<PAGE>
FORTIS-Registered Trademark-
[GRAPHIC]
BRINGING YOU
A WORLD OF OPPORTUNITY . . .
FORTIS
Series Fund, Inc.
Annual Report
December 31, 1997
<PAGE>
FORTIS SERIES FUND, INC.
ANNUAL REPORT
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HIGHLIGHTS
<TABLE>
<CAPTION>
U.S. GLOBAL
MONEY GOVERNMENT DIVERSIFIED GLOBAL HIGH ASSET ASSET
MARKET SECURITIES INCOME BOND YIELD ALLOCATION ALLOCATION VALUE
SERIES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
------ ---------- ----------- ------ ------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1997:
NET ASSET VALUE PER SHARE:
Beginning of year................... $10.94 $10.57 $11.70 $11.11 $9.83 $16.99 $12.34 $ 11.38
End of year......................... $11.03 $10.68 $11.98 $10.65 $10.77 $17.62 $13.29 $ 13.42
ACCUMULATION UNIT PERFORMANCE:
Fortis Opportunity Annuity/Masters
Variable Annuity.................. +3.93 % +7.62% +8.96% -1.04 % +8.29 % +18.62% +11.99% +23.56%
Harmony Investment Life+............ +4.56 % +8.27% +9.62% -0.44 % +8.94 % +19.34% +12.65% +24.30%
Wall Street Series 220/500.......... +4.12 % +7.81% +9.16% -0.86 % +8.48 % +18.84% +12.18% +23.78%
Wall Street Series Survivor......... +3.93 % +7.62% +8.96% -1.04 % +8.29 % +18.62% +11.98% +23.56%
</TABLE>
<TABLE>
<CAPTION>
S&P BLUE
GROWTH & 500 CHIP GLOBAL GROWTH INTERNATIONAL AGGRESSIVE
INCOME INDEX STOCK GROWTH STOCK STOCK GROWTH
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
-------- -------- -------- ------ ------ ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1997:
NET ASSET VALUE PER SHARE:
Beginning of year................... $15.16 $11.47 $11.67 $19.00 $32.59 $12.44 $13.62
End of year......................... $18.76 $14.93 $14.76 $20.29 $36.64 $13.36 $13.81
ACCUMULATION UNIT PERFORMANCE:
Fortis Opportunity Annuity/Masters
Variable Annuity.................. +25.98% +30.55% +25.25% +5.39 % +10.91% +10.49% +0.06%
Harmony Investment Life............. +26.74% +31.33% +26.01% +6.02 % +11.58% +11.15% +0.67%
Wall Street Series 220/500.......... +26.21% +30.78% +25.48% +5.57 % +11.11% +10.68% +0.24%
Wall Street Series Survivor......... +25.98% +30.55% +25.25% +5.39 % +10.91% +10.49% +0.06%
</TABLE>
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OPERATING EXPENSES:*
<TABLE>
<CAPTION>
U.S. GLOBAL
MONEY GOVERNMENT DIVERSIFIED GLOBAL HIGH ASSET ASSET
MARKET SECURITIES INCOME BOND YIELD ALLOCATION ALLOCATION VALUE
SERIES SERIES SERIES SERIES SERIES SERIES SERIES SERIES
------ ---------- ----------- ------ ------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1997:
Investment Advisory and Management
Fee................................ .30% .47% .47% .75% .50% .48% .90% .70%
Other Expenses........................ .08% .07% .08% .35% .12% .05% .26% .13%
------ --- --- ------ ------ --- ----- ---
TOTAL FORTIS SERIES OPERATING
EXPENSES........................... .38% .54% .55% 1.10% .62% .53% 1.16% .83%
------ --- --- ------ ------ --- ----- ---
</TABLE>
<TABLE>
<CAPTION>
S&P BLUE
GROWTH & 500 CHIP GLOBAL GROWTH INTERNATIONAL AGGRESSIVE
INCOME INDEX STOCK GROWTH STOCK STOCK GROWTH
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
-------- -------- -------- ------ ------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
FOR THE YEAR ENDED DECEMBER 31, 1997:
Investment Advisory and Management
Fee................................. .65% .40% .90% .70% .61% .85% .69%
Other Expenses........................ .05% .11% .12% .09% .05% .23% .07%
--- --- -------- ------ ------ ----- ---
TOTAL FORTIS SERIES OPERATING
EXPENSES............................ .70% .51% 1.02% .79% .66% 1.08% .76%
--- --- -------- ------ ------ ----- ---
</TABLE>
* Represents the expenses of the Series itself, without the expenses associated
with the variable annuities or variable universal life insurance policies.
<PAGE>
HOW TO USE THIS REPORT
For a quick overview of the
Portfolios' performance during the
past year, refer to the Highlights
box. The letter from the portfolio
managers and presidents provide a
more detailed analysis of the Fund
and financial markets.
The charts alongside the letter are
useful because they provide more
information about your investments.
The top holdings chart shows the
types of securities in which the
Portfolios invest, 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 Products and Services.
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.
----------------------------------------------------------------------
<TABLE>
<S> <C>
CONTENTS
Letter to Shareholders............................ 2
Schedules of Investments
Money Market Series............................. 20
U.S. Government Securities Series............... 21
Diversified Income Series....................... 23
Global Bond Series.............................. 28
High Yield Series............................... 30
Asset Allocation Series......................... 34
Global Asset Allocation Series.................. 42
Value Series.................................... 46
Growth & Income Series.......................... 48
S&P 500 Index Series............................ 51
Blue Chip Stock Series.......................... 56
Global Growth Series............................ 59
Growth Stock Series............................. 62
International Stock Series...................... 64
Aggressive Growth Series........................ 66
Statements of Assets and Liabilities.............. 68
Statements of Operations.......................... 70
Statements of Changes in Net Assets............... 72
Notes to Financial Statements..................... 75
Independent Auditors' Report...................... 88
Directors and Officers............................ 89
</TABLE>
1
<PAGE>
[PHOTO]
FORTIS SERIES FUND, INC. ANNUAL REPORT,
DECEMBER 31, 1997
DEAR SHAREHOLDER:
The U.S. markets had another extraordinary year in 1997. On a total return
basis, the S&P 500 advanced 33 percent, the DOW JONES INDUSTRIAL AVERAGE rose 23
percent and the NASDAQ COMPOSITE was up 22 percent. Each of these returns are
among the highest recorded for the equity market in any one year. The genesis of
the performance was solid economic growth, very low inflation, low interest
rates and strong earnings gains.
Foreign markets did not fare as well. While European markets advanced a very
healthy 24 percent, Asian markets fell by 50 - 60 percent late in the year
reflecting sudden economic weakness accompanied by currency devaluations and
business failures. As a result, overall international equity gains were held to
2 percent as measured by the MSCI EAFE INDEX.
EQUITY MARKET REVIEW AND OUTLOOK
Through the first half of the year, the equity market soared as the economy
continued to expand, without advances in inflation, resulting in strong
corporate earnings. The leadership of the market was found in LARGE
CAPITALIZATION STOCKS and in the technology, telecommunications, consumer
staples, and financial sectors. At mid-year, however, there were signs that the
unbridled optimism was weakening. Several bell-weather companies, including
Coca-Cola and Gillette, reported weaker earnings than investors were expecting.
By the fourth quarter, the Asian crisis had fully developed bringing into
question the potential for continued economic and earnings growth for most of
the US economy.
As a result, the final quarter of the year was marked by volatility which has
not been experienced for many years. Again, investors favored large, liquid
companies with predominantly domestic sales bases as a safer haven than
internationally-oriented or small companies. The correction in the market late
last year has resulted in much more attractive valuations for many sectors of
the equity market.
Our forecast for 1998 is for positive economic growth, continued low inflation
and interest rates, and a modest gain of approximately 7 percent in corporate
earnings. With valuation levels reasonable, these factors suggest a positive
environment for stocks this year. However, lingering concerns over the Asian
economic slump coupled with more modest growth assumptions for the United States
are likely to result in a volatile stock market this year. As the year
progresses, there should be greater clarity which should lead to more confidence
on the part of investors and renewed interest in equities.
Our strategy is to focus on sectors which are relatively immune to dislocations
stemming from the Asian problems, reasonably valued large cap stocks, and MID TO
SMALL CAP ISSUES which underperformed in 1997 and where current valuations and
growth prospects are compelling.
FIXED INCOME MARKET REVIEW AND OUTLOOK
As stated in last year's Annual Report, our view that "the 1997 economy will
continue to expand and inflation will continue to be under control" was borne
out by ensuing events. This proved to be beneficial for fixed income returns
during the 12-month period. Considering that the economy expanded at a pace well
beyond our expectations (estimated to be between 3.5 - 4.0 percent on the year)
and the labor market tightened, the inflation restraint was remarkable. In
addition, the deterioration of the Asian markets, which precluded any
possibility of monetary tightening by the FEDERAL RESERVE BANK and produced
safe-haven demand for U.S. Treasury securities, put downward pressure on
domestic interest rates. While rates were volatile and range-bound during the
early part of the year, the fourth quarter rally produced a year-over-year
decline in rates of 72 basis points, as measured by the 30-year Treasury bond.
The Treasury bond, which began 1997 at 6.64 percent yield, traded as high as
7.17 percent and ended the year at 5.92 percent.
2
<PAGE>
Our fixed income strategy during the year centered on a residual bias that the
bond market, while volatile and range-bound, offered relatively good historic
value when Treasury yields provided real returns (nominal rates minus recent
inflation) between 3.5 - 4.0 percent. Correspondingly, we consistently
lengthened portfolio DURATIONS when the nominal rate for long Treasury bonds
exceeded 6.5 percent and, subsequently, brought the duration back to more normal
levels when that same rate receded closer to 6.0 percent. This activity
benefited our fixed income fund performance. Additionally, our investment
strategy emphasized the importance of current income for bond fund shareholders
while not sacrificing performance. This was done by modestly reducing average
credit quality to selectively participate in higher-yielding securities with
improving fundamentals, while avoiding exposure to securities with substantial
early redemption (call) risk. This latter strategy added important incremental
returns during a period of volatile and generally declining interest rates, as
the prices of bonds that are callable do not keep pace in a bond rally.
Because our outlook for the economy remains optimistic for 1998, with a slight
moderation in growth and continued containment of inflation, we believe that the
bond market will provide positive results for investors. While interest rates
are low by the standards of the past few years, they are not in the longer term.
Considering the modest level of domestic inflation supplemented by the salutary
effect of the events in the Far East, price pressures should remain under
control for the foreseeable future.
THANK YOU
Thank you for your investment with Fortis. We appreciate your trust in our
management of your investment funds.
Sincerely,
<TABLE>
<S> <C> <C>
[SIGNATURE] [SIGNATURE] [SIGNATURE]
Dean C. Kopperud Lucinda S. Mezey Howard H. Hudson
President Vice President, Equities Vice President, Fixed Income
</TABLE>
Dated: January 14, 1998
3
<PAGE>
GLOSSARY OF TERMS*
Terms defined are in ITALICS in the shareholder letters
AGENCY DEBENTURE SECTOR: Government Agency bonds.
BENCHMARK: Is an index which is a synthetic portfolio of similar securities
against which a portfolio is measured.
CYCLICALS: Securities or industries that are sensitive to business cycles.
DOLLAR BLOC BOND MARKETS: A market consisting of bonds traded in dollars.
DOW JONES INDUSTRIAL AVERAGE: A composite of 30 blue chip stocks.
DURATION: The measure of a bond fund's sensitivity to interest rate changes.
Traditionally measured in years, higher durations mean potentially greater
fluctuations in bond values, just as lower durations typically mean less
volatility.
EMU: European Monetary Unit
FEDERAL FUNDS ("FED FUNDS") RATE: Interest rate charged by banks with excess
reserves to banks that need the money to meet reserve requirements.
FEDERAL RESERVE BANK ("THE FED"): Led by its chairman, Alan Greenspan, the
Federal Reserve Bank is the central bank of the United States. The Federal
Reserve Bank is charged with responsibility for implementing policies which
preserve the purchasing power of the U.S. dollar, and encouraging economic
growth. One of the more widely known tools used by the Fed in pursuing its goals
is the FEDERAL FUNDS ("FED FUNDS") RATE.
GROSS DOMESTIC PRODUCT (GDP): The market value of a country's total output of
goods and services.
INVESTMENT GRADE CORPORATES: Corporate bonds issued with credit ratings of BBB
or better.
LARGE CAPITALIZATION STOCKS: Companies with total market value of outstanding
stock greater than 5 billion.
LIPPER VA UNDERLYING GROWTH FUNDS AVERAGE: Standard index for tracking
performance in a variable annuity growth product.
MBS PREPAYMENTS: Principal payments on mortgage backed securities.
MSCI EAFE INDEX: Morgan Stanley Capital International Europe Australia Far East
Index.
MID-CAPITALIZATION STOCKS: Companies with total market value of outstanding
stock between 1 billion and 5 billion.
NASDAQ COMPOSITE: A composite which tracks all the stocks traded on NASDAQ
(National Association of Securities Dealers Automated Quotation).
PERIPHERAL MARKETS: Inter-related markets.
SMALL-CAPITALIZATION STOCKS: Companies with total market value of outstanding
stock less than 1 billion.
TOTAL RETURNS: Change in market value of a security plus income received.
YIELD CURVE: Visual illustration that represents the term structure of interest
rates.
4
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Consumer Financing 23.9%
Banks 13.2%
Diversified Finance 15.5%
Captive Equipment Finance 14.6%
Utilities-Electric 14.2%
Captive Auto Finance 9.7%
Brokerage and Investment 4.6%
Food-Grocery, Misc. 4.3%
</TABLE>
FORTIS SERIES FUND: MONEY MARKET SERIES
AS THE MOST CONSERVATIVE SUBACCOUNT, THIS PORTFOLIO IS DESIGNED FOR INVESTORS
SEEKING LIQUIDITY AND STABLE PRINCIPAL. ACCORDINGLY, THE MONEY MANAGERS CHOOSE
HIGH-QUALITY, SHORT-TERM MONEY MARKETS AND U.S. GOVERNMENT SECURITIES.
REVIEW
Throughout 1997, short-term interest rates stayed in a relatively tight range.
Thirty-day commercial rates ranged from a low of 5.23 percent to a high of 5.85
percent. In March, short-term rates rose 0.25 percent, similar to the increase
in the FEDERAL FUNDS RATE announced on March 25th. After rates rose in March,
there was little change until late October, when year-end pressures and
increasing market sentiment that the FEDERAL RESERVE BANK may have to raise
rates again, led to a modest 0.15 percent rise in market rates. Rates remained
at the higher levels until year-end with the 30-day commercial paper rate
closing at 5.58 percent.
The Portfolio's total return in 1997 was 5.34 percent, up from 5.17 percent in
1996. The improvement over 1996 was mostly due to the higher rates available on
short-term paper in 1997. We began the year with the Portfolio's average
maturity targeted at 55 days. This allowed us to take advantage of the higher
yields on longer maturities during a period in which we expected rates to remain
stable. In late February, the release of stronger economic information led us to
shorten the average maturity to 35 days, anticipating an increase in short-term
interest rates. Following March's 0.25 percent increase in rates, we targeted
the Portfolio's average maturity at 40 - 45 days until early November. Then we
moved the average maturity up to 50 days to capture the higher yields available
on paper that matured after year-end. Furthermore, the longer average maturity
shows our belief that the Fed would not raise rates in the face of low inflation
and an Asian economic crisis.
OUTLOOK
Looking forward, we expect the economy to slow in 1998 from 1997's healthy pace.
Although U.S. economic basics remain strong, the current turmoil occurring in
the Asian economies is likely to have a dampening effect on U.S. economic
growth. Therefore, we feel that GROSS DOMESTIC PRODUCT will probably moderate to
a 2.0 - 2.5 percent level in 1998. Inflation, which has remained low during a
period of strong economic growth, is likely to remain so as economic growth
slows. However, we do not feel that the economy will be sluggish enough to
warrant a lowering of the federal funds rate in the near future. Nonetheless,
the extent of Asia's economic troubles and their impact on the U.S. economy may
change this view, if they prove to be greater than we now believe. Until these
conditions are resolved, we will target the portfolio's average maturity at our
neutral range of 40 - 45 days.
5
<PAGE>
PORTFOLIO ALLOCATION
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
U.S. Treasury Securities 41.8%
FNMAs 19.7%
Other Direct Federal Obligations 18.5%
GNMAs 11.0%
Cash Equivalents/Receivables 5.2%
Other 2.3%
FHLMCs 1.5%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. U.S. Treasury Note (6.375%) 2000 20.2%
2. TVA Global (6.375%) 2005 10.8%
3. GNMA (7.50%) #447688 2027 6.8%
4. U.S. Treasury Note (6.625%) 2002 6.3%
5. FHLB Note (7.31%) 2004 5.9%
6. U.S. Treasury Note (5.625%) 1999 5.0%
7. U.S. Treasury Note (6.125%) 2001 4.2%
8. U.S. Treasury Note (6.875%) 2006 3.3%
9. FNMA (7.00%) #307055 2025 3.3%
10. FNMA (7.00%) #250345 2025 3.2%
</TABLE>
FORTIS SERIES FUND: U.S. GOVERNMENT SECURITIES SERIES
THIS PORTFOLIO IS DESIGNED FOR CONSERVATIVE INVESTORS SEEKING A STRONG TOTAL
RETURN, AS WELL AS A RELATIVELY HIGH LEVEL OF CURRENT INCOME. IT FOCUSES ITS
INVESTMENTS IN U.S. GOVERNMENT BONDS, TREASURIES AND GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES.
REVIEW
In our last shareholder letter, we forecasted robust economic growth (GDP
between 2.5 - 3.0 percent) and continuing economic expansion well into 1998. We
also felt that the increasingly tight labor market would put pressure on wages
and ultimately result in a modest increase in inflation. This could have
prompted the FEDERAL RESERVE to raise short-term interest rates by .25 percent.
In retrospect, our forecast was correct about the contributing factors. The
economy grew at an estimated 3.3 percent, 1.8 million jobs were created (versus
1.2 million in the first half of 1997), and average hourly earnings grew by 2.1
percent (versus 1.6 percent). We were incorrect, however, about the effects of
these factors. The wage pressures have yet to appear in the overall inflation
rate, and the Fed did not have to raise rates. In addition, the financial crisis
in the Far East resulted in significant inflows into the U.S. Bond market, as
investors sought a safe haven for their money.
The net result of these events was that the peak in interest rates for the year
occurred in March, when the Federal Reserve made its only policy change in 1997,
raising short-term rates .25 percent. In the second half of the year, rates have
declined significantly, with the ten-year Treasury yield falling from 6.50
percent on June 30 to 5.75 percent on December 31. The shape of the YIELD CURVE
has also flattened over the last six months, as two-year Treasury yields fell by
42 basis points, while 30-year Treasury yields fell by 86 basis points.
Our strategy in the second half of the year was similar to the strategy in the
first half of 1997, in that we extended the Portfolio's DURATION as interest
rates rose. However, we did not shorten the Portfolio duration relative to our
BENCHMARK as rates fell. Given our positive long-term outlook on rates, and the
fact that the decline in yields during the fourth quarter was driven almost
exclusively by the crisis in Asia, we felt uncomfortable repositioning the
portfolio based on the events that drove the market in the fourth quarter.
Accordingly, we maintained a neutral duration relationship relative to our
benchmark from mid-September through year-end. Our total duration currently
stands at 4.0 years, which is slightly shorter than at mid-year (only because
the overall market duration shortened as rates fell and MBS PREPAYMENTS
increased). Our mortgage-backed securities exposure is virtually unchanged from
mid-1997 at 28 percent of the Portfolio, and we continue to overweight the
AGENCY DEBENTURE SECTOR, with 25 percent in the Portfolio, reflecting our bias
toward well-structured, income-producing securities. Overall, our investment
decisions produced a 9.1 percent return for the Portfolio, compared to a 9.5
percent for the Lehman Government Index.
OUTLOOK
Our strategy going forward will depend on the severity and length of the Asian
crisis. Specifically, should the difficulties in the Far East continue as
anticipated, it is likely that the spillover will slow U.S. economic growth. In
addition, a continuing crisis should bolster the strength of the U.S. dollar,
making foreign goods cheaper and decreasing the risks of inflation. In this
scenario, it is possible that rates could drop significantly from their current
levels. On the other hand, should the situation in the Far East be resolved
quickly, the underlying strength in the economy should give rise to the modest
inflation pressures we were looking for six months ago.
VALUE OF $10,000 INVESTED JANUARY 1, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
INTERMEDIATE GOV'T INDEX** U.S. GOVERNMENT SECURITIES SERIES
<S> <C> <C>
1/1/88 10,000 10,000
88 10,640 10,636
89 11,989 12,034
90 13,135 12,988
91 14,988 14,853
92 16,027 15,765
93 17,335 17,255
94 17,054 16,144
95 19,528 19,177
96 20,169 19,600
97 21,727 21,380
U.S. Government Securities Series
Average Annual Total Return*
1 Year 5 Year 10 Year
+9.08% +6.28% +7.89%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** An unmanaged index of government bonds with an average maturity of three to
four years.
6
<PAGE>
PORTFOLIO ALLOCATION
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds - Investment Grade 35.0%
Asset Backed Securities 21.9%
Corporate Bonds - Non-Investment Grade 20.5%
U.S. Government Agencies 10.9%
U.S. Treasury Securities 5.7%
Cash Equivalent/Receivables 3.1%
Municipal Bonds 2.8%
Equity Securities 0.1%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. U.S. Treasury Note (5.625%) 1999 5.0%
2. GNMA (9.00%) #286497 2020 2.7%
3. FNMA (7.00%) #307055 2025 2.6%
4. DLJ Mtg Acceptance Corp. (8.50%) 2001 2.1%
5. GTE Corp. (7.51%) 2009 2.0%
6. Republic NY Capital I (7.75%) 2026 2.0%
7. Nationslink Funding Corp. (7.52%) 2005 1.9%
8. Green Tree Financial Corp. (7.20%) 2019 1.7%
9. FNMA (7.00%) #250345 2025 1.7%
10. Mortgage Capital Funding, Inc. (7.90%) 2006 1.7%
</TABLE>
FORTIS SERIES FUND: DIVERSIFIED INCOME SERIES
THIS PORTFOLIO IS DESIGNED ESPECIALLY FOR THOSE PEOPLE INTERESTED IN SEEKING
INCOME FROM BOTH GOVERNMENT SECURITIES AND CORPORATE BONDS. THE MAJORITY OF THE
PORTFOLIO WILL PURSUE HIGH-QUALITY CORPORATE BONDS AND U.S. GOVERNMENT
SECURITIES. A PORTION MAY BE INVESTED IN DIVIDEND-PAYING STOCKS AND LOWER-RATED
CORPORATE BONDS FOR ADDED OPPORTUNITY.
REVIEW
1997 marked the seventh consecutive year of economic expansion in the United
States. Historically, the latter stages of an economic expansion contain rising
inflation and higher interest rates. When 1997 began, history seemed to be
repeating itself. Interest rates rose in the first quarter, anticipating future
inflation. Acting against this threat, the FEDERAL RESERVE BANK raised the
FEDERAL FUNDS RATE 0.25 percent on March 25th. However, as the year progressed,
the feared rise in inflation never happened. In fact, it fell to 30-year lows.
Buoyed by the favorable inflation data, interest rates also fell, with the yield
on the 30-year Treasury bond falling from a high of 7.17 percent on April 14 to
5.92 percent at year end.
For the year ending December 31, 1997, the Diversified Income Portfolio earned a
10.4 percent total rate of return. The return for the Lehman Brothers Aggregate
Bond Index over the same time period was 9.7. The Portfolio's outperformance of
the BENCHMARK was due largely to the significant drop in interest rates. It was
helped by our strategies regarding duration, sector allocation and security
selection. By keeping the Portfolio's duration relatively long for most of the
April - September period, we were able to enhance the positive effect of
declining interest rates on the portfolio return. A sector allocation which
benefited the Portfolio was an overweighting in mortgages in the first half of
the year, when the sector was undervalued. In the second half of the year, we
reduced our mortgage exposure as the sector became fairly valued.
OUTLOOK
In 1998, we expect the pace of economic growth in the United States to slow from
its 1997 levels. The current economic crisis in Asia is likely to have a
spillover effect on our economy and drag GROSS DOMESTIC PRODUCT growth down to a
2.0 - 2.5 percent rate. However, the effect of the Asian economic weakness on
inflation should be positive as a result of Asian currency depreciation versus
the dollar. The resulting lower import prices will, in turn, force some U.S.
companies to lower their prices to remain competitive. Therefore, we feel that
inflation will remain low and stable throughout 1998. With inflation benign and
economic growth moderating, we view the near-term outlook for U.S. Government
securities as favorable. Our view of corporate and mortgage-backed bonds is not
as optimistic. We plan to maintain a neutral to slightly below neutral position
in these asset classes.
VALUE OF $10,000 INVESTED MAY 2, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
AGGREGATE BOND INDEX*** DIVERSIFIED INCOME SERIES
<S> <C> <C>
5/2/88 10,000 10,000
88 10,454 10,390
89 11,973 11,668
90 13,046 12,704
91 15,133 14,567
92 16,254 15,598
93 17,838 17,588
94 17,333 16,670
95 20,535 19,548
96 21,152 20,359
97 23,200 22,485
Diversified Income Series
Average Annual Total Return*
Since
1 Year 5 Year May 2, 1988**
+10.44% +7.59% +8.74%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of government, corporate and mortgage-backed securities
with an average maturity of approximately nine years.
7
<PAGE>
PORTFOLIO DIVERSIFICATION BY COUNTRY AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
United States 21.8%
Germany 17.1%
Italy 12.4%
Denmark 10.3%
Cash Equivalents/Receivables 9.9%
Australia 7.2%
Netherlands 7.2%
Spain 6.2%
Austria 3.6%
United Kingdom 2.8%
Canada 1.5%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. German Government (6.50%) 2027 7.4%
2. U.S. Treasury Note (5.75%) 2000 4.8%
3. German Government (7.125%) 2002 4.7%
4. Kingdom of Denmark (8.00%) 2003 4.7%
5. Buoni Poliennali Del Tesoro (8.25%) 1999 4.6%
6. General Electric Capital Corp. (8.125%) 2007 4.6%
7. Buoni Poliennali Del Tesoro (9.50%) 2001 4.5%
8. ARKAIG Finance Co. (5.65%) 1999 4.3%
9. Kingdom of Denmark (8.00%) 2001 3.6%
10. Republic of Austria (7.875%) 2002 3.6%
</TABLE>
FORTIS SERIES FUND: GLOBAL BOND SERIES
(SUBADVISED BY MERCURY ASSET MANAGEMENT)
BECAUSE IT OFFERS INVESTORS A COMBINATION OF CURRENT INCOME AND GROWTH
POTENTIAL, THIS PORTFOLIO MAKES AN EXCELLENT CHOICE FOR THOSE INVESTORS WHO SEEK
TO ROUND OUT THEIR INVESTMENT SELECTIONS WITH GLOBAL BONDS. THE MONEY MANAGERS
SEEK OUT HIGH-QUALITY BONDS AND OTHER FIXED INCOME SECURITIES OFFERED BY
GOVERNMENTS AND CORPORATIONS WORLDWIDE, EMPHASIZING DEVELOPED COUNTRIES.
REVIEW
The Global Bond Portfolio had a 0.1 percent return for the year ending December
31, 1997. While the Salomon Brothers World Government Bond Index had a return of
0.2 percent for the same time period. The Portfolio's performance reflected the
overall market environment, as a strong U.S. dollar lowered the performance of
the non-U.S. bond markets. While the Portfolio kept a strong position in the
dollar, the remaining exposure to international currencies had a negative impact
on performance.
The Portfolio stayed overweighted in the DOLLAR BLOC BOND MARKETS of Australia,
Canada and the United States. We kept an overweighting in Europe throughout the
period. However within the Continent, a mid-year shift emphasized the
higher-yielding PERIPHERAL MARKETS at the expense of the lower-yielding core.
During the year, the Portfolio stayed underweighted in the low-yielding Japanese
bond market. By year-end, even this small position was eliminated.
OUTLOOK
Bonds will continue to look attractive against a background of uncertain
earnings potential, unpredictable equity markets and better chances for
inflation. We must also consider the current Asian currency turmoil and its
potential impact on the United States. Any new U.S. interest rate policy changes
may stay on hold for some time. In core European markets, effects from Asia may
delay expected rate hikes. In the United Kingdom, recent data suggests economic
growth is slowing and base rates may be near their peak. Japanese bonds are
unappealing given their low yields. On the money front, a good domestic U.S.
economy and "safe haven" status suggest the U.S. dollar will remain strong,
especially against the Japanese yen.
VALUE OF $10,000 INVESTED JANUARY 3, 1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SALOMON BROS WORLD GLOBAL
GOV'T BOND INDEX *** BOND SERIES
<S> <C> <C>
1/3/95 10,000 10,000
95 11,904 11,914
96 12,335 12,310
97 12,364 12,327
Global Bond Series
Average Annual Total Return*
Since
1 Year January 3, 1995**
+.14% +7.24%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of world government bonds with maturities of at least
one year.
8
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 35.4%
Cable Television 17.2%
Telecommunications 14.5%
Industrial 8.2%
Textile Manufacturing 6.2%
Cash Equivalents/Receivables 5.4%
Housing 4.6%
Health Care Services 4.4%
Broadcasting 4.1%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. MDC Holdings, Inc. (11.125%) 2003 2.8%
2. Australis Media Ltd. (14.00%) 2003 2.2%
3. Unisys Corp. (11.75%) 2004 1.9%
4. Petersen Publishing Co. (11.125%) 2006 1.9%
5. Collins & Aikman Products (11.50%) 2006 1.9%
6. Young Broadcasting, Inc. (11.75%) 2004 1.9%
7. Greyhound Lines, Inc. (11.50%) 2007 1.9%
8. Galaxy Telecom L.P. (12.375%) 2005 1.9%
9. Falcon Holding Group L.P. (11.00%) 2003 1.9%
10. Tenet Healthcare Corp. (10.125%) 2005 1.8%
</TABLE>
FORTIS SERIES FUND: HIGH YIELD SERIES
LONG-TERM INVESTORS, WILLING TO ACCEPT GREATER PRICE FLUCTUATIONS, MAY CHOOSE TO
DIVERSIFY THEIR STOCK OR BOND INVESTMENTS WITH THIS PORTFOLIO OF HIGHER YIELD
BONDS. ITS MONEY MANAGERS INVEST IN A WIDELY DIVERSIFIED PORTFOLIO OF
LOWER-RATED CORPORATE BONDS.
REVIEW
Encouraged by the strength of the global economy, low default rates, low
inflation, and healthy U.S. stock and Treasury bond markets, high yield
securities, on average, recorded their third straight year of double-digit
returns in 1997.
The High Yield Portfolio recorded a disappointing 9.8 percent return for the
year. The return of the Lehman Brothers High Yield Index over the same time
period was 12.0 percent. Although the Portfolio generated well above-average
income, it did not do as well in seeking to attain its goal of delivering
above-average TOTAL RETURNS versus its competitive universe. Most of the
shortfall in the 1997 performance can be attributed to specific bond holdings,
rather than industry sector or quality weightings. Australis Media, an
Australian pay-television operator, had its bonds drop substantially in price
after a failed merger. The bonds of Wireless One, a U.S. wireless cable
television company, declined throughout the year as concerns increased that the
company had insufficient cash to continue the build-out of its cable systems.
From a industry sector standpoint, our focus on telecommunication companies and
traditional cable television companies helped the Portfolio's performance. Also,
avoiding supermarket bonds and bonds issued by companies sensitive to the
business cycle like steel, chemical, and forest products concerns was helpful.
OUTLOOK
Our 1998 outlook for high yield bonds is cautious. The collapse of the Asian
economies is likely to slow the U.S. economy in 1998 and thereby increase the
chance of default among lower-rated issuers of corporate debt. Although demand
for high yielding, lower-rated paper is at all-time highs, the difference
("spread") between these securities and U.S. Government bonds is historically
narrow. In addition, the U.S. stock market, often the primary source for
companies looking to reduce their debt burden, has had an unprecedented
three-year upswing. This may prove hard to match in 1998. Our current strategy
is to work to improve the overall credit quality of the Portfolio. While this
may result in lower dividends at some point in the year, our efforts will be
focused on improving the total return of the Portfolio.
VALUE OF $10,000 INVESTED MAY 2, 1994
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
HIGH YIELD INDEX*** HIGH YIELD SERIES
<S> <C> <C>
5/2/94 $10,000 $10,000
94 10,165 9,925
95 12,150 11,189
96 13,417 12,366
97 15,031 13,572
High Yield Series
Average Annual Total Return*
Since
1 Year May 2, 1994**
+9.76% +8.68%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of lower quality, high yield corporate debt securities.
9
<PAGE>
PORTFOLIO ALLOCATION AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 56.1%
Asset Backed Securities 10.9%
Corporate Bonds-Investment Grade 9.1%
Corporate Bonds-Non-investment Grade 7.5%
Cash Equivalents/Receivables 7.2%
U.S. Treasury Securities 4.2%
U.S. Government Agencies 4.1%
Municipal Bonds 0.9%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. American International Group, Inc. 2.2%
2. Fannie Mae 2.0%
3. Home Depot, Inc. 1.5%
4. Schlumberger Ltd. 1.4%
5. Archer-Daniels-Midland Co. 1.4%
6. Costco Companies, Inc. 1.3%
7. AirTouch Communications, Inc. 1.3%
8. AES Corp. 1.3%
9. MGIC Investment Corp 1.3%
<CAPTION>
Bonds
- -------------------------------------------------------------------
<C> <S> <C>
1. U.S. Treasury Note (6.00%) 1999 1.6%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 12/31/97
STOCK ADDITIONS: STOCK ELIMINATIONS:
Archer-Daniels-Midland Co. Green Tree Financial Corp.
Hartford Life, Inc. Oracle Corp.
Time Warner, Inc. First Data Corp.
Cendant Corp. CUC International, Inc.
Groupe Danone-ADR Columbia/HCA Healthcare Corp.
Warner-Lambert Co. Pep Boys-Manny Moe & Jack
Nabisco Holdings Corp. Class A Computer Associates
Interpublic Group of International, Inc.
Companies, Inc. Franklin Resources, Inc.
Walgreen Co. Scholastic Corp.
Norwest Corp. AutoZone, Inc.
FORTIS SERIES FUND: ASSET ALLOCATION SERIES
DESIGNED FOR INVESTORS WHO SEEK TOTAL RETURN FROM A BLEND OF GROWTH POTENTIAL
AND CURRENT INCOME. THE PORTFOLIO MANAGERS SELECT A MEDLEY OF U.S. STOCKS, BONDS
AND MONEY MARKETS IN PERCENTAGES THAT MAY VARY WITH CURRENT MARKET CONDITIONS.
REVIEW
The Asset Allocation Portfolio adjusts its weightings between stocks and bonds
as economic and market conditions warrant. In August, the equity portion was
lowered to 50 percent as stocks reached new highs. Subsequently, in November,
the stock portion was increased in two 3 percent increments and currently stands
at 56 percent of total assets. During the second fiscal period, the Asset
Allocation Portfolio registered a gain of 8.8 percent, which compares to an S&P
500 Index return of 10.6 percent and a 6.4 percent return for the Lehman
Brothers Aggregate Bond Index. For 1997 as a whole, the Asset Allocation
Portfolio returned 20.2 percent which compares to 33.3 percent for the S&P 500
Index and 9.7 percent for the Lehman Index.
The equity portion of the Asset Allocation Portfolio is currently well
diversified with emphasis on financial, health care and energy sectors. We have
reduced the portfolio holdings in the technology sector in favor of companies
exhibiting more predictable earnings growth. Equity valuations continue to be
high on a historical basis as the favorable inflationary outlook continues.
Recent economic problems in Asia and potential slowing domestic growth could
present problems to the U.S. equity market in the period ahead. Hence, our less
than fully bullish stand on equities at present.
In the bond portion of the Fund, we managed the DURATION of the portfolio to
take advantage of a significant decline in interest rates over the course of the
year. After hitting a high yield of 7.17 percent on April 14, the 30-year
Treasury bond fell to a yield of 5.92 percent by year end. The drop in interest
rates was due in large part to continuing low inflation and the deterioration of
Asian economies toward the end of the year. For much of the year, the
combination of strong economic growth and low inflation created an atmosphere
that was favorable for non-Treasury debt. The problems in Asia, however, caused
the performance of corporate debt to lag Treasuries later in the year as
investors feared a negative impact on corporate profits. Fortunately, we managed
to avoid any direct exposure to Asia in our portfolio.
Our fixed income strategy was to modestly overweight mortgage-backed and
asset-backed securities in the first half of the year, as our valuation
indicators suggested the sector was undervalued. Indeed, the sector outperformed
Treasuries and INVESTMENT GRADE CORPORATES. As we moved into the second half of
the year, we reduced our mortgage exposure as the sector's valuation moved back
to fair value.
OUTLOOK
In 1998, we expect the pace of economic growth in the United States to slow from
its 1997 levels. The current economic crisis in Asia is likely to have a
spillover effect on our economy and drag GDP growth down to a 2.0 - 2.5
percentage rate. However, the effect of the Asian economic weakness on inflation
should be positive as a result of Asian currency depreciation versus the dollar.
The resulting lower import prices will, in turn, force some U.S. companies to
lower their prices to remain competitive. Therefore, we feel that inflation will
remain low and stable throughout 1998. With inflation benign and economic growth
moderating, we view the near-term outlook for U.S. Government securities as
favorable. Our view of corporate and mortgage-backed bonds is not as optimistic
and we plan to maintain a neutral to slightly below neutral position in these
asset classes.
VALUE OF $10,000 INVESTED JANUARY 1, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
AGGREGATE BOND INDEX + S&P 500 ++ ASSET ALLOCATION SERIES
<S> <C> <C> <C>
1/1/88 $10,000 $10,000 $10,000
88 10,789 11,681 10,371
89 12,356 15,359 12,834
90 13,463 14,872 13,093
91 15,618 19,415 16,712
92 16,774 20,904 17,874
93 18,409 22,993 19,624
94 17,888 23,293 19,563
95 21,192 32,029 23,861
96 21,829 39,260 26,844
97 23,943 52,317 32,277
Asset Allocation Series
Average Annual Total Return*
1 Year 5 Year 10 Year
+20.24% +12.55% +12.43%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
+ An unmanaged index of government, corporate, and mortgage-backed securities
with an average maturity of approximately nine years.
++ This is an unmanaged index of 500 common stocks.
10
<PAGE>
PORTFOLIO ALLOCATION AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Equity Securities 56.7%
Long-Term Foreign Bonds - Investment Grade 23.1%
U.S. Treasury Securities 13.4%
Cash Equivalents/Receivables 6.8%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. U.S. Treasury Note (5.75%) 2003 3.5%
2. U.S. Treasury Bond (8.125%) 2019 3.1%
3. Treuhandanstalt Obligation (7.00%) 1999 2.1%
4. U.S. Treasury Note (7.875%) 2004 1.9%
5. U.S. Treasury Note (7.25%) 2004 1.9%
6. United Kingdom Treasury (8.00%) 2013 1.7%
7. Australian Government (9.00%) 2004 1.6%
<CAPTION>
Stocks
- -------------------------------------------------------------------
<C> <S> <C>
1. Houghton Mifflin Co. 1.9%
2. UST Corp. 1.6%
3. Philip Morris Companies, Inc. 1.6%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 12/31/97
ADDITIONS: ELIMINATIONS:
Irish Life plc Waban, Inc.
Pharmacia and UpJohn, Inc. Bank of New York Co., Inc.
BJ's Wholesale Club, Inc. Repsol S.A.
Potash Corp. of Saskatchewan Valeo S.A.
Peninsular & Orient Steam MCI Communications Corp.
Navigation PSA Peugeot Citroen S.A.
Borg-Warner Automotive, Inc. General Motors Corp.
Albertson's, Inc. Novartis AG
Royal Sun Alliance Insurance Greenfield Industries, Inc.
Group East Japan Railway Co.
Mediaset Spa
Bank of Ireland
FORTIS SERIES FUND: GLOBAL ASSET ALLOCATION SERIES
(SUBADVISED BY MORGAN STANLEY ASSET MANAGEMENT)
DESIGNED ESPECIALLY FOR INVESTORS WHO WANT A FLEXIBLE PORTFOLIO THAT SEEKS TOTAL
RETURN FROM A BLEND OF GROWTH POTENTIAL AND CURRENT INCOME FROM AROUND THE
WORLD, INCLUDING THE UNITED STATES. THE MONEY MANAGERS INVEST IN GLOBAL STOCKS,
BONDS AND MONEY MARKETS IN PERCENTAGES THAT MAY VARY WITH MARKET CONDITIONS.
REVIEW
During the fourth quarter, the Global Asset Allocation Portfolio gained 0.9
percent, with the equity component outperforming its benchmark and the fixed
income portion slightly behind. For the full year, both sectors outperformed,
with the equities up 25.4 percent compared with the MSCI World Index return of
16.0 percent. The major contributors to the outperformance were strong stock
selection in Europe and Japan and minimal exposure to the collapsing Southeast
Asian markets. The bond holdings gained 2.8 percent ahead of the Salomon
Brothers World Government Bond Index return of .24 percent. The total fund
return for the full year was 13.5 percent.
The United States was again among the strongest equity markets, with the MSCI
USA Index rising 3.4 percent over the quarter and 33.4 percent for the year as a
whole. The continuing crisis in Asia dominated the period, with U.S. stocks
enjoying safe-haven status encouraged by the strength of the dollar. However,
investor nervousness was heightened by several high profile earnings warnings
and an awareness of the importance of Asian growth on the technology sector.
LARGE CAPITALIZATION, defensive stocks, such as utilities, telecoms and banks,
continued to benefit, boosted by further merger activity and continuing strong
balance sheets. Following a volatile period, the MSCI Europe Index ended the
quarter up 0.1 percent in U.S. dollar terms to give a return of 23.8 percent for
the year. The main beneficiaries of the Asian story were the more liquid markets
of Germany, France and Switzerland. Those markets with a heavier concentration
in the financial industry also performed well due to the restructuring in the
sector and particularly the merger of USB and Swiss Bank Corp. The MSCI Japan
Index fell 19.8 percent during the quarter in U.S. dollar terms resulting in a
loss of 23.7 percent for the year. The deepening banking crisis, the impact of
Asia on corporate earnings, continuing weak private consumption and the specter
of deflation all weighed down on stocks. Weakest sectors included banks,
construction and CYCLICALS, while the large exporters continued to benefit from
yen weakness.
Global fixed income markets performed well in local currency terms during the
fourth quarter, largely in response to the Asian economic crisis. Two positive
influences for bond markets were the general perception that the region's
problems would reduce world growth, and that the devaluation of Asian currencies
would increase competitive pressures globally and keep inflation in check.
Continuing a trend, bond market returns in U.S. dollar terms were significantly
reduced as the dollar gained on its safe-haven status. Over the quarter, the
dollar rose 1.8 percent versus the deutschemark and 7.7 percent versus the
Japanese yen.
Our major strategy move over the quarter was a 2 percent reduction in the
underweighting of the Japanese yen in favor of the dollar. Our interest rate
exposure remained broadly neutral in the DOLLAR BLOC and European markets, and
underweight in the Japanese market. During the quarter, your Portfolio benefited
from its overweighting in the European high yield and Irish bond markets and its
underweighting in the yen.
OUTLOOK
Although the impact of the Asian crisis will be to slow economic growth, the
expansions in Europe and North America are set to continue. In the United
States, the Asian crisis should help lower growth to a more sustainable pace.
This reduction, combined with the likely pressure on goods' pricing resulting
from the increased competitiveness of Asian exporters, will both act to prevent
any near-term tightening on the part of the FEDERAL RESERVE. U.S. labor markets
are very tight, however, and the prospect remains for increases in both U.S.
wages and service sector prices. Within Europe, inflation is at a low. Exchange
rates at competitive levels to the dollar and still lower interest rates
continue to promote a broadening of the recovery. The impact of Asia will likely
also be less within Europe than the United States. We remain cautious of
increasing interest rate exposure in either North America or Europe at the
current time. In Japan, we retain the view that the exceptionally low levels of
Japanese yields offer minimal value.
VALUE OF $10,000 INVESTED JANUARY 3, 1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
SALOMON BROS WORLD GLOBAL ASSET
GOV'T BOND INDEX + MSCI WORLD INDEX ++ ALLOCATION SERIES
<S> <C> <C> <C>
1/3/95 $10,000 $10,000 $10,000
95 11,904 12,132 11,747
96 12,335 13,830 13,242
97 12,364 16,048 15,031
Global Asset Allocation Series
Average Annual Total Return*
Since
1 Year January 3,1995**
+13.51% +14.58%
</TABLE>
Annual period ended December 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. This represents the performance of the
Series itself, without the expenses associated with the
variable annuities or variable universal life insurance
policies.
* SEC defined total returns, including reinvestment
of all dividend and capital gains distributions.
** Date shares were first offered to the public.
+ An unmanaged index of world government bonds with
maturities of at least one year.
++ An unmanaged index of the world's major equity
markets in U.S. dollars, weighted by stock market
value.
11
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 42.3%
Cash Equivalents/Receivables 10.3%
Banks 9.4%
Financial Services 5.6%
Utilities-Telephone 5.5%
Oil-Refining 5.3%
Drugs 4.4%
Office Equipment and Supplies 4.4%
Insurance 3.5%
Utilities-Electric 3.5%
Aerospace and Equipment 2.9%
Chemicals-Specialty 2.9%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Republic New York Corp. 2.7%
2. Federated Department Stores, Inc. 2.1%
3. International Business Machines Corp. 2.1%
4. Burlington Northern Santa Fe Corp. 2.0%
5. Bank of New York Co., Inc. 2.0%
6. Fannie Mae 2.0%
7. U.S. Bancorp 2.0%
8. Royal Dutch Petroluem Co. NY Shares 1.9%
9. Finova Group, Inc. 1.9%
10. American International Group, Inc. 1.8%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 12/31/97
ADDITIONS: ELIMINATIONS:
Republic New York Corp. Kimco Realty Corp.
Fannie Mae Columbia/HCA Healthcare Corp.
U.S. Bancorp Exxon Corp.
Royal Dutch Petroleum Co. NY ADT Ltd.
Shares Owens Corning
American International Group, Mallinckrodt Group, Inc.
Inc. Ameritech Corp.
Mobil Corp. Interpublic Group of
Cincinnati Bell, Inc. Companies, Inc.
BankBoston Corp. Vishay Intertechnology, Inc.
Bell Atlantic Corp. Grainger (W.W.), Inc.
Hartford Financial Services
Group
FORTIS SERIES FUND: VALUE SERIES
DESIGNED FOR INVESTORS WHO LIKE TO DISCOVER QUALITY-GROWTH INVESTMENT
OPPORTUNITIES AT "BARGAIN" PRICES. THE PORTFOLIO MANAGERS CHOOSE STOCKS WITH
CURRENT PRICES THAT DO NOT NECESSARILY REFLECT THE STOCKS' POTENTIAL VALUE.
REVIEW
The Value Portfolio achieved a total return of 25.24 percent for the 12 months
ending December 31, 1997, which compares to the somewhat larger increase of
33.26 percent for the S&P 500 over the same period.
Common stocks in general achieved very strong returns in 1997. Sector
performance varied considerably from quarter to quarter. However, for the year,
LARGE CAPITALIZATION STOCKS tended to perform better than their smaller
counterparts, while growth stocks tended to perform better than value stocks.
The Value Portfolio benefited from moderately above-average exposure (relative
to the competition) to common stocks with relatively stable earnings growth.
OUTLOOK
We will keep a cautious outlook, given the stock market's strong performance
over the past three years. We will continue to focus our efforts on identifying
and investing in undervalued, large capitalization companies that have
above-average earnings stability.
VALUE OF $10,000 INVESTED MAY 1, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500*** VALUE SERIES
<S> <C> <C>
5/1/86 $10,000 $10,000
96 11,453 11,149
97 15,262 13,962
Value Series
Average Annual Total Return*
Since
1 Year May 1, 1996**
+25.24% +22.14%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of 500 common stocks.
12
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 30.0%
Cash Equivalents/Receivables 10.3%
Drugs 10.1%
Utilities-Telephone 8.0%
Real Estate-Investment Trust 7.0%
Finance Services 6.9%
Natural Gas Transmissions 5.9%
Banks 5.1%
Utilities-Electric 4.7%
Food 4.3%
Oil-Crude Petroleum and Gas 3.9%
Insurance 3.8%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. SBC Communications, Inc. 2.0%
2. Glaxo Wellcome ADR 2.0%
3. Lilly (Eli) & Co., Inc. 1.9%
4. Enron Corp. 1.9%
5. Duke Energy Corp. 1.8%
6. Sunamerica, Inc. Convertible Preferred 1.8%
7. General Electric Co. 1.8%
8. AES Corp. Convertible, Ser A "Tecons" 1.8%
9. Banc One Corp. 1.7%
10. Household International, Inc. 1.7%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES
FOR THE YEAR ENDED 12/31/97
ADDITIONS: ELIMINATIONS:
SBC Communications, Inc. PanEnergy Corp.
Glaxo Wellcome plc ADR Beacon Properties Corp.
