<PAGE>
FORTIS CAPITAL FUND
Semi-Annual Report
February 28, 1995
HIGHLIGHTS
FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 1995:
<TABLE>
<CAPTION>
S&P 500
CLASS A CLASS B* CLASS C* CLASS H* STOCK INDEX
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE PER SHARE:
Beginning of period $18.36 $18.35 $18.35 $18.35 475.50
End of period $17.55 $17.52 $17.51 $17.51 487.38
DISTRIBUTIONS PER SHARE:
From net investment income $ .039 $ .020 $ .020 $ .020 --
From net realized gains $ .764 $ .764 $ .764 $ .764 --
<FN>
*Period from November 14, 1994 (commencement of operations) to February 28, 1995.
</TABLE>
CONTENTS
LETTER TO SHAREHOLDERS 1
SCHEDULE OF INVESTMENTS 3
STATEMENT OF ASSETS AND LIABILITIES 4
STATEMENT OF OPERATIONS 5
STATEMENTS OF CHANGES IN NET ASSETS 6
NOTES TO FINANCIAL STATEMENTS 7
BOARD OF DIRECTORS AND OFFICERS 9
HOW TO USE THIS REPORT
For a quick overview of the fund's performance during the past six months, refer
to the Highlights box below. The letter from the portfolio manager and president
provides a more detailed analysis of the fund and financial markets.
The charts alongside the letter 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 chart graphically compares the fund's 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. Sales charges pay for your investment
representative's advice.
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.
TOLL-FREE PERSONAL ASSISTANCE
Shareholder Services
(800) 800-2638, Ext. 3012 or 3014
7:30 a.m. to 5:30 p.m. CST, M-Th
7:30 a.m. to 5:00 p.m. CST, F
TOLL-FREE INFORMATION LINE
For daily account balances, transaction activity or net asset value information
(800) 800-2638, Ext. 4344 24 hours a day
<PAGE>
FOR MORE INFORMATION ABOUT FORTIS FINANCIAL GROUP'S FAMILY OF PRODUCTS, CALL
YOUR INVESTMENT REPRESENTATIVE OR THE HOME OFFICE AT (800) 800-2638. TO ORDER
PROSPECTUSES OR SALES LITERATURE FOR ANY FORTIS PRODUCT, CALL (800) 800-2638,
EXT. 4579.
DEAR SHAREHOLDER,
We're pleased to present the Fortis Capital Fund semi-annual report for the
period ended February 28, 1995.
ECONOMIC REVIEW AND INVESTMENT STRATEGIES
For the third consecutive year, stock price indices traded within an extremely
narrow range, producing modest returns at best. The main reason for last year's
lackluster market was the sharp rise in interest rates, reversing more than a
decade of rate declines. Although 1994 corporate profits realized strong
increases, price/earnings ratios applied to those profits were compressed by
rising interest rates. Looking forward, the three-year sideways correction in a
period of rising earnings produced attractive equity valuations as we entered
1995
Thus far in 1995, stock prices have moved irregularly upward to new all-time
highs. Investors currently feel the Federal Reserve has completed its tight
monetary policy, initiated in February 1994 in an effort to control inflation.
Further, the belief is that the Federal Reserve has accomplished its objective
of slowing economic activity to a noninflationary growth level. This outcome
would be ideal, but its reality is currently far from certain.
In the meantime, continued strength in corporate earnings provides a strong
underpinning for stock prices. The surge in cash flows, which has not been well
publicized, has strengthened corporate financial positions and led to a major
trend in stock buy/back programs, rivaling the huge equity retirement of the
1980s.
Mutual funds continue to see an inflow into equity funds. Some of which may be
redemptions from nondomestic funds returning to safer havens, considering the
problems in Mexico and the poor experience in emerging market investments in the
past year.
Additionally, there are expectations for Congressional actions that could be
favorable to our markets, including a reduction in the capital gains tax rate,
various plans to stimulate savings, and real action to limit government
spending. While these are some of the factors currently supporting stock prices,
ultimately the interrelationships of economic activity, inflation and interest
rates will dictate the stock market's direction and magnitude of change.
PORTFOLIO REVIEW
The portfolio continues to include a large exposure to several widely diverse
areas of technology. The motivation behind capital spending for some time has
been the need to improve productivity to compete more effectively in one's
domestic and global markets. Much of this corporate spending has been in the
technological area in an effort to improve processes and products, as well as to
lower costs of production.
Simultaneously, sales of personal computers for home use have been exploding as
individuals attempt to gain better control of their lives and time.
