<PAGE>
FORTIS-Registered Trademark-
SPECIAL
PORTFOLIOS, INC.
ANNUAL REPORT
OCTOBER 31, 1995
<PAGE>
SPECIAL PORTFOLIOS, INC. ANNUAL REPORT
CONTENTS
LETTER TO SHAREHOLDERS 1
SCHEDULES OF INVESTMENTS
CASH PORTFOLIO 4
STOCK PORTFOLIO 6
STATEMENTS OF ASSETS AND LIABILITIES 9
STATEMENTS OF OPERATIONS 10
STATEMENTS OF CHANGES IN NET ASSETS
CASH PORTFOLIO 11
STOCK PORTFOLIO 12
NOTES TO FINANCIAL STATEMENTS 13
INDEPENDENT AUDITORS' REPORT 15
BOARD OF DIRECTORS AND OFFICERS 16
- - TOLL-FREE PERSONAL ASSISTANCE
- Shareholder Services
- (800) 800-2638, Ext. 3012
- 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
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.
<PAGE>
HIGHLIGHTS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
STANDARD &
CASH STOCK POOR'S 500
PORTFOLIO PORTFOLIO STOCK INDEX
---------- ---------- ------------
<S> <C> <C> <C>
NET ASSET VALUE PER SHARE:
Beginning of year...................... $ 9.46 $ 33.94 472.35
End of year............................ $ 9.57 $ 42.32 581.50
Total Return*.......................... 7.18% 25.41% 26.40%
DISTRIBUTIONS PER SHARE:
From net investment income............. $ 0.55 -- --
From net realized gains................ -- $0.186 --
* These are the fund's total returns during the year, including reinvestment of all
dividend and capital gains distributions.
</TABLE>
HOW TO USE THIS REPORT
For a quick overview of the portfolios' performance during the past twelve
months, refer to the Highlights box below. The letter from the portfolio manager
and president provides a more detailed analysis of the portfolio's 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 portfolio's invests, and the pie chart shows a breakdown of the
portfolios' assets by industry. The portfolio changes show the investment
decisions your portfolio manager has made over the period in response to
changing market conditions.
The performance chart graphically compares the portfolios' total return
performance with a selected investment index. Remember, however, that an index
may reflect the performance of securities the portfolio may not hold. Also, the
index does not deduct investment advisory fees and other fund expenses, whereas
your portfolio 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.
FEDERAL INCOME TAX INFORMATION
The information set forth below is for the portfolio'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 for
portions of two fiscal years of the portfolios. Accordingly, the information
needed by shareholders for income tax purposes will be sent to them in early
1996. Shareholders may wish to consult a tax advisor on how to report
distributions for state and local purposes.
Special Cash Portfolio paid income distributions, taxable as dividend income, of
which none qualified for deduction by corporations. Detailed below are the per
share distributions made for the year ended October 31, 1995.
SPECIAL PORTFOLIOS -- CASH PORFOLIO
<TABLE>
<CAPTION>
Ordinary Income
Per Share
<S> <C>
- ------------------------------------------------
December 23, 1994 $ 0.13
March 24, 1995 0.14
June 23, 1995 0.14
September 25, 1995 0.14
- ------------------------------------------------
Total Distributions $ 0.55
- ------------------------------------------------
</TABLE>
SPECIAL PORTFOLIOS -- STOCK PORTFOLIO
<TABLE>
<CAPTION>
Long-Term
Capital Gain
Per Share
<S> <C>
- ----------------------------------------------
December 16, 1994 $ 0.186
- ----------------------------------------------
</TABLE>
<PAGE>
SPECIAL PORTFOLIOS, INC.
DEAR SHAREHOLDER,
We're pleased to present the Special Portfolios annual report for the period
ended October 31, 1995.
ECONOMIC REVIEW AND INVESTMENT STRATEGIES
The stock market moved sharply higher for most of the fiscal year under review.
The major factors behind this gain have been relatively low and declining
inflation, stable to lower interest rates and surprisingly strong corporate
profits. Another positive influence was the perception of a sincere and
potentially successful effort to address the U.S. budget and trade deficits, as
well as its income tax structure. Also, a supporting factor may have been the
growing understanding that U.S. corporations have become the world's lowest cost
producers and technological leaders in many, if not most, industries.
Looking ahead these forces remain in place, with one exception. As economic
activity slows, it will be difficult to maintain the recent pace of corporate
profit growth. This could impede the progress of the stock market unless it gets
some reassurance in the form of lower interest rates. With only moderate growth
of the economy and very low rates of inflation, our view is that interest rates
should stay at their recent low levels, or possibly go somewhat lower.
Nevertheless, it will be incumbent on us as portfolio managers to make certain
that the companies we select can keep growing earnings at expected rates
throughout the period ahead.
PORTFOLIO STRATEGIES
SPECIAL CASH
Our primary concerns in managing the Special Cash Fund are quality, safety and
liquidity. Our approved list of eligible investments continues to emphasize high
quality domestic issuers. With short-term rates relatively stable recently, our
strategy has been to maintain an average maturity of less than 300 days.
