oracle Corp.
Masco Corp. Mirage Resorts, Inc.
Sun Microsystems, Inc. Precision Drilling Corp.
Tiffany & Co. Tellabs, Inc.
Wal-Mart Stores, Inc. U.S. Filter Corp.
</TABLE>
4
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 8/31/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 41.9%
Cash Equivalents/Receivables 9.7%
Paper 6.8%
Financial Services 6.6%
Oil - Crude Petroleum and Gas 5.8%
Drugs 5.4%
Utilities-Electric 5.0%
Electronic - Control and Equipment 4.2%
Building Materials 3.8%
Telephone Services 3.7%
Real Estate Investment Trust 3.7%
Banks 3.4%
</TABLE>
TOP 10 HOLDINGS AS OF 8/31/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Chevron Corp. 2.8%
2. S & P 500 Depositary Receipt 2.7%
3. Wang Labs (6.5%) Conv. Preferred Series B 2.4%
4. Newell Co. 2.4%
5. Fort James Corp. 2.4%
6. Tenet Healthcare Corp. 2.4%
7. Cooper Industries, Inc. 2.3%
8. McGraw Hill Companies, Inc. 2.3%
9. Mead Corp. 2.2%
10. CMS Energy Corp. 2.2%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B shares(Diamond) -3.33% +11.02%
Class B shares(Diamond)(Diamond) -6.39% +9.89%
Class C shares(Diamond) -3.24% +11.06%
Class C shares(Diamond)(Diamond) -4.21% +11.06%
Class H shares(Diamond) -3.24% +11.06%
Class H shares(Diamond)(Diamond) -6.30% +9.93%
</TABLE>
Past performance is not indicative of future performance. Total returns include
reinvestment of all dividend and capital gains distributions. The performance of
the separate classes (A, B, C, and H) will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Class A has a maximum sales charge of 4.75%, Class B and H
have a CDSC of 4.00% if redeemed within two years of purchase, or 3.00% if
redeemed in year three or four (with a waiver of 10% of the amount invested).
Class C has a CDSC of 1.00% if redeemed within one year of purchase.
(Diamond) Without CDSC.
(Diamond)(Diamond) With CDSC. Assumes redemption on August 31, 1998.
+ Shares were first offered to the public January 2, 1996.
FORTIS VALUE FUND
YOUR VALUE FUND
QUALITY STOCKS, INEXPENSIVELY PRICED
For the fiscal year ended August 31, 1998, the S&P 500 Index advanced 9.15
percent while the Fortis Value Fund Class A shares with no sales charge returned
- -2.52 percent. While we were disappointed in this performance, it is in line
with the performance of our competition: funds investing in
large-capitalization, value stocks as defined by Morningstar.
The fund's primary strategy is to invest in companies with accelerating earnings
growth, where we anticipate a company growth rate to rise over time. To the
extent that we cannot find accelerating earnings growth, we focus on our
secondary criteria, inexpensively-valued growth. In the current market
environment, earnings acceleration is rare so we find ourselves focusing on
inexpensively valued growth. We continue to maintain adequate diversification
across market sectors and remain focused on stock selection.
We've also recently added Hubbell and Mead, two companies we believe have
relatively attractive prospects at low valuations.
Looking ahead, we see the economy in the late stages of the current expansion
and we expect to see a shift to slower economic growth. We believe that the
health care sector is a logical place for us to invest in this kind of
environment because companies in the business of providing goods and services
used in the delivery of health care tend to enjoy relatively stable demand.
Rising interest rates and uncertainties in Southeast Asia could affect the
fund's performance. We continue to monitor the effects of interest rates and
Asia on the portfolio's holdings.
We remain focused on investing in accelerating earnings growth and
inexpensively-valued growth. We believe that this investment philosophy will
provide good returns to shareholders for the long term.
VALUE OF $10,000 INVESTED JANUARY 2, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FORTIS VALUE FUND
S&P 500*** CLASS A
<S> <C> <C>
1/2/96 $10,000 $9,525
96 $10,700 $10,239
97 $15,054 $13,174
98 $16,432 $12,843
FORTIS VALUE FUND
AVERAGE ANNUAL TOTAL RETURN
1 SINCE
YEAR JANUARY 2, 1996@
Class A* -7.15% + 9.84%
Class A** -2.52% + 11.86%
</TABLE>
Annual period ended August 31
Past performance is not indicative of future performance. Investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions and the reduction due to the maximum sales
charge of 4.75%.
** These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
*** An unmanaged index of 500 common stocks.
@ Date shares were first offered to the public.
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 8/31/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
Chevron Corp. Anadarko Petroleum Corp.
CMS Energy Corp. Avnet, Inc.
Hubbell, Inc. Class B Burlington Northern Santa Fe Corp.
Mead Corp. Citicorp
Newell Co. Federated Department Stores, Inc.
Owens Corning Lowe's Companies, Inc.
Sonoco Products Co. Pitney Bowes, Inc.
Temple-Inland, Inc. Sara Lee Corp.
Tenet Healthcare Corp. Sysco Corp.
Wang Labs 6.50% Conv. Preferred Series B Williams Companies, Inc.
</TABLE>
5
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 8/31/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 27.5%
Cash Equivalents/Receivables 11.2%
Drugs 9.2%
Telephone Services 8.2%
Oil-Crude Petroleum and Gas 6.2%
Financial Services 5.4%
Real Estate Investment Trust 5.2%
Natural Gas Transmissions 5.2%
Utilities - Electric 4.3%
Food 4.0%
Banks 3.8%
Publishing 3.8%
Insurance 3.7%
Business Services and Supplies 2.3%
</TABLE>
TOP 10 HOLDINGS AS OF 8/31/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. McGraw Hill Companies, Inc. 3.0%
2. Enron Corp. 2.2%
3. Household International, Inc. 2.1%
4. Frontier Corp. 2.0%
5. SBC Communications, Inc. 2.0%
6. Omnicom Group, Inc. 1.9%
7. Pharmacia and UpJohn, Inc. 1.9%
8. American Home Products Corp. 1.9%
9. Duke Energy Corp. 1.8%
10. Eastman Kodak Co. 1.8%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B shares(Diamond) +1.99% +12.03%
Class B shares(Diamond)(Diamond) -1.61% +10.91%
Class C shares(Diamond) +1.99% +12.03%
Class C shares(Diamond)(Diamond) +0.99% +12.03%
Class H shares(Diamond) +1.99% +12.03%
Class H shares(Diamond)(Diamond) -1.61% +10.91%
</TABLE>
Past performance is not indicative of future performance. Total returns include
reinvestment of all dividend and capital gains distributions. The performance of
the separate classes (A, B, C, and H) will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Class A has a maximum sales charge of 4.75%, Class B and H
have a CDSC of 4.00% if redeemed within two years of purchase, or 3.00% if
redeemed in year three or four (with a waiver of 10% of the amount invested).
Class C has a CDSC of 1.00% if redeemed within one year of purchase.
(Diamond) Without CDSC.
(Diamond)(Diamond) With CDSC. Assumes redemption on August 31, 1998.
+ Shares were first offered to the public January 2, 1996.
FORTIS GROWTH & INCOME FUND
YOUR GROWTH & INCOME FUND
CONSERVATIVE GROWTH WITH QUARTERLY DIVIDENDS
During fiscal 1998, the stock market witnessed a very strong upward trend
through July and an equally significant decline through August. The market's
earlier strength related primarily to an optimistic outlook for the economy and
corporate earnings due to the low levels of inflation and interest rates. The
market's retreat stemmed mainly from a rather sudden realization that perhaps
the problems upsetting many foreign economies might disrupt our own economic
outlook.
Over this period, the Growth and Income Fund Class A shares with no sales charge
registered an increase of 2.81 percent which compares to a 9.15 percent rise in
the S&P 500 Index. The index is the weighted average of 500 of the largest U.S.
companies, as calculated by Standard and Poors. The Fund's underperformance
during the period can be attributed to a more conservative stance by the
holdings in the portfolio and a significant underweighting in technology, a
sector which offers little current income.
We continue our strategy to invest in companies with higher dividend yields than
the S&P 500. Emphasis is also on well-established companies with consistent
growth prospects. This combination of moderate growth and growing dividends
should prove to be rewarding over time with less volatility than the overall
market.
We continue to favor the telecommunications, utilities and financial sectors. We
expect to continue to be underweighted in technology. New names in the portfolio
include Readers Digest and Du Pont.
Looking ahead, we anticipate a slowing in earnings growth for the S&P 500
stocks. At the same time, we continue to feel the economy will experience low
interest and inflation rates. This outlook should be good for the Growth and
Income Fund relative to the S&P 500 in the months ahead.
VALUE OF $10,000 INVESTED JANUARY 2, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FORTIS GROWTH & INCOME FUND
S&P 500*** CLASS A
<S> <C> <C>
1/2/96 $10,000 $9,525
96 $10,700 $9,916
97 $15,054 $12,792
98 $16,432 $13,151
FORTIS GROWTH & INCOME FUND
AVERAGE ANNUAL TOTAL RETURN
1 SINCE
YEAR JANUARY 2, 1996@
Class A* - 2.08% + 10.82%
Class A** + 2.81% + 12.86%
</TABLE>
Annual period ended August 31
Past performance is not indicative of future performance. Investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions and the reduction due to the maximum sales
charge of 4.75%.
** These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
*** An unmanaged index of 500 common stocks.
@ Date shares were first offered to the public.
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 8/31/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
ALLTEL Corp. AT & T Corp.
Ameritech Corp. Baker Hughes, Inc.
Columbia Energy Group Chase Manhattan Corp.
Du Pont (E.I.) de Nemours Deutsche Telekom AG ADR
Eastman Kodak Co. Lilly (Eli) & Co. (with rights)
Endesa S.A. ADR Limited, Inc.
Frontier Corp. SLM Holding Corp.
Groupe Danone ADR Sonat, Inc.
Johnson & Johnson St. Paul Companies, Inc.
Royal Caribbean Cruises Ltd. Sprint Corp.
</TABLE>
6
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 8/31/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 35.6%
Cash Equivalents/Receivables 16.8%
Drugs 9.4%
Telephone Services 5.9%
Insurance 5.5%
Business Services and Supplies 5.2%
Computer - Software 4.3%
Retail - Specialty 4.2%
Computer - Communications Equipment 4.2%
Retail - Discount Stores 3.6%
Financial Services 2.9%
Publishing 2.4%
</TABLE>
TOP 10 HOLDINGS AS OF 8/31/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. American International Group, Inc. 3.0%
2. Microsoft Corp. 2.8%
3. Fiserv, Inc. 2.0%
4. Hartford Life, Inc. Class A 2.0%
5. Groupe Danone ADR 2.0%
6. Amgen, Inc. 2.0%
7. Warner-Lambert Co. 1.9%
8. Interpublic Group of Companies, Inc. 1.8%
9. Home Depot, Inc. 1.8%
10. Frontier Corp. 1.8%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B shares(Diamond) +0.80% +14.42%
Class B shares(Diamond)(Diamond) -2.80% +13.93%
Class C shares(Diamond) +0.76% +14.42%
Class C shares(Diamond)(Diamond) -0.24% +14.42%
Class H shares(Diamond) +0.80% +14.43%
Class H shares(Diamond)(Diamond) -2.80% +13.94%
</TABLE>
Past performance is not indicative of future performance. Total returns include
reinvestment of all dividend and capital gains distributions. The performance of
the separate classes (A, B, C, and H) will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Class A has a maximum sales charge of 4.75%, Class B and H
have a CDSC of 4.00% if redeemed within two years of purchase,or 3.00% if
redeemed in year three or four (with a waiver of 10% of the amount invested).
Class C has a CDSC of 1.00% if redeemed within one year of purchase.
(Diamond) Without CDSC.
(Diamond)(Diamond) With CDSC. Assumes redemption on August 31, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public
FORTIS CAPITAL FUND
YOUR CAPITAL FUND
LONG-TERM GROWTH THROUGH LARGER, ESTABLISHED COMPANIES
Fiscal 1998 witnessed significant volatility as the Asian economic crisis
created uncertainty as to its effect on the U.S. economy. Blessed with low
inflation and interest rates, corporate earnings have been on a steady upward
trend, allowing price-earnings ratios to expand to historic highs. In recent
months, however, Asia has loomed larger as economic problems have surfaced in
Russia and Latin America. How great an affect these international concerns have
on the U.S. economy remains to be seen, but we will be monitoring this
carefully. During the year, the fund Class A shares with no sales charge
reported a gain of 1.56 percent while the S&P 500 reported a greater gain of
9.15 percent.
We continue our strategy of increasing the average size of companies held in the
fund as we position this fund to be truly a large-capitalization portfolio. We
are also increasing the diversification of the fund so as to decrease the
volatility in comparison to the S&P 500. Recently, an overweighted retail sector
has been reduced and health care has been increased. Energy holdings have also
been reduced over the past several months. An above average cash position at
fiscal year end is being held to take advantage of volatility in the market.
Technology holdings will likely be increased in the months ahead.
Looking ahead, we anticipate a slowing in earnings growth for the S&P 500
stocks. At the same time, we feel interest rates and inflation are likely to
remain quite constrained. Therefore, we feel confident that good stock selection
is likely to be rewarded in the period ahead.
VALUE OF $10,000 INVESTED SEPTEMBER 1, 1973
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500 *** FORTIS CAPITAL FUND CLASS A
<S> <C> <C> <C> <C>
09/01/73 $10,000 $9,525
74 $7,203 $7,217
75 $9,084 $8,368
76 $11,186 $9,712
77 $10,986 $9,332
78 $12,358 $11,819
79 $13,794 $13,063
80 $16,294 $18,616
81 $17,155 $21,011
82 $17,724 $24,881
83 $25,500 $38,563
84 $27,079 $37,270
85 $32,115 $43,031
86 $44,606 $61,758
87 $60,011 $78,552
88 $49,352 $60,545
89 $68,609 $87,095
90 $65,191 $82,007
91 $82,717 $105,333
92 $89,287 $116,670
93 $102,807 $125,864
94 $108,413 $139,151
95 $131,657 $169,061
96 $155,615 $174,743
97 $218,946 $235,161
98 $238,984 $238,834
FORTIS CAPITAL FUND
AVERAGE ANNUAL TOTAL RETURN
1 YEAR 5 YEAR 10 YEAR 25 YEARS
Class A* -3.26% + 12.57% + 14.15% + 13.53%
Class A** + 1.56% + 13.67% + 14.71% + 13.75%
</TABLE>
Annual period ended August 31
Past performance is not indicative of future performance. Investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions and the reduction due to the maximum sales
charge of 4.75%. Prior to January 1, 1990, the portfolio had a sales
charge of 8.50%, and therefore, these figures do not represent actual
performance that would have been achieved by investing as described
above.
** These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
*** An unmanaged index of 500 common stocks.
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 8/31/98
<TABLE>
<S> <C> <C>
ADDITIONS: ELIMINATIONS:
Groupe Danone ADR Green Tree Financial Corp.
Frontier Corp. Archer-Daniels-Midland Co.
Masco Corp. Tellabs, Inc.
General Electric Co. Ericsson (L.M.) Telephone Co. Class
Lilly (Eli) & Co. (with rights) B ADR
Viacom, Inc. Class B MGIC Investment Corp.
Sun Microsystems, Inc. U.S. Filter Corp.
Wal-Mart Stores, Inc. Nuevo Energy Co.
Exxon Corp. Mirage Resorts, Inc.
McDonald's Corp. Intel Corp.
First Data Corp.
</TABLE>
7
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 8/31/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 35.3%
Cash Equivalents/Receivables 17.5%
Drugs 9.5%
Telephone Services 5.9%
Insurance 5.2%
Business Services and Supplies 5.2%
Retail - Specialty 4.3%
Computer - Software 4.2%
Computer - Communications Equipment 4.2%
Retail - Discount Stores 3.5%
Financial Services 2.9%
Publishing 2.3%
</TABLE>
TOP 10 HOLDINGS AS OF 8/31/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. American International Group, Inc. 2.8%
2. Microsoft Corp. 2.7%
3. Groupe Danone ADR 2.2%
4. Warner-Lambert Co. 2.0%
5. Fiserv, Inc. 2.0%
6. Hartford Life, Inc. Class A 2.0%
7. Amgen, Inc 2.0%
8. Interpublic Group of Companies, Inc. 1.8%
9. Home Depot, Inc. 1.8%
10. Frontier Corp. 1.7%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B shares(Diamond) +1.29% +15.32%
Class B shares(Diamond)(Diamond) -2.31% +14.83%
Class C Shares(Diamond) +1.29% +15.32%
Class C Shares(Diamond)(Diamond) +0.29% +15.32%
Class H shares(Diamond) +1.26% +15.32%
Class H shares(Diamond)(Diamond) -2.34% +14.83%
</TABLE>
Past performance is not indicative of future performance. Total returns include
reinvestment of all dividend and capital gains distributions. The performance of
the separate classes (A, B, C, and H) will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Class A has a maximum sales charge of 4.75%, Class B and H
have a CDSC of 4.00% if redeemed within two years of purchase or or 3.00% if
redeemed in year three or four (with a waiver of 10% of the amount invested).
Class C has a CDSC of 1.00% if redeemed within one year of purchase.
(Diamond) Without CDSC.
(Diamond)(Diamond) With CDSC. Assumes redemption on August 31, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public
FORTIS FIDUCIARY FUND
YOUR FIDUCIARY FUND
A MEDLEY OF GROWTH STOCKS
Fiscal 1998 witnessed significant volatility as the Asian economic crisis
created uncertainty as to its effect on the U.S. economy. Blessed with low
inflation and interest rates, corporate earnings have been on a steady upward
trend, allowing price-earnings ratios to expand to historic highs. In recent
months, however, Asia has loomed larger as economic problems have surfaced in
Russia and Latin America. How great an affect these international concerns have
on the U.S. economy remains to be seen, but we will be monitoring this
carefully. During the year, the fund Class A shares with no sales charge
reported a gain of 1.97 percent while the S&P 500 reported a greater gain of
9.15 percent.
We continue our strategy of increasing the average size of companies held in the
fund as we position this fund to be truly a large-capitalization portfolio. We
are also increasing the diversification of the Fund so as to decrease the
volatility in comparison to the S&P 500. Recently, an overweighted retail sector
has been reduced and health care has been increased. Energy holdings have also
been reduced over the past several months. An above average cash position at
fiscal year end is being held to take advantage of volatility in the market.
Technology holdings will likely be increased in the months ahead.
Looking ahead, we anticipate a slowing in earnings growth for the S&P 500
stocks. At the same time, we feel interest rates and inflation are likely to
remain quite constrained. Therefore, we feel confident that good stock selection
is likely to be rewarded in the period ahead.
VALUE OF $10,000 INVESTED SEPTEMBER 1, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500*** FORTIS FIDUCIARY FUND CLASS A
<S> <C> <C> <C>
9/1/88 $10,000 $9,525
89 $13,902 $13,626
90 $13,209 $12,807
91 $16,761 $16,464
92 $18,092 $18,156
93 $20,831 $20,077
94 $21,967 $22,117
95 $26,677 $27,140
96 $31,532 $28,275
97 $44,364 $38,195
98 $48,424 $38,946
Fortis Fiduciary Fund
Average Annual Total Return
1 Year 5 Year 10 Year
Class A* -2.88% +13.07% +14.56%
Class A** +1.97% +14.17% +15.12%
</TABLE>
Annual period ended August 31
Past performance is not indicative of future performance. Investment return
and principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions and the reduction due to the maximum sales
charge of 4.75%. Prior to March 1, 1992, the portfolio had a sales
charge of 4.50%, and therefore, these figures do not represent actual
performance that would have been achieved by investing as described
above.
** These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
*** An unmanaged index of 500 common stocks.
@ Date shares were first offered to the public.
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 8/31/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
Exxon Corp. Archer-Daniels-Midland Co.
Frontier Corp. BMC Software, Inc.
General Electric Co. Ericsson (L.M.) Telephone Co. Class
Groupe Danone ADR B ADR
Lilly (Eli) & Co. (with rights) Green Tree Financial Corp.
Masco Corp. Intel Corp.
Sun Microsystems, Inc. MGIC Investment Corp.
Unisys Corp. Mirage Resorts, Inc.
Viacom, Inc. Class B R & B Falcon Corp.
Wal-Mart Stores, Inc. Tellabs, Inc.
U.S. Filter Corp.
</TABLE>
8
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 8/31/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 31.7%
Computer-Software 13.7%
Cash Equivalents/Receivables 12.6%
Financial Services 10.0%
Retail - Specialty 6.9%
Medical Supplies 4.4%
Computer - Communications Equipment 4.3%
Health Care Services 3.8%
Insurance 3.4%
Drugs 3.3%
Retail - Department Stores 3.0%
Capital Spending 2.9%
</TABLE>
TOP 10 HOLDINGS AS OF 8/31/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Cisco Systems, Inc. 4.3%
2. Microsoft Corp. 4.0%
3. BMC Software, Inc. 3.2%
4. Capital One Financial Corp. 3.2%
5. Kohl's Corp. 3.0%
6. WorldCom, Inc. 2.9%
7. Home Depot, Inc. 2.9%
8. Staples, Inc. 2.8%
9. Life Re Corp. 2.2%
10. Franklin Resources, Inc. 2.1%
</TABLE>
CLASS B, C, H AND Z AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception
- -------------------------------------------------------------
<S> <C> <C>
Class B shares(Diamond) -11.25% +10.93%+
Class B shares(Diamond)(Diamond) -13.98% +10.40%+
Class C Shares(Diamond) -11.22% +10.93%+
Class C Shares(Diamond)(Diamond) -12.01% +10.93%+
Class H shares(Diamond) -11.25% +10.94%+
Class H shares(Diamond)(Diamond) -13.98% +10.41%+
Class Z shares -10.34% +6.19%++
</TABLE>
Past performance is not indicative of future performance. Total returns include
reinvestment of all dividend and capital gains distributions. The performance of
the separate classes (A, B, C, and H) will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Class A has a maximum sales charge of 4.75%, Class B and H
have a CDSC of 4.00% if redeemed within two years of purchase,or 3.00% if
redeemed in year three or four (with a waiver of 10% of the amount invested).
Class C has a CDSC of 1.00% if redeemed within one year of purchase. Class Z has
no sales charge or CDSC.
(Diamond) Without CDSC.
(Diamond)(Diamond) With CDSC. Assumes redemption on August 31, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public
++ Since March 1, 1996 -- Date shares were first offered to the
public
FORTIS GROWTH FUND
YOUR GROWTH FUND
MID-SIZED COMPANIES POISED TO BE TOMORROW'S LEADERS
For the fiscal year ended August 31, 1998, the Fortis Growth Fund Class A shares
with no sales charge had a total return of -10.59 percent. This compares to a
- -10.47 percent return for the S&P 400 MidCap Index. This index is the most
relevant comparison for the Growth Fund, as the Fund's primary investment focus
is mid capitalization stocks, typically those with a market capitalizations
between $1 billion and $6 billion.
The stock market exhibited a roller coaster performance during the course of
this fiscal year. In the fall of 1997 the stock market experienced a strong
correction due to concerns about the developing financial crisis in Asia. These
fears eased during the early part of 1998 as the U.S. economy remained strong
and the Asian crisis appeared contained. The stock market staged a strong
recovery which lasted until July, with the Standard & Poor's 500 index advancing
nearly 40% from its October low. In August the market turned back down with a
vengeance, with the S&P 500 down nearly 20% on concerns that the Asian crisis
was spreading.
The Fund suffered during the market downturn in 1997. Both the technology and
energy sectors were particularly hard hit, as Asia had been perceived as an area
of growth for these industries. During this downturn the Fund had a material
overweighting in both of these sectors, as they had previously demonstrated
strong earnings growth. When the market recovered in the first half of this
year, the Fund's performance improved, helped by the overweighting in
technology, which bounced back strongly, particularly software and
telecommunications equipment, and by a significant presence in consumer
cyclicals, in particular retailers, which benefited from low unemployment and
strong growth in personal income. Additionally, the energy sector rallied
smartly in the spring, and the Fund's holdings in this area were significantly
reduced on this rally with the proceeds shifted into financial services, health
care and business services. The sharp downturn in August hit high earnings
growth stocks the hardest, and contributed to the Fund's slight underperformance
for the year versus the S&P 400 Midcap Index.
The Growth Fund had a change of portfolio managers in March, and has seen a
substantial modification in the composition of the portfolio as a result. The
number of holdings has risen from 49 to 64, large weightings in certain economic
sectors and individual stocks have been reduced, while diversification has been
increased. These changes are designed to reduce the volatility or overall risk
of the Fund. Other changes include increasing exposure to the health care
sector, business services, and financial services, while decreasing positions in
technology and energy. Going forward, the Fund will maintain a disciplined
investment process investing in a well diversified portfolio, with an emphasis
on companies with strong earnings growth, upside earnings momentum and
reasonable valuation.
The stock market outlook for the rest of the year is somewhat dubious. While the
U.S. economy remains healthy, inflation is subdued, and interest rates are low,
the crisis in Asia appears to be spreading around the globe. Russia is an
economic disaster, and financial markets in Latin America have declined sharply.
Deflation is a concern and would certainly have a negative impact on corporate
profits. In addition, the U.S. political situation is uncertain, and could
witness a potential presidential impeachment. With the recent sharp correction,
the stock market may adequately reflect all these issues, but there could be
further downside. We would emphasize that, regardless of the near term market
environment, we will stick to our disciplined investment process and will
maintain a well diversified portfolio. We believe this approach offers the best
opportunity for portfolio performance in the long run.