Another highly publicized activity, but whose promise is just dawning, is the
information highway. The beneficiaries of all this activity include software
companies, managers of large data bases, companies that facilitate computer
networks -- intraoffice, as well as across the entire enterprise -- and a wide
range of producers of products and services that provide the implementation and
use of all these technologies. The need for all these technolgies is worldwide,
and U.S. companies are the clear leaders in nearly all of these areas.
IN CLOSING
We're pleased to announce the addition of class share pricing, which offers
investors a choice of purchasing plans. Each class of shares represents the same
investment portfolio, the same fund philosophy and the same professional money
management you've come to associate with Fortis Financial Group.
As you invest, consider the amount of your investment, the length of time you
plan to hold it, your current financial needs and the expenses of each class of
shares. Then talk with your financial advisor to determine the class of shares
that best meets your financial needs and goals.
We appreciate your investment in the Fortis Capital Fund. If you have any
questions, please call us or talk with your investment professional.
Sincerely,
Dean C. Kopperud
President
Stephen M. Poling
Vice President
March 23, 1995
<PAGE>
TOP TEN HOLDINGS AS OF 2/28/95
<TABLE>
<CAPTION>
Percent of
Stocks net assets
<S> <C>
1. Silicon Graphics, Inc. 4.9%
2. Oracle Systems Corp. 4.7%
3. Mattel, Inc. 4.0%
4. Motorola, Inc. 3.8%
5. Home Depot, Inc. 3.0%
6. Microsoft Corp. 2.8%
7. General Instrument Corp. 2.6%
8. Lowe's Companies, Inc. 2.5%
9. Office Depot, Inc. 2.2%
10. First Data Corp. 2.1%
<FN>
Note: Excludes holdings in U.S. Government Securities representing 10.3% of net
assets.
</TABLE>
Portfolio Changes for the Six-Month Period Ended February 28, 1995
ADDITIONS:
Computer Associates International, Inc.
Viacom, Inc. Non-Voting
ELIMINATIONS:
Blockbuster Entertainment Corp.
Grupo Televisa, S.A. de C.V. ADR
H &R Block, Inc.
MCI Communications Corp.
Shaw Industries, Inc.
Telefonos de Mexico, S.A. de C.V. ADR
<TABLE>
<CAPTION>
FORTIS CAPITAL FUND
Class B, C, and H Total Returns
Since Inception 11/14/94+
Without With
CDSC CDSC++
<S> <C> <C>
Class B Shares +0.04% -3.40%
Class C Shares -0.02% -0.97%
Class H Shares -0.02% -3.45%
</TABLE>
The performance of the separate classes will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Total returns include investment of all dividend and capital
gains distributions.
+Date shares were first offered to the public.
++Assumes redemption on February 28, 1995.
FORTIS CAPITAL FUND
Schedule of Investments
<TABLE>
<CAPTION>
(Unaudited)
February 28, 1995
COMMON STOCKS -- 81.37%
Market
Shares Cost (b) Value (c)
<S> <C> <C> <C>
BROADCASTING -- 1.87%
129,600 The News Corp., Ltd. ADS (d) $ 2,287,945 $ 2,349,000
51,522 Viacom, Inc. Non-Voting (a) 1,988,842 2,305,610
4,276,787 4,654,610
BUSINESS SERVICES AND SUPPLIES -- 5.85%
97,900 First Data Corp. 3,275,890 5,262,125
13,468 First Financial Management Corp. (d) 710,070 930,975
168,000 MBNA Corp. 3,617,255 4,431,000
139,300 Sensormatic Electronics Corp. 4,063,799 3,952,638
11,667,014 14,576,738
COMPUTER -- SOFTWARE -- 9.25%
26,000 Computer Associates International, Inc. 1,301,248 1,482,000
67,700 Lotus Development Corp. (a) 3,436,579 2,826,475
109,600 Microsoft Corp. (a) 1,300,789 6,904,800
375,000 Oracle Systems Corp. (a) 2,734,304 11,812,500
8,772,920 23,025,775
ELECTRONIC -- CONTROLS AND EQUIPMENT -- 1.63%