CASH PORTFOLIO
TOP TEN HOLDINGS AS OF 10/31/95
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
<C> <S> <C>
- -------------------------------------------------------------------------------
1. U.S. Treasury Note (6.00%) 1996 5.9%
2. U.S. West Capital Funding (8.00%) 1996 5.0%
3. Federal Home Loan Bank (6.125%) 1996 4.9%
4. Xerox Credit Corp. (6.25%) 1996 4.9%
5. CIT Group Holdings, Inc. (5.65%) 1995 4.7%
6. Texaco Capital Corp. (9.00%) 1996 4.4%
7. Phillip Morris Companies, Inc. (8.875%) 1996 4.4%
8. General Electric Capital Corp. (8.00%) 1997 4.0%
9. Carolina Power & Light Co. (7.90%) 1996 4.0%
10. Nordstrom Credit Corp. (8.35%) 1996 4.0%
</TABLE>
CASH PORTFOLIO
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 10/31/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Consumer Finance 15.6%
Banks 11.8%
Cash Equivalents/Receivables 11.6%
U.S. Treasury Securities 9.8%
Captive Equipment Finance 7.9%
Utilities-Electric 7.9%
Captive Auto Finance 7.8%
Utilities-Telephone 5.0%
Finance Companies 4.9%
Other Direct Federal Obligations 4.9%
Captive Oil Finance 4.4%
Tobacco 4.4%
Retail-Miscellaneous 4.0%
</TABLE>
1
<PAGE>
CASH PORTFOLIO
Value of $10,000 invested November 1, 1989
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE GOV'T LEHMAN BROTHERS 1-3 YR
INDEX*** GOV'T BOND INDEX** CASH PORTFOLIO
<S> <C> <C> <C>
11/1/89 10,000 10,000 10,000
90 10,782 10,884 10,791
91 12,218 12,106 11,684
92 13,422 13,089 12,469
93 14,658 13,845 13,061
94 14,424 14,005 13,434
95 16,138 15,266 14,398
</TABLE>
Annual period ended October 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. Cash Portfolio does not have a
sales charge.
** An unmanaged index of government bonds with maturities of one to
three years.
*** An unmanaged index of government bonds with an average maturity of
three to four years.
@ Date shares were first offered to the public.
STOCK PORTFOLIO
TOP TEN HOLDINGS AS OF 10/31/95
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
<C> <S> <C>
- --------------------------------------------------------------------------
1. 3Com Corp. 6.9%
2. Cisco Systems, Inc. 5.3%
3. Oracle Corp. 5.0%
4. Informix Corp. 4.1%
5. Microsoft Corp. 3.9%
6. Tellabs, Inc. 3.5%
7. Lone Star Steakhouse and Saloon, Inc. 2.7%
8. Solectron Corp. 2.5%
9. Sterling Software, Inc. 2.4%
10. Worldcom, Inc. 2.3%
</TABLE>
SPECIAL STOCK
The Special Stock Portfolio invests primarily in medium-size companies that are
growing their revenues and earnings at significantly above average rates. The
25.4 percent return for the year ended October 31, 1995, can be mainly
attributed to the sizeable holding of technology stocks.
Approximately one-half of the portfolio is diversified across a wide range of
technology-based businesses. The common denominator is that they are all
benefiting from U.S. corporations looking to improve productivity, as well as
compete more effectively in highly competitive global markets.
More recently, consumer markets have begun to grow rapidly, as individuals seek
to moderate the complexity of modern life. We believe these trends are secular
and not just cyclical in nature; a condition that will be evidenced worldwide
over time.
IN CLOSING
We appreciate your investment in the Special Portfolios. If you have any
questions, please call us or talk with your investment professional.
Sincerely,
[SIG]
Dean C. Kopperud
President
[SIG]
Howard G. Hudson
Vice President
[SIG]
Stephen M. Poling
Vice President
November 21, 1995
2
<PAGE>
STOCK PORTFOLIO
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 10/31/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Telecommunications 20.5%
Computer-Software 17.7%
Other 12.0%
Retail-Miscellaneous 6.9%
Electronic-Semiconductor and
Capacitor 6.4%
Cash Equivalents/Receivables 6.3%
Health Care Services 6.1%
Electronic-Controls and Equipment 6.0%
Telephone Services 5.2%
Electronic-Communication Security 5.0%
Office Equipment and Supplies 4.0%
Restaurants and Franchising 3.9%
</TABLE>
STOCK PORTFOLIO
Value of $10,000 invested January 2, 1966
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500*** STOCK PORTFOLIO
<S> <C> <C>
1/2/66 10,000 10,000
10/31/66 8,907 8,020
10/31/67 10,779 13,825
10/31/68 12,252 16,323
10/31/69 11,888 14,130
10/31/70 10,568 12,065
10/31/71 12,352 14,489
10/31/72 15,060 19,140
10/31/73 15,061 17,731
10/31/74 10,719 13,062
10/31/75 13,510 14,525
10/31/76 16,228 15,889
10/31/77 15,222 15,286
10/31/78 16,195 17,660
10/31/79 18,680 23,302
10/31/80 24,668 39,639
10/31/81 24,799 41,866
10/31/82 28,820 51,162
10/31/83 36,864 67,529
10/31/84 39,256 64,995
10/31/85 46,945 75,644
10/31/86 62,474 108,840
10/31/87 66,586 97,642
10/31/88 76,400 104,996
10/31/89 96,494 149,516
10/31/90 89,274 128,116
10/31/91 119,193 213,378
10/31/92 131,031 230,570
10/31/93 150,516 279,329
10/31/94 156,450 260,118
10/31/95 197,748 326,219
</TABLE>
Annual period ended October 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. Stock Portfolio does not have a
sales charge.
