<PAGE>
FORTIS TAX-FREE PORTFOLIOS, INC.
Semi-Annual Report
March 31, 1995
CONTENTS
LETTER TO SHAREHOLDERS 1
SCHEDULE OF INVESTMENTS
NATIONAL PORTFOLIO 4
MINNESOTA PORTFOLIO 7
NEW YORK PORTFOLIO 10
STATEMENTS OF ASSETS AND LIABILITIES 12
STATEMENTS OF OPERATIONS 13
STATEMENTS OF CHANGES IN NET ASSETS 14
NOTES TO FINANCIAL STATEMENTS 17
BOARD OF DIRECTORS AND OFFICERS 21
HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1995:
CLASS A* CLASS B* CLASS C* CLASS E CLASS H*
NATIONAL PORTFOLIO
<S> <C> <C> <C> <C> <C>
Net Asset Value per share:
Beginning of period $ 9.79 $ 9.79 $ 9.79 $10.38 $ 9.79
End of period $10.59 $10.58 $10.58 $10.59 $10.58
Distributions per share:
From net investment income $ 0.22 $ 0.19 $ 0.19 $ 0.29 $ 0.19
From net realized gains on investments $ 0.01 $ 0.01 $ 0.01 $ 0.01 $ 0.01
MINNESOTA PORTFOLIO
Net Asset Value per share:
Beginning of period $ 9.56 $ 9.56 $ 9.56 $10.08 $ 9.56
End of period $10.19 $10.17 $10.19 $10.21 $10.19
Distributions per share:
From net investment income $ 0.21 $ 0.19 $ 0.19 $ 0.29 $ 0.19
NEW YORK PORTFOLIO**
Net Asset Value per share:
Beginning of period $10.35 $10.35 -- $10.74 --
End of period $10.79 $10.77 -- $10.79 --
Distributions per share:
From net investment income $ 0.23 $ 0.19 -- $ 0.31 --
From net realized gains on investments $ 0.02 $ 0.02 -- $ 0.02 --
<FN>
**Period from November 14, 1994 (commencement of operations) to March 31, 1995.
**Class C and H have no activity as of March 31, 1995.
</TABLE>
HOW TO USE THIS REPORT
For a quick overview of the fund's performance during the past six months, refer
to the Highlights box below. The letter from the portfolio manager and president
provides a more detailed analysis of the fund and financial markets.
The charts alongside the letter are useful because they provide more information
about your investments. The top holdings chart shows the type of securities in
which the fund invests, and the pie chart shows a breakdown of the fund's assets
by sector.
<PAGE>
The performance chart graphically compares the fund's total return performance
with a selected investment index. Remember, however, that an index may reflect
the performance of securities the fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your fund does. Individuals cannot buy an unmanaged index fund without incurring
some charges and expenses. Sales charges pay for your investment
representative's advice.
This report is just one of several tools you can use to learn more about your
investment in the Fortis Family of Mutual Funds. Your investment representative,
who understands your personal financial situation, can best explain the features
of your investment and how it's designed to help you meet your financial goals.
TOLL-FREE PERSONAL ASSISTANCE
Shareholder Services
(800) 800-2638, Ext. 3012 or 3014
7:30 a.m. to 5:30 p.m. CST, M-Th
7:30 a.m. to 5:00 p.m. CST, F
TOLL-FREE INFORMATION LINE
For daily account balances, transaction activity or net asset value information
(800) 800-2638, Ext. 4344 24 hours a day
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>
[PHOTO]
"Not only does the Fortis Tax-Free National Portfolio help me reduce my tax
bill now, it lets me help revitalize our country by investing in America."
DEAR SHAREHOLDER:
We're pleased to present the Fortis Tax-Free Portfolios semi-annual report for
the period ended March 31, 1995.
ECONOMIC REVIEW AND INVESTMENT STRATEGIES
Since our last shareholder letter, short-term interest rates have risen about 1
percent, while longer term rates are down nearly 1/2 percent. In fact, domestic
economic growth seems to have slowed to a pace where many financial analysts
believe there is little need for further federal reserve tightening.
However, we have several concerns that give us reason to believe the fed may
have to tighten rates yet again in the months ahead. Specifically, we're
concerned by price increases in raw commodities (e.g. metals, grains, food
products) and intermediate goods (e.g. steel, fabric, plastic). We're also
concerned by the fact that any additional economic expansion could lead to
more production bottlenecks, thereby creating higher consumer prices. Finally,
we feel the slowdown may be short-lived because the current lower interest rates
could cause some acceleration in economic growth.
NATIONAL PORTFOLIO COMPOSITION BY INDUSTRY AS OF 3/31/95
Housing 2.5%
Cash Equivalents/Receivables 2.2%
Health Care/Services 14.4%
Utilities - Electric 19.1%
General Obligation 25.0%
Other 8.8%
Utilities - Water and Sewer 11.7%
Higher Education 5.5%
Miscellaneous 5.4%
Refunded with U.S. Gov't 5.4%
NATIONAL PORTFOLIO CLASS E SHARES
Value of $10,000 invested June 2, 1986
NATIONAL PORTFOLIO CLASS E AVERAGE ANNUAL TOTAL RETURN
SINCE
1 YEAR 5 YEAR JUNE 2, 1986@
Class E* +1.61% +6.96% +6.92%
Class E** +6.40% +7.95% +7.48%
Lehman Bros. Municipal Bond Index***
National Portfolio Class E
6/2/86
87
88
89
90
91
92
93
94
95 $20,357 $18,057
Annual period ended March 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.
@Date shares were first offered to the public.
*SEC defined total returns, including reinvestment of all dividend and capital
gains distributions and the reduction due to the maximum sales charge of
4.50%.
**These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
***An unmanaged index of municipal bonds with maturities greater than two years.
<PAGE>
[PHOTO]
"The Fortis Tax-Free Minnesota Portfolio provides tax-free income exempt from
both state and federal taxes. We feel good knowing our investments ultimately
support the schools, hospitals and roads in our state."
PORTFOLIO REVIEW
The municipal market has performed better than most other fixed income markets
over the past six months. Perhaps, the reason for better than average
performance is the fact that new issuance is down more than 40 percent from
prior periods. We expect this strong trend of lower new supply to continue into
the future. Our recent strategy has involved increasing the average coupon rate
slightly. Our portfolio remains of high quality, and we do not expect to deviate
from that strategy.
IN CLOSING
We're pleased to announce the addition of class share pricing, which offers
investors a choice of purchas ing plans. Each class of shares represents the
same investment portfolio, the same fund philosophy and the same professional
money management you've come to associate with Fortis Financial Group.
As you invest, consider the amount of your investment, the length of time you
plan to hold it, your current financial needs and the expenses of each class of
shares. Then talk with your financial advisor to determine the class of shares
that best meets your financial needs and goals.
MINNESOTA PORTFOLIO COMPOSITION BY INDUSTRY AS OF 3/31/95
Health Care/Services 21.5%
Housing 19.4%
General Obligation 13.3%
Utilities - Electric 14.8%
Miscellaneous 4.6%
Pollution Control 5.0%
Refunded with U.S. Gov't 5.5%
Higher Education 8.3%
Public Facilities 4.0%
Cash Equivalents/Receivables 2.6%
Utility - Water & Sewer 1.0%
MINNESOTA PORTFOLIO CLASS E SHARES
Value of $10,000 invested June 2, 1986
MINNESOTA PORTFOLIO CLASS E
AVERAGE ANNUAL TOTAL RETURN
Since
1 Year 5 Year June 2, 1986@
Class E* +1.71% +6.56% +6.37%
Class E** +6.50% +7.54% +6.92%
Lehman Brothers
Municipal Bond Index***
Minnesota Portfolio
Class E
6/2/86
87
88
89
90
91
92
93
94
95 $20,357 $17,246
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.
@Date shares were first offered to the public.
*SEC defined total returns, including reinvestment of all dividend and capital
gains distributions and the reduction due to the maximum sales charge of
4.50%.
**These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
***An unmanaged index of municipal bonds with maturities greater than two years.
<PAGE>
[PHOTO]
"Because I live in New York City, which has a very heavy tax burden, the Fortis
Tax-Free New York Portfolios' offers the triple tax-free income I need."
We appreciate your investment in the Fortis Tax-Free Portfolios. If you have any
questions, please call us or talk with your investment professional.
Sincerely,
Dean C. Kopperud, President
Dennis M. Ott, Vice President
April 26, 1995
NEW YORK PORTFOLIO COMPOSITION BY INDUSTRY AS OF 3/31/95
Health Care/Services 6.6%
Housing 21.6%
General Obligation 2.2%
Utilities - Electric 2.2%
Miscellaneous 6.2%
Pollution Control 8.3%
Refunded with U.S. Gov't 36.4%
Transportation 12.0%
Cash Equivalents/Receivables 4.5%
NEW YORK PORTFOLIO CLASS E SHARES
Value of $10,000 invested November 6, 1987
Lehman Brothers Municipal Bond Index***
New York Portfolio Class E
11/6/87
88
89
90
91
92
93
94
95
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.
