<PAGE>
FORTIS GROWTH FUND, INC.
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
NET ASSET VALUE PER SHARE:
<S> <C> <C> <C> <C> <C>
Beginning of period $26.25 $25.85 $25.85 $25.85 475.50
End of period $25.86 $25.81 $25.80 $25.81 487.38
DISTRIBUTIONS PER SHARE:
From net realized gains $ .495 $ .495 $ .495 $ .495 --
<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 Growth 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 objectiveof
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 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 Growth 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
FORTIS GROWTH FUND
Class B, C, and H Total Returns
Since Inception 11/14/94+
Without With
CDSC CDSC++
Class B Shares +1.85% -1.74%
Class C Shares +1.81% +0.82%
<PAGE>
Class H Shares +1.85% -1.74%
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.
TOP TEN HOLDINGS AS OF 2/28/95
Percent of
Stocks net assets
1. 3Com Corp. 5.3%
2. Oracle Systems Corp. 4.8%
3. Tellabs, Inc. 3.4%
4. Informix Corp. 3.2%
5. Microsoft Corp. 3.0%
6. Cisco Systems, Inc. 2.7%
7. DSC Communications Corp. 2.4%
8. Home Depot, Inc. 2.2%
9. Sybase, Inc. 2.1%
10. Office Depot, Inc. 2.1%
PORTFOLIO CHANGES FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 1995
ADDITIONS:
Biogen, Inc.
Centocor, Inc.
EMCCorp.
HBO & Co.
LDDS Communications, Inc.
Legent Corp.
Lowe's Companies, Inc.
Medaphis Corp.
Micron Technology, Inc.
Mobile Telecommunications Technology Corp.
Paging Network, Inc.
Sensormatic Electronics Corp.
ELIMINATIONS:
ALZA Corp. Class A
Grupo Televisa, S.A. de C.V. ADR
International Game Technology
Landmark Graphics Corp.
Wellfleet Communications, Inc.
SCHEDULE OF INVESTMENTS
(Unaudited)
February 28, 1995
<TABLE>
<CAPTION>
COMMON STOCK -- 83.87%
Market
Shares Cost (b) Value (c)
<S> <C> <C> <C>
BIOMEDICS, GENETICS RESEARCH -- 1.69%
121,000 Biogen, Inc. (a) $ 6,468,954 $ 4,991,250
236,000 Centocor, Inc. (a) 4,214,264 4,498,750
10,683,218 9,490,000
BUSINESS SERVICES -- 1.24%
32,056 First Financial Management Corp. 1,690,363 2,215,871
168,800 Sensormatic Electronics Corp. 5,737,112 4,789,700
7,427,475 7,005,571
COMPUTER-SOFTWARE -- 21.83%
168,800 BMC Software, Inc. (a) 6,110,120 10,845,400
302,500 Compuware Corp. (a) 7,538,800 11,116,875
405,000 E M C Corp. (a) 8,354,557 6,935,625
74,000 HBO & Co. 2,726,840 2,849,000
477,000 Informix Corp. (a) 10,102,124 18,006,750
149,000 Legent Corp. (a) 5,396,569 4,321,000
82,000 Medaphis Corp. (a) 4,533,073 4,633,000
269,650 Microsoft Corp. (a) 7,934,830 16,987,950
854,400 Oracle Systems Corp. (a) 4,616,051 26,913,600
216,500 Parametric Technology Corp. (a) 6,327,023 8,281,125
290,200 Sybase, Inc. (a) 4,003,786 11,825,650
<PAGE>
67,643,773 122,715,975
DRUGS -- 1.27%
140,700 Forest Laboratories, Inc. (a) 2,983,003 7,140,525
ELECTRONIC-CONTROLS AND EQUIPMENT -- 4.79%
419,000 American Power Conversion Corp. (a) 5,536,629 7,515,813
230,900 Lam Research Corp. (a) 7,814,131 9,236,000
420,600 Solectron Corp. (a) 11,676,729 10,146,975
25,027,489 26,898,788
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR -- 2.41%
88,000 Intel Corp. 3,204,194 7,018,000
