<PAGE>
Invest for growth opportunities
[logo]
Fortis Stock Funds
Semi-Annual Report
FEBRUARY 28, 1998
FORTIS FINANCIAL GROUP
[PICTURE]
<PAGE>
FORTIS FINANCIAL GROUP'S OTHER PRODUCTS AND SERVICES
MUTUAL Fortis Bond Funds MONEY FUND
FUNDS/PORTFOLIOS U.S. GOVERNMENT
CONVENIENT ACCESS TO SECURITIES FUND
A BROAD RANGE OF TAX-FREE NATIONAL
SECURITIES PORTFOLIO
TAX-FREE MINNESOTA
PORTFOLIO
STRATEGIC INCOME FUND
HIGH YIELD PORTFOLIO
Fortis Stock Funds ASSET ALLOCATION
PORTFOLIO
VALUE FUND
GROWTH & INCOME FUND
CAPITAL FUND
FIDUCIARY FUND
GLOBAL GROWTH PORTFOLIO
GROWTH FUND
INTERNATIONAL EQUITY
PORTFOLIO
CAPITAL APPRECIATION
PORTFOLIO
FIXED AND VARIABLE Fortis Opportunity Fixed FIXED ACCOUNT
ANNUITIES & Variable Annuity MONEY MARKET SUBACCOUNT
TAX-DEFERRED Masters Variable Annuity U.S. GOVERNMENT
INVESTING SECURITIES SUBACCOUNT
DIVERSIFIED INCOME
SUBACCOUNT
GLOBAL BOND SUBACCOUNT
HIGH YIELD SUBACCOUNT
GLOBAL ASSET ALLOCATION
SUBACCOUNT
ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
INTERNATIONAL STOCK
SUBACCOUNT
MID CAP STOCK SUBACCOUNT
SMALL CAP VALUE
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
LARGE CAP GROWTH
SUBACCOUNT
GROWTH STOCK SUBACCOUNT
AGGRESSIVE GROWTH
SUBACCOUNT
Fortune Fixed Annuities SINGLE PREMIUM ANNUITY
FLEXIBLE PREMIUM ANNUITY
Income Annuities GUARANTEED FOR LIFE
GUARANTEED FOR A
SPECIFIED PERIOD
LIFE Wall Street Series FIXED ACCOUNT
INSURANCE PROTECTION Variable Universal Life MONEY MARKET SUBACCOUNT
AND TAX-DEFERRED Insurance U.S. GOVERNMENT
INVESTMENT SECURITIES SUBACCOUNT
OPPORTUNITY DIVERSIFIED INCOME
SUBACCOUNT
GLOBAL BOND SUBACCOUNT
HIGH YIELD SUBACCOUNT
GLOBAL ASSET ALLOCATION
SUBACCOUNT
ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
INTERNATIONAL STOCK
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
GROWTH STOCK SUBACCOUNT
AGGRESSIVE GROWTH
SUBACCOUNT
Adaptable Life
Universal Life
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, FIRST FORTIS LIFE 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.
<PAGE>
HOW TO USE THIS REPORT
For a quick overview of the Fund's
performance during the past six
months, refer to the Highlights box.
The letters from the portfolio
managers and president provide a
more detailed analysis of the Funds
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
Fund invests, and the pie chart
shows a breakdown of the Fund's
assets by sector. The portfolio
changes show the largest investment
decisions your portfolio manager has
made over the period in response to
changing market conditions.
The performance chart graphically
compares the Funds' 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 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 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 3
SCHEDULES OF INVESTMENTS
FORTIS ASSET ALLOCATION PORTFOLIO 11
FORTIS VALUE FUND 18
FORTIS GROWTH AND INCOME FUND 21
FORTIS CAPITAL FUND 24
FORTIS FIDUCIARY FUND 26
FORTIS GROWTH FUND 28
FORTIS CAPITAL APPRECIATION PORTFOLIO 30
STATEMENTS OF ASSETS AND LIABILITIES 32
STATEMENTS OF OPERATIONS 34
STATEMENTS OF CHANGES IN NET ASSETS
FORTIS ASSET ALLOCATION PORTFOLIO 36
FORTIS VALUE FUND 37
FORTIS GROWTH AND INCOME FUND 38
FORTIS CAPITAL FUND 39
FORTIS FIDUCIARY FUND 40
FORTIS GROWTH FUND 41
FORTIS CAPITAL APPRECIATION PORTFOLIO 42
NOTES TO FINANCIAL STATEMENTS 43
BOARD OF DIRECTORS AND OFFICERS 57
</TABLE>
TOLL-FREE PERSONAL ASSISTANCE
- Shareholder Services
- (800) 800-2000, 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) 800-2000, 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) 800-2000.
TO ORDER PROSPECTUSES OR SALES LITERATURE FOR ANY FORTIS PRODUCT, CALL (800)
800-2000, EXT. 4579.
1
<PAGE>
HIGHLIGHTS
FOR THE SIX-MONTH PERIOD ENDED FEBRUARY 28, 1998
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS H CLASS Z
--------- --------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
FORTIS ASSET ALLOCATION PORTFOLIO
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 18.98 $ 18.87 $ 18.81 $ 18.86 --
End of period.............................. $ 18.15 $ 18.03 $ 17.97 $ 18.03 --
TOTAL RETURN 9.21% 8.88% 8.91% 8.95% --
DISTRIBUTIONS PER SHARE
From net investment income................. $ 0.238 $ 0.182 $ 0.182 $ 0.182 --
From net realized gains on investments..... $ 2.18 $ 2.18 $ 2.18 $ 2.18 --
FORTIS VALUE FUND
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 13.51 $ 13.39 $ 13.39 $ 13.39 --
End of period.............................. $ 14.00 $ 13.90 $ 13.90 $ 13.90
TOTAL RETURN 15.17% 14.75% 14.75% 14.75% --
DISTRIBUTIONS PER SHARE
From net investment income................. $ .086 -- -- -- --
From net realized gains on investments..... $ 1.36 $ 1.36 $ 1.36 $ 1.36 --
FORTIS GROWTH AND INCOME FUND
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 13.06 $ 13.03 $ 13.03 $ 13.03 --
End of period.............................. $ 14.73 $ 14.69 $ 14.69 $ 14.69 --
TOTAL RETURN 13.86% 13.41% 13.41% 13.41% --
DISTRIBUTIONS PER SHARE --
From net investment income................. $ 0.121 $ 0.072 $ 0.072 $ 0.072 --
From net realized gains on investments..... $ 0.0088 $ 0.0088 $ 0.0088 $ 0.0088 --
FORTIS CAPITAL FUND
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 26.13 $ 25.67 $ 25.68 $ 25.68 --
End of period.............................. $ 24.42 $ 23.81 $ 23.81 $ 23.83 --
TOTAL RETURN 10.87% 10.45% 10.41% 10.49% --
DISTRIBUTIONS PER SHARE
From net realized gains on investments....... $ 4.06 $ 4.06 $ 4.06 $ 4.06 --
FORTIS FIDUCIARY FUND
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 46.15 $ 45.15 $ 45.17 $ 45.16 --
End of period.............................. $ 44.11 $ 42.83 $ 42.85 $ 42.83 --
TOTAL RETURN 9.86% 9.44% 9.44% 9.41% --
DISTRIBUTIONS PER SHARE
From net realized gains on investments..... $ 5.94 $ 5.94 $ 5.94 $ 5.94 --
FORTIS GROWTH FUND
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 37.32 $ 36.53 $ 36.52 $ 36.54 $ 37.47
End of period.............................. $ 35.34 $ 34.37 $ 34.36 $ 34.38 $ 35.55
TOTAL RETURN 6.11% 5.73% 5.73% 5.73% 6.24%
DISTRIBUTIONS PER SHARE
From net realized gains on investments..... $ 3.84 $ 3.84 $ 3.84 $ 3.84 $ 3.84
FORTIS CAPITAL APPRECIATION PORTFOLIO
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 30.60 $ 30.16 $ 30.18 $ 30.18 --
End of period.............................. $ 34.75 $ 34.15 $ 34.17 $ 34.18 --
TOTAL RETURN 13.56% 13.23% 13.22% 13.25% --
</TABLE>
2
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<TABLE>
<S> <C>
Asset
Allocation
[PHOTO] Portfolio
Value
[PHOTO] Fund
Growth &
Income
[PHOTO] Fund
Capital
[PHOTO] Fund
Fiduciary
[PHOTO] Fund
Growth
[PHOTO] Fund
Capital
Appreciation
[PHOTO] Fund
</TABLE>
DEAR SHAREHOLDER:
The market continued to provide spectacular returns for the first half of the
fiscal year of the Fortis equity funds. From the end of August 1997 to the end
of February 1998, the S&P 500 Stock Index rose 17.61 percent. This advance,
however, included several meaningful corrections that resulted in a difficult
environment in which to navigate.
The second half of 1997 was dominated by the collapse of Asian economies and
currencies, providing a stark reminder that global growth trends do not persist
forever. Indeed, these economies had provided much of the fuel that benefited
the remainder of the world in terms of providing inexpensive exports and
fledgling consumer economies hungry for imports from the Western world. The
financial crisis is in the process of being addressed; however, it is likely
that 1998 will be significantly influenced by the unfolding of a companion
economic crisis that will take time to correct.
In the fourth quarter of 1997, the Asian crisis was reflected in a worldwide
investor flight to quality. All of the Asian markets experienced significant
market declines, negatively impacting emerging international and global
investment funds.
U.S. stocks also reflected this flight to quality. Large, liquid stocks, such as
those found in the S&P 500, became the best choice for investors. This helped
the performance of the Fortis Capital, Fiduciary and Value Funds. However, it
hindered the performance of the Growth and Capital Appreciation Funds. The
sectors of the stock market most negatively impacted included technology,
telecommunications, capital goods and energy. These areas were among those with
favorable growth prospects and were heavily weighted in our growth and small cap
funds.
Thus far in 1998, the stock market has focused on two important factors:
prospects for very low inflation and positive, albeit slower, economic growth.
We expect the economy to experience 2.5 percent growth in 1998 and corporate
profits to climb another 8 percent. Led by the consumer, health care and
financial sectors, the stock market is likely to record new highs during the
year. We caution, however, that there will undoubtedly be periods of high
volatility. Plus, the full impact of the Asian problem is not over.
International unrest, particularly in the Middle East is a concern. The U.S.
Presidency is under attack. With valuations for stocks full, any of these issues
could cause the market to retrace some of its gains. We will be vigilant. When
these corrections occur, we will put your money to work as we remain confident
that the outlook for stocks over the long term remains promising.
Sincerely,
<TABLE>
<S> <C> <C>
[SIGNATURE] [SIGNATURE] [SIGNATURE]
Howard H. Hudson
Dean C. Kopperud Lucinda S. Mezey Vice President
President Vice President, Equities Fixed Income
</TABLE>
March 13, 1998
3
<PAGE>
PORTFOLIO ALLOCATION AS OF 2/28/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Common Stocks 60.7%
U.S. Government Securities 12.2%
Asset Backed Securities 9.3%
Corporate Bonds-Non-Investment Grade 7.6%
Corporate Bonds-Investment Grade 7.0%
Cash Equivalents/Receivables 3.2%
</TABLE>
TOP 10 HOLDINGS AS OF 2/28/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Fannie Mae 2.2%
2. American International Group, Inc. 2.1%
3. MGIC Investment Corp. 1.5%
4. AirTouch Communications, Inc. 1.4%
5. Mattel, Inc. 1.4%
6. Archer-Daniels-Midland Co. 1.4%
7. Costco Companies, Inc. 1.4%
<CAPTION>
Bonds
- -------------------------------------------------------------------
<C> <S> <C>
1. U.S. Treasury Note (6.375%) 2000 2.4%
2. U.S. Treasury Bond (6.125%) 2027 1.5%
3. FNMA TBA (6.50%) 2028 1.5%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B sharesDiamond +21.43% +16.88%
Class B sharesDiamond Diamond +17.83% +16.31%
Class C sharesDiamond +21.51% +16.80%
Class C sharesDiamond Diamond +20.51% +16.80%
Class H sharesDiamond +21.51% +16.89%
Class H sharesDiamond Diamond +17.91% +16.32%
</TABLE>
Past performance is not indicative of future performance. Total returns
include reinvestment of all dividend and capital gains distributions. The
performance of the separate classes (A, B, C, and H) 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
4.75%, Class B and H have a CDSC of 4.00% if redeemed within two years or
3.00% if redeemed in year three or four (with a waiver of 10% of the amount
invested). Class C has a CDSC of 1.00% if redeemed within one year of
purchase.
Diamond Without CDSC.
Diamond Diamond With CDSC. Assumes redemption on February 28, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public
TEN LARGEST STOCK PORTFOLIO CHANGES FOR THE PERIOD ENDED 2/28/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
Disney (Walt) Co. Associated Group, Inc. Class A
Frontier Corp. Boston Scientific Corp.
Groupe Danone ADR ConAgra, Inc.
Loral Space and Communications Depuy, Inc.
Ltd. First Data Corp.
MCI Communications Corp. Green Tree Financial Corp.
Nabisco Holdings Corp. Class A Oracle Corp.
Norwest Corp. Teva Pharmaceutical Industries
SmithKline Beecham plc ADR Ltd. ADR
St. Joe Corp.
Walgreen Co.
</TABLE>
FORTIS ASSET ALLOCATION PORTFOLIO
YOUR ASSET ALLOCATION PORTFOLIO
STOCKS, BONDS AND CASH BLENDED TO SMOOTH OUT THE HIGHS AND LOWS
REVIEW
The Asset Allocation Portfolio adjusts its weightings between stocks and bonds
as economic and market conditions warrant. During the period ended February 28,
1998, the assets in equities were increased from 50% to 60% of the Portfolio
after the October stock market weakness. For the first half of fiscal 1998, the
fund posted a total return of 9.21 percent for Class A before sales charge,
which compares to S&P 500 index return of 17.61 percent and a 4.18 percent
return for the Lehman Brothers Aggregate Bond Index.
The equity focus remains on maintaining a well-diversified portfolio of large
capitalization stocks. The weighting in the technology sector was further
reduced during the period in favor of investments in the service sectors, an
area that exhibits greater earnings growth stability. During the period, the
Portfolio's performance was enhanced by its retail sector holdings while
technology stocks under performed.
Historically high stock market valuations have continued to move higher as
investors applaud a moderately growing economy amidst declining inflation. In
this environment, we are placing increased emphasis on solid earnings growth
prospects.
In the bond portion of the Portfolio, our strategy was largely influenced by two
factors, the continuing fundamental strength of the U.S. economy and the
burgeoning economic crisis in Asia. An overly strong economy is generally
associated with rising interest rates and the troubles in Asia are widely
assumed to cause lower interest rates. Therefore, our outlook focused on which
of these two forces would win out. For most of the past six months we did not
have a strong conviction that interest rates would make a significant move in
either direction and structured the portfolio accordingly. Interest rates did in
fact fall since our last report, with the 10-year Treasury falling from 6.34
percent to 5.62 percent.
Our fixed income strategy regarding sectors was to modestly overweight corporate
and mortgaged-backed securities over the past six months as our valuation
indicators suggested the sectors were undervalued. The mortgage-backed sector
outperformed Treasuries. However, Asia's problems had a negative effect on
corporate securities causing them to underperform Treasuries. Fortunately, the
Portfolio's lack of direct exposure to Asia helped us to avoid the worst
performing corporates. In December, we increased the portfolio's exposure to
lower-rated, high yield bonds from 14 percent to 21 percent of the fixed income
allocation, to take advantage of the seasonal patterns that favor this category
in the early part of the calendar year.
OUTLOOK
Looking forward, we expect the pace of economic growth in the U.S. to slow from
its 1997 levels. The current economic crisis in Asia will likely have a
spillover effect on our economy and drag the gross domestic product (GDP) growth
rate down to between 2.25 percent and 2.75 percent. Furthermore, we believe that
a slowing economy, higher productivity, falling commodity prices and the
inability of companies to pass along wage gains in the form of higher prices,
will push inflation rates moderately lower. Specifically we look for the
Consumer Price Index (CPI) to drop to 2 percent or less in the next 12 months.
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
position in these asset classes.
With regard to equities, historically high stock market valuations have
continued to move higher as investors applaud a moderately growing economy
amidst declining inflation. In this environment, we are placing increased
emphasis on solid earnings growth prospects.
VALUE OF $10,000 INVESTED JANUARY 4, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS ASSET ALLOCATION
AGGREGATE BOND INDEX# S&P 500## PORTFOLIO CLASS A
<S> <C> <C> <C> <C>
1/4/88 $10,000 $10,000 $9,534
88 $10,474 $10,917 $9,697
89 $10,864 $12,214 $10,010
90 $12,249 $14,514 $11,533
91 $13,746 $16,641 $12,898
92 $15,506 $19,298 $15,378
93 $17,395 $21,341 $16,451
94 $18,333 $23,122 $18,454
95 $18,676 $24,829 $18,865
96 $20,961 $33,446 $22,577
97 $21,951 $42,007 $25,277
98 $24,230 $56,708 $30,885
Fortis Asset Allocation Portfolio
Average Annual Total Return
Since
1 Year 5 Year 10 Year January 4, 1988@
Class A* +16.38% +12.33% +11.74% +11.75%
Class A** +22.19% +13.43% +12.28% +12.28%
</TABLE>
Annual period ended February 28
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 4.75%. Prior to January 1, 1996, the portfolio had a sales charge
of 4.50%, and therefore, these figures do not represent actual performance
that would have been achieved by investing as described above.
** 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, corporate, and mortgage-backed securities
with an average maturity of approximately nine years.
## This is an unmanaged index of 500 common stocks.
@ Date shares were first offered to the public.
4
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 2/28/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 50.7%
Cash Equivalents/Receivables 9.8%
Banks 9.1%
Oil-Crude Petroleum and Gas 6.2%
Finance Services 5.7%
Telephone Services 4.4%
Aerospace and Equipment 4.0%
Utilities-Electric 3.8%
Insurance 3.2%
Drugs 3.1%
</TABLE>
TOP 10 HOLDINGS AS OF 2/28/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Republic New York Corp. 2.4%
2. Emerson Electric Co. 2.0%
3. Lockheed Martin Corp. 1.9%
4. Bank of New York Co., Inc. 1.8%
5. Chevron Corp. 1.8%
6. Federated Department Stores, Inc. 1.8%
7. U.S. Bancorp. 1.8%
8. Anadarko Petroleum Corp. 1.8%
9. Finova Group, Inc. 1.8%
10. Crown Cork & Seal Company, Inc. 1.7%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B sharesDiamond +25.95% +23.16%
Class B sharesDiamond Diamond +22.35% +21.87%
Class C sharesDiamond +25.95% +23.16%
Class C sharesDiamond Diamond +24.95% +23.16%
Class H sharesDiamond +25.95% +23.16%
Class H sharesDiamond Diamond +22.35% +21.87%
</TABLE>
Past performance is not indicative of future performance. Total returns
include reinvestment of all dividend and capital gains distributions. The
performance of the separate classes (A, B, C, and H) 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
4.75%, Class B and H have a CDSC of 4.00% if redeemed within two years of
purchase, or 3.00% if redeemed in year three or four (with a waiver of 10% of
the amount invested). Class C has a CDSC of 1.00% if redeemed within one year
of purchase.
Diamond Without CDSC.
Diamond Diamond With CDSC. Assumes redemption on February 28, 1998.
+ Shares were first offered to the public January 2, 1996.
FORTIS VALUE FUND
YOUR VALUE FUND
QUALITY STOCKS, INEXPENSIVELY PRICED
The Value Fund achieved a total return of 15.17 percent for Class A before sales
charge for the six months ended February 28, 1998. This return was roughly
comparable to portfolios with similar objectives, and somewhat less than the
return of the S&P 500 Stock Index., which had a return of 17.61 percent.
Common stocks in general achieved very strong returns during this reporting
period, although performance of specific industry sectors varied considerably.
However, for the period, large capitalization stocks tended to perform better
than their smaller counterparts, while growth stocks tended to perform better
than value stocks. During this time, your Value Fund benefited from a slightly
above average exposure (relative to the competition) to common stocks with
relatively stable earnings growth.
We maintain a cautious outlook given the stock market's strong performance over
the past few years. We 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 JANUARY 2, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FORTIS VALUE FUND
S&P 500*** CLASS A
<S> <C> <C>
1/2/96 $10,000 $9,525
96 $10,442 $9,687
97 $13,115 $11,955
98 $17,705 $15,173
Fortis Value Fund
Average Annual Total Return
1 Year Since January 2, 1996@
Class A* +20.88% +21.27%
Class A** +26.91% +24.03%
</TABLE>
Annual period ended February 28
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 4.75%.
** 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 500 common stocks.
@ Date shares were first offered to the public.
TEN LARGEST PORTFOLIO CHANGES FOR THE PERIOD ENDED 2/28/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
BankAmerica Corp. Ameritech Corp.
Burlington Resources, Inc. Avnet, Inc.
Chevron Corp. Cabot Corp.
CMS Energy Corp. Citicorp
Honeywell, Inc. Cleveland-Cliffs, Inc.
Newell Co. Columbia/HCA Healthcare Corp.
Promus Hotel Corp. Interpublic Group of Companies, Inc.
Republic New York Corp. Mobil Corp.
Service Corp. International Sigma-Aldrich Corp.
Tenet Healthcare Corp. Unisource Worldwide, Inc.
</TABLE>
5
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 2/28/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 31.2%
Cash Equivalents/Receivables 8.8%
Finance Services 6.4%
Natural Gas Transmissions 6.1%
Telephone Services 9.2%
Oil-Crude Petroleum and Gas 3.8%
Banks 4.7%
Insurance 3.7%
Utilities-Electric 4.1%
Drugs 11.1%
Food 4.5%
Real Estate-Investment Trust 6.4%
</TABLE>
TOP 10 HOLDINGS AS OF 2/28/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Enron Corp. 2.4%
2. Glaxo Wellcome plc ADR 2.2%
3. Pharmacia and Upjohn, Inc. 2.0%
4. SBC Communications, Inc. 1.8%
5. GTE Corp. 1.8%
6. Royal Caribbean Cruises Ltd. 1.7%
7. General Electric Co. 1.7%
8. Banc One Corp. 1.7%
9. Household International, Inc. 1.6%
10. American Home Products Corp. 1.6%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B sharesDiamond +23.13% +20.82%
Class B sharesDiamond Diamond +19.53% +19.50%
Class C sharesDiamond +23.02% +20.82%
Class C sharesDiamond Diamond +22.02% +20.82%
Class H sharesDiamond +23.02% +20.82%
Class H sharesDiamond Diamond +19.42% +19.50%
</TABLE>
Past performance is not indicative of future performance. Total returns
include reinvestment of all dividend and capital gains distributions. The
performance of the separate classes (A, B, C, and H) 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
4.75%, Class B and H have a CDSC of 4.00% if redeemed within two years of
purchase, or 3.00% if redeemed in year three or four (with a waiver of 10% of
the amount invested). Class C has a CDSC of 1.00% if redeemed within one year
of purchase.
Diamond Without CDSC.
Diamond Diamond With CDSC. Assumes redemption on February 28, 1998.
+ Shares were first offered to the public January 2, 1996.
FORTIS GROWTH & INCOME FUND
YOUR GROWTH & INCOME FUND
CONSERVATIVE GROWTH WITH QUARTERLY DIVIDENDS
REVIEW
The Growth & Income Fund focuses on dividend-paying companies with good earnings
growth prospects, allowing for future consistent dividend increases. The Fund is
well diversified across many economic sectors and primarily concentrates on
larger, more mature companies with well-established industry positions.
Currently, the Fund's larger-sector weightings are found in the financial,
energy and telecommunications sectors. The technology sector remains
substantially under weighted due to the general lack of dividend-paying
companies.
For the first half of fiscal 1998, the Growth & Income Fund provided a total
return of 13.86 percent for Class A before sales charge. This compares to a
return of 17.61 percent for the S&P 500 Stock Index during the same period. The
more conservative nature of the Fund and an above average cash reserve position
negatively impacted performance relative to the Index during this reporting
period.
OUTLOOK
With stock market valuations near record highs, prudence is warranted, as well
as an emphasis on solid investment fundamentals.
VALUE OF $10,000 INVESTED JANUARY 2, 1996
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FORTIS GROWTH & INCOME FUND
S&P 500*** CLASS A
<S> <C> <C>
1/2/96 $10,000 $9,525
96 $10,442 $9,677
97 $13,115 $11,745
98 $17,705 $14,565
Fortis Growth & Income Fund
Average Annual Total Return
1 Year Since January 2, 1996@
Class A* +18.12% +19.00%
Class A** +24.01% +21.71%
</TABLE>
Annual period ended February 28
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 4.75%.
** 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 500 common stocks.
@ Date shares were first offered to the public.
TEN LARGEST PORTFOLIO CHANGES FOR THE PERIOD ENDED 2/28/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
Alltel Corp. Beacon Properties Corp.
Ameritech Corp. Deutsche Telekom AG ADR
Endesa S.A. ADR Monterey Resources, Inc.
Fleet Financial Group, Inc. Pfizer, Inc.
Frontier Corp. Student Loan Marketing Association
Groupe Danone ADR Telecom Corp. of New Zealand Ltd. ADR
Johnson & Johnson Union Planters Corp.
Metromedia Internatinal Group, Inc.
Royal Caribbean Cruises Ltd.
Starwood Hotels & Resorts
</TABLE>
6
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 2/28/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 40.4%
Finance Services 9.4%
Retail-Specialty 8.3%
Telephone Services 7.5%
Drugs 5.3%
Computer-Software 5.2%
Insurance 5.1%
Food 4.8%
Business Services & Supplies 4.0%
Oil and Gas Field Services 3.5%
Cash Equivalents/Receivables 3.3%
Retail-Department Stores 3.2%
</TABLE>
TOP 10 HOLDINGS AS OF 2/28/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Home Depot, Inc. 3.9%
2. Fannie Mae 3.9%
3. American International Group, Inc. 3.3%
4. Kohl's Corp. 3.2%
5. Mattel, Inc. 2.8%
6. WorldCom, Inc. 2.7%
7. MGIC Investment Corp. 2.6%
8. MBNA Corp. 2.5%
9. Archer-Daniels-Midland Co. 2.4%
10. AirTouch Communications, Inc. 2.4%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B sharesDiamond +30.48% +20.09%
Class B sharesDiamond Diamond +26.88% +19.55%
Class C sharesDiamond +30.54% +20.09%
Class C sharesDiamond Diamond +29.54% +20.09%
Class H sharesDiamond +30.58% +20.12%
Class H sharesDiamond Diamond +26.98% +19.58%
</TABLE>
Past performance is not indicative of future performance. Total returns
include reinvestment of all dividend and capital gains distributions. The
performance of the separate classes (A, B, C, and H) 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
4.75%, Class B and H have a CDSC of 4.00% if redeemed within two years of
purchase, or 3.00% if redeemed in year three or four (with a waiver of 10% of
the amount invested). Class C has a CDSC of 1.00% if redeemed within one year
of purchase.
Diamond Without CDSC.
