<PAGE>
[FORTIS LOGO] -REGISTERED TRADEMARK-
[GRAPHIC]
A DISCIPLINED, CONSISTENT
APPROACH TO INVESTING . . .
FORTIS
SECURITIES FUND, INC.
SEMI-ANNUAL REPORT
January 31, 1997
<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
- - 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 six 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.
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>
JANUARY 31, 1997:
TOTAL NET ASSETS............................. $ 115,720,458
MARKET PRICE PER SHARE....................... $ 8.50
SHARES OUTSTANDING........................... $ 12,619,689
FOR THE SIX-MONTH PERIOD ENDED JANUARY 31,
1997:
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 8.97
End of period.............................. $ 9.17
DISTRIBUTION FROM NET INVESTMENT INCOME:
TOTAL DIVIDENDS PAID....................... $ 4,625,314
DIVIDENDS PER SHARE........................ $ .366
</TABLE>
<PAGE>
PORTFOLIO COMPOSITION BY INDUSTRY AS OF 1/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds -- Investment Grade 38.5%
Corporate Bonds -- Non-Investment Grade 24.1%
Asset Backed Securities 12.5%
FNMAs 10.0%
FHLMCs 5.9%
GNMAs 4.9%
Cash Equivalent/Receivables 2.6%
U.S. Treasury Securities 1.5%
</TABLE>
TOP 10 HOLDINGS AS OF 1/31/97
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. DLJ Mortgage Acceptance Corp. (8.50%) 2001 2.7%
2. Green Tree Financial Corp. (7.65%) 2019 2.6%
3. Oakwood Mtg Investors, Inc. (7.10%) 2020 2.5%
4. FNMA (7.50%) 2024 2.3%
5. Banc One Corp., (7.75%) 2025 2.2%
6. Georgia-Pacific Corp. (9.625%) 2022 2.0%
7. United Air Lines, (10.02%) 2022 2.0%
8. GNMA (9.50%) 2019 1.9%
9. FNMA (8.00%) 2024 1.8%
10. GTE Corp., (7.90%) 2027 1.7%
</TABLE>
DEAR SHAREHOLDER,
We are pleased to present the Fortis Securities semi-annual report for the
period ended January 31, 1997.
GOOD ENVIRONMENT FOR BONDS
In the summer of 1996, we saw indicators of continued, moderate economic growth.
In addition, the wage increases normally associated with a tight labor market
were absent. We believed interest rates would continue to be volatile with a
moderate upward trend. Consistent with this outlook, our investment strategy
going into August 1996 was to maintain a relatively constant duration in 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.
From August - November 1996, we maintained the duration of the portfolio between
five and five and a half years as the market traded in the range of 6.35% -
7.15% on the 30-year Treasury Bond. In December 1996, we lengthened the duration
of the portfolio to around five and three-quarters years, which we considered to
be about average within our competitive universe or neutral for strategic
reasons.
During the past six months, we have reduced our investments in treasuries and
government agency obligations. This has increased our commitment to investment
grade corporates and asset backed securities which currently offer the prospects
for higher returns. The outlook for improved corporate profitability and a
market favoring higher yielding securities supported our decision.
In the lower-rated, higher-yielding bonds, we continued to maintain an
allocation just below the Fortis Securities 25% limit. Moderate growth in the
U.S. economy, low inflation, declining default rates, and a stock market surge
all contributed to a good environment for lower-rated bonds. This sector was the
highest performing one in the fixed income market for the six months ended
January 31, 1997. These results, combined with strong performance in investment
grade corporates and asset-backed securities, contributed to a total return of
7.56% over the past six months.
QUALITY RESEARCH PROVIDES FUTURE ADVANTAGE
We believe the 1997 economy will continue to expand and inflation should remain
under control. We also forecast that interest rates will fluctuate within
trading ranges determined by the strength of economic data releases. Our
portfolio duration strategy will remain neutral with moderate adjustments as we
approach the perceived boundaries of these ranges.
We will continue to invest a larger portion of the fund in corporate bonds and
asset-backed securities for the reasons outlined above. Our main focus in
corporate bonds will be on industry sectors that present improving fundamentals,
lower business and event risks, and yet offer a high enough yield. We identify
favorable sectors, improving situations and undervalued securities using
extensive credit research by our portfolio managers and in-house research staff.
We believe that the quality of our research should give us an advantage in the
quest for strong returns.