105,000 Micron Technology, Inc. 5,814,005 6,510,000
9,018,199 13,528,000
FINANCE COMPANIES -- 2.96%
213,000 Franklin Resources, Inc. 2,787,446 8,253,750
523,700 Mercury Finance Co. 8,620,417 8,379,200
11,407,863 16,632,950
HEALTH CARE SERVICES -- 6.91%
126,400 PacifiCare Health Systems, Inc., Class B (a) 5,231,345 8,879,600
170,600 Quantum Health Resources, Inc. (a) 4,325,275 3,753,200
220,000 United Healthcare Corp. 5,891,387 9,460,000
202,787 U.S. HealthCare, Inc. 4,955,814 8,719,841
215,686 Value Health, Inc. (a) 7,718,158 8,034,304
28,121,979 38,846,945
HOTEL & MOTEL -- 0.92%
144,200 Promus Companies, Inc. (a) $ 4,285,480 $ 5,155,150
MISCELLANEOUS -- 1.89%
301,400 CUC International, Inc. (a) 7,844,614 10,624,350
OFFICE EQUIPMENT & SUPPLIES -- 0.89%
145,000 Compaq Computer Corp. (a) 5,364,130 5,002,500
PUBLISHING -- 1.07%
118,800 Scholastic Corp. (a) 6,053,565 5,999,400
RECREATION EQUIPMENT -- 1.21%
478,650 Acclaim Entertainment, Inc. (a) 5,510,653 6,820,762
RESTAURANTS AND FRANCHISING -- 5.75%
249,000 Brinker International, Inc. (a) 2,745,644 4,948,875
355,650 Buffets, Inc. (a) 2,472,582 3,778,781
236,250 Cracker Barrel Old Country Store, Inc. 6,425,607 5,359,922
443,300 Lone Star Steakhouse & Saloon, Inc. (a) 6,776,715 10,971,675
277,800 Outback Steakhouse, Inc. (a) 4,236,044 7,257,525
22,656,592 32,316,778
RETAIL - DEPARTMENT STORES -- 1.75%
117,600 Kohl's Corp. (a) 3,779,664 4,821,600
210,800 Wal-Mart Stores, Inc. 1,494,008 5,006,500
5,273,672 9,828,100
RETAIL - MISCELLANEOUS -- 7.40%
197,300 Barnes & Noble, Inc. (a) 4,940,859 5,820,350
273,749 Home Depot, Inc. 1,678,473 12,284,486
225,000 Lowe's Companies, Inc. 8,484,612 7,565,625
497,850 Office Depot, Inc. (a) 4,497,152 11,637,244
312,850 Price/Costco, Inc. (a) 2,989,109 4,262,581
22,590,205 41,570,286
TELECOMMUNICATIONS -- 16.18%
454,000 Cisco Systems, Inc. (a) 1,600,855 15,322,500
373,600 DSC Communications Corp. (a) 11,883,884 13,449,600
107,000 MFS Communications Co. (a) 4,581,250 3,718,250
287,300 Newbridge Networks Corp. (a) 4,426,888 9,732,288
365,000 Tellabs, Inc. (a) 8,326,156 18,980,000
570,600 3Com Corp. (a) 4,549,203 29,742,525
35,368,236 90,945,163
TELEPHONE SERVICES -- 3.71%
320,000 LDDS Communications, Inc. (a) 7,084,331 7,500,000
323,000 Mobile Telecommunications Technologies Corp. (a) 6,966,742 7,146,375
187,000 Paging Network, Inc. (a) 5,656,750 6,217,750
19,707,823 20,864,125
TOTAL COMMON STOCKS $296,967,969 $471,385,368
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS -- 15.84%
Principal Market
Amount Value (c)
DISCOUNT NOTES:
<S> <C> <C>
$20,000,000 Ford Motor Credit, 6.11% 3-16-1995 $ 19,946,667
16,000,000 General Motors Acceptance Corp., 6.22% 3-10-1995 15,972,889
16,000,000 Merrill Lynch & Co., 6.17% 3-6-1995 15,983,866
12,000,000 National Westminster Bancorp, 6.04% 3-24-1995 11,952,560
63,855,982
TIME DEPOSITS:
25,195,000 First Trust Money Market Variable Rate Deposit Account, Current Rate -- 5.94% 25,195,000
TOTAL SHORT-TERM INVESTMENTS 89,050,982
TOTAL INVESTMENTS IN SECURITIES (COST: $386,018,951) (b) $560,436,350
<FN>
(a) Presently not paying dividend income.