87,700 APPLIED MATERIALS, INC. (a) 3,590,291 4,045,162
<PAGE>
ELECTRONIC -- SEMICONDUCTOR AND CAPACITOR -- 5.01%
38,300 INTEL CORP 1,207,433 3,054,425
164,000 MOTOROLA, INC. 3,982,540 9,430,000
5,189,973 12,484,425
FINANCE COMPANIES -- MISCELLANEOUS -- 4.09%
66,500 Federal National Mortgage Association 2,327,500 5,128,812
132,288 Green Tree Financial Corp. 3,472,611 5,060,016
5,800,111 10,188,828
HEALTH CARE SERVICES -- 5.66%
67,000 Columbia/HCA Healthcare Corp. 2,492,203 2,772,125
55,700 Pacificare Health Systems, Inc., Class B (a) 2,617,125 3,912,925
90,650 U.S. Healthcare, Inc. 2,436,802 3,897,950
81,600 United Healthcare Corp. 2,721,079 3,508,800
10,267,209 14,091,800
HOTEL AND MOTEL -- 1.11%
115,500 Mirage Resorts, Inc. (a) 2,603,580 2,757,562
MEDICAL SUPPLIES -- 1.76%
73,200 Medtronic, Inc. (and rights) 1,699,325 4,392,000
MISCELLANEOUS -- 2.09%
147,400 CUC INTERNATIONAL, INC. (a) 3,676,989 5,195,850
OFFICE EQUIPMENT AND SUPPLIES -- 6.56%
355,000 Silicon Graphics, Inc. (a) 4,616,121 12,291,875
90,400 Tandy Corp. (d) 3,906,654 4,045,400
8,522,775 16,337,275
PUBLISHING -- 1.01%
49,800 Scholastic Corp. (a) 2,539,082 2,514,900
RESTAURANTS AND FRANCHISING -- 0.61%
76,000 Brinker International, Inc. (a) $ 1,363,779 $ 1,510,500
RETAIL -- DEPARTMENT STORES -- 2.90%
95,200 Kohl's Corp. (a) 3,718,455 3,903,200
139,600 Wal-Mart Stores, Inc. 978,983 3,315,500
4,697,438 7,218,700
RETAIL -- MISCELLANEOUS -- 13.95%
128,200 AutoZone, Inc. (a) 2,473,408 3,397,300
167,166 Home Depot, Inc. 2,307,584 7,501,574
182,000 Lowe's Companies, Inc. 3,676,379 6,119,750
236,025 Office Depot, Inc. (a) 1,806,806 5,517,084
141,000 Pep Boys Manny Moe & Jack 2,606,629 4,617,750
148,000 Price/Costco, Inc. (a) 2,840,050 2,016,500
90,700 Talbots (The), Inc. 2,322,008 2,868,388
96,825 Toys 'R' Us, Inc. (a) 1,653,030 2,698,997
19,685,894 34,737,343
TELECOMMUNICATIONS -- 5.57%
96,300 Cisco Systems, Inc. (a) 2,387,013 3,250,125
71,000 Ericsson (L.M.) Telephone Co., Class B ADR 3,485,341 4,038,125
207,400 General Instrument Corp. (a) (d) 5,296,662 6,584,950
11,169,016 13,873,200
TELEPHONE SERVICES -- 2.07%
220,450 LDDS Communications, Inc. (a) 2,346,825 5,166,797
TOYS -- 3.98%
442,675 Mattel, Inc. 3,496,886 9,904,853
UTILITIES -- TELEPHONE -- 5.15%
84,789 ALC Communications Corp. (a) 2,167,862 2,501,276
128,000 Air Touch Communications, Inc. (a) 3,299,050 3,488,000
73,000 Telephone & Data Systems, Inc. 3,876,300 3,330,625
115,000 Vodafone Group plc ADR 3,649,723 3,507,500
12,992,935 12,827,401
WASTE DISPOSAL -- 1.25%
117,700 WMX Technologies, Inc. 3,289,008 3,104,338
TOTAL COMMON STOCKS $127,647,837 $202,608,057
PREFERRED STOCKS -- 1.59%
BROADCASTING -- 0.42%
64,800 The News Corp., Preferred ADS (a) (d) $ 989,913 $ 1,044,900
TELECOMMUNICATIONS -- 1.17%
38,700 Nokia ADS (NOK) (a) $ 1,582,311 $ 2,912,175
TOTAL PREFERRED STOCK $ 2,572,224 $ 3,957,075
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
U.S. GOVERNMENT SECURITIES -- 10.26%
Principal
Amount
<S> <C> <C> <C>
U.S. TREASURY NOTE 10.26%
$25,000,000 9.50% 11-15-1995 $ 25,507,812 $ 25,546,875
TOTAL LONG-TERM INVESTMENTS $155,727,873 $232,112,007
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS -- 6.22%
Principal Market
Amount Value (c)
<S> <C> <C>
DISCOUNT NOTES:
$ 5,000,000 General Motors Acceptance Corp., 5.44%, 3-3-1995 $ 4,997,521
TIME DEPOSIT:
10,501,802 First Trust Money Market Variable Rate
Time Deposit Account, Current Rate -5.94% 10,501,802
Total Short-Term Investments 15,499,323
TOTAL INVESTMENTS IN SECURITIES (COST: $171,227,196) (b) $247,611,330
<FN>
(a) Presently not paying dividend income.
