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[LOGO]
[GRAPHIC]
FORTIS
SECURITIES, INC.
Semi-Annual Report
January 31, 1996
<PAGE>
FORTIS SECURITIES, INC. SEMI-ANNUAL REPORT
CONTENTS
LETTER TO SHAREHOLDERS 1
SCHEDULES OF INVESTMENTS 2
STATEMENTS OF ASSETS AND LIABILITIES 8
STATEMENTS OF OPERATIONS 9
STATEMENTS OF CHANGES IN NET ASSETS 10
NOTES TO FINANCIAL STATEMENTS 11
BOARD OF DIRECTORS AND OFFICERS 13
HIGHLIGHTS
<TABLE>
<CAPTION>
FORTIS
SECURITIES
INC.
------------
<S> <C>
January 31, 1996:
TOTAL NET ASSETS.................................. $117,485,151
MARKET PRICE PER SHARE............................ $ 8.750
SHARES OUTSTANDING................................ $ 12,614,077
For the six-month period ended January 31, 1995:
NET ASSET VALUE PER SHARE:
Beginning of period............................. $ 9.18
End of period................................... $ 9.31
DISTRIBUTION FROM NET INVESTMENT INCOME:
TOTAL DIVIDENDS PAID............................ $ 5,109,202
DIVIDENDS PER SHARE............................. $ .41
</TABLE>
FORTIS FINANCIAL GROUP'S OTHER PRODUCTS AND SERVICES
MUTUAL FUNDS/PORTFOLIOS
CONVENIENT ACCESS TO A BROAD RANGE OF SECURITIES
Fortis Bond Funds
FORTIS MONEY FUND
FORTIS U.S. GOVERNMENT SECURITIES FUND
FORTIS TAX-FREE MINNESOTA PORTFOLIO
FORTIS TAX-FREE NATIONAL PORTFOLIO
FORTIS TAX-FREE NEW YORK PORTFOLIO
FORTIS HIGH YIELD PORTFOLIO
Fortis Stock Funds
FORTIS ASSET ALLOCATION PORTFOLIO
FORTIS VALUE FUND
FORTIS GROWTH AND INCOME FUND
FORTIS CAPITAL FUND
FORTIS FIDUCIARY FUND
FORTIS GROWTH FUND
FORTIS CAPITAL APPRECIATION PORTFOLIO
FORTIS GLOBAL GROWTH PORTFOLIO
FIXED AND VARIABLE ANNUITIES
TAX-DEFERRED INVESTING
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 SPECIFIED PERIOD
VARIABLE UNIVERSAL LIFE
INSURANCE PROTECTION AND TAX-DEFERRED INVESTMENT OPPORTUNITY
Wall Street Series VUL 100, 220 & 500
Harmony
FIXED ACCOUNT
MONEY MARKET
U.S. GOVERNMENT SECURITIES
DIVERSIFIED INCOME
GLOBAL BOND
HIGH YIELD
ASSET ALLOCATION
GLOBAL ASSET ALLOCATION
GROWTH & INCOME
GROWTH STOCK
GLOBAL GROWTH
INTERNATIONAL STOCK
AGGRESSIVE GROWTH
Adaptable Life
Universal Life
[FORTIS LOGO
THE FORTIS FINANCIAL GROUP manages and
distributes mutual funds, annuities and life insurance products. The mutual
funds, variable life and variable annuity products are distributed through
FORTIS INVESTORS, INC. and managed by FORTIS ADVISERS, INC. The insurance
products are issued by FORTIS BENEFITS INSURANCE COMPANY and TIME INSURANCE
COMPANY.
<PAGE>
FORTIS SECURITIES, INC.
DEAR SHAREHOLDER,
We are pleased to present the Fortis Securities, Inc., semi-annual report for
the period ended January 31, 1996.
ECONOMIC REVIEW AND
INVESTMENT STRATEGIES
Over the past six months, fixed income markets performed well. During this
period, longer-term rates declined about 1 percent. The rally in bond prices has
been caused by signs of an economic slowdown, combined with subdued inflation.
The Federal Reserve confirmed the bond market's recognition of a slowdown by
lowering short-term rates in July, December and, most recently, the first of
February.
The consumer is showing some signs of spending fatigue, as indicated by reports
from major retailers of poor holiday results, after generally small gains all
year. In addition, job growth has been limited, jobless claims have drifted
higher, help wanted advertising has declined and, in general, people feel the
job market is tight.
These developments point to the likelihood that economic expansion will
continue, but will probably lose rather
than gain momentum as we move into the first half of 1996. In this environment,
with inflation stable or decreasing, it is likely that monetary policy will be
more accommodating: perhaps lowering the federal funds' rate again later in the
first or second quarter of 1996. Meanwhile, near term economic activity will be
only nominally impacted by the outcome of the current budget compromise effort.
In our view, this economic background has been and continues to be extremely
favorable for fixed income markets. As long as productivity continues to rise
and labor cost increases remain minor, inflation should stay below 3 percent.
PORTFOLIO REVIEW
The primary objective of this fund is to maximize current income while
maintaining a competitive total return through a combination of coupon income
and price appreciation. With this objective in mind, and our anticipation of
lower rates, we have reduced our exposure to prepayment risk during this period
and used the proceeds to lock in more secure returns.