(b) At February 28, 1995, the cost of securities for federal income tax
purposes was $386,083,723 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation $184,878,757
Unrealized depreciation (10,526,130)
Net unrealized appreciation $174,352,627
(c) See Note A 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 investmentsin foreign securities
represents 1.73% of net assets as of February 28, 1995.
</TABLE>
<TABLE>
<CAPTION>
STATEMENT OF ASSETS AND LIABILITIES
(Unaudited)
February 28, 1995
<S> <C>
ASSETS:
Investments in securities, as detailed in the accompanying schedule,
at market (cost $386,018,951) (Note A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $560,436,350
Cash on deposit with custodian. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 267
Receivables:
Investment securities sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,471,722
Subscriptions of capital stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 523,985
Dividends and interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,167
Prepaid Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 227,383
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 566,808,874
LIABILITIES:
Investment securities purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,728,245
Redemptions of capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 684,682
Payable for investment advisory and management fees . . . . . . . . . . . . . . . . . . . . . . . . . . 338,202
Payable for distribution fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,509
Accounts payable and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,285
TOTAL LIABILITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,789,923
NET ASSETS:
Net proceeds of capital stock, par value $.01 per share --
authorized 100,000,000,000 shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 378,877,113
Unrealized appreciation of investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174,417,399
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,364
Accumulated net realized gain from sale of investments. . . . . . . . . . . . . . . . . . . . . . . . . 8,554,075
TOTAL NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $562,018,951
Shares outstanding and net asset value per share:
Class A shares (based on net assets of $560,261,521 and 21,665,671 shares outstanding). . . . . . . . . $ 25.86
Class B shares (based on net assets of $493,058 and 19,102 shares outstanding). . . . . . . . . . . . . $ 25.81
Class C shares (based on net assets of $46,279 and 1,794 shares outstanding). . . . . . . . . . . . . . $ 25.80
Class H shares (based on net assets of $1,218,093 and 47,202 shares outstanding). . . . . . . . . . . . $ 25.81
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENT OF OPERATIONS
(Unaudited)
For the Six-Month Period Ended February 28, 1995
NET INVESTMENT INCOME:
<S> <C>
Income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,844,693
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,924
Total income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,175,617
Expenses:
Investment advisory and management fees (Note B) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,129,967
Distribution fees (Class A) (Note B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 680,494
Distribution fees (Class B) (Note B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 668
Distribution fees (Class C) (Note B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Distribution fees (Class H) (Note B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,321
Registration fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39,671
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,745
Shareholders' notices and reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61,490
Directors' fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,084
Legal and auditing fees (Note B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,447
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,319
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,005,253
NET INVESTMENT INCOME. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,364
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE A):
Net realized gain from security transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,696,419
Net change in unrealized appreciation (depreciation) of investments . . . . . . . . . . . . . . . . . . (9,480,693)
NET GAIN ON INVESTMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,215,726
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . $ 2,386,090
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
STATEMENT 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 (loss). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 170,364 $ (2,037,846)
Net realized gain from security transactions. . . . . . . . . . . . . . . . . . . . . . . . . 11,696,419 7,321,947
Net change in unrealized appreciation (depreciation) of investments . . . . . . . . . . . . . (9,480,693) (24,780,117)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS. . . . . . . . . . . . . . . . 2,386,090 (19,496,016)
