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SPECIAL
PORTFOLIOS, INC.
Semi-Annual Report
April 30, 1995
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SPECIAL PORTFOLIOS, INC. SEMI-ANNUAL REPORT
CONTENTS
LETTER TO SHAREHOLDERS 2
SCHEDULES OF INVESTMENTS
CASH PORTFOLIO 5
STOCK PORTFOLIO 7
STATEMENTS OF ASSETS AND LIABILITIES 10
STATEMENTS OF OPERATIONS 11
STATEMENTS OF CHANGES IN NET ASSETS
CASH PORTFOLIO 12
STOCK PORTFOLIO 13
NOTES TO FINANCIAL STATEMENTS 14
BOARD OF DIRECTORS AND OFFICERS 17
- - 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
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.
HOW TO USE THIS REPORT
For a quick overview of the portfolios' 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 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 sector. 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.
HIGHLIGHTS
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 1995
<TABLE>
<CAPTION>
STANDARD &
CASH STOCK POOR'S 500
PORTFOLIO PORTFOLIO STOCK INDEX
---------- ---------- ------------
<S> <C> <C> <C>
NET ASSET VALUE PER SHARE:
Beginning of period.................... $ 9.46 $ 33.94 472.35
End of period.......................... $ 9.51 $ 34.44 514.71
Total Return*.......................... 3.44% 2.06% 10.50%
DISTRIBUTIONS PER SHARE:
From net investment income............. $ .27 -- --
From net realized gains................ -- $ .186 --
* These are the fund's total returns during the period, including reinvestment of
all dividend and capital gains distributions.
</TABLE>
1
<PAGE>
SPECIAL PORTFOLIOS, INC.
DEAR SHAREHOLDER:
We're pleased to present the Special Portfolios semi-annual report for the
period ended April 30, 1995.
ECONOMIC REVIEW AND INVESTMENT STRATEGIES
The rise of the U.S. equity markets year-to-date has been surprising for its
strength, yet not entirely unexpected. The reasons for continued vigor in the
equity markets are quiet inflation, a more relaxed posture by the Federal
Reserve and declining interest rates.
The economic slowdown in the United States is well underway, and is likely to
last a few more quarters. This is in contrast to the economy's strength in 1994,
which was due to two unsustainable forces: excessive consumer credit growth and
business investory buildup. Neither of these factors is likely to resume soon.
In fact, slower final demand is beginning to feed back into the system,
contributing to a weaker employment picture and falling commodity prices.
Currently, the greatest risk to the U.S. equity markets is if the Fed overstays
its welcome and maintains a tight credit policy for too long. This situation
would hurt corporate profits in general, and provoke a narrowing list of
companies to sustain earnings growth during late 1995 and early 1996. However,
we do not expect this scenario to unfold. The U.S. bond market has already taken
charge by leading rates downward. Today's lower interest rates may stimulate
growth later.
SPECIAL CASH PORTFOLIO
TOP TEN HOLDINGS AS OF 4/30/95
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
<C> <S> <C>
- -------------------------------------------------------------------------------
1. U.S. Treasury Note (6.00%) 1996 5.6%
2. U.S. West Capital Funding (8.00%) 1996 4.7%
3. Xerox Credit Corp. (6.25%) 1996 4.7%
4. Federal Home Loan Bank (6.125%) 1996 4.6%
5. CIT Group Holdings, Inc. (5.65%) 1995 4.5%
6. Texaco Capital Corp. (9.00%) 1996 4.2%
7. Phillip Morris Companies, Inc. (8.875%) 1996 4.2%
8. General Electric Capital Corp. (8.00%) 1997 3.8%
9. Nordstrom Credit Corp. (8.35%) 1996 3.8%
10. Carolina Power & Light Co. (7.90%) 1996 3.8%
</TABLE>
SPECIAL CASH PORTFOLIO
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 4/30/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CASH PORTFOLIO
<S> <C>
Portfolio Composition by Industry
as of 4/30/95
Banks 3.7%
Utilities-Electric 3.8%
Retail-Miscellaneous 3.8%
Tobacco 4.2%
Captive Oil Finance 4.2%
Other Direct Federal Obligations 4.7%
Utilities-Telephone 4.8%
Cash Equivalents/Receivables 5.0%
Captive Equipment Finance 7.4%
Captive Auto Finance 9.3%
Industrial 11.2%
Finance Companies 12.1%
Consumer Finance 12.9%
U.S. Treasury Securities 12.9%
</TABLE>
2
<PAGE>
PORTFOLIO REVIEW
SPECIAL CASH
Our primary concerns in managing the Special Cash Portfolio are quality, safety
and liquidity. Our approved list of eligible investments continues to emphasize
high quality domestic issuers. With short-term rates increasing nearly one-half
of 1 percent over the past six months, our strategy of maintaining an average
maturity of between 300 and 330 days has allowed us to take advantage of higher
rates as maturities come due. We want to reassure shareholders that we have
never used, nor plan to use, derivatives in the Special Cash Portfolio.