This process resulted in a decrease of 9.3 percent in government and mortgage-
backed securities and an increase of nearly 10 percent in investment grade
corporates. The portfolio has benefited from this strategy since investment
grade corporate securities outperformed other sectors in 1995.
Throughout this period, we maintained our exposure to high yield at close to the
maximum allowable of 25 percent of assets. However, we have upgraded quality,
improved liquidity and maintained a high degree of diversification. At the end
of this reporting period, we had 60 separate high yield holdings vs. 56 holdings
at the end of July 1995.
During this period, we have maintained a portfolio duration of approximately
five years.
Thank you for your investment in the Fortis Securities.
Sincerely,
[SIG]
Dean C. Kopperud
President
[SIG]
Howard G. Hudson
Vice President
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 1/31/96
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CORPORATE BONDS - NON-INVESTMENT
GRADE 24.3%
<S> <C>
Common Stock 0.1%
Corporate Bonds - Investment Grade 24.9%
FNMAs 13.1%
GNMAs 11.1%
Asset Backed Securities 12.2%
FHLMCs 8.5%
U.S. Treasury Securities 4.7%
Receivables/Cash Equivalents 1.1%
</TABLE>
TOP TEN HOLDINGS AS OF 1/31/96
<TABLE>
<CAPTION>
Percent of
Bonds net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. GNMA (7.50%) 2022 4.2%
2. U.S. Treasury Note
(9.375%) 1996 2.8%
3. Green Tree Financial Corp.
(7.65%) 2019 2.8%
4. DLJ Mortgage Acceptance Corp.
(8.50%) 2001 2.7%
5. Oakwood Mtg Investors, Inc.
(7.10%) 2020 2.7%
6. FNMA (7.50%) 2024 2.4%
7. NationsBank Corp.
(7.75%) 2015 2.3%
8. GNMA (9.50%) 2019 2.3%
9. FHLMC (9.50%) 2016 2.1%
10. FNMA (8.00%) 2024 2.1%
</TABLE>
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
(Unaudited)
January 31, 1996
COMMON STOCKS-0.04%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Value
Shares Cost (b) (c)
- ------ --------- --------
<C> <S> <C> <C>
APPAREL-0.00%
500 Hosiery Corp. of America, Class A (a)(g).................... $ 8,460 $5,000
--------- --------
CONSUMER GOODS-0.00%
5,800 Drypers Corp. (Warrants) (a)................................ 17,400 58
--------- --------
CONTAINERS AND PACKAGING-0.00%
500 RXI Holdings, Inc. (Warrants) (a)(g)........................ 9,675 2,500
--------- --------
LEISURE TIME-AMUSEMENTS-0.00%
3,000 Casino Magic Finance Corp. (Warrants) (a)................... 4,500 150
6,000 Hemmeter Enterprises, Inc. (Warrants) (a)................... 24,000 60
--------- --------
28,500 210
--------- --------
MACHINERY-0.01%
500 MVE, Inc. (Warrants) (a).................................... 3,438 10,000
2,250 Terex Corp. (Rights) (a).................................... 5,625 225
3,000 Terex Corp. (SAR's) (a)..................................... 9,408 300
--------- --------
18,471 10,525
--------- --------
RETAIL-GROCERY-0.02%
3,674 Grand Union Co. (a)......................................... 198,716 26,636
--------- --------
RETAIL-MISCELLANEOUS-0.01%
500 Petro PSC Properties, L.P. (Warrants) (a)................... 18,285 16,000
--------- --------
TOTAL COMMON STOCKS......................................... $299,507 $60,929
--------- --------
--------- --------
</TABLE>
ASSET BACKED SECURITIES-12.18%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
- ---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
COMMERCIAL LOANS-0.86%
$1,000,000 Resolution Trust Corp., 7.45% Mtg Pass Thru Certificate Ser
1995-2 Cl A1C 5-25-2029................................... AAA $ 994,786 $ 1,017,810
------------ ------------
MANUFACTURED HOMES-6.40%
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 3,276,843
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 1,102,729
2,993,000 Oakwood Mortgage Investors, Inc., 7.10% Ser 1995-A Cl A3
9-15-2020................................................. AAA 2,990,194 3,136,598
------------ ------------
6,977,225 7,516,170
------------ ------------
MULTI-FAMILY LOANS-3.64%
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 3,211,311
1,000,000 DLJ Mtg Acceptance Corp., 8.80% Multifamily Mtg Pass Thru
Certificate Ser 1993-12 Class B1 9-18-2003................ BBB** 982,500 1,060,006
------------ ------------
4,006,406 4,271,317
------------ ------------
WHOLE LOAN RESIDENTIAL-1.28%
1,478,528 Residential Resources, Inc., 9.50% Ser 14 Cl A 12-1-2018.... AAA 1,515,954 1,499,862
------------ ------------
TOTAL ASSET BACKED SECURITIES............................... $13,494,371 $14,305,159
------------ ------------
------------ ------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-24.91%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
- ---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
AUTOMOBILE MANUFACTURERS-1.34%
$1,500,000 General Motors Corp., 7.40% Deb 9-11-2025................... A- $ 1,488,072 $ 1,576,327
------------ ------------
</TABLE>
