<PAGE>
[LOGO]
FORTIS
SECURITIES, INC.
Annual Report
July 31, 1995
[LOGO]
<PAGE>
FORTIS SECURITIES, INC. ANNUAL REPORT
CONTENTS
LETTER TO SHAREHOLDERS 1
SCHEDULE OF INVESTMENTS 2
STATEMENT OF ASSETS AND LIABILITIES 7
STATEMENT OF OPERATIONS 8
STATEMENTS OF CHANGES IN NET ASSETS 9
NOTES TO FINANCIAL STATEMENTS 10
INDEPENDENT AUDITORS' REPORT 12
BOARD OF DIRECTORS AND OFFICERS 13
HIGHLIGHTS
<TABLE>
<CAPTION>
FORTIS
SECURITIES,
INC.
-------------
<S> <C>
JULY 31, 1995:
Total net assets.............................................. $115,642,137
Market price per share........................................ $8.75
Shares outstanding............................................ 12,603,789
FOR THE YEAR ENDED JULY 31, 1995:
NET ASSET VALUE PER SHARE:
Beginning of year........................................... $9.33
End of year................................................. $9.18
DISTRIBUTIONS:
Total dividends paid........................................ $11,007,586
Dividends per share (classified as ordinary income for
federal income tax purposes).............................. $.879
</TABLE>
FORTIS FINANCIAL GROUP'S OTHER PRODUCTS AND SERVICES
MUTUAL FUNDS/PORTFOLIOS
Fortis Advantage Portfolios, Inc.
ASSET ALLOCATION PORTFOLIO
CAPITAL APPRECIATION PORTFOLIO
GOVERNMENT TOTAL RETURN PORTFOLIO
HIGH YIELD PORTFOLIO
Fortis Capital Fund
Fortis Fiduciary Fund, Inc.
Fortis Global Growth Portfolio
Fortis Growth Fund, Inc.
Fortis Money Fund
Fortis Tax-Free Portfolios, Inc.
MINNESOTA PORTFOLIO
NATIONAL PORTFOLIO
NEW YORK PORTFOLIO
Fortis U.S. Government
Securities Fund
FIXED AND VARIABLE ANNUITIES
Fortis Opportunity Fixed
& Variable Annuity
Masters Variable Annuity
FIXED ACCOUNT
MONEY MARKET
U.S. GOVERNMENT SECURITIES
DIVERSIFIED INCOME
GLOBAL BOND
HIGH YIELD
ASSET ALLOCATION
GLOBAL ASSET ALLOCATION
GROWTH & INCOME
GLOBAL GROWTH
GROWTH STOCK
INTERNATIONAL STOCK
AGGRESSIVE GROWTH
Fortune Fixed Annuities
SINGLE PREMIUM ANNUITY
FLEXIBLE PREMIUM ANNUITY
Income Annuities
GUARANTEED FOR LIFE
GUARANTEED FOR A SPECIFIC PERIOD
LIFE AND DISABILITY
Wall Street Series VUL 220 & VUL 500
FIXED ACCOUNT
MONEY MARKET
U.S. GOVERNMENT SECURITIES
DIVERSIFIED INCOME
GLOBAL BOND
HIGH YIELD
ASSET ALLOCATION
GLOBAL ASSET ALLOCATION
GROWTH & INCOME
GLOBAL GROWTH
GROWTH STOCK
INTERNATIONAL STOCK
AGGRESSIVE GROWTH
Adaptable Life
Universal Life
Disability
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>
FORTIS SECURITIES, INC.
DEAR SHAREHOLDER,
We're pleased to present the Fortis Securities annual report for the period
ended July 31, 1995.
ECONOMIC REVIEW AND
INVESTMENT STRATEGIES
Over the past year, fixed income markets performed well. Even though short-term
rates rose due to Federal Reserve tightening, longer-term rates declined about
1/2 of 1 percent. This rally in bond prices was caused by signs of an economic
slowdown, combined with subdued inflation. In fact, the Federal Reserve
confirmed the bond market's recognition of a slowdown by lowering short term
rates in July.
The current pause may be the economic response to the doubling of short-term
interest rates, which the Federal Reserve engineered during 1994. With the cost
of money now moderately lower, we feel economic growth should continue through
the
balance of this year and into 1996. As long as productivity continues to rise
and labor cost increases remain small, the expectation for inflation should
remain in the current range of about 2.5 percent to 3 percent.
PORTFOLIO REVIEW
Changes in interest rates have various affects on portfolios: when rates
decrease as they did earlier this year, the value of the portfolio rises.
However, rate declines cause mortgages to be repaid more rapidly and corporate
bonds to be called. Unfortunately, these events cause cash to be added to the
portfolio and reinvested at lower rates. Thus a period of lower rates generally
leads to lower earnings and lower dividends.
Because Fortis Securities has always sought to pay the highest current dividend,
our commitment to the more aggressive high yield sector has averaged about 25
percent of
total assets. To lessen earnings and asset value risk, we have maintained a high
degree of diversification in this sector of the overall portfolio. Currently,
there are 56 separate high yield securities, versus 54 securities at the
beginning of the fiscal year. The average duration for the fund's holdings has
been about five years throughout this investment period.
IN CLOSING
We appreciate your investment in Fortis Securities. If you have any questions,
please call us.