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains on investments
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,375,679) (36,528,832)
Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,965) --
Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (188) --
Class H . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (4,330) --
TOTAL DISTRIBUTIONS TO SHAREHOLDERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (10,382,162) (36,528,832)
CAPITAL STOCK SOLD AND REPURCHASED:
Proceeds from sale of shares (Note B)
Class A (2,280,468 and 4,390,426 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . 59,145,293 120,052,496
Class B (19,015 shares). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 484,701 --
Class C (1,786 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45,713 --
Class H (47,252 shares). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,209,587 --
Proceeds of shares issued as a result of reinvested dividends
Class A (401,387 and 1,248,862 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,886,209 34,930,672
Class B (89 shares). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,186 --
<PAGE>
Class C (8 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 188 --
Class H (173 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,257 --
Less cost of repurchase of shares
Class A (2,295,359 and 4,474,493 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . (59,346,647) (125,486,181)
Class B (2 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (50) --
Class C (0 share). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- --
Class H (223 shares) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (5,722) --
NET INCREASE IN NET ASSETS FROM SHARE TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . 11,425,715 29,496,987
TOTAL INCREASE (DECREASE) IN NET ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,429,643 (26,527,861)
NET ASSETS:
Beginning of period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58,589,308 585,117,169
End of period (includes undistributed net investment income
of $170,364 and $0, respectively) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $562,018,951 $558,589,308
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The fund is an open-end
diversified management investment company. The primary investment objective
of the fund is short and long-term capital appreciation. 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 $85,665,207 and $32,387,479, respectively.
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 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
generally pay annual distributions from net investment income and make
distributions of any realized capital gains as required by law. These
income and capital gains distributions 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 $810,988 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 10 billion to 100 billion
andallows the fund to issue multiple classes of shares.
<PAGE>
D. FINANCIAL HIGHLIGHTS: Selected per share historical data was as follows:
<TABLE>
<CAPTION>
Class A
Year Ended
August 31, December 31,
1995*** 1994 1993 1992 1991** 1990
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $26.25 $29.09 $24.31 $24.40 $17.47 $20.92
Operations:
Investment income (loss) -- net .01 (.10) (.06) 05 -- .24
Net realized and unrealized gains
(losses) on investments .10 (.88) .5.52 1.16 6.93 (1.55)
Total from operations .11 (.98) .5.46 1.21 6.93 (1.31)
Distributions to shareholders:
From investment income -- net -- -- (.04) (.02) -- (.24)
From net realized gains (.50) (1.86) (.64) (1.28) -- (1.90)
Total distributions to shareholders (.50) (1.86) (.68) (1.30) -- (2.14)
Net asset value, end of period $25.86 $26.25 $29.09 $24.31 $24.40 $17.47
Total return@ .50% (3.77%) 22.69% 4.72% 39.67% (6.31%)
Net assets end of period (000's omitted) $560,262 $558,589 $585,117 $473,258 $325,901 $237,182
Ratio of expenses to average daily net assets 1.10%* 1.09% 1.10% 1.13% 1.20%* 1.21%
Ratio of net investment income (loss) to
average daily net assets .06%* (.36%) (.20%) .24% (.03%)* 1.30%
Portfolio turnover rate 7% 23% 49% 33% 33% 58%
</TABLE>
<TABLE>
<CAPTION>
Class B Class C Class H
1995+ 1995+ 1995+
<S> <C> <C> <C>
Net asset value, beginning of period $25.85 $25.85 $25.85
Operations:
Investment income (loss) -- net (.02) (.02) (.02)
Net realized and unrealized gains (losses) on investments .48 .47 .48
Total from operations .46 .45 .46
Distribution to shareholders:
From investment income -- net -- -- --
From net realized gains (.50) (.50) (.50)
Total distributions to shareholders (.50) (.50) (.50)
Net asset value, end of period $25.81 $25.80 $25.81
Total return@ 1.85% 1.81% 1.85%
Net assets end of period (000s omitted) $ 493 $ 46 $1,218
Ratio of expenses to average daily net assets 1.85%* 1.85%* 1.85%*
Ratio of net investment income (loss) to average daily net assets (.69%)* (.69%)* (.69%)*
Portfolio turnover rate 7% 7% 7%
<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.
** Eight-month period ended August 31, 1991.
*** For the 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.