2
<PAGE>
CORPORATE BONDS-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
- ---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
BANKS-3.61%
$1,500,000 Corp Andina De Formento, 7.10% Yankee Bond 2-1-2003 (d)..... Ba2* $ 1,499,010 $ 1,508,980
2,500,000 NationsBank Corp., 7.75% Sub Note 8-15-2015................. A- 2,500,000 2,737,327
------------ ------------
3,999,010 4,246,307
------------ ------------
CHEMICALS-0.89%
1,000,000 Methanex Corp., 7.40% Note 8-15-2002........................ BBB+ 995,490 1,047,219
------------ ------------
FINANCE COMPANIES-1.49%
1,500,000 Tenneco Credit Corp., 9.625% Note 8-15-2001................. BBB- 1,585,320 1,749,086
------------ ------------
FOREIGN-GOVERNMENT-1.47%
1,500,000 Quebec (Province of), 8.80% 4-15-2003 (d)................... A+ 1,637,670 1,727,114
------------ ------------
FOREIGN-GOVERNMENT AGENCIES-1.94%
2,000,000 Hydro-Quebec, 8.05% 7-7-2024 (d)............................ A+ 2,198,671 2,283,838
------------ ------------
FOREST PRODUCTS-3.49%
2,150,000 Georgia-Pacific Corp., 9.625% Deb 3-15-2022................. BBB- 2,169,818 2,408,735
1,500,000 Noranda, Inc., 8.625% Deb 7-15-2002......................... BBB 1,494,960 1,693,884
------------ ------------
3,664,778 4,102,619
------------ ------------
HOTEL AND MOTEL-0.89%
1,000,000 Renaissance Hotel Group Finance Corp., 8.875% 10-1-2005..... BBB 999,044 1,047,500
------------ ------------
HOUSING-1.31%
1,500,000 Pulte Corp, 7.30% 10-24-2005................................ BBB 1,498,750 1,533,350
------------ ------------
MEDIA-1.48%
1,500,000 News America Holdings, Inc., 8.875% Sr Note 4-26-2023 (d)... BBB 1,487,589 1,744,626
------------ ------------
MISCELLANEOUS-4.75%
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 1,596,948
1,000,000 New York (City of), 10.00% General Obligation Taxable Bond
Fiscal 1991 Ser D 8-1-2005................................ BBB+ 944,626 1,153,706
1,000,000 New York (City of), 9.75% General Obligation Taxable Bond
Fiscal 1991 Ser D 8-1-1996................................ BBB+ 980,180 1,018,697
1,500,000 Telecommunications, Inc., 9.80% Sr Note 2-1-2012............ BBB- 1,658,835 1,798,664
------------ ------------
4,940,516 5,568,015
------------ ------------
OIL-CRUDE PETROLEUM AND GAS-0.90%
1,000,000 Occidental Petroleum Corp., 11.75% Sr Sub Deb 3-15-2011..... BBB 1,013,663 1,055,281
------------ ------------
PAPER-1.35%
1,565,000 Champion Intl., 7.35% 11-1-2025............................. BBB 1,556,443 1,585,278
------------ ------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE.................... $27,065,016 $29,266,560
------------ ------------
------------ ------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-24.31%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
- ---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
AEROSPACE AND EQUIPMENT-0.46%
$ 500,000 K & F Industries, Inc., 11.875% Sr Secured Note 12-1-2003... B+ $ 471,250 $ 542,500
------------ ------------
AIRLINES-0.95%
500,000 Northwest Airlines Trust No. 2, 13.875% Ser D Sub Aircraft
Note 6-21-2008............................................ BB+ 500,000 616,066
500,000 U.S. Air, Inc., 10.375% Pass Thru Certificate 3-1-2013...... B+ 466,357 494,223
------------ ------------
966,357 1,110,289
------------ ------------
APPAREL-0.46%
500,000 Hosiery Corp. of America, Inc., 13.75% Sr Sub Note
8-1-2002.................................................. B- 487,178 540,000
------------ ------------
BROADCASTING-1.31%
500,000 Act III Broadcasting, Inc., 10.25% Sr Sub Note 12-15-2005... B- 500,000 512,500
500,000 Argyle Television, Inc., 9.75% Sr Sub Note 11-1-2005........ B- 500,000 502,500
</TABLE>
3
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
(Unaudited)
January 31, 1996
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
- ---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
$ 500,000 Paxson Communications Corp., 11.625% Sr Sub Note 10-1-2002
(g)....................................................... B- $ 494,156 $ 523,750
------------ ------------
1,494,156 1,538,750
------------ ------------
CABLE TELEVISION-1.51%
500,000 Adelphia Communications Corp., 12.50% Sr Note 5-15-2002..... B 479,173 503,125
710,452 Falcon Holding Group, L.P., 11.00% Sr Sub Note SerB
9-15-2003 (Interest is Payable-in kind)................... NR* 700,492 658,044
1,000,000 Telewest plc, 11.00% Sr Disc Deb 10-1-2007 (Zero coupon
until 10-1-2000) (d)(e)................................... BB 607,709 612,500
------------ ------------
1,787,374 1,773,669
------------ ------------
CHEMICALS-0.99%
750,000 Indspec Chemical Corp., 11.50% Sr Sub Disc Note Ser B
12-1-2003 (Zero coupon until 12-1-1998) (e)............... B- 547,762 631,875
500,000 LaRoche Industries, Inc., 13.00% Sr Sub Note 8-15-2004...... B 523,875 532,500
------------ ------------
1,071,637 1,164,375
