<PAGE>
Fortis
[LOGO]
FORTIS
SECURITIES, INC.
Annual Report
July 31, 1996
[LOGO]
<PAGE>
FORTIS SECURITIES, INC. ANNUAL REPORT
CONTENTS
LETTER TO SHAREHOLDERS 2
SCHEDULE OF INVESTMENTS 3
STATEMENT OF ASSETS AND LIABILITIES 9
STATEMENT OF OPERATIONS 10
STATEMENTS OF CHANGES IN NET ASSETS 11
NOTES TO FINANCIAL STATEMENTS 12
INDEPENDENT AUDITORS' REPORT 14
PRODUCTS & SERVICES 15
BOARD OF DIRECTORS AND OFFICERS 16
- - TOLL-FREE PERSONAL ASSISTANCE
- Shareholder Services
- (800) 800-2638, Ext. 3012
- 7:30 a.m. to 5:30 p.m. CST, M-Th
- 7:30 a.m. to 5:00 p.m. CST, F
- - TOLL-FREE INFORMATION LINE
- For daily account balances,
transaction activity or net asset
value information
- (800) 800-2638, Ext. 4344
- 24 hours a day
FOR MORE INFORMATION ABOUT FORTIS FINANCIAL GROUP'S FAMILY OF PRODUCTS, CALL
YOUR INVESTMENT REPRESENTATIVE OR THE HOME OFFICE AT (800) 800-2638.
TO ORDER PROSPECTUSES OR SALES LITERATURE FOR ANY FORTIS PRODUCT, CALL (800)
800-2638, EXT. 4579.
HOW TO USE THIS REPORT
For a quick overview of the fund's performance during the past twelve months,
refer to the Highlights box below. The letter from the portfolio manager and
president provides a more detailed analysis of the fund and financial markets.
The charts alongside the letter are useful because they provide more information
about your investments. The top holdings charts show the types of securities in
which the fund invests, and the pie chart shows a breakdown of the fund's assets
by industry.
The performance chart graphically compares the fund's total return performance
with a selected investment index. Remember, however, that an index may reflect
the performance of securities the fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your fund does. Individuals cannot buy an unmanaged index fund without incurring
some charges and expenses.
This report is just one of several tools you can use to learn more about your
investment in the Fortis Family of Mutual Funds. Your investment representative,
who understands your personal financial situation, can best explain the features
of your investment and how it's designed to help you meet your financial goals.
HIGHLIGHTS
<TABLE>
<CAPTION>
FORTIS
SECURITIES,
INC.
------------
<S> <C>
JULY 31, 1996:
Total net asset....................... $113,150,995
Market price per share................ $ 7.875
Shares outstanding.................... 12,615,078
FOR THE YEAR ENDED JULY 31, 1996:
NET ASSET VALUE PER SHARE:
Beginning of year..................... $ 9.18
End of year........................... $ 8.97
DISTRIBUTIONS:
Total dividends paid.................. $ 9,945,584
Dividends per share (classified as
ordinary income for federal income tax
purposes)............................. $ .789
</TABLE>
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY
AS OF 7/31/96
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds Non-Investment Grade 24.5%
U.S. Treasury Securities 7.6%
FHLMCs 7.0%
Asset Backed Securities 11.3%
GNMAs 9.7%
FNMAs 12.1%
Corporate Bonds Investment Grade 27.8%
</TABLE>
TOP 10 HOLDINGS AS OF 7/31/96
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. GNMA (7.50%) 2022 3.9%
2. U.S. Treasury Bond (6.25%) 2003 3.7%
3. U.S. Treasury Bond (8.125%) 2021 2.8%
4. DLJ Mortgage Acceptance Corp. (8.50%) 2001 2.7%
5. Green Tree Financial Corp. (7.65%) 2019 2.6%
6. Oakwood Mtg Investors, Inc. (7.10%) 2020 2.5%
7. FNMA (7.50%) 2024 2.3%
8. NationsBank Corp. (7.75%) 2015 2.2%
9. GNMA (9.50%) 2019 2.1%
10. Georgia-Pacific Corp. (9.625%) 2022 2.0%
</TABLE>
DEAR SHAREHOLDER,
We are pleased to present the Fortis Securities annual report for the period
ended July 31, 1996.
A YEAR OF ECONOMIC CHANGE
The economic slowdown that prompted the Federal Reserve to lower short-term
rates in July 1995 continued through the end of February 1996 with sluggish
sales and a fairly tight job market. The Federal Reserve responded by again
lowering short-term rates in December 1995 and February 1996.
Our strategy entering 1996 was based on our outlook for a marginally expanding
U.S. economy with little or no inflationary pressure. Accordingly, we positioned
our portfolio to reflect our positive view on bonds. In anticipation of lower
rates, we reduced our exposure to prepayment risk, increased our commitment to
investment-grade corporates and maintained our exposure to higher yielding,
lower rated bonds at close to the maximum allowable of 25 percent of assets. The
goal was to lock in more secure returns while maintaining a portfolio duration
of about five years.
The employment statistics released in early March dramatically changed our
interest rate outlook. The strongest payroll report in nearly nine years caused
us to instantly assume a more conservative posture, recognizing that more market
volatility and higher interest rates could be expected. We reduced the portfolio
duration* and maintained it until recently between 4.6 and 4.8 years. That
shortening of duration, combined with a strategic move to upgrade quality in the
noninvestment grade sector, and the loss of some high yielding securities
through maturities and calls, forced us to cut the dividend twice by 0.3 cents
in March and July. With recent signs of moderating growth and higher interest
rates, the duration of the portfolio stands closer to five years again.