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
February 12, 1997
</TABLE>
1
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
(Unaudited)
January 31, 1997
COMMON STOCKS AND WARRANTS-0.09%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
------- --------- -------------
<C> <S> <C> <C>
APPAREL-0.02%
500 Hosiery Corp. of America, Class A (a)(f)..... $ 8,460 $ 27,500
--------- -------------
CONSUMER GOODS-0.02%
5,800 Drypers Corp. (Warrants) (a)(f).............. 17,400 17,400
--------- -------------
LEISURE TIME-AMUSEMENTS-0.00%
6,000 Hemmeter Enterprises, Inc. (Warrants) (a).... 24,000 1
--------- -------------
RETAIL-MISCELLANEOUS-0.02%
500 Petro PSC Properties, L.P. (Warrants) (a).... 18,285 26,500
--------- -------------
TELECOMMUNICATIONS-0.03%
3,300 Clearnet Communications, Inc. (Warrants)
(a)........................................ 49,500 29,700
--------- -------------
TOTAL COMMON STOCKS AND WARRANTS............. $117,645 $ 101,101
--------- -------------
--------- -------------
</TABLE>
ASSET BACKED SECURITIES-12.45%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------ -------------
<C> <S> <C> <C> <C>
AIR FREIGHT-0.87%
$1,000,000 Federal Express, 7.84% Pass Thru Certificate
Ser 1996-B2 1-30-2018...................... BBB+ $ 1,000,000 $ 1,001,003
------------ -------------
AIRLINES-1.31%
1,200,000 Delta Airlines, 10.50% Pass Thru Certificate
4-30-2016.................................. BBB 1,463,888 1,513,715
------------ -------------
COMMERCIAL LOANS-0.98%
1,100,000 Midland, 7.76% Ser 1996-C1-B 7-25-2008....... AA 1,110,797 1,135,062
------------ -------------
MANUFACTURED HOMES-5.18%
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 3,048,495
2,993,000 Oakwood Mortgage Investors, Inc., 7.10% Ser
1995-A Cl A3 9-15-2020..................... AAA 2,990,194 2,949,871
------------ -------------
5,978,475 5,998,366
------------ -------------
MULTI-FAMILY LOANS-4.11%
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 3,097,296
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 1,021,276
865,819 Fund America Structured Transactions, L.P.,
Collateralized Note, 8.231% Ser 1996-1 Cl A
PO 1-1-2033 (f)(g)......................... NR 627,705 635,295
------------ -------------
4,634,111 4,753,867
------------ -------------
TOTAL ASSET BACKED SECURITIES................ $14,187,271 $ 14,402,013
------------ -------------
------------ -------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-38.48%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------ -------------
<C> <S> <C> <C> <C>
AIRLINES-3.06%
$1,000,000 AMR Corp., 10.00% Deb 4-15-2021.............. Baa3* $ 1,168,411 $ 1,219,148
2,000,000 United Air Lines, 10.02% Deb 3-22-2014....... BBB- 2,416,232 2,318,260
------------ -------------
3,584,643 3,537,408
------------ -------------
AUTOMOBILE MANUFACTURERS-1.27%
1,500,000 General Motors Corp., 7.40% Deb 9-11-2025.... A- 1,488,476 1,473,750
------------ -------------
BANKS-3.07%
2,500,000 Banc One Corp., 7.75% 7-15-2025.............. A+ 2,435,892 2,537,527
1,000,000 Comerica Bank, 7.875% 9-15-2026.............. A- 988,018 1,017,674
------------ -------------
3,423,910 3,555,201
------------ -------------
</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>
BROKERAGE AND INVESTMENT-0.93%
$1,000,000 Lehman Brothers Holdings, 8.50% Note
5-1-2007................................... A $ 1,060,299 $ 1,073,849
------------ -------------
CHEMICALS-1.65%
2,000,000 Lyondell Petrochemical, 7.55% Note
2-15-2026.................................. BBB- 1,869,838 1,906,726
------------ -------------
CONTAINERS AND PACKAGING-0.84%
1,000,000 Crown Cork & Seal Co., Inc., 7.375%
12-15-2026................................. BBB+ 988,005 973,325
------------ -------------
ENERGY-4.25%
1,500,000 Apache Corp, 7.70% 3-15-2026................. BBB 1,494,526 1,509,036
1,500,000 Columbia Gas Systems, 7.42% 11-28-2015....... BBB 1,388,184 1,439,262
1,000,000 El Paso Natural Gas Co., 7.50% Deb
11-15-2026................................. BBB 1,000,000 976,716
1,000,000 NGC Corp., 7.625% 10-15-2026................. BBB+ 995,233 1,000,287
------------ -------------
4,877,943 4,925,301
------------ -------------
ENTERTAINMENT-2.81%
1,800,000 Time Warner Entertainment, 8.375% Sr Note
7-15-2033.................................. BBB- 1,731,969 1,804,142
1,500,000 Transcontinental Gas Pipeline, 7.25%