Diamond Diamond With CDSC. Assumes redemption on February 28, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public
FORTIS CAPITAL FUND
YOUR CAPITAL FUND
LONG-TERM GROWTH THROUGH LARGER, ESTABLISHED COMPANIES
REVIEW
The Capital Fund focuses on large, rapidly growing companies with
well-established positions within their business sector. We continue to broaden
the diversification of the portfolio to reduce its risk level. Current large
sector weightings include financials, retail and health care. We increased the
service sector during this reporting period, as these companies generally
exhibit more stable earnings growth patterns. We also continued to reduce the
technology weighting as the earnings outlook for this sector became less
certain.
During the first six months of fiscal 1998, the S&P 500 Stock Index provided a
return of 17.61 percent, while the Capital Fund posted an advance of 10.87
percent for Class A before sales charge. The S&P 500 continues to be led by its
very largest component weightings, while the Capital Fund is more diversified in
its capitalization weightings. Retail holdings contributed to the Fund's
performance during the period while technology stocks detracted from overall
performance.
OUTLOOK
Stock market valuations continued to move higher as inflation and interest rates
remained remarkably subdued. Consumer sentiment rose as a strong economy
produced more jobs and furthered growth in real disposable income. Domestic and
international political problems thus far go largely ignored by this bull market
as fund flows into our equity market continue at historically high levels.
Going forward, your Fund continues to emphasize solid growth prospects in a
valuation environment that allows little room for disappointment.
VALUE OF $10,000 INVESTED MARCH 1, 1973
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
S&P 500*** CAPITAL FUND CLASS A
<S> <C> <C> <C> <C>
3/1/73 $10,000 $9,063
74 $8,911 $8,133
75 $7,922 $7,347
76 $10,077 $8,839
77 $10,498 $8,842
78 $9,624 $8,208
79 $11,224 $9,941
80 $13,973 $14,277
81 $16,970 $19,765
82 $15,430 $20,208
83 $21,310 $30,348
84 $23,629 $31,631
85 $28,524 $36,846
86 $37,327 $50,152
87 $48,325 $65,675
88 $47,003 $58,533
89 $52,584 $61,790
90 $62,487 $74,775
91 $71,647 $86,093
92 $83,086 $109,782
93 $91,884 $110,806
94 $99,548 $123,270
95 $106,899 $128,350
96 $143,999 $158,333
97 $180,857 $182,394
98 $244,152 $239,853
Fortis Capital Fund
Average Annual Total Return
1 Year 5 Year 10 Year 25 Years
Class A* +25.26% +15.57% +14.59% +13.55%
Class A** +31.50% +16.70% +15.15% +13.77%
</TABLE>
Annual period ended February 28
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 4.75%. Prior to January 1, 1990, the portfolio had a sales charge
of 8.50%, and therefore, these figures do not represent actual performance
that would have been achieved by investing as described above.
** 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 500 common stocks.
TEN LARGEST PORTFOLIO CHANGES FOR THE PERIOD ENDED 2/28/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
America Online, Inc. Associated Group, Inc. Class A
Frontier Corp. Biovail Corp. International
Groupe Danone ADR Boston Scientific Corp.
Intermedia Communications, Inc. Depuy, Inc.
Loral Space and Communications Ltd. First Data Corp.
MCI Communications Corp. Green Tree Financial Corp.
Mellon Bank Corp. Oracle Corp.
Nabisco Holdings Corp. Class A Oxford Health Plans, Inc.
St. Joe Corp. Pep Boys-Manny Moe & Jack
Walgreen Co. Teva Pharmaceutical Industries Ltd. ADR
</TABLE>
7
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 2/28/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 44.6%
Finance Services 8.1%
Telephone Services 7.6%
Retail-Specialty 7.2%
Drugs 7.0%
Cash Equivalents/Receivables 6.0%
Insurance 5.5%
Computer-Software 5.1%
Food 4.8%
Business Services & Supplies 4.1%
</TABLE>
TOP 10 HOLDINGS AS OF 2/28/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. American International Group, Inc. 3.5%
2. Mattel, Inc. 2.8%
3. WorldCom, Inc. 2.7%
4. Home Depot, Inc. 2.7%
5. Fannie Mae 2.6%
6. MGIC Investment Corp. 2.6%
7. Mylan Laboratories, Inc. 2.5%
8. MBNA Corp. 2.4%
9. Archer-Daniels-Midland Co. 2.4%
10. Costco Companies, Inc. 2.4%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B sharesDiamond +30.47% +20.66%
Class B sharesDiamond Diamond +26.87% +20.12%
Class C SharesDiamond +30.50% +20.67%
Class C SharesDiamond Diamond +29.50% +20.67%
Class H sharesDiamond +30.47% +20.66%
Class H sharesDiamond Diamond +26.87% +20.12%
</TABLE>
Past performance is not indicative of future performance. Total returns
include reinvestment of all dividend and capital gains distributions. The
performance of the separate classes (A, B, C, and H) 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
4.75%, Class B and H have a CDSC of 4.00% if redeemed within two years of
purchase or 3.00% if redeemed in year three or four (with a waiver of 10% of
the amount invested). Class C has a CDSC of 1.00% if redeemed within one year
of purchase.
Diamond Without CDSC.
Diamond Diamond With CDSC. Assumes redemption on February 28, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public
FORTIS FIDUCIARY FUND
YOUR FIDUCIARY FUND
A MEDLEY OF GROWTH STOCKS
REVIEW
The Fiduciary Fund invests in a mix of large and medium capitalization growth
companies. Generally, companies selected for the Fund's portfolio have dominant
positions within their respective industries and exhibit growth rates
substantially above the overall economy. Currently, large sector weightings
include financials, retail and health care products. The Fund's retail holdings
contributed to its performance while technology stocks generally detracted from
overall performance. Therefore, as a reflection of our greater confidence in its
future earnings growth patterns, we increased holdings in the more stable
service sector and reduced the portfolio's technology weighting. In general,
your Fund continues to emphasize more stable earnings growth in its stock
selection as valuation levels leave little room for error.
A strong economic environment with generally declining inflation and interest
rates has allowed a high valuation stock market to move even higher over the
past six months. During this period, the S&P 500 Stock Index returned 17.61
percent, while the Fiduciary Fund showed an increase of 9.86 percent for Class A
before sales charge. The S&P 500's advance continued to concentrate on its very
largest components. The Fiduciary Fund, however, is more broadly diversified, a
fact that should benefit the Fund in future periods.
OUTLOOK
Stock market valuations continued to move higher as inflation and interest rates
remained remarkably subdued. Consumer sentiment rose as a strong economy
produced more jobs and furthered growth in real disposable income. Domestic and
international political problems thus far go largely ignored by this bull market
as fund flows into our equity market continue at historically high levels.
Going forward, your Fund continues to emphasize solid growth prospects in a
valuation environment that allows little room for disappointment.
VALUE OF $10,000 INVESTED JANUARY 2, 1982
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FIDUCIARY FUND
S&P 500*** CLASS A
<S> <C> <C> <C> <C>
1/2/82 $10,000 $9,430
82 $9,333 $9,572
83 $12,890 $13,954
84 $14,293 $14,725
85 $17,254 $17,480
86 $22,578 $25,317
87 $29,231 $33,400
88 $28,431 $28,197
89 $31,807 $29,962
90 $39,797 $36,405
91 $43,338 $42,044
92 $50,257 $54,891
93 $55,579 $54,867
94 $60,214 $61,911
95 $64,664 $64,290
96 $87,102 $79,582
97 $109,397 $91,666
98 $147,682 $120,529
Fortis Fiduciary Fund
Average Annual Total Return
1 Year 5 Year 10 Year Since January 2, 1982@
Class A* +25.24% +15.91% +15.07% +16.66%
Class A** +31.49% +17.05% +15.63% +17.01%
</TABLE>
Annual period ended February 28
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 4.75%. Prior to March 1, 1992, the portfolio had a sales charge of
4.50%, and therefore, these figures do not represent actual performance that
would have been achieved by investing as described above.
** 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 500 common stocks.
@ Date shares were first offered to the public.
TEN LARGEST PORTFOLIO CHANGES FOR THE PERIOD ENDED 2/28/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
America Online, Inc. Associated Group, Inc. Class A
Frontier Corp. Biovail Corp. International
Groupe Danone ADR BMC Software
Intermedia Communications, Inc. Boston Scientific Corp.
Loral Space and Communications Ltd. CapStar Hotel
MCI Communications Corp. First Data Corp.
Mellon Bank Corp. Green Tree Financial Corp.
Nabisco Holdings Corp. Class A Oracle Corp.
St. Joe Corp. Oxford Health Plans, Inc.
Walgreen Co. Pep Boys-Manny Moe & Jack
</TABLE>
8
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 2/28/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 21.0%
Computer-Software 13.5%
Financial Services 11.7%
Cash Equivalents/Receivables 10.6%
Retail-Specialty 9.4%
Oil and Gas Field Services 6.3%
Health Care Services 5.9%
Telecommunication Equipment 5.7%
Oil-Offshore Drilling 5.0%
Telephone Services 4.0%
Computer-Communication Equipment 3.9%
Electronic-Components 3.0%
</TABLE>
TOP 10 HOLDINGS AS OF 2/28/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. BMC Software, Inc. 4.3%
2. WorldCom, Inc. 4.0%
3. Franklin Resources, Inc. 4.0%
4. Cisco Systems, Inc. 3.9%
5. Microsoft Corp. 3.7%
6. Tellabs, Inc. 3.6%
7. Cendant Corp. 3.1%
8. Solectron Corp. 3.0%
9. Petroleum Geo-Services ADR 2.8%
10. Parametric Technology Corp. 2.7%
</TABLE>
CLASS B, C, H AND Z AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B sharesDiamond +22.10% +18.86%
Class B sharesDiamond Diamond +18.50% +18.31%
Class C SharesDiamond +22.07% +18.85%
Class C SharesDiamond Diamond +21.07% +18.85%
Class H sharesDiamond +22.14% +18.87%
Class H sharesDiamond Diamond +18.54% +18.32%
Class Z shares +23.36% +17.38%++
</TABLE>
Past performance is not indicative of future performance. Total returns
include reinvestment of all dividend and capital gains distributions. The
performance of the separate classes (A, B, C, and H) 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
4.75%, Class B and H have a CDSC of 4.00% if redeemed within two years of
purchase, or 3.00% if redeemed in year three or four (with a waiver of 10% of
the amount invested). Class C has a CDSC of 1.00% if redeemed within one year
of purchase.
Diamond Without CDSC.
Diamond Diamond With CDSC. Assumes redemption on February 28, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public
++ Since March 1, 1996 -- Date shares were first offered to the
public
FORTIS GROWTH FUND
YOUR GROWTH FUND
MEDIUM-SIZED COMPANIES POISED TO BE TOMORROW'S LEADERS
REVIEW
The U.S. stock market continued to advance during the first half of the Fund's
fiscal year, although accompanied by a high degree of volatility. Your Growth
Fund also gained in this time frame, but experienced a great deal of volatility,
as well.
During the first six months of fiscal 1998, the S&P 500 Stock Index provided a
return of 17.61 percent, while the Growth Fund showed an increase of 6.11
percent for Class A before sales charge. During that same time period the S&P
400 Mid Cap Index, which is comprised of mid-cap stocks, posted a return of
12.90 percent. Fund performance in the 1997 fourth calendar quarter suffered
from sharp price declines in its holdings of oil and gas service companies.
While the earnings growth of these companies remains strong, their stocks
continue to be weak. This reflects weakness in crude oil prices based on
concerns of excessive worldwide supplies of oil.
Price declines in technology stocks also hurt the Fund in late 1997 and early
1998. But these stocks have since recovered strongly, many currently selling at
all-time highs.
Financial service holdings benefited from lower interest rates, and a number of
our specialty retailers did exceptionally well in an otherwise slow retail
environment. Our health care stock holdings, however, experienced mixed results.
NEW PORTFOLIO MANAGER
Effective March 16, 1998, Michael Romanowski became the primary portfolio
manager of the Growth Fund, succeeding Steve Poling who retired after 17 years
as the Fund's manager. Mike is an excellent candidate to assume the leadership
of this Fund. His experience includes 8 successful years as a mid-cap growth
fund manager at Monarch Capital and Value Line. Additionally, he was an
insurance industry analyst with Conning and Co. for several years. He holds an
MBA from the University of Massachusetts and is a Certified Financial Analyst
(CFA).
OUTLOOK
Recent volatility in the stock market reflects concerns about the collapse of
the economies, currencies and markets of several Asian countries, as well as
severe weakness in Japan, and their impact on the U.S. economy and markets. In
particular, questions have arisen as to the continued strength of corporate
profits in this country as a result of events 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 sustained
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.
As of February 28, 1998 the median market capitalization of the Fund was $4.8
billion, which is at the high end of the target range of $1 to $5 billion. The
Fund has experienced increases in its market capitalization due to the
continued, significant increase in the value of certain securities held in the
Fund. We are in the process of restructuring the Fund to bring it further into
the target capitalization range. As you would expect, this restructuring
involves the sale of certain securities and is likely to result in significant
capital gains that are required to be distributed to the Fund's shareholders.
The potential of a capital gain distribution does not have any impact to
customers with IRAs or other tax qualified accounts.
VALUE OF $10,000 INVESTED MARCH 1, 1973
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
GROWTH FUND
S&P 500*** CLASS A
<S> <C> <C> <C> <C>
9/73 $10,000 $10,000
74 $8,911 $7,994
75 $7,922 $7,462
76 $10,077 $9,667
77 $10,498 $9,617
78 $9,624 $10,025
79 $11,224 $13,704
80 $13,973 $21,071
81 $16,970 $28,827
82 $15,430 $30,538
83 $21,310 $47,088
84 $23,629 $47,150
85 $28,524 $54,013
86 $37,327 $72,917
87 $48,325 $100,057
88 $47,003 $82,130
89 $52,584 $90,723
90 $62,487 $111,640
91 $71,647 $136,060
92 $83,086 $187,939
93 $91,884 $179,984
94 $99,548 $217,832
95 $106,899 $196,322
96 $143,999 $258,822
97 $180,857 $282,740
98 $244,152 $347,809
Fortis Growth Fund
Average Annual Total Return
1 Year 5 Year 10 Year 25 Year
Class A* +17.17% +12.98% +14.97% +15.25%
Class A** +23.01% +14.08% +15.53% +15.48%
</TABLE>
Annual period ended February 28
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 4.75%. Prior to January 1, 1990, the portfolio had a higher sales
charge of 8.50%, and therefore, these figures do not represent actual
performance that would have been achieved by investing as described above.
** 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 500 common stocks.
TEN LARGEST PORTFOLIO CHANGES FOR THE PERIOD ENDED 2/28/98
<TABLE>
<S> <C> <C>
ADDITIONS: ELIMINATIONS: First Data Corp.
Edwards (J.D.) & Co. 3Com Corp. Green Tree Financial Corp.
Freddie Mac Ascend Communications, Inc. Oxford Health Plans, Inc.
Stolt Comex Seaway S.A. Boston Scientific Corp. West Marine, Inc.
U.S.A. Waste Services, Inc. Callaway Golf Co. Wisconsin Central Transportation
Danka Business Systems plc ADR Corp.
</TABLE>
9
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 2/28/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other 21.1%
Computer-Software 16.5%
Business Services 14.4%
Retail-Specialty 10.5%
Telephone Services 10.1%
Cash Equivalents/Receivables 7.3%
Oil and Gas Field Services 6.7%
Health Care Services 5.5%
Medical Supplies 4.5%
Waste Disposal 3.4%
</TABLE>
TOP 10 HOLDINGS AS OF 2/28/98
<TABLE>
<CAPTION>
Percent of
Stocks Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Acxiom Corp. 3.5%
2. U.S.A. Waste Services, Inc. 3.4%
3. Parametric Technology Corp. 2.7%
4. Petroleum Geo-Services ADR 2.7%
5. Intermedia Communications, Inc. 2.6%
6. STERIS Corp. 2.6%
7. Bed Bath & Beyond, Inc. 2.5%
8. WorldCom, Inc. 2.4%
9. Input/Output, Inc. 2.4%
10. Sterling Commerce, Inc. 2.2%
</TABLE>
CLASS B, C AND H AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Since
1 Year Inception+
- -------------------------------------------------------------
<S> <C> <C>
Class B sharesDiamond +26.06% +15.44%
Class B sharesDiamond Diamond +22.46% +14.85%
Class C sharesDiamond +26.04% +15.46%
Class C sharesDiamond Diamond +25.04% +15.46%
Class H sharesDiamond +26.08% +15.47%
Class H sharesDiamond Diamond +22.48% +14.88%
</TABLE>
Past performance is not indicative of future performance. Total returns
include reinvestment of all dividend and capital gains distributions. The
performance of the separate classes (A, B, C, and H) 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
4.75%, Class B and H have a CDSC of 4.00% if redeemed within two years of
purchase, or 3.00% if redeemed in year three or four (with a waiver of 10% of
the amount invested). Class C has a CDSC of 1.00% if redeemed within one year
of purchase.
Diamond Without CDSC.
Diamond Diamond With CDSC. Assumes redemption on February 28, 1998.
+ Since November 14, 1994 -- Date shares were first offered to
the public.
FORTIS CAPITAL APPRECIATION PORTFOLIO
YOUR CAPITAL APPRECIATION PORTFOLIO
OPPORTUNITY THROUGH AMERICA'S ENTREPRENEURS
REVIEW
The first half of the Portfolio's fiscal year showed some nice improvement. In
the six months ended February 28, 1998, your Capital Appreciation Portfolio was
up 13.56 percent for Class A before sales charge. Performance of the Portfolio
and the overall market, however, continued to demonstrate a substantial amount
of volatility. While large cap stocks have continued to rise, the small-cap
growth companies in which this Portfolio mainly invests in have finally begun to
perform more in line with the larger stocks. We continued to invest in some of
the highest quality, rapidly growing industries, such as computer software,
business services, emerging telephone companies and deep water oil services. The
Portfolio maintained a broad balance of companies in many different sectors to
provide diversification and counter the risk of specific company or industry
difficulties.
OUTLOOK
While the economy continues to grow at a reasonable rate along with low
inflation, which provides an excellent scenario for smaller cap growth stocks,
we remain mindful of the risks that could derail this pleasant situation.
Delayed impacts to the U.S. from the Asian problems, and risks of a change in
the sizeable flows of money in pension accounts into the U.S. stock market are
just two visible risks that we monitor. We continue to search for individual
companies with the potential for substantial long-term growth, and to trim
positions in those that appear to be past the major part of their high growth
phase.
As of February 28, 1998, the median market capitalization of the Portfolio was
$1.5 billion. This is above the target range of less than $1 billion, and the
increase is due to the continued, significant increase in the value of certain
securities held in the Portfolio. We are in the process of restructuring the
Portfolio to bring it further into the target capitalization range. As you would
expect, this restructuring involves the sale of certain securities and might
result in significant capital gains that are required to be distributed to the
Portfolio's shareholders. The potential of a capital gain distribution does not
have any impact to customers with IRAs or other tax qualified accounts.
Understand that investing in smaller companies can be more volatile over the
short term. This is often a result of these companies' higher relative
valuations. It appears that a substantial portion of this higher relative
valuation was removed over the past nine or 10 months. We continue to believe
that investors with patience and a long-term horizon can be rewarded by the
capital appreciation of some of the leading growth companies of the future.
VALUE OF $10,000 INVESTED JANUARY 4, 1988
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CAPITAL APPRECIATION
S&P 500*** PORTFOLIO CLASS A
<S> <C> <C> <C> <C>
1/4/88 $10,000 $9,525
88 $10,917 $9,792
89 $12,214 $11,227
90 $14,514 $14,481
91 $16,641 $15,714
92 $19,298 $21,908
93 $21,341 $21,352
94 $23,122 $26,857
95 $24,829 $25,782
96 $33,446 $35,519
97 $42,007 $31,372
98 $56,708 $39,772
Fortis Capital
Appreciation Portfolio
Average Annual Total Return
Since
1 Year 5 Year 10 Year January 4, 1988@
Class A* +20.76% +12.15% +14.49% +14.57%
Class A** +26.78% +13.25% +15.05% +15.12%
</TABLE>
Annual period ended February 28
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 4.75%. Prior to January 1, 1996, the portfolio had a sales
charge of 4.50%, and therefore, these figures do not represent actual
performance that would have been achieved by investing as described
above.
** 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 500 common stocks.
@ Date shares were first offered to the public.
TEN LARGEST PORTFOLIO CHANGES FOR THE PERIOD ENDED 2/28/98
<TABLE>
<S> <C>
ADDITIONS: ELIMINATIONS:
Applied Graphics Technologies, Inc. CKS Group, Inc.
Assisted Living Concepts, Inc. Indus International
E*TRADE Group, Inc. International Rectifier Corp.
Hexcel Corp. Medic Computer Systems, Inc.
Industri-Matematikk International Corp. MedPartners, Inc.
PeopleSoft, Inc. Precision Response Corp.
Pier 1 Imports, Inc. Rational Software Corp.
Saville Systems plc ADR Scopus Technology, Inc.
Sofamor Danek Group, Inc. Seattle Film Works, Inc.
Veritas DGC, Inc. TeleTech Holdings, Inc.