Sincerely,
/s/ DEAN C. KOPPERUD
Dean C. Kopperud
President
/s/ DENNIS M. OTT
Dennis M. Ott
Vice President
Dated: July 19, 1995
TOP TEN HOLDINGS AS OF 7/31/95
<TABLE>
<CAPTION>
Percent of
Bonds net assets
- -----------------------------------------------------------------------------
<C> <S> <C>
1. U.S. Treasury Note (9.375%) 1996 5.2%
2. GNMA (7.50%) 2022 4.3%
3. REFCORP (7.355%) 2014 3.5%
4. DLJ Mortgage Acceptance Corp. (8.50%) 2001 2.7%
5. Fleet Mtg Securities (9.125%) 2018 2.7%
6. GNMA (9.50%) 2019 2.6%
7. Green Tree Financial Corp. (7.65%) 2019 2.6%
8. Oakwood Mtg Investors, Inc. (7.10%) 2020 2.5%
9. FNMA (7.50%) 2024 2.5%
10. FHLMC (9.50%) 2016 2.3%
</TABLE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 7/31/95
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds Non-Investment
Grade 24.5%
Corporate Bonds Investment Grade 15.0%
FNMAs 14.3%
GNMAs 12.6%
Asset Backed Securities 11.1%
FHLMCs 10.3%
U.S. Treasury Securities 5.7%
Other Government Agencies 3.5%
Receivables/Cash Equivalents 2.7%
Common Stock 0.3%
</TABLE>
1
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
July 31, 1995
COMMON STOCKS-0.29%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
- -------- ----------- ---------
<C> <S> <C> <C>
BROADCASTING-0.02%
500 Petro PSC Properties, L.P. (Warrants) (a).............. $ 18,285 $ 17,500
----------- ---------
CONSUMER GOODS-0.03%
5,800 Drypers Corp. (Warrants) (a)........................... 17,400 10,875
500 Hosiery Corp. of America, Class A (a)(d)............... 8,460 20,000
----------- ---------
25,860 30,875
----------- ---------
LEISURE TIME-AMUSEMENTS-0.00%
3,000 Casino Magic Finance Corp. (Warrants) (a).............. 4,500 750
6,000 Hemmeter Enterprises, Inc. (Warrants) (a).............. 24,000 750
----------- ---------
28,500 1,500
----------- ---------
MACHINERY-0.00%
2,250 Terex Corp. (Rights) (a)............................... 5,625 1,688
----------- ---------
RETAIL-MISCELLANEOUS-0.24%
17,674 Grand Union Co. (a).................................... 1,023,438 265,110
8,995 Southland Corp. (Warrants) (a)......................... 2,922 17,990
----------- ---------
1,026,360 283,100
----------- ---------
TOTAL COMMON STOCKS.................................... $1,104,630 $334,663
----------- ---------
----------- ---------
</TABLE>
ASSET BACKED SECURITIES-11.06%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
- ----------- ----------- ------------ ------------
<C> <S> <C> <C> <C>
MANUFACTURED HOMES-6.05%
$1,000,000 Green Tree Financial Corp., 8.35% Ser 1994-7 Class A4
Sr Sub Pass Thru Certificate 3-15-2020............... Aaa* $ 998,750 $ 1,052,300
3,000,000 Green Tree Financial Corp., 7.65% Ser 1994-1 Class A5
Sr Sub Pass Thru Certificate 4-15-2019............... Aa2* 2,988,282 3,012,594
2,993,000 Oakwood Mtg Investors, Inc., 7.10% Ser 1995-A Cl A3
9-15-2020............................................ AAA 2,990,194 2,930,521
------------ ------------
6,977,226 6,995,415
------------ ------------
MULTI-FAMILY LOANS-3.58%
3,000,000 DLJ Mtg Acceptance Corp., 8.50% Ser 1994-4 Cl A2
Multifamily Mtg Pass Thru Certificate 4-18-2001...... A 3,023,906 3,127,548
1,000,000 DLJ Mtg Acceptance Corp., 8.80% Ser 1993-12 Cl B1
Multifamily Mtg Pass Thru Certificate 9-18-2003...... Bbb** 982,500 1,014,124
------------ ------------
4,006,406 4,141,672
------------ ------------
WHOLE LOAN RESIDENTIAL-1.43%
1,620,942 Residential Resources, Inc., 9.50% Ser 14 Cl A
12-1-2018............................................ AAA 1,661,972 1,651,722
------------ ------------
TOTAL ASSET BACKED SECURITIES.......................... 12,645,604 12,788,809
------------ ------------
------------ ------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-14.96%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
- ----------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
FINANCE COMPANIES-1.46%
$1,500,000 Tenneco Credit Corp., 9.625% Note 8-15-2001............ BBB- $ 1,585,320 $ 1,688,229
------------ ------------
FOREIGN-GOVERNMENT-3.19%
2,000,000 Hydro-Quebec, 8.00% Deb 2-1-2013....................... A+ 2,182,120 2,041,798
1,500,000 Quebec (Province of), 8.80% Bond 4-15-2003............. A+ 1,637,670 1,643,203
------------ ------------
3,819,790 3,685,001
------------ ------------
* Moody's Rating
** Duff & Phelps' Rating
</TABLE>
2
<PAGE>
CORPORATE BONDS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
- ----------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
FOREST PRODUCTS-3.40%
$2,150,000 Georgia-Pacific Corp., 9.625% Deb 3-15-2022............ BBB- $ 2,169,817 $ 2,316,051
1,500,000 Noranda, Inc., 8.625% Deb 7-15-2002.................... BBB 1,494,960 1,617,845
------------ ------------
3,664,777 3,933,896
------------ ------------
MEDIA-1.41%
1,500,000 News America Holdings, Inc., 8.875% Sr Note
4-26-2023............................................ BBB- 1,487,359 1,623,906
------------ ------------
MISCELLANEOUS-4.57%
1,330,000 Minneapolis MN Community Development Agency, 11.25% Ltd
Tax Dev Rev Bond Ser 1990-6B 6-1-2007 BBB+ 1,356,875 1,550,265
1,000,000 New York (City of), 10.00% General Obligation Taxable
Bond Fiscal 1991 Ser D 8-1-2005...................... BBB+ 942,987 1,113,314
1,000,000 New York (City of), 9.75% General Obligation Taxable
Bond Fiscal 1991 Ser D 8-1-1996...................... BBB+ 980,180 1,025,249
1,500,000 Telecommunications, Inc., 9.80% Sr Note 2-1-2012....... BBB- 1,658,835 1,600,352