------------ ------------
CONSUMER GOODS-0.41%
500,000 Chattem, Inc., 12.75% Sr Sub Note Ser B 6-15-2004........... B- 460,625 481,875
------------ ------------
CONTAINERS AND PACKAGING-0.37%
500,000 RXI Holdings, Inc., 14.00% Sr Secured Note 7-15-2002 (g).... B- 491,114 430,000
------------ ------------
COSMETICS AND SUNDRIES-0.44%
500,000 Revlon Consumer Products, 10.50% Sr Sub Notes 2-15-2003..... B- 515,812 516,875
------------ ------------
FOOD-MISCELLANEOUS-0.79%
500,000 Enviordyne Industries, Inc., 12.00% First Priority Sr
Secured Note 6-15-2000.................................... NR* 495,019 490,000
500,000 Specialty Foods Corp., 11.25% Sr Sub Note 8-15-2003......... B- 467,375 432,500
------------ ------------
962,394 922,500
------------ ------------
FOREST PRODUCTS-0.89%
500,000 Rainy River Forest Products, 10.75% 10-15-2001.............. BB+ 554,549 550,000
500,000 Stone Container, 11.50% Sr Notes 11-1-2004.................. B+ 506,791 496,875
------------ ------------
1,061,340 1,046,875
------------ ------------
HOTEL AND MOTEL-0.43%
500,000 Host Marriott Properties, Inc., 9.00% Sr Note 12-15-2007
(g)....................................................... BB- 500,000 510,000
------------ ------------
HOUSING-0.41%
500,000 MDC Holdings, Inc., 11.125% Note 12-15-2003................. B 473,750 485,000
------------ ------------
LEISURE TIME-AMUSEMENTS-3.27%
500,000 Bally's Park Place, 9.25% First Mtg 3-15-2004............... BB 473,397 512,500
500,000 Boomtown, Inc., 11.50% First Mtg Note 11-1-2003............. B+ 459,375 430,000
500,000 Capital Gaming International, Inc., 11.50% Secured Note
2-1-2001 (a).............................................. Caa* 299,375 190,000
500,000 Casino Magic Finance Corp., 11.50% First Mtg Note
10-15-2001................................................ B+ 419,790 452,500
500,000 GNF, 10.625% First Mtg Bond 4-1-2003........................ BB 445,387 473,750
500,000 Hollywood Casino Corp., 12.75% Sr Secured Note 11-1-2003.... B+ 476,288 471,250
500,000 Kloster Cruise, Inc., 13.00% Sr Secured Note 5-1-2003....... B 368,839 365,000
500,000 Lady Luck Gaming Finance Corp., 10.50% First Mtg Note
3-1-2001.................................................. CCC+ 417,500 410,000
500,000 Trump Plaza Funding, Inc., 10.875% First Mtg Note
6-15-2001................................................. B 424,726 531,250
9,875 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* 9,875 9,541
------------ ------------
3,794,552 3,845,791
------------ ------------
MACHINERY-1.23%
500,000 MVE, Inc., 12.50% Sr Secured Note 2-15-2002................. B+ 496,883 502,500
250,000 Spreckels Industries, Inc., 11.50% Sr Secured Note
9-1-2000.................................................. B 253,750 252,500
750,000 Terex Corp., 13.75% Sr Secured Note 5-15-2002 (g)........... CAA 725,592 693,750
------------ ------------
1,476,225 1,448,750
------------ ------------
METALS-MINING AND MISCELLANEOUS-1.61%
500,000 Haynes International, Inc., 11.25% Sr Secured Note Ser A
6-15-1998................................................. CCC+ 475,000 500,000
500,000 Haynes International, Inc., 13.50% Sr Sub Deb 8-15-1999..... CCC- 320,000 375,000
500,000 Renco Metals, Inc., 12.00% Sr Note 7-15-2000................ B+ 500,000 540,000
</TABLE>
4
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
- ---------- ------------ ------------ ------------
<C> <S> <C> <C> <C>
$ 500,000 Sheffield Steel Corp., 12.00% First Mtg Note 11-1-2001 (and
warrants)................................................. B- $ 497,500 $ 475,000
------------ ------------
1,792,500 1,890,000
------------ ------------
MORTGAGE BACKED SECURITIES-0.59%
928,705 Sandia Mtg Corp., 9.14% 1991-A Variable Rate Pass Thru
Certificate Cl B 8-1-2018 (h)............................. NR* 698,613 696,529
------------ ------------
OFFICE EQUIPMENT AND SUPPLIES-0.41%
500,000 Mail-Well Corp., 10.50% Sr Sub Note 2-15-2004 (f)........... B 490,625 480,000
------------ ------------
RESTAURANTS AND FRANCHISING-0.80%
500,000 American Restaurant Group, 12.00% Sr Note 09-15-1998........ B- 418,750 417,500
752,000 Flagstar Corp., 11.25% Sr Sub Deb 11-1-2004................. CCC+ 763,485 522,640
------------ ------------
1,182,235 940,140
------------ ------------
RETAIL-GROCERY-1.84%
650,000 Farm Fresh, Inc., 12.25% Sr Note 10-1-2000.................. B- 646,250 565,500
750,000 Grand Union Co., 12.00% Sr Note 9-1-2004.................... B- 726,055 626,250
500,000 Pantry (The), Inc., 12.00% Sr Note Ser B 11-15-2000......... B+ 500,000 490,000
500,000 Pay 'N' Pak Stores, Inc., 13.50% Sr Sub Deb 6-1-1998 (a).... Ca* 498,687 2,500
500,000 Ralphs Grocery Co., 11.00% Sr Sub Note 6-15-2005............ B- 500,000 473,750
------------ ------------
2,870,992 2,158,000
------------ ------------
RETAIL-MISCELLANEOUS-0.94%