Duke Energy Corp. Student Loan Marketing
AES Corp. Conv. Preferred, Ser Association
A "Tecons" Kerr-McGee Corp.
Ameritech Corp. Safeco Corp.
Texaco, Inc. Monterey Resources, Inc.
Excel Realty Trust, Inc. American Brands, Inc.
Royal Caribbean Cruises Ltd. Green Tree Financial Corp.
Equity Office Properties Trust Frontier Corp.
Washington Mutual, Inc. Readers Digest Association,
Inc. Class A
FORTIS SERIES FUND: GROWTH & INCOME SERIES
THIS PORTFOLIO OFFERS A SOLUTION TO INVESTORS WHO WANT TO COMBINE CONSERVATIVE
GROWTH OPPORTUNITIES WITH INCOME POTENTIAL. IT FOCUSES ON COMPANIES WITH
ATTRACTIVE CURRENT DIVIDEND YIELDS RELATIVE TO THE STANDARD AND POOR'S 500 STOCK
INDEX. THE PORTFOLIO IS WELL DIVERSIFIED WITH EXPOSURE TO MANY SECTORS OF THE
ECONOMY.
REVIEW
The Growth & Income Portfolio focuses on companies with growing streams of
earnings and dividends. The Portfolio is well diversified by economic sector and
generally is comprised of more mature companies which have the ability to share
their earnings growth with shareholders through dividend increases. Currently,
the largest sector weightings include financial, healthcare, utilities and
energy.
For the second half of fiscal 1997, the fund returned 11.26 percent. This
compares to the 10.58 percent increase in the S&P 500 Index over the similar
period. For the year as a whole, the Growth & Income Portfolio posted a gain of
27.69 percent, which compares to the somewhat larger increase of 33.26 percent
for the S&P 500 over the same period. Although selected areas of the technology
sector posted strong results, the portfolio did not reap these benefits; we
underweight this sector because it pays few dividends. We also had an
above-average weighting in cash reserves, which detracted from overall
performance in a period of strong market returns.
OUTLOOK
Looking at the year ahead, the market outlook remains generally optimistic. Low
rates of inflation and interest rates coupled with moderate economic growth may
justify currently lofty market valuations. We believe that a slowing in
corporate earnings growth is perhaps the greatest potential hazard to these
current market valuation levels. While mindful of changing overall levels of
economic growth, the Growth & Income Portfolio's focus continues to be on
companies that exhibit steady earnings and dividend growth.
VALUE OF $10,000 INVESTED MAY 2, 1994
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH &
S&P 500*** INCOME SERIES
<S> <C> <C>
5/2/94 10,000 10,000
94 10,397 10,174
95 14,297 13,196
96 17,524 16,035
97 23,352 20,475
Growth & Income Series
Average Annual Total Return*
Since
1 Year May 2, 1994**
+27.69% +21.57%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of 500 common stocks.
13
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Spending 21.4%
Finance 16.6%
Consumer Staples 12.7%
Consumer Discretionary 11.1%
Health Care 9.5%
Utilities 9.2%
Energy & Related 8.4%
Basic Industry 4.8%
Cash Equivalents/Receivables 4.2%
Other 2.1%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. General Electric Co. 3.1%
2. Coca Cola Co. 2.1%
3. Microsoft Corp. 2.0%
4. EXXON Corp. 1.9%
5. Merck & Co., Inc. 1.6%
6. Royal Dutch Petroleum NY Reg Shares 1.5%
7. Intel Corp. 1.5%
8. Philip Morris Co., Inc. 1.4%
9. Procter & Gamble Co. 1.4%
10. International Business Machines 1.3%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 12/31/97
ADDITIONS: ELIMINATIONS:
Cendant Corp. Nynex Corp.
CBS Corp. McDonnell Douglas Corp.
Washington Mutual, Inc. Pacific Telesis Group
P G & E Corporation WMX Technologies, Inc.
Waste Management, American Brands, Inc.
Inc. CUC International, Inc.
Raytheon Corp Class B First Bank System, Inc.
Charles Schwab Corp. Pacific Gas & Elect5ic
Healthsouth Corp. HFS, Inc.
HBO & Company of Georgia Alco Standard Corp.
State Street Corp.
FORTIS SERIES FUND: S&P 500 INDEX SERIES
(SUBADVISED BY DREYFUS)
THIS PORTFOLIO IS DESIGNED ESPECIALLY FOR INVESTORS WHO WANT TO EMULATE THE
TOTAL RETURN OF THE STANDARD & POOR'S 500 STOCK INDEX.
REVIEW
For the 12-month period ended December 31, 1997, the Portfolio realized a total
return of 32.3 percent, while the Standard & Poor's 500 Stock Index had a total
return of 33.3 percent. This minor underperformance was due to the fact that the
Portfolio must pay certain expenses that the index does not incur.
The Portfolio is designed to replicate the LARGE CAPITALIZATION U.S. equity
market as it is represented by the S&P 500 Index. Large capitalization equities
had a very strong 12 months, outperforming both SMALL AND MID-CAPITALIZATION
STOCKS.
In 1997, some of the best performing groups in the S&P 500 were trucking,
savings & loan, brokerage and investment banking companies. Currently, the
Fortis S&P Index Portfolio holds all 500 stocks in the S&P 500 in approximately
the direct proportion to their weight in the index.
OUTLOOK
As a Portfolio that mirrors the holdings of an existing stock index, we will
continue to make the appropriate changes in accordance with the Portfolio's
investment objective.
VALUE OF $10,000 INVESTED MAY 1, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500*** S&P 500 SERIES
<S> <C> <C>
5/1/96 10,000 10,000
96 11,453 11,429
97 15,262 15,123
S&P 500 Index Series
Average Annual Total Return*
Since
1 yr May 1, 1996**
+32.32% +28.13%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of 500 common stocks.
14
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 42.4%
Finance Services 8.6%
Drugs 8.1%
Banks 7.6%
Cash Equivalent/Receivables 7.6%
Computer-Software 5.3%
Food 5.0%
Insurance 4.4%
Business Services 3.0%
Utilites-Telephone 3.0%
Retail-Department Stores 2.8%
Aerospace and Equipment 2.2%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Travelers Group, Inc. 1.5%
2. Merck & Co., Inc. 1.4%
3. AlliedSignal, Inc. 1.3%
4. Pfizer, Inc. 1.2%
5. Tyco International Ltd. 1.2%
6. Fannie Mae 1.2%
7. Freddie Mac 1.2%
8. Philip Morris Companies, Inc. 1.2%
9. Mellon Bank Corp. 1.1%
10. Safeway, Inc. 1.1%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 12/31/97
ADDITIONS: ELIMINATIONS:
Cendant Corp. Columbia/HCA Healthcare Corp.
Bristol-Myers Squibb Co. Alco Standard Corp.
U.S. Bancorp Eastman Kodak Co.
Tribune Co. Student Loan Marketing
CVS Corp. Association
Service Corp. International Revco D.S., Inc.
Mattel, Inc. 3Com Corp.
First Union Corp. Tupperware Corp.
SLM Holding Corp. Vencor, Inc.
Starwood Lodging Trust PacifiCare Health Systems,
Inc. Class B
Richfood Holding, Inc.
FORTIS SERIES FUND: BLUE CHIP STOCK SERIES
(SUBADVISED BY T. ROWE PRICE)
THE MONEY MANAGERS FOR THIS PORTFOLIO TARGET "BLUE CHIP" COMPANIES WITH LEADING
MARKET POSITIONS, SEASONED MANAGEMENT AND STRONG FINANCIAL FUNDAMENTALS. IT IS
DESIGNED FOR PEOPLE WHO WANT TO INVEST IN WELL-ESTABLISHED COMPANIES THAT
GENERATE CONSISTENT, DURABLE EARNINGS GROWTH WITH THE POTENTIAL FOR ABOVE
AVERAGE STOCK PERFORMANCE.
REVIEW
The U.S. stock market again surprised many investors with its consistent
strength. Mounting problems in several Asian economies have caused investors to
begin to question the underpinnings of the long economic expansion in the United
States and many of our trading partners. While the severity and the ultimate
effect of the problems in Asia should not be underestimated, the environment for
U.S. equities continues to be favorable. Inflation and interest rate data,
mutual fund inflows and corporate earnings are also positive.
In this favorable environment, the Blue Chip Stock Portfolio continues to
perform reasonably well. For the 12 months ending December 31, the Portfolio
returned 27.00 percent, outperforming the LIPPER VA UNDERLYING GROWTH FUNDS
AVERAGE but trailing the return of the Standard & Poor's 500 Stock Index (33.3
percent).
Financial stocks performed well as interest rates moderated and investors
continue to focus on companies with consistent earnings growth and strong
capital generation (funding significant share repurchase). Consumer product
stocks continued to play a key role in the Portfolio's performance.
Pharmaceutical stocks have been the standouts with Pfizer being one of the top
contributors to performance. Consumer services stocks were also among the many
performers for the portfolio. In the retailing area, the Portfolio scored
respectable gains with holdings such as Safeway, CVS and Home Depot. In general,
technology holdings performed quite well for 1997.
As always, there were stocks which produced disappointing results. In fact, the
volatility of the market in 1997 tends to magnify the punishment which investors
administer to stocks with flawed fundamentals. First Data, the leading provider
of credit card servicing, was one of our largest losers. Margins contracted more
than expected in its core business, and several ancillary businesses have not
performed well. Although we have allowed this holding to diminish significantly
in weight (as problems have been resolved), we think it will perform reasonably
well over time. Vencor, the leader in acute hospital and nursing care, continues
to struggle with Medicare reimbursement issues. Consequently, we eliminated this
position.
OUTLOOK
Stock valuations remain expensive by all conventional valuation measures,
particularly as evidenced by the historically low dividend yield on the S&P 500.
We are also cautious because the market has generated strong results for several
consecutive years, and the problems in Asia certainly have the potential to hurt
earnings growth for certain multinational companies.
We are attempting to invest your money with the knowledge that the stock market
will not always go up. We believe we can enhance returns and lower risk over
time by investing in "all season" growth companies (those that can generate
earnings growth regardless of the economic or interest rate environment), while
striving to invest at reasonable valuations.
As always, we strive to seek out blue chip companies with leading market
positions, seasoned management and strong financial fundamentals as we continue
to believe they will provide superior investment results.
VALUE OF $10,000 INVESTED MAY 1, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BLUE CHIP
S&P 500*** STOCK SERIES
<S> <C> <C>
5/1/96 10,000 10,000
96 11,453 11,624
97 15,262 14,763
Blue Chip Stock Series
Average Annual Total Return*
Since
1 year May 1, 1996**
+27.00% +26.30%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of 500 common stocks.
15
<PAGE>
PORTFOLIO DIVERSIFICATION BY COUNTRY AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
United States 39.3%
Other 20.7%
Receivables/Cash Equivalents 7.7%
Germany 7.4%
United Kingdom 6.0%
France 4.4%
Japan 4.1%
Sweden 4.0%
Netherlands 3.8%
Finland 2.6%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. SAP AG Systeme Preferred (Germany) 4.0%
2. Gartner Group, Inc. Class A (US) 2.7%
3. 3Com Corp. (US) 2.2%
4. Petroleum Geo-Services ADR (Norway) 2.2%
5. Cendant Corp. (US) 2.0%
6. Cisco Systems, Inc. (US) 1.9%
7. Telefonica de Espana S.A. ADR (Spain) 1.8%
8. Tellabs, Inc. (US) 1.8%
9. Industri Matematik Internatinal Corp. (Sweden) 1.7%
10. Nokia (AB) K Shares (Finland) 1.7%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 12/31/97
ADDITIONS: ELIMINATIONS:
Cendant Corp. Wisconsin Central
Telefonica de Espana, S.A. ADR Transportation Corp.
R&B Falcon Corp. U.S. Robotics Corp.
Glaxo Wellcome plc ADR Dixons Group plc
VNU-Verinigd Bezit Fila Holdings S.p.A. ADR
Deutsche Lufthansa AG Astra AB 'B'
Transocean Offshore, Inc. CUC International, Inc.
Accustaff, Inc. Wolford AG
Stolt Comex Seaway S.A. Credit Acceptance Corp.
Covance, Inc. Green Tree Financial Corp.
DDI Corp.
FORTIS SERIES FUND: GLOBAL GROWTH SERIES
SLIGHTLY MORE AGGRESSIVE GROWTH INVESTORS WHO WANT TO DIVERSIFY AND EXPAND THEIR
HORIZONS BEYOND THE UNITED STATES MAY WANT TO CONSIDER THIS HIGHLY DIVERSIFIED
PORTFOLIO.
REVIEW
As a global portfolio, the Global Growth Portfolio has the flexibility to invest
in a variety of stock markets around the world, including the United States.
This is a highly diversified Portfolio composed of companies with superior
growth prospects. The Portfolio had 101 holdings in 22 different nations at year
end 1997.
The Global Growth Portfolio had a total return of 6.8 percent during 1997,
compared to a return of 16.0 percent for the MSCI World Index. Many mid-sized
and smaller global holdings lagged in performance versus their larger
counterparts during 1997. The best performing equities on a global basis tended
to be in the "mega cap"category of the world's largest corporations. The
Portfolio's exposure to this segment was limited to companies in overseas
markets. In the United States, the primary focus has been on mid-sized growth
companies in industries such as technology, energy services and
consumer-related. Historically, these types of companies have demonstrated
superior growth relative to the average company. We anticipate that the market
will refocus its attention on growth companies sometime in 1998.
OUTLOOK
Due to the crisis in Asia and the expectation of a slowing global economy during
1998, the market outlook on the near term basis remains uncertain. The
volatility experienced in the world's equity markets over the past year will
likely continue into 1998. Financial markets are concerned about several
important factors: competitive currency devaluations in southeast Asia, the
corresponding deflationary pressures from lower export prices, a slowing of the
world's economy, and the corresponding slowdown in corporate earnings in the
United States.
Slower economic growth, reduced commodity prices, and excess global capacity
should lead to a disinflationary environment. This in turn should help sustain
interest rates at low levels. Longer term, these factors could prove to be
positive for financial markets; however, an adjustment period to the lower level
of corporate earnings will be required.
VALUE OF $10,000 INVESTED MAY 1, 1992
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
MSCI WORLD INDEX*** GLOBAL GROWTH PORTFOLIO
<S> <C> <C>
5/1/92 10,000 10,000
92 10,236 11,088
93 12,613 13,075
94 13,317 12,685
95 16,156 16,553
96 18,417 19,715
97 21,371 21,059
Global Growth Series
Average Annual Total Return*
Since
1 Year 5 Year May 1, 1992**
+6.82% +13.69% +14.04%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of the world's major equity markets in U.S. dollars,
weighted by stock market value.
16
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 18.8%
Cash Equivalents/Receivables 15.6%
Computer-Software 12.1%
Financial Services 9.0%
Retail-Specialty 9.0%
Oil-Offshore Drilling 6.8%
Health Care Services 6.4%
Machinery-Oil and Well 6.3%
Telecommunication Equipment 5.9%
Computer-Communications Equipment 4.1%
Telephone Services 3.9%
Banks 2.1%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. WorldCom, Inc. 3.9%
2. BMC Software, Inc. 3.7%
3. Cisco Systems, Inc. 3.4%
4. Tellabs, Inc. 3.3%
5. Petroleum Geo-Services ADR 3.2%
6. Cendant Corp. 3.1%
7. Microsoft Corp. 3.0%
8. Solectron Corp. 2.7%
9. Medtronic, Inc. (and rights) 2.5%
10. HBO & Co. 2.5%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES FOR
THE YEAR ENDED 12/31/97
ADDITIONS: ELIMINATIONS:
Cendant Corp. MFS Communications
R & B Falcon Corp. Co., Inc.
Banc One Corp. CUC International,
Cooper Cameron Corp. Inc.
Transocean Offshore, Inc. Informix Corp.
Healthsouth Corp. HFS, Inc.
Dollar Tree Stores, Inc. First USA, Inc.
American Express Co. PacificCare Health
U.S. Filter Corp. Systems, Inc. Class B
Dresser Industries, Inc. Lone Star Steakhouse &
Saloon, Inc.
Ascend Communications,
Inc.
Cascade Communications
Corp.
Computer Associates
International, Inc.
FORTIS SERIES FUND: GROWTH STOCK SERIES
THIS PORTFOLIO IS DESIGNED FOR INVESTORS WHO SEEK REWARD POTENTIAL ENTIRELY
THROUGH U.S. STOCKS. IT INVESTS IN MEDIUM-SIZED GROWTH COMPANIES THAT HAVE MOVED
BEYOND THE VENTURE STAGE.
REVIEW
The continuing strength of the stock market again benefited the performance of
the Growth Stock Portfolio in 1997. The Portfolio's gain of 12.4 percent in the
year reflected strength in a wide range of holdings including those in
technology, energy services, health care and financial services. Our performance
was restrained compared to the major indices, such as the S&P 500's gain of 33.3
percent, because we emphasize smaller companies more than the large
multi-national companies that make up the bulk of those indexes. These large
company stocks have benefited from a more defensive-oriented posture on the part
of many investors during this period of global uncertainties and relatively high
stock prices. In addition, as happened in late 1996, the last few weeks of the
calendar year saw sharp declines in the price of a number of growth stocks,
including those in technology and oil and gas service, two very important areas
in our portfolio.
OUTLOOK
The recent pullback in the market reflects increasing concerns about the
collapse of the economies, currencies and markets of several Asian countries, as
well as severe weakness in Japan, and its impact on the U.S. economy and
markets. There is also concern about the declining rate of expansion in
corporate profits in this country, a condition which is expected to worsen with
the result of the events occurring in the Far East. Nevertheless, the U.S.
economy is fundamentally strong, inflation remains well under control and
interest rates are at historically low levels. In fact, American economic
strength and political stability provide a safe haven for funds of foreign
investors in this time of global instability. While a continued increase in
stock prices may have to await the resolution of Asia's problems, America's
strengths should support its markets in the volatile days ahead.
VALUE OF $10,000 INVESTED JANUARY 1, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500** GROWTH STOCK SERIES
<S> <C> <C>
1/1/88 $10,000 $10,000
88 11,681 10,449
89 15,359 14,259
90 14,872 13,818
91 19,415 21,210
92 20,904 21,834
93 22,993 23,751
94 23,293 23,082
95 32,029 29,467
96 39,260 34,305
97 52,317 38,567
Growth Stock Series
Average Annual Total Return*
1 Year 5 Year 10 Year
+12.42% +12.05% +14.45%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** An unmanaged index of 500 common stocks.
17
<PAGE>
PORTFOLIO DIVERSIFICATION BY COUNTRY
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
United Kingdom 21.6%
Japan 21.1%
France 13.0%
Germany 12.1%
Switzerland 9.1%
Other 5.9%
Italy 5.2%
Sweden 3.9%
Netherlands 3.2%
Hong Kong 2.6%
Cash Equivalents/Receivables 2.3%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. British Aerospace (United Kingdom) 3.2%
2. Sony Corp. (Japan) 2.3%
3. Viag AG(Germany) 2.3%
4. Elf Aquitaine (France) 2.2%
5. Ricoh Corp. Ltd. (Japan) 2.2%
6. Rhone Poulenc (France) 2.2%
7. CIE Generale Des Eaux (France) 2.2%
8. Novartis AG (Switzerland) 2.0%
9. Matsushita Electric Industrial Co. (Japan) 1.9%
10. Telecom Italia S.p.A (Italy) 1.9%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES FOR
THE YEAR ENDED 12/31/97
ADDITIONS: ELIMINATIONS:
Viag AG Rohm Co.
Telecom Italia S.p.A Empresa Nacional de
Zurich Versicherungs Electricidad
Diageo, Plc Grand Metropolitan ORD
Nippon Telegraph & Telephone Veba AG
Corp. Sears
National Westminster Bank Allied Domecq plc
Telefonica de Espana Toyota Motor
Axa S.A. Accor S.A.
Credit Suisse Group - Reg Baloise Holdings Ltd.
Lucasvarity plc Total S.A. Co. Francaise
Petroles 'B'
FORTIS SERIES FUND: INTERNATIONAL STOCK SERIES
(SUBADVISED BY LAZARD FRERES ASSET MANAGEMENT)
INVESTORS WILLING TO BALANCE THE RISKS AND REWARDS OF INTERNATIONAL STOCK
INVESTING OFTEN SELECT THIS PORTFOLIO TO DIVERSIFY AN ESTABLISHED INVESTMENT
STRATEGY. IT FOCUSES EXCLUSIVELY ON VALUE COMPANY STOCKS OUTSIDE OF THE UNITED
STATES.
REVIEW
The International Stock Portfolio gained 12 percent in 1997, outpacing the weak
MSCI EAFE INDEX which rose only 2 percent. This strong outperformance and the
pattern of performance is consistent with the Lazard bottom-up value investment
discipline. The Portfolio outperformed during a flat first quarter, participated
in the second quarter bull rise of the equity market, and protected itself in
the sliding second half when Asian financial turmoil sparked a global equity
market decline, sending the MSCI EAFE down nearly 10 percent from its mid-July
peak. In contrast, the Portfolio slipped just 3 percent, protecting its earlier
gains.
Asian market turmoil and its global repercussions shook equity markets in the
second half of 1997. The widely held belief that emerging Asian economies could
grow 7 - 10 percent in perpetuity without contraction led to premium valuations.
Due to these excessive valuations, the Portfolio had a very low exposure in Asia
(excluding Japan) with less than 4 percent, a weighting prior to the crisis.
Undisciplined capital spending, excessive property valuations, imprudent
lending, and inappropriate policy responses ultimately led to the Asian currency
devaluation and corresponding equity markets fall.
This past year, European managements started addressing global competition and
recognizing shareholders through corporate action prompted by the impending EMU
and the shifting European political climate. During the first quarter, Alcatel
Alsthom's (France, telecom and energy systems) stock price soared over 60
percent as the company returned to profit delivering on a restructuring plan
outlined by its CEO Serge Tchuruk in late 1995. Alcatel then turned to focusing
its core business by taking control of Thomson-CSF (defense electronics) and
finally closed the year by announcing its intention to spin off its GEC-Alsthom
energy business. During the second quarter, Philips Electronics' (Netherlands)
restructuring program implemented last year began to bear fruit in the form of
its first quarterly earnings upturn in over two years. Other European companies
are striving both to sharpen their globally competitive edge and to achieve
better results by merging with others. Many of these combinations contributed to
performance in the fourth quarter and over the full year: 1) In Germany, Thyssen
and Krupp Hoesch announced a merger that will give them needed critical mass and
help rationalize the highly competitive global steel industry; 2) Grand
Metropolitan (UK) and Guinness (UK) merged to form Diageo creating a powerful
combination of brands and distribution in the fragmented global spirits
industry; and 3) B.A.T Industries merged its insurance business with Zurich
Insurance (Switzerland) leaving B.A.T a focused tobacco company and
strengthening Zurich's global financial presence.
Japanese stock selection was also a major contributor to returns even as
Japanese equities struggled throughout 1997. Regional turmoil compounded
domestic problems and a weak economic outlook continued to plague Japanese
companies. Over the last two years, the Japanese equity market has become
polarized as exporters forced to change to compete with global peers have
prospered, while domestic companies in regulated industries have languished. Our
focus on attractively priced proactive businesses led us to a high exposure in
companies like Sony, Honda, and Nintendo. These stocks have in turn strongly
outperformed the Japanese market as a whole. A weak Yen has helped, but they
have also helped themselves with years of restructuring to develop competitive
advantages globally in their respective industries. The select few Japanese
domestic companies that are taking action to remain competitive in deregulating
industries also boosted Portfolio performance. Orix (leasing) has taken a number
of positive steps which have driven its stock to be the Portfolio's strongest
performer this year. After its bad debt provisions peaked, Orix took over a
bankrupt leasing company and announced and joint venture with Banc One to
strengthen its core business and position itself to take advantage of favorable
deregulation announced at the beginning of the year. Orix also recognized its
shareholders by announcing a share buy back and became one of the first Japanese
companies to align its management's interest with those of shareholders through
a stock option incentive scheme. Such domestic leaders have joined global
exporters to post strong absolute returns in a weak market.
OUTLOOK
Opportunities to create value in 1998 already appear: continuation of global
industry consolidation, the impact of the "Euro", compelling Japanese equity
valuations, and possible "bottom fishing" in emerging markets. While potential
opportunities are readily apparent, risks appear: whether the "Euro" becomes a
strong or weak currency will have a large portfolio impact, as will continued
strength of the US dollar. Further potential deterioration of emerging markets
and understanding the knock-on consequences for developed market companies may
be one of the keys to success in 1998.
VALUE OF $10,000 INVESTED JANUARY 3, 1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
INTERNATIONAL
MSCI EAFE*** STOCK SERIES
<S> <C> <C>
1/3/95 $10,000 $10,000
95 11,155 11,435
96 11,896 13,038
97 12,130 14,601
International Stock Series
Average Annual Total Return*
Since
1 Year January 3, 1995**
+11.99% +13.47%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of the stocks of Europe, Australia, and the Far East.
18
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 12/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 19.5%
Computer-Software 15.4%
Business Services 13.1%
Cash Equivalents/Receivables 11.7%
Retail-Speciality 10.6%
Telephone Services 9.7%
Health Care Services 5.4%
Machinery-Oil and Well 4.8%
Telecommunication Equipment 3.4%
Oil-Offshore Drilling 3.3%
Medical Supplies 3.1%
</TABLE>
TOP 10 HOLDINGS AS OF 12/31/97
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Petroleum Geo-Services ADR 2.6%
2. Intermedia Communications, Inc. 2.2%
3. Input/Output, Inc. 2.2%
4. Parametric Technology Corp. 1.9%
5. Acxiom Corp. 1.9%
6. U.S.A Waste Services, Inc. 1.8%
7. Cisco Systems, Inc. 1.8%
8. Apollo Group, Inc. Class A 1.7%
9. Sterling Commerce, Inc. 1.7%
10. LCI International, Inc. 1.7%
</TABLE>
TEN LARGEST PORTFOLIO CHANGES FOR THE YEAR ENDED 12/31/97
ADDITIONS: ELIMINATIONS:
U.S.A. Waste Services, Inc. MFS Communications Co., Inc.
Dollar Tree Stores, Inc. Cascade Communications Corp.
Arterial Vascular Engineering, United Waste Systems, Inc.
Inc. Ascend Communications, Inc.
R & B Falcon Corp. Network General Corp.
Cendant Corp. TeleTech Holdings, Inc.
HSN, Inc. Precision Response Corp.
WorldCom, Inc. Verity, Inc.
Stolt Comex Seaway S.A. Medic Computer Systems, Inc.
General Nutrition Companies, Rainforest Cafe, Inc.
Inc.
Fiserv, Inc.
FORTIS SERIES FUND: AGGRESSIVE GROWTH SERIES
DESIGNED ESPECIALLY FOR THE MOST AGGRESSIVE, LONG-TERM INVESTOR WHO BELIEVES IN
THE ENTREPRENEURIAL OPPORTUNITIES OF AMERICA. THIS PORTFOLIO INVESTS IN SMALLER,
EMERGING GROWTH COMPANIES THAT HAVE HIGH UNIT GROWTH RATES FOR THEIR PRODUCTS OR
SERVICES.
REVIEW
Overall market performance during 1997 was highly stratified according to size
of company, with the very largest, moderate growth companies turning in very
large gains, while mid-sized companies lagged and the smaller, high growth
sector was significantly behind. The latter two sectors represented the majority
of the investments in the portfolio, which leads to the underperformance that
occurred in the first four months of the year. The Aggressive Growth Portfolio
was up only 1.4 percent for the full year 1997 compared to the 33.3 percent
return in the S&P 500 Index. However, with a 29.2 percent return over the last 8
months of the year, the Portfolio did outperform several major indices, such as
the S&P 500 Index (22.6 percent) and the Russell 2000 (28.6 percent). The
Portfolio remained well diversified among industry groups, and while committed
to faster growing, emerging major growth companies of the future, the Portfolio
continued to spread risk by holding approximately 90 different companies. We
also aimed at slightly larger companies with more market liquidity.
OUTLOOK
The U.S. economy should be slowing in 1998, partly in response to the Asian
difficulties, and overall corporate earnings growth may slow markedly. There is
a great deal of uncertainty over the outlook for 1998, not unlike that of early
1997, and the market may remain volatile. There should, however, remain
opportunities for price appreciation in companies where consistent, high growth
rates persist, and we will make every effort to find these. Many of these
companies are in the Portfolio now, and we will monitor them very carefully.
We will continue our focus on well-managed, emerging growth companies, with a
bottom-up, company-by-company approach. Companies in the Aggressive Growth
Portfolio will have higher growth rates relative to the moderating growth in the
major companies. With interest rates lower and inflation remaining low, they
should be able to perform well in the market. We emphasize a policy of longer
term investing, which can benefit from volatility and the growth in the most
dynamic sectors of the economy.
VALUE OF $10,000 INVESTED MAY 2, 1994
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500*** AGGRESSIVE GROWTH SERIES
<S> <C> <C>
5/2/94 $10,000 $10,000
94 10,397 9,811
95 14,297 12,743
96 17,524 13,718
97 23,352 13,913
Aggressive Growth Series
Average Annual Total Return*
Since
1 Year May 2, 1994**
+1.43% +9.42%
</TABLE>
Annual period ended December 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. This represents the performance of the Series
itself, without the expenses associated with the variable annuities or variable
universal life insurance policies.
* SEC defined total returns, including reinvestment of all dividend and
capital gains distributions.
** Date shares were first offered to the public.
*** An unmanaged index of 500 common stocks.
19
<PAGE>
FORTIS SERIES FUND, INC.
MONEY MARKET SERIES
Schedule of Investments
December 31, 1997
SHORT-TERM INVESTMENTS-100.53%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Maturity Rating
Amount Yield Date (Unaudited) Value (a)
----------- --------- ------------ ------------- ------------
<C> <S> <C> <C> <C> <C>
BANKS-13.27%
$3,000,000 Banc One Funding Corp.(d).................... 5.75% 01/23/98 A1 $ 2,989,267
1,678,000 First Trust Money Market Variable Rate Time
Deposit.................................... 5.56% 01/01/98 A1+ 1,678,000
2,900,000 Toronto-Dominion Holdings USA, Inc........... 5.66% 01/07/98 A1+ 2,896,899
------------
7,564,166
------------
BROKERAGE AND INVESTMENT-4.60%
2,700,000 Merrill Lynch & Co., Inc..................... 5.91% 06/29/98 A1+ 2,623,725
------------
CAPTIVE AUTO FINANCE-9.72%
2,900,000 Ford Motor Credit Corp....................... 5.69% 01/22/98 A1 2,890,200
1,200,000 General Motors Acceptance Corp............... 5.81% 03/24/98 P1* 1,184,507
1,500,000 General Motors Acceptance Corp............... 5.85% 06/04/98 P1* 1,463,704
------------
5,538,411
------------
CAPTIVE EQUIPMENT FINANCE-14.66%
3,000,000 IBM Credit Corp.............................. 5.73% 02/12/98 A1 2,980,077
2,600,000 John Deere Capital Corp...................... 5.81% 02/11/98 A1 2,582,862
2,800,000 PACCAR Financial Corp........................ 5.88% 01/09/98 A1 2,795,954
------------
8,358,893
------------
CONSUMER FINANCING-24.04%
3,000,000 American Express Credit Co................... 5.67% 02/02/98 A1 2,984,902
2,700,000 American General Finance Corp................ 5.89% 04/15/98 A1 2,655,112
2,900,000 Beneficial Corp.............................. 5.76% 02/09/98 A1 2,882,020
2,700,000 Commercial Credit Corp....................... 5.78% 01/15/98 A1 2,693,644
2,500,000 Household Financial Corp..................... 5.72% 01/29/98 A1 2,488,823
------------
13,704,501
------------
DIVERSIFIED FINANCE-15.55%
781,000 Associates Corp. Master Variable Rate Note... 5.44% 01/01/98 A1+ 781,000
2,700,000 CIT Group Holdings, Inc...................... 5.84% 03/12/98 A1 2,669,754
2,700,000 General Electric Capital Corp................ 5.87% 04/24/98 A1+ 2,651,436
2,800,000 Prudential Funding Corp...................... 5.82% 03/20/98 A1 2,765,345
------------
8,867,535
------------
FOOD-GROCERY, MISCELLANEOUS-4.38%
2,500,000 Nestle Capital Corp.......................... 5.66% 01/09/98 A1+ 2,496,537
------------
UTILITIES-ELECTRIC-14.31%
2,600,000 Central & South West Credit, Inc............. 5.77% 02/05/98 A1+ 2,585,414
2,700,000 Duke Energy Corp............................. 5.81% 02/06/98 A1 2,684,266
2,900,000 Wisconsin Electric Fuel Trust................ 5.84% 01/27/98 A1+ 2,887,602
------------
8,157,282
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$57,311,050) (b)........................... $57,311,050
------------
------------
</TABLE>
(a) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(b) Also represents cost for federal income tax purposes.
(c) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 5.08% of total net assets as of December 31, 1997.
(d) Commercial paper sold within the terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or to other
"accredited investors". This security has been determined to be liquid
under the guidelines established by the Board of Directors. The aggregate
value of this security at December 31, 1997, was $2,989,267, which
represents 5.24% of total net assets.
* Moody's Rating
20
<PAGE>
FORTIS SERIES FUND, INC.
U.S. GOVERNMENT SECURITIES SERIES
Schedule of Investments
December 31, 1997
U.S. GOVERNMENT SECURITIES-94.82%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (a) Value (b)
------------ ------------- -------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION-1.48%
MORTGAGE BACKED SECURITIES:
$ 12,439 11.25% 2015.................................. $ 13,531 $ 13,862
------------- -------------
NOTES:
2,000,000 6.75% 2006................................... 2,060,881 2,090,924
------------- -------------
TOTAL FEDERAL HOME LOAN MORTGAGE
CORPORATION................................ 2,074,412 2,104,786
------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-19.67%
MORTGAGE BACKED SECURITIES:
1,520,000 6.00% 2013(f)................................ 1,486,750 1,495,300
2,444,047 6.50% 2010-2024.............................. 2,413,961 2,445,483
750,000 6.54% 2007................................... 764,054 762,891
10,995,243 7.00% 2003-2025.............................. 10,837,205 11,084,482
3,030,246 7.50% 2023................................... 3,118,313 3,099,372
233,596 8.50% 2017................................... 239,017 243,889
166,291 9.00% 2020-2021.............................. 165,943 176,685
1,015,498 9.75% 2020................................... 1,095,468 1,094,356
------------- -------------
20,120,711 20,402,456
------------- -------------
NOTES:
3,935,000 6.58% 2007................................... 3,925,843 4,078,191
------------- -------------
REMIC-Z BONDS:
3,560,670 6.89% Z-Tranche Ser 1997-M Class 2A
2035(e).................................... 3,364,758 3,456,075
------------- -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ 27,411,312 27,936,722
------------- -------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION-11.02%
MORTGAGE BACKED SECURITIES:
9,391,606 7.50% 2027................................... 9,454,448 9,617,587
2,481,213 9.00% 2020................................... 2,599,071 2,653,347
274,072 9.125% 2018.................................. 280,538 274,414
2,889,089 9.50% 2018-2021.............................. 2,997,435 3,103,485
------------- -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 15,331,491 15,648,833
------------- -------------
OTHER DIRECT FEDERAL OBLIGATIONS-18.48%
FEDERAL HOME LOAN BANK:
2,500,000 5.925% 2000.................................. 2,503,720 2,503,625
7,895,000 7.31% 2004................................... 7,915,502 8,439,337
------------- -------------
10,419,222 10,942,962
------------- -------------
TENNESSEE VALLEY AUTHORITY:
15,000,000 6.375% Global 2005........................... 14,413,004 15,305,910
------------- -------------
TOTAL OTHER DIRECT FEDERAL OBLIGATIONS....... 24,832,226 26,248,872
------------- -------------
OTHER GOVERNMENT AGENCIES-2.34%
RESOLUTION FUNDING CORPORATION:
9,000,000 8.395% Zero Coupon Strips 2014(d)............ 2,536,846 3,330,081
------------- -------------
U.S. TREASURY SECURITIES-41.83%
BONDS:
2,250,000 8.125% 2019-2021............................. 2,555,950 2,824,790
------------- -------------
NOTES:
7,100,000 5.625% 1999.................................. 7,086,706 7,091,125
1,350,000 6.00% 1999................................... 1,349,359 1,356,750
5,825,000 6.125% 2001.................................. 5,741,459 5,903,270
28,230,000 6.375% 2000.................................. 28,418,159 28,653,450
8,625,000 6.625% 2002.................................. 8,887,925 8,905,312
</TABLE>
21
<PAGE>
FORTIS SERIES FUND, INC.
U.S. GOVERNMENT SECURITIES SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (a) Value (b)
------------ ------------- -------------
<C> <S> <C> <C>
$ 4,390,000 6.875% 2006.................................. $ 4,529,838 $ 4,698,670
------------- -------------
56,013,446 56,608,577
------------- -------------
TOTAL U.S. TREASURY SECURITIES............... 58,569,396 59,433,367
------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............. $ 130,755,683 $ 134,702,661
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-6.22%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (b)
----------- -------------
<C> <S> <C>
BANKS-0.34%
$ 482,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 482,000
-------------
DIVERSIFIED FINANCE-3.35%
4,765,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.44%...................... 4,765,000
-------------
U.S. GOVERNMENT AGENCY-2.53%
1,600,000 Federal Home Loan Mortgage Corp., 5.82%,
1-20-1998.................................. 1,594,925
2,000,000 Federal National Mortgage Assoc., 5.61%,
1-5-1998................................... 1,998,475
-------------
3,593,400
-------------
TOTAL SHORT-TERM INVESTMENTS................. 8,840,400
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$139,596,083) (a).......................... $ 143,543,061
-------------
-------------
</TABLE>
(a) At December 31, 1997, the cost of securities for federal income tax
purposes was $139,803,921 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 3,943,008
Unrealized depreciation..................................... (203,868)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $ 3,739,140
- -------------------------------------------------------------------------
</TABLE>
(b) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(c) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets.
(d) The interest rate disclosed for this security represents the effective
yield on the date of acquisition.
(e) Z-Tranche securities pay no principal or interest during their initial
accrual period, but accrue additional principal at a specified coupon rate.
The interest rate disclosed represents the effective rate at which the
additional principal is currently being accrued.
(f) The cost of securities purchased on a when-issued basis at December 31,
1997, was $1,486,750.
22
<PAGE>
FORTIS SERIES FUND, INC.
DIVERSIFIED INCOME SERIES
Schedule of Investments
December 31, 1997
WARRANTS-0.11%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
------- ------------ -------------
<C> <S> <C> <C>
CONSUMER GOODS-0.11%
1,000 Iridium LLC/Capital Corp. (Warrants) (a)
(d)........................................ $ 96,501 $ 115,000
------------ -------------
</TABLE>
MUNICIPAL BONDS-2.83%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ -------------
<C> <S> <C> <C> <C>
GENERAL OBLIGATIONS-1.41%
$ 500,000 Atlanta Georgia, 5.125% Public Improvement
General Obigation Ser B 12-1-2021.......... AA $ 493,558 $ 499,292
1,000,000 California State, 5.125% General Obligation
10-1-2027.................................. A+ 981,946 983,411
------------ -------------
1,475,504 1,482,703
------------ -------------
TRANSPORTATION-1.42%
500,000 Massachusetts Bay, 5.00% Transportation Auth
Rev Bond Ser C 3-1-2024.................... AA- 482,285 485,752
1,000,000 Massachusetts Turnpike Authority, 5.125% Rev
Bond Ser A 1-1-2023........................ AAA 1,011,980 1,005,000
------------ -------------
1,494,265 1,490,752
------------ -------------
TOTAL MUNICIPAL BONDS........................ $ 2,969,769 $ 2,973,455
------------ -------------
------------ -------------
</TABLE>
ASSET BACKED SECURITIES-21.94%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ -------------
<C> <S> <C> <C> <C>
COMMERCIAL LOANS-12.07%
$ 447,151 DLJ Mortgage Acceptance Corp., 7.28% Ser
1996-CF1 Class A-1A 3-13-2028 (d).......... AAA $ 450,459 $ 462,103
1,250,000 First Union Lehman Brothers Commercial
Mortgage, 7.30% Ser 1997-C1 Class A2
12-18-2006................................. Aaa* 1,262,539 1,307,812
851,938 GS Mortgage Securities Corp. II Protective
Life, 7.02% Ser 1996-PL Class A1
3-1-2026................................... Aaa* 851,884 865,782
914,035 J.P. Morgan Commercial Mortgage Finance
Corp., 6.47% Ser 1996-C2 Class A
11-25-2027................................. AAA 920,541 917,719
895,086 Merrill Lynch Mortgage Investors, Inc., 6.79%
Variable Rate Ser 1995-C3 Class A1
12-26-2025................................. AAA 870,954 904,028
1,400,000 Merrill Lynch Mortgage Investors, Inc., 7.42%
Ser 1996-C1 Class B 4-25-2028.............. AA 1,365,254 1,499,638
1,000,000 Midland Realty Acceptance Corp., 7.76% Ser
1996-C1 Class B 7-25-2008.................. AA 1,009,307 1,067,812
250,000 Morgan Stanley Capital I, Inc., 7.27% Ser
1997-HF1 Class A2 1-15-2007 (d)............ Aaa* 254,287 262,070
600,000 Morgan Stanley Capital I, Inc., 7.38% Ser
1996-WF1 Class A3 8-15-2006 (d)............ Aaa* 611,486 632,062
1,650,000 Mortgage Capital Funding, Inc., 7.90% Ser
1996-MC1 Class B 2-15-2006................. AA+ 1,665,146 1,773,453
2,000,000 Nationslink Funding Corp., 7.52% Ser 1996-1
Class A2 7-20-2005......................... AAA 2,002,182 2,095,625
878,432 Nationslink Funding Corp., 7.53% Ser 1996-1
Class A1 9-20-2002......................... AAA 885,323 912,609
------------ -------------
12,149,362 12,700,713
------------ -------------
HOUSING-1.21%
750,000 Money Store (The) Home Improvement Trust,
7.41% Ser 1997-1 Class M1 5-15-2017........ AA 753,014 781,378
500,000 Money Store (The) Residential Trust, 7.09%
1997-I-M1 7-15-2016........................ AA 499,922 492,344
------------ -------------
1,252,936 1,273,722
------------ -------------
MANUFACTURED HOMES-3.25%
1,800,000 Green Tree Financial Corp., 7.20% Ser 1993-4
Class B1 1-15-2019......................... Baa3* 1,787,349 1,823,062
1,500,000 Green Tree Financial Corp., 7.65% Ser 1994-1
Class A5 4-15-2019......................... Aa2* 1,494,141 1,589,828
------------ -------------
3,281,490 3,412,890
------------ -------------
MISCELLANEOUS-0.28%
295,009 Fifth Third Auto Grantor Trust, 6.70% Ser
1996-B Class B 3-15-2002................... A 294,843 296,540
------------ -------------
</TABLE>
23
<PAGE>
FORTIS SERIES FUND, INC.
DIVERSIFIED INCOME SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
ASSET BACKED SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ -------------
<C> <S> <C> <C> <C>
MULTI-FAMILY LOANS-4.17%
$2,150,000 DLJ Mortgage Acceptance Corp., 8.50%
Multifamily Mtg Pass Thru Certificate Ser
1994-MF4 Class A2 4-18-2001................ A $ 2,180,486 $ 2,239,591
1,500,000 DLJ Mortgage Acceptance Corp., 8.80%
Multifamily Mtg Pass Thru Certificate Ser
1993-MF12 Class B1 9-18-2003............... NR 1,473,750 1,569,015
746,304 Fund America Structured Transactions, L.P.,
Collateralized Note, 8.76% Ser 1996-1 Class
A Principal Only 1-1-2033 (e) (g).......... Baa3* 561,060 577,453
------------ -------------
4,215,296 4,386,059
------------ -------------
WHOLE LOAN RESIDENTIAL-0.96%
966,654 Mid-State Trust 7.54% Ser 6 Class A3
7-1-2035................................... AA 966,052 1,013,305
------------ -------------
TOTAL ASSET BACKED SECURITIES................ $22,159,979 $ 23,083,229
------------ -------------
------------ -------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-35.04%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ -------------
<C> <S> <C> <C> <C>
AEROSPACE AND EQUIPMENT-0.51%
$ 500,000 Lockheed Martin Corp., 7.65% Deb 5-1-2016.... BBB+ $ 502,853 $ 540,642
------------ -------------
AIRLINES-1.64%
1,300,000 Delta Airlines, 10.50% Pass Thru Certificate
4-30-2016.................................. BBB 1,582,197 1,720,446
------------ -------------
BANKS-9.30%
750,000 Banco Santiago S.A., 7.00% Sub Note
7-18-2007.................................. BBB 743,487 752,036
1,500,000 Bank Austria AG, 7.25% Sub Note 2-15-2017
(e)........................................ AAA 1,497,209 1,583,104
1,000,000 Citicorp Capital II, 8.02% Bond 2-15-2027.... A- 1,000,000 1,069,192
1,000,000 Corestates Capital Corp., 6.75% Medium Term
Note 11-15-2006............................ A- 1,007,331 1,023,789
1,500,000 Keystone Financial Funding Corp., 7.30%
Medium Term Note 5-15-2004................. BBB+ 1,496,580 1,557,720
2,000,000 Republic NY Capital I, 7.75% 11-15-2026...... A+ 1,938,280 2,140,320
1,100,000 Republic NY Capital II, 7.53% 12-4-2026...... A+ 1,053,207 1,152,072
500,000 St. Paul Bancorp, Inc., 7.125% Sr Note
2-15-2004.................................. BBB- 497,919 509,296
------------ -------------
9,234,013 9,787,529
------------ -------------
BROKERAGE AND INVESTMENT-3.41%
1,500,000 Bear Stearns Capital Trust I, 7.00% Variable
Rate Bond 1-15-2027........................ BBB 1,499,139 1,519,285
1,500,000 Lehman Brothers Holdings, 7.375% Sr Note
5-15-2004.................................. A 1,494,510 1,556,216
500,000 Salomon, Inc., 6.75% Sr Note 2-15-2003....... A 499,215 507,098
------------ -------------
3,492,864 3,582,599
------------ -------------
CABLE TELEVISION-1.12%
1,000,000 Comcast Cable Communications, Inc., 8.50%
Note 5-1-2027 (with rights)................ BBB- 998,299 1,179,545
------------ -------------
CHEMICALS-0.99%
1,000,000 Lyondell Petrochemical, 7.55% Deb
2-15-2026.................................. BBB- 946,414 1,042,427
------------ -------------
ENERGY-0.80%
750,000 NGC Corp. Capital Trust, 8.32% 6-1-2027...... BBB- 750,000 843,606
------------ -------------
FINANCE COMPANIES-1.21%
1,250,000 Homeside Lending, Inc., 6.875% Medium Term
Note 6-30-2002............................. BBB 1,249,623 1,273,331
------------ -------------
FOREIGN-GOVERNMENT-1.20%
1,250,000 Poland (Republic of), 7.125% Yankee Bond
7-1-2004................................... BBB- 1,243,991 1,267,624
------------ -------------
FOREST PRODUCTS-0.48%
500,000 Fort James Corp., 6.50% Sr Note 9-15-2002.... BBB- 499,417 501,404
------------ -------------
</TABLE>
24
<PAGE>
CORPORATE BONDS-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ -------------
<C> <S> <C> <C> <C>
MEDIA-1.11%
$1,000,000 News America Holdings, 8.875% Deb
4-26-2023.................................. BBB- $ 992,309 $ 1,165,896
------------ -------------
NATURAL GAS TRANSMISSIONS-1.75%
1,000,000 Tennessee Gas Pipeline, 7.50% Bond
4-1-2017................................... BBB 984,297 1,070,819
750,000 Trans-Canada Pipelines Ltd., 7.06% Note
10-14-2025................................. A- 750,000 766,037
------------ -------------
1,734,297 1,836,856
------------ -------------
OIL-REFINING-3.08%
1,500,000 Coastal Corp., 7.42% Note 2-15-2037.......... BBB- 1,426,970 1,568,156
1,500,000 Tosco Corp., 7.80% 1-1-2027.................. BBB- 1,498,335 1,676,241
------------ -------------
2,925,305 3,244,397
------------ -------------
REAL ESTATE-1.01%
1,000,000 Meditrust, 7.82% Note 9-10-2026.............. BBB- 1,000,000 1,058,789
------------ -------------
SUPRANATIONAL-0.96%
1,000,000 Corp Andina De Fomento, 7.10% Yankee Bond
2-1-2003................................... BBB+ 999,490 1,015,173
------------ -------------
TELECOMMUNICATIONS-0.99%
1,000,000 360 Communications Co., 7.50% Sr Note
3-1-2006................................... BBB- 997,995 1,038,259
------------ -------------
TELEPHONE SERVICES-2.04%
2,000,000 GTE Corp., 7.51% Note 4-1-2009............... A 1,984,409 2,144,892
------------ -------------
UTILITIES-ELECTRIC-3.44%
1,500,000 Empresa Nacional de Electricidad, 7.325%
Yankee Bond 2-1-2037....................... A- 1,500,000 1,522,017
750,000 Puget Sound Energy, Inc., 7.02% Medium Term
Note 12-1-2027............................. A- 750,000 758,882
1,250,000 Texas Utilities Electric Capital V, 8.175%
1-30-2037.................................. BBB 1,250,000 1,339,330
------------ -------------
3,500,000 3,620,229
------------ -------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $34,633,476 $ 36,863,644
------------ -------------
------------ -------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-20.47%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ -------------
<C> <S> <C> <C> <C>
BROADCASTING-0.50%
$ 500,000 Sinclair Broadcasting Group, Inc., 10.00% Sr
Sub Note 9-30-2005......................... B $ 500,000 $ 526,250
------------ -------------
BUSINESS SERVICES AND SUPPLIES-0.47%
500,000 T/SF Communications Corp., 10.375% Sr Sub
Note 11-1-2007 (e)......................... B 490,699 495,000
------------ -------------
CABLE TELEVISION-2.21%
1,000,000 Australis Media Ltd., 16.20% Sr Sub Disc Note
5-15-2003 (Zero coupon through 5-15-2000,
thereafter 15.75%) (f)..................... D 764,272 435,001
1,000,000 Cablevision Systems Corp., 10.50% Sr Sub Deb
5-15-2016.................................. BB- 1,014,728 1,162,500
527,500 Falcon Holding Group, L.P., 11.00% Sr Sub
Note Ser B 9-15-2003 (Interest is
Payable-in-Kind)........................... NR 548,224 549,722
500,000 Wireless One, Inc., 13.00% Sr Note
10-15-2003................................. B- 489,926 180,000
------------ -------------
2,817,150 2,327,223
------------ -------------
COMPUTER-HARDWARE-1.09%
1,000,000 Unisys Corp., 11.75% Sr Note 10-15-2004...... B+ 1,083,144 1,142,500
------------ -------------
ENERGY-0.95%
1,000,000 Energy Corp. of America, 9.50% Sr Sub Note
5-15-2007.................................. B 1,000,000 997,500
------------ -------------
FOOD-MISCELLANEOUS-1.02%
1,000,000 Envirodyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000......... B+ 1,000,000 1,068,750
------------ -------------
</TABLE>
25
<PAGE>
FORTIS SERIES FUND, INC.
