<PAGE>
FORTIS-Registered Trademark-
FORTIS
ADVANTAGE
PORTFOLIOS, INC.
Annual Report
October 31, 1995
<PAGE>
FORTIS ADVANTAGE PORTFOLIOS, INC. ANNUAL REPORT
CONTENTS
LETTER TO SHAREHOLDERS 1
SCHEDULES OF INVESTMENTS
HIGH YIELD PORTFOLIO 4
GOVERNMENT TOTAL RETURN PORTFOLIO 8
STATEMENTS OF ASSETS AND LIABILITIES 10
STATEMENTS OF OPERATIONS 11
STATEMENTS OF CHANGES IN NET ASSETS
HIGH YIELD PORTFOLIO 12
GOVERNMENT TOTAL RETURN PORTFOLIO 13
NOTES TO FINANCIAL STATEMENTS 14
INDEPENDENT AUDITORS' REPORT 18
BOARD OF DIRECTORS AND OFFICERS 19
OTHER PRODUCTS AND SERVICES 20
- - TOLL-FREE PERSONAL ASSISTANCE
- Shareholder Services
- (800) 800-2638, Ext. 3012
- 7:30 a.m. to 5:30 p.m. CST, M-Th
- 7:30 a.m. to 5:00 p.m. CST, F
- - TOLL-FREE INFORMATION LINE
- For daily account balances,
transaction activity or net asset
value information
- (800) 800-2638, Ext. 4344
- 24 hours a day
FOR MORE INFORMATION ABOUT FORTIS FINANCIAL GROUP'S FAMILY OF PRODUCTS, CALL
YOUR INVESTMENT REPRESENTATIVE OR THE HOME OFFICE AT (800) 800-2638.
TO ORDER PROSPECTUSES OR SALES LITERATURE FOR ANY FORTIS PRODUCT, CALL (800)
800-2638, EXT. 4579.
HIGHLIGHTS
FOR THE YEAR ENDED OCTOBER 31, 1995
<TABLE>
<CAPTION>
CLASS A CLASS B* CLASS C* CLASS H*
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
HIGH YIELD PORTFOLIO
NET ASSET VALUE PER SHARE:
Beginning of period.................... $ 7.90 $ 7.87 $ 7.87 $ 7.87
End of period.......................... $ 7.61 $ 7.60 $ 7.59 $ 7.60
TOTAL RETURN@ 8.07% 7.25% 7.12% 7.26%
DISTRIBUTIONS PER SHARE................. $ 0.8979 $ 0.8185 $ 0.8185 $ 0.8185
GOVERNMENT TOTAL RETURN PORTFOLIO
NET ASSET VALUE PER SHARE:
Beginning of period.................... $ 7.73 $ 7.64 $ 7.64 $ 7.64
End of period.......................... $ 8.16 $ 8.13 $ 8.15 $ 8.13
TOTAL RETURN@ 13.35% 13.26% 13.53% 13.27%
DISTRIBUTIONS PER SHARE................. $ 0.5648** $ 0.4944** $ 0.4944** $ 0.4944**
* Period from November 14, 1994 (commencement of operations) to October 31, 1995.
** Includes $0.01 per share tax return of capital.
@ These are the Fund's total returns during the periods, including reinvestment of all
dividend and capital gains distributions without adjustments for sales charge.
</TABLE>
HOW TO USE THIS REPORT
For a quick overview of the fund's performance during the past twelve months,
refer to the Highlights box below. The letter from the portfolio manager and
president provides a more detailed analysis of the fund and financial markets.
The charts alongside the letter are useful because they provide more information
about your investments. The top holdings charts show the types of securities in
which the fund invests, and the pie chart shows a breakdown of the fund's assets
by industry.
The performance chart graphically compares the fund's total return performance
with a selected investment
index. Remember, however, that an index may reflect the performance of
securities the fund may not hold. Also, the index does not deduct sales charges,
investment advisory fees and other fund expenses, whereas your fund does.
Individuals cannot buy an unmanaged index fund without incurring some charges
and expenses.
This report is just one of several tools you can use to learn more about your
investment in the Fortis Family of Mutual Funds. Your investment representative,
who understands your personal financial situation, can best explain the features
of your investment and how it's designed to help you meet your financial goals.
<PAGE>
[PHOTO]
"It makes sense to put part of my money into the High Yield Portfolio.
I want the opportunity to earn the kind of returns that high yield
bonds can offer."
[PHOTO]
"The Government Total Return Portfolio offers an alternative to CDs.
It seemed to be the right choice for us."
DEAR SHAREHOLDER,
We're pleased to present the High Yield Portfolio and Government Total Return
Portfolio (portfolios within Fortis Advantage Portfolios, Inc.) annual report
for the year ended October 31, 1995.
ECONOMIC REVIEW AND INVESTMENT STRATEGIES
Over the past year, fixed income markets performed well. During 1995 alone,
longer-term rates declined over 1 1/2 percent. The rally in bond prices has been
caused by signs of an economic slowdown, combined with subdued inflation. The
Federal Reserve confirmed the bond market's recognition of a slowdown by
lowering short-term rates in July.
Recently, the consumer is showing some signs of fatigue, as indicated by reports
from major department and chain stores. Retail sales rose by a very modest 0.4
percent over the past three months of the reporting period. In addition, job
growth has been limited, jobless claims have drifted higher, help wanted
advertising has declined, and, in general, people feel the job market is tight.
These developments point to the likelihood that economic expansion will
continue, but will probably lose rather than gain momentum as we move through
year-end. In this environment, with inflation stable or decreasing, it is likely
that monetary policy will be more accommodating; perhaps lowering the federal
funds' rate before the new year.
Meanwhile, the Federal Reserve remains on hold, awaiting the outcome of the
Gingrich, Dole, Clinton compromise and final budget resolution. It seems likely
that we will weather the near term debt ceiling expiration with a package that
allows the government to continue to function, and we feel that some form of
balanced budget legislation will pass in the near future.
In our view, this economic background has been, and continues to be, extremely
favorable for fixed income markets. As long as productivity continues to rise
and labor increases remain minor, the expectation for inflation should remain
below 3 percent.
1
<PAGE>
HIGH YIELD PORTFOLIO COMPOSITION BY INDUSTRY AS OF 10/31/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
OTHER 24.3%
<S> <C>
Leisure Time-Amusements 12.5%
Cable Television 10.1%
Cash Equivalents/Receivables 8.1%
Retail-Grocery 7.7%
Chemicals 7.0%
Containers and Packaging 6.7%
Broadcasting 6.2%
Telecommunications 5.8%
Metals-Mining and Miscellaneous 3.6%
Food-Miscellaneous 2.9%
Machinery 2.5%
Technology 2.6%
</TABLE>
HIGH YIELD PORTFOLIO
TOP TEN HOLDINGS AS OF 10/31/95
<TABLE>
<CAPTION>
Percent of
Net Assets
- -----------------------------------------------------------------------
<C> <S> <C>
1. Argyle Television (9.75%) 2005 2.0%
2. Renco Metals, Inc. (12.00%) 2000 1.8%
3. Paging Network, Inc. (10.125%) 2007 1.8%
4. Falcon Holding Group (11.00%) 2003 1.7%
5. Liggett Group, Inc. (11.50%) 1999 1.6%
6. Hollywood Casino Corp. (12.75%) 2003 1.6%
7. Owens-Illinois, Inc. (11.00%) 2003 1.5%
8. PriCellular Wireless Corp. (12.25%) 2003 1.5%
9. Trump Castle Funding, Inc. (11.75%) 2003 1.5%
10. Arcadian Partners (10.75%) 2005 1.5%
</TABLE>
HIGH YIELD PORTFOLIO
CLASS B, C AND H CUMULATIVE TOTAL RETURNS
Since Inception 11/14/94+
<TABLE>
<CAPTION>
Without With
CDSC CDSC++
- ---------------------------------------------------------------
<S> <C> <C>
Class B shares +7.25% +3.65%
Class C shares +7.12% +6.12%
Class H shares +7.26% +3.66%
Past performance is not indicative of future performance. Total
returns include investment of all dividend and capital gains
distributions. The performance of the separate (A, B, C and H)
classes will vary based on the differences in sales loads and
distribution fees paid by shareholders investing in the
different classes. Class A has a maximum sales charge of 4.50%,
Class B and H have a CDSC of 4.00% (with a waiver of 10% of the
amount invested) if redeemed within two years of purchase, and
Class C has a CDSC of 1.00% if redeemed within one year of
purchase.
+ Date shares were first offered to the public.
++ Assumes redemption on October 31, 1995.
</TABLE>
PORTFOLIO REVIEW
ADVANTAGE HIGH YIELD PORTFOLIO
Over the past year, the high yield bond market rallied with government and high
grade corporate bond markets, but did not significantly outperform those sectors
as it had done in the previous three and a half years.
Despite the low to moderate growth that the U.S. economy has demonstrated,
credit quality within the high yield bond universe has actually declined during
the last 12 months. We feel this negative trend is due to the large number of
lower-quality bonds issued two to three years ago by companies whose prospects
have not mirrored the improvements in the economy. As a result, our present view
on the high yield bond market is cautious. However, we remain optimistic about
the future of the high yield market for the long-term investor.
The High Yield Portfolio delivered disappointing returns during the last 12
months due to its exposure to companies whose businesses did not perform well
during the period. In particular, companies involved in retail, consumer goods
and gaming have suffered from weakness in consumer spending and/or extremely
competitive environments.