12-1-2026.................................. BBB 1,497,454 1,450,824
------------ -------------
3,229,423 3,254,966
------------ -------------
FOREIGN-GOVERNMENT-1.42%
1,500,000 Quebec (Province of), 8.80% Bond 4-15-2003... A+ 1,637,670 1,646,308
------------ -------------
FOREST PRODUCTS-3.44%
2,150,000 Georgia-Pacific Corp., 9.625% Deb
3-15-2022.................................. BBB- 2,169,818 2,364,200
1,500,000 Noranda, Inc., 8.625% Deb 7-15-2002.......... BBB 1,494,960 1,614,417
------------ -------------
3,664,778 3,978,617
------------ -------------
MEDIA-1.37%
1,500,000 News America Holdings, Inc., 8.875% Sr Note
4-26-2023.................................. BBB 1,488,046 1,580,233
------------ -------------
MISCELLANEOUS-3.65%
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 1,444,585
1,000,000 New York (City of), 10.00% General Obligation
Taxable Bond Fiscal 1991 Ser D 8-1-2005.... BBB+ 948,179 1,126,768
1,500,000 Telecommunications, Inc., 9.80% Sr Note
2-1-2012................................... BBB- 1,658,835 1,649,037
------------ -------------
3,908,889 4,220,390
------------ -------------
OIL-REFINING-0.89%
1,000,000 Diamond Shamrock, 7.65% 7-1-2026............. BBB 998,458 1,031,640
------------ -------------
PAPER-1.28%
1,565,000 Champion Intl., 7.35% 11-1-2025.............. BBB 1,556,527 1,478,035
------------ -------------
REAL ESTATE-INVESTMENT TRUST-0.89%
1,000,000 Meditrust, 7.82% Note 9-10-2026.............. BBB- 1,000,000 1,033,587
------------ -------------
RETAIL-DEPARTMENT STORES-1.18%
1,400,000 Dayton Hudson Co., 7.875% 6-15-2023.......... BBB+ 1,410,508 1,363,655
------------ -------------
RETAIL-MISCELLANEOUS-1.29%
1,500,000 Rite Aid Corp., 7.70% Deb 2-15-2027.......... BBB+ 1,495,744 1,491,942
------------ -------------
TELECOMMUNICATIONS-2.15%
1,000,000 360 Communications Corp., 7.50% Sr Note
3-1-2006................................... BBB- 997,837 988,617
1,500,000 U.S. West Capital Funding, Inc., 7.90%
2-1-2027................................... BBB+ 1,500,000 1,495,361
------------ -------------
2,497,837 2,483,978
------------ -------------
TELEPHONE SERVICES-1.74%
2,000,000 GTE Corp., 7.90% 2-1-2027.................... A- 2,000,000 2,018,000
------------ -------------
UTILITIES-ELECTRIC-1.30%
1,500,000 Texas Electric Capital V, 8.175% 1-30-2037... BBB 1,500,000 1,507,926
------------ -------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $43,680,994 $ 44,534,837
------------ -------------
------------ -------------
</TABLE>
3
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
(Unaudited)
January 31, 1997
CORPORATE BONDS-NON-INVESTMENT GRADE-24.09%
<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 12-01-2003............................ B+ $ 471,250 $ 536,250
------------ -------------
AIRLINES-0.96%
500,000 Northwest Airlines Trust No. 2, 13.875% Ser D
Sub Aircraft Note 6-21-2008................ BB+ 500,000 590,000
500,000 U.S. Air, Inc., 10.375% Pass Thru Certificate
3-1-2013................................... B+ 467,066 516,250
------------ -------------
967,066 1,106,250
------------ -------------
APPAREL-0.48%
499,659 Hosiery Corp. of America, Inc., 13.75% Sr Sub
Note 8-1-2002.............................. NR 488,148 552,123
------------ -------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.85%
500,000 J.B. Poindexter & Co., 12.50% Sr Note
5-15-2004.................................. B- 479,404 493,750
500,000 Penda Corp., 10.75% Sr Note Ser B 3-1-2004... B 495,032 491,250
------------ -------------
974,436 985,000
------------ -------------
BROADCASTING-1.35%
500,000 Paxson Communications Corp., 11.625% Sr Sub
Note 10-1-2002............................. B- 494,940 526,250
500,000 SFX Broadcasting, 10.75% Sr Sub Note
5-15-2006.................................. B- 500,600 527,500
500,000 Sinclair Broadcasting, 10.00% Sr Sub Note
9-30-2005.................................. B 520,443 511,250
------------ -------------
1,515,983 1,565,000
------------ -------------
CABLE TELEVISION-2.54%
1,000,000 Adelphia Communications Corp., 12.50% Sr Note
5-15-2002.................................. B 1,045,361 1,027,500
500,000 Groupe Videotron, 10.625% Sr Note
2-15-2005.................................. BB+ 525,040 555,000
500,000 Telewest plc, 9.625% Sr Deb 10-1-2006........ BB 516,221 507,500
500,000 United International Holdings, Inc., 14.00%
Zero Coupon Sr Secured Disc Note Ser B