During the year ended July 31, we increased our investment grade corporate
securities from 15 percent to nearly 28 percent. Better quality corporates
outperformed other types of securities in the second half of 1995. In the
noninvestment grade portion of the portfolio, we moderately upgraded the quality
and increased the diversification between August and December 1995. Since the
beginning of 1996, high yield bonds have been the best performing sector. In
addition to their ability to enhance the income of the portfolio, high yield
bonds are less sensitive to rising interest rates, and have therefore lessened
the negative impact of a declining bond market on the portfolio.
* An important concept in managing fixed income securities, duration is the
measure of a bond fund's sensitivity to interest rate changes. Traditionally
measured in years, higher durations mean potentially greater fluctuations in
bond values, just as lower durations typically mean less volatility.
A POSITIVE LOOK AHEAD
Over the next three months, we believe that higher interest rates will slow the
pace of economic activity. Once this occurs, we anticipate having a more
positive interest rate outlook as concern about future inflation dissipates.
Assuming this scenario, we will likely further increase the portfolio's
duration, providing investors with the prospect of some additional capital
appreciation as rates decline.
We appreciate your investment with Fortis. If you have any questions, please
call us or talk with your investment professional.
Sincerely,
<TABLE>
<S> <C>
[SIGNATURE] [SIGNATURE]
Dean C. Kopperud Howard G. Hudson
President Vice President
August 12, 1996
</TABLE>
2
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
July 31, 1996
COMMON STOCKS AND WARRANTS-0.04%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost(b) Value(c)
------------- ------------- -------------
<C> <S> <C> <C>
APPAREL-0.00%
500 Hosiery Corp. of America, Class A (a)(f)..... $ 8,460 $ 2,500
------------- -------------
CONSUMER GOODS-0.00%
5,800 Drypers Corp. (Warrants) (a)(f).............. 17,400 58
------------- -------------
LEISURE TIME-AMUSEMENTS-0.00%
3,000 Casino Magic Finance Corp. (Warrants) (a).... 4,500 30
6,000 Hemmeter Enterprises, Inc. (Warrants) (a).... 24,000 60
------------- -------------
28,500 90
------------- -------------
MACHINERY-0.02%
500 MVE, Inc. (Warrants) (a)..................... 3,438 17,500
2,250 Terex Corp. (Rights) (a)..................... 5,625 225
------------- -------------
9,063 17,725
------------- -------------
RETAIL-GROCERY-0.00%
1,174 Grand Union Co. (a).......................... 63,498 7,191
------------- -------------
RETAIL-MISCELLANEOUS-0.02%
500 Petro PSC Properties, L.P. (Warrants) (a).... 18,285 18,000
------------- -------------
TOTAL COMMON STOCKS AND WARRANTS............. $ 145,206 $ 45,564
------------- -------------
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</TABLE>
ASSET BACKED SECURITIES-11.33%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost(b) Value(c)
------------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
MANUFACTURED HOMES-6.04%
$ 3,000,000 Green Tree Financial Corp., 7.65% Sr Sub Pass
Thru Certificate Ser 1994-1 Cl A5
4-15-2019.................................. Aa2* $ 2,988,281 $ 2,928,450
1,000,000 Green Tree Financial Corp., 8.35% Sr Sub Pass
Thru Certificate Ser 1994-7 Cl A4
3-15-2020.................................. Aaa* 998,750 1,050,259
2,993,000 Oakwood Mortgage Investors, Inc., 7.10% Ser
1995-A Cl A3 9-15-2020..................... AAA 2,990,194 2,861,335
------------- -------------
6,977,225 6,840,044
------------- -------------
MULTI-FAMILY LOANS-4.17%
3,000,000 DLJ Mtg Acceptance Corp., 8.50% Multifamily
Mtg Pass Thru Certificate Ser 1994-4 Cl A2
4-18-2001.................................. A 3,023,906 3,063,597
1,000,000 DLJ Mtg Acceptance Corp., 8.80% Multifamily
Mtg Pass Thru Certificate Ser 1993-12 Class
B1 9-18-2003............................... NR 982,500 1,001,563
941,468 Fund America Structured Transactions, L.P.,
Collateralized Note, 8.231% Ser 1996-1 Cl A
Principal Only 1-1-2033 (f)(g)............. NR 676,932 656,821
------------- -------------
4,683,338 4,721,981
------------- -------------
WHOLE LOAN RESIDENTIAL-1.12%
1,270,098 Residential Resources, Inc., 9.50% Ser 14 Cl
A 12-1-2018................................ AAA 1,302,247 1,263,416
------------- -------------
TOTAL ASSET BACKED SECURITIES................ $ 12,962,810 $ 12,825,441
------------- -------------
------------- -------------
</TABLE>
3
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
July 31, 1996
CORPORATE BONDS-INVESTMENT GRADE-27.76%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost(b) Value(c)
------------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AUTOMOBILE MANUFACTURERS-1.25%
$ 1,500,000 General Motors Corp., 7.40% Deb 9-11-2025.... A- $ 1,488,273 $ 1,411,191
------------- -------------
BANKS-2.19%
2,500,000 NationsBank Corp., 7.75% Sub Note
8-15-2015.................................. A- 2,500,000 2,482,677
------------- -------------
CHEMICALS-0.87%
1,000,000 Methanex Corp., 7.40% Note 8-15-2002......... BBB+ 995,834 988,570
------------- -------------
ENERGY-2.49%
1,500,000 Apache Corp., 7.70% 3-15-2026................ BBB 1,494,501 1,418,227
1,500,000 Columbia Gas Systems, 7.42% 11-28-2015....... BBB 1,386,933 1,394,067
------------- -------------
2,881,434 2,812,294
------------- -------------