1,000,000 Color Tile, Inc., 10.75% Sr Note 12-15-2001 (a)............. D 700,000 80,000
500,000 Petro PSC Properties, L.P., 12.50% Sr Note 6-1-2002......... B 481,715 480,000
500,000 Thrifty Payless, Inc., 12.25% Sr Sub Note 4-15-2004......... B- 519,016 545,000
------------ ------------
1,700,731 1,105,000
------------ ------------
TECHNOLOGY-0.87%
500,000 Computervision Corp., 11.375% Sr Sub Note 8-15-1999......... B- 450,000 527,500
500,000 Genicom Corp., 12.50% Sr Sub Note 2-15-1997................. NR* 445,000 500,000
------------ ------------
895,000 1,027,500
------------ ------------
TELECOMMUNICATIONS-2.10%
500,000 A+ Network Inc., 11.875% 11-1-2005.......................... CCC+ 496,426 518,750
500,000 Fonorola, Inc., 12.50% Sr Secured Note 8-15-2002............ B+ 500,000 541,250
500,000 International Cabletel, Inc., 11.50% Sr Deferred Coupon Note
2-1-2006 (Zero Coupon until 2-1-2001, thereafter 11.50%)
(e)(g).................................................... N/A 286,064 291,250
500,000 Mobile Telecommunications, 13.50% Sr Note 12-15-2002........ BB- 556,820 561,250
500,000 Paging Network, 10.125% Sr Sub Note 8-1-2007................ B 505,425 552,500
------------ ------------
2,344,735 2,465,000
------------ ------------
TOBACCO-0.53%
750,000 Liggett Group, Inc., 11.50% Secured Note Ser B 2-1-1999..... NR* 555,000 622,500
------------ ------------
TRANSPORTATION-0.70%
500,000 Ameritruck Distribution Corp., 12.25% Sr Sub Note 11-15-2005
(g)....................................................... B3* 493,053 491,250
344,333 Fruehauf Trailer Corp., 14.75% Sr Secured Note 4-30-2002.... NR 337,446 327,116
------------ ------------
830,499 818,366
------------ ------------
TOTAL CORPORATE BONDS - NON-INVESTMENT GRADE................ 29,374,694 28,560,284
------------ ------------
TOTAL ASSET BACKED AND CORPORATE DEBT SECURITIES............ $69,934,081 $72,132,003
------------ ------------
------------ ------------
</TABLE>
U.S. GOVERNMENT SECURITIES-37.31%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
- ---------- ------------ ------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION-8.46%
MORTGAGE BACKED SECURITIES:
$1,590,812 8.00% 2001.................................................. $ 1,630,582 $ 1,639,531
601,014 9.00% 2022.................................................. 639,141 633,131
2,266,539 9.50% 2016.................................................. 2,405,740 2,427,320
</TABLE>
5
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
(Unaudited)
January 31, 1996
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
- ---------- ------------ ------------
<C> <S> <C> <C>
$ 909,181 10.50% 2017................................................. $ 967,210 $ 997,257
479,509 11.25% 2010................................................. 518,619 533,004
379,637 11.50% 2014................................................. 418,067 423,296
461,381 11.75% 2010................................................. 489,063 516,313
------------ ------------
7,068,422 7,169,852
------------ ------------
REMIC-IO & IO-ETTE:
36,354 60.00% Trust #1404-E Interest Only Strip I/O-ette 2006
(i)....................................................... 442,186 527,128
------------ ------------
REMIC-PAC'S:
851,906 9.00% Trust #136-D 2020..................................... 856,165 879,251
1,326,800 9.50% Trust #1001-F 2003.................................... 1,352,506 1,357,474
------------ ------------
2,208,671 2,236,725
------------ ------------
TOTAL FEDERAL HOME LOAN MORTGAGE CORPORATION................ 9,719,279 9,933,705
------------ ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-13.06%
MORTGAGE BACKED SECURITIES:
2,697,180 7.50% 2024.................................................. 2,691,280 2,767,137
4,231,677 8.00% 2024-2025............................................. 4,285,646 4,386,395
2,208,025 10.50% 2014-2020............................................ 2,305,407 2,441,936
1,173,566 11.00% 2011-2018............................................ 1,208,677 1,311,093
46,809 11.25% 2011................................................. 48,594 52,456
130,163 12.00% 2014................................................. 138,583 147,369
231,169 12.50% 2015................................................. 261,077 263,316
------------ ------------
10,939,264 11,369,702
------------ ------------
NOTES:
1,600,000 8.50% 2005.................................................. 1,664,500 1,740,392
------------ ------------
REMIC-PAC'S:
1,980,000 7.00% Trust #1992-49H 2020.................................. 1,947,516 2,019,261
214,640 13.50% Trust #1989-98G 2017................................. 224,299 216,399
------------ ------------
2,171,815 2,235,660
------------ ------------
TOTAL FEDERAL NATIONAL MORTGAGE ASSOCIATION................. 14,775,579 15,345,754