11-15-1999 (e)............................. B- 363,489 366,250
500,000 Wireless One, Inc., 13.00% Sr Note
10-15-2003................................. CCC+ 492,628 483,750
------------ -------------
2,942,739 2,940,000
------------ -------------
CHEMICALS-1.41%
1,000,000 LaRoche Industries, Inc., 13.00% Sr Sub Note
8-15-2004.................................. B 1,054,631 1,105,000
500,000 NL Industries, Inc., 11.75% Sr Secured Note
10-15-2003................................. B 514,696 527,500
------------ -------------
1,569,327 1,632,500
------------ -------------
CONSUMER GOODS-0.22%
250,000 Chattem, Inc., 12.75% Sr Sub Note Ser B
6-15-2004.................................. B- 230,312 260,000
------------ -------------
CONTAINERS AND PACKAGING-0.12%
135,000 Silgan Holdings Corp., 13.25% Sr Disc Deb
12-15-2002................................. B- 136,163 137,700
------------ -------------
ENERGY-0.47%
500,000 Mesa Operating Co., 10.625% Sr Note
7-1-2006................................... B 500,000 541,250
------------ -------------
FINANCE COMPANIES-0.62%
625,000 Homeside, Inc., 11.25% Sr Secured Second
Priority Note 5-15-2003.................... B+ 643,787 712,500
------------ -------------
FOOD-MISCELLANEOUS-0.47%
500,000 Envirodyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000......... B+ 495,942 540,000
------------ -------------
FOREST PRODUCTS-0.46%
500,000 Stone Container Corp., 11.875% Sr Note
8-1-2016................................... B+ 500,000 527,500
------------ -------------
HOUSING-0.44%
500,000 MDC Holding, Inc., 11.125% Note 12-15-2003... NR 476,384 508,750
------------ -------------
INDUSTRIAL-0.44%
500,000 Amtrol Acquisition, Inc., 10.625% Sr Sub Note
12-31-2006 (f)............................. B- 500,000 513,750
------------ -------------
LEISURE TIME-AMUSEMENTS-4.18%
500,000 Boomtown, Inc., 11.50% First Mtg Note
11-1-2003.................................. B 459,375 530,000
500,000 Kloster Cruise, Inc., 13.00% Sr Secured Note
5-1-2003................................... B 378,052 490,000
1,000,000 Mohegan Tribal Gaming, 13.50% Sr Note
11-15-2002................................. NR 1,236,616 1,317,500
500,000 Showboat Marina Casino & Finance Corp.,
13.50% First Mtg Bond 3-15-2003............ B 500,000 565,000
500,000 Stuart Entertainment, 12.50% Sr Sub Note
11-15-2004 (f)............................. B- 500,000 511,875
1,000,000 Trump Atlantic City Associates, 11.25% First
Mtg Bond 5-1-2006.......................... BB- 995,708 960,000
</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 Trump Castle Funding, Inc., 11.75% First Mtg
Bond 11-15-2003............................ Caa* $ 469,829 $ 465,000
------------ -------------
4,539,580 4,839,375
------------ -------------
MACHINERY-0.46%
500,000 MVE, Inc., 12.50% Sr Secured Note
2-15-2002.................................. B+ 497,254 530,000
------------ -------------
MORTGAGE BACKED SECURITIES-0.55%
851,378 Sandia Mtg Corp., 9.14% 1991-A Variable Rate
Pass Thru Certificate Cl B 8-1-2018 (f).... NR 640,618 638,534
------------ -------------
RETAIL-GROCERY-0.92%
500,000 Grand Union Co., 12.00% Sr Note 9-1-2004..... B- 487,287 505,625
500,000 Pay 'N' Pak Stores, Inc., 13.50% Sr Sub Deb
6-1-1998 (a)............................... NR 498,687 2,500
500,000 Smith's Food & Drug Centers, Inc., 11.25% Sr
Sub Note 5-15-2007......................... B- 500,000 555,625
------------ -------------
1,485,974 1,063,750
------------ -------------
RETAIL-MISCELLANEOUS-0.48%
1,000,000 Color Tile, Inc., 10.75% Sr Note 12-15-2001
(a)........................................ NR 700,000 35,000
500,000 Petro PSC Properties, L.P., 12.50% Sr Note
6-1-2002................................... B 481,715 515,000
------------ -------------
1,181,715 550,000
------------ -------------
STEEL AND IRON-0.89%
500,000 Bar Technologies, Inc., 13.50% Sr Secured
Note 4-1-2001.............................. B- 509,577 520,000
500,000 Weirton Steel Corp., 11.375% Sr Notes
7-1-2004................................... B2* 502,473 515,000
------------ -------------
1,012,050 1,035,000
------------ -------------
TECHNOLOGY-0.93%
500,000 Advanced Micro Devices, 11.00% Sr Secured
Note 8-1-2003.............................. B 500,000 552,500
500,000 Computervision Corp., 11.375% Sr Sub Note
8-15-1999.................................. B- 450,000 520,000
------------ -------------