In August, we began to reposition the portfolio by improving its overall credit
quality, increasing its trading liquidity, and, most importantly, focusing on
sectors such as telecommunications and broadcasting. We believe these sectors
will exhibit good momentum through 1996. While this strategy has resulted in a
decline in the portfolio's dividend, we believe it is better-positioned to
deliver good performance in the years ahead.
HIGH YIELD PORTFOLIO CLASS A
Value of $10,000 invested January 4, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
HIGH YIELD PORTFOLIO CLASS A
<S> <C> <C> <C>
Average Annual Total Return
Since
1 Year 5 Year January 4, 1988@
With Sales Charge* 3.21% 17.53% 8.40%
Without Sales Charge** 8.07% 18.61% 9.04%
Lehman Brothers High Yield Portfolio
High Yield Index*** Class A
01/04/88 10,000 9,550
88 11,135 10,395
89 11,352 10,208
90 9,893 8,008
91 14,708 12,474
92 16,950 14,245
93 19,985 17,142
94 20,232 17,396
95 23,476 18,800
</TABLE>
Annual period ended October 31
Past performance is not indicative of future performance. Investment
return and principal value will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost.
* SEC defined total returns, including reinvestment of all dividend
and capital gains distributions and the reduction due to the maximum
sales charge of 4.50%.
** These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
*** An unmanaged index of lower quality, high yield corporate debt
securities.
@ Date shares were first offered to the public.
2
<PAGE>
GOVERNMENT TOTAL RETURN PORTFOLIO COMPOSITION BY INDUSTRY AS OF 10/31/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. TREASURY SECURITIES 29.9%
<S> <C>
GNMA's 17.2%
FNMA's 16.4%
FHLMC's 9.3%
Receivables/Cash Equivalents 8.8%
Other Direct Federal Obligations 5.9%
Miscellaneous 3.3%
Other Government Agencies 3.3%
Whole Loan Residential 2.5%
Manufactured Homes 2.4%
Multi-Family Loans 1.0%
</TABLE>
GOVERNMENT TOTAL RETURN PORTFOLIO
TOP TEN HOLDINGS AS OF 10/31/95
<TABLE>
<CAPTION>
Percent of
Net Assets
- -----------------------------------------------------------------------
<C> <S> <C>
1. U.S. Treasury Note (9.00%) 1998 7.7%
2. U.S. Treasury Bond (8.125%) 2021 6.6%
3. FHLB (7.31%) 2004 5.9%
4. GNMA (8.00%) 2022 5.6%
5. U.S. Treasury Note (9.375%) 1996 4.3%
6. U.S. Treasury Note (7.875%) 2004 3.6%
7. FNMA (8.50%) 2005 3.4%
8. U.S. Treasury Note (8.75%) 1997 3.4%
9. FNMA (8.50%) 2022 3.3%
10. Green Tree Financial Corp. (7.65%) 2019 3.3%
</TABLE>
GOVERNMENT TOTAL RETURN PORTFOLIO
CLASS B, C AND H CUMULATIVE TOTAL RETURNS
Since Inception 11/14/94+
<TABLE>
<CAPTION>
Without With
CDSC CDSC++
- -----------------------------------------------------------------
<S> <C> <C>
Class B shares +13.26% +9.66%
Class C shares +13.53% +12.53%
Class H shares +13.27% +9.67%
Past performance is not indicative of future performance. Total
returns include investment of all dividend and capital gains
distributions. The performance of the separate (A, B, C and H)
classes will vary based on the differences in sales loads and
distribution fees paid by shareholders investing in the different
classes. Class A has a maximum sales charge of 4.50%, Class B and
H have a CDSC of 4.00% (with a waiver of 10% of the amount
invested) if redeemed within two years of purchase, and Class C
has a CDSC of 1.00% if redeemed within one year of purchase.
+ Date shares were first offered to the public.
++ Assumes redemption on October 31, 1995.
</TABLE>
ADVANTAGE GOVERNMENT TOTAL RETURN PORTFOLIO
Currently, the effective duration on the Advantage Government Total Return
Portfolio is 4.4 years. Recent changes in the make-up of the portfolio were
relatively minor. The portion of mortgage-backed securities declined slightly,
from about 44 percent at midyear to its current level of nearly 36 percent. The
percentage committed to non-mortgage-backed government securities was increased
from about 52 percent at midyear to the current amount of nearly 55 percent.
This positioning is consistent with our favorable outlook for the bond market.
GOVERNMENT TOTAL RETURN PORTFOLIO CLASS A
Value of $10,000 invested May 28, 1986
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GOVERNMENT TOTAL RETURN PORTFOLIO
CLASS A
<S> <C> <C> <C>
Average Annual Total Return
Since
1 Year 5 Year May 28, 1986@
With Sales Charge* +8.25% +4.97% +6.10%
Without Sales Charge** +13.35% +5.94% +6.62%
Lehman Brothers Government Total Return
Intermediate Gov't Index Class A
5/28/86 10,000 9,550
86 10,629 9,955
87 10,973 10,196
88 11,950 11,140
89 13,193 11,939
90 14,226 13,100
91 16,120 14,333
92 17,708 15,155
93 19,338 16,650
94 19,030 15,421
95 21,292 17,480
</TABLE>
Annual period ended October 31
Past performance is not indicative of future performance. Investment
return and principal value will fluctuate so that shares, when redeemed,
may be worth more or less than their original cost.
* SEC defined total returns, including reinvestment of all dividend
and capital gains distributions and the reduction due to the maximum
sales charge of 4.50%.
** These are the portfolios total returns during the period, including
reinvestment of all dividend and capital gains distributions without
adjustment for sales charge.
*** An unmanaged index of government bonds with an average maturity of
three to four years.
@ Date shares were first offered to the public.
IN CLOSING
We appreciate your investment in the Fortis Advantage Portfolios. If you have
any questions, please call us or talk with your investment professional.
Sincerely,
[SIG] [SIG]
Dean C. Kopperud Howard G. Hudson
President Vice President
November 21, 1995
3
<PAGE>
FORTIS ADVANTAGE HIGH YIELD PORTFOLIO
Schedule of Investments
October 31, 1995
COMMON STOCKS-0.44%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
- --------- ---------- ---------
<C> <S> <C> <C>
APPAREL-0.03%
1,250 Hosiery Corp. of America, Class A (a)
(f).................................... $ 21,150 $ 50,000
---------- ---------
BROADCASTING-0.06%
1,000 Commodore Media (Warrants) (a) (f)....... 26,500 90,000
---------- ---------
CABLE TELEVISION-0.02%
10,000 American Telecasting, Inc. (Warrants)
(a).................................... 20,000 26,250
---------- ---------
CONSUMER GOODS-0.00%
1,800 Chattem, Inc. (Warrants) (a)............. 18,424 630
17,400 Drypers Corp. (Warrants) (a) (f)......... 52,200 174
---------- ---------
70,624 804
---------- ---------
CONTAINERS AND PACKAGING-0.03%
2,000 RXI Holdings, Inc. (Warrants) (a) (f).... 38,954 38,700
---------- ---------
LEISURE TIME-AMUSEMENTS-0.01%
4,565 Boomtown (Warrants) (a).................. 28,942 1,141
26,670 Capital Gaming (a)....................... 133,350 6,401
22,750 Capital Gaming (Warrants) (a)............ 35,440 455
6,000 Casino Magic Finance Corp. (Warrants)
(a).................................... 9,000 300
<CAPTION>
Market
Shares Cost (b) Value (c)
- --------- ---------- ---------
<C> <S> <C> <C>
6,000 Hemmeter Enterprises, Inc. (Warrants)
(a).................................... $ 24,000 $ 60
---------- ---------
230,732 8,357
---------- ---------
MACHINERY-0.03%
1,250 MVE, Inc. (Warrants) (a)................. 8,594 37,500
7,500 Terex Corp. (Rights) (a)................. 18,750 750
---------- ---------
27,344 38,250
---------- ---------
RETAIL-GROCERY-0.15%
20,697 Grand Union Co. (a)...................... 434,848 222,493
---------- ---------
RETAIL-MISCELLANEOUS-0.10%
1,000 Petro PSC Properties, L.P. (Warrants)
(a).................................... 36,570 32,000
5,397 Southland Corp. (Warrants) (a)........... 1,991 10,119
28,500 Thrifty Payless Holdings, Inc. (Warrants)
(a).................................... 160,500 114,000
---------- ---------
199,061 156,119
---------- ---------
STEEL AND IRON-0.01%
1,250 Gulf States Steel (Warrants) (a) (f)..... 13,651 8,750
---------- ---------
TOTAL COMMON STOCKS...................... $1,082,864 $ 639,723
---------- ---------
</TABLE>
PREFERRED STOCKS-0.14%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
