<PAGE>
[LOGO]
A DISCIPLINED, CONSISTENT
APPROACH TO INVESTING ...
FORTIS
SECURITIES FUND, INC.
ANNUAL REPORT
July 31, 1997
<PAGE>
FORTIS SECURITIES, INC. ANNUAL REPORT
CONTENTS
LETTER TO SHAREHOLDERS 1
SCHEDULE OF INVESTMENTS 2
STATEMENT OF ASSETS AND LIABILITIES 8
STATEMENT OF OPERATIONS 8
STATEMENTS OF CHANGES IN NET ASSETS 9
NOTES TO FINANCIAL STATEMENTS 10
INDEPENDENT AUDITORS' REPORT 12
BOARD OF DIRECTORS AND OFFICERS 13
- - TOLL-FREE PERSONAL ASSISTANCE
- Shareholder Services
- (800) 800-2638, Ext. 3012
- 7:30 a.m. to 5:30 p.m. CST, M-Th
- 7:30 a.m. to 5:00 p.m. CST, F
- - TOLL-FREE INFORMATION LINE
- For daily account balances,
transaction activity or net asset
value information
- (800) 800-2638, Ext. 4344
- 24 hours a day
FOR MORE INFORMATION ABOUT FORTIS FINANCIAL GROUP'S FAMILY OF PRODUCTS, CALL
YOUR INVESTMENT REPRESENTATIVE OR THE HOME OFFICE AT (800) 800-2638.
TO ORDER PROSPECTUSES OR SALES LITERATURE FOR ANY FORTIS PRODUCT, CALL (800)
800-2638, EXT. 4579.
HOW TO USE THIS REPORT
For a quick overview of the fund's performance during the past twelve months,
refer to the Highlights box below. The letter from the portfolio manager and
president provides a more detailed analysis of the fund and financial markets.
The charts alongside the letter are useful because they provide more information
about your investments. The top holdings charts show the types of securities in
which the fund invests, and the pie chart shows a breakdown of the fund's assets
by sector.
This report is just one of several tools you can use to learn more about your
investment in the Fortis Family of Mutual Funds. Your investment representative,
who understands your personal financial situation, can best explain the features
of your investment and how it's designed to help you meet your financial goals.
HIGHLIGHTS
<TABLE>
<CAPTION>
FORTIS
SECURITIES,
INC.
--------------
<S> <C>
JULY 31, 1997:
TOTAL NET ASSETS............................. $ 119,284,960
MARKET PRICE PER SHARE....................... $ 8.688
SHARES OUTSTANDING........................... 12,621,450
FOR THE YEAR ENDED JULY 31, 1997:
NET ASSET VALUE PER SHARE:
Beginning of year.......................... $ 8.97
End of year................................ $ 9.45
TOTAL DIVIDENDS PAID......................... $ 9,247,104
DIVIDENDS PER SHARE (CLASSIFIED AS ORDINARY
INCOME FOR FEDERAL INCOME TAX PURPOSES)... $ 0.732
</TABLE>
<PAGE>
PORTFOLIO COMPOSITION BY SECTOR
AS OF 7/31/97
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds -- Investment Grade 40.4%
Corporate Bonds -- Non-Investment Grade 24.9%
Asset Backed Securities 11.0%
FNMAs 7.6%
FHLMCs 3.4%
GNMAs 3.7%
Cash Equivalent/Receivables 3.0%
U.S. Treasury Securities 6.0%
</TABLE>
TOP 10 HOLDINGS AS OF 7/31/97
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. U.S. Treasury Note (6.00%) 1999 3.6%
2. Green Tree Financial Corp. (7.65%) 2019 2.6%
3. DLJ Mortgage Acceptance Corp. (8.50%) 2001 2.6%
4. FNMA (7.50%) 2024 2.2%
5. Nationsbank Corp. (7.25%) 2025 2.1%
6. United Air Lines, (10.02%) 2022 2.1%
7. Georgia-Pacific Corp. (9.625%) 2022 2.0%
8. GTE Corp., (7.90%) 2027 1.8%
9. Lyondell Petrochemical (7.55%) 2026 1.7%
10. FNMA (8.00%) 2024 1.6%
</TABLE>
DEAR SHAREHOLDER,
We are pleased to present the Fortis Securities annual report for the period
ended July 31, 1997.