------------ ------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-11.14%
MORTGAGE BACKED SECURITIES:
4,744,754 7.50% 2022.................................................. 4,753,650 4,884,131
1,919,005 9.00% 2021.................................................. 1,970,032 2,028,747
2,348,485 9.125% Fleet Mtg Securities, Ser 1989-3 Cl C1 D 2018 (GNMA
Backed)................................................... 2,402,187 2,400,267
3,550,990 9.50% 2019-2020............................................. 3,716,476 3,767,858
------------ ------------
TOTAL GOVERNMENT NATIONAL MORTGAGE ASSOCIATION.............. 12,842,345 13,081,003
------------ ------------
U.S. TREASURY SECURITIES-4.65%
BONDS:
1,700,000 8.125% 2021................................................. 2,071,331 2,140,404
------------ ------------
NOTES:
3,300,000 9.375% 1996................................................. 3,394,484 3,327,839
------------ ------------
TOTAL U.S. TREASURY SECURITIES.............................. 5,465,815 5,468,243
------------ ------------
TOTAL U.S. GOVERNMENT SECURITIES............................ 42,803,018 43,828,705
------------ ------------
TOTAL LONG TERM DEBT SECURITIES............................. 112,737,099 115,960,708
------------ ------------
TOTAL LONG TERM INVESTMENTS................................. $113,036,606 $116,021,637
------------ ------------
------------ ------------
</TABLE>
6
<PAGE>
SHORT-TERM INVESTMENTS-0.42%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
- ---------- ------------
<C> <S> <C>
BANKS-0.42%
$ 494,000 First Trust Money Market Variable Rate Time Deposit, Current
rate -- 5.39%............................................. $ 494,000
------------
TOTAL INVESTMENTS IN SECURITIES (COST: $113,530,606) (B).... $116,515,637
------------
------------
</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 January 31, 1996, the cost of securities for federal income tax purposes
was $113,530,606 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 5,345,537
Unrealized depreciation........................... (2,360,506)
---------------------------------------------------------------
Net unrealized appreciation....................... $ 2,985,031
---------------------------------------------------------------
</TABLE>
(c) See Note A of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 6.70% of net assets as of January 31, 1996.
(e) The interest rate disclosed for these securities represents the original
issue discount yields on the date of acquisition.
(f) Securities sold within terms of a private placement memorandum, exempt from
registration under Section 144A of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or other "accreditied
investors" pursuant to guidelines adopted by the Board of Directors, these
issues are determined to be liquid.
(g) 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 portfolio entered into the following section
144A security transactions. On February 3, 1995, the portfolio acquired
$500,000 par of RXI Holdings, Inc., due 2002 with a cost basis of $491,114.
On April 27, 1995 and June 9, 1995, the portfolio acquired $500,000 and
$250,000 par of Terex Corp due 2002 with a cost basis of $493,600 and
$231,992, respectively. On June 30, 1995, the portfolio acquired 500 par of
Hosiery Corp. of America, class A with a cost basis of $8,460. On September
21, 1995, the portfolio acquired $500,000 par of Paxson Communications due
2002 with a cost basis of $494,156. On October 31, 1995, the portfolio
acquired 500 par of RXI Holdings (warrants) with a cost basis of $9,675. On
November 10, 1995, the portfolio acquired $500,000 par of Ameritruck
Distribution Corp., due 2005 with a cost basis of $492,975. On December 15,
1995, the portfolio acquired $500,000 par of Host Marriott Properties,
Inc., due 2007 with a cost basis of $500,000. On January 26, 1996, the
portfolio acquired $500,000 par of International Cabletel, Inc., due 2006
with a cost basis of $286,064. The value of these securities at January 31,
1996, is $2,947,500 which represents 2.51% of net assets.
(h) The fund entered into the following restricted security transactions: On
March 8, 1993 and October 26, 1993 the portfolio acquired $824,490 and
$104,214 par of Sandia Mtg. Corp. due 2018 with a cost basis of $618,368
and $80,245, respectively. The value of these securities at January 31,
1996, is $696,529 which represents .59% of net assets.
(i) The interest rates disclosed for interest only strips represent effective
yields at January 31, 1996, based upon the estimated timing and amount of
future cash flows. These investments have been identified by portfolio
management as illiquid securities. The aggregate value of these securities
at January 31, 1996, is $527,128 which represents .45% of net assets.
* Moody's Rating
** Duff & Phelps Rating
7
<PAGE>
FORTIS SECURITIES, INC.