** An unmanaged index of 500 common stocks.
@ Date shares were first offered to the public.
STOCK PORTFOLIO
PORTFOLIO CHANGES FOR THE YEAR ENDED 10/31/95
ADDITIONS:
ADC Telecommunications, Inc.
America Online, Inc.
Andrew Corp.
Applied Materials, Inc.
Bay Networks, Inc.
Cypress Semiconductor Corp.
First Data Corp.
HBO & Co.
Harrah's Entertainment, Inc.
LSI Logic Corp.
Medaphis Corp.
Micron Technology, Inc.
Motorola, Inc.
Nokia Corp. ADR
Oxford Health Plans, Inc.
Petroleum Geo-Services ADS
Promus Hotel Corp.
Qualcomm, Inc.
Staples, Inc.
Tommy Hilfiger Corp.
Vencor, Inc.
ELIMINATIONS:
Acclaim Entertainment, Inc.
Brinker International, Inc.
Buffets, Inc.
Centocor, Inc.
Compuware Corp.
E M C Corp.
First Financial Management Corp.
Forest Laboratories, Inc.
Grupo Televisa, S.A. de C.V. ADR
International Game Technology
Landmark Graphics Corp.
Newbridge Networks Corp.
Price/Costco, Inc.
Promus Companies, Inc.
Quantum Health Resources, Inc.
Sensormatic Electronics Corp.
Sybase, Inc.
Value Health, Inc.
3
<PAGE>
SPECIAL PORTFOLIOS, INC.
Cash Portfolio
Schedule of Investments
October 31, 1995
CORPORATE BONDS AND NOTES-INVESTMENT GRADE-73.72%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (a) Value (b)
- ------------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
BANKS-11.80%
$ 1,000,000 Bankamerica Corp., 6.00% Note 7-15-1997..................... A+ $ 1,002,600 $ 1,000,590
1,000,000 Barnett Bank, Inc., 7.10% Medium Term Note 4-1-1997......... A 1,017,070 1,014,319
1,000,000 Nationsbank Corp., 5.375% Sr Note 12-1-1995................. A 1,016,120 999,573
------------- -------------
3,035,790 3,014,482
------------- -------------
CAPTIVE AUTO FINANCE-7.82%
1,000,000 Ford Motor Credit Corp., 5.05% Medium Term Note 3-25-1996... A+ 984,860 997,061
1,000,000 General Motors Acceptance Corp., 4.75% Medium Term Note
11-15-1995................................................ A- 998,210 999,529
------------- -------------
1,983,070 1,996,590
------------- -------------
CAPTIVE EQUIPMENT FINANCE-7.89%
1,000,000 AT&T Capital Corp., 5.125% Medium Term Note 2-21-1997....... A 947,470 989,539
1,000,000 General Electric Capital Corp., 8.00% Medium Term Note
2-1-1997.................................................. AAA 1,003,640 1,024,858
------------- -------------
1,951,110 2,014,397
------------- -------------
CAPTIVE OIL FINANCE-4.44%
1,100,000 Texaco Capital Corp., 9.00% 11-15-1996...................... A+ 1,139,952 1,133,222
------------- -------------
CONSUMER FINANCE-15.57%
1,000,000 American General Finance, 6.53% Note 5-30-1997.............. A+ 1,000,000 1,008,329
1,200,000 CIT Group Holdings, Inc., 5.65% Note 11-15-1995............. A+ 1,226,880 1,199,915
750,000 Commercial Credit Co., 6.375% Note 1-1-1996................. A+ 776,678 750,518
1,000,000 Household Finance Co., 7.80% Sr Note 11-1-1996.............. A 1,001,620 1,017,745
------------- -------------
4,005,178 3,976,507
------------- -------------
FINANCE COMPANIES-4.90%
1,250,000 Xerox Credit Corp., 6.25% Note 1-15-1996.................... A 1,255,675 1,250,738
------------- -------------
RETAIL-MISCELLANEOUS-3.99%
1,000,000 Nordstrom Credit Corp., 8.35% Medium Term Note 8-15-1996.... A+ 1,028,300 1,018,149
------------- -------------
TOBACCO-4.39%
1,100,000 Phillip Morris Companies, Inc., 8.875% Medium Term Note
7-1-1996.................................................. A 1,132,758 1,119,655
------------- -------------
UTILITIES-ELECTRIC-7.93%
1,000,000 Carolina Power & Light Co., 7.90% Medium Term Note
12-27-1996................................................ A 1,000,537 1,020,739
1,000,000 Texas Utilities, 6.375% First Mtg Note 8-1-1997............. BBB+ 1,001,710 1,003,661
------------- -------------
2,002,247 2,024,400
------------- -------------
UTILITIES-TELEPHONE-4.99%
1,250,000 U.S. West Capital Funding, Inc., 8.00% Deb 10-15-1996....... A+ 1,259,400 1,274,046
------------- -------------
TOTAL CORPORATE BONDS AND NOTES - INVESTMENT GRADE.......... $ 18,793,480 $ 18,822,186
------------- -------------
------------- -------------
</TABLE>
U.S. GOVERNMENT SECURITIES-14.70%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (a) Value (b)
- ------------- ------------- -------------
<C> <S> <C> <C>
OTHER DIRECT FEDERAL OBLIGATIONS-4.91%
FEDERAL HOME LOAN BANK:
$ 1,250,000 6.125% Global Registered Note 1996.......................... $ 1,247,325 $ 1,253,766
------------- -------------
U.S. TREASURY SECURITIES-9.79%
NOTES:
1,000,000 4.00% 1996.................................................. 992,500 995,936
1,500,000 6.00% 1996.................................................. 1,494,609 1,504,217
------------- -------------
TOTAL U.S. TREASURY SECURITIES.............................. 2,487,109 2,500,153
------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............................ 3,734,434 3,753,919
------------- -------------
TOTAL DEBT SECURITIES....................................... $ 22,527,914 $ 22,576,105
------------- -------------
------------- -------------