(b) At February 28,1995, the cost of securities for federal income tax purposes
was $171,227,196 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $78,825,700
Unrealized depreciation (2,441,566)
Net unrealized appreciation $76,384,134
(c) See Note A of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Security is fully or partially on loan at February 28, 1995. See Note A of
accompanying Notes to Financial Statements.
(e) 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 5.56% of net assets as of February 28, 1995.
</TABLE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
(Unaudited)
February 28, 1995
ASSETS:
<S> <C>
Investments in securities, as detailed in the accompanying schedule,
at market (cost $171,227,196) (Note A) $ 247,611,330
Cash on deposit with custodian 34,995
Collateral for securities lending transactions (Note A) 6,961,300
Receivables:
Investment securities sold 704,800
Subscriptions of capital stock 112,730
Dividends and interest 750,839
Prepaid Expenses 132,136
TOTAL ASSETS 256,308,130
LIABILITIES:
Payable upon return of securities loaned (Note A) 6,961,300
Redemptions of capital stock 140,276
Payable for investment advisory and management fees 167,777
Payable for distribution fees 6,919
Accounts payable and accrued expenses 23,702
TOTAL LIABILITIES 7,299,974
NET ASSETS:
Net proceeds of capital stock, par value $.01 per share -
authorized 100,000,000,000 shares 176,343,169
Unrealized appreciation of investments 76,384,134
Undistributed net investment income 227,965
Accumulated net realized loss from sale of investments (3,947,112)
TOTAL NET ASSETS $ 249,008,156
Shares outstanding and net asset value per share:
Class A shares (based on net assets of $247,735,802 and 14,118,770 shares outstanding) $ 17.55
Class B shares (based on net assets of $230,126 and 13,138 shares outstanding) $ 17.52
Class C shares (based on net assets of $67,916 and 3,878 shares outstanding) $ 17.51
Class H shares (based on net assets of $974,312 and 55,634 shares outstanding) $ 17.51
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(Unaudited)
For the Six-Month Period Ended February 28, 1995
<S> <C>
NET INVESTMENT INCOME:
Income:
Dividends $ 535,677
Interest 1,364,188
Fee Income (Note A) 648
Total income 1,900,513
Expenses:
Investment advisory and management fees (Note B) 1,058,636
Distribution fees (Class A) (Note B) 299,524
Distribution fees (Class B) (Note B) 272
Distribution fees (Class C) (Note B) 57
Distribution fees (Class H) (Note B) 951
Registration fees 18,758
Custodian fees 19,587
Shareholders' notices and reports 19,042
Legal and auditing fees (Note B) 17,356
Directors' fees and expenses 11,158
Other 9,940
Total expenses 1,455,281
NET INVESTMENT INCOME 445,232
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE A):
Net realized loss from security transactions (3,918,516)
Net change in unrealized appreciation of investments 3,958,481
NET GAIN ON INVESTMENTS 39,965
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 485,197
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the Six-Month
Period Ended For the
February 28, 1995 Year Ended
(Unaudited) August 31, 1994
<S> <C> <C>
OPERATIONS:
Net investment income $ 445,232 $ 982,470
Net realized gain (loss) from security transactions (3,918,516) 10,237,114
Net change in unrealized appreciation of investments 3,958,481 12,923,960
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 485,197 24,143,544
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A (522,703) (1,645,959)
Class B (66) --
Class C (2) --
Class H (62) --
From realized gains on investments
Class A (10,247,702) (18,967,588)
Class B (2,531) --
Class C (67) --
Class H (2,368) --
TOTAL DISTRIBUTIONS (10,775,501) (20,613,547)
CAPITAL STOCK SOLD AND REPURCHASED:
Proceeds from sale of shares (Note B)
<PAGE>
Class A (989,314 and 1,232,755 shares) 17,475,205 21,693,806
Class B (12,981 shares) 223,170 --
Class C (3,875 shares) 66,475 --
Class H (55,766 shares) 960,913 --
Proceeds of shares issued as a result of reinvested dividends
Class A (610,883 and 1,112,749 shares) 10,038,167 19,145,433
Class B (158 shares) 2,597 --
Class C (4 shares) 69 --
Class H (120 shares) 2,394 --
Less cost of repurchase of shares
Class A (868,251 and 2,551,486 shares) (15,243,156) (44,961,545)
Class B (1 share) (18) --
Class C (1 share) (18) --
Class H (252 shares) (3,767) --
NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 13,522,031 (4,122,306)
TOTAL INCREASE (DECREASE) IN NET ASSETS 3,231,727 (592,309)
NET ASSETS:
Beginning of period 245,776,429 246,368,738
End of period (includes undistributed net investment income of
$227,965 and $305,566, respectively) $249,008,156 $245,776,429
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The fund is a diversified
series of Fortis Equity Portfolios, Inc. ("Fortis Equity"), an open-end
management investment company. The primary investment objective of the fund
is long-term capital appreciation. Current income through the receipt of
interest or dividends from investments is only a secondary objective. The
articles of incorporation of Fortis Equity permits the Board of Directors
to create additional portfolios in the future.