Statement of Assets and Liabilities
(Unaudited)
January 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, as detailed in the accompanying schedules, at
market (cost $113,530,606)(Note A)..................................... $ 116,515,637
Cash on deposit with custodian........................................... 146
Receivables:
Investment securities sold............................................. 48,000
Interest and dividends................................................. 2,282,602
Prepaid expenses......................................................... 25,194
-------------
TOTAL ASSETS............................................................... 118,871,579
-------------
LIABILITIES
Dividends payable ($.067/share).......................................... 845,147
Payable for investment securities purchased.............................. 417,500
Payable for investment advisory and management fees...................... 66,831
Accounts payable and accrued expenses.................................... 56,950
-------------
TOTAL LIABILITIES.......................................................... 1,386,428
-------------
NET ASSETS
Net proceeds of capital stock, par value $.01 per share- authorized
15,000,000 shares; outstanding 12,614,077 shares....................... 135,952,906
Unrealized appreciation of investments................................... 2,985,031
Excess of distributions over net investment income....................... (10,634)
Accumulated net realized loss from sale of investments................... (21,442,152)
-------------
TOTAL NET ASSETS........................................................... $ 117,485,151
-------------
NET ASSET VALUE PER SHARE.................................................. $9.31
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
FORTIS SECURITIES, INC.
Statement of Operations
(Unaudited)
For the Six-Month Period Ended January 31, 1996
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
NET INVESTMENT INCOME:
Income
Interest income........................................................ $ 5,591,228
-------------
Expenses:
Investment advisory and management fees (Note B)....................... 373,489
Legal and auditing fees (Note B)....................................... 22,623
Custodian fees......................................................... 8,798
Shareholders' notices and reports...................................... 18,601
Directors' fees and expenses........................................... 8,961
Exchange listing fees.................................................. 13,222
Other.................................................................. 5,857
-------------
Total expenses........................................................... 451,551
-------------
NET INVESTMENT INCOME...................................................... 5,139,677
-------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE A):
Net realized loss from security transactions............................. (1,928,707 )
Net change in unrealized appreciation of investments in securities....... 3,645,940
-------------
NET GAIN ON INVESTMENTS.................................................... 1,717,233
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS....................... $ 6,856,910
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FORTIS SECURITIES, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED
JANUARY 31, FOR THE
1996 YEAR ENDED
(UNAUDITED) JULY 31, 1995
------------- -------------
<S> <C> <C>
OPERATIONS
Net investment income........................... $ 5,139,677 $ 10,566,247
Net realized loss from security transactions.... (1,928,707) (5,233,766)
Net change in unrealized appreciation of
investments................................... 3,645,940 3,821,651
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ 6,856,910 9,154,132
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income...................... (5,109,202) (10,890,625)
Excess distributions of net realized gains...... -- (116,961)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (5,109,202) (11,007,586)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Issuance of 10,288 and 237,790 shares,
respectively, to shareholders participating in
the dividend reinvestment plan................ 95,306 2,145,549
------------- -------------
TOTAL INCREASE IN NET ASSETS...................... 1,843,014 292,095
NET ASSETS:
Beginning of period............................. 115,642,137 115,350,042
------------- -------------
End of period (includes excess of distributions
over net investment income of $10,634 and
$41,109, respectively)........................ $ 117,485,151 $ 115,642,137
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
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 January 31, 1996, there were no outstanding purchases on a
when-issued basis.
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 six-month period ended January 31, 1996, the Fund
had no such fees.
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, on securities
purchased prior to August 1, 1995, except for original issue discount, the
fund does not amortize long-term bond premiums or discounts. For securities
purchased on or after August 1, 1995, the Fund amortizes original issue
discount and long-term bond premiums and discounts. For the six-month period
ended January 31, 1996, the cost of purchases and proceeds from sales of
securities (other than short-term securities) aggregated $43,652,469 and
$41,759,858, 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 January 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 January 31, 1996, was
$4,171,157 which represents 3.55% 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.
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 investment income.
Legal fees and expenses aggregating $12,568 for the six-month period ended
January 31, 1996, were paid to a law firm of which the secretary of the fund
is a partner.
C. At the annual meeting of shareholders on Dec. 7, 1995 approval was given to
amend the Investment Advisory and Services Agreement, which broadened the
base for calculating a portion of the management fee from "interest and
dividend income "to" investment income."
11
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements (continued)
(Unaudited)
- --------------------------------------------------------------------------------
D. FINANCIAL HIGHLIGHTS Selected per share historical data was as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------
1996+ 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period............................................. $ 9.18 $ 9.33 $ 10.24 $ 10.13
--------- --------- --------- ---------
Operations:
Net investment income.......................................................... .41 .84 .93 1.02
Net realized and unrealized gain (loss) on investments......................... .13 (.11) (.89) 0.12
--------- --------- --------- ---------
Total from operations............................................................ .54 .73 .04 1.14
--------- --------- --------- ---------
Distributions to shareholders:
From net investment income..................................................... (.41) (.87) (.95) (1.03)
Excess distributions of net realized gains..................................... -- (.01) -- --
--------- --------- --------- ---------
Total distributions to shareholders.............................................. (.41) (.88) (.95) (1.03)
--------- --------- --------- ---------
Net asset value, end of period................................................... $ 9.31 $ 9.18 $ 9.33 $ 10.24
--------- --------- --------- ---------
Per-share market value, end of period............................................ $ 8.75 $ 8.75 $ 9.625 $ 11.50
Total investment return, market value*........................................... 5.50% .25% (8.16%) 9.91%
Total investment return, net asset value**....................................... 6.94% 8.46% .01% 11.06%
Net assets at end of period (000's omitted)...................................... $ 117,485 $ 115,642 $ 115,350 $ 123,541
Ratio of expenses to average monthly net assets.................................. 0.77%*** 0.78% 0.76% 0.80%
Ratio of net investment income to average monthly net assets..................... 8.79%*** 9.33% 9.30% 10.12%
Portfolio turnover rate (excluding short-term securities)........................ 36% 75% 125% 86%
<CAPTION>
1992 1991
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of period............................................. $ 9.91 $ 9.62
--------- ---------
Operations:
Net investment income.......................................................... 1.02 1.06
Net realized and unrealized gain (loss) on investments......................... 0.25 0.30
--------- ---------
Total from operations............................................................ 1.27 1.36
--------- ---------
Distributions to shareholders:
From net investment income..................................................... (1.03) (1.07)
Excess distributions of net realized gains..................................... (0.02) --
--------- ---------
Total distributions to shareholders.............................................. (1.05) (1.07)
--------- ---------
Net asset value, end of period................................................... $ 10.13 $ 9.91
--------- ---------
Per-share market value, end of period............................................ $ 11.50 $ 10.88
Total investment return, market value*........................................... 16.51% 35.11%
Total investment return, net asset value**....................................... 12.61% 15.18%
Net assets at end of period (000's omitted)...................................... $ 119,080 $ 113,364
Ratio of expenses to average monthly net assets.................................. 0.82% 0.88%
Ratio of net investment income to average monthly net assets..................... 10.10% 11.12%
Portfolio turnover rate (excluding short-term securities)........................ 49% 67%
</TABLE>
<TABLE>
<S> <C>
* 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.