</TABLE>
4
<PAGE>
SHORT-TERM INVESTMENTS-9.96%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (b)
- ------------- -------------
<C> <S> <C>
BANKS-2.14%
$ 546,000 First Trust Money Market Variable Rate Time Deposit, Current
rate -- 5.62%............................................. $ 546,000
-------------
BROKERAGE AND INVESTMENT-0.69%
178,000 Goldman Sachs Master Variable Rate Note, Current
rate -- 5.91%............................................. 178,000
-------------
CONSUMER FINANCING-4.23%
1,100,000 American Express Credit Corp., 5.87% 2-27-1996.............. 1,079,347
-------------
DIVERSIFIED FINANCE-2.90%
741,000 Associates Corp. Master Variable Rate Note, Current
rate -- 5.79%............................................. 741,000
-------------
TOTAL SHORT-TERM INVESTMENTS................................ 2,544,347
-------------
TOTAL INVESTMENTS IN SECURITIES (COST: $25,072,261)(A)...... $ 25,120,452
-------------
-------------
<FN>
(a) At October 31, 1995, the cost of securities for federal
income tax purposes was $25,072,261 and the aggregate gross
unrealized appreciation and depreciation based on that cost
was:
Unrealized appreciation......................... $ 157,545
Unrealized depreciation......................... (109,354)
-----------
Net unrealized appreciation..................... $ 48,191
-----------
(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.
</TABLE>
5
<PAGE>
SPECIAL PORTFOLIOS, INC.
Stock Portfolio
Schedule of Investments
October 31, 1995
COMMON STOCKS-93.72%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
- ------------- ------------- -------------
<C> <S> <C> <C>
APPAREL-0.25%
6,000 Tommy Hilfiger Corp. (a).................................... $ 121,500 $ 228,750
------------- -------------
BIOMEDICS, GENETICS RESEARCH AND DEVELOPMENT-1.09%
16,500 Biogen, Inc. (a)............................................ 878,609 1,010,625
------------- -------------
BROADCASTING-0.43%
5,000 America Online, Inc. (a).................................... 209,775 400,000
------------- -------------
BUSINESS SERVICES AND SUPPLIES-1.25%
17,445 First Data Corp............................................. 715,454 1,153,544
------------- -------------
COMPUTER-SOFTWARE-17.69%
45,200 BMC Software, Inc. (a)...................................... 829,327 1,610,250
10,000 HBO & Co.................................................... 368,412 707,500
130,000 Informix Corp. (a).......................................... 1,374,610 3,786,250
36,050 Microsoft Corp. (a)......................................... 1,040,321 3,605,000
107,100 Oracle Corp. (a)............................................ 566,678 4,672,237
30,000 Parametric Technology Corp. (a)............................. 870,340 2,006,250
------------- -------------
5,049,688 16,387,487
------------- -------------
ELECTRONIC-COMMUNICATION SECURITY-4.98%
29,000 ADC Telecommunications, Inc. (a)............................ 943,938 1,160,000
15,800 Andrew Corp. (a)............................................ 763,817 667,550
13,000 Bay Networks, Inc. (a)...................................... 720,969 861,250
50,000 Qualcomm, Inc. (a).......................................... 2,025,517 1,925,000
------------- -------------
4,454,241 4,613,800
------------- -------------
ELECTRONIC-CONTROLS AND EQUIPMENT-5.99%
59,000 American Power Conversion Corp. (a)......................... 943,526 604,750
14,000 Applied Materials, Inc. (a)................................. 726,908 701,750
31,500 Lam Research Corp. (a)...................................... 1,057,222 1,917,562
57,800 Solectron Corp. (a)......................................... 1,600,666 2,326,450
------------- -------------
4,328,322 5,550,512
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-6.37%
27,000 Cypress Semiconductor Corp. (a)............................. 791,318 951,750
27,000 Intel Corp.................................................. 605,205 1,886,625
20,000 LSI Logic Corp. (a)......................................... 1,089,960 942,500
30,000 Micron Technology, Inc...................................... 830,841 2,118,750
------------- -------------
3,317,324 5,899,625
------------- -------------
FINANCE COMPANIES-2.91%
25,000 Franklin Resources, Inc..................................... 780,125 1,268,750
74,000 Mercury Finance Co.......................................... 1,213,738 1,424,500
------------- -------------
1,993,863 2,693,250
------------- -------------
HEALTH CARE SERVICES-6.09%
15,000 Medaphis Corp. (a).......................................... 428,802 476,250
19,000 Oxford Health Plans, Inc. (a)............................... 839,345 1,486,750
14,100 PacifiCare Health Systems, Inc. Class B (a)................. 644,201 1,025,775
27,000 U.S. HealthCare, Inc........................................ 957,245 1,039,500
20,500 United Healthcare Corp...................................... 797,731 1,089,062
19,000 Vencor, Inc. (a)............................................ 595,218 527,250
------------- -------------