The fund offers Class A, Class B, Class C and Class H shares. 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, 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 a contingent deferred sales charge. 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.
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; listed securities for which no sale was
reported are valued at the previous day's last sale price on that exchange;
and over-the-counter securities for which no sale was reported are valued
at the last reported bid price. 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.
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. For the six-month period ended February 28, 1995, the cost of
purchases and proceeds from sales of securities (other than short-term
securities) aggregated $57,219,191 and $64,556,387, respectively.
LENDING OF PORTFOLIO SECURITIES: At February 28, 1995 securities valued at
$6,674,237 were on loan to brokers from the Fund. For collateral, the
Fund's custodian received $6,961,300 in cash which is maintained in a
separate account and invested by the custodian in short term investment
vehicles. Fee income from securities lending amounted to $648 for the
six-month period ended February 28, 1995. The risks to the Fund 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 less than amounts required to be returned to the borrowers.
INCOME TAXES: The fund intends to qualify, under the Internal Revenue Code,
as a regulated investment company and if so qualified, will not have to pay
federal income taxes to the extent its taxable net income is distributed.
On a calendar year basis, the fund is subject to a 4% federal excise tax to
the extent it does not distribute substantially all of its net investment
income and realized gains, if any.
Net investment income and net realized gains may differ for financial
statement and tax purposes because of wash sale transactions and other
book-to-tax differences. 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
<PAGE>
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.
INCOME AND CAPITAL GAINS DISTRIBUTIONS: It is the policy of the fund to pay
quarterly dividends from net investment income and make distributions of
any realized capital gains as required by law. These dividends and capital
gains are distributed on the record date and are reinvested in additional
shares of the fund at net asset value or payable in cash without any charge
to the shareholder.
B. PAYMENTS TO RELATED PARTIES: Fortis Advisers, Inc., is the investment
adviser for the fund. Investment advisory and management fees are computed
at an annual rate of 1% of the first $100 million of average daily net
assets, .8% for the next $150 million and .7% of net assets in excess of
$250 million.
In addition to the investment advisory and management fee, Classes A, B, C
and H pay Fortis Investors, Inc. (the fund's principal underwriter)
distribution fees equal to .25% (Class A) and 1.00% (Class B, C and H) of
average daily net assets (of the respective classes) 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 of the fund's shares)
aggregating $246,991 for Class A for the six-month period ended February
28, 1995.
Legal fees and expenses aggregating $7,438 for the six-month period ended
February 28, 1995, were paid to a law firm of which the secretary of the
fund is a partner.
C. CAPITAL CHANGES: At the special shareholders' meeting of August 23, 1994,
the Amended and Restated Articles of Incorporation were approved, which
increased the number of authorized shares from 2 billion to 10 billion and
allows the fund to issue multiple classes of shares.