VALUE OF $10,000 INVESTED SEPTEMBER 1, 1973
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500*** FORTIS GROWTH FUND CLASS A
<S> <C> <C> <C> <C>
9/73 $10,000 $9,525
74 $7,203 $7,295
75 $9,084 $8,982
76 $11,186 $10,383
77 $10,986 $10,951
78 $12,358 $15,994
79 $13,794 $18,966
80 $16,294 $27,346
81 $17,155 $32,721
82 $17,724 $37,263
83 $25,500 $58,688
84 $27,079 $56,049
85 $32,115 $62,646
86 $44,606 $91,378
87 $60,011 $117,637
88 $49,352 $85,802
89 $68,609 $130,988
90 $65,191 $121,640
91 $82,717 $171,640
92 $89,287 $179,746
93 $102,807 $220,521
94 $108,413 $212,204
95 $131,657 $269,328
96 $155,615 $280,357
97 $218,946 $356,068
98 $238,984 $318,364
FORTIS GROWTH FUND
AVERAGE ANNUAL TOTAL RETURN
1 Year 5 Year 10 Year 25 Year
Class A* -14.83% +6.58% +13.46% +14.85%
Class A** -10.59% +7.62% +14.01% +15.07%
</TABLE>
Annual period ended August 31
Past performance is not indicative of future performance. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions and the reduction due to the maximum sales
charge of 4.75%. Prior to January 1, 1990, the portfolio had a higher sales
charge of 8.50%, and therefore, these figures do not represent actual
performance that would have been achieved by investing as described above.
** These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
*** An unmanaged index of 500 common stocks.
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 8/31/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
Alaska Air Group, Inc. ADC Telecommunications, Inc.
Ambac Financial Group, Inc. Cooper Cameron Corp.
Concord EFS, Inc. ENSCO International, Inc.
DST Systems, Inc. Fannie Mae
Life Re Corp. Green Tree Financial Corp.
Platinum Technology, Inc. Intel Corp.
Sofamor Danek Group, Inc. Medtronic, Inc. (with rights)
Uniphase Corp. Oracle Corp.
Waters Corp. Oxford Health Plans, Inc.
Watson Pharmaceuticals, Inc. R & B Falcon Corp.
</TABLE>
9
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 8/31/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash Equivalents/Receivables 28.0%
Computer - Software 19.8%
Other 16.2%
Educational Services 5.6%
Business Services 5.1%
Telephone Services 5.0%
Medical Supplies 3.8%
Computer-Communication Equipment 3.2%
Retail - Specialty 3.0%
Health Care Services 3.0%
Retail - Miscellaneous 2.7%
Waste Disposal 2.4%
Electronic - Components 2.2%
</TABLE>
TOP 10 HOLDINGS AS OF 8/31/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Legato Systems, Inc. 2.5%
2. STERIS Corp. 2.5%
3. Sterling Commerce, Inc. 2.2%
4. Acxiom Corp. 2.0%
5. VERITAS Software Corp. 1.8%
6. Intermedia Communications, Inc. 1.8%
7. Cisco Systems, Inc. 1.7%
8. Dollar Tree Stores, Inc. 1.7%
9. Insight Enterprises, Inc. 1.7%
10. McLeodUSA, Inc. Class A 1.5%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- --------------------------------------------------------------
<S> <C> <C>
Class B shares(Diamond) -14.12% +5.31%
Class B shares(Diamond)(Diamond) -17.16% +4.69%
Class C shares(Diamond) -14.12% +5.33%
Class C shares(Diamond)(Diamond) -14.98% +5.33%
Class H shares(Diamond) -14.12% +5.33%
Class H shares(Diamond)(Diamond) -17.16% +4.71%
</TABLE>
Past performance is not indicative of future performance. Total returns include
reinvestment of all dividend and capital gains distributions. The performance of
the separate classes (A, B, C, and H) will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Class A has a maximum sales charge of 4.75%, Class B and H
have a CDSC of 4.00% if redeemed within two years of purchase, or 3.00% if
redeemed in year three or four (with a waiver of 10% of the amount invested).
Class C has a CDSC of 1.00% if redeemed within one year of purchase.
(Diamond) Without CDSC.
(Diamond)(Diamond) With CDSC. Assumes redemption on August 31, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public.
FORTIS CAPITAL APPRECIATION PORTFOLIO
YOUR CAPITAL APPRECIATION PORTFOLIO
OPPORTUNITY THROUGH AMERICA'S ENTREPRENEURS
For the fiscal year ended August 31, 1998, Class A shares of the Capital
Appreciation Fund with no sales charge had a return of -13.66 percent. Clearly
this is a disappointing result because for most of the year, the fund generated
substantial performance and as recently as the end of June was up over 13
percent. The final two months of the fund's fiscal year were indeed difficult
for all stock funds and even worse for small capitalization funds such as this
one.
From last fall to today, the equity market, including the small-capitalization
sector, experienced both boom and bust periods. The backdrop for most of the
year was one which benefitted from continuing strength in the U.S. economy,
particularly in the consumer sector. Consumers enjoyed higher incomes, full
employment and low inflation permitting them to spend on goods and services.
Your fund participated in this strength by being invested in small retailers
such as Bed Bath and Beyond and restaurants including Papa John's International.
Last fall, it became clear that the economies in the Far East were in trouble
which caused concern about growth in that region. Energy stocks and technology
stocks were hard hit. While the stocks which your fund owned in those sectors
were not immune to these changes in events, the fund weathered this storm
reasonably well. During the first half of this year, the fund fully participated
in the recovery of the technology sector and performance improved markedly.
In the past two months, however, the situation in the Far East has spread to
Russia and some economies in Latin America. Investors have focused on earnings
consistency, reliability and liquidity which forced more and more money into the
large capitalization sector of the equity market. Small cap funds like yours
suffered and significant declines in prices caused the fund to give back all of
the appreciation it had gained.
While clearly a decline in the value of your shares is disappointing, your fund
has performed extremely well versus other small cap alternatives. The
performance ranked the fund in the top 15 percent of small cap funds over the
past 12 months and bettered the decline of 19 percent recorded by the Russell
2000 Index.
As of this writing the portfolio is transitioning to be more diversified in
terms of sectors and number of stocks in order to mitigate the volatility and
risk associated with small-cap stocks. The fund now is under the seasoned
management of Laura Granger, previously with General Motors Investment
Management Corporation. We believe that currently small-cap stocks represent
significant value and that the strong growth rates of the stocks will lead to
excellent performance in the long run.
VALUE OF $10,000 INVESTED SEPTEMBER 1, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CAPITAL APPRECIATION PORTFOLIO
S&P 500*** CLASS A
<S> <C> <C> <C> <C> <C>
9/1/88 10,000 9,525
89 13,902 13,639
90 13,209 13,158
91 16,761 17,111
92 18,092 17,158
93 20,831 23,338
94 21,967 21,791
95 26,677 30,573
96 31,532 34,916
97 44,364 32,160
98 48,424 27,767
Fortis Capital Appreciation Portfolio
Average Annual Total Return
1 Year 5 Year 10 Year
Class A* -17.76% + 2.53% + 10.75%
Class A** -13.66% + 3.54% + 11.29%
</TABLE>
Annual period ended August 31
Past performance is not indicative of future performance. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions and the reduction due to the maximum sales
charge of 4.75%. Prior to January 1, 1996, the portfolio had a sales charge
of 4.50%, and therefore, those figures do not represent actual performance
that would have been achieved by investing as described above.
** These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
*** An unmanaged index of 500 common stocks.
@ Date shares were first offered to the public.
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 8/31/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
Insight Enterprises, Inc. Input/Output, Inc.
Mercury Interactive Corp. Fastenal Co.
Network Appliance, Inc. Parametric Technology Corp.
Boron, LePore & Associates, Inc. Bed Bath & Beyond, Inc.
Tekelec Ascend Communications, Inc.
Sylvan Learning Systems, Inc. ADC Telecommunications, Inc.
DM Management Co. WorldCom, Inc.
Pacific Sunwear of California, Inc. LCI International, Inc.
Education Management Corp. West Marine, Inc.
Citrix Systems, Inc. Gadzooks, Inc.
</TABLE>
10
<PAGE>
FORTIS STOCK FUNDS
ASSET ALLOCATION PORTFOLIO
Schedule of Investments
August 31, 1998
COMMON STOCKS-58.93%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
-------- ------------- -------------
<C> <S> <C> <C>
ADVERTISING-PUBLIC RELATIONS-0.99%
33,000 Interpublic Group of Companies, Inc.......... $ 1,624,181 $ 1,881,000
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.60%
250 Highwaymaster Communications, Inc. (Warrants)
(a)(e)..................................... 4,547 12
19,000 Magna International, Inc. Class A (j)........ 859,728 1,138,812
------------- -------------
864,275 1,138,824
------------- -------------
BANKS-1.19%
24,200 Banc One Corp................................ 848,687 919,600
26,000 Mellon Bank Corp............................. 1,748,199 1,352,000
------------- -------------
2,596,886 2,271,600
------------- -------------
BEVERAGE-0.74%
28,100 Panamerican Beverages, Inc. Class A.......... 752,076 447,844
35,000 PepsiCo, Inc................................. 1,430,887 969,062
------------- -------------
2,182,963 1,416,906
------------- -------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-1.21%
38,000 Amgen, Inc. (a).............................. 2,243,026 2,313,250
------------- -------------
BROADCASTING-1.18%
34,000 USA Networks, Inc. (a)....................... 1,035,480 667,250
32,000 Viacom, Inc. Class B (a)..................... 1,585,042 1,588,000
------------- -------------
2,620,522 2,255,250
------------- -------------
BUILDING MATERIALS-0.82%
68,000 Masco Corp................................... 1,856,883 1,564,000
------------- -------------
BUSINESS SERVICES AND SUPPLIES-2.79%
22,500 Computer Sciences Corp. (a).................. 1,150,718 1,272,656
56,400 Fiserv, Inc. (a)............................. 1,493,973 2,199,600
14,000 Gartner Group, Inc. Class A (a)(j)........... 452,701 323,750
12,000 IMS Health, Inc.............................. 475,527 660,000
19,000 Ingram Micro, Inc. Class A (a)(j)............ 377,028 855,000
------------- -------------
3,949,947 5,311,006
------------- -------------
CHEMICALS-0.95%
33,000 Monsanto Co.................................. 1,389,066 1,804,687
------------- -------------
CHEMICALS-SPECIALTY-0.38%
20,000 Minerals Technologies, Inc................... 1,017,590 726,250
------------- -------------
COMPUTER-COMMUNICATIONS EQUIPMENT-2.78%
22,500 3Com Corp. (a)............................... 664,454 532,969
21,000 Cisco Systems, Inc. (a)...................... 618,475 1,719,375
43,500 Sun Microsystems, Inc. (a)................... 2,078,758 1,723,687
74,000 Unisys Corp. (a)............................. 1,781,339 1,327,375
------------- -------------
5,143,026 5,303,406
------------- -------------
COMPUTER-SOFTWARE-2.76%
13,500 America Online, Inc. (a)(j).................. 659,834 1,106,156
28,000 Computer Associates International, Inc. 1,117,900 756,000
30,000 Microsoft Corp. (a).......................... 959,196 2,878,125
16,000 Sterling Commerce, Inc. (a).................. 476,840 528,000
------------- -------------
3,213,770 5,268,281
------------- -------------
CONSUMER GOODS-0.51%
13,500 Colgate-Palmolive Co......................... 1,281,283 973,687
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------- -------------
<C> <S> <C> <C>
DRUGS-6.72%
32,000 Abbott Laboratories.......................... $ 727,120 $ 1,232,000
21,000 Biovail Corp. International (a)(j)........... 724,759 589,312
40,000 Forest Laboratories, Inc. (a)(j)............. 1,104,797 1,310,000
36,000 Lilly (Eli) & Co. (with rights).............. 1,777,304 2,358,000
70,000 Mylan Laboratories, Inc. (j)................. 1,450,251 1,601,250
42,000 Pharmacia and UpJohn, Inc.................... 2,036,445 1,745,625
15,000 SmithKline Beecham plc ADR................... 880,237 853,125
48,000 Warner-Lambert Co............................ 1,971,716 3,132,000
------------- -------------
10,672,629 12,821,312
------------- -------------
ELECTRICAL EQUIPMENT-0.89%
21,200 General Electric Co.......................... 936,634 1,696,000
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-0.34%
15,000 Motorola, Inc................................ 861,223 645,937
------------- -------------
FINANCIAL SERVICES-2.94%
19,000 American Express Co.......................... 1,941,649 1,482,000
26,000 Conseco, Inc................................. 1,223,353 718,250
35,000 Fannie Mae................................... 1,109,991 1,988,437
35,000 MBNA Corp.................................... 222,797 822,500
14,200 MGIC Investment Corp......................... 484,010 589,300
------------- -------------
4,981,800 5,600,487
------------- -------------
FOOD-1.46%
55,000 Groupe Danone ADR............................ 1,705,000 2,791,250
------------- -------------
HEALTH CARE SERVICES-0.76%
16,500 Cardinal Health, Inc......................... 781,880 1,443,750
------------- -------------
HOTEL AND GAMING-0.53%
27,000 Sun International Hotels Ltd. (a)(j)......... 1,298,462 1,017,563
------------- -------------
INSURANCE-3.29%
44,400 American International Group, Inc............ 2,070,820 3,432,675
43,600 Hartford Life, Inc. Class A.................. 1,516,525 2,234,500
7,000 Lincoln National Corp........................ 669,001 602,000
------------- -------------
4,256,346 6,269,175
------------- -------------
LEISURE TIME-AMUSEMENTS-0.16%
50,000 Royal Olympic Cruise Lines, Inc. (a)......... 765,739 300,000
------------- -------------
MEDICAL TECHNOLOGY-0.89%
33,000 Medtronic, Inc. (with rights)................ 432,371 1,695,375
------------- -------------
NATURAL GAS TRANSMISSIONS-1.19%
35,000 Enron Corp................................... 1,832,642 1,480,938
34,000 Williams Companies, Inc...................... 856,586 782,000
------------- -------------
2,689,228 2,262,938
------------- -------------
OFFICE EQUIPMENT AND SUPPLIES-1.05%
38,000 Compaq Computer Corp......................... 1,215,740 1,061,625
21,000 EMC Corp. (a)(j)............................. 858,375 948,938
------------- -------------
2,074,115 2,010,563
------------- -------------
OIL AND GAS FIELD SERVICES-1.11%
28,000 Camco International, Inc..................... 1,691,985 1,407,000
16,000 Schlumberger Ltd............................. 809,164 701,000
------------- -------------
2,501,149 2,108,000
------------- -------------
OIL-CRUDE PETROLEUM AND GAS-0.72%
21,000 Exxon Corp................................... 1,534,032 1,374,188
------------- -------------
PAPER-0.63%
60,000 St. Joe Company (The)........................ 1,866,700 1,203,750
------------- -------------
</TABLE>
11
<PAGE>
FORTIS STOCK FUNDS
ASSET ALLOCATION PORTFOLIO (CONTINUED)
Schedule of Investments
August 31, 1998
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------- -------------
<C> <S> <C> <C>
PERSONAL SERVICES-0.25%
14,000 Service Corp. International.................. $ 539,611 $ 474,250
------------- -------------
PHOTOGRAPHIC-0.70%
17,000 Eastman Kodak Co............................. 1,432,442 1,328,125
------------- -------------
PUBLISHING-2.67%
42,200 New York Times Co. Class A................... 1,488,816 1,223,800
50,000 Readers Digest Association, Inc. Class A
(j)........................................ 1,407,820 981,250
36,000 Time Warner, Inc............................. 1,894,425 2,893,500
------------- -------------
4,791,061 5,098,550
------------- -------------
RESTAURANTS AND FRANCHISING-0.71%
24,200 McDonald's Corp.............................. 1,449,806 1,356,713
------------- -------------
RETAIL-DEPARTMENT STORES-1.37%
35,000 Kohl's Corp. (a)............................. 342,824 1,590,313
40,000 Proffitt's, Inc. (a)......................... 1,311,279 1,020,000
------------- -------------
1,654,103 2,610,313
------------- -------------
RETAIL-DISCOUNT STORES-2.39%
35,000 Costco Companies, Inc. (a)................... 527,375 1,647,188
90,000 Kmart Corp. (a).............................. 1,428,806 1,147,500
30,000 Wal-Mart Stores, Inc......................... 1,576,984 1,762,500
------------- -------------
3,533,165 4,557,188
------------- -------------
RETAIL-GROCERY-0.61%
26,000 Kroger Co. (a)............................... 1,379,102 1,170,000
------------- -------------
RETAIL-SPECIALTY-2.88%
36,000 AutoZone, Inc. (a)........................... 1,296,880 933,750
49,000 Home Depot, Inc.............................. 361,181 1,886,500
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------- -------------
<C> <S> <C> <C>
36,500 Tiffany & Co................................. $ 1,795,032 $ 1,357,344
34,000 Walgreen Co.................................. 1,111,580 1,309,000
------------- -------------
4,564,673 5,486,594
------------- -------------
TELECOMMUNICATION EQUIPMENT-0.16%
42,000 Advanced Fibre Communications (a)............ 1,109,829 299,250
------------- -------------
TELEPHONE SERVICES-3.86%
26,000 AirTouch Communications, Inc. (a)............ 706,183 1,462,500
82,000 Frontier Corp................................ 2,213,892 2,490,750
15,800 MCI Communications Corp...................... 672,150 790,000
30,000 Vanguard Cellular Systems, Inc. Class A
(a)........................................ 684,631 562,500
50,000 WorldCom, Inc. (a)(j)........................ 299,022 2,046,875
------------- -------------
4,575,878 7,352,625
------------- -------------
TOBACCO-1.42%
65,000 Philip Morris Companies, Inc................. 2,402,997 2,701,563
------------- -------------
TOYS-0.41%
24,000 Mattel, Inc. (j)............................. 318,636 777,000
------------- -------------
UTILITIES-ELECTRIC-1.37%
50,000 AES Corp. (a)................................ 1,330,195 1,362,500
70,000 Endesa S.A. ADR.............................. 1,576,260 1,260,000
------------- -------------
2,906,455 2,622,500
------------- -------------
WASTE DISPOSAL-0.55%
24,000 Waste Management, Inc. (a)................... 857,613 1,059,000
------------- -------------
TOTAL COMMON STOCKS.......................... $ 98,856,097 $ 112,362,106
------------- -------------
------------- -------------
</TABLE>
ASSET BACKED SECURITIES-9.40%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
COMMERCIAL LOANS-5.24%
$ 845,390 DLJ Mortgage Acceptance Corp., 7.28% Ser
1996-CF1 Class A-1A 3-13-2028 (e).......... AAA $ 851,604 $ 894,913
1,250,000 First Union Lehman Brothers Commercial
Mortgage, 7.30% Ser 1997-C1 Class A2
12-18-2006................................. Aaa* 1,261,857 1,339,862
355,000 GMAC Commercial Mortgage Securities, Inc.,
7.085% Ser 1997-C1 Class E 12-15-2010...... A 356,684 362,987
531,309 GS Mortgage Securities Corp. II Protective
Life, 7.02% Ser 1996-PL Class A1
3-1-2026................................... Aaa* 531,276 557,886
1,532,547 J.P. Morgan Commercial Mortgage Finance
Corp., 6.47% Ser 1996-C2 Class A
11-25-2027................................. AAA 1,453,678 1,572,960
818,617 Merrill Lynch Mortgage Investors, Inc., 6.76%
Variable Rate Ser 1995-C3 Class A1
12-26-2025................................. AAA 825,932 842,537
700,000 Midland Realty Acceptance Corp., 7.76% Ser
1996-C1 Class B 7-25-2008.................. AA 706,232 760,813
1,750,000 Mortgage Capital Funding, Inc., 7.90% Ser
1996-MC1 Class B 2-15-2006................. AA+ 1,765,092 1,933,050
470,000 Nationslink Funding Corp., 7.52% Ser 1996-1
Class A2 7-20-2005......................... AAA 470,478 503,027
1,158,391 Nationslink Funding Corp., 7.53% Ser 1996-1
Class A1 9-20-2002......................... AAA 1,166,377 1,221,199
------------- -------------
9,389,210 9,989,234
------------- -------------
HOUSING-1.23%
1,044,172 Green Tree Recreational, Equipment & Consumer
Trust, 6.71% Ser 1998-A Class A1H
5-15-2029.................................. AAA 1,039,785 1,046,456
750,000 Money Store (The) Home Improvement Trust,
7.41% Ser 1997-1 Class M1 5-15-2017........ AA 752,965 800,235
500,000 Money Store (The) Residential Trust, 7.09%
1997-I-M1 7-15-2016........................ AA 499,924 501,875
------------- -------------
2,292,674 2,348,566
------------- -------------
MANUFACTURED HOMES-0.85%
1,500,000 Green Tree Financial Corp., 7.65% Ser 1994-1
Class A5 4-15-2019......................... Aa2* 1,494,141 1,628,133
------------- -------------
</TABLE>
12
<PAGE>
ASSET BACKED SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
MULTI-FAMILY LOANS-1.58%
$1,500,000 DLJ Mortgage Acceptance Corp., 8.50%
Multifamily Mtg Pass Thru Certificate Ser
1994-MF4 Class A2 4-18-2001................ A $ 1,517,408 $ 1,563,195
1,000,000 DLJ Mortgage Acceptance Corp., 8.80%
Multifamily Mtg Pass Thru Certificate Ser
1993-12 Class B1 9-18-2003................. NR 982,500 1,048,140
488,158 Fund America Structured Transactions, L.P.,
Collateralized Note, 8.76% Ser 1996-1 Class
A Principal Only 1-1-2033 (f)(h)........... Baa3* 368,624 390,222
------------- -------------
2,868,532 3,001,557
------------- -------------
WHOLE LOAN RESIDENTIAL-0.50%
893,448 Mid-State Trust, 7.54% Ser 6 Class A3
7-1-2035................................... AA 892,893 942,578
------------- -------------
TOTAL ASSET BACKED SECURITIES................ $ 16,937,450 $ 17,910,068
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-7.79%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
--------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AEROSPACE AND EQUIPMENT-0.29%
$500,000 Lockheed Martin Corp., 7.65% Deb 5-1-2016.... BBB+ $ 502,803 $ 551,089
------------- -------------
AIR FREIGHT-0.28%
492,241 Federal Express, 7.50% Pass Thru Certificate
Ser 1997-A 1-15-2018....................... AAA 492,241 542,720
------------- -------------
BANKS-0.69%
500,000 Bank Austria AG, 7.25% Sub Note 2-15-2017
(f)........................................ AAA 499,085 542,605
250,000 CoreStates Capital Corp., 6.75% Medium Term
Note 11-15-2006............................ A 251,729 259,149
500,000 St. Paul Bancorp, Inc., 7.125% Sr Note
2-15-2004.................................. BBB- 498,105 519,997
------------- -------------
1,248,919 1,321,751
------------- -------------
BROKERAGE AND INVESTMENT-0.69%
500,000 Bear Stearns Capital Trust I, 7.00% Variable
Rate Bond 1-15-2027........................ BBB 499,714 514,682
750,000 Lehman Brothers Holdings, Inc., 7.375% Sr
Note 5-15-2004 (j)......................... A 747,486 792,626
------------- -------------
1,247,200 1,307,308
------------- -------------
CHEMICALS-0.25%
500,000 Lyondell Petrochemical, 7.55% Deb
2-15-2026.................................. BBB- 481,131 476,808
------------- -------------
CONSUMER FINANCE-0.26%
500,000 Beneficial Corp., 6.33% Medium Term Note
12-18-2000................................. A 496,909 505,873
------------- -------------
ENERGY-0.31%
500,000 NGC Corp. Capital Trust, 8.32% 6-1-2027...... BBB 500,000 589,341
------------- -------------
FINANCE COMPANIES-0.54%
500,000 Homeside Lending, Inc., 6.875% Medium Term
Note 6-30-2002............................. A+ 499,869 517,580
500,000 Prudential Insurance Co., 6.375% Sr Note
7-23-2006 (e).............................. A+ 497,809 506,327
------------- -------------
997,678 1,023,907
------------- -------------
FOREIGN-GOVERNMENT-0.13%
250,000 Poland (Republic of), 7.125% Yankee Bond
7-1-2004................................... BBB- 248,898 250,625
------------- -------------
FOREIGN-GOVERNMENT AGENCIES-0.28%
500,000 Quebec (Province of), 7.50% Yankee Bond
7-15-2002.................................. A+ 512,572 527,815
------------- -------------
FOREST PRODUCTS-0.63%
500,000 Fort James Corp., 6.50% Sr Note 9-15-2002.... BBB- 499,489 510,595
600,000 Georgia-Pacific Corp., 9.625% Deb
3-15-2022.................................. BBB- 616,932 691,004
------------- -------------
1,116,421 1,201,599
------------- -------------
HOUSING-0.27%
500,000 Masco Corp., 6.625% 4-15-2018................ A- 499,301 506,021
------------- -------------
</TABLE>
13
<PAGE>
FORTIS STOCK FUNDS
ASSET ALLOCATION PORTFOLIO (CONTINUED)
Schedule of Investments
August 31, 1998
CORPORATE BONDS-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
--------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
INDUSTRIAL-0.40%
$750,000 Tyco International Group, 6.375% 6-15-2005... A- $ 747,013 $ 757,502
------------- -------------
MISCELLANEOUS-0.30%
100,000 New York (City of), 10.00% General Obligation
Taxable Bond Ser D 8-1-2005................ A- 99,057 113,050
400,000 New York (City of), 10.00% General Obligation
Taxable Bond Ser D 8-1-2005 (Prerefunded
8-1-2001 @103)............................. A- 391,157 458,160
------------- -------------
490,214 571,210
------------- -------------
NATURAL GAS TRANSMISSIONS-0.56%
750,000 Tennessee Gas Pipeline, 7.50% Bond
4-1-2017................................... BBB 738,409 800,369
250,000 Trans-Canada Pipelines Ltd., 7.06% Note
10-14-2025................................. A- 250,000 261,081
------------- -------------
988,409 1,061,450
------------- -------------
REAL ESTATE-INVESTMENT TRUST-0.27%
500,000 Meditrust, 7.82% Note 9-10-2026.............. BBB- 523,146 513,277
------------- -------------
SUPRANATIONAL-0.40%
750,000 Corp Andina de Fomento, 7.10% Yankee Bond
2-1-2003................................... BBB+ 749,660 768,398
------------- -------------
TELECOMMUNICATIONS-0.28%
500,000 360 Communications Co., 7.50% Sr Note
3-1-2006................................... A 499,058 537,040
------------- -------------
TELEPHONE SERVICES-0.55%
500,000 Century Telephone Enterprises, Inc., 6.15%
1-15-2005.................................. BBB+ 499,296 499,571
500,000 GTE Corp., 7.51% Note 4-1-2009............... A 496,253 552,976
------------- -------------
995,549 1,052,547
------------- -------------
UTILITIES-ELECTRIC-0.41%
750,000 Texas Utilities Electric Capital V, 8.175%
1-30-2037.................................. BBB 750,000 791,708
------------- -------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $ 14,087,122 $ 14,857,989
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-5.64%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
--------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
BROADCASTING-0.27%
$500,000 Sinclair Broadcasting Group, Inc., 10.00% Sr
Sub Note 9-30-2005......................... B $ 500,000 $ 520,000
------------- -------------
CABLE TELEVISION-0.87%
500,000 Adelphia Communications, Inc., 9.25% Sr Note
10-1-2002.................................. NR 508,818 500,000
504,088 Australis Media Ltd., 14.00% Sr Sub Disc Note
5-15-2003 (Zero coupon through 5-15-2000,
thereafter 15.75%) (a)(e)(g)............... D 401,365 5
500,000 CSC Holdings, Inc., 10.50% Sr Sub Deb
5-15-2016.................................. BB- 507,268 560,000
500,000 Lenfest Communications, 8.25% Sr Sub Note
2-15-2008 (f).............................. BB- 498,682 505,000
500,000 Wireless One, Inc., 13.00% Sr Note
10-15-2003................................. CCC+ 490,736 85,000
------------- -------------
2,406,869 1,650,005
------------- -------------
COMPUTER-HARDWARE-0.30%
500,000 Unisys Corp., 11.75% Sr Note 10-15-2004...... BB- 538,604 567,500
------------- -------------
ENERGY-0.24%
500,000 Energy Corp. of America, 9.50% Sr Sub Note