------------ ------------
4,938,877 5,289,180
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-0.93%
1,000,000 Occidental Petroleum Corp., 11.75% Sr Sub Deb
3-15-2011............................................ BBB 1,013,663 1,077,445
------------ ------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE............... 16,509,786 17,297,657
------------ ------------
------------ ------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-24.49%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
- ----------- ----------- ------------ ------------
<C> <S> <C> <C> <C>
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.39%
$ 500,000 Penda Corp., 10.75% Sr Note Ser B 3-1-2004............. B $ 458,125 $ 455,000
------------ ------------
BEVERAGE-0.43%
750,000 Heileman Acquisition Co., 9.625% Sr Sub Note
1-31-2004............................................ CCC+ 616,687 495,000
------------ ------------
BUILDING MATERIALS-1.16%
500,000 Associated Materials, Inc., 11.50% Sr Sub Note
8-15-2003............................................ B- 500,000 456,250
500,000 Nortek, Inc., 9.875% Sr Sub Note 3-1-2004.............. CCC+ 450,000 457,500
500,000 Wickes Lumber Co., 11.625% Sr Sub Note 12-15-2003...... B- 502,500 430,000
------------ ------------
1,452,500 1,343,750
------------ ------------
CHEMICALS-0.42%
750,000 Indspec Chemical Corp., 11.50% Sr Sub Disc Note Ser B
12-1-2003 (Zero coupon until 12-1-1998) (i).......... B- 518,185 487,500
------------ ------------
CONSUMER GOODS-2.36%
500,000 Chattem, Inc., 12.75% Sr Sub Note Ser B 6-15-2004...... B- 460,625 480,000
500,000 Hosiery Corp. of America, Inc., 13.75% Sr Sub Note
8-1-2002............................................. B- 486,591 500,000
750,000 Plastic Specialty & Technologies, Inc., 11.25% Sr
Secured Note 12-1-2003............................... B- 718,000 690,000
500,000 Roadmaster Industries, Inc., 11.75% Sr Sub Note
7-15-2002............................................ B- 500,000 460,000
600,000 Solon Automated Services, Inc., 12.75% Sr Note
7-15-2001............................................ B+ 602,125 594,000
------------ ------------
2,767,341 2,724,000
------------ ------------
CONTAINERS AND PACKAGING-1.25%
500,000 Mail-Well Corp., 10.50% Sr Sub Note 2-15-2004 (e)...... B- 490,625 445,000
500,000 RXI Holdings, Inc., 14.00% Sr Secured Note 7-15-2002
(and warrants) (d)................................... B- 500,000 500,000
500,000 Williamhouse-Regency of Delaware, Inc., 11.50% Sr Sub
Deb 6-15-2005........................................ B- 505,000 500,000
------------ ------------
1,495,625 1,445,000
------------ ------------
ENERGY-0.43%
500,000 WRT Energy Corp., 13.875% Sr Note 3-1-2002 (and
warrants)............................................ B- 490,000 497,500
------------ ------------
FOOD-GROCERY, MISCELLANEOUS-2.02%
1,000,000 Di Giorgio Corp., 12.00% Sr Note 2-15-2003............. B 927,500 775,000
750,000 Envirodyne Industries, Inc., 10.25% Sr Note
12-1-2001............................................ B- 639,062 607,500
500,000 Pilgrims Pride Corp., 10.875% Sr Sub Deb 8-1-2003...... B- 493,978 465,000
</TABLE>
3
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
July 31, 1995
CORPORATE BONDS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
- ----------- ----------- ------------ ------------
<C> <S> <C> <C> <C>
$ 500,000 Specialty Foods Corp., 11.25% Sr Sub Note 8-15-2003.... B- $ 467,375 $ 487,500
------------ ------------
2,527,915 2,335,000
------------ ------------
LEISURE TIME-AMUSEMENTS-2.38%
500,000 Boomtown, Inc., 11.50% First Mtg Note 11-1-2003........ B+ 459,375 457,500
500,000 Capital Gaming International, Inc., 11.50% Secured Note
2-1-2001 (a)......................................... Caa* 299,375 230,000
561,800 Hemmeter Enterprises, Inc., 12.00% Sr Secured Note
12-15-2000 (Interest is Payable-in-Kind) (e)......... NR 356,299 247,973
600,000 PRT Funding Corp., 11.625% Sr Note 4-15-2004........... B- 572,500 522,000
500,000 Trump Castle Funding, Inc., 11.75% First Mtg Bond
11-15-2003........................................... Caa* 295,000 401,250
500,000 Trump Plaza Funding, Inc., 10.875% First Mtg Note
6-15-2001............................................ B+ 424,410 477,500
509,875 Trump Taj Mahal Funding, Inc., 11.35% First Mtg Note
11-15-1999 (Interest is 9.375% cash and 1.975%
Payable-in-Kind)..................................... Caa* 390,237 416,782
------------ ------------
2,797,196 2,753,005
------------ ------------
MACHINERY-2.03%
500,000 Interlake Corp., 12.00% Sr Note 11-15-2001............. B- 500,000 520,000
500,000 MVE, Inc., 12.50% Sr Secured Note 2-15-2002 (and
warrants)............................................ B+ 500,000 527,500
500,000 Spreckels Industries, Inc., 11.50% Sr Secured Note
9-1-2000............................................. B 507,500 492,500
1,000,000 Terex Corp., 13.75% Sr Secured Note 5-15-2002 (and
rights) (d).......................................... B 985,000 810,000
------------ ------------
2,492,500 2,350,000
------------ ------------
MEDIA-0.54%
673,414 Falcon Holding Group, L.P., 11.00% Sr Sub Note Ser B
9-15-2003 (Interest is Payable-in kind).............. NR 670,314 623,656
------------ ------------
METALS-MINING AND MISCELLANEOUS-1.59%
500,000 Haynes International, Inc., 11.25% Sr Secured Note Ser