PORTFOLIO REVIEW
SPECIAL STOCK
After lagging the overall market advance in its early stages, Special Stock
Portfolio has regained momentum recently as growth stocks have moved back into
favor with investors. Earnings of growth companies should continue to increase
strongly as cyclical earnings begin to weaken under the pressure of a slowing
economy.
Special Stock has benefited from significant holdings in technology stocks.
While subject to wide swings in shorter time periods, these stocks represent
what we believe will be a sustainable growth theme for the balance of the '90s
- -- the need for companies to improve productivity to compete globally in the
markets of the future.
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,
- --------------------
Dean C. Kopperud
President
- --------------------
Stephen M. Poling
Vice President
- ----------------
Dennis M. Ott
Vice President
May 24, 1995
SPECIAL STOCK PORTFOLIO
TOP TEN HOLDINGS AS OF 4/30/95
Stocks
Percent
of
Net
Assets
- ----------------------------------------------------------------------------
1. 3Com Corp. 4.7%
2. Oracle System Corp. 4.0%
3. Tellabs, Inc. 4.0%
4. Microsoft Corp. 3.6%
5. Informix Corp. 3.1%
6. Cisco Systems, Inc. 3.1%
7. Lone Star Steakhouse and Saloon, Inc. 2.4%
8. DSC Communications Corp. 2.3%
9. Solectron Corp. 2.1%
10. Sterling Software, Inc. 2.0%
SPECIAL STOCK PORTFOLIO
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 4/30/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STOCK PORTFOLIO
<S> <C>
Computer-Software 20.8%
Cash Equivalents/Receivables 15.9%
Telecommunications 15.6%
Other 11.3%
Retail-Miscellaneous 6.4%
Electronic-Semiconductor and Ca-
pacitor 5.4%
Electronic-Controls and Equipment 5.4%
Health Care Services 5.2%
Telephone Services 3.9%
Office Equipment and Supplies 3.8%
Restaurants and Franchising 3.7%
Finance Companies 2.6%
</TABLE>
3
<PAGE>
SPECIAL CASH PORTFOLIO
Value of $10,000 invested November 1, 1989
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PORTFOLIOValue of $10,000 invested
November 1, 1989
<S> <C> <C> <C>
Lehman Brothers
Intermediate Gov't Lehman Bros. 1-3yr Gov't
Index** Bond Index*** Cash Portfolio
11/01/89 10,000 10,000 10,000
4/30/90 10,081 10,248 10,278
4/30/91 11,458 11,480 11,268
4/30/92 12,642 12,546 12,045
4/30/93 14,156 13,559 12,799
4/30/94 14,281 13,780 13,182
4/30/95 15,180 14,564 13,895
Cash Portfolio
Average Annual Return
1 Year 5 Year Since November 1,1989@
+5.41% +6.22% +6.17%
<FN>
Annual period ended April 30
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 an average maturity of three to
four years.
*** An unmanaged index of government bonds with maturities of one to three
years.
@ Date shares first offered to the public.
</TABLE>
SPECIAL STOCK PORTFOLIO
Value of $10,000 invested January 2, 1966
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
STOCK PORTFOLIO
<S> <C> <C> <C>
Value of $10,000 invested January
2, 1966
S&P 500*** Stock Portfolio
1/2/66 10000 10000
4/30/66 10045 10450
4/30/67 10738 11959
4/30/68 11508 15126
4/30/69 12608 15813
4/30/70 10253 11758
4/30/71 13556 15533
4/30/72 14478 18644
4/30/73 14798 16887
4/30/74 12930 14687
4/30/75 13111 14797
4/30/76 15874 16777
4/30/77 16006 15671
4/30/78 16565 17781
4/30/79 18355 22672
4/30/80 20239 26914
4/30/81 26563 44851
4/30/82 24611 42705
4/30/83 36614 70856
4/30/84 37287 62266
4/30/85 43889 69160
4/30/86 59948 105438
4/30/87 75813 132559
4/30/88 70994 106207
4/30/89 87215 128437
4/30/90 96373 147535
4/30/91 113341 178842
4/30/92 129165 215717
4/30/93 141078 236767
4/30/94 148621 257282
4/30/95 174710 265477
Stock Portfolio
Average Annual Total Return
1 Year 5 Year 10 Year Since January 2, 1966@
0.0318 0.1247 0.144 0.1183
<FN>
Annual period ended April 30
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 first offered to the public.