950,000 1,072,500
------------ -------------
TELECOMMUNICATIONS-4.39%
500,000 American Communications Services, Inc.,
13.00% Sr Disc Note 11-1-2005 (Zero coupon
until 11-1-2000, thereafter 13.00%) (e).... NR 303,191 310,000
1,000,000 Clearnet Communications, Inc., 14.75% Sr Disc
Note 12-15-2005 (Zero coupon until
12-15-2000, 14.75% thereafter) (e)......... B3* 589,603 645,000
500,000 Fonorola, Inc., 12.50% Sr Secured Note
8-15-2002.................................. B+ 500,000 543,750
500,000 IXC Communications, Inc., 12.50% Sr Note
10-1-2005.................................. B3* 514,490 557,500
1,000,000 Mobile Telecommunications, 13.50% Sr Note
12-15-2002................................. B- 1,016,768 960,000
500,000 Nextlink Communications, L.L.C., 12.50% Sr
Note 4-15-2006............................. NR 500,000 541,250
500,000 Orbcomm Global L.P./Capital, 14.00% Sr Note
8-15-2004 (f).............................. B- 504,960 512,500
500,000 Paging Network, Inc., 10.125% Sr Sub Note
8-1-2007................................... B 505,245 495,000
500,000 RSL Communications Ltd., 12.25% 11-15-2006
(and warrants) (f)......................... NR 500,000 518,750
------------ -------------
4,934,257 5,083,750
------------ -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $27,652,985 $ 27,871,482
------------ -------------
------------ -------------
</TABLE>
U.S. GOVERNMENT SECURITIES-22.30%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION-5.94%
MORTGAGE BACKED SECURITIES:
$1,127,293 8.00% 2001................................... $ 1,155,475 $ 1,157,236
458,625 9.00% 2022................................... 487,719 484,136
1,869,399 9.50% 2016................................... 1,978,379 2,013,692
707,534 10.50% 2017.................................. 753,716 781,603
359,199 11.25% 2010.................................. 388,496 404,042
297,815 11.50% 2014-2015............................. 327,677 337,089
272,158 11.75% 2010.................................. 288,488 309,282
------------- -------------
5,379,950 5,487,080
------------- -------------
</TABLE>
5
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
(Unaudited)
January 31, 1997
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
REMIC-IO & IO-ETTE:
$ 19,310 1.00% Trust #1404-E Interest Only Strip I/O
ette 2006 (g).............................. $ 183,835 $ 324,605
------------- -------------
REMIC-PAC'S:
516,518 9.00% Trust #136D 2020....................... 519,101 526,710
532,744 9.50% Trust #1001F 2003...................... 543,066 537,722
------------- -------------
1,062,167 1,064,432
------------- -------------
TOTAL FEDERAL HOME LOAN MORTGAGE
CORPORATION................................ 6,625,952 6,876,117
------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-10.04%
MORTGAGE BACKED SECURITIES:
2,628,215 7.50% 2024................................... 2,622,466 2,630,678
3,613,328 8.00% 2024-2025.............................. 3,659,235 3,685,594
1,697,101 10.50% 2014-2020............................. 1,776,093 1,877,949
955,494 11.00% 2011-2018............................. 984,442 1,069,257
40,196 11.25% 2011.................................. 41,729 45,246
118,062 12.00% 2014.................................. 125,699 134,960
171,607 12.50% 2015.................................. 193,809 197,456
------------- -------------
9,403,473 9,641,140
------------- -------------
REMIC-PAC'S:
1,980,000 7.00% Trust #1992-49H 2020................... 1,947,516 1,981,643
------------- -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ 11,350,989 11,622,783
------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-4.86%
MORTGAGE BACKED SECURITIES:
1,457,139 9.00% 2021................................... 1,471,506 1,538,192
1,134,728 9.125% Fleet Mtg. Securities, Series
1989-3C1D 2018 (GNMA Backed) 2018.......... 1,159,603 1,149,126
2,727,747 9.50% 2019-2020.............................. 2,847,503 2,928,497
------------- -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 5,478,612 5,615,815
------------- -------------
U.S. TREASURY SECURITIES-1.46%
BONDS:
1,600,000 6.75% 2026................................... 1,588,557 1,583,000
------------- -------------
NOTES:
110,000 6.50% 2005................................... 109,869 110,069
------------- -------------
TOTAL U.S. TREASURY SECURITIES............... 1,698,426 1,693,069