</TABLE>
10
<PAGE>
FORTIS STOCK FUNDS
ASSET ALLOCATION PORTFOLIO
Schedule of Investments
February 28, 1998 (Unaudited)
COMMON STOCKS-60.67%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
ADVERTISING-PUBLIC RELATIONS-0.74%
27,500 Interpublic Group of Companies, Inc. (j)..... $ 1,300,443 $ 1,498,750
------------- -------------
AEROSPACE AND EQUIPMENT-0.60%
47,000 Loral Space and Communications Ltd. (a)...... 1,037,921 1,201,437
------------- -------------
AIRLINES-0.09%
5,100 KLM Royal Dutch Air Lines NV................. 187,338 186,787
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.57%
500 Highwaymaster Communications, Inc. (Warrants)
(a) (e).................................... 9,093 5,000
19,000 Magna International, Inc. Class A (j) 859,728 1,149,500
------------- -------------
868,821 1,154,500
------------- -------------
BANKS-2.44%
24,200 Banc One Corp. (j)........................... 848,687 1,367,300
15,000 Mellon Bank Corp............................. 940,828 934,687
29,000 Norwest Corp................................. 1,061,983 1,187,187
23,000 Union Planters Corp. (j)..................... 798,322 1,421,687
------------- -------------
3,649,820 4,910,861
------------- -------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-1.12%
20,000 Amgen, Inc. (a).............................. 1,075,770 1,062,500
33,000 Centocor, Inc. (a)........................... 1,218,662 1,190,062
------------- -------------
2,294,432 2,252,562
------------- -------------
BROADCASTING-0.74%
6,700 America Online, Inc. (a) (j)................. 620,058 811,537
14,000 Viacom, Inc. Class B (a)..................... 545,605 672,000
------------- -------------
1,165,663 1,483,537
------------- -------------
BUILDING MATERIALS-0.54%
20,000 Masco Corp................................... 1,047,986 1,087,500
------------- -------------
BUSINESS SERVICES AND SUPPLIES-1.96%
23,000 Cognizant Corp............................... 987,840 1,148,562
37,600 Fiserv, Inc. (a)............................. 1,493,973 2,058,600
19,000 Ingram Micro, Inc. Class A (a) (j)........... 377,028 733,875
------------- -------------
2,858,841 3,941,037
------------- -------------
CHEMICALS-1.36%
10,500 Dow Chemical Co.............................. 1,032,542 960,750
35,000 Monsanto Co.................................. 1,389,845 1,780,625
------------- -------------
2,422,387 2,741,375
------------- -------------
COMPUTER-COMMUNICATIONS EQUIPMENT-0.77%
14,000 3Com Corp. (a)............................... 472,500 500,500
16,000 Cisco Systems, Inc. (a)...................... 126,288 1,054,000
------------- -------------
598,788 1,554,500
------------- -------------
COMPUTER-SOFTWARE-2.90%
14,000 EMC Corp. (a)................................ 492,100 535,500
22,000 Microsoft Corp. (a) (j)...................... 234,344 1,864,500
16,000 PeopleSoft, Inc. (a) (j)..................... 561,405 715,000
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
59,978 Sterling Commerce, Inc. (a).................. $ 813,216 $ 2,736,496
------------- -------------
2,101,065 5,851,496
------------- -------------
CONTAINERS AND PACKAGING-0.63%
23,600 Crown Cork & Seal Company, Inc............... 1,121,993 1,274,400
------------- -------------
DRUGS-4.79%
16,000 Abbott Laboratories.......................... 727,120 1,197,000
31,200 Forest Laboratories, Inc. (a) (j)............ 1,174,069 1,951,950
20,000 Lilly (Eli) & Co., Inc....................... 640,344 1,316,250
56,000 Mylan Laboratories, Inc. (j)................. 1,022,978 1,141,000
22,900 SmithKline Beecham plc ADR (j)............... 1,351,008 1,416,937
18,000 Warner-Lambert Co............................ 2,140,239 2,632,500
------------- -------------
7,055,758 9,655,637
------------- -------------
ELECTRICAL EQUIPMENT-0.82%
21,200 General Electric Co.......................... 936,634 1,648,300
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-1.03%
5,000 Intel Corp................................... 197,188 448,437
29,300 Motorola, Inc................................ 1,248,483 1,633,475
------------- -------------
1,445,671 2,081,912
------------- -------------
FINANCE SERVICES-4.83%
71,000 Fannie Mae................................... 1,847,316 4,530,687
63,000 MBNA Corp.................................... 401,035 2,256,187
40,000 MGIC Investment Corp. (j).................... 1,348,608 2,947,500
------------- -------------
3,596,959 9,734,374
------------- -------------
FOOD-3.91%
128,000 Archer-Daniels-Midland Co.................... 2,692,099 2,872,000
55,000 Groupe Danone ADR............................ 1,705,000 2,193,125
24,000 Heinz (H.J.) Co.............................. 766,680 1,351,500
31,000 Nabisco Holdings Corp. Class A (j) 1,470,201 1,462,813
------------- -------------
6,633,980 7,879,438
------------- -------------
HEALTH CARE SERVICES-0.67%
16,500 Cardinal Health, Inc......................... 781,880 1,350,938
------------- -------------
HOTEL AND GAMING-0.87%
44,000 Mirage Resorts, Inc. (a)..................... 501,600 1,006,500
17,000 Sun International Hotels Ltd. (a) (j)........ 843,144 739,500
------------- -------------
1,344,744 1,746,000
------------- -------------
INSURANCE-3.17%
34,500 American International Group, Inc............ 2,369,605 4,146,469
52,000 Hartford Life, Inc. Class A.................. 1,774,789 2,239,250
------------- -------------
4,144,394 6,385,719
------------- -------------
LEISURE TIME-AMUSEMENTS-1.13%
13,000 Disney (Walt) Co............................. 1,276,434 1,455,188
55,000 Royal Olympic Cruise Lines, Inc. (a) 840,739 825,000
------------- -------------
2,117,173 2,280,188
------------- -------------
MACHINERY-OIL AND WELL-0.51%
25,000 Baker Hughes, Inc............................ 1,076,413 1,023,438
------------- -------------
MEDICAL TECHNOLOGY-1.16%
44,000 Medtronic, Inc. (with rights)................ 492,656 2,337,500
------------- -------------
NATURAL GAS TRANSMISSIONS-0.58%
36,000 Williams Companies, Inc. (j)................. 882,956 1,176,750
------------- -------------
</TABLE>
11
<PAGE>
FORTIS STOCK FUNDS
ASSET ALLOCATION PORTFOLIO (CONTINUED)
Schedule of Investments
February 28, 1998 (Unaudited)
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
OIL AND GAS FIELD SERVICES-2.28%
16,500 Camco International, Inc. (j)................ $ 716,862 $ 965,250
33,000 Precision Drilling Corp. (a) (j)............. 646,472 608,438
36,000 Schlumberger Ltd............................. 1,672,011 2,713,500
17,000 Trico Marine Services, Inc. (a).............. 476,000 316,625
------------- -------------
3,511,345 4,603,813
------------- -------------
OIL-CRUDE PETROLEUM AND GAS-1.45%
10,000 EVI, Inc. (a) (j)............................ 493,103 490,625
40,600 Nuevo Energy Co. (a)......................... 1,590,500 1,456,525
87,000 Santa Fe Energy Resources, Inc. (a) 777,781 973,313
------------- -------------
2,861,384 2,920,463
------------- -------------
OIL-OFFSHORE DRILLING-0.26%
15,000 Santa Fe International Corp.................. 445,350 531,563
------------- -------------
PAPER-0.68%
40,000 St. Joe Corp................................. 1,360,000 1,365,000
------------- -------------
PERSONAL SERVICES-0.26%
14,000 Service Corp. International (j).............. 539,611 530,250
------------- -------------
POLLUTION CONTROL-0.61%
36,000 U.S. Filter Corp. (a) (j).................... 1,115,479 1,221,750
------------- -------------
PRECISION INSTRUMENTS-TEST, RESEARCH-0.30%
8,300 Perkin-Elmer Corp............................ 650,729 607,456
------------- -------------
PUBLISHING-1.27%
5,100 CMP Media, Inc. Class A (a).................. 112,200 120,488
36,000 Time Warner, Inc............................. 1,894,425 2,430,000
------------- -------------
2,006,625 2,550,488
------------- -------------
RAILROAD AND RAILROAD EQUIPMENT-0.27%
48,000 Tranz Rail Holdings Ltd. ADR................. 864,000 534,000
------------- -------------
RESTAURANTS AND FRANCHISING-0.41%
15,000 McDonald's Corp.............................. 837,150 821,250
------------- -------------
RETAIL-DEPARTMENT STORES-1.07%
27,000 Kohl's Corp. (a)............................. 528,074 2,165,063
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
RETAIL-SPECIALTY-3.53%
59,800 Cendant Corp. (a)............................ $ 704,345 $ 2,242,500
58,000 Costco Companies, Inc. (a)................... 869,500 2,834,750
32,000 Home Depot, Inc.............................. 419,098 2,042,000
------------- -------------
1,992,943 7,119,250
------------- -------------
RETAIL-VARIETY AND VARIETY MAIL ORDER-0.68%
37,100 Walgreen Co.................................. 1,212,503 1,361,106
------------- -------------
TELECOMMUNICATION EQUIPMENT-0.97%
18,200 Ericsson (L.M.) Telephone Co. Class B ADR.... 184,926 824,688
18,600 Tellabs, Inc.(a)............................. 375,832 1,122,975
------------- -------------
560,758 1,947,663
------------- -------------
TELEPHONE SERVICES-3.89%
65,000 AirTouch Communications, Inc. (a) 1,685,363 2,920,938
51,200 Frontier Corp................................ 1,247,137 1,417,600
26,000 MCI Communications Corp...................... 1,040,625 1,243,125
59,016 WorldCom, Inc. (a) (j)....................... 347,180 2,253,674
------------- -------------
4,320,305 7,835,337
------------- -------------
TOBACCO-1.16%
54,000 Philip Morris Companies, Inc................. 1,936,964 2,345,625
------------- -------------
TOYS-1.44%
68,488 Mattel, Inc. (j)............................. 643,894 2,897,899
------------- -------------
UTILITIES-ELECTRIC-1.61%
57,000 AES Corp. (a)................................ 1,469,950 2,508,000
43,000 UniSource Energy Corp. Holding Company (a)
(j)........................................ 718,890 733,688
------------- -------------
2,188,840 3,241,688
------------- -------------
WASTE DISPOSAL-0.60%
29,000 U.S.A. Waste Services, Inc. (a) (j).......... 1,036,088 1,207,125
------------- -------------
TOTAL COMMON STOCKS.......................... $ 79,776,758 $ 122,245,725
------------- -------------
------------- -------------
</TABLE>
ASSET BACKED SECURITIES-9.26%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
COMMERCIAL LOANS-5.12%
$ 882,332 DLJ Mortgage Acceptance Corp., 7.28% Ser
1996-CF1 Class A-1A 3-13-2028 (e).......... AAA $ 888,849 $ 913,213
1,250,000 First Union Lehman Brothers Commercial
Mortgage, 7.30% Ser 1997-C1 Class A2
12-18-2006................................. Aaa* 1,262,372 1,315,512
355,000 GMAC Commercial Mortgage Securities, Inc.,
7.08% Ser 1997-C1 Class E 12-15-2010....... Baa2* 356,726 358,217
631,649 GS Mortgage Securities Corp. II Protective
Life, 7.02% Ser 1996-PL Class A1
3-1-2026................................... Aaa* 631,609 644,282
1,754,127 J.P. Morgan Commercial Mortgage Finance
Corp., 6.47% Ser 1996-C2 Class A
11-25-2027................................. AAA 1,676,421 1,761,968
885,829 Merrill Lynch Mortgage Investors, Inc., 6.79%
Variable Rate Ser 1995-C3 Class A1
12-26-2025................................. AAA 893,890 899,143
700,000 Midland Realty Acceptance Corp., 7.76% Ser
1996-C1 Class B 7-25-2008.................. AA 706,439 754,906
1,750,000 Mortgage Capital Funding, Inc., 7.90% Ser
1996-MC1 Class B 2-15-2006................. AA+ 1,765,826 1,883,893
470,000 Nationslink Funding Corp., 7.51% Ser 1996-1
Class A2 7-20-2005......................... AAA 470,504 493,627
</TABLE>
12
<PAGE>
ASSET BACKED SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
$1,252,709 Nationslink Funding Corp., 7.53% Ser 1996-1
Class A1 9-20-2002......................... AAA $ 1,262,244 $ 1,303,206
------------- -------------
9,914,880 10,327,967
------------- -------------
HOUSING-0.63%
750,000 Money Store (The) Home Improvement Trust,
7.41% Ser 1997-1 Class M1 5-15-2017........ AA 753,002 776,531
500,000 TMS Residential Trust, 7.08% 1997-I-M1
7-15-2016.................................. AA 499,923 497,813
------------- -------------
1,252,925 1,274,344
------------- -------------
MANUFACTURED HOMES-0.78%
1,500,000 Green Tree Financial Corp., 7.65% Ser 1994-1
Class A5 4-15-2019......................... Aa2*
1,494,141 1,566,102
------------- -------------
MULTI-FAMILY LOANS-1.51%
1,500,000 DLJ Mortgage Acceptance Corp., 8.50%
Multifamily Mtg Pass Thru Certificate Ser
1994-MF4 Class A2 4-18-2001................ A 1,520,323 1,556,640
1,000,000 DLJ Mortgage Acceptance Corp., 8.80%
Multifamily Mtg Pass Thru Certificate Ser
1993-MF12 Class B1 9-18-2003............... NR 982,500 1,048,890
546,261 Fund America Structured Transactions, L.P.,
Collateralized Note, 8.76% Ser 1996-1 Class
A Principal Only 1-1-2033 (f) (h).......... Baa3* 410,442 433,082
------------- -------------
2,913,265 3,038,612
------------- -------------
WHOLE LOAN RESIDENTIAL-1.22%
945,515 Mid-State Trust, 7.54% Ser 6 Class A3
7-1-2035................................... AA 944,926 962,600
1,467,882 PNC Mortgage Securities Corp., 7.50% Ser 1997
Class 2PP1 7-25-2027....................... AAA 1,464,462 1,490,928
------------- -------------
2,409,388 2,453,528
------------- -------------
TOTAL ASSET BACKED SECURITIES................ $ 17,984,599 $ 18,660,553
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-6.96%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AEROSPACE AND EQUIPMENT-0.27%
$ 500,000 Lockheed Martin Corp., 7.65% Deb 5-1-2016.... BBB+ $ 502,840 $ 544,545
------------- -------------
AIR FREIGHT-0.26%
495,754 Federal Express Corp., 7.50% 1997-A Pass Thru
Certificate 1-15-2018...................... AAA 495,753 530,392
------------- -------------
BANKS-0.64%
500,000 Bank Austria AG, 7.25% Sub Note 2-15-2017
(f)........................................ AAA 499,073 528,299
250,000 Corestates Capital Corp., 6.75% Medium Term
Note 11-15-2006............................ A- 251,808 255,962
500,000 St. Paul Bancorp, Inc., 7.125% Sr Note
2-15-2004.................................. BBB- 497,963 513,865
------------- -------------
1,248,844 1,298,126
------------- -------------
BROKERAGE AND INVESTMENT-0.64%
500,000 Bear Stearns Capital Trust I, 7.00% Variable
Rate Bond 1-15-2027........................ BBB 499,712 508,196
750,000 Lehman Brothers Holdings, 7.375% Sr Note
5-15-2004.................................. A 747,311 782,242
------------- -------------
1,247,023 1,290,438
------------- -------------
CHEMICALS-0.52%
1,000,000 Lyondell Petrochemical, 7.55% Deb
2-15-2026.................................. BBB- 946,497 1,045,161
------------- -------------
CONSUMER FINANCE-0.25%
500,000 Beneficial Corp., 6.33% Medium Term Note
12-18-2000................................. A 496,290 501,052
------------- -------------
ENERGY-0.28%
500,000 NGC Corp. Capital Trust, 8.32% 6-1-2027...... BBB 500,000 562,931
------------- -------------
FINANCE COMPANIES-0.25%
500,000 Homeside Lending, Inc., 6.875% Medium Term
Note 6-30-2002............................. A+ 499,854 509,547
------------- -------------
</TABLE>
13
<PAGE>
FORTIS STOCK FUNDS
ASSET ALLOCATION PORTFOLIO (CONTINUED)
Schedule of Investments
February 28, 1998 (Unaudited)
CORPORATE BONDS-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
FOREIGN-GOVERNMENT-0.13%
$ 250,000 Poland (Republic of), 7.125% Yankee Bond
7-1-2004................................... BBB- $ 248,822 $ 252,812
------------- -------------
FOREIGN-GOVERNMENT AGENCIES-0.26%
500,000 Quebec (Province of), 7.50% Yankee Bond
7-15-2002.................................. A+ 513,990 523,845
------------- -------------
FOREST PRODUCTS-0.59%
500,000 Fort James Corp., 6.50% Sr Note 9-15-2002.... BBB- 499,435 503,555
600,000 Georgia-Pacific Corp., 9.625% Deb
3-15-2022.................................. BBB- 616,932 688,248
------------- -------------
1,116,367 1,191,803
------------- -------------
MEDIA-0.25%
500,000 News America Holdings, 7.50% Sr Note
3-1-2000................................... BBB- 504,964 511,764
------------- -------------
MISCELLANEOUS-0.28%
500,000 New York (City of), 10.00% General Obligation
Taxable Bond Fiscal 1991 Ser D 8-1-2005.... BBB+ 476,228 567,222
------------- -------------
NATURAL GAS TRANSMISSIONS-0.53%
750,000 Tennessee Gas Pipeline, 7.50% Bond
4-1-2017................................... BBB 738,267 804,921
250,000 Trans-Canada Pipelines Ltd., 7.06% Note
10-14-2025................................. A- 250,000 256,046
------------- -------------
988,267 1,060,967
------------- -------------
REAL ESTATE-INVESTMENT TRUST-0.27%
500,000 Meditrust, 7.82% Note 9-10-2026.............. BBB- 523,269 544,410
------------- -------------
SUPRANATIONAL-0.38%
750,000 Corp Andina De Fomento, 7.10% Yankee Bond
2-1-2003................................... BBB+ 749,628 761,372
------------- -------------
TELECOMMUNICATIONS-0.26%
500,000 360 Communications Co., 7.50% Sr Note
3-1-2006................................... BBB- 499,012 526,957
------------- -------------
TELEPHONE SERVICES-0.51%
500,000 Century Telephone Enterprises, Inc., 6.15%
1-15-2005.................................. BBB+ 499,251 489,643
500,000 GTE Corp., 7.51% Note 4-1-2009............... A 496,138 539,277
------------- -------------
995,389 1,028,920
------------- -------------
UTILITIES-ELECTRIC-0.39%
750,000 Texas Utilities Electric Capital V, 8.175%
1-30-2037.................................. BBB 750,000 774,735
------------- -------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $ 13,303,037 $ 14,026,999
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-7.59%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.26%
$ 500,000 Highwaymaster, Inc., 13.75% Sr Note
9-15-2005.................................. NR $ 520,274 $ 523,750
------------- -------------
BROADCASTING-0.27%
500,000 Sinclair Broadcasting Group, Inc., 10.00% Sr
Sub Note 9-30-2005......................... B 500,000 537,500
------------- -------------
BUSINESS SERVICES AND SUPPLIES-0.25%
500,000 T/SF Communications Corp., 10.375% Sr Sub
Note 11-1-2007 (f)......................... B- 490,789 505,000
------------- -------------
CABLE TELEVISION-1.25%
500,000 Adelphia Communications, Inc., 9.25% Sr Note
10-1-2002.................................. B3* 509,708 518,750
500,000 Australis Media Ltd., 14.00% Sr Sub Disc Note
5-15-2003 (Zero coupon through 5-15-2000,
thereafter 15.75%) (g)..................... D 391,207 200,000
500,000 Cablevision Systems Corp., 10.50% Sr Sub Deb
5-15-2016.................................. BB- 507,341 578,750
527,500 Falcon Holding Group, L.P., 11.00% Sr Sub
Note Ser B 9-15-2003 (Interest is
Payable-in-Kind) (j)....................... NR 524,346 559,150
500,000 Lenfest Communications, 8.25% Sr Note
2-15-2008 (f).............................. BB- 498,636 498,750
</TABLE>
14
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
$ 500,000 Wireless One, Inc., 13.00% Sr Note
10-15-2003................................. B- $ 490,117 $ 165,000
------------- -------------
2,921,355 2,520,400
------------- -------------
COMPUTER-HARDWARE-0.29%
500,000 Unisys Corp., 11.75% Sr Note 10-15-2004...... B+ 540,867 581,875
------------- -------------
COSMETICS AND SUNDRIES-0.25%
500,000 Revlon Consumer Products, 8.625% Sr Note
2-1-2008 (f)............................... B- 499,831 498,750
------------- -------------
ENERGY-0.25%
500,000 Energy Corp. of America, 9.50% Sr Sub Note
5-15-2007.................................. B 500,000 498,750
------------- -------------
FOOD-MISCELLANEOUS-0.26%
500,000 Envirodyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000......... B+ 500,000 533,125
------------- -------------
HEALTH CARE SERVICES-0.27%
500,000 Tenet Healthcare Corp., 10.125% Sr Sub Note
3-1-2005................................... BB- 529,837 548,125
------------- -------------
HOTEL AND MOTEL-0.26%
500,000 HMH Properties, Inc., 9.50% Sr Note
5-15-2005.................................. BB- 521,308 531,250
------------- -------------
HOUSING-0.27%
500,000 MDC Holdings, Inc., 11.125% Note
12-15-2003................................. BB- 525,025 550,000
------------- -------------
INDUSTRIAL-0.70%
500,000 Intelcom Group (USA), Inc., 10.26% 5-1-2006
(Zero coupon through 5-1-2001, thereafter
12.50%) (g)................................ NR 379,232 388,125
500,000 Inter-City Products Corp. USA, 9.75% Sr
Secured Note 3-1-2000...................... B+ 511,851 507,500
500,000 Speedway Motorsports, Inc., 8.50% Sr Sub Deb
8-15-2007.................................. B+ 504,217 522,500
------------- -------------
1,395,300 1,418,125
------------- -------------
PUBLISHING-0.47%
500,000 Nebraska Book Co., 8.75% Sr Sub Note
2-15-2008 (e).............................. B- 503,116 497,500
375,000 Petersen Publishing Co. LLC, 11.125% Sr Sub
Note 11-15-2006............................ B 419,908 446,250
------------- -------------
923,024 943,750
------------- -------------
STEEL AND IRON-0.27%
500,000 Weirton Steel Corp., 11.375% Sr Note 7-1-2004
(j)........................................ B 545,365 538,750
------------- -------------
TELECOMMUNICATIONS-1.72%
500,000 Hyperion Telecommunication, 12.25% Sr Note
9-1-2004................................... B 547,251 565,000
250,000 Intermedia Communications, 8.50% Sr Note
1-15-2008 (f).............................. B 256,510 258,438
500,000 Iridium LLC/Capital Corp., 14.00% Sr Note
7-15-2005.................................. B- 561,154 568,750
500,000 Nextel Communications, Inc., 10.25% Sr Disc
Note 9-15-2007 (Zero coupon through
9-15-2002, thereafter 10.65%) (g).......... CCC+ 321,022 323,750
500,000 Omnipoint Corp., 11.625% Sr Note 8-15-2006
(j)........................................ CCC+ 488,556 546,875
500,000 Phonetel Technologies, Inc., 12.00% Sr Note
12-15-2006 (j)............................. B- 501,191 523,750
250,000 Poland Telecommunications Finance Corp.,
14.00% Sr Note 12-1-2007 (with warrants)
(e)........................................ NR 250,000 268,125
500,000 Winstar Communications, Inc., 9.83% Sr Disc
Note 10-15-2005 (Zero coupon through
10-15-2000, thereafter 14.00%) (g)......... CCC+ 415,670 410,000
------------- -------------
3,341,354 3,464,688
------------- -------------
TEXTILE MANUFACTURING-0.27%
500,000 Pillowtex Corp., 10.00% Sr Sub Note
11-15-2006................................. B+ 525,748 542,500
------------- -------------
TRANSPORTATION-0.28%
500,000 Greyhound Lines, Inc., 11.50% Sr Note
4-15-2007.................................. B- 539,769 561,875
------------- -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $ 15,319,846 $ 15,298,213
------------- -------------
------------- -------------
</TABLE>
15
<PAGE>
FORTIS STOCK FUNDS
ASSET ALLOCATION PORTFOLIO (CONTINUED)
Schedule of Investments
February 28, 1998 (Unaudited)
U.S. GOVERNMENT SECURITIES-12.18%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 3.93%
MORTGAGE BACKED SECURITIES:
$ 675,000 6.00% 2003 (i)............................... $ 667,195 $ 665,504
3,000,000 6.50% 2028 (i)............................... 2,959,219 2,969,046
2,262,640 7.00% 2028 (i)............................... 2,288,095 2,286,667
467,877 7.50% 2028 (i)............................... 480,305 480,156
1,285,409 8.00% 2025................................... 1,304,891 1,331,998
181,196 9.00% 2016-2021.............................. 178,848 192,408
------------- -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ 7,878,553 7,925,779
------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -
0.97%
MORTGAGE BACKED SECURITIES:
1,775,929 9.00% 2023................................... 1,833,646 1,903,574
40,978 9.50% 2019................................... 40,645 44,448
------------- -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 1,874,291 1,948,022
------------- -------------
U.S. TREASURY SECURITIES - 7.28%
BONDS:
2,965,000 6.125% 2027 (j).............................. 3,057,112 3,048,391
750,000 8.125% 2021.................................. 951,467 947,109
------------- -------------
4,008,579 3,995,500
------------- -------------
NOTES:
500,000 5.625% 1999 (j).............................. 501,671 500,313
450,000 6.00% 2000 (j)............................... 455,949 454,359
220,000 6.125% 2007.................................. 227,713 226,806
1,080,000 6.25% 2002................................... 1,103,979 1,105,650
4,685,000 6.375% 2000.................................. 4,777,015 4,761,131
2,045,000 6.625% 2002-2007 (j)......................... 2,171,605 2,166,425
------------- -------------
9,237,932 9,214,684
------------- -------------
STRIPS:
2,050,000 5.98% 2009 (g)............................... 1,028,410 1,033,259
550,000 6.05% 2019 (g)............................... 157,594 155,792
1,100,000 6.12% 2021 (g)............................... 263,768 264,120
------------- -------------
1,449,772 1,453,171
------------- -------------
TOTAL U.S. TREASURY SECURITIES............... 14,696,283 14,663,355
------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............. 24,449,127 24,537,156
------------- -------------
TOTAL LONG-TERM INVESTMENTS.................. $ 150,833,367 $ 194,768,646
------------- -------------
------------- -------------
</TABLE>
16
<PAGE>
SHORT-TERM INVESTMENTS-6.18%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- -------------
<C> <S> <C>
BANKS-0.00%
$ 8,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.44%............. $ 8,000
-------------
INVESTMENT COMPANY-2.56%
5,165,472 Norwest Advantage Cash Investment Fund,
Current rate -- 5.40%...................... 5,165,472
-------------
DIVERSIFIED FINANCE-3.62%
7,289,000 Norwest Bank Associates Corp. Master Variable
Rate Note, Current rate -- 5.45%........... 7,289,000
-------------
TOTAL SHORT-TERM INVESTMENTS................. 12,462,472
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$163,295,839) (b).......................... $ 207,231,118
-------------
-------------
</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 February 28, 1998, the cost of securities for federal income tax
purposes was $163,296,752 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $45,809,362
Unrealized depreciation..................................... (1,874,996)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $43,934,366
- -------------------------------------------------------------------------
</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 6.53% of total net assets as of February 28, 1998.
(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>
May 17, 1996 882,332 DLJ Mortgage Acceptance Corp. due 2028 $ 888,849
January 7, 1998 500 Highwaymaster Communications, Inc. (Warrants) 9,093
February 11, 1998 500,000 Nebraska Book Co. due 2008 503,116
November 24, 1998 250,000 Poland Telecommunications Finance Corp. due 2007 250,000
</TABLE>
The aggregate value of these securities at February 28, 1998, was
$1,683,838, which represents .84% 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 February 28, 1998, was $2,722,319, which represents
1.35% 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 the
effective yield at February 28, 1998. These investments have been
identified by portfolio management as liquid securities. The aggregate
value of these securities at February 28, 1998, was $433,082, which
represents .21% of total net assets.
(i) The cost of securities purchased on a when-issued basis at February 28,
1998, was $6,394,814.
(j) Security is fully or partially on loan at February 28, 1998. See Note 1 of
accompanying Notes to Financial Statements.