4,262,542 5,644,587
------------- -------------
HOTEL AND MOTEL-0.80%
20,800 Harrah's Entertainment, Inc. (a)............................ 455,927 514,800
10,400 Promus Hotel Corp. (a)...................................... 189,798 228,800
------------- -------------
645,725 743,600
------------- -------------
MACHINERY-OIL AND WELL-0.84%
40,000 Petroleum Geo-Services A/S ADS (a).......................... 959,892 775,000
------------- -------------
</TABLE>
6
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
- ------------- ------------- -------------
<C> <S> <C> <C>
MISCELLANEOUS-2.18%
58,350 CUC International, Inc. (a)................................. $ 1,012,449 $ 2,020,369
------------- -------------
OFFICE EQUIPMENT AND SUPPLIES-4.01%
27,000 Compaq Computer Corp. (a)................................... 1,009,940 1,505,250
47,900 Sterling Software, Inc. (a)................................. 875,723 2,209,387
------------- -------------
1,885,663 3,714,637
------------- -------------
PUBLISHING-0.97%
14,600 Scholastic Corp. (a)........................................ 743,383 901,550
------------- -------------
RESTAURANTS AND FRANCHISING-3.93%
64,300 Lone Star Steakhouse & Saloon, Inc. (a)..................... 1,085,535 2,483,588
36,900 Outback Steakhouse, Inc. (a)................................ 590,369 1,157,738
------------- -------------
1,675,904 3,641,326
------------- -------------
RETAIL-DEPARTMENT STORES-1.40%
14,700 Kohl's Corp. (a)............................................ 472,458 667,013
29,000 Wal-Mart Stores, Inc........................................ 283,669 627,125
------------- -------------
756,127 1,294,138
------------- -------------
RETAIL-MISCELLANEOUS-6.91%
26,200 Barnes & Noble, Inc. (a).................................... 658,732 956,300
34,966 Home Depot, Inc............................................. 340,449 1,302,484
27,000 Lowe's Companies, Inc....................................... 1,010,234 729,000
69,525 Office Depot, Inc. (a)...................................... 586,500 1,990,153
53,250 Staples, Inc. (a)........................................... 971,085 1,417,781
------------- -------------
3,567,000 6,395,718
------------- -------------
TELECOMMUNICATIONS-20.48%
135,200 3Com Corp. (a).............................................. 538,095 6,354,400
63,800 Cisco Systems, Inc. (a)..................................... 225,216 4,944,500
50,400 DSC Communications Corp. (a)................................ 1,582,612 1,864,800
14,500 MFS Communications Co. (a).................................. 609,687 585,438
19,000 Motorola, Inc............................................... 1,038,710 1,246,875
14,000 Nokia Corp. ADR............................................. 922,256 780,500
94,000 Tellabs, Inc.(a)............................................ 1,073,247 3,196,000
------------- -------------
5,989,823 18,972,513
------------- -------------
TELEPHONE SERVICES-5.15%
53,000 Mobile Telecommunications Technologies Corp. (a)............ 1,152,141 1,503,875
50,000 Paging Network, Inc. (a).................................... 756,250 1,150,000
65,000 Worldcom, Inc. (a).......................................... 1,502,463 2,120,625
------------- -------------
3,410,854 4,774,500
------------- -------------
TOTAL COMMON STOCKS......................................... $ 45,978,138 $ 86,815,531
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-6.13%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
- ------------- -------------
<C> <S> <C>
BANKS-5.01%
$ 4,642,000 First Trust Money Market Variable Rate Time Deposit, Current
rate -- 5.62%............................................. $ 4,642,000
-------------
BROKERAGE AND INVESTMENT-0.72%
666,000 Goldman Sachs Master Variable Rate Note, Current
rate -- 5.91%............................................. 666,000
-------------
</TABLE>
7
<PAGE>
SPECIAL PORTFOLIOS, INC.
Stock Portfolio (continued)
Schedule of Investments
October 31, 1995
SHORT-TERM INVESTMENTS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Value (c)
- ------------- -------------
<C> <S> <C>
DIVERSIFIED FINANCE-0.40%
$ 366,000 Associates Corp. Master Variable Rate Note, Current
rate -- 5.79%............................................. $ 366,000
-------------
TOTAL SHORT-TERM INVESTMENTS................................ 5,674,000
-------------
TOTAL INVESTMENTS IN SECURITIES (COST: $51,652,138)(B)...... $ 92,489,531
-------------
-------------
<FN>
(a) Presently not paying dividend income.
(b) At October 31, 1995, the cost of securities for federal income tax purposes was
$51,652,138 and the aggregate gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation........................................ $42,245,672
Unrealized depreciation........................................ (1,408,279)
-----------
Net unrealized appreciation.................................... $40,837,393
-----------
(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 1.68%
of net assets as of October 31, 1995.