DIVERSIFIED INCOME SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ -------------
<C> <S> <C> <C> <C>
HEALTH CARE SERVICES-0.52%
$ 500,000 Tenet Healthcare Corp., 10.125% Sr Sub Note
3-1-2005................................... B+ $ 530,337 $ 545,625
------------ -------------
HOTEL AND MOTEL-1.01%
1,000,000 HMH Properties, Inc., 9.50% Sr Note
5-15-2005.................................. BB- 1,011,287 1,063,750
------------ -------------
HOUSING-0.52%
500,000 MDC Holdings, Inc., 11.125% Note
12-15-2003................................. BB- 525,542 552,500
------------ -------------
INDUSTRIAL-2.17%
1,000,000 Intelcom Group (USA), Inc., 10.26% 5-1-2006
(Zero coupon through 5-1-2001, thereafter
12.50%) (f)................................ NR 745,752 750,000
500,000 Inter-City Products Corp. USA, 9.75% Sr
Secured Note 3-1-2000...................... B+ 512,733 510,000
1,000,000 Speedway Motorsports, Inc., 8.50% Sr Sub Deb
8-15-2007.................................. B+ 1,008,529 1,020,000
------------ -------------
2,267,014 2,280,000
------------ -------------
PUBLISING-0.80%
750,000 Petersen Publishing Co. LLC, 11.125% Sr Sub
Note 11-15-2006............................ B 840,921 847,500
------------ -------------
STEEL AND IRON-1.00%
1,000,000 Weirton Steel Corp., 11.375% Sr Note
7-1-2004................................... B 1,058,804 1,050,000
------------ -------------
TELECOMMUNICATIONS-6.14%
1,000,000 American Communications Services, Inc.,
13.00% Sr Disc Note 11-1-2005 (Zero coupon
until 11-1-2000, thereafter 13.00%) (f).... NR 732,570 800,000
500,000 Dobson Communications Corp., 11.75% Sr Note
4-15-2007.................................. NR 475,876 528,125
2,000,000 Knology Holdings, Inc., 11.875% Sr Disc Note
10-15-2007 (Zero coupon until 10-15-2002,
thereafter 11.875%) (with warrants) (d)
(f)........................................ NR 1,096,739 1,090,000
500,000 Nextel Communications, Inc., 9.58% Sr Disc
Note 9-15-2000 (Zero coupon through
9-15-2002, thereafter 10.65%) (e) (f)...... CCC 314,756 315,000
500,000 Omnipoint Corp., 11.625% Sr Note 8-15-2006... CCC+ 488,430 527,500
500,000 Omnipoint Corp., 11.625% Sr Note Ser A
8-15-2006.................................. CCC+ 487,212 527,500
1,000,000 Orbcomm Global LP Capital, 14.00% Sr Note
8-15-2004.................................. NR 1,070,905 1,085,000
500,000 Phonetel Technologies, Inc., 12.00% Sr Note
12-15-2006................................. B- 521,620 518,750
250,000 Poland Telecommunications Finance Corp.,
14.00% Sr Note 12-1-2007 (with warrants)
(d)........................................ NR 250,000 258,125
1,000,000 Teleport Communications, 11.125% Sr Disc Note
7-1-2007 (Zero coupon until 7-1-2001,
thereafter 11.125%) (f).................... B+ 697,278 812,500
------------ -------------
6,135,386 6,462,500
------------ -------------
TEXTILE MANUFACTURING-1.02%
1,000,000 Pillowtex Corp., 10.00% Sr Sub Note
11-15-2006................................. B2* 1,052,083 1,070,000
------------ -------------
TRANSPORTATION-1.05%
1,000,000 Greyhound Lines, Inc., 11.50% Sr Note
4-15-2007.................................. B3* 1,080,333 1,105,000
------------ -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $21,392,700 $ 21,534,098
------------ -------------
------------ -------------
</TABLE>
U.S. GOVERNMENT SECURITIES-16.55%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
----------- ------------ -------------
<C> <S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION-6.72%
MORTGAGE BACKED SECURITIES:
$ 845,000 6.00% 2013 (i)............................... $ 826,515 $ 831,269
4,542,247 7.00% 2025................................... 4,474,136 4,573,476
1,630,812 7.50% 2022-2026.............................. 1,678,934 1,668,322
------------ -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ 6,979,585 7,073,067
------------ -------------
</TABLE>
26
<PAGE>
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
----------- ------------ -------------
<C> <S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION-4.13%
MORTGAGE BACKED SECURITIES:
$2,672,076 9.00% 2020................................... $ 2,798,999 $ 2,857,451
258,920 9.125% Fleet Mortgage Securities Ser 1989-3
Class D 2018 (GNMA Backed)................. 262,630 259,243
1,141,445 9.50% 2019................................... 1,184,948 1,223,826
------------ -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 4,246,577 4,340,520
------------ -------------
U.S. TREASURY SECURITIES-5.70%
NOTES:
5,300,000 5.625% 1999.................................. 5,290,077 5,293,375
660,000 6.875% 2006.................................. 678,907 706,406
------------ -------------
TOTAL U.S. TREASURY SECURITIES............... 5,968,984 5,999,781
------------ -------------
TOTAL U.S. GOVERNMENT SECURITIES............. $17,195,146 $ 17,413,368
------------ -------------
------------ -------------
TOTAL LONG-TERM INVESTMENTS.................. $98,447,571 $ 101,982,794
------------ -------------
------------ -------------
</TABLE>
SHORT-TERM INVESTMENTS-2.48%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- -------------
<C> <S> <C>
BANKS-2.03%
$2,137,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 2,137,000
-------------
DIVERSIFIED FINANCE-0.45%
475,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.44%...................... 475,000
-------------
TOTAL SHORT-TERM INVESTMENTS................. 2,612,000
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$101,059,571) (b).......................... $ 104,594,794
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $101,061,122 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 4,237,458
Unrealized depreciation..................................... (703,786)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $ 3,533,672
- -------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuations of securities.
(d) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". These investments have been identified by portfolio
management as illiquid securities. The Portfolio entered into the following
Section 144A security transactions:
<TABLE>
<CAPTION>
Date Acquired Shares/Par Security Cost Basis
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
May 15, 1996 447,151 DLJ Mortgage Acceptance Corp., 7.28% Ser 1996-CF1 Class A1 3-13-2028 $ 450,459
July 11, 1997 1,000 Iridium LLC/Capital Corp. (Warrants) 96,501
December 12, 1997 2,000,000 Knology Holdings, Inc., 11.875% Sr Disc Note 10-15-2007 (Zero coupon until
10-15-2002, thereafter 11.875%) (with warrants) 1,096,739
August 12, 1997 250,000 Morgan Stanley Capital I, Inc., 7.27% Ser 1997-HF1 Class A2 1-15-2007 254,287
June 11, 1997 600,000 Morgan Stanley Capital I, Inc., 7.38% Ser 1996-WF1 Class A3 8-15-2006 611,486
November 24, 1997 250,000 Poland Telecommunications Finance Corp., 14.00% Sr Note 12-1-2007 (with
warrants) 250,000
</TABLE>
The aggregate value of these securities at December 31, 1997, was
$2,819,360, which represents 2.68% of total net assets.
(e) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". Pursuant to guidelines adopted by the Board of
Directors, these issues are deemed to be liquid. The aggregate value of
these securities at December 31, 1997, was $2,970,557, which represents
2.82% of total net assets.
(f) The interest rate disclosed for these securities represents the effective
yield on the date of acquisition.
(g) The interest rate disclosed for principal only strips represents the
effective yield at December 31, 1997 based upon future cash flows. This
security has been identified by portfolio management as a liquid security.
The aggregate value of this security at December 31, 1997, was $577,453,
which represents .55% of total net assets.
(h) 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 7.22% of total net assets as of December 31, 1997.
(i) The cost of securities purchased on a when-issued basis at December 31,
1997, was $826,515.
* Moody's Rating
27
<PAGE>
FORTIS SERIES FUND, INC.
GLOBAL BOND SERIES
Schedule of Investments
December 31, 1997
ASSET BACKED SECURITIES-4.35%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's
Amount Rating Market
(d) (Unaudited) Cost (a)(d) Value (b)(d)
--------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
NETHERLANDS-4.35%
$900,000 ARKAIG Finance Co. (US Dollar), 5.97%
Floating Rate Note 3-19-1999 (f)........... AAA $ 899,891 $ 899,505
------------ ------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-68.55%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (d) (Unaudited) Cost (a)(d) Value (b)(d)
--------------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
AUSTRALIA-7.21%
$ 1,000,000 Australian Government (Australian Dollar),
7.50% 9-15-2009............................ AAA $ 750,309 $ 731,631
460,000 Australian Government (Australian Dollar),
8.75% 8-15-2008............................ AAA 402,842 363,246
545,000 State Bank New South Wales (Australian
Dollar), 9.00% 9-17-2002................... AAA 397,062 396,580
------------ ------------
1,550,213 1,491,457
------------ ------------
AUSTRIA-3.60%
700,000 Republic of Austria (US Dollar), 7.875%
3-26-2002.................................. AAA 732,656 744,625
------------ ------------
CANADA - 1.47%
345,000 Canadian Government (Canadian Dollar), 8.00%
6-1-2023................................... AAA 288,253 305,216
------------ ------------
DENMARK-10.30%
5,700,000 Kingdom of Denmark (Danish Krone), 8.00%
3-15-2006.................................. AAA 931,803 964,150
4,550,000 Kingdom of Denmark (Danish Krone), 8.00%
5-15-2003.................................. AAA 833,240 750,956
2,600,000 Kingdom of Denmark (Danish Krone), 7.00%
11-15-2007................................. AAA 412,445 416,853
------------ ------------
2,177,488 2,131,959
------------ ------------
GERMANY-17.13%
880,000 Deutsche Ausgleichsbank (German
Deutschemark), 6.375% 11-7-2002............ AAA 622,637 520,162
2,550,000 German Government (German Deutschemark),
6.50% 7-4-2027............................. Aaa* 1,533,282 1,525,426
1,600,000 German Government (German Deutschemark),
7.125% 12-20-2002.......................... Aaa* 971,773 976,686
860,000 Landeskreditbank Baden-Wurttemberg (German
Deutschemark), 6.625% 8-20-2003............ AAA 612,473 521,341
------------ ------------
3,740,165 3,543,615
------------ ------------
ITALY-12.44%
1,080,000,000 Buoni Poliennali Del Tesoro (Italian Lira),
10.50% 4-1-2000............................ AAA 697,562 680,427
1,610,000,000 Buoni Poliennali Del Tesoro (Italian Lira),
8.25% 7-1-1999............................. AAA 929,730 954,584
1,475,000,000 Buoni Poliennali Del Tesoro (Italian Lira),
9.50% 2-1-2001............................. AAA 983,245 939,449
------------ ------------
2,610,537 2,574,460
------------ ------------
NETHERLANDS-2.80%
1,100,000 Dutch Government (Dutch Guilders), 6.50%
4-15-2003.................................. NR 677,185 578,506
------------ ------------
SPAIN-6.23%
70,000,000 Bonos Y Obligation Del Estado (Spanish
Peseta), 7.40% 7-30-1999................... Aa2* 504,843 478,924
70,000,000 Bonos Y Obligation Del Estado (Spanish
Peseta), 7.90% 2-28-2002................... Aa2* 529,423 509,329
38,000,000 Bonos Y Obligation Del Estado (Spanish
Peseta), 8.20% 2-28-2009................... Aa2* 293,620 300,041
------------ ------------
1,327,886 1,288,294
------------ ------------
UNITED KINGDOM-2.76%
325,000 United Kingdom Treasury (British Pound),
7.25% 12-7-2007............................ Aa2* 585,682 572,021
------------ ------------
UNITED STATES-4.61%
850,000 General Electric Capital Corp., 8.125%
2-23-2007.................................. AAA 925,813 953,594
------------ ------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $14,615,878 $14,183,747
------------ ------------
------------ ------------
</TABLE>
28
<PAGE>
U.S. GOVERNMENT SECURITIES-17.14%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount (d) Cost (a)(d) Value (b)(d)
----------- ------------ ------------
<C> <S> <C> <C>
U.S. TREASURY SECURITIES-17.14%
BONDS:
$1,450,000 7.03% 2017 (e)............................... $ 388,702 $ 452,848
450,000 7.50% 2016................................... 503,859 524,953
400,000 8.125% 2019.................................. 458,132 500,625
------------ ------------
1,350,693 1,478,426
------------ ------------
NOTES:
1,000,000 5.75% 2000................................... 1,002,356 1,001,875
500,000 6.625% 2007.................................. 498,732 529,375
500,000 7.00% 2006................................... 511,652 539,843
------------ ------------
2,012,740 2,071,093
------------ ------------
TOTAL U.S. GOVERNMENT SECURITIES............. $ 3,363,433 $ 3,549,519
------------ ------------
------------ ------------
TOTAL LONG-TERM INVESTMENTS.................. $18,879,202 $18,632,771
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-3.82%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal
Amount Market
(d) Value (b)(d)
--------- ------------
<C> <S> <C>
BANKS-0.01%
$ 872 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 872
------------
INVESTMENT COMPANY-0.21%
43,881 First American Government Obligations Fund,
Current rate -- 5.31%...................... 43,881
------------
U.S. TREASURY BILLS-3.60%
750,000 U.S. Treasury Bill, 5.04% 2-12-1998.......... 745,563
------------
TOTAL SHORT-TERM INVESTMENTS................. 790,316
------------
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$19,669,518) (a)........................... $19,423,087
------------
------------
</TABLE>
(a) At December 31, 1997, the cost of securities for federal income tax
purposes was $19,669,518 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 316,223
Unrealized depreciation..................................... (562,654)
- -------------------------------------------------------------------------
Net unrealized depreciation................................. $ (246,431)
- -------------------------------------------------------------------------
</TABLE>
(b) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(c) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets.
(d) Cost and market value are stated in U.S. dollars; principal amount is
stated in the currency indicated.
(e) The interest rate disclosed for these securities represents the effective
yield on the date of acquisition.
(f) Interest Rate varies based on a predetermined schedule or to reflect
current market conditions; rate shown is the effective rate on December 31,
1997.
* Moody's Rating
29
<PAGE>
FORTIS SERIES FUND, INC.
HIGH YIELD SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS AND WARRANTS-0.24%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
------- ------------ ------------
<C> <S> <C> <C>
APPAREL-0.03%
250 Hosiery Corp. of America Class A (a) (e)..... $ 4,230 $ 17,500
------------ ------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.01%
500 Highwaymaster Communications, Inc. (Warrants)
(a) (e).................................... 8,578 8,750
------------ ------------
CABLE TELEVISION-0.00%
2,500 American Telecasting, Inc. (Warrants) (a)
(e)........................................ 5,000 25
------------ ------------
CONSUMER GOODS-0.00%
200 Chattem, Inc. (Warrants) (a) (e)............. 2,546 2,100
1,000 Wireless One, Inc. (Warrants) (a) (e)........ 7,831 1,000
------------ ------------
10,377 3,100
------------ ------------
TELECOMMUNICATIONS-0.20%
1,000 American Communications Services, Inc.
(Warrants) (a) (e)......................... 45,700 75,000
3,300 Clearnet Communications, Inc. (Warrants) (a)
(e)........................................ 42,075 23,100
2,560 Powertel, Inc. (Warrants) (a) (e)............ 18,824 19,200
------------ ------------
106,599 117,300
------------ ------------
TOTAL COMMON STOCKS AND WARRANTS............. $ 134,784 $ 146,675
------------ ------------
------------ ------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-94.28%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
AIR FREIGHT-0.86%
$ 500,000 Kitty Hawk, Inc., 9.95% Sr Note 11-15-2004
(e)........................................ B+ $ 512,439 $ 510,000
------------ ------------
APPAREL-0.91%
500,000 Hosiery Corp. of America, Inc., 13.75% Sr Sub
Note 8-1-2002.............................. B- 534,197 540,000
------------ ------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-2.75%
1,000,000 Collins & Aikman Products, 11.50% Sr Sub Note
4-15-2006.................................. B 1,116,271 1,125,000
500,000 Highwaymaster, Inc., 13.75% Sr Note 9-15-2005
(e)........................................ B 491,597 505,000
------------ ------------
1,607,868 1,630,000
------------ ------------
BROADCASTING-4.13%
250,000 Commodore Media, Inc., 13.25% Sr Sub Note
5-1-2003................................... NR 249,577 280,000
1,000,000 Sinclair Broadcasting Group, Inc., 10.00% Sr
Sub Note 9-30-2005......................... B 1,033,770 1,052,500
1,000,000 Young Broadcasting, Inc., 11.75% Sr Sub Note
11-15-2004................................. B 1,104,420 1,112,500
------------ ------------
2,387,767 2,445,000
------------ ------------
BUSINESS SERVICES AND SUPPLIES-2.55%
500,000 Dialog Corp. plc, 11.00% Sr Sub Note
11-15-2007 (e)............................. B 500,000 518,750
1,000,000 T/SF Communications Corp., 10.375% Sr Sub
Note 11-1-2007 (f)......................... B 1,000,000 990,000
------------ ------------
1,500,000 1,508,750
------------ ------------
CABLE TELEVISION-17.19%
1,000,000 Adelphia Communications, Inc., 9.25% Sr Note
10-1-2002.................................. NR 1,020,280 1,020,000
1,000,000 American Telecasting, Inc., 24.17% Sr Disc
Note 8-15-2005 (Zero coupon until
8-15-2000, thereafter 14.50%) (g).......... CCC+ 404,462 290,000
3,008,750 Australis Media Ltd., 14.00% Sr Sub Disc Note
5-15-2003 (Zero coupon through 5-15-2000,
thereafter 15.75%) (g)..................... D 2,163,539 1,308,809
1,000,000 Cablevision Systems Corp., 9.25% Sr Sub Note
11-1-2005.................................. BB- 1,053,242 1,063,750
1,000,000 Century Communications Corp., 8.875% Sr Note
1-15-2007.................................. BB- 1,031,865 1,030,000
1,055,000 Falcon Holding Group, L.P., 11.00% Sr Sub
Note Ser B 9-15-2003 (Interest is
Payable-in-Kind)........................... NR 1,024,312 1,099,443
1,000,000 Galaxy Telecom L.P., 12.375% Sr Sub Note
10-1-2005.................................. B- 1,094,476 1,100,000
500,000 Olympus Communication L.P., 10.625% Sr Note
11-15-2006................................. B 500,000 553,750
</TABLE>
30
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
$3,000,000 People's Choice T.V. Corp., 17.08% Sr Disc
Note 6-1-2004 (Zero coupon until 6-1-2000,
thereafter 13.125%) (g).................... CCC+ $ 1,324,370 $ 1,080,020
1,000,000 Source Media, Inc., 12.00% Sr Secured Note
11-1-2004 (f).............................. B- 1,000,000 992,500
1,500,000 Wireless One, Inc., 13.00% Sr Note
10-15-2003................................. B- 1,174,703 540,000
500,000 Wireless One, Inc., 13.463% Sr Disc Note
8-1-2006 (Zero coupon through 8-1-2001,
thereafter 13.50%) (g)..................... B- 310,723 100,000
------------ ------------
12,101,972 10,178,272
------------ ------------
CHEMICALS-2.79%
500,000 Agricultural Minerals & Chemicals, 10.75% Sr
Note 9-30-2003............................. BB- 523,253 535,000
1,000,000 Sterling Chemical Holdings, 12.33% Sr Disc
Note 8-15-2008 (Zero coupon through
8-15-2001, thereafter 13.50%) (g).......... B+ 676,648 610,000
500,000 Sterling Chemicals, Inc., 11.75% Sr Sub Note
8-15-2006.................................. B+ 550,624 510,000
------------ ------------
1,750,525 1,655,000
------------ ------------
COMPUTER-HARDWARE-1.93%
1,000,000 Unisys Corp., 11.75% Sr Note 10-15-2004...... B+ 1,122,496 1,142,500
------------ ------------
CONSUMER GOODS-0.99%
250,000 Chattem, Inc., 12.75% Sr Sub Note Ser B
6-15-2004.................................. B- 258,330 285,000
500,000 Coleman Escrow Corp., 15.71% Zero Coupon Note
5-15-2001 (g).............................. B 324,557 300,000
------------ ------------
582,887 585,000
------------ ------------
DAIRY PRODUCTS-0.82%
500,000 Fage Dairy Industries, Inc., 9.00% Sr Note
7-1-2007................................... BB 490,543 486,250
------------ ------------
ENERGY-2.35%
400,000 Chesapeake Energy Corp. 7.875% Sr Note
3-15-2004.................................. BB- 394,651 395,000
1,000,000 Energy Corp. of America, 9.50% Sr Sub Note
5-15-2007.................................. B 997,547 997,500
------------ ------------
1,392,198 1,392,500
------------ ------------
ENTERTAINMENT-1.63%
1,000,000 Fox Kids Worldwide, Inc., 9.25% Sr Note
11-1-2007 (f).............................. B 957,719 967,500
------------ ------------
FINANCE COMPANIES-2.50%
500,000 Emergent Group, Inc., 10.75% Sr Note
9-15-2004 (f).............................. B- 482,770 495,625
81,000 Homeside, Inc., 11.25% Sr Secured Second
Priority Note 5-15-2003.................... BB+ 81,000 95,985
500,000 Mego Mortgage Corp., 12.50% Sr Sub Note
12-1-2001 (e).............................. Caa* 504,809 380,000
500,000 Wilshire Financial Services, 13.00% Ser A
Note 8-15-2004 (e)......................... NR 500,000 508,750
------------ ------------
1,568,579 1,480,360
------------ ------------
FOOD-MISCELLANEOUS-1.81%
1,000,000 Envirodyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000......... B+ 1,050,370 1,068,750
------------ ------------
HEALTH CARE SERVICES-4.39%
500,000 Healthcor Holdings, Inc., 11.00% Sr Note
12-1-2004 (e).............................. B+ 500,000 512,500
1,000,000 Paragon Health Networks, 9.50% Sr Sub Note
11-1-2007 (f).............................. B- 998,414 997,500
1,000,000 Tenet Healthcare Corp., 10.125% Sr Sub Note
3-1-2005................................... B+ 1,094,212 1,091,250
------------ ------------
2,592,626 2,601,250
------------ ------------
HOTEL AND MOTEL-1.80%
1,000,000 HMH Properties, Inc., 9.50% Sr Note
5-15-2005.................................. BB- 1,006,088 1,063,750
------------ ------------
HOUSING-4.62%
1,500,000 MDC Holdings, Inc., 11.125% Note
12-15-2003................................. BB- 1,543,065 1,657,500
1,000,000 NVR, Inc., 11.00% Sr Note 4-15-2003.......... B+ 1,071,773 1,080,000
------------ ------------
2,614,838 2,737,500
------------ ------------
INDUSTRIAL-8.20%
1,000,000 Exide Corp., 10.75% Sr Note 12-15-2002....... B+ 1,056,525 1,053,699
1,000,000 Intelcom Group (USA), Inc., 10.26% 5-1-2006
(Zero coupon through 5-1-2001, thereafter
12.50%) (g)................................ NR 745,752 750,000
1,000,000 Inter-City Products Corp. USA, 9.75% Sr
Secured Note 3-1-2000...................... B+ 1,015,943 1,020,000
</TABLE>
31
<PAGE>
FORTIS SERIES FUND, INC.
HIGH YIELD SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
$1,000,000 Riverwood International Corp., 10.625% Sr
Note 8-1-2007.............................. B- $ 1,039,662 $ 1,015,000
1,000,000 Speedway Motorsports, Inc., 8.50% Sr Sub Deb
8-15-2007.................................. B+ 1,009,143 1,020,000
------------ ------------
4,867,025 4,858,699
------------ ------------
MACHINERY-1.79%
1,000,000 Clark Materials Handling, 10.75% Sr Note
11-15-2006................................. B+ 1,027,359 1,062,500
------------ ------------
MACHINERY-TOOLS-0.87%
500,000 Werner Holdings Co., Inc., 10.00% Sr Sub Note
11-15-2007 (e)............................. B- 500,000 512,500
------------ ------------
PUBLISHING-2.81%
500,000 Garden State Newspapers, 8.75% Sr Sub Note
10-1-2009 (e).............................. B+ 503,745 501,875
1,000,000 Marvel (Parent) Holdings, Inc., 14.46% Sr
Secured Zero Coupon Discount Note 4-15-1998
(a) (g).................................... D 845,091 35,000
1,000,000 Petersen Publishing Co. LLC, 11.125% Sr Sub
Note 11-15-2006............................ B 1,078,920 1,130,000
------------ ------------
2,427,756 1,666,875
------------ ------------
RESTAURANTS AND FRANCHISING-0.86%
500,000 Friendly Ice Cream, 10.50% Sr Note
12-1-2007.................................. B 502,184 506,250
------------ ------------
SHIP BUILDING, SHIPPING-0.89%
500,000 Newport News Ship Building, 9.25% Sr Sub Note
12-1-2006.................................. B+ 531,250 529,375
------------ ------------
STEEL AND IRON-1.77%
1,000,000 Weirton Steel Corp., 11.375% Sr Note
7-1-2004................................... B 1,045,613 1,050,000
------------ ------------
TELECOMMUNICATIONS-14.31%
1,000,000 American Communications Services, Inc.,
13.00% Sr Disc Note 11-1-2005 (Zero coupon
until 11-1-2000, thereafter 13.00%) (g).... NR 732,570 800,000
500,000 Cellular Communications, Inc., 11.96% Zero
Coupon Note 8-15-2000 (g).................. CCC+ 377,947 400,000
500,000 Fonorola, Inc., 12.50% Sr Secured Note
8-15-2002.................................. BB- 515,211 557,500
500,000 Hyperion Telecommunication, 12.25% Sr Note
9-1-2004................................... NR 539,658 552,500
1,000,000 Intermedia Communications, Inc., 11.25% Sr
Disc Note 7-15-2007 (Zero Coupon until
7-15-2002, thereafter 11.25%) (g).......... B 727,222 712,500
500,000 Iridium LLC/Capital Corp., 13.00% Sr Note
7-15-2005.................................. B- 518,325 522,500
500,000 Iridium LLC/Capital Corp., 14.00% Sr Note
7-15-2005.................................. B- 562,013 542,500
500,000 MGC Communications, Inc., 13.00% Sr Sec Note
10-1-2004 (and warrants) (e)............... NR 518,411 502,500
1,500,000 Microcell Telecommunications, Inc., 11.80%
Disc Note 6-1-2006 (Zero coupon until
12-1-2001, thereafter 14.00%) (g).......... B3* 994,126 1,005,000
1,250,000 Nextel Communications, Inc., 9.58% Sr Disc
Note 9-15-2007 (Zero coupon through
9-15-2002, thereafter 10.65%) (f) (g)...... CCC 814,934 787,500
1,000,000 Omnipoint Corp., 11.625% Sr Note Ser A
8-15-2006.................................. CCC+ 967,849 1,055,000
1,000,000 Phonetel Technologies, Inc., 12.00% Sr Note
12-15-2006................................. B- 1,002,407 1,037,500
------------ ------------
8,270,673 8,475,000
------------ ------------
TEXTILE MANUFACTURING-6.16%
1,025,000 Anvil Knitwear, Inc., 10.875% Sr Note
3-15-2007.................................. B+ 1,046,922 1,053,188
1,000,000 Dan River, Inc., 10.125% Sr Sub Note
12-15-2003................................. B 1,071,025 1,068,750
1,000,000 Maxim Group, Inc., 9.25% Sr Note 10-15-2007
(e)........................................ B 988,815 992,500
500,000 Pillowtex Corp., 10.00% Sr Sub Note
11-15-2006................................. B+ 530,987 535,000
------------ ------------
3,637,749 3,649,438
------------ ------------
TRANSPORTATION-1.87%
1,000,000 Greyhound Lines, Inc., 11.50% Sr Note
4-15-2007.................................. NR 1,055,312 1,105,000
------------ ------------
WASTE DISPOSAL-0.73%
375,000 Norcal Waste Systems, Inc., 13.50% Increasing
Rate Sr Note 11-15-2005.................... BB- 373,467 431,250
------------ ------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... 58,011,500 55,839,269
------------ ------------
------------ ------------
TOTAL LONG-TERM INVESTMENTS.................. $58,146,284 $55,985,944
------------ ------------
------------ ------------
</TABLE>
32
<PAGE>
SHORT-TERM INVESTMENTS-6.18%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- ------------
<C> <S> <C>
BANKS-3.28%
$1,944,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 1,944,000
------------
DIVERSIFIED FINANCE-2.90%
1,716,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.44%...................... 1,716,000
------------
TOTAL SHORT-TERM INVESTMENTS................. 3,660,000
------------
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$61,806,284) (b)........................... $59,645,944
------------
------------
</TABLE>
(a) Presently non-income producing. For long-term debt securities, items
identified are in default as to payment of interest and/or principal.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $61,818,683 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 1,153,452
Unrealized depreciation..................................... (3,326,191)
- -------------------------------------------------------------------------
Net unrealized depreciation................................. $(2,172,739)
- -------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 6.54% of total net assets as of December 31, 1997.
(e) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". These investments have been identified by portfolio
management as illiquid securities:
<TABLE>
<CAPTION>
Date Acquired Shares/Par Security Cost Basis
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------
November 10, 1995 1,000 American Communications Services, Inc. (Warrants) -- $ 45,700
144A
June 10, 1994 200 Chattem, Inc. (Warrants) -- 144A 2,546
November 11, 1997 500,000 Dialog Corp. 11.00% 11-15-2007 -- 144A 500,000
December 17, 1997 500,000 Garden State Newspapers, 8.75% 10-1-2009 -- 144A 503,745
November 24, 1997 500,000 Healthcor Holdings, Inc., 11.00% 12-1-2004 -- 144A 500,000
November 21, 1997 500,000 Highwaymaster, Inc., 13.75% 9-15-2005 -- 144A 491,597
November 21, 1997 500 Highwaymaster, Inc. (Warrants) -- 144A 8,578
October 7, 1994 250 Hosiery Corp. (Warrants) -- 144A 4,230
December 10, 1997 500,000 Kitty Hawk, Inc., 9.95% 11-15-2004 -- 144A 512,439
November 14, 1997 1,000,000 Maxim Group, Inc., 9.25% 10-15-2007 -- 144A 988,815
October 15, 1997 500,000 Mego Mortgage Corp., 12.50% 12-1-2001 -- 144A 504,809
October 20, 1997 500,000 MGC Communications, Inc., 13.00% 10-1-2004 -- 144A 518,411
November 14, 1997 500,000 Werner Holdings Co. Inc., 10.00% 11-15-2007 -- 144A 500,000
August 13, 1997 500,000 Wilshire Financial Services, 13.00% 8-15-2004 -- 144A 500,000
September 9, 1997 1,000 Wireless One, Inc. (Warrants) -- 144A 7,831
May 9, 1995 2,500 American Telecasting, Inc. (Warrants) 5,000
August 5, 1996 3,300 Clearnet Communications, Inc. (Warrants) 42,075
January 27, 1997 2,560 Powertel, Inc. (Warrants) 18,824
</TABLE>
The aggregate value of these securities at December 31, 1997, was
$5,591,050, which represents 9.44% of total net assets.
(f) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". Pursuant to guidelines adopted by the Board of
Directors, these issues are determined to be liquid. The aggregate value of
these securities at December 31, 1997, was $5,230,625, which represents
8.83% of total net assets.
(g) The interest rates disclosed for these securities represents the effective
yield on the date of acquisition.
* Moody's Rating
33
<PAGE>
FORTIS SERIES FUND, INC.
ASSET ALLOCATION SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-56.05%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
ADVERTISING-PUBLIC RELATIONS-0.70%
67,600 Interpublic Group of Companies, Inc. $ 3,196,787 $ 3,367,325
------------- -------------
AEROSPACE AND EQUIPMENT-0.52%
117,000 Loral Space and Communications Ltd. (a)...... 2,597,688 2,508,187
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE
PARTS-0.60%
1,000 Highwaymaster Communications, Inc. (Warrants)
(a)(e)..................................... 18,186 17,500
46,000 Magna International, Inc. Class A............ 2,185,416 2,889,375
------------- -------------
2,203,602 2,906,875
------------- -------------
BANKS-2.22%
53,000 Banc One Corp................................ 2,049,928 2,878,562
23,000 Mellon Bank Corp............................. 1,461,183 1,394,375
73,000 Norwest Corp................................. 2,700,804 2,819,625
53,000 Union Planters Corp.......................... 1,839,620 3,600,687
------------- -------------
8,051,535 10,693,249
------------- -------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-0.94%
37,000 Amgen, Inc. (a).............................. 2,059,153 2,002,625
76,000 Centocor, Inc. (a)........................... 2,844,151 2,527,000
------------- -------------
4,903,304 4,529,625
------------- -------------
BROADCASTING-0.29%
34,000 Viacom, Inc. Class B (a)..................... 1,325,041 1,408,875
------------- -------------
BUSINESS SERVICES AND
SUPPLIES-1.62%
55,000 Cognizant Corp............................... 2,362,226 2,450,937
82,300 Fiserv, Inc. (a)............................. 3,143,889 4,042,987
45,000 Ingram Micro, Inc. Class A (a)............... 893,400 1,310,625
------------- -------------
6,399,515 7,804,549
------------- -------------
CHEMICALS-1.16%
24,000 Dow Chemical Co.............................. 2,360,437 2,436,000
75,000 Monsanto Co.................................. 2,920,714 3,150,000
------------- -------------
5,281,151 5,586,000
------------- -------------
COMPUTER-COMMUNICATIONS
EQUIPMENT-0.44%
38,000 Cisco Systems, Inc. (a)...................... 300,703 2,118,500
------------- -------------
COMPUTER-SOFTWARE-2.55%
20,500 Computer Sciences Corp. (a).................. 1,745,662 1,711,750
28,000 Microsoft Corp. (a).......................... 596,512 3,619,000
39,000 PeopleSoft, Inc. (a)......................... 1,368,424 1,521,000
141,919 Sterling Commerce, Inc. (a).................. 2,383,221 5,455,012
------------- -------------
6,093,819 12,306,762
------------- -------------
CONTAINERS AND PACKAGING-0.42%
40,500 Crown Cork & Seal Company, Inc............... 1,875,060 2,030,062
------------- -------------
DRUGS-3.93%
37,000 Abbott Laboratories.......................... 1,681,465 2,425,812
73,200 Forest Laboratories, Inc. (a)................ 2,735,536 3,609,675
60,000 Lilly (Eli) & Co., Inc....................... 1,915,257 4,177,500
133,000 Mylan Laboratories, Inc...................... 2,422,610 2,784,687
34,200 Teva Pharmaceutical Industries Ltd. ADR...... 1,696,950 1,618,087
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
35,000 Warner-Lambert Co............................ $ 3,848,960 $ 4,340,000
------------- -------------
14,300,778 18,955,761
------------- -------------
ELECTRICAL EQUIPMENT-0.79%
52,000 General Electric Co.......................... 2,339,305 3,815,500
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND
CAPACITOR-1.14%
26,000 Intel Corp................................... 981,551 1,826,500
64,400 Motorola, Inc................................ 2,884,391 3,674,825
------------- -------------
3,865,942 5,501,325
------------- -------------
FINANCE SERVICES-4.15%
169,000 Fannie Mae................................... 4,410,213 9,643,562
150,000 MBNA Corp.................................... 1,566,606 4,096,875
94,000 MGIC Investment Corp......................... 3,146,689 6,251,000
------------- -------------
9,123,508 19,991,437
------------- -------------
FOOD-4.44%
318,000 Archer-Daniels-Midland Co.................... 6,690,953 6,896,625
91,200 ConAgra, Inc................................. 1,998,455 2,992,500
135,000 Groupe Danone-ADR (a)........................ 4,185,000 4,826,250
58,000 Heinz (H.J.) Co.............................. 1,852,810 2,947,125
77,000 Nabisco Holdings Corp. Class A............... 3,651,562 3,729,687
------------- -------------
18,378,780 21,392,187
------------- -------------
HEALTH CARE SERVICES-0.61%
39,000 Cardinal Health, Inc......................... 1,848,080 2,929,875
------------- -------------
HOTEL AND GAMING-0.81%
105,500 Mirage Resorts, Inc. (a)..................... 1,199,434 2,400,125
40,000 Sun International Hotels Ltd. (a)............ 1,976,978 1,505,000
------------- -------------
3,176,412 3,905,125
------------- -------------
INSURANCE-3.36%
96,000 American International Group, Inc............ 6,578,642 10,440,000
127,400 Hartford Life, Inc........................... 4,363,467 5,772,813
------------- -------------
10,942,109 16,212,813
------------- -------------
LEISURE TIME-AMUSEMENTS-0.51%
25,000 Disney (Walt) Co............................. 2,338,859 2,476,563
------------- -------------
MACHINERY-OIL AND WELL-0.54%
60,000 Baker Hughes, Inc............................ 2,583,149 2,617,500
------------- -------------
MEDICAL TECHNOLOGY-1.30%
22,900 Boston Scientific Corp. (a).................. 949,121 1,050,538
99,400 Medtronic, Inc. (and rights)................. 2,020,745 5,199,863
------------- -------------
2,969,866 6,250,401
------------- -------------
NATURAL GAS TRANSMISSIONS-0.49%
84,000 Williams Companies, Inc...................... 2,060,232 2,383,500
------------- -------------
OIL AND GAS FIELD SERVICES-2.61%
38,900 Camco International, Inc..................... 1,691,080 2,477,444
78,400 Precision Drilling Corp. (a)................. 1,538,575 1,911,000
86,000 Schlumberger Ltd............................. 3,979,114 6,923,000
43,000 Trico Marine Services, Inc. (a).............. 1,204,000 1,263,125
------------- -------------
8,412,769 12,574,569
------------- -------------
OIL-CRUDE PETROLEUM AND GAS-1.47%
25,000 EVI, Inc. (a)................................ 1,232,860 1,293,750
100,400 Nuevo Energy Co. (a)......................... 3,991,559 4,091,300
</TABLE>
34
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
151,000 Santa Fe Energy Resources, Inc. (a).......... $ 1,249,485 $ 1,698,750
------------- -------------
6,473,904 7,083,800
------------- -------------
OIL-OFFSHORE DRILLING-0.31%
37,000 Santa Fe International Corp. (a)............. 1,100,910 1,505,438
------------- -------------
POLLUTION CONTROL-0.78%
125,000 U.S. Filter Corp. (a)........................ 3,855,470 3,742,188
------------- -------------
PRECISION INSTRUMENTS-TEST,
RESEARCH-0.29%
20,000 Perkin Elmer Corp............................ 1,564,097 1,421,250
------------- -------------
PUBLISHING-1.15%
12,700 CMP Media, Inc. Class A (a).................. 279,400 219,075
86,000 Time Warner, Inc............................. 4,513,824 5,332,000
------------- -------------
4,793,224 5,551,075
------------- -------------
RAILROAD AND RAILROAD
EQUIPMENT-0.72%
112,500 Tranz Rail Holdings Ltd. ADR................. 2,025,000 1,293,750
35,000 Union Pacific Corp........................... 2,256,408 2,185,313
------------- -------------
4,281,408 3,479,063
------------- -------------
RETAIL-DEPARTMENT STORES-1.18%
83,200 Kohl's Corp. (a)............................. 1,624,871 5,668,000
------------- -------------
RETAIL-SPECIALTY-3.90%
149,750 Cendant Corp. (a)............................ 2,807,587 5,147,656
145,000 Costco Companies, Inc. (a)................... 2,448,415 6,470,625
122,250 Home Depot, Inc.............................. 3,542,446 7,197,469
------------- -------------
8,798,448 18,815,750
------------- -------------
RETAIL-VARIETY AND VARIETY MAIL
ORDER-0.60%
92,900 Walgreen Co.................................. 3,034,504 2,914,738
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
TELECOMMUNICATION
EQUIPMENT-1.40%
6,400 Associated Group, Inc. Class A (a)........... $ 179,200 $ 189,600
90,000 Ericsson (L.M.) Telephone Co. Class B ADR.... 1,007,927 3,358,125
61,000 Tellabs, Inc.(a)............................. 1,232,566 3,225,375
------------- -------------
2,419,693 6,773,100
------------- -------------
TELECOMMUNICATIONS-0.03%
1,000 Globalstar LP/Capital (Warrants) (a)(e) 51,746 105,000
1,000 Hyperion Telecom (Warrants) (a)(e)........... 4,022 60,000
------------- -------------
55,768 165,000
------------- -------------
TELEPHONE SERVICES-2.22%
154,000 AirTouch Communications, Inc. (a)............ 4,074,979 6,400,625
142,988 WorldCom, Inc. (a)........................... 1,915,733 4,325,387
------------- -------------
5,990,712 10,726,012
------------- -------------
TOBACCO-1.24%
132,000 Philip Morris Companies, Inc................. 4,750,716 5,981,250
------------- -------------
TOYS-1.25%
161,651 Mattel, Inc.................................. 2,523,828 6,021,500
------------- -------------
UTILITIES-ELECTRIC-1.70%
135,000 AES Corp. (a)................................ 3,435,481 6,294,375
104,000 Tucson Electric Power Co. (a)................ 1,739,356 1,885,000
------------- -------------
5,174,837 8,179,375
------------- -------------
UTILITIES-TELEPHONE-1.11%
105,900 Frontier Corp................................ 2,561,523 2,548,219
65,000 MCI Communications Corp...................... 2,606,375 2,782,813
------------- -------------
5,167,898 5,331,032
------------- -------------
WASTE DISPOSAL-0.55%
68,000 U.S.A. Waste Services, Inc. (a).............. 2,429,286 2,669,000
------------- -------------
TOTAL COMMON STOCKS.......................... $ 188,607,568 $ 270,294,136
------------- -------------
------------- -------------
</TABLE>
MUNICIPAL BONDS-0.88%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
GENERAL OBLIGATIONS-0.26%
$1,000,000 Atlanta Georgia, 5.125% Public Improvement
General Obligation Ser B 12-1-2021......... AA $ 987,116 $ 998,585
250,000 New York (City of), 10.00% General Obligation
Taxable Bond Fiscal 1991 Ser D 8-1-2005.... BBB+ 237,946 283,097
------------- -------------
1,225,062 1,281,682
------------- -------------
HIGHER EDUCATION-0.20%
1,000,000 Pennsylvania State University 5.00% Rev Bond
Ser A 8-15-2022............................ AA- 975,718 990,159
------------- -------------
TRANSPORTATION-0.42%
1,000,000 Massachusetts Bay, 5.00% Transportation Auth
Rev Bond Ser C 3-1-2024.................... AA- 964,570 971,504
1,000,000 Massachusetts Turnpike Authority, 5.125% Rev
Bond Ser A 1-1-2023........................ AAA 1,011,980 1,005,000
------------- -------------
1,976,550 1,976,504
------------- -------------
TOTAL MUNICIPAL BONDS........................ $ 4,177,330 $ 4,248,345
------------- -------------
------------- -------------
</TABLE>
35
<PAGE>
FORTIS SERIES FUND, INC.