ECONOMY HAVING POSITIVE EFFECT ON BOND MARKET
The U.S. economy entered its seventh consecutive year of expansion in 1997, one
of the longest expansions in the 20th century. Historically, as an economic
expansion reaches its later stages, inflation begins to rise. This expansion,
however, has been different. Global competition, lower deficits and rising
productivity have contributed to the lowest inflation levels in 30 years. This
unprecedented scenario has had a favorable impact on the bond market, causing
yields to fall (and conversely, prices to rise). For example, the 10-year
treasury yield fell 78 basis points in the last 12 months.
For the year ended July 31, 1997 the Fortis Securities Fund provided a
distribution yield of 8.37 percent, the highest in its competitive universe
(Lipper Closed-End Investment Grade Bond Funds). The fund had a market value
total return of 20.27 percent and a net asset value total return of 14.83
percent. This strong total returns were largely due to the steep drop in bond
yields and was supported by our duration* and sector allocation strategies.
The Fortis Securities Fund's primary investment emphasis is to maximize the
fund's yield with a secondary emphasis on capital appreciation. Correspondingly,
we seek to invest in securities that have high yields and, if possible, good
total return potential. One sector that exhibited these characteristics last
year was lower-rated corporate bonds. Strong company profits and relatively low
default rates created a positive environment for lower-rated, higher-yielding
bonds. Therefore, we maintained the proportion of the fund invested in
lower-rated bonds just below the 25 percent fund limit throughout the past year.
The overweighting in high yield securities paid off in two ways: high yield
bonds generated greater income for the fund; they also boosted the fund's return
as they were the best performing fixed income sector for the year ended July 31,
1997.
In addition, our investment strategy focused on keeping the fund's duration
equal to or longer than our target duration. We expected lower interest rates in
the long term while being aware of short term volatility. Furthermore, we
increased our commitment to investment grade corporates while reducing our
exposure to mortgage-backed securities. We believed that investment grade
corporates would outperform other sectors in a moderate growth, low-inflation
economic environment.
OUTLOOK REMAINS POSITIVE
We expect the economy to continue to grow at a 2-3 percent pace in the coming
months. Although inflation has been very well-behaved to date, there is the
possibility that in the next six to twelve months the continued expansion could
lead to a modest increase in inflation and possibly tighter monetary policy.
Under these conditions, rates should back up somewhat, giving us an opportunity
to lengthen the duration of the portfolio. Our outlook on investment grade and
lower-rated corporate bonds remains positive and we will maintain an overweight
position in both sectors.
We appreciate your investment with Fortis. If you have any questions, please
call us or your investment professional.
Sincerely,
<TABLE>
<S> <C>
[SIGNATURE] [SIGNATURE]
Dean C. Kopperud Howard G. Hudson
President Vice President
August 12, 1997
</TABLE>
* 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.