</TABLE>
SPECIAL STOCK PORTFOLIO
PORTFOLIO CHANGES FOR THE SIX-MONTH
PERIOD ENDED 4/30/95
ADDITIONS:
ADC Telecommunications, Inc.
Cypress Semiconductor Corp.
HBO & Co.
Legent Corp.
Medaphis Corp.
Micron Technology, Inc.
Motorola, Inc.
Novell, Inc.
Oxford Health Plans, Inc.
Staples, Inc.
Tommy Hilfiger Corp.
ELIMINATIONS:
Brinker International, Inc.
Grupo Televisa, S.A. de C.V. ADR
International Game Technology
Landmark Graphics
4
<PAGE>
SPECIAL PORTFOLIOS, INC.
Cash Portfolio
Schedule of Investments
(Unaudited)
April 30, 1995
CORPORATE BONDS-INVESTMENT GRADE-77.37%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (a) Value (b)
- ---------- ----------- ----------- -----------
<C> <S> <C> <C> <C>
BANKS - 3.71%
$1,000,000 Nationsbank Corp., 5.375% Sr Note 12-1-1995....... A $1,016,120 $ 993,523
----------- -----------
CAPTIVE AUTO FINANCE - 9.25%
1,000,000 Ford Motor Credit Corp., 5.05% Medium Term Note
3-25-1996....................................... A+ 984,860 985,377
1,000,000 General Motors Acceptance Corp., 4.75% Medium Term
Note 11-15-1995................................. BBB+ 998,210 989,971
500,000 General Motors Acceptance Corp., 6.90% Medium Term
Note 5-8-1995................................... BBB+ 517,865 500,080
----------- -----------
2,500,935 2,475,428
----------- -----------
CAPTIVE EQUIPMENT FINANCE - 7.43%
1,000,000 AT&&T Capital Corp., 5.125% Medium Term Note
2-21-1997....................................... A 947,470 970,779
1,000,000 General Electric Capital Corp., 8.00% Medium Term
Note 2-1-1997................................... AAA 1,003,640 1,019,010
----------- -----------
1,951,110 1,989,789
----------- -----------
CAPTIVE OIL FINANCE - 4.24%
1,100,000 Texaco Capital Corp., 9.00% Note 11-15-1996....... A+ 1,139,952 1,134,120
----------- -----------
CONSUMER FINANCE - 12.91%
1,200,000 CIT Group Holdings, Inc., 5.65% Note 11-15-1995... A+ 1,226,880 1,194,755
750,000 Commercial Credit Co., 6.375% Note 1-1-1996....... A+ 776,678 749,057
500,000 Countrywide Funding Corp., 6.92% Note 6-1-1995.... A- 521,715 500,225
1,000,000 Household Finance Co., 7.80% Sr Note 11-1-1996.... A 1,001,620 1,011,916
----------- -----------
3,526,893 3,455,953
----------- -----------
FINANCE COMPANIES - 12.13%
1,000,000 New York Life Funding, Inc., 9.25% Guaranteed Note
5-15-1995....................................... AAA 1,086,780 1,000,882
1,000,000 Shearson Lehman Holdings, Inc., 4.86% Medium Term
Note 5-30-1995.................................. A 1,000,000 998,403
1,250,000 Xerox Credit Corp., 6.25% Note 1-15-1996.......... A 1,255,675 1,246,880
----------- -----------
3,342,455 3,246,165
----------- -----------
INDUSTRIAL - 11.16%
1,000,000 Coca Cola Enterprises, Inc., 8.35% Note
6-20-1995....................................... AA- 1,070,980 1,002,546
1,000,000 ITT Corp., 5.25% Medium Term Note 2-15-1996....... A+ 1,002,500 987,686
1,000,000 John Deere Capital Corp., 5.24% Medium Term Note
8-24-1995....................................... A- 1,013,270 996,843
----------- -----------
3,086,750 2,987,075
----------- -----------
RETAIL-MISCELLANEOUS - 3.81%
1,000,000 Nordstrom Credit Corp., 8.35% Medium Term Note
8-15-1996....................................... A+ 1,028,300 1,018,489
----------- -----------
TOBACCO - 4.20%
1,100,000 Phillip Morris Companies, Inc., 8.875% Medium Term
Note 7-1-1996................................... A 1,132,758 1,123,133
----------- -----------
UTILITIES-ELECTRIC - 3.79%
1,000,000 Carolina Power & Light Co., 7.90% Medium Term Note
12-27-1996...................................... A2* 1,000,537 1,015,119
----------- -----------
UTILITIES-TELEPHONE - 4.74%
1,250,000 U.S. West Capital Funding, Inc., 8.00% Deb
10-15-1996...................................... A+ 1,259,400 1,268,900
----------- -----------
TOTAL CORPORATE BONDS - INVESTMENT GRADE.......... 20,985,210 20,707,694
----------- -----------
</TABLE>
* Moody's Rating
5
<PAGE>
SPECIAL PORTFOLIOS, INC.