ASSET ALLOCATION SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
ASSET BACKED SECURITIES-10.89%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
COMMERCIAL LOANS-6.04%
$1,788,176 DLJ Mortgage Acceptance Corp., 7.28% Ser
1996-CF1 Class A-1A 3-13-2028 (e).......... AAA $ 1,801,404 $ 1,847,968
2,500,000 First Union Lehman Brothers Commercial
Mortgage, 7.30% Ser 1997-C1 Class A2
12-18-2006................................. Aaa* 2,525,079 2,615,625
2,510,000 GMAC Commercial Mortgage Securities, Inc.,
7.09% Ser 1997-C1 Class E 12-15-2010....... Baa2* 2,522,301 2,520,197
2,768,798 GS Mortgage Securities Corp. II Protective
Life, 7.02% Ser 1996-PL Class A1
3-1-2026................................... Aaa* 2,726,816 2,813,791
1,371,053 J.P. Morgan Commercial Mortgage Finance
Corp., 6.47% Ser 1996-C2 Class A
11-25-2027................................. AAA 1,380,811 1,376,578
2,250,000 J.P. Morgan Commercial Mortgage Finance
Corp., 7.07% Ser 1997-C5 Class A2
9-15-2029.................................. AAA 2,283,676 2,297,227
860,000 J.P. Morgan Commercial Mortgage Finance
Corp., 7.47% Ser 1997-C4 Class B
12-26-2028................................. AA 866,403 906,762
1,253,122 Merrill Lynch Mortgage Investors, Inc., 6.79%
Variable Rate Ser 1995-C3 Class A1
12-26-2025................................. AAA 1,265,461 1,265,641
802,129 Merrill Lynch Mortgage Investors, Inc., 6.82%
Variable Rate Ser 1995-C2 Class A1
6-15-2021.................................. Aaa* 814,064 815,572
1,600,000 Merrill Lynch Mortgage Investors, Inc., 7.42%
Ser 1996-C1 Class B 4-25-2028.............. AA 1,602,464 1,713,872
1,200,000 Midland Realty Acceptance Corp., 7.76% Ser
1996-C1 Class B 7-25-2008.................. AA 1,211,168 1,281,375
2,000,000 Morgan Stanley Capital I, Inc., 7.27% Ser
1997-HF1Class A2 1-15-2007 (e)............. Aaa* 2,034,295 2,096,563
550,000 Morgan Stanley Capital I, Inc., 7.38% Ser
1996-WF1 Class A3 8-15-2006 (e)............ Aaa* 560,529 579,391
1,075,000 Mortgage Capital Funding, Inc., 7.29% Ser
1997-MC1 Class A3 3-20-2007................ Aaa* 1,085,358 1,121,773
1,000,000 Mortgage Capital Funding, Inc., 7.90% Ser
1996-MC1 Class B 2-15-2006................. AA+ 1,009,180 1,074,820
1,870,000 Nationslink Funding Corp., 7.52% Ser 1996-1
Class A2 7-20-2005......................... AAA 1,872,040 1,959,409
2,723,139 Nationslink Funding Corp., 7.54% Ser 1996-1
Class A1 9-20-2002......................... AAA 2,736,010 2,829,086
------------- -------------
28,297,059 29,115,650
------------- -------------
HOUSING-0.62%
500,000 Money Store (The) Home Improvement Trust,
7.41% Ser 1997-1 Class M1 5-15-2017........ AA 502,009 520,919
2,500,000 Money Store (The) Residential Trust, 7.09%
1997-I-M1 7-15-2016........................ AA 2,499,612 2,461,719
------------- -------------
3,001,621 2,982,638
------------- -------------
MANUFACTURED HOMES-1.20%
1,500,000 Green Tree Financial Corp., 7.54% Ser 1997-2
Class M1 4-15-2028......................... Aa3* 1,542,964 1,562,813
4,000,000 Green Tree Financial Corp., 7.65% Ser 1994-1
Class A5 4-15-2019......................... Aa2* 4,070,313 4,239,540
------------- -------------
5,613,277 5,802,353
------------- -------------
MISCELLANEOUS-0.10%
500,015 Fifth Third Auto Grantor Trust, 6.70% Ser
1996-B Class B 3-15-2002................... A 499,734 502,611
------------- -------------
MULTI-FAMILY LOANS-1.84%
1,500,000 DLJ Mortgage Acceptance Corp., 7.14%
Multifamily Mtg Pass thru Certificate Ser
1997-CF2 Class B1 10-15-2007 (e)........... BBB 1,514,995 1,501,875
4,851,000 DLJ Mortgage Acceptance Corp., 8.50%
Multifamily Mtg Pass Thru Certificate Ser
1994-MF4 Class A2 4-18-2001................ A 4,919,786 5,053,141
1,500,000 DLJ Mortgage Acceptance Corp., 8.80%
Multifamily Mtg Pass Thru Certificate Ser
1993-MF12 Class B1 9-18-2003............... NR 1,473,750 1,569,015
944,704 Fund America Structured Transactions, L.P.,
Collateralized Note, 8.76% Ser 1996-1 Class
A Principal Only 1-1-2033 (f)(h)........... Baa3* 706,474 730,964
------------- -------------
8,615,005 8,854,995
------------- -------------
RAILROAD AND RAILROAD EQUIPMENT-0.20%
910,000 Railcar Leasing L.L.C., 7.125% Ser 1997-1
Class A2 1-15-2013 (e)..................... AAA 908,186 957,465
------------- -------------
WHOLE LOAN RESIDENTIAL-0.89%
1,752,381 Blackrock Capital Funding L.L.C., 7.75%
97-R1-C1 Class A1 3-1-2027 (e)............. Aaa* 1,768,426 1,789,345
966,654 Mid-State Trust 7.54% Ser 6 Class A3
7-1-2035................................... AA 966,052 1,013,305
1,483,571 PNC Mortgage Securities Corp., 7.50% Ser 1997
Class 2PP1 7-25-2027....................... AAA 1,480,109 1,503,750
------------- -------------
4,214,587 4,306,400
------------- -------------
TOTAL ASSET BACKED SECURITIES................ $ 51,149,469 $ 52,522,112
------------- -------------
------------- -------------
</TABLE>
36
<PAGE>
CORPORATE BONDS-INVESTMENT GRADE-9.09%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AEROSPACE AND EQUIPMENT-0.65%
$1,500,000 Lockheed Martin Corp., 7.65% Deb 5-1-2016.... BBB+ $ 1,508,557 $ 1,621,927
1,500,000 Raytheon 6.30% 8-15-2000..................... BBB 1,498,558 1,506,019
------------- -------------
3,007,115 3,127,946
------------- -------------
AIR FREIGHT-0.33%
1,500,000 Federal Express Corp., 7.50% 1997-A Pass Thru
Certificate 1-15-2018...................... AAA 1,500,000 1,594,230
------------- -------------
BANKS-1.27%
1,500,000 Bank Austria AG, 7.25% Sub Note 2-15-2017
(f)........................................ AAA 1,497,209 1,583,104
500,000 Citicorp Capital II, 8.02% Bond 2-15-2027.... A- 500,000 534,596
1,350,000 Corestates Capital Corp., 6.75% Medium Term
Note 11-15-2006............................ A- 1,359,897 1,382,115
1,000,000 Republic NY Capital I, 7.75% 11-15-2026...... A+ 975,181 1,070,160
1,500,000 St. Paul Bancorp, Inc., 7.125% Sr Note
2-15-2004.................................. BBB- 1,493,757 1,527,889
------------- -------------
5,826,044 6,097,864
------------- -------------
BROKERAGE AND INVESTMENT-1.22%
1,500,000 Bear Stearns Capital Trust I, 7.00% Variable
Rate Bond 1-15-2027........................ BBB 1,499,138 1,519,286
2,250,000 Lehman Brothers Holdings, 7.375% Sr Note
5-15-2004.................................. A 2,241,765 2,334,323
2,000,000 Salomon, Inc., 6.75% Sr Note 2-15-2003....... A 1,996,861 2,028,392
------------- -------------
5,737,764 5,882,001
------------- -------------
BUILDING MATERIALS-0.21%
1,000,000 Owens-Corning, 7.00% Medium Term Note
5-15-2000.................................. BBB- 1,000,000 1,015,942
------------- -------------
CHEMICALS-0.32%
1,500,000 Lyondell Petrochemical, 7.55% Deb
2-15-2026.................................. BBB- 1,413,609 1,563,641
------------- -------------
CONSUMER FINANCE-0.21%
1,000,000 Beneficial Corp., 6.33% Medium Term Note
12-18-2000................................. A 992,190 1,000,569
------------- -------------
ENERGY-0.18%
750,000 NGC Corp. Capital Trust, 8.316% 6-1-2027..... BBB- 750,000 843,606
------------- -------------
FINANCE COMPANIES-0.47%
1,250,000 Homeside Lending, Inc., 6.875% Medium Term
Note 6-30-2002............................. BBB 1,249,623 1,273,331
1,000,000 Salomon, Inc., 6.25% Note 10-1-1999.......... A 999,436 1,001,993
------------- -------------
2,249,059 2,275,324
------------- -------------
FOREIGN-GOVERNMENT-0.21%
1,000,000 Poland (Republic of), 7.125% Yankee Bond
7-1-2004................................... BBB- 995,193 1,014,099
------------- -------------
FOREIGN-GOVERNMENT AGENCIES-0.27%
1,250,000 Quebec (Province of), 7.50% Yankee Bond
7-15-2002.................................. A+ 1,286,087 1,308,038
------------- -------------
FOREST PRODUCTS-0.21%
1,000,000 Fort James Corp., 6.50% Sr Note 9-15-2002.... BBB- 998,835 1,002,807
------------- -------------
MEDIA-0.73%
750,000 Belo (A.H.) Corp., 7.25% Note 9-15-2027...... BBB- 745,586 774,425
1,235,000 News America Holdings, 7.50% Sr Note
3-1-2000................................... BBB- 1,248,187 1,263,630
1,250,000 News America Holdings, 8.875% Deb
4-26-2023.................................. BBB- 1,309,493 1,457,370
------------- -------------
3,303,266 3,495,425
------------- -------------
NATURAL GAS TRANSMISSIONS-0.38%
1,250,000 Tennessee Gas Pipeline, 7.50% Bond
4-1-2017................................... BBB 1,230,372 1,338,524
500,000 Trans-Canada Pipelines Ltd., 7.06% Note
10-14-2025................................. A- 500,000 510,691
------------- -------------
1,730,372 1,849,215
------------- -------------
OIL-CRUDE PETROLEUM AND GAS-0.21%
$1,000,000 Saga Petroleum ASA, 7.25% Yankee Bond
9-23-2027.................................. BBB+ 990,016 1,023,684
------------- -------------
</TABLE>
37
<PAGE>
FORTIS SERIES FUND, INC.
ASSET ALLOCATION SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
CORPORATE BONDS-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
RAILROAD AND RAILROAD EQUIPMENT-0.38%
1,650,000 CSX Corp., 7.90% Deb 5-1-2017................ BBB $ 1,649,057 $ 1,847,850
------------- -------------
REAL ESTATE-0.33%
1,500,000 Meditrust, 7.82% Note 9-10-2026.............. BBB- 1,569,926 1,588,184
------------- -------------
SUPRANATIONAL-0.26%
1,250,000 Corp Andina De Fomento, 7.10% Yankee Bond
2-1-2003................................... BBB+ 1,249,362 1,268,966
------------- -------------
TELECOMMUNICATIONS-0.70%
3,250,000 360 Communications Co., 7.50% Sr Note
3-1-2006................................... BBB- 3,243,483 3,374,342
------------- -------------
TELEPHONE SERVICES-0.22%
1,000,000 GTE Corp., 7.51% Note 4-1-2009............... A 992,205 1,072,446
------------- -------------
UTILITIES-ELECTRIC-0.33%
1,500,000 Texas Utilities Electric Capital V, 8.175%
1-30-2037.................................. BBB 1,500,000 1,607,196
------------- -------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $ 41,983,583 $ 43,853,375
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-7.46%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.21%
$1,000,000 Highwaymaster, Inc., 13.75% Sr Note 9-15-2005
(e)........................................ B $ 1,041,071 $ 1,010,000
------------- -------------
BROADCASTING-0.22%
1,000,000 Sinclair Broadcasting Group, Inc., 10.00% Sr
Sub Note 9-30-2005......................... B 1,000,000 1,052,500
------------- -------------
BUSINESS SERVICES AND SUPPLIES-0.20%
1,000,000 T/SF Communications Corp., 10.375% Sr Sub
Note 11-1-2007 (f)......................... B 981,399 990,000
------------- -------------
CABLE TELEVISION-1.01%
1,000,000 Adelphia Communications, Inc., 9.25% Sr Note
10-1-2002.................................. NR 1,019,972 1,020,000
1,000,000 Australis Media Ltd., 16.20% Sr Sub Disc Note
5-15-2003 (Zero coupon through 5-15-2000,
thereafter 15.75%) (g)..................... D 764,271 435,001
1,000,000 Cablevision Systems Corp., 10.50% Sr Sub Deb
5-15-2016.................................. BB- 1,014,728 1,162,500
750,000 Cablevision Systems Corp., 8.125% Deb
8-15-2009.................................. BB+ 771,488 774,375
1,055,000 Falcon Holding Group, L.P., 11.00% Sr Sub
Note Ser B 9-15-2003 (Interest is
Payable-in-Kind)........................... NR 1,048,693 1,099,443
1,000,000 Wireless One, Inc., 13.00% Sr Note
10-15-2003................................. B- 979,851 360,000
------------- -------------
5,599,003 4,851,319
------------- -------------
COMPUTER-HARDWARE-0.24%
1,000,000 Unisys Corp., 11.75% Sr Note 10-15-2004...... B+ 1,083,144 1,142,500
------------- -------------
ENERGY-0.36%
1,750,000 Energy Corp. of America, 9.50% Sr Sub Note
5-15-2007.................................. B 1,750,000 1,745,625
------------- -------------
FOOD-MISCELLANEOUS-0.33%
1,500,000 Envirodyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000......... B+ 1,498,125 1,603,125
------------- -------------
HEALTH CARE SERVICES-0.23%
1,000,000 Tenet Healthcare Corp., 10.125% Sr Sub Note
3-1-2005................................... B+ 1,060,673 1,091,250
------------- -------------
HOTEL AND MOTEL-0.39%
1,750,000 HMH Properties, Inc., 9.50% Sr Note
5-15-2005.................................. BB- 1,812,722 1,861,563
------------- -------------
HOUSING-0.34%
1,500,000 MDC Holdings, Inc., 11.125% Note
12-15-2003................................. BB- 1,588,085 1,657,500
------------- -------------
</TABLE>
38
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
INDUSTRIAL-0.58%
$1,000,000 Intelcom Group (USA), Inc., 10.26% 5-1-2006
(Zero coupon through 5-1-2001, thereafter
12.50%) (g)................................ NR $ 745,752 $ 750,000
1,000,000 Inter-City Products Corp. USA, 9.75% Sr
Secured Note 3-1-2000...................... B+ 1,025,466 1,020,000
1,000,000 Speedway Motorsports, Inc., 8.50% Sr Sub Deb
8-15-2007.................................. B+ 1,008,529 1,020,000
------------- -------------
2,779,747 2,790,000
------------- -------------
PUBLISHING-0.17%
750,000 Petersen Publishing Co. LLC, 11.125% Sr Sub
Note 11-15-2006............................ B 840,921 847,500
------------- -------------
STEEL AND IRON-0.22%
1,000,000 Weirton Steel Corp., 11.375% Sr Note
7-1-2004................................... B 1,032,625 1,050,000
------------- -------------
TELECOMMUNICATIONS-2.51%
1,000,000 American Communications Services, Inc.,
13.00% Sr Disc Note 11-1-2005 (Zero coupon
until 11-1-2000, thereafter 13.00%) (g).... NR 732,570 800,000
1,000,000 Dobson Communications Corp., 11.75% Sr Note
4-15-2007.................................. NR 954,150 1,056,250
1,000,000 Globalstar LP/Capital, 11.375% Sr Note
2-15-2004.................................. B 986,578 1,010,000
1,000,000 Hyperion Telecommunication, 12.25% Sr Note
9-1-2004................................... NR 1,099,872 1,105,000
750,000 Intermedia Communications, 8.50% Sr Note
1-15-2008 (e).............................. B 750,000 750,000
1,000,000 Iridium LLC/Capital Corp., 14.00% Sr Note
7-15-2005.................................. B- 1,124,026 1,085,000
750,000 Microcell Telecommunications, Inc., 11.80%
Disc Note 6-1-2006 (Zero coupon until
12-1-2001, thereafter 14.00%) (g).......... B3* 489,867 502,500
1,000,000 Nextel Communications, Inc., 9.58% Sr Disc
Note 9-15-2000 (Zero coupon through
9-15-2002, thereafter 10.65%) (f)(g)....... CCC 629,513 630,000
500,000 Omnipoint Corp., 11.625% Sr Note 8-15-2006... CCC+ 488,430 527,500
750,000 Omnipoint Corp., 11.625% Sr Note Ser A
8-15-2006.................................. CCC+ 741,345 791,250
1,000,000 Orbcomm Global LP Capital, 14.00% Sr Note
8-15-2004.................................. NR 1,070,905 1,085,000
1,000,000 Phonetel Technologies, Inc., 12.00% Sr Note
12-15-2006................................. B- 1,022,824 1,037,500
500,000 Poland Telecommunications Finance Corp.,
14.00% Sr Note 12-1-2007 (with warrants)
(e)........................................ NR 500,000 516,250
$1,500,000 Teleport Communications, 11.125% Sr Disc Note
7-1-2007 (Zero coupon until 7-1-2001,
thereafter 11.125%) (g).................... B+ 1,045,918 1,218,750
------------- -------------
11,635,998 12,115,000
------------- -------------
TEXTILE MANUFACTURING-0.22%
1,000,000 Pillowtex Corp., 10.00% Sr Sub Note
11-15-2006................................. B+ 1,052,130 1,070,000
------------- -------------
TRANSPORTATION-0.23%
1,000,000 Greyhound Lines, Inc., 11.50% Sr Note
4-15-2007.................................. NR 1,080,333 1,105,000
------------- -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $ 35,835,976 $ 35,982,882
------------- -------------
------------- -------------
</TABLE>
U.S. GOVERNMENT SECURITIES-8.28%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION-2.62%
MORTGAGE BACKED SECURITIES:
$1,680,000 6.00% 2013 (i)............................... $ 1,643,250 $ 1,652,700
7,202,701 7.00% 2011-2025.............................. 7,085,374 7,265,812
2,212,086 7.50% 2022-2026.............................. 2,279,734 2,262,856
1,356,531 8.00% 2025................................... 1,377,091 1,404,010
51,231 9.00% 2021................................... 51,119 54,433
------------- -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ 12,436,568 12,639,811
------------- -------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION-1.46%
MORTGAGE BACKED SECURITIES:
2,980,663 7.50% 2023................................... 2,840,013 3,052,384
3,528,500 9.00% 2022-2023.............................. 3,643,176 3,773,289
</TABLE>
39
<PAGE>
FORTIS SERIES FUND, INC.
ASSET ALLOCATION SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
$ 137,035 9.125% Fleet Mortgage Securities Ser 1989-3
Class D 2018 (GNMA Backed)................. $ 140,290 $ 137,206
82,021 9.50% 2020................................... 81,816 88,737
------------- -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 6,705,295 7,051,616
------------- -------------
U.S. TREASURY SECURITIES-4.20%
NOTES:
4,100,000 5.625% 1999.................................. 4,092,323 4,094,875
7,650,000 6.00% 1999................................... 7,640,895 7,688,250
1,915,000 6.125% 2001.................................. 1,913,239 1,940,732
2,670,000 6.25% 2002................................... 2,668,029 2,724,233
3,735,000 6.375% 2000.................................. 3,752,147 3,791,025
------------- -------------
TOTAL U.S. TREASURY SECURITIES............... 20,066,633 20,239,115
------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............. 39,208,496 39,930,542
------------- -------------
------------- -------------
TOTAL LONG-TERM INVESTMENTS.................. $ 360,962,422 $ 446,831,392
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-7.21%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
------------ -------------
<C> <S> <C>
BANKS-2.73%
$13,157,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 13,157,000
-------------
DIVERSIFIED FINANCE-1.38%
6,689,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.44%...................... 6,689,000
-------------
U.S. GOVERNMENT AGENCY-3.10%
15,000,000 Federal Home Loan Mortagage Corporation,
5.79%, 1-26-1998........................... 14,938,575
-------------
TOTAL SHORT-TERM INVESTMENTS................. 34,784,575
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$395,746,997) (b).......................... $ 481,615,967
-------------
-------------
</TABLE>
(a) Presently non-income producing. For long-term debt securities, items
identified are in default as to payment of interest and/or principal.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $395,746,997 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $89,873,837
Unrealized depreciation..................................... (4,004,867)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $85,868,970
- -------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 6.74% of net assets as of December 31, 1997.
40
<PAGE>
- --------------------------------------------------------------------------------
(e) Securities sold within the terms of a private placement memorandum, exempt
form registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". These investments have been identified by portfolio
management as illiquid securities:
<TABLE>
<CAPTION>
Date Acquired Shares/Par Security Cost Basis
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
April 2, 1997 $1,752,381 Blackrock Capital Funding L.L.C., 7.75% 97-R1-C1 Class A1 3-1-2027 $1,768,426
September 26, 1997 1,500,000 DLJ Mortgage Acceptance Corp., 7.14% Multifamily Mtg Pass thru Certificate Ser
1997-CF2 Class B1 10-15-2007 1,514,995
May 17, 1996 1,788,176 DLJ Mortgage Acceptance Corp., 7.28% Ser 1996-CF1 Class A-1A 3-13-2028 1,801,404
June 10, 1997 1,000 Globalstar (Warrants) 51,746
October 7, 1997 1,000 Highwaymaster Communications, Inc. (Warrants) 18,186
October 7, 1997 1,000,000 Highwaymaster, Inc., 13.75% Sr Note 9-15-2005 1,041,071
April 26, 1996 1,000 Hyperion Telecom (Warrants) 4,022
December 19, 1997 750,000 Intermedia Communications, 8.50% Sr Note 1-15-2008 750,000
August 12, 1997 2,000,000 Morgan Stanley Capital I, Inc., 7.27% Ser 1997-HF1 Class A2 1-15-2007 2,034,295
June 11, 1997 550,000 Morgan Stanley Capital I, Inc., 7.3773% Ser 1996-WF1Class A3 8-15-2006 560,529
November 24, 1997 500,000 Poland Telecommunications Finance Corp., 14.00% Sr Note 12-1-2007 (with
warrants) 500,000
March 4, 1997 910,000 Railcar Leasing L.L.C., 7.125% Ser 1997-1 Class A2 1-15-2013 908,186
</TABLE>
The aggregate value of these securities at December 31, 1997, was
$11,231,357, which represents 2.33% of total net assets.
(f) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". Pursuant to guidelines adopted by the Board of
Directors, these issues are deemed to be liquid. The aggregate value of
these securities at December 31, 1997, was $3,934,068, which represents
.82% of total net assets.
(g) The interest rate disclosed for these securities represents the effective
yield on the date of acquisition.
(h) The interest rate disclosed for principal only strips represents effective
yield at December 31, 1997 based on future cash flows. This security has
been identified by portfolio management as a liquid security. The aggregate
value of this security at December 31, 1997, was $730,964, which represents
.15% of total net assets.
(i) The cost of securities purchased on a when-issued basis at December 31,
1997, was $1,643,250.
* Moody's Rating
41
<PAGE>
FORTIS SERIES FUND, INC.
GLOBAL ASSET ALLOCATION SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-56.46%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b)(e) Value (c)(e)
--------- ------------ ------------
<C> <S> <C> <C>
AUSTRALIA-0.75%
25,147 Coles Myer Ltd. -- RETAIL-MISCELLANEOUS $ 89,781 $ 120,757
47,300 CSR Limited -- BUILDING MATERIALS............ 167,647 160,259
52,700 Telstra Corp., Partly Paid --
TELECOMMUNICATIONS......................... 73,623 111,254
------------ ------------
331,051 392,270
------------ ------------
BELGIUM-0.49%
5,100 Delhaize-Le Lion S.A. -- RETAIL-
MISCELLANEOUS.............................. 255,685 258,786
------------ ------------
BERMUDA-0.52%
10,300 Terra Nova (Burmuda) Holdings -- INSURANCE... 202,333 270,375
------------ ------------
CANADA-1.24%
5,300 Potash Corp. of Saskatchewan -- CHEMICALS.... 430,856 440,920
9,470 Telus Corp. -- TELEPHONE SERVICES............ 199,155 209,780
------------ ------------
630,011 650,700
------------ ------------
FRANCE-1.25%
97 Banque Nationale de Paris -- BANKS........... 3,441 5,158
341 Bongrain S.A. -- FOOD........................ 169,170 143,976
1,683 Elf Aquitaine -- OIL-CRUDE PETROLEUM AND
GAS........................................ 119,270 195,832
2,300 France Telecom S.A. -- TELECOMMUNICATIONS.... 72,517 83,461
4,750 Scor S.A. -- INSURANCE....................... 189,645 227,241
------------ ------------
554,043 655,668
------------ ------------
GERMANY-2.23%
5,000 Basf AG -- CHEMICALS......................... 110,339 178,528
6,550 Bayer AG -- CHEMICALS........................ 182,990 243,160
660 Karstadt AG -- RETAIL-DEPARTMENT STORES 255,306 228,315
4,400 Veba AG -- UTILITIES-ELECTRIC................ 209,002 299,771
250 Viag AG -- ELECTRIC PRODUCTS................. 102,693 136,955
150 Volkswagen AG -- AUTOMOBILE MANUFACTURERS.... 43,858 83,841
------------ ------------
904,188 1,170,570
------------ ------------
HONG KONG-0.21%
42,000 Jardine Strategic Holdings Ltd. --
MISCELLANEOUS.............................. 125,664 110,880
------------ ------------
IRELAND-2.86%
21,900 Bank of Ireland -- BANKS..................... 272,700 336,924
23,700 Clondalkin Group Units plc -- CONTAINERS AND
PACKAGING.................................. 205,365 191,872
46,969 Green Property plc -- REAL ESTATE............ 129,763 267,785
123,077 Irish Life plc -- INSURANCE.................. 627,099 706,964
------------ ------------
1,234,927 1,503,545
------------ ------------
ITALY-1.19%
74,300 Mediaset S.p.A. -- BROADCASTING.............. 358,531 365,197
59,193 Telecom Italia S.p.A. -- UTILITIES-
TELEPHONE.................................. 128,527 261,146
------------ ------------
487,058 626,343
------------ ------------
<CAPTION>
Market
Shares Cost (b)(e) Value (c)(e)
--------- ------------ ------------
<C> <S> <C> <C>
JAPAN-4.44%
4,000 Daicel Chemical Industries Ltd. --
CHEMICALS.................................. $ 21,751 $ 5,230
18,000 Fuji Photo Film -- PHOTOGRAPHIC.............. 531,715 692,195
6,000 Hitachi Ltd. -- ELECTRONIC-CONTROLS AND
EQUIPMENT.................................. 56,981 42,916
22,000 Kao Corp. -- HOUSEHOLD PRODUCTS.............. 300,249 318,102
13,000 Matsushita Electric Industrial Co. --
ELECTRIC PRODUCTS.......................... 202,800 190,969
54,000 Nichido Fire & Marine Insurance --
INSURANCE.................................. 419,179 282,416
20 Nippon Telegraph & Telephone Corp. --
TELEPHONE SERVICES......................... 142,089 172,280
86,000 NKK Corp. -- STEEL AND IRON.................. 152,956 68,789
2,000 Sony Corp. -- ELECTRONIC-CONTROLS AND
EQUIPMENT.................................. 114,488 178,433
10,000 Sumitomo Rubber Industries -- AUTOMOBILE AND
MOTOR VEHICLE PARTS........................ 88,145 42,378
2,000 TDK Corp. -- ELECTRIC-COMPONENTS AND PARTS... 105,885 151,360
4,000 Toyo Seikan Kaisha -- CONTAINERS AND
PACKAGING.................................. 113,255 57,221
6,000 Yamanouchi Pharmaceutical -- DRUGS........... 126,213 129,210
------------ ------------
2,375,706 2,331,499
------------ ------------
NETHERLANDS-2.76%
13,872 ABN-AMRO Holding NV -- BANKS................. 127,746 270,292
1,300 Akzo Nobel NV -- CHEMICALS................... 142,361 224,188
3,650 Benckiser NV Class B -- MISCELLANEOUS 123,179 151,061
2,050 Hollandsche Beton Groep NV -- CONSTRUCTION... 31,456 38,124
10,722 ING Groep NV -- FINANCE SERVICES............. 316,828 451,680
5,200 Philips Electronics NV -- ELECTRIC
PRODUCTS................................... 169,562 311,914
------------ ------------
911,132 1,447,259
------------ ------------
NEW ZEALAND-0.45%
105,800 Lion Nathan Ltd. -- BUILDING MATERIALS....... 259,633 237,132
------------ ------------
PORTUGAL-0.25%
4,930 Cimpor Cimentos De Portugal -- BUILDING
MATERIALS.................................. 124,185 129,361
------------ ------------
SPAIN-1.13%
25,500 Iberdrola S.A. -- UTILITIES-ELECTRIC......... 230,401 335,448
9,000 Telefonica de Espana -- TELECOMMUNICATIONS... 113,414 256,864
------------ ------------
343,815 592,312
------------ ------------
SWEDEN-1.64%
56,900 Nordbanken Holding AB -- BANKS............... 271,659 321,993
6,600 Skandia Forsakrings AB -- INSURANCE.......... 145,049 311,518
10,000 Svenska Cellulosa B Free -- BANKS............ 135,893 224,971
------------ ------------
552,601 858,482
------------ ------------
SWITZERLAND-3.23%
92 ABB AG Baden -- ELECTRONIC-CONTROLS AND
EQUIPMENT.................................. 123,082 115,745
145 Ascom Holding AG -- TELECOMMUNICATIONS....... 145,129 186,898
65 Bobst S.A. -- MACHINERY...................... 79,455 95,814
</TABLE>
42
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b)(e) Value (c)(e)
--------- ------------ ------------
<C> <S> <C> <C>
690 Forbo Holding AG -- HOUSEHOLD PRODUCTS....... $ 288,071 $ 282,424
500 Holderbank Financiere Glaris AG -- BUILDING
MATERIALS.................................. 400,197 408,625
280 Nestle S.A. Registered -- FOOD............... 292,398 420,226
110 SIG Schweizerische Industrie-Gesellschaft
Holding AG -- MACHINERY ................... 107,975 150,458
57 Sulzer AG -- MISCELLANEOUS................... 38,181 36,188
------------ ------------
1,474,488 1,696,378
------------ ------------
UNITED KINGDOM-8.59%
38,133 Aggreko plc -- ELECTRONIC-CONTROLS AND
EQUIPMENT.................................. 110,144 98,508
16,700 Bass plc -- BEVERAGE......................... 219,625 257,196
12,100 Burmah Castrol plc -- OIL-CRUDE PETROLEUM AND
GAS........................................ 199,890 210,442
12,150 Danka Business Systems plc ADR -- BUSINESS
SERVICES AND SUPPLIES...................... 198,696 193,641
28,082 English China Clays plc -- MINERALS.......... 121,618 124,294
42,000 Imperial Tobacco Group plc -- TOBACCO 264,801 265,370
50,000 Matthews (Bernard) plc -- FOOD............... 74,479 81,447
37,000 Peninsular & Orient Steam Navigation -- SHIP
BUILDING, SHIPPING......................... 406,862 422,810
33,800 Premier Farnell plc -- ELECTRONIC
COMPONENTS................................. 257,505 244,982
36,900 Racal Electronics plc -- ELECTRICAL
EQUIPMENT.................................. 139,849 160,895
32,867 Reckitt & Colman plc -- HOUSEHOLD PRODUCTS... 368,722 516,720
38,600 Royal Sun Alliance Insurance Group --
INSURANCE.................................. 331,004 387,426
38,133 Salvesen Christian plc -- MISCELLANEOUS 71,018 62,117
15,969 Southern Electric plc -- UTILITIES-ELECTRIC 86,853 127,698
22,787 Tate & Lyle plc -- FOOD...................... 167,692 188,219
86,400 Unilever plc -- CONSUMER GOODS............... 428,321 741,378
96,000 WPP Group plc -- ADVERTISING-PUBLIC
RELATIONS.................................. 369,475 425,698
------------ ------------
3,816,554 4,508,841
------------ ------------
UNITED STATES-23.23%
8,600 Albertson's, Inc. -- RETAIL-GROCERY.......... 299,495 407,425
4,200 Aluminum Company of America --
METALS-FABRICATING......................... 211,484 295,575
7,747 Ascent Entertainment Group (a) --
TELECOMMUNICATIONS......................... 50,609 80,375
4,050 AT & T Corp. -- UTILITIES-TELEPHONE.......... 161,528 248,063
3,000 Beazer Homes USA, Inc. (a) -- MANUFACTURED
HOMES...................................... 43,950 59,813
15,500 BJ's Wholesale Club, Inc. (a) -- RETAIL-
MISCELLANEOUS.............................. 266,734 486,313
7,900 Borg-Warner Automotive, Inc. -- AUTOMOBILE
AND MOTOR VEHICLE PARTS.................... 338,112 410,800
3,252 Browning-Ferris Industries, Inc. -- WASTE
DISPOSAL................................... 77,965 120,324
19,000 Cadiz Land Co., Inc. (a) -- LAND
DEVELOPMENT................................ 108,321 162,687
26,330 Comsat Corp. -- TELECOMMUNICATIONS........... 499,024 638,503
21,950 Data General Corp. (a) -- COMPUTER-
SOFTWARE................................... 289,959 382,753
<CAPTION>
Market
Shares Cost (b)(e) Value (c)(e)
--------- ------------ ------------
<C> <S> <C> <C>
18,300 Egghead, Inc. (a) -- RETAIL-SPECIALTY........ $ 163,751 $ 118,950
9,100 Enhance Financial Services Group,
Inc. -- INSURANCE.......................... 203,568 541,450
12,000 Finova Group, Inc. -- FINANCE SERVICES....... 241,239 596,250
3,300 General Signal Corp. -- ELECTRICAL
EQUIPMENT.................................. 149,405 139,219
13,000 GenRad, Inc. (a) -- ELECTRONIC-CONTROLS AND
EQUIPMENT.................................. 73,818 392,437
2,850 Georgia-Pac (Georgia-Pac GP) -- FOREST
PRODUCTS................................... 158,382 173,137
2,850 Georgia-Pacific (Timber Grp) -- FOREST
PRODUCTS................................... 46,747 64,659
6,800 Goodrich (B.F.) Co. -- CHEMICALS-SPECIALTY... 295,941 281,775
15,500 Homebase, Inc. (a) -- RETAIL-MISCELLANEOUS... 75,381 122,063
25,900 Houghton Mifflin Co. -- PUBLISHING........... 643,633 993,913
7,150 IBP, Inc. -- FOOD............................ 166,581 149,703
39,300 Intelidata Technologies Corp. (a) --
TELECOMMUNICATIONS......................... 311,431 72,459
5,300 Lukens, Inc. -- STEEL AND IRON............... 152,922 151,381
5,100 MBIA, Inc. -- INSURANCE...................... 177,327 340,744
8,000 Mellon Bank Corp. -- BANKS................... 161,649 485,000
7,953 NCR Corp. -- COMPUTER-COMMUNICATIONS
EQUIPMENT.................................. 235,095 221,193
4,850 Noble Drilling Corp. (a) -- OIL-OFFSHORE
DRILLING................................... 151,124 148,531
14,250 Penncorp Financial Group, Inc. -- FINANCE
SERVICES................................... 486,050 508,547
1,200 Pennzoil Co. -- OIL-CRUDE PETROLEUM AND
GAS........................................ 57,655 80,175
14,800 Pharmacia and UpJohn, Inc. -- DRUGS.......... 501,873 542,050
18,000 Philip Morris Companies, Inc. -- TOBACCO..... 663,418 815,625
2,900 Polaroid Corp. -- PHOTOGRAPHIC............... 115,565 141,194
3,600 Tecumseh Products Co. Class A -- MACHINERY... 193,800 175,500
6,200 Tenneco, Inc. -- AUTOMOBILE AND MOTOR VEHICLE
PARTS...................................... 285,035 244,900
8,300 Toys 'R' Us, Inc. (a) -- RETAIL-
MISCELLANEOUS.............................. 211,660 260,931
5,400 United Dominion Industries Ltd. --
MACHINERY.................................. 135,070 136,687
6,000 United Meridian Corp. -- OIL-CRUDE PETROLEUM
AND GAS.................................... 182,957 168,750
29,400 UST Corp. -- BANKS........................... 440,001 815,850
15,200 WorldCorp, Inc. (a) -- AIRLINES.............. 138,291 17,100
------------ ------------
9,166,550 12,192,804
------------ ------------
TOTAL COMMON STOCKS.......................... $ 23,749,624 $ 29,633,205
------------ ------------
------------ ------------
</TABLE>
43
<PAGE>
FORTIS SERIES FUND, INC.
GLOBAL ASSET ALLOCATION SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
PREFERRED STOCKS-0.21%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b)(e) Value (c)(e)
----- ------------ ------------
<C> <S> <C> <C>
GERMANY-0.21%
250 Volkswagen AG -- AUTOMOBILE MANUFACTURERS.... $ 53,169 $ 107,200
------------ ------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-23.10%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (e) (Unaudited) Cost (b)(e) Value (c)(e)
--------------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
AUSTRALIA-1.60%
$ 1,100,000 Australian Government (Australian Dollar),
9.00% 9-15-2004............................ AAA $ 901,214 $ 839,053
------------ ------------
CANADA-1.42%
550,000 Canadian Government (Canadian Dollar), 7.50%
3-1-2001................................... AAA 423,479 407,975
400,000 Canadian Government (Canadian Dollar), 8.75%
12-1-2005.................................. AAA 344,663 335,400
------------ ------------
768,142 743,375
------------ ------------
DENMARK-1.29%
3,650,000 Kingdom of Denmark (Danish Krone), 7.00%
12-15-2004................................. AAA 595,028 582,047
600,000 Kingdom of Denmark (Danish Krone), 8.00%
11-15-2001................................. AAA 106,438 97,099
------------ ------------
701,466 679,146
------------ ------------
GERMANY-6.50%
600,000 German Government (German Deutschemark),
6.25% 1-4-2024............................. Aaa* 358,504 347,545
900,000 German Government (German Deutschemark),
6.50% 7-15-2003............................ Aaa* 565,170 537,618
1,300,000 German Government (German Deutschemark),
8.50% 8-21-2000............................ Aaa* 930,771 795,759
980,000 German Unity Fund (German Deutschemark),
8.00% 1-21-2002............................ NR 715,093 609,604
1,900,000 Treuhandanstalt Obligation (German
Deutschemark), 7.00% 11-25-1999............ AAA 1,122,361 1,118,901
------------ ------------
3,691,899 3,409,427
------------ ------------
IRELAND-0.73%
230,000 Irish Government (Irish Pound), 8.00%
8-18-2006.................................. NR 385,123 382,409
------------ ------------
ITALY-2.20%
640,000,000 Italian Government (Italian Lira), 10.00%
8-1-2003................................... AAA 428,757 444,755
1,000,000,000 Italian Government BTP (Italian Lira), 9.50%
Bond 2-1-2006.............................. AAA 678,099 712,971
------------ ------------
1,106,856 1,157,726
------------ ------------
JAPAN-2.66%
20,000,000 European Investment Bank (Japanese Yen),
3.00% 9-20-2006............................ AAA 177,147 169,146
57,000,000 Int'l Bank Reconstruction & Development
(Japanese Yen), 4.75% 12-20-2004........... AAA 588,432 529,553
20,000,000 Int'l Bank Reconstruction & Development
(Japanese Yen), 5.25% 3-20-2002............ AAA 207,706 179,771
56,000,000 Japan Development Bank (Japanese Yen), 6.50%
9-20-2001.................................. AAA 616,093 515,557
------------ ------------
1,589,378 1,394,027
------------ ------------
SPAIN-1.43%
110,000,000 Bonos Y Obligation Del Estado (Spanish
Peseta), 11.45% 8-30-1998.................. Aa2* 792,830 752,370
------------ ------------
SWEDEN-2.63%
4,500,000 Swedish Government (Swedish Krona), 6.00%
2-9-2005................................... Aa1* 588,406 571,636
3,300,000 Swedish Government (Swedish Krona), 9.00%
4-20-2009.................................. Aa1* 526,103 513,325
300,000 Swedish Government (US Dollar), 4.50%
3-24-1999.................................. AA+ 292,926 295,125
------------ ------------
1,407,435 1,380,086
------------ ------------
UNITED KINGDOM-2.64%
270,000 United Kingdom Treasury (British Pound),
7.75% 9-8-2006............................. Aaa* 481,028 483,964
470,000 United Kingdom Treasury (British Pound),
8.00% 9-27-2013............................ Aaa* 903,915 900,697
------------ ------------
1,384,943 1,384,661
------------ ------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $12,729,286 $12,122,280
------------ ------------
------------ ------------
</TABLE>
44
<PAGE>
U.S. GOVERNMENT SECURITIES-13.39%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount (e) Cost (b)(e) Value (c)(e)
----------- ------------ ------------
<C> <S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION-0.32%
NOTES:
$ 250,000 6.50% 2002................................... $ 185,232 $ 166,908
------------ ------------
U.S. TREASURY SECURITIES-13.07%
BONDS:
1,300,000 8.125% 2019.................................. 1,570,750 1,627,031
------------ ------------
NOTES:
350,000 3.625% 2002.................................. 350,356 348,359
350,000 5.625% 2001.................................. 341,190 349,344
1,850,000 5.75% 2003................................... 1,766,882 1,851,733
700,000 6.25% 2000................................... 703,000 708,750
900,000 7.25% 2004................................... 939,263 971,437
900,000 7.875% 2004.................................. 964,757 1,006,031
------------ ------------
5,065,448 5,235,654
------------ ------------
TOTAL U.S. TREASURY SECURITIES............... 6,636,198 6,862,685
------------ ------------
TOTAL U.S. GOVERNMENT SECURITIES............. 6,821,430 7,029,593
------------ ------------
------------ ------------
TOTAL LONG-TERM INVESTMENTS.................. $43,353,509 $48,892,278
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-6.66%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount (e) Value (c)(e)
----------- ------------
<C> <S> <C>
BANKS-6.66%
$3,495,087 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 3,495,087
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$46,848,596) (b)........................... $52,387,365
------------
------------
</TABLE>
(a) Presently not paying dividend income.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $46,848,596 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 7,287,563
Unrealized depreciation..................................... (1,748,794)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $ 5,538,769
- -------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets.
(e) Cost and market value are stated in U.S. dollars; principal amount is
stated in the currency indicated.
* Moody's Rating
45
<PAGE>
FORTIS SERIES FUND, INC.
VALUE SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-89.71%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
AEROSPACE AND EQUIPMENT-2.90%
8,200 Lockheed Martin Corp......................... $ 831,482 $ 807,700
15,642 Raytheon Corp................................ 861,881 789,921
------------ ------------
1,693,363 1,597,621
------------ ------------
APPAREL-0.40%
8,600 Fruit of the Loom, Inc., Class A (a)......... 311,137 220,375
------------ ------------
AUTOMOBILE MANUFACTURERS-1.56%
14,200 General Motors Corp.......................... 825,026 860,875
------------ ------------
BANKS-9.45%
18,700 Bank of New York Co., Inc.................... 727,085 1,081,094
7,900 Chase Manhattan Corp......................... 783,535 865,050
5,500 Citicorp..................................... 694,382 695,406
13,000 Republic New York Corp....................... 1,435,400 1,484,437
9,600 U.S. Bancorp................................. 804,827 1,074,600
------------ ------------
4,445,229 5,200,587
------------ ------------
BROADCASTING-0.68%
11,800 Comcast Corp., Special Class A............... 255,812 372,437
------------ ------------
BUSINESS SERVICES AND SUPPLIES-0.95%
10,700 Fiserv, Inc. (a)............................. 482,161 525,637
------------ ------------
CHEMICALS-SPECIALTY-2.85%
6,400 Air Products and Chemicals, Inc.............. 499,983 526,400
16,000 Morton International, Inc. (with rights)..... 540,450 550,000
12,400 Sigma-Aldrich Corp........................... 393,987 492,900
------------ ------------
1,434,420 1,569,300
------------ ------------
COMPUTER-COMMUNICATIONS
EQUIPMENT-0.36%
3,600 Cisco Systems, Inc. (a)...................... 198,900 200,700
------------ ------------
COMPUTER-SOFTWARE-2.03%
4,100 Automatic Data Processing, Inc............... 194,076 251,637
6,750 Computer Associates International, Inc....... 305,742 356,906
13,200 Sterling Commerce, Inc. (a).................. 466,667 507,375
------------ ------------
966,485 1,115,918
------------ ------------
CONTAINERS AND PACKAGING-1.76%
19,300 Crown Cork & Seal Company, Inc............... 983,625 967,412
------------ ------------
DRUGS-4.44%
8,600 Abbott Laboratories.......................... 523,861 563,837
5,200 Bristol-Myers Squibb Co...................... 431,810 492,050
5,600 Johnson & Johnson............................ 337,588 368,900
2,500 Pfizer, Inc.................................. 146,310 186,406
6,600 Schering-Plough Corp......................... 349,160 410,025
3,400 Warner-Lambert Co............................ 448,445 421,600
------------ ------------
2,237,174 2,442,818
------------ ------------
ELECTRONIC COMPONENTS-0.13%
1,500 Thomas and Betts Corp........................ 81,360 70,875
------------ ------------
ELECTRICAL EQUIPMENT-1.73%
13,000 General Electric Co.......................... 720,370 953,875
------------ ------------
ELECTRIC PRODUCTS-0.67%
5,400 Honeywell, Inc............................... 369,211 369,900
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
ELECTRONIC-SEMICONDUCTOR
AND CAPACITOR-1.82%
7,600 Intel Corp................................... $ 566,916 $ 533,900
8,200 Motorola, Inc................................ 561,513 467,913
------------ ------------
1,128,429 1,001,813
------------ ------------
FINANCE SERVICES-5.57%
10,000 BankBoston Corp.............................. 813,348 939,375
18,900 Fannie Mae................................... 827,864 1,078,481
21,100 Finova Group, Inc............................ 802,665 1,048,406
------------ ------------
2,443,877 3,066,262
------------ ------------
FOOD-2.30%
17,700 ConAgra, Inc................................. 530,410 580,781
2,900 Ralston -- Ralston Purina Group.............. 266,417 269,519
9,100 Sysco Corp................................... 320,327 414,619
------------ ------------
1,117,154 1,264,919
------------ ------------
GLASS AND GLASS PRODUCTS,
POTTERY-0.44%
6,500 Corning, Inc................................. 288,320 241,313
------------ ------------
HEALTH CARE SERVICES-1.46%
24,200 Tenet Healthcare Corp. (a)................... 768,084 801,625
------------ ------------
HOTEL AND GAMING-0.70%
9,200 Promus Hotel Corp. (with rights)(a).......... 400,009 386,400
------------ ------------
HOUSEHOLD PRODUCTS-1.08%
2,600 Clorox Co.................................... 183,759 205,563
4,900 Procter & Gamble Co.......................... 300,698 391,081
------------ ------------
484,457 596,644
------------ ------------
INSURANCE-3.48%
9,200 American International Group, Inc............ 941,383 1,000,500
9,800 Hartford Financial Services Group............ 845,660 916,913
------------ ------------
1,787,043 1,917,413
------------ ------------
LEISURE TIME-AMUSEMENTS-1.58%
8,800 Disney (Walt) Co............................. 746,441 871,750
------------ ------------
MACHINERY-OIL AND WELL-0.92%
11,600 Baker Hughes, Inc............................ 533,673 506,050
------------ ------------
MEDICAL SUPPLIES-0.71%
7,700 Baxter International, Inc.................... 379,500 388,369
------------ ------------
METALS-FABRICATING-0.46%
6,000 Newell Co.................................... 249,286 255,000
------------ ------------
MISCELLANEOUS-1.37%
20,400 Service Corp. International.................. 667,478 753,525
------------ ------------
NATURAL GAS TRANSMISSIONS-2.49%
19,900 Enron Corp................................... 799,887 827,094
13,500 MCN Energy Group, Inc........................ 436,639 545,063
------------ ------------
1,236,526 1,372,157
------------ ------------
OFFICE EQUIPMENT AND SUPPLIES-4.35%
4,100 Compaq Computer Corp......................... 279,202 231,394
10,800 International Business Machines Corp......... 907,270 1,129,275
8,800 Pitney Bowes, Inc............................ 627,799 791,450
3,300 Xerox Corp................................... 246,951 243,581
------------ ------------
2,061,222 2,395,700
------------ ------------
</TABLE>
46
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
OIL-CRUDE PETROLEUM AND GAS-2.82%
11,600 Anadarko Petroleum Corp...................... $ 733,895 $ 703,975
15,600 Texaco, Inc.................................. 920,536 848,250
------------ ------------
1,654,431 1,552,225
------------ ------------
OIL-REFINING-5.28%
10,800 Atlantic Richfield Co........................ 788,426 865,350
13,600 Mobil Corp................................... 948,267 981,750
19,600 Royal Dutch Petroleum Co. NY Shares.......... 986,314 1,062,075
------------ ------------
2,723,007 2,909,175
------------ ------------
PAPER-1.60%
22,980 Fort James Corp.............................. 794,094 878,985
------------ ------------
PRECISION INSTRUMENTS-TEST,
RESEARCH-1.55%
15,100 Emerson Electric Co.......................... 775,118 852,206
------------ ------------
PUBLISHING-1.08%
8,000 McGraw Hill Companies, Inc................... 514,991 592,000
------------ ------------
RAILROAD AND RAILROAD EQUIPMENT-2.71%
12,100 Burlington Northern Santa Fe Corp............ 1,135,074 1,124,544
5,900 Union Pacific Corp........................... 371,632 368,381
------------ ------------
1,506,706 1,492,925
------------ ------------
REAL ESTATE-INVESTMENT TRUST-0.69%
13,400 Liberty Property Trust....................... 347,837 382,738
------------ ------------
RETAIL-DEPARTMENT STORES-2.10%
26,800 Federated Department Stores, Inc. (a)........ 1,037,057 1,154,075
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
RETAIL-SPECIALTY-0.87%
10,000 Lowe's Companies, Inc........................ $ 384,225 $ 476,875
------------ ------------
TELECOMMUNICATIONS-1.77%
31,400 Cincinnati Bell, Inc......................... 880,543 973,400
------------ ------------
TOBACCO-0.58%
7,100 Philip Morris Companies, Inc................. 306,290 321,719
------------ ------------
UTILITIES-ELECTRIC-3.46%
18,400 CMS Energy Corp.............................. 685,705 810,750
6,900 Duke Energy Corp............................. 353,993 382,088
14,900 New Century Energies, Inc.................... 632,293 714,269
------------ ------------
1,671,991 1,907,107
------------ ------------
UTILITIES-TELEPHONE-5.46%
10,256 Bell Atlantic Corp........................... 701,521 933,296
10,600 GTE Corp..................................... 464,588 553,850
11,800 SBC Communications, Inc...................... 644,783 864,350
11,200 Sprint Corp.................................. 531,920 656,600
------------ ------------
2,342,812 3,008,096
------------ ------------
WASTE DISPOSAL-1.10%
9,600 U.S.A. Waste Services, Inc. (a).............. 380,665 376,800
8,300 Waste Management, Inc........................ 272,901 228,250
------------ ------------
653,566 605,050
------------ ------------
TOTAL COMMON STOCKS.......................... $ 44,888,440 $ 49,393,846
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-10.06%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- ------------
<C> <S> <C>
BANKS-2.79%
$1,536,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 1,536,000
------------
DIVERSIFIED FINANCE-3.28%
1,808,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.44%...................... 1,808,000
------------
U.S. GOVERNMENT AGENCY-1.81%
1,000,000 Federal Home Loan Mortgage Corp., 5.77%,
2-5-1998................................... 994,350
------------
U.S. OTHER DIRECT FEDERAL OBLIGATIONS-2.18%
1,200,000 Federal Farm Credit Bank, 5.59%, 1-14-1998... 1,197,452
------------
TOTAL SHORT-TERM INVESTMENTS................. 5,535,802
------------
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$50,424,242) (b)........................... $54,929,648
------------
------------
</TABLE>
(a) Presently not paying dividend income.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $50,433,595 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $5,400,549
Unrealized depreciation..................................... (904,496)
- ------------------------------------------------------------------------
Net unrealized appreciation................................. $4,496,053
- ------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 1.93% of total net assets as of December 31, 1997.
47
<PAGE>
`
FORTIS SERIES FUND, INC.