FINANCE COMPANIES-1.46%
1,500,000 Tenneco Credit Corp., 9.625% Note
8-15-2001.................................. BBB- 1,585,320 1,646,842
------------- -------------
FOREIGN-GOVERNMENT-1.44%
1,500,000 Quebec (Province of), 8.80% Bond 4-15-2003... A+ 1,637,670 1,626,373
------------- -------------
FOREIGN-GOVERNMENT AGENCIES-1.86%
2,000,000 Hydro-Quebec, 8.05% 7-7-2024................. A+ 2,197,572 2,108,858
------------- -------------
FOREST PRODUCTS-3.44%
2,150,000 Georgia-Pacific Corp., 9.625% Deb
3-15-2022.................................. BBB- 2,169,818 2,305,460
1,500,000 Noranda, Inc., 8.625% Deb 7-15-2002.......... BBB 1,494,960 1,591,994
------------- -------------
3,664,778 3,897,454
------------- -------------
HOUSING-2.95%
2,000,000 Centex Corp., 7.375% 6-1-2005................ BBB- 1,921,614 1,917,876
1,500,000 Pulte Corp, 7.30% 10-24-2005................. BBB 1,498,795 1,413,972
------------- -------------
3,420,409 3,331,848
------------- -------------
INDUSTRIAL-0.85%
1,000,000 Olsten Corp., 7.00% Sr Note 3-15-2006........ A- 994,990 966,987
------------- -------------
MEDIA-1.37%
1,500,000 News America Holdings, Inc., 8.875% Sr Note
4-26-2023.................................. BBB 1,487,816 1,549,724
------------- -------------
MISCELLANEOUS-4.59%
1,275,000 Minneapolis MN Community Development Agency,
11.25% Ltd Tax Dev Rev Bond Ser 1990-6B
6-1-2007 BBB+ 1,301,875 1,458,281
1,000,000 New York (City of), 10.00% General Obligation
Taxable Bond Fiscal 1991 Ser D 8-1-2005.... BBB+ 946,355 1,129,070
1,000,000 New York (City of), 9.75% General Obligation
Taxable Bond Fiscal 1991 Ser D 8-1-1996.... BBB+ 980,180 1,000,000
1,500,000 Telecommunications, Inc., 9.80% Sr Note
2-1-2012................................... BBB- 1,658,835 1,611,635
------------- -------------
4,887,245 5,198,986
------------- -------------
OIL-REFINING-0.89%
1,000,000 Diamond Shamrock, 7.65% 7-1-2026............. BBB 998,451 1,010,247
------------- -------------
PAPER-1.27%
1,565,000 Champion International, 7.35% 11-1-2025...... BBB 1,556,484 1,432,819
------------- -------------
TELECOMMUNICATIONS-0.84%
1,000,000 360 Communications Corp., 7.50% Sr Note
3-1-2006................................... BBB- 997,753 945,158
------------- -------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $ 31,294,029 $ 31,410,028
------------- -------------
------------- -------------
</TABLE>
4
<PAGE>
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>
AEROSPACE AND EQUIPMENT-0.48%
$ 500,000 K & F Industries, Inc., 11.875% Sr Secured
Note 12-1-2003............................. B+ $ 471,250 $ 537,500
------------- -------------
AIRLINES-0.95%
500,000 Northwest Airlines Trust No. 2, 13.875% Ser D
Sub Aircraft Note 6-21-2008................ BB+ 500,000 583,750
500,000 U.S. Air, Inc., 10.375% Pass Thru Certificate
3-1-2013................................... B+ 466,698 487,500
------------- -------------
966,698 1,071,250
------------- -------------
APPAREL-0.48%
499,659 Hosiery Corp. of America, Inc., 13.75% Sr Sub
Note 8-1-2002.............................. NR 487,474 542,130
------------- -------------
BROADCASTING-1.76%
500,000 Argyle Television, Inc., 9.75% Sr Sub Note
11-1-2005.................................. B- 500,000 480,000
500,000 Paxson Communications Corp., 11.625% Sr Sub
Note 10-1-2002............................. B- 494,629 520,000
500,000 SFX Broadcasting, 10.75% Sr Sub Note
5-15-2006 (f).............................. B- 500,619 502,500
500,000 Sinclair Broadcasting, 10.00% Sr Sub Notes
9-30-2005.................................. B+ 521,210 492,500
------------- -------------
2,016,458 1,995,000
------------- -------------
CABLE TELEVISION-2.06%
500,000 Adelphia Communications Corp., 12.50% Sr Note
5-15-2002.................................. B 480,272 513,750
749,526 Falcon Holding Group, L.P., 11.00% Sr Sub
Note SerB 9-15-2003 (Interest is
Payable-in-Kind)........................... NR 736,618 676,263
500,000 Groupe Videotron, 10.625% Sr Note
2-15-2005.................................. BB+ 526,055 527,500
500,000 Telewest plc, 11.00% Sr Disc Deb 10-1-2007
(Zero coupon until 10-1-2000, thereafter
11.00%) (e)................................ BB 320,511 291,250
500,000 United International Holdings, Inc., 14.00%
Sr Sec Disc Note Ser B 11-15-1999 (e)...... B- 342,675 330,000
------------- -------------
2,406,131 2,338,763
------------- -------------
CHEMICALS-1.10%
250,000 Inspec Chemcial Corp., 11.50% Sr Sub Disc
Note Ser B 12-1-2003 (Zero Coupon until
12-1-1998, thereafter 11.50%) (e).......... BB- 193,009 213,750
500,000 LaRoche Industries, Inc., 13.00% Sr Sub Note
8-15-2004.................................. B 522,482 531,250
500,000 NL Industries, Inc., 11.75% Sr Secured Note
10-15-2003................................. B 515,429 508,750
------------- -------------
1,230,920 1,253,750
------------- -------------
CONSUMER GOODS-0.23%
250,000 Chattem, Inc., 12.75% Sr Sub Note Ser B
6-15-2004.................................. B- 230,312 257,500
------------- -------------
CONTAINERS AND PACKAGING-0.14%
163,000 Silgan Holdings Corp., 13.25% Sr Disc Deb
12-15-2002................................. B- 164,484 163,815
------------- -------------
COSMETICS AND SUNDRIES-0.45%
500,000 Revlon Consumer Products, 10.50% Sr Sub Notes
2-15-2003.................................. B- 509,828 503,750
------------- -------------
ENERGY-0.89%
500,000 Mesa Capital Corp., 12.75% Secured Note