@Date shares were first offered to the public.
*SEC defined total returns, including reinvestment of all dividend and capital
gains distributions and the reduction due to the maximum sales charge of
4.50%.
**These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
***An unmanaged index of municipal bonds with maturities greater than two years.
<PAGE>
NATIONAL PORTFOLIO TOP TEN HOLDINGS AS OF 3/31/95
Percent of
Bonds net assets
1. North Carolina Municipal Agency (5.75%) 2020 4.8%
2. Massachusetts Water Resources (6.25%) 2010 4.2%
3. Massachusetts (5.875%) 2010 3.9%
4. Michigan State Trunk Line (5.50%) 2021 3.6%
5. Nebraska Public Power Dist (6.125%) 2015 3.4%
6. Boston, MA (6.00%) 2014 3.4%
7. New York State Dorm Auth (7.70%) 2012 3.2%
8. Fulton County Georgia Water & Sewer (6.375%) 2014 2.6%
9. Nevada School Dist #3 Clark County (7.65%) 2010 2.3%
10. Georgetown University (8.25%) 2018 2.3%
NATIONAL PORTFOLIO CLASS A, B, C AND H TOTAL RETURNS
WITHOUT WITH
SALES CHARGE SALES CHARGE
Class A shares+ +10.54% +5.57%
WITHOUT WITH
CDSC CDSC++
Class B shares+ +10.14% +6.54%
Class C shares+ +10.14% +9.14%
Class H shares+ +10.14% +6.54%
The performance of the separate classes will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Past performance is not indicative of future performance.
Total returns include invest-ment of all dividend and capital gains
distributions.
+ Since November 14, 1994 - Date shares were first offered to the
public.
++ Assumes redemption on March 31, 1995.
MINNESOTA PORTFOLIO TOP TEN HOLDINGS AS OF 3/31/95
Percent of
Bonds net assets
1. Western MN Municipal Power Agency (7.00%) 2013 4.8%
2. Rochester, MN (6.25%) 2014 4.4%
3. Puerto Rico (5.75%) 2016 4.0%
4. Robbinsdale, MN (5.45%) 2013 3.6%
5. Minneapolis, MN (6.25%) 2012 3.6%
6. St. Cloud MN Hydro Electric (7.375%) 2018 2.9%
7. Brainerd, MN (6.65%) 2017 2.9%
8. Northfield, MN (6.40%) 2021 2.8%
9. St. Louis Park, MN (7.25%) 2015 2.6%
10. Minnesota Higher Education (6.40%) 2022 2.4%
MINNESOTA PORTFOLIO CLASS A, B, C AND H TOTAL RETURNS
WITHOUT WITH
SALES CHARGE SALES CHARGE
Class A shares+ +9.00% +4.09%
WITHOUT WITH
CDSC CDSC++
Class B shares+ +8.38% +4.78%
Class C shares+ +8.70% +7.70%
Class H shares+ +8.70% +5.10%
The performance of the separate classes will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Past performance is not indicative of future performance.
Total returns include invest-ment of all dividend and capital gains
distributions.
+ Since November 14, 1994 - Date shares were first offered to the public.
++ Assumes redemption on March 31, 1995.
NEW YORK PORTFOLIO TOP TEN HOLDINGS AS OF 3/31/95
Percent of
Bonds net assets
1. New York State Dorm Auth (7.80%) 2005 7.6%
2. New York State Dorm Auth (7.50%) 2011 7.0%
3. New York City, NY (8.25%) 2017 6.6%
4. Babylon, NY (8.50%) 2019 5.7%
5. New York State Urban Development Corp (7.375%) 2018 5.5%
<PAGE>
6. New York Local Government Assistance Corp (7.50%) 2020 5.5%
7. New York State Med Care (7.45%) 2029 5.4%
8. New York Triborough Bridge & Tunnel Auth (8.125%) 2012 4.4%
9. New York State Med Care (6.375%) 2029 4.0%
10. New York State Thruway Service Contract (6.375%) 2012 4.0%
NEW YORK PORTFOLIO CLASS A, B, C AND H TOTAL RETURNS
WITHOUT WITH
SALES CHARGE SALES CHARGE
Class A shares+ +6.79% +1.99%
WITHOUT WITH
CDSC CDSC++
Class B shares+ +6.27% +2.67%
Class C shares+ +6.27% +5.27%
Class H shares+ +6.27% +2.67%
The performance of the separate classes will vary based on the differences in
sales loads and distribution fees paid by shareholders investing in the
different classes. Past performance is not indicative of future performance.
Total returns include invest-ment of all dividend and capital gains
distributions.
+ Since November 14, 1994 - Date shares were first offered to the public.
++ Assumes redemption on March 31, 1995.
Note: The total returns for Class C and H are what it would have been if there
was share activity.
NATIONAL PORTFOLIO
Schedule of Investments (Unaudited)
March 31, 1995
MUNICIPAL OBLIGATIONS - 97.74%
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (a) Value (b)
<S> <C> <C> <C>
CALIFORNIA - 3.07%
$4,000,000 Southern California Public Power, 6.36% Zero Coupon Bond 7-1-2013 (d) AA- $ 1,275,908 $ 1,296,320
2,750,000 Sulphur Springs (City of) CA, 7.00% Zero Coupon General Obligation
Ser A MBIA Insured 9-1-2012 (d) AAA 829,661 943,085
2,105,569 2,239,405
DISTRICT OF COLUMBIA - 4.19%
1,250,000 District of Columbia, 7.50% General Obligation Ser 1990B FSA Insured
6-1-2010 (Refunded 6-1-2000 @ 102) AAA 1,235,938 1,409,375
1,500,000 Georgetown University, 8.25% District of Columbia Bond
4-1-2018 (Crossover Refunded 10-1-2001 @ 103) A+ 1,553,669 1,642,080
2,789,607 3,051,455
FLORIDA - 2.44%
500,000 Florida (State of), 7.50% Mid-Bay Bridge Auth Ser 1991A 10-1-2017
(Crossover Refunded 10-1-2001 @ 103) N/R 472,340 543,860
500,000 Leesburg (City of) FL, 7.50% Capital Improvement Hosp Rev Bond
(Leesburg Reg Med Ctr) Ser 1991A 7-1-2021 (Refunded 7-1-2002 @ 102) Baa1* 487,841 579,840
600,000 Tampa (City of) FL, 8.25% Cap Improvement Program
Rev Bond Ser A 10-1-2018 AA 598,833 657,264
1,559,014 1,780,964
GEORGIA - 4.05%
1,800,000 Fulton County Georgia Water & Sewer, 6.375%
Ref Bond FGIC Insured 1-1-2014 AAA 1,784,587 1,906,505
1,000,000 Municipal Electric Auth of Georgia, 6.50% 5th Crossover Ser
Project 1 1-1-2017 A+ 992,249 1,042,760
2,776,836 2,949,265
ILLINOIS - 5.85%
500,000 Channahon Park IL District, 7.50% General Obligation 1-1-2011 N/R 499,375 526,845
750,000 Chicago Gas Supply, 7.50% Rev for Peoples Gas Ser B 3-1-2015 AA- 760,233 808,162
1,000,000 Illinois Dev Fin Auth, 7.375% Power Co Proj Ser 1991-A 7-1-2021 BBB 992,141 1,057,230
750,000 Illinois Health Fac Auth, 8.25% Rev Ref Bond
(West Suburban Hosp Med Ctr) 8-1-2013 A* 765,723 812,978
1,000,000 Illinois Housing Dev Auth, 7.55% Multi-family Housing Ser 1990A 7-1-2014 A+ 987,575 1,056,820