A 6-15-1998.......................................... CCC+ 475,000 480,000
500,000 Haynes International, Inc., 13.50% Sr Sub Deb
8-15-1999............................................ CCC- 320,000 350,000
500,000 Renco Metals, Inc., 12.00% Sr Note 7-15-2000........... B+ 500,000 511,250
500,000 Sheffield Steel Corp., 12.00% First Mtg Note 11-1-2001
(and warrants)....................................... B- 497,500 491,250
------------ ------------
1,792,500 1,832,500
------------ ------------
MORTGAGE BACKED SECURITIES-0.61%
939,156 Sandia Mtg Corp., 8.94% 1991-A Variable Rate Pass Thru
Certificate Cl B 8-1-2018 (f)........................ NR 706,451 704,367
------------ ------------
RESTAURANTS AND FRANCHISING-1.58%
500,000 American Restaurant Group, 12.00% Sr Note 09-15-98..... B+ 418,750 415,000
500,000 Carrols Corp., 11.50% Sr Note 8-15-2003................ B+ 501,875 488,750
500,000 Family Restaurants, Inc., 9.75% Sr Note 2-1-2002....... CCC+ 342,500 295,000
752,000 Flagstar Corp., 11.25% Sr Sub Deb 11-1-2004............ CCC+ 763,485 629,800
------------ ------------
2,026,610 1,828,550
------------ ------------
RETAIL-MISCELLANEOUS-3.05%
1,000,000 Color Tile, Inc., 10.75% Sr Note 12-15-2001............ CCC+ 700,000 477,500
1,000,000 Cumberland Farms, Inc., 10.50% Sr Secured Note
10-1-2003 (f)........................................ NR 927,500 830,000
650,000 Farm Fresh, Inc., 12.25% Sr Note 10-1-2000............. B- 646,250 607,750
1,000,000 Pantry (The), Inc., 12.00% Sr Note Ser B 11-15-2000.... B+ 1,000,000 1,000,000
500,000 Pay 'N' Pak Stores, Inc., 13.50% Sr Sub Deb 6-1-1998
(a).................................................. Ca* 498,688 2,500
500,000 Ralphs Grocery Co., 11.00% Sr Sub Note 6-15-2005....... B- 500,000 480,000
500,000 Victory Markets, Inc., 12.50% Sub Exchange Note
3-15-2000............................................ NR 425,000 125,000
------------ ------------
4,697,438 3,522,750
------------ ------------
TECHNOLOGY-0.87%
500,000 Computervision Corp., 11.375% Sr Sub Note 8-15-1999.... CCC+ 450,000 497,500
500,000 Genicom Corp., 12.50% Sr Sub Note 2-15-1997............ NR 445,000 506,250
------------ ------------
895,000 1,003,750
------------ ------------
TEXTILE MANUFACTURING-1.02%
750,000 Synthetic Industries, Inc., 12.75% Sr Sub Deb
12-1-2002............................................ B- 755,000 753,750
500,000 U.S. Leather, Inc., 10.25% Sr Note 7-31-2003........... B+ 488,244 430,000
------------ ------------
1,243,244 1,183,750
------------ ------------
TOBACCO-0.48%
750,000 Liggett Group, Inc., 11.50% Ser B Secured Note
2-1-1999............................................. NR 555,000 551,250
------------ ------------
* Moody's Rating
</TABLE>
4
<PAGE>
CORPORATE BONDS-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
- ----------- ----------- ------------ ------------
<C> <S> <C> <C> <C>
TRANSPORTATION-1.88%
$ 650,000 Continental Airlines, Inc., 12.125% Secured Equipment
Trust Certificate 4-15-1996 (a)...................... NR $ 208,553 $ 97,500
500,000 Fruehauf Trailer Corp., 14.75% Sr Secured Note
4-30-2002 (f)........................................ NR 490,000 500,000
500,000 K & F Industries, Inc., 11.875% Sr Secured Note
12-1-2003............................................ B+ 471,250 518,750
500,000 Northwest Airlines Trust No. 2, 13.875% Ser D Sub
Aircraft Note 6-21-2008.............................. NR 500,000 560,000
500,000 Petro PSC Properties, L.P., 12.50% Sr Note 6-1-2002.... B 481,715 502,500
------------ ------------
2,151,518 2,178,750
------------ ------------
TOTAL CORPORATE BONDS - NON-INVESTMENT GRADE........... 30,354,149 28,315,078
------------ ------------
TOTAL ASSET BACKED & CORPORATE DEBT SECURITIES......... $59,509,539 $58,401,544
------------ ------------
------------ ------------
</TABLE>
U.S. GOVERNMENT SECURITIES-46.42%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
- ------------ --------------- ---------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION-10.29%
MORTGAGE BACKED SECURITIES:
$ 1,830,168 8.00% 2001............................................. $ 1,875,922 $ 1,873,062
659,306 9.00% 2022............................................. 701,131 686,090
2,560,666 9.50% 2016............................................. 2,722,248 2,687,099
1,007,272 10.50% 2017............................................ 1,071,064 1,095,093
531,215 11.25% 2010............................................ 574,542 585,997
430,867 11.50% 2014-2015....................................... 473,938 476,782
470,174 11.75% 2010............................................ 498,384 522,187
--------------- ---------------
7,917,229 7,926,310
--------------- ---------------
REMICS:
47,100 100.00% Trust #1404-E Interest Only Strip I/O-ette 2006
(g).................................................. 466,680 753,601
43,303 100.00% Trust #1364-L Interest Only Strip I/O-ette 2005
(g).................................................. 195,664 649,542
1,017,429 9.00% Trust #136-D 2020................................ 1,022,516 1,040,544
1,500,000 9.50% Trust #1001-F 2003............................... 1,529,063 1,535,443
--------------- ---------------
3,213,923 3,979,130
--------------- ---------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION........... 11,131,152 11,905,440
--------------- ---------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-14.30%
MORTGAGE BACKED SECURITIES:
2,908,750 7.50% 2024............................................. 2,902,387 2,899,661
4,466,150 8.00% 2024-2025 (h).................................... 4,523,051 4,534,536
2,382,265 10.50% 2014-2020....................................... 2,487,939 2,610,812
1,325,646 11.00% 2011-2018....................................... 1,365,757 1,469,395
49,825 11.25% 2011............................................ 51,724 55,399
143,173 12.00% 2014............................................ 152,435 160,846
265,702 12.50% 2015............................................ 300,077 300,326
--------------- ---------------
11,783,370 12,030,975
--------------- ---------------
NOTES:
1,600,000 8.50% 2005............................................. 1,664,500 1,712,226
--------------- ---------------
REMICS:
1,980,000 7.00% Trust #1992-49H 2020............................. 1,947,516 1,966,712
806,596 13.50% Trust #1989-98G 2017............................ 853,885 823,090
--------------- ---------------
2,801,401 2,789,802
--------------- ---------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION............ 16,249,271 16,533,003
--------------- ---------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-12.57%
$ 4,994,105 7.50% 2022............................................. $ 5,003,469 $ 4,986,299
2,117,847 9.00% 2021............................................. 2,184,658 2,222,416
3,010,146 9.125% Fleet Mtg Securities, Ser 1989-3 Cl D 2018 (GNMA
Backed).............................................. 3,079,520 3,075,493
</TABLE>
5
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
July 31, 1995
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
- ------------ --------------- ---------------
<C> <S> <C> <C>
1,166,110 9.50% 2019............................................. 1,247,076 1,237,534
2,869,440 9.50% 2020............................................. 2,982,873 3,012,912
--------------- ---------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION......... 14,497,596 14,534,654
--------------- ---------------
OTHER GOVERNMENT AGENCIES-3.51%
RESOLUTION FUNDING CORPORATION:
15,500,000 7.355% Zero Coupon Strip 2014 (i)...................... 3,977,811 4,056,489
--------------- ---------------
U.S. TREASURY SECURITIES-5.75%
BONDS:
525,000 8.125% 2021............................................ 535,500 598,500
--------------- ---------------
NOTES:
5,900,000 9.375% 1996............................................ 6,067,203 6,047,500
--------------- ---------------
TOTAL U.S. TREASURY SECURITIES......................... 6,602,703 6,646,000
--------------- ---------------
TOTAL U.S. GOVERNMENT AND AGENCIES..................... 52,458,533 53,675,586
--------------- ---------------
TOTAL LONG TERM DEBT SECURITIES........................ 111,968,072 112,077,130
--------------- ---------------
TOTAL LONG TERM INVESTMENTS............................ $ 113,072,702 $ 112,411,793
--------------- ---------------
--------------- ---------------
</TABLE>
SHORT-TERM INVESTMENTS-1.78%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
- ----------- -------------
<C> <S> <C>
BANKS-1.78%
$2,073,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.71%................... $ 2,073,000
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$115,145,702) (B)................................ $ 114,484,793
-------------
-------------
</TABLE>
(a) Presently non-income producing. For corporate debt securities, items
identified are in default as to payment of interest and/or principal.
(b) At July 31, 1995, the cost of securities for federal income tax purposes
was $115,289,866 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation......................................... $ 3,096,380
Unrealized depreciation......................................... (3,901,453)
- -------------------------------------------------------------------------------
Net unrealized depreciation..................................... $ (805,073)
- -------------------------------------------------------------------------------
</TABLE>
(c) See Note A of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Securities sold within terms of a private placement memorandum, exempt from
registration under Section 144A of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or to other "accredited
investors". These investments have been identified by portfolio management
as illiquid securities. The value of these securities at July 31, 1995, is
$1,330,000 which represent 1.15% of net assets.
(e) Securities sold within terms of a private placement memorandum, exempt from
registration under Section 144A of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accreditied
investors". Pursuant to guidelines adopted by the Board of Directors, these
issues are determined to be liquid.
(f) The fund entered into the following restricted security transactions: On
March 8 and October 27, 1993, the fund acquired $834,942 and $104,214 par
of Sandia Mortgage 1991-A Variable Pass Thru Certificates due 2018 with a
cost basis of $626,206 and $80,245, respectively. On February 2, 1994, the
fund purchased 1,000,000 par of Cumberland Farms with a cost basis of
$927,500. On May 18, 1995, the fund purchased 500,000 par of Fruehauf
Trailer Corp. with a cost basis of $490,000. The value of these securities
at July 31, 1995, is $2,034,367 which represents 1.76% of net assets.