</TABLE>
8
<PAGE>
SPECIAL PORTFOLIOS, INC.
Statements of Assets and Liabilities
October 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CASH STOCK
PORTFOLIO PORTFOLIO
------------- -------------
<S> <C> <C>
ASSETS:
Investments in securities, as detailed in the accompanying
schedules, at market (cost $25,072,261 and $51,652,138;
respectively) (Note 1).................................. $ 25,120,452 $ 92,489,531
Cash on deposit with custodian............................ -- 747
Receivables:
Investment securities sold.............................. -- 210,043
Interest and dividends.................................. 430,698 15,889
Deferred registration costs (Note 1).................... 7,996 9,076
Prepaid expenses........................................ 1,733 153
------------- -------------
TOTAL ASSETS................................................ 25,560,879 92,725,439
------------- -------------
LIABILITIES:
Bank overdraft.......................................... 15,834 --
Payable for investment advisory and management fees
(Note 2)............................................... 6,473 79,034
Accounts payable and accrued expenses................... 5,645 12,541
------------- -------------
TOTAL LIABILITIES........................................... 27,952 91,575
------------- -------------
NET ASSETS:
Net proceeds of capital stock, par value $.01 per
share-authorized 15,000,000,000; outstanding
2,669,309;and 2,188,704 shares, respectively........... 26,756,673 47,513,839
Unrealized appreciation of investments.................. 48,191 40,837,393
Undistributed net investment income..................... 171,206 --
Accumulated net realized gain (loss) from sale of
investments............................................ (1,443,143) 4,282,632
------------- -------------
TOTAL NET ASSETS............................................ $ 25,532,927 $ 92,633,864
------------- -------------
NET ASSET VALUE PER SHARE................................... $ 9.57 $ 42.32
------------- -------------
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
SPECIAL PORTFOLIOS, INC.
Statements of Operations
For the Year Ended October 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CASH STOCK
PORTFOLIO PORTFOLIO
------------- -------------
<S> <C> <C>
NET INVESTMENT INCOME (LOSS):
Income:
Interest income......................................... $ 1,707,519 $ 690,632
Dividend Income......................................... -- 97,350
------------- -------------
Total income.............................................. 1,707,519 787,982
------------- -------------
Expenses:
Investment advisory and management fees (Note 2)........ 81,479 848,470
Registration fees....................................... 16,170 15,123
Custodian fees.......................................... 9,800 22,000
Directors' fees and expenses............................ 4,001 14,600
Legal and auditing fees (Note 2)........................ 15,300 26,200
Shareholders' notices and reports....................... 920 11,701
Other................................................... 3,250 6,985
------------- -------------
Total expenses............................................ 130,920 945,079
Less fees waived by the advisor (Note 2).................. (26,600) --
------------- -------------
Net Expenses.............................................. 104,320 945,079
------------- -------------
NET INVESTMENT INCOME (LOSS)................................ 1,603,199 (157,097)
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1):
Net realized gain (loss) from security transactions....... (380,441) 4,286,398
Net change in unrealized appreciation of investments...... 647,983 15,893,140
------------- -------------
NET GAIN ON INVESTMENTS..................................... 267,542 20,179,538
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 1,870,741 $ 20,022,441
------------- -------------
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
SPECIAL PORTFOLIOS, INC.
Statements of Changes in Net Assets
CASH PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income..................................... $ 1,603,199 $ 1,584,251
Net realized loss from security transactions.............. (380,441) (729,995)
Net change in unrealized appreciation (depreciation) of
investments in securities............................... 647,983 (84,737)
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ 1,870,741 769,519
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................................ (1,556,690) (1,673,229)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of 670,321 and 816,726 shares,
respectively............................................ 6,334,839 7,847,847
Proceeds from 163,965 and 175,284 shares issued as a
result of reinvested dividends.......................... 1,555,005 1,671,529
Less cost of repurchase of 1,078,240 and 694,362 shares,
respectively............................................ (10,241,486) (6,648,707)
------------- -------------
NET INCREASE (DECREASE) OF (243,954) AND 297,648 SHARES,
RESPECTIVELY.............................................. (2,351,642) 2,870,669
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... (2,037,591) 1,966,959
NET ASSETS:
Beginning of year......................................... 27,570,518 25,603,559
------------- -------------
End of year (includes undistributed net investment income
of $171,206 and $124,697, respectively)................. $ 25,532,927 $ 27,570,518
------------- -------------
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
SPECIAL PORTFOLIOS, INC.
Statement of Changes in Net Assets
STOCK PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment loss....................................... $ (157,097) $ (267,886)
Net realized gain from security transactions.............. 4,286,398 418,002
Net change in unrealized appreciation (depreciation) of
investments in securities............................... 15,893,140 (5,570,821)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS................................................ 20,022,441 (5,420,705)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains on investments........................ (420,000) (4,190,750)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of 308,505 and 322,972 shares,
respectively............................................ 10,904,778 11,339,474
Proceeds from 12,916 and 116,261 shares issued as a result
of reinvested dividends................................. 415,237 4,137,735
Less cost of repurchase of 356,272 and 197,871 shares,
respectively............................................ (13,753,664) (6,892,184)
------------- -------------
NET INCREASE (DECREASE) OF (34,851) AND 241,362 SHARES,
RESPECTIVELY.............................................. (2,433,649) 8,585,025
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS..................... 17,168,792 (1,026,430)
NET ASSETS:
Beginning of year......................................... 75,465,072 76,491,502
------------- -------------
End of year............................................... $ 92,633,864 $ 75,465,072
------------- -------------
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
SPECIAL PORTFOLIOS, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Special Portfolios, Inc. is registered under the Investment Company Act of
1940 (as amended) as an open-end diversified management investment company.