*** Annualized.
+ For the six-month period ended January 31, 1996.
</TABLE>
12
<PAGE>
DIRECTORS AND OFFICERS
DIRECTORS Richard W. Cutting CPA AND FINANCIAL CONSULTANT
Allen R. Freedman CHAIRMAN AND CHIEF EXECUTIVE OFFICER
AND PRESIDENT, FORTIS, INC. MANAGING
DIRECTOR OF FORTIS INTERNATIONAL,
N.V.
Dr. Robert M. Gavin PRESIDENT, MACALESTER COLLEGE
Benjamin S. Jaffray CHAIRMAN, SHEFFIELD GROUP, LTD.
Jean L. King PRESIDENT, COMMUNI-KING
Dean C. Kopperud CHIEF EXECUTIVE OFFICER AND DIRECTOR,
FORTIS ADVISERS, INC. PRESIDENT AND
DIRECTOR, FORTIS INVESTORS, INC.
SENIOR VICE PRESIDENT AND DIRECTOR,
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 PRIOR TO JULY, 1995, VICE PRESIDENT AND
TREASURER, JOSTENS, INC.
Leonard J. Santow PRINCIPAL, GRIGGS & SANTOW, INC.
Joseph M. Wikler INVESTMENT CONSULTANT AND PRIVATE
INVESTOR, PRIOR TO JANUARY, 1994,
DIRECTOR OF RESEARCH, CHIEF
INVESTMENT OFFICER, PRINCIPAL, AND
DIRECTOR, THE ROTHSCHILD CO.
OFFICERS
Dean C. Kopperud
PRESIDENT AND DIRECTOR
Robert W. Beltz, Jr.
VICE PRESIDENT
James S. Byrd
VICE PRESIDENT
Charles J. Dudley
VICE PRESIDENT
Thomas D. Gualdoni
VICE PRESIDENT
Maroun M. Hayek
VICE PRESIDENT
Howard G. Hudson
VICE PRESIDENT
Robert C. Lindberg
VICE PRESIDENT
Larry A. Medin
VICE PRESIDENT
Kevin J. Michels
VICE PRESIDENT
Jon H. Nicholson
VICE PRESIDENT
Fred Obser
VICE PRESIDENT
Dennis M. Ott
VICE PRESIDENT
David A. Peterson
VICE PRESIDENT
Nicholas L. M. de Peyster
VICE PRESIDENT
Stephen M. Poling
VICE PRESIDENT
Stephen M. Rickert
VICE PRESIDENT
Richard P. Roche
VICE PRESIDENT
Anthony J. Rotondi
VICE PRESIDENT
Rhonda T. Schwartz
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 LLP
MINNEAPOLIS, MINNESOTA
INDEPENDENT AUDITORS KPMG Peat Marwick LLP
MINNEAPOLIS, MINNESOTA
---------------------------------------------
MARKET Fortis Securities, Inc. is listed on
PRICE 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 finanical 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>
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 variable universal life insurance.
Traditional life insurance products are issued and underwritten by Time
Insurance Company and Fortis Benefits Insurance Company.
FFG is part of Fortis, Inc., a financial services company which owns or
manages approximately $10 billion in assets. Fortis, Inc., is an affiliate of
Fortis, a worldwide, diversified financial services group jointly owned by
Fortis AMEV of the Netherlands and Fortis AG of Belgium with worldwide assets
in excess of $125 billion.
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.
[LOGO] ---------------------------------------
FORTIS FINANCIAL GROUP Bulk Rate
P.O. Box 64284 US Postage
St. Paul, MN 55164 PAID
Permit No. 3794
Minneapolis, MN
---------------------------------------
FORTIS
SECURITIES, INC.
PRINTED ON RECYCLED PAPER WITH
40% PRECONSUMER WASTE AND
[GRAPHIC] 10% POST CONSUMER WASTE.
PLEASE RECYCLE.
95351 (Ed. 3/96)