------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............. 25,153,979 25,807,784
------------- -------------
------------- -------------
TOTAL LONG TERM INVESTMENTS.................. $ 110,792,874 $ 112,717,217
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-2.02%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- -------------
<C> <S> <C>
BANKS-2.02%
$2,336,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.24%............. $ 2,336,000
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$113,128,874) (B).......................... $ 115,053,217
-------------
-------------
</TABLE>
* Moody's
(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 January 31, 1997, the cost of securities for federal income tax purposes
was $113,188,327, and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 3,688,312
Unrealized depreciation........................... (1,823,422)
---------------------------------------------------------------
Net unrealized depreciation....................... $(1,864,890)
---------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
6
<PAGE>
(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 4.76% of net assets as of January 31, 1997.
(e) The interest rate disclosed for these securities represents the effective
yield on the date of acquisition.
(f) Securities sold within terms of a private placement memorandum, exempt from
registration under Section 144A of the Securities Act of 1933, as amended,
and may be sold only to dealers in that program or to other "accredited
investors". These investments have been identified by portfolio management
as illiquid securities. The portfolio entered into the following section
144A security transactions:
<TABLE>
<CAPTION>
Date Acquired Shares/Par Security Cost Basis
- ------------------ ----------- ------------------------------------------------------------------------------ -----------
<S> <C> <C> <C>
March 8, 1993 747,164 Sandia Mortgage Corp., due 2018 - restricted $ 560,373
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 (warrants) - 144A 8,460
March 29, 1996 865,819 Fund America Structured Transactions, L.P. due 2033-144A 627,705
September 30, 1996 500,000 RSL Communications, Ltd., due 2006 - 144A 500,000
November 7, 1996 500,000 Amtrol Acquisition, Inc., due 2006 - 144A 500,000
November 7, 1996 500,000 Stuart Entertainment, due 2004 - 144A 500,000
November 19, 1996 500,000 Orbcomm Global, L.P., due 2004 - 144A 504,960
</TABLE>
The value of these securities at January 31, 1997, is $3,375,604 which
represents 2.92% of net assets.
(g) The interest rates disclosed for interest only and principal only strips
represents effective yields at January 31, 1997, based upon the estimated
timing and 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 $3,700,209 which
represents 3.20% of net assets at January 31, 1997.
7
<PAGE>
FORTIS SECURITIES, INC.
Statement of Assets and Liabilities
(Unaudited)
January 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, as detailed
in the accompanying schedules, at
market (cost $113,128,874)(Note
1).................................. $ 115,053,217
Cash on deposit with custodian........ 10,428
Receivables:
Investment securities sold.......... 1,433,054
Interest and dividends.............. 2,200,857
Prepaid expenses...................... 18,885
--------------
TOTAL ASSETS............................ 118,716,441
--------------
LIABILITIES
Cash portion of dividends payable
($.061 per share)................... 769,801
Payable for investment securities
purchased........................... 2,000,000
Payable for investment advisory and
management fees (Note 2)............ 76,584
Accounts payable and accrued
expenses............................ 149,598
--------------
TOTAL LIABILITIES....................... 2,995,983
--------------
NET ASSETS
Net proceeds of capital stock, par
value $.01 per share- authorized
15,000,000 shares; outstanding
12,619,689 shares................... 134,925,762
Unrealized appreciation of
investments......................... 1,924,343
Undistributed net investment income... 66,976
Accumulated net realized loss from
sale of investments................. (21,196,623)
--------------
TOTAL NET ASSETS........................ $ 115,720,458
--------------
NET ASSET VALUE PER SHARE............... $9.17
--------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
FORTIS SECURITIES, INC.