(g) The interest rates disclosed for interest only strips represent effective
yields at July 31, 1995, based upon the current cost basis, estimated
timing and amount of future cash flows. These investments have been
identified by portfolio management as illiquid securities. The aggregate of
these securities at July 31, 1995, is $1,403,143 which represents 1.21% of
net assets.
(h) The cost of securities purchased on a when-issued basis at July 31, 1995,
is $2,030,313.
(i) The interest rate disclosed for these securities represents the original
issue discount yields on the date of acquisition.
(j) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets.
6
<PAGE>
Fortis Securities, Inc.
Statement of Assets and Liabilities
July 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, as detailed in the accompanying schedules, at
market (cost $115,145,702) (Note A)......................................... $ 114,484,793
Cash on deposit with custodian................................................ 992
Receivables:
Investment securities sold.................................................. 2,426,337
Interest and dividends...................................................... 2,152,851
-------------
TOTAL ASSETS.................................................................... 119,064,973
-------------
LIABILITIES:
Dividends payable ($.07 per share)............................................ 882,265
Payable for investment securities purchased................................... 2,449,063
Payable for investment advisory and management fees........................... 62,146
Accounts payable and accrued expenses......................................... 29,362
-------------
TOTAL LIABILITIES............................................................... 3,422,836
-------------
NET ASSETS:
Net proceeds of capital stock, par value $.01 per share - authorized
15,000,000 shares; outstanding 12,603,789 shares............................ 135,857,600
Unrealized depreciation of investments........................................ (660,909)
Excess of distributions over net investment income............................ (41,109)
Accumulated net realized loss from sale of investments........................ (19,513,445)
-------------
TOTAL NET ASSETS................................................................ $ 115,642,137
-------------
-------------
NET ASSET VALUE PER SHARE....................................................... $9.18
-------------
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
FORTIS SECURITIES, INC.
Statement of Operations
For the Year Ended July 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET INVESTMENT INCOME:
<S> <C>
Income
Interest income............................................................. $ 11,442,054
Fee income (Note A)......................................................... 5,371
-------------
Total Income.................................................................. 11,447,425
-------------
Expenses:
Investment advisory and management fees (Note B)............................ 730,462
Legal and auditing fees (Note B)............................................ 43,500
Custodian fees.............................................................. 15,500
Shareholders' notices and reports........................................... 37,000
Directors' fees and expenses................................................ 17,020
Exchange listing fees....................................................... 26,150
Other....................................................................... 11,546
-------------
Total expenses................................................................ 881,178
-------------
NET INVESTMENT INCOME........................................................... 10,566,247
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE A):
Net realized loss from security transactions.................................. (5,233,766)
Net change in unrealized appreciation (depreciation) of investments in
securities.................................................................. 3,821,651
-------------
NET LOSS ON INVESTMENTS......................................................... (1,412,115)
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ $ 9,154,132
-------------
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
FORTIS SECURITIES, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JULY 31, JULY 31,
1995 1994
------------ ------------
<S> <C> <C>
OPERATIONS:
Net investment income......................................................... $ 10,566,247 $ 11,263,729
Net realized loss from security transactions.................................. (5,233,766) (3,427,672)
Net change in unrealized appreciation (depreciation) of investments........... 3,821,651 (7,548,805)
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ 9,154,132 287,252
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................... (10,890,625) (11,514,885)
Excess distributions of net realized gains (Note A)........................... (116,961) (37,369)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............................................. (11,007,586) (11,552,254)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Issuance of 237,790 and 299,808 shares, respectively, to shareholders
participating in the dividend reinvestment plan............................. 2,145,549 3,073,781
------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................................... 292,095 (8,191,221)
NET ASSETS:
Beginning of year............................................................. 115,350,042 123,541,263
------------ ------------
End of year (includes undistributed (excess of distributions over) net
investment income of ($41,109) and $283,269, respectively).................. $115,642,137 $115,350,042
------------ ------------
------------ ------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fortis Securities, Inc., ("the
fund") is a closed-end diversified management investment company. The primary
investment objective of the fund is to seek a high level of current income
through investment in a diversified portfolio of debt securities, some of
which may be privately placed and some of which may have equity features.
Capital appreciation is a secondary objective.
SECURITY VALUATION: Long-term debt securities are valued at current market
prices on the basis of valuations furnished by independent pricing services;
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 Fortis Securities Fund 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 fund maintains, in a segregated account with its
custodian, assets with a market value equal to the amount of its purchase
commitments. As of July 31, 1995, there was one outstanding purchase on a
when-issued basis in the amount of $2,030,313.
Consistent with its ability to purchase securities on a when-issued basis,
the Fund may enter into transactions to sell its purchase commitments to
third parties at the current market values and concurrently acquire other
purchase commitments for similar securities at later dates. As an inducement
for the fund to "rollover" its purchase commitments, the fund receives
negotiated fees. For the year ended July 31, 1995, such fees earned by the
fund amounted to $5,371.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Securities transactions
are accounted for on the trade date. Interest income is recorded on the
accrual basis. Realized security gains and losses are determined using the
identified cost method. For financial reporting purposes, except for original
issue discount, the fund does not amortize long-term bond premiums and
discounts. For the year ended July 31, 1995, the cost of purchases and
proceeds from sales of securities (other than short-term securities)
aggregated $83,648,783 and $84,331,007, respectively.
INCOME TAXES: The fund intends to qualify, under the Internal Revenue Code, as
a regulated investment company and if so qualified, will not have to pay
federal income taxes to the extent its taxable income is distributed. On a
calendar year basis, the fund is subject to a 4% federal excise tax to the
extent it does not distribute substantially all of its net investment income
and realized gains, if any.
Net investment income and net realized gains differ for financial statement
and tax purposes primarily because of the recognition of market discount as
ordinary income for tax purposes 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. The effect
on dividend distributions of the book-to-tax difference is presented as
"excess distributions of net realized gains" in the statement of changes in
net assets and the financial highlights.