Cash Portfolio
Schedule of Investments (continued)
(Unaudited)
April 30, 1995
U.S. GOVERNMENT SECURITIES-17.59%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (a) Value (b)
- ---------- ----------- -----------
<C> <S> <C> <C>
OTHER DIRECT FEDERAL OBLIGATIONS - 4.65%
FEDERAL HOME LOAN BANK:
$1,250,000 Federal Home Loan Bank, 6.125% Global Registered
Note 8-5-1996................................... $1,247,324 $1,243,512
----------- -----------
U.S. TREASURY SECURITIES - 12.94%
NOTES:
1,000,000 3.875% 1995....................................... 993,594 988,436
1,000,000 4.00% 1996........................................ 992,500 983,125
1,500,000 6.00% 1996........................................ 1,494,609 1,492,967
----------- -----------
3,480,703 3,464,528
----------- -----------
TOTAL U.S. GOVERNMENT SECURITIES.................. 4,728,027 4,708,040
----------- -----------
TOTAL DEBT SECURITIES............................. $25,713,237 $25,415,734
----------- -----------
</TABLE>
SHORT-TERM INVESTMENTS-3.19%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (b)
- -------- -----------
<C> <S> <C>
BANKS - 3.19%
$854,000 First Trust Money Market Variable Rate Time
Deposit Account, Current rate -- 5.95%.......... $ 854,000
-----------
TOTAL INVESTMENTS IN SECURITIES (COST:
$26,567,237) (a)................................ $26,269,734
-----------
-----------
<FN>
(a) At April 30, 1995, the cost of securities for federal
income tax purposes was $26,567,237 and the aggregate gross
unrealized appreciation and depreciation based on that cost
was:
Unrealized appreciation......................... $ 73,574
Unrealized depreciation......................... (371,077)
-----------
Net unrealized depreciation..................... $ (297,503)
-----------
(b) See Note A 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>
6
<PAGE>
SPECIAL PORTFOLIOS, INC.
Stock Portfolio
Schedule of Investments
(Unaudited)
April 30, 1995
COMMON STOCKS-84.14%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
- -------- ----------- -----------
<C> <S> <C> <C>
APPAREL-0.17%
6,000 Tommy Hilfiger Corp.(a)...................... $ 121,500 $ 138,000
----------- -----------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-1.35%
16,500 Biogen, Inc. (a)............................. 878,609 647,625
32,000 Centocor, Inc. (a)........................... 571,229 452,000
----------- -----------
1,449,838 1,099,625
----------- -----------
BUSINESS SERVICES AND SUPPLIES-1.63%
4,019 First Financial Management Corp.............. 212,043 293,889
34,600 Sensormatic Electronics Corp................. 1,123,743 1,029,350
----------- -----------
1,335,786 1,323,239
----------- -----------
COMPUTER-SOFTWARE-20.84%
22,600 BMC Software, Inc. (a)....................... 829,327 1,406,850
44,700 Compuware Corp. (a).......................... 1,100,125 1,173,375
55,000 EMC Corp. (a)................................ 1,135,248 1,086,250
10,000 HBO & Co..................................... 368,412 457,500
65,000 Informix Corp. (a)........................... 1,374,610 2,559,375
21,000 Legent Corp. (a)............................. 760,955 572,250
15,000 Medaphis Corp. (a)........................... 833,109 855,000
36,050 Microsoft Corp. (a).......................... 1,040,321 2,947,087
20,000 Novell, Inc. (a)............................. 435,540 435,000
107,100 Oracle Systems Corp. (a)..................... 566,678 3,266,550
30,000 Parametric Technology Corp. (a).............. 870,340 1,425,000
31,700 Sybase, Inc. (a)............................. 423,370 768,725
----------- -----------
9,738,035 16,952,962
----------- -----------
DRUGS-1.05%
19,000 Forest Laboratories, Inc. (a)................ 350,742 855,000
----------- -----------
ELECTRONIC-COMMUNICATION SECURITY-1.01%
25,000 ADC Telecommunications, Inc. (a)............. 823,937 825,000
----------- -----------
ELECTRONIC-CONTROLS AND EQUIPMENT-5.35%
62,600 American Power Conversion Corp. (a).......... 879,935 1,064,200
31,500 Lam Research Corp. (a)....................... 1,057,222 1,590,750