Statement of Operations
(Unaudited)
For the Six-Month Period Ended January 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
NET INVESTMENT INCOME:
Income
Interest income..................... $ 4,976,085
Expenses:
Investment advisory and management
fees (Note 2)..................... 355,278
Legal and auditing fees (Note 2).... 24,449
Custodian fees...................... 9,452
Shareholders' notices and reports... 64,382
Directors' fees and expenses........ 9,121
Exchange listing fees............... 14,367
Other............................... 26,176
------------
Total expenses........................ 503,225
------------
NET INVESTMENT INCOME................... 4,472,860
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 1):
Net realized loss from security
transactions........................ (47,533)
Net change in unrealized appreciation
of investments in securities........ 2,716,149
------------
NET GAIN ON INVESTMENTS................. 2,668,616
------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS......................... $ 7,141,476
------------
</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
1997 YEAR ENDED
(UNAUDITED) JULY 31, 1996
-------------- --------------
<S> <C> <C>
OPERATIONS
Net investment income................. $ 4,472,860 $ 9,773,183
Net realized loss on investments...... (47,533) (2,281,389)
Net change in unrealized appreciation
(depreciation) of investments....... 2,716,149 (130,897)
-------------- --------------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS......................... 7,141,476 7,360,897
-------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income............ (4,387,018) (9,750,940)
Excess distributions of net realized
gains (Note 1)...................... (238,296) (194,644)
-------------- --------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS..... (4,625,314) (9,945,584)
-------------- --------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from 4,611 and 11,289 shares
issued as a result of reinvested
dividends........................... 53,301 93,545
-------------- --------------
TOTAL INCREASE (DECREASE) IN NET
ASSETS.................................. 2,569,463 (2,491,142)
NET ASSETS:
Beginning of period................... 113,150,995 115,642,137
-------------- --------------
End of period (includes undistributed
(excess of distributions over) net
investment income of $66,976 and
$(18,866), respectively)............ $ 115,720,458 $ 113,150,995
-------------- --------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
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 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, 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, 1997, there were no outstanding purchases on a
when-issued basis.
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 six-month period ended January 31, 1997, the
cost of purchases and proceeds from sales of securities (other than
short-term securities) aggregated $77,692,086 and $81,014,386, 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
$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 January 31, 1997, 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, 1997, was
$3,700,209 which represents 3.20% 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. (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.
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 $11,342 for the six-month period ended
January 31, 1997, were paid to a law firm of which the secretary of the fund
is a partner.
11
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements (continued)
(Unaudited)
- --------------------------------------------------------------------------------
3. FINANCIAL HIGHLIGHTS Selected per share historical data for the Portfolio was
as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------------------------------------
1997*** 1996 1995 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 8.97 $ 9.18 $ 9.33 $ 10.24 $ 10.13 $ 9.91
--------- --------- --------- --------- --------- ---------
Operations:
Investment income - net............... .37 .78 .84 .93 1.02 1.02
Net realized and unrealized gain
(loss) on investments............... .20 (.20) (.11) (.89) .12 .25
--------- --------- --------- --------- --------- ---------
Total from operations................... .57 .58 .73 .04 1.14 1.27
--------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... (.35) (.78) (.87) (.95) (1.03) (1.03)
Excess distributions of net realized
gains............................... (.02) (.01) (.01) -- -- (.02)
--------- --------- --------- --------- --------- ---------
Total distributions to shareholders..... (.37) (.79) (.88) (.95) (1.03) (1.05)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 9.17 $ 8.97 $ 9.18 $ 9.33 $ 10.24 $ 10.13
--------- --------- --------- --------- --------- ---------
Per-share market value, end of period... $ 8.50 $ 7.875 $ 8.75 $ 9.625 $ 10.24 $ 11.50
Total investment return, market
value*................................ 13.55% (1.36%) .25% (8.16%) 11.50% 16.51%
Total investment return, net asset
value**............................... 7.56% 6.93% 8.46% .01% 9.91% 12.61%
Net assets end of period (000s
omitted).............................. $ 115,720 $ 113,151 $ 115,642 $ 115,350 $ 123,541 $ 119,080
Ratio of expenses to average monthly net
assets................................ .87%+ .80% .78% .76% .80% .82%
Ratio of net investment income to
average monthly net assets............ 7.70%+ 8.47% 9.33% 9.30% 10.12% 10.10%
Portfolio turnover rate................. 69% 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 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.