GROWTH & INCOME SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-82.30%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (a) Value (b)
--------- ------------- -------------
<C> <S> <C> <C>
AEROSPACE AND EQUIPMENT-1.17%
39,200 United Technologies Corp..................... $ 2,250,682 $ 2,854,250
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE
PARTS-2.49%
76,000 Genuine Parts Co. (e)........................ 2,213,545 2,579,250
89,000 Tenneco, Inc................................. 4,007,655 3,515,500
------------- -------------
6,221,200 6,094,750
------------- -------------
BANKS-5.07%
78,000 Banc One Corp. (e)........................... 3,075,039 4,236,375
16,000 Chase Manhattan Corp......................... 1,471,995 1,752,000
10,570 U.S. Bancorp (e)............................. 787,129 1,183,179
36,000 Union Planters Corp.......................... 1,305,767 2,445,750
43,900 Washington Mutual, Inc. (e).................. 2,414,719 2,801,369
------------- -------------
9,054,649 12,418,673
------------- -------------
BUSINESS SERVICES AND
SUPPLIES-1.09%
63,000 Omnicom Group, Inc. (e)...................... 969,907 2,669,625
------------- -------------
CONSUMER GOODS-1.03%
68,000 Fortune Brands, Inc.......................... 2,109,367 2,520,250
------------- -------------
DIVERSIFIED COMPANIES-1.44%
25,500 Chemed Corp.................................. 901,850 1,056,656
30,000 Minnesota Mining and Manufacturing Co........ 1,860,371 2,461,875
------------- -------------
2,762,221 3,518,531
------------- -------------
DRUGS-10.07%
33,300 Abbott Laboratories.......................... 1,350,588 2,183,231
44,000 American Home Products Corp.................. 2,215,035 3,366,000
100,000 Glaxo Welcome plc ADR (e).................... 3,685,750 4,787,500
36,000 Johnson & Johnson............................ 2,398,943 2,371,500
66,000 Lilly (Eli) & Co., Inc....................... 1,489,560 4,595,250
33,500 Merck & Co., Inc............................. 1,966,881 3,559,375
21,000 Pfizer, Inc.................................. 648,251 1,565,812
61,000 Pharmacia and UpJohn, Inc.................... 2,514,623 2,234,125
------------- -------------
16,269,631 24,662,793
------------- -------------
ELECTRICAL EQUIPMENT-1.77%
59,200 General Electric Co.......................... 2,295,975 4,343,800
------------- -------------
FINANCE SERVICES-6.91%
27,500 American Express Co.......................... 969,270 2,454,375
37,100 Beneficial Corp.............................. 1,802,661 3,083,937
43,200 Fannie Mae................................... 975,787 2,465,100
32,000 Household International, Inc................. 1,737,322 4,082,000
28,000 Marsh and McLennan Companies, Inc............ 2,063,348 2,087,750
100,912 MBNA Corp.................................... 899,370 2,756,159
------------- -------------
8,447,758 16,929,321
------------- -------------
FOOD-4.27%
66,000 ConAgra, Inc................................. 1,430,893 2,165,625
72,000 Groupe Danone-ADR (e)........................ 2,238,560 2,574,000
65,000 Heinz (H.J.) Co.............................. 2,076,425 3,302,812
46,000 Quaker Oats Co............................... 1,944,305 2,426,500
------------- -------------
7,690,183 10,468,937
------------- -------------
<CAPTION>
Market
Shares Cost (a) Value (b)
--------- ------------- -------------
<C> <S> <C> <C>
FURNITURE-0.61%
90,000 Shelby Williams Industries, Inc.............. $ 1,237,500 $ 1,485,000
------------- -------------
HAND TOOLS AND GENERAL
HARDWARE-1.20%
67,500 Snap-On, Inc................................. 2,030,431 2,944,687
------------- -------------
HOUSEHOLD PRODUCTS-1.21%
37,600 Clorox Co.................................... 1,266,517 2,972,750
------------- -------------
INSURANCE-1.95%
70,000 LaSalle Re Holdings Ltd...................... 2,036,000 2,476,250
28,000 St. Paul Companies, Inc. (e)................. 1,924,034 2,297,750
------------- -------------
3,960,034 4,774,000
------------- -------------
LEISURE TIME-AMUSEMENTS-1.41%
65,000 Royal Caribbean Cruises Ltd. (e)............. 2,640,625 3,465,312
------------- -------------
MACHINERY-OIL AND WELL-2.60%
42,300 Baker Hughes, Inc............................ 924,012 1,845,337
41,000 Dresser Industries, Inc. (e)................. 892,957 1,719,438
54,000 Halliburton Co............................... 1,263,695 2,804,625
------------- -------------
3,080,664 6,369,400
------------- -------------
MEDICAL SUPPLIES-1.19%
58,000 Baxter International, Inc. (e)............... 2,145,564 2,925,375
------------- -------------
NATURAL GAS TRANSMISSIONS-5.94%
57,127 El Paso Natural Gas Co....................... 1,836,879 3,798,946
109,212 Enron Corp................................... 4,215,324 4,539,124
57,900 Sonat, Inc. (e).............................. 2,238,564 2,648,925
125,500 Williams Companies, Inc. (e)................. 1,609,680 3,561,063
------------- -------------
9,900,447 14,548,058
------------- -------------
OIL-CRUDE PETROLEUM AND GAS-3.71%
25,600 Amoco Corp................................... 1,759,417 2,179,200
48,000 Exxon Corp................................... 1,982,160 2,937,000
72,888 Texaco, Inc.................................. 3,433,067 3,963,285
------------- -------------
7,174,644 9,079,485
------------- -------------
OIL-REFINING-0.94%
32,000 Mobil Corp................................... 2,069,086 2,310,000
------------- -------------
PUBLISHING-1.39%
46,000 McGraw Hill Companies, Inc................... 1,942,430 3,404,000
------------- -------------
RAILROAD AND RAILROAD
EQUIPMENT-0.42%
89,500 Tranz Rail Holdings Ltd. ADR................. 1,190,250 1,029,250
------------- -------------
REAL ESTATE-INVESTMENT TRUST-6.18%
141,400 Cornerstone Properties, Inc.................. 1,992,368 2,713,113
63,600 Crescent Real Estate Equities Trust.......... 1,649,766 2,504,250
99,847 Equity Office Properties Trust............... 2,091,137 3,151,430
113,000 Excel Realty Trust, Inc...................... 3,086,375 3,559,500
42,500 Highwoods Properties, Inc.................... 1,228,505 1,228,505
38,000 Spieker Properties, Inc...................... 1,311,000 1,629,250
------------- -------------
11,359,151 15,138,012
------------- -------------
RETAIL-CLOTHING-0.94%
90,000 Limited (The), Inc........................... 1,697,225 2,295,000
------------- -------------
</TABLE>
48
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (a) Value (b)
--------- ------------- -------------
<C> <S> <C> <C>
RETAIL-DEPARTMENT STORES-0.79%
42,800 Sears Roebuck & Co........................... $ 1,764,053 $ 1,936,700
------------- -------------
RETAIL-SPECIALTY-1.92%
77,000 Intimate Brands, Inc. (e).................... 1,137,947 1,852,813
48,400 Rite Aid Corp................................ 1,446,178 2,840,475
------------- -------------
2,584,125 4,693,288
------------- -------------
SHIP BUILDING, SHIPPING-0.52%
45,000 Knightsbridge Tankers Ltd.................... 900,000 1,274,063
------------- -------------
TELECOMMUNICATIONS-1.64%
50,000 Ameritech Corp. (e).......................... 3,744,862 4,025,000
------------- -------------
TOBACCO-1.48%
80,000 Philip Morris Companies, Inc................. 2,287,660 3,625,000
------------- -------------
<CAPTION>
Market
Shares Cost (a) Value (b)
--------- ------------- -------------
<C> <S> <C> <C>
UTILITIES-ELECTRIC-2.94%
79,896 Duke Energy Corp............................. $ 2,347,508 $ 4,424,241
153,000 Endesa S.A.-ADR.............................. 2,747,880 2,782,688
------------- -------------
5,095,388 7,206,929
------------- -------------
UTILITIES-TELEPHONE-8.01%
60,000 AT & T Corp.................................. 2,359,200 3,675,000
43,000 Deutsche Telekom AG ADR...................... 812,270 800,875
70,000 GTE Corp..................................... 3,187,616 3,657,500
67,500 SBC Communications, Inc...................... 4,076,008 4,944,375
40,500 Sprint Corp.................................. 1,437,021 2,374,313
33,000 Telecom Corp. of New Zealand Ltd. ADR (e).... 1,093,831 1,278,750
64,000 U.S. West Communications Group............... 1,988,480 2,888,000
------------- -------------
14,954,426 19,618,813
------------- -------------
TOTAL COMMON STOCKS.......................... $ 141,096,655 $ 201,601,052
------------- -------------
------------- -------------
</TABLE>
PREFERRED STOCKS-5.70%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (a) Value (b)
-------- ------------- -------------
<C> <S> <C> <C>
CONTAINERS AND PACKAGING-0.73%
37,900 Crown Cork and Seal Co, Inc., Convertible
4.50%...................................... $ 1,677,075 $ 1,781,300
------------- -------------
INSURANCE-1.80%
95,000 Sunamerica, Inc., Convertible 8.50%.......... 3,564,404 4,423,437
------------- -------------
MEDIA-0.44%
24,000 Metromedia International Group, Inc.
Cumulative Convertible 7.25%............... 1,200,000 1,086,000
------------- -------------
OIL-CRUDE PETROLEUM AND GAS-0.18%
9,000 Nuevo Energy Co., Convertible, Ser A,
5.75%...................................... 450,000 441,000
------------- -------------
REAL ESTATE-INVESTMENT TRUST-0.79%
65,000 Excel Realty Trust, Inc. Conv................ 1,625,000 1,929,688
------------- -------------
UTILITIES-ELECTRIC-1.76%
60,000 AES Corp. Convertible, Ser A "Tecons",
5.375%..................................... 3,000,000 4,305,000
------------- -------------
TOTAL PREFERRED STOCKS....................... $ 11,516,479 $ 13,966,425
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-0.71%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (a) Value (b)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
WASTE DISPOSAL-0.71%
$1,600,000 USA Waste Services, Inc., 4.00% Sub Note
2-1-2002................................... BBB- $ 1,643,875 $ 1,744,000
------------- -------------
</TABLE>
49
<PAGE>
FORTIS SERIES FUND, INC.
GROWTH & INCOME SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
CORPORATE BONDS-NON-INVESTMENT GRADE-0.95%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (a) Value (b)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
ELECTRONIC-MISCELLANEOUS-0.07%
$ 200,000 Kent Electronics Corp., 4.50% Convertible Sub
Note 9-1-2004.............................. B $ 200,000 $ 162,500
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-0.55%
1,600,000 Cypress Semiconductor, Corp., 6.00%
Convertible 10-1-2002 (d) (e).............. B 1,600,000 1,346,000
------------- -------------
METALS-MINING AND MISCELLANEOUS-0.33%
1,000,000 Coeur D'Alene Mines, Corp., 7.25% Convertible
Sub Deb 10-31-2005 (d)..................... B3* 1,000,000 811,250
------------- -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... 2,800,000 2,319,750
------------- -------------
------------- -------------
TOTAL LONG-TERM INVESTMENTS.................. $ 157,057,009 $ 219,631,227
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-10.06%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (b)
----------- -------------
<C> <S> <C>
BANKS-3.29%
$8,070,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 8,070,000
-------------
DIVERSIFIED FINANCE-1.84%
4,506,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.44%...................... 4,506,000
-------------
U.S. GOVERNMENT AGENCIES-4.93%
4,600,000 Federal Home Loan Mortgage Corp., 5.72%,
1-9-1998................................... 4,593,548
7,500,000 Federal National Mortgage Assoc., 5.82%,
1-21-1998.................................. 7,475,063
-------------
12,068,611
-------------
TOTAL SHORT-TERM INVESTMENTS................. 24,644,611
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$181,701,620) (a).......................... $ 244,275,838
-------------
-------------
</TABLE>
(a) At December 31, 1997, the cost of securities for federal income tax
purposes was $181,701,620 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $64,464,880
Unrealized depreciation........................... (1,890,662)
---------------------------------------------------------------
Net unrealized appreciation....................... $62,574,218
---------------------------------------------------------------
</TABLE>
(b) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(c) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 6.94% of total net assets as of December 31, 1997.
(d) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". These investments have been identified by portfolio
management as illiquid securities. The portfolio entered into the following
Section 144A security transactions:
<TABLE>
<CAPTION>
Date Acquired Shares/Par Security Cost Basis
- ------------------ ----------- ------------------------------------------------------------------------------ ----------
<S> <C> <C> <C>
September 19, 1997 1,600,000 Cypress Semiconductor, Corp. 6.00% 10-1-2002 $1,600,000
October 8, 1997 1,000,000 Coeur D'Alene Mines, Corp. 6.00% 10-31-2005 1,000,000
</TABLE>
The aggregate value of these securities at December 31, 1997, was
$2,157,250, which represents 0.88% of total net assets.
(e) Security is fully or partially on loan at December 31, 1997. See Note 1 of
accompanying Notes to Financial Statements.
* Moody's Rating
50
<PAGE>
FORTIS SERIES FUND, INC.
S&P 500 INDEX SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-95.80%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
BASIC INDUSTRY-4.81%
1,000 Adobe Systems, Inc........................... $ 45,081 $ 41,250
1,300 Air Products & Chemicals..................... 96,572 106,925
400 Armstrong World Industry..................... 25,547 29,900
900 Ashland, Inc................................. 41,391 48,319
2,100 Autozone, Inc. (a)........................... 56,383 60,900
1,200 Avery Dennison Corp.......................... 49,769 53,700
600 Ball Corp.................................... 21,696 21,187
900 Bemis, Inc................................... 35,088 39,656
900 Boise Cascade Corp........................... 32,727 27,225
400 Centex Corp.................................. 12,291 25,175
1,500 Champion International Corp.................. 82,123 67,969
1,300 Clear Channel Communications, Inc............ 86,724 103,269
2,000 Crown Cork & Seal Company, Inc............... 101,216 100,250
3,100 Dow Chemical Co.............................. 268,011 314,650
15,700 Du Pont (E.I.) De Nemours.................... 860,891 942,981
900 Eastman Chemical Co.......................... 52,535 53,606
1,700 Engelhard Corp............................... 35,958 29,537
900 Fluor Corp................................... 57,600 33,637
400 FMC Corp. (a)................................ 31,866 26,925
2,500 Fort James Corp.............................. 92,737 95,625
1,300 Georgia-Pac Corp............................. 91,377 78,975
1,100 Goodrich (B.F.) Co........................... 48,072 45,581
1,200 Grace (W. R.) & Co........................... 73,411 96,525
700 Great Lakes Chemical......................... 35,289 31,412
2,800 HBO & Company of Georgia..................... 129,168 134,400
1,400 Hercules, Inc................................ 66,247 70,087
4,200 International Paper.......................... 196,638 181,125
600 Kaufman & Broad Home Corp.................... 8,596 13,462
7,600 Kimberly Clark Corp.......................... 369,173 374,775
1,400 KlA-Tenor Corp............................... 84,912 54,075
1,300 Louisiana Pacific Corp....................... 27,590 24,700
2,400 Masco Corp................................... 95,418 122,100
2,000 Mead Corp.................................... 64,803 56,000
8,100 Monsanto Co.................................. 307,422 340,200
1,900 Morton International, Inc. (with rights)..... 59,370 65,312
1,100 Nalco Chemical Co............................ 41,221 43,519
2,100 NextLevel Systems, Inc....................... 29,794 37,537
4,700 Occidental Petroleum Corp.................... 118,046 137,769
2,000 Omnicom Group, Inc........................... 78,530 84,750
1,800 Owens-Illinois, Inc.......................... 64,875 68,287
1,800 Parametric Technology Corp. (a).............. 77,401 85,275
600 Potlatch Corp................................ 29,831 25,800
2,200 Praxair, Inc................................. 108,408 99,000
900 Rohm & Haas Co............................... 76,001 86,175
2,200 Sherwin Williams Co.......................... 64,541 61,050
1,200 Sigma Aldrich Corp........................... 36,157 47,700
1,100 Stone Container Corp......................... 15,215 11,481
700 Temple Inland, Inc........................... 40,842 36,619
2,600 Tenneco, Inc................................. 113,919 102,700
2,300 Tricon Global Restaurants.................... 62,931 66,844
1,000 Union Camp Corp.............................. 55,205 53,687
1,700 Union Carbide Corp. Holdings Co.............. 83,204 72,994
1,200 Westvaco Corp................................ 36,959 37,725
3,000 Weyerhaeuser Co.............................. 149,381 147,187
1,700 Willamette Industries, Inc................... 60,457 54,719
------------ -------------
5,086,610 5,272,233
------------ -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
CAPITAL SPENDING-21.44%
5,000 3 Com Corp. (a).............................. $ 223,212 $ 174,687
2,100 Advanced Micro Devices (a)................... 55,629 37,669
400 Aeroquip-Vickers, Inc........................ 14,999 19,625
2,192 Allegheny Teledyne, Inc...................... 56,559 56,718
8,000 Allied Signal, Inc........................... 300,690 311,500
2,900 Amp, Inc..................................... 123,643 121,800
1,100 Andrew Corp. (with rights) (a)............... 34,882 26,400
1,600 Apple Computer, Inc. (a)..................... 34,420 21,000
5,000 Applied Materials, Inc. (a).................. 162,746 150,625
700 Autodesk, Inc................................ 27,422 25,900
4,300 Automatic Data Processing.................... 199,377 263,912
2,700 Bay Networks, Inc. (a)....................... 71,622 69,019
13,906 Boeing Co.................................... 693,479 680,525
300 Briggs & Stratton Corp....................... 14,378 14,569
2,700 Browning Ferris Industries................... 86,319 99,900
2,300 Cabletron System, Inc. (a)................... 66,569 34,500
1,100 Case Corp.................................... 72,737 66,481
5,100 Caterpillar, Inc............................. 242,235 247,669
900 Ceridian Corp. (a)........................... 35,826 41,231
600 Cincinnati Milacron.......................... 15,570 15,562
13,800 Cisco Systems, Inc. (a)...................... 608,996 769,350
2,300 Cognizant Corp............................... 83,799 102,494
10,777 Compaq Computer Corp. (a).................... 461,152 608,227
7,500 Computer Association International........... 288,380 396,562
1,400 Computer Sciences (a)........................ 105,637 116,900
1,600 Cooper Industries............................ 76,856 78,400
650 Crane Co..................................... 25,501 28,194
500 Cummins Engine, Inc.......................... 30,967 29,531
700 Data General Corp. (a)....................... 20,376 12,206
3,600 Deere & Co................................... 172,816 209,925
4,600 Dell Computer Corp. (a)...................... 234,444 386,400
900 Deluxe Corp.................................. 30,727 31,050
2,200 Digital Equipment Corp. (a).................. 89,063 81,400
3,000 Dover Corp................................... 87,390 108,375
1,100 Dow Jones & Co., Inc......................... 45,632 59,056
2,500 Dresser Industries, Inc...................... 88,218 104,844
1,400 DSC Communications (a)....................... 34,683 33,600
2,100 Dun & Bradstreet............................. 53,403 64,969
6,900 E M C Corp. (a).............................. 136,142 189,319
1,100 Eaton Corp................................... 83,794 98,175
600 EG & G, Inc.................................. 11,774 12,487
6,300 Emerson Electric Co.......................... 324,191 355,556
6,200 First Data Corp.............................. 229,992 181,350
600 Foster Wheeler Corp.......................... 24,899 16,237
900 General Dynamics Corp........................ 71,979 77,794
45,900 General Electric Co.......................... 2,695,443 3,367,912
600 General Signal Corp.......................... 24,049 25,312
2,550 Genuine Parts Co............................. 80,728 86,541
700 Grainger (W.W.), Inc......................... 56,223 68,031
800 Harnischfeger Industries..................... 34,258 28,250
1,100 Harris Corp.................................. 45,921 50,462
14,600 Hewlett Packard Co........................... 820,849 912,500
1,800 Honeywell, Inc............................... 119,661 123,300
2,000 IKON Office Solutions, Inc................... 59,734 56,250
3,400 Illinois Tool Works, Inc..................... 148,594 204,425
2,150 Ingersoll Rand Co............................ 74,310 87,075
23,000 Intel Corp................................... 1,688,025 1,615,750
13,800 International Business Machines.............. 1,143,570 1,442,962
1,700 Interpublic Group............................ 67,001 84,681
</TABLE>
51
<PAGE>
FORTIS SERIES FUND, INC.
S&P 500 INDEX SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
1,600 ITT Industries, Inc.......................... $ 42,278 $ 50,200
1,000 Johnson Controls, Inc........................ 41,079 47,750
2,600 Lockheed Martin Corp......................... 243,550 256,100
2,100 LSI Logic Corp. (a).......................... 63,777 41,475
8,831 Lucent Technologies, Inc..................... 571,077 705,376
600 McDermott International, Inc................. 12,533 21,975
2,900 Micron Technology, Inc....................... 95,240 75,400
16,800 Microsoft Corp. (a).......................... 1,823,478 2,171,400
5,700 Minnesota Mining & Manufacturing Co.......... 498,247 467,756
8,100 Motorola, Inc................................ 521,355 462,206
2,300 National Semiconductor (a)................... 66,964 59,656
900 National Service Industry.................... 37,779 44,606
3,600 Northern Telecom Ltd......................... 282,721 320,400
800 Northrop Grumman Co.......................... 73,346 92,000
4,600 Novell, Inc. (a)............................. 44,891 34,500
13,500 Oracle System Corp. (a)...................... 420,548 301,219
800 Owens Corning................................ 33,985 27,300
1,600 Pall Corp.................................... 37,348 33,100
1,700 Parker Hannifin Corp......................... 62,456 77,987
800 Perkin Elmer Corp............................ 52,906 56,850
2,000 Pitney Bowes, Inc............................ 134,298 179,875
2,300 PPG Industries, Inc.......................... 131,679 131,387
1,200 Raychem Corp................................. 50,230 51,675
3,100 Raytheon Corp. Class B....................... 156,864 156,550
637 Raytheon Corp. Class A....................... 35,676 31,412
2,900 Rockwell International Corp.................. 153,612 151,525
900 Ryder System, Inc............................ 28,691 29,475
900 Safety Kleen Corp............................ 19,101 24,694
900 Scientific Atlanta........................... 18,378 15,075
3,400 Seagate Technology (a)....................... 117,562 65,450
3,600 Service Corp. International.................. 113,971 132,975
100 Shared Medical System Corp................... 6,355 6,600
2,400 Silicon Graphics (a)......................... 47,287 29,850
800 Snap-On, Inc................................. 29,678 34,900
1,200 Stanley Works................................ 46,806 56,625
5,200 Sun Microsystem, Inc. (a).................... 196,239 207,350
600 Tektronix, Inc............................... 22,959 23,812
2,300 Tellabs, Inc. (a)............................ 127,490 121,612
5,100 Texas Instruments, Inc....................... 205,828 229,500
2,400 Textron, Inc................................. 133,774 150,000
2,300 Thermo Electron Corp......................... 87,798 102,350
800 Thomas & Betts Corp.......................... 38,397 37,800
1,100 Timken Co.................................... 31,981 37,812
7,400 Tyco International Ltd. Class B.............. 256,806 333,462
2,200 Unisys Corp. (a)............................. 18,790 30,525
3,100 United Technologies Corp..................... 224,087 225,719
8,700 US West Media Group (a)...................... 184,681 251,212
6,300 Waste Management, Inc........................ 200,657 173,250
4,600 Xerox Corp................................... 296,561 339,537
------------ -------------
21,153,285 23,494,409
------------ -------------
CONSUMER DISCRETIONARY-11.06%
3,600 Albertsons, Inc.............................. 134,689 170,550
1,100 American Greetings Corp...................... 35,431 43,037
3,700 American Stores Co........................... 84,075 76,081
1,200 Black & Decker Mfg. Co....................... 47,335 46,875
1,500 Brunswick Corp............................... 41,487 45,469
10,000 CBS Corp..................................... 226,318 294,375
1,600 Charming Shoppes, Inc. (a)................... 8,716 7,500
9,600 Chrysler Corp................................ 320,143 337,800
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
1,200 Circuit City Stores.......................... $ 40,447 $ 42,675
4,900 Comcast Corp................................. 102,147 154,656
800 Cooper Tire & Rubber......................... 17,856 19,500
2,800 Costco Companies, Inc........................ 83,012 124,950
2,500 CVS Corp..................................... 132,192 160,156
1,200 Dana Corp.................................... 46,200 57,000
1,900 Darden Restaurant............................ 18,738 23,750
3,000 Dayton Hudson Corp........................... 149,165 202,500
1,500 Dillards, Inc. Class A....................... 54,921 52,875
9,300 Disney (Walt) Co. Holdings................... 718,096 921,281
2,200 Donnelley (R.R.) & Sons...................... 77,025 81,950
600 Echlin, Inc.................................. 20,070 21,712
2,700 Federated Department Stores (a).............. 98,298 116,269
400 Fleetwood Enterprises........................ 10,334 16,975
17,000 Ford Motor Co................................ 649,524 827,687
1,100 Fruit of the Loom, Inc. (a).................. 36,097 28,187
3,700 Gannett, Inc................................. 162,057 228,706
5,250 Gap, Inc..................................... 123,574 186,047
10,000 General Motors Corp.......................... 550,942 606,250
700 Giant Foods, Inc............................. 23,185 23,581
2,300 Goodyear Tire & Rubber Co.................... 132,037 146,337
300 Great Atlantic & Pacific Tea Co.............. 9,543 8,906
900 Harcourt General, Inc........................ 42,370 49,275
600 Harland John H. Co........................... 14,341 12,600
1,200 Harrah's Entertainment, Inc. (a)............. 23,420 22,650
1,600 Hasbro, Inc.................................. 42,074 50,400
3,500 Hilton Hotels Corp........................... 102,453 104,125
10,150 Home Depot, Inc.............................. 431,742 597,581
1,700 ITT Corp. (a)................................ 106,102 140,887
700 Jostens, Inc................................. 17,193 16,144
6,800 K Mart Corp. (a)............................. 83,535 78,625
600 King World Productions, Inc. (a)............. 23,656 34,650
1,300 Knight-Ridder, Inc........................... 58,868 67,600
3,300 Kroger Co. (a)............................... 92,317 121,894
4,000 Limited (The), Inc........................... 83,933 102,000
900 Liz Claiborne, Inc........................... 37,744 37,631
700 Longs Drug Stores, Inc....................... 20,007 22,487
2,300 Lowe's Companies, Inc........................ 87,595 109,681
1,700 Mariott International, Inc................... 103,834 117,725
4,000 Mattel, Inc.................................. 121,106 149,000
3,300 May Department Stores Co..................... 163,658 173,869
1,400 Maytag Corp.................................. 36,135 52,237
9,500 McDonald's Corp.............................. 456,339 453,625
1,500 McGraw Hill Companies, Inc................... 83,481 111,000
400 Mercantile Stores Co., Inc................... 20,441 24,350
700 Meredith Corp................................ 16,822 24,981
2,300 Mirage Resorts, Inc.......................... 62,256 52,325
1,200 Moore Corp. Ltd.............................. 22,923 18,150
1,100 Navistar International Corp. (a)............. 17,028 27,294
1,200 New York Times Co............................ 52,486 79,350
4,200 Nike, Inc. Class B........................... 243,589 164,850
900 Nordstrom, Inc............................... 42,862 54,337
900 Paccar, Inc.................................. 32,770 47,250
3,300 Penney (J.C.), Inc........................... 180,141 199,031
900 Pep Boys Manny Moe & Jack.................... 27,149 21,487
500 Reebok International Ltd..................... 18,369 14,406
1,800 Rite Aid Corp................................ 87,647 105,637
600 Russell Corp................................. 17,349 15,937
5,400 Sears Roebuck & Co........................... 271,286 244,350
100 Springs Industries, Inc. Class A............. 4,417 5,200
</TABLE>
52
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COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
600 Supervalu, Inc............................... $ 16,833 $ 25,125
2,500 Sysco Corp................................... 89,228 113,906
1,700 Tandy Corp................................... 52,905 65,556
7,000 Tele-Communications TCI Group, Inc. (a)...... 104,646 195,562
7,700 Time Warner, Inc............................. 361,910 477,400
1,200 Times Mirror Co. Class A..................... 60,420 73,800
2,200 TJX Companies, Inc........................... 52,002 75,625
4,000 Toys"R"US, Inc. (a).......................... 121,368 125,750
1,700 Tribune Co................................... 78,492 105,825
1,600 TRW, Inc..................................... 84,264 85,400
1,800 V F Corp..................................... 77,533 82,687
4,900 Viacom, Inc. Class B (a)..................... 161,214 203,044
31,800 Wal-Mart Stores, Inc......................... 988,150 1,254,112
6,800 Walgreen Co.................................. 164,384 213,350
1,800 Wendy's International, Inc................... 39,501 43,312
900 Whirlpool Corp............................... 47,510 49,500
2,300 Winn Dixie Stores, Inc....................... 83,422 100,481
1,600 Woolworth Corp. (a).......................... 39,474 32,600
------------ -------------
10,126,348 12,121,293
------------ -------------
CONSUMER STAPLES-12.66%
700 Alberto-Culver Co............................ 18,399 22,444
7,000 Anheuser Busch Companies, Inc................ 291,656 308,000
7,823 Archer-Daniels Midland....................... 154,347 169,661
1,800 Avon Products, Inc........................... 117,957 110,475
1,000 Brown Forman Corp............................ 46,824 55,250
6,200 Campbell Soup Co............................. 275,076 360,375
1,300 Cardinal Health, Inc......................... 77,423 97,662
10,834 Cendant Corp................................. 282,781 372,419
1,500 Clorox Co.................................... 92,897 118,594
34,800 Coca Cola Co................................. 2,055,270 2,318,550
4,200 Colgate-Palmolive Co......................... 255,911 308,700
6,700 Conagra, Inc................................. 193,370 219,844
600 Coors Adolph Co. Class B..................... 16,343 19,950
3,200 Corning, Inc................................. 139,291 118,800
2,000 CPC International, Inc....................... 174,232 215,500
4,500 Eastman Kodak Co............................. 335,957 273,656
800 Ecolab, Inc.................................. 32,531 44,350
2,300 Fortune Brands, Inc.......................... 74,388 85,244
2,100 General Mills, Inc........................... 134,212 150,413
7,700 Gillette Co.................................. 632,217 773,369
5,100 Heinz (H.J.) Co.............................. 215,550 259,144
1,900 Hershey Foods Corp........................... 108,114 117,681
1,700 International Flavors & Fragrance, Inc....... 80,500 87,550
18,800 Johnson & Johnson Co......................... 1,084,003 1,238,450
5,700 Kellogg Co................................... 219,904 282,863
100 Nacco Industries, Inc........................ 6,117 10,719
2,100 Newell Co.................................... 73,070 89,250
21,700 Pepsico, Inc................................. 709,156 790,694
34,000 Philip Morris Co., Inc....................... 1,371,827 1,540,625
800 Pioneer Hi-Bred International................ 53,289 85,800
600 Polaroid Corp................................ 29,772 29,213
18,900 Procter & Gamble Co.......................... 1,180,977 1,508,456
1,900 Quaker Oats Co............................... 77,608 100,225
1,500 Ralston-Ralston Purina Group................. 122,117 139,406
1,800 Rubbermaid, Inc.............................. 48,293 45,000
6,900 Sara Lee Corp................................ 291,185 388,556
5,000 Seagrams Ltd................................. 184,737 161,563
900 Tupperware Corp.............................. 37,064 25,088
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
9,100 Unilever N.V................................. $ 440,937 $ 568,181
2,400 UST, Inc..................................... 70,485 88,650
1,300 Whitman Corp................................. 31,986 33,881
1,700 Wrigley Jr., William Co...................... 105,097 135,256
------------ -------------
11,942,870 13,869,507
------------ -------------
ENERGY & RELATED-8.41%
1,500 Amerada Hess Corp............................ 82,461 82,313
6,800 Amoco Corp................................... 581,275 578,850
1,000 Anadarko Petroleum Corp...................... 71,609 60,688
1,400 Apache Corp.................................. 51,028 49,088
4,400 Atlantic Richfield........................... 307,945 352,550
2,400 Baker Hughes, Inc............................ 93,539 104,700
2,305 Burlington Resources, Inc.................... 103,434 103,293
9,000 Chevron Corp................................. 638,728 693,000
1,500 Coastal Corp................................. 76,125 92,906
700 Columbia Gas Systems, Inc.................... 43,915 54,994
1,400 Cons Natural Gas............................. 73,213 84,700
100 Eastern Enterprises.......................... 3,504 4,500
4,200 Enron Corp................................... 168,903 174,563
34,700 EXXON Corp................................... 1,905,985 2,123,206
3,700 Halliburton Co............................... 153,950 192,169
600 Helmerich & Payne............................ 40,580 40,725
600 Kerr-McGee Corp.............................. 41,483 37,988
10,800 Mobil Corp................................... 729,271 779,625
800 Nicor, Inc................................... 28,571 33,750
600 Oneok, Inc................................... 18,850 24,225
1,500 Oryx Energy Co. (a).......................... 34,143 38,250
1,000 Pacific Enterprises.......................... 31,545 37,625
700 Pennzoil Co.................................. 40,922 46,769
600 Peoples Energy Corp. (with rights)........... 20,472 23,625
3,500 Phillips Petroleum Co........................ 150,726 170,188
1,000 Rowan Companies, Inc. (a).................... 24,082 30,500
30,100 Royal Dutch Petroleum NY Reg. Shares 1,419,759 1,631,044
6,700 Schlumberger Ltd............................. 422,170 539,350
1,400 Sonat, Inc................................... 65,129 64,050
900 Sun Co., Inc................................. 27,541 37,856
7,600 Texaco, Inc.................................. 402,523 413,250
3,592 Union Pacific Resources Group................ 94,545 87,106
3,300 Unocal Corp.................................. 130,701 128,081
3,900 USX-Marathon Group........................... 109,965 131,625
600 Western Atlas, Inc. (a)...................... 31,690 44,400
4,200 Williams Companies, Inc...................... 88,197 119,175
------------ -------------
8,308,479 9,210,727
------------ -------------
FINANCE-16.64%
2,044 Aetna, Inc................................... 184,244 144,230
1,300 Ahmanson H F & Co............................ 52,432 87,019
6,000 Allstate Corp................................ 414,408 545,250
6,600 American Express Co.......................... 442,083 589,050
3,610 American General Corp........................ 168,118 195,166
10,150 American International Group, Inc............ 901,920 1,103,813
2,550 Aon Corp..................................... 121,626 149,494
7,900 Banc One Corp................................ 376,016 429,069
5,100 Bank New York, Inc........................... 205,419 294,844
9,600 BankAmerica Corp............................. 579,889 700,800
2,000 BankBoston Corp.............................. 149,454 187,875
1,400 Bankers Trust of New York Corp............... 138,139 157,413
2,700 Barnett Banks, Inc........................... 134,812 194,063
1,800 BB&T Corp.................................... 116,300 115,313
</TABLE>
53
<PAGE>
FORTIS SERIES FUND, INC.
S&P 500 INDEX SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
500 Beneficial Corp.............................. $ 34,057 $ 41,563
1,500 Block H & R, Inc............................. 49,850 67,219
3,700 Charles Schwab Corp.......................... 108,986 155,169
5,800 Chase Manhattan Corp......................... 559,571 635,100
2,300 Chubb Corp................................... 132,899 173,938
1,000 Cigna Corp................................... 156,589 173,063
700 Cincinnati Financial Corp.................... 97,663 98,525
6,700 Citicorp..................................... 787,525 847,131
1,500 Comerica, Inc................................ 92,318 135,375
2,400 Conseco, Inc................................. 94,632 109,050
2,700 Corestates Financial Corp.................... 146,192 216,169
1,400 Countrywide Credit Industries................ 48,457 60,025
2,200 Equifax, Inc................................. 70,685 77,963
15,100 Fannie Mae................................... 647,445 861,644
2,150 Fifth Third Bancorp.......................... 107,169 175,763
4,100 First Chicago NBD Corp....................... 246,341 342,350
8,600 First Union Corp............................. 390,106 440,750
3,700 Fleet Financial Group, Inc................... 215,214 277,269
9,600 Freddie Mac.................................. 301,782 402,600
1,100 General Re Corp.............................. 197,961 233,200
1,000 Golden West Financial........................ 75,049 97,813
1,600 Green Tree Financial......................... 59,652 41,900
1,700 Hartford Financial Services Group............ 141,616 159,056
1,500 Household International Corp................. 158,695 191,344
2,800 Huntington Bancshares, Inc................... 95,820 100,800
1,000 Jefferson Pilot Corp......................... 67,516 77,875
3,100 KeyCorp...................................... 176,533 219,519
1,200 Lincoln National Corp........................ 74,388 93,750
1,600 Loews Corp................................... 153,610 169,800
2,400 Marsh & McLennan Companies................... 155,515 178,950
1,500 MBIA, Inc.................................... 86,583 100,219
6,850 MBNA Corp.................................... 161,845 187,091
3,600 Mellon Bank Corp............................. 155,648 218,250
4,400 Merrill Lynch & Co........................... 237,616 320,925
1,500 MGIC Investment Corp......................... 59,993 99,750
2,500 Morgan J. P. & Co., Inc...................... 263,564 282,188
8,015 Morgan Stanley, Dean Witter, Discover &
Co......................................... 343,607 473,887
2,800 National City Corp........................... 137,371 184,100
9,822 Nationsbank Corp............................. 562,007 597,300
10,500 Norwest Corp................................. 283,012 405,563
4,100 PNC Bank Corp................................ 165,337 233,956
1,000 Progressive Corp............................. 108,733 119,875
1,200 Providian Financial Corp..................... 35,684 54,225
100 Pulte Corp................................... 2,692 4,181
800 Republic New York Corp....................... 75,220 91,350
1,700 Safeco Corp.................................. 71,761 82,875
1,200 St. Paul Companies, Inc...................... 82,276 98,475
2,100 State Street Corp............................ 112,978 122,194
2,800 SunAmerica, Inc.............................. 105,006 119,700
2,800 Suntrust Banks, Inc.......................... 157,858 199,850
2,300 Synovus Financial Corp....................... 73,675 75,325
2,200 Torchmark Corp............................... 76,560 92,538
900 Transamerica Corp............................ 84,823 95,850
15,892 Travelers Group, Inc......................... 595,527 856,182
3,357 U.S. Bancorp................................. 271,932 375,774
1,700 UNUM Corp.................................... 65,351 92,438
1,700 USF & G Corp................................. 36,329 37,506
2,800 Wachavia Corp................................ 184,475 227,150
3,500 Washington Mutual, Inc....................... 224,450 223,344
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
1,200 Wells Fargo & Co............................. $ 320,481 $ 407,325
------------ -------------
14,771,090 18,227,458
------------ -------------
HEALTH CARE-9.54%
11,000 Abbott Labs.................................. 654,313 721,188
600 Allergan, Inc................................ 21,346 20,138
900 Alza Corp. (a)............................... 24,939 28,631
9,000 American Home Products....................... 626,361 688,500
3,600 Amgen, Inc. (a).............................. 207,353 194,850
600 Bard (C.R.), Inc............................. 18,972 18,788
600 Bausch & Lomb................................ 22,796 23,775
3,700 Baxter International, Inc.................... 181,449 186,619
2,000 Becton Dickinson............................. 91,225 100,000
1,400 Biomet, Inc.................................. 25,459 35,875
2,900 Boston Scientific Corp. (a).................. 156,121 133,038
14,000 Bristol Myers Squibb......................... 967,831 1,324,750
9,350 Columbia/HCA Healthcare Corp................. 327,052 276,994
2,200 Guidant Corp................................. 94,645 136,950
5,400 Healthsouth Corp. (a)........................ 127,806 149,850
2,200 Humana, Inc. (a)............................. 48,094 45,650
15,800 Lilly (Eli) & Co............................. 768,314 1,100,075
800 Mallinckrodt Group, Inc...................... 30,745 30,400
1,100 Manor Care, Inc.............................. 33,687 38,500
6,400 Medtronic, Inc............................... 239,277 334,800
16,900 Merck & Co., Inc............................. 1,502,523 1,795,625
400 Millipore Corp............................... 16,760 13,575
18,300 Pfizer, Inc.................................. 960,074 1,364,494
7,300 Pharmacia & Upjohn, Inc...................... 271,292 267,363
10,100 Schering Plough Corp......................... 432,424 627,463
1,100 St. Jude Medical, Inc. (a)................... 44,609 33,550
4,400 Tenet Healthcare Corp. (a)................... 119,457 145,750
1,200 U S Surgical Corp............................ 41,184 35,175
2,400 United Healthcare............................ 117,865 119,250
3,700 Warner Lambert Co............................ 384,679 458,800
------------ -------------
8,558,652 10,450,416
------------ -------------
METAL & MINING-0.78%
3,200 Alcan Aluminium Ltd.......................... 105,578 88,400
2,200 Aluminum Company of America.................. 166,698 154,825
1,600 Armco, Inc. (a).............................. 7,199 7,900
900 ASARCO, Inc.................................. 26,473 20,194
5,200 Barrick Gold Corp............................ 126,423 96,850
3,000 Battle Mountain Gold Co...................... 19,448 17,625
1,600 Bethlehem Steel Corp. (a).................... 15,387 13,800
1,200 Cyprus Amax Mineral.......................... 28,678 18,450
1,900 Echo Bay Mines Ltd........................... 11,835 4,631
2,800 Freeport-McMoran Copper & Gold, Inc. 78,242 44,100
2,000 Homestake Mining Co.......................... 29,327 17,750
2,200 Inco Ltd..................................... 63,957 37,400
800 Inland Steel Industries, Inc................. 17,007 13,700
2,301 Newmont Mining Corp.......................... 86,753 67,592
1,000 Nucor Corp................................... 54,620 48,313
600 Phelps Dodge Corp............................ 44,142 37,350
3,100 Placer Dome, Inc............................. 62,425 39,331
1,200 Reynolds Metals Co........................... 76,501 72,000
1,100 USX-US Steel Group, Inc...................... 35,472 34,375
1,100 Worthington Industries, Inc.................. 22,583 18,150
------------ -------------
1,078,748 852,736
------------ -------------
</TABLE>
54
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COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
TRANSPORTATION-1.24%
1,300 AMR Corp. (a)................................ $ 125,024 $ 167,050
2,100 Burlington Northern Santa Fe................. 183,813 195,169
600 Caliber System, Inc.......................... 19,459 29,213
2,900 CSX Corp..................................... 150,507 156,600
1,000 Delta Air Lines, Inc......................... 88,615 119,000
1,800 Federal Express Corp. (a).................... 104,966 109,913
4,300 Laidlaw, Inc................................. 56,860 58,588
5,200 Norfolk Southern Corp........................ 162,068 160,225
2,850 Southwest Airlines Co........................ 52,057 70,181
3,600 Union Pacific Corp........................... 220,752 224,775
1,100 USAir Group, Inc. (a)........................ 30,222 68,750
------------ -------------
1,194,343 1,359,464
------------ -------------
UTILITIES-9.22%
6,800 Airtouch Communication (a)................... 205,639 282,625
2,500 Alltel Corp.................................. 80,026 102,656
2,600 American Electric Power, Inc................. 112,018 134,225
7,600 Ameritech Corp............................... 484,005 611,800
22,900 AT & T Corp.................................. 926,400 1,402,625
1,900 Baltimore Gas & Electric..................... 51,392 64,719
10,709 Bell Atlantic Corp........................... 749,492 974,519
13,900 Bellsouth Corp............................... 622,213 782,744
2,200 Carolina Power and Light Co.................. 78,583 93,363
2,700 Central & South West Corp.................... 64,056 73,069
2,100 Cinergy Corp................................. 69,974 80,456
3,400 Cons-Edison Co. NY........................... 107,764 139,400
2,500 Dominion Resources, Inc...................... 93,751 106,406
1,900 DTE Energy Co................................ 57,082 65,906
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ -------------
<C> <S> <C> <C>
4,953 Duke Energy Corp............................. $ 225,640 $ 274,272
5,500 Edison International......................... 121,100 149,531
3,200 Entergy Corp................................. 81,145 95,800
3,000 FirstEnergy Corp............................. 70,120 87,000
2,300 FPL Group, Inc............................... 107,425 136,131
2,100 Frontier Corp................................ 46,234 50,531
1,600 GPU, Inc..................................... 54,556 67,400
13,200 GTE Corp..................................... 595,082 689,700
3,774 Houston Industries, Inc...................... 79,387 100,719
9,900 MCI Communications Corp...................... 344,769 423,844
2,100 Niagara Mohawk Power (a)..................... 19,709 22,050
1,000 Northern States Power Co..................... 48,505 58,250
6,000 P G & E Corporation.......................... 142,567 182,625
4,000 Pacificorp................................... 85,712 109,250
2,900 Peco Energy Co............................... 67,550 70,325
2,100 PP&L Resources, Inc.......................... 46,526 50,269
3,000 Public Service Enterprise.................... 79,050 95,063
12,901 SBC Communications........................... 731,347 944,998
9,500 Southern Co.................................. 212,207 245,813
5,900 Sprint Corp.................................. 275,890 345,888
3,502 Texas Utilities Co........................... 138,242 145,552
2,900 Unicom Corp.................................. 71,437 89,175
1,800 Union Electric Co............................ 69,731 77,850
6,700 US West Communications Group................. 240,280 302,338
12,500 Worldcom, Inc. (a)........................... 362,177 378,125
------------ -------------
8,018,783 10,107,012
------------ -------------
TOTAL COMMON STOCKS.......................... $ 90,239,208 $ 104,965,255
------------ -------------
------------ -------------
</TABLE>
SHORT-TERM INVESTMENTS-3.08%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- -------------
<C> <S> <C>
INVESTMENT COMPANY-2.93%
$3,212,551 First American Prime Obligation Fund, Current
rate -- 5.47%.............................. $ 3,212,552
-------------
U.S. TREASURY BILLS-0.15%
170,000 US Treasury Bill, 5.08%, 3-26-1998 (e)....... 168,017
-------------
TOTAL SHORT-TERM INVESTMENTS................. 3,380,569
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$93,619,777) (B)........................... $ 108,345,824
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $93,674,021 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $17,394,265
Unrealized depreciation..................................... (2,722,462)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $14,671,803
- -------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 3.16% of total net assets as of December 31, 1997.
(e) Security pledged as initial margin deposit for open financial futures
position detailed below:
<TABLE>
<CAPTION>
FINANCIAL FUTURES-LONG
UNREALIZED
MARKET VALUE APPRECIATION/
NUMBER OF COVERED (DEPRECIATION)
ISSUER CONTRACT(S) BY CONTRACT(S) EXPIRATION AT 12/31/97
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Standard & Poor's 500....................................... 15 $ 3,671,625 March 98 $19,775
</TABLE>
55
<PAGE>
FORTIS SERIES FUND, INC.