1
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
July 31, 1997
ASSET BACKED SECURITIES-11.03%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AIR FREIGHT-0.90%
$1,000,000 Federal Express, 7.84% Pass Thru Certificate
Ser 1996-B2 1-30-2018...................... BBB+ $ 1,000,000 $ 1,070,770
------------- -------------
AIRLINES-1.29%
1,200,000 Delta Airlines, 10.50% Pass Thru Certificate
4-30-2016.................................. BBB 1,460,986 1,538,380
------------- -------------
COMMERCIAL LOANS-0.99%
1,100,000 Midland Realty Acceptance Corp., 7.76% Ser
1996-C1 Class B 7-25-2008.................. AA 1,110,497 1,180,095
------------- -------------
MANUFACTURED HOMES-3.48%
3,000,000 Green Tree Financial Corp., 7.65% Sr Sub Pass
Thru Certificate Ser 1994-1 Class A5
4-15-2019.................................. Aa2* 2,988,281 3,125,277
1,000,000 Green Tree Financial Corp., 7.76% Sr Sub Pass
Thru Certificate Ser 1997-1 Class B2
3-15-2028.................................. Baa* 999,844 1,025,312
------------- -------------
3,988,125 4,150,589
------------- -------------
MULTI-FAMILY LOANS-3.52%
3,000,000 DLJ Mtg Acceptance Corp., 8.50% Multifamily
Mtg Pass Thru Certificate Ser 1994-4 Class
A2 4-18-2001............................... A 3,023,906 3,124,818
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 1,072,305
------------- -------------
4,006,406 4,197,123
------------- -------------
WHOLE LOAN RESIDENTIAL-0.85%
984,032 Mid-State Trust, 7.54% Ser 6 Class A3
7-1-2035................................... AA 983,418 1,022,163
------------- -------------
TOTAL ASSET BACKED SECURITIES................ $ 12,549,432 $ 13,159,120
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-40.40%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AIRLINES-4.08%
$1,000,000 AMR Corp., 10.00% Deb 4-15-2021.............. BBB- $ 1,167,297 $ 1,288,192
1,000,000 Federal Express Corp., 7.50% 1997-A Pass Thru
Certificate 1-15-2018...................... AAA 1,000,000 1,066,369
2,000,000 United Air Lines, 10.02% Deb 3-22-2014....... BBB- 2,410,315 2,509,580
------------- -------------
4,577,612 4,864,141
------------- -------------
AUTOMOBILE MANUFACTURERS-0.87%
1,000,000 Chrysler Corp., 7.40% Deb 8-1-2097........... A 999,140 1,034,313
------------- -------------
BANKS-4.33%
1,000,000 Comerica Bank, 7.875% 9-15-2026.............. A- 988,070 1,080,733
1,500,000 Keystone Financial Funding Corp., 7.30%
Medium Term Note 5-15-2004................. BBB+ 1,496,406 1,555,500
2,500,000 Nationsbank Corp., 7.25% Sub Note
10-15-2025................................. A 2,327,867 2,535,622
------------- -------------
4,812,343 5,171,855
------------- -------------
BROKERAGE AND INVESTMENT-1.30%
1,500,000 Lehman Brothers Holdings, 7.375% Sr Note
5-15-2004.................................. A 1,494,232 1,552,137
------------- -------------
CABLE TELEVISION-4.10%
1,000,000 Comcast Cable Communications, Inc., 8.50%
Note 5-1-2027 (with rights) (h)............ BBB- 998,293 1,117,700
1,500,000 Telecommunications, Inc., 9.80% Sr Note
2-1-2012................................... BBB- 1,658,835 1,808,856
1,800,000 Time Warner Entertainment, 8.375% Sr Note
7-15-2033.................................. BBB- 1,732,107 1,959,201
------------- -------------
4,389,235 4,885,757
------------- -------------
CHEMICALS-2.23%
600,000 Agrium, Inc., 7.70% 2-1-2017................. BBB 594,236 637,678
2,000,000 Lyondell Petrochemical, 7.55% Deb
2-15-2026.................................. BBB- 1,870,415 2,027,612
------------- -------------
2,464,651 2,665,290
------------- -------------
ENERGY-3.12%