---------- --------- ------------
<C> <S> <C> <C>
MACHINERY-0.14%
25,000 Terex Corp. (Warrants) (a) (h)..... $50,000 $ 212,500
--------- ------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-1.04%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
---------- ------------ ---------- ----------
<C> <S> <C> <C> <C>
HOTEL AND MOTEL-1.04%
$1,500,000 Renaissance Hotel Group Finance Corp.,
8.875% 10-1-2005........................ BBB $1,498,528 $1,528,125
---------- ----------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-90.54%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
AEROSPACE AND EQUIPMENT-1.23%
$1,250,000 K & F Industries, Inc., 11.875% Sr Secured
Note 12-1-2003.......................... B+ $ 1,185,000 $ 1,325,000
500,000 Sabreliner Corp., 12.50% Sr Note
4-15-2003............................... B+ 420,000 472,500
------------ ------------
1,605,000 1,797,500
------------ ------------
AIRLINES-1.72%
1,000,000 Northwest Airlines Trust No. 2, 13.875%
Ser D Sub Aircraft Note 6-21-2008....... Ba3* 1,000,000 1,152,920
1,500,000 U.S. Air, Inc., 10.00% Sr Note 7-1-2003... CCC+ 1,351,875 1,365,000
------------ ------------
2,351,875 2,517,920
------------ ------------
BROADCASTING-6.09%
1,200,000 Allbritton Communications Co., 11.50% Sr
Sub Deb 8-15-2004....................... B- 1,272,000 1,273,500
3,000,000 Argyle Television, 9.75% Sr Sub Note
11-01-2005 (g).......................... B- 3,000,000 3,007,500
1,250,000 Commodore Media, 12.71% Sr Sub Note
5-1-2003................................ NR 1,085,558 1,131,250
1,500,000 Paxson Communications Corp., 11.625% Sr
Sub Note 10-1-2002 (f).................. B- 1,482,450 1,477,500
</TABLE>
4
<PAGE>
CORPORATE BONDS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
$2,000,000 Sinclair Broadcasting, Inc., 10.00% Sr Sub
Note 9-30-2005.......................... B+ $ 2,000,000 $ 2,055,000
------------ ------------
8,840,008 8,944,750
------------ ------------
CABLE TELEVISION-10.08%
2,144,001 American Telecasting, Inc., 12.75% Sr Sub
Disc Note 6-15-2004 (Zero coupon until
6-15-1999) (e).......................... CCC+ 1,277,003 1,388,241
2,500,000 Australis Media, 9.31% Sr Sub Note
5-15-2003 (Zero coupon until 5-15-2000)
(and warrants) (e)...................... CCC 1,654,526 1,800,000
2,250,000 Bell Cablemedia PLC, 11.875% Sr Disc Note
9-15-2005 (Zero coupon until 9-15-2000)
(e) (f)................................. BB- 1,283,002 1,316,250
1,500,000 Comcast Corp., 9.375% Sr Sub Deb
5-15-2005............................... B+ 1,530,250 1,545,000
2,000,000 Continental Cablevision, Inc., 9.50% Sr
Deb 8-1-2013............................ BB+ 2,070,000 2,100,000
2,656,986 Falcon Holding Group, L.P., 11.00% Sr Sub
Note Ser B 9-15-2003 (Interest is
Payable-in-Kind)........................ NR 2,611,699 2,501,285
1,500,000 Telewest plc, 11.00% Sr Disc Deb 10-1-2007
(Zero coupon until 10-1-2000) (e)....... BB 888,695 877,500
1,500,000 Telewest plc, 9.625% Sr Deb 10-1-2006..... BB 1,503,125 1,498,125
3,000,000 Videotron Holdings plc, 11.67% Sr Disc
Note 8-15-2005 (Zero coupon until
8-15-2000) (e) (g)...................... B+ 1,719,342 1,773,750
------------ ------------
14,537,642 14,800,151
------------ ------------
CHEMICALS-7.05%
1,750,000 Acetex Corp., 9.75% Sr Secured Note
10-1-2003 (f)........................... BB- 1,751,722 1,793,750
2,000,000 Arcadian Partners L.P., 10.75% Sr Note Ser
B 5-1-2005.............................. BB- 2,085,859 2,155,000
1,500,000 Harris Chemical North America, Inc.,
11.66% Sr Secured Disc Note 7-15-2001
(Zero coupon until 1-15-1996) (e)....... B+ 1,386,727 1,318,125
2,000,000 Indspec Chemical Corp., 11.50% Sr Sub Disc
Note Ser B 12-1-2003 (Zero coupon until
12-1-1998) (e).......................... B- 1,405,354 1,360,000
1,500,000 LaRoche Industries, Inc., 13.00% Sr Sub
Note 8-15-2004.......................... B 1,569,375 1,597,500
2,000,000 NL Industries, Inc., 11.75% Sr Secured
Note 10-15-2003......................... B 2,130,000 2,120,000
------------ ------------
10,329,037 10,344,375
------------ ------------
CONSUMER GOODS-0.75%
1,135,000 Chattem, Inc., 12.75% Sr Sub Note Ser B
6-15-2004............................... B- 1,108,722 1,100,950
------------ ------------
CONTAINERS AND PACKAGING-6.71%
2,000,000 Owens-Illinois, Inc., 11.00% Sr Deb
12-1-2003............................... BB 2,187,500 2,217,500
1,750,000 Riverwood International Corp., 10.75% Sr
Note 6-15-2000.......................... B+ 1,850,000 1,846,250
2,000,000 RXI Holdings, Inc., 14.00% Sr Secured Note
7-15-2002 (f)........................... B- 1,976,204 1,961,300
1,750,000 Silgan Corp., 11.75% Sr Sub Note
6-15-2002............................... B- 1,846,250 1,855,000
2,000,000 Stone Container Corp., 9.875% Sr Note
2-1-2001................................ B+ 1,990,000 1,980,000
------------ ------------
9,849,954 9,860,050
------------ ------------
COSMETICS AND SUNDRIES-1.05%
1,500,000 Revlon Consumer Products Corp., 10.50% Sr
Sub Note 2-15-2003...................... B- 1,512,812 1,543,125
------------ ------------
FOOD-MISCELLANEOUS-2.86%
1,500,000 Curtice-Burns Foods Inc., 12.25% Sr Sub
Note 2-1-2005........................... B 1,531,250 1,560,000
1,250,000 Envirodyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000
(f)..................................... NR 1,240,625 1,234,375
1,650,000 Specialty Foods Corp., 11.25% Sr Sub Note
8-15-2003............................... B- 1,478,750 1,398,375
------------ ------------
4,250,625 4,192,750
------------ ------------
FOOD SERVICE-0.35%
500,000 SC International, Inc., 13.00% Sr Sub Deb
10-1-2005 (g)........................... B 500,000 512,500
------------ ------------
FOREST PRODUCTS-1.28%
2,000,000 Pacific Lumber Co., 10.50% Sr Note
3-1-2003................................ B+ 1,900,000 1,880,000
------------ ------------
HEALTH CARE SERVICES-1.04%
1,500,000 Tenet Healthcare Corp., 8.625% Sr Note
12-1-2003............................... B+ 1,495,009 1,533,750
------------ ------------
HOTEL AND MOTEL-1.37%
2,000,000 Host Marriott Properties, Inc., 9.50% Sr
Note 5-15-2005 (f)...................... BB- 1,941,077 2,010,000
------------ ------------
HOUSING-0.64%
1,000,000 MDC Holdings, Inc., 11.125% Note
12-15-2003.............................. B 933,874 940,000
------------ ------------
INDUSTRIAL-0.57%
1,000,000 American Standard, Inc., 9.45% Sr Sub Deb
6-1-2005 (Zero coupon until 6-1-1998)
(e)..................................... B+ 830,442 837,500
------------ ------------
LEISURE TIME-AMUSEMENTS-12.46%
2,000,000 Bally's Park Place, Inc., 9.25% First Mtg
Bond 3-15-2004.......................... BB 1,890,338 1,972,500
1,250,000 Boomtown, Inc., 11.50% First Mtg Note
11-1-2003............................... B+ 1,175,841 1,075,000
</TABLE>
5
<PAGE>
FORTIS ADVANTAGE HIGH YIELD PORTFOLIO
Schedule of Investments
October 31, 1995
CORPORATE BONDS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
$1,250,000 Capital Gaming International, Inc., 11.50%
Secured Note 2-1-2001 (a) (g)........... Caa* $ 868,640 $ 625,000
500,000 Casino Magic Finance Corp., 11.50% First
Mtg Note Cl B 10-15-2001................ B+ 417,500 417,500
1,250,000 GNF Corp., 10.625% 1st Mtg Note
4-1-2003................................ BB 1,037,245 1,087,500
60,368 Hemmeter Enterprises, Inc., 12.00% Sr
Secured Note 12-15-2000 (Interest is
Payable-in-Kind) (h).................... NR 7,962 24,714
2,500,000 Hollywood Casino Corp., 12.75% Sr Secured
Note 11-1-2003 (g)...................... B+ 2,380,565 2,350,000
2,000,000 Pioneer Finance Corp., 13.50% First Mtg
Bond 12-1-1998.......................... B- 1,641,250 1,600,000
2,000,000 Players International, Inc. 10.875% Sr
Note 4-15-2005.......................... BB 1,983,750 1,911,252
1,349,000 Royal Caribbean Cruises, Ltd., 11.375% Sr
Sub Note 5-15-2002...................... BB+ 1,473,323 1,483,900
1,000,000 Showboat, Inc., 13.00% Sr Sub Note
8-1-2009 (g)............................ B 1,082,500 1,090,000
2,750,000 Trump Castle Funding, Inc., 11.75% First