5-15-2007.................................. B 500,000 455,000
------------- -------------
ENTERTAINMENT-0.26%
500,000 Speedway Motorsports, Inc., 8.50% Sr Sub Deb
8-15-2007.................................. B+ 504,064 500,000
------------- -------------
FOREIGN-GOVERNMENT-0.38%
125,000 Korea (Republic of), 8.75% Note 4-15-2003
(j)........................................ BB+ 119,302 106,567
375,000 Korea (Republic of), 8.875% Note 4-15-2008
(j)........................................ BB+ 370,046 264,971
500,000 Philippines (Republic of), 8.875% Sr Note
4-15-2008 (j).............................. BB+ 497,441 350,000
------------- -------------
986,789 721,538
------------- -------------
</TABLE>
14
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
--------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
HOUSING-0.28%
$500,000 MDC Holdings, Inc., 11.125% Note
12-15-2003................................. BB- $ 523,362 $ 525,000
------------- -------------
RESTAURANTS AND FRANCHISING-0.27%
500,000 Tricon Global Restaurants, Inc., 7.65% Sr
Note 5-15-2008............................. BB 498,900 512,630
------------- -------------
STEEL AND IRON-0.26%
500,000 Weirton Steel Corp., 11.375% Sr Note 7-1-2004
(j)........................................ B 542,638 505,000
------------- -------------
TELECOMMUNICATIONS-1.70%
500,000 Hyperion Telecommunication, 12.25% Sr Note
9-1-2004 (j)............................... B 544,602 480,000
250,000 Intermedia Communications, Inc., 8.50% Sr
Note 1-15-2008............................. B 256,282 233,750
500,000 Iridium LLC/Capital Corp., 14.00% Sr Note
7-15-2005.................................. B- 558,375 465,000
500,000 Nextel Communications, Inc., 10.35% Sr Disc
Note 9-15-2007 (Zero coupon through
9-15-2002, thereafter 10.65%) (g).......... CCC+ 336,371 302,500
500,000 Omnipoint Corp., 11.625% Sr Note 8-15-2006
(j)........................................ CCC+ 488,970 475,000
500,000 Phonetel Technologies, Inc., 12.00% Sr Note
12-15-2006................................. CCC 501,151 495,000
500,000 Rogers Cantel, Inc., 9.375% Sr Secured Deb
6-1-2008................................... BB+ 530,352 490,000
500,000 Winstar Communications, Inc., 9.83% Sr Disc
Note 10-15-2005 (Zero coupon through
10-15-2000, thereafter 14.00%) (g)(j)...... CCC+ 430,126 310,000
------------- -------------
3,646,229 3,251,250
------------- -------------
TEXTILE MANUFACTURING-0.27%
500,000 Pillowtex Corp., 10.00% Sr Sub Note
11-15-2006................................. B+ 524,742 512,500
------------- -------------
TRANSPORTATION-0.28%
500,000 Greyhound Lines, Inc., 11.50% Sr Note
4-15-2007.................................. B- 538,384 535,000
------------- -------------
UTILITIES-ELECTRIC-0.26%
500,000 Niagara Mohawk Power, 7.25% Sr Note
10-1-2002.................................. BB- 497,239 498,125
------------- -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $ 12,207,820 $ 10,753,548
------------- -------------
------------- -------------
</TABLE>
U.S. GOVERNMENT SECURITIES-12.98%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 5.84%
MORTGAGE BACKED SECURITIES:
$ 660,201 6.00% 2013................................... $ 650,451 $ 658,345
1,800,000 6.00% 2013 (i)............................... 1,781,438 1,781,438
278,616 6.30% 2008................................... 278,978 289,303
2,971,380 6.50% 2028................................... 2,931,194 2,980,665
1,459,552 6.63% 2005................................... 1,501,144 1,533,508
2,262,640 7.00% 2028 (i)............................... 2,297,198 2,302,236
439,716 7.50% 2027................................... 451,780 451,671
928,109 8.00% 2025................................... 942,175 961,172
168,898 9.00% 2016-2021.............................. 166,836 178,345
------------- -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ 11,001,194 11,136,683
------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -
0.85%
MORTGAGE BACKED SECURITIES:
1,485,111 9.00% 2023................................... 1,533,377 1,585,355
33,318 9.50% 2019................................... 33,047 35,983
------------- -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 1,566,424 1,621,338
------------- -------------
U.S. TREASURY SECURITIES - 6.29%
BONDS:
250,000 8.125% 2021.................................. 326,157 335,703
------------- -------------
NOTES:
500,000 5.625% 1999 (j).............................. 501,182 502,657
1,350,000 5.75% 2003 (j)............................... 1,361,814 1,390,923
</TABLE>
15
<PAGE>
FORTIS STOCK FUNDS
ASSET ALLOCATION PORTFOLIO (CONTINUED)
Schedule of Investments
August 31, 1998
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
$3,350,000 6.125% 2007 (j).............................. $ 3,515,293 $ 3,585,549
400,000 6.25% 2002 (j)............................... 408,132 416,625
4,685,000 6.375% 2000.................................. 4,756,970 4,788,951
400,000 6.625% 2002.................................. 411,358 420,500
------------- -------------
10,954,749 11,105,205
------------- -------------
STRIPS:
1,000,000 5.98% Zero Coupon 2009 (g)................... 516,044 554,090
------------- -------------
TOTAL U.S. TREASURY SECURITIES............... 11,796,950 11,994,998
------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............. 24,364,568 24,753,019
------------- -------------
TOTAL LONG-TERM INVESTMENTS.................. $ 166,453,057 $ 180,636,730
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-6.04%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- -------------
<C> <S> <C>
BANKS-0.00%
$ 7,234 U.S. Bank N.A. Money Market Variable Rate
Time Deposit, Current rate -- 5.40%........ $ 7,234
-------------
INVESTMENT COMPANY-3.49%
6,647,286 Norwest Advantage Cash Investment Fund,
Current rate -- 5.27%...................... 6,647,287
-------------
DIVERSIFIED FINANCE-0.46%
871,000 Norwest Bank Associates Corp., Master
Variable Rate Note, Current
rate -- 5.43%.............................. 871,000
-------------
U.S. GOVERNMENT AGENCY-2.09%
4,000,000 Federal Home Loan Mortgage Corp., 5.57%,
10-2-1998.................................. 3,980,622
-------------
TOTAL SHORT-TERM INVESTMENTS................. 11,506,143
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$177,959,200) (b).......................... $ 192,142,873
-------------
-------------
</TABLE>
(a) Presently non-income producing. For long-term debt securities, items
identified are in default as to payment of interest and/or principal.
(b) At August 31, 1998, the cost of securities for federal income tax purposes
was $177,959,200 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 28,543,221
Unrealized depreciation........................... (14,359,548)
----------------------------------------------------------------
Net unrealized appreciation....................... $ 14,183,673
----------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 6.51% of total net assets as of August 31, 1998.
(e) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". These investments have been identified by portfolio
management as illiquid securities:
<TABLE>
<CAPTION>
Date Acquired Shares/Par Security Cost Basis
- ------------- ----------- ------------------------------------------------------------------------------------ -----------
<S> <C> <C> <C>
1997 504,088 Australis Media Ltd. due 2000 $ 401,365
1996 845,390 DLJ Mortgage Acceptance Corp. due 2028 -- 144A 851,604
1998 250 Highwaymaster Communications, Inc. (Warrants) -- 144A 4,547
1998 500,000 Prudential Insurance Co. due 2006 -- 144A 497,809
</TABLE>
The aggregate value of these securities at August 31, 1998, was $1,401,257,
which represents .73% of total net assets.
(f) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". Pursuant to guidelines adopted by the Board of
Directors, these issues are deemed to be liquid. The aggregate value of
these securities at August 31, 1998, was $1,437,827, which represents .75%
of total net assets.
(g) The interest rate disclosed for these securities represents the effective
yield on the date of acquisition.
(h) The interest rate disclosed for principal only strips represents the
effective yield at August 31, 1998, based upon the estimated timing and
amount of future cash flows. These investments have been identified by
portfolio management as liquid securities. The aggregate value of these
securities at August 31, 1998, was $390,222, which represents .20% of total
net assets.
(i) The cost of securities purchased on a when-issued basis at August 31, 1998,
was $4,078,636. See Note 1 of accompanying Notes to Financial Statements.
(j) Security is fully or partially on loan at August 31, 1998. See Note 1 of
accompanying Notes to Financial Statements.
* Moody's Rating
16
<PAGE>
FORTIS STOCK FUNDS
VALUE FUND
Schedule of Investments
August 31, 1998
COMMON STOCKS-86.32%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
BANKS-3.41%
16,800 Bank of New York Company, Inc................ $ 420,959 $ 406,350
6,900 Chase Manhattan Corp......................... 396,223 365,700
13,600 U.S. Bancorp................................. 464,352 464,100
------------ ------------
1,281,534 1,236,150
------------ ------------
BROADCASTING-0.61%
5,900 Comcast Corp. Special Class A................ 186,894 220,512
------------ ------------
BUILDING MATERIALS-3.83%
28,600 Masco Corp................................... 775,431 657,800
20,800 Owens Corning................................ 839,797 729,300
------------ ------------
1,615,228 1,387,100
------------ ------------
CHEMICALS-1.26%
7,900 Du Pont (E.I.) de Nemours & Co............... 464,330 455,731
------------ ------------
CHEMICALS-SPECIALTY-0.67%
8,000 Air Products and Chemicals, Inc.............. 255,737 244,500
------------ ------------
COMPUTER-COMMUNICATIONS EQUIPMENT-2.93%
28,500 Diebold, Inc................................. 702,228 623,437
11,100 Sun Microsystems, Inc. (a)................... 502,067 439,837
------------ ------------
1,204,295 1,063,274
------------ ------------
COMPUTER-SOFTWARE-0.79%
8,700 Sterling Commerce, Inc. (a).................. 352,531 287,100
------------ ------------
CONTAINERS AND PACKAGING-2.60%
5,000 Crown Cork & Seal Company, Inc............... 177,510 163,750
30,420 Sonoco Products Co........................... 966,128 779,512
------------ ------------
1,143,638 943,262
------------ ------------
DRUGS-5.38%
12,300 Abbott Laboratories.......................... 466,917 473,550
5,900 Bristol-Myers Squibb Co...................... 671,344 577,462
12,300 Pharmacia and UpJohn, Inc.................... 585,604 511,219
4,500 Schering-Plough Corp......................... 440,951 387,000
------------ ------------
2,164,816 1,949,231
------------ ------------
ELECTRICAL EQUIPMENT-1.96%
8,900 General Electric Co.......................... 663,099 712,000
------------ ------------
ELECTRIC-COMPONENTS AND PARTS-2.92%
22,200 Hubbell, Inc. Class B........................ 958,296 793,650
11,500 SCI Systems, Inc. (a)........................ 343,473 263,781
------------ ------------
1,301,769 1,057,431
------------ ------------
ELECTRONIC-CONTROLS AND EQUIPMENT-4.25%
26,300 American Power Conversion Corp. (a).......... 818,126 710,100
19,500 Cooper Industries, Inc....................... 950,764 829,969
------------ ------------
1,768,890 1,540,069
------------ ------------
FINANCIAL SERVICES-5.00%
7,700 Fannie Mae................................... 404,218 437,456
6,000 Finova Group, Inc............................ 337,609 267,750
13,100 Household International, Inc................. 559,039 483,881
6,700 J.P. Morgan & Company, Inc................... 844,142 623,100
------------ ------------
2,145,008 1,812,187
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
FOOD-1.15%
16,800 ConAgra, Inc................................. $ 423,400 $ 415,800
------------ ------------
FREIGHT CARRIERS-0.73%
8,500 CNF Transportation, Inc...................... 350,531 265,625
------------ ------------
HEALTH CARE SERVICES-2.96%
11,500 Quorum Health Group, Inc. (a)................ 218,730 218,500
33,100 Tenet Healthcare Corp. (a)................... 1,023,425 854,394
------------ ------------
1,242,155 1,072,894
------------ ------------
HOUSEHOLD PRODUCTS-1.17%
11,100 Kimberly-Clark Corp.......................... 483,315 423,188
------------ ------------
INSURANCE-3.10%
4,800 American International Group, Inc............ 403,746 371,100
16,800 Hartford Financial Services Group, Inc....... 776,159 751,800
------------ ------------
1,179,905 1,122,900
------------ ------------
MACHINERY-SPECIALTY-0.66%
6,000 Ingersoll-Rand Co............................ 268,231 238,500
------------ ------------
MEDICAL SUPPLIES-0.37%
2,500 Baxter International, Inc.................... 146,244 133,125
------------ ------------
METALS-FABRICATING-2.37%
18,000 Newell Co.................................... 858,380 859,500
------------ ------------
NATURAL GAS TRANSMISSIONS-1.18%
10,100 Enron Corp................................... 455,583 427,356
------------ ------------
OFFICE EQUIPMENT AND SUPPLIES-1.89%
18,300 Compaq Computer Corp......................... 604,073 511,256
2,000 Xerox Corp................................... 211,134 175,625
------------ ------------
815,207 686,881
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-5.81%
29,000 Apache Corp.................................. 731,894 663,375
7,500 Burlington Resources, Inc. (f)............... 274,638 221,719
13,800 Chevron Corp................................. 1,065,638 1,022,063
5,000 Royal Dutch Petroleum Co. NY Shares.......... 262,175 198,750
------------ ------------
2,334,345 2,105,907
------------ ------------
OIL-REFINING-1.09%
8,700 Ashland, Inc................................. 469,995 396,394
------------ ------------
PAPER-6.76%
29,343 Fort James Corp.............................. 1,014,879 854,615
29,600 Mead Corp.................................... 925,484 810,300
17,500 Temple-Inland, Inc........................... 897,378 784,219
------------ ------------
2,837,741 2,449,134
------------ ------------
PUBLISHING-2.27%
10,800 McGraw Hill Companies, Inc................... 804,215 823,500
------------ ------------
RAILROAD AND RAILROAD EQUIPMENT-1.10%
10,000 Union Pacific Corp........................... 423,439 398,125
------------ ------------
REAL ESTATE-INVESTMENT TRUST-3.71%
32,200 Indymac Mortgage Holdings, Inc............... 713,239 631,925
30,300 Manufactured Home Communities, Inc........... 782,914 713,944
------------ ------------
1,496,153 1,345,869
------------ ------------
RETAIL-LEISURE TIME-0.52%
6,000 Consolidated Stores Corp. (a)................ 224,210 189,000
------------ ------------
</TABLE>
17
<PAGE>
FORTIS STOCK FUNDS
VALUE FUND (CONTINUED)
Schedule of Investments
August 31, 1998
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
RETAIL-SPECIALTY-1.17%
16,400 AutoZone, Inc. (a)........................... $ 538,443 $ 425,375
------------ ------------
TELEPHONE SERVICES-3.74%
8,402 Bell Atlantic Corp........................... 371,762 370,738
15,500 SBC Communications, Inc. (f)................. 518,214 589,000
5,900 Sprint Corp.................................. 250,092 395,669
------------ ------------
1,140,068 1,355,407
------------ ------------
UNIT INVESTMENT TRUST-2.69%
10,200 S & P 500 Depositary Receipt (f)............. 984,743 976,013
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
UTILITIES-ELECTRIC-5.03%
11,500 CalEnergy Company, Inc. (a)(f)............... $ 326,010 $ 292,531
18,900 CMS Energy Corp.............................. 768,254 799,706
6,100 Duke Energy Corp............................. 336,533 380,488
7,600 New Century Energies, Inc.................... 355,355 350,550
------------ ------------
1,786,152 1,823,275
------------ ------------
WASTE DISPOSAL-1.24%
10,200 Waste Management, Inc. (a)................... 512,677 450,075
------------ ------------
TOTAL COMMON STOCKS.......................... $ 34,322,901 $ 31,292,390
------------ ------------
------------ ------------
</TABLE>
PREFERRED STOCKS-4.02%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
COMPUTER-SOFTWARE-2.41%
18,500 Wang Labs 6.50% Conv. Preferred Series B..... $ 963,100 $ 874,125
------------ ------------
FINANCIAL SERVICES-1.61%
34,300 Sun Financing 7.00% Conv. Preferred (e)...... 773,051 583,100
------------ ------------
TOTAL PREFERRED STOCKS....................... 1,736,151 1,457,225
------------ ------------
TOTAL LONG-TERM INVESTMENTS.................. $36,059,052 $32,749,615
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-10.77%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- ------------
<C> <S> <C>
BANKS-0.01%
$ 1,158 U.S. Bank N.A. Money Market Variable Rate
Time Deposit, Current rate -- 5.40%........ $ 1,158
------------
INVESTMENT COMPANY-3.58%
1,296,420 Norwest Advantage Cash Investment
Fund -- CURRENT RATE -- 5.27%.............. 1,296,420
------------
DIVERSIFIED FINANCE-4.43%
1,607,000 Norwest Bank Associates Corp., Master
Variable Rate Note, Current
rate -- 5.43%.............................. 1,607,000
------------
U.S. GOVERNMENT AGENCY-2.75%
1,000,000 Federal Home Loan Mortgage Corp., 5.57%,
9-14-1998.................................. 997,877
------------
TOTAL SHORT-TERM INVESTMENTS................. 3,902,455
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$39,961,507) (b)........................... $36,652,070
------------
------------
</TABLE>
(a) Presently not paying dividend income.
(b) At August 31, 1998, the cost of securities for federal income tax purposes
was $40,828,504 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation......................................................................................... $ 740,862
Unrealized depreciation......................................................................................... (4,917,296)
- -----------------------------------------------------------------------------------------------------------------------------
Net unrealized depreciation..................................................................................... $(4,176,434)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents .55% of total net assets as of August 31, 1998.
(e) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
'accredited investors'. This investment has been identified by portfolio
management as an illiquid security. The portfolio entered into the
following Section 144A security transaction: in 1998 the portfolio acquired
34,300 shares of Sun Financing preferred stock with a cost basis of
$773,051. The value of this security at August 31, 1998 is $583,100 which
represents 1.61% of total net assets.
(f) Security is fully or partially on loan at August 31, 1998. See Note 1 of
accompanying Notes to Financial Statements.
18
<PAGE>
FORTIS STOCK FUNDS
GROWTH & INCOME FUND
Schedule of Investments
August 31, 1998
COMMON STOCKS-81.04%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (a) Value (b)
-------- ------------ ------------
<C> <S> <C> <C>
AEROSPACE AND EQUIPMENT-1.05%
5,000 United Technologies Corp..................... $ 359,512 $ 362,812
------------ ------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-2.13%
13,500 Genuine Parts Co............................. 441,333 422,719
10,000 Tenneco, Inc................................. 442,494 316,875
------------ ------------
883,827 739,594
------------ ------------
BANKS-3.81%
11,350 Banc One Corp................................ 510,589 431,300
4,000 Fleet Financial Group, Inc................... 284,240 262,250
2,265 U.S. Bancorp................................. 56,223 77,293
11,000 Valley National Bancorp...................... 385,999 299,750
7,800 Washington Mutual, Inc. (e).................. 295,151 249,600
------------ ------------
1,532,202 1,320,193
------------ ------------
BUSINESS SERVICES AND SUPPLIES-2.34%
5,000 Deluxe Corp.................................. 189,509 145,000
14,000 Omnicom Group, Inc........................... 492,032 666,750
------------ ------------
681,541 811,750
------------ ------------
CHEMICALS-1.08%
6,500 Du Pont (E.I.) de Nemours & Co............... 481,867 374,969
------------ ------------
CONSUMER GOODS-0.70%
8,800 Fortune Brands, Inc.......................... 304,919 242,550
------------ ------------
DIVERSIFIED COMPANIES-1.26%
3,200 Chemed Corp.................................. 127,328 94,200
5,000 Minnesota Mining and Manufacturing Co. 407,578 342,500
------------ ------------
534,906 436,700
------------ ------------
DRUGS-9.17%
10,600 Abbott Laboratories.......................... 314,524 408,100
13,000 American Home Products Corp.................. 465,730 651,625
11,000 Glaxo Wellcome plc ADR (e)................... 465,500 611,187
5,500 Johnson & Johnson............................ 372,295 379,500
4,000 Merck & Co., Inc............................. 348,981 463,750
16,000 Pharmacia and UpJohn, Inc.................... 631,339 665,000
------------ ------------
2,598,369 3,179,162
------------ ------------
ELECTRICAL EQUIPMENT-1.73%
7,500 General Electric Co.......................... 421,048 600,000
------------ ------------
FINANCIAL SERVICES-5.37%
5,700 American Express Co.......................... 542,717 444,600
3,900 Fannie Mae................................... 144,347 221,569
20,000 Household International, Inc................. 641,815 738,750
6,300 Marsh and McLennan Companies, Inc............ 328,037 305,550
6,468 MBNA Corp. (e)............................... 93,145 151,998
------------ ------------
1,750,061 1,862,467
------------ ------------
FOOD-4.04%
12,000 Groupe Danone ADR............................ 431,348 609,000
8,400 Heinz (H.J.) Co.............................. 347,913 447,825
6,500 Quaker Oats Co............................... 295,200 345,312
------------ ------------
1,074,461 1,402,137
------------ ------------
HAND TOOLS AND GENERAL HARDWARE-0.64%
8,500 Snap-On, Inc................................. 307,430 223,125
------------ ------------
<CAPTION>
Market
Shares Cost (a) Value (b)
-------- ------------ ------------
<C> <S> <C> <C>
HOUSEHOLD PRODUCTS-1.39%
5,000 Clorox Co.................................... $ 329,895 $ 482,188
------------ ------------
INSURANCE-2.19%
20,000 LaSalle Re Holdings Ltd. (e)................. 698,098 587,500
2,000 Lincoln National Corp........................ 191,065 172,000
------------ ------------
889,163 759,500
------------ ------------
LEISURE TIME-AMUSEMENTS-1.40%
20,000 Royal Caribbean Cruises Ltd. (e)............. 406,250 485,000
------------ ------------
MACHINERY-OIL AND WELL-0.79%
4,500 Dresser Industries, Inc...................... 136,780 115,031
6,000 Halliburton Co............................... 205,660 159,375
------------ ------------
342,440 274,406
------------ ------------
MEDICAL SUPPLIES-1.08%
7,000 Baxter International, Inc.................... 325,992 372,750
------------ ------------
NATURAL GAS TRANSMISSIONS-5.19%
6,900 Columbia Energy Group........................ 393,583 343,275
15,072 El Paso Energy Corp.......................... 402,835 373,974
17,712 Enron Corp................................... 737,108 749,439
14,400 Williams Companies, Inc...................... 346,937 331,200
------------ ------------
1,880,463 1,797,888
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-5.54%
10,000 Amoco Corp................................... 402,123 453,125
6,000 Exxon Corp................................... 318,656 392,625
7,500 Mobil Corp................................... 543,233 518,438
10,000 Texaco, Inc.................................. 500,373 555,625
------------ ------------
1,764,385 1,919,813
------------ ------------
PHOTOGRAPHIC-1.80%
8,000 Eastman Kodak Co............................. 550,478 625,000
------------ ------------
PUBLISHING-3.77%
13,500 McGraw Hill Companies, Inc................... 906,467 1,029,375
14,200 Readers Digest Association, Inc. Class A
(e)........................................ 390,938 278,675
------------ ------------
1,297,405 1,308,050
------------ ------------
RAILROAD AND RAILROAD EQUIPMENT-0.10%
9,000 Tranz Rail Holdings Ltd. ADR (e)............. 136,375 36,000
------------ ------------
REAL ESTATE-INVESTMENT TRUST-5.24%
18,000 Cornerstone Properties, Inc.................. 279,084 258,750
7,500 Crescent Real Estate Equities Co............. 207,327 172,500
11,140 Equity Office Properties Trust............... 258,587 252,739
19,235 Excel Realty Trust, Inc...................... 502,263 449,618
6,000 Highwoods Properties, Inc.................... 190,154 152,625
8,000 Manufactured Home Communities, Inc........... 208,480 188,500
4,000 Spieker Properties, Inc...................... 143,869 142,250
5,500 Starwood Hotels & Resorts.................... 286,173 200,750
------------ ------------
2,075,937 1,817,732
------------ ------------
RETAIL-DEPARTMENT STORES-0.66%
5,000 Sears Roebuck & Co........................... 273,120 227,188
------------ ------------
</TABLE>
19
<PAGE>
FORTIS STOCK FUNDS
GROWTH & INCOME FUND (CONTINUED)
Schedule of Investments
August 31, 1998
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (a) Value (b)
-------- ------------ ------------
<C> <S> <C> <C>
RETAIL-SPECIALTY-1.85%
8,200 Intimate Brands, Inc......................... $ 147,733 $ 151,700
13,500 Rite Aid Corp................................ 344,341 488,531
------------ ------------
492,074 640,231
------------ ------------
SHIP BUILDING, SHIPPING-1.90%
6,600 Knightsbridge Tankers Ltd.................... 140,936 136,950
10,000 Sea Containers Ltd. Class A.................. 433,616 300,625
12,000 Teekay Shipping Corp......................... 311,250 222,750
------------ ------------
885,802 660,325
------------ ------------
TELECOMMUNICATIONS-1.69%
12,400 Ameritech Corp............................... 481,297 584,350
------------ ------------
TELEPHONE SERVICES-8.20%
10,000 ALLTEL Corp.................................. 432,195 451,250
23,000 Frontier Corp................................ 653,025 698,625
<CAPTION>
Market
Shares Cost (a) Value (b)
-------- ------------ ------------
<C> <S> <C> <C>
10,400 GTE Corp..................................... $ 505,272 $ 520,000
18,000 SBC Communications, Inc. (e)................. 584,950 684,000
9,400 U.S. West, Inc............................... 372,996 488,800
------------ ------------
2,548,438 2,842,675
------------ ------------
TOBACCO-1.71%
14,300 Philip Morris Companies, Inc................. 573,942 594,344
------------ ------------
UTILITIES-ELECTRIC-3.22%
10,128 Duke Energy Corp............................. 420,128 631,734
27,000 Endesa S.A. ADR.............................. 507,710 486,000
------------ ------------
927,838 1,117,734
------------ ------------
TOTAL COMMON STOCKS.......................... $ 27,111,437 $ 28,100,633
------------ ------------
------------ ------------
</TABLE>
PREFERRED STOCKS-4.74%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (a) Value (b)
-------- ------------ ------------
<C> <S> <C> <C>
CONSTRUCTION-0.65%
5,500 Sealed Air Corp., Conv., Ser A............... $ 354,052 $ 226,187
------------ ------------
CONTAINERS AND PACKAGING-0.45%
5,000 Crown Cork and Seal Co, Inc., Conv. 4.50%.... 242,016 156,875
------------ ------------
INSURANCE-1.47%
10,000 Sunamerica, Inc., Conv. 8.50%................ 415,108 508,750
------------ ------------
MEDIA-0.44%
6,000 Metromedia International Group, Inc., Cumm.