* Moody's Rating
17
<PAGE>
FORTIS STOCK FUNDS
VALUE FUND
Schedule of Investments
February 28, 1998 (Unaudited)
COMMON STOCKS-90.20%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
AEROSPACE AND EQUIPMENT-4.03%
6,100 Lockheed Martin Corp......................... $ 620,864 $ 711,794
4,300 Raytheon Co. Class A......................... 217,426 249,400
8,809 Raytheon Co. Class B (e)..................... 482,448 518,079
------------ ------------
1,320,738 1,479,273
------------ ------------
APPAREL-0.45%
5,100 Fruit of the Loom, Inc. Class A (a).......... 185,314 163,837
------------ ------------
AUTOMOBILE MANUFACTURERS-1.50%
8,000 General Motors Corp.......................... 452,421 551,500
------------ ------------
BANKS-9.07%
11,500 Bank of New York Co., Inc.................... 391,034 673,469
6,700 BankAmerica Corp............................. 445,951 519,249
4,700 Chase Manhattan Corp......................... 461,263 583,094
7,400 Republic New York Corp....................... 809,434 895,400
5,700 U.S. Bancorp................................. 454,387 655,856
------------ ------------
2,562,069 3,327,068
------------ ------------
BROADCASTING-0.75%
7,900 Comcast Corp. Special Class A................ 170,539 276,500
------------ ------------
BUILDING MATERIALS-1.87%
5,900 Masco Corp................................... 303,151 320,812
11,800 Owens Corning................................ 344,613 364,325
------------ ------------
647,764 685,137
------------ ------------
BUSINESS SERVICES AND SUPPLIES-0.69%
4,600 Fiserv, Inc. (a)............................. 168,328 251,850
------------ ------------
CHEMICALS-SPECIALTY-1.87%
5,900 Air Products and Chemicals, Inc.............. 468,949 495,231
5,800 Morton International, Inc. (with rights) 198,377 191,762
------------ ------------
667,326 686,993
------------ ------------
COMPUTER-COMMUNICATIONS EQUIPMENT-0.46%
2,550 Cisco Systems, Inc. (a)...................... 140,887 167,981
------------ ------------
COMPUTER-SOFTWARE-2.18%
3,300 Automatic Data Processing, Inc............... 171,191 201,506
4,600 Computer Associates International, Inc....... 211,116 216,775
8,400 Sterling Commerce, Inc. (a).................. 298,412 383,250
------------ ------------
680,719 801,531
------------ ------------
CONSUMER GOODS-0.59%
3,600 Illinois Tool Works, Inc..................... 210,328 215,775
------------ ------------
CONTAINERS AND PACKAGING-2.87%
11,700 Crown Cork & Seal Company, Inc. (e) 599,302 631,800
10,900 Sonoco Products Co........................... 377,674 421,694
------------ ------------
976,976 1,053,494
------------ ------------
DRUGS-3.14%
4,600 Abbott Laboratories.......................... 280,056 344,137
2,300 Bristol-Myers Squibb Co...................... 189,592 230,431
2,300 Johnson & Johnson............................ 140,531 173,650
3,900 Lilly (Eli) & Co., Inc....................... 251,860 256,669
1,000 Warner-Lambert Co............................ 135,892 146,250
------------ ------------
997,931 1,151,137
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
ELECTRICAL EQUIPMENT-1.02%
4,800 General Electric Co.......................... $ 227,793 $ 373,200
------------ ------------
ELECTRIC PRODUCTS-1.51%
7,000 Honeywell, Inc............................... 479,175 554,750
------------ ------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-0.68%
2,800 Intel Corp................................... 198,150 251,125
------------ ------------
FINANCE SERVICES-5.71%
5,600 BankBoston Corp.............................. 444,199 558,250
8,900 Fannie Mae................................... 388,258 567,931
11,700 Finova Group, Inc............................ 411,383 643,500
2,500 Household International, Inc................. 310,475 324,687
------------ ------------
1,554,315 2,094,368
------------ ------------
FOOD-2.85%
14,500 Archer-Daniels-Midland Co.................... 324,518 325,344
3,900 Campbell Soup Co............................. 221,273 226,444
6,900 ConAgra, Inc. (e)............................ 204,415 207,000
6,100 Sysco Corp................................... 220,532 287,081
------------ ------------
970,738 1,045,869
------------ ------------
FREIGHT CARRIERS-0.44%
4,100 CNF Transportation, Inc...................... 160,100 160,412
------------ ------------
GLASS AND GLASS PRODUCTS, POTTERY-0.35%
3,200 Corning, Inc................................. 153,242 130,000
------------ ------------
HEALTH CARE SERVICES-1.60%
15,700 Tenet Healthcare Corp. (a)................... 510,047 585,806
------------ ------------
HOTEL AND GAMING-1.49%
11,300 Promus Hotel Corp. (with rights) (a)......... 499,573 545,225
------------ ------------
HOUSEHOLD PRODUCTS-2.22%
2,500 Clorox Co.................................... 191,731 219,375
6,600 Kimberly-Clark Corp.......................... 330,327 367,537
2,700 Procter & Gamble Co.......................... 190,361 229,331
------------ ------------
712,419 816,243
------------ ------------
INSURANCE-3.22%
5,000 American International Group, Inc............ 505,364 600,937
5,900 Hartford Financial Services Group............ 510,252 579,675
------------ ------------
1,015,616 1,180,612
------------ ------------
LEISURE TIME-AMUSEMENTS-1.07%
3,500 Disney (Walt) Co............................. 295,088 391,781
------------ ------------
MEDICAL SUPPLIES-0.43%
2,800 Baxter International, Inc.................... 123,559 158,550
------------ ------------
METALS-FABRICATING-1.36%
10,900 Newell Co.................................... 456,203 500,037
------------ ------------
NATURAL GAS TRANSMISSIONS-3.08%
6,500 Coastal Corp................................. 395,343 413,563
10,100 Enron Corp. (e).............................. 417,532 474,700
6,600 MCN Energy Group, Inc. (e)................... 211,807 242,963
------------ ------------
1,024,682 1,131,226
------------ ------------
</TABLE>
18
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
OFFICE EQUIPMENT AND SUPPLIES-2.38%
4,700 Compaq Computer Corp......................... $ 169,004 $ 150,694
2,600 International Business Machines Corp. 240,779 271,538
9,600 Pitney Bowes, Inc............................ 313,416 450,000
------------ ------------
723,199 872,232
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-6.16%
10,100 Anadarko Petroleum Corp...................... 591,858 651,450
11,000 Apache Corp.................................. 385,047 374,000
12,500 Burlington Resources, Inc.................... 560,636 559,375
8,300 Chevron Corp................................. 619,390 673,338
------------ ------------
2,156,931 2,258,163
------------ ------------
OIL-OFFSHORE DRILLING-0.85%
3,400 Diamond Offshore Drilling, Inc............... 149,137 154,063
3,700 Transocean Offshore, Inc..................... 153,457 159,100
------------ ------------
302,594 313,163
------------ ------------
OIL-REFINING-0.87%
4,100 Atlantic Richfield Co........................ 297,590 318,775
------------ ------------
PAPER-1.54%
12,443 Fort James Corp. (e)......................... 414,813 564,601
------------ ------------
PERSONAL SERVICES-1.53%
14,800 Service Corp. International (e).............. 502,153 560,550
------------ ------------
PRECISION INSTRUMENTS-TEST, RESEARCH-2.02%
11,600 Emerson Electric Co.......................... 615,939 740,225
------------ ------------
PUBLISHING-1.20%
5,800 McGraw Hill Companies, Inc................... 386,474 438,625
------------ ------------
RAILROAD AND RAILROAD EQUIPMENT-0.68%
2,500 Burlington Northern Santa Fe Corp............ 235,756 249,063
------------ ------------
REAL ESTATE-INVESTMENT TRUST-0.59%
8,100 Liberty Property Trust....................... 206,272 215,156
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
RETAIL-DEPARTMENT STORES-2.25%
14,000 Federated Department Stores, Inc. (a) $ 532,598 $ 656,250
2,400 JC Penney Company, Inc....................... 163,896 169,650
------------ ------------
696,494 825,900
------------ ------------
RETAIL-SPECIALTY-1.44%
8,600 AutoZone, Inc. (a) (e)....................... 253,012 260,150
4,600 Lowe's Companies, Inc........................ 171,533 268,813
------------ ------------
424,545 528,963
------------ ------------
TELECOMMUNICATIONS-1.17%
13,400 Cincinnati Bell, Inc......................... 388,817 428,800
------------ ------------
TELECOMMUNICATION EQUIPMENT-0.33%
2,700 Ericsson (L.M.) Telephone Co. Class B ADR.... 123,100 122,344
------------ ------------
TELEPHONE SERVICES-4.44%
5,451 Bell Atlantic Corp........................... 338,476 489,227
5,600 GTE Corp..................................... 238,987 303,100
5,900 SBC Communications, Inc...................... 329,932 446,188
5,900 Sprint Corp.................................. 250,092 389,400
------------ ------------
1,157,487 1,627,915
------------ ------------
TOBACCO-0.51%
4,300 Philip Morris Companies, Inc................. 181,641 186,781
------------ ------------
UTILITIES-ELECTRIC-3.79%
11,900 CMS Energy Corp.............................. 462,221 526,575
7,400 Duke Energy Corp............................. 391,810 411,163
9,700 New Century Energies, Inc.................... 415,164 452,263
------------ ------------
1,269,195 1,390,001
------------ ------------
UNIT INVESTMENT TRUST-1.43%
5,000 S & P 500 Depositary Receipt (e)............. 512,778 525,313
------------ ------------
WASTE DISPOSAL-0.52%
4,600 U.S.A. Waste Services, Inc. (a) (e).......... 185,010 191,475
------------ ------------
TOTAL COMMON STOCKS.......................... $ 28,342,828 $ 33,089,325
------------ ------------
------------ ------------
</TABLE>
19
<PAGE>
FORTIS STOCK FUNDS
VALUE FUND (CONTINUED)
Schedule of Investments
February 28, 1998 (Unaudited)
SHORT-TERM INVESTMENTS-10.40%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- ------------
<C> <S> <C>
BANKS-0.00%
$ 598 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.44%............. $ 598
------------
INVESTMENT COMPANY-2.14%
787,155 Norwest Advantage Cash Investment Fund,
Current rate -- 5.40%...................... 787,155
------------
DIVERSIFIED FINANCE-3.64%
1,335,000 Norwest Bank Associates Corp. Master Variable
Rate Note, Current rate -- 5.45%........... 1,335,000
------------
U.S. GOVERNMENT AGENCY-4.62%
700,000 Federal Home Loan Mortgage Corp., 5.52%,
3-12-1998.................................. 698,736
1,000,000 Federal Home Loan Mortgage Corp., 5.58%,
3-26-1998.................................. 996,042
------------
1,694,778
------------
TOTAL SHORT-TERM INVESTMENTS................. 3,817,531
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$32,160,359) (b)........................... $36,906,856
------------
------------
</TABLE>
(a) Presently not paying dividend income.
(b) At February 28, 1998, the cost of securities for federal income tax
purposes was $32,161,741 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $4,862,891
Unrealized depreciation..................................... (117,776)
- ------------------------------------------------------------------------
Net unrealized appreciation................................. $4,745,115
- ------------------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements.
(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 .33% of total net assets as of February 28, 1998.
(e) Security is fully or partially on loan at February 28, 1998. See Note 1 of
accompanying Notes to Financial Statements.
20
<PAGE>
FORTIS STOCK FUNDS
GROWTH & INCOME FUND
Schedule of Investments
February 28, 1998 (Unaudited)
COMMON STOCKS-82.54%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
AEROSPACE AND EQUIPMENT-1.20%
4,300 United Technologies Corp..................... $ 293,044 $ 384,044
------------ ------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-2.56%
11,000 Genuine Parts Co............................. 355,728 407,000
10,000 Tenneco, Inc................................. 442,494 411,250
------------ ------------
798,222 818,250
------------ ------------
BANKS-4.67%
9,350 Banc One Corp. (f)........................... 389,094 528,275
2,000 Chase Manhattan Corp......................... 193,604 248,125
4,000 Fleet Financial Group, Inc................... 284,240 315,250
755 U.S. Bancorp................................. 56,223 86,872
4,700 Washington Mutual, Inc. (f).................. 257,658 315,487
------------ ------------
1,180,819 1,494,009
------------ ------------
BUSINESS SERVICES AND SUPPLIES-1.00%
7,000 Omnicom Group, Inc........................... 183,284 320,250
------------ ------------
CONSUMER GOODS-0.99%
8,000 Fortune Brands, Inc.......................... 271,390 317,500
------------ ------------
DIVERSIFIED COMPANIES-1.73%
3,200 Chemed Corp.................................. 127,328 126,400
5,000 Minnesota Mining and Manufacturing Co........ 407,578 426,562
------------ ------------
534,906 552,962
------------ ------------
DRUGS-11.05%
5,300 Abbott Laboratories.......................... 314,524 396,506
5,500 American Home Products Corp.................. 365,985 515,625
13,200 Glaxo Wellcome plc ADR (f)................... 545,954 716,925
4,000 Johnson & Johnson............................ 266,549 302,000
7,000 Lilly (Eli) & Co., Inc....................... 271,673 460,687
4,000 Merck & Co., Inc............................. 348,981 510,250
16,000 Pharmacia and UpJohn, Inc.................... 631,339 633,000
------------ ------------
2,745,005 3,534,993
------------ ------------
ELECTRICAL EQUIPMENT-1.70%
7,000 General Electric Co.......................... 377,893 544,250
------------ ------------
FINANCE SERVICES-6.40%
3,300 American Express Co.......................... 203,239 297,206
4,000 Beneficial Corp.............................. 279,095 472,000
3,900 Fannie Mae................................... 144,347 248,869
4,000 Household International, Inc................. 376,000 519,500
3,200 Marsh and Mclennan Companies, Inc. 235,811 277,400
6,468 MBNA Corp.................................... 93,145 231,635
------------ ------------
1,331,637 2,046,610
------------ ------------
FOOD-4.45%
7,200 ConAgra, Inc. (f)............................ 208,978 216,000
8,000 Groupe Danone ADR............................ 249,640 319,000
6,800 Heinz (H.J.) Co.............................. 256,549 382,925
5,000 Keebler Foods Co. (a) (f).................... 120,000 156,875
6,500 Quaker Oats Co............................... 295,200 350,187
------------ ------------
1,130,367 1,424,987
------------ ------------
FURNITURE-0.34%
6,700 Shelby Williams Industries, Inc.............. 92,125 108,037
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
HAND TOOLS AND GENERAL HARDWARE-1.13%
8,500 Snap-On, Inc................................. $ 307,430 $ 361,250
------------ ------------
HOUSEHOLD PRODUCTS-1.15%
4,200 Clorox Co.................................... 258,147 368,550
------------ ------------
INSURANCE-2.20%
9,000 LaSalle Re Holdings Ltd...................... 268,618 306,000
4,500 St. Paul Companies, Inc...................... 337,003 398,812
------------ ------------
605,621 704,812
------------ ------------
LEISURE TIME-AMUSEMENTS-1.71%
10,000 Royal Caribbean Cruises Ltd. (f)............. 406,250 547,500
------------ ------------
MACHINERY-OIL AND WELL-2.11%
4,800 Baker Hughes, Inc............................ 181,883 196,500
4,500 Dresser Industries, Inc...................... 136,780 201,094
6,000 Halliburton Co............................... 205,660 279,000
------------ ------------
524,323 676,594
------------ ------------
MEDICAL SUPPLIES-1.24%
7,000 Baxter International, Inc.................... 325,992 396,375
------------ ------------
MISCELLANEOUS-0.82%
4,000 Eastman Kodak Co............................. 260,290 262,500
------------ ------------
NATURAL GAS TRANSMISSIONS-6.09%
6,386 El Paso Natural Gas Co. (f).................. 315,128 423,871
16,112 Enron Corp................................... 655,749 757,264
6,400 Sonat, Inc................................... 297,529 276,000
15,000 Williams Companies, Inc. (f)................. 293,996 490,312
------------ ------------
1,562,402 1,947,447
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-3.22%
3,000 Amoco Corp................................... 238,383 255,000
4,800 Exxon Corp................................... 234,028 306,600
8,412 Texaco, Inc.................................. 409,365 469,495
------------ ------------
881,776 1,031,095
------------ ------------
OIL-REFINING-0.79%
3,500 Mobil Corp................................... 234,493 253,531
------------ ------------
PUBLISHING-1.30%
5,500 McGraw Hill Companies, Inc................... 285,094 415,938
------------ ------------
RAILROAD AND RAILROAD EQUIPMENT-0.31%
9,000 Tranz Rail Holdings Ltd. ADR................. 136,375 100,125
------------ ------------
REAL ESTATE-INVESTMENT TRUST-5.79%
14,800 Cornerstone Properties, Inc.................. 221,074 264,550
7,000 Crescent Real Estate Equities Trust.......... 190,623 238,438
9,140 Equity Office Properties Trust............... 200,833 269,630
13,000 Excel Realty Trust, Inc...................... 359,848 417,625
5,500 Highwoods Properties, Inc.................... 172,885 191,469
4,000 Spieker Properties, Inc...................... 143,869 158,750
5,500 Starwood Hotels & Resorts.................... 286,173 311,094
------------ ------------
1,575,305 1,851,556
------------ ------------
RETAIL-CLOTHING-0.95%
10,500 Limited (The), Inc........................... 215,078 304,500
------------ ------------
</TABLE>
21
<PAGE>
FORTIS STOCK FUNDS
GROWTH & INCOME FUND (CONTINUED)
Schedule of Investments
February 28, 1998 (Unaudited)
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
RETAIL-DEPARTMENT STORES-0.66%
4,000 Sears Roebuck & Co........................... $ 215,872 $ 212,250
------------ ------------
RETAIL-SPECIALTY-1.81%
8,200 Intimate Brands, Inc. (f).................... 147,733 222,425
11,000 Rite Aid Corp. (f)........................... 253,723 356,125
------------ ------------
401,456 578,550
------------ ------------
SHIP BUILDING, SHIPPING-0.51%
6,000 Knightsbridge Tankers Ltd.................... 123,000 162,750
------------ ------------
TELECOMMUNICATIONS-1.33%
10,200 Ameritech Corp............................... 382,647 425,213
------------ ------------
TELEPHONE SERVICES-9.20%
7,000 Alltel Corp.................................. 296,265 319,813
6,000 AT & T Corp.................................. 235,920 365,250
17,000 Frontier Corp................................ 449,124 470,688
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
10,400 GTE Corp..................................... $ 505,272 $ 562,900
7,500 SBC Communications, Inc...................... 452,890 567,188
4,000 Sprint Corp.................................. 174,127 264,000
7,600 U.S. West Communications Group............... 269,612 395,675
------------ ------------
2,383,210 2,945,514
------------ ------------
TOBACCO-1.26%
9,300 Philip Morris Companies, Inc................. 364,962 403,969
------------ ------------
UTILITIES-ELECTRIC-2.87%
7,728 Duke Energy Corp............................. 282,787 429,387
22,000 Endesa S.A. ADR.............................. 395,120 489,500
------------ ------------
677,907 918,887
------------ ------------
TOTAL COMMON STOCKS.......................... $ 21,066,322 $ 26,414,798
------------ ------------
------------ ------------
</TABLE>
PREFERRED STOCKS-5.77%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
CONTAINERS AND PACKAGING-0.79%
5,000 Crown Cork and Seal Co, Inc., Convertible
4.50%...................................... $ 242,016 $ 251,562
------------ ------------
INSURANCE-1.49%
10,000 Sunamerica, Inc., Convertible 8.50%.......... 415,108 477,500
------------ ------------
MEDIA-0.97%
6,000 Metromedia International Group, Inc.
Cumulative Convertible 7.25%............... 300,000 309,000
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-0.62%
4,000 Nuevo Energy Co., Convertible, Ser A, 5.75%
(f)........................................ 196,460 200,000
------------ ------------
REAL ESTATE-INVESTMENT TRUST-0.63%
6,500 Excel Realty Trust, Inc. Convertible......... 167,310 201,094
------------ ------------
UTILITIES-ELECTRIC-1.27%
6,000 AES Corp. Convertible, Ser A "Tecons",
5.375%..................................... 305,415 406,500
------------ ------------
TOTAL PREFERRED STOCKS....................... $ 1,626,309 $ 1,845,656
------------ ------------
------------ ------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-0.70%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
WASTE DISPOSAL-0.70%
$ 200,000 USA Waste Services, Inc., 4.00% Convertible
Sub Note 2-1-2002.......................... BBB- $ 203,875 $ 225,500
------------ ------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-2.23%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
ELECTRONIC-MISCELLANEOUS-0.13%
$ 50,000 Kent Electronics Corp., 4.50% Convertible Sub
Note 9-1-2004.............................. B $ 50,000 $ 42,125
------------ ------------
</TABLE>
22
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------ ------------
<C> <S> <C> <C> <C>
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-1.41%
$ 100,000 Centocor, Inc., Convertible 4.75% 2-15-2005
(e)........................................ NR $ 100,000 $ 101,000
400,000 Cypress Semiconductor, Corp., Convertible
6.00% 10-1-2002 (e)........................ B 400,000 349,000
------------ ------------
500,000 450,000
------------ ------------
METALS-MINING AND MISCELLANEOUS-0.69%
250,000 Coeur D'Alene Mines, Corp., 7.25% Convertible
Sub Deb 10-31-2005 (e)..................... CCC+ 250,000 221,250
------------ ------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... 800,000 713,375
------------ ------------
TOTAL LONG-TERM INVESTMENTS.................. $23,696,506 $29,199,329
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-9.11%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- ------------
<C> <S> <C>
BANKS-0.00%
$ 1,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.44%............. $ 1,000
------------
INVESTMENT COMPANY-3.06%
979,284 Norwest Advantage Cash Investment Fund,
Current rate -- 5.40%...................... 979,284
------------
DIVERSIFIED FINANCE-2.94%
940,000 Norwest Bank Associates Corp. Master Variable
Rate Note, Current rate -- 5.45%........... 940,000
------------
U.S. GOVERNMENT AGENCY-3.11%
1,000,000 Federal National Mortgage Association, 5.53%,
3-27-1998.................................. 995,927
------------
TOTAL SHORT-TERM INVESTMENTS................. 2,916,211
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$26,612,717) (b)........................... $32,115,540
------------
------------
</TABLE>
(a) Presently not paying dividend income.
(b) At February 28, 1998, the cost of securities for federal income tax
purposes was $26,612,717 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $5,792,301
Unrealized depreciation..................................... (289,478)
- ------------------------------------------------------------------------
Net unrealized appreciation................................. $5,502,823
- ------------------------------------------------------------------------
</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 February 28, 1998.
(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>
February 13, 1998 100,000 Centocor, Inc. due 2005 $ 100,000
October 8, 1997 250,000 Coeur D' Alene Mines, Corp. due 2005 250,000
September 19, 1997 400,000 Cypress Semiconductor, Corp. due 2002 400,000
</TABLE>
The aggregate value of these securities at February 28, 1998, was $671,250,
which represents 2.10% of total net assets.
(f) Security is fully or partially on loan at February 28, 1998. See Note 1 of
accompanying Notes to Financial Statements.
23
<PAGE>
FORTIS STOCK FUNDS
CAPITAL FUND
Schedule of Investments
February 28, 1998 (Unaudited)
COMMON STOCKS-96.72%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
------------ ------------- -------------
<C> <S> <C> <C>
ADVERTISING-PUBLIC RELATIONS-1.55%
109,100 Interpublic Group of Companies, Inc. (e)..... $ 4,467,826 $ 5,945,950
------------- -------------
AEROSPACE AND EQUIPMENT-1.08%
163,000 Loral Space and Communications Ltd. (a)
(e)........................................ 3,650,084 4,166,687
------------- -------------
AIRLINES-0.17%
17,800 KLM Royal Dutch Air Lines NV................. 653,847 651,925
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.99%
63,000 Magna International, Inc. Class A (e)........ 2,984,455 3,811,500
------------- -------------
BANKS-1.23%
45,000 Mellon Bank Corp............................. 2,828,542 2,804,062
47,000 Norwest Corp................................. 1,797,947 1,924,062
------------- -------------
4,626,489 4,728,124
------------- -------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-1.75%
59,000 Amgen, Inc. (a).............................. 3,356,803 3,134,375
100,000 Centocor, Inc. (a)........................... 3,630,234 3,606,250
------------- -------------
6,987,037 6,740,625
------------- -------------
BROADCASTING-1.23%
20,900 America Online, Inc. (a) (e)................. 1,934,376 2,531,512
46,000 Viacom, Inc. Class B (a)..................... 1,792,703 2,208,000
------------- -------------
3,727,079 4,739,512
------------- -------------
BUILDING MATERIALS-0.54%
38,000 Masco Corp................................... 1,994,593 2,066,250
------------- -------------
BUSINESS SERVICES AND SUPPLIES-4.04%
130,400 Cognizant Corp............................... 4,906,515 6,511,850
118,000 Fiserv, Inc. (a)............................. 4,663,574 6,460,500
66,000 Ingram Micro, Inc. Class A (a) (e)........... 1,310,320 2,549,250
------------- -------------
10,880,409 15,521,600
------------- -------------
CHEMICALS-1.44%
109,000 Monsanto Co.................................. 4,176,204 5,545,375
------------- -------------
COMPUTER-COMMUNICATIONS EQUIPMENT-1.33%
38,000 3Com Corp. (a)............................... 1,349,000 1,358,500
57,000 Cisco Systems, Inc. (a)...................... 449,901 3,754,875
------------- -------------
1,798,901 5,113,375
------------- -------------
COMPUTER-SOFTWARE-5.22%
58,000 EMC Corp. (a)................................ 2,114,355 2,218,500
80,000 Microsoft Corp. (a) (e)...................... 733,750 6,780,000
54,000 PeopleSoft, Inc. (a) (e)..................... 1,894,741 2,413,125
189,956 Sterling Commerce, Inc. (a) (e).............. 6,175,479 8,666,742
------------- -------------
10,918,325 20,078,367
------------- -------------
CONTAINERS AND PACKAGING-0.83%
59,400 Crown Cork & Seal Company, Inc. 2,750,088 3,207,600
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
------------ ------------- -------------
<C> <S> <C> <C>
DRUGS-5.27%
100,800 Forest Laboratories, Inc. (a) (e)............ $ 3,789,510 $ 6,306,300
56,000 Intelligent Polymers Ltd. (with warrants)
(a)........................................ 1,120,000 1,442,000
191,000 Mylan Laboratories, Inc. (e)................. 3,486,385 3,891,625
38,000 SmithKline Beecham plc ADR (e)............... 1,652,145 2,351,250
43,000 Warner-Lambert Co............................ 4,280,075 6,288,750
------------- -------------
14,328,115 20,279,925
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-2.37%
42,000 Intel Corp................................... 1,869,863 3,766,875
95,700 Motorola, Inc................................ 3,871,447 5,335,275
------------- -------------
5,741,310 9,102,150
------------- -------------
FINANCE SERVICES-9.43%
20,000 American Express Co.......................... 1,794,892 1,801,250
234,000 Fannie Mae................................... 2,047,500 14,932,125
265,000 MBNA Corp. (e)............................... 1,687,075 9,490,312
136,000 MGIC Investment Corp. (e).................... 4,567,635 10,021,500
------------- -------------
10,097,102 36,245,187
------------- -------------
FOOD-4.79%
409,500 Archer-Daniels-Midland Co.................... 8,365,727 9,188,156
113,000 Groupe Danone ADR (e)........................ 3,505,460 4,505,875
100,000 Nabisco Holdings Corp. Class A (e)........... 4,732,391 4,718,750
------------- -------------
16,603,578 18,412,781
------------- -------------
HEALTH CARE SERVICES-1.28%
60,000 Cardinal Health, Inc......................... 3,060,700 4,912,500
------------- -------------
HOTEL AND GAMING-2.40%
231,000 Mirage Resorts, Inc. (a)..................... 2,603,580 5,284,125
91,000 Sun International Hotels Ltd. (a) (e) 4,349,186 3,958,500
------------- -------------
6,952,766 9,242,625
------------- -------------
INSURANCE-5.12%
105,000 American International Group, Inc. 6,954,479 12,619,688
164,100 Hartford Life, Inc. Class A.................. 5,510,663 7,066,556
------------- -------------
12,465,142 19,686,244
------------- -------------
LEISURE TIME-AMUSEMENTS-0.97%
20,000 Disney (Walt) Co............................. 1,866,142 2,238,750
100,000 Royal Olympic Cruise Lines, Inc. (a) (e)..... 1,528,591 1,500,000
------------- -------------
3,394,733 3,738,750
------------- -------------
MACHINERY-OIL AND WELL-0.93%
87,000 Baker Hughes, Inc............................ 3,745,465 3,561,563
------------- -------------
MEDICAL TECHNOLOGY-2.29%
166,000 Medtronic, Inc. (with rights)................ 994,294 8,818,750
------------- -------------
MOTION PICTURES-0.44%
46,000 Cinar Films, Inc. Class B (a)................ 1,552,500 1,702,000
------------- -------------
NATURAL GAS TRANSMISSIONS-0.77%
90,000 Williams Companies, Inc. (e)................. 2,096,229 2,941,875
------------- -------------
</TABLE>
24
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
------------ ------------- -------------
<C> <S> <C> <C>
OIL AND GAS FIELD SERVICES-3.51%
50,500 Camco International, Inc. (e)................ $ 2,191,614 $ 2,954,250
106,500 Precision Drilling Corp. (a) (e)............. 2,027,866 1,963,594
114,000 Schlumberger Ltd............................. 5,063,906 8,592,750
------------- -------------
9,283,386 13,510,594
------------- -------------
OIL-CRUDE PETROLEUM AND GAS-2.38%
37,000 EVI, Inc. (a) (e)............................ 1,510,781 1,815,313
123,600 Nuevo Energy Co. (a)......................... 4,492,200 4,434,150
259,000 Santa Fe Energy Resources, Inc. (a) (e)...... 2,231,428 2,897,563
------------- -------------
8,234,409 9,147,026
------------- -------------
OIL-OFFSHORE DRILLING-0.48%
52,000 Santa Fe International Corp.................. 1,546,260 1,842,750
------------- -------------
PAPER-0.75%
85,000 St. Joe Corp................................. 2,890,000 2,900,625
------------- -------------
POLLUTION CONTROL-1.60%
181,000 U.S. Filter Corp. (a) (e).................... 5,553,962 6,142,688
------------- -------------
PRECISION INSTRUMENTS-TEST, RESEARCH-0.55%
28,700 Perkin-Elmer Corp............................ 2,269,360 2,100,481
------------- -------------
PUBLISHING-1.36%
18,300 CMP Media, Inc. Class A (a).................. 402,600 432,338
71,000 Time Warner, Inc. (e)........................ 3,319,250 4,792,500
------------- -------------
3,721,850 5,224,838
------------- -------------
RETAIL-DEPARTMENT STORES-3.23%
155,000 Kohl's Corp. (a) (e)......................... 3,028,155 12,429,063
------------- -------------
RETAIL-SPECIALTY-8.34%
210,950 Cendant Corp. (a)............................ 2,359,321 7,910,625
187,000 Costco Companies, Inc. (a)................... 3,860,497 9,139,625
<CAPTION>
Market
Shares Cost (b) Value (c)
------------ ------------- -------------
<C> <S> <C> <C>
235,599 Home Depot, Inc.............................. $ 2,190,591 $ 15,034,161
------------- -------------
8,410,409 32,084,411
------------- -------------
RETAIL-VARIETY AND VARIETY MAIL ORDER-0.95%
99,900 Walgreen Co. (e)............................. 3,035,228 3,665,081
------------- -------------
TELECOMMUNICATION EQUIPMENT-1.90%
59,000 Ericsson (L.M.) Telephone Co. Class B ADR.... 630,654 2,673,438
77,000 Tellabs, Inc. (a) (e)........................ 1,539,692 4,648,875
------------- -------------
2,170,346 7,322,313
------------- -------------
TELEPHONE SERVICES-7.49%
204,000 AirTouch Communications, Inc. (a) 5,406,392 9,167,250
100,000 Frontier Corp................................ 2,593,053 2,768,750
38,000 Intermedia Communications, Inc. (a) (e)...... 2,487,273 2,902,250
76,000 MCI Communications Corp...................... 2,912,250 3,633,750
271,000 WorldCom, Inc. (a) (e)....................... 1,450,568 10,348,813
------------- -------------
14,849,536 28,820,813
------------- -------------
TOYS-2.84%
258,043 Mattel, Inc. (e)............................. 1,407,005 10,918,444
------------- -------------
UTILITIES-ELECTRIC-2.89%
188,000 AES Corp. (a)................................ 4,379,888 8,272,000
166,000 UniSource Energy Corp. Holding Company (a)
(e)........................................ 2,771,223 2,832,375
------------- -------------
7,151,111 11,104,375
------------- -------------
WASTE DISPOSAL-0.99%
91,000 U.S.A. Waste Services, Inc. (a) (e) 3,250,984 3,787,875
------------- -------------
TOTAL COMMON STOCKS.......................... $ 217,449,272 $ 371,962,617
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-3.24%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
------------ -------------
<C> <S> <C>
BANKS-0.00%
$ 13,802 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.44%............. $ 13,802
-------------
INVESTMENT COMPANY-3.24%
12,442,832 Norwest Advantage Cash Investment Fund,
Current rate -- 5.40%...................... 12,442,832
-------------
TOTAL SHORT-TERM INVESTMENTS................. 12,456,634
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$229,905,906) (b).......................... $ 384,419,251
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At February 28, 1998, the cost of securities for federal income tax
purposes was $229,905,906 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $156,511,862
Unrealized depreciation..................................... (1,998,517)
- --------------------------------------------------------------------------
Net unrealized appreciation................................. $154,513,345
- --------------------------------------------------------------------------
</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 7.86% of total net assets as of February 28, 1998.