57,800 Solectron Corp. (a).......................... 1,600,666 1,697,875
----------- -----------
3,537,823 4,352,825
----------- -----------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-5.36%
27,000 Cypress Semiconductor Corp. (a).............. 791,318 816,750
12,000 Intel Corp................................... 434,316 1,228,500
15,000 Micron Technology, Inc....................... 830,841 1,233,750
19,000 Motorola, Inc................................ 1,038,710 1,080,625
----------- -----------
3,095,185 4,359,625
----------- -----------
FINANCE COMPANIES-2.61%
25,000 Franklin Resources, Inc...................... 780,125 1,006,250
74,000 Mercury Finance Co........................... 1,213,738 1,119,250
----------- -----------
1,993,863 2,125,500
----------- -----------
HEALTH CARE SERVICES-5.16%
19,000 Oxford Health Plans, Inc. (a)................ 839,345 790,875
14,100 PacifiCare Health Systems, Inc., Class B
(a)........................................ 644,201 874,200
16,000 Quantum Health Resources, Inc. (a)........... 410,611 260,000
17,825 U.S. HealthCare, Inc......................... 652,969 476,819
20,500 United Healthcare Corp....................... 797,731 743,125
30,570 Value Health, Inc. (a)....................... 1,110,972 1,054,665
----------- -----------
4,455,829 4,199,684
----------- -----------
HOTEL AND MOTEL-0.99%
20,800 Promus Companies, Inc. (a)................... 645,725 800,800
----------- -----------
</TABLE>
7
<PAGE>
SPECIAL PORTFOLIOS, INC.
Stock Portfolio
Schedule of Investments (continued)
(Unaudited)
April 30, 1995
COMMON STOCKS-84.14%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
- -------- ----------- -----------
<C> <S> <C> <C>
MISCELLANEOUS-1.95%
38,900 CUC International, Inc. (a).................. $1,012,449 $1,585,175
----------- -----------
OFFICE EQUIPMENT AND SUPPLIES-3.78%
20,000 Compaq Computer Corp. (a).................... 739,880 760,000
28,500 Staples, Inc. (a)............................ 808,062 687,562
47,900 Sterling Software, Inc. (a).................. 875,723 1,628,600
----------- -----------
2,423,665 3,076,162
----------- -----------
PUBLISHING-1.01%
14,600 Scholastic Corp. (a)......................... 743,382 817,600
----------- -----------
RECREATION EQUIPMENT-0.67%
36,500 Acclaim Entertainment, Inc. (a).............. 425,639 547,500
----------- -----------
RESTAURANTS AND FRANCHISING-3.70%
10,700 Buffets, Inc. (a)............................ 62,283 108,337
64,300 Lone Star Steakhouse & Saloon, Inc. (a)...... 1,085,535 1,969,188
36,900 Outback Steakhouse, Inc. (a)................. 590,369 931,725
----------- -----------
1,738,187 3,009,250
----------- -----------
RETAIL-DEPARTMENT STORES-1.66%
14,700 Kohl's Corp. (a)............................. 472,458 657,825
29,000 Wal-Mart Stores, Inc......................... 283,669 688,750
----------- -----------
756,127 1,346,575
----------- -----------
RETAIL-MISCELLANEOUS-6.41%
26,200 Barnes & Noble, Inc. (a)..................... 658,732 749,975
34,966 Home Depot, Inc.............................. 340,449 1,459,831
27,000 Lowe's Companies, Inc........................ 1,010,234 779,625
69,525 Office Depot, Inc. (a)....................... 586,500 1,581,694
44,100 Price/Costco, Inc. (a)....................... 458,185 644,963
----------- -----------
3,054,100 5,216,088
----------- -----------
TELECOMMUNICATIONS-15.58%
63,800 Cisco Systems, Inc. (a)...................... 225,216 2,544,025
50,400 DSC Communications Corp. (a)................. 1,582,612 1,864,800
14,500 MFS Communications Co. (a)................... 609,687 518,375
23,000 Newbridge Networks Corp. (a)................. 370,965 713,000
47,000 Tellabs, Inc.(a)............................. 1,073,247 3,243,000
67,600 3Com Corp. (a)............................... 538,095 3,785,600
----------- -----------
4,399,822 12,668,800
----------- -----------
TELEPHONE SERVICES-3.86%
50,000 LDDS Communications, Inc. (a)................ 1,122,113 1,200,000
53,000 Mobile Telecommunications Technologies Corp.