*** For the six-month period ended January 31, 1997.
+ Annualized.
12
<PAGE>
DIRECTORS AND OFFICERS
DIRECTORS Richard W. Cutting CPA AND FINANCIAL CONSULTANT
Allen R. Freedman CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
FORTIS, INC. MANAGING DIRECTOR OF
FORTIS INTERNATIONAL, N.V.
Dr. Robert M. Gavin INTERIM 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 AND
TIME INSURANCE COMPANY
Edward M. Mahoney PRIOR TO JANUARY, 1995, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER, FORTIS
ADVISERS, INC., FORTIS INVESTORS,
INC.
Robb L. Prince FINANCIAL AND EMPLOYEE BENEFIT
CONSULTANT PRIOR TO JULY, 1995, VICE
PRESIDENT AND TREASURER, JOSTENS,
INC.
Leonard J. Santow PRINCIPAL, GRIGGS & SANTOW, INC.
Noel Shadko MARKETING CONSULTANT PRIOR TO MAY,
1996, SENIOR VICE PRESIDENT OF
MARKETING & STRATEGIC PLANNING,
ROLLERBLADE, INC.
Joseph M. Wikler INVESTMENT CONSULTANT AND PRIVATE
INVESTOR PRIOR TO JANUARY, 1994,
DIRECTOR OF RESEARCH, CHIEF
INVESTMENT OFFICER, PRINCIPAL, AND
DIRECTOR, THE ROTHSCHILD CO.
OFFICERS
Dean C. Kopperud
PRESIDENT AND DIRECTOR
Robert W. Beltz, Jr.
VICE PRESIDENT
James S. Byrd
VICE PRESIDENT
Tamara L. Fagely
VICE PRESIDENT AND TREASURER
Howard G. Hudson
VICE PRESIDENT
David A. Peterson
VICE PRESIDENT
Scott Plummer
VICE PRESIDENT
Rhonda J. Schwartz
VICE PRESIDENT
Gary N. Yalen
VICE PRESIDENT
Michael J. Radmer
SECRETARY
INVESTMENT MANAGER 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 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.
The use of this material is authorized only when preceded or accompanied by a
prospectus.
13
<PAGE>
FORTIS FINANCIAL GROUP
Fortis Financial Group (FFG) provides solutions for customers' financial needs
using mutual funds, annuities and life insurance. Besides our own array of
quality products, we create and deliver customized products for other financial
service providers. Like the Fortis name, which comes from the Latin for strong
and steadfast, we concentrate on the customer relationships we build, the
services we provide, the solutions we offer and the performance we seek.
FFG includes Fortis Advisers, Inc. an established money
manager, as well as Fortis Investors, Inc., a broker dealer [GRAPHIC]
with nationwide sales and marketing influence. The guarantees
in our insurance products are underwritten by Fortis Benefits
Insurance Company and Time Insurance Company.
Fortis Financial Group is part of Fortis, Inc. a financial services company that
provides specialty insurance and investment products to individuals, businesses,
associations and other financial services organizations in the United States.
Fortis, Inc., is part of Fortis, a worldwide group of companies active in the
fields of insurance, banking and investment. Fortis is jointly owned by Fortis,
AMEV of The Netherlands and Fortis AG of Belgium.
[GRAPHIC] FOR MORE INFORMATION, CALL YOUR INVESTMENT REPRESENTATIVE OR FORTIS
AT (800) 800-2638.
[FORTIS LOGO]-REGISTERED TRADEMARK- ---------------
Bulk Rate
FORTIS FINANCIAL GROUP U.S. Postage
P.O. BOX 64284 PAID
ST. PAUL, MN 55164 Permit No. 3794
Minneapolis, MN
---------------
FORTIS SECURITIES
FUND, INC.
[RECYCLE LOGO] Printed on recycled paper with
40% preconsumer waste and 10%
post consumer waste. Please recycle.
[FORTIS LOGO] -REGISTERED TRADEMARK- and Fortis -REGISTERED TRADEMARK- are
registered trademarks of Fortis AMEV and Fortis AG.
95387 (3/97)