Mtg Bond 11-15-2003 (g)................. Caa* 1,969,087 2,172,500
1,250,000 Trump Plaza Funding, 10.875% First Mtg
Note 6-15-2001.......................... B+ 1,008,664 1,168,750
1,552,139 Trump Taj Mahal Funding, Inc., 11.35%
First Mtg Note 11-15-1999 (Interest is
9.375% cash and 1.975%
Payable-in-Kind)........................ Caa* 1,305,301 1,324,673
------------ ------------
18,241,966 18,303,289
------------ ------------
MACHINERY-2.43%
1,250,000 MVE, Inc., 12.50% Sr Secured Note
2-15-2002............................... B+ 1,241,993 1,300,000
1,000,000 Specialty Equipment Companies, Inc.,
11.375% Sr Sub Note 12-1-2003........... B- 1,000,000 1,035,000
1,300,000 Spreckels Industries, Inc., 11.50% Sr
Secured Note 9-1-2000................... B 1,310,875 1,238,250
------------ ------------
3,552,868 3,573,250
------------ ------------
METALS-MINING AND MISCELLANEOUS-3.60%
1,550,000 Haynes International, Inc., 11.25% Sr
Secured Note Ser A 6-15-1998............ CCC+ 1,511,250 1,488,000
1,750,000 Haynes International, Inc., 13.50% Sr Sub
Deb 8-15-1999........................... CCC- 1,115,000 1,102,500
2,500,000 Renco Metals, Inc., 12.00% Sr Note
7-15-2000............................... B+ 2,586,562 2,700,000
------------ ------------
5,212,812 5,290,500
------------ ------------
MISCELLANEOUS-1.25%
2,000,000 Jordan Industries, Inc., 10.375% Sr Note
8-1-2003................................ B+ 1,892,500 1,830,000
------------ ------------
OFFICE EQUIPMENT AND SUPPLIES-1.39%
1,300,000 Mail-Well Corp., 10.50% Sr Sub Note
2-15-2004............................... B 1,271,000 1,235,000
800,000 Williamhouse-Regency of Delaware, Inc.,
11.50% Sr Sub Deb 6-15-2005............. B- 789,500 800,000
------------ ------------
2,060,500 2,035,000
------------ ------------
PRINTING-0.62%
1,350,000 U.S. Banknote Corp., 11.625% Sr Note Ser B
8-1-2002................................ B- 1,281,061 904,500
------------ ------------
PUBLISHING-0.99%
2,000,000 Marvel (Parent) Holdings, Inc., 12.25% Sr
Secured Zero Coupon Disc Note 4-15-1998
(e)..................................... B- 1,497,624 1,460,000
------------ ------------
RESTAURANTS AND FRANCHISING-1.24%
2,502,000 Flagstar Corp., 11.25% Sr Sub Deb
11-1-2004............................... CCC+ 2,380,280 1,813,950
------------ ------------
RETAIL-GROCERY-7.57%
2,000,000 Bruno's, Inc., 10.50% Sr Sub Note 8-1-2005
(g)..................................... B- 1,962,500 1,960,000
1,000,000 Dominick's Finer Foods, Inc., 10.875% Sr
Sub Note 5-1-2005....................... B- 1,022,500 1,052,500
2,295,153 Farm Fresh Holdings Corp.,14.25% Sr Note
10-1-2002) (Interest is Payable-in-Kind
thru 10-1-1997)......................... CCC+ 838,501 969,664
1,500,000 Grand Union Co., 12.00% Sr Note 9-1-2004
(g)..................................... B- 1,439,062 1,443,750
1,422,932 Kash N Karry Corp., 11.50% Sr Note
2-1-2003 (Interest is Payable in
Kind)................................... B- 1,273,783 1,392,336
750,000 Pantry (The), Inc., 12.00% Sr Note Ser B
11-15-2000.............................. B+ 743,750 723,750
350,000 Pay 'N' Pak Stores, Inc., 13.50% Sr Sub
Deb 6-1-1998 (a)........................ Ca* 350,000 1,750
1,500,000 Purity Supreme, Inc., 11.75% Sr Secured
Note 8-1-1999........................... CCC+ 1,636,875 1,629,375
2,000,000 Ralphs Grocery Co., 11.00% Sr Sub Note
6-15-2005 (g)........................... B- 1,953,125 1,940,000
------------ ------------
11,220,096 11,113,125
------------ ------------
RETAIL-MISCELLANEOUS-2.55%
1,000,000 Color Tile, Inc., 10.75% Sr Note
12-15-2001 (a).......................... CCC+ 590,000 390,000
1,500,000 Farm Fresh, Inc., 12.25% Sr Note
10-1-2000............................... B- 1,525,000 1,237,500
2,000,000 Thrifty Payless, Inc., 12.25% Sr Sub Note
4-15-2004 (g)........................... B- 1,847,938 2,120,000
------------ ------------
3,962,938 3,747,500
------------ ------------
</TABLE>
6
<PAGE>
CORPORATE BONDS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
STEEL AND IRON-1.53%
$1,000,000 AK Steel Corp., 10.75% Sr Note 4-1-2004... BB- $ 1,075,000 $ 1,090,000
1,250,000 Gulf States Steel Corp., 13.50% First Mtg
Note 4-15-2003.......................... B 1,236,349 1,162,500
------------ ------------
2,311,349 2,252,500
------------ ------------
TECHNOLOGY-2.55%
2,000,000 Computervision Corp., 11.375% Sr Sub Note
8-15-1999............................... CCC+ 1,724,688 2,080,000
1,650,000 Genicom Corp., 12.50% Sr Sub Note
2-15-1997............................... NR 1,465,500 1,670,625
------------ ------------
3,190,188 3,750,625
------------ ------------
TELECOMMUNICATIONS-5.84%
1,250,000 A+ Communications, Inc., 11.875% Sr Sub
Note 11-1-2005 (g)...................... CCC+ 1,240,935 1,253,125
750,000 Metrocall, Inc., 10.375% Sr Sub Note
10-1-2007............................... B- 750,000 768,750
1,500,000 Mobile Telecommunications, 13.50% Sr Note
12-15-2002.............................. BB- 1,676,250 1,691,250
2,500,000 Paging Network, Inc., 10.125% Sr Sub Note
8-1-2007................................ B 2,536,250 2,662,500
3,000,000 PriCellular Wireless Corp., 12.25% Sr Disc
Note 10-1-2003 (Zero coupon until
10-1-1998) (e) (g)...................... CCC+ 2,121,563 2,205,000
------------ ------------
8,324,998 8,580,625
------------ ------------
TOBACCO-1.63%
3,000,000 Liggett Group, Inc., 11.50% Ser B Secured
Note 2-1-1999........................... NR 2,196,625 2,400,000
------------ ------------
TRANSPORTATION-1.16%
1,750,000 Fruehauf Trailer Corp., 14.75% Sr Secured
Note 4-30-2002.......................... NR 1,688,750 1,697,500
------------ ------------
WASTE DISPOSAL-0.94%
1,290,000 Allied Waste Industries, Inc., 12.00% Sr
Sub Note 2-1-2004....................... B 1,262,450 1,373,850
------------ ------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE................................... 132,263,082 132,941,535
------------ ------------
TOTAL CORPORATE BONDS..................... 133,761,610 134,469,660
------------ ------------
TOTAL LONG-TERM INVESTMENTS............... $134,894,474 $135,321,883
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-3.78%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
- ---------- -------------
<C> <S> <C>
BANKS-2.89%
$4,240,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.62%.............. $ 4,240,000
-------------
DIVERSIFIED FINANCE-0.89%
1,306,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.79%....................... 1,306,000
-------------
TOTAL SHORT-TERM INVESTMENTS.................. 5,546,000
-------------
TOTAL INVESTMENTS IN SECURITIES
(COST: $140,440,474) (B).................. $ 140,867,883
-------------
-------------
</TABLE>
(a) Presently non-income producing. For corporate debt securities, items
identified are in default as to payment of interest and/or principal.
(b) At October 31, 1995, the cost of securities for federal income tax purposes
was $140,448,121 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation ........................................ $ 4,070,628
Unrealized depreciation ....................................... (3,650,866)
-------------------------------------------------------------------
Net unrealized appreciation ..................................... $ 419,762
-------------------------------------------------------------------
(c) See Note A of accompanying Notes to Financial Statements regarding
valuation of Securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets.
(e) The interest rate disclosed for these securities represent the original
issue discount yields on the date of acquisition.
(f) Securities sold within 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 value of these securities at October 31, 1995
is $9,980,799 which represents 6.79% of net assets.
(g) Security is fully or partially on loan at October 31, 1995. See Note 1 of
accompanying Notes to Financial Statements.
(h) Securities sold within 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.
* Moody's Rating.