6-30-1998.................................. Caa* 501,420 500,000
500,000 Mesa Operating Co., 10.625% Sr Note
7-1-2006................................... B 500,000 512,500
------------- -------------
1,001,420 1,012,500
------------- -------------
FINANCE COMPANIES-0.58%
625,000 Homeside, Inc., 11.25% Sr Secured Second
Priority Notes 5-15-2003 (f)............... B+ 644,868 653,125
------------- -------------
FOOD-MISCELLANEOUS-0.46%
500,000 Enviordyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000......... NR 495,464 520,000
------------- -------------
FOREST PRODUCTS-0.90%
500,000 Stone Container Corp., 11.50% Sr Notes
11-1-2004.................................. B+ 506,551 507,500
500,000 Stone Container Corp., 11.875% Sr Note
8-1-2016 (f)............................... B+ 500,000 506,875
------------- -------------
1,006,551 1,014,375
------------- -------------
</TABLE>
5
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
July 31, 1996
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost(b) Value(c)
------------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
HOTEL AND MOTEL-0.41%
$ 500,000 HMC Acquisition Properties, Inc., 9.00% Sr
Note 12-15-2007............................ BB- $ 500,000 $ 460,000
------------- -------------
HOUSING-0.43%
500,000 MDC Holdings, Inc., 11.125% Note
12-15-2003................................. B 473,750 482,500
------------- -------------
LEISURE TIME-AMUSEMENTS-2.77%
500,000 Boomtown, Inc., 11.50% First Mtg Note
11-1-2003.................................. B 459,375 487,500
500,000 Capital Gaming International, Inc., 11.50%
Secured Note 2-1-2001 (a).................. Caa* 299,375 230,000
500,000 Kloster Cruise, Inc., 13.00% Sr Secured Note
5-1-2003................................... B 373,226 475,000
500,000 Showboat Marina Casino & Finance Corp.,
13.50% First Mtg Bond 3-15-2003 (f)........ B 500,000 537,500
500,000 Showboat, Inc., 9.25% First Mtg Bond
5-1-2008................................... BB- 508,653 495,000
500,000 Six Flags, 12.25% Sr. Sub. Disc. Notes
6-15-2005 (Zero Coupon until 6-15-98,
thereafter 12.25%) (e)..................... B 429,171 425,000
500,000 Trump Atlantic City Associates, 11.25% First
Mortgage Bond 5-1-2006..................... BB- 500,000 487,500
------------- -------------
3,069,800 3,137,500
------------- -------------
MACHINERY-0.46%
500,000 MVE, Inc., 12.50% Sr Secured Note
2-15-2002.................................. B+ 497,062 520,000
------------- -------------
METALS-MINING AND MISCELLANEOUS-0.90%
500,000 Haynes International, Inc., 13.50% Sr Sub Deb
8-15-1999.................................. Ca* 320,000 505,000
500,000 Renco Metals, Inc., 11.50% Sr Note
7-1-2003................................... B 500,000 508,750
------------- -------------
820,000 1,013,750
------------- -------------
MORTGAGE BACKED SECURITIES-0.61%
915,620 Sandia Mtg Corp., 9.14% 1991-A Variable Rate
Pass Thru Certificate Cl B 8-1-2018 (f).... NR 688,800 686,715
------------- -------------
RESTAURANTS AND FRANCHISING-0.44%
750,000 Flagstar Corp., 11.25% Sr Sub Deb
11-1-2004.................................. CCC+ 761,604 493,125
------------- -------------
RETAIL-DEPARTMENT STORES-0.44%
500,000 Specialty Retailers, Inc., 10.00% Sr Note
8-15-2000.................................. B+ 498,835 495,000
------------- -------------
RETAIL-GROCERY-3.19%
490,000 Cumberland Farms, Inc., 10.50% Sr Note
10-1-2003.................................. NR 468,546 465,500
500,000 Farm Fresh, Inc., 12.25% Sr Note 10-1-2000... B- 428,353 422,500
750,000 Grand Union Co., 12.00% Sr Note 9-1-2004..... B- 727,444 735,000
500,000 Jitney-Jungle Stores, Inc., 12.00% Sr Note
3-1-2006................................... B 500,000 516,250
250,000 Kash N Karry Corp., 11.50% Sr Note
2-1-2003................................... B- 251,518 250,000
500,000 Pay 'N' Pak Stores, Inc., 13.50% Sr Sub Deb
6-1-1998 (a)............................... NR 498,688 2,500
750,000 Ralphs Grocery Co., 11.00% Sr Sub Note
6-15-2005.................................. B- 739,388 710,625
500,000 Smith's Food & Drug Centers, Inc., 11.25% Sr
Sub Note 5-15-2007......................... B- 500,000 511,875
------------- -------------
4,113,937 3,614,250
------------- -------------
RETAIL-MISCELLANEOUS-0.80%
1,000,000 Color Tile, Inc., 10.75% Sr Note 12-15-2001
(a)........................................ D 700,000 67,500
500,000 Petro PSC Properties, L.P., 12.50% Sr Note
6-1-2002................................... B 481,715 485,000
325,000 Thrifty Payless, Inc., 12.25% Sr Sub Note
4-15-2004.................................. B- 336,610 357,500
------------- -------------
1,518,325 910,000
------------- -------------
TECHNOLOGY-0.45%
500,000 Computervision Corp., 11.375% Sr Sub Note
8-15-1999.................................. B- 450,000 513,750
------------- -------------
TELECOMMUNICATIONS-2.67%
500,000 A+ Network, Inc., 11.875% Sr Sub Note
11-1-2005.................................. CCC+ 496,527 492,500
500,000 Fonorola, Inc., 12.50% Sr Secured Note
8-15-2002.................................. B+ 500,000 542,500
500,000 IXC Communications, Inc., 12.50% Sr Note
10-1-2005 (f).............................. B-3* 514,978 510,000
500,000 NextLink Communications, L.L.C., 12.50% Sr
Note 4-15-2006 (f)......................... NR 500,000 486,875
500,000 Paging Network, Inc., 10.125% Sr Sub Note
8-1-2007................................... B 505,385 497,500