(a)........................................ 1,152,141 1,252,125
25,000 Paging Network, Inc. (a)..................... 756,250 687,500
----------- -----------
3,030,504 3,139,625
----------- -----------
TOTAL COMMON STOCKS.......................... $45,132,138 $68,439,035
----------- -----------
</TABLE>
8
<PAGE>
SHORT-TERM INVESTMENTS-17.05%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
- ----------- ------------
<C> <S> <C>
BANKS-4.40%
$3,578,000 First Trust Money Market Variable Rate Time Deposit
Account, Current rate - 5.95%........................ $ 3,578,000
------------
BROKERAGE AND INVESTMENT-1.85%
1,507,000 Goldman Sachs Master Variable Rate Note, Current rate -
6.13%................................................ 1,507,000
------------
CAPTIVE AUTO FINANCE-8.71%
3,400,000 Ford Motor Credit Co., 6.04% 5-8-1995.................. 3,395,512
3,700,000 General Motors Acceptance Corp., 6.18% 5-15-1995....... 3,690,657
------------
7,086,169
------------
DIVERSIFIED FINANCE-2.09%
1,699,000 Associates Corp. Master Variable Rate Note, Current
rate - 6.00%......................................... 1,699,000
------------
TOTAL SHORT-TERM INVESTMENTS........................... 13,870,169
------------
TOTAL INVESTMENTS IN SECURITIES (COST: $59,002,307)
(B).................................................. $82,309,204
------------
------------
<FN>
(a) Presently not paying dividend income.
(b) At April 30, 1995, the cost of securities for federal income tax purposes was
$59,002,307 and the aggregate gross unrealized appreciation and depreciation based on
that cost was:
Unrealized appreciation........................................ $25,327,767
Unrealized depreciation........................................ (2,020,870)
-----------
Net unrealized appreciation.................................... $23,306,897
-----------
(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 investments in foreign securities represents 0.88%
of net assets as of April 30, 1995.
</TABLE>
9
<PAGE>
Special Portfolios, Inc.
Statements of Assets and Liabilities
(Unaudited)
April 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CASH STOCK
PORTFOLIO PORTFOLIO
------------ ------------
<S> <C> <C>
ASSETS:
Investments in securities, as detailed in the
accompanying schedules, at market (cost
$26,567,237; and $59,002,307; respectively)
(Note A)....................................... $26,269,734 $82,309,204
Cash on deposit with custodian................... 20,301 2,265
Receivables:
Investment securities sold..................... -- 143,791
Interest and dividends......................... 476,749 32,424
Deferred registration costs (Note A)........... 7,240 3,047
Prepaid expenses............................... 8,370 9,721
------------ ------------
TOTAL ASSETS....................................... 26,782,394 82,500,452
------------ ------------
LIABILITIES:
Payable for investment securities purchased.... -- 1,079,052
Payable for investment advisory and management
fees (Note B)................................. 6,642 66,178
Accounts payable and accrued expenses.......... 10,304 18,865
------------ ------------
TOTAL LIABILITIES.................................. 16,946 1,164,095
------------ ------------
NET ASSETS:
Net proceeds of capital stock, par value $.01
per share - authorized 15,000,000,000 shares;
outstanding 2,814,395; 2,361,659 shares,
respectively.................................. 28,146,205 54,718,601
Unrealized appreciation (depreciation) of
investments................................... (297,503) 23,306,897
Undistributed net investment income............ 150,784 11,958
Accumulated net realized gain (loss) from sale
of investments................................ (1,234,038) 3,298,901
------------ ------------
TOTAL NET ASSETS................................... $26,765,448 $81,336,357
------------ ------------
NET ASSET VALUE PER SHARE.......................... $ 9.51 $ 34.44
------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
SPECIAL PORTFOLIOS, INC.