4,005,047 4,262,035
INDIANA - 3.72%
1,200,000 Indiana Bond Bank, 8.50% Special Loan Program Ser B 2-1-2018 A 1,213,548 1,303,452
1,250,000 Indianapolis (City of) IN Local Public Improvement Bond Bank, 7.40%
Ser 1990A 1-1-2020 (Refunded 7-1-2000 @ 102) Aaa* 1,247,159 1,406,788
<PAGE>
2,460,707 2,710,240
KENTUCKY - 1.46%
1,000,000 Louisville & Jefferson County KY, 6.75% Metro Sewer Dist Rev Bond Ser A
AMBAC Insured 5-15-2019 AAA 996,237 1,067,200
Maine - 2.22%
1,500,000 Regional Waste Sys, Inc. of ME, 7.95% Ser A-C 7-1-2010 AA 1,513,002 1,616,940
MASSACHUSETTS - 12.30%
500,000 Boston City Hospital MA, 7.625% Rev Bond Ser A 2-15-2021
(Refunded 8-15-2000 @ 102) Aaa* 496,188 567,265
2,500,000 Boston (City of) MA G.O., 6.00% AMSAC Insured 8-1-2014 AAA 2,493,698 2,494,075
2,850,000 Massachusetts General Obligation, 5.875% Ser B FGIC Insured 8-1-2010 AAA 2,824,231 2,845,412
3,000,000 Massachusetts Water Resources, 6.25% Gen Rev
Ref Bond Ser 1992B 11-1-2010 A 2,996,687 3,062,610
8,810,804 8,969,362
MICHIGAN - 3.62%
2,850,000 Michigan State Trunk Line, 5.50% Ser A MBIA-IBC Insured 10-1-2021 AAA 2,564,588 2,640,753
MINNESOTA - 7.03%
1,140,000 Fergus Falls (City of) MN, 6.50% Health Care Facility
(Lake Regional Hospital) Ser A 9-1-2018 BBB+ 1,133,575 1,086,032
2,000,000 Minneapolis (City of) MN, 5.75% General Obligation Zero
Coupon Bond Ser 1993A 12-1-2013 (d) AAA 708,950 648,540
670,000 Minneapolis (City of) MN, 7.00% Health Care Fac Rev
(St. Olaf Residence) Ser 1993 10-1-2012 N/R 670,000 683,970
1,000,000 Rochester (City of) MN, 6.25% Health Care Fac Rev Bond Mayo
Foundation/Mayo Medical Ctr Ser 1992D 11-15-2014 AA+ 993,500 1,017,250
690,000 St. Anthony (City of) MN, 6.75% Housing Dev Rev Ref Bond 7-1-2007 AA 690,000 740,922
1,000,000 St. Paul (City of) MN, 6.625% Housing & Redev Auth Hospital
Facility (Healtheast Project) 11-1-2017 BBB- 1,022,901 947,920
5,218,926 5,124,634
MISSOURI - 1.76%
1,250,000 Missouri State Health & Educ, 7.70% Still Regional Med Ctr 2-1-2013 BBB 1,306,038 1,285,213
NEBRASKA - 3.44%
2,500,000 Nebraska Public Power District, 6.125% Power Supply Sys Rev 1-1-2015 A+ 2,458,788 2,506,050
NEVADA - 4.17%
1,500,000 Nevada School District #3 (Clark County), 7.65% General Obligation 5-1-2010
(Refunded 5-1-2000 @ 102) Aaa* 1,490,865 1,699,005
1,200,000 Washoe County Nevada Hosp, 7.60% (Washoe Med Ctr)
Rev Bond Ser 1989A 6-1-2019 A 1,171,462 1,338,828
2,662,327 3,037,833
NEW MEXICO - 2.22%
1,550,000 Albuquerque (City of) NM, 8.25% Gross Receipts Tax Airport
Rev Bond 7-1-2014 AA 1,570,059 1,615,115
NEW YORK - 8.61%
750,000 New York City, 7.50% General Obligation Group A Ser B 2-1-2009 A- 732,921 799,305
1,000,000 New York City, 8.25% General Obligation Ser B 6-1-2005 A- 988,554 1,143,820
730,000 New York State Med Care, 7.50% Mental Health Ser A 2-15-2021
(Refunded 2-15-2001 @ 102) AAA 700,995 831,528
2,080,000 New York State, 7.70% Dorm Auth Ser 1990A 5-15-2012
(Refunded 5-15-2000 @ 102) Aaa* 2,090,764 2,366,187
1,000,000 New York State, 7.75% UDC Correctional Fac Ser 1 1-1-2014
(Refunded 1-1-2000 @ 102) Aaa* 957,198 1,137,530
5,470,432 6,278,370
NORTH CAROLINA - 4.78%
3,640,000 North Carolina Municipal Power, 5.75% Ref Rev Bond MBIA
Insured 1-1-2020 AAA 3,693,885 3,482,424
NORTH DAKOTA - 2.31%
500,000 Mercer County ND, 7.70% Basin City Elec Power Ser 1984C 1-1-2019 A 500,995 522,095
1,100,000 Ward County ND, 7.50% Health Care Fac Ser 1991B 7-1-2011 A- 1,136,889 1,164,207
1,637,884 1,686,302
OHIO - 1.07%
750,000 Cleveland (City of) OH Parking Fac, 8.10% Improvement
Rev Bond 9-15-2022 N/R 761,961 777,495
PENNSYLVANIA - 2.37%
750,000 Clarion County PA Hosp Auth, 8.50% Clarion Hosp Proj
Rev Bond 7-1-2021 BBB- 732,678 788,333
890,000 Delaware County PA, 8.10% IDA Rev Res Recov Ser A LOC Security Pacific;
Proj Guar by Westinghouse 12-1-2013 A+ 935,131 939,030
1,667,809 1,727,363
PUERTO RICO - 1.89%
1,455,000 Puerto Rico, 5.75% Public Building Auth Rev Ref Bond Ser L 7-1-2016 A 1,454,369 1,379,718
SOUTH CAROLINA - 1.36%
<PAGE>
1,000,000 Charleston (City of) SC, 6.00% Water & Sewer Rev Bond 1-1-2018 AA- 968,561 993,750
UTAH - 2.23%
1,500,000 Intermountain Power Agency, 7.75% Utah Power Supply Rev
Ref Bond Ser B 7-1-2020 AA 1,536,562 1,624,140
VIRGINIA - 7.18%
1,500,000 Fairfax County VA, 6.00% Water Auth Rev 4-1-2022 AA- 1,474,414 1,474,410
1,190,000 Richmond (City of) VA, 6.25% Public Improvement 1-15-2018 AA 1,188,572 1,192,035
1,500,000 Virginia State Public School Auth, 6.20% Ser A 8-1-2014 AA 1,491,455 1,536,660
1,000,000 Virginia State Transportation Board, 6.50% Rte 28 Proj 4-1-2018 AA 990,165 1,032,980
5,144,606 5,236,085
WASHINGTON - 3.27%
1,200,000 Washington Public Power Supply Sys, 7.00% Nuclear Proj 2
Ref Rev Bond Ser 1990B 7-1-2012 AA 1,156,510 1,251,648
1,000,000 Washington Public Power Supply Sys, 7.625% Proj 2 Rev Bond Ser 1990A
7-1-2008 (Refunded 7-1-2000 @ 102) AAA 986,875 1,133,230
2,143,385 2,384,878
WISCONSIN - 1.13%
750,000 Wisconsin Health & Educ Fac Auth, 8.50% Rev Bond Ser 1990
(Franciscan Health Sys) 3-1-2020 BBB+ 750,000 825,203
TOTAL MUNICIPAL OBLIGATIONS $68,027,003 $71,252,192
<FN>
* Moody's rating
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS-0.66%
Principal Market
Amount Value (b)
Investment Company
<S> <C> <C> <C>
$480,721 Federated Tax-Free Obligation Fund, Current Rate - 4.05% $ 480,721
TOTAL INVESTMENTS IN SECURITIES (COST $68,507,724) (A) $71,732,913
(a) At March 31,1995, the cost of securities for federal income tax
purposes was $68,513,518 and the aggregate gross unrealized
appreciation and depreciation based on that cost was:
Unrealized appreciation $3,715,064
Unrealized depreciation (495,669)
Net unrealized appreciation $3,219,395
(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.
(d) The interest rate disclosed for zero coupon securities represents
the effective yield on the date of acquisition.