Conv. 7.25%................................ 300,000 153,000
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-0.67%
7,000 Nuevo Energy Co., Conv., Ser A, 5.75% (e).... 339,050 231,000
------------ ------------
UTILITIES-ELECTRIC-1.06%
7,500 AES Corp., Conv., Ser A "Tecons", 5.375%..... 425,599 368,438
------------ ------------
TOTAL PREFERRED STOCKS....................... $ 2,075,825 $ 1,644,250
------------ ------------
------------ ------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-0.67%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (a) Value (b)
--------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
WASTE DISPOSAL-0.67%
$200,000 Waste Management, 4.00% Conv. Sub Note
2-1-2002................................... BBB $ 203,875 $ 232,000
------------ ------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-2.38%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (a) Value (b)
--------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-1.92%
$300,000 Assisted Living Concepts, Inc., 5.625% Conv.
5-1-2003 (d)............................... NR $ 300,000 $ 241,875
100,000 Centocor Inc., 4.75% Conv. 2-15-2005 (d)..... NR 100,000 95,125
</TABLE>
20
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (a) Value (b)
--------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
$400,000 Cypress Semiconductor, Corp., 6.00% Conv.
10-1-2002 (d).............................. B $ 400,000 $ 330,000
------------ ------------
800,000 667,000
------------ ------------
METALS-MINING AND MISCELLANEOUS-0.46%
250,000 Coeur D'Alene Mines, Corp., 7.25% Conv. Sub
Deb 10-31-2005 (d)......................... CCC+ 250,000 160,312
------------ ------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... 1,050,000 827,312
------------ ------------
TOTAL LONG-TERM INVESTMENTS.................. $30,441,137 $30,804,195
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-10.92%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (b)
----------- ------------
<C> <S> <C>
BANKS-0.00%
$ 1,028 U.S. Bank N.A. Money Market Variable Rate
Time Deposit, Current rate -- 5.40%........ $ 1,028
------------
INVESTMENT COMPANY-4.38%
1,516,642 Norwest Advantage Cash Investment Fund,
Current rate -- 5.27%...................... 1,516,642
------------
DIVERSIFIED FINANCE-5.10%
1,769,000 Norwest Bank Associates Corp., Master
Variable Rate Note, Current
rate -- 5.43%.............................. 1,769,000
------------
U.S. GOVERNMENT AGENCY-1.44%
500,000 Federal National Mortgage Association, 5.56%,
9-18-1998.................................. 498,635
------------
TOTAL SHORT-TERM INVESTMENTS................. 3,785,305
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$34,226,442) (a)........................... $34,589,500
------------
------------
</TABLE>
(a) At August 31, 1998, the cost of securities for federal income tax purposes
was $34,226,442 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 3,441,923
Unrealized depreciation........................... (3,078,865)
---------------------------------------------------------------
Net unrealized appreciation....................... $ 363,058
---------------------------------------------------------------
</TABLE>
(b) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(c) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 7.11% of total net assets as of August 31, 1998.
(d) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". These investments have been identified by portfolio
management as illiquid securities:
<TABLE>
<CAPTION>
Date Acquired Shares/Par Security Cost Basis
- ------------- ----------- ------------------------------------------------------------------------------------ -----------
<S> <C> <C> <C>
1998 300,000 Assisted Living Concepts, Inc. 2003 -- 144A $ 300,000
1998 100,000 Centocor, Inc. 2005 -- 144A 100,000
1997 250,000 Coeur D' Alene Mines, Corp. 2005 -- 144A 250,000
1997 400,000 Cypress Semiconductor, Corp. 2002 -- 144A 400,000
</TABLE>
The aggregate value of these securities at August 31, 1998, was $827,312,
which represents 2.38% of total net assets.
(e) Security is fully or partially on loan at August 31, 1998. See Note 1 of
accompanying Notes to Financial Statements.
21
<PAGE>
FORTIS STOCK FUNDS
CAPITAL FUND
Schedule of Investments
August 31, 1998
COMMON STOCKS-83.18%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
ADVERTISING-PUBLIC RELATIONS-1.82%
109,100 Interpublic Group of Companies, Inc. (e)..... $ 4,467,826 $ 6,218,700
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-1.00%
57,000 Magna International, Inc. Class A (e)........ 2,701,705 3,416,437
------------- -------------
BEVERAGE-0.45%
95,800 Panamerican Beverages, Inc. Class A (e)...... 2,564,008 1,526,812
------------- -------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-1.98%
111,000 Amgen, Inc. (a).............................. 6,710,001 6,757,125
------------- -------------
BROADCASTING-1.88%
67,000 USA Networks, Inc. (a)....................... 2,040,505 1,314,875
103,000 Viacom, Inc. Class B (a) (e)................. 5,304,977 5,111,375
------------- -------------
7,345,482 6,426,250
------------- -------------
BUILDING MATERIALS-1.67%
248,000 Masco Corp................................... 6,818,049 5,704,000
------------- -------------
BUSINESS SERVICES AND SUPPLIES-5.23%
72,000 Computer Sciences Corp. (a).................. 3,946,419 4,072,500
177,000 Fiserv, Inc. (a)............................. 4,663,574 6,903,000
90,000 Gartner Group, Inc. Class A (a) (e).......... 3,167,631 2,081,250
33,000 IMS Health, Inc.............................. 1,295,435 1,815,000
66,000 Ingram Micro, Inc. Class A (a) (e)........... 1,310,320 2,970,000
------------- -------------
14,383,379 17,841,750
------------- -------------
CHEMICALS-1.68%
105,000 Monsanto Co. (e)............................. 4,323,566 5,742,187
------------- -------------
CHEMICALS-SPECIALTY-0.60%
56,600 Minerals Technologies, Inc................... 2,889,674 2,055,287
------------- -------------
COMPUTER-COMMUNICATIONS EQUIPMENT-4.22%
63,000 Cisco Systems, Inc. (a)...................... 1,040,526 5,158,125
127,000 Sun Microsystems, Inc. (a)................... 6,068,922 5,032,375
234,000 Unisys Corp. (a)............................. 5,619,696 4,197,375
------------- -------------
12,729,144 14,387,875
------------- -------------
COMPUTER-SOFTWARE-4.28%
41,000 America Online, Inc. (a) (e)................. 2,077,837 3,359,437
100,000 Microsoft Corp. (a).......................... 2,545,880 9,593,750
50,000 Sterling Commerce, Inc. (a).................. 1,775,665 1,650,000
------------- -------------
6,399,382 14,603,187
------------- -------------
CONSUMER GOODS-0.85%
40,000 Colgate-Palmolive Co......................... 3,795,556 2,885,000
------------- -------------
DRUGS-9.37%
64,000 Biovail Corp. International (a) (e).......... 2,208,888 1,796,000
119,000 Forest Laboratories, Inc. (a) (e)............ 2,348,561 3,897,250
50,000 Johnson & Johnson............................ 3,877,205 3,450,000
80,000 Lilly (Eli) & Co. (with rights).............. 5,626,300 5,240,000
191,000 Mylan Laboratories, Inc. (e)................. 3,486,385 4,369,125
90,000 Pharmacia and UpJohn, Inc.................... 4,349,034 3,740,625
52,000 SmithKline Beecham plc ADR................... 3,051,490 2,957,500
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
100,000 Warner-Lambert Co............................ $ 3,796,738 $ 6,525,000
------------- -------------
28,744,601 31,975,500
------------- -------------
ELECTRICAL EQUIPMENT-1.62%
69,000 General Electric Co.......................... 5,859,633 5,520,000
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-0.63%
50,000 Motorola, Inc................................ 2,747,559 2,153,125
------------- -------------
FINANCIAL SERVICES-2.92%
40,000 American Express Co.......................... 4,217,223 3,120,000
98,000 Fannie Mae................................... 857,500 5,567,625
55,000 MBNA Corp. (e)............................... 350,109 1,292,500
------------- -------------
5,424,832 9,980,125
------------- -------------
FOOD-1.99%
134,000 Groupe Danone ADR............................ 4,414,377 6,800,500
------------- -------------
HEALTH CARE SERVICES-1.54%
60,000 Cardinal Health, Inc......................... 3,060,700 5,250,000
------------- -------------
HOTEL AND GAMING-1.00%
91,000 Sun International Hotels Ltd. (a)(e)......... 4,349,186 3,429,563
------------- -------------
INSURANCE-5.48%
130,500 American International Group, Inc............ 5,810,114 10,089,281
133,000 Hartford Life, Inc. Class A (e).............. 4,545,849 6,816,250
21,000 Lincoln National Corp........................ 2,007,370 1,806,000
------------- -------------
12,363,333 18,711,531
------------- -------------
LEISURE TIME-AMUSEMENTS-0.30%
170,000 Royal Olympic Cruise Lines, Inc. (a)(e) 1,838,591 1,020,000
------------- -------------
MEDICAL TECHNOLOGY-1.67%
111,000 Medtronic, Inc. (with rights)................ 689,712 5,702,625
------------- -------------
MOTION PICTURES-0.54%
112,000 Cinar Films, Inc. Class B (a)................ 1,885,000 1,855,000
------------- -------------
NATURAL GAS TRANSMISSIONS-1.54%
81,000 Enron Corp................................... 4,278,029 3,427,313
80,000 Williams Companies, Inc...................... 2,265,304 1,840,000
------------- -------------
6,543,333 5,267,313
------------- -------------
OFFICE EQUIPMENT AND SUPPLIES-1.88%
120,000 Compaq Computer Corp. (e).................... 3,839,178 3,352,500
68,000 EMC Corp. (a)(e)............................. 2,972,926 3,072,750
------------- -------------
6,812,104 6,425,250
------------- -------------
OIL AND GAS FIELD SERVICES-1.53%
60,000 Camco International, Inc..................... 3,175,970 3,015,000
50,000 Schlumberger Ltd............................. 2,311,138 2,190,625
------------- -------------
5,487,108 5,205,625
------------- -------------
OIL-CRUDE PETROLEUM AND GAS-1.30%
68,000 Exxon Corp................................... 4,967,162 4,449,750
------------- -------------
PUBLISHING-2.36%
81,000 New York Times Co. Class A................... 2,857,680 2,349,000
71,000 Time Warner, Inc............................. 3,319,250 5,706,625
------------- -------------
6,176,930 8,055,625
------------- -------------
</TABLE>
22
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
RESTAURANTS AND FRANCHISING-1.24%
75,500 McDonald's Corp.............................. $ 4,779,115 $ 4,232,719
------------- -------------
RETAIL-DEPARTMENT STORES-1.96%
112,000 Kohl's Corp. (a)............................. 1,097,124 5,089,000
63,000 Proffitt's, Inc. (a)......................... 2,221,254 1,606,500
------------- -------------
3,318,378 6,695,500
------------- -------------
RETAIL-DISCOUNT STORES-3.56%
101,000 Costco Companies, Inc. (a)................... 2,134,563 4,753,313
225,000 Kmart Corp. (a)(e)........................... 3,670,263 2,868,750
77,000 Wal-Mart Stores, Inc. (e).................... 4,006,452 4,523,750
------------- -------------
9,811,278 12,145,813
------------- -------------
RETAIL-GROCERY-0.99%
75,000 Kroger Co. (a)............................... 3,978,180 3,375,000
------------- -------------
RETAIL-SPECIALTY-4.23%
54,000 AutoZone, Inc. (a)........................... 2,005,576 1,400,625
156,000 Home Depot, Inc.............................. 832,336 6,006,000
96,000 Tiffany & Co................................. 4,590,897 3,570,000
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
90,000 Walgreen Co. (e)............................. $ 2,734,361 $ 3,465,000
------------- -------------
10,163,170 14,441,625
------------- -------------
TELEPHONE SERVICES-5.94%
83,000 AirTouch Communications, Inc. (a)(e) 2,305,582 4,668,750
197,500 Frontier Corp................................ 5,512,089 5,999,063
40,900 MCI Communications Corp...................... 1,644,262 2,045,000
100,000 Vanguard Cellular Systems, Inc. Class A
(a)........................................ 2,281,939 1,875,000
138,600 WorldCom, Inc. (a)(e)........................ 740,287 5,673,938
------------- -------------
12,484,159 20,261,751
------------- -------------
TOYS-0.73%
77,000 Mattel, Inc.................................. 396,750 2,492,875
------------- -------------
UTILITIES-ELECTRIC-2.23%
164,000 AES Corp. (a)................................ 3,911,949 4,469,000
175,000 Endesa S.A. ADR (e).......................... 3,940,650 3,150,000
------------- -------------
7,852,599 7,619,000
------------- -------------
WASTE DISPOSAL-0.97%
75,000 Waste Management, Inc. (a)................... 2,679,864 3,309,375
------------- -------------
TOTAL COMMON STOCKS.......................... $ 231,955,426 $ 283,939,800
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-12.38%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
------------ -------------
<C> <S> <C>
BANKS-0.01%
$ 13,445 U.S. Bank N.A. Money Market Variable Rate
Time Deposit, Current rate -- 5.40%........ $ 13,445
-------------
INVESTMENT COMPANY-2.35%
8,025,397 Norwest Advantage Cash Investment Fund,
Current rate -- 5.27%...................... 8,025,397
-------------
DIVERSIFIED FINANCE-4.59%
15,671,000 Norwest Bank Associates Corp., Master
Variable Rate Note, Current
rate -- 5.43%.............................. 15,671,000
-------------
U.S. GOVERNMENT AGENCY-5.43%
11,200,000 Federal Home Loan Mortgage Corp., 5.57%,
9-14-1998.................................. 11,176,218
5,000,000 Federal Home Loan Mortgage Corp., 5.57%,
10-2-1998.................................. 4,975,778
2,400,000 Federal National Mortgage Assoc., 5.58%,
9-17-1998.................................. 2,393,801
-------------
18,545,797
-------------
TOTAL SHORT-TERM INVESTMENTS................. 42,255,639
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$274,211,065) (b).......................... $ 326,195,439
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At August 31, 1998, the cost of securities for federal income tax purposes
was $274,267,107 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 76,789,495
Unrealized depreciation........................... (24,861,163)
----------------------------------------------------------------
Net unrealized appreciation....................... $ 51,928,332
----------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 7.30% of total net assets as of August 31, 1998.
(e) Security is fully or partially on loan at August 31, 1998. See Note 1 of
accompanying Notes to Financial Statements.
23
<PAGE>
FORTIS STOCK FUNDS
FIDUCIARY FUND, INC.
Schedule of Investments
August 31, 1998
COMMON STOCKS-82.55%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
ADVERTISING-PUBLIC RELATIONS-1.82%
28,100 Interpublic Group of Companies, Inc.......... $ 1,151,275 $ 1,601,700
------------ ------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.99%
14,500 Magna International, Inc. Class A (e)........ 686,778 869,094
------------ ------------
BEVERAGE-0.42%
23,000 Panamerican Beverages, Inc. Class A.......... 615,561 366,562
------------ ------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-1.98%
28,500 Amgen, Inc. (a).............................. 1,737,356 1,734,937
------------ ------------
BROADCASTING-1.85%
17,000 USA Networks, Inc. (a)....................... 517,740 333,625
26,000 Viacom, Inc. Class B (a)..................... 1,253,196 1,290,250
------------ ------------
1,770,936 1,623,875
------------ ------------
BUILDING MATERIALS-1.62%
62,000 Masco Corp................................... 1,702,425 1,426,000
------------ ------------
BUSINESS SERVICES AND SUPPLIES-5.17%
18,000 Computer Sciences Corp. (a).................. 987,154 1,018,125
45,000 Fiserv, Inc. (a)............................. 1,190,478 1,755,000
24,000 Gartner Group, Inc. Class A (a)(e)........... 845,409 555,000
9,000 IMS Health, Inc.............................. 354,838 495,000
16,000 Ingram Micro, Inc. Class (a)(e).............. 318,024 720,000
------------ ------------
3,695,903 4,543,125
------------ ------------
CHEMICALS-1.68%
27,000 Monsanto Co.................................. 1,127,873 1,476,562
------------ ------------
CHEMICALS-SPECIALTY-0.62%
14,900 Minerals Technologies, Inc................... 760,709 541,056
------------ ------------
COMPUTER-COMMUNICATIONS EQUIPMENT-4.19%
16,000 Cisco Systems, Inc. (a)...................... 307,377 1,310,000
32,300 Sun Microsystems, Inc. (a)................... 1,543,416 1,279,887
60,500 Unisys Corp. (a)............................. 1,455,462 1,085,219
------------ ------------
3,306,255 3,675,106
------------ ------------
COMPUTER-SOFTWARE-4.20%
10,500 America Online, Inc. (a)..................... 534,696 860,344
25,000 Microsoft Corp. (a).......................... 821,802 2,398,437
13,000 Sterling Commerce, Inc. (a).................. 311,215 429,000
------------ ------------
1,667,713 3,687,781
------------ ------------
CONSUMER GOODS-0.82%
10,000 Colgate-Palmolive Co......................... 949,518 721,250
------------ ------------
DRUGS-9.49%
16,000 Biovail Corp. International (a)(e)........... 552,223 449,000
30,800 Forest Laboratories, Inc. (a)(e)............. 610,528 1,008,700
13,000 Johnson & Johnson............................ 1,008,073 897,000
21,000 Lilly (Eli) & Co. (with rights).............. 1,469,760 1,375,500
50,000 Mylan Laboratories, Inc. (e)................. 790,426 1,143,750
23,000 Pharmacia and UpJohn, Inc.................... 1,111,784 955,938
13,000 SmithKline Beecham plc ADR................... 762,873 739,375
27,000 Warner-Lambert Co............................ 1,020,438 1,761,750
------------ ------------
7,326,105 8,331,013
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
ELECTRICAL EQUIPMENT-1.55%
17,000 General Electric Co.......................... $ 1,443,120 $ 1,360,000
------------ ------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-0.59%
12,000 Motorola, Inc................................ 665,830 516,750
------------ ------------
FINANCIAL SERVICES-2.88%
10,000 American Express Co.......................... 1,060,880 780,000
25,000 Fannie Mae................................... 218,750 1,420,313
14,000 MBNA Corp (e)................................ 98,215 329,000
------------ ------------
1,377,845 2,529,313
------------ ------------
FOOD-2.20%
38,000 Groupe Danone ADR............................ 1,291,807 1,928,500
------------ ------------
HEALTH CARE SERVICES-1.49%
15,000 Cardinal Health, Inc......................... 765,175 1,312,500
------------ ------------
HOTEL AND GAMING-0.94%
22,000 Sun International Hotels Ltd. (a)(e)......... 1,052,175 829,125
------------ ------------
INSURANCE-5.25%
31,500 American International Group, Inc............ 1,411,518 2,435,344
34,000 Hartford Life, Inc. Class A.................. 1,202,930 1,742,500
5,000 Lincoln National Corp........................ 477,893 430,000
------------ ------------
3,092,341 4,607,844
------------ ------------
LEISURE TIME-AMUSEMENTS-0.27%
40,000 Royal Olympic Cruise Lines, Inc. (a)......... 422,450 240,000
------------ ------------
MEDICAL TECHNOLOGY-1.64%
28,000 Medtronic, Inc. (with rights)................ 179,460 1,438,500
------------ ------------
MOTION PICTURES-0.57%
30,000 Cinar Films, Inc. Class B (a)................ 506,250 496,875
------------ ------------
NATURAL GAS TRANSMISSIONS-1.54%
21,000 Enron Corp................................... 1,110,857 888,563
20,000 Williams Companies, Inc...................... 546,369 460,000
------------ ------------
1,657,226 1,348,563
------------ ------------
OFFICE EQUIPMENT AND SUPPLIES-1.88%
30,000 Compaq Computer Corp......................... 959,795 838,125
18,000 EMC Corp. (a)(e)............................. 784,483 813,375
------------ ------------
1,744,278 1,651,500
------------ ------------
OIL AND GAS FIELD SERVICES-1.51%
15,000 Camco International, Inc..................... 991,327 753,750
13,000 Schlumberger Ltd............................. 639,216 569,563
------------ ------------
1,630,543 1,323,313
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-1.30%
17,500 Exxon Corp................................... 1,277,739 1,145,156
------------ ------------
PUBLISHING-2.31%
20,200 New York Times Co. Class A................... 712,656 585,800
18,000 Time Warner, Inc............................. 841,500 1,446,750
------------ ------------
1,554,156 2,032,550
------------ ------------
RESTAURANTS AND FRANCHISING-1.21%
18,900 McDonald's Corp.............................. 1,200,787 1,059,581
------------ ------------
</TABLE>
24
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
RETAIL-DEPARTMENT STORES-1.97%
29,000 Kohl's Corp. (a)............................. $ 283,848 $ 1,317,688
16,000 Proffitt's, Inc. (a)......................... 564,128 408,000
------------ ------------
847,976 1,725,688
------------ ------------
RETAIL-DISCOUNT STORES-3.54%
26,000 Costco Companies, Inc. (a)................... 636,147 1,223,625
60,000 Kmart Corp. (a).............................. 956,030 765,000
19,000 Wal-Mart Stores, Inc......................... 996,094 1,116,250
------------ ------------
2,588,271 3,104,875
------------ ------------
RETAIL-GROCERY-1.02%
20,000 Kroger Co. (a)............................... 1,060,848 900,000
------------ ------------
RETAIL-SPECIALTY-4.28%
13,900 AutoZone, Inc. (a)........................... 516,207 360,531
40,000 Home Depot, Inc.............................. 600,641 1,540,000
24,000 Tiffany & Co................................. 1,147,724 892,500
25,000 Walgreen Co.................................. 759,491 962,500
------------ ------------
3,024,063 3,755,531
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
TELEPHONE SERVICES-5.91%
21,000 AirTouch Communications, Inc. (a)............ $ 582,385 $ 1,181,250
50,200 Frontier Corp................................ 1,397,346 1,524,825
11,800 MCI Communications Corp...................... 469,775 590,000
25,000 Vanguard Cellular Systems, Inc. Class A
(a)........................................ 570,493 468,750
34,700 WorldCom, Inc. (a)(e)........................ 185,300 1,420,531
------------ ------------
3,205,299 5,185,356
------------ ------------
TOYS-0.74%
20,000 Mattel, Inc.................................. 99,951 647,500
------------ ------------
UTILITIES-ELECTRIC-2.16%
40,000 AES Corp. (a)................................ 966,379 1,090,000
45,000 Endesa S.A. ADR.............................. 1,013,310 810,000
------------ ------------
1,979,689 1,900,000
------------ ------------
WASTE DISPOSAL-0.95%
19,000 Waste Management, Inc. (a)................... 678,918 838,375
------------ ------------
TOTAL COMMON STOCKS.......................... $ 59,844,604 $ 72,475,456
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-13.08%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- ------------
<C> <S> <C>
BANKS-0.01%
$ 3,530 U.S. Bank N.A. Money Market Variable Rate
Time Deposit, Current rate -- 5.40%........ $ 3,530
------------
INVESTMENT COMPANY-3.20%
2,809,430 Norwest Advantage Cash Investment Fund,
Current rate -- 5.27%...................... 2,809,430
------------
DIVERSIFIED FINANCE-4.65%
4,086,000 Norwest Bank Associates Corp., Master
Variable Rate Note, Current
rate -- 5.43%.............................. 4,086,000
------------
U.S. GOVERNMENT AGENCY-5.22%
2,600,000 Federal Home Loan Mortgage Corp., 5.57%,
9-14-1998.................................. 2,594,479
2,000,000 Federal Home Loan Mortgage Corp., 5.57%,
10-2-1998.................................. 1,990,311
------------
4,584,790
------------
TOTAL SHORT-TERM INVESTMENTS................. 11,483,750
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$71,328,354) (b)........................... $83,959,206
------------
------------
</TABLE>
(a) Presently not paying dividend income.