(e) Security is fully or partially on loan at February 28, 1998. See Note 1 of
accompanying Notes to Financial Statements.
25
<PAGE>
FORTIS STOCK FUNDS
FIDUCIARY FUND, INC.
Schedule of Investments
February 28, 1998 (Unaudited)
COMMON STOCKS-94.00%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
ADVERTISING-PUBLIC RELATIONS-1.58%
28,100 Interpublic Group of Companies, Inc. (e)..... $ 1,151,275 $ 1,531,450
------------ ------------
AEROSPACE AND EQUIPMENT-1.14%
43,000 Loral Space and Communications Ltd. (a)...... 960,166 1,099,187
------------ ------------
AIRLINES-0.17%
4,400 KLM Royal Dutch Air Lines NV................. 161,625 161,150
------------ ------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-1.00%
16,000 Magna International, Inc. Class A (e)........ 757,466 968,000
------------ ------------
BANKS-1.28%
12,000 Mellon Bank Corp............................. 754,278 747,750
12,000 Norwest Corp................................. 459,050 491,250
------------ ------------
1,213,328 1,239,000
------------ ------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-1.79%
15,000 Amgen, Inc. (a).............................. 859,207 796,875
26,000 Centocor, Inc. (a)........................... 981,985 937,625
------------ ------------
1,841,192 1,734,500
------------ ------------
BROADCASTING-1.33%
5,900 America Online, Inc. (a) (e)................. 546,147 714,637
12,000 Viacom, Inc. Class B (a)..................... 467,662 576,000
------------ ------------
1,013,809 1,290,637
------------ ------------
BUILDING MATERIALS-0.53%
9,500 Masco Corp................................... 498,648 516,562
------------ ------------
BUSINESS SERVICES AND SUPPLIES-4.10%
34,100 Cognizant Corp............................... 1,290,709 1,702,869
30,000 Fiserv, Inc. (a)............................. 1,190,478 1,642,500
16,000 Ingram Micro, Inc. Class A (a) (e)........... 318,024 618,000
------------ ------------
2,799,211 3,963,369
------------ ------------
CHEMICALS-1.42%
27,000 Monsanto Co.................................. 1,034,799 1,373,625
------------ ------------
COMPUTER-COMMUNICATIONS EQUIPMENT-1.32%
10,000 3Com Corp. (a)............................... 355,000 357,500
14,000 Cisco Systems, Inc. (a)...................... 110,502 922,250
------------ ------------
465,502 1,279,750
------------ ------------
COMPUTER-SOFTWARE-5.07%
16,000 EMC Corp. (a)................................ 584,085 612,000
18,000 Microsoft Corp. (a).......................... 187,557 1,525,500
14,000 PeopleSoft, Inc. (a) (e)..................... 491,229 625,625
47,000 Sterling Commerce, Inc. (a).................. 554,543 2,144,375
------------ ------------
1,817,414 4,907,500
------------ ------------
CONTAINERS AND PACKAGING-0.80%
14,400 Crown Cork & Seal Company, Inc............... 666,688 777,600
------------ ------------
DRUGS-6.96%
26,300 Forest Laboratories, Inc. (a) (e)............ 987,323 1,645,394
14,000 Intelligent Polymers Ltd. (with warrants)
(a)........................................ 280,000 360,500
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
120,000 Mylan Laboratories, Inc. (e)................. $ 1,672,976 $ 2,445,000
10,000 SmithKline Beecham plc ADR (e)............... 434,775 618,750
11,400 Warner-Lambert Co............................ 1,139,868 1,667,250
------------ ------------
4,514,942 6,736,894
------------ ------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-2.37%
11,000 Intel Corp................................... 489,726 986,562
23,400 Motorola, Inc................................ 943,794 1,304,550
------------ ------------
1,433,520 2,291,112
------------ ------------
FINANCE SERVICES-8.13%
5,000 American Express Co.......................... 448,723 450,312
40,000 Fannie Mae................................... 350,000 2,552,500
66,000 MBNA Corp.................................... 429,276 2,363,625
34,000 MGIC Investment Corp......................... 1,146,710 2,505,375
------------ ------------
2,374,709 7,871,812
------------ ------------
FOOD-4.85%
105,000 Archer-Daniels-Midland Co.................... 2,146,447 2,355,937
29,000 Groupe Danone ADR (e)........................ 902,280 1,156,375
25,000 Nabisco Holdings Corp. Class A (e)........... 1,183,243 1,179,687
------------ ------------
4,231,970 4,691,999
------------ ------------
HEALTH CARE SERVICES-1.27%
15,000 Cardinal Health, Inc......................... 765,175 1,228,125
------------ ------------
HOTEL AND GAMING-2.14%
48,500 Mirage Resorts, Inc. (a)..................... 546,510 1,109,438
22,000 Sun International Hotels Ltd. (a) (e)........ 1,052,175 957,000
------------ ------------
1,598,685 2,066,438
------------ ------------
INSURANCE-5.54%
28,000 American International Group, Inc............ 1,856,549 3,365,250
46,400 Hartford Life, Inc. Class A.................. 1,598,018 1,998,100
------------ ------------
3,454,567 5,363,350
------------ ------------
LEISURE TIME-AMUSEMENTS-0.98%
5,000 Disney (Walt) Co............................. 466,536 559,688
26,000 Royal Olympic Cruise Lines, Inc. (a)......... 397,450 390,000
------------ ------------
863,986 949,688
------------ ------------
MACHINERY-OIL AND WELL-0.85%
20,000 Baker Hughes, Inc............................ 860,646 818,750
------------ ------------
MEDICAL TECHNOLOGY-2.36%
43,000 Medtronic, Inc. (with rights)................ 262,089 2,284,375
------------ ------------
MOTION PICTURES-0.57%
15,000 Cinar Films, Inc. Class B (a)................ 506,250 555,000
------------ ------------
NATURAL GAS TRANSMISSIONS-0.81%
24,000 Williams Companies, Inc. (e)................. 558,986 784,500
------------ ------------
OIL AND GAS FIELD SERVICES-2.58%
10,000 Camco International, Inc. (e)................ 434,997 585,000
30,000 Precision Drilling Corp. (a) (e)............. 564,139 553,125
18,000 Schlumberger Ltd............................. 854,678 1,356,750
------------ ------------
1,853,814 2,494,875
------------ ------------
</TABLE>
26
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
OIL-CRUDE PETROLEUM AND GAS-1.84%
29,800 Nuevo Energy Co. (a)......................... $ 1,082,036 $ 1,069,075
64,000 Santa Fe Energy Resources, Inc. (a).......... 552,108 716,000
------------ ------------
1,634,144 1,785,075
------------ ------------
OIL-OFFSHORE DRILLING-0.48%
13,000 Santa Fe International Corp.................. 386,565 460,688
------------ ------------
PAPER-0.71%
20,000 St. Joe Corp................................. 680,000 682,500
------------ ------------
POLLUTION CONTROL-1.61%
46,000 U.S. Filter Corp. (a) (e).................... 1,409,663 1,561,125
------------ ------------
PRECISION INSTRUMENTS-TEST, RESEARCH-0.52%
6,900 Perkin-Elmer Corp............................ 545,781 504,994
------------ ------------
PUBLISHING-1.37%
4,600 CMP Media, Inc. Class A (a).................. 101,200 108,675
18,000 Time Warner, Inc............................. 841,500 1,215,000
------------ ------------
942,700 1,323,675
------------ ------------
RETAIL-DEPARTMENT STORES-2.07%
25,000 Kohl's Corp. (a)............................. 488,598 2,004,687
------------ ------------
RETAIL-SPECIALTY-7.17%
54,375 Cendant Corp. (a)............................ 676,394 2,039,063
47,000 Costco Companies, Inc. (a)................... 1,057,575 2,297,125
40,849 Home Depot, Inc.............................. 809,167 2,606,677
------------ ------------
2,543,136 6,942,865
------------ ------------
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ ------------
<C> <S> <C> <C>
RETAIL-VARIETY AND VARIETY MAIL ORDER-1.03%
27,100 Walgreen Co. (e)............................. $ 823,311 $ 994,231
------------ ------------
TELECOMMUNICATION EQUIPMENT-1.97%
15,500 Ericsson (L.M.) Telephone Co. Class B ADR.... 157,492 702,344
20,000 Tellabs, Inc.(a)............................. 391,560 1,207,500
------------ ------------
549,052 1,909,844
------------ ------------
TELEPHONE SERVICES-7.61%
51,000 AirTouch Communications, Inc. (a)............ 1,361,108 2,291,813
26,000 Frontier Corp................................ 674,855 719,875
10,000 Intermedia Communications, Inc. (a) (e)...... 654,534 763,750
20,000 MCI Communications Corp...................... 766,000 956,250
69,008 WorldCom, Inc. (a) (e)....................... 373,035 2,635,243
------------ ------------
3,829,532 7,366,931
------------ ------------
TOYS-2.80%
64,057 Mattel, Inc. (e)............................. 377,073 2,710,412
------------ ------------
UTILITIES-ELECTRIC-2.89%
48,000 AES Corp. (a)................................ 1,122,352 2,112,000
40,100 UniSource Energy Corp. Holding Company (a)
(e)........................................ 669,426 684,206
------------ ------------
1,791,778 2,796,206
------------ ------------
WASTE DISPOSAL-0.99%
23,000 U.S.A. Waste Services, Inc. (a) (e).......... 821,698 957,375
------------ ------------
TOTAL COMMON STOCKS.......................... $ 54,483,493 $ 90,979,856
------------ ------------
------------ ------------
</TABLE>
SHORT-TERM INVESTMENTS-5.95%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- ------------
<C> <S> <C>
BANKS-0.00%
$ 3,941 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.44%............. $ 3,941
------------
INVESTMENT COMPANY-1.79%
1,727,754 Norwest Advantage Cash Investment Fund,
Current rate -- 5.40%...................... 1,727,754
------------
DIVERSIFIED FINANCE-4.16%
4,023,000 Norwest Bank Associates Corp. Master Variable
Rate Note, Current rate -- 5.45%........... 4,023,000
------------
TOTAL SHORT-TERM INVESTMENTS................. 5,754,695
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$60,238,188) (b)........................... $96,734,551
------------
------------
</TABLE>
(a) Presently not paying dividend income.
(b) At February 28, 1998, the cost of securities for federal income tax
purposes was $60,238,188 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $37,031,161
Unrealized depreciation..................................... (534,798)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $36,496,363
- -------------------------------------------------------------------------
</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 7.26% of total net assets as of February 28, 1998.
(e) Security is fully or partially on loan at February 28, 1998. See Note 1 of
accompanying Notes to Financial Statements.
27
<PAGE>
FORTIS STOCK FUNDS
GROWTH FUND, INC.
Schedule of Investments
February 28, 1998 (Unaudited)
COMMON STOCKS-89.44%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
------------ ------------- -------------
<C> <S> <C> <C>
APPAREL-1.51%
258,000 Tommy Hilfiger Corp. (a)..................... $ 9,273,765 $ 13,819,125
------------- -------------
BANKS-2.30%
371,922 Banc One Corp................................ 8,397,580 21,013,599
------------- -------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-2.71%
329,800 BioChem Pharma, Inc. (a)..................... 7,316,542 7,399,887
205,000 Biogen, Inc. (a)............................. 5,496,203 9,045,625
281,600 Genzyme Corp. (a)............................ 8,467,352 8,324,800
------------- -------------
21,280,097 24,770,312
------------- -------------
BUSINESS SERVICES AND SUPPLIES-1.24%
402,800 AccuStaff, Inc. (a).......................... 10,277,196 11,379,100
------------- -------------
COMPUTER-COMMUNICATIONS EQUIPMENT-3.91%
543,150 Cisco Systems, Inc. (a)...................... 642,162 35,780,006
------------- -------------
COMPUTER-SOFTWARE-13.46%
508,400 BMC Software, Inc. (a)....................... 5,492,697 38,892,600
400,800 Microsoft Corp. (a).......................... 4,401,912 33,967,800
360,000 Oracle Corp. (a)............................. 975,225 8,865,000
413,000 Parametric Technology Corp. (a).............. 5,983,603 25,012,312
359,435 Sterling Commerce, Inc. (a).................. 8,943,707 16,399,201
------------- -------------
25,797,144 123,136,913
------------- -------------
ELECTRONIC COMPONENTS-3.04%
574,200 Solectron Corp. (a).......................... 7,702,224 27,776,925
------------- -------------
ELECTRONIC-SEMICONDUCTOR AND CAPACITOR-0.91%
92,500 Intel Corp................................... 1,563,694 8,296,094
------------- -------------
FINANCE SERVICES-11.69%
75,000 American Express Co.......................... 4,327,567 6,754,687
262,200 Capital One Financial Corp................... 7,902,045 17,616,562
370,000 Fannie Mae................................... 13,903,689 23,610,625
714,000 Franklin Resources, Inc...................... 3,567,571 36,414,000
100,000 Freddie Mac.................................. 4,469,400 4,725,000
497,250 MBNA Corp.................................... 8,309,637 17,807,766
------------- -------------
42,479,909 106,928,640
------------- -------------
HEALTH CARE SERVICES-5.92%
456,000 HBO & Co..................................... 6,217,977 24,681,000
369,000 Healthsouth Corp. (a)........................ 9,628,869 9,963,000
363,000 Medpartners, Inc. (a)........................ 8,751,006 4,356,000
205,100 PhyCor, Inc. (a)............................. 6,369,298 5,274,916
162,500 United Healthcare Corp....................... 5,954,993 9,861,719
------------- -------------
36,922,143 54,136,635
------------- -------------
HOTEL AND GAMING-0.91%
172,420 Promus Hotel Corp. (with rights) (a)......... 5,429,806 8,319,265
------------- -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
------------ ------------- -------------
<C> <S> <C> <C>
MACHINERY-OIL AND WELL-1.80%
198,100 Cooper Cameron Corp. (a)..................... $ 7,951,439 $ 10,623,112
130,000 Dresser Industries, Inc...................... 4,571,736 5,809,375
------------- -------------
12,523,175 16,432,487
------------- -------------
MEDICAL SUPPLIES-1.44%
223,000 Steris Corp. (a)............................. 7,598,388 13,198,812
------------- -------------
MEDICAL TECHNOLOGY-2.41%
415,000 Medtronic, Inc. (with rights)................ 12,460,860 22,046,875
------------- -------------
OIL AND GAS FIELD SERVICES-6.34%
339,400 Input/Output, Inc. (a)....................... 7,701,429 7,318,312
451,700 Petroleum Geo-Services ADR (a)............... 11,492,122 25,633,975
160,000 Schlumberger Ltd............................. 7,819,893 12,060,000
162,800 Smith International, Inc. (a)................ 7,992,634 8,669,100
180,000 Stolt Comex Seaway S.A. (a).................. 5,445,000 4,342,500
------------- -------------
40,451,078 58,023,887
------------- -------------
OIL-OFFSHORE DRILLING-5.01%
421,400 ENSCO International, Inc..................... 11,621,810 12,273,275
364,000 Noble Drilling Corp. (a)..................... 7,262,818 10,328,500
554,600 R & B Falcon Corp. (a)....................... 9,853,733 14,696,900
199,400 Transocean Offshore, Inc..................... 6,227,789 8,574,200
------------- -------------
34,966,150 45,872,875
------------- -------------
POLLUTION CONTROL-1.02%
276,000 U.S. Filter Corp. (a)........................ 9,397,157 9,366,750
------------- -------------
RESTAURANTS AND FRANCHISING-1.26%
290,300 Starbucks Corp. (a).......................... 4,913,519 11,484,994
------------- -------------
RETAIL-DEPARTMENT STORES-2.32%
264,600 Kohl's Corp. (a)............................. 4,252,122 21,217,613
------------- -------------
RETAIL-SPECIALTY-9.40%
764,589 Cendant Corp. (a)............................ 14,116,225 28,672,088
204,000 Dollar Tree Stores, Inc. (a)................. 6,596,000 8,848,500
313,072 Home Depot, Inc.............................. 1,650,758 19,977,907
292,175 Office Depot, Inc. (a)....................... 3,360,111 8,034,813
969,562 Staples, Inc. (a)............................ 8,170,747 20,481,997
------------- -------------
33,893,841 86,015,305
------------- -------------
TELECOMMUNICATION EQUIPMENT-5.72%
420,200 ADC Telecommunications, Inc. (a) 6,831,763 10,846,413
299,250 Andrew Corp. (with rights) (a)............... 6,423,092 8,266,781
551,000 Tellabs, Inc. (a)............................ 3,219,364 33,266,625
------------- -------------
16,474,219 52,379,819
------------- -------------
TELEPHONE SERVICES-4.01%
961,000 Worldcom, Inc. (a)........................... 11,739,843 36,698,188
------------- -------------
WASTE DISPOSAL-1.11%
245,000 U.S.A. Waste Services, Inc. (a).............. 8,867,539 10,198,125
------------- -------------
TOTAL COMMON STOCKS.......................... $ 367,303,611 $ 818,292,344
------------- -------------
------------- -------------
</TABLE>
28
<PAGE>
SHORT-TERM INVESTMENTS-10.65%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
------------ -------------
<C> <S> <C>
BANKS-0.00%
$ 37,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.44%............. $ 37,000
-------------
INVESTMENT COMPANY-2.46%
22,563,786 Norwest Advantage Cash Investment Fund,
Current rate -- 5.40%...................... 22,563,786
-------------
DIVERSIFIED FINANCE-2.90%
26,501,000 Norwest Bank Associates Corp. Master Variable
Rate Note, Current rate -- 5.45%........... 26,501,000
-------------
U.S. GOVERNMENT AGENCY-2.71%
24,800,000 Federal Home Loan Mortgage Corp., 5.50%,
3-5-1998................................... 24,781,400
-------------
U.S. OTHER DIRECT FEDERAL OBLIGATIONS-2.58%
23,600,000 Federal Farm Credit Bank, 5.48%, 3-4-1998.... 23,585,892
-------------
TOTAL SHORT-TERM INVESTMENTS................. 97,469,078
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$464,772,689) (b).......................... $ 915,761,422
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At February 28, 1998, the cost of securities for federal income tax
purposes was $464,772,689 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $460,371,483
Unrealized depreciation..................................... (9,382,750)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $450,988,733
- -------------------------------------------------------------------------
</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 4.59% of total net assets as of February 28, 1998.
29
<PAGE>
FORTIS STOCK FUNDS
CAPITAL APPRECIATION PORTFOLIO
Schedule of Investments
February 28, 1998 (Unaudited)
COMMON STOCKS-92.68%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
----------- ------------ -------------
<C> <S> <C> <C>
AEROSPACE AND EQUIPMENT-0.42%
22,000 Hexcel Corp. (a) (e)......................... $ 694,496 $ 578,875
------------ -------------
APPAREL-0.81%
40,000 North Face, Inc. (a) (e)..................... 925,589 1,100,000
------------ -------------
BIOMEDICS, GENETICS RESEARCH AND
DEVELOPMENT-1.15%
70,000 BioChem Pharma, Inc. (a) (e)................. 1,500,025 1,570,625
------------ -------------
BROADCASTING-0.75%
20,000 USA Networks, Inc. (a)....................... 697,250 1,030,000
------------ -------------
BROKERAGE AND INVESTMENT-0.62%
31,600 E*TRADE Group, Inc. (a) (e).................. 1,150,363 845,300
------------ -------------
BUSINESS SERVICES AND SUPPLIES-14.37%
33,080 AccuStaff, Inc. (a) (e)...................... 801,466 934,510
230,000 Acxiom Corp. (a)............................. 715,312 4,830,000
38,000 APAC TeleServices, Inc. (a) (e).............. 349,169 560,500
31,000 CORESTAFF, Inc. (a).......................... 826,888 966,812
40,000 Corrections Corp. of America (a)............. 1,252,115 1,530,000
48,000 Covance, Inc. (a)............................ 922,349 1,032,000
25,600 Envoy Corp. (a) (e).......................... 878,080 1,040,000
60,000 Fastenal Co. (e)............................. 356,875 2,632,500
15,000 Fiserv, Inc. (a)............................. 560,579 821,250
1,000 Hall, Kinion & Associates, Inc. (a).......... 15,000 13,875
10,350 Paychex, Inc................................. 296,427 534,319
77,000 Romac International, Inc. (a) (e)............ 993,050 1,896,125
26,200 Saville Systems plc ADR (a) (e).............. 875,275 1,228,125
29,400 Snyder Communications, Inc. (a) (e) 591,307 1,207,237
22,500 Sykes Enterprises, Inc. (a).................. 681,137 414,844
------------ -------------
10,115,029 19,642,097
------------ -------------
COMPUTER-COMMUNICATIONS EQUIPMENT-2.28%
20,000 Ascend Communications, Inc. (a) (e) 606,250 748,750
35,900 Cisco Systems, Inc. (a)...................... 236,075 2,364,912
------------ -------------
842,325 3,113,662
------------ -------------
COMPUTER-SOFTWARE-16.47%
30,000 Aspen Technology, Inc. (a) (e)............... 766,517 1,192,500
34,000 HNC Software, Inc. (a) (e)................... 1,125,440 1,211,250
26,000 Industri-Matematik International Corp. (a)... 520,000 718,250
50,800 Legato Systems, Inc. (a) (e)................. 642,650 2,489,200
8,000 Netscape Communications Corp. (a) 378,591 155,000
9,000 Networks Associates, Inc. (a) (e)............ 568,407 581,625
62,000 Parametric Technology Corp. (a).............. 304,238 3,754,875
1,300 Pegasus Systems, Inc. (a).................... 16,900 28,925
24,000 PeopleSoft, Inc. (a) (e)..................... 727,500 1,072,500
42,000 Platinum Technology, Inc. (a) (e)............ 588,736 1,065,750
23,800 Siebel Systems, Inc. (a)..................... 601,744 1,463,700
66,281 Sterling Commerce, Inc. (a).................. 741,640 3,024,071
32,200 Sterling Software, Inc. (a) (e).............. 223,341 1,696,537
49,800 Synopsys, Inc. (a)........................... 857,600 1,739,887
28,000 Vantive Corp. (a) (e)........................ 850,041 766,500
27,225 VERITAS Software Corp. (a) (e)............... 830,601 1,548,422
------------ -------------
9,743,946 22,508,992
------------ -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ -------------
<C> <S> <C> <C>
CONSUMER GOODS-0.89%
40,500 Blyth Industries, Inc. (a) (e)............... $ 979,390 $ 1,217,531
------------ -------------
EDUCATIONAL SERVICES-1.86%
60,000 Apollo Group, Inc. Class A (a) (e)........... 1,163,187 2,542,500
------------ -------------
ELECTRONIC COMPONENTS-0.69%
51,700 DSP Communications, Inc. (a)................. 830,605 914,444
1,200 Sawtek, Inc. (a)............................. 40,200 30,750
------------ -------------
870,805 945,194
------------ -------------
ELECTRICAL EQUIPMENT-1.59%
46,500 Chicago Miniature Lamp, Inc. (a)............. 1,317,750 2,173,875
------------ -------------
FINANCE SERVICES-0.18%
14,000 Franchise Mortgage Acceptance Co. LLC (a).... 252,000 252,000
------------ -------------
HEALTH CARE SERVICES-5.51%
61,800 ABR Information Services, Inc. (a)........... 1,397,059 1,753,575
77,100 American Oncology Resources, Inc. (a)........ 978,729 1,175,775
22,000 Assisted Living Concepts, Inc. (a)........... 396,756 409,750
60,000 Omnicare, Inc. (e)........................... 592,500 2,220,000
30,000 PAREXEL International Corp. (a) (e).......... 506,250 1,132,500
40,000 Pharmaceutical Product Development, Inc.