1,500,000 Apache Corp, 7.70% 3-15-2026................. BBB 1,494,552 1,602,196
1,000,000 El Paso Natural Gas Co., 7.50% Deb
11-15-2026................................. BBB 1,000,000 1,045,351
500,000 NGC Corp., 7.625% Deb 10-15-2026............. BBB+ 497,627 525,760
</TABLE>
2
<PAGE>
CORPORATE BONDS-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
$ 500,000 NGC Corp., 8.316% Deb 6-1-2027 (h)........... BBB $ 500,000 $ 546,345
------------- -------------
3,492,179 3,719,652
------------- -------------
FOREIGN-GOVERNMENT-1.40%
1,500,000 Quebec (Province of), 8.80% Bond 4-15-2003... A+ 1,637,670 1,668,418
------------- -------------
FOREST PRODUCTS-3.41%
2,150,000 Georgia-Pacific Corp., 9.625% Deb
3-15-2022.................................. BBB- 2,169,817 2,439,715
1,500,000 Noranda, Inc., 8.625% Deb 7-15-2002.......... BBB 1,494,960 1,630,884
------------- -------------
3,664,777 4,070,599
------------- -------------
MEDIA-1.44%
1,500,000 News America Holdings, Inc., 8.875% Deb
4-26-2023.................................. BBB 1,488,271 1,715,526
------------- -------------
MISCELLANEOUS-2.10%
1,215,000 Minneapolis MN Community Development Agency,
11.25% Ltd Tax Dev Rev Bond Ser 1990-6B
6-1-2007................................... A- 1,241,875 1,374,715
1,000,000 New York (City of), 10.00% General Obligation
Taxable Bond Fiscal 1991 Ser D 8-1-2005.... BBB+ 950,103 1,136,953
------------- -------------
2,191,978 2,511,668
------------- -------------
NATURAL GAS TRANSMISSIONS-2.62%
1,500,000 Columbia Gas Systems, 7.62% 11-28-2025....... BBB+ 1,421,028 1,528,008
1,500,000 Tennessee Gas Pipeline, 7.625% 4-1-2037...... BBB 1,481,787 1,596,407
------------- -------------
2,902,815 3,124,415
------------- -------------
OIL-REFINING-1.28%
1,500,000 Coastal Corp., 7.42% Note 2-15-2037.......... BBB- 1,426,850 1,525,902
------------- -------------
RAILROAD AND RAILROAD EQUIPMENT-0.69%
750,000 CSX Corp., 7.90% Deb 5-1-2017 (h)............ BBB 749,567 817,982
------------- -------------
REAL ESTATE-INVESTMENT TRUST-0.89%
1,000,000 Meditrust, 7.82% Note 9-10-2026.............. BBB- 1,000,000 1,061,876
------------- -------------
RETAIL-DEPARTMENT STORES-1.22%
1,400,000 Dayton Hudson Co., 7.875% 6-15-2023.......... BBB+ 1,410,445 1,457,443
------------- -------------
TELECOMMUNICATIONS-2.21%
1,000,000 360 Communications Co., 7.50% Sr Note
3-1-2006................................... BBB- 997,921 1,034,547
1,500,000 U.S. West Capital Funding, Inc., 7.90%
2-1-2027................................... BBB+ 1,500,000 1,596,201
------------- -------------
2,497,921 2,630,748
------------- -------------
TELEPHONE SERVICES-1.79%
2,000,000 GTE Corp., 7.90% 2-1-2027.................... A 2,000,000 2,139,618
------------- -------------
UTILITIES-ELECTRIC-1.32%
1,500,000 Texas Utilities Electric Capital V, 8.175%
1-30-2037.................................. BBB 1,500,000 1,578,140
------------- -------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $ 44,699,686 $ 48,195,480
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-24.93%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AEROSPACE AND EQUIPMENT-0.31%
$ 350,000 K & F Industries, Inc., 11.875% Sr Secured
Note 12-1-2003............................. BB- $ 329,875 $ 368,375
------------- -------------
AIRLINES-0.49%
500,000 Northwest Airlines Trust No. 2, 13.875% Ser D
Sub Aircraft Note 6-21-2008................ BB+ 500,000 587,500
------------- -------------
APPAREL-0.45%
499,659 Hosiery Corp. of America, Inc., 13.75% Sr Sub
Note 8-1-2002.............................. NR 488,870 539,632
------------- -------------
</TABLE>
3