</TABLE>
MINNESOTA PORTFOLIO
Schedule of Investments (Unaudited)
March 31, 1995
MUNICIPAL OBLIGATIONS - 97.40%
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (a) Value (b)
GENERAL OBLIGATION - 13.30%
<S> <C> <C> <C> <C>
$ 450,000 Eagan (City of) MN, 7.25% General Obligation Water Rev Sys Bond
Ser 1990A 12-1-2008 (Crossover Refunded 12-1-1999 @ 100) A+ $ 445,500 $ 486,198
500,000 Edina (City of) MN, 7.30% General Obligation 2-1-2008
(Crossover Refunded 2-1-1998 @ 100) AA 504,197 527,815
1,900,000 Minneapolis (City of) MN, 6.25% General Obligation Sales Tax
Rev Bond Ser 1992 4-1-2012 AAA 1,921,151 1,961,959
1,000,000 New London-Spicer (City of) MN, 5.15% General Obligation
School District #345, Ref Ser A 2-1-2016 AA 985,251 915,130
2,295,000 Puerto Rico, 5.75% Public Building Auth Rev Ref Bond Ser L 7-1-2016 A 2,286,035 2,176,257
1,200,000 St. Paul, MN, 5.80% Independent School District # 625 Ser B 2-1-2012 AA 1,190,504 1,203,456
7,332,638 7,270,815
HEALTH CARE & SERVICES - 21.47%
575,000 Burnsville MN Fairview County Hospital, 9.00% Ref Bond
Ser A MBIA Insured 5-1-2012 AAA 588,174 588,633
400,000 Duluth (City of) MN, 6.30% EDA Health Care Fac Ref Rev Bond for Duluth Clinic Ser 1992
AMBAC Insured 11-1-2022 AAA 395,089 405,708
1,000,000 Duluth (City of) MN, 8.375% EDA Health Care Fac Rev for St. Mary's Med Ctr Ser 1990
2-15-2020 (Refunded 2-15-2000 @ 102) AAA 1,024,182 1,156,680
<PAGE>
785,000 Duluth (City of) MN, 9.00% Hospital Fac Rev Bond for St. Luke's Ser 1988 5-1-2018
(Refunded 5-1-1998 @ 102) AAA 803,162 891,469
1,100,000 Minneapolis & St. Paul (Cities of) MN HRA, 6.75% Health Care System, Health One
Obligated Group MBIA Insured 8-15-2014 AAA 1,098,769 1,162,524
800,000 Minneapolis & St. Paul (Cities of) MN HRA, 6.75% Health Care Fac Rev Bond Group
Health Inc Ser 1992 12-1-2013 A- 777,517 822,176
2,100,000 Robbinsdale (City of) MN, 5.45% Hospital Rev North Memorial Medical Ctr Ser B AMBAC
Insured 5-15-2013 AAA 2,107,746 1,982,106
2,375,000 Rochester (City of) MN, 6.25% Health Care Fac Rev Bond Mayo Foundation/Mayo
Medical Ctr Ser 1992D 11-15-2014 AA+ 2,378,371 2,415,969
1,275,000 St. Louis Park (City of) MN, 7.25% Hospital Fac Rev Methodist Ser 1990C AMBAC
Insured 7-1-2015 (Refunded 7-1-2000 @ 102) AAA 1,261,341 1,423,053
765,000 St. Louis Park (City of) MN, 8.50% Health Care Fac for Park Nicollet Med Ctr Ser A
1-1-2011 (Refunded 1-1-2001 @ 100) N/R 772,028 886,926
11,206,379 11,735,244
HIGHER EDUCATION - 8.28%
1,275,000 Minnesota Higher Education, 6.40% Rev Ser 3J for Macalester
College 3-1-2022 AA- 1,263,204 1,294,431
460,000 Minnesota Higher Education, 7.625% Mortgage Rev Ser 3F for
St. Mary's College 10-1-2016 (Refunded 10-1-2001 @ 100) BBB 457,700 523,577
1,500,000 Northfield (City of) MN, 6.40% College Fac Rev Bond for St. Olaf
College Ser 1992 10-1-2021 A* 1,519,038 1,529,355
500,000 Northfield (City of) MN, 8.00% College Fac Rev Bond for St. Olaf College
10-1-2018 (Refunded 10-1-1998 @ 100) A* 501,035 549,635
600,000 University of Minnesota, 7.75% Ref Bond Ser A 2-1-2010
(Refunded 2-1-1996 @ 102) AAA 610,377 628,542
4,351,354 4,525,540
HOUSING - 19.39%
1,500,000 Brainerd (City of) MN, 6.65% Rev Ref Bond Ser 1992B Evangelical Lutheran-
Good Samaritan Project 3-2-2017 AAA 1,515,011 1,570,680
385,000 Dakota County MN HRA, 8.10% Single Family Rev GNMA
Backed 3-1-2016 AAA 392,466 402,544
300,000 Eden Prairie (City of) MN, 7.40% Multifamily Housing Ser 1990
FHA Insured 8-1-2025 AAA 299,956 314,265
890,000 Eden Prairie (City of) MN, 8.00% Multifamily Housing Ser A FHA
Insured 7-1-2026 AAA 890,000 952,531
610,000 Edina (City of) MN, 7.50% Housing Dev Ref Rev Edina Park Plaza
Ser 1989A 12-1-2009 Aa* 609,625 644,184
500,000 Edina (City of) MN, 7.70% Housing Dev Ref Rev Edina Park Plaza
Ser A FHA Insured 12-1-2028 Aa* 500,000 524,820
525,000 Mankato (City of) MN, 8.25% Nursing Home Rev Bond Board of Soc Ministry Mankato
Lutheran Ser 1991A 10-1-2021 N/R 520,000 571,562
600,000 Minneapolis (City of) MN CDA & HRA, 7.875% Rev Bond 7-1-2017 AA- 592,536 621,972
1,040,000 Minneapolis (City of) MN HRA, 7.10% Mortgage Rev Bond Riverplace Proj Ser A
LOC Bank of Tokyo 1-1-2020 Aa3* 1,053,137 1,061,590
485,000 Minneapolis (City of) MN, 8.25% Health Care Fac Rev Bond Jones-Harrison Residence
Ser 1991 9-1-2011 N/R 479,122 518,451
350,000 Minneapolis (City of) MN, 8.25% Rev Bond Trinity Housing
Proj Ser 1991 2-1-2018 N/R 350,000 355,359
500,000 Minnesota Housing Finance Agency, 6.95% Housing Dev Bond
Ser 1992A 8-1-2017 A+ 500,000 519,130
220,000 Minnesota Housing Finance Agency, 7.70% Single Family Mortgage
Bond Ser C 7-1-2014 AA+ 221,321 232,177
440,000 Northfield (City of) MN, 7.00% Health Care Fac Northfield
Retirement Ctr 5-1-2015 N/R 435,935 444,818
735,000 Red Wing (City of) MN, 6.50% Elderly Housing Fac Ref Rev River
Region Obligated Group Ser 1993C 9-1-2022 BBB+ 730,567 692,951
500,000 Spring Park (City of) MN, 8.25% Health Care Fac Rev Bond Twin Birch
Health Care Ctr 8-1-2011 N/R 500,000 543,300
660,000 Waconia (City of) MN HRA, 6.00% Ref Rev Bond Evangelical Lutheran
Good Samaritan Society Ser 1993A 6-1-2014 A- 660,000 626,815
10,249,676 10,597,149
MISCELLANEOUS - 4.60%
450,000 Dakota County MN HRA, 7.50% Limited Annual Appropriation Tax & Rev
Supported Bond Ser 1991 1-1-2006 BBB+ 450,000 468,661
400,000 Dawson (City of) MN, 7.30% IDR Ref Bond Associated Milk
Producers 9-1-2000 N/R 396,426 414,760
1,000,000 Minneapolis (City of) MN CDA, 7.375% Limited Tax Supported Dev Rev Common
Bond Fund Ser 1992G-3 12-1-2012 BBB+ 1,000,000 1,077,510
500,000Minneapolis (City of) MN CDA, 8.375% Limited Tax Supported Dev Rev Common
Bond Fund Ser 1990-6A 6-1-2007 BBB+ 497,500 556,100
2,343,926 2,517,031
<PAGE>
POLLUTION CONTROL - 4.99%
500,000 Bass Brook (City of) MN, 6.00% Pollution Control Ref Rev Bond Minnesota Power
& Light Co Proj Ser 1992 7-1-2022 A- 484,117 481,145
650,000 East Grand Forks (City of) MN, 7.75% Pollution Control Rev Ser 1991A
(American Crystal Sugar) 4-1-2018 BBB+ 650,532 675,461
1,000,000 Minnesota Public Fac Auth, 6.65% Zero Coupon Water Pollution
Rev Bond Ser 1992A 3-1-2007 (d) AAA 458,681 490,160
1,000,000 Minnesota Public Fac Auth, 7.10% Water Pollution Rev
Bond Ser 1990A 3-1-2012 AAA 978,768 1,078,410
2,572,098 2,725,176
PUBLIC FACILITIES - 4.01%
400,000 Duluth (City of) MN, 6.75% Gross Rev Recreation Fac Bond
Spirit Mountain Ser 1992 2-1-2007 N/R 400,000 407,068
325,000 Moorhead (City of) MN, 7.75% Golf Course Rev Bond
Ser 1992A 12-1-2N/R 325,000 352,121
500,000 St. Paul (City of) MN HRA, 6.45% Parking Rev Bond Ser 1992A 8-1-2007 A 500,000 512,835
1,000,000 St. Paul (City of) MN HRA, 5.45% Sales Tax Rev Bond Civic Ctr
Proj Ser 1993 11-1-2013 A 983,302 920,970
2,208,302 2,192,994
REFUNDED WITH US GOVERNMENT SECURITIES - 5.52%
230,000 Minneapolis (City of) MN CDA for Mt Sinai Hospital Assoc, 9.50% Ser 1986 11-1-2006
(Refunded 11-1-1996 @ 102) AAA 243,870 251,618
400,000 Minneapolis (City of) MN HRA, 8.00% St Paul Healthone Ser 1990B 8-15-2014
(Refunded 8-15-2000 @ 102) AAA 412,960 461,000
1,100,000 Minneapolis (City of) MN, 9.125% Hospital Fac Ref Rev Bond Ser B 12-1-2014
(Refunded 12-1-1997 @ 102) AAA 1,189,416 1,238,479
1,020,000 Southern MN Municipal Power Agency, 7.125% Power Supply Sys Rev Bond
Ser C 1-1-2015 (Refunded 1-1-1996 @ 102) AAA 1,021,201 1,061,249
2,867,447 3,012,346
UTILITIES - ELECTRIC - 14.83%
1,000,000 Northern MN Municipal Power Agency, 5.50% Elec Sys Rev Bond
Ser B AMBAC Insured 1-1-2018 AAA 946,235 947,760
1,295,000 Northern MN Municipal Power Agency, 7.102% Zero Coupon Elec Sys Ref Rev Ser A Primary
Insured AMBAC 1-1-2011(d) AAA 442,260 505,723
945,000 Northern MN Municipal Power Agency, 7.25% Elec Sys Rev
Bond Ser A 1-1-2016 A 962,331 1,014,987
500,000 Northern MN Municipal Power Agency, 7.40% Elec Sys Rev Bond
Ser A AMBAC Insured
1-1-2018 (Refunded 1-1-1999 @ 102) AAA 508,257 550,090
1,515,000 St. Cloud MN Hydro Electric, 7.375% Gen Fac Rev Bond 12-16-2018 A- 1,545,882 1,582,826
1,000,000 Southern MN Municipal Power Agency, 5.00% Power Supply Sys
Rev Bond Ser 1993A 1-1-2012 A+ 947,190 891,260
2,505,000 Western MN Municipal Power Agency, 7.00% Minnesota Power Supply
Sys Rev Bond Ser A 1-1-2013 A 2,504,458 2,609,584
7,856,613 8,102,230
UTILITIES - WATER & SEWER - 1.01%
500,000 St. Paul (City of) MN, 8.00% Sewer Rev Bond Ser 1988A 12-1-2008 (Crossover Refunded
12-1-1998 @ 101) BBB 500,000 549,745
TOTAL MUNICIPAL OBLIGATIONS $51,488,433 $53,228,270
<FN>
* Moody's Rating
</TABLE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS-0.92%
Principal Market
Amount Value (b)
INVESTMENT COMPANY:
<S> <C> <C> <C> <C>
$504,612 Federated Minnesota Municipal Cash Trust, Current rate--4.09% $ 504,612
TOTAL INVESTMENTS IN SECURITIES (COST: $51,993,045) (A) $53,732,882
(a) At March 31,1995, the cost of securities for federal income tax purposes was $52,008,011
and the aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $2,236,715
Unrealized depreciation (511,844)
Net unrealized appreciation $1,724,871
(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.