(a)........................................ 993,206 840,000
------------ -------------
4,864,500 7,531,600
------------ -------------
MEDICAL SUPPLIES-4.46%
19,200 Arterial Vascular Engineering, Inc. (a)
(e)........................................ 1,088,711 1,572,000
13,000 Sofamor Danek Group, Inc. (a)................ 639,859 978,250
60,000 STERIS Corp. (a)............................. 1,067,130 3,551,250
------------ -------------
2,795,700 6,101,500
------------ -------------
MEDICAL TECHNOLOGY-0.24%
8,000 Stryker Corp................................. 243,000 327,500
------------ -------------
MISCELLANEOUS-0.61%
43,000 BMC Industries, Inc.......................... 1,334,057 835,812
------------ -------------
OIL AND GAS FIELD SERVICES-6.75%
13,500 Camco International, Inc. (e)................ 580,962 789,750
151,000 Input/Output, Inc. (a)....................... 448,406 3,255,937
64,000 Petroleum Geo-Services ADR (a)............... 1,127,444 3,632,000
64,000 Stolt Comex Seaway S.A. (a).................. 820,200 1,544,000
------------ -------------
2,977,012 9,221,687
------------ -------------
OIL-OFFSHORE DRILLING-1.31%
38,000 Marine Drilling Companies, Inc. (a).......... 612,750 681,625
42,000 R & B Falcon Corp. (a)....................... 731,844 1,113,000
------------ -------------
1,344,594 1,794,625
------------ -------------
PRECISION INSTRUMENTS-TEST, RESEARCH-0.45%
15,000 Veritas DGC, Inc. (a)........................ 607,546 619,688
------------ -------------
PRINTING-0.52%
12,000 Applied Graphics Technologies, Inc. (a)
(e)........................................ 600,367 709,500
------------ -------------
</TABLE>
30
<PAGE>
COMMON STOCKS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ -------------
<C> <S> <C> <C>
RESTAURANTS AND FRANCHISING-2.94%
67,300 Applebee's International, Inc................ $ 1,201,960 $ 1,547,900
9,500 Cracker Barrel Old Country Store, Inc........ 246,011 384,156
56,250 Papa John's International, Inc. (a).......... 720,625 2,088,281
------------ -------------
2,168,596 4,020,337
------------ -------------
RETAIL-HOUSEHOLD FURNITURE-0.33%
17,100 Pier 1 Imports, Inc.......................... 461,141 457,425
------------ -------------
RETAIL-MISCELLANEOUS-0.61%
82,050 Corporate Express, Inc. (a) (e).............. 583,467 830,756
------------ -------------
RETAIL-SPECIALTY-10.52%
80,000 Bed Bath & Beyond, Inc. (a) (e).............. 455,000 3,455,000
47,175 Cendant Corp. (a)............................ 1,100,750 1,769,063
39,000 Dollar Tree Stores, Inc. (a) (e)............. 1,261,000 1,691,625
83,400 Gadzooks, Inc. (a) (e)....................... 1,241,280 2,335,200
24,000 General Nutrition Companies, Inc. (a) 535,993 954,000
39,000 Just for Feet, Inc. (a)...................... 1,356,875 660,563
6,300 Michaels Stores, Inc. (a).................... 151,462 214,200
34,000 Viking Office Products, Inc. (a)............. 534,352 748,000
64,000 West Marine, Inc. (a) (e).................... 808,339 1,756,000
26,000 Wet Seal (The), Inc. Class A (a)............. 542,750 797,875
------------ -------------
7,987,801 14,381,526
------------ -------------
<CAPTION>
Market
Shares Cost (b) Value (c)
----------- ------------ -------------
<C> <S> <C> <C>
TELECOMMUNICATIONS-0.15%
8,000 Primus Telecommunications Group, Inc. (a).... $ 180,000 $ 208,000
------------ -------------
TELECOMMUNICATION EQUIPMENT-2.69%
46,000 ADC Telecommunications, Inc. (a)............. 737,033 1,187,375
15,700 Andrew Corp. (with rights) (a)............... 367,677 433,713
48,000 PairGain Technologies, Inc. (a) (e).......... 1,247,726 966,000
18,000 Tellabs, Inc. (a)............................ 805,500 1,086,750
------------ -------------
3,157,936 3,673,838
------------ -------------
TELEPHONE SERVICES-10.13%
52,300 ICG Communications, Inc. (a) (e)............. 759,413 1,758,588
47,000 Intermedia Communications, Inc. (a) (e)...... 793,125 3,589,625
74,000 LCI International, Inc. (a).................. 601,620 2,442,000
53,000 McLeodUSA, Inc. Class A (a).................. 1,262,301 2,065,344
18,000 STAR Telecommunications, Inc. (a)............ 331,000 672,750
86,837 WorldCom, Inc. (a) (e)....................... 1,236,388 3,316,088
------------ -------------
4,983,847 13,844,395
------------ -------------
WASTE DISPOSAL-3.38%
111,155 U.S.A. Waste Services, Inc. (a) (e).......... 1,158,950 4,626,827
------------ -------------
TOTAL COMMON STOCKS.......................... $ 65,700,669 $ 126,705,667
------------ -------------
------------ -------------
</TABLE>
SHORT-TERM INVESTMENTS-6.33%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- -------------
<C> <S> <C>
BANKS-0.01%
$ 7,064 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.44%............. $ 7,064
-------------
INVESTMENT COMPANY-2.67%
3,651,820 Norwest Advantage Cash Investment Fund,
Current rate -- 5.40%...................... 3,651,820
-------------
DIVERSIFIED FINANCE-3.65%
4,989,000 Norwest Bank Associates Corp. Master Variable
Rate Note, Current rate -- 5.45%........... 4,989,000
-------------
TOTAL SHORT-TERM INVESTMENTS................. 8,647,884
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$74,348,553) (b)........................... $ 135,353,551
-------------
-------------
</TABLE>
(a) Presently not paying dividend income.
(b) At February 28, 1998, the cost of securities for federal income tax
purposes was $74,348,553 and the aggregate gross unrealized appreciation
and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $63,909,422
Unrealized depreciation..................................... (2,904,424)
- -------------------------------------------------------------------------
Net unrealized appreciation................................. $61,004,998
- -------------------------------------------------------------------------
</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 5.21% of total net assets as of February 28, 1998.
(e) Security is fully or partially on loan at February 28, 1998. See Note 1 of
accompanying Notes to Financial Statements.
31
<PAGE>
FORTIS STOCK FUNDS
Statements of Assets and Liabilities
(Unaudited)
February 28, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET
ALLOCATION VALUE
PORTFOLIO FUND
------------- ------------
<S> <C> <C>
ASSETS:
Investments in securities, as detailed
in the accompanying schedules, at
market (cost $163,295,839;
$32,160,359; $26,612,717;
$229,905,906; $60,238,188;
$464,772,689; and $74,348,553
respectively) (Note 1).............. $207,231,118 $36,906,856
Collateral for securities lending
transactions (Note 1)............... 31,320,980 3,045,335
Receivables:
Investment securities sold.......... 2,087,800 665,436
Interest and dividends.............. 1,110,810 68,361
Subscriptions of capital stock...... 108,447 --
Deferred registration costs (Note
1).................................. 32,951 34,519
Prepaid expenses...................... 4,147 1,651
------------- ------------
TOTAL ASSETS............................ 241,896,253 40,722,158
------------- ------------
LIABILITIES:
Payable upon return of securities
loaned (Note 1)..................... 31,320,980 3,045,335
Payable for investment securities
purchased........................... 8,881,340 952,648
Redemptions of capital stock.......... 15,119 --
Payable for investment advisory and
management fees..................... 137,397 26,535
Payable for distribution fees......... 6,065 1,043
Accounts payable and accrued
expenses............................ 28,665 10,683
------------- ------------
TOTAL LIABILITIES....................... 40,389,566 4,036,244
------------- ------------
NET ASSETS:
Net proceeds of capital stock, par
value $.01 per share-authorized
10,000,000,000; 10,000,000,000;
10,000,000,000; 10,000,000,000;
100,000,000,000; 100,000,000,000;
10,000,000,000 shares;
respectively........................ 150,639,270 30,051,810
Unrealized appreciation of
investments......................... 43,935,279 4,746,497
Undistributed net investment income
(loss).............................. 596,119 29,945
Accumulated net realized gain (loss)
from the sale of investments........ 6,336,019 1,857,662
------------- ------------
TOTAL NET ASSETS........................ $201,506,687 $36,685,914
------------- ------------
------------- ------------
SHARES OUTSTANDING AND NET ASSET VALUE
PER SHARE:
Class A shares (based on net assets of
$165,268,448; $23,478,000;
$19,452,841; $356,905,453;
$83,520,088; $738,509,294; and
$110,780,008; respectively and
9,105,684; 1,676,545; 1,320,534;
14,614,375; 1,893,644; 20,899,021; and
3,188,258 shares outstanding;
respectively)......................... $18.15 $14.00
------------- ------------
Class B shares (based on net assets of
$9,340,860; $4,273,626; $4,104,337;
$8,975,835; $3,954,784; $14,562,334;
and $7,895,421; respectively and
517,932; 307,562; 279,385; 376,929;
92,333; 423,748; and 231,176 shares
outstanding; respectively)............ $18.03 $13.90
------------- ------------
Class C shares (based on net assets of
$5,685,737; $1,749,183; $1,870,323;
$1,997,540; $1,092,010; $2,806,862;
and $2,200,244; respectively and
316,433; 125,843; 127,291; 83,892;
25,485; 81,682; and 64,385 shares
outstanding; respectively)............ $17.97 $13.90
------------- ------------
Class H shares (based on net assets of
$21,211,642; $7,185,105; $6,574,768;
$16,689,512; $8,216,210; $39,015,461;
and $15,830,064; respectively and
1,176,536; 516,887; 447,451; 700,462;
191,822; 1,134,811; and 463,198 shares
outstanding; respectively)............ $18.03 $13.90
------------- ------------
Class Z shares (based on net assets of
$0; $0; $0; $0; $0; $120,001,093; and
$0; respectively and 0; 0; 0; 0; 0;
3,375,396; and 0 shares outstanding;
respectively)......................... -- --
------------- ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
32
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH & CAPITAL
INCOME CAPITAL FIDUCIARY GROWTH APPRECIATION
FUND FUND FUND FUND PORTFOLIO
------------ ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in securities, as detailed
in the accompanying schedules, at
market (cost $163,295,839;
$32,160,359; $26,612,717;
$229,905,906; $60,238,188;
$464,772,689; and $74,348,553
respectively) (Note 1)................ $32,115,540 $384,419,251 $ 96,734,551 $915,761,422 $135,353,551
Collateral for securities lending
transactions (Note 1)................. 3,425,900 99,480,733 23,866,251 -- 44,811,739
Receivables:
Investment securities sold............ -- 2,251,612 441,655 -- 1,770,941
Interest and dividends................ 82,169 184,171 61,604 325,869 37,388
Subscriptions of capital stock........ 2,551 5,976 128,318 31,763 --
Deferred registration costs (Note 1).... 40,808 21,894 32,835 30,625 30,184
Prepaid expenses........................ 11,565 8,018 7,384 16,106 2,264
------------ ------------- ------------- ------------- -------------
TOTAL ASSETS............................ 35,678,533 486,371,655 121,272,598 916,165,785 182,006,067
------------ ------------- ------------- ------------- -------------
LIABILITIES:
Payable upon return of securities
loaned (Note 1)..................... 3,425,900 99,480,733 23,866,251 -- 44,811,739
Payable for investment securities
purchased........................... 209,246 1,994,593 498,648 -- 361,480
Redemptions of capital stock.......... -- 47,442 30,820 99,324 --
Payable for investment advisory and
management fees..................... 23,569 236,246 72,379 513,751 95,878
Payable for distribution fees......... 13,798 6,400 1,874 13,288 4,145
Accounts payable and accrued
expenses............................ 3,751 37,901 19,534 644,378 27,088
------------ ------------- ------------- ------------- -------------
TOTAL LIABILITIES....................... 3,676,264 101,803,315 24,489,506 1,270,741 45,300,330
------------ ------------- ------------- ------------- -------------
NET ASSETS:
Net proceeds of capital stock, par
value $.01 per share-authorized
10,000,000,000; 10,000,000,000;
10,000,000,000; 10,000,000,000;
100,000,000,000; 100,000,000,000;
10,000,000,000 shares;
respectively........................ 26,202,481 207,871,629 50,752,885 462,226,140 77,470,288
Unrealized appreciation of
investments......................... 5,502,823 154,513,345 36,496,363 450,988,733 61,004,998
Undistributed net investment income
(loss).............................. 53,657 (647,914) (303,963) (1,742,798) (654,850)
Accumulated net realized gain (loss)
from the sale of investments........ 243,308 22,831,280 9,837,807 3,422,969 (1,114,699)
------------ ------------- ------------- ------------- -------------
TOTAL NET ASSETS........................ $32,002,269 $384,568,340 $ 96,783,092 $914,895,044 $136,705,737
------------ ------------- ------------- ------------- -------------
------------ ------------- ------------- ------------- -------------
SHARES OUTSTANDING AND NET ASSET VALUE
PER SHARE:
Class A shares (based on net assets of
$165,268,448; $23,478,000;
$19,452,841; $356,905,453;
$83,520,088; $738,509,294; and
$110,780,008; respectively and
9,105,684; 1,676,545; 1,320,534;
14,614,375; 1,893,644; 20,899,021; and
3,188,258 shares outstanding;
respectively)......................... $14.73 $24.42 $44.11 $35.34 $34.75
------------ ------------- ------------- ------------- -------------
Class B shares (based on net assets of
$9,340,860; $4,273,626; $4,104,337;
$8,975,835; $3,954,784; $14,562,334;
and $7,895,421; respectively and
517,932; 307,562; 279,385; 376,929;
92,333; 423,748; and 231,176 shares
outstanding; respectively)............ $14.69 $23.81 $42.83 $34.37 $34.15
------------ ------------- ------------- ------------- -------------
Class C shares (based on net assets of
$5,685,737; $1,749,183; $1,870,323;
$1,997,540; $1,092,010; $2,806,862;
and $2,200,244; respectively and
316,433; 125,843; 127,291; 83,892;
25,485; 81,682; and 64,385 shares
outstanding; respectively)............ $14.69 $23.81 $42.85 $34.36 $34.17
------------ ------------- ------------- ------------- -------------
Class H shares (based on net assets of
$21,211,642; $7,185,105; $6,574,768;
$16,689,512; $8,216,210; $39,015,461;
and $15,830,064; respectively and
1,176,536; 516,887; 447,451; 700,462;
191,822; 1,134,811; and 463,198 shares
outstanding; respectively)............ $14.69 $23.83 $42.83 $34.38 $34.18
------------ ------------- ------------- ------------- -------------
Class Z shares (based on net assets of
$0; $0; $0; $0; $0; $120,001,093; and
$0; respectively and 0; 0; 0; 0; 0;
3,375,396; and 0 shares outstanding;
respectively)......................... -- -- -- $35.55 --
------------ ------------- ------------- ------------- -------------
</TABLE>
33
<PAGE>
FORTIS STOCK FUNDS
Statements of Operations
(Unaudited)
For The Six-Month Period Ended February 28, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSET
ALLOCATION VALUE
PORTFOLIO FUND
------------ -----------
<S> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest income..................... $ 3,207,714 $ 86,842
Dividend income..................... 365,722 257,263
Fee income (Note 1)................. 27,112 2,692
------------ -----------
Total income.......................... 3,600,548 346,797
------------ -----------
Expenses:
Investment advisory and management
fees (Note 2)..................... 862,868 158,175
Distribution fees (Class A) (Note
2)................................ 357,536 26,636
Distribution fees (Class B) (Note
2)................................ 41,334 15,895
Distribution fees (Class C) (Note
2)................................ 25,740 6,459
Distribution fees (Class H) (Note
2)................................ 93,016 29,278
Registration fees................... 26,034 20,827
Shareholders' notices and reports... 17,406 1,114
Legal and auditing fees (Note 2).... 17,654 8,777
Custodian fees...................... 18,348 8,430
Directors' fees and expenses........ 5,405 719
Other............................... 7,781 1,012
------------ -----------
Total expenses........................ 1,473,122 277,322
------------ -----------
NET INVESTMENT INCOME (LOSS)............ 2,127,426 69,475
------------ -----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 1):
Net realized gain from security
transactions........................ 8,397,530 3,197,350
Net change in unrealized appreciation
(depreciation) of investments....... 6,410,224 1,344,853
------------ -----------
NET GAIN ON INVESTMENTS................. 14,807,754 4,542,203
------------ -----------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $16,935,180 $4,611,678
------------ -----------
------------ -----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
34
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
GROWTH & CAPITAL
INCOME CAPITAL FIDUCIARY GROWTH APPRECIATION
FUND FUND FUND FUND PORTFOLIO
----------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Income:
Interest income....................... $ 118,909 $ 652,856 $ 183,972 $ 2,001,813 $ 279,702
Dividend income....................... 298,095 796,737 193,356 1,012,533 14,312
Fee income (Note 1)................... 5,850 78,770 18,921 -- 103,011
----------- ------------ ------------ ------------ ------------
Total income............................ 422,854 1,528,363 396,249 3,014,346 397,025
----------- ------------ ------------ ------------ ------------
Expenses:
Investment advisory and management
fees (Note 2)....................... 130,582 1,498,494 471,238 3,311,845 613,886
Distribution fees (Class A) (Note
2).................................. 19,590 424,412 103,816 898,568 237,146
Distribution fees (Class B) (Note
2).................................. 15,719 39,279 15,809 64,703 35,151
Distribution fees (Class C) (Note
2).................................. 7,847 8,608 4,512 12,457 10,082
Distribution fees (Class H) (Note
2).................................. 28,657 76,379 35,759 180,293 71,161
Registration fees..................... 14,877 26,481 22,018 57,454 30,448
Shareholders' notices and reports..... 645 32,777 8,133 86,566 14,528
Legal and auditing fees (Note 2)...... 8,286 21,521 15,918 30,706 16,613
Custodian fees........................ 6,546 22,861 10,562 49,539 12,893
Directors' fees and expenses.......... 332 11,108 8,529 25,733 3,917
Other................................. 475 14,357 3,918 39,280 6,050
----------- ------------ ------------ ------------ ------------
Total expenses.......................... 233,556 2,176,277 700,212 4,757,144 1,051,875
----------- ------------ ------------ ------------ ------------
NET INVESTMENT INCOME (LOSS)............ 189,298 (647,914) (303,963) (1,742,798) (654,850)
----------- ------------ ------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 1):
Net realized gain from security
transactions........................ 252,982 26,650,352 11,092,452 9,064,480 1,399,155
Net change in unrealized appreciation
(depreciation) of investments....... 3,033,641 11,789,211 (2,106,367) 46,201,381 15,851,386
----------- ------------ ------------ ------------ ------------
NET GAIN ON INVESTMENTS................. 3,286,623 38,439,563 8,986,085 55,265,861 17,250,541
----------- ------------ ------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS....................... $3,475,921 $37,791,649 $ 8,682,122 $53,523,063 $16,595,691
----------- ------------ ------------ ------------ ------------
----------- ------------ ------------ ------------ ------------
</TABLE>
35
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
ASSET ALLOCATION PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED FOR THE
FEBRUARY 28, YEAR ENDED
1998 AUGUST 31,
(UNAUDITED) 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 2,127,426 $ 3,702,769
Net realized gain from security transactions.... 8,397,530 21,517,162
Net change in unrealized appreciation on
investments in securities..................... 6,410,224 12,305,587
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 16,935,180 37,525,518
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A....................................... (1,955,057) (3,394,288)
Class B....................................... (74,887) (102,347)
Class C....................................... (48,871) (62,513)
Class H....................................... (173,091) (240,105)
From net realized gains on investments
Class A....................................... (17,863,810) (7,790,082)
Class B....................................... (930,803) (290,516)
Class C....................................... (594,058) (175,535)
Class H....................................... (2,140,225) (668,944)
Excess distributions of net realized gains
Class A....................................... -- (26,271)
Class B....................................... -- (792)
Class C....................................... -- (484)
Class H....................................... -- (1,858)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (23,780,802) (12,753,735)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (550,483 and 1,049,780 shares)........ 10,295,835 18,325,244
Class B (99,597 and 172,571 shares)........... 1,829,472 2,998,989
Class C (68,195 and 123,842 shares)........... 1,241,309 2,158,427
Class H (231,609 and 356,375 shares).......... 4,278,812 6,214,436
Proceeds from shares issued as a result of
reinvested dividends
Class A (1,081,675 and 623,301 shares)........ 18,516,307 10,494,510
Class B (57,940 and 23,140 shares)............ 984,844 387,752
Class C (37,021 and 13,876 shares)............ 627,165 231,768
Class H (130,446 and 51,275 shares)........... 2,215,933 858,303
Less cost of repurchase of shares
Class A (783,209 and 1,706,945 shares)........ (14,605,395) (30,091,087)
Class B (35,016 and 69,197 shares)............ (650,193) (1,205,507)
Class C (43,350 and 44,638 shares)............ (771,271) (768,795)
Class H (94,331 and 164,068 shares)........... (1,737,782) (2,860,606)
-------------- --------------
NET INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS.................................... 22,225,036 6,743,434
-------------- --------------
TOTAL INCREASE IN NET ASSETS...................... 15,379,414 31,515,217
NET ASSETS:
Beginning of period............................. 186,127,273 154,612,056
-------------- --------------
End of period (includes undistributed net
investment income of $596,119 and $720,599,
respectively)................................. $ 201,506,687 $ 186,127,273
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
36
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
VALUE FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED FOR THE
FEBRUARY 28, YEAR ENDED
1998 AUGUST 31,
(UNAUDITED) 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 69,475 $ 109,544
Net realized gain from security transacations... 3,197,350 1,524,189
Net change in unrealized appreciation of
investments in securities..................... 1,344,853 3,192,347
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 4,611,678 4,826,080
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A....................................... (116,026) (62,943)
Class B....................................... -- (2,233)
Class C....................................... -- (680)
Class H....................................... -- (4,998)
From net realized gains on investments
Class A....................................... (1,834,815) (228,302)
Class B....................................... (316,448) (19,112)
Class C....................................... (128,894) (5,825)
Class H....................................... (582,707) (42,783)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (2,978,890) (366,876)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (467,334 and 816,622 shares).......... 6,422,908 10,071,023
Class B (111,985 and 134,156 shares).......... 1,523,178 1,639,623
Class C (43,956 and 59,914 shares)............ 599,083 740,650
Class H (164,069 and 285,757 shares).......... 2,239,942 3,504,117
Proceeds from shares issued as a result of
reinvested dividends
Class A (147,793 and 25,047 shares)........... 1,918,350 287,791
Class B (24,067 and 1,855 shares)............. 310,465 21,220
Class C (9,863 and 562 shares)................ 127,238 6,429
Class H (44,045 and 4,125 shares)............. 568,184 47,188
Less cost of repurchase of shares
Class A (556,227 and 140,400 shares).......... (7,889,410) (1,735,918)
Class B (13,751 and 10,742 shares)............ (184,441) (133,427)
Class C (2,855 and 6,447 shares).............. (38,926) (79,920)
Class H (56,853 and 74,308 shares)............ (776,907) (911,833)
-------------- --------------
NET INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS.................................... 4,819,664 13,456,943
-------------- --------------
TOTAL INCREASE IN NET ASSETS...................... 6,452,452 17,916,147
NET ASSETS:
Beginning of period............................. 30,233,462 12,317,315
-------------- --------------
End of period (includes undistributed net
investment income of $29,945 and $76,496,
respectively)................................. $ 36,685,914 $ 30,233,462
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
37
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
GROWTH & INCOME FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD
ENDED FOR THE
FEBRUARY 28, YEAR ENDED
1998 AUGUST 31,
(UNAUDITED) 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment income........................... $ 189,298 $ 173,038
Net realized gain from security transacations... 252,982 79,211
Net change in unrealized appreciation of
investments in securities..................... 3,033,641 2,394,136
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 3,475,921 2,646,385
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A....................................... (135,776) (95,456)
Class B....................................... (15,459) (7,150)
Class C....................................... (7,841) (4,240)
Class H....................................... (29,214) (16,440)
From net realized gains on investments
Class A....................................... (10,124) (42,381)
Class B....................................... (2,098) (7,753)
Class C....................................... (1,029) (3,546)
Class H....................................... (3,663) (17,951)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (205,204) (194,917)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (448,368 and 913,354 shares).......... 6,232,824 11,139,324
Class B (122,074 and 134,438 shares).......... 1,680,364 1,627,226
Class C (43,894 and 75,761 shares)............ 606,421 917,962
Class H (113,671 and 311,309 shares).......... 1,571,134 3,801,926
Proceeds from shares issued as a result of
reinvested dividends
Class A (9,915 and 10,741 shares)............. 135,816 127,797
Class B (1,262 and 1,263 shares).............. 17,268 14,789
Class C (610 and 625 shares).................. 8,347 7,348
Class H (2,357 and 2,865 shares).............. 32,247 33,503
Less cost of repurchase of shares
Class A (202,664 and 160,250 shares).......... (2,810,767) (1,974,529)
Class B (21,020 and 7,826 shares)............. (285,692) (97,559)
Class C (16,211 and 6,655 shares)............. (226,941) (79,312)
Class H (58,914 and 48,414 shares)............ (818,070) (594,546)
-------------- --------------
NET INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS.................................... 6,142,951 14,923,929
-------------- --------------
TOTAL INCREASE IN NET ASSETS...................... 9,413,668 17,375,397
NET ASSETS:
Beginning of period............................. 22,588,601 5,213,204
-------------- --------------
End of period (includes undistributed net
investment income of $53,657 and $52,649,
respectively)................................. $ 32,002,269 $ 22,588,601
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
38
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
CAPITAL FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED FOR THE
FEBRUARY 28, YEAR ENDED
1998 AUGUST 31,
(UNAUDITED) 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................. $ (647,914) $ (1,209,262)
Net realized gain from security transacations... 26,650,352 63,878,182
Net change in unrealized appreciation of
investments in securities..................... 11,789,211 33,552,766
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 37,791,649 96,221,686
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income
Class A....................................... -- (141,299)
From net realized gains on investments
Class A....................................... (51,765,285) (33,970,839)
Class B....................................... (1,231,053) (572,462)
Class C....................................... (528,836) (126,988)
Class H....................................... (2,412,646) (1,124,462)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (55,937,820) (35,936,050)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (895,438 and 967,481 shares).......... 22,363,456 22,693,862
Class B (56,371 and 99,817 shares)............ 1,375,223 2,280,963
Class C (97,208 and 26,028 shares)............ 2,427,313 592,828
Class H (92,070 and 215,855 shares)........... 2,294,344 5,025,197
Proceeds from shares issued as a result of
reinvested dividends
Class A (2,201,510 and 1,473,677 shares)...... 47,970,902 31,713,534
Class B (57,626 and 26,803 shares)............ 1,226,273 569,830
Class C (11,229 and 5,860 shares)............. 238,946 124,476
Class H (107,308 and 49,765 shares)........... 2,284,582 1,057,494
Less cost of repurchase of shares
Class A (1,530,547 and 2,075,394 shares)...... (37,883,557) (48,029,755)
Class B (20,814 and 31,749 shares)............ (494,981) (719,644)
Class C (80,322 and 14,112 shares)............ (1,723,233) (319,497)
Class H (62,251 and 73,545 shares)............ (1,497,787) (1,701,467)
-------------- --------------
NET INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS.................................... 38,581,481 13,287,821
-------------- --------------
TOTAL INCREASE IN NET ASSETS...................... 20,435,310 73,573,457
NET ASSETS:
Beginning of period............................. 364,133,030 290,559,573
-------------- --------------
End of period (includes undistributed net
investment loss of $647,914 and $0,
respectively)................................. $ 384,568,340 $ 364,133,030
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
39
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
FIDUCIARY FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED FOR THE
FEBRUARY 28, YEAR ENDED
1998 AUGUST 31,
(UNAUDITED) 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................. $ (303,963) $ (626,755)
Net realized gain from security transacations... 11,092,452 14,259,204
Net change in unrealized appreciation
(depreciation) of investments in securities... (2,106,367) 10,814,437
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 8,682,122 24,446,886
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains on investments
Class A....................................... (10,713,649) (4,979,555)
Class B....................................... (422,294) (124,877)
Class C....................................... (118,873) (39,295)
Class H....................................... (954,059) (291,166)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (12,208,875) (5,434,893)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (228,199 and 264,554 shares).......... 9,973,339 10,695,362
Class B (25,858 and 32,851 shares)............ 1,136,275 1,306,041
Class C (8,247 and 6,194 shares).............. 343,866 241,373
Class H (42,112 and 72,797 shares)............ 1,852,213 2,906,990
Proceeds from shares issued as a result of
reinvested dividends
Class A (261,730 and 127,747 shares).......... 10,403,771 4,862,050
Class B (10,825 and 3,357 shares)............. 418,476 125,643
Class C (3,073 and 1,047 shares).............. 118,850 39,264
Class H (24,449 and 7,734 shares)............. 945,193 289,482
Less cost of repurchase of shares
Class A (413,140 and 361,725 shares).......... (17,590,660) (14,656,981)
Class B (3,338 and 14,724 shares)............. (147,381) (592,169)
Class C (4,156 and 2,440 shares).............. (168,618) (95,382)
Class H (18,868 and 23,662 shares)............ (822,024) (943,779)
-------------- --------------
NET INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS.................................... 6,463,300 4,177,894
-------------- --------------
TOTAL INCREASE IN NET ASSETS...................... 2,936,547 23,189,887
NET ASSETS:
Beginning of period............................. 93,846,545 70,656,658
-------------- --------------
End of period (includes undistributed net
investment loss of $303,963 and $0,
respectively)................................. $ 96,783,092 $ 93,846,545
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
40
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
GROWTH FUND
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED
FEBRUARY 28, FOR THE
1998 YEAR ENDED
(UNAUDITED) AUGUST 31, 1997
---------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................. $ (1,742,798) $ (3,849,243)
Net realized gain from security transacations... 9,064,480 101,212,746
Net change in unrealized appreciation of
investments in securities..................... 46,201,381 102,027,949
---------------- ----------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 53,523,063 199,391,452
---------------- ----------------
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains on investments
Class A....................................... (73,562,102) (60,229,768)
Class B....................................... (1,380,587) (773,234)
Class C....................................... (263,232) (138,820)
Class H....................................... (3,820,899) (2,272,953)
Class Z....................................... (11,439,433) (8,698,046)
---------------- ----------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (90,466,253) (72,112,821)
---------------- ----------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (3,996,709 and 5,049,377 shares)...... 142,393,655 171,053,540
Class B (71,213 and 142,718 shares)........... 2,470,904 4,747,591
Class C (17,361 and 36,673 shares)............ 591,573 1,214,910
Class H (142,429 and 382,332 shares).......... 4,981,856 12,751,164
Class Z (359,643 and 421,091 shares).......... 12,652,944 14,099,862
Proceeds from shares issued as a result of
reinvested dividends
Class A (2,215,381 and 1,768,394 shares)...... 70,604,208 57,897,492
Class B (44,165 and 23,932 shares)............ 1,370,890 771,073
Class C (8,466 and 4,296 shares).............. 262,703 138,406
Class H (121,742 and 69,264 shares)........... 3,780,075 2,231,699
Class Z (344,351 and 260,207 shares).......... 11,036,437 8,537,395
Less cost of repurchase of shares
Class A (5,000,390 and 7,075,360 shares)...... (179,048,247) (240,578,784)
Class B (24,237 and 45,388 shares)............ (821,447) (1,512,337)
Class C (8,961 and 10,067 shares)............. (309,513) (336,196)
Class H (85,543 and 162,457 shares)........... (2,969,683) (5,434,477)
Class Z (327,487 and 572,423 shares).......... (11,625,237) (19,422,060)
---------------- ----------------
NET INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS.................................... 55,371,118 6,159,278
---------------- ----------------
TOTAL INCREASE IN NET ASSETS...................... 18,427,928 133,437,909
NET ASSETS:
Beginning of period............................. 896,467,116 763,029,207
---------------- ----------------
End of period (includes undistributed net
investment loss of $1,742,798 and $0,
respectively)................................. $ 914,895,044 $ 896,467,116
---------------- ----------------
---------------- ----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
41
<PAGE>
FORTIS STOCK FUNDS
Statements of Changes in Net Assets
CAPITAL APPRECIATION PORTFOLIO
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED FOR THE
FEBRUARY 28, YEAR ENDED
1998 AUGUST 31,
(UNAUDITED) 1997
-------------- --------------
<S> <C> <C>
OPERATIONS:
Net investment loss............................. $ (654,850) $ (1,150,267)
Net realized gain from security transacations... 1,399,155 470,737
Net change in unrealized appreciation
(depreciation) of investments in securities... 15,851,386 (9,268,528)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................. 16,595,691 (9,948,058)
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From realized gains on investments
Class A....................................... -- (3,954,147)
Class B....................................... -- (189,757)
Class C....................................... -- (47,703)
Class H....................................... -- (381,589)
Tax return of capital
Class A....................................... -- (905,283)
Class B....................................... -- (43,444)
Class C....................................... -- (10,921)
Class H....................................... -- (87,363)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... -- (5,620,207)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from sale of shares
Class A (703,570 and 1,798,460 shares)........ 22,256,555 54,031,052
Class B (36,231 and 118,162 shares)........... 1,137,587 3,552,423
Class C (12,754 and 43,602 shares)............ 400,719 1,297,540
Class H (72,606 and 236,178 shares)........... 2,278,720 7,111,058
Proceeds from shares issued as a result of
reinvested dividends
Class A (0 and 151,618 shares)................ -- 4,748,671
Class B (0 and 7,441 shares).................. -- 230,517
Class C (0 and 1,874 shares).................. -- 58,089
Class H (0 and 15,016 shares)................. -- 465,003
Less cost of repurchase of shares
Class A (960,260 and 1,793,757 shares)........ (30,519,266) (54,047,060)
Class B (22,574 and 39,286 shares)............ (704,587) (1,159,231)
Class C (10,485 and 12,477 shares)............ (323,068) (353,713)
Class H (52,696 and 85,586 shares)............ (1,653,153) (2,540,636)
-------------- --------------
NET INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS.................................... (7,126,493) 13,393,713
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 9,469,198 (2,174,552)
NET ASSETS:
Beginning of period............................. 127,236,539 129,411,091
-------------- --------------
End of period (includes undistributed net
investment loss of $654,850 and $0,
respectively)................................. $ 136,705,737 $ 127,236,539
-------------- --------------
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
42
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: The funds are open-end,
diversified management investment companies, each of which has different
investment objectives and their own investment portfolios and net asset
values. Asset Allocation and Capital Appreciation Portfolios are series of
Fortis Advantage Portfolios, Inc. ("Fortis Advantage") and Fortis Value Fund,
Fortis Growth & Income Fund and Fortis Capital Fund are funds of Fortis
Equity Portfolios, Inc. ("Fortis Equity"). The investment objectives of each
portfolio are as follows:
- The objective of the Fortis Asset Allocation Portfolio is maximum total
return on invested capital, to be derived mainly from capital appreciation,
dividends and interest.