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
July 31, 1997
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.43%
$ 500,000 J.B. Poindexter & Co., 12.50% Sr Note
5-15-2004.................................. B- $ 480,275 $ 520,000
------------- -------------
BANKS-0.87%
1,000,000 Big V Supermarkets, 11.00% Sr Sub Note
2-15-2004.................................. B- 1,018,447 1,037,500
------------- -------------
CABLE TELEVISION-2.25%
1,000,000 Adelphia Communications Corp., 12.50% Sr Note
5-15-2002.................................. B 1,042,133 1,061,250
1,000,000 CCA Holdings Corp., 19.50% Sr Sub Zero Coupon
Note 12-31-1999 (matures at 1,860 per 1,000
face amount) (e) (f)....................... NR 1,213,048 1,310,000
500,000 Wireless One, Inc., 13.00% Sr Note
10-15-2003................................. B- 492,982 310,000
------------- -------------
2,748,163 2,681,250
------------- -------------
CHEMICALS-1.40%
1,000,000 LaRoche Industries, Inc., 13.00% Sr Sub Note
8-15-2004.................................. B 1,052,291 1,125,000
500,000 NL Industries, Inc., 11.75% Sr Secured Note
10-15-2003................................. B 513,936 551,250
------------- -------------
1,566,227 1,676,250
------------- -------------
CONSUMER GOODS-0.24%
250,000 Chattem, Inc., 12.75% Sr Sub Note Ser B
6-15-2004.................................. B- 230,313 282,500
------------- -------------
FINANCE COMPANIES-0.82%
406,000 Homeside, Inc., 11.25% Sr Secured Second
Priority Note 5-15-2003.................... BB+ 420,372 475,020
500,000 Wilshire Financial Services, 13.00% Note
1-1-2004................................... NR 505,972 505,000
------------- -------------
926,344 980,020
------------- -------------
FOOD-MISCELLANEOUS-0.46%
500,000 Envirodyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000......... B+ 496,443 545,000
------------- -------------
FOREST PRODUCTS-0.45%
500,000 Stone Container Corp., 11.875% Sr Note
8-1-2016................................... B 500,000 540,000
------------- -------------
HOUSING-1.36%
500,000 Hovnanian Enterprises, Inc., 11.25% Sub Note
4-15-2002.................................. B 515,614 520,000
1,000,000 MDC Holding, Inc., 11.125% Note 12-15-2003... B+ 1,010,488 1,097,500
------------- -------------
1,526,102 1,617,500
------------- -------------
INDUSTRIAL-2.09%
500,000 Amtrol, Inc., 10.625% Sr Sub Note
12-31-2006................................. B- 500,000 528,750
1,000,000 Precise Technology, Inc., 11.125% Sr Sub Note
6-15-2007 (f).............................. B- 1,000,000 1,012,500
1,000,000 Riverwood International, Inc., 10.875% Sr Sub
Note 4-1-2008.............................. CCC+ 925,409 951,250
------------- -------------
2,425,409 2,492,500
------------- -------------
LEISURE TIME-AMUSEMENTS-3.24%
500,000 Argosy Gaming Co., 13.25% First Mortgage Bond
6-1-2004................................... B+ 491,339 495,000
500,000 Kloster Cruise, Inc., 13.00% Sr Secured Note
5-1-2003 (f)............................... B 383,360 480,000
1,000,000 Mohegan Tribal Gaming, 13.50% Sr Note
11-15-2002................................. BB+ 1,220,373 1,315,000
500,000 Showboat Marina Casino & Finance Corp.,
13.50% First Mtg Bond 3-15-2003............ B 500,000 572,500
1,000,000 Trump Atlantic City Associates Funding, Inc.,
11.25% First Mtg Bond 5-1-2006............. BB- 995,844 1,002,500
------------- -------------
3,590,916 3,865,000
------------- -------------
MACHINERY-0.43%
500,000 MVE, Inc., 12.50% Sr Secured Note
2-15-2002.................................. B+ 497,457 515,000
------------- -------------
MORTGAGE BACKED SECURITIES-0.53%