(d) The interest rate disclosed for zero coupon securities represents the effective yield on the date of acquisition.
</TABLE>
<PAGE>
NEW YORK PORTFOLIO
Schedule of Investments (Unaudited)
March 31, 1995
<TABLE>
<CAPTION>
MUNICIPAL OBLIGATIONS - 95.47%
Standard
Principal & Poor's Market
Amount Rating Cost (a) Value (b)
<S> <C> <C> <C> <C>
GENERAL OBLIGATIONS - 2.22%
$250,000 North Hempstead (Town of) NY, 7.25% Public Improvement Ser Bond FGIC
Insured Ser A Unlimited Tax 4-1-2012 (Refunded 4-1-1999 @ 102) AAA $ 249,375 $ 276,090
HEALTH CARE/ SERVICES - 6.64%
500,000 New York State Med Care Fac Fin Agency, 6.375% Mt. Sinai Hospital &
Nursing Home Rev Ref Mtg C FHA Insured 8-15-2029 AAA 497,064 503,280
305,000 New York Med Care Fac Fin Agency - Mental Health, 7.70% 2-15-2018 BBB+ 315,761 323,111
812,825 826,391
HOUSING - 21.62%
410,000 New York Mortgage Agency, 7.85% Rev Homeowner Mtg
Ser BB-2 10-1-2008 Aa* 409,133 435,326
861,000 New York State, 7.80% Dorm Auth Rev Bond Insd-Pooled Cap Prog,
FGIC Insured 12-1-2005 AAA 872,433 947,806
400,000 New York State, 8.125% Dorm Auth City Univ Ref Bond Ser A 7-1-2007 BBB 401,774 435,012
770,000 New York State, 7.50% Dorm Auth Rev Ref State Univ
Edl Fac Ser B 5-15-2011 BBB+ 785,562 870,184
2,468,902 2,688,328
MISCELLANEOUS - 6.19%
250,000 New York (City of) Municipal Assistance Corp., 7.625% Ser 67 Bond (Pub
Benefit Corp. of the State of NY) 7-1-2008 AA- 252,787 275,933
500,000 United Nations Development Corp., 6.00% Rev Ref
Sr Lien Ser 1992A 7-1-2012 A* 483,615 493,335
736,402 769,268
POLLUTION CONTROL - 8.27%
290,000 Babylon (Town of) NY, 8.10% Industrial Dev Agency Res Recov Rev
Bond Ser 1985 (Odgen Martin Systems, Inc.) 1-1-2000 Baa* 289,825 314,827
655,000 Babylon (Town of) NY, 8.50% Industrial Dev Agency Res Recov Rev
Bond Ser 1985C (Odgen Martin Systems, Inc.) 1-1-2019 Baa* 681,286 713,583
971,111 1,028,410
REFUNDED WITH US GOV'T SECURITIES - 36.36%
395,000 Metropolitan Transportation Auth, NY, 8.375% Transit Fac Rev Bond Ser F
7-1-2016 (Refunded 7-1-1996 @ 102) AAA 397,567 421,528
350,000 New York (City of) Municipal Assistance Corp., 8.25% Ser 56 Bond 7-1-2008
(Refunded 7-1-1996 @ 102) AAA 353,678 373,160
690,000 New York City, 8.25% General Obligation Ser 1991F 11-15-2017
(Refunded 11-15-2001 @ 101.5) AAA 672,236 822,935
450,000 New York City Municipal Water Fin Auth, 7.875% Water & Sewer Sys Rev Bond
Ser B 6-15-2016 (Refunded 6-15-1996 @ 102) AAA 455,772 476,546
600,000 New York Local Government Assistance Corp., 7.50% Ser 1991B Bond
4-1-2020 (Refunded 4-1-2001 @102) AAA 599,375 685,854
600,000 New York State Med Care, 7.45% (St. Luke's Hosp) FHA and Secondary
MBIA Insured Ser B 2-15-2029 (Refunded 2-15-2000 @102) AAA 598,500 673,920
345,000 New York Med Care Fac Fin Agency - Mental Health, 7.70% 2-15-2018
(Refunded 2-15-1998 @ 102) AAA 355,319 378,810
600,000 New York State Urban Development Corp., 7.375% Rev Correctional
Cap Fac FSA Insured Ser 3 1-1-2018 (Refunded 1-1-2002 @102) Aaa* 595,918 690,066
4,028,365 4,522,819
TRANSPORTATION - 12.02%
500,000 New York State Thruway Service Contract, 6.375% Local
Highway & Bridge 4-1-2012 BBB 494,480 503,255
500,000 New York Triborough Bridge & Tunnel Auth,
8.125% General Purpose Rev Ref Bond Ser L 1-1-2012 A+ 501,955 549,710
420,000 Port Authority of NY & NJ, 8.70% 7-15-2020 AA 444,793 441,672
1,441,228 1,494,637
UTILITY - ELECTRIC - 2.15%
300,000 New York (State of), 5.25% Power Auth General Purpose Ser CC 1-1-2018 AA- 296,127 267,972
TOTAL MUNICIPAL OBLIGATIONS $11,004,335 $11,873,915
<FN>
* Moody's Rating
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENTS-2.32%
Principal Market
Amount Value (b)
INVESTMENT COMPANY:
<S> <C> <C> <C>
$287,951 Federated Tax-Free Obligation Fund, Current rate 4.05% $ 287,951
TOTAL INVESTMENTS IN SECURITIES (COST $11,292,286) $12,161,866
(a) At March 31, 1995, the cost of securities for federal income tax purposes was $11,292,286
and the aggregate gross unrealized appreciation and depreciation based on that cost was:
Unrealized appreciation $900,855
Unrealized depreciation (31,275)
Net unrealized appreciation $869,58
(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>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
(Unaudited)
March 31, 1995 National Minnesota New York
Portfolio Portfolio Portfolio
ASSETS:
<S> <C> <C> <C>
Investments in securities, as detailed in the accompanying schedule, at market
(cost $68,507,724; $51,993,045; and $11,292,286; respectively) (Note A) $ 71,732,913 $ 53,732,882 $ 12,161,866
Receivables:
Interest 1,268,950 955,086 242,130
Subscriptions of capital stock 30,041 22 --
Deferred registration costs (Note A) 45,557 15,214 33,393
Prepaid expenses 43,817 60,127 20,755
TOTAL ASSETS 73,121,278 54,763,331 12,458,144
LIABILITIES:
Cash portion of distributions payable 114,803 58,285 12,205
Redemptions of capital stock 53,085 18,578 152
Payable for investment advisory and management fees (Note B) 47,498 33,289 8,440
Payable for distribution fees (Note B) 40 25 10
Accounts payable and accrued expenses 3,454 2,518 651
TOTAL LIABILITIES 218,880 112,695 21,458
NET ASSETS:
Net proceeds of capital stock, par value $.01
per share - authorized 100,000,000,000 shares (Note D) 70,671,470 53,383,184 11,563,791
Unrealized appreciation of investments 3,225,189 1,739,837 869,580
Undistributed (excess of distributions over) net investment income 50,554 27,501 (2,136)
Accumulated net realized gain (loss) from sale of investments (1,044,815) (499,886) 5,451
TOTAL NET ASSETS $ 72,902,398 $ 54,650,636 $ 12,436,686
Shares outstanding and net asset value per share:
Class A shares (based on net assets of $681,786; $287,639; and $20,085,
respectively, and 64,380; 28,224; and 1,861 shares outstanding, respectively) $10.59 $10.19 $10.79
Class B shares (based on net assets of $100,935; $78,000; and $175,955,
respectively, and 9,542; 7,673; and 16,335 shares outstanding, respectively) $10.58 $10.17 $10.77
Class C shares (based on net assets of $1,968; $12,390; and $0,
respectively, and 186; 1,216; and 0 shares outstanding, respectively) $10.58 $10.19 $ --
Class E shares (based on net assets of $71,645,269; $53,985,158; and $12,240,646,
respectively, and 6,764,983; 5,289,168; and 1,134,096 shares outstanding,
respectively) $10.59 $10.21 $10.79
Class H shares (based on net assets of $472,440; $287,449; and $0,
respectively, and 44,637; 28,214; and 0 shares outstanding, respectively) $10.58 $10.19 $ --
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
(Unaudited)
For the Six-Month Period Ended March 31, 1995
National Minnesota New York
Portfolio Portfolio Portfolio
NET INVESTMENT INCOME:
<S> <C> <C> <C>
Income:
Interest Income $2,405,177 $1,781,787 $428,721