7
<PAGE>
FORTIS ADVANTAGE GOVERNMENT TOTAL RETURN PORTFOLIO
Schedule of Investments
October 31, 1995
ASSET BACKED SECURITIES-9.19%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (a) Value (b)
- ------------ ------------ ---------- ----------
<C> <S> <C> <C> <C>
MANUFACTURED HOMES-2.40%
$1,500,000 Oakwood Mtg Investors, Inc., 7.10% Ser 1995-A Cl A3
9-15-2020............................................ AAA $1,498,615 $1,509,471
---------- ----------
MISCELLANEOUS-3.31%
2,000,000 Green Tree Financial Corp., 7.65% Ser 1994-1 Class A5
Sr Sub Pass Thru Certificate 4-15-2019............... AA2 1,992,690 2,081,210
---------- ----------
MULTI-FAMILY LOANS-0.96%
600,000 Paine Webber Mortgage Acceptance Corp. IV, 6.70% Series
1995-M1 Class A 10-1-2007(f)......................... AAA 600,372 600,375
---------- ----------
WHOLE LOAN RESIDENTIAL-2.52%
1,558,940 Residential Resources, Inc., 9.50% Series 14 Class A
Busted PAC 12-1-2018................................. AAA 1,596,088 1,587,467
---------- ----------
TOTAL ASSET BACKED SECURITIES.......................... $5,687,765 $5,778,523
---------- ----------
</TABLE>
U.S. GOVERNMENT SECURITIES-82.09%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (a) Value (b)
------------ ------------ ------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION-9.28%
MORTGAGE BACKED SECURITIES:
$ 359,090 9.00% 2001-2018........................................ $ 347,786 $ 372,556
1,622,391 9.50% 2016............................................. 1,735,413 1,712,636
260,042 11.25% 2014............................................ 279,897 288,077
421,344 11.50% 2019............................................ 450,225 468,219
286,761 12.50% 2019............................................ 311,295 322,965
------------ ------------
3,124,616 3,164,453
------------ ------------
REMIC-PAC'S:
1,109,036 9.00% 2020............................................. 1,114,403 1,139,689
1,500,000 9.50% 2003............................................. 1,526,171 1,533,808
------------ ------------
2,640,574 2,673,497
------------ ------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION........... 5,765,190 5,837,950
------------ ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-16.42%
MORTGAGE BACKED SECURITIES:
1,000,000 6.50% 2010 (e)......................................... 987,656 991,557
2,026,685 8.50% 2022............................................. 2,139,225 2,101,407
351,773 10.50% 2014............................................ 375,253 387,500
350,445 11.50% 2015............................................ 382,264 392,389
248,663 12.00% 2011............................................ 272,716 280,445
249,583 12.50% 2015............................................ 278,132 283,198
------------ ------------
4,435,246 4,436,496
------------ ------------
NOTES:
2,000,000 6.85% 2000............................................. 2,000,000 2,047,732
1,500,000 7.40% 2004............................................. 1,574,485 1,614,939
2,000,000 8.50% 2005............................................. 2,076,227 2,164,604
------------ ------------
5,650,712 5,827,275
------------ ------------
REMIC-PAC'S:
57,202 13.50% 2017............................................ 65,447 58,150
------------ ------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION............ 10,151,405 10,321,921
------------ ------------
<CAPTION>
Principal Market
Amount Cost (a) Value (b)
------------ ------------ ------------
<C> <S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-17.24%
MORTGAGE BACKED SECURITIES:
$ 1,628,331 7.50% 2022............................................. $ 1,631,331 $ 1,651,220
3,945,838 8.00% 2017-2022........................................ 4,046,355 4,064,189
541,302 9.00% 2016............................................. 573,482 564,476
1,187,419 Fleet Mtg Securities Class D, 9.125% 2018 (GNMA
Backed).............................................. 1,214,279 1,213,054
3,151,132 9.50% 2016-2019........................................ 3,296,740 3,347,216
------------ ------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION......... 10,762,187 10,840,155
------------ ------------
OTHER DIRECT FEDERAL OBLIGATIONS-5.94%
FEDERAL HOME LOAN BANK:
3,500,000 7.31% 2004............................................. 3,510,840 3,734,504
------------ ------------
OTHER GOVERNMENT AGENCIES-3.28%
RESOLUTION FUNDING CORPORATION:
7,000,000 8.395% Zero Coupon Strip 2014 (d)...................... 1,818,842 2,059,883
------------ ------------
U.S. TREASURY SECURITIES-29.93%
BONDS:
250,000 7.50% 2024............................................. 269,326 286,094
3,440,000 8.125% 2021............................................ 3,891,256 4,161,320
------------ ------------
4,160,582 4,447,414
------------ ------------
NOTES:
1,080,000 5.75% 2003............................................. 1,065,691 1,064,475
1,360,000 6.375% 2002............................................ 1,389,934 1,394,000
2,000,000 7.875% 2004............................................ 2,073,872 2,254,372
2,000,000 8.75% 1997............................................. 2,086,029 2,114,372
4,500,000 9.00% 1998............................................. 4,780,861 4,848,750
2,650,000 9.375% 1996............................................ 2,683,019 2,694,719
------------ ------------
14,079,406 14,370,688
------------ ------------
TOTAL U.S. TREASURY SECURITIES......................... 18,239,988 18,818,102
------------ ------------
TOTAL U.S. GOVERNMENT SECURITIES....................... 50,248,452 51,612,515
------------ ------------
TOTAL LONG-TERM DEBT SECURITIES........................ $ 55,936,217 $ 57,391,038
------------ ------------
</TABLE>
8
<PAGE>
SHORT-TERM INVESTMENTS-9.16%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (b)
----------- ------------
<C> <S> <C>
DIVERSIFIED FINANCE-2.33%
$1,468,000 Associates Corp. Master Variable Rate
Note, Current rate -- 5.79%............. $ 1,468,000
------------
U.S. OTHER DIRECT FEDERAL OBLIGATIONS-6.83%
2,300,000 Federal Home Loan Bank, 5.71%,
11-9-1995............................... 2,296,768
2,000,000 Federal Farm Credit Bank, 5.72%,
11-13-1995.............................. 1,995,934
------------
4,292,702
------------
TOTAL SHORT-TERM INVESTMENTS.............. 5,760,702
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$61,696,919) (A)........................ $63,151,740
------------
------------
</TABLE>
(a) At October 31, 1995, the cost of securities for federal income tax purposes
was $62,330,575 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
Unrealized appreciation ......................................... $1,376,455
Unrealized depreciation ......................................... (555,290)
- --------------------------------------------------------------------------------
Net unrealized appreciation ...................................... $ 821,165
- --------------------------------------------------------------------------------
(b) See Note A of accompanying Notes to Financial Statements regarding
valuation of securities.
(c) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets.
(d) The interest rate disclosed for these securities represents the original
issue discount yields on the date of acquisition.
(e) The cost of securities purchased on a when-issued basis at October 31,
1995, is $987,656.
(f) Securities sold within 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 other 'accredited
investors'. These investments have been identified by portfolio management
as illiquid securities. The value of these securities at October 31, 1995
is $600,375 which represents 0.95% of net assets.
9
<PAGE>
Fortis Advantage Portfolios, Inc.
Statements of Assets and Liabilities
October 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GOVERNMENT
HIGH TOTAL
YIELD RETURN
PORTFOLIO PORTFOLIO
------------- -------------
<S> <C> <C>
ASSETS:
Investments in securities, as detailed in the accompanying
schedules, at market (cost $140,440,474; and $61,696,919;
respectively) (Note 1)............................................ $ 140,867,883 $ 63,151,740
Cash on deposit with custodian...................................... -- 21,926
Collateral for securities lending transactions (Note 1)............. 14,001,600 --
Receivables:
Investment securities sold........................................ 2,480,625 35,297
Interest and dividends............................................ 3,734,759 874,251
Subscriptions of capital stock.................................... 361,823 20
Deferred registration costs (Note 1)................................ 17,263 15,607
Prepaid expenses.................................................... 165 --
------------- -------------
TOTAL ASSETS.......................................................... 161,464,118 64,098,841
------------- -------------
LIABILITIES:
Cash portion of dividends payable................................... 513,092 120,344
Payable upon return of securities loaned (Note 1)................... 14,001,600 --
Payable for investment securities purchased......................... -- 987,656
Redemptions of capital stock........................................ 2,492 61,018
Payable for investment advisory and management fees (Note 2)........ 89,767 42,450
Payable for distribution fees (Note 2).............................. 7,977 2,471
Accounts payable and accrued expenses............................... 10,245 12,756
------------- -------------
TOTAL LIABILITIES..................................................... 14,625,173 1,226,695
------------- -------------
NET ASSETS:
Net proceeds of capital stock, par value $.01 per share-authorized
10,000,000,000 shares............................................. 161,185,639 75,445,312
Unrealized appreciation of investments.............................. 427,409 1,454,821
Undistributed (excess distributions of) net investment income....... 98,588 (120,344)
Accumulated net realized loss from sale of investments.............. (14,872,691) (13,907,643)
------------- -------------
TOTAL NET ASSETS...................................................... $ 146,838,945 $ 62,872,146
------------- -------------
------------- -------------
SHARES OUTSTANDING AND NET ASSET VALUE PER SHARE:
Class A shares (based on net assets of $113,267,509; and
$62,004,422; respectively, and 14,889,405; and 7,596,755 shares
outstanding; respectively)........................................ $7.61 $8.16
------------- -------------
Class B shares (based on net assets of $7,529,601; and $113,833;
respectively, and 990,294; and 14,004 shares outstanding;
respectively)..................................................... $7.60 $8.13
------------- -------------
Class C shares (based on net assets of $2,179,995; and $29,954;
respectively, and 287,148; and 3,675 shares outstanding;
respectively)..................................................... $7.59 $8.15
------------- -------------
Class H shares (based on net assets of $23,861,840; and $723,937;
respectively, and 3,139,420; and 89,086 shares outstanding;
respectively)..................................................... $7.60 $8.13
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
FORTIS ADVANTAGE PORTFOLIOS, INC.