(b) At August 31, 1998, the cost of securities for federal income tax purposes
was $71,345,719 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $19,007,890
Unrealized depreciation........................... (6,394,403)
---------------------------------------------------------------
Net unrealized appreciation....................... $12,613,487
---------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 7.39% of total net assets as of August 31, 1998.
(e) Security is fully or partially on loan at August 31, 1998. See Note 1 of
accompanying Notes to Financial Statements.
25
<PAGE>
FORTIS STOCK FUNDS
GROWTH FUND, INC.
Schedule of Investments
August 31, 1998
COMMON STOCKS-87.40%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
ADVERTISING-PUBLIC RELATIONS-1.50%
275,000 Outdoor Systems, Inc. (a).................... $ 6,512,574 $ 6,393,750
148,200 Young & Rubicam, Inc. (a).................... 4,035,687 4,529,362
------------- -------------
10,548,261 10,923,112
------------- -------------
AIRLINES-1.26%
235,100 Alaska Air Group, Inc. (a)................... 13,323,125 9,154,206
------------- -------------
APPAREL-1.31%
203,000 Tommy Hilfiger Corp. (a)..................... 8,160,016 9,490,250
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.95%
130,000 Federal-Mogul Corp........................... 8,167,785 6,938,750
------------- -------------
BANKS-1.80%
145,222 Banc One Corp................................ 3,257,281 5,518,436
198,000 Zions Bancorporation......................... 10,170,429 7,598,250
------------- -------------
13,427,710 13,116,686
------------- -------------
BROADCASTING-1.21%
330,000 Univision Communications, Inc. (a)........... 9,751,179 8,786,250
------------- -------------
BUSINESS SERVICES AND SUPPLIES-1.62%
316,400 Century Business Services (a)................ 7,279,617 6,051,150
275,000 Viad Corp.................................... 7,150,783 5,706,250
------------- -------------
14,430,400 11,757,400
------------- -------------
CAPITAL SPENDING-2.95%
275,000 Affiliated Computer Services, Inc. (a)....... 10,451,314 8,989,062
231,000 Waters Corp. (a)............................. 13,774,764 12,445,125
------------- -------------
24,226,078 21,434,187
------------- -------------
CHEMICALS-0.72%
357,500 Crompton & Knowles Corp...................... 9,605,997 5,228,437
------------- -------------
COMPUTER-COMMUNICATIONS EQUIPMENT-4.26%
378,150 Cisco Systems, Inc. (a)...................... 447,084 30,961,031
------------- -------------
COMPUTER-HARDWARE-0.83%
276,000 Storage Technology Corp. (a)................. 10,288,929 6,003,000
------------- -------------
COMPUTER-SOFTWARE-13.69%
330,000 BEA Systems, Inc. (a)........................ 6,638,621 5,032,500
556,800 BMC Software, Inc. (a)....................... 3,704,584 23,559,600
165,000 DST Systems, Inc. (a)........................ 9,742,594 9,322,500
300,800 Microsoft Corp. (a).......................... 3,236,087 28,858,000
165,000 National Instruments Corp. (a)............... 5,520,172 4,166,250
551,000 Parametric Technology Corp. (a).............. 3,850,579 5,647,750
605,000 Platinum Technology, Inc. (a)................ 16,219,620 11,343,750
139,435 Sterling Commerce, Inc. (a).................. 4,291,550 4,601,340
220,000 SunGard Data Systems, Inc. (a)............... 8,029,363 6,971,250
------------- -------------
61,233,170 99,502,940
------------- -------------
CONSTRUCTION-1.07%
220,000 Centex Corp.................................. 8,423,606 7,782,500
------------- -------------
DRUGS-3.26%
385,000 Mylan Laboratories, Inc...................... 11,955,870 8,806,875
330,000 Watson Pharmaceuticals, Inc. (a)............. 13,885,065 14,870,625
------------- -------------
25,840,935 23,677,500
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
EDUCATIONAL SERVICES-0.03%
8,700 Sylvan Learning Systems, Inc. (a)............ $ 184,281 $ 185,963
------------- -------------
ELECTRONIC COMPONENTS-1.79%
314,200 Solectron Corp. (a).......................... 4,149,857 12,980,388
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-1.73%
314,700 Uniphase Corp. (a)........................... 16,512,574 12,568,331
------------- -------------
FINANCE-0.94%
330,000 Imperial Bancorp (a)......................... 10,100,066 6,806,250
------------- -------------
FINANCIAL SERVICES-9.97%
220,000 Ambac Financial Group, Inc................... 14,050,666 10,381,250
262,200 Capital One Financial Corp................... 7,902,045 22,942,500
632,500 Concord EFS, Inc. (a)........................ 14,256,902 12,491,875
464,000 Franklin Resources, Inc...................... 2,966,695 14,964,000
497,250 MBNA Corp.................................... 8,309,637 11,685,375
------------- -------------
47,485,945 72,465,000
------------- -------------
FOOD-1.22%
183,700 Suiza Foods Corp. (a)........................ 8,995,607 8,886,488
------------- -------------
FURNITURE-1.09%
385,000 Herman Miller, Inc........................... 12,332,036 7,892,500
------------- -------------
HEALTH CARE SERVICES-3.82%
699,500 HBO & Co..................................... 5,247,281 14,864,375
238,200 Omnicare, Inc................................ 9,323,647 7,428,863
288,400 Total Renal Care Holdings, Inc. (a).......... 9,143,358 5,479,600
------------- -------------
23,714,286 27,772,838
------------- -------------
INSURANCE-3.36%
310,400 Horace Mann Educators Corp................... 10,848,533 8,652,400
175,500 Life Re Corp................................. 12,557,109 15,751,125
------------- -------------
23,405,642 24,403,525
------------- -------------
LEISURE TIME-AMUSEMENTS-1.11%
331,800 Royal Caribbean Cruises Ltd.................. 11,256,745 8,046,150
------------- -------------
MEDICAL SUPPLIES-4.37%
156,900 Sofamor Danek Group, Inc. (a)................ 13,097,214 13,091,344
446,000 STERIS Corp. (a)............................. 7,598,388 10,648,250
440,000 Sybron International Corp. (a)............... 10,520,952 8,002,500
------------- -------------
31,216,554 31,742,094
------------- -------------
METALS-FABRICATING-0.67%
130,100 Precision Castparts Corp..................... 7,809,301 4,903,144
------------- -------------
MISCELLANEOUS-0.79%
138,400 Central Parking Corp......................... 6,043,593 5,717,650
------------- -------------
OIL AND GAS FIELD SERVICES-0.57%
320,700 Petroleum Geo-Services ADR (a)............... 4,481,849 4,169,100
------------- -------------
OIL-OFFSHORE DRILLING-0.39%
116,900 Transocean Offshore, Inc..................... 3,873,848 2,871,356
------------- -------------
RESTAURANTS AND FRANCHISING-1.26%
290,300 Starbucks Corp. (a).......................... 6,313,049 9,162,594
------------- -------------
RETAIL-DEPARTMENT STORES-2.96%
474,200 Kohl's Corp. (a)............................. 3,812,122 21,546,463
------------- -------------
RETAIL-GROCERY-1.25%
220,000 Whole Foods Market, Inc. (a)................. 12,981,282 9,102,500
------------- -------------
</TABLE>
26
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
RETAIL-SPECIALTY-6.88%
306,000 Dollar Tree Stores, Inc. (a)................. $ 6,596,000 $ 8,874,000
541,144 Home Depot, Inc.............................. 1,546,445 20,834,044
749,562 Staples, Inc. (a)............................ 6,357,337 20,331,869
------------- -------------
14,499,782 50,039,913
------------- -------------
TELECOMMUNICATION EQUIPMENT-0.64%
109,800 Tellabs, Inc. (a)............................ 655,369 4,639,050
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
TELEPHONE SERVICES-4.63%
175,900 Century Telephone Enterprises, Inc........... $ 8,556,778 $ 7,981,462
520,500 WorldCom, Inc. (a)........................... 7,507,692 21,307,969
------------- -------------
16,064,470 24,284,431
------------- -------------
WASTE DISPOSAL-2.10%
275,000 Republic Services, Inc. (a).................. 6,850,341 4,434,375
245,000 Waste Management, Inc. (a)................... 8,867,539 10,810,625
------------- -------------
15,717,880 15,245,000
------------- -------------
TOTAL COMMON STOCKS.......................... $ 499,480,413 $ 635,191,977
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-13.44%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
------------ -------------
<C> <S> <C>
BANKS-0.00%
$ 37,000 U.S. Bank N.A. Money Market Variable Rate
Time Deposit, Current rate -- 5.40%........ $ 37,000
-------------
INVESTMENT COMPANY-2.84%
20,629,853 Norwest Advantage Cash Investment Fund,
Current rate -- 5.27%...................... 20,629,853
-------------
DIVERSIFIED FINANCE-3.31%
24,050,000 Norwest Bank Associates Corp., Master
Variable Rate Note, Current
rate -- 5.43%.............................. 24,050,000
-------------
U.S. GOVERNMENT AGENCY-7.29%
15,200,000 Federal Home Loan Mortgage Corp., 5.53%,
9-10-1998.................................. 15,177,031
25,000,000 Federal Home Loan Mortgage Corp., 5.58%,
9-14-1998.................................. 24,946,819
12,900,000 Federal Home Loan Mortgage Corp., 5.58%,
9-25-1998.................................. 12,850,908
-------------
52,974,758
-------------
TOTAL SHORT-TERM INVESTMENTS................. 97,691,611
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$597,172,024) (b).......................... $ 732,883,588
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At August 31, 1998, the cost of securities for federal income tax purposes
was $597,850,540 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 214,996,455
Unrealized depreciation........................... (79,963,407)
-----------------------------------------------------------------
Net unrealized appreciation....................... $ 135,033,048
-----------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 0.57% of total net assets as of August 31, 1998.
27
<PAGE>
FORTIS STOCK FUNDS
CAPITAL APPRECIATION PORTFOLIO
Schedule of Investments
August 31, 1998
COMMON STOCKS-71.99%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
--------- ------------ -------------
<C> <S> <C> <C>
ADVERTISING-PUBLIC RELATIONS-0.82%
25,000 Lamar Advertising Co. (a).................... $ 872,345 $ 812,500
------------ -------------
BROADCASTING-1.39%
16,000 Emmis Communications, Inc. Class A (a)....... 692,374 600,000
40,000 USA Networks, Inc. (a)....................... 697,250 785,000
------------ -------------
1,389,624 1,385,000
------------ -------------
BUSINESS SERVICES AND SUPPLIES-5.10%
7,500 Abacus Direct Corp. (a)...................... 307,656 306,562
98,000 Acxiom Corp. (a)............................. 368,562 1,966,125
22,500 Fiserv, Inc. (a)............................. 560,579 877,500
77,000 Romac International, Inc. (a)................ 993,050 1,443,750
29,000 Saville Systems plc ADR (a).................. 999,919 474,875
------------ -------------
3,229,766 5,068,812
------------ -------------
COMPUTER-COMMUNICATIONS EQUIPMENT-3.23%
20,900 Cisco Systems, Inc. (a)...................... 178,072 1,711,187
36,000 Network Appliance, Inc. (a).................. 1,688,602 1,500,750
------------ -------------
1,866,674 3,211,937
------------ -------------
COMPUTER-SOFTWARE-19.76%
40,000 Apex PC Solutions, Inc. (a).................. 788,750 685,000
35,000 Aspect Development, Inc. (a)................. 1,186,718 1,019,375
40,000 Aspen Technology, Inc. (a)................... 1,009,805 947,500
40,000 BroadVison, Inc. (a)......................... 837,152 747,500
18,000 Citrix Systems, Inc. (a)..................... 1,042,501 1,037,250
30,000 Concord Communications, Inc. (a)............. 904,813 802,500
34,000 HNC Software, Inc. (a) (e)................... 1,125,440 1,234,625
23,800 Industri-Matematik International Corp. (a)... 476,000 142,800
71,600 Legato Systems, Inc. (a)..................... 438,275 2,514,950
30,000 Lycos, Inc. (a).............................. 857,969 650,625
45,000 Mercury Interactive Corp. (a) (e)............ 1,858,124 1,513,125
20,300 Mobius Management Systems, Inc. (a).......... 353,652 172,550
13,500 Networks Associates, Inc. (a) (e)............ 568,407 435,375
24,500 New Era of Networks, Inc. (with rights)
(a)........................................ 759,284 701,312
47,600 Siebel Systems, Inc. (a) (e)................. 601,744 892,500
66,281 Sterling Commerce, Inc. (a).................. 741,640 2,187,273
39,800 Synopsys, Inc. (a)........................... 727,600 1,039,775
30,000 TSI International Software Ltd. (a).......... 795,625 806,250
12,500 Verio, Inc. (a) (e).......................... 322,450 276,563
40,837 VERITAS Software Corp. (a)................... 830,591 1,832,560
------------ -------------
16,226,540 19,639,408
------------ -------------
CONSUMER GOODS-0.93%
40,500 Blyth Industries, Inc. (a) (e)............... 979,390 928,969
------------ -------------
EDUCATIONAL SERVICES-5.57%
50,000 Apollo Group, Inc. Class A (a)............... 650,689 1,518,750
37,000 Bright Horizons Family Solutions, Inc. (a)... 800,061 781,625
15,000 CBT Group plc ADR (a)........................ 785,625 705,000
34,500 Education Management Corp. (a)............... 1,205,650 1,207,500
62,000 Sylvan Learning Systems, Inc. (a) (e)........ 1,752,094 1,325,250
------------ -------------
5,194,119 5,538,125
------------ -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------ -------------
<C> <S> <C> <C>
ELECTRONIC COMPONENTS-2.22%
65,200 DSP Communications, Inc. (a)................. $ 1,050,790 $ 745,725
29,000 Flextronics International Ltd. (a)........... 997,461 783,000
30,000 Level One Communications, Inc. (a)........... 630,000 523,125
5,000 Sanmina Corp. (a)............................ 167,187 154,375
------------ -------------
2,845,438 2,206,225
------------ -------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-0.64%
16,000 Uniphase Corp. (a)........................... 645,563 639,000
------------ -------------
FINANCIAL SERVICES-1.93%
50,000 Financial Federal Corp. (a).................. 1,183,750 868,750
8,500 Franchise Mortgage Acceptance Co. LLC (a).... 137,063 137,063
30,000 HealthCare Financial Partners, Inc. (a) 1,054,193 915,000
------------ -------------
2,375,006 1,920,813
------------ -------------
HEALTH CARE SERVICES-2.98%
47,000 Boron, LePore & Associates, Inc. (a)......... 1,439,844 1,410,000
30,000 PAREXEL International Corp. (a) (e).......... 506,250 746,250
30,000 Province Healthcare Co. (a).................. 848,124 810,000
------------ -------------
2,794,218 2,966,250
------------ -------------
LEASING-0.59%
36,600 DVI, Inc. (a)................................ 661,517 585,600
------------ -------------
LEISURE TIME-AMUSEMENTS-0.69%
45,000 Family Golf Centers, Inc. (a) (e)............ 826,491 680,625
------------ -------------
MEDICAL SUPPLIES-3.83%
38,400 Arterial Vascular Engineering, Inc. (a)
(e)........................................ 1,088,711 1,344,000
103,000 STERIS Corp. (a)............................. 916,893 2,459,125
------------ -------------
2,005,604 3,803,125
------------ -------------
MEDICAL TECHNOLOGY-0.72%
30,000 QuadraMed Corp. (a).......................... 725,157 712,500
------------ -------------
OIL AND GAS FIELD SERVICES-1.47%
112,000 Petroleum Geo-Services ADR (a)............... 996,444 1,456,000
------------ -------------
RESTAURANTS AND FRANCHISING-2.12%
33,200 Applebee's International, Inc................ 513,481 614,200
56,250 Papa John's International, Inc. (a).......... 720,625 1,490,625
------------ -------------
1,234,106 2,104,825
------------ -------------
RETAIL-CLOTHING-1.27%
69,000 Pacific Sunwear of California, Inc. (a)...... 1,613,889 1,259,250
------------ -------------
RETAIL-MISCELLANEOUS-2.74%
28,500 Action Performance Companies, Inc. (a)....... 659,063 659,063
42,050 Corporate Express, Inc. (a).................. 299,022 404,731
39,000 Insight Enterprises, Inc. (a)................ 1,933,248 1,657,500
------------ -------------
2,891,333 2,721,294
------------ -------------
RETAIL-SPECIALTY-3.05%
17,000 American Eagle Outfitters, Inc. (a).......... 715,863 595,000
58,500 Dollar Tree Stores, Inc. (a) (e)............. 1,261,000 1,696,500
28,600 Restoration Hardware, Inc. (a) (e)........... 776,520 736,450
------------ -------------
2,753,383 3,027,950
------------ -------------
</TABLE>
28
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------ -------------
<C> <S> <C> <C>
RETAIL-VARIETY AND VARIETY MAIL ORDER-1.29%
88,500 DM Management Co. (a)........................ $ 1,586,237 $ 1,283,250
------------ -------------
TELECOMMUNICATIONS-0.92%
63,000 IDT Corp. (a)................................ 1,068,297 913,500
------------ -------------
TELECOMMUNICATION EQUIPMENT-1.38%
76,000 Tekelec (a).................................. 1,751,157 1,372,750
------------ -------------
TELEPHONE SERVICES-4.99%
72,300 ICG Communications, Inc. (a)................. 1,425,663 1,296,881
70,000 Intermedia Communications, Inc. (a) (e) 590,625 1,741,250
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------ -------------
<C> <S> <C> <C>
53,000 McLeodUSA, Inc. Class A (a).................. $ 1,262,301 $ 1,537,000
36,900 STAR Telecommunications, Inc. (a)............ 331,000 387,450
------------ -------------
3,609,589 4,962,581
------------ -------------
WASTE DISPOSAL-2.36%
45,000 Waste Industries, Inc. (a)................... 995,625 967,500
31,300 Waste Management, Inc. (a)................... 325,365 1,381,113
------------ -------------
1,320,990 2,348,613
------------ -------------
TOTAL COMMON STOCKS.......................... $ 61,462,877 $ 71,548,902
------------ -------------
------------ -------------
</TABLE>
SHORT-TERM INVESTMENTS-44.14%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
------------- -------------
<C> <S> <C>
BANKS-0.00%
$ 4,876 U.S. Bank N.A. Money Market Variable Rate
Time Deposit, Current rate -- 5.40%........ $ 4,876
-------------
INVESTMENT COMPANY-1.91%
1,893,313 Norwest Advantage Cash Investment Fund,
Current rate -- 5.27%...................... 1,893,313
-------------
DIVERSIFIED FINANCE-5.02%
4,989,000 Norwest Bank Associates Corp., Master
Variable Rate Note, Current
rate -- 5.43%.............................. 4,989,000
-------------
U.S. GOVERNMENT AGENCY-37.21%
2,200,000 Federal Home Loan Mortgage Corp., 5.57%,
10-2-1998.................................. 2,187,011
34,800,000 Federal Home Loan Mortgage Corp., 5.78%,
9-1-1998................................... 34,794,490
-------------
36,981,501
-------------
TOTAL SHORT-TERM INVESTMENTS................. 43,868,690
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$105,331,567) (b).......................... $ 115,417,592
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At August 31, 1998, the cost of securities for federal income tax purposes
was $105,331,567 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $16,794,164
Unrealized depreciation........................... (6,708,139)
---------------------------------------------------------------
Net unrealized appreciation....................... $10,086,025
---------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 2.80% of total net assets as of August 31, 1998.
(e) Security is fully or partially on loan at August 31, 1998. See Note 1 of
accompanying Notes to Financial Statements.