Expenses:
Investment advisory and management fees (Note B) 274,483 189,663 49,709
Distribution fees (Class A) (Note B) 338 133 15
Distribution fees (Class B) (Note B) 295 164 540
Distribution fees (Class C) (Note B) 3 24 --
Distribution fees (Class H) (Note B) 1,073 619 --
Registration fees (Note A) 25,685 15,214 24,519
Legal and auditing fees (Note B) 13,887 14,016 7,520
Shareholders' notices and reports 11,762 6,579 2,892
Custodian fees 6,573 4,327 1,491
Directors' fees and expenses 3,776 3,165 428
Other 3,370 2,202 1,674
Total expenses 341,245 236,106 88,788
<PAGE>
Less: Reimburseable expenses (Note B) -- -- (19,878)
Net expenses 341,245 236,106 68,910
NET INVESTMENT INCOME 2,063,932 1,545,681 359,811
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE A):
Net realized gain (loss) from security transactions (506,108) (338,838) 14,804
Net change in unrealized appreciation (depreciation) of investments 1,836,646 1,003,263 72,561
NET GAIN ON INVESTMENTS 1,330,538 664,425 87,365
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,394,470 $2,210,106 $ 447,176
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
STATEMENTS OF CHANGES IN NET ASSETS
NATIONAL PORTFOLIO
<TABLE>
<CAPTION>
SIX-MONTH THREE-MONTH
PERIOD ENDED PERIOD ENDED
MARCH 31, 1995 SEPTEMBER 30, 1994
(UNAUDITED) (NOTE C)
OPERATIONS:
<S> <C> <C>
Net investment income $ 2,063,932 $ 1,096,634
Net realized gain (loss) from security transactions (506,108) (480,946)
Net change in unrealized appreciation (depreciation) of investments 1,836,646 (144,516)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,394,470 471,172
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A (7,384) --
Class B (1,331) --
Class C (17) --
Class E (2,035,500) (1,042,508)
Class H (5,033) --
From net realized gains on investments
Class A (158) --
Class B (39) --
Class C -- --
Class E (35,740) --
Class H (111) --
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (2,085,313) (1,042,508)
CAPITAL STOCK SOLD AND REPURCHASED:
Proceeds from sale of shares (Note B)
Class A (64,271 shares) 657,005 --
Class B (9,413 shares) 93,834 --
Class C (187 shares) 1,925 --
Class E (298,780 and 288,469 shares) 3,080,585 3,032,231
Class H (44,383 shares) 449,594 --
Proceeds from shares issued as a result of reinvested dividends
Class A (268 shares) 2,809 --
Class B (129 shares) 1,343 --
Class C (2 shares) 17 --
Class E (133,799 and 66,477 shares) 1,373,896 701,460
Class H (254 shares) 2,655 --
Less cost of repurchase of shares
Class A (159 shares) (1,626) --
Class B (0 shares) -- --
Class C (3 shares) (25) --
Class E (879,286 and 478,650 shares) (8,945,421) (5,031,493)
Class H (0 shares) -- --
NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (3,283,409) (1,297,802)
TOTAL INCREASE (DECREASE) IN NET ASSETS (1,974,252) (1,869,138)
NET ASSETS:
Beginning of period 74,876,650 76,745,788
End of period (includes undistributed net investment income of
$50,554 and $35,887, respectively) $ 72,902,398 $ 74,876,650
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
MINNESOTA PORTFOLIO
<TABLE>
<CAPTION>
SIX-MONTH THREE-MONTH
PERIOD ENDED PERIOD ENDED
MARCH 31, 1995 SEPTEMBER 30, 1994
(UNAUDITED) (NOTE C)
OPERATIONS:
<S> <C> <C>
Net investment income $ 1,545,681 $ 783,827
Net realized gain (loss) from security transactions (338,838) (86,449)
Net change in unrealized appreciation (depreciation) of investments 1,003,263 (300,009)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2,210,106 397,369
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A (2,869) --
Class B (794) --
Class C (117) --
Class E (1,533,097) (777,817)
Class H (2,824) --
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (1,539,701) (777,817)
CAPITAL STOCK SOLD AND REPURCHASED:
Proceeds from sale of shares (Note B)
Class A (29,866 shares) 295,772 --
Class B (7,597 shares) 74,892 --
Class C (1,208 shares) 11,942 --
Class E (156,370 and 115,839 shares) 1,544,905 1,180,013
Class H (28,006 shares) 277,000 --
Proceeds from shares issued as a result of reinvested dividends
Class A (55 shares) 553 --
Class B (79 shares) 794 --
Class C (11 shares) 114 --
Class E (117,631 and 59,511 shares) 1,169,606 607,372
Class H (208 shares) 2,097 --
Less cost of repurchase of shares
Class A (1,697 shares) (16,804) --
Class B (3 shares) (25)
Class C (3 shares) (25) --
Class E (399,219 and 166,694 shares) (3,940,957) (1,700,863)
Class H (0 shares) -- --
Net Increase (Decrease) in Net Assets from Share Transactions (580,136) 86,522
TOTAL INCREASE (DECREASE) IN NET ASSETS 90,269 (293,926)
NET ASSETS:
Beginning of period 54,560,367 54,854,293
End of period (includes undistributed net investment income of
$27,501 and $21,521, respectively) $ 54,650,636 $ 54,560,367
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NEW YORK PORTFOLIO
SIX-MONTH THREE-MONTH
PERIOD ENDED PERIOD ENDED
MARCH 31, 1995 SEPTEMBER 30, 1994
(UNAUDITED) (NOTE C)
OPERATIONS:
<S> <C> <C>
Net investment income $ 359,811 $ 183,772
Net realized gain (loss) from security transactions 14,804 --
Net change in unrealized appreciation (depreciation) of
investments 72,561 (93,136)
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 447,176 90,636
DISTRIBUTIONS TO SHAREHOLDERS:
<PAGE>
From net investment income
Class A (334) --
Class B (2,720) --
Class C -- --
Class E (356,771) (183,333)
Class H -- --
From excess distribution of net investment income
Class A -- --
Class B -- --
Class C -- --
Class E -- (2,122)
Class H -- --
From realized gains on investments
Class A (34) --
Class B (286) --
Class C -- --
Class E (21,850) --
Class H -- --
TOTAL DISTRIBUTIONS TO SHAREHOLDERS (381,995) (185,455)
CAPITAL STOCK SOLD AND REPURCHASED:
Proceeds from sale of shares (Note B)
Class A (1,829 shares) 19,130 --
Class B (16,049 shares) 166,075
Class C (2 shares) 25 --
Class E (9,614 and 12,315 shares) 101,936 133,289
Class H (2 shares) 25 --
Proceeds from shares issued as a result of reinvested dividends
Class A (34 shares) 368 --
Class B (286 shares) 3,040 --
Class C (0 shares) -- --
Class E (28,017 and 13,268 shares) 296,724 143,899
Class H (0 shares) -- --
Less cost of repurchase of shares
Class A (2 shares) (25) --
Class B (0 shares) --
Class C (2 shares) (25) --
Class E (95,562 and 21,826 shares) (1,012,561) (236,486)
Class H (2 shares) (25) --
Net Increase (Decrease) in Net Assets from Share Transactions (425,313) 40,702
Total Increase (Decrease) in Net Assets (360,132) (54,117)
Net Assets:
Beginning of period 12,796,818 12,850,935
End of period (includes excess distributions over net investment income
of $2,136 and $2,122, respectively) $ 12,436,686 $ 12,796,818
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
FORTIS TAX-FREE PORTFOLIOS, INC.