For federal income tax purposes, the fund had a capital loss carryover of
$19,369,281 at July 31, 1995, which, if not offset by subsequent capital
gains will expire as follows:
<TABLE>
<S> <C>
1996..................................................... $1,078,684
1997..................................................... 2,087,647
1998..................................................... 1,344,644
1999..................................................... 5,325,293
2001..................................................... 315,226
2002..................................................... 258,409
2003..................................................... 4,462,090
2004..................................................... 4,497,288
</TABLE>
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.
ILLIQUID SECURITIES: At July 31, 1995, investments in securities for the fund
included issues that are illiquid. The fund currently limits investments in
illiquid securities to 15% of net assets, at market value, at the date of
purchase. The aggregate value of such securities at July 31, 1995 was
$4,767,510 which represents 4.12% of net assets. Pursuant to guidelines
adopted by the Board of Directors, certain unregistered securities are
determined to be liquid and are not included within the 15% limitation
specified above.
DIVIDEND REINVESTMENT PLAN: A shareholder may choose to have their dividends
and capital gains distributions reinvested in additional whole and fractional
shares. Although reinvested, this distribution will still be taxable. Under
this plan, when the market price is greater than the net asset value, the
reinvestment price will be the greater of 95 percent of the month-end market
price (plus brokerage commissions) or the month-end net asset value. When the
market price is less than the net asset value, the reinvestment price will be
the market price (plus brokerage commissions) to the extent that shares can be
purchased in the open market. The Dividend Reinvestment Agreement has been
amended (by the Fund Board of Directors) to provide that, where applicable,
the Purchasing Agent shall commence acquiring shares in the open market on the
first business day of the month, and shall cease purchasing shares on the
fifth business day of the month. The Board of Directors has also amended it to
allow for the computation of fractional shares to three decimal places,
previously four.
A shareholder will receive his dividends and capital gains distributions in
cash automatically, unless they inform the fund in writing that they desire
to have their distributions reinvested in additional shares. This may be done
by contacting Fortis Advisers, Inc. (see page 13). Notice to initiate or to
terminate this Plan must be received by Advisers 15 days prior to the
dividend date for which it is to become effective.
B. PAYMENTS TO RELATED PARTIES: Fortis Advisers, Inc., is the investment adviser
for the fund. Investment advisory and management fees are computed at the
annual rate of .45% for the first $100 million of average monthly net assets
and at the annual rate of .40% of average monthly net assets over $100
million, plus 2% of dividend and interest income.
Legal fees and expenses aggregating $24,000 for the year ended July 31, 1995,
were paid to a law firm of which the secretary of the fund is a partner.
10
<PAGE>
- --------------------------------------------------------------------------------
C. FINANCIAL HIGHLIGHTS: Selected per share historical data was as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------------------------------------
1995 1994 1993 1992 1991
<S> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of year.......................... $ 9.33 $ 10.24 $ 10.13 $ 9.91 $ 9.62
--------- --------- --------- --------- ---------
Operations:
Net investment income..................................... .84 .93 1.02 1.02 1.06
Net realized and unrealized gain (loss) on investments.... (.11) (.89) 0.12 0.25 0.30
--------- --------- --------- --------- ---------
Total from operations....................................... .73 .04 1.14 1.27 1.36
--------- --------- --------- --------- ---------
Distributions to shareholders:
From net investment income................................ (.87) (.95) (1.03) (1.03) (1.07)
Excess distributions of net realized gains................ (.01) -- -- (0.02) --
--------- --------- --------- --------- ---------
Total distributions to shareholders......................... (.88) (.95) (1.03) (1.05) (1.07)
--------- --------- --------- --------- ---------
Net asset value, end of year................................ $ 9.18 $ 9.33 $ 10.24 $ 10.13 $ 9.91
--------- --------- --------- --------- ---------
Per-share market value, end of year......................... $ 8.75 $ 9.625 $ 11.50 $ 11.50 $ 10.88
Total investment return, market value*...................... .25% (8.16%) 9.91% 16.51% 35.11%
Total investment return, net asset value**.................. 8.46% .01% 11.06% 12.61% 15.18%
Net assets at end of period (000's omitted)................. $ 115,642 $ 115,350 $ 123,541 $ 119,080 $ 113,364
Ratio of expenses to average monthly net assets............. 0.78% 0.76% 0.80% 0.82% 0.88%
Ratio of net investment income to average monthly net
assets..................................................... 9.33% 9.30% 10.12% 10.10% 11.12%
Portfolio turnover rate (excluding short-term securities)... 75% 125% 86% 49% 67%
*Total investment return, market value, is based on the change in market price of a share during the period and assumes
reinvestment of distributions at actual prices pursuant to the fund's dividend reinvestment plan.
**Total investment return, net asset value, is based on the change in net asset value of a share during the period and
assumes reinvestment of distributions at actual prices pursuant to the fund's dividend reinvestment plan.