29
<PAGE>
FORTIS STOCK FUNDS
Statements of Assets and Liabilities
August 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET
ALLOCATION VALUE
PORTFOLIO FUND
------------- ------------
<S> <C> <C>
ASSETS:
Investments in securities, as detailed in the
accompanying schedules, at market (cost
$177,959,200; $39,961,507; $34,226,442;
$274,211,065; $71,328,354; $597,172,024; and
$105,331,567; respectively) (Note 1).......... $192,142,873 $36,652,070
Cash on deposit with custodian.................. -- --
Collateral for securities lending transactions
(Note 1)...................................... 21,923,774 1,091,791
Receivables:
Investment securities sold.................... 1,902,508 3,021,152
Interest and dividends........................ 952,809 75,840
Subscriptions of capital stock................ 30,354 2,168
Deferred registration costs (Note 1)............ 18,311 15,475
------------- ------------
TOTAL ASSETS...................................... 216,970,629 40,858,496
------------- ------------
LIABILITIES:
Payable upon return of securities loaned (Note
1)............................................ 21,923,774 1,091,791
Payable for investment securities purchased..... 4,078,636 3,458,081
Redemptions of capital stock.................... 96,097 --
Payable for investment advisory and management
fees (Note 2)................................. 158,849 34,369
Payable for distribution fees (Note 2).......... 12,372 2,234
Accounts payable and accrued expenses........... 42,603 22,222
------------- ------------
TOTAL LIABILITIES................................. 26,312,331 4,608,697
------------- ------------
NET ASSETS:
Net proceeds of capital stock, par value $.01
per share-authorized 10,000,000,000;
10,000,000,000; 10,000,000,000;
10,000,000,000; 100,000,000,000;
100,000,000,000; 10,000,000,000 shares;
respectively.................................. 153,831,756 36,429,830
Unrealized appreciation (depreciation) of
investments................................... 14,183,673 (3,309,437)
Undistributed net investment income............. 635,918 63,712
Accumulated net realized gain from the sale of
investments................................... 22,006,951 3,065,694
------------- ------------
TOTAL NET ASSETS.................................. $190,658,298 $36,249,799
------------- ------------
------------- ------------
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE:
Class A shares (based on net assets of
$151,919,819; $22,448,820; $20,994,307;
$312,582,197; $72,636,100; $581,818,754; and
$79,813,218; respectively and 8,983,702;
1,894,249; 1,591,074; 13,973,341; 1,774,096;
19,538,392; and, 3,020,824 shares outstanding;
respectively)................................... $16.91 $11.85
------------- ------------
Class B shares (based on net assets of $9,928,052;
$4,793,957; $5,158,623; $9,338,795; $4,571,708;
$12,416,546; and $5,848,934; respectively and
590,940; 409,260; 391,957; 429,750; 115,325;
430,379; and, 225,785 shares outstanding;
respectively)................................... $16.80 $11.71
------------- ------------
Class C shares (based on net assets of $5,830,993;
$1,990,524; $2,217,192; $2,452,708; $1,389,298;
$2,737,896; and $1,793,777; respectively and
348,401; 169,861; 168,471; 112,878; 35,032;
94,905; and, 69,204 shares outstanding;
respectively)................................... $16.74 $11.72
------------- ------------
Class H shares (based on net assets of
$22,979,434; $7,016,498; $6,305,699;
$16,986,594; $9,201,444; $34,452,800; and
$11,932,860; respectively and 1,368,337;
598,717; 479,134; 781,254; 232,113; 1,193,677;
and, 460,343 shares outstanding;
respectively)................................... $16.79 $11.72
------------- ------------
Class Z shares (based on net assets of $0; $0; $0;
$0; $0; $95,369,978; and $0; respectively and 0;
0; 0; 0; 0; 3,179,327; and, 0 shares
outstanding; respectively)...................... -- --
------------- ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
30
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH & CAPITAL
INCOME CAPITAL FIDUCIARY GROWTH APPRECIATION
FUND FUND FUND FUND PORTFOLIO
------------ ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, as detailed in the
accompanying schedules, at market (cost
$177,959,200; $39,961,507; $34,226,442;
$274,211,065; $71,328,354; $597,172,024; and
$105,331,567; respectively) (Note 1)............ $34,589,500 $326,195,439 $83,959,206 $732,883,588 $115,417,592
Cash on deposit with custodian.................... -- -- 65,666 -- --
Collateral for securities lending transactions
(Note 1)........................................ 3,193,665 70,790,013 8,263,173 -- 13,767,338
Receivables:
Investment securities sold...................... -- 15,190,297 3,701,859 12,356,720 5,757,016
Interest and dividends.......................... 127,711 303,969 77,740 353,121 45,167
Subscriptions of capital stock.................. 176 11,476 95,858 466,532 19,947
Deferred registration costs (Note 1).............. 15,225 18,935 23,599 31,502 18,770
------------ ------------- ------------ ------------- -------------
TOTAL ASSETS...................................... 37,926,277 412,510,129 96,187,101 746,091,463 135,025,830
------------ ------------- ------------ ------------- -------------
LIABILITIES:
Payable upon return of securities loaned (Note
1)............................................ 3,193,665 70,790,013 8,263,173 -- 13,767,338
Payable for investment securities purchased..... -- -- -- 18,522,716 21,666,927
Redemptions of capital stock.................... -- 14,270 -- 97,033 60,797
Payable for investment advisory and management
fees (Note 2)................................. 32,073 270,286 84,393 548,817 98,422
Payable for distribution fees (Note 2).......... 2,174 12,664 3,933 23,305 6,499
Accounts payable and accrued expenses........... 22,544 62,602 37,052 103,618 37,058
------------ ------------- ------------ ------------- -------------
TOTAL LIABILITIES................................. 3,250,456 71,149,835 8,388,551 19,295,489 35,637,041
------------ ------------- ------------ ------------- -------------
NET ASSETS:
Net proceeds of capital stock, par value $.01
per share-authorized 10,000,000,000;
10,000,000,000; 10,000,000,000;
10,000,000,000; 100,000,000,000;
100,000,000,000; 10,000,000,000 shares;
respectively.................................. 33,129,709 193,918,206 47,917,669 404,667,256 68,596,613
Unrealized appreciation (depreciation) of
investments................................... 363,058 51,984,374 12,630,852 135,711,564 10,086,025
Undistributed net investment income............. 125,891 -- -- -- --
Accumulated net realized gain from the sale of
investments................................... 1,057,163 95,457,714 27,250,029 186,417,154 20,706,151
------------ ------------- ------------ ------------- -------------
TOTAL NET ASSETS.................................. $34,675,821 $341,360,294 $87,798,550 $726,795,974 $ 99,388,789
------------ ------------- ------------ ------------- -------------
------------ ------------- ------------ ------------- -------------
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE:
Class A shares (based on net assets of
$151,919,819; $22,448,820; $20,994,307;
$312,582,197; $72,636,100; $581,818,754; and
$79,813,218; respectively and 8,983,702;
1,894,249; 1,591,074; 13,973,341; 1,774,096;
19,538,392; and, 3,020,824 shares outstanding;
respectively)................................... $13.20 $22.37 $40.94 $29.78 $26.42
------------ ------------- ------------ ------------- -------------
Class B shares (based on net assets of $9,928,052;
$4,793,957; $5,158,623; $9,338,795; $4,571,708;
$12,416,546; and $5,848,934; respectively and
590,940; 409,260; 391,957; 429,750; 115,325;
430,379; and, 225,785 shares outstanding;
respectively)................................... $13.16 $21.73 $39.64 $28.85 $25.90
------------ ------------- ------------ ------------- -------------
Class C shares (based on net assets of $5,830,993;
$1,990,524; $2,217,192; $2,452,708; $1,389,298;
$2,737,896; and $1,793,777; respectively and
348,401; 169,861; 168,471; 112,878; 35,032;
94,905; and, 69,204 shares outstanding;
respectively)................................... $13.16 $21.73 $39.66 $28.85 $25.92
------------ ------------- ------------ ------------- -------------
Class H shares (based on net assets of
$22,979,434; $7,016,498; $6,305,699;
$16,986,594; $9,201,444; $34,452,800; and
$11,932,860; respectively and 1,368,337;
598,717; 479,134; 781,254; 232,113; 1,193,677;
and, 460,343 shares outstanding;
respectively)................................... $13.16 $21.74 $39.64 $28.86 $25.92
------------ ------------- ------------ ------------- -------------
Class Z shares (based on net assets of $0; $0; $0;
$0; $0; $95,369,978; and $0; respectively and 0;
0; 0; 0; 0; 3,179,327; and, 0 shares
outstanding; respectively)...................... -- -- -- $30.00 --
------------ ------------- ------------ ------------- -------------
</TABLE>
31
<PAGE>
FORTIS STOCK FUNDS
Statements of Operations
For the Year Ended August 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET
ALLOCATION VALUE
PORTFOLIO FUND
------------- ------------
<S> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest income............................... $ 6,142,011 $ 195,657
Dividend income............................... 815,076 554,857
Fee income (Note 1)........................... 81,050 7,900
------------- ------------
Total income.................................... 7,038,137 758,414
------------- ------------
Expenses:
Investment advisory and management fees (Note
2)........................................... 1,811,123 366,680
Distribution fees (Class A) (Note 2).......... 743,488 59,431
Distribution fees (Class B) (Note 2).......... 93,313 42,186
Distribution fees (Class C) (Note 2).......... 56,594 17,105
Distribution fees (Class H) (Note 2).......... 211,805 69,663
Registration fees............................. 52,500 47,668
Shareholders' notices and reports............. 34,301 10,927
Legal and auditing fees (Note 2).............. 38,635 18,050
Custodian fees................................ 25,000 19,494
Directors' fees and expenses.................. 10,013 1,820
Other......................................... 14,333 2,155
------------- ------------
Total expenses.................................. 3,091,105 655,179
------------- ------------
NET INVESTMENT INCOME (LOSS)...................... 3,947,032 103,235
------------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTE 1):
Net realized gain from security transactions.... 24,129,373 4,405,530
Net change in unrealized depreciation of
investments in securities..................... (23,341,382) (6,711,081)
------------- ------------
NET GAIN (LOSS) ON INVESTMENTS.................... 787,991 (2,305,551)
------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $ 4,735,023 $(2,202,316)
------------- ------------
------------- ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH & CAPITAL
INCOME CAPITAL FIDUCIARY GROWTH APPRECIATION
FUND FUND FUND FUND PORTFOLIO
------------ ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest income................................. $ 335,461 $ 1,245,775 $ 335,581 $ 4,902,565 $ 519,347
Dividend income................................. 691,961 1,812,164 453,675 1,974,705 23,050
Fee income (Note 1)............................. 10,875 233,348 53,948 -- 177,876
------------ ------------- ------------- --------------- -------------
Total income...................................... 1,038,297 3,291,287 843,204 6,877,270 720,273
------------ ------------- ------------- --------------- -------------
Expenses:
Investment advisory and management fees (Note
2)............................................ 318,842 3,140,323 980,839 6,792,000 1,261,410
Distribution fees (Class A) (Note 2)............ 48,149 890,699 211,898 1,834,723 485,139
Distribution fees (Class B) (Note 2)............ 42,283 90,364 39,932 141,289 75,375
Distribution fees (Class C) (Note 2)............ 19,457 20,889 11,511 28,268 21,680
Distribution fees (Class H) (Note 2)............ 64,503 169,259 84,048 388,621 151,623
Registration fees............................... 47,831 45,240 49,640 83,637 53,478
Shareholders' notices and reports............... 7,082 72,043 25,379 148,981 23,472
Legal and auditing fees (Note 2)................ 23,500 52,860 35,521 62,050 37,424
Custodian fees.................................. 12,600 36,314 17,699 61,750 18,721
Directors' fees and expenses.................... 1,740 21,786 16,624 47,160 6,594
Other........................................... 1,939 26,800 6,885 67,235 15,025
------------ ------------- ------------- --------------- -------------
Total expenses.................................... 587,926 4,566,577 1,479,976 9,655,714 2,149,941
------------ ------------- ------------- --------------- -------------
NET INVESTMENT INCOME (LOSS)...................... 450,371 (1,275,290) (636,772) (2,778,444) (1,429,668)
------------ ------------- ------------- --------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTE 1):
Net realized gain from security transactions.... 1,099,245 99,276,929 28,505,801 192,064,434 21,798,973
Net change in unrealized depreciation of
investments in securities..................... (2,106,124) (90,739,760) (25,971,878) (269,075,788) (35,067,587)
------------ ------------- ------------- --------------- -------------
NET GAIN (LOSS) ON INVESTMENTS.................... (1,006,879) 8,537,169 2,533,923 (77,011,354) (13,268,614)
------------ ------------- ------------- --------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. $ (556,508) $ 7,261,879 $ 1,897,151 $ (79,789,798) $(14,698,282)
------------ ------------- ------------- --------------- -------------
------------ ------------- ------------- --------------- -------------
</TABLE>
33
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
ASSET ALLOCATION PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income..................................... $ 3,947,032 $ 3,702,769
Net realized gain from security transactions.............. 24,129,373 21,517,162
Net change in unrealized appreciation (depreciation) of
investments in securities............................... (23,341,382) 12,305,587
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ 4,735,023 37,525,518
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A................................................. (3,530,865) (3,394,288)
Class B................................................. (143,082) (102,347)
Class C................................................. (89,621) (62,513)
Class H................................................. (329,951) (240,105)
From net realized gains on investments
Class A................................................. (17,863,647) (7,790,082)
Class B................................................. (930,570) (290,516)
Class C................................................. (594,047) (175,535)
Class H................................................. (2,139,737) (668,944)
Excess distributions of net realized gains
Class A................................................. -- (26,271)
Class B................................................. -- (792)
Class C................................................. -- (484)
Class H................................................. -- (1,858)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS......................... (25,621,520) (12,753,735)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (1,109,799 and 1,049,780 shares)................ 20,793,396 18,325,244
Class B (206,273 and 172,571 shares).................... 3,816,059 2,998,989
Class C (140,714 and 123,842 shares).................... 2,591,158 2,158,427
Class H (550,316 and 356,375 shares).................... 10,208,415 6,214,436
Proceeds from shares issued as a result of reinvested
dividends
Class A (1,160,677 and 623,301 shares).................. 19,984,798 10,494,510
Class B (61,525 and 23,140 shares)...................... 1,051,151 387,752
Class C (39,182 and 13,876 shares)...................... 666,985 231,768
Class H (138,497 and 51,275 shares)..................... 2,364,813 858,303
Less cost of repurchase of shares
Class A (1,543,509 and 1,706,945 shares)................ (28,876,194) (30,091,087)
Class B (72,269 and 69,197 shares)...................... (1,344,891) (1,205,507)
Class C (86,062 and 44,638 shares)...................... (1,563,619) (768,795)
Class H (229,288 and 164,068 shares).................... (4,274,549) (2,860,606)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS.......... 25,417,522 6,743,434
--------------- ---------------
TOTAL INCREASE IN NET ASSETS................................ 4,531,025 31,515,217
NET ASSETS:
Beginning of year......................................... 186,127,273 154,612,056
--------------- ---------------
End of year (includes undistributed net investment income
of $635,918 and $720,599, respectively)................. $ 190,658,298 $ 186,127,273
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
VALUE FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income..................................... $ 103,235 $ 109,544
Net realized gain from security transactions.............. 4,405,530 1,524,189
Net change in unrealized appreciation (depreciation) of
investments in securities............................... (6,711,081) 3,192,347
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ (2,202,316) 4,826,080
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A................................................. (116,019) (62,943)
Class B................................................. -- (2,233)
Class C................................................. -- (680)
Class H................................................. -- (4,998)
From net realized gains on investments
Class A................................................. (1,834,718) (228,302)
Class B................................................. (316,546) (19,112)
Class C................................................. (128,889) (5,825)
Class H................................................. (582,859) (42,783)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS......................... (2,979,031) (366,876)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (874,678 and 816,622 shares).................... 12,265,360 10,071,023
Class B (247,000 and 134,156 shares).................... 3,441,440 1,639,623
Class C (102,283 and 59,914 shares)..................... 1,427,509 740,650
Class H (319,681 and 285,757 shares).................... 4,443,733 3,504,117
Proceeds from shares issued as a result of reinvested
dividends
Class A (147,749 and 25,047 shares)..................... 1,917,777 287,791
Class B (24,075 and 1,855 shares)....................... 310,563 21,220
Class C (9,863 and 562 shares).......................... 127,233 6,429
Class H (44,057 and 4,125 shares)....................... 568,335 47,188
Less cost of repurchase of shares
Class A (745,823 and 140,400 shares).................... (10,582,157) (1,735,918)
Class B (47,076 and 10,742 shares)...................... (652,071) (133,427)
Class C (17,164 and 6,447 shares)....................... (243,534) (79,920)
Class H (130,647 and 74,308 shares)..................... (1,826,504) (911,833)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS.......... 11,197,684 13,456,943
--------------- ---------------
TOTAL INCREASE IN NET ASSETS................................ 6,016,337 17,916,147
NET ASSETS:
Beginning of year......................................... 30,233,462 12,317,315
--------------- ---------------
End of year (includes undistributed net investment income
of $63,712 and $76,496, respectively)................... $ 36,249,799 $30,233,462
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
35
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income..................................... $ 450,371 $ 173,038
Net realized gain from security transactions.............. 1,099,245 79,211
Net change in unrealized appreciation (depreciation) of
investments in securities............................... (2,106,124) 2,394,136
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ (556,508) 2,646,385
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A................................................. (301,319) (95,456)
Class B................................................. (34,770) (7,150)
Class C................................................. (16,440) (4,240)
Class H................................................. (57,011) (16,440)
From net realized gains on investments
Class A................................................. (10,124) (42,381)
Class B................................................. (2,098) (7,753)
Class C................................................. (1,029) (3,546)
Class H................................................. (3,660) (17,951)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS......................... (426,451) (194,917)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (884,571 and 913,354 shares).................... 12,851,409 11,139,324
Class B (259,849 and 134,438 shares).................... 3,766,301 1,627,226
Class C (101,311 and 75,761 shares)..................... 1,476,183 917,962
Class H (235,030 and 311,309 shares).................... 3,401,436 3,801,926
Proceeds from shares issued as a result of reinvested
dividends
Class A (20,537 and 10,741 shares)...................... 295,600 127,797
Class B (2,527 and 1,263 shares)........................ 36,284 14,789
Class C (1,174 and 625 shares).......................... 16,824 7,348
Class H (4,142 and 2,865 shares)........................ 59,106 33,503
Less cost of repurchase of shares
Class A (378,949 and 160,250 shares).................... (5,467,953) (1,974,529)
Class B (47,488 and 7,826 shares)....................... (680,889) (97,559)
Class C (33,012 and 6,655 shares)....................... (477,648) (79,312)
Class H (150,375 and 48,414 shares)..................... (2,206,474) (594,546)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS.......... 13,070,179 14,923,929
--------------- ---------------
TOTAL INCREASE IN NET ASSETS................................ 12,087,220 17,375,397
NET ASSETS:
Beginning of year......................................... 22,588,601 5,213,204
--------------- ---------------
End of year (includes undistributed net investment income
of $125,891 and $52,649, respectively).................. $34,675,821 $22,588,601
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
CAPITAL FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment loss....................................... $ (1,275,290) $ (1,209,262)
Net realized gain from security transactions.............. 99,276,929 63,878,182
Net change in unrealized appreciation (depreciation) of
investments in securities............................... (90,739,760) 33,552,766
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ 7,261,879 96,221,686
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A................................................. -- (141,299)
From net realized gains on investments
Class A................................................. (51,765,513) (33,970,839)
Class B................................................. (1,230,974) (572,462)
Class C................................................. (528,829) (126,988)
Class H................................................. (2,412,647) (1,124,462)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS......................... (55,937,963) (35,936,050)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (1,862,268 and 967,481 shares).................. 47,595,909 22,693,862
Class B (147,489 and 99,817 shares)..................... 3,672,027 2,280,963
Class C (139,698 and 26,028 shares)..................... 3,497,435 592,828
Class H (241,584 and 215,855 shares).................... 6,064,134 5,025,197
Proceeds from shares issued as a result of reinvested
dividends
Class A (2,201,521 and 1,473,677 shares)................ 47,971,130 31,713,534
Class B (57,622 and 26,803 shares)...................... 1,226,194 569,830
Class C (11,228 and 5,860 shares)....................... 238,938 124,476
Class H (107,308 and 49,765 shares)..................... 2,284,583 1,057,494
Less cost of repurchase of shares
Class A (3,138,422 and 2,075,394 shares)................ (79,897,413) (48,029,755)
Class B (59,107 and 31,749 shares)...................... (1,460,979) (719,644)
Class C (93,825 and 14,112 shares)...................... (2,064,335) (319,497)
Class H (130,973 and 73,545 shares)..................... (3,224,275) (1,701,467)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS.......... 25,903,348 13,287,821
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... (22,772,736) 73,573,457
NET ASSETS:
Beginning of year......................................... 364,133,030 290,559,573
--------------- ---------------
End of year............................................... $ 341,360,294 $ 364,133,030
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
FIDUCIARY FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment loss....................................... $ (636,772) $ (626,755)
Net realized gain from security transactions.............. 28,505,801 14,259,204
Net change in unrealized appreciation (depreciation) of
investments in securities............................... (25,971,878) 10,814,437
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ 1,897,151 24,446,886
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains on investments
Class A................................................. (10,714,620) (4,979,555)
Class B................................................. (422,294) (124,877)
Class C................................................. (118,877) (39,295)
Class H................................................. (954,211) (291,166)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS......................... (12,210,002) (5,434,893)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (370,547 and 264,554 shares).................... 16,630,052 10,695,362
Class B (57,556 and 32,851 shares)...................... 2,580,000 1,306,041
Class C (19,777 and 6,194 shares)....................... 870,402 241,373
Class H (103,623 and 72,797 shares)..................... 4,647,409 2,906,990
Proceeds from shares issued as a result of reinvested
dividends
Class A (261,755 and 127,747 shares).................... 10,404,742 4,862,050
Class B (10,825 and 3,357 shares)....................... 418,476 125,643
Class C (3,074 and 1,047 shares)........................ 118,854 39,264
Class H (24,453 and 7,734 shares)....................... 945,346 289,482
Less cost of repurchase of shares
Class A (675,061 and 361,725 shares).................... (29,756,455) (14,656,981)
Class B (12,044 and 14,724 shares)...................... (542,474) (592,169)
Class C (6,140 and 2,440 shares)........................ (259,588) (95,382)
Class H (40,092 and 23,662 shares)...................... (1,791,908) (943,779)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS.......... 4,264,856 4,177,894
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... (6,047,995) 23,189,887
NET ASSETS:
Beginning of year......................................... 93,846,545 70,656,658
--------------- ---------------
End of year............................................... $ 87,798,550 $ 93,846,545
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
GROWTH FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment loss....................................... $ (2,778,444) $ (3,849,243)
Net realized gain from security transactions.............. 192,064,434 101,212,746
Net change in unrealized appreciation (depreciation) of
investments in securities............................... (269,075,788) 102,027,949
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ (79,789,798) 199,391,452
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains on investments
Class A................................................. (73,567,568) (60,229,768)
Class B................................................. (1,380,595) (773,234)
Class C................................................. (263,230) (138,820)
Class H................................................. (3,821,196) (2,272,953)
Class Z................................................. (11,439,433) (8,698,046)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS......................... (90,472,022) (72,112,821)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (8,712,019 and 5,049,377 shares)................ 316,513,028 171,053,540
Class B (137,137 and 142,718 shares).................... 4,825,473 4,747,591
Class C (39,174 and 36,673 shares)...................... 1,368,169 1,214,910
Class H (334,801 and 382,332 shares).................... 11,860,557 12,751,164
Class Z (633,162 and 421,091 shares).................... 22,701,753 14,099,862
Proceeds from shares issued as a result of reinvested
dividends
Class A (2,215,552 and 1,768,394 shares)................ 70,609,674 57,897,492
Class B (44,166 and 23,932 shares)...................... 1,370,898 771,073
Class C (8,466 and 4,296 shares)........................ 262,702 138,406
Class H (121,751 and 69,264 shares)..................... 3,780,372 2,231,699
Class Z (344,351 and 260,207 shares).................... 11,036,437 8,537,395
Less cost of repurchase of shares
Class A (11,076,500 and 7,075,360 shares)............... (403,375,496) (240,578,784)
Class B (83,531 and 45,388 shares)...................... (2,961,085) (1,512,337)
Class C (17,551 and 10,067 shares)...................... (618,203) (336,196)
Class H (219,058 and 162,457 shares).................... (7,761,611) (5,434,477)
Class Z (797,075 and 572,423 shares).................... (29,021,990) (19,422,060)
--------------- ---------------
NET INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS.......... 590,678 6,159,278
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... (169,671,142) 133,437,909
NET ASSETS:
Beginning of year......................................... 896,467,116 763,029,207
--------------- ---------------
End of year............................................... $ 726,795,974 $ 896,467,116
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
AUGUST 31, 1998 AUGUST 31, 1997
--------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment loss....................................... $ (1,429,668) $ (1,150,267)
Net realized gain from security transactions.............. 21,798,973 470,737
Net change in unrealized depreciation of investments in
securities.............................................. (35,067,587) (9,268,528)
--------------- ---------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS........ (14,698,282) (9,948,058)
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
Tax return of capital
Class A................................................. -- (905,283)
Class B................................................. -- (43,444)
Class C................................................. -- (10,921)
Class H................................................. -- (87,363)
From realized gains on investments
Class A................................................. -- (3,954,147)
Class B................................................. -- (189,757)
Class C................................................. -- (47,703)
Class H................................................. -- (381,589)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS......................... -- (5,620,207)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (1,784,435 and 1,798,460 shares)................ 60,422,475 54,031,052
Class B (67,943 and 118,162 shares)..................... 2,245,080 3,552,423
Class C (69,065 and 43,602 shares)...................... 2,233,307 1,297,540
Class H (143,196 and 236,178 shares).................... 4,725,103 7,111,058
Proceeds from shares issued as a result of reinvested
dividends
Class A (0 and 151,618 shares).......................... -- 4,748,671
Class B (0 and 7,441 shares)............................ -- 230,517
Class C (0 and 1,874 shares)............................ -- 58,089
Class H (0 and 15,016 shares)........................... -- 465,003
Less cost of repurchase of shares
Class A (2,208,559 and 1,793,757 shares)................ (74,574,459) (54,047,060)
Class B (59,677 and 39,286 shares)...................... (1,999,115) (1,159,231)
Class C (61,977 and 12,477 shares)...................... (1,979,707) (353,713)
Class H (126,141 and 85,586 shares)..................... (4,222,152) (2,540,636)
--------------- ---------------
NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS.............................................. (13,149,468) 13,393,713
--------------- ---------------
TOTAL DECREASE IN NET ASSETS................................ (27,847,750) (2,174,552)
NET ASSETS:
Beginning of year......................................... 127,236,539 129,411,091
--------------- ---------------
End of year............................................... $ 99,388,789 $ 127,236,539
--------------- ---------------
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The funds are open-end,
diversified management investment companies, each of which has different
investment objectives and their own investment portfolios and net asset
values. Asset Allocation and Capital Appreciation Portfolios are series of
Fortis Advantage Portfolios, Inc. ("Fortis Advantage") and Fortis Value Fund,
Fortis Growth & Income Fund and Fortis Capital Fund are funds of Fortis
Equity Portfolios, Inc. ("Fortis Equity"). The investment objectives of each
portfolio are as follows:
- The objective of the Fortis Asset Allocation Portfolio is maximum total
return on invested capital, to be derived mainly from capital appreciation,
dividends and interest.
- The objective of Fortis Value Fund is short and long-term capital
appreciation. Current income is only a secondary objective. The fund
invests primarily in equity securities and selects stocks based on a
concept of fundamental value.
- The objective of the Fortis Growth & Income Fund is capital appreciation
and current income. The fund invests primarily in equity securities that
provide an income component.
- The objective of the Fortis Capital Fund is short and long-term capital
appreciation. Current income is only a secondary objective.
- The objective of the Fortis Fiduciary Fund is short and long-term capital
appreciation. Current income is only a secondary objective.
- The objective of Fortis Growth Fund is short and long-term capital
appreciation. Current income is only a secondary objective.
- The objective of Fortis Capital Appreciation Portfolio is maximum long-term
capital appreciation. Dividend and interest income from investments, if
any, is incidental.
The Articles of Incorporation of Fortis Advantage and Fortis Equity permits
the Board of Directors to create additional portfolios in the future.
The Fortis Advantage Portfolios, Fortis Equity Portfolios, Fortis Growth Fund
and Fortis Fiduciary Fund offer Class A, Class B, Class C and Class H shares.
The Fortis Advantage Portfolios, Fortis Capital Fund, Fortis Growth Fund and
Fortis Fiduciary Fund began to issue multiple class shares effective November
14, 1994. The inception of Fortis Value Fund and Fortis Growth & Income Fund
was December 15, 1995, and the commencement of operations was January 2,
1996. Class A shares are sold with a front-end sales charge. Class B and H
shares are sold without a front-end sales charge and may be subject to a
contingent deferred sales charge for six years, and such shares automatically
convert to Class A after eight years. Class C shares are sold without a
front-end sales charge and may be subject to contingent deferred sales charge
for one year. Class Z shares are sold without a front-end sales charge or a
contingent deferred sales charge and has no distribution fees. Only Fortis
Growth Fund issues Class Z shares. All classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that the level of distribution fees charged differs
between classes. Income, expenses (other than expenses incurred under each
class's distribution agreement) and realized and unrealized gains or losses
on investments are allocated to each class of shares based on its relative
net assets.
The significant accounting policies followed by the Funds are summarized as
follows:
SECURITY VALUATION: Investments in securities traded on a national securities
exchange or on the NASDAQ National Market System are valued at the last
reported sales price. Securities for which over-the-counter market quotations
are readily available are valued on the basis of the last current bid price.
An outside pricing service may be utilized to provide such valuations. For
fixed income 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. Securities for which
quotations are not readily available are valued at fair value as determined
in good faith by management under supervision of the Board of Directors.
Short-term investments, with maturities of less than 60 days when acquired,
or which subsequently are within 60 days of maturity, are valued at amortized
cost.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS: Delivery and payment for
securities that have been purchased by the Asset Allocation Portfolio on a
forward commitment or when-issued basis can take place a month or more after
the transaction date. During this period, such securities are subject to
market fluctuations and the portfolio maintains, in a segregated account with
its custodian, assets with a market value equal to the amount of its purchase
commitments. At August 31, 1998, the Asset Allocation Portfolio had entered
into outstanding when-issued or forward commitments of $4,078,636.
Consistent with its ability to purchase securities on a when-issued basis,
the Asset Allocation Portfolio may enter into transactions to defer
settlement of its purchase commitments. As an inducement to defer settlement,
the portfolio repurchases a similar security for settlement at a later date
at a lower purchase price relative to the current market. This transaction is
referred to as a Dollar Roll.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security transactions
are accounted for on the trade date and dividend income is recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Realized
security gains and losses are determined using the identified cost method.
The Advantage Asset Allocation Portfolio amortizes original issue discount,
long term bond premium, and market discount.
For the year ended August 31, 1998, the cost of purchases and proceeds from
sales of securities (other than short-term securities) were as follows:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
<S> <C> <C>
- --------------------------------------------------------------------------------
Asset Allocation Portfolio................... $ 222,278,160 $ 220,857,697
Value Fund................................... 92,993,621 85,185,589
Growth & Income Fund......................... 19,313,412 5,511,902
Capital Fund................................. 251,967,463 312,684,682
Fiduciary Fund............................... 65,791,786 83,912,972
Growth Fund.................................. 489,123,527 589,186,306
Capital Appreciation Portfolio............... 55,801,482 85,846,939
</TABLE>
LENDING OF PORTFOLIO SECURITIES: At August 31, 1998, securities were on loan
to brokers from the funds. For collateral, the Fund's custodian received cash
which is maintained in a separate account and invested in short-term
investment vehicles. The risks to the funds in security lending transactions
are that the borrower may not provide additional collateral when required or
return the securities when due and that the proceeds from the sale of
investments made with cash collateral received will be
41
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
less than amounts required to be returned to the borrowers. Value of
securities on loan and fee income from securities lending was as follows for
the year ended August 31, 1998:
<TABLE>
<CAPTION>
Fee Income
For the Year
Ended
Securities August 31,
On Loan Collateral 1998
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------
Asset Allocation Portfolio.............. $ 19,431,332 $ 21,923,774 $ 81,050
Value Fund.............................. 984,283 1,091,791 7,900
Growth & Income Fund.................... 2,830,341 3,193,665 10,875
Capital Fund............................ 60,377,198 70,790,013 233,348
Fiduciary Fund.......................... 7,087,756 8,263,173 53,948
Capital Appreciation Portfolio.......... 11,599,125 13,767,338 177,876
</TABLE>
FEDERAL TAXES: The funds intend to qualify, under the Internal Revenue Code,
as regulated investment companies and if so qualified, will not have to pay
federal income taxes to the extent their taxable net income is distributed.