837,495 Sandia Mtg Corp., 9.14% 1991 A Variable Rate
Pass Thru Certificate Class B 8-1-2018
(f)........................................ NR 630,397 628,121
------------- -------------
PUBLISHING-0.45%
500,000 Affinity Group Holding, 11.00% Sr Note
4-1-2007 (f)............................... B 504,298 535,000
------------- -------------
RETAIL-GROCERY-0.00%
500,000 Pay `N' Pak Stores, Inc., 13.50% Sr Sub Deb
6-1-1998 (a)............................... NR 498,688 2,500
------------- -------------
RETAIL-MISCELLANEOUS-0.03%
1,000,000 Color Tile, Inc., 10.75% Sr Note 12-15-2001
(a)........................................ NR 700,000 30,000
------------- -------------
</TABLE>
4
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
& Poor's
Principal Rating Market
Amount (Unaudited) Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
STEEL AND IRON-0.45%
$ 500,000 Weirton Steel Corp., 11.375% Sr Note
7-1-2004................................... B $ 502,362 $ 542,500
------------- -------------
TECHNOLOGY-0.47%
500,000 Advanced Micro Devices, 11.00% Sr Secured
Note 8-1-2003.............................. B 500,000 562,500
------------- -------------
TELECOMMUNICATIONS-6.82%
500,000 American Communications Services, Inc.,
13.75% Sr Note 7-15-2007 (f)............... NR 500,000 530,000
1,000,000 Dobson Communications Corp., 11.75% Sr Note
4-15-2007.................................. NR 953,065 970,000
500,000 Fonorola, Inc., 12.50% Sr Secured Note
8-15-2002.................................. B+ 500,000 557,500
500,000 Iridium LLC/Capital Corp., 14.00% Sr Note
7-15-2005 (f).............................. B- 477,211 505,000
500,000 IXC Communications, Inc., 12.50% Sr Note
10-1-2005.................................. B 513,995 570,000
500,000 Metrocall, Inc., 10.375% Sr Sub Note
10-1-2007.................................. CCC 433,854 475,000
1,000,000 Mobile Telecommunications, 13.50% Sr Note
12-15-2002................................. B- 1,015,781 1,092,500
1,000,000 Nextel Communications, 11.84% Sr Disc Note
8-15-2004 (Zero coupon through 2-15-1999,
thereafter
9.75%) (e)................................. CCC- 790,370 821,250
500,000 Nextlink Communications, L.L.C., 12.50% Sr
Note 4-15-2006............................. NR 500,000 560,000
1,000,000 Phonetel Technologies, 12.00% Sr Note
12-15-2006................................. B- 1,002,469 1,005,000
500,000 RSL Communications Ltd., 12.25% Sr Note
11-15-2006................................. B- 499,522 520,000
500,000 Western Wireless Corp., 10.50% Sr Sub Note
6-1-2006................................... B- 523,077 525,000
------------- -------------
7,709,344 8,131,250
------------- -------------
TEXTILE MANUFACTURING-0.45%
500,000 Pillowtex Corp., 10.00% Sr Sub Note
11-15-2006................................. B+ 525,668 540,000
------------- -------------
TOBACCO-0.44%
500,000 North Atlantic Trading, 11.00% Sr Note
6-15-2004 (f).............................. B 500,000 520,000
------------- -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $ 29,395,598 $ 29,739,898
------------- -------------
------------- -------------
</TABLE>
U.S. GOVERNMENT SECURITIES-20.66%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION-3.35%
MORTGAGE BACKED SECURITIES:
$1,022,205 8.00% 2001................................... $ 1,047,760 $ 1,053,510
401,893 9.00% 2022................................... 427,388 427,011
630,111 10.50% 2017.................................. 671,745 693,515
321,013 11.25% 2010.................................. 347,195 359,634
283,005 11.50% 2014-2015............................. 311,328 318,911