</TABLE>
D. QUARTERLY DATA (UNAUDITED)
<TABLE>
<CAPTION>
Net Realized Net Increase
Net Investment and Unrealized (Decrease) in Net
Gains (Losses) Assets Resulting
Income on Investments From Operations Distributions
------------------- -------------------- -------------------- ------------------- Quarter End
Total Per Per Per Per Net Asset
Quarter Ended Income Amount Share Amount Share Amount Share Amount Share Value
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
October 31, 1994 $ 2,907,043 $ 2,684,021 $0.21 $(4,686,745) $(0.38) $(2,002,724) $(0.17) $ 2,794,647 $0.22 $8.94
January 31, 1995 2,807,264 2,589,669 0.21 (741,881) (0.06) 1,847,788 0.15 2,812,035 0.23 8.86
April 30, 1995 2,803,191 2,590,459 0.21 2,758,095 0.22 5,348,554 0.43 2,752,234 0.22 9.07
July 31, 1995 2,929,927 2,702,098 0.21 1,258,416 0.11 3,960,514 0.32 2,648,670 0.21 9.18
----------- ----------- ----- ----------- ------ ----------- ------ ----------- -----
$11,447,425 $10,566,247 $0.84 $(1,412,115) $(0.11) $ 9,154,132 $ 0.73 $11,007,586 $0.88
----------- ----------- ----- ----------- ------ ----------- ------ ----------- -----
</TABLE>
11
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Fortis Securities, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of Fortis Securities, Inc. as of July
31, 1995 and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
ended July 31, 1995 and the financial highlights for each of the years in the
five-year period ended July 31, 1995. These financial statements and the
financial highlights are the responsibility of fund management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased and sold but not received or delivered, we
request confirmations from brokers, and where replies are not received, we carry
out other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights referred
to above present fairly, in all material respects, the financial position of
Fortis Securities, Inc. at July 31, 1995, and the results of its operations for
the year then ended, the changes in its net assets for each of the years in the
two-year period ended July 31, 1995 and the financial highlights for each of the
years in the five-year period ended July 31, 1995, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
September 8, 1995
12
<PAGE>
<TABLE>
<CAPTION>
DIRECTORS OFFICERS
<S> <C> <C> <C>
RICHARD W. CUTTING DEAN C. KOPPERUD ROBB L. PRINCE DEAN C. KOPPERUD
CPA and Financial President and Director Prior to July, 1995, President and Director
Consultant Fortis Advisers, Inc. Vice President and STEPHEN M. POLING
ALLEN R. FREEDMAN Fortis Investors, Inc. Treasurer Vice President
Chairman and Chief Senior Vice President and Jostens, Inc. DENNIS M. OTT
Executive Officer Director of Fortis Benefits LEONARD J. SANTOW Vice President
Fortis, Inc.; Insurance Company Principal JAMES S. BYRD
Managing Director of Senior Vice President of Griggs & Santow, Inc. Vice President
Fortis International, N.V. Time Insurance JOSEPH M. WIKLER ROBERT C. LINDBERG
DR. ROBERT M. GAVIN Company Investment Consultant and Vice President
President EDWARD M. MAHONEY Private Investor KEITH R. THOMSON
Macalester College Prior to January, 1995, Prior to January, 1994, Vice President
BENJAMIN S. JAFFRAY Chairman and Chief Director of Research, ROBERT W. BELTZ, JR.
Chairman Executive Officer Chief Investment Officer, Vice President
Sheffield Group, Ltd. Fortis Advisers, Inc. Principal, and Director THOMAS D. GUALDONI
JEAN L. KING Fortis Investors, Inc. The Rothschild Co. Vice President
President LARRY A. MEDIN
Communi-King Vice President
JON H. NICHOLSON
Vice President
JOHN W. NORTON
Vice President
DAVID A. PETERSON
Vice President
MICHAEL J. RADMER
Secretary
TAMARA L. FAGELY
Treasurer
DAVID G. CARROLL
2nd Vice President
CHRIS J. NEUHARTH
2nd Vice President
INVESTMENT ADVISOR CUSTODIAN
AND DIVIDEND DISBURSING First Bank
AGENT National Association
Fortis Advisers, Inc. Minneapolis, Minnesota
Box 64284 GENERAL COUNSEL
St. Paul, Minnesota 55164 Dorsey & Whitney P.L.L.P.
REGISTRAR Minneapolis, Minnesota
Norwest Bank INDEPENDENT AUDITORS
Minnesota, N.A. KPMG Peat Marwick LLP
Minneapolis, Minnesota Minneapolis, Minnesota
</TABLE>
- -------------------------------------------------------------
MARKET Fortis Securities, Inc. is listed on the
PRICE New York Stock Exchange with the Ticker
symbol "FOR." The market price is
carried daily in the financial pages of
most newspapers in the New York Stock
Exchange Composite Transactions listings
under the abbreviation FortisSec.
In addition, each Monday THE WALL STREET JOURNAL and other financial
publications include a "Closed-End Funds" table which sets forth on a per share
basis the previous week's net asset value, market price and the percentage
difference between net asset value and market price for the fund under the name
Fortis Securities.
13
<PAGE>
<TABLE>
<S> <C> <C>
FORTIS FINANCIAL GROUP Fortis Financial Group (FFG) is a premier With more than $5 billion in assets under
provider of insurance and investment portfolios management, FFG is part of Fortis, a $100 billion
whose fund manager, Fortis Advisers, Inc. has worldwide financial services and insurance
established a nationwide reputation for money organization represented in 11 countries.
management. Through Fortis Investors, Inc., FFG Like the Fortis name, which comes
offers mutual funds, annuities and variable from the Latin for steadfast, our focus is on the
universal life insurance. Life and disability long-term in all we do: the relationships we
products are issued and underwritten by Time build, the performance we seek, the service we
Insurance Company and Fortis Benefits Insurance provide and the products we offer.
Company.
</TABLE>
[LOGO]
----------------
Bulk Rate
FORTIS FINANCIAL GROUP
US Postage
P.O. Box 64284
PAID
St. Paul, MN 55164
Permit No. 3794
Minneapolis, MN
------------------
FORTIS
SECURITIES, INC.
[LOGO]
PRINTED ON RECYCLED PAPER WITH
40% PRECONSUMER WASTE AND
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95387 (Ed. 9/95)