500,000 Western Wireless Corp., 10.50% Sr Sub Note
6-1-2006................................... B- 505,572 492,500
------------- -------------
3,022,462 3,021,875
------------- -------------
</TABLE>
6
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost(b) Value(c)
------------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
TOBACCO-0.44%
$ 625,000 Liggett Group, Inc., 11.50% Secured Note Ser
B 2-1-1999................................. NR $ 461,250 $ 500,000
------------- -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $ 28,507,683 $ 27,711,923
------------- -------------
------------- -------------
</TABLE>
U.S. GOVERNMENT SECURITIES-36.57%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost(b) Value(c)
------------- --------------- -------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION-7.07%
MORTGAGE BACKED SECURITIES:
$ 1,236,416 8.00% 2001................................... $ 1,267,327 $ 1,256,894
503,394 9.00% 2022................................... 535,328 524,786
2,024,573 9.50% 2016................................... 2,145,361 2,155,536
796,351 10.50% 2017.................................. 847,752 868,271
378,801 11.25% 2010.................................. 409,697 420,646
306,560 11.50% 2014-2015............................. 337,329 342,580
417,006 11.75% 2010.................................. 442,026 467,829
--------------- -------------
5,984,820 6,036,542
--------------- -------------
REMIC-IO & IO-ETTE:
26,491 8.00% Trust #1404-E Interest Only Strip I/O
ette 2006 (g).............................. 308,065 434,714
--------------- -------------
REMIC-PAC'S:
634,621 9.00% Trust #136-D 2020...................... 637,794 651,507
857,807 9.50% Trust #1001-F 2003..................... 874,427 874,525
--------------- -------------
1,512,221 1,526,032
--------------- -------------
TOTAL FEDERAL HOME LOAN MORTGAGE
CORPORATION................................ $ 7,805,106 $ 7,997,288
--------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-12.12%
MORTGAGE BACKED SECURITIES:
2,681,578 7.50% 2024................................... 2,675,712 2,638,003
3,777,658 8.00% 2024-2025.............................. 3,825,643 3,797,725
1,891,515 10.50% 2014-2020............................. 1,976,507 2,070,616
1,078,888 11.00% 2011-2018............................. 1,111,616 1,195,205
43,609 11.25% 2011.................................. 45,271 48,617
120,002 12.00% 2014.................................. 127,765 135,602
199,979 12.50% 2015.................................. 225,851 227,351
--------------- -------------
9,988,365 10,113,119
--------------- -------------
NOTES:
1,600,000 8.50% 2005................................... 1,664,500 1,665,693
--------------- -------------
REMIC-PAC'S:
1,980,000 7.00% Trust #1992-49H 2020................... 1,947,516 1,936,438
--------------- -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ $ 13,600,381 $ 13,715,250
--------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-9.74%
MORTGAGE BACKED SECURITIES:
4,456,092 7.50% 2022................................... 4,464,447 4,376,716
1,683,067 9.00% 2021................................... 1,715,367 1,760,373
1,650,945 9.125% Fleet Mtg Securities, Series 1989-3 C1
D 2018 (GNMA Backed)....................... 1,688,081 1,682,543
3,016,443 9.50% 2019-2020.............................. 3,152,936 3,203,635
--------------- -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ $ 11,020,831 $ 11,023,267
--------------- -------------
</TABLE>
7
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
July 31, 1996
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost(b) Value(c)
------------- --------------- -------------
<C> <S> <C> <C>
U.S. TREASURY SECURITIES-7.64%
BONDS:
$ 4,250,000 6.25% 2003................................... $ 4,170,159 $ 4,158,353
2,830,000 8.125% 2021.................................. 3,341,609 3,169,600
--------------- -------------
7,511,768 7,327,953
--------------- -------------
NOTES:
1,290,000 7.125% 1999.................................. 1,314,893 1,314,187
--------------- -------------
TOTAL U.S. TREASURY SECURITIES............... 8,826,661 8,642,140
--------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............. 41,252,979 41,377,945
--------------- -------------
TOTAL LONG TERM INVESTMENTS.................. $ 114,162,707 $ 113,370,901
--------------- -------------
--------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-1.18%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value(c)
------------- -------------
<C> <S> <C>
BANKS-1.18%
$ 1,340,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.21%............. $ 1,340,000
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$115,502,707) (b).......................... $ 114,710,901
-------------
-------------
</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 July 31, 1996, the cost of securities for federal income tax
purposes was $115,527,321 and the aggregate gross unrealized
appreciation and depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 2,387,771
Unrealized depreciation........................... (3,204,191)
---------------------------------------------------------------
Net unrealized depreciation....................... $ (816,420)
---------------------------------------------------------------
</TABLE>
(c) See Note1 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 4.97% of net assets as of June 30, 1996.