BLUE CHIP STOCK SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-92.44%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
AEROSPACE AND EQUIPMENT-2.17%
26,400 AlliedSignal, Inc............................ $ 971,891 $ 1,027,950
2,600 Boeing Co.................................... 138,280 127,237
4,800 Lockheed Martin Corp......................... 452,284 472,800
1,600 Raytheon Corp. Class B....................... 93,663 80,800
------------ ------------
1,656,118 1,708,787
------------ ------------
APPAREL-0.67%
16,800 Warnaco Group Class A........................ 491,786 527,100
------------ ------------
BANKS-7.60%
12,600 Banc One Corp................................ 597,540 684,337
7,000 Chase Manhattan Corp......................... 669,748 766,500
6,100 Citicorp..................................... 697,613 771,269
11,600 First Union Corp............................. 561,193 594,500
14,900 Mellon Bank Corp............................. 592,260 903,312
7,300 NationsBank Corp............................. 405,871 443,931
20,600 Norwest Corp................................. 506,805 795,675
6,400 U.S. Bancorp................................. 606,935 716,400
900 Wells Fargo & Co............................. 243,108 305,494
------------ ------------
4,881,073 5,981,418
------------ ------------
BEVERAGE-0.83%
17,900 PepsiCo, Inc................................. 583,967 652,231
------------ ------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-0.22%
4,700 Biogen, Inc. (a)............................. 167,201 170,962
------------ ------------
BUILDING MATERIALS-0.65%
10,100 Masco Corp................................... 425,487 513,837
------------ ------------
BUSINESS SERVICES AND SUPPLIES-2.98%
20,100 First Data Corp.............................. 749,541 587,925
5,900 Galileo International, Inc................... 157,114 162,987
10,800 Omnicom Group, Inc........................... 362,343 457,650
21,116 Tyco International Ltd....................... 588,830 951,540
4,700 Wallace Computer Services, Inc............... 156,467 182,712
------------ ------------
2,014,295 2,342,814
------------ ------------
CABLE TELEVISION-0.44%
12,000 U.S. West Media Group (a).................... 235,550 346,500
------------ ------------
CHEMICALS-1.25%
4,800 Du Pont (E.I.) de Nemours & Co............... 236,606 288,300
7,600 Great Lakes Chemical Corp.................... 370,522 341,050
7,100 Hercules, Inc................................ 320,807 355,444
------------ ------------
927,935 984,794
------------ ------------
CHEMICALS-SPECIALTY-0.57%
4,400 Olin Corp.................................... 192,141 206,250
6,200 Sigma-Aldrich Corp........................... 213,561 246,450
------------ ------------
405,702 452,700
------------ ------------
COMPUTER-COMMUNICATIONS
EQUIPMENT-1.26%
10,650 Cisco Systems, Inc. (a)...................... 448,805 593,737
3,100 Dell Computer Corp. (a)...................... 188,059 260,400
3,400 Sun Microsystems, Inc. (a)................... 151,845 135,575
------------ ------------
788,709 989,712
------------ ------------
COMPUTER-SOFTWARE-5.25%
10,600 Automatic Data Processing, Inc............... 486,723 650,575
9,600 BMC Software, Inc. (a)....................... 431,683 630,000
6,800 EMC Corp. (a)................................ 182,185 186,575
6,500 Microsoft Corp. (a).......................... 746,848 840,125
3,400 National Data Corp........................... 129,217 122,825
9,600 Networks Associates, Inc. (a)................ 529,475 507,600
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
6,750 Oracle Corp. (a)............................. $ 207,840 $ 150,609
8,900 Parametric Technology Corp. (a).............. 399,934 421,637
11,500 SunGard Data Systems, Inc. (a)............... 237,287 356,500
7,500 Synopsys, Inc. (a)........................... 285,123 268,125
------------ ------------
3,636,315 4,134,571
------------ ------------
CONSUMER GOODS-1.13%
1,700 Black & Decker Corp.......................... 66,861 66,406
8,700 Colgate-Palmolive Co......................... 517,733 639,450
3,000 Unilever N.V. ADR............................ 157,054 187,312
------------ ------------
741,648 893,168
------------ ------------
CONTAINERS AND PACKAGING-0.29%
4,500 Crown Cork & Seal Company, Inc............... 246,467 225,562
------------ ------------
COSMETICS AND SUNDRIES-0.15%
1,200 Gillette Co.................................. 94,660 120,525
------------ ------------
DIVERSIFIED COMPANIES-0.32%
4,000 Textron, Inc................................. 252,576 250,000
------------ ------------
DRUGS-8.11%
4,300 Abbott Laboratories.......................... 266,167 281,919
9,600 American Home Products Corp.................. 645,038 734,400
8,100 Bristol-Myers Squibb Co...................... 677,840 766,462
10,400 Johnson & Johnson............................ 584,668 685,100
3,700 Lilly (Eli) & Co., Inc....................... 150,293 257,612
10,200 Merck & Co., Inc............................. 913,232 1,083,750
12,800 Pfizer, Inc.................................. 611,889 954,400
9,400 Schering-Plough Corp......................... 388,478 583,975
9,500 SmithKline Beecham plc ADR................... 327,952 488,656
4,400 Warner-Lambert Co............................ 454,368 545,600
------------ ------------
5,019,925 6,381,874
------------ ------------
ELECTRONIC COMPONENTS-0.12%
2,400 KLA-Tencor Corp. (a)......................... 107,283 92,700
------------ ------------
ELECTRICAL EQUIPMENT-1.06%
11,400 General Electric Co.......................... 621,383 836,475
------------ ------------
ELECTRIC PRODUCTS-0.66%
7,600 Honeywell, Inc............................... 504,221 520,600
------------ ------------
ELECTRIC-COMPONENTS AND PARTS-0.77%
6,600 Hubbell, Inc. Class B........................ 255,541 325,462
4,900 Linear Technology Corp....................... 258,078 282,362
------------ ------------
513,619 607,824
------------ ------------
ELECTRONIC-CONTROLS AND
EQUIPMENT-0.88%
7,600 Hewlett-Packard Co........................... 451,591 475,000
2,400 Sony Corp. ADR............................... 213,751 217,800
------------ ------------
665,342 692,800
------------ ------------
ELECTRONIC-SEMICONDUCTOR
AND CAPACITOR-1.48%
7,300 Intel Corp................................... 485,543 512,825
8,800 Maxim Integrated Products, Inc. (a).......... 204,779 303,600
6,100 Motorola, Inc................................ 398,398 348,081
------------ ------------
1,088,720 1,164,506
------------ ------------
FINANCE SERVICES-8.55%
9,100 American Express Co.......................... 621,820 812,175
800 Associates First Capital Corp. Class A....... 51,804 56,900
6,300 BankBoston Corp.............................. 489,659 591,806
3,300 C.I.T. Group, Inc. (a)....................... 89,100 106,425
16,600 Fannie Mae................................... 702,220 947,237
22,200 Freddie Mac.................................. 675,052 931,012
11,200 Block H&R, Inc............................... 364,541 501,900
</TABLE>
56
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
4,600 Household International, Inc................. $ 488,635 $ 586,787
3,000 Mercantile Bancorporation, Inc............... 158,401 184,500
3,200 Money Store, Inc. (The)...................... 77,664 67,200
3,500 Morgan Stanley, Dean Witter, Discover and
Co......................................... 182,568 206,938
4,200 SLM Holding Corp............................. 540,200 584,325
21,449 Travelers Group, Inc......................... 782,210 1,155,565
------------ ------------
5,223,874 6,732,770
------------ ------------
FOOD-5.00%
8,400 American Stores Co........................... 208,143 172,725
25,000 Cadbury Schweppes plc........................ 241,024 248,867
3,000 Dean Foods Co................................ 135,534 178,500
5,600 Heinz (H.J.) Co.............................. 208,503 284,550
3,800 Hershey Foods Corp........................... 210,776 235,363
5,800 Interstate Bakeries Corp..................... 103,982 216,775
7,270 JP Foodservice, Inc. (a)..................... 241,782 268,536
8,900 Nabisco Holdings Corp. Class A............... 350,801 431,094
3,300 Ralston -- Ralston Purina Group.............. 267,397 306,694
14,100 Safeway, Inc. (a)............................ 686,284 891,825
12,400 Sara Lee Corp................................ 509,975 698,275
------------ ------------
3,164,201 3,933,204
------------ ------------
GLASS AND GLASS PRODUCTS,
POTTERY-0.27%
5,700 Corning, Inc................................. 264,541 211,613
------------ ------------
HEALTH CARE SERVICES-1.96%
15,900 Healthsouth Corp. (a)........................ 363,601 441,225
700 McKesson Corp................................ 46,926 75,731
12,600 Tenet Healthcare Corp. (a)................... 362,186 417,375
12,200 United Healthcare Corp....................... 630,502 606,188
------------ ------------
1,403,215 1,540,519
------------ ------------
HOUSEHOLD PRODUCTS-1.10%
10,300 Kimberly-Clark Corp.......................... 481,406 507,919
4,500 Procter & Gamble Co.......................... 242,000 359,156
------------ ------------
723,406 867,075
------------ ------------
INSURANCE-4.41%
9,000 Ace Ltd...................................... 571,769 868,500
2,700 American International Group, Inc............ 207,287 293,625
6,600 Exel Limited................................. 319,862 418,275
7,400 Mid Ocean Ltd................................ 367,986 401,450
5,000 St. Paul Companies, Inc...................... 336,401 410,313
16,600 Travelers Property Casualty Corp............. 573,796 730,400
6,400 UNUM Corp.................................... 250,118 348,000
------------ ------------
2,627,219 3,470,563
------------ ------------
LEISURE TIME-AMUSEMENTS-1.91%
11,600 Carnival Corp. Class A....................... 457,089 642,350
8,700 Disney (Walt) Co............................. 664,213 861,844
------------ ------------
1,121,302 1,504,194
------------ ------------
MACHINERY-0.93%
2,200 ASM Lithography Holding N.V. (a)............. 154,453 148,500
15,400 Teleflex, Inc................................ 433,667 581,350
------------ ------------
588,120 729,850
------------ ------------
MACHINERY-OIL AND WELL-1.00%
6,200 Cooper Cameron Corp. (a)..................... 222,370 378,200
7,900 Halliburton Co............................... 283,594 410,306
------------ ------------
505,964 788,506
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
MACHINERY-TOOLS-1.32%
12,000 Danaher Corp................................. $ 573,409 $ 757,500
4,100 SPX Corp..................................... 203,331 282,900
------------ ------------
776,740 1,040,400
------------ ------------
MEDICAL SUPPLIES-1.03%
3,900 Baxter International, Inc.................... 219,548 196,706
4,500 St. Jude Medical, Inc. (a)................... 164,060 137,250
16,300 United States Surgical Corp.................. 560,056 477,794
------------ ------------
943,664 811,750
------------ ------------
MEDICAL TECHNOLOGY-0.83%
6,300 Boston Scientific Corp. (a).................. 364,793 289,013
7,000 Medtronic, Inc. (with rights)................ 226,970 366,188
------------ ------------
591,763 655,201
------------ ------------
METALS-FABRICATING-0.46%
8,500 Newell Co.................................... 297,114 361,250
------------ ------------
METALS-MINING AND
MISCELLANEOUS-0.31%
8,300 Newmont Mining Corp.......................... 332,177 243,813
------------ ------------
MISCELLANEOUS-1.16%
16,900 Service Corp. International.................. 535,134 624,244
6,100 Stanley Works................................ 232,385 287,844
------------ ------------
767,519 912,088
------------ ------------
OFFICE EQUIPMENT AND SUPPLIES-1.88%
9,100 Compaq Computer Corp......................... 385,012 513,581
6,700 International Business Machines Corp......... 538,667 700,569
3,600 Xerox Corp................................... 278,632 265,725
------------ ------------
1,202,311 1,479,875
------------ ------------
OIL AND GAS FIELD SERVICES-0.43%
2,800 BJ Services Co. (a).......................... 147,291 201,425
2,100 Camco International, Inc..................... 89,901 133,744
------------ ------------
237,192 335,169
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-1.65%
5,900 British Petroleum Co. plc ADR................ 407,318 470,156
7,000 Texaco, Inc.................................. 379,436 380,625
13,200 USX-Marathon Group........................... 422,391 445,500
------------ ------------
1,209,145 1,296,281
------------ ------------
OIL-REFINING-1.44%
5,100 Atlantic Richfield Co........................ 369,683 408,638
10,100 Mobil Corp................................... 666,884 729,094
------------ ------------
1,036,567 1,137,732
------------ ------------
PRINTING-0.47%
3,200 Donnelley (R.R.) & Sons Co................... 114,026 119,200
6,700 Valassis Communications, Inc................. 163,155 247,900
------------ ------------
277,181 367,100
------------ ------------
PUBLISHING-1.70%
10,500 Time Warner, Inc............................. 509,932 651,000
11,100 Tribune Co................................... 534,028 690,975
------------ ------------
1,043,960 1,341,975
------------ ------------
RAILROAD AND RAILROAD EQUIPMENT-0.67%
4,700 Burlington Northern Santa Fe Corp............ 420,229 436,806
3,000 Norfolk Southern Corp........................ 91,921 92,438
------------ ------------
512,150 529,244
------------ ------------
</TABLE>
57
<PAGE>
FORTIS SERIES FUND, INC.
BLUE CHIP STOCK SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
REAL ESTATE-INVESTMENT TRUST-1.43%
7,200 Crescent Real Estate Equities Trust.......... $ 283,039 $ 283,500
9,099 Patriot American Hospitality, Inc............ 222,525 262,165
10,000 Starwood Lodging Trust....................... 474,998 578,750
------------ ------------
980,562 1,124,415
------------ ------------
RESTAURANTS AND FRANCHISING-0.37%
6,100 McDonald's Corp.............................. 288,347 291,275
------------ ------------
RETAIL-DEPARTMENT STORES-2.82%
2,400 Dayton-Hudson Corp........................... 162,627 162,000
9,900 Federated Department Stores, Inc. (a)........ 362,162 426,319
7,900 Fred Meyer, Inc. (a)......................... 265,773 287,363
3,600 JC Penney Co., Inc........................... 215,682 217,125
3,900 Kohl's Corp. (a)............................. 150,889 265,688
10,300 Neiman-Marcus Group, Inc. (a)................ 287,110 311,575
14,000 Wal-Mart Stores, Inc......................... 457,777 552,125
------------ ------------
1,902,020 2,222,195
------------ ------------
RETAIL-MISCELLANEOUS-1.06%
13,650 Corporate Express, Inc. (a).................. 199,668 175,744
10,271 CVS Corp..................................... 489,758 657,986
------------ ------------
689,426 833,730
------------ ------------
RETAIL-SPECIALTY-2.13%
24,850 Cendant Corp. (a)............................ 658,205 854,219
11,400 General Nutrition Companies, Inc. (a)........ 260,355 387,600
7,450 Home Depot, Inc.............................. 303,550 438,619
------------ ------------
1,222,110 1,680,438
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
-------- ------------ ------------
<C> <S> <C> <C>
TELECOMMUNICATIONS-0.48%
1,700 Lucent Technologies, Inc..................... $ 100,213 $ 135,788
3,500 Nokia Corp. ADR Class A...................... 260,413 245,000
------------ ------------
360,626 380,788
------------ ------------
TELEPHONE SERVICES-0.88%
8,400 Alltel Corp.................................. 271,059 344,925
11,400 WorldCom, Inc. (a)........................... 337,539 344,850
------------ ------------
608,598 689,775
------------ ------------
TEXTILE MANUFACTURING-0.46%
8,900 Unifi, Inc................................... 345,227 362,119
------------ ------------
TOBACCO-1.17%
20,400 Philip Morris Companies, Inc................. 823,452 924,375
------------ ------------
TOYS-0.76%
16,100 Mattel, Inc.................................. 479,324 599,725
------------ ------------
UTILITIES-TELEPHONE-3.04%
9,600 AT & T Corp.................................. 406,478 588,000
12,500 MCI Communications Corp...................... 446,654 535,156
11,900 SBC Communications, Inc...................... 689,584 871,675
5,500 Vodafone Group plc ADR....................... 262,810 398,750
------------ ------------
1,805,526 2,393,581
------------ ------------
WASTE DISPOSAL-0.50%
10,100 U.S.A. Waste Services, Inc. (a).............. 362,452 396,425
------------ ------------
TOTAL COMMON STOCKS.......................... $ 60,786,977 $ 72,780,473
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-8.32%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- ------------
<C> <S> <C>
INVESTMENT COMPANY-1.02%
$ 803,121 First American Prime Obligation Fund, Current
rate -- 5.47%.............................. $ 803,121
------------
FINANCE COMPANIES-4.76%
1,000,000 Associates Financial Service Co. of Puerto
Rico, Inc., 5.74%, 2-6-1998................ 994,265
2,200,000 New York Life Cap Corp., 5.88%,
2-13-1998(e)............................... 2,184,566
575,000 Ciesco LP, 5.89%, 2-13-1998.................. 570,959
------------
3,749,790
------------
FOOD-GROCERY, MISCELLANEOUS-2.54%
2,000,000 Albertson's, Inc., 5.87%, 1-16-1998.......... 1,994,889
------------
TOTAL SHORT-TERM INVESTMENTS................. 6,547,800
------------
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$67,334,777) (b)........................... $79,328,273
------------
------------
</TABLE>
(a) Presently not paying dividend income.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $67,378,926 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $13,324,559
Unrealized depreciation..................................... (1,375,212)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $11,949,347
- -------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 4.10% of total net assets as of December 31, 1997.
(e) Commercial paper sold within the terms of a private placement memorandum,
exempt from registration under Section 4(2) of the Securities Act of 1933,
as amended, and may be sold only to dealers in that program or to other
"accredited investors". This security has been determined to be illiquid
under the guidelines established by the Board of Directors. The aggregate
value of this security at December 31, 1997, was $2,184,566, which
represents 2.77% of total net assets.
58
<PAGE>
FORTIS SERIES FUND, INC.
GLOBAL GROWTH SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-87.56%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
ARGENTINA-1.79%
35,000 Banco Rio de La Plata S.A. ADR
(a) -- BANKS............................... $ 525,000 $ 490,000
130,000 Disco S.A. ADR (a) -- RETAIL-GROCERY 2,049,750 5,841,875
------------- -------------
2,574,750 6,331,875
------------- -------------
AUSTRIA-1.29%
33,000 OMV Aktiengesellschaft (e) -- OIL-CRUDE
PETROLEUM AND GAS.......................... 3,380,433 4,564,912
------------- -------------
BELGIUM-1.56%
30,000 Barco N.V. -- TELECOMMUNICATION EQUIPMENT.... 3,715,162 5,506,088
------------- -------------
BRAZIL-1.47%
24,000 Telebras ADR (f) -- UTILITIES-TELEPHONE...... 1,514,978 2,794,500
52,000 Uniao de Bancos Brasileiros S.A. GDR
(a) -- BANKS............................... 1,755,000 1,673,750
74,000 Votorantim Celulose e Papel S.A.
ADR -- PAPER............................... 1,104,080 712,798
------------- -------------
4,374,058 5,181,048
------------- -------------
FINLAND-2.55%
50,000 Amer Group Ltd.(a) -- DIVERSIFIED
COMPANIES.................................. 1,029,160 959,511
66,100 KCI Konecranes International Corp.
(e) -- MACHINERY........................... 1,369,093 2,184,930
82,000 Nokia (AB) K Shares -- TELECOMMUNICATION
EQUIPMENT.................................. 1,611,926 5,872,756
------------- -------------
4,010,179 9,017,197
------------- -------------
FRANCE-4.40%
63,000 Cipe Group France -- BUSINESS SERVICES AND
SUPPLIES................................... 2,940,144 2,130,069
79,000 Companie Generale de Geophysique ADR
(a) -- OIL AND GAS FIELD SERVICES.......... 1,558,690 2,024,375
7,500 Groupe Danone Spons -- FOOD.................. 1,162,500 1,340,207
63,327 Rhone-Poulenc (Warrants) (a) -- CHEMICALS.... 216,168 205,813
63,327 Rhone-Poulenc Ltd S.A. ADR
(a)(f) -- CHEMICALS........................ 2,572,753 2,810,136
34,000 Sanofi S.A. -- DRUGS......................... 1,996,096 3,786,656
65,000 Stolt Comex Seaway S.A. (a) -- OIL-OFFSHORE
DRILLING................................... 1,144,363 3,250,000
------------- -------------
11,590,714 15,547,256
------------- -------------
GERMANY-3.33%
210,000 Deutsche Lufthansa AG (e) -- AIRLINES........ 3,988,706 3,947,627
165,000 Phoenix AG -- AUTOMOBILE AND MOTOR VEHICLE
PARTS...................................... 2,587,281 2,936,528
38,000 SGL Carbon AG -- STEEL AND IRON.............. 1,949,942 4,860,843
------------- -------------
8,525,929 11,744,998
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
HONG KONG-1.39%
1,900,000 First Pacific Co. Ltd. -- DIVERSIFIED
COMPANIES.................................. $ 2,212,214 $ 919,560
1,400,000 Hong Kong Land Holdings Ltd. -- REAL
ESTATE..................................... 3,833,101 2,688,000
210,000 Hutchison Whampoa Ltd. -- DIVERSIFIED
COMPANIES.................................. 1,379,712 1,317,198
------------- -------------
7,425,027 4,924,758
------------- -------------
HUNGARY-1.32%
35,000 Matav Rt. ADR (a)(f) -- TELECOMMUNICATIONS... 652,750 910,000
155,000 MOL Magyar Olaj-es Gazipari Rt. GDR
(e) -- OIL-REFINING........................ 1,255,500 3,756,998
------------- -------------
1,908,250 4,666,998
------------- -------------
ISRAEL-1.69%
84,000 ECI Telecommunications Ltd. (f) --
TELECOMMUNICATION EQUIPMENT................ 1,662,746 2,142,000
81,000 Teva Pharmaceutical Industries Ltd. ADR
(f) -- DRUGS............................... 2,755,500 3,832,313
------------- -------------
4,418,246 5,974,313
------------- -------------
ITALY-1.05%
52,000 Industrie Natuzzi S.p.A. ADR -- FURNITURE.... 765,795 1,072,500
414,000 Telecom Italia S.p.A. --
TELECOMMUNICATIONS......................... 2,709,915 2,646,046
------------- -------------
3,475,710 3,718,546
------------- -------------
JAPAN-4.13%
27,000 Canon, Inc. ADR -- OFFICE EQUIPMENT AND
SUPPLIES................................... 2,113,634 3,152,250
24,000 Kyocera Corp. -- ELECTRONIC-CONTROLS AND
EQUIPMENT.................................. 1,947,177 1,092,746
165,000 Laox Co. Ltd. -- RETAIL-ELECTRIC PRODUCTS,
RADIO, TV, AUDIO........................... 3,259,298 1,332,476
16,700 Matsushita Electric Industrial Co. Ltd.
ADR -- ELECTRONIC-CONTROLS AND EQUIPMENT... 2,772,445 2,538,400
439 Nippon Telegraph & Telephone
Corp. -- TELEPHONE SERVICES................ 3,775,023 3,781,540
30,000 Sony Corp. -- ELECTRONIC-CONTROLS AND
EQUIPMENT.................................. 1,951,042 2,676,489
------------- -------------
15,818,619 14,573,901
------------- -------------
MEXICO-0.63%
68,000 Panamerican Beverages, Inc. Class
A -- BEVERAGE.............................. 1,189,321 2,218,500
------------- -------------
NETHERLANDS-3.81%
42,000 IHC Caland N.V. -- MACHINERY-OIL AND WELL.... 955,247 2,179,529
112,500 Randstad Holdings N.V. -- BUSINESS SERVICES
AND SUPPLIES............................... 1,260,270 4,234,232
140,000 VNU-Verinigd Bezit -- PUBLISHING............. 3,256,385 3,950,224
24,000 Wolters Kluwer N.V. -- PUBLISHING............ 1,404,741 3,100,590
------------- -------------
6,876,643 13,464,575
------------- -------------
</TABLE>
59
<PAGE>
FORTIS SERIES FUND, INC.
GLOBAL GROWTH SERIES (CONTINUED)
Schedule of Investments
December 31, 1997
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
NORWAY-2.34%
28,000 Fred. Olsen Energy ASA (a) -- OIL-OFFSHORE
DRILLING................................... $ 567,863 $ 581,103
118,700 Petroleum Geo-Services ADR
(a)(f) -- MACHINERY-OIL AND WELL........... 3,323,284 7,685,825
------------- -------------
3,891,147 8,266,928
------------- -------------
PORTUGAL-0.85%
63,800 Portugal Telecom S.A. ADR (f) --
UTILITIES-TELEPHONE........................ 1,989,354 2,998,600
------------- -------------
SPAIN-2.23%
35,000 Repsol S.A. -- OIL-CRUDE PETROLEUM AND GAS... 1,448,791 1,492,631
70,000 Telefonica de Espana S.A. ADR
(f) -- UTILITIES-TELEPHONE................. 4,919,131 6,374,375
------------- -------------
6,367,922 7,867,006
------------- -------------
SWEDEN-4.02%
138,000 Ericsson (L.M.) Telephone Co. Class B ADR --
TELECOMMUNICATION EQUIPMENT................ 2,352,375 5,149,125
95,000 Hoganas AB Class B -- MISCELLANEOUS.......... 2,474,103 2,909,497
208,000 Industri Matematik International Corp.
(a) -- COMPUTER-SOFTWARE................... 1,974,108 6,136,000
------------- -------------
6,800,586 14,194,622
------------- -------------
SWITZERLAND-2.07%
2,667 Novartis AG -- DRUGS......................... 3,059,226 4,333,612
300 Roche Holdings AG, Genusschein
NVP -- DRUGS............................... 1,568,202 2,983,442
------------- -------------
4,627,428 7,317,054
------------- -------------
TAIWAN-0.27%
52,500 Taiwan Semiconductor Manufacturing Co. Ltd.
(a)(f) -- ELECTRONIC-SEMICONDUCTOR AND
CAPACITOR.................................. 1,300,950 954,844
------------- -------------
UNITED KINGDOM-6.03%
800,000 Avis Europe plc -- BUSINESS SERVICES AND
SUPPLIES................................... 1,650,954 2,277,233
491,700 Capita Group plc -- BUSINESS SERVICES AND
SUPPLIES................................... 1,050,020 2,985,369
100,000 Dr. Solomon's Group plc ADR (a) --
COMPUTER-SOFTWARE.......................... 1,981,250 3,225,000
103,500 Energis plc (a) -- TELEPHONE SERVICES........ 496,388 432,559
87,000 Glaxo Wellcome plc ADR (f) -- DRUGS.......... 3,320,936 4,165,125
155,000 JBA Holdings plc -- COMPUTER-SOFTWARE........ 2,082,828 2,623,055
675,000 Orange plc (a) -- TELEPHONE SERVICES......... 2,141,022 2,976,528
260,000 Powerscreen International plc --
CONSTRUCTION............................... 1,304,787 2,598,909
------------- -------------
14,028,185 21,283,778
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
UNITED STATES-39.34%
221,000 3Com Corp. (a)(f) -- COMPUTER-COMMUNICATIONS
EQUIPMENT.................................. $ 2,788,487 $ 7,721,188
150,000 AccuStaff, Inc. (a)(f) -- BUSINESS SERVICES
AND SUPPLIES............................... 3,418,110 3,450,000
66,000 Altera Corp. (a)(f) -- ELECTRONIC-
SEMICONDUCTOR AND CAPACITOR................ 1,388,406 2,186,250
192,500 Apple South, Inc. (f) -- RESTAURANTS AND
FRANCHISING................................ 2,430,573 2,526,563
85,000 Applebee's International, Inc. (f) --
RESTAURANTS AND FRANCHISING................ 1,454,875 1,535,313
75,000 Avant! Corp. (a)(f) -- COMPUTER-SOFTWARE..... 1,945,445 1,256,250
139,000 Bed, Bath & Beyond, Inc. (a)(f) --
RETAIL-SPECIALTY........................... 2,512,394 5,351,500
115,500 Blyth Industries, Inc. (a)(f) -- CONSUMER
GOODS...................................... 3,510,585 3,457,781
49,000 Camco International, Inc. -- OIL AND GAS
FIELD SERVICES............................. 2,097,316 3,120,688
209,000 Cendant Corp. (a)(f) -- RETAIL-SPECIALTY..... 4,912,441 7,184,375
111,300 Cheesecake Factory, Inc. (a) -- RESTAURANTS
AND FRANCHISING............................ 3,046,325 3,394,650
120,000 Cisco Systems, Inc. (a)(f) --
COMPUTER-COMMUNICATIONS EQUIPMENT.......... 917,000 6,690,000
163,200 Covance, Inc. (a)(f) -- BUSINESS SERVICES AND
SUPPLIES................................... 3,177,281 3,243,600
135,000 Data Processing Resources Corp.
(a)(f) -- BUSINESS SERVICES AND SUPPLIES... 2,708,975 3,442,500
225,000 DSP Communications, Inc. (a) -- ELECTRONIC
COMPONENTS................................. 3,833,816 2,700,000
84,000 ENSCO International, Inc. -- OIL-OFFSHORE
DRILLING................................... 2,096,396 2,814,000
52,000 Galileo International, Inc. -- BUSINESS
SERVICES AND SUPPLIES...................... 1,274,000 1,436,500
260,000 Gartner Group, Inc. Class A (a)(f) --
BUSINESS SERVICES AND SUPPLIES............. 1,300,000 9,685,000
130,000 Input/Output, Inc. (a) -- MACHINERY-OIL AND
WELL....................................... 934,975 3,859,375
106,000 Interim Services, Inc. (a) -- BUSINESS
SERVICES AND SUPPLIES...................... 2,292,250 2,742,750
28,000 Motorola, Inc. -- ELECTRONIC-SEMICONDUCTOR
AND CAPACITOR.............................. 1,925,647 1,597,750
108,000 Oracle Corp. (a) -- COMPUTER-SOFTWARE........ 968,000 2,409,750
85,000 Outback Steakhouse, Inc. (a)(f) --
RESTAURANTS AND FRANCHISING................ 2,414,413 2,443,750
100,000 Parametric Technology Corp.
(a)(f) -- COMPUTER-SOFTWARE ............... 1,506,616 4,737,500
37,300 Perkin Elmer Corp. (f) -- PRECISION
INSTRUMENTS-TEST, RESEARCH................. 2,894,093 2,650,631
126,000 Polo Ralph Lauren Corp. (a) -- APPAREL....... 3,047,870 3,063,375
120,000 R & B Falcon Corp. (a)(f) -- OIL-OFFSHORE
DRILLING................................... 2,081,252 4,207,500
55,800 R.P. Scherer Corp. (a)(f) -- DRUGS........... 2,548,570 3,403,800
</TABLE>
60
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
100,000 Service Corp. International (f) --
MISCELLANEOUS.............................. $ 2,209,570 $ 3,693,750
35,700 Steris Corp. (a)(f) -- MEDICAL SUPPLIES...... 615,731 1,722,525
170,000 Sykes Enterprises, Inc. (a)(f) -- BUSINESS
SERVICES AND SUPPLIES...................... 4,100,880 3,315,000
88,000 Synopsys, Inc. (a)(f) -- COMPUTER-SOFTWARE... 2,059,256 3,146,000
120,000 Tellabs, Inc.(a) -- TELECOMMUNICATION
EQUIPMENT.................................. 1,613,430 6,345,000
55,000 Tommy Hilfiger Corp. (a)(f) -- APPAREL....... 2,159,675 1,931,875
180,003 Total Renal Care Holdings, Inc.
(a)(f) -- HEALTH CARE SERVICES............. 4,284,899 4,950,077
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
78,000 Transocean Offshore, Inc. -- OIL-OFFSHORE
DRILLING................................... $ 2,137,040 $ 3,758,625
126,500 Vans, Inc. (a) -- SHOES AND LEATHER 1,934,188 1,913,313
37,500 Western Atlas, Inc. (a) -- OIL AND GAS FIELD
SERVICES................................... 1,338,427 2,775,000
60,000 Xilinx, Inc. (a) -- ELECTRONIC-SEMICONDUCTOR
AND CAPACITOR.............................. 1,193,640 2,103,750
66,800 Xylan Corp. (a)(f) -- COMPUTER-COMMUNICATIONS
EQUIPMENT.................................. 2,244,617 1,010,350
------------- -------------
91,317,464 138,977,604
------------- -------------
TOTAL COMMON STOCKS.......................... $ 209,606,077 $ 309,295,401
------------- -------------
------------- -------------
</TABLE>
PREFERRED STOCKS-4.66%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
-------- ------------- -------------
<C> <S> <C> <C>
BRAZIL-0.61%
93,000 Petroleo Brasileiro S.A. ADR (f) -- OIL-CRUDE
PETROLEUM AND GAS.......................... $ 2,104,125 $ 2,174,954
------------- -------------
GERMANY-4.05%
44,000 SAP AG Systeme - Computer-Software........... 1,692,811 14,295,995
------------- -------------
TOTAL PREFERRED STOCKS....................... 3,796,936 16,470,949
------------- -------------
------------- -------------
TOTAL LONG-TERM INVESTMENTS.................. $ 213,403,013 $ 325,766,350
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-7.90%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
------------ -------------
<C> <S> <C>
BANKS-3.97%
$14,016,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 14,016,000
-------------
DIVERSIFIED FINANCE-1.67%
5,914,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.44%...................... 5,914,000
-------------
U.S. GOVERNMENT AGENCY-2.26%
8,000,000 Federal Home Loan Mortagage Corp. , 5.79%,
1-26-1998.................................. 7,967,240
-------------
TOTAL SHORT-TERM INVESTMENTS................. 27,897,240
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$241,300,253) (b).......................... $ 353,663,590
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $241,300,253 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $124,507,395
Unrealized depreciation..................................... (12,144,058)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $112,363,337
- -------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets.
(e) Securities sold within the terms of a private placement memorandum, exempt
from registration under Section 144A of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or to other
"accredited investors". These investments have been identified by portfolio
management as illiquid securities:
<TABLE>
<CAPTION>
Date Acquired Shares/Par Security Cost Basis
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
October 13, 1997 210,000 Deutsche Lufthansa AG $3,988,706
March 19, 1996 27,000 KCI Konecranes International Corp. 397,927
July 12, 1996 39,100 KCI Konecranes International Corp. 971,166
November 22, 1995 155,000 MOL Magyar Olaj-es Gazipari Rt. GDR 1,255,500
May 22, 1996 33,000 OMV Aktiengesellschaft 3,380,433
</TABLE>
The aggregate value of these securities at December 31, 1997, was
$14,454,467, which represents 4.09% of total net assets.
(f) Security is fully or partially on loan at December 31, 1997. See Note 1 of
accompanying Notes to Financial Statements.
61
<PAGE>
FORTIS SERIES FUND, INC.
GROWTH STOCK SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-84.44%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
APPAREL-1.04%
209,000 Tommy Hilfiger Corp. (a)..................... $ 7,768,525 $ 7,341,125
------------- -------------
BANKS-2.10%
273,498 Banc One Corp................................ 7,340,301 14,854,360
------------- -------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-2.47%
265,200 BioChem Pharma, Inc. (a)..................... 5,891,273 5,536,050
165,000 Biogen, Inc. (a)............................. 4,408,687 6,001,875
213,400 Genzyme Corp. (a)............................ 6,380,502 5,921,850
------------- -------------
16,680,462 17,459,775
------------- -------------
BUSINESS SERVICES AND
SUPPLIES-1.54%
320,500 AccuStaff, Inc. (a).......................... 8,124,588 7,371,500
121,206 First Data Corp.............................. 3,410,267 3,545,275
------------- -------------
11,534,855 10,916,775
------------- -------------
COMPUTER-COMMUNICATIONS
EQUIPMENT-4.13%
147,900 3Com Corp. (a)............................... 1,802,799 5,167,256
431,100 Cisco Systems, Inc. (a)...................... 3,193,381 24,033,825
------------- -------------
4,996,180 29,201,081
------------- -------------
COMPUTER-SOFTWARE-12.05%
400,800 BMC Software, Inc. (a)....................... 5,037,454 26,302,500
163,200 Microsoft Corp. (a).......................... 3,519,623 21,093,600
494,900 Oracle Corp. (a)............................. 1,325,388 11,042,456
331,800 Parametric Technology Corp. (a).............. 5,818,043 15,719,025
288,419 Sterling Commerce, Inc. (a).................. 2,797,559 11,086,105
------------- -------------
18,498,067 85,243,686
------------- -------------
ELECTRONIC COMPONENTS-2.72%
463,000 Solectron Corp. (a).......................... 6,740,809 19,243,437
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND
CAPACITOR-0.74%
74,500 Intel Corp................................... 2,095,981 5,233,625
------------- -------------
FINANCE SERVICES-9.00%
60,000 American Express Co.......................... 3,462,054 5,355,000
210,800 Capital One Financial Corp................... 6,343,017 11,422,725
304,000 Fannie Mae................................... 7,588,481 17,347,000
150,000 Franklin Resources, Inc...................... 3,604,950 13,040,625
208,500 Green Tree Financial Corp.................... 6,885,227 5,460,094
403,750 MBNA Corp.................................... 6,864,397 11,027,422
------------- -------------
34,748,126 63,652,866
------------- -------------
HEALTH CARE SERVICES-6.39%
364,000 HBO & Co..................................... 6,260,504 17,472,000
252,500 Healthsouth Corp. (a)........................ 6,675,597 7,006,875
436,000 Medpartners, Inc. (a)........................ 11,146,904 9,755,500
112,200 Oxford Health Plans, Inc. (a)................ 3,928,720 1,746,112
157,400 PhyCor, Inc. (a)............................. 4,861,954 4,249,800
99,600 United Healthcare Corp....................... 4,296,512 4,948,875
------------- -------------
37,170,191 45,179,162
------------- -------------
HOTEL AND GAMING-0.79%
133,338 Promus Hotel Corp. (with rights) (a)......... 4,817,447 5,600,196
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------- -------------
<C> <S> <C> <C>
MACHINERY-OIL AND WELL-6.31%
157,500 Cooper Cameron Corp. (a)..................... $ 6,350,987 $ 9,607,500
105,000 Dresser Industries, Inc...................... 3,692,556 4,403,437
272,800 Input/Output, Inc. (a)....................... 6,249,493 8,098,750
347,100 Petroleum Geo-Services ADR (a)............... 9,028,922 22,474,725
------------- -------------
25,321,958 44,584,412
------------- -------------
MEDICAL SUPPLIES-1.14%
167,000 Steris Corp. (a)............................. 5,690,284 8,057,750
------------- -------------
MEDICAL TECHNOLOGY-2.48%
335,000 Medtronic, Inc. (with rights)................ 10,062,362 17,524,688
------------- -------------
OIL AND GAS FIELD SERVICES-2.43%
130,000 Schlumberger Ltd............................. 6,369,408 10,465,000
109,700 Smith International, Inc. (a)................ 5,362,498 6,732,838
------------- -------------
11,731,906 17,197,838
------------- -------------
OIL-OFFSHORE DRILLING-6.77%
343,000 ENSCO International, Inc..................... 9,471,834 11,490,500
296,000 Noble Drilling Corp. (a)..................... 5,936,211 9,065,000
452,600 R & B Falcon Corp. (a)....................... 8,184,848 15,869,288
74,000 Stolt Comex Seaway S.A. (a).................. 4,477,000 3,700,000
160,600 Transocean Offshore, Inc..................... 5,022,892 7,738,913
------------- -------------
33,092,785 47,863,701
------------- -------------
POLLUTION CONTROL-0.73%
172,300 U.S. Filter Corp. (a)........................ 5,922,419 5,158,231
------------- -------------
RECREATION EQUIPMENT-0.20%
49,900 Callaway Golf Co............................. 1,774,615 1,425,269
------------- -------------
RESTAURANTS AND FRANCHISING-1.26%
231,700 Starbucks Corp. (a).......................... 3,921,277 8,891,488
------------- -------------
RETAIL-DEPARTMENT STORES-0.82%
85,400 Kohl's Corp. (a)............................. 1,372,378 5,817,875
------------- -------------
RETAIL-SPECIALTY-9.00%
629,968 Cendant Corp. (a)............................ 13,189,803 21,655,150
163,500 Dollar Tree Stores, Inc. (a)................. 5,286,500 6,764,813
250,800 Home Depot, Inc.............................. 7,113,402 14,765,850
238,975 Office Depot, Inc. (a)....................... 4,752,504 5,720,464
530,125 Staples, Inc. (a)............................ 7,902,361 14,710,969
------------- -------------
38,244,570 63,617,246
------------- -------------
TELECOMMUNICATION
EQUIPMENT-5.85%
293,800 ADC Telecommunications, Inc. (a)............. 4,771,039 12,266,150
244,250 Andrew Corp. (with rights) (a)............... 5,441,561 5,862,000
439,800 Tellabs, Inc.(a)............................. 2,975,820 23,254,425
------------- -------------
13,188,420 41,382,575
------------- -------------
TELEPHONE SERVICES-3.90%
911,900 WorldCom, Inc. (a)........................... 11,490,249 27,584,975
------------- -------------
WASTE DISPOSAL-0.58%
105,000 U.S.A. Waste Services, Inc. (a).............. 3,719,917 4,121,250
------------- -------------
TOTAL COMMON STOCKS.......................... $ 317,924,084 $ 597,153,386
------------- -------------
------------- -------------
</TABLE>
62
<PAGE>
SHORT-TERM INVESTMENTS-15.55%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
------------ -------------
<C> <S> <C>
BANKS-4.70%
$33,255,595 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 33,255,595
-------------
DIVERSIFIED FINANCE-1.58%
11,146,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.44%...................... 11,146,000
-------------
U.S. GOVERNMENT AGENCY-9.27%
16,400,000 Federal Home Loan Mortgage Corp., 5.72%,
1-9-1998................................... 16,376,999
7,000,000 Federal Home Loan Mortgage Corp., 5.77%,
2-5-1998................................... 6,960,450
20,800,000 Federal National Mortgage Assoc., 5.61%,
1-5-1998................................... 20,784,140
21,500,000 Federal National Mortgage Assoc., 5.82%,
1-21-1998.................................. 21,428,489
-------------
65,550,078
-------------
TOTAL SHORT-TERM INVESTMENTS................. 109,951,673
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$427,875,757) (b).......................... $ 707,105,059
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $427,875,757 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $290,578,599
Unrealized depreciation..................................... (11,349,297)
- --------------------------------------------------------------------------
Net unrealized appreciation................................. $279,229,302
- --------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 5.18% of total net assets as of December 31, 1997.
63
<PAGE>
FORTIS SERIES FUND, INC.
INTERNATIONAL STOCK SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-96.61%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
--------- ------------ ------------
<C> <S> <C> <C>
AUSTRALIA-1.88%
232,100 Westpac Banking Corp. Ltd. -- BANKS.......... $ 1,028,824 $ 1,484,460
------------ ------------
DENMARK-1.08%
11,600 Unidanmark A/S 'A' Registered -- BANKS 535,884 852,143
------------ ------------
FINLAND-0.91%
76,800 Merita Ltd. OY A Shares -- BANKS............. 393,689 420,282
15,000 UPM-Kymmene Corp. -- PAPER................... 307,943 300,249
------------ ------------
701,632 720,531
------------ ------------
FRANCE-13.00%
10,610 Alcatel Alsthom CIE Generale D'Electricite
S.A. -- TELECOMMUNICATIONS................. 1,002,308 1,349,208
17,200 Axa S.A. -- INSURANCE........................ 1,123,492 1,331,487
19,500 Banque Nationale de Paris -- BANKS........... 805,098 1,036,934
12,300 CIE Generale Des Eaux --
TELECOMMUNICATIONS......................... 1,425,853 1,717,460
6,260 Compagnie De Saint-Gobain -- BUILDING
MATERIALS.................................. 829,858 889,698
15,200 Elf Aquitaine -- OIL-CRUDE PETROLEUM AND
GAS........................................ 1,286,785 1,768,658
6,300 Havas S.A. -- ADVERTISING-PUBLIC RELATIONS... 449,990 453,451
38,888 Rhone Poulenc -- BUILDING MATERIALS.......... 1,100,565 1,742,760
------------ ------------
8,023,949 10,289,656
------------ ------------
GERMANY-12.15%
19,000 Daimler Benz AG -- AUTOMOBILE
MANUFACTURERS.............................. 1,190,736 1,342,015
12,100 Deutsche Bank AG -- BANKS.................... 613,986 846,576
19,900 Dresdner Bank AG -- BANKS.................... 838,068 905,329
34,800 Hoechst AG -- CHEMICALS...................... 1,111,940 1,205,778
2,660 Mannesmann AG -- MACHINERY................... 958,511 1,335,887
30,200 Metallgesellschaft AG (a) -- METALS-MINING
AND MISCELLANEOUS.......................... 639,636 552,590
22,520 Metro AG -- CONSUMER GOODS................... 909,821 799,078
3,700 Thyssen AG -- STEEL AND IRON................. 747,065 790,193
3,350 Viag AG -- ELECTRIC PRODUCTS................. 1,409,097 1,835,191
------------ ------------
8,418,860 9,612,637
------------ ------------
HONG KONG-2.58%
45,605 HSBC Holdings plc -- BANKS................... 851,716 1,124,194
74,500 Swire Pacific Ltd. "A" -- DIVERSIFIED
COMPANIES.................................. 600,798 408,640
233,000 Wharf Holdings Ltd. -- REAL ESTATE........... 632,322 511,211
------------ ------------
2,084,836 2,044,045
------------ ------------
ITALY-4.17%
217,300 Credito Italiano -- BANKS.................... 441,309 670,460
197,200 Ente Nazionale Idrocarbuiri S.p.A. --
OIL-REFINING............................... 977,652 1,118,733
341,900 Telecom Italia S.p.A. -- UTILITIES-
TELEPHONE.................................. 1,237,365 1,508,385
------------ ------------
2,656,326 3,297,578
------------ ------------
JAPAN-21.12%
39,000 Honda Motor -- AUTOMOBILE MANUFACTURERS...... 1,095,707 1,436,767
17,000 Ito-Yokado Co. Ltd. -- FOOD.................. 815,809 869,474
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------ ------------
<C> <S> <C> <C>
144 Japan Tobacco, Inc. -- TOBACCO............... $ 1,092,185 $ 1,025,557
105,000 Matsushita Electric Industrial Co. --
ELECTRIC PRODUCTS.......................... 1,850,456 1,542,442
205,000 Mitsubishi Heavy Industries Ltd. --
AUTOMOBILE MANUFACTURERS................... 1,352,220 857,707
57,000 Mitsui Marine & Fire Ins. -- INSURANCE....... 404,697 291,968
12,600 Nintendo -- TOYS............................. 901,597 1,240,414
159 Nippon Telegraph & Telephone Corp. --
TELEPHONE SERVICES......................... 1,443,806 1,369,624
41,000 Omron Corp. -- ELECTRONIC-CONTROLS AND
EQUIPMENT.................................. 737,397 643,280
17,800 Orix Corp. -- LEASING........................ 676,771 1,245,798
11,550 Promise Co. Ltd. -- FINANCE SERVICES......... 475,881 643,142
141,000 Ricoh Corp. Ltd. -- OFFICE EQUIPMENT AND
SUPPLIES................................... 1,633,226 1,756,792
119,000 Sekisui Chemical Co. -- CHEMICALS............ 1,269,299 606,802
20,600 Sony Corp. -- ELECTRONIC-CONTROLS AND
EQUIPMENT.................................. 1,376,269 1,837,856
258,000 Sumitomo Trust & Bank -- BANKS............... 2,381,537 1,345,351
------------ ------------
17,506,857 16,712,974
------------ ------------
MALAYSIA-0.34%
109,000 Genting Berhad -- LEISURE TIME-AMUSEMENTS.... 476,551 273,034
------------ ------------
NETHERLANDS-3.15%
3,800 Heineken NV -- BEVERAGE...................... 715,251 661,692
19,300 Philips Electronics NV -- ELECTRIC
PRODUCTS................................... 1,031,746 1,157,680
12,400 Royal Dutch Petroleum Co. NY
Shares -- OIL-REFINING..................... 488,661 671,925
------------ ------------
2,235,658 2,491,297
------------ ------------
SPAIN-1.70%
47,200 Telefonica de Espana -- TELECOMMUNICATIONS... 1,194,085 1,347,108
------------ ------------
SWEDEN-3.87%
41,867 Astra AB -- CLASS B SHARES -- DRUGS.......... 613,085 704,430
12,400 Electrolux AB 'B' Free -- HOUSEHOLD
PRODUCTS................................... 661,057 861,115
73,300 Nordbanken Holding AB -- BANKS............... 406,791 414,800
31,400 Svenska Handelsbanken -- BANKS............... 674,264 1,086,326
------------ ------------
2,355,197 3,066,671
------------ ------------
SWITZERLAND-9.07%
8,060 Credit Suisse Group -- REG -- BANKS.......... 1,094,915 1,248,884
780 Holderbank Financiere Glaris AG -- BUILDING
MATERIALS.................................. 736,111 637,455
575 Nestle S.A. Registered -- FOOD............... 646,547 862,963
995 Novartis AG -- DRUGS......................... 961,750 1,616,777
690 S.M.H. AG -- MISCELLANEOUS................... 434,122 381,297
494 SGS Societe Generale de Surveillance Holding
S.A. -- BANKS.............................. 965,942 948,339
3,110 Zurich Versicherungs -- INSURANCE............ 967,672 1,484,049
------------ ------------
5,807,059 7,179,764
------------ ------------
UNITED KINGDOM-21.59%
120,400 B.A.T. Industries plc -- TOBACCO............. 988,672 1,098,499
87,483 British Aerospace plc -- AEROSPACE AND
EQUIPMENT.................................. 1,194,159 2,506,074
</TABLE>
64
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------ ------------
<C> <S> <C> <C>
64,100 British Petroleum Co. plc -- OIL-
MISCELLANEOUS.............................. $ 864,929 $ 844,288
257,300 BTR plc -- MISCELLANEOUS..................... 1,047,220 789,569
120,910 Cadbury Schweppes plc -- FOOD................ 1,000,982 1,203,619
151,406 Diageo, Plc -- RETAIL-DEPARTMENT STORES 1,222,357 1,391,354
67,320 EMI Group plc -- MISCELLANEOUS............... 725,052 580,703
92,500 General Electric Co. plc -- ELECTRIC
PRODUCTS................................... 542,498 600,427
55,400 Granada Group plc -- DIVERSIFIED COMPANIES... 733,626 854,124
337,984 Lucasvarity plc -- AUTOMOBILE AND MOTOR
VEHICLE PARTS.............................. 1,135,364 1,198,436
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------ ------------
<C> <S> <C> <C>
94,800 Mirror Group plc -- PUBLISHING............... $ 290,173 $ 306,508
150,000 National Power plc -- UTILITIES-ELECTRIC..... 1,143,807 1,487,030
82,000 National Westminster Bank -- BANKS........... 1,149,624 1,362,046
76,300 Prudential Corp. plc -- INSURANCE............ 711,883 886,968
130,200 Rank Group plc -- LEISURE TIME-AMUSEMENTS.... 825,547 747,131
143,600 Unilever plc -- CONSUMER GOODS............... 727,443 1,232,197
------------ ------------
14,303,336 17,088,973
------------ ------------
TOTAL COMMON STOCKS.......................... $ 67,329,054 $ 76,460,871
------------ ------------
------------ ------------
</TABLE>
PREFERRED STOCKS-1.06%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
--------- ------------ ------------
<C> <S> <C> <C>
ITALY-1.06%
183,500 Fiat S.p.A. -- AUTOMOBILE MANUFACTURERS...... $ 272,005 $ 280,232
191,070 Fiat S.p.A. ORD -- AUTOMOBILE
MANUFACTURERS.............................. 537,704 556,028
------------ ------------
809,709 836,260
------------ ------------
TOTAL PREFERRED STOCKS....................... 809,709 836,260
------------ ------------
------------ ------------
TOTAL LONG-TERM INVESTMENTS.................. $68,138,763 $77,297,131
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-2.18%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- ------------
<C> <S> <C>
BANKS-2.18%
$1,728,576 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 1,728,576
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$69,867,339) (b)........................... $79,025,707
------------
------------
</TABLE>
(a) Presently not paying dividend income.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $69,912,558 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $13,407,985
Unrealized depreciation..................................... (4,294,836)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $ 9,113,149
- -------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets.
65
<PAGE>
FORTIS SERIES FUND, INC.