For tax purposes, each fund is a single taxable entity.
On a calendar year basis, each fund intends to distribute substantially all
of its net investment income and realized gains, if any, to avoid payment of
federal excise taxes.
Net investment income and net realized gains may differ for financial
statement and tax purposes. The character of distributions made during the
year from net investment income or net realized gains may, therefore, differ
from their ultimate characterization for federal income tax purposes. Also,
due to the timing of dividend distributions, the fiscal year in which amounts
are distributed may differ from the year that the income or realized gains
(losses) were recorded by the fund.
On the Statements of assets and Liabilities, due to permanent book-to-tax
differences, accumulated net realized gain (loss) and undistributed net
investment income have been increased (decreased), resulting in a net
reclassification adjustment to reduce paid-in-capital by the following:
<TABLE>
<CAPTION>
Undistributed
Net Investment Paid-in- Accumulated
Income Capital Gains
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Asset Allocation Portfolio................... $ 61,806 -- $ (61,806)
Growth & Income Fund......................... $ 32,411 -- $ (32,411)
Capital Fund................................. $ 1,275,290 $ (1,275,290) --
Fiduciary Fund............................... $ 636,772 $ (636,772) --
Growth Fund.................................. $ 2,778,444 $ (2,778,444) --
Capital Appreciation Portfolio............... $ 1,429,668 $ (2,850,700) $ 1,421,032
</TABLE>
DEFERRED COSTS: Registration costs are deferred and charged to income over
the registration period.
INCOME AND CAPITAL GAINS DISTRIBUTIONS: It is the policy of Fortis Asset
Allocation Portfolio, and Fortis Growth & Income Fund to pay quarterly
distributions from net investment income; Fortis Value Fund, Fortis Capital
Fund, Fortis Fiduciary Fund, Fortis Growth Fund and Fortis Capital
Appreciation Portfolio to pay annual distributions from net investment
income. Distributions of net realized capital gains, if any, are made
annually by each fund. The distributions are recorded on the record date and
are payable in cash or reinvested in additional shares of the fund at net
asset value without any charge to the shareholder.
ILLIQUID SECURITIES: At August 31, 1998, investments in securities for the
Asset Allocation Portfolio, Value Fund and the Growth & Income Fund included
issues that are illiquid. The funds currently limit investments in illiquid
securities to 15% of net assets; at market value, at the date of purchase.
The aggregate value of such securities at August 31, 1998, was $1,401,257
Asset Allocation Portfolio; $583,100 Value Fund; and $827,312 Growth & Income
Fund, which represents .73% , 1.61%, and 2.39% of net assets, respectively.
Pursuant to guidelines adopted by the Board of Directors, certain
unregistered securities are determined to be liquid and are not included
within the percent limitations specified above.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of increase and decrease
in net assets from operations during the reporting period. Actual results
could differ from those estimates.
2. PAYMENTS TO RELATED PARTIES: Fortis Advisers, Inc., (Advisers), is the
investment adviser for each fund. Investment advisory and management fees are
computed for Fortis Asset Allocation Portfolio, Fortis Value Fund, Fortis
Growth & Income Fund, Fortis Capital Fund, Fortis Fiduciary Fund, Fortis
Growth Fund, and Fortis Capital Appreciation Portfolio at an annual rate of
1% of the first $100 million of average daily net assets, .80% for the next
$150 million, and .70% for average daily net assets over $250 million of each
portfolio.
In addition to the investment advisory and management fee, Classes A, B, C,
and H pay Fortis Investors, Inc. (the funds' principal underwriter)
distribution fees equal to .45% of average daily net assets for Class A for
each of Asset Allocation and Capital Appreciation Portfolios and .25% of
average daily net assets for Class A for each of Value Fund, Growth & Income
Fund, Capital Fund, Fiduciary Fund, and Growth Fund and 1.00% of average
daily net assets for Classes B, C, and H for each fund on an annual basis, to
be used to compensate those who sell shares of the fund and to pay certain
other expenses of selling fund shares. Fortis Investors, Inc. also received
sales charges (paid by purchasers or redeemers of the funds' shares) as
follows:
<TABLE>
<CAPTION>
Class A Class B Class C Class H
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
Asset Allocation Portfolio................... $ 438,623 $ 13,580 $ 3,395 $ 44,509
Value Fund................................... 202,655 7,178 581 26,012
Growth & Income Fund......................... 215,428 6,625 1,624 23,008
Capital Fund................................. 456,456 14,084 16,542 43,847
Fiduciary Fund............................... 233,790 5,541 231 22,867
Growth Fund.................................. 1,051,136 48,071 7,937 149,202
Capital Appreciation Portfolio............... 274,920 35,774 1,075 55,340
</TABLE>
For the year ended August 31, 1998, legal fees and expenses were paid as
follows to a law firm of which the secretary of the funds is a partner.
<TABLE>
<CAPTION>
Amount
<S> <C>
- ---------------------------------------------------------
Asset Allocation Portfolio................... $ 6,084
Value Fund................................... 1,273
Growth & Income Fund......................... 800
Capital Fund................................. 23,831
Fiduciary Fund............................... 6,547
Growth Fund.................................. 23,400
Capital Appreciation Portfolio............... 4,741
</TABLE>
3. SUBSEQUENT EVENT: The Board of Directors of the Fortis Funds have approved,
pending the approval of Fortis Fiduciary Fund shareholders, the merger of the
Fortis Fiduciary Fund into the Fortis Capital Fund to take place October 23,
1998. Fortis Capital Fund will be the surviving entity for financial
reporting and income tax purposes. The merger will be accounted for by the
method of accounting for tax free mergers of investment companies (sometimes
referred to as the pooling without restatement method).
42
<PAGE>
- --------------------------------------------------------------------------------
4. FINANCIAL HIGHLIGHTS: Selected per share historical data for each of the
Stock Funds was as follows:
<TABLE>
<CAPTION>
Class A
-----------------------------------------------------------------------
Year Ended August 31, Year Ended October 31,
--------------------------------------------- -----------------------
ASSET ALLOCATION PORTFOLIO 1998 1997 1996 1995++ 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period................... $ 18.98 $ 16.48 $ 16.52 $ 14.44 $ 15.43 $ 14.00
--------- --------- --------- --------- --------- -----------
Operations:
Investment income - net.............................. .39 .39 .47 .43 .37 .42
Net realized and unrealized gains (losses) on
investments........................................ .13 3.47 .29 2.14 (.31) 1.52
--------- --------- --------- --------- --------- -----------
Total from operations.................................. .52 3.86 .76 2.57 .06 1.94
--------- --------- --------- --------- --------- -----------
Distributions to shareholders:
From investment income - net......................... (.41) (.41) (.47) (.40) (.33) (.51)
From net realized gains.............................. (2.18) (.95) (.32) (.09) (.72) --
Excess distributions of net realized gains........... -- -- (.01) -- -- --
--------- --------- --------- --------- --------- -----------
Total distributions to shareholders.................... (2.59) (1.36) (.80) (.49) (1.05) (.51)
--------- --------- --------- --------- --------- -----------
Net asset value, end of period......................... $ 16.91 $ 18.98 $ 16.48 $ 16.52 $ 14.44 $ 15.43
--------- --------- --------- --------- --------- -----------
Total return @......................................... 2.71% 24.62% 4.73% 18.25% .48% 14.20%
Net assets end of period (000s omitted)................ $ 151,920 $ 156,734 $ 136,656 $ 132,939 $ 119,395 $ 108,488
Ratio of expenses to average daily net assets.......... 1.44% 1.48% 1.50% 1.57%* 1.55% 1.58%
Ratio of net investment income to average daily net
assets............................................... 2.07% 2.22% 2.85% 3.31%* 2.60% 2.90%
Portfolio turnover rate................................ 104% 109% 89% 94% 94% 103%
</TABLE>
<TABLE>
<CAPTION>
Class B
---------------------------------------
Year Ended August 31,
---------------------------------------
ASSET ALLOCATION PORTFOLIO 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------
Net asset value, beginning of period................... $ 18.87 $ 16.40 $ 16.46 $ 14.27
--------- ------- ------- -------
Operations:
Investment income - net.............................. .29 .27 .37 .39
Net realized and unrealized gains (losses) on
investments........................................ .13 3.47 .29 2.26
--------- ------- ------- -------
Total from operations.................................. .42 3.74 .66 2.65
--------- ------- ------- -------
Distributions to shareholders:
From investment income - net......................... (.31) (.32) (.39) (.37)
From net realized gains.............................. (2.18) (.95) (.32) (.09)
Excess distributions of net realized gains........... -- -- (.01) --
--------- ------- ------- -------
Total distributions to shareholders.................... (2.49) (1.27) (.72) (.46)
--------- ------- ------- -------
Net asset value, end of period......................... $ 16.80 $ 18.87 $ 16.40 $ 16.46
--------- ------- ------- -------
Total return @......................................... 2.14% 23.92% 4.12% 19.00%
Net assets end of period (000s omitted)................ $ 9,928 $ 7,462 $ 4,411 $ 692
Ratio of expenses to average daily net assets.......... 1.99% 2.03% 2.05% 2.12%*
Ratio of net investment income to average daily net
assets............................................... 1.50% 1.67% 2.34% 2.51%*
Portfolio turnover rate................................ 104% 109% 89% 94%
</TABLE>
* Annualized.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
++ Ten-month period ended August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
43
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class C
-------------------------------------
Year Ended August 31,
-------------------------------------
ASSET ALLOCATION PORTFOLIO 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------
Net asset value, beginning of period................... $ 18.81 $ 16.35 $ 16.41 $ 14.27
------- ------- ------- -------
Operations:
Investment income - net.............................. .29 .26 .37 .39
Net realized and unrealized gains (losses) on
investments........................................ .13 3.47 .29 2.21
------- ------- ------- -------
Total from operations.................................. .42 3.73 .66 2.60
------- ------- ------- -------
Distributions to shareholders:
From investment income - net......................... (.31) (.32) (.39) (.37)
From net realized gains.............................. (2.18) (.95) (.32) (.09)
Excess distributions of net realized gains........... -- -- (.01) --
------- ------- ------- -------
Total distributions to shareholders.................... (2.49) (1.27) (.72) (.46)
------- ------- ------- -------
Net asset value, end of period......................... $ 16.74 $ 18.81 $ 16.35 $ 16.41
------- ------- ------- -------
Total return @......................................... 2.15% 23.93% 4.13% 18.64%
Net assets end of period (000s omitted)................ $ 5,831 $ 4,789 $ 2,641 $ 777
Ratio of expenses to average daily net assets.......... 1.99% 2.03% 2.05% 2.12%*
Ratio of net investment income to average daily net
assets............................................... 1.51% 1.67% 2.33% 2.52%*
Portfolio turnover rate................................ 104% 109% 89% 94%
</TABLE>
<TABLE>
<CAPTION>
Class H
----------------------------------------
Year Ended August 31,
----------------------------------------
ASSET ALLOCATION PORTFOLIO 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Net asset value, beginning of period................... $ 18.86 $ 16.39 $ 16.44 $ 14.27
------- -------- -------- --------
Operations:
Investment income - net.............................. .29 .27 .38 .39
Net realized and unrealized gains (losses) on
investments........................................ .13 3.47 .29 2.24
------- -------- -------- --------
Total from operations.................................. .42 3.74 .67 2.63
------- -------- -------- --------
Distributions to shareholders:
From investment income - net......................... (.31) (.32) (.39) (.37)
From net realized gains.............................. (2.18) (.95) (.32) (.09)
Excess distributions of net realized gains........... -- -- (.01) --
------- -------- -------- --------
Total distributions to shareholders.................... (2.49) (1.27) (.72) (.46)
------- -------- -------- --------
Net asset value, end of period......................... $ 16.79 $ 18.86 $ 16.39 $ 16.44
------- -------- -------- --------
Total return @......................................... 2.15% 23.93% 4.19% 18.86%
Net assets end of period (000s omitted)................ $22,979 $ 17,142 $ 10,904 $ 4,676
Ratio of expenses to average daily net assets.......... 1.99% 2.03% 2.05% 2.12%*
Ratio of net investment income to average daily net
assets............................................... 1.50% 1.67% 2.32% 2.54%*
Portfolio turnover rate................................ 104% 109% 89% 94%
</TABLE>
* Annualized.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
44
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class A Class B
------------------------------- ------------------------------
Year Ended August 31, Year Ended August 31,
------------------------------- ------------------------------
VALUE FUND 1998 1997 1996+ 1998 1997 1996+
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 13.51 $ 10.75 $ 10.00 $ 13.39 $ 10.70 $ 10.00
-------- -------- ------- ------- ------- --------
Operations:
Investment income (loss) - net........ .09 .09 .05 (.02) (.01) --
Net realized and unrealized gains
(losses) on investments............. (.30) 2.94 .70 (.30) 2.94 .70
-------- -------- ------- ------- ------- --------
Total from operations................... (.21) 3.03 .75 (.32) 2.93 .70
-------- -------- ------- ------- ------- --------
Distributions to shareholders:
From investment income - net.......... (.09) (.06) -- -- (.03) --
From net realized gains............... (1.36) (.21) -- (1.36) (.21) --
-------- -------- ------- ------- ------- --------
Total distributions to shareholders..... (1.45) (.27) -- (1.36) (.24) --
-------- -------- ------- ------- ------- --------
Net asset value, end of period.......... $ 11.85 $ 13.51 $ 10.75 $ 11.71 $ 13.39 $ 10.70
-------- -------- ------- ------- ------- --------
Total return @.......................... (2.52%) 28.66% 7.50% (3.33%) 27.75% 7.00%
Net assets end of period (000s
omitted).............................. $ 22,449 $ 21,855 $ 9,847 $ 4,794 $ 2,480 $ 642
Ratio of expenses to average daily net
assets................................ 1.52% 1.59% 1.65%* 2.27% 2.34% 2.40%*
Ratio of net investment income to
average daily net assets.............. .55% .72% .75%* (.20%) (.04%) --
Portfolio turnover rate................. 260% 93% 41% 260% 93% 41%
</TABLE>
<TABLE>
<CAPTION>
Class C Class H
----------------------------- -----------------------------
Year Ended August 31, Year Ended August 31,
----------------------------- -----------------------------
VALUE FUND 1998 1997 1996+ 1998 1997 1996+
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 13.39 $ 10.70 $ 10.00 $ 13.39 $ 10.70 $ 10.00
------- ------- ------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.01) (.01) -- (.01) (.01) --
Net realized and unrealized gains
(losses) on investments............. (.30) 2.94 .70 (.30) 2.94 .70
------- ------- ------- ------- ------- -------
Total from operations................... (.31) 2.93 .70 (.31) 2.93 .70
------- ------- ------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... -- (.03) -- -- (.03) --
From net realized gains............... (1.36) (.21) -- (1.36) (.21) --
------- ------- ------- ------- ------- -------
Total distributions to shareholders..... (1.36) (.24) -- (1.36) (.24) --
------- ------- ------- ------- ------- -------
Net asset value, end of period.......... $ 11.72 $ 13.39 $ 10.70 $ 11.72 $ 13.39 $ 10.70
------- ------- ------- ------- ------- -------
Total return @.......................... (3.24%) 27.75% 7.00% (3.24%) 27.75% 7.00%
Net assets end of period (000s
omitted).............................. $ 1,991 $ 1,002 $ 223 $ 7,016 $ 4,896 $ 1,605
Ratio of expenses to average daily net
assets................................ 2.27% 2.34% 2.40%* 2.27% 2.34% 2.40%*
Ratio of net investment income to
average daily net assets.............. (.20%) (.04%) -- (.20%) (.04%) --
Portfolio turnover rate................. 260% 93% 41% 260% 93% 41%
</TABLE>
* Annualized.
+ For the period from January 2, 1996 (commencement of operations) to
August 31, 1996.
@ These are the total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
45
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class A Class B
------------------------------- -----------------------------
Year Ended August 31, Year Ended August 31,
------------------------------- -----------------------------
GROWTH & INCOME FUND 1998 1997 1996+ 1998 1997 1996+
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 13.06 $ 10.35 $ 10.00 $ 13.03 $ 10.32 $ 10.00
-------- -------- ------- ------- ------- -------
Operations:
Investment income - net............... .32 .20 .07 .20 .11 .02
Net realized and unrealized gains
(losses) on investments............. .07 2.77 .34 .07 2.77 .34
-------- -------- ------- ------- ------- -------
Total from operations................... .39 2.97 .41 .27 2.88 .36
-------- -------- ------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... (.24) (.16) (.06) (.13) (.07) (.04)
From net realized gains............... (.01) (.10) -- (.01) (.10) --
-------- -------- ------- ------- ------- -------
Total distributions to shareholders..... (.25) (.26) (.06) (.14) (.17) (.04)
-------- -------- ------- ------- ------- -------
Net asset value, end of period.......... $ 13.20 $ 13.06 $ 10.35 $ 13.16 $ 13.03 $ 10.32
-------- -------- ------- ------- ------- -------
Total return @.......................... 2.81% 29.00% 4.11% 1.99% 28.16% 3.55%
Net assets end of period (000s
omitted).............................. $ 20,994 $ 13,907 $ 3,117 $ 5,159 $ 2,306 $ 508
Ratio of expenses to average daily net
assets................................ 1.55% 1.75% 2.33%* 2.30% 2.50% 3.08%*
Ratio of net investment income to
average daily net assets.............. 1.71% 1.68% 1.16%* .96% .92% .35%*
Portfolio turnover rate................. 20% 15% 5% 20% 15% 5%
</TABLE>
<TABLE>
<CAPTION>
Class C Class H
----------------------------- -----------------------------
Year Ended August 31, Year Ended August 31,
----------------------------- -----------------------------
GROWTH & INCOME FUND 1998 1997 1996+ 1998 1997 1996+
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 13.03 $ 10.33 $ 10.00 $ 13.03 $ 10.33 $ 10.00
------- ------- ------- ------- ------- -------
Operations:
Investment income - net............... .20 .10 .03 .20 .10 .03
Net realized and unrealized gains
(losses) on investments............. .07 2.77 .34 .07 2.77 .34
------- ------- ------- ------- ------- -------
Total from operations................... .27 2.87 .37 .27 2.87 .37
------- ------- ------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... (.13) (.07) (.04) (.13) (.07) (.04)
From net realized gains............... (.01) (.10) -- (.01) (.10) --
------- ------- ------- ------- ------- -------
Total distributions to shareholders..... (.14) (.17) (.04) (.14) (.17) (.04)
------- ------- ------- ------- ------- -------
Net asset value, end of period.......... $ 13.16 $ 13.03 $ 10.33 $ 13.16 $ 13.03 $ 10.33
------- ------- ------- ------- ------- -------
Total return @.......................... 1.99% 28.03% 3.65% 1.99% 28.03% 3.65%
Net assets end of period (000s
omitted).............................. $ 2,217 $ 1,290 $ 302 $ 6,306 $ 5,085 $ 1,286
Ratio of expenses to average daily net
assets................................ 2.30% 2.50% 3.08%* 2.30% 2.50% 3.08%*
Ratio of net investment income to
average daily net assets.............. .96% .94% .54%* .96% .93% .44%*
Portfolio turnover rate................. 20% 15% 5% 20% 15% 5%
</TABLE>
* Annualized.
+ For the period from January 2, 1996 (commencement of operations) to
August 31, 1996.
@ These are the total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
46
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class A
-------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------
CAPITAL FUND 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 26.13 $ 21.89 $ 21.22 $ 18.36 $ 18.12
--------- --------- --------- --------- ---------
Operations:
Investment income (loss) - net........ (.08) (.08) .04 .08 .07
Net realized and unrealized gains
(losses) on investments............. .38 7.06 .67 3.62 1.73
--------- --------- --------- --------- ---------
Total from operations................... .30 6.98 .71 3.70 1.80
--------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... -- (.01) (.04) (.08) (.12)
From net realized gains............... (4.06) (2.73) -- (.76) (1.44)
--------- --------- --------- --------- ---------
Total distributions to shareholders..... (4.06) (2.74) (.04) (.84) (1.56)
--------- --------- --------- --------- ---------
Net asset value, end of year............ $ 22.370 $ 26.13 $ 21.89 $ 21.22 $ 18.36
--------- --------- --------- --------- ---------
Total return @.......................... 1.56% 34.57% 3.36% 21.49% 10.56%
Net assets end of year (000s omitted)... $ 312,582 $ 340,949 $ 277,587 $ 291,263 $ 245,776
Ratio of expenses to average daily net
assets................................ 1.13% 1.18% 1.21% 1.24% 1.21%
Ratio of net investment income to
average daily net assets.............. (.28%) (.33%) .17% .42% .41%
Portfolio turnover rate................. 71% 43% 28% 14% 41%
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------
Year Ended August 31,
----------------------------------------
CAPITAL FUND 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 25.67 $ 21.69 $ 21.14 $ 18.35
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.26) (.35) (.12) --
Net realized and unrealized gains
(losses) on investments............. .38 7.06 .67 3.58
------- ------- ------- -------
Total from operations................... .12 6.71 .55 3.58
------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... -- -- -- (.03)
From net realized gains............... (4.06) (2.73) -- (.76)
------- ------- ------- -------
Total distributions to shareholders..... (4.06) (2.73) -- (.79)
------- ------- ------- -------
Net asset value, end of period.......... $ 21.73 $ 25.67 $ 21.69 $ 21.14
------- ------- ------- -------
Total return @.......................... .80% 33.55% 2.60% 20.74%
Net assets end of period (000s
omitted).............................. $ 9,339 $ 7,284 $ 4,097 $ 1,527
Ratio of expenses to average daily net
assets................................ 1.88% 1.93% 1.96% 1.99%*
Ratio of net investment income to
average daily net assets.............. (1.03%) (1.08%) (.60%) (.36%)*
Portfolio turnover rate................. 71% 43% 28% 14%
</TABLE>
* Annualized
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
47
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class C
----------------------------------------
Year Ended August 31,
----------------------------------------
CAPITAL FUND 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 25.68 $ 21.68 $ 21.13 $ 18.35
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.27) (.33) (.12) --
Net realized and unrealized gains
(losses) on investments............. .38 7.06 .67 3.57
------- ------- ------- -------
Total from operations................... .11 6.73 .55 3.57
------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... -- -- -- (.03)
From net realized gains............... (4.06) (2.73) -- (.76)
------- ------- ------- -------
Total distributions to shareholders..... (4.06) (2.73) -- (.79)
------- ------- ------- -------
Net asset value, end of period.......... $ 21.73 $ 25.68 $ 21.68 $ 21.13
------- ------- ------- -------
Total return @.......................... .76% 33.68% 2.60% 20.68%
Net assets end of period (000s
omitted).............................. $ 2,453 $ 1,432 $ 824 $ 344
Ratio of expenses to average daily net
assets................................ 1.88% 1.93% 1.96% 1.99%*
Ratio of net investment income to
average daily net assets.............. (1.03%) (1.08%) (.60%) (.36%)*
Portfolio turnover rate................. 71% 43% 28% 14%
</TABLE>
<TABLE>
<CAPTION>
Class H
------------------------------------------
Year Ended August 31,
------------------------------------------
CAPITAL FUND 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 25.68 $ 21.69 $ 21.14 $ 18.35
-------- -------- ------- -------
Operations:
Investment income (loss) - net........ (.26) (.34) (.12) --
Net realized and unrealized gains
(losses) on investments............. .38 7.06 .67 3.58
-------- -------- ------- -------
Total from operations................... .12 6.72 .55 3.58
-------- -------- ------- -------
Distributions to shareholders:
From investment income - net.......... -- -- -- (.03)
From net realized gains............... (4.06) (2.73) -- (.76)
-------- -------- ------- -------
Total distributions to shareholders..... (4.06) (2.73) -- (.79)
-------- -------- ------- -------
Net asset value, end of period.......... $ 21.74 $ 25.68 $ 21.69 $ 21.14
-------- -------- ------- -------
Total return @.......................... .80% 33.61% 2.60% 20.74%
Net assets end of period (000s
omitted).............................. $ 16,987 $ 14,468 $ 8,052 $ 4,052
Ratio of expenses to average daily net
assets................................ 1.88% 1.93% 1.96% 1.99%*
Ratio of net investment income to
average daily net assets.............. (1.03%) (1.06%) (.60%) (.37%)*
Portfolio turnover rate................. 71% 43% 28% 14%
</TABLE>
* Annualized
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
48
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class A
--------------------------------------------------------
Year Ended August 31,
--------------------------------------------------------
FIDUCIARY FUND, INC. 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 46.15 $ 36.75 $ 35.54 $ 30.23 $ 30.07
-------- -------- -------- -------- --------
Operations:
Investment income (loss) - net........ (.25) (.28) (.03) (.16) (.14)
Net realized and unrealized gains
(losses) on investments............. .98 12.56 1.50 6.68 2.99
-------- -------- -------- -------- --------
Total from operations................... .73 12.28 1.47 6.52 2.85
-------- -------- -------- -------- --------
Distributions to shareholders:
From net realized gains............... (5.94) (2.88) (.26) (1.21) (2.69)
-------- -------- -------- -------- --------
Net asset value, end of year............ $ 40.94 $ 46.15 $ 36.75 $ 35.54 $ 30.23
-------- -------- -------- -------- --------
Total return @.......................... 1.97% 35.08% 4.18% 22.71% 10.17%
Net assets end of year (000s omitted)... $ 72,636 $ 83,847 $ 65,641 $ 63,195 $ 48,833
Ratio of expenses to average daily net
assets................................ 1.40% 1.41% 1.42% 1.62% 1.45%
Ratio of net investment income to
average daily net assets.............. (.55%) (.70%) (.07%) (.53%) (.45%)
Portfolio turnover rate................. 73% 46% 30% 12% 25%
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------
Year Ended August 31,
----------------------------------------
FIDUCIARY FUND, INC. 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 45.15 $ 36.26 $ 35.35 $ 30.15
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.55) (.79) (.33) (.13)
Net realized and unrealized gains
(losses) on investments............. .98 12.56 1.50 6.54
------- ------- ------- -------
Total from operations................... .43 11.77 1.17 6.41
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... (5.94) (2.88) (.26) (1.21)
------- ------- ------- -------
Net asset value, end of period.......... $ 39.64 $ 45.15 $ 36.26 $ 35.35
------- ------- ------- -------
Total return @.......................... 1.29% 34.10% 3.35% 22.38%
Net assets end of period (000s
omitted).............................. $ 4,572 $ 2,663 $ 1,360 $ 473
Ratio of expenses to average daily net
assets................................ 2.15% 2.16% 2.17% 2.37%*
Ratio of net investment income to
average daily net assets.............. (1.30%) (1.44%) (.78%) (1.31%)*
Portfolio turnover rate................. 73% 46% 30% 12%
</TABLE>
* Annualized.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distribution without adjustments for
sales charge.