Notes to Financial Statements
(Unaudited)
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fortis Tax-Free Portfolios,
Inc. (the fund) is an open-end management investment company which
currently is comprised of three separate investment portfolios and series
of capital stock: the National and Minnesota Portfolios, both of which are
diversified portfolios, and the New York Portfolio, which is a non-
diversified portfolio, each of which has different investment objectives
and its own investment portfolio and net asset values. The investment
objective of National Portfolio is to seek as high a level of current
income exempt from federal income tax as is believed to be consistent with
preservation of capital. The investment objective of Minnesota Portfolio is
to seek as high a level of current income exempt from federal and Minnesota
income tax as is believed to be consistent with preservation of capital.
The investment objective of New York Portfolio is to seek as high a level
of current income exempt from federal, New York State, and New York City
income tax as is believed to be consistent with the preservation of
capital. The Minnesota and New York Portfolios concentrate their
investments in a single state and, therefore, may have more credit risk
related to the economic conditions of the respective state than a portfolio
with broader geographical diversification. The fund offers Class A, Class
B, Class C, Class E and Class H shares. Class E shares are only available
to existing shareholders on November 14, 1994. Class A and E shares are
sold with a front-end sales charge. Class B and H shares are sold without a
front-end sales charge and may be subject to a contingent deferred sales
charge, and such shares automatically convert to Class A after eight years.
Class C shares are sold without a front-end sales charge and may be subject
to a contingent deferred sales charge. All classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that the level of distribution fees charged differs
between classes. Income, expenses (other than expenses incurred under each
class's distribution agreement) and realized and unrealized gains or losses
on investments are allocated to each class of shares based on its relative
net assets. Security Valuation: Tax exempt bonds for which quotations are
not readily available are valued at fair value as determined by a pricing
system approved by the Board of Directors. The pricing system may employ
electronic data processing techniques and/or a matrix system to determine
valuations using methods which include consideration of yields or prices of
municipal bonds of comparable quality, type of issue, coupon, maturity and
rating; indications as to value from dealers; and general market
conditions. 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. Interest income is recorded on the
accrual basis. Realized security gains and losses are determined using the
identified cost method. For financial reporting purposes, the portfolios
amortize long-term bond premium and original issue discount.
For the six-month period ended March 31, 1995, the cost of purchases and
proceeds from sales of securities (other than short-term securities)
aggregated $14,053,046 and $17,063,236 for National Portfolio; $4,986,190
and $5,539,970 for Minnesota Portfolio; and $0 and $600,365 for New York
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 fund intends to distribute
substantially all of its taxable net investment income and realized gains,
if any, to avoid the payment of federal excise taxes.
Net realized gains may differ for financial statement and tax purposes
primarily because of wash sale transactions. The character of distributions
made during the year from net investment income or net realized gains may
also 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. The effect on
dividend distributions of certain book-to-tax differences are reflected as
excess distributions of net investment income in the statements of changes
in net assets and the financial highlights.
For federal income tax purposes the National and Minnesota Portfolios had
the following capital loss carryovers at September 30, 1994, which, if not
offset by subsequent capital gains, will expire in 2002 for the National
Portfolio, and in 1997 and 2002 for the Minnesota Portfolio. It is unlikely
the Board of Directors will authorize a distribution of any net realized
gains until the available capital loss carryovers have been offset or
expired.
National Portfolio $530,828
Minnesota Portfolio 146,082
<PAGE>
DEFERRED COSTS: Registration costs are deferred and charged to income over
the registration period.
INCOME AND CAPITAL GAINS DISTRIBUTION: The portfolios declare income
distributions daily to be paid on the last business day of each month. The
portfolios will make annual distributions of any realized capital gains as
required by law. These income and capital gains distributions may be
reinvested in additional shares of the portfolio at net asset value on the
payable date or paid in cash five business days after month end without any
charge to the shareholder.
B. Payments to Related Parties: Fortis Advisers, Inc. (Advisers), is the
investment adviser for the fund. Investment advisory fees paid by the
Minnesota and New York Portfolios are computed at an annual rate of .8% of
the first $50 million in average daily net assets, .7% of the next $50
million in average daily net assets and .625% of average daily net assets
in excess of $100 million. The National Portfolio's investment advisory
fees are computed at an annual rate of .8% of the first $50 million in
average daily net assets, and .7% of average daily net assets in excess of
$50 million. The fee percentage for the Minnesota Portfolio is based upon
the aggregate average net assets of the National and Minnesota Portfolios
combined. The fee is then allocated to the Minnesota Portfolio based upon
proportionate net assets. The fee percentage for National and New York
Portfolio is based upon the average net assets of each portfolio alone.
In addition to the investment advisory and management fee, Classes A, B, C
and H pay Fortis Investors, Inc. (the fund's principal underwriter)
distribution fees equal to .25% (Class A) and 1.00% (Class B, C and H) of
average daily net assets (of the respective classes) on an annual basis, to
be used to compensate those who sell shares of the fund and to pay certain
other expenses of selling fund shares. Fortis Investors, Inc., also
received sales charges (paid by purchasers of the fund's shares)
aggregating $16,626 for Class A and $51,621 for Class E for National
Portfolio; $11,540 for Class A and $45,018 for Class E for Minnesota
Portfolio; and $895 for Class A and $4,063 for Class E for New York
Portfolio for the six-month period ended March 31, 1995.
Advisers has voluntarily undertaken to limit annual expenses for New York
Portfolio (exclusive of interest, taxes, brokerage commissions, 12b-1 fees
and non-recurring extraordinary charges and expenses) commencing November
1, 1994 to 1.09% of average net assets. During the six-month period ended
March 31, 1995, Advisers waived $19,878 of its advisory fee.
Legal fees and expenses aggregating $6,558, $10,339 and $1,530 for the
National, Minnesota, and New York Portfolios, respectively, were paid to a
law firm of which the secretary of the fund is a partner.
C. Change in Accounting Period: Effective September 30, 1994, Fortis Tax-Free
Portfolios, Inc. changed its fiscal accounting and tax year-end to
September 30 (previously June 30).
D. Capital Changes: At the special shareholders' meeting of August 23, 1994,
the Amended and Restated Articles of Incorporation were approved, which
increased the number of authorized shares from 20 billion to 100 billion
and allows the fund to issue multiple classes of shares.
E. Financial Highlights: Selected per share historical data for each of the
Portfolios were as follows:
CLASS E
<TABLE>
<CAPTION>
Three-Month Six-Month
Period Ended Period Ended Year Ended
September 30, Year Ended June 30, June 30, December 31,
<S> <C> <C> <C> <C> <C> <C> <C>
NATIONAL PORTFOLIO 1995** 1994 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 10.38 $ 10.46 $ 11.13 $ 10.54 $ 9.99 $ 9.82 $ 9.98
Operations:
Investment income - net .30 .15 .60 .63 .66 .32 .66
Net realized and unrealized gains (losses) on investments .21 (.09) (.64) .59 .55 .17 (.15)
Total from operations .51 .06 (.04) 1.22 1.21 .49 .51
Distributions to shareholders:
From investment income - net (.29) (.14) (.59) (.62) (.66) (.32) (.67)
Excess distribution of net investment income - - - (.01) - - -
From net realized gains on investments (.01) - (.04) - - - -
Total distributions to shareholders (.30) (.14) (.63) (.63) (.66) (.32) (.67)
Net asset value, end of period $ 10.59 $ 10.38 $ 10.46 $ 11.13 $ 10.54 $ 9.99 $ 9.82
Total Return@ 5.03% .59% (0.49%) 11.99% 12.46% 5.09% 5.33%
Net assets, end of period (000s omitted) $71,645 $74,877 $76,746 $70,754 $54,189 $43,707 $41,041
Ratio of expenses to average daily net assets .94%* .87%* .87% .94% .92% .95%* .95%
Ratio of net investment income to average daily net assets 5.74%* 5.74%* 5.38% 5.80% 6.40% 6.58%* 6.71%
Portfolio turnover rate 20% 17% 25% 29% 38% 25% 90%
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Class A Class B Class C Class H
1995+ 1995+ 1995+ 1995+
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.79 $ 9.79 $ 9.79 $ 9.79
Operations:
Investment income - net .22 .18 .18 .18
Net realized and unrealized gains (losses) on investments .81 .81 .81 .81
Total from operations 1.03 .99 .99 .99
Distribution to shareholders:
From investment income - net (.22) (.19) (.19) (.19)
From net realized gains on investments (.01) (.01) (.01) (.01)
Total distributions to shareholders (.23) (.20) (.20) (.20)
Net asset value, end of period $10.59 $10.58 $10.58 $10.58
Total Return@ 10.54% 10.14% 10.14% 10.14%
Net assets end of period (000s omitted) $ 682 $ 101 $ 2 $ 472
Ratio of expenses to average daily net assets 1.19%* 1.94%* 1.94%* 1.94%*
Ratio of net investment income to average daily net assets 5.27%* 4.46%* 4.46%* 4.46%*
Portfolio turnover rate 20% 20% 20% 20%
</TABLE>
* ANNUALIZED.
** FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1995.
+ FOR THE PERIOD FROM NOVEMBER 14, 1994 (COMMENCEMENT OF OPERATIONS) TO
MARCH 31, 1995.
@ THESE ARE THE PORTFOLIO'S TOTAL RETURNS DURING THE PERIOD, INCLUDING
REINVESTMENT OF ALL DIVIDEND AND CAPITAL GAINS DISTRIBUTIONS, WITHOUT
ADJUSTMENT FOR SALES CHARGE.
<TABLE>
<CAPTION>
CLASS E
Three-Month Six-Month
Period Ended Period Ended Year Ended
September 30, Year Ended June 30, June 30, December 31,
<S> <C> <C> <C> <C> <C> <C> <C>
MINNESOTA PORTFOLIO 1995** 1994 1994 1993 1992 1991 1990
Net asset value, beginning of period $ 10.08 $ 10.15 $ 10.65 $ 10.16 $ 9.78 $ 9.68 $ 9.73
Operations:
Investment income - net .29 .15 .59 .61 .64 .31 .63
Net realized and unrealized gains (losses) on investments .13 (.08) (.51) .49 .38 .11 (.05)
Total from operations .42 .07 .08 1.10 1.02 .42 .58
Distributions to shareholders:
From investment income - net (.29) (.14) (.58) (.61) (.64) (.32) (.63)
Net asset value, end of period $ 10.21 $ 10.08 $ 10.15 $ 10.65 $ 10.16 $ 9.78 $ 9.68
Total Return@ 4.26% .72% .64% 11.17% 10.71% 4.36% 6.20%
Net assets, end of period (000s omitted) $53,985 $54,560 $54,854 $52,271 $38,586 $29,449 $26,481
Ratio of expenses to average daily net assets. .89%* .85%* .85% .89% .90% .97%* .98%
Ratio of net investment income to average daily net assets 5.83%* 5.69%* 5.51% 5.82% 6.37% 6.47%* 6.56%
Portfolio turnover rate 10% 8% 11% 17% 10% 8% 63%
</TABLE>
<TABLE>
<CAPTION>
Class A Class B Class C Class H
1995+ 1995+ 1995+ 1995+
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 9.56 $ 9.56 $ 9.56 $ 9.56
Operations:
Investment income - net .21 .19 .19 .19
Net realized and unrealized gains (losses) on investments .63 .61 .63 .63
Total from operations .84 .80 .82 .82
Distribution to shareholders:
From investment income - net (.21) (.19) (.19) (.19)
Net asset value, end of period $10.19 $10.17 $10.19 $10.19
Total Return@ 9.00% 8.38% 8.70% 8.70%
Net assets end of period (000s omitted) $ 288 $ 78 $ 12 $ 287
Ratio of expenses to average daily net assets 1.14%* 1.89%* 1.89%* 1.89%*
Ratio of net investment income to average daily net assets 5.31%* 4.76%* 4.31%* 4.31%*
Portfolio turnover rate 10% 10% 10% 10%
</TABLE>
* Annualized.
** For the six-month period ended March 31, 1995.
+ For the period from November 14, 1994 (commencement of operations) to
March 31, 1995.
@ These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions, without
adjustment for sales charge.
<TABLE>
<CAPTION>
CLASS E
Three-Month Nine-Month
Period Ended Period Ended
September 30, Year Ended June 30, June 30,
<S> <C> <C> <C> <C> <C> <C>
NEW YORK PORTFOLIO 1995** 1994 1994 1993 1992 1991
Net asset value, beginning of period $ 10.74 $ 10.81 $ 11.51 $ 11.03 $ 10.57 $ 10.27
Operations:
Investment income - net .30 .15 .62 .65 .66 .48
Net realized and unrealized gains (losses) on investments .08 (.06) (.54) .65 .62 .30
Total from operations .38 .09 .08 1.30 1.28 .78
Distributions to shareholders:
<PAGE>
From investment income - net (.31) (.16) (.62) (.65) (.66) (.48)
Excess distribution of net investment income - - - (.01) -
From net realized gains on investments (.02) - (.16) (.16) (.16) -
Total distributions to shareholders (.33) (.16) (.78) (.82) ,(.82) (.48)
Net asset value, end of period $ 10.79 $ 10.74 $ 10.81 $ 11.51 $ 11.03 $ 10.57
Total Return@ 3.59% .79% .63% 12.19% 12.53% 5.49%
Net assets, end of period (000s omitted) $12,241 $12,797 $12,851 $13,915 $14,943 $15,952
Ratio of expenses to average daily net assets (a). 1.09%* 1.09%* .99% .99% 1.00% 1.23%*
Ratio of net investment income to average daily net assets (a) 5.80%* 5.74%* 5.55% 5.74% 6.15% 6.08%*
Portfolio turnover rate 0% 0% 4% 17% 19% 18%
</TABLE>
CLASS E
<TABLE>
<CAPTION>
Year Ended
September 30,
<S> <C>
NEW YORK PORTFOLIO 1990
Net asset value, beginning of period $ 10.50
Operations:
Investment income - net .67
Net realized and unrealized gains (losses) on investments (.22)
Total from operations .45
Distributions to shareholders:
From investment income - net (.67)
Excess distribution of net investment income -
From net realized gains on investments (.01)
Total distributions to shareholders (.68)
Net asset value, end of period $ 10.27
Total Return@ 4.44%
Net assets, end of period (000s omitted) $27,065
Ratio of expenses to average daily net assets (a). 1.09%
Ratio of net investment income to average daily net assets (a) 6.35%
Portfolio turnover rate 31%
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Class A Class B Class C Class H
1995+ 1995+ 1995*** 1995***
Net asset value, beginning of period $10.35 $10.35 $ - $ -
Operations:
Investment income - net .22 .18 - -
Net realized and unrealized gains (losses) on investments .47 .45 - -
Total from operations .69 .63 - -
Distribution to shareholders:
From investment income - net (.23) (.19) - -
From net realized gains on investments (.02) (.02) - -
Total distributions to shareholders (.25) (.21) - -
Net asset value, end of period $10.79 $10.77 - -
Total Return@ 6.79% 6.27%
Net assets end of period (000s omitted) $ 20 $ 176
Ratio of expenses to average daily net assets (a) 1.34%* 2.09%*
Ratio of net investment income to average daily net assets (a) 5.56%* 4.76%*
Portfolio turnover rate 0% 0%
</TABLE>
(a) Advisers has voluntarily undertaken to limit annual expenses for New
York Portfolio (exclusive of interest, taxes, brokerage commissions, 12b-1 fees
and non-recurring extraordinary charges and expenses) to 1.09% of average net
assets. From June 1, 1993 to June 30, 1994, Advisers agreed to limit expenses to
.99% of average net assets. Prior to June 1, 1993, Advisers agreed to limit
expenses to 1.00% of average net assets. Prior to June 1, 1991 Empire of
American Advisory Services, Inc., the previous advisor of the Portfolio, and
Empire National Securities, Incorporated, the previous distributor of the
Portfolio, each agreed to waive a portion of its fees or reimburse the Fund for
certain operating expenses. For each of the periods presented, had the waivers
and reimbursement of expenses not been in effect, the ratios of expenses and net
investment income to average daily net assets would have been 1.42% and 5.47%
for class E, 1.67% and 5.23% for class A, 2.42% and 4.43% for class B, for the
period ending March 31, 1995; 1.09% and 5.45% for the year ended June 30, 1994;
1.05% and 5.68% for the year ended June 30, 1993; 1.26% and 5.89% for the year
ended June 30, 1992; 1.48% and 5.83% for the nine-month period ended June 30,
1991; and 1.49% and 5.95% for the year ended September 30, 1990.
* Annualized.
** For the six-month period ended March 31, 1995.
*** Class C and H have no activity as of March 31, 1995.
+ For the period from November 14, 1994 (commencement of operations)
to March 31, 1995.
@ These are the portfolio's total returns during the period,
including reinvestment of all dividend and capital gains distributions, without
adjustment for sales charge.
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, 1994, 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 Incorporated
ROBB L. PRINCE, Vice President and Treasurer, Jostens, Inc.
LEONARD J. SANTOW, Principal, Griggs &Santow, Inc.
JOSEPH M. WIKLER, Prior to January, 1994, Director of Research, Chief Investment
Officer, Principal and Director, The Rothschild Co.
<PAGE>
OFFICERS
DEAN C. KOPPERUD, Vice President
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, First Bank National Association, 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.
<PAGE>
FORTIS FINANCIAL GROUP
Fortis Financial Group (FFG) is a premier provider of insurance and
investment portfolios whose fund manager, Fortis Advisors, 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.