AGGRESSIVE GROWTH SERIES
Schedule of Investments
December 31, 1997
COMMON STOCKS-88.28%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
--------- ------------ -------------
<C> <S> <C> <C>
AEROSPACE AND EQUIPMENT-0.49%
24,000 Hexcel Corporation (a)....................... $ 757,632 $ 598,500
------------ -------------
APPAREL-0.95%
53,000 North Face, Inc. (a)(e)...................... 1,226,416 1,166,000
------------ -------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-1.06%
62,000 BioChem Pharma, Inc. (a)..................... 1,421,725 1,294,250
------------ -------------
BROADCASTING-1.26%
30,000 HSN, Inc. (a)................................ 1,045,876 1,545,000
------------ -------------
BROKERAGE AND INVESTMENT-0.55%
29,400 E*TRADE Group, Inc. (a)(e)................... 1,070,074 676,200
------------ -------------
BUSINESS SERVICES AND
SUPPLIES-13.07%
27,920 AccuStaff, Inc. (a).......................... 696,080 642,160
121,700 Acxiom Corp. (a)............................. 1,559,387 2,342,725
34,000 APAC TeleServices, Inc. (a)(e)............... 312,414 459,000
7,200 Catalina Marketing Corp. (a)................. 200,394 333,000
32,000 COREstaff, Inc. (a).......................... 853,611 848,000
46,000 Corrections Corp. of America (a)............. 1,448,704 1,704,875
52,000 Covance, Inc. (a)............................ 999,211 1,033,500
30,900 Envoy Corp. (a)(e)........................... 1,056,232 899,962
30,800 Fastenal Co. (e)............................. 1,089,700 1,178,100
26,000 Fiserv, Inc. (a)............................. 971,656 1,277,250
1,000 Hall, Kinion & Associates, Inc. (a).......... 15,000 21,875
13,350 Paychex, Inc................................. 382,348 675,844
73,000 Romac International, Inc. (a)................ 941,325 1,783,937
26,000 Saville Systems, PLC. (a).................... 780,000 1,079,000
30,600 Snyder Communications, Inc. (a).............. 615,442 1,116,900
31,500 Sykes Enterprises, Inc. (a).................. 953,487 614,250
------------ -------------
12,874,991 16,010,378
------------ -------------
COMPUTER-COMMUNICATIONS
EQUIPMENT-1.83%
40,200 Cisco Systems, Inc. (a)...................... 474,700 2,241,150
------------ -------------
COMPUTER-SOFTWARE-15.36%
28,000 Aspen Technology, Inc. (a)................... 715,546 959,000
28,000 HNC Software, Inc. (a)....................... 926,744 1,204,000
36,200 Indus International (a)...................... 653,252 262,450
34,000 Industri Matematik International Corp. (a)... 680,000 1,003,000
33,800 Legato Systems, Inc. (a)..................... 583,150 1,487,200
21,000 Netscape Communications Corp. (a)............ 999,762 511,875
11,000 Networks Associates, Inc. (a)................ 694,719 581,625
49,600 Parametric Technology Corp. (a).............. 1,638,711 2,349,800
1,200 Pegasus Systems, Inc. (a).................... 15,600 17,850
30,000 PeopleSoft, Inc. (a)......................... 909,375 1,170,000
36,000 Platinum Technology, Inc. (a)................ 505,640 1,017,000
13,500 Scopus Technology, Inc. (a).................. 187,029 162,000
26,200 Siebel Systems, Inc. (a)..................... 661,756 1,095,487
54,778 Sterling Commerce, Inc. (a).................. 1,372,022 2,105,524
27,100 Sterling Software, Inc. (a).................. 649,038 1,111,100
42,800 Synopsys, Inc. (a)........................... 1,331,013 1,530,100
30,000 Vantive Corp. (a)............................ 910,758 757,500
29,175 Veritas Software Corp. (a)................... 890,183 1,487,925
------------ -------------
14,324,298 18,813,436
------------ -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------ -------------
<C> <S> <C> <C>
CONSUMER GOODS-1.03%
42,000 Blyth Industries, Inc. (a)(e)................ $ 1,016,960 $ 1,257,375
------------ -------------
EDUCATIONAL SERVICES-1.74%
45,000 Apollo Group, Inc., Class A (a).............. 872,434 2,126,250
------------ -------------
ELECTRONIC COMPONENTS-0.42%
39,800 DSP Communications, Inc. (a)................. 618,375 477,600
1,300 Sawtek, Inc. (a)............................. 43,550 34,287
------------ -------------
661,925 511,887
------------ -------------
ELECTRICAL EQUIPMENT-1.28%
46,500 Chicago Miniature Lamp, Inc. (a)............. 1,311,000 1,569,375
------------ -------------
ELECTRONIC-SEMICONDUCTOR AND
CAPACITOR-0.77%
39,000 International Rectifier Corp. (a)............ 833,005 460,687
55,000 Standard Microsystems Corp. (a).............. 933,056 477,812
------------ -------------
1,766,061 938,499
------------ -------------
FINANCE SERVICES-0.24%
16,000 Franchise Mortgage Acceptance Company (a).... 288,000 294,000
------------ -------------
HEALTH CARE SERVICES-5.42%
58,700 ABR Information Services, Inc. (a)........... 1,384,309 1,401,463
114,000 American Oncology Resources, Inc. (a) 1,495,925 1,824,000
22,000 Assisted Living Concepts, Inc. (a)........... 396,762 434,500
52,500 Omnicare, Inc................................ 891,128 1,627,500
20,000 Parexel International Corp. (a).............. 337,500 740,000
40,000 Pharmaceutical Products Development, Inc.
(a)........................................ 1,043,045 615,000
------------ -------------
5,548,669 6,642,463
------------ -------------
MACHINERY-OIL AND WELL-4.82%
92,000 Input/Output, Inc. (a)....................... 1,512,700 2,731,250
49,000 Petroleum Geo-Services ADR (a)............... 1,442,883 3,172,750
------------ -------------
2,955,583 5,904,000
------------ -------------
MEDICAL SUPPLIES-3.08%
26,000 Arterial Vascular Engineering, Inc. (a)...... 700,912 1,690,000
17,000 Sofamor/Danek Group, Inc. (a)................ 836,859 1,106,063
19,000 Spine Tech, Inc. (a)......................... 914,055 977,312
------------ -------------
2,451,826 3,773,375
------------ -------------
MEDICAL TECHNOLOGY-0.42%
13,800 Stryker Corp................................. 419,175 514,050
------------ -------------
MISCELLANEOUS-0.65%
49,000 BMC Industries, Inc.......................... 1,520,284 790,125
------------ -------------
OIL AND GAS FIELD SERVICES-0.86%
16,500 Camco International, Inc..................... 710,064 1,050,844
------------ -------------
OIL-OFFSHORE DRILLING-3.31%
42,000 Marine Drilling Companies, Inc. (a).......... 677,250 871,500
48,000 R & B Falcon Corp. (a)(e).................... 836,394 1,683,000
30,000 Stolt Comex Seaway S.A. (a).................. 785,450 1,500,000
------------ -------------
2,299,094 4,054,500
------------ -------------
PRECISION INSTRUMENTS-TEST,
RESEARCH-0.64%
20,000 Veritas DGC, Inc. (a)........................ 810,055 790,000
------------ -------------
</TABLE>
66
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------ -------------
<C> <S> <C> <C>
PRINTING-0.70%
16,000 Applied Graphics Technologies, Inc. (a) $ 800,458 $ 852,000
------------ -------------
RESTAURANTS AND FRANCHISING-2.35%
56,900 Applebee's International, Inc................ 1,366,177 1,027,756
16,200 Cracker Barrel Old Country Store, Inc. 419,514 540,675
37,600 Papa John's International, Inc. (a).......... 997,600 1,311,300
------------ -------------
2,783,291 2,879,731
------------ -------------
RETAIL-MISCELLANEOUS-0.47%
45,050 Corporate Express, Inc. (a).................. 623,919 580,019
------------ -------------
RETAIL-SPECIALTY-10.56%
53,000 Bed, Bath & Beyond, Inc. (a)................. 1,139,675 2,040,500
45,900 Cendant Corp. (a)............................ 985,999 1,577,813
43,500 Dollar Tree Stores, Inc. (a)................. 1,406,500 1,799,813
76,100 Gadzooks, Inc. (a)(e)........................ 1,466,158 1,598,100
41,000 General Nutrition Companies, Inc. (a)........ 915,357 1,394,000
36,000 Just for Feet, Inc. (a)...................... 1,252,500 472,500
34,000 The Wet Seal, Inc. (a)....................... 709,750 1,003,000
57,000 Viking Office Products, Inc. (a)............. 894,086 1,243,313
80,400 West Marine, Inc. (a)(e)..................... 1,305,922 1,798,950
------------ -------------
10,075,947 12,927,989
------------ -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
--------- ------------ -------------
<C> <S> <C> <C>
TELECOMMUNICATION EQUIPMENT-3.38%
25,000 ADC Telecommunications, Inc. (a)............. $ 403,225 $ 1,043,750
21,300 Andrew Corp. (with rights) (a)............... 498,823 511,200
60,000 Pairgain Technologies, Inc. (a).............. 1,705,523 1,162,500
26,800 Tellabs, Inc.(a)............................. 311,000 1,417,050
------------ -------------
2,918,571 4,134,500
------------ -------------
TELEPHONE SERVICES-9.72%
32,250 Brooks Fiber Properties, Inc. (a)............ 934,159 1,773,750
48,400 ICG Communications, Inc. (a)(e).............. 768,834 1,318,900
45,000 Intermedia Communications, Inc. (a)(e) 759,375 2,733,750
67,200 LCI International, Inc. (a).................. 1,126,870 2,066,400
50,000 McLeod, Inc. Class A (a)..................... 1,190,951 1,600,000
27,000 Star Telecommunications, Inc. (a)............ 496,500 867,375
51,060 WorldCom, Inc. (a)........................... 529,671 1,544,565
------------ -------------
5,806,360 11,904,740
------------ -------------
WASTE DISPOSAL-1.85%
57,620 U.S.A. Waste Services, Inc. (a).............. 1,019,925 2,261,585
------------ -------------
TOTAL COMMON STOCKS.......................... $ 79,855,313 $ 108,102,221
------------ -------------
------------ -------------
</TABLE>
SHORT-TERM INVESTMENTS-11.72%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- -------------
<C> <S> <C>
BANKS-4.26%
$5,223,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.56%............. $ 5,223,000
-------------
DIVERSIFIED FINANCE-0.62%
760,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.44%...................... 760,000
-------------
U.S. GOVERNMENT AGENCY-6.84%
8,400,000 Federal National Mortgage Assoc., 5.82%,
1-21-1998.................................. 8,372,070
-------------
TOTAL SHORT-TERM INVESTMENTS................. 14,355,070
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$94,210,383) (b)........................... $ 122,457,291
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At December 31, 1997, the cost of securities for federal income tax
purposes was $94,210,383 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $35,395,449
Unrealized depreciation..................................... (7,148,541)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $28,246,908
- -------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 5.52% of total net assets as of December 31, 1997.
(e) Security is fully or partially on loan at December 31, 1997. See Note 1 of
accompanying Notes to Financial Statements.
67
<PAGE>
FORTIS SERIES FUND, INC.
Statements of Assets and Liabilities
December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY U.S. GOV'T. DIVERSIFIED GLOBAL HIGH ASSET
MARKET SECURITIES INCOME BOND YIELD ALLOCATION
SERIES SERIES SERIES SERIES SERIES SERIES
------------ ------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities,
as detailed in the
accompanying schedules, at
market* (Note 1).......... $57,311,050 $ 143,543,061 $ 104,594,794 $19,423,087 $59,645,944 $481,615,967
Cash on deposit with
custodian................. 50,879 109 433 -- 29,254 11,614
Foreign currency on deposit
with custodian............ -- -- -- 316,033 -- --
Collateral for securities
lending transactions (Note
1)........................ -- -- -- -- -- --
Receivables:
Unrealized appreciation on
forward foreign currency
contracts-net (Note 1
and 3).................. -- -- -- 45,779 -- --
Investment securities
sold.................... -- -- 33,713 810,019 19,612 66,064
Interest and dividends.... 10,747 1,007,089 1,449,731 536,350 1,089,211 2,556,997
Subscriptions of capital
stock................... -- -- 14,483 431 31,836 99,812
------------ ------------- ------------- ------------ ------------ ------------
TOTAL ASSETS.................. 57,372,676 144,550,259 106,093,154 21,131,699 60,815,857 484,350,454
------------ ------------- ------------- ------------ ------------ ------------
LIABILITIES:
Bank overdraft.............. -- -- -- -- -- --
Unrealized depreciation on
forward foreign currency
contracts-net (Note 1 and
3)........................ -- -- -- -- -- --
Payable upon return of
securities loaned (Note
1)........................ -- -- -- -- -- --
Payable for investment
securities purchased...... -- 1,486,750 826,515 396,580 1,545,000 1,643,250
Redemptions of capital
stock..................... 333,087 906,010 -- 11,760 -- 169,858
Payable for investment
advisory and management
fees (Note 2)............. 14,611 56,618 42,293 13,266 24,939 192,400
Accounts payable and accrued
expenses.................. 15,743 31,017 24,406 18,124 17,478 64,917
------------ ------------- ------------- ------------ ------------ ------------
TOTAL LIABILITIES............. 363,441 2,480,395 893,214 439,730 1,587,417 2,070,425
------------ ------------- ------------- ------------ ------------ ------------
NET ASSETS:
Net proceeds of capital
stock, par value $.01 per
share-authorized
20,000,000,000
shares;**................. 53,776,965 149,014,644 103,800,815 21,038,404 55,640,883 394,367,219
Unrealized appreciation
(depreciation) of
investments in securities
and other assets and
liabilities denominated in
foreign currency.......... -- 3,946,978 3,535,223 (216,012) (2,160,340) 85,868,970
Undistributed (excess of
distributions over) net
investment income......... 3,313,609 8,884,763 7,342,378 (201,281) 5,343,079 180,729
Accumulated net realized
gain (loss) from sale of
investments and foreign
currency.................. (81,339) (19,776,521) (9,478,476) 70,858 404,818 1,863,111
------------ ------------- ------------- ------------ ------------ ------------
TOTAL NET ASSETS.............. $57,009,235 $ 142,069,864 $ 105,199,940 $20,691,969 $59,228,440 $482,280,029
------------ ------------- ------------- ------------ ------------ ------------
NET ASSET VALUE PER SHARE..... $11.03 $10.68 $11.98 $10.65 $10.77 $17.62
------------ ------------- ------------- ------------ ------------ ------------
*Cost......................... $57,311,050 $ 139,596,083 $ 101,059,571 $19,669,518 $61,806,284 $395,746,997
**Outstanding shares.......... 5,168,568 13,301,888 8,778,784 1,943,330 5,499,676 27,372,975
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
68
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL ASSET GROWTH & S&P BLUE CHIP GLOBAL
ALLOCATION VALUE INCOME 500 INDEX STOCK GROWTH
SERIES SERIES SERIES SERIES SERIES SERIES
------------ ------------ ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, as
detailed in the accompanying
schedules, at market* (Note
1).......................... $52,387,365 $54,929,648 $ 244,275,838 $ 108,345,824 $79,328,273 $ 353,663,590
Cash on deposit with
custodian................... -- 42 9,441 -- -- 4,691
Foreign currency on deposit
with custodian.............. 544,963 -- -- -- -- --
Collateral for securities
lending transactions (Note
1).......................... -- -- 22,880,235 -- -- 93,459,385
Receivables:
Unrealized appreciation on
forward foreign currency
contracts-net (Note 1 and
3)........................ 48,933 -- -- -- -- --
Investment securities
sold...................... -- -- 149,399 29,602 43,937 --
Interest and dividends...... 525,566 73,111 633,247 154,595 100,289 250,155
Subscriptions of capital
stock..................... 15,884 98,248 60,383 1,119,734 232,048 --
------------ ------------ ------------- ------------- ------------ -------------
TOTAL ASSETS.................. 53,522,711 55,101,049 268,008,643 109,649,755 79,704,547 447,377,821
------------ ------------ ------------- ------------- ------------ -------------
LIABILITIES:
Bank overdraft.............. -- -- -- 200 -- --
Unrealized depreciation on
forward foreign currency
contracts-net (Note 1 and
3)........................ -- -- -- -- -- --
Payable upon return of
securities loaned (Note
1)........................ -- -- 22,880,335 -- -- 93,459,385
Payable for investment
securities purchased...... 969,297 -- -- 17,308 903,415 89,460
Redemptions of capital
stock..................... -- -- -- -- -- 287,642
Payable for investment
advisory and management
fees (Note 2)............. 39,580 31,582 130,539 35,824 57,283 208,089
Accounts payable and accrued
expenses.................. 31,442 11,565 27,402 24,656 15,242 78,675
------------ ------------ ------------- ------------- ------------ -------------
TOTAL LIABILITIES............. 1,040,319 43,147 23,038,276 77,988 975,940 94,123,251
------------ ------------ ------------- ------------- ------------ -------------
NET ASSETS:
Net proceeds of capital
stock, par value $.01 per
share-authorized
20,000,000,000
shares;**................. 46,194,373 50,082,063 182,309,438 94,696,902 67,072,044 241,431,401
Unrealized appreciation
(depreciation) of
investments in securities
and other assets and
liabilities denominated in
foreign currency.......... 5,572,264 4,505,406 62,574,218 14,745,822 11,993,444 112,356,125
Undistributed (excess of
distributions over) net
investment income......... 115,734 -- -- 4,654 24,616 390,257
Accumulated net realized
gain (loss) from sale of
investments and foreign
currency.................. 600,021 470,433 86,711 124,389 (361,497) (923,213)
------------ ------------ ------------- ------------- ------------ -------------
TOTAL NET ASSETS.............. $52,482,392 $55,057,902 $ 244,970,367 $ 109,571,767 $78,728,607 $ 353,254,570
------------ ------------ ------------- ------------- ------------ -------------
NET ASSET VALUE PER SHARE..... $13.29 $13.42 $18.76 $14.93 $14.76 $20.29
------------ ------------ ------------- ------------- ------------ -------------
*Cost......................... $46,848,596 $50,424,242 $ 181,701,620 $ 93,619,777 $67,334,777 $ 241,300,253
**Outstanding shares.......... 3,949,879 4,102,492 13,061,059 7,339,084 5,335,633 17,409,548
<CAPTION>
GROWTH INTERNATIONAL AGGRESSIVE
STOCK STOCK GROWTH
SERIES SERIES SERIES
------------- ------------ ------------
<S> <C> <C> <C>
ASSETS:
Investments in securities, as
detailed in the accompanying
schedules, at market* (Note
1).......................... $ 707,105,059 $79,025,707 $122,457,291
Cash on deposit with
custodian................... 266 -- 352
Foreign currency on deposit
with custodian.............. -- -- --
Collateral for securities
lending transactions (Note
1).......................... -- -- 14,743,210
Receivables:
Unrealized appreciation on
forward foreign currency
contracts-net (Note 1 and
3)........................ -- -- --
Investment securities
sold...................... -- -- --
Interest and dividends...... 414,460 259,156 34,480
Subscriptions of capital
stock..................... 536,637 61,580 52,486
------------- ------------ ------------
TOTAL ASSETS.................. 708,056,422 79,346,443 137,287,819
------------- ------------ ------------
LIABILITIES:
Bank overdraft.............. -- -- --
Unrealized depreciation on
forward foreign currency
contracts-net (Note 1 and
3)........................ -- 379 --
Payable upon return of
securities loaned (Note
1)........................ -- -- 14,743,210
Payable for investment
securities purchased...... 436,797 108,892 --
Redemptions of capital
stock..................... -- -- --
Payable for investment
advisory and management
fees (Note 2)............. 364,997 56,438 68,836
Accounts payable and accrued
expenses.................. 99,842 38,306 20,613
------------- ------------ ------------
TOTAL LIABILITIES............. 901,636 204,015 14,832,659
------------- ------------ ------------
NET ASSETS:
Net proceeds of capital
stock, par value $.01 per
share-authorized
20,000,000,000
shares;**................. 391,374,022 70,102,082 109,700,349
Unrealized appreciation
(depreciation) of
investments in securities
and other assets and
liabilities denominated in
foreign currency.......... 279,229,302 9,153,347 28,246,908
Undistributed (excess of
distributions over) net
investment income......... 2,324,342 837,589 251,124
Accumulated net realized
gain (loss) from sale of
investments and foreign
currency.................. 34,227,120 (950,590) (15,743,221)
------------- ------------ ------------
TOTAL NET ASSETS.............. $ 707,154,786 $79,142,428 $122,455,160
------------- ------------ ------------
NET ASSET VALUE PER SHARE..... $36.64 $13.36 $13.81
------------- ------------ ------------
*Cost......................... $ 427,875,757 $69,867,339 $ 94,210,383
**Outstanding shares.......... 19,300,472 5,923,626 8,864,746
</TABLE>
69
<PAGE>
FORTIS SERIES FUND, INC.
Statements of Operations
For the Year Ended December 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MONEY U.S. GOV'T. DIVERSIFIED GLOBAL HIGH ASSET
MARKET SECURITIES INCOME BOND YIELD ALLOCATION
SERIES SERIES SERIES SERIES SERIES SERIES
----------- ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest income..................... $3,557,402 $ 9,668,172 $ 7,897,617 $1,098,594 $ 5,641,137 $14,586,854
Dividend Income..................... -- -- -- -- -- 1,639,787
Fee income (Note 1)................. -- -- -- -- -- --
----------- ------------ ------------ ----------- ------------ ------------
Total Income *........................ 3,557,402 9,668,172 7,897,617 1,098,594 5,641,137 16,226,641
----------- ------------ ------------ ----------- ------------ ------------
Expenses:
Investment advisory and management
fees (Note 2)..................... 191,433 687,529 488,855 149,694 258,195 2,102,625
Legal and auditing fees (Note 2).... 19,588 31,074 25,376 21,787 20,848 42,559
Custodian fees...................... 14,053 26,020 24,213 38,868 26,012 69,341
Shareholders' notices and reports... 14,668 37,082 24,168 4,865 9,929 84,806
Directors' fees and expenses........ 2,391 5,022 4,051 888 1,848 13,749
Other............................... 1,289 8,692 5,307 3,157 2,233 21,302
----------- ------------ ------------ ----------- ------------ ------------
Total Expenses........................ 243,422 795,419 571,970 219,259 319,065 2,334,382
----------- ------------ ------------ ----------- ------------ ------------
NET INVESTMENT INCOME................... 3,313,980 8,872,753 7,325,647 879,335 5,322,072 13,892,259
----------- ------------ ------------ ----------- ------------ ------------
REALIZED & UNREALIZED GAIN (LOSS) ON
INVESTMENTS & FOREIGN CURRENCY
TRANSACTIONS: (NOTE 1)
Net realized gain (loss) from:
Investments......................... -- 1,395,092 269,397 71,005 1,616,252 52,435,168
Foreign currency transactions....... -- -- -- (553,723) -- --
Futures contracts................... -- -- -- -- -- --
----------- ------------ ------------ ----------- ------------ ------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS..... -- 1,395,092 269,397 (482,718) 1,616,252 52,435,168
----------- ------------ ------------ ----------- ------------ ------------
NET CHANGES IN UNREALIZED APPRECIATION
(DEPRECIATION) OF:
Investments........................... 3,000 2,349,632 2,635,067 202,205 (2,246,434) 14,177,467
Translation of assets and liabilities
denominated in foreign currency..... -- -- -- (562,557) -- --
----------- ------------ ------------ ----------- ------------ ------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS......... 3,000 2,349,632 2,635,067 (360,352) (2,246,434) 14,177,467
----------- ------------ ------------ ----------- ------------ ------------
NET GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY...................... 3,000 3,744,724 2,904,464 (843,070) (630,182) 66,612,635
----------- ------------ ------------ ----------- ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $3,316,980 $12,617,477 $10,230,111 $ 36,265 $ 4,691,890 $80,504,894
----------- ------------ ------------ ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
*Net of foreign witholding taxes of:
<S> <C>
Global Bond Series $ 27,214
Asset Allocation Series 20,641
Global Asset Allocation Series 55,736
S&P 500 Index Series 4,105
Blue Chip Stock Series 559
Global Growth Series 163,134
International Stock Series 75,386
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
70
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL
ASSET GROWTH & S&P BLUE CHIP GLOBAL
ALLOCATION VALUE INCOME 500 INDEX STOCK GROWTH
SERIES SERIES SERIES SERIES SERIES SERIES
----------- ----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest income....................... $1,171,184 $ 206,549 $ 1,236,429 $ 124,372 $ 262,705 $ 1,429,197
Dividend Income....................... 444,689 527,671 4,980,436 1,059,633 538,666 1,586,209
Fee income (Note 1)................... -- -- 32,396 -- -- 114,787
----------- ----------- ------------ ------------ ------------ ------------
Total Income *.......................... 1,615,873 734,220 6,249,261 1,184,005 801,371 3,130,193
----------- ----------- ------------ ------------ ------------ ------------
Expenses:
Investment advisory and management
fees (Note 2)....................... 406,583 230,143 1,250,461 251,081 407,113 2,416,410
Legal and auditing fees (Note 2)...... 20,330 21,138 25,576 18,668 20,545 39,445
Custodian fees........................ 81,199 14,756 26,998 29,154 26,219 149,861
Shareholders' notices and reports..... 9,140 3,877 31,319 7,847 3,663 74,969
Directors' fees and expenses.......... 5,246 1,040 6,796 1,807 1,466 13,267
Other................................. 2,068 1,316 7,590 8,583 1,585 17,281
----------- ----------- ------------ ------------ ------------ ------------
Total Expenses.......................... 524,566 272,270 1,348,740 317,140 460,591 2,711,233
----------- ----------- ------------ ------------ ------------ ------------
NET INVESTMENT INCOME................... 1,091,307 461,950 4,900,521 866,865 340,780 418,960
----------- ----------- ------------ ------------ ------------ ------------
REALIZED & UNREALIZED GAIN (LOSS) ON
INVESTMENTS & FOREIGN CURRENCY
TRANSACTIONS: (NOTE 1)
Net realized gain (loss) from:
Investments......................... 2,290,349 3,157,481 3,221,007 563,655 (357,742) 15,987,781
Foreign currency transactions....... (95,875) -- -- -- 99 (28,703)
Futures contracts................... -- -- -- 283,463 -- --
----------- ----------- ------------ ------------ ------------ ------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS..... 2,194,474 3,157,481 3,221,007 847,118 (357,643) 15,959,078
----------- ----------- ------------ ------------ ------------ ------------
NET CHANGES IN UNREALIZED APPRECIATION
(DEPRECIATION) OF:
Investments........................... 3,269,832 3,509,573 37,967,041 13,027,357 10,236,178 6,811,622
Translation of assets and liabilities
denominated in foreign currency..... (794,872) -- -- -- (52) (6,870)
----------- ----------- ------------ ------------ ------------ ------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS......... 2,474,960 3,509,573 37,967,041 13,027,357 10,236,126 6,804,752
----------- ----------- ------------ ------------ ------------ ------------
NET GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY...................... 4,669,434 6,667,054 41,188,048 13,874,475 9,878,483 22,763,830
----------- ----------- ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $5,760,741 $7,129,004 $46,088,569 $14,741,340 $10,219,263 $23,182,790
----------- ----------- ------------ ------------ ------------ ------------
<CAPTION>
GROWTH INTERNATIONAL AGGRESSIVE
STOCK STOCK GROWTH
SERIES SERIES SERIES
------------ ----------- ------------
<S> <C> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest income....................... $ 5,548,454 $ 208,910 $ 976,563
Dividend Income....................... 1,392,537 1,257,872 17,840
Fee income (Note 1)................... -- -- 65,562
------------ ----------- ------------
Total Income *.......................... 6,940,991 1,466,782 1,059,965
------------ ----------- ------------
Expenses:
Investment advisory and management
fees (Note 2)....................... 4,268,503 571,117 735,430
Legal and auditing fees (Note 2)...... 54,064 23,196 23,540
Custodian fees........................ 85,782 124,396 18,278
Shareholders' notices and reports..... 147,123 3,807 21,543
Directors' fees and expenses.......... 26,088 2,453 4,608
Other................................. 34,984 2,780 5,085
------------ ----------- ------------
Total Expenses.......................... 4,616,544 727,749 808,484
------------ ----------- ------------
NET INVESTMENT INCOME................... 2,324,447 739,033 251,481
------------ ----------- ------------
REALIZED & UNREALIZED GAIN (LOSS) ON
INVESTMENTS & FOREIGN CURRENCY
TRANSACTIONS: (NOTE 1)
Net realized gain (loss) from:
Investments......................... 38,901,237 2,280,650 (9,457,837)
Foreign currency transactions....... -- (12,523) --
Futures contracts................... -- -- --
------------ ----------- ------------
NET REALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY TRANSACTIONS..... 38,901,237 2,268,127 (9,457,837)
------------ ----------- ------------
NET CHANGES IN UNREALIZED APPRECIATION
(DEPRECIATION) OF:
Investments........................... 39,658,806 4,149,752 12,954,426
Translation of assets and liabilities
denominated in foreign currency..... -- (5,445) --
------------ ----------- ------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) ON INVESTMENTS AND
FOREIGN CURRENCY TRANSACTIONS......... 39,658,806 4,144,307 12,954,426
------------ ----------- ------------
NET GAIN (LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY...................... 78,560,043 6,412,434 3,496,589
------------ ----------- ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $80,884,490 $7,151,467 $ 3,748,070
------------ ----------- ------------
</TABLE>
71
<PAGE>
FORTIS SERIES FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
U.S. GOVERNMENT
MONEY MARKET SERIES SECURITIES SERIES
- -------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 3,313,980 $ 2,705,255 $ 8,872,753 $ 10,440,214
Net realized gain (loss) on
investments and foreign currency
transactions........................ -- -- 1,395,092 (834,376)
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency.................... 3,000 (52,386) 2,349,632 (6,445,889)
------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... 3,316,980 2,652,869 12,617,477 3,159,949
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............ (2,705,380) (2,223,183) (10,443,459) (11,838,465)
Tax return of capital................. -- -- -- --
From net realized gains on
investments......................... -- -- -- --
Excess distributions of net realized
gains............................... -- -- (12,585) (28,104)
------------- ------------- ------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..... (2,705,380) (2,223,183) (10,456,044) (11,866,569)
------------- ------------- ------------- -------------
CAPITAL STOCK SOLD AND REPURCHASED:
(NOTE 6)
Proceeds from sale of shares.......... 61,306,146 62,995,729 8,542,021 11,422,482
Proceeds from shares issued as a
result of reinvested dividends...... 2,705,380 2,223,183 10,456,044 11,866,569
Less cost of repurchase............... (69,520,242) (45,549,360) (40,767,607) (35,591,789)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARES TRANSACTIONS.............. (5,508,716) 19,669,552 (21,769,542) (12,302,738)
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................ (4,897,116) 20,099,238 (19,608,109) (21,009,358)
NET ASSETS:
Beginning of year..................... 61,906,351 41,807,113 161,677,973 182,687,331
------------- ------------- ------------- -------------
End of year (Note 5).................. $ 57,009,235 $ 61,906,351 $142,069,864 $161,677,973
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
GLOBAL ASSET
ALLOCATION SERIES VALUE SERIES
- ---------------------------------------------------------------------------------------------------
FOR THE
PERIOD FROM
MARCH 28,
FOR THE FOR THE FOR THE 1996
YEAR ENDED YEAR ENDED YEAR ENDED (INCEPTION)
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO DECEMBER
1997 1996 1997 31, 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 1,091,307 $ 864,460 $ 461,950 $ 81,183
Net realized gain (loss) on
investments and foreign currency
transactions........................ 2,194,474 668,532 3,157,481 (15,575)
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency.................... 2,474,960 2,018,694 3,509,573 995,833
------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... 5,760,741 3,551,686 7,129,004 1,061,441
------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............ (958,004) (897,921) (467,774) (75,521)
Tax return of capital................. -- -- -- --
From net realized gains on
investments......................... (1,725,819) (601,285) (2,671,473) --
Excess distributions of net realized
gains............................... -- -- -- --
------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..... (2,683,823) (1,499,206) (3,139,247) (75,521)
------------ ------------ ------------ ------------
CAPITAL STOCK SOLD AND REPURCHASED:
(NOTE 6)
Proceeds from sale of shares.......... 11,926,186 17,172,109 35,435,693 13,000,854
Proceeds from shares issued as a
result of reinvested dividends...... 2,683,823 1,499,206 3,139,247 75,521
Less cost of repurchase............... (2,511,567) (3,496,933) (1,458,270) (110,820)
------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARES TRANSACTIONS.............. 12,098,442 15,174,382 37,116,670 12,965,555
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................ 15,175,360 17,226,862 41,106,427 13,951,475
NET ASSETS:
Beginning of year..................... 37,307,032 20,080,170 13,951,475 0
------------ ------------ ------------ ------------
End of year (Note 5).................. $52,482,392 $37,307,032 $55,057,902 $13,951,475
------------ ------------ ------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
72
<PAGE>
<TABLE>
<CAPTION>
DIVERSIFIED INCOME SERIES GLOBAL BOND SERIES HIGH YIELD SERIES
----------------------------- --------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997 1996
------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 7,325,647 $ 7,301,944 $ 879,335 $ 888,088 $ 5,322,072 $ 3,499,009
Net realized gain (loss) on
investments and foreign currency
transactions........................ 269,397 (825,580) (482,718) 329,721 1,616,252 305,622
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency.................... 2,635,067 (2,233,621) (360,352) (439,690) (2,246,434) (372,410)
------------- ------------- ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... 10,230,111 4,242,743 36,265 778,119 4,691,890 3,432,221
------------- ------------- ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............ (7,363,139) (8,135,037) (692,786) (669,496) (57,517) (3,450,721)
Tax return of capital................. -- -- -- -- -- --
From net realized gains on
investments......................... -- -- (189,105) (311,936) -- --
Excess distributions of net realized
gains............................... (16,851) (78,938) -- -- (21,313) (171,270)
------------- ------------- ------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..... (7,379,990) (8,213,975) (881,891) (981,432) (78,830) (3,621,991)
------------- ------------- ------------ ------------ ------------ ------------
CAPITAL STOCK SOLD AND REPURCHASED:
(NOTE 6)
Proceeds from sale of shares.......... 5,081,901 6,371,872 3,704,954 9,900,900 17,384,708 16,606,547
Proceeds from shares issued as a
result of reinvested dividends...... 7,379,990 8,213,975 881,891 981,432 78,830 3,621,991
Less cost of repurchase............... (15,942,672) (13,903,761) (3,276,871) (3,638,872) (5,426,218) (5,589,855)
------------- ------------- ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARES TRANSACTIONS.............. (3,480,781) 682,086 1,309,974 7,243,460 12,037,320 14,638,683
------------- ------------- ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................ (630,660) (3,289,146) 464,348 7,040,147 16,650,380 14,448,913
NET ASSETS:
Beginning of year..................... 105,830,600 109,119,746 20,227,621 13,187,474 42,578,060 28,129,147
------------- ------------- ------------ ------------ ------------ ------------
End of year (Note 5).................. $105,199,940 $105,830,600 $20,691,969 $20,227,621 $59,228,440 $42,578,060
------------- ------------- ------------ ------------ ------------ ------------
<CAPTION>
ASSET ALLOCATION SERIES
-----------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income................. $ 13,892,259 $ 13,585,802
Net realized gain (loss) on
investments and foreign currency
transactions........................ 52,435,168 14,650,440
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency.................... 14,177,467 15,819,704
------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... 80,504,894 44,055,946
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............ (13,867,757) (13,564,759)
Tax return of capital................. -- --
From net realized gains on
investments......................... (51,914,842) (6,227,823)
Excess distributions of net realized
gains............................... (43,990) (158,951)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..... (65,826,589) (19,951,533)
------------- -------------
CAPITAL STOCK SOLD AND REPURCHASED:
(NOTE 6)
Proceeds from sale of shares.......... 33,396,356 36,485,877
Proceeds from shares issued as a
result of reinvested dividends...... 65,826,589 19,951,533
Less cost of repurchase............... (29,333,554) (24,340,796)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARES TRANSACTIONS.............. 69,889,391 32,096,614
------------- -------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................ 84,567,696 56,201,027
NET ASSETS:
Beginning of year..................... 397,712,333 341,511,306
------------- -------------
End of year (Note 5).................. $482,280,029 $397,712,333
------------- -------------
</TABLE>
<TABLE>
<CAPTION>
GROWTH & INCOME SERIES S&P 500 INDEX SERIES BLUE CHIP STOCK SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
FOR THE FOR THE
PERIOD FROM PERIOD FROM
MARCH 28, MARCH 28,
FOR THE FOR THE FOR THE 1996 FOR THE 1996
YEAR ENDED YEAR ENDED YEAR ENDED (INCEPTION) YEAR ENDED (INCEPTION)
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO DECEMBER DECEMBER 31, TO DECEMBER
1997 1996 1997 31, 1996 1997 31, 1996
------------- ------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 4,900,521 $ 2,268,263 $ 866,865 $ 128,502 $ 340,780 $ 61,105
Net realized gain (loss) on
investments and foreign currency
transactions........................ 3,221,007 1,336,739 847,118 86,309 (357,643) 11,079
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency.................... 37,967,041 15,884,901 13,027,357 1,718,465 10,236,126 1,757,318
------------- ------------- ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... 46,088,569 19,489,903 14,741,340 1,933,276 10,219,263 1,829,502
------------- ------------- ------------ ------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............ (4,905,160) (2,285,895) (869,171) (121,710) (317,040) (60,328)
Tax return of capital................. -- -- -- -- -- --
From net realized gains on
investments......................... (2,662,426) (1,402,797) (807,932) (1,106) (14,834) --
Excess distributions of net realized
gains............................... -- -- -- -- -- --
------------- ------------- ------------ ------------ ------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..... (7,567,586) (3,688,692) (1,677,103) (122,816) (331,874) (60,328)
------------- ------------- ------------ ------------ ------------ ------------
CAPITAL STOCK SOLD AND REPURCHASED:
(NOTE 6)
Proceeds from sale of shares.......... 70,154,490 58,720,953 92,987,716 21,220,266 51,873,817 18,830,072
Proceeds from shares issued as a
result of reinvested dividends...... 7,567,586 3,688,692 1,677,102 122,816 331,874 60,328
Less cost of repurchase............... (6,204,897) (2,811,581) (20,135,877) (1,174,953) (970,631) (3,053,416)
------------- ------------- ------------ ------------ ------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARES TRANSACTIONS.............. 71,517,179 59,598,064 74,528,941 20,168,129 51,235,060 15,836,984
------------- ------------- ------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................ 110,038,162 75,399,275 87,593,178 21,978,589 61,122,449 17,606,158
NET ASSETS:
Beginning of year..................... 134,932,205 59,532,930 21,978,589 0 17,606,158 0
------------- ------------- ------------ ------------ ------------ ------------
End of year (Note 5).................. $244,970,367 $134,932,205 $109,571,767 $21,978,589 $78,728,607 $17,606,158
------------- ------------- ------------ ------------ ------------ ------------
</TABLE>
73
<PAGE>
FORTIS SERIES FUND, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
GLOBAL GROWTH SERIES GROWTH STOCK SERIES
- -------------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 418,960 $ 406,323 $ 2,324,447 $ 2,320,174
Net realized gain (loss) on
investments and foreign currency
transactions........................ 15,959,078 (3,142,634) 38,901,237 22,383,900
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency.................... 6,804,752 46,400,736 39,658,806 65,647,351
------------- ------------- ------------- -------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... 23,182,790 43,664,425 80,884,490 90,351,425
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............ -- (420,937) (66,251) (2,282,758)
Tax return of capital................. -- (12,672) -- --
From net realized gains on
investments......................... -- -- -- --
Excess distributions of net realized
gains............................... -- -- -- --
------------- ------------- ------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..... -- (433,609) (66,251) (2,282,758)
------------- ------------- ------------- -------------
CAPITAL STOCK SOLD AND REPURCHASED:
(NOTE 6)
Proceeds from sale of shares.......... 32,866,688 75,164,853 27,477,854 67,982,620
Proceeds from shares issued as a
result of reinvested dividends...... -- 433,609 66,251 2,282,758
Less cost of repurchase............... (22,625,629) (6,911,460) (62,424,600) (28,061,530)
------------- ------------- ------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARES TRANSACTIONS.............. 10,241,059 68,687,002 (34,880,495) 42,203,848
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................ 33,423,849 111,917,818 45,937,744 130,272,515
NET ASSETS:
Beginning of year..................... 319,830,721 207,912,903 661,217,042 530,944,527
------------- ------------- ------------- -------------
End of year (Note 5).................. $353,254,570 $319,830,721 $707,154,786 $661,217,042
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL STOCK SERIES AGGRESSIVE GROWTH SERIES
- ----------------------------------------------------------------------------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income................. $ 739,033 $ 634,380 $ 251,481 $ 170,855
Net realized gain (loss) on
investments and foreign currency
transactions........................ 2,268,127 919,558 (9,457,837) (4,837,293)
Net change in unrealized appreciation
(depreciation) of investments and
foreign currency.................... 4,144,307 3,683,445 12,954,426 6,947,700
------------ ------------ ------------- ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... 7,151,467 5,237,383 3,748,070 2,281,262
------------ ------------ ------------- ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............ (862,090) (698,708) (1,710) (169,502)
Tax return of capital................. -- -- -- --
From net realized gains on
investments......................... (2,341,614) (882,391) -- --
Excess distributions of net realized
gains............................... -- -- -- --
------------ ------------ ------------- ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..... (3,203,704) (1,581,099) (1,710) (169,502)
------------ ------------ ------------- ------------
CAPITAL STOCK SOLD AND REPURCHASED:
(NOTE 6)
Proceeds from sale of shares.......... 23,285,792 30,566,115 29,055,088 54,010,106
Proceeds from shares issued as a
result of reinvested dividends...... 3,203,705 1,581,099 1,710 169,502
Less cost of repurchase............... (3,626,173) (4,799,479) (7,278,761) (6,303,867)
------------ ------------ ------------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM SHARES TRANSACTIONS.............. 22,863,324 27,347,735 21,778,037 47,875,741
------------ ------------ ------------- ------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS................................ 26,811,087 31,004,019 25,524,397 49,987,501
NET ASSETS:
Beginning of year..................... 52,331,341 21,327,322 96,930,763 46,943,262
------------ ------------ ------------- ------------
End of year (Note 5).................. $79,142,428 $52,331,341 $122,455,160 $96,930,763
------------ ------------ ------------- ------------
</TABLE>
74
<PAGE>
FORTIS SERIES FUND, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The Fund is an open-end
management investment company which currently is comprised of fifteen
separate investment portfolios and series of capital stock: Money Market
Series, U.S. Government Securities Series, Diversified Income Series, High
Yield Series, Asset Allocation Series, Global Asset Allocation Series, Value
Series, Growth & Income Series, S&P 500 Index Series, Blue Chip Stock Series,
Global Growth Series, Growth Stock Series, International Stock Series and
Aggressive Growth Series, which are diversified portfolios, and Global Bond
Series which is non-diversified. Each Series has different investment
objectives and its own investment portfolio and net asset value. The
investment objectives of the Series, which can be changed at any time without
the approval of Contract owners, are as follows:
- The objectives of the "Money Market Series" are high levels of capital
stability and liquidity and, to the extent consistent with these primary
objectives, a high level of current income.
- The objective of the "U.S. Government Securities Series" is to maximize
total return (from income and market value change), while providing
shareholders with a high level of current income consistent with prudent
investment risk through investment primarily in debt securities of varying
maturities which have been issued, guaranteed, insured or collateralized by
the United States Government or its agencies or instrumentalities.
- The objective of the "Diversified Income Series" is to maximize total
return (from income and market value change), by investing primarily in a
diversified portfolio of government securities and investment grade
corporate bonds.
- The objectives of the "Global Bond Series" is total return from current
income and capital appreciation. The Series invests in a global portfolio
principally consisting of high quality fixed-income securities of
governmental and corporate issuers and supranational organizations.
- The objective of the "High Yield Series" is maximum total return (from
income and market value change), by investing primarily in high-yield,
high-risk fixed-income securities.
- The objective of the "Asset Allocation Series" is maximum total return on
invested capital, to be derived primarily from capital appreciation,
dividends, and interest.
- The objective of the "Global Asset Allocation Series" is maximum total
return, to be derived primarily from capital appreciation, dividends and
interest, by following a flexible asset allocation strategy investing in
global securities.
- The objective of the "Value Series" is short and long-term capital
appreciation. Current income is only a secondary objective. The Series
invests primarily in equity securities and selects stocks based on the
concept of fundamental value philosophy.
- The objectives of the "Growth & Income Series" are capital appreciation and
current income, which such Series seeks by investing primarily in equity
securities that provide an income component and the potential for growth.
- The objective of the "S&P 500 Index Series" is to replicate the total
return of the Standard & Poor's 500 Composite Stock Price Index primarily
through investments in equity securities.
- The primary objective of the "Blue Chip Stock Series" is to provide
long-term growth of capital. Current income is a secondary objective, and
many of the stocks in the Series' portfolio are expected to pay dividends.
- The primary objective of the "Global Growth Series" is long-term
appreciation, which it seeks primarily by investing in a global portfolio
of equity securities, allocated among diverse international markets.
- The primary objective of the "Growth Stock Series" is short and long-term
capital appreciation. The Series will seek to meet these objectives by
investing primarily in common stocks and securities convertible into common
stocks.
- The objective of the "International Stock Series" is capital appreciation
by investing primarily in the equity securities of non-United States
companies.
- The objective of the "Aggressive Growth Series" is maximum long-term
capital appreciation by investing primarily in equity securities of small
and medium sized companies that are early in their life cycles, but which
have the potential to become major enterprises, and of more established
companies that have the potential for above-average capital growth.
The Articles of Incorporation of Fortis Series Fund, Inc., permits the Board
of Directors to create additional portfolios in the future. An investment in
the Money Market Series is neither insured nor guaranteed by the U.S.
Government.
Shares of the Fund will not be sold directly to the public, but sold only to
Fortis Benefits Insurance Company or First Fortis Life separate accounts in
connection with variable insurance contracts and policies.
The inception of Value Series, S&P 500 Index Series, and Blue Chip Stock
Series was March 28, 1996, and the commencement of operations was May 1,
1996.
The significant accounting policies followed by the Portfolios are summarized
as follows:
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. Securities for which over-the-counter market quotations
are readily available are valued on the basis of the last current bid price.
An outside pricing service may be utilized to provide such valuations. For
fixed income securities, the pricing service may employ electronic data
processing techniques and/or a matrix system to determine valuations using
methods which include consideration of yields or prices of bonds of
comparable quality, type of issue, coupon, maturity and rating indications as
to value from dealers, and general market conditions. For Money Market
Series, all investments are valued at amortized cost. For other Portfolios
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.
75
<PAGE>
FORTIS SERIES FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
Securities for which quotations are not readily available are valued at fair
value as determined in good faith by management under supervision of the
Board of Directors.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS: Delivery and payment for
securities that have been purchased by all portfolios except for Money Market
Series and Growth Stock Series on a forward commitment or when-issued basis
can take place a month or more after the transaction date. During this
period, such securities are subject to market fluctuation and the portfolio
maintains, in a segregated account with its custodian, assets with a market
value equal to the amount of its purchase commitments. As of December 31,
1997 U.S. Government Securities Series, Diversified Income Series and Asset
Allocation Series entered into outstanding when-issued or forward commitments
of $1,486,750, $826,515 and $1,643,250 respectively.
Consistent with its ability to purchase securities on a when-issued basis,
the U.S. Government Securities Series, Diversified Income Series and Asset
Allocation Series have entered into transactions to defer settlement of its
purchase commitments. As an inducement to defer settlement, the Portfolio
repurchases a similar security for settlement at a later date at a lower
purchase price relative to the current market. This transaction is referred
to as a Dollar Roll.
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS:
Securities and other assets and liabilities denominated in foreign currencies
are translated daily into U.S. dollars at the closing rate of exchange.
Foreign currency amounts related to the purchase or sale of securities,
income and expenses are translated at the exchange rate on the transaction
date. The effect of changes in foreign exchange rates on realized and
unrealized security gains or losses is reflected as a component of such gains
or losses. In the statement of operations, net realized gains or losses from
foreign currency transactions may arise from sales of foreign currency,
closed forward contracts, exchange gains or losses realized between the trade
date and settlement date on security transactions, and other translation
gains or losses on dividends, interest income and foreign withholding taxes.
Certain Portfolios may enter into forward foreign currency exchange contracts
for operational purposes and to attempt to minimize the risk from adverse
exchange rate fluctuations. The net U.S. dollar value of foreign currency
underlying all contractual commitments held by the fund and the resulting
unrealized appreciation or depreciation are determined using foreign currency
exchange rates from an independent pricing service. The Portfolio is subject
to the credit risk that the other party will not complete the obligations of
the contract.