Special Portfolios, Inc. currently consists of a series of two separate
portfolios, the Cash Portfolio and the Stock Portfolio. The primary
objectives of the Cash Portfolio are high levels of capital stability and
liquidity, and a high level of current income. The primary objectives of the
Stock Portfolio are appreciation of capital and realization of both long and
short-term capital gains.
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. Long-term debt securities are valued at current
market prices on the basis of valuations furnished by an independent pricing
service. 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 financial reporting purposes, except for original issue discount, long
term bond discount and premiums are not amortized.
For the year ended October 31, 1995, the cost of purchases and proceeds from
sales of securities (other than short-term securities) aggregated $9,234,048
and $12,346,980 for Cash Portfolio, and $21,786,945 and $17,952,763 for Stock
Portfolio, respectively.
INCOME TAXES: The portfolios 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. On a calendar year basis, the portfolios intend to distribute
substantially all of their net investment income and realized gains, if any,
to avoid the payment of federal excise taxes. For federal income tax purposes
Cash Portfolio had a capital loss carryover of $1,443,143 at October 31,
1995, which if not offset by subsequent capital gains will expire as follows:
<TABLE>
<S> <C>
1998............................................... $ 24,614
1999............................................... 66,680
2000............................................... 70,929
2001............................................... 167,389
2002............................................... 733,090
2003............................................... 380,441
</TABLE>
It is unlikely the Board of Directors will authorize a distribution of any
realized gains until the available capital loss carryover has been offset or
expires.
Net investment income (loss) and net realized gains (losses) 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.
On the Statement of Assets & Liabilities, for Stock Portfolio, due to
permanent book-to-tax differences, accumulated net investment loss decreased
by $157,097, resulting in a net reclassification adjustment to reduce paid-in
capital by $157,097.
DEFERRED COSTS: Registration fees are deferred and charged to income over the
registration period.
INCOME AND CAPITAL GAINS DISTRIBUTIONS: It is the policy of Stock Portfolio
to pay annual distributions and Cash Portfolio to pay quarterly distributions
from net investment income and make distributions of any realized capital
gains as required by law. These distributions are recorded on the record date
and are reinvested in additional shares of the portfolio at net asset value
or payable in cash without any charge to the shareholder.
2. PAYMENTS TO RELATED PARTIES: Fortis Advisers, Inc., is the investment adviser
for the portfolios. Investment advisory and management fees for the Cash
Portfolio are computed at an annual rate of .3% of the first $500 million of
average daily net assets, and .25% of net assets in excess of $500 million.
Investment advisory and management fees for the Stock Portfolio 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.
Legal fees and expenses aggregating $3,600 and $9,500 for Cash Portfolio and
Stock Portfolio, respectively, for the year ended October 31, 1995, were paid
to a law firm of which the secretary of the fund is a partner.
Effective November 1, 1991, Advisers has voluntarily agreed to waive a
portion of the advisory fee equal to .1 of 1% of average net assets otherwise
payable by Cash Portfolio until Cash Portfolio's net assets first reach $50
million.
13
<PAGE>
SPECIAL PORTFOLIOS, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
3. FINANCIAL HIGHLIGHTS: Selected per share and other historical data was as
follows:
<TABLE>
<S> <C> <C> <C> <C> <C>
Year Ended October 31,
---------------------------------------------------------
CASH PORTFOLIO 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year..................... $ 9.46 $ 9.79 $ 10.03 $ 10.20 $ 10.09
--------- --------- --------- --------- ---------
Operations:
Investment income-net................................ .57 .56 .70 .81 .72
Net realized and unrealized gain (loss) on
investments........................................ .09 (.29) (.24) (.15) .09
--------- --------- --------- --------- ---------
Total from operations.................................. .66 .27 .46 .66 .81
--------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income-net........................... (.55) (.60) (.70) (.83) (.70)
--------- --------- --------- --------- ---------
Net asset value, end of year........................... $ 9.57 $ 9.46 $ 9.79 $ 10.03 $ 10.20
--------- --------- --------- --------- ---------
Total return@.......................................... 7.18% 2.85% 4.74% 6.73% 8.28%
Net assets at end of period (000's omitted)............ $ 25,533 $ 27,571 $ 25,604 $ 21,901 $ 20,326
Ratio of expenses to average daily net assets.......... .38%* .42%* .39%* .40%* .52%
Ratio of net investment income to average daily net
assets................................................ 5.90%* 5.90%* 7.04%* 7.55%* 7.36%
Portfolio turnover rate................................ 37% 58% 29% 69% 66%
</TABLE>
*For the years ended October 31, 1995, 1994, 1993 and 1992, the advisor
voluntarily waived a portion of the investment advisory and management fee.
Had the fund paid all the advisory fee, the ratios of expenses and net
investment income to total net assets would have been .48% and 5.80%; .52%
and 5.80%; .49% and 6.94%; .50% and 7.45% for 1995, 1994, 1993 and 1992,
respectively.