49
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class C
----------------------------------------
Year Ended August 31,
----------------------------------------
FIDUCIARY FUND, INC. 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 45.17 $ 36.32 $ 35.40 $ 30.15
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.55) (.83) (.32) (.12)
Net realized and unrealized gains
(losses) on investments............. .98 12.56 1.50 6.58
------- ------- ------- -------
Total from operations................... .43 11.73 1.18 6.46
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... (5.94) (2.88) (.26) (1.21)
------- ------- ------- -------
Net asset value, end of period.......... $ 39.66 $ 45.17 $ 36.32 $ 35.40
------- ------- ------- -------
Total return @.......................... 1.29% 33.92% 3.38% 22.55%
Net assets end of period (000s
omitted).............................. $ 1,389 $ 828 $ 491 $ 272
Ratio of expenses to average daily net
assets................................ 2.15% 2.16% 2.17% 2.37%*
Ratio of net investment income to
average daily net assets.............. (1.30%) (1.44%) (.82%) (1.31%)*
Portfolio turnover rate................. 73% 46% 30% 12%
</TABLE>
<TABLE>
<CAPTION>
Class H
----------------------------------------
Year Ended August 31,
----------------------------------------
FIDUCIARY FUND, INC. 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 45.16 $ 36.26 $ 35.35 $ 30.15
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.56) (.78) (.33) (.17)
Net realized and unrealized gains
(losses) on investments............. .98 12.56 1.50 6.58
------- ------- ------- -------
Total from operations................... .42 11.78 1.17 6.41
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... (5.94) (2.88) (.26) (1.21)
------- ------- ------- -------
Net asset value, end of period.......... $ 39.64 $ 45.16 $ 36.26 $ 35.35
------- ------- ------- -------
Total return @.......................... 1.26% 34.13% 3.35% 22.38%
Net assets end of period (000s
omitted).............................. $ 9,201 $ 6,508 $ 3,164 $ 1,481
Ratio of expenses to average daily net
assets................................ 2.15% 2.16% 2.17% 2.37%*
Ratio of net investment income to
average daily net assets.............. (1.30%) (1.44%) (.80%) (1.29%)*
Portfolio turnover rate................. 73% 46% 30% 12%
</TABLE>
* Annualized.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distribution without adjustments for
sales charge.
50
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class A
-------------------------------------------------------------
Year Ended August 31,
-------------------------------------------------------------
GROWTH FUND 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 37.32 $ 32.14 $ 32.66 $ 26.25 $ 29.09
--------- --------- --------- --------- ---------
Operations:
Investment income (loss) - net........ (.11) (.16) (.11) (.04) (.10)
Net realized and unrealized gains
(losses) on investments............. (3.59) 8.41 1.30 6.95 (.88)
--------- --------- --------- --------- ---------
Total from operations................... (3.70) 8.25 1.19 6.91 (.98)
--------- --------- --------- --------- ---------
Distributions to shareholders:
From net realized gains............... (3.84) (3.07) (1.71) (.50) (1.86)
--------- --------- --------- --------- ---------
Net asset value, end of year............ $ 29.78 $ 37.32 $ 32.14 $ 32.66 $ 26.25
--------- --------- --------- --------- ---------
Total return @.......................... (10.59%) 27.01% 4.09% 26.92% (3.77%)
Net assets end of year (000s omitted)... $ 581,819 $ 734,654 $ 641,061 $ 670,753 $ 558,589
Ratio of expenses to average daily net
assets................................ 1.05% 1.07% 1.09% 1.13% 1.09%
Ratio of net investment income to
average daily net assets.............. (.29%) (.45%) (.33%) (.13%) (.36%)
Portfolio turnover rate................. 61% 28% 32% 27% 23%
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
------------------------------------------ ----------------------------------------
Year Ended August 31,
--------------------------------------------------------------------------------------
GROWTH FUND 1998 1997 1996 1995** 1998 1997 1996 1995**
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 36.53 $ 31.75 $ 32.48 $25.85 $ 36.52 $ 31.75 $ 32.49 $25.85
-------- -------- ------- ------- ------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.25) (.56) (.32) (.13) (.24) (.57) (.33) (.10)
Net realized and unrealized gains
(losses) on investments............. (3.59) 8.41 1.30 7.26 (3.59) 8.41 1.30 7.24
-------- -------- ------- ------- ------- ------- ------- -------
Total from operations................... (3.84) 7.85 .98 7.13 (3.83) 7.84 .97 7.14
-------- -------- ------- ------- ------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... (3.84) (3.07) (1.71) (.50) (3.84) (3.07) (1.71) (.50)
-------- -------- ------- ------- ------- ------- ------- -------
Net asset value, end of period.......... $ 28.85 $ 36.53 $ 31.75 $32.48 $ 28.85 $ 36.52 $ 31.75 $32.49
-------- -------- ------- ------- ------- ------- ------- -------
Total return @.......................... (11.25%) 26.02% 3.45% 28.17% (11.22%) 25.98% 3.41% 28.21%
Net assets end of period (000s
omitted).............................. $ 12,417 $ 12,149 $ 6,710 $2,179 $ 2,738 $ 2,367 $ 1,077 $ 264
Ratio of expenses to average daily net
assets................................ 1.80% 1.82% 1.84% 1.88%* 1.80% 1.82% 1.84% 1.88%*
Ratio of net investment income to
average daily net assets.............. (1.04%) (1.19%) (1.07%) (1.09%)* (1.04%) (1.19%) (1.07%) (1.10%)*
Portfolio turnover rate................. 61% 28% 32% 27% 61% 28% 32% 27%
</TABLE>
* Annualized.
** For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
51
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class H
-------------------------------------------
Year Ended August 31,
-------------------------------------------
GROWTH FUND 1998 1997 1996 1995**
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 36.54 $ 31.75 $ 32.49 $25.85
-------- -------- -------- -------
Operations:
Investment income (loss) - net........ (.25) (.55) (.33) (.11)
Net realized and unrealized gains
(losses) on investments............. (3.59) 8.41 1.30 7.25
-------- -------- -------- -------
Total from operations................... (3.84) 7.86 .97 7.14
-------- -------- -------- -------
Distributions to shareholders:
From net realized gains............... (3.84) (3.07) (1.71) (.50)
-------- -------- -------- -------
Net asset value, end of period.......... $ 28.86 $ 36.54 $ 31.75 $32.49
-------- -------- -------- -------
Total return @.......................... (11.25%) 26.05% 3.41% 28.21%
Net assets end of period (000s
omitted).............................. $ 34,453 $ 34,941 $ 21,176 $6,867
Ratio of expenses to average daily net
assets................................ 1.80% 1.82% 1.84% 1.88%*
Ratio of net investment income to
average daily net assets.............. (1.04%) (1.19%) (1.07%) (1.10%)*
Portfolio turnover rate................. 61% 28% 32% 27%
</TABLE>
<TABLE>
<CAPTION>
Class Z
---------------------------------
Year Ended August 31,
---------------------------------
GROWTH FUND 1998 1997 1996***
<S> <C> <C> <C>
- ----------------------------------------------------------------------------
Net asset value, beginning of period.... $ 37.47 $ 32.18 $ 31.61
-------- --------- --------
Operations:
Investment income (loss) - net........ (.04) (.05) --
Net realized and unrealized gains
(losses) on investments............. (3.59) 8.41 .57
-------- --------- --------
Total from operations................... (3.63) 8.36 .57
-------- --------- --------
Distributions to shareholders:
From net realized gains............... (3.84) (3.07) --
-------- --------- --------
Net asset value, end of period.......... $ 30.00 $ 37.47 $ 32.18
-------- --------- --------
Total return @.......................... (10.34%) 27.34% 1.80%
Net assets end of period (000s
omitted).............................. $ 95,370 $ 112,356 $93,006
Ratio of expenses to average daily net
assets................................ .80% .82% .84%*
Ratio of net investment income to
average daily net assets.............. (.04%) (.20%) .01%*
Portfolio turnover rate................. 61% 28% 32%
</TABLE>
* Annualized.
** For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
*** For the period from March 1, 1996 (commencement of operations) to
August 31, 1996.
@ These are the total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
52
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class A
----------------------------------------------------------------------
Year Ended
Year Ended August 31, October 31,
---------------------------------------------- --------------------
CAPITAL APPRECIATION PORTFOLIO 1998 1997 1996 1995++ 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 30.60 $ 34.76 $ 30.67 $ 23.05 $ 27.38 $ 19.85
-------- --------- --------- -------- -------- --------
Operations:
Investment income (loss) - net........ (.35) (.26) (.29) (.17) (.12) (.30)
Net realized and unrealized gains
(losses) on investments............. (3.83) (2.45) 4.61 7.79 (2.45) 7.83
-------- --------- --------- -------- -------- --------
Total from operations................... (4.18) (2.71) 4.32 7.62 (2.57) 7.53
-------- --------- --------- -------- -------- --------
Distributions to shareholders:
From net realized gains............... -- (1.18) (.23) -- (1.76) --
Tax return of capital................. -- (.27) -- -- -- --
-------- --------- --------- -------- -------- --------
Total distributions to shareholders..... -- (1.45) (.23) -- (1.76) --
-------- --------- --------- -------- -------- --------
Net asset value, end of period.......... $ 26.42 $ 30.60 $ 34.76 $ 30.67 $ 23.05 $ 27.38
-------- --------- --------- -------- -------- --------
Total return @.......................... (13.66%) (7.89%) 14.21% 33.06% (9.56%) 37.93%
Net assets end of period (000s
omitted).............................. $ 79,813 $ 105,422 $ 114,310 $ 90,918 $ 68,352 $ 58,434
Ratio of expenses to average daily net
assets................................ 1.52% 1.55% 1.56% 1.69%* 1.62% 1.62%
Ratio of net investment income to
average daily net assets.............. (.97%) (.84%) (.96%) (.82%)* (.61%) (1.23%)
Portfolio turnover rate................. 47% 25% 34% 21% 36% 60%
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------
Year Ended August 31,
----------------------------------------
CAPITAL APPRECIATION PORTFOLIO 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 30.16 $ 34.46 $ 30.57 $ 22.45
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.43) (.40) (.49) (.35)
Net realized and unrealized gains
(losses) on investments............. (3.83) (2.45) 4.61 8.47
------- ------- ------- -------
Total from operations................... (4.26) (2.85) 4.12 8.12
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... -- (1.18) (.23) --
Tax return of capital................. -- (.27) -- --
------- ------- ------- -------
Total distributions to shareholders..... -- (1.45) (.23) --
------- ------- ------- -------
Net asset value, end of period.......... $ 25.90 $ 30.16 $ 34.46 $ 30.57
------- ------- ------- -------
Total return @.......................... (14.12%) (8.38%) 13.60% 36.17%
Net assets end of period (000s
omitted).............................. $ 5,849 $ 6,561 $ 4,522 $ 841
Ratio of expenses to average daily net
assets................................ 2.07% 2.10% 2.11% 2.24%*
Ratio of net investment income to
average daily net assets.............. (1.52%) (1.39%) (1.47%) (1.61%)*
Portfolio turnover rate................. 47% 25% 34% 21%
</TABLE>
* Annualized
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
++ Ten-month period ended August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
53
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
4. FINANCIAL HIGHLIGHTS (continued):
Class C
----------------------------------------
Year Ended August 31,
----------------------------------------
CAPITAL APPRECIATION PORTFOLIO 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 30.18 $ 34.48 $ 30.58 $ 22.45
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.43) (.40) (.48) (.36)
Net realized and unrealized gains
(losses) on investments............. (3.83) (2.45) 4.61 8.49
------- ------- ------- -------
Total from operations................... (4.26) (2.85) 4.13 8.13
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... -- (1.18) (.23) --
Tax return of capital................. -- (.27) -- --
------- ------- ------- -------
Total distributions to shareholders..... -- (1.45) (.23) --
------- ------- ------- -------
Net asset value, end of period.......... $ 25.92 $ 30.18 $ 34.48 $ 30.58
------- ------- ------- -------
Total return @.......................... (14.12%) (8.38%) 13.62% 36.21%
Net assets end of period (000s
omitted).............................. $ 1,794 $ 1,875 $ 1,004 $ 227
Ratio of expenses to average daily net
assets................................ 2.07% 2.10% 2.11% 2.24%*
Ratio of net investment income to
average daily net assets.............. (1.52%) (1.39%) (1.46%) (1.62%)*
Portfolio turnover rate................. 47% 25% 34% 21%
</TABLE>
<TABLE>
<CAPTION>
Class H
------------------------------------------
Year Ended August 31,
------------------------------------------
CAPITAL APPRECIATION PORTFOLIO 1998 1997 1996 1995+
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 30.18 $ 34.48 $ 30.58 $ 22.45
-------- -------- ------- -------
Operations:
Investment income (loss) - net........ (.43) (.40) (.48) (.36)
Net realized and unrealized gains
(losses) on investments............. (3.83) (2.45) 4.61 8.49
-------- -------- ------- -------
Total from operations................... (4.26) (2.85) 4.13 8.13
-------- -------- ------- -------
Distributions to shareholders:
From net realized gains............... -- (1.18) (.23) --
Tax return of capital................. -- (.27) -- --
-------- -------- ------- -------
Total distributions to shareholders..... -- (1.45) (.23) --
-------- -------- ------- -------
Net asset value, end of period.......... $ 25.92 $ 30.18 $ 34.48 $ 30.58
-------- -------- ------- -------
Total return @.......................... (14.12%) (8.38%) 13.62% 36.21%
Net assets end of period (000s
omitted).............................. $ 11,933 $ 13,379 $ 9,575 $ 2,115
Ratio of expenses to average daily net
assets................................ 2.07% 2.10% 2.11% 2.24%*
Ratio of net investment income to
average daily net assets.............. (1.52%) (1.39%) (1.46%) (1.62%)*
Portfolio turnover rate................. 47% 25% 34% 21%
</TABLE>
* Annualized
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
54
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Fortis Advantage Portfolios, Inc.
Fortis Equity Portfolios, Inc.
Fortis Fiduciary Fund, Inc.
Fortis Growth Fund, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of Asset Allocation Portfolio and
Capital Appreciation Portfolio (funds within Fortis Advantage Portfolios, Inc.),
Fortis Capital Fund, Fortis Value Fund, and Fortis Growth & Income Fund (funds
within Fortis Equity Portfolios, Inc.), Fortis Fiduciary Fund, Inc., and Fortis
Growth Fund, Inc. as of August 31, 1998 and the related statements of operations
for the year then ended, and the statements of changes in net assets and the
financial highlights for each of the periods presented. These financial
statements and the financial highlights are the responsibility of management.
Our responsibility is to express an opinion on these financial statements and
the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold but not received or delivered,
and securities on loan, we request confirmation from brokers and the custodian,
and where replies are not received, we carry out other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Asset Allocation Portfolio, Capital Appreciation Portfolio, Fortis Capital Fund,
Fortis Value Fund, Fortis Growth & Income Fund, Fortis Fiduciary Fund, Inc., and
Fortis Growth Fund, Inc. as of August 31, 1998 and the results of their
operations for the year then ended, and the changes in their net assets and the
financial highlights for the periods presented, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
October 9, 1998
55
<PAGE>
FEDERAL INCOME TAX INFORMATION
The information set forth below is for the fund's fiscal year as required by
federal tax law. Shareholders, however, must report distributions on a calendar
year basis for income tax purposes which may include distributions of two fiscal
years of the fund. Accordingly, the information needed by shareholders for
income tax purposes will be sent to them in early 1999. Shareholders may wish to
consult a tax advisor on how to report distribution for state and local
purposes.
Fortis Asset Allocation Portfolio, Fortis Value Fund and Fortis Growth & Income
Fund paid income distributions, taxable as dividend income, of which 9.00%,
14.78% and 58.29% and qualified for deduction by corporations. Detailed below
are the per share distributions made for the fiscal year ended August 31, 1998.
ASSET ALLOCATION PORTFOLIO
<TABLE>
<CAPTION>
RECORD DATES Class A Class B Class C Class H Class Z
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------
Net Investment Income Per Share
09/18/97..................................... $0.120 $0.090 $0.090 $0.090
12/18/97..................................... 0.118 0.092 0.092 0.092
03/18/98..................................... 0.087 0.064 0.064 0.064
06/18/98..................................... 0.087 0.062 0.062 0.062
------- ------- ------- -------
Total Distributions.......................... 0.412 0.308 0.308 0.308
------- ------- ------- -------
Short-Term Capital Gain Per Share
12/18/97..................................... $0.2840 $0.2840 $0.2840 $0.2840
------- ------- ------- -------
Mid-Term Capital Gain Per Share (Distribution
is Taxable at a Maximum rate of 28%)
12/18/97..................................... $0.7260 $0.7260 $0.7260 $0.7260
------- ------- ------- -------
Long-Term Capital Gain Per Share
(Distribution is Taxable at a Maximum rate
of 20%)
12/18/97..................................... $1.1700 $1.1700 $1.1700 $1.1700
------- ------- ------- -------
VALUE FUND
RECORD DATES
Net Investment Income Per Share
12/18/97..................................... $0.086 -- -- --
------- ------- ------- -------
Short-Term Capital Gain Per Share
12/18/97..................................... $0.7660 $0.7660 $0.7660 $0.7660
------- ------- ------- -------
Mid-Term Capital Gain Per Share (Distribution
is Taxable at a Maximum rate of 28%)
12/18/97..................................... $0.5130 $0.5130 $0.5130 $0.5130
------- ------- ------- -------
Long-Term Capital Gain Per Share
(Distribution is Taxable at a Maximum rate
of 20%)
12/18/97..................................... $0.0810 $0.0810 $0.0810 $0.0810
------- ------- ------- -------
GROWTH & INCOME
RECORD DATES
Net Investment Income Per Share:
09/18/97..................................... $0.058 $0.034 $0.034 $0.034
12/18/97..................................... 0.063 0.038 0.038 0.038
03/18/98..................................... 0.058 0.032 0.032 0.032
06/18/98..................................... 0.056 0.027 0.027 0.027
------- ------- ------- -------
Total Distributions.......................... 0.235 0.131 0.131 0.131
------- ------- ------- -------
Short-Term Capital Gain Per Share
12/18/97..................................... $0.0088 $0.0088 $0.0088 $0.0088
------- ------- ------- -------
CAPITAL FUND
RECORD DATES
Mid-Term Capital Gain Per Share (Distribution
is Taxable at a Maximum rate of 28%)
12/18/97..................................... $2.6400 $2.6400 $2.6400 $2.6400
------- ------- ------- -------
Long-Term Capital Gain Per Share
(Distribution is Taxable at a Maximum rate
of 20%)
12/18/97..................................... $1.4200 $1.4200 $1.4200 $1.4200
------- ------- ------- -------
FIDUCIARY FUND
RECORD DATES
Mid-Term Capital Gain Per Share (Distribution
is Taxable at a Maximum rate of 28%)
12/18/97..................................... $3.8600 $3.8600 $3.8600 $3.8600
------- ------- ------- -------
Long-Term Capital Gain Per Share
(Distribution is Taxable at a Maximum rate
of 20%)
12/18/97..................................... $2.0800 $2.0800 $2.0800 $2.0800
------- ------- ------- -------
GROWTH FUND
RECORD DATES
Mid-Term Capital Gain Per Share (Distribution
is Taxable at a Maximum rate of 28%)
12/18/97..................................... $2.9400 $2.9400 $2.9400 $2.9400 $2.9400
------- ------- ------- ------- -------
Long-Term Capital Gain Per Share
(Distribution is Taxable at a Maximum rate
of 20%)
12/18/97..................................... $0.9000 $0.9000 $0.9000 $0.9000 $0.9000
------- ------- ------- ------- -------
</TABLE>
56
<PAGE>
DIRECTORS AND OFFICERS
DIRECTORS Richard W. Cutting CPA AND FINANCIAL CONSULTANT
Allen R. Freedman CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
FORTIS, INC. MANAGING DIRECTOR OF
FORTIS INTERNATIONAL, N.V.
Dr. Robert M. Gavin PRESIDENT, CRANBROOK EDUCATION
COMMUNITY. PRIOR TO JULY 1996,
PRESIDENT MACALESTER COLLEGE
Benjamin S. Jaffray CHAIRMAN, SHEFFIELD GROUP, LTD.
Jean L. King PRESIDENT, COMMUNI-KING
Dean C. Kopperud CHIEF EXECUTIVE OFFICER AND DIRECTOR,
FORTIS ADVISERS, INC. PRESIDENT AND
DIRECTOR, FORTIS INVESTORS, INC.
SENIOR VICE PRESIDENT AND DIRECTOR,
FORTIS BENEFITS INSURANCE COMPANY AND
TIME INSURANCE COMPANY
Edward M. Mahoney PRIOR TO JANUARY, 1995, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER, FORTIS
ADVISERS, INC., FORTIS INVESTORS,
INC.
Robb L. Prince FINANCIAL AND EMPLOYEE BENEFIT
CONSULTANT. PRIOR TO JULY, 1995, VICE
PRESIDENT AND TREASURER, JOSTENS,
INC.
Leonard J. Santow PRINCIPAL, GRIGGS & SANTOW, INC.
Noel Shadko MARKETING CONSULTANT. PRIOR TO MAY,
1996, SENIOR VICE PRESIDENT OF
MARKETING & STRATEGIC PLANNING,
ROLLERBLADE, INC.
Joseph M. Wikler INVESTMENT CONSULTANT AND PRIVATE
INVESTOR. PRIOR TO JANUARY, 1994,
DIRECTOR OF RESEARCH, CHIEF
INVESTMENT OFFICER, PRINCIPAL, AND
DIRECTOR, THE ROTHSCHILD CO.
OFFICERS
Dean C. Kopperud
PRESIDENT AND DIRECTOR
Robert W. Beltz, Jr.
VICE PRESIDENT
James S. Byrd
VICE PRESIDENT
Peggy L. Ettestad
VICE PRESIDENT
Tamara L. Fagely
VICE PRESIDENT AND TREASURER
Howard G. Hudson
VICE PRESIDENT
Dickson W. Lewis
VICE PRESIDENT
Lucinda S. Mezey
VICE PRESIDENT
David A. Peterson
VICE PRESIDENT
Scott R. Plummer
VICE PRESIDENT
Rhonda J. Schwartz
VICE PRESIDENT
Melinda S. Urion
VICE PRESIDENT
Gary N. Yalen
VICE PRESIDENT
Michael J. Radmer
SECRETARY
INVESTMENT MANAGER, REGISTRAR Fortis Advisers, Inc.
AND TRANSFER AGENT BOX 64284, ST. PAUL, MINNESOTA 55164
PRINCIPAL UNDERWRITER Fortis Investors, Inc.
BOX 64284, ST. PAUL, MINNESOTA 55164
CUSTODIAN Norwest Bank Minnesota N.A.
MINNEAPOLIS, MINNESOTA
GENERAL COUNSEL Dorsey & Whitney LLP
MINNEAPOLIS, MINNESOTA
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
MINNEAPOLIS, MINNESOTA
The use of this material is authorized only when preceded or accompanied by a
prospectus.
57
<PAGE>
[FORTIS LOGO]
FORTIS
Solid partners, flexible solutions-Service Mark-
FORTIS MEANS STEADFAST
Fortis means "steadfast" in Latin. The worldwide Fortis family of companies
lives up to the name, and has each day since the 1800s, with flexible solutions
tailored to our customers' individual needs. We deliver the stability you
require today ... and tomorrow. You can count on it.
Fortis Financial Group offers mutual funds, annuities and life insurance
through its broker/dealer Fortis Investors, Inc.
We're part of Fortis, Inc., a financial services company that provides
specialty insurance and investment products to individuals, businesses,
associations and other financial services organizations throughout the United
States.
Fortis, Inc. is part of Fortis, a worldwide group of companies active in the
fields of insurance, banking and investments. Fortis is jointly owned by Fortis
AMEV of The Netherlands and Fortis AG of Belgium.
Fortis: steadfast for YOU!
FORTIS FINANCIAL GROUP
Fortis Advisers, Inc.
(fund management since 1949)
Fortis Investors, Inc.
(principal underwriter;
member NASD, SIPC)
Fortis Benefits Insurance Company
& Fortis Insurance Company
(issuers of FFG's insurance products)
P.O. Box 64284, St. Paul, MN 55164
(800) 800-2000
http://www.ffg.us.fortis.com
FORTIS FINANCIAL GROUP -----------------
P.O. Box 64284 Bulk Rate
St. Paul, MN 55164 U.S. Postage
PAID
Permit No. 3794
Minneapolis, MN
-----------------
Fortis Stock Funds
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40% preconsumer waste and 10%
post consumer waste. Please recycle.
The Fortis logo and Fortis-Service Mark- are servicemarks of
Fortis AMEV and Fortis AG.
98144 -Copyright- Fortis 10/98