Statements of Operations
For the Year Ended October 31, 1995
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
GOVERNMENT
HIGH TOTAL
YIELD RETURN
PORTFOLIO PORTFOLIO
------------- -------------
<S> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest income................................................... $ 14,268,702 $ 4,978,914
Fee income (Note 1)............................................... 23,440 6,842
------------- -------------
Total Income........................................................ 14,292,142 4,985,756
------------- -------------
Expenses:
Investment advisory and management fees (Note 2).................. 874,371 517,700
Distribution fees (Class A) (Note 2).............................. 367,747 228,911
Distribution fees (Class B) (Note 2).............................. 23,433 236
Distribution fees (Class C) (Note 2).............................. 8,906 156
Distribution fees (Class H) (Note 2).............................. 94,620 2,505
Registration fees................................................. 72,500 54,106
Shareholders' notices and reports................................. 41,250 19,212
Legal and auditing fees (Note 2).................................. 26,850 28,585
Custodian fees.................................................... 29,500 23,664
Directors' fees and expenses...................................... 9,500 5,017
Other............................................................. 9,657 7,535
------------- -------------
Total Expenses...................................................... 1,558,334 887,627
------------- -------------
NET INVESTMENT INCOME................................................. 12,733,808 4,098,129
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 1):
Net realized loss from security transactions........................ (13,580,003) (2,921,938)
Net change in unrealized appreciation of investments................ 9,314,020 7,035,529
------------- -------------
NET GAIN (LOSS) ON INVESTMENTS........................................ (4,265,983) 4,113,591
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. $ 8,467,825 $ 8,211,720
------------- -------------
------------- -------------
</TABLE>
11
<PAGE>
FORTIS ADVANTAGE PORTFOLIOS, INC.
Statements of Changes in Net Assets
HIGH YIELD PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 12,733,808 $ 9,248,772
Net realized gain (loss) from security transactions................. (13,580,003) 806,811
Net change in unrealized appreciation (depreciation) of investments
in securities..................................................... 9,314,020 (9,512,273)
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS.................. 8,467,825 543,310
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A........................................................... (11,554,220) (9,506,269)
Class B........................................................... (234,800) --
Class C........................................................... (90,925) --
Class H........................................................... (955,294) --
Excess distributions of net realized gains
Class A........................................................... (528,575) (45,321)
Class B........................................................... (10,742) --
Class C........................................................... (4,160) --
Class H........................................................... (43,702) --
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS................................... (13,422,418) (9,551,590)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (4,938,047 and 6,891,317 shares).......................... 38,455,673 58,803,866
Class B (1,018,845 shares)........................................ 7,922,888 --
Class C (289,026 shares).......................................... 2,255,501 --
Class H (3,315,347 shares)........................................ 25,836,255 --
Proceeds from shares issued as a result of reinvested dividends
Class A (991,834 and 719,057 shares).............................. 7,704,696 6,047,165
Class B (15,217 shares)........................................... 117,480 --
Class C (8,061 shares)............................................ 62,290 --
Class H (64,902 shares)........................................... 502,965 --
Less cost of repurchase of shares
Class A (3,522,187 and 3,616,490 shares).......................... (27,386,262) (30,627,112)
Class B (43,768 shares)........................................... (337,347) --
Class C (9,939 shares)............................................ (77,278) --
Class H (240,829 shares).......................................... (1,874,246) --
------------- -------------
NET INCREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............ 53,182,615 34,223,919
------------- -------------
TOTAL INCREASE IN NET ASSETS.......................................... 48,228,022 25,215,639
NET ASSETS:
Beginning of year................................................... 98,610,923 73,395,284
------------- -------------
End of year (includes undistributed net investment income of $98,588
and $199,411, respectively)....................................... $ 146,838,945 $ 98,610,923
------------- -------------
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
12
<PAGE>
FORTIS ADVANTAGE PORTFOLIOS, INC.
Statement of Changes in Net Assets
GOVERNMENT TOTAL RETURN PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31,
1995 1994
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income............................................... $ 4,098,129 $ 5,024,228
Net realized loss from security transactions........................ (2,921,938) (4,120,660)
Net change in unrealized appreciation (depreciation) of investments
in securities..................................................... 7,035,529 (7,013,797)
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS....... 8,211,720 (6,110,229)
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A........................................................... (4,016,921) (5,025,096)
Class B........................................................... (1,212) --
Class C........................................................... (818) --
Class H........................................................... (13,247) --
Excess distributions of net realized gains
Class A........................................................... (613,905) (1,152,236)
Class B........................................................... (185) --
Class C........................................................... (125) --
Class H........................................................... (2,024) --
Tax return of capital
Class A........................................................... (53,495) --
Class B........................................................... (16) --
Class C........................................................... (11) --
Class H........................................................... (176) --
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS................................... (4,702,135) (6,177,332)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (141,987 and 690,778 shares).............................. 1,109,300 5,875,894
Class B (13,877 shares)........................................... 111,920 --
Class C (3,791 shares)............................................ 29,784 --
Class H (130,817 shares).......................................... 1,049,649 --
Proceeds from shares issued as a result of reinvested dividends
Class A (358,635 and 433,482 shares).............................. 2,836,471 3,609,513
Class B (132 shares).............................................. 1,062 --
Class C (52 shares)............................................... 413 --
Class H (934 shares).............................................. 7,504 --
Less cost of repurchase of shares
Class A (1,962,482 and 2,074,479 shares).......................... (15,481,356) (17,294,834)
Class B (5 shares)................................................ (35) --
Class C (168 shares).............................................. (1,363) --
Class H (42,665 shares)........................................... (342,068) --
------------- -------------
NET DECREASE IN NET ASSETS FROM CAPITAL STOCK TRANSACTIONS............ (10,678,719) (7,809,427)
------------- -------------
TOTAL DECREASE IN NET ASSETS.......................................... (7,169,134) (20,096,988)
NET ASSETS:
Beginning of year................................................... 70,041,280 90,138,268
------------- -------------
End of year (including distributions in excess of net investment
income of $120,344 and $186,275, respectively).................... $ 62,872,146 $ 70,041,280
------------- -------------
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
13
<PAGE>
FORTIS ADVANTAGE PORTFOLIOS, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Fortis Advantage Portfolios, Inc. ("Fortis Advantage") is a diversified,
open-end management investment company which currently is comprised of four
separate investment portfolios and series of capital stock: Asset Allocation
Portfolio, Capital Appreciation Portfolio, High Yield Portfolio, and
Government Total Return Portfolio, each of which has different investment
objectives and its own investment portfolio and net asset value. Two of the
portfolios, High Yield and Government Total Return, are included in this
report. The other two have a fiscal year-end of August 31 and were included
in a report for all Fortis Stock Funds dated August 31, 1995. The Articles of
Incorporation of Fortis Advantage permits the Board of Directors to create
additional portfolios in the future. The fund offers Class A, Class B, Class
C and Class H shares. The fund began to issue multiple class shares effective
November 14, 1994. Class A shares are sold with a front-end sales charge.
Class B and H shares are sold without a front-end sales charge and may be
subject to a contingent deferred sales charge for six years, and such shares
automatically convert to Class A after eight years. Class C shares are sold
without a front-end sales charge and may be subject to contingent deferred
sales charge for one year. All classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions,
except that the level of distribution fees charged differs between classes.
Income, expenses (other than expenses incurred under each class's
distribution agreement) and realized and unrealized gains or losses on
investments are allocated to each class of shares based on its relative net
assets.
The significant accounting policies followed by the Funds 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; listed securities and over-the-counter securities for
which no sale was reported are valued at the last reported bid price.
Long-term debt securities are valued at current market prices on the basis of
valuations furnished by an independent pricing service. Short-term
investments, with maturities of less than 60 days when acquired, or which
subsequently are within 60 days of maturity, are valued at amortized cost.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS: Delivery and payment for
securities that have been purchased by the Government Total Return Portfolio
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 October 31, 1995, the portfolio had entered into
outstanding when-issued or forward commitments of $987,656.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security transactions
are accounted for on the trade date and dividend income is recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. Realized
security gains and losses are determined using the identified cost method.
For financial reporting purposes, except for original issue discount, the
High Yield portfolio does not amortize bond premium and discount. For
Government Total Return Portfolio, interest income includes amortization of
bond premium and discount.
For the year ended October 31, 1995, the cost of purchases and proceeds from
sales of securities (other than short-term securities) were as follows:
<TABLE>
<CAPTION>
COST OF PROCEEDS
PURCHASES FROM SALES
------------ ------------
<S> <C> <C>
High Yield Portfolio............................... $156,851,753 $112,362,791
Government Total Return Portfolio.................. 56,741,226 70,400,979
</TABLE>
LENDING OF PORTFOLIO SECURITIES: At October 31, 1995 securities were on loan
to brokers from the Fund. For collateral, the Funds' custodian received cash
which is maintained in a separate account and invested by the custodian in
short term investment vehicles. The risks to the Funds 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. Fee income from securities
lending was as follows for the year ended October 31, 1995:
<TABLE>
<CAPTION>
FEE INCOME
FOR
SECURITIES TWELVE-MONTH
FUND ON LOAN COLLATERAL PERIOD
- --------------------------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
High Yield Portfolio......................... $13,103,193 $14,001,600 $23,440
Government Total Return Portfolio............ -- -- 6,842
</TABLE>
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. For tax purposes, each portfolio is a single taxable entity.
On a calendar year basis, each portfolio intends to distribute substantially
all of its net investment income and realized gains, if any, to avoid payment
of federal excise taxes.