D. FINANCIAL HIGHLIGHTS: Selected per share historical data was as follows:
<TABLE>
<CAPTION>
Year Ended
Year Ended August 31, August 31, November 30,
1995*** 1994 1993 1992 1991** 1990
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.36 $18.12 $17.86 $16.50 $13.55 $16.30
Operations:
Investment income - net .03 .07 .14 .13 .13 .23
Net realized and unrealized gains (losses) on investments (.04) 1.73 1.25 1.63 4.03 (1.92)
Total from operations (.01) 1.80 1.39 1.76 4.16 (1.69)
Distributions to shareholders:
From investment income - net (.04) (.12) (.09) (.11) (.18) (.25)
From net realized gains (.76) (1.44) (1.04) (.29) (1.03) (.81)
Total distributions to shareholders (.80) (1.56) (1.13) (.40) (1.21) (1.06)
Net asset value, end of period $17.55 $18.36 $18.12 $17.86 $16.50 $13.55
Total return @ 3.21% 10.56% 7.88% 10.77% 33.36% (10.99%)
Net assets end of period (000's omitted) $247,736 $245,776 $246,369 $223,865 $191,390 $143,367
Ratio of expenses to average daily net assets 1.20%* 1.21% 1.22% 1.23% 1.28%* 1.25%
Ratio of net investment income to average daily net assets .37%* .41% .77% .72% 1.19%* 1.66%
Portfolio turnover rate 28% 41% 68% 18% 34% 62%
</TABLE>
<TABLE>
<CAPTION>
Class B Class C Class H
1995+ 1995+ 1995+
<S> <C> <C> <C>
Net asset value, beginning of period $18.35 $18.35 $18.35
Operations:
Investment income - net .01 .01 .01
Net realized and unrealized gains (losses) on investments (.06) (.07) (.07)
Total from operations (.05) (.06) (.06)
Distribution to shareholders:
From investment income - net (.02) (.02) (.02)
From net realized gains (.76) (.76) (.76)
Total distributions to shareholders (.78) (.78) (.78)
Net asset value, end of period $17.52 $17.51 $17.51
Total Return@ .04% (.02%) (.02%)
Net assets end of period (000s omitted) $ 230 $ 68 $ 974
Ratio of expenses to average daily net assets 1.95%* 1.95%* 1.95%*
Ratio of net investment income to average daily net assets .07%* .07%* .07%*
Portfolio turnover rate 28% 28% 28%
<FN>
@ These are the Fund's total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments for sales
charge.
* Annualized.
** Nine-month period ended August 31, 1991.
*** Six-month period ended February 28, 1995.
+ For the period from November 14, 1994 (commencement of operations) to February
28, 1995.
</TABLE>
<PAGE>
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, Macalester College
BENJAMIN S. JAFFRAY, Chairman, Sheffield Group, Ltd.
JEAN L. KING, President, Communi-King
DEAN C. KOPPERUD, President and Director, Fortis Advisers, Inc., Fortis
Investors, Inc.; Senior Vice President and Director of Fortis Benefits Insurance
Company; Senior Vice President of Time Insurance Company
EDWARD M. MAHONEY, Prior to January, 1995, Chairman and Chief Executive Officer,
Fortis Advisers, Inc.Fortis Investors, Inc.
THOMAS R. PELLETT, Prior to January, 1991, Senior Vice President, Administration
and Corporate Affairs and Director, Pet, Inc.
ROBB L. PRINCE, Vice President and Treasurer, Jostens, Inc.
LEONARD J. SANTOW, Principal, Griggs &Santow, Inc.
JOSEPH M. WIKLER, Prior to January, 1994, Director of Research, Chief Investment
Officer, Principal, and Director, The Rothschild Co.
OFFICERS
DEAN C. KOPPERUD, President and Director
STEPHEN M. POLING, Vice President
DENNIS M. OTT, Vice President
JAMES S. BYRD, Vice President
ROBERT C. LINDBERG, Vice President
KEITH R. THOMSON, Vice President
ROBERT W. BELTZ, JR., Vice President
ROBERT J. CLANCY, Vice President
THOMAS D. GUALDONI, Vice President
LARRY A. MEDIN, Vice President
JON H. NICHOLSON , Vice President
JOHN W. NORTON, Vice President
DAVID A. PETERSON , Vice President
MICHAEL J. RADMER, Secretary
TAMARA L. FAGELY, Treasurer
DAVID G. CARROLL, 2nd Vice President
CHRIS J. NEUHARTH, 2nd Vice President
INVESTMENT MANAGER, REGISTRAR AND TRANSFER AGENT, Fortis Advisers, Inc.,
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, Minneapolis, Minnesota
INDEPENDENT AUDITORS, KPMGPeat Marwick LLP, Minneapolis, Minnesota
THE USE OF THIS MATERIAL IS AUTHORIZED ONLY WHEN PRECEDED OR ACCOMPANIED BY A
PROSPECTUS.