Statements of Operations
(Unaudited)
For the Six-Month Period Ended April 30, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
CASH STOCK
PORTFOLIO PORTFOLIO
--------- ------------
<S> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest income................................... $888,509 $ 403,082
Dividend income................................... -- 46,430
--------- ------------
Total Income........................................ 888,509 449,512
--------- ------------
Expenses:
Investment advisory and management fees (Note
B)............................................... 42,207 383,880
Registration fees................................. 9,223 12,634
Custodian fees.................................... 4,386 10,896
Directors' fees and expenses...................... 1,998 5,552
Legal and auditing fees (Note B).................. 7,541 11,902
Shareholders' notices and reports................. 553 8,707
Other............................................. 6,558 3,983
--------- ------------
Total expenses...................................... 72,466 437,554
Less fees waived by the advisor (Note B)............ (13,191) --
--------- ------------
Net Expenses........................................ 59,275 437,554
--------- ------------
NET INVESTMENT INCOME................................. 829,234 11,958
--------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
(NOTE A):
Net realized gain (loss) from security
transactions...................................... (171,336) 3,302,667
Net change in unrealized appreciation (depreciation)
of investments.................................... 302,289 (1,637,356)
--------- ------------
NET GAIN ON INVESTMENTS............................... 130,953 1,665,311
--------- ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS............................................ $960,187 $ 1,677,269
--------- ------------
</TABLE>
11
<PAGE>
SPECIAL PORTFOLIOS, INC.
Statements of Changes in Net Assets
CASH PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED
APRIL 30, FOR THE
1995 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1994
------------- -----------------
<S> <C> <C>
OPERATIONS:
Net investment income...................... $ 829,234 $ 1,584,251
Net realized loss from security
transactions............................. (171,336) (729,995)
Net change in unrealized appreciation
(depreciation) of investments in
securities............................... 302,289 (84,737)
------------- -----------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS................................... 960,187 769,519
------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income................. (803,147) (1,673,229)
------------- -----------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sales of 558,656 and 816,726
shares, respectively..................... 5,266,809 7,847,847
Proceeds from 84,789 and 175,284 shares,
issued as a result of reinvested
dividends................................ 802,438 1,671,529
Less cost of repurchase of 742,313 and
694,362 shares, respectively............. (7,031,357) (6,648,707)
------------- -----------------
NET INCREASE (DECREASE) OF (98,868) AND
297,648 SHARES, RESPECTIVELY................. (962,110) 2,870,669
------------- -----------------
TOTAL INCREASE (DECREASE) IN NET ASSETS...... (805,070) 1,966,959
NET ASSETS:
Beginning of period........................ 27,570,518 25,603,559
------------- -----------------
End of period (includes undistributed net
investment income of $150,784 and
$124,697, respectively).................. $ 26,765,448 $ 27,570,518
------------- -----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
SPECIAL PORTFOLIOS, INC.
Statements of Changes in Net Assets
STOCK PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED FOR THE
APRIL 30, YEAR ENDED
1995 OCTOBER 31,
(UNAUDITED) 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income (loss)............... $ 11,958 $ (267,886)
Net realized gain from security
transactions............................. 3,302,667 418,002
Net change in unrealized depreciation of
investments in securities................ (1,637,356) (5,570,821)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS.................... 1,677,269 (5,420,705)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net realized gains on investments..... (420,000) (4,190,750)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sales of 235,090 and 322,972
shares, respectively..................... 7,927,373 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 109,902 and
197,871 shares, respectively............. (3,728,594) (6,892,184)
------------- -------------
NET INCREASE OF 138,104 AND 241,362 SHARES,
RESPECTIVELY................................. 4,614,016 8,585,025
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS...... 5,871,285 (1,026,430)
NET ASSETS:
Beginning of period........................ 75,465,072 76,491,502
End of period (includes undistributed net
investment income of $11,958 and $0,
respectively)............................ $ 81,336,357 $ 75,465,072
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
SPECIAL PORTFOLIOS, INC.
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
A. 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 six-month period ended April 30, 1995, the cost of purchases and
proceeds from sales of securities (other than short-term securities)
aggregated $5,212,667 and $5,349,381 for Cash Portfolio, and $10,885,620 and
$6,913,707 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 $1,062,702 at October 31, 1994,
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
</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.
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.
B. 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 $1,739 and $3,422 for Cash Portfolio and
Stock Portfolio, respectively, for the six-month period ended April 30, 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.