Net investment income and net realized gains differ for financial statement
and tax purposes primarily because of the recognition of market discount as
ordinary income for tax purposes for High Yield Portfolio, the
non-recognition of premium amortization as a reduction of ordinary income for
tax purposes for Government Total Return Portfolio, and wash sale
transactions. 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 differ from the year that the income or realized gains (losses)
were recorded by the fund. The 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.
On the Statement of Assets and Liabilities, due to permanent book-to-tax
differences, accumulated net realized gain (loss) and undistributed net
investment income have been increased (decreased), resulting in a
reclassification adjustment to reduce (increase) paid-in-capital by the
following:
<TABLE>
<CAPTION>
GOVERNMENT
TOTAL
HIGH YIELD RETURN
PORTFOLIO PORTFOLIO
---------- ----------
<S> <C> <C>
Accumulated Net Realized Gain (Loss)......... $ -- $635,861
Undistributed Net Investment Income.......... 608 --
----- ----------
Paid-in-Capital.............................. $608 $635,861
----- ----------
</TABLE>
14
<PAGE>
FORTIS ADVANTAGE PORTFOLIOS, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
For federal income tax purposes the portfolios had the following capital loss
carryovers at October 31, 1995, which, if not offset by subsequent capital
gains, will expire in 1996 through 2003.
<TABLE>
<S> <C>
High Yield Portfolio.............................................. $14,865,044
Government Total Return Portfolio................................. 13,273,987
</TABLE>
It is unlikely the Board of Directors will authorize a distribution of any
net realized gains until the available capital loss carryovers have been
offset or expired.
DEFERRED COSTS: Registration costs are deferred and charged to income over
the registration period.
INCOME AND CAPITAL GAINS DISTRIBUTIONS: It is the policy of High Yield
Portfolio and Government Total Return Portfolio to declare daily and pay
monthly distributions from net investment income. Distributions of net
realized capital gains, if any, are made annually by each portfolio. The
distributions are recorded on the record date and are payable in cash or
reinvested in additional shares of the portfolio at net asset value without
any charge to the shareholder.
ILLIQUID SECURITIES: At October 31, 1995, investments in securities for the
High Yield Portfolio included issues that are illiquid. The fund currently
limits investments in illiquid securities to 15% of net assets, at market
value, at the date of purchase. The aggregate value of such securities at
October 31, 1995, was $9,980,799 for the High Yield Portfolio which
represents 6.79% of net assets. Pursuant to guidelines adopted by the Board
of Directors, certain unregistered securities are determined to be liquid and
are not included within the 15% limitation specified above.
2. PAYMENTS TO RELATED PARTIES: Fortis Advisers, Inc., is the investment adviser
for each portfolio. Investment advisory and management fees are computed for
High Yield Portfolio at an annual rate of .80% for the first $50 million of
average net assets and .70% for assets over $50 million. The fee for
Government Total Return Portfolio is computed at an annual rate of .80% of
the first $50 million of average daily net assets, .75% of the next $450
million, and .70% of net assets in excess of $500 million.
In addition to the investment advisory and management fee, Classes A, B, C
and H pay Fortis Investors, Inc. (the fund's principal underwriter)
distribution fees equal to .35% of average daily net assets for Class A for
each of High Yield and Government Total Return Portfolios and 1.00% (Class B,
C and H) of average daily net assets (of the respective classes for each of
the portfolios) on an annual basis, to be used to compensate those who sell
shares of the fund and to pay certain other expenses of selling fund shares.
Fortis Investors, Inc. also received sales charges (paid by purchasers or
redeemers of the fund's shares) aggregating $789,688 for Class A, $3,288 for
Class B, $304 for Class C, and $21,799 for Class H for High Yield Portfolio;
and $35,205 for Class A, $13 for Class C, and $34 for Class H for Government
Total Return Portfolio, for the year ended October 31, 1995.
Legal fees and expenses aggregating $10,000 and $5,999 for High Yield
Portfolio and Government Total Return Portfolios, respectively, for the year
ended October 31, 1995, were paid to a law firm of which the secretary of
Fortis Advantage is a partner.
15
<PAGE>
FORTIS ADVANTAGE PORTFOLIOS, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
3. FINANCIAL HIGHLIGHTS: Selected per share historical data for each of the
Portfolios was as follows:
<TABLE>
<CAPTION>
Class A
For the Year Ended October 31,
--------------------------------------------------------
HIGH YIELD PORTFOLIO 1995 1994 1993 1992 1991
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............................. $ 7.90 $ 8.65 $ 8.00 $ 7.82 $ 5.72
-------- ------- ------- ------- -------
Operations:
Investment income-net.......................................... .86 .86 .87 .85 .95
Net realized and unrealized gain (loss) on investments......... (.25) (.72) .68 .22 2.03
-------- ------- ------- ------- -------
Total from operations............................................ .61 .14 1.55 1.07 2.98
-------- ------- ------- ------- -------
Distributions to shareholders:
From investment income-net..................................... (.86) (.89) (.89) (.85) (.88)
Excess distributions of net realized gains..................... (.04) -- (.01) (.04) --
-------- ------- ------- ------- -------
Total distributions to shareholders.............................. (.90) (.89) (.90) (.89) (.88)
-------- ------- ------- ------- -------
Net asset value, end of period................................... $ 7.61 $ 7.90 $ 8.65 $ 8.00 $ 7.82
-------- ------- ------- ------- -------
Total return@.................................................... 8.07% 1.48% 20.33% 14.20% 55.78%
Net assets at end of period (000's omitted)...................... $113,268 $98,611 $73,395 $45,628 $31,250
Ratio of expenses to average daily net assets.................... 1.25% 1.23% 1.29% 1.33% 1.51%
Ratio of net investment income to average daily net assets....... 10.61% 10.18% 10.43% 10.34% 13.80%
Portfolio turnover rate.......................................... 101% 63% 95% 80% 61%
</TABLE>
<TABLE>
<CAPTION>
Class B Class C Class H
HIGH YIELD PORTFOLIO 1995+ 1995+ 1995+
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period........................ $ 7.87 $ 7.87 $ 7.87
------- ------- --------
Operations:
Investment income-net..................................... .78 .78 .78
Net realized and unrealized gains (losses) on
investments............................................. (.23) (.24) (.23)
------- ------- --------
Total from operations....................................... .55 .54 .55
------- ------- --------
Distribution to shareholders:
From investment income-net................................ (.78) (.78) (.78)
Excess distributions of net realized gains................ (.04) (.04) (.04)
------- ------- --------
Total distributions to shareholders......................... (.82) (.82) (.82)
------- ------- --------
Net asset value, end of period.............................. $ 7.60 $ 7.59 $ 7.60
------- ------- --------
Total Return@............................................... 7.25% 7.12% 7.25%
Net assets end of period (000's omitted).................... $7,530 $2,180 $23,862
Ratio of expenses to average daily net assets............... 1.90%* 1.90%* 1.90%*
Ratio of net investment income to average daily net
assets.................................................... 9.66%* 9.83%* 9.81%*
Portfolio turnover rate..................................... 101%** 101%** 101%**
<FN>
*Annualized.
**For the period ended October 31, 1995. Portfolio turnover computed at the fund
level.
@These are the Fund's total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments for sales
charge.
+For the period from November 14, 1994 (commencement of operations) to October
31, 1995.
</TABLE>
16
<PAGE>
FORTIS ADVANTAGE PORTFOLIOS, INC.
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
3. FINANCIAL HIGHLIGHTS (continued):
<TABLE>
<CAPTION>
Class A
----------------------------------------------------------
For the Period
April 27, 1991
For the Year Ended October 31, to
---------------------------------------- October 31,
GOVERNMENT TOTAL RETURN PORTFOLIO 1995 1994 1993 1992 1991***
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period............................. $ 7.73 $ 9.01 $ 8.88 $ 9.11 $ 9.06
------- ------- ------- ------- --------------
Operations:
Investment income-net.......................................... .48 .52 .52 .63 .31
Net realized and unrealized gain (loss) on investments......... .51 (1.16) .33 (.13) .13
------- ------- ------- ------- --------------
Total from operations............................................ .99 (.64) .85 .50 .44
------- ------- ------- ------- --------------
Distributions to shareholders:
From investment income-net..................................... (.48) (.52) (.53) (.59) (.37)
Excess distributions of net realized gains..................... (.07) (.12) (.19) (.14) (.02)
Tax return of capital.......................................... (.01) -- -- -- --
------- ------- ------- ------- --------------
Total distributions to shareholders.............................. (.56) (.64) (.72) (.73) (.39)
------- ------- ------- ------- --------------
Net asset value, end of period................................... $ 8.16 $ 7.73 $ 9.01 $ 8.88 $ 9.11
------- ------- ------- ------- --------------
Total return@.................................................... 13.35% (7.38%) 9.87% 5.73% 4.98%
Net assets at end of period (000's omitted)...................... $62,004 $70,041 $90,138 $94,336 $70,912
Ratio of expenses to average daily net assets.................... 1.35% 1.28% 1.25% 1.25% 1.25%*
Ratio of net investment income to average daily net assets....... 6.24% 6.20% 5.81% 6.64% 6.74%*
Portfolio turnover rate.......................................... 91% 135% 113% 122% 118%
</TABLE>
<TABLE>
<CAPTION>
Class B Class C Class H
GOVERNMENT TOTAL RETURN PORTFOLIO 1995+ 1995+ 1995+
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of period......... $ 7.64 $ 7.64 $ 7.64
-------- -------- --------
Operations:
Investment income-net...................... .41 .41 .41
Net realized and unrealized gains (losses)
on investments........................... .57 .59 .57
-------- -------- --------
Total from operations........................ .98 1.00 .98
-------- -------- --------
Distribution to shareholders:
From investment income-net................. (.41) (.41) (.41)
Excess distributions of net realized
gains.................................... (.07) (.07) (.07)
Tax return of capital...................... (.01) (.01) (.01)
-------- -------- --------
Total distributions to shareholders.......... (.49) (.49) (.49)
-------- -------- --------
Net asset value, end of period............... $ 8.13 $ 8.15 $ 8.13
-------- -------- --------
Total Return@................................ 13.26% 13.53% 13.27%
Net assets end of period (000's omitted)..... $ 114 $ 30 $ 724
Ratio of expenses to average daily net
assets..................................... 2.00%* 2.00%* 2.00%*
Ratio of net investment income to average
daily net assets........................... 4.93%* 5.20%* 5.08%*
Portfolio turnover rate...................... 91%** 91%** 91%**
<FN>
*Annualized.