(e) The interest rate disclosed for these securities represents the
effective yields on the date of acquisition.
(f) Securities sold within terms of a private placement memorandum, and
securities exempt from registration under Section 144A of the
Securities Act of 1933, as amended, and are noted below, 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>
March 8, 1993 811,406 Sandia Mortgage Corp. due 2018 -- restricted $ 608,555
October 26, 1993 104,214 Sandia Mortgage Corp. due 2018 -- restricted 80,245
April 29, 1993 5,800 Drypers Corp. (Warrants) -- 144A 17,400
October 7, 1994 500 Hosiery Corp. of America, Class A -- 144A 8,460
March 21, 1996 500,000 Showboat Marina Casino & Finance Corp due 2003 -- 144A 500,000
March 29, 1996 941,468 Fund America Structured Transactions, L.P. due 2033 -- 144A 676,932
April 18, 1996 500,000 Nextlink Communications, L.L.C. due 2006 -- 144A 500,000
May 8, 1996 125,000 Homeside, Inc., due 2003 -- 144A 125,000
May 23, 1996 250,000 SFX Broadcasting due 2006 -- 144A 250,000
May 29, 1996 250,000 SFX Broadcasting due 2006 -- 144A 250,619
July 2, 1996 500,000 Homeside, Inc., due 2003 -- 144A 519,868
July 17, 1996 500,000 Stone Container Corp., due 2016 -- 144A 500,000
July 18, 1996 500,000 IXC Communications, Inc., due 2005 -- 144A 514,978
</TABLE>
(g) The interest rates disclosed for interest only and principal only
strips represent effective yields at July 31, 1996, based upon the
estimated timing and, in the case of interest only strips, amount of
future cash flows. These investments have been identified by portfolio
management as illiquid securities.
(h) Note: The aggregate value of securities identified by portfolio
management as illiquid securities in footnote (f) and (g) above is
$4,977,683 which represents 4.40% of net assets at July 31, 1996.
* Moody's Rating
8
<PAGE>
FORTIS SECURITIES, INC.
Statement of Assets and Liabilities
July 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, as detailed in the accompanying schedules, at market (cost
$115,502,707) (Note 1).......................................................................... $ 114,710,901
Cash on deposit with custodian.................................................................... 46,185
Receivables:
Investment securities sold...................................................................... 1,023,481
Interest and dividends.......................................................................... 2,349,786
Prepaid expenses.................................................................................. 6,041
---------------
TOTAL ASSETS........................................................................................ 118,136,394
---------------
LIABILITIES
Cash portion of dividends payable ($.061 per share)............................................... 769,520
Payable for investment securities purchased....................................................... 4,007,315
Payable for investment advisory and management fees (Note 2)...................................... 76,869
Accounts payable and accrued expenses............................................................. 131,695
---------------
TOTAL LIABILITIES................................................................................... 4,985,399
---------------
NET ASSETS
Net proceeds of capital stock, par value $.01 per share- authorized 15,000,000 shares; outstanding
12,615,078 shares............................................................................... 134,872,461
Unrealized depreciation of investments............................................................ (791,806)
Excess of distributions over net investment income................................................ (18,866)
Accumulated net realized loss from sale of investments............................................ (20,910,794)
---------------
TOTAL NET ASSETS.................................................................................... $ 113,150,995
---------------
NET ASSET VALUE PER SHARE........................................................................... $8.97
---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FORTIS SECURITIES, INC.