@These are the Fund's total returns during the years, including reinvestment of
all dividend and capital gains distributions.
<TABLE>
<S> <C> <C> <C> <C> <C>
Year Ended October 31,
---------------------------------------------------------
STOCK PORTFOLIO 1995 1994 1993 1992 1991
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year..................... $ 33.94 $ 38.59 $ 33.22 $ 31.51 $ 20.65
--------- --------- --------- --------- ---------
Operations:
Investment income (loss)-net......................... (.07) (.12) (.15) .04 .06
Net realized and unrealized gains (losses) on
investments........................................ 8.64 (2.44) 6.97 2.48 12.75
--------- --------- --------- --------- ---------
Total from operations.................................. 8.57 (2.56) 6.82 2.52 12.81
--------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income-net........................... -- -- (.03) (.03) (.34)
From net realized gains.............................. (.19) (2.09) (1.42) (.78) (1.61)
--------- --------- --------- --------- ---------
Total distributions to shareholders.................... (.19) (2.09) (1.45) (.81) (1.95)
--------- --------- --------- --------- ---------
Net asset value, end of year........................... $ 42.32 $ 33.94 $ 38.59 $ 33.22 $ 31.51
--------- --------- --------- --------- ---------
Total return@.......................................... 25.41% (6.88%) 21.15% 8.05% 66.55%
Net assets at end of period (000's omitted)............ $ 92,634 $ 75,465 $ 76,492 $ 61,586 $ 53,201
Ratio of expenses to average daily net assets.......... 1.11% 1.15% 1.13% 1.13% 1.21%
Ratio of net investment income (loss) to average daily
net assets............................................ (.19%) (.36%) (.41%) .13% .19%
Portfolio turnover rate................................ 25% 26% 37% 38% 45%
</TABLE>
@These are the Fund's total returns during the years, including reinvestment of
all dividend and capital gains distributions.
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Special Portfolios, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of Cash Portfolio and Stock
Portfolio (portfolios within Special Portfolios, Inc.) as of October 31, 1995
and the related statements of operations for the year then ended, the statements
of changes in net assets for each of the years in the two-year period ended
October 31, 1995, and the financial highlights presented in footnote 3 to the
financial statements. These financial statements and the financial highlights
are the responsibility of the Portfolios' 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 sold but not delivered, we request confirmations
from brokers, 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
Cash Portfolio and Stock Portfolio at October 31, 1995, and the results of their
operations for the year then ended, the changes in their net assets for each of
the years in the two-year period ended October 31, 1995, and the financial
highlights presented in footnote 3 to the financial statements, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 1, 1995
15
<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
Chief Executive Officer and Director
Fortis Advisers, Inc.
President and Director
Fortis Investors, Inc.
Senior Vice President and
Director of
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
Prior to July, 1995,
Vice President and Treasurer
Jostens, Inc.
LEONARD J. SANTOW
Principal
Griggs & Santow, 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.
DEAN C. KOPPERUD
President and Director
ROBERT W. BELTZ, JR.
Vice President
JAMES S. BYRD
Vice President
CHARLES J. DUDLEY
Vice President
THOMAS D. GUALDONI
Vice President
MAROUN M. HAYEK
Vice President
HOWARD G. HUDSON
Vice President
ROBERT C. LINDBERG
Vice President
LARRY A. MEDIN
Vice President
KEVIN J. MICHELS
Vice President
JON H. NICHOLSON
Vice President
JOHN W. NORTON
Vice President
FRED OBSER
Vice President
DENNIS M. OTT
Vice President
DAVID A. PETERSON
Vice President
NICHOLAS L. M. DE PEYSTER
Vice President
STEPHEN M. POLING
Vice President
STEPHEN M. RICKERT
Vice President
RICHARD P. ROCHE
Vice President
ANTHONY J. ROTONDI
Vice President
KEITH R. THOMSON
Vice President
CHRISTOPHER J. WOODS
Vice President
GARY N. YALEN
Vice President
MICHAEL J. RADMER
Secretary
TAMARA L. FAGELY
Treasurer
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 P.L.L.P.
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.
16
<PAGE>
FORTIS FINANCIAL GROUP
Fortis Financial Group (FFG) is a premier provider of insurance and
investment portfolios whose fund manager, Fortis Advisers, Inc., has
established a nationwide reputation for money management. Through Fortis
Investors, Inc., FFG offers mutual funds, annuities and variable universal
life insurance. Traditional life insurance products are issued and
underwritten by Time Insurance Company and Fortis Benefits Insurance Company.
FFG is part of Fortis, Inc., a financial services company which owns or
manages approximately $10 billion in assets. Fortis, Inc., is an affiliate of
Fortis, a worldwide, diversified financial services group jointly owned by
Fortis AMEV of the Netherlands and Fortis AG of Belgium with worldwide assets
in excess of $125 billion.
Like the Fortis name, which comes from the Latin for STEADFAST, our focus
is on the long term in all we do: the relationships we build, the performance
we seek, the service we provide and the products we offer.
FORTIS-Registered Trademark- BULK RATE
FORTIS FINANCIAL GROUP US POSTAGE
P.O. BOX 64284 PAID
ST. PAUL, MN 55164 PERMIT NO. 3794
MINNEAPOLIS, MN
SPECIAL PORTFOLIOS
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