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 for all funds or upon receipt of ex-dividend notification in
the case of certain foreign securities. Interest income is recorded on the
accrual basis. Realized security gains and losses are determined using the
identified cost method. Each Portfolio amortizes bond premium, market
discount and original issue discount. For the year ended December 31, 1997,
the cost of purchases and proceeds from sales of securities for Money Market
Series were $388,366,629 and $392,434,818, respectively. The cost of
purchases and proceeds from sales of securities (other than short-term
securities) for the other portfolios were as follows:
<TABLE>
<CAPTION>
Cost of Proceeds
Purchases from Sales
<S> <C> <C>
- --------------------------------------------------------------------------------
U.S. Government Securities Series............ $ 204,080,520 $ 214,009,319
Diversified Income Series.................... 169,408,859 175,821,771
Global Bond Series........................... 28,655,859 28,410,508
High Yield Series............................ 182,355,306 165,929,973
Asset Allocation Series...................... 481,718,968 485,429,236
Global Asset Allocation Series............... 33,472,223 21,294,279
Value Series................................. 65,404,965 35,317,779
Growth & Income Series....................... 80,920,855 18,773,806
S&P 500 Index Series......................... 73,112,979 3,203,498
Blue Chip Stock Series....................... 56,619,508 9,722,773
Global Growth Series......................... 110,161,613 112,221,095
Growth Stock Series.......................... 110,909,209 190,473,344
International Stock Series................... 39,653,195 18,631,652
Aggressive Growth Series..................... 43,950,558 22,434,005
</TABLE>
In the Global Asset Allocation Series for the year ended from January 2, 1997
to December 31, 1997, brokerage commissions paid to an affiliated broker
amounted to $1,698.
LENDING OF PORTFOLIO SECURITIES: At December 31, 1997, securities valued at
$87,825,722, $22,186,972, and $11,145,822, were on loan to brokers from
Global Growth Series, Growth & Income Series, and Aggressive Growth Series,
respectively. For collateral, the Portfolios received $93,459,385,
$22,880,335, and $14,743,210, in cash which is maintained in a separate
account and invested in short-term investment vehicles. Fee income from
securities lending amounted to $114,787, $32,396, and $65,562, for the year
ended December 31, 1997, for Global Growth Series, Growth & Income Series,
and Aggressive Growth Series. The risks to the Portfolio in security lending
transactions are that the borrower may not provide additional collateral when
required or return the securities when due and that the proceeds from the
sale of investments made with cash collateral received will be less than
amounts required to be returned to the borrowers.
INCOME TAXES: The 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.
Net investment income and net realized gains may differ for financial
statement and tax purposes. 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 Portfolios. The
76
<PAGE>
- --------------------------------------------------------------------------------
effect on dividend distributions of certain current year permanent book-
to-tax differences is reflected as excess distributions of net realized gains
in the statements of changes in net assets and the financial highlights.
<TABLE>
<CAPTION>
Undistributed
Net
Investment Accumulated Paid-in-
Income Gains Capital
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Money Market Series.......................... $ -- $ 19,112 $(19,112)
Global Bond Series........................... (550,752) 553,723 (2,971)
High Yield Series............................ 183 -- (183)
Global Asset Allocation Series............... (95,875) 95,875 --
Value Series................................. 162 -- (162)
S&P Index Series............................. 168 -- (168)
Blue Chip Series............................. 99 (99) --
Global Growth Series......................... (28,703) 28,703 --
International Stock Series................... 915,311 (915,311) --
</TABLE>
For federal income tax purposes the portfolios had the following capital loss
carryovers at December 31, 1997, which, if not offset by subsequent capital
gains, will expire in 1998 through 2005. 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 expire.
<TABLE>
<S> <C>
Money Market Series.......................... $ 81,339
U.S. Government Securities Series............ 15,568,683
Diversified Income Series.................... 9,476,925
Blue Chip Stock Series....................... 310,339
Global Growth Series......................... 923,213
Aggressive Growth Series..................... 15,743,221
</TABLE>
ILLIQUID SECURITIES: At December 31, 1997, investments in securities for the
funds included issues that are illiquid. Money Market Series, U.S. Government
Series, Diversified Income Series, Asset Allocation Series, and Growth Stock
Series currently limit investments in illiquid securities to 5% of total net
assets; Global Growth Series to 10%; Global Bond Series, High Yield Series,
Global Asset Allocation Series, Growth and Income Series, International Stock
Series, Aggressive Growth Series, Value Series, S&P 500 Series, and Blue Chip
Stock Series to 15%, of net assets, at market value, at date of purchase. The
aggregate values of such securities at December 31, 1997, were $2,819,360
Diversified Income Series; $11,231,357 Asset Allocation Series; $5,591,050
High Yield Series; $2,157,250 Growth & Income Series; $14,454,467 Global
Growth Series, which represents 2.68%, 2.33%, 9.44%, .88%, 4.09% of net
assets, respectively. Pursuant to guidelines adopted by the Board of
Directors, certain unregistered securities are determined to be liquid and
are not included within the percent limitations specified above.
INCOME AND CAPITAL GAINS DISTRIBUTIONS: The portfolios intend to make income
and capital gains distributions, if any, on an annual basis. All
distributions will be reinvested in additional shares of the portfolio at net
asset value.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of increase and decrease
in net assets from operations during the reporting period. Actual results
could differ from those estimates.
2. PAYMENTS TO RELATED PARTIES: Fortis Advisers, Inc., (Advisers), is the
investment adviser for each series. Investment advisory and management fees
are based on each series' average daily net assets and decrease in reduced
percentages as average daily net assets increase.
The following chart represents the annual fee percentages:
<TABLE>
<CAPTION>
Annual
Investment Advisory
Series Average Net Assets and Management Fee
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
Money Market Series For the first $500 million .3%
For assets over $500 million .25%
U.S. Government Securities Series For the first $50 million .5%
For assets over $50 million .45%
Diversified Income Series For the first $50 million .5%
For assets over $50 million .45%
Global Bond Series For the first $100 million .75%
For assets over $100 million .65%
High Yield Series For the first $250 million .5%
For assets over $250 million .45%
Asset Allocation Series For the first $250 million .5%
For assets over $250 million .45%
Global Asset Allocation Series For the first $100 million .9%
For assets over $100 million .85%
Value Series For the first $100 million .7%
For assets over $100 million .6%
Growth & Income Series For the first $100 million .7%
For assets over $100 million .6%
S&P 500 Index Series For all assets .4%
Blue Chip Stock Series For the first $100 million .9%
For assets over $100 million .85%
Global Growth Series For the first $500 million .7%
For assets over $500 million .6%
Growth Stock Series For the first $100 million .7%
For assets over $100 million .6%
International Stock Series For the first $100 million .85%
For assets over $100 million .8%
Aggressive Growth Series For the first $100 million .7%
For assets over $100 million .6%
</TABLE>
The Global Bond Series, Global Asset Allocation Series, International Stock
Series, S&P 500 Index Series, and Blue Chip Series have retained sub-advisers
under an investment sub-advisory agreement to provide investment advice and,
in general, to conduct the management investment program of each portfolio,
subject to the general control of Advisers and the Board of Directors of the
Fortis Series Fund, Inc. Pursuant to the sub-advisory agreements, each
sub-adviser will regularly provide its respective portfolio with investment
research, advice and supervision and furnish continuously an investment
program for each portfolio consistent with its investment objectives and
policies, including the purchase, retention and disposition of securities.
77
<PAGE>
FORTIS SERIES FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
From its advisory fee, Advisers pays the following fees to each of the sub-
advisers:
<TABLE>
<CAPTION>
Annual
Advisory
Series Sub-Adviser Average Net Assets Fee
<S> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
Global Bond Mercury Asset Management For the first $100 million .35%
Series International Ltd. For assets over $100 million .225%
Global Asset Morgan Stanley Asset For the first $100 million .5%
Allocation Series Management Limited For assets over $100 million .4%
S&P 500 Index The Dreyfus Corporation For all levels of assets .17%
Series
Blue Chip Stock T. Rowe Price Associate, For the first $100 million .5%
Series Inc. For assets over $100 million .45%
International Lazard-Freres Asset For the first $100 million .45%
Stock Series Management For assets over $100 million .375%
</TABLE>
For the year ended December 31, 1997, legal fees and expenses were paid as
follows to a law firm of which the secretary of the fund is a partner.
<TABLE>
<CAPTION>
Series Amount
<S> <C>
- ---------------------------------------------------------
Money Market Series.......................... $ 2,828
U.S. Government Securities Series............ 3,492
Diversified Income Series.................... 2,782
Global Bond Series........................... 712
High Yield Series............................ 1,301
Asset Allocation Series...................... 13,282
Global Asset Allocation Series............... 1,580
Value Series................................. 2,287
Growth & Income Series....................... 6,008
S&P 500 Index Series......................... 1,700
Blue Chip Stock Series....................... 1,620
Global Growth Series......................... 10,015
Growth Stock Series.......................... 22,540
International Stock Series................... 2,094
Aggressive Growth Series..................... 3,763
</TABLE>
3. FORWARD FOREIGN CURRENCY CONTRACTS: At December 31, 1997, the Global Bond
Series, Global Asset Allocation Series and International Stock Series entered
into forward foreign currency exchange contracts that obligated the Series to
deliver/receive currencies at a specified future date. The unrealized
appreciation (depreciation) of $45,779, $48,933, ($379), respectively, on
these contracts is included in the accompanying financial statements. The
terms of the open contracts are as follows:
<TABLE>
<CAPTION>
GLOBAL BOND SERIES
- -------------------------------------------------------------------------------------------
U.S. Dollar U.S. Dollar Unrealized
Currency To Value As Of Currency To Value As Of Appreciation/
Settle Date Be Delivered Dec. 31, 1997 Be Received Dec. 31, 1997 (Depreciation)
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------
Jan. 28, 1998 878,523 $ 878,523 535,000 $ 883,384 $ 4,861
U.S. Dollar British Pound
Sterling
Jan. 28, 1998 338,608 338,608 480,000 335,015 (3,593)
U.S. Dollar Canadian
Dollar
Jan. 28, 1998 2,361,997 2,361,997 305,000,000 2,354,922 (7,075)
U.S. Dollar Japanese Yen
Jan. 28, 1998 223,992 223,992 450,000 223,153 (839)
U.S. Dollar Netherland
Guilder
Jan. 28, 1998 352,628 352,628 53,000,000 349,565 (3,063)
U.S. Dollar Spanish
Peseta
Jan. 28, 1998 1,275,000 833,518 853,880 853,880 20,362
Australian U.S. Dollar
Dollar
Jan. 28, 1998 620,000 405,318 406,714 406,714 1,396
Australian U.S. Dollar
Dollar
Jan. 28, 1998 350,000 577,915 585,900 585,900 7,985
British Pound U.S. Dollar
Sterling
Jan. 28, 1998 4,700,000 689,533 691,889 691,889 2,356
Danish Krone U.S. Dollar
Jan. 28, 1998 2,835,000 415,921 422,063 422,063 6,142
Danish Krone U.S. Dollar
Jan. 28, 1998 360,000 201,089 201,915 201,915 826
Deutsche Mark U.S. Dollar
Jan. 28, 1998 2,650,000,000 1,504,190 1,513,307 1,513,307 9,117
Italian Lira U.S. Dollar
Jan. 28, 1998 53,000,000 349,566 351,226 351,226 1,660
Spanish U.S. Dollar
Peseta
Jan. 2, 1998 64,513,644 423,275 428,919 428,919 5,644
Spanish U.S. Dollar
Peseta
------------- ------------- --------------
$9,556,073 $9,601,852 $45,779
------------- ------------- --------------
</TABLE>
78
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GLOBAL ASSET ALLOCATION SERIES
- ------------------------------------------------------------------------------------------
U.S. Dollar U.S. Dollar Unrealized
Currency To Value As Of Currecy To Value As Of Appreciation/
Settle Date Be Delivered Dec 31, 1997 Be Received Dec 31, 1997 (Depreciation)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Jan. 23, 1998 456,571 $ 456,571 630,000 $ 439,803 $ (16,768)
U.S. Dollar Canadian
Dollar
Feb. 20, 1998 5,400,000 683,918 1,233,665 690,070 6,152
Swedish Krona Deutsche Mark
Jan. 22, 1998 397,976 397,976 700,000 390,643 (7,333)
U.S. Dollar Deutsche Mark
Feb. 9, 1998 839,295 839,295 122,000,000 805,174 (34,121)
U.S. Dollar Spanish
Peseta
Feb. 20, 1998 1,231,639 688,937 5,400,000 683,918 (5,019)
Deutsche Mark Swedish Krona
Jan. 22, 1998 1,700,000 1,169,575 1,165,661 1,165,661 (3,914)
Swiss Franc U.S. Dollar
Jan. 22, 1998 700,000 390,643 397,118 397,118 6,475
Deutsche Mark U.S. Dollar
Jan. 23, 1998 630,000 439,803 454,874 454,874 15,071
Canadian U.S. Dollar
Dollar
Feb. 6, 1998 250,000 356,944 376,175 376,175 19,231
Irish Punt U.S. Dollar
Feb. 9, 1998 122,000,000 805,174 839,989 839,989 34,815
Spanish U.S. Dollar
Peseta
Mar. 3, 1998 1,200,000 785,225 806,655 806,655 21,430
Australian U.S. Dollar
Dollar
Dec. 16, 1998 1,135,000 1,838,866 1,851,780 1,851,780 12,914
British Pound U.S. Dollar
------------- ------------- -------------
$8,852,927 $8,901,860 $ 48,933
------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
INTERNATIONAL STOCK SERIES
- ------------------------------------------------------------------------------------------
U.S. Dollar U.S. Dollar Unrealized
Currency To Value As Of Currency To Value As Of Appreciation/
Settle Date Be Delivered Dec. 31, 1997 Be Received Dec. 31, 1997 (Depreciation)
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Jan. 6, 1998 109,271 $ 109,271 14,158,264 $ 108,892 $ (379)
U.S. Dollar Japanese Yen
------------- ------------- ------
$ 109,271 $ 108,892 $ (379)
------------- ------------- ------
</TABLE>
4. FUTURES TRANSACTIONS: Certain Portfolios may invest in financial futures
contracts in order to gain exposure to or protect against changes in the
market. The S&P 500 Index Series is exposed to market risk as a result of
changes in the value of the underlying financial instruments (see the Notes
to the Schedule of Investments). Investment in financial futures require the
Fund to "mark to market" on a daily basis, which reflects the change in the
market value of the contract at the close of each day's trading. Accordingly,
variation margin payments are received or made to reflect daily unrealized
gain or losses. When the contracts are closed, the Fund recognizes a realized
gain or loss. These investments require initial margin deposits with a
custodian, which consist of cash or cash equivalents. The amount of these
deposits is determined by the exchange or Board of Trade on which the
contract is traded and is subject to change. Contracts open as of December
31, 1997 and their related unrealized market appreciation are set forth in
the Notes to the Schedule of Investments.
5. NET ASSETS INCLUDE UNDISTRIBUTED (EXCESS OF DISTRIBUTIONS OVER) NET
INVESTMENT INCOME OF:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
- -----------------------------------------------------------------------------
Money Market Series.......................... $ 3,313,609 $ 2,705,009
U.S. Government Securitites Series........... 8,884,763 10,455,469
Diversified Income Series.................... 7,342,378 7,379,870
Global Bond Series........................... (204,252) 162,922
High Yield Series............................ 5,342,896 78,341
Asset Allocation Series...................... 180,729 156,227
Global Asset Allocation Series............... 115,734 78,306
Value Series................................. -- 5,662
Growth & Income Series....................... 132,470 4,639
S&P 500 Index Series......................... 4,486 6,792
Blue Chip Stock Series....................... 24,616 777
Global Growth Series......................... 390,257 --
Growth Stock Series.......................... 2,324,342 66,146
International Stock Series................... 838,239 45,335
Aggressive Growth Series..................... 251,124 1,353
</TABLE>
79
<PAGE>
FORTIS SERIES FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
6. SHARES OF CAPITAL STOCK SOLD AND REPURCHASED:
<TABLE>
<CAPTION>
SHARES ISSUED AS A
RESULT OF REINVESTED NET INCREASE (DECREASE) OF
SHARES SOLD DIVIDENDS SHARES REPURCHASED SHARES
--------------------- ----------------------- ------------------------ --------------------------
1997 1996 1997 1996 1997 1996 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------------
Money Market Series...... 5,533,479 5,746,206 249,293 206,460 (6,270,961) (4,157,440) (488,189) 1,795,226
U.S. Government
Securities Series...... 800,925 1,061,458 1,020,261 1,175,676 (3,815,885) (3,307,239) (1,994,699) (1,070,105)
Diversified Income
Series................. 427,986 532,522 644,619 737,175 (1,340,634) (1,169,544) (268,029) 100,153
Global Bond Series....... 342,502 889,018 82,806 89,211 (302,578) (324,860) 122,730 653,369
High Yield Series........ 1,683,695 1,622,409 7,380 371,174 (524,733) (548,867) 1,166,342 1,444,716
Asset Allocation
Series................. 1,768,619 2,214,581 3,773,001 1,169,911 (1,572,987) (1,459,586) 3,968,633 1,924,906
Global Asset Allocation
Series................. 916,423 1,436,030 203,873 123,737 (192,721) (295,210) 927,575 1,264,557
Value Series............. 2,752,180 1,229,584 235,641 6,662 (111,372) (10,203) 2,876,449 1,226,043
Growth & Income Series... 4,127,164 4,220,664 406,642 244,448 (371,603) (205,106) 4,162,203 4,260,006
S&P 500 Index Series..... 6,825,585 2,011,060 112,916 10,638 (1,516,202) (104,913) 5,422,299 1,916,785
Blue Chip Stock Series... 3,878,517 1,790,768 22,898 5,170 (74,415) (287,305) 3,827,000 1,508,633
Global Growth Series..... 1,712,007 4,179,864 -- 23,217 (1,139,381) (384,054) 572,626 3,819,027
Growth Stock Series...... 793,904 2,229,103 1,742 69,162 (1,781,802) (911,048) (986,156) 1,387,217
International Stock
Series................. 1,745,215 2,586,940 241,819 131,438 (269,473) (404,381) 1,717,561 2,313,997
Aggressive Growth
Series................. 2,311,002 3,864,188 125 12,491 (563,264) (463,405) 1,747,863 3,413,274
</TABLE>
- --------------------------------------------------------------------------------
7. FINANCIAL HIGHLIGHTS: Selected per share historical data for each of the
Series was as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------
MONEY MARKET SERIES 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 10.94 $ 10.83 $ 10.63 $ 10.23 $ 10.21
-------- -------- -------- -------- --------
Operations:
Investment income - net............... .58 .57 .60 .41 .28
Net realized and unrealized gains
(losses) on investments............. -- -- -- (.01) .02
-------- -------- -------- -------- --------
Total from operations................... .58 .57 .60 .40 .30
-------- -------- -------- -------- --------
Distributions to shareholders:
From investment income - net.......... (.49) (.46) (.40) -- (.28)
-------- -------- -------- -------- --------
Net asset value, end of year............ $ 11.03 $ 10.94 $ 10.83 $ 10.63 $ 10.23
-------- -------- -------- -------- --------
Total Return @.......................... 5.34% 5.17% 5.71% 3.92% 2.77%
Net assets end of year (000s omitted)... $ 57,009 $ 61,906 $ 41,807 $ 44,833 $ 28,682
Ratio of expenses to average daily net
assets................................ .38% .38% .40% .40% .44%
Ratio of net investment income to
average daily net assets.............. 5.19% 5.14% 5.44% 3.96% 2.74%
</TABLE>
@ These are the portfolio's total returns during the period, including
reinvestment of all dividend and capital gains distributions.
80
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS (continued):
Year Ended December 31,
-------------------------------------------------------------
U.S. GOVERNMENT SECURITIES SERIES 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 10.57 $ 11.16 $ 9.40 $ 10.94 $ 10.73
--------- --------- --------- --------- ---------
Operations:
Investment income - net............... .80 .67 .70 .71 .74
Net realized and unrealized gains
(losses) on investments............. .12 (.51) 1.06 (1.54) .46
--------- --------- --------- --------- ---------
Total from operations................... .92 .16 1.76 (.83) 1.20
--------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... (.81) (.75) -- (.71) (.74)
From net realized gains............... -- -- -- -- (.24)
Excess distributions of net realized
gains............................... -- -- -- -- (.01)
--------- --------- --------- --------- ---------
Total distributions to shareholders..... (.81) (.75) -- (.71) (.99)
--------- --------- --------- --------- ---------
Net asset value, end of year............ $ 10.68 $ 10.57 $ 11.16 $ 9.40 $ 10.94
--------- --------- --------- --------- ---------
Total Return @.......................... 9.08% 2.21% 18.78% (6.44%) 9.45%
Net assets end of year (000s omitted)... $ 142,070 $ 161,678 $ 182,687 $ 172,656 $ 235,588
Ratio of expenses to average daily net
assets................................ .54% .53% .53% .53% .52%
Ratio of net investment income to
average daily net assets.............. 6.03% 6.17% 6.78% 6.87% 6.49%
Portfolio turnover rate................. 148% 176% 115% 187% 141%
</TABLE>
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------
DIVERSIFIED INCOME SERIES 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 11.70 $ 12.20 $ 10.40 $ 11.93 $ 11.34
--------- --------- --------- -------- --------
Operations:
Investment income - net............... .91 .82 .88 .87 .87
Net realized and unrealized gains
(losses) on investments............. .26 (.40) .92 (1.53) 1.03
--------- --------- --------- -------- --------
Total from operations................... 1.17 .42 1.80 (.66) 1.90
--------- --------- --------- -------- --------
Distributions to shareholders:
From investment income - net.......... (.89) (.91) -- (.87) (.87)
From net realized gains............... -- -- -- -- (.43)
Excess distributions of net realized
gains............................... -- (.01) -- -- (.01)
--------- --------- --------- -------- --------
Total distributions to shareholders..... (.89) (.92) -- (.87) (1.31)
--------- --------- --------- -------- --------
Net asset value, end of year............ $ 11.98 $ 11.70 $ 12.20 $ 10.40 $ 11.93
--------- --------- --------- -------- --------
Total Return @.......................... 10.44% 4.15% 17.26% (5.22%) 12.76%
Net assets end of year (000s omitted)... $ 105,200 $ 105,831 $ 109,120 $ 98,314 $ 92,589
Ratio of expenses to average daily net
assets................................ .55% .55% .55% .55% .57%
Ratio of net investment income to
average daily net assets.............. 7.11% 6.86% 7.78% 7.59% 7.15%
Portfolio turnover rate................. 166% 171% 139% 142% 125%
</TABLE>
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
81
<PAGE>
FORTIS SERIES FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS (continued):
Year Ended December 31,
--------------------------------
GLOBAL BOND SERIES 1997 1996 1995+
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
Net asset value, beginning of year...... $ 11.11 $ 11.30 $ 10.00
-------- -------- --------
Operations:
Investment income - net............... .46 .57 .54
Net realized and unrealized gains
(losses) on investments............. (.45) (.13) 1.52
-------- -------- --------
Total from operations................... .01 .44 2.06
-------- -------- --------
Distributions to shareholders:
From investment income - net.......... (.37) (.43) (.54)
From net realized gains............... (.10) (.20) (.22)
-------- -------- --------
Total distributions to shareholders..... (.47) (.63) (.76)
-------- -------- --------
Net asset value, end of year............ $ 10.65 $ 11.11 $ 11.30
-------- -------- --------
Total Return @.......................... .14% 3.32% 19.14%
Net assets end of year (000s omitted)... $ 20,692 $ 20,228 $ 13,187
Ratio of expenses to average daily net
assets................................ 1.10% 1.02% 1.28%*
Ratio of net investment income to
average daily net assets.............. 4.41% 5.07% 5.01%*
Portfolio turnover rate................. 168% 129% 184%
</TABLE>
* Annualized
+ For the Period January 3, 1995 (commencement of operations) to
December 31, 1995. The portfolio's inception was December 14, 1994,
when it was initially capitalized. However, the portfolio's shares did
not become effectively registered under the Securities Act of 1933
until January 3, 1995. Information is not presented for the period
from December 14, 1994, through January 3, 1995, as the portfolio's
shares were not registered during that period.
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------
HIGH YIELD SERIES 1997 1996 1995 1994+
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 9.83 $ 9.74 $ 9.47 $ 10.00
-------- -------- -------- --------
Operations:
Investment income - net............... .96 1.04 1.15 .71
Net realized and unrealized gains
(losses) on investments............. -- .13 .30 (.53)
-------- -------- -------- --------
Total from operations................... .96 1.17 1.45 .18
-------- -------- -------- --------
Distributions to shareholders:
From investment income - net.......... (.02) (1.03) (1.14) (.71)
Excess distributions of net realized
gains............................... -- (.05) (.04) --
-------- -------- -------- --------
Total distributions to shareholders..... (.02) (1.08) (1.18) (.71)
-------- -------- -------- --------
Net asset value, end of year............ $ 10.77 $ 9.83 $ 9.74 $ 9.47
-------- -------- -------- --------
Total Return @.......................... 9.76% 10.52% 12.73% (0.75%)
Net assets end of year (000s omitted)... $ 59,228 $ 42,578 $ 28,129 $ 13,706
Ratio of expenses to average daily net
assets................................ .62% .63% .63% .75%*
Ratio of net investment income to
average daily net assets.............. 10.31% 10.22% 11.30% 10.44%*
Portfolio turnover rate................. 353% 235% 130% 20%
</TABLE>
* Annualized.
+ For the Period May 2, 1994 (commencement of operations) to December
31, 1994. The portfolio's inception was April 26, 1994, when it was
initially capitalized. However, the portfolio's shares did not become
effectively registered under the Securities Act of 1933 until May 2,
1994. Information is not presented for the period from April 26, 1994,
through May 2, 1994, as the portfolio's shares were not registered
during that period.
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
82
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS (continued):
Year Ended December 31,
-------------------------------------------------------------
ASSET ALLOCATION SERIES 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 16.99 $ 15.90 $ 13.56 $ 14.14 $ 13.28
--------- --------- --------- --------- ---------
Operations:
Investment income - net............... .59 .61 .65 .56 .52
Net realized and unrealized gains
(losses) on investments............. 2.82 1.38 2.35 (.58) .92
--------- --------- --------- --------- ---------
Total from operations................... 3.41 1.99 3.00 (.02) 1.44
--------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... (.59) (.61) (.64) (.56) (.52)
From net realized gains............... (2.19) (.28) (.02) -- (.06)
Excess distributions of net realized
gains............................... -- (.01) -- -- --
--------- --------- --------- --------- ---------
Total distributions to shareholders..... (2.78) (.90) (.66) (.56) (.58)
--------- --------- --------- --------- ---------
Net asset value, end of year............ $ 17.62 $ 16.99 $ 15.90 $ 13.56 $ 14.14
--------- --------- --------- --------- ---------
Total Return @.......................... 20.24% 12.50% 21.97% (0.31%) 9.79%
Net assets end of year (000s omitted)... $ 482,280 $ 397,712 $ 341,511 $ 260,593 $ 204,603
Ratio of expenses to average daily net
assets................................ .53% .54% .55% .56% .56%
Ratio of net investment income to
average daily net assets.............. 3.16% 3.66% 4.25% 4.05% 3.72%
Portfolio turnover rate................. 113% 115% 98% 73% 74%
Average commission rate paid{::}........ $ .0677 $ .0748 -- -- --
</TABLE>
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
{::} In accordance with rules adopted by the Securities and Exchange
Commission, disclosure of average commission rate paid is required
beginning with fiscal year 1996. The amount represents total brokerage
commission paid on applicable purchases and sales of securities for
the period, divided by the total number of related shares purchased
and sold.
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------
GLOBAL ASSET ALLOCATION SERIES 1997 1996 1995+
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
Net asset value, beginning of year...... $ 12.34 $ 11.42 $ 10.00
-------- -------- --------
Operations:
Investment income - net............... .28 .36 .35
Net realized and unrealized gains
(losses) on investments............. 1.39 1.19 1.55
-------- -------- --------
Total from operations................... 1.67 1.55 1.90
-------- -------- --------
Distributions to shareholders:
From investment income - net.......... (.26) (.38) (.34)
From net realized gains............... (.46) (.25) (.14)
-------- -------- --------
Total distributions to shareholders..... (.72) (.63) (.48)
-------- -------- --------
Net asset value, end of year............ $ 13.29 $ 12.34 $ 11.42
-------- -------- --------
Total Return @.......................... 13.51% 12.72% 17.47%
Net assets end of year (000s omitted)... $ 52,482 $ 37,307 $ 20,080
Ratio of expenses to average daily net
assets................................ 1.16% 1.20% 1.28%*
Ratio of net investment income to
average daily net assets.............. 2.42% 3.01% 3.26%*
Portfolio turnover rate................. 51% 46% 44%
Average commission rate paid{::}........ $ .0360 $ .0412 --
</TABLE>
* Annualized.
+ For the Period January 3, 1995 (commencement of operations) to
December 31, 1995. The portfolio's inception was December 14, 1994,
when it was initially capitalized. However, the portfolio's shares did
not become effectively registered under the Securities Act of 1933
until January 3, 1995. Information is not presented for the period
from December 14, 1994, through January 3, 1995, as the portfolio's
shares were not registered during that period.
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
{::} In accordance with rules adopted by the Securities and Exchange
Commission, disclosure of average commission rate paid is required
beginning with fiscal year 1996. The amount represents total brokerage
commission paid on applicable purchases and sales of securities for
the period divided by the total number of related shares purchased and
sold. The comparability of this information may be affected by the
fact that commission rates per share vary significantly among foreign
countries.
83
<PAGE>
FORTIS SERIES FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS (continued):
Year Ended
December 31,
----------------------
VALUE SERIES 1997 1996+
<S> <C> <C>
- -----------------------------------------------------------------
Net asset value, beginning of period.... $ 11.38 $ 10.27
--------- ---------
Operations:
Investment income - net............... .12 .14
Net realized and unrealized gains
(losses) on investments............. 2.75 1.10
--------- ---------
Total from operations................... 2.87 1.24
--------- ---------
Distributions to shareholders:
From investment income - net.......... (.13) (.13)
From net realized gains............... (.70) --
--------- ---------
Total distributions to shareholders..... (.83) (.13)
--------- ---------
Net asset value, end of period.......... $ 13.42 $ 11.38
--------- ---------
Total Return @.......................... 25.24% 11.49%
Net assets end of period (000s
omitted).............................. $ 55,058 $ 13,951
Ratio of expenses to average daily net
assets................................ .83% .87%*
Ratio of net investment income to
average daily net assets.............. 1.41% 1.72%*
Portfolio turnover rate................. 121% 36%
Average commission rate paid{::}........ $ .0606 $ .0556
</TABLE>
* Annualized.
+ For the period May 1, 1996 (commencement of operations) to December
31,1996. The portfolio's inception was March 28, 1996 when it was
initally capitalized. However, the portfolio's shares did not become
effectively registered under the Securities Act of 1933 until May 1,
1996. Information is not presented for the period from March 28, 1996
through May 1, 1996, as the portfolio's shares were not registered
during the period.
@ These are the portfolio's total returns during the periods, including
reinvestment of all dividends and capital gains distributions.
{::} In accordance with rules adopted by the Securities and Exchange
Commission, disclosure of average commission rate paid is required
beginning with fiscal year 1996. The amount represents total brokerage
commission paid on applicable purchases and sales of securities for
the period, divided by the total number of related shares purchased
and sold.
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------------
GROWTH & INCOME SERIES 1997 1996 1995 1994+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 15.16 $ 12.83 $ 10.07 $ 10.00
--------- --------- -------- --------
Operations:
Investment income - net............... .40 .34 .33 .21
Net realized and unrealized gains
(losses) on investments............. 3.80 2.54 2.76 .07
--------- --------- -------- --------
Total from operations................... 4.20 2.88 3.09 .28
--------- --------- -------- --------
Distributions to shareholders:
From investment income - net.......... (.39) (.34) (.33) (.21)
From net realized gains............... (.21) (.21) -- --
--------- --------- -------- --------
Total distributions to shareholders..... (.60) (.55) (.33) (.21)
--------- --------- -------- --------
Net asset value, end of year............ $ 18.76 $ 15.16 $ 12.83 $ 10.07
--------- --------- -------- --------
Total Return @.......................... 27.69% 21.51% 29.70% 1.74%
Net assets end of year (000s omitted)... $ 244,970 $ 134,932 $ 59,533 $ 16,276
Ratio of expenses to average daily net
assets................................ .70% .76% .80% .86%*
Ratio of net investment income to
average daily net assets.............. 2.63% 2.38% 2.86% 3.12%*
Portfolio turnover rate................. 11% 20% 17% 2%
Average commission rate paid............ $ .0710 $ .0688 -- --
</TABLE>
* Annualized.
+ For the Period May 2, 1994 (commencement of operations) to December
31, 1994. The portfolio's inception was April 26, 1994, when it was
initially capitalized. However, the portfolio's shares did not become
effectively registered under the Securities Act of 1933 until May 2,
1994. Information is not presented for the period from April 26, 1994,
through May 2, 1994, as the portfolio's shares were not registered
during that period.
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
{::} In accordance with rules adopted by the Securities and Exchange
Commission, disclosure of average commission rate paid is required
beginning with fiscal year 1996. The amount represents total brokerage
commission paid on applicable purchases and sales of securities for
the period, divided by the total number of related shares purchases
and sold.
84
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS (continued):
Year Ended
December 31,
----------------------
S&P 500 INDEX SERIES 1997 1996+
<S> <C> <C>
- -----------------------------------------------------------------
Net asset value, beginning of period.... $ 11.47 $ 10.09
--------- ---------
Operations:
Investment income - net............... .12 .10
Net realized and unrealized gains
(losses) on investments............. 3.58 1.37
--------- ---------
Total from operations................... 3.70 1.47
--------- ---------
Distributions to shareholders:
From investment income - net.......... (.12) (.09)
From net realized gains............... (.12) --
--------- ---------
Total distributions to shareholders..... (.24) (.09)
--------- ---------
Net asset value, end of period.......... $ 14.93 $ 11.47
--------- ---------
Total Return @.......................... 32.32% 14.29%
Net assets end of period (000s
omitted).............................. $ 109,572 $ 21,979
Ratio of expenses to average daily net
assets................................ .51% .79%*
Ratio of net investment income to
average daily net assets.............. 1.41% 1.47%*
Portfolio turnover rate................. 5% 6%
Average commission rate paid{::}........ $ 0.0458 $ 0.0477
</TABLE>
* Annualized.
+ For the period May 1,1996 (commencement of operations) to June 30,
1996. The portfolio's inception was March 28, 1996, when it was
initially capitalized. However, the portfolios shares did not become
effectively registered under the Securities Act of 1933 until May 1,
1996. Supplementary information is not presented for the period from
March 28, 1996, through May 1, 1996, as the portfolio's shares were
not registered during the period.
@ These are the portfolios total return during the period, including
reinvestment of all dividend and capital gains distributions.
{::} In accordance with rules adopted by the Securities and Exchange
Commission, disclosure of average commission rate paid is required
beginning with fiscal year 1996. The amount represents total brokerage
commission paid on applicable purchases and sales of securities for
the period, divided by the total number of related shares purchased
and sold.
<TABLE>
<CAPTION>
Year Ended
December 31,
----------------------
BLUE CHIP STOCK SERIES 1997 1996+
<S> <C> <C>
- -----------------------------------------------------------------
Net asset value, beginning of period.... $ 11.67 $ 10.07
--------- ---------
Operations:
Investment income - net............... .07 .07
Net realized and unrealized gains
(losses) on investments............. 3.08 1.60
--------- ---------
Total from operations................... 3.15 1.67
--------- ---------
Distributions to shareholders:
From investment income - net.......... (.06) (.07)
--------- ---------
Net asset value, end of period.......... $ 14.76 $ 11.67
--------- ---------
Total Return @.......................... 27.00% 16.24%
Net assets end of period (000s
omitted).............................. $ 78,729 $ 17,606
Ratio of expenses to average daily net
assets................................ 1.02% 1.13%*
Ratio of net investment income to
average daily net assets.............. .75% .82%*
Portfolio turnover rate................. 24% 17%
Average commission rate paid{::}........ $ 0.0346 $ 0.0329
</TABLE>
* Annualized.
+ For the period May 1, 1996 (commencement of operations) to June 30,
1996. The portfolio's inception was March 28, 1996, when it was
initially capitalized. However, the portfolio's shares did not become
effectively registered under the Securities Act of 1933 until May 1,
1996. Supplementary information is not presented for the period from
March 28, 1996, through May 1, 1996, as the portfolio's shares were
not regestered during the period.
@ These are the portfolios total return during the period, including
reinvestment of all dividend and capital gains distributions.
{::} In accordance with rules adopted by the Securities and Exchange
Commission, disclosure of average commission rate paid is required
beginning with fiscal year 1996. The amount represents total brokerage
commission paid on applicable purchases and sales of securities for
the period, divided by the total number of related shares purchased
and sold.
85
<PAGE>
FORTIS SERIES FUND, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS (continued):
Year Ended December 31,
------------------------------------------------------------
GLOBAL GROWTH SERIES 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 19.00 $ 15.97 $ 12.31 $ 12.77 $ 10.86
--------- --------- --------- --------- --------
Operations:
Investment income - net............... .02 .03 .09 .10 .06
Net realized and unrealized gains
(losses) on investments............. 1.27 3.03 3.66 (.46) 1.91
--------- --------- --------- --------- --------
Total from operations................... 1.29 3.06 3.75 (.36) 1.97
--------- --------- --------- --------- --------
Distributions to shareholders:
From investment income - net.......... -- (.03) (.09) (.10) (.06)
--------- --------- --------- --------- --------
Net asset value, end of year............ $ 20.29 $ 19.00 $ 15.97 $ 12.31 $ 12.77
--------- --------- --------- --------- --------
Total Return @.......................... 6.82% 19.10% 30.49% 2.98% 17.92%
Net assets end of year (000s omitted)... $ 353,255 $ 319,831 $ 207,913 $ 144,647 $ 75,882
Ratio of expenses to average daily net
assets................................ .79% .79% .80% .81% 1.02%
Ratio of net investment income to
average daily net assets.............. .12% .15% .64% .82% .53%
Portfolio turnover rate................. 35% 14% 29% 20% 19%
Average commission rate paid{::}........ $ .0260 $ .0295 -- -- --
</TABLE>
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
{::} In accordance with rules adopted by the Securities and Exchange
Commission, disclosure of average commission rate paid is required
beginning with fiscal year 1996. The amount represents total brokerage
commion paid on applicable purchases and sales of securities for the
period divided by the total number of related shares purchased and
sold. The comparability of this information may be affected by the
fact that commission rates per share vary significantly among foreign
countries.
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------------------------------
GROWTH STOCK SERIES 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 32.59 $ 28.09 $ 22.11 $ 22.92 $ 21.15
--------- --------- --------- --------- ---------
Operations:
Investment income - net............... .12 .12 .13 .18 .09
Net realized and unrealized gains
(losses) on investments............. 3.93 4.50 5.98 (.81) 1.77
--------- --------- --------- --------- ---------
Total from operations................... 4.05 4.62 6.11 (.63) 1.86
--------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... -- (.12) (.13) (.18) (.09)
--------- --------- --------- --------- ---------
Net asset value, end of year............ $ 36.64 $ 32.59 $ 28.09 $ 22.11 $ 22.92
--------- --------- --------- --------- ---------
Total Return @.......................... 12.42% 16.41% 27.66% (2.82%) 8.78%
Net assets end of year (000s omitted)... $ 707,155 $ 661,217 $ 530,945 $ 377,483 $ 304,293
Ratio of expenses to average daily net
assets................................ .66% .67% .67% .68% .69%
Ratio of net investment income to
average daily net assets.............. .33% .39% .51% .81% .46%
Portfolio turnover rate................. 19% 30% 20% 19% 26%
Average commission rate paid{::}........ $ .0659 $ .0728 -- -- --
</TABLE>
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
{::} In accordance with rules adopted by the Securities and Exchange
Commission, disclosure of average commission rate paid is required
beginning with fiscal year 1996. The amount represents total brokerage
commission paid on applicable purchases and sales of securities for
the period, divided by the total number of related shares purchased
and sold.
86
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
7. FINANCIAL HIGHLIGHTS (continued):
Year Ended December 31,
--------------------------------
INTERNATIONAL STOCK SERIES 1997 1996 1995+
<S> <C> <C> <C>
- ---------------------------------------------------------------------------
Net asset value, beginning of year...... $ 12.44 $ 11.27 $ 10.00
-------- -------- --------
Operations:
Investment income - net............... .13 .20 .14
Net realized and unrealized gains
(losses) on investments............. 1.35 1.48 1.38
-------- -------- --------
Total from operations................... 1.48 1.68 1.52
-------- -------- --------
Distributions to shareholders:
From investment income - net.......... (.15) (.21) (.09)
From net realized gains............... (.41) (.30) (.16)
-------- -------- --------
Total distributions to shareholders..... (.56) (.51) (.25)
-------- -------- --------
Net asset value, end of year............ $ 13.36 $ 12.44 $ 11.27
-------- -------- --------
Total Return @.......................... 11.99% 14.02% 14.35%
Net assets end of year (000s omitted)... $ 79,142 $ 52,331 $ 21,327
Ratio of expenses to average daily net
assets................................ 1.08% 1.15% 1.14%*
Ratio of net investment income to
average daily net assets.............. 1.10% 1.71% 1.41%*
Portfolio turnover rate................. 30% 27% 39%
Average commission rate paid{::}........ $ .0256 $ .0363 --
</TABLE>
* Annualized.
+ For the Period January 3, 1995 (commencement of operations) to
December 31, 1995. The portfolio's inception was December 14, 1994,
when it was initially capitalized. However, the portfolio's shares did
not become effectively registered under the Securities Act of 1933
until January 3, 1995. Information is not presented for the period
from December 14, 1994, through January 3, 1995, as the portfolio's
shares were not registered during that period.
@ These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions.
{::} In accordance with rules adopted by the Securities and Exchange
Commission, disclosure of average commission rate paid is required
beginning with fiscal year 1996. The amount represents total brokerage
commission paid on applicable purchases and sales of securities for
the period, divided by the total number of related shares purchased
and sold. The comparability of this information may be affected by the
fact that commission rates per share vary significantly among foreign
countries.
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------
AGGRESSIVE GROWTH SERIES 1997 1996 1995 1994+
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 13.62 $ 12.68 $ 9.80 $ 10.03
--------- -------- -------- --------
Operations:
Investment income - net............... .03 .03 .07 .08
Net realized and unrealized gains
(losses) on investments............. .16 .94 2.88 (.23)
--------- -------- -------- --------
Total from operations................... .19 .97 2.95 (.15)
--------- -------- -------- --------
Distributions to shareholders:
From investment income - net.......... -- (.03) (.07) (.08)
--------- -------- -------- --------
Net asset value, end of year............ $ 13.81 $ 13.62 $ 12.68 $ 9.80
--------- -------- -------- --------
Total Return @.......................... 1.43% 7.64% 29.89% (1.89%)
Net assets end of year (000s omitted)... $ 122,455 $ 96,931 $ 46,943 $ 13,526
Ratio of expenses to average daily net
assets................................. .76% .78% .81% .88%*
Ratio of net investment income to
average daily net assets............... .24% .22% .58% 1.24%*
Portfolio turnover rate................. 25% 22% 21% 5%
Average commission rate paidF........... $ .0616 $ .0692 -- --
</TABLE>
<TABLE>
<C> <S>
* Annualized.
+ For the Period May 2, 1994 (commencement of operations) to December 31, 1994. The portfolio's inception was April 26,
1994, when it was initially capitalized. However, the portfolio's shares did not become effectively registered under the
Securities Act of 1933 until May 2, 1994. Information is not presented for the period from April 26, 1994, through May 2,
1994, as the portfolio's shares were not registered during that period.
@ These are the portfolios total returns during the period, including reinvestment of all dividend and capital gains
distributions.
F In accordance with rules adopted by the Securities and Exchange Commission, disclosure of average commision rate paid is
required beginning with fiscal year 1996. The amount represents total brokerage commission paid on applicable purchases
and sales of securities for the period, divided by the total number of related shares purchased and sold.
</TABLE>
87
<PAGE>
INDEPENDENT AUDITOR'S REPORT
The Board of Directors and Shareholders
Fortis Series Fund, Inc.:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of Money Market Series, U.S.
Government Securities Series, Diversified Income Series, Global Bond Series,
High Yield Series, Asset Allocation Series, Global Asset Allocation Series,
Value Series, Growth & Income Series, S&P 500 Index Series, Blue Chip Stock
Series, Global Growth Series, Growth Stock Series, International Stock Series
and Aggressive Growth Series (series within Fortis Series Fund, Inc.) as of
December 31, 1997 and the related statements of operations, statement of changes
in net assets and the financial highlights for the periods presented. These
financial statements and the financial highlights are the responsibility of fund
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold but not received or delivered,
and securities on loan, we request confirmations from brokers and the custodian,
and where replies are not received, we carry out other appropriate auditing
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluation of the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Money Market Series, U.S. Government Securities Series, Diversified Income
Series, Global Bond Series, High Yield Series, Asset Allocation Series, Global
Asset Allocation Series, Value Series, Growth & Income Series, S&P 500 Index
Series, Blue Chip Stock Series, Global Growth Series, Growth Stock Series,
International Stock Series and Aggressive Growth Series as of December 31, 1997
and the results of their operations, changes in their net assets and the
financial highlights for the periods presented, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 6, 1998
88
<PAGE>
DIRECTORS AND OFFICERS
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, CRANBROOK EDUCATION
COMMUNITY. PRIOR TO JULY 1996,
PRESIDENT MACALESTER COLLEGE
Jean L. King PRESIDENT, COMMUNI-KING
Dean C. Kopperud CHIEF EXECUTIVE OFFICER AND DIRECTOR,
FORTIS ADVISERS, INC. PRESIDENT AND
DIRECTOR, FORTIS INVESTORS, INC.
SENIOR VICE PRESIDENT AND DIRECTOR,
FORTIS BENEFITS INSURANCE COMPANY AND
TIME INSURANCE COMPANY
Edward M. Mahoney PRIOR TO JANUARY, 1995, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER, FORTIS
ADVISERS, INC., FORTIS INVESTORS,
INC.
Robb L. Prince FINANCIAL AND EMPLOYEE BENEFIT
CONSULTANT. PRIOR TO JULY, 1995, VICE
PRESIDENT AND TREASURER, JOSTENS,
INC.
Leonard J. Santow PRINCIPAL, GRIGGS & SANTOW, INC.
Joseph M. Wikler INVESTMENT CONSULTANT AND PRIVATE
INVESTOR. PRIOR TO JANUARY, 1994,
DIRECTOR OF RESEARCH, CHIEF
INVESTMENT OFFICER, PRINCIPAL, AND
DIRECTOR, THE ROTHSCHILD CO.
OFFICERS
Dean C. Kopperud
PRESIDENT AND DIRECTOR
Robert W. Beltz, Jr.
VICE PRESIDENT
James S. Byrd
VICE PRESIDENT
Tamara L. Fagely
VICE PRESIDENT AND TREASURER
Howard G. Hudson
VICE PRESIDENT
Lucinda S. Mezey
VICE PRESIDENT
David A. Peterson
VICE PRESIDENT
Scott R. Plummer
VICE PRESIDENT
Rhonda J. Schwartz
VICE PRESIDENT
Gary N. Yalen
VICE PRESIDENT
Michael J. Radmer
SECRETARY
INVESTMENT MANAGER, REGISTRAR Fortis Advisers, Inc.
AND TRANSFER AGENT BOX 64284, ST. PAUL, MINNESOTA 55164
PRINCIPAL UNDERWRITER Fortis Investors, Inc.
BOX 64284, ST. PAUL, MINNESOTA 55164
CUSTODIAN U.S. Bank National Association
MINNEAPOLIS, MINNESOTA
GENERAL COUNSEL Dorsey & Whitney LLP
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.
89
<PAGE>
[GRAPHIC]
FORTIS FINANCIAL GROUP
Fortis Financial Group (FFG) provides solutions for customers' financial needs
using mutual funds, annuities and life insurance. Besides our own array of
quality products, we create and deliver customized products for other financial
service providers. Like the Fortis name, which comes from the Latin for strong
and steadfast, we concentrate on the customer relationships we build, the
services we provide, the solutions we offer and the performance we seek.
[GRAPHIC]
FFG includes Fortis Advisers, Inc., an established money manager, as well as
Fortis Investors, Inc., a broker dealer with nationwide sales and marketing
influence. The guarantees in our insurance products are underwritten by Fortis
Benefits Insurance Company and Time Insurance Company.
Fortis Financial Group is part of Fortis, Inc., a financial services company
that provides specialty insurance and investment products to individuals,
businesses, associations and other financial services organizations in the
United States. Fortis, Inc. is part of Fortis, a worldwide group of companies
active in the fields of insurance, banking and investments. Fortis is jointly
owned by Fortis AMEV of The Netherlands and Fortis AG of Belgium.
[GRAPHIC] For more information, call your investment representative or Fortis at
(800) 800-2638.
---------------
FORTIS-Registered Trademark- Bulk Rate
U.S. Postage
FORTIS FINANCIAL GROUP PAID
P.O. BOX 64284 Permit No. 3794
ST. PAUL, MN 55164 Minneapolis, MN
---------------
FORTIS SERIES FUND, INC.
[LOGO]Printed on recycled paper with
40% preconsumer waste and 10%
post consumer waste. Please recycle.
FORTIS-Registered Trademark- and Fortis-Registered Trademark- are registered
servicemarks of Fortis AMEV and Fortis AG.
59749 (1/98)