14
<PAGE>
SPECIAL PORTFOLIOS, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
C. FINANCIAL HIGHLIGHTS: Selected per share and other historical data was as
follows:
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------
CASH PORTFOLIO 1995** 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.............. $ 9.46 $ 9.79 $ 10.03 $ 10.20 $ 10.09 $ 10.00
---------- --------- --------- --------- --------- ---------
Operations:
Investment income-net........................... .28 .56 .70 .81 .72 .77
Net realized and unrealized gain (loss) on
investments................................... .04 (.29) (.24) (.15) .09 --
---------- --------- --------- --------- --------- ---------
Total from operations............................. .32 .27 .46 .66 .81 .77
---------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income-net...................... (.27) (.60) (.70) (.83) (.70) (.68)
---------- --------- --------- --------- --------- ---------
Net asset value, end of period.................... $ 9.51 $ 9.46 $ 9.79 $ 10.03 $ 10.20 $ 10.09
---------- --------- --------- --------- --------- ---------
Total return@..................................... 3.44% 2.85% 4.74% 6.73% 8.28% 7.91%
Net assets at end of period (000's omitted)....... $ 26,765 $ 27,571 $ 25,604 $ 21,901 $ 20,326 $ 18,739
Ratio of expenses to average daily net assets..... .42%*+ .42%* .39%* .40%* .52% .52%
Ratio of net investment income to average daily
net assets....................................... 5.85%*+ 5.90%* 7.04%* 7.55%* 7.36% 8.03%
Portfolio turnover rate........................... %20 58% 29% 69% 66% 34%
<FN>
*For the six-month period ended April 30, 1995 and the years ended October 31, 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 .51% and 5.94%; .52% and 5.80%; .49%
and 6.94%; .50% and 7.45% for 1995 (annualized), 1994, 1993 and 1992.
**For the six-month period ended April 30, 1995.
+Annualized.
@These are the Fund's total returns during the periods, including reinvestment of all dividend and capital gains
distributions.
</TABLE>
<TABLE>
<CAPTION>
Year Ended October 31,
---------------------------------------------------------
STOCK PORTFOLIO 1995** 1994 1993 1992 1991 1990
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $ 33.94 $ 38.59 $ 33.22 $ 31.51 $ 20.65 $ 25.89
--------- --------- --------- --------- --------- ---------
Operations:
Investment income (loss)-net.................... .01 (.12) (.15) .04 .06 .33
Net realized and unrealized gains (losses) on
investments................................... .68 (2.44) 6.97 2.48 12.75 (3.83)
--------- --------- --------- --------- --------- ---------
Total from operations............................. .69 (2.56) 6.82 2.52 12.81 (3.50)
--------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income-net...................... -- -- (.03) (.03) (.34) (.04)
From net realized gains......................... (.19) (2.09) (1.42) (.78) (1.61) (1.70)
--------- --------- --------- --------- --------- ---------
Total distributions to shareholders............... (.19) (2.09) (1.45) (.81) (1.95) (1.74)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.................... $ 34.44 $ 33.94 $ 38.59 $ 33.22 $ 31.51 $ 20.65
--------- --------- --------- --------- --------- ---------
Total return@..................................... 2.06% (6.88%) 21.15% 8.05% 66.55% (14.31%)
Net assets at end of period (000's omitted)....... $ 81,336 $ 75,465 $ 76,492 $ 61,586 $ 53,201 $ 29,862
Ratio of expenses to average daily net assets..... 1.13%* 1.15% 1.13% 1.13% 1.21% 1.25%
Ratio of net investment income (loss) to average
daily net assets................................. .03%* (.36%) (.41%) .13% .19% 1.34%
Portfolio turnover rate........................... 11% 26% 37% 38% 45% 63%
<FN>
*Annualized.
**For the six-month period ended April 30, 1995.
@These are the Fund's total returns during the periods, including reinvestment of all dividend and capital gains
distributions.
</TABLE>
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
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
Investment Consultant and Private Investor
Prior to January, 1994, Director of Research, Chief Investment Officer,
Principal, and Director
The Rothschild Co.
OFFICERS
DEAN C. KOPPERUD
President and Director
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 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.
17
<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. Life
and disability products are issued and underwritten by Time Insurance Company
and Fortis Benefits Insurance Company.
With more than $5 billion in assets under management, FFG is part of
Fortis, a $100 billion worldwide financial services and insurance organization
represented in 11 countries.
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.
[LOGO]
----------------
Bulk Rate
FORTIS FINANCIAL GROUP
US Postage
P.O. Box 64284
PAID
St. Paul, MN 55164
Permit No. 3794
Minneapolis, MN
------------------
SPECIAL PORTFOLIOS, INC.
[LOGO]
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95377 (Ed. 6/95)