**For the period ended October 31, 1995. Portfolio turnover computed at the
fund level.
***Fortis Advisers, Inc. assumed management of the fund on April 27, 1991
(formerly Olympus U.S. Government Plus Fund).
@These are the Fund's total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments for sales
charge.
+For the period from November 14, 1994 (commencement of operations) to October
31, 1995.
</TABLE>
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Fortis Advantage Portfolios, Inc:
We have audited the accompanying statements of assets and liabilities, including
the schedules of investments in securities, of High Yield Portfolio and
Government Total Return Portfolio (portfolios within Fortis Advantage
Portfolios, Inc.) as of October 31, 1995 and the related statements of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two-year period ended October 31, 1995, and the
financial highlights presented in footnote 3 to the financial statements. These
financial statements and the financial highlights are the responsibility of fund
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold but not received or delivered, we
request confirmations from brokers, and where replies are not received, we carry
out other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
High Yield Portfolio and Government Total Return Portfolio at October 31, 1995
and the results of their operations for the year then ended, the changes in
their net assets for each of the years in the two-year period ended October 31,
1995, and the financial highlights presented in footnote 3 to the financial
statements, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 8, 1995
18
<PAGE>
DIRECTORS
RICHARD W. CUTTING
CPA and Financial Consultant
ALLEN R. FREEDMAN
Chairman and Chief Executive Officer
Fortis, Inc.;
Managing Director of
Fortis International, N.V.
DR. ROBERT M. GAVIN
President
Macalester College
BENJAMIN S. JAFFRAY
Chairman
Sheffield Group, Ltd.
JEAN L. KING
President
Communi-King
DEAN C. KOPPERUD
Chief Executive Officer
and Director
Fortis Advisers, Inc.
President and Director
Fortis Investors, Inc.
Senior Vice President and Director of Fortis Benefits
Insurance Company and
Time Insurance
Company
EDWARD M. MAHONEY
Prior to January, 1995, Chairman and Chief Executive Officer
Fortis Advisers, Inc.
Fortis Investors, Inc.
ROBB L. PRINCE
Prior to July, 1995,
Vice President and
Treasurer
Jostens, Inc.
LEONARD J. SANTOW
Principal
Griggs & Santow, Inc.
JOSEPH M. WIKLER
Investment Consultant and Private Investor
Prior to January, 1994, Director of Research,
Chief Investment Officer,
Principal, and Director
The Rothschild Co.
OFFICERS
DEAN C. KOPPERUD
President and Director
ROBERT W. BELTZ, JR.
Vice President
JAMES S. BYRD
Vice President
CHARLES J. DUDLEY
Vice President
THOMAS D. GUALDONI
Vice President
MAROUN M. HAYEK
Vice President
HOWARD G. HUDSON
Vice President
ROBERT C. LINDBERG
Vice President
LARRY A. MEDIN
Vice President
KEVIN J. MICHELS
Vice President
JON H. NICHOLSON
Vice President
JOHN W. NORTON
Vice President
FRED OBSER
Vice President
DENNIS M. OTT
Vice President
DAVID A. PETERSON
Vice President
NICHOLAS L. M. DE PEYSTER
Vice President
STEPHEN M. POLING
Vice President
STEPHEN M. RICKERT
Vice President
RICHARD P. ROCHE
Vice President
ANTHONY J. ROTONDI
Vice President
KEITH R. THOMSON
Vice President
CHRISTOPHER J. WOODS
Vice President
GARY N. YALEN
Vice President
MICHEAL J. RADMER
Secretary
TAMARA L. FAGELY
Treasurer
INVESTMENT MANAGER, REGISTRAR AND
TRANSFER AGENT
Fortis Advisers, Inc.
Box 64284
St. Paul, Minnesota 55164
PRINCIPAL UNDERWRITER
Fortis Investors, Inc.
Box 64284
St. Paul, Minnesota 55164
CUSTODIAN
Norwest Bank
Minnesota, N.A.
Minneapolis, Minnesota
GENERAL COUNSEL
Dorsey & Whitney P.L.L.P.
Minneapolis, Minnesota
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
Minneapolis, Minnesota
THE USE OF THIS MATERIAL IS AUTHORIZED ONLY WHEN PRECEDED OR ACCOMPANIED BY A
PROSPECTUS.
19
<PAGE>
FORTIS FINANCIAL GROUP'S OTHER PRODUCTS AND SERVICES
MUTUAL FUNDS/PORTFOLIOS
Fortis Stock Funds
FORTIS ASSET ALLOCATION PORTFOLIO
FORTIS CAPITAL FUND
FORTIS FIDUCIARY FUND
FORTIS GROWTH FUND
FORTIS CAPITAL APPRECIATION PORTFOLIO
FORTIS GLOBAL GROWTH PORTFOLIO
Fortis Bond Funds
FORTIS MONEY FUND
FORTIS U.S. GOVERNMENT SECURITIES FUND
FORTIS GOVERNMENT TOTAL RETURN PORTFOLIO
FORTIS TAX-FREE MINNESOTA PORTFOLIO
FORTIS TAX-FREE NATIONAL PORTFOLIO
FORTIS TAX-FREE NEW YORK PORTFOLIO
FORTIS HIGH YIELD PORTFOLIO
FIXED AND VARIABLE ANNUITIES
Fortis Opportunity Fixed
& Variable Annuity
Masters Variable Annuity
FIXED ACCOUNT
MONEY MARKET
U.S. GOVERNMENT SECURITIES
DIVERSIFIED INCOME
GLOBAL BOND
HIGH YIELD
ASSET ALLOCATION
GLOBAL ASSET ALLOCATION
GROWTH & INCOME
GLOBAL GROWTH
GROWTH STOCK
INTERNATIONAL STOCK
AGGRESSIVE GROWTH
Fortune Fixed Annuities
SINGLE PREMIUM ANNUITY
FLEXIBLE PREMIUM ANNUITY
Income Annuities
GUARANTEED FOR LIFE
GUARANTEED FOR A SPECIFIC PERIOD
LIFE AND DISABILITY
WALL STREET SERIES VUL 100, 220 & 500
FIXED ACCOUNT
MONEY MARKET
U.S. GOVERNMENT SECURITIES
DIVERSIFIED INCOME
GLOBAL BOND
HIGH YIELD
ASSET ALLOCATION
GLOBAL ASSET ALLOCATION
GROWTH & INCOME
GROWTH STOCK
GLOBAL GROWTH
INTERNATIONAL STOCK
AGGRESSIVE GROWTH
Adaptable Life
Universal Life
Disability
FORTIS-Registered Trademark-
THE FORTIS FINANCIAL GROUP manages and distributes mutual funds, annuities and
life insurance products. The mutual funds, variable life and variable annuity
products are distributed through FORTIS INVESTORS, INC. and managed by FORTIS
ADVISERS, INC. The insurance products are issued by FORTIS BENEFITS INSURANCE
COMPANY and TIME INSURANCE COMPANY.
FOR MORE COMPLETE INFORMATION, INCLUDING CHARGES AND EXPENSES, SEND FOR A
PROSPECTUS. WRITE TO: FORTIS INVESTORS, INC., P.O. BOX 64284, ST. PAUL, MN
55164. READ IT CAREFULLY BEFORE INVESTING OR SENDING MONEY.
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FORTIS FINANCIAL GROUP
Fortis Financial Group (FFG) is a premier provider of insurance and
investment portfolios whose fund manager, Fortis Advisers, Inc. has
established a nation wide reputation for money management. Through Fortis
Investors, Inc., FFG offers mutual funds, annuities and variable universal
life insurance. Life and disability products are issued and underwritten by
Time Insurance Company and Fortis Benefits Insurance Company.
With more than $5 billion assets under management, FFG is part of Fortis,
a $100 billion worldwide financial services and insurance organization
represented in 11 countries.
Like the Fortis name, which comes from the Latin for steadfast, our focus
is on the long-term in all we do: the relationships we build, the performance
we seek, the service we provide and the products we offer.
FORTIS-Registered Trademark- BULK RATE
FORTIS FINANCIAL GROUP US POSTAGE
P.O. BOX 64284 PAID
ST. PAUL, MN 55164 PERMIT NO. 3794
MINNEAPOLIS, MN
PRINTED ON RECYCLED PAPER WITH
40% PRECONSUMER WASTE AND
10% POST CONSUMER WASTE.
PLEASE RECYCLE.
95558 (Ed. 12/95)