Statement of Operations
For the Year Ended July 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
NET INVESTMENT INCOME:
Income
Interest income................................................................................. $ 10,701,746
Expenses:
Investment advisory and management fees (Note 2)................................................ 741,471
Legal and auditing fees (Note 2)................................................................ 45,643
Custodian fees.................................................................................. 17,302
Shareholders' notices and reports............................................................... 53,665
Directors' fees and expenses.................................................................... 20,727
Exchange listing fees........................................................................... 28,311
Other........................................................................................... 21,444
----------------
Total expenses.................................................................................... 928,563
----------------
NET INVESTMENT INCOME............................................................................... 9,773,183
----------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 1):
Net realized loss from security transactions...................................................... (2,281,389)
Net change in unrealized depreciation of investments in securities................................ (130,897)
----------------
NET LOSS ON INVESTMENTS............................................................................. (2,412,286)
----------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................................................ $ 7,360,897
----------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
FORTIS SECURITIES, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
JULY 31, 1996 JULY 31, 1995
--------------- ---------------
<S> <C> <C>
OPERATIONS
Net investment income......................................................... $ 9,773,183 $ 10,566,247
Net realized loss from security transactions.................................. (2,281,389) (5,233,766)
Net change in unrealized appreciation (depreciation) of investments........... (130,897) 3,821,651
--------------- ---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............................ 7,360,897 9,154,132
--------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income.................................................... (9,750,940) (10,890,625)
Excess distributions of net realized gains (Note 1)........................... (194,644) (116,961)
--------------- ---------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............................................. (9,945,584) (11,007,586)
--------------- ---------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from 11,289 and 237,790 shares issued as a result of reinvested
dividends................................................................... 93,545 2,145,549
--------------- ---------------
TOTAL INCREASE (DECREASE) IN NET ASSETS......................................... (2,491,142) 292,095
NET ASSETS:
Beginning of year............................................................. 115,642,137 115,350,042
--------------- ---------------
End of year (includes excess of distributions over net investment income of
$18,866 and $41,109 respectively)........................................... $ 113,150,995 $ 115,642,137
--------------- ---------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
11
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. 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: 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.
When market quotations are not readily available, or when restricted or
illiquid securities or other assets are being valued, such securities or
other assets are valued at fair value as determined in good faith by
management under supervision of the Board of Directors. However, debt
securities may be valued on the basis of valuations furnished by a pricing
service which utilizes electronic data processing techniques to determine
valuations for normal institutional-size trading units of debt securities
when such valuations are believed to more accurately reflect the fair market
value of such securities. Short-term investments in debt securities 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.
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 the year ended July 31, 1996, the cost of
purchases and proceeds from sales of securities (other than short-term
securities) aggregated $79,331,263 and $75,959,869, 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 bond premium and market discount
recognition 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. The effect on dividend distributions of certain current
year permanent book-to-tax difference is reflected as "excess distributions
of net realized gains" in the statement of changes in net assets and the
financial highlights.
On the statement of Assets and Liabilities; due to permanent book-to-tax
differences, accumulated net realized loss has been decreased $1,078,684;
resulting in a reclassification to reduce paid-in-capital by the same amount.
For federal income tax purposes, the fund had a capital loss carryover of
$20,886,180 at July 31, 1996, which, if not offset by subsequent capital
gains will expire as follows:
<TABLE>
<S> <C>
1997.......................................... 2,087,647
1998.......................................... 1,344,644
1999.......................................... 5,325,293
2001.......................................... 315,226
2002.......................................... 258,409
2003.......................................... 4,462,090
2004.......................................... 7,000,194
2005.......................................... 92,677
</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, 1996, 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, 1996 was
$4,977,683 which represents 4.40% 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.
INCOME AND CAPITAL GAINS DISTRIBUTION: Income distributions are declared and
paid monthly. The fund will make annual distributions of any realized capital
gains as required by law.
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.
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. 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.
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., 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 investment income.
Legal fees and expenses aggregating $22,343 for the year ended July 31, 1996,
were paid to a law firm of which the secretary of the fund is a partner.
12
<PAGE>
- --------------------------------------------------------------------------------
3. FINANCIAL HIGHLIGHTS: Selected per share historical data was as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
-----------------------------------------------------------------
1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 9.18 $ 9.33 $ 10.24 $ 10.13 $ 9.91
----------- --------- ----------- --------- ---------
Operations:
Investment income - net............... .78 .84 .93 1.02 1.02
Net realized and unrealized gain
(loss) on investments............... (.20) (.11) (.89) .12 .25
----------- --------- ----------- --------- ---------
Total from operations................... .58 .73 .04 1.14 1.27
----------- --------- ----------- --------- ---------
Distributions to shareholders:
From investment income - net.......... (.78) (.87) (.95) (1.03) (1.03)
Excess distributions of net realized
gains............................... (.01) (.01) -- -- (.02)
----------- --------- ----------- --------- ---------
Total distributions to shareholders..... (.79) (.88) (.95) (1.03) (1.05)
----------- --------- ----------- --------- ---------
Net asset value, end of year............ $ 8.97 $ 9.18 $ 9.33 $ 10.24 $ 10.13
----------- --------- ----------- --------- ---------
Per-share market value, end of year..... $ 7.875 $ 8.75 $ 9.625 $ 11.50 $ 11.50
Total Investment return, market
value*................................ (1.36%) .25% (8.16%) 9.91% 16.51%
Total investment return, net asset
value**............................... 6.93% 8.46% .01% 11.06% 12.61%
Net assets at end of period (000s
omitted).............................. $ 113,151 $ 115,642 $ 115,350 $ 123,541 $ 119,080
Ratio of expenses to average monthly net
assets................................ .80% .78% .76% .80% .82%
Ratio of net investment income to
average monthly net assets............ 8.47% 9.33% 9.30% 10.12% 10.10%
Portfolio turnover rate (excluding
short-term securities)................ 67% 75% 125% 86% 49%
</TABLE>
* 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.