- The objective of Fortis Value Fund is short and long-term capital
appreciation. Current income is only a secondary objective. The portfolio
invests primarily in equity securities and selects stocks based on the
"value" philosophy.
- The objective of the Fortis Growth & Income Fund is capital appreciation
and current income. The fund invests primarily in equity securities that
provide an income component.
- The objective of the Fortis Capital Fund is short and long-term capital
appreciation. Current income is only a secondary objective.
- The objective of the Fortis Fiduciary Fund is short and long-term capital
appreciation. Current income is only a secondary objective.
- The objective of Fortis Growth Fund is short and long-term capital
appreciation. Current income is only a secondary objective.
- The objective of Fortis Capital Appreciation Portfolio is maximum long-term
capital appreciation. Dividend and interest income from investments, if
any, is incidental.
The Articles of Incorporation of Fortis Advantage and Fortis Equity permits
the Board of Directors to create additional portfolios in the future.
The Fortis Advantage Portfolios, Fortis Equity Portfolios, Fortis Growth Fund
and Fortis Fiduciary Fund offer Class A, Class B, Class C and Class H shares.
The Fortis Advantage Portfolios, Fortis Capital Fund, Fortis Growth Fund and
Fortis Fiduciary Fund began to issue multiple class shares effective November
14, 1994. The inception of Fortis Value Fund and Fortis Growth & Income Fund
was December 15, 1995, and the commencement of operations was January 2,
1996. 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. Class Z shares are sold without a front-end sales charge, a
contingent deferred sales charge and has no distribution fees. Only Fortis
Growth Fund issues Class Z shares. 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. 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. 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.
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 Asset Allocation 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 fluctuations and the portfolio maintains, in a segregated account with
its custodian, assets with a market value equal to the amount of its purchase
commitments. At February 28, 1998, the Asset Allocation Portfolio had entered
into outstanding when-issued or forward commitments of $6,394,814.
Consistent with its ability to purchase securities on a when-issued basis,
the Asset Allocation Portfolio may enter 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.
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.
The Advantage Asset Allocation Portfolio amortizes original issue discount,
long term bond premium, and market discount.
For the period ended February 28, 1998, 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>
- -------------------------------------------------------------------------------
Fortis Asset Allocation Portfolio............ $ 100,744,366 $ 99,211,750
Fortis Value Fund............................ 27,638,315 26,338,327
Fortis Growth & Income Fund.................. 9,085,248 1,182,106
Fortis Capital Fund.......................... 56,822,575 59,419,371
Fortis Fiduciary Fund........................ 15,240,827 21,309,775
Fortis Growth Fund........................... 35,940,505 85,180,132
Fortis Capital Appreciation Portfolio........ 12,437,070 17,844,917
</TABLE>
LENDING OF PORTFOLIO SECURITIES: At February 28, 1998, securities were on
loan to brokers from the Funds. For collateral, the Fund's custodian
43
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
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.
Value of securities on loan and fee income from securities lending was as
follows for the period ended ended February 28, 1998:
<TABLE>
<CAPTION>
Fee
Income
For
Period
Ended
February
Securities 28,
On Loan Collateral 1998
<S> <C> <C> <C>
- --------------------------------------------------------------------------------------------
Asset Allocation Portfolio................... $ 30,626,072 $ 31,320,980 $ 27,112
Value Fund................................... 3,029,826 3,045,335 2,692
Growth & Income Fund......................... 3,302,320 3,425,900 5,850
Capital Fund................................. 97,281,141 99,480,733 78,770
Fiduciary Fund............................... 23,184,237 23,866,251 18,921
Capital Appreciation Portfolio............... 43,845,251 44,811,739 103,011
</TABLE>
FEDERAL 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
policies 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 may differ from the year that the income or
realized gains (losses) were recorded by the fund.
For federal income tax purposes Capital Appreciation Portfolio had a capital
loss carryover of $2,513,854 at August 31, 1997, which, if not offset by
subsequent capital gains, will expire in 2006. It is unlikely the Board of
Directors will authorize a distribution of any net realized gains until the
available capital loss carryover has 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 Fortis Asset
Allocation Portfolio, and Fortis Growth & Income Fund to pay quarterly
distributions from net investment income; Fortis Capital Appreciation
Portfolio, Fortis Value Fund, Fortis Capital Fund, Fortis Fiduciary Fund and
Fortis Growth Fund to pay annual distributions from net investment income.
Distributions of net realized capital gains, if any, are made annually by
each Fund. 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 February 28, 1998, investments in securities for the
Asset Allocation Portfolio and the Growth & Income Fund included issues that
are illiquid. The funds currently limit investments in illiquid securities to
15% of net assets; at market value, at the date of purchase. The aggregate
value of such securities at February 28, 1998, was $1,683,838 Asset
Allocation Portfolio; $671,250 Growth & Income Fund, which represents .84% ,
2.10% 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.
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 Fund. Investment advisory and management fees are
computed for Fortis Asset Allocation Portfolio, Fortis Value Fund, Fortis
Growth & Income Fund, Fortis Capital Fund, Fortis Fiduciary Fund, Fortis
Growth Fund, and Fortis Capital Appreciation Portfolio at an annual rate of
1% of the first $100 million of average daily net assets, .80% for the next
$150 million, and .70% for average daily net assets over $250 million of each
portfolio.
In addition to the investment advisory and management fee, Classes A, B, C,
and H pay Fortis Investors, Inc. (the funds' principal underwriter)
distribution fees equal to .45% of average daily net assets for Class A for
each of Asset Allocation and Capital Appreciation Portfolios and .25% of
average daily net assets for Class A for each of Value Fund, Growth & Income
Fund, Capital Fund, Fiduciary Fund, and Growth Fund and 1.00% of average
daily net assets for Classes B, C, and H for each fund 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 funds' shares) as
follows:
<TABLE>
<CAPTION>
Class A Class B Class C Class H
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Asset Allocation Portfolio................... $ 210,482 $ 9,886 $ 2,533 $ 25,524
Value Fund................................... 103,373 2,716 277 14,028
Growth & Income Fund......................... 103,258 3,434 472 11,952
Capital Fund................................. 221,345 7,012 15,171 26,628
Fiduciary Fund............................... 109,076 2,556 113 11,209
Growth Fund.................................. 536,582 16,798 505 48,421
Capital Appreciation Portfolio............... 141,330 10,503 522 22,873
</TABLE>
For the period ended ended February 28, 1998, legal fees and expenses were
paid as follows to a law firm of which the secretary of the fund is a
partner.
<TABLE>
<CAPTION>
Amount
<S> <C>
- ---------------------------------------------------------
Asset Allocation Portfolio................... $ 2,281
Value Fund................................... 223
Growth & Income Fund......................... 104
Capital Fund................................. 4,661
Fiduciary Fund............................... 1,984
Growth Fund.................................. 11,667
Capital Appreciation Portfolio............... 1,736
</TABLE>
44
<PAGE>
- --------------------------------------------------------------------------------
3. FINANCIAL HIGHLIGHTS: Selected per share historical data for each of the
Stock Funds is presented based upon average fund shares outstanding:
<TABLE>
<CAPTION>
Class A
--------------------------------------------------------------------------
Year Ended August 31, Year Ended October 31,
------------------------------------------------ ----------------------
ASSET ALLOCATION PORTFOLIO 1998** 1997 1996 1995++ 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 18.98 $ 16.48 $ 16.52 $ 14.44 $ 15.43 $ 14.00
--------- --------- --------- --------- --------- ---------
Operations:
Investment income - net............... .22 .39 .47 .43 .37 .42
Net realized and unrealized gains
(losses) on investments............. 1.37 3.47 .29 2.14 (.31) 1.52
--------- --------- --------- --------- --------- ---------
Total from operations................... 1.59 3.86 .76 2.57 .06 1.94
--------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... (0.24) (.41) (.47) (.40) (.33) (.51)
From net realized gains............... (2.18) (.95) (.32) (.09) (.72) --
Excess distributions of net realized
gains............................... -- -- (.01) -- -- --
--------- --------- --------- --------- --------- ---------
Total distributions to shareholders..... (2.42) (1.36) (.80) (.49) (1.05) (.51)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 18.15 $ 18.98 $ 16.48 $ 16.52 $ 14.44 $ 15.43
--------- --------- --------- --------- --------- ---------
Total return @.......................... 9.21% 24.62% 4.73% 18.25% .48% 14.20%
Net assets end of period (000s
omitted).............................. $ 165,268 $ 156,734 $ 136,656 $ 132,939 $ 119,395 $ 108,488
Ratio of expenses to average daily net
assets................................ 1.45%* 1.48% 1.50% 1.57%* 1.55% 1.58%
Ratio of net investment income to
average daily net assets.............. 2.32%* 2.22% 2.85% 3.31%* 2.60% 2.90%
Portfolio turnover rate................. 50% 109% 89% 94% 94% 103%
Average Commission Paid {::}............ $ .0632 $ .0701 $ .0743 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------
Year Ended August 31,
----------------------------------------
ASSET ALLOCATION PORTFOLIO 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $18.87 $ 16.40 $ 16.46 $ 14.27
------- ------- ------- -------
Operations:
Investment income - net............... .15 .27 .37 .39
Net realized and unrealized gains
(losses) on investments............. 1.37 3.47 .29 2.26
------- ------- ------- -------
Total from operations................... 1.52 3.74 .66 2.65
------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... (.18) (.32) (.39) (.37)
From net realized gains............... (2.18) (.95) (.32) (.09)
Excess distributions of net realized
gains............................... -- -- (.01) --
------- ------- ------- -------
Total distributions to shareholders..... (2.36) (1.27) (.72) (.46)
------- ------- ------- -------
Net asset value, end of period.......... $18.03 $ 18.87 $ 16.40 $ 16.46
------- ------- ------- -------
Total return @.......................... 8.88% 23.92% 4.12% 19.00%
Net assets end of period (000s
omitted).............................. $9,341 $ 7,462 $ 4,411 $ 692
Ratio of expenses to average daily net
assets................................ 2.00%* 2.03% 2.05% 2.12%*
Ratio of net investment income to
average daily net assets.............. 1.76%* 1.67% 2.34% 2.51%*
Portfolio turnover rate................. 50% 109% 89% 94%
Average Commission Paid {::}............ $.0632 $ .0701 $ .0743 --
</TABLE>
* Annualized
** Six-month period ended February 28, 1998.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
++ Ten-month period ended August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a funds' fiscal year must be
disclosed.
45
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class C
----------------------------------------
Year Ended August 31,
----------------------------------------
ASSET ALLOCATION PORTFOLIO 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $18.81 $ 16.35 $ 16.41 $ 14.27
------- ------- ------- -------
Operations:
Investment income - net............... .15 .26 .37 .39
Net realized and unrealized gains
(losses) on investments............. 1.37 3.47 .29 2.21
------- ------- ------- -------
Total from operations................... 1.52 3.73 .66 2.60
------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... (.18) (.32) (.39) (.37)
From net realized gains............... (2.18) (.95) (.32) (.09)
Excess distributions of net realized
gains............................... -- -- (.01) --
------- ------- ------- -------
Total distributions to shareholders..... (2.36) (1.27) (.72) (.46)
------- ------- ------- -------
Net asset value, end of period.......... $17.97 $ 18.81 $ 16.35 $ 16.41
------- ------- ------- -------
Total return @.......................... 8.91% 23.93% 4.13% 18.64%
Net assets end of period (000s
omitted).............................. $5,686 $ 4,789 $ 2,641 $ 777
Ratio of expenses to average daily net
assets................................ 2.00%* 2.03% 2.05% 2.12%*
Ratio of net investment income to
average daily net assets.............. 1.77%* 1.67% 2.33% 2.52%*
Portfolio turnover rate................. 50% 109% 89% 94%
Average Commission Paid {::}............ $.0632 $ .0701 $ .0743 --
</TABLE>
<TABLE>
<CAPTION>
Class H
-------------------------------------------
Year Ended August 31,
-------------------------------------------
ASSET ALLOCATION PORTFOLIO 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 18.86 $ 16.39 $ 16.44 $ 14.27
-------- -------- -------- -------
Operations:
Investment income - net............... .16 .27 .38 .39
Net realized and unrealized gains
(losses) on investments............. 1.37 3.47 .29 2.24
-------- -------- -------- -------
Total from operations................... 1.53 3.74 .67 2.63
-------- -------- -------- -------
Distributions to shareholders:
From investment income - net.......... (.18) (.32) (.39) (.37)
From net realized gains............... (2.18) (.95) (.32) (.09)
Excess distributions of net realized
gains............................... -- -- (.01) --
-------- -------- -------- -------
Total distributions to shareholders..... (2.36) (1.27) (.72) (.46)
-------- -------- -------- -------
Net asset value, end of period.......... $ 18.03 $ 18.86 $ 16.39 $ 16.44
-------- -------- -------- -------
Total return @.......................... 8.95% 23.93% 4.19% 18.86%
Net assets end of period (000s
omitted).............................. $ 21,212 $ 17,142 $ 10,904 $ 4,676
Ratio of expenses to average daily net
assets................................ 2.00%* 2.03% 2.05% 2.12%*
Ratio of net investment income to
average daily net assets.............. 1.76%* 1.67% 2.32% 2.54%*
Portfolio turnover rate................. 50% 109% 89% 94%
Average Commission Paid {::}............ $ .0632 $ .0701 $ .0743 --
</TABLE>
* Annualized
** Six-month period ended February 28, 1998.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a funds' fiscal year must be
disclosed.
46
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class A Class B
------------------------------- -----------------------------
Year Ended August 31, Year Ended August 31,
------------------------------- -----------------------------
VALUE FUND 1998** 1997 1996+ 1998** 1997 1996+
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 13.51 $ 10.75 $ 10.00 $13.39 $ 10.70 $ 10.00
-------- -------- ------- ------- ------- -------
Operations:
Investment income (loss) - net........ .06 .09 .05 (.01) (.01) --
Net realized and unrealized gains
(losses) on investments............. 1.88 2.94 .70 1.88 2.94 .70
-------- -------- ------- ------- ------- -------
Total from operations................... 1.94 3.03 .75 1.87 2.93 .70
-------- -------- ------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... (.09) (.06) -- -- (.03) --
From net realized gains............... (1.36) (.21) -- (1.36) (.21) --
-------- -------- ------- ------- ------- -------
Total distributions to shareholders..... (1.45) (.27) -- (1.36) (.24) --
-------- -------- ------- ------- ------- -------
Net asset value, end of period.......... $ 14.00 $ 13.51 $ 10.75 $13.90 $ 13.39 $ 10.70
-------- -------- ------- ------- ------- -------
Total return @.......................... 15.17% 28.66% 7.50% 14.75% 27.75% 7.00%
Net assets end of period (000s
omitted).............................. $ 23,478 $ 21,855 $ 9,847 $4,274 $ 2,480 $ 642
Ratio of expenses to average daily net
assets................................ 1.51%* 1.59% 1.65%* 2.26%* 2.34% 2.40%*
Ratio of net investment income to
average daily net assets.............. .68%* .72% .75%* (.07%)* (.04%) .00%*
Portfolio turnover rate................. 91% 93% 41% 91% 93% 41%
Average commission paid {::}............ $ .0598 $ .0657 $ .0521 $.0598 $ .0657 $ .0521
</TABLE>
<TABLE>
<CAPTION>
Class C Class H
----------------------------- -----------------------------
Year Ended August 31, Year Ended August 31,
----------------------------- -----------------------------
VALUE FUND 1998** 1997 1996+ 1998** 1997 1996+
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $13.39 $ 10.70 $ 10.00 $13.39 $ 10.70 $ 10.00
------- ------- ------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.01) (.01) -- (.01) (.01) --
Net realized and unrealized gains
(losses) on investments............. 1.88 2.94 .70 1.88 2.94 .70
------- ------- ------- ------- ------- -------
Total from operations................... 1.87 2.93 .70 1.87 2.93 .70
------- ------- ------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... -- (.03) -- -- (.03) --
From net realized gains............... (1.36) (.21) -- (1.36) (.21) --
------- ------- ------- ------- ------- -------
Total distributions to shareholders..... (1.36) (.24) -- (1.36) (.24) --
------- ------- ------- ------- ------- -------
Net asset value, end of period.......... $13.90 $ 13.39 $ 10.70 $13.90 $ 13.39 $ 10.70
------- ------- ------- ------- ------- -------
Total return @.......................... 14.75% 27.75% 7.00% 14.75% 27.75% 7.00%
Net assets end of period (000s
omitted).............................. $1,749 $ 1,002 $ 223 $7,185 $ 4,896 $ 1,605
Ratio of expenses to average daily net
assets................................ 2.26%* 2.34% 2.40%* 2.26%* 2.34% 2.40%*
Ratio of net investment income to
average daily net assets.............. (.07%)* (.04%) .00%* (.07%)* (.04%) .00%*
Portfolio turnover rate................. 91% 93% 41% 91% 93% 41%
Average commission paid {::}............ $.0598 $ .0657 $ .0521 $.0598 $ .0657 $ .0521
</TABLE>
* Annualized.
** Six-month period ended February 28, 1998.
+ For the period from January 2, 1996 (commencement of operations) to
August 31, 1996.
@ These are the total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a funds' fiscal year must be
disclosed.
47
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class A Class B
------------------------------- -----------------------------
Year Ended August 31, Year Ended August 31,
------------------------------- -----------------------------
GROWTH & INCOME FUND 1998** 1997 1996+ 1998** 1997 1996+
<S> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 13.06 $ 10.35 $ 10.00 $13.03 $ 10.32 $ 10.00
-------- -------- ------- ------- ------- -------
Operations:
Investment income - net............... .12 .20 .07 .06 .11 .02
Net realized and unrealized gains
(losses) on investments............. 1.68 2.77 .34 1.68 2.77 .34
-------- -------- ------- ------- ------- -------
Total from operations................... 1.80 2.97 .41 1.74 2.88 .36
-------- -------- ------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... (0.12) (.16) (.06) (.07) (.07) (.04)
From net realized gains............... (0.01) (.10) -- (.01) (.10) --
-------- -------- ------- ------- ------- -------
Total distributions to shareholders..... (0.13) (.26) (.06) (.08) (.17) (.04)
-------- -------- ------- ------- ------- -------
Net asset value, end of period.......... $ 14.73 $ 13.06 $ 10.35 $14.69 $ 13.03 $ 10.32
-------- -------- ------- ------- ------- -------
Total return @.......................... 13.86% 29.00% 4.11% 13.41% 28.16% 3.55%
Net assets end of period (000s
omitted).............................. $ 19,453 13,907 $ 3,117 $4,104 $ 2,306 $ 508
Ratio of expenses to average daily net
assets................................ 1.49%* 1.75% 2.33%* 2.24%* 2.50% 3.08%*
Ratio of net investment income to
average daily net assets.............. 1.84%* 1.68% 1.16%* 1.09%* .92% .35%*
Portfolio turnover rate................. 5% 15% 5% 5% 15% 5%
Average commission paid {::}............ $ .0560 $ .0592 $ .0597 $.0560 $ .0592 $ .0597
</TABLE>
<TABLE>
<CAPTION>
Class C Class H
----------------------------- -----------------------------
Year Ended August 31, Year Ended August 31,
----------------------------- -----------------------------
GROWTH & INCOME FUND 1998** 1997 1996+ 1998** 1997 1996+
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $13.03 $ 10.33 $ 10.00 $13.03 $ 10.33 $ 10.00
------- ------- ------- ------- ------- -------
Operations:
Investment income - net............... .06 .10 .03 .06 .10 .03
Net realized and unrealized gains
(losses) on investments............. 1.68 2.77 .34 1.68 2.77 .34
------- ------- ------- ------- ------- -------
Total from operations................... 1.74 2.87 .37 1.74 2.87 .37
------- ------- ------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... (0.07) (.07) (.04) (0.07) (.07) (.04)
From net realized gains............... (0.01) (.10) -- (0.01) (.10) --
------- ------- ------- ------- ------- -------
Total distributions to shareholders..... (0.08) (.17) (.04) (0.08) (.17) (.04)
------- ------- ------- ------- ------- -------
Net asset value, end of period.......... $14.69 $ 13.03 $ 10.33 $14.69 $ 13.03 $ 10.33
------- ------- ------- ------- ------- -------
Total return @.......................... 13.41% 28.03% 3.65% 13.41% 28.03% 3.65%
Net assets end of period (000s
omitted).............................. $1,870 $ 1,290 $ 302 $6,575 $ 5,085 $ 1,286
Ratio of expenses to average daily net
assets................................ 2.24%* 2.50% 3.08%* 2.24%* 2.50% 3.08%*
Ratio of net investment income to
average daily net assets.............. 1.09%* .94% .54%* 1.09%* .93% .44%*
Portfolio turnover rate................. 5% 15% 5% 5% 15% 5%
Average commission paid {::}............ $.0560 $ .0592 $ .0597 $.0560 $ .0592 $ .0597
</TABLE>
* Annualized.