13
<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, 1996 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, 1996 and the financial highlights for each of the years in the
five-year period ended July 31, 1996. 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, 1996 and the results of its operations for
the year then ended, changes in its net assets for each of the years in the
two-year period ended July 31, 1996 and the financial highlights for each of the
years in the five-year period ended July 31, 1996, in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
September 6, 1996
14
<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 MINNESOTA
SECURITIES PORTFOLIO
TAX-FREE NATIONAL
PORTFOLIO
TAX-FREE NEW YORK
PORTFOLIO
HIGH YIELD PORTFOLIO
Fortis Stock Funds ASSET ALLOCATION
PORTFOLIO
VALUE FUND
GROWTH & INCOME FUND
CAPITAL FUND
FIDUCIARY FUND
GLOBAL GROWTH PORTFOLIO
GROWTH FUND
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
ASSET ALLOCATION
SUBACCOUNT
GLOBAL ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
GROWTH STOCK SUBACCOUNT
INTERNATIONAL 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
ASSET ALLOCATION
SUBACCOUNT
GLOBAL ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
GROWTH STOCK SUBACCOUNT
INTERNATIONAL 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.
15
<PAGE>
DIRECTORS AND OFFICERS
DIRECTORS Richard W. Cutting CPA AND FINANCIAL CONSULTANT
Allen R. Freedman CHAIRMAN, CHIEF EXECUTIVE OFFICER AND
PRESIDENT, FORTIS, INC. MANAGING
DIRECTOR OF
FORTIS INTERNATIONAL, N.V.
Dr. Robert M. Gavin PRESIDENT, HAVERFORD COLLEGE. 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,
SENIOR VICE PRESIDENT AND DIRECTOR,
TIME INSURANCE COMPANY
Edward M. Mahoney PRIOR TO JANUARY, 1995, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER, FORTIS
ADVISERS, INC. AND FORTIS INVESTORS,
INC.
Robb L. Prince FINANCIAL AND EMPLOYEE BENEFIT
CONSULTANT. PRIOR TO JULY, 1995, VICE
PRESIDENT AND TREASURER, JOSTENS,
INC.
Leonard J. Santow PRINCIPAL, GRIGGS & SANTOW, INC.
Joseph M. Wikler INVESTMENT CONSULTANT AND PRIVATE
INVESTOR, PRIOR TO JANUARY, 1994,
DIRECTOR OF RESEARCH, CHIEF
INVESTMENT OFFICER, PRINCIPAL, AND
DIRECTOR, THE ROTHSCHILD CO.
OFFICERS
Dean C. Kopperud
PRESIDENT AND DIRECTOR
Robert W. Beltz, Jr.
VICE PRESIDENT
James S. Byrd
VICE PRESIDENT
Charles J. Dudley
VICE PRESIDENT
Thomas D. Gualdoni
VICE PRESIDENT
Maroun M. Hayek
VICE PRESIDENT
Howard G. Hudson
VICE PRESIDENT
Robert C. Lindberg
VICE PRESIDENT
Charles L. Mehlhouse
VICE PRESIDENT
Kevin J. Michels
VICE PRESIDENT
Jon H. Nicholson
VICE PRESIDENT
Fred Obser
VICE PRESIDENT
Dennis M. Ott
VICE PRESIDENT
David A. Peterson
VICE PRESIDENT
Nicholas L. M. de Peyster
VICE PRESIDENT
Stephen M. Poling
VICE PRESIDENT
Stephen M. Rickert
VICE PRESIDENT
Richard P. Roche
VICE PRESIDENT
Keith R. Thomson
VICE PRESIDENT
Christopher J. Woods
VICE PRESIDENT
Gary N. Yalen
VICE PRESIDENT
Michael J. Radmer
SECRETARY
Tamara L. Fagely
TREASURER
INVESTMENT ADVISOR AND Fortis Advisers, Inc.
DIVIDEND DISBURSING AGENT BOX 64284, ST. PAUL, MINNESOTA 55164
REGISTRAR Norwest Bank
MINNESOTA, N.A.
MINNEAPOLIS, MINNESOTA
CUSTODIAN First Bank National Association
MINNEAPOLIS, MINNESOTA
GENERAL COUNSEL Dorsey & Whitney P.L.L.P.
MINNEAPOLIS, MINNESOTA
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
MINNEAPOLIS, MINNESOTA
MARKET PRICE Fortis Securities, Inc. is listed on the 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.
16
<PAGE>
(This page has been left blank intentionally.)
17
<PAGE>
Fortis Financial Group
Fortis Financial Group (FFG) is a premier provider of insurance and
investment portfolios whose fund manager, Fortis Advisers, Inc. has established
a nationwide reputation for money management. Through Fortis Investors, Inc.,
FFG offers mutual funds, annuities and life insurance. Life insurance products
are issued and underwritten by Fortis Benefits Insurance Company and Time
Insurance Company.
Fortis, Inc. is part of Fortis, a wordwide group of
[GRAPHIC]
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.
Like the Fortis name, which comes from the Latin for steadfast, our focus
is on the long-term in all we do: the relationships we build, the performance we
seek, the service we provide and the products we offer.
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FORTIS Bulk Rate
Fortis Financial Group US Postage
P.O. Box 64284 PAID
St. Paul, MN 55164 Permit No. 3794
Minneapolis, MN
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Fortis
Securities, Inc.
PRINTED ON RECYCLED PAPER WITH
40% PRECONSUMER WASTE AND
[LOGO] 10% POST CONSUMER WASTE.
PLEASE RECYCLE.
95387 (Ed. 9/96)