** Six-month period ended February 28, 1998.
+ For the period from January 2, 1996 (commencement of operations) to
August 31, 1996.
@ These are the total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a funds' fiscal year must be
disclosed.
48
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class A
--------------------------------------------------------------------------
Year Ended August 31,
--------------------------------------------------------------------------
CAPITAL FUND 1998** 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 26.13 $ 21.89 $ 21.22 $ 18.36 $ 18.12 $ 17.86
--------- --------- --------- --------- --------- ---------
Operations:
Investment income (loss) - net........ (.04) (.08) .04 .08 .07 .14
Net realized and unrealized gains
(losses) on investments............. 2.39 7.06 .67 3.62 1.73 1.25
--------- --------- --------- --------- --------- ---------
Total from operations................... 2.35 6.98 .71 3.70 1.80 1.39
--------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... -- (.01) (.04) (.08) (.12) (.09)
From net realized gains............... (4.06) (2.73) -- (.76) (1.44) (1.04)
--------- --------- --------- --------- --------- ---------
Total distributions to shareholders..... (4.06) (2.74) (.04) (.84) (1.56) (1.13)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 24.42 $ 26.13 $ 21.89 $ 21.22 $ 18.36 $ 18.12
--------- --------- --------- --------- --------- ---------
Total return @.......................... 10.87% 34.57% 3.36% 21.49% 10.56% 7.88%
Net assets end of period (000s
omitted).............................. $ 356,905 $ 340,949 $ 277,587 $ 291,263 $ 245,776 $ 246,369
Ratio of expenses to average daily net
assets................................ 1.14%* 1.18% 1.21% 1.24% 1.21% 1.22%
Ratio of net investment income to
average daily net assets.............. (.30%)* (.33%) .17% .42% .41% .77%
Portfolio turnover rate................. 17% 43% 28% 14% 41% 68%
Average Commission Paid {::}............ $ .0635 $ .0693 $ .0718 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------
Year Ended August 31,
----------------------------------------
CAPITAL FUND 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $25.67 $ 21.69 $ 21.14 $ 18.35
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.19) (.35) (.12) --
Net realized and unrealized gains
(losses) on investments............. 2.39 7.06 .67 3.58
------- ------- ------- -------
Total from operations................... 2.20 6.71 .55 3.58
------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... -- -- -- (.03)
From net realized gains............... (4.06) (2.73) -- (.76)
------- ------- ------- -------
Total distributions to shareholders..... (4.06) (2.73) -- (.79)
------- ------- ------- -------
Net asset value, end of period.......... $23.81 $ 25.67 $ 21.69 $ 21.14
------- ------- ------- -------
Total return @.......................... 10.45% 33.55% 2.60% 20.74%
Net assets end of period (000s
omitted).............................. $8,976 $ 7,284 $ 4,097 $ 1,527
Ratio of expenses to average daily net
assets................................ 1.89%* 1.93% 1.96% 1.99%*
Ratio of net investment income to
average daily net assets.............. (1.05%)* (1.08%) (.60%) (.36%)*
Portfolio turnover rate................. 17% 43% 28% 14%
Average Commission Paid {::}............ $.0635 $ .0693 $ .0718 --
</TABLE>
* Annualized
** Six-month period ended February 28, 1998.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a funds' fiscal year must be
disclosed.
49
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class C
----------------------------------------
Year Ended August 31,
----------------------------------------
CAPITAL FUND 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $25.68 $ 21.68 $ 21.13 $ 18.35
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.20) (.33) (.12) --
Net realized and unrealized gains
(losses) on investments............. 2.39 7.06 .67 3.57
------- ------- ------- -------
Total from operations................... 2.19 6.73 .55 3.57
------- ------- ------- -------
Distributions to shareholders:
From investment income - net.......... -- -- -- (.03)
From net realized gains............... (4.06) (2.73) -- (.76)
------- ------- ------- -------
Total distributions to shareholders..... (4.06) (2.73) -- (.79)
------- ------- ------- -------
Net asset value, end of period.......... $23.81 $ 25.68 $ 21.68 $ 21.13
------- ------- ------- -------
Total return @.......................... 10.41% 33.68% 2.60% 20.68%
Net assets end of period (000s
omitted).............................. $1,998 $ 1,432 $ 824 $ 344
Ratio of expenses to average daily net
assets................................ 1.89%* 1.93% 1.96% 1.99%*
Ratio of net investment income to
average daily net assets.............. (1.05%)* (1.08%) (.60%) (.36%)*
Portfolio turnover rate................. 17% 43% 28% 14%
Average Commission Paid {::}............ $.0635 $ .0693 $ .0718 --
</TABLE>
<TABLE>
<CAPTION>
Class H
------------------------------------------
Year Ended August 31,
------------------------------------------
CAPITAL FUND 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 25.68 $ 21.69 $ 21.14 $ 18.35
-------- -------- ------- -------
Operations:
Investment income (loss) - net........ (.18) (.34) (.12) --
Net realized and unrealized gains
(losses) on investments............. 2.39 7.06 .67 3.58
-------- -------- ------- -------
Total from operations................... 2.21 6.72 .55 3.58
-------- -------- ------- -------
Distributions to shareholders:
From investment income - net.......... -- -- -- (.03)
From net realized gains............... (4.06) (2.73) -- (.76)
-------- -------- ------- -------
Total distributions to shareholders..... (4.06) (2.73) -- (.79)
-------- -------- ------- -------
Net asset value, end of period.......... $ 23.83 $ 25.68 $ 21.69 $ 21.14
-------- -------- ------- -------
Total return @.......................... 10.49% 33.61% 2.60% 20.74%
Net assets end of period (000s
omitted).............................. $ 16,690 $ 14,468 $ 8,052 $ 4,052
Ratio of expenses to average daily net
assets................................ 1.89%* 1.93% 1.96% 1.99%*
Ratio of net investment income to
average daily net assets.............. (1.05%)* (1.08%) (.60%) (.37%)*
Portfolio turnover rate................. 17% 43% 28% 14%
Average Commission Paid {::}............ $ .0635 $ 0.693 $ .0718 --
</TABLE>
* Annualized
** Six-month period ended February 28, 1998.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a funds' fiscal year must be
disclosed.
50
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class A
--------------------------------------------------------------------
Year Ended August 31,
--------------------------------------------------------------------
FIDUCIARY FUND, INC. 1998** 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 46.15 $ 36.75 $ 35.54 $ 30.23 $ 30.07 $ 28.74
-------- -------- -------- -------- -------- --------
Operations:
Investment income (loss) - net........ (.12) (.28) (.03) (.16) (.14) (.09)
Net realized and unrealized gains
(losses) on investments............. 4.02 12.56 1.50 6.68 2.99 3.11
-------- -------- -------- -------- -------- --------
Total from operations................... 3.90 12.28 1.47 6.52 2.85 3.02
-------- -------- -------- -------- -------- --------
Distributions to shareholders:
From net realized gains............... (5.94) (2.88) (.26) (1.21) (2.69) (1.69)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.......... $ 44.11 $ 46.15 $ 36.75 $ 35.54 $ 30.23 $ 30.07
-------- -------- -------- -------- -------- --------
Total return @.......................... 9.86% 35.08% 4.18% 22.71% 10.17% 10.58%
Net assets end of period (000s
omitted).............................. $ 83,520 $ 83,847 $ 65,641 $ 63,195 $ 48,833 $ 47,543
Ratio of expenses to average daily net
assets................................ 1.40%* 1.41% 1.42% 1.62% 1.45% 1.45%
Ratio of net investment income to
average daily net assets.............. (.56%)* (.70%) (.07%) (.53%) (.45%) (.31%)
Portfolio turnover rate................. 17% 46% 30% 12% 25% 53%
Average Commission Paid {::}............ $ .0631 $ .0684 $ .0715 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------
Year Ended August 31,
----------------------------------------
FIDUCIARY FUND, INC. 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $45.15 $ 36.26 $ 35.35 $ 30.15
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.40) (.79) (.33) (.13)
Net realized and unrealized gains
(losses) on investments............. 4.02 12.56 1.50 6.54
------- ------- ------- -------
Total from operations................... 3.62 11.77 1.17 6.41
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... (5.94) (2.88) (.26) (1.21)
------- ------- ------- -------
Net asset value, end of period.......... $42.83 $ 45.15 $ 36.26 $ 35.35
------- ------- ------- -------
Total return @.......................... 9.44% 34.10% 3.35% 22.38%
Net assets end of period (000s
omitted).............................. $3,955 $ 2,663 $ 1,360 $ 473
Ratio of expenses to average daily net
assets................................ 2.15%* 2.16% 2.17% 2.37%*
Ratio of net investment income to
average daily net assets.............. (1.30%)* (1.44%) (.78%) (1.31%)*
Portfolio turnover rate................. 17% 46% 30% 12%
Average Commission Paid {::}............ $.0631 $ .0684 $ .0715 --
</TABLE>
* Annualized.
** Six-month period ended February 28, 1998.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distribution without adjustments for
sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a fund's fiscal year must be
disclosed.
51
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class C
----------------------------------------
Year Ended August 31,
----------------------------------------
FIDUCIARY FUND, INC. 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $45.17 $ 36.32 $ 35.40 $ 30.15
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.40) (.83) (.32) (.12)
Net realized and unrealized gains
(losses) on investments............. 4.02 12.56 1.50 6.58
------- ------- ------- -------
Total from operations................... 3.62 11.73 1.18 6.46
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... (5.94) (2.88) (.26) (1.21)
------- ------- ------- -------
Net asset value, end of period.......... $42.85 $ 45.17 $ 36.32 $ 35.40
------- ------- ------- -------
Total return @.......................... 9.44% 33.92% 3.38% 22.55%
Net assets end of period (000s
omitted).............................. $1,092 $ 828 $ 491 $ 272
Ratio of expenses to average daily net
assets................................ 2.15%* 2.16% 2.17% 2.37%*
Ratio of net investment income to
average daily net assets.............. (1.30%)* (1.44%) (.82%) (1.31%)*
Portfolio turnover rate................. 17% 46% 30% 12%
Average Commission Paid {::}............ $.0631 $ .0684 $ .0715 --
</TABLE>
<TABLE>
<CAPTION>
Class H
----------------------------------------
Year Ended August 31,
----------------------------------------
FIDUCIARY FUND, INC. 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $45.16 $ 36.26 $ 35.35 $ 30.15
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.41) (.78) (.33) (.17)
Net realized and unrealized gains
(losses) on investments............. 4.02 12.56 1.50 6.58
------- ------- ------- -------
Total from operations................... 3.61 11.78 1.17 6.41
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... (5.94) (2.88) (.26) (1.21)
------- ------- ------- -------
Net asset value, end of period.......... $42.83 $ 45.16 $ 36.26 $ 35.35
------- ------- ------- -------
Total return @.......................... 9.41% 34.13% 3.35% 22.38%
Net assets end of period (000s
omitted).............................. $8,216 $ 6,508 $ 3,164 $ 1,481
Ratio of expenses to average daily net
assets................................ 2.15%* 2.16% 2.17% 2.37%*
Ratio of net investment income to
average daily net assets.............. (1.30%)* (1.44%) (.80%) (1.29%)*
Portfolio turnover rate................. 17% 46% 30% 12%
Average Commission Paid {::}............ $.0631 $ .0684 $ .0715 --
</TABLE>
* Annualized.
** Six-month period ended February 28, 1998.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distribution without adjustments for
sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a fund's fiscal year must be
disclosed.
52
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class A
--------------------------------------------------------------------------
Year Ended August 31,
--------------------------------------------------------------------------
GROWTH FUND 1998** 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 37.32 $ 32.14 $ 32.66 $ 26.25 $ 29.09 $ 24.31
--------- --------- --------- --------- --------- ---------
Operations:
Investment income (loss) - net........ (.07) (.16) (.11) (.04) (.10) (.06)
Net realized and unrealized gains
(losses) on investments............. 1.93 8.41 1.30 6.95 (.88) 5.52
--------- --------- --------- --------- --------- ---------
Total from operations................... 1.86 8.25 1.19 6.91 (.98) 5.46
--------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... -- -- -- -- -- (.04)
From net realized gains............... (3.84) (3.07) (1.71) (.50) (1.86) (.64)
--------- --------- --------- --------- --------- ---------
Total distributions to shareholders..... (3.84) (3.07) (1.71) (.50) (1.86) (.68)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 35.34 $ 37.32 $ 32.14 $ 32.66 $ 26.25 $ 29.09
--------- --------- --------- --------- --------- ---------
Total return @.......................... 6.11% 27.01% 4.09% 26.92% (3.77%) 22.69%
Net assets end of period (000s
omitted).............................. $ 738,509 $ 734,654 $ 641,061 $ 670,753 $ 558,589 $ 585,117
Ratio of expenses to average daily net
assets................................ 1.07%* 1.07% 1.09% 1.13% 1.09% 1.10%
Ratio of net investment income to
average daily net assets.............. (.38%)* (.45%) (.33%) (.13%) (.36%) (.20%)
Portfolio turnover rate................. 5% 28% 32% 27% 23% 49%
Average commission paid {::}............ $ .0592 $ .0679 $ .0709 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class B Class C
------------------------------------------ ----------------------------------------
Year Ended August 31, Year Ended August 31,
------------------------------------------ ----------------------------------------
GROWTH FUND 1998** 1997 1996 1995+ 1998** 1997 1996 1995+
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 36.53 $ 31.75 $ 32.48 $ 25.85 $36.52 $ 31.75 $ 32.49 $ 25.85
-------- -------- ------- ------- ------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.25) (.56) (.32) (.13) (.25) (.57) (.33) (.10)
Net realized and unrealized gains
(losses) on investments............. 1.93 8.41 1.30 7.26 1.93 8.41 1.30 7.24
-------- -------- ------- ------- ------- ------- ------- -------
Total from operations................... 1.68 7.85 .98 7.13 1.68 7.84 .97 7.14
-------- -------- ------- ------- ------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... (3.84) (3.07) (1.71) (.50) (3.84) (3.07) (1.71) (.50)
-------- -------- ------- ------- ------- ------- ------- -------
Net asset value, end of period.......... $ 34.37 $ 36.53 $ 31.75 $ 32.48 $34.36 $ 36.52 $ 31.75 $ 32.49
-------- -------- ------- ------- ------- ------- ------- -------
Total return @.......................... 5.73% 26.02% 3.45% 28.17% 5.73% 25.98% 3.41% 28.21%
Net assets end of period (000s
omitted).............................. $ 14,562 $ 12,149 $ 6,710 $ 2,179 $2,807 $ 2,367 $ 1,077 $ 264
Ratio of expenses to average daily net
assets................................ 1.82%* 1.82% 1.84% 1.88%* 1.82%* 1.82% 1.84% 1.88%*
Ratio of net investment income to
average daily net assets.............. (1.14%)* (1.19%) (1.07%) (1.09%)* (1.14%)* (1.19%) (1.07%) (1.10%)*
Portfolio turnover rate................. 5% 28% 32% 27% 5% 28% 32% 27%
Average commission paid {::}............ $ .0592 $ .0679 $ .0709 -- $.0592 $ .0679 $ .0709 --
</TABLE>
* Annualized.
** Six-month period ended February 28, 1998.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a fund's fiscal year must be
disclosed.
53
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class H
-------------------------------------------
Year Ended August 31,
-------------------------------------------
GROWTH FUND 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 36.54 $ 31.75 $ 32.49 $ 25.85
-------- -------- -------- -------
Operations:
Investment income (loss) - net........ (.25) (.55) (.33) (.11)
Net realized and unrealized gains
(losses) on investments............. 1.93 8.41 1.30 7.25
-------- -------- -------- -------
Total from operations................... 1.68 7.86 .97 7.14
-------- -------- -------- -------
Distributions to shareholders:
From net realized gains............... (3.84) (3.07) (1.71) (.50)
-------- -------- -------- -------
Net asset value, end of period.......... $ 34.38 $ 36.54 $ 31.75 $ 32.49
-------- -------- -------- -------
Total return @.......................... 5.73% 26.05% 3.41% 28.21%
Net assets end of period (000s
omitted).............................. $ 39,015 $ 34,941 $ 21,176 $ 6,867
Ratio of expenses to average daily net
assets................................ 1.82%* 1.82% 1.84% 1.88%*
Ratio of net investment income to
average daily net assets.............. (1.14%)* (1.19%) (1.07%) (1.10%)*
Portfolio turnover rate................. 5% 28% 32% 27%
Average commission paid {::}............ $ .0592 $ .0679 $ .0709 --
</TABLE>
<TABLE>
<CAPTION>
Class Z
----------------------------------
Year Ended August 31,
----------------------------------
GROWTH FUND 1998** 1997 1996++
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Net asset value, beginning of period.... $ 37.47 $ 32.18 $ 31.61
--------- --------- --------
Operations:
Investment income (loss) - net........ (.01) (.05) --
Net realized and unrealized gains
(losses) on investments............. 1.93 8.41 .57
--------- --------- --------
Total from operations................... 1.92 8.36 .57
--------- --------- --------
Distributions to shareholders:
From net realized gains............... (3.84) (3.07) --
--------- --------- --------
Net asset value, end of period.......... $ 35.55 $ 37.47 $ 32.18
--------- --------- --------
Total return @.......................... 6.24% 27.34% 1.80%
Net assets end of period (000s
omitted).............................. $ 120,001 $ 112,356 $ 93,006
Ratio of expenses to average daily net
assets................................ .82%* .82% .84%*
Ratio of net investment income to
average daily net assets.............. (.13%)* (.20%) .01%*
Portfolio turnover rate................. 5% 28% 32%
Average commission paid {::}............ $ .0592 $ .0679 $ .0709
</TABLE>
* Annualized.
** Six-month period ended February 28, 1998.
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
++ For the period from March 1, 1996 (commencement of operations) to
August 31, 1996.
@ These are the total returns during the periods, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a fund's fiscal year must be
disclosed.
54
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class A
-----------------------------------------------------------------------
Year Ended October
Year Ended August 31, 31,
----------------------------------------------- --------------------
CAPITAL APPRECIATION PORTFOLIO 1998** 1997 1996 1995++ 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 30.60 $ 34.76 $ 30.67 $ 23.05 $ 27.38 $ 19.85
--------- --------- --------- -------- -------- --------
Operations:
Investment income (loss) - net........ (.15) (.26) (.29) (.17) (.12) (.30)
Net realized and unrealized gains
(losses) on investments............. 4.30 (2.45) 4.61 7.79 (2.45) 7.83
--------- --------- --------- -------- -------- --------
Total from operations................... 4.15 (2.71) 4.32 7.62 (2.57) 7.53
--------- --------- --------- -------- -------- --------
Distributions to shareholders:
From net realized gains............... -- (1.18) (.23) -- (1.76) --
Tax Return of Capital................. -- (.27) -- -- -- --
--------- --------- --------- -------- -------- --------
Total distributions to shareholders..... -- (1.45) (.23) -- (1.76) --
--------- --------- --------- -------- -------- --------
Net asset value, end of period.......... $ 34.75 $ 30.60 $ 34.76 $ 30.67 $ 23.05 $ 27.38
--------- --------- --------- -------- -------- --------
Total return @.......................... 13.56% (7.89%) 14.21% 33.06% (9.56%) 37.93%
Net assets end of period (000s
omitted).............................. $ 110,780 $ 105,422 $ 114,310 $ 90,918 $ 68,352 $ 58,434
Ratio of expenses to average daily net
assets................................ 1.54%* 1.55% 1.56% 1.69%* 1.62% 1.62%
Ratio of net investment income to
average daily net assets.............. (.92%)* (.84%) (.96%) (.82%)* (.61%) (1.23%)
Portfolio turnover rate................. 10% 25% 34% 21% 36% 60%
Average Commission Paid {::}............ $ .0583 $ .0611 $ .0691 -- -- --
</TABLE>
<TABLE>
<CAPTION>
Class B
----------------------------------------
Year Ended August 31,
----------------------------------------
CAPITAL APPRECIATION PORTFOLIO 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $30.16 $ 34.46 $ 30.57 $ 22.45
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.31) (.40) (.49) (.35)
Net realized and unrealized gains
(losses) on investments............. 4.30 (2.45) 4.61 8.47
------- ------- ------- -------
Total from operations................... 3.99 (2.85) 4.12 8.12
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... -- (1.18) (.23) --
Tax Return of Capital................. -- (.27) -- --
------- ------- ------- -------
Total distributions to shareholders..... -- (1.45) (.23) --
------- ------- ------- -------
Net asset value, end of period.......... $34.15 $ 30.16 $ 34.46 $ 30.57
------- ------- ------- -------
Total return @.......................... 13.23% (8.38%) 13.60% 36.17%
Net assets end of period (000s
omitted).............................. $7,895 $ 6,561 $ 4,522 $ 841
Ratio of expenses to average daily net
assets................................ 2.09%* 2.10% 2.11% 2.24%*
Ratio of net investment income to
average daily net assets.............. (1.48%)* (1.39%) (1.47%) (1.61%)*
Portfolio turnover rate................. 10% 25% 34% 21%
Average Commission Paid {::}............ $.0583 $ .0611 $ .0691 --
</TABLE>
* Annualized
** Six-month period ended February 28, 1998
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
++ Ten-month period ended August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a fund's fiscal year must be
disclosed.
55
<PAGE>
FORTIS STOCK FUNDS
Notes to Financial Statements (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
3. FINANCIAL HIGHLIGHTS (continued):
Class C
----------------------------------------
Year Ended August 31,
----------------------------------------
CAPITAL APPRECIATION PORTFOLIO 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
Net asset value, beginning of period.... $30.18 $ 34.48 $ 30.58 $ 22.45
------- ------- ------- -------
Operations:
Investment income (loss) - net........ (.31) (.40) (.48) (.36)
Net realized and unrealized gains
(losses) on investments............. 4.30 (2.45) 4.61 8.49
------- ------- ------- -------
Total from operations................... 3.99 (2.85) 4.13 8.13
------- ------- ------- -------
Distributions to shareholders:
From net realized gains............... -- (1.18) (.23) --
Tax Return of Capital................. -- (.27) -- --
------- ------- ------- -------
Total distributions to shareholders..... -- (1.45) (.23) --
------- ------- ------- -------
Net asset value, end of period.......... $34.17 $ 30.18 $ 34.48 $ 30.58
------- ------- ------- -------
Total return @.......................... 13.22% (8.38%) 13.62% 36.21%
Net assets end of period (000s
omitted).............................. $2,200 $ 1,875 $ 1,004 $ 227
Ratio of expenses to average daily net
assets................................ 2.09%* 2.10% 2.11% 2.24%*
Ratio of net investment income to
average daily net assets.............. (1.49%)* (1.39%) (1.46%) (1.62%)*
Portfolio turnover rate................. 10% 25% 34% 21%
Average Commission Paid {::}............ $.0583 $ .0611 $ .0691 --
</TABLE>
<TABLE>
<CAPTION>
Class H
------------------------------------------
Year Ended August 31,
------------------------------------------
CAPITAL APPRECIATION PORTFOLIO 1998** 1997 1996 1995+
<S> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 30.18 $ 34.48 $ 30.58 $ 22.45
-------- -------- ------- -------
Operations:
Investment income (loss) - net........ (.30) (.40) (.48) (.36)
Net realized and unrealized gains
(losses) on investments............. 4.30 (2.45) 4.61 8.49
-------- -------- ------- -------
Total from operations................... 4.00 (2.85) 4.13 8.13
-------- -------- ------- -------
Distributions to shareholders:
From net realized gains............... -- (1.18) (.23) --
Tax Return of Capital................. -- (.27) -- --
-------- -------- ------- -------
Total distributions to shareholders..... -- (1.45) (.23) --
-------- -------- ------- -------
Net asset value, end of period.......... $ 34.18 $ 30.18 $ 34.48 $ 30.58
-------- -------- ------- -------
Total return @.......................... 13.25% (8.38%) 13.62% 36.21%
Net assets end of period (000s
omitted).............................. $ 15,830 $ 13,379 $ 9,575 $ 2,115
Ratio of expenses to average daily net
assets................................ 2.09%* 2.10% 2.11% 2.24%*
Ratio of net investment income to
average daily net assets.............. (1.47%)* (1.39%) (1.46%) (1.62%)*
Portfolio turnover rate................. 10% 25% 34% 21%
Average Commission Paid {::}............ $ .0583 $ .0611 $ .0691 --
</TABLE>
* Annualized
** Six-month period ended February 28, 1998
+ For the period from November 14, 1994 (initial offering of shares) to
August 31, 1995.
@ These are the total returns during the period, including reinvestment
of all dividend and capital gains distributions without adjustments
for sales charge.
{::} In accordance with new SEC guidelines under the 1934 Act, beginning in
1996 average commission rate during a fund's fiscal year must be
disclosed.
56
<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
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,
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.
Noel Shadko MARKETING CONSULTANT. PRIOR TO MAY,
1996, SENIOR VICE PRESIDENT OF
MARKETING & STRATEGIC PLANNING,
ROLLERBLADE, 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
Peggy L. Ettestad
VICE PRESIDENT
Tamara L. Fagely
VICE PRESIDENT AND TREASURER
Howard G. Hudson
VICE PRESIDENT
Dickson W. Lewis
VICE PRESIDENT
Lucinda S. Mezey
VICE PRESIDENT
David A. Peterson
VICE PRESIDENT
Scott R. Plummer
VICE PRESIDENT
Rhonda J. Schwartz
VICE PRESIDENT
Melinda S. Urion
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 Norwest Bank Minnesota N.A.
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.
57
<PAGE>
[logo]
FORTIS MEANS STEADFAST
Fortis means "steadfast" in Latin. The worldwide Fortis family of companies
lives up to the name, and has each day since the 1800s, with flexible
solutions tailored to our customers' individual needs. We deliver the
stability you require today ... and tomorrow. You can count on it.
Fortis Financial Group offers mutual funds, annuities and life insurance
through its broker/dealer Fortis Investors, Inc.
We're part of Fortis, Inc., a financial services company that provides
specialty insurance and investment products to individuals, businesses,
associations and other financial services organizations throughout 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.
Fortis: steadfast for YOU!
FORTIS FINANCIAL GROUP
Fortis Advisers, Inc.
(fund management since 1949)
Fortis Investors, Inc.
(principal underwriter; member NASD, SIPC)
Fortis Benefits Insurance Company
& Fortis Insurance Company
(issuers of FFG's insurance products)
P.O. Box 64284, St. Paul, MN 55164
(800) 800-2000
http://www.ffg.us.fortis.com
FORTIS FINANCIAL GROUP
P.O. Box 64284
St. Paul, MN 55164
Fortis Stock Funds
Bulk Rate
U.S. Postage
PAID
Permit No. 3794
Minneapolis, MN
[logo]
Printed on recycled paper with 40% preconsumer waste and 10% post consumer
waste. Please recycle.
The Fortis logo and Fortis-SM- are servicemarks of Fortis AMEV and Fortis AG.
98356 -C- Fortis 4/98