266,011 11.75% 2010.................................. 281,971 301,049
------------- -------------
3,087,387 3,153,630
------------- -------------
REMIC-IO & IO-ETTE:
16,203 10.00% Trust #1404-E Interest Only strip I/O
ette 2006 (g).............................. 86,364 241,425
------------- -------------
REMIC-PAC'S:
386,266 9.00% Trust #136D 2020....................... 388,198 393,581
208,324 9.50% Trust #1001F 2003...................... 212,360 208,796
------------- -------------
600,558 602,377
------------- -------------
TOTAL FEDERAL HOME LOAN MORTGAGE
CORPORATION................................ 3,774,309 3,997,432
------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION-7.63%
MORTGAGE BACKED SECURITIES:
2,553,821 7.50% 2024................................... 2,548,235 2,596,922
3,410,204 8.00% 2024-2025.............................. 3,453,556 3,513,573
1,564,652 10.50% 2014-2020............................. 1,639,140 1,722,094
829,416 11.00% 2011-2018............................. 854,268 923,243
36,534 11.25% 2011.................................. 37,926 40,906
</TABLE>
5
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
July 31, 1997
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
$ 116,079 12.00% 2014.................................. $ 123,588 $ 131,931
154,013 12.50% 2015.................................. 173,939 176,297
------------- -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ 8,830,652 9,104,966
------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION-3.73%
MORTGAGE BACKED SECURITIES:
1,277,448 9.00% 2021................................... 1,287,627 1,359,283
644,262 9.125% Fleet Mtg. Securities, Series 1989-3
Class D 2018 (GNMA Backed)................. 658,355 648,611
2,276,354 9.50% 2019-2020.............................. 2,367,010 2,445,434
------------- -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 4,312,992 4,453,328
------------- -------------
U.S. TREASURY SECURITIES-5.95%
BONDS:
1,400,000 8.875% 2019.................................. 1,748,073 1,808,187
------------- -------------
NOTES:
4,250,000 6.00% 1999................................... 4,243,615 4,271,250
1,000,000 6.375% 2000.................................. 1,011,531 1,014,687
------------- -------------
5,255,146 5,285,937
------------- -------------
TOTAL U.S. TREASURY SECURITIES............... 7,003,219 7,094,124
------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............. $ 23,921,172 $ 24,649,850
------------- -------------
------------- -------------
</TABLE>
COMMON STOCKS AND WARRANTS-0.05%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
------- ------------- -------------
<C> <S> <C> <C>
APPAREL-0.03%
500 Hosiery Corp. of America Class A (a)(f) ..... $ 8,460 $ 35,000
------------- -------------
LEISURE TIME-AMUSEMENTS-0.00%
6,000 Hemmeter Enterprises, Inc. (Warrants)
(a)(f)..................................... 24,000 --
------------- -------------
TELECOMMUNICATIONS-0.02%
500 RSL (Warrants) (a)(f)........................ 500 22,500
------------- -------------
TOTAL COMMON STOCKS AND WARRANTS............. 32,960 57,500
------------- -------------
------------- -------------
TOTAL LONG-TERM INVESTMENTS.................. $ 110,598,848 $ 115,801,848
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS-0.10%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
--------- -------------
<C> <S> <C>
BANKS-0.02%
$ 22,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.47%............. $ 22,000
-------------
DIVERSIFIED FINANCE-0.08%
100,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.43%...................... 100,000
-------------
TOTAL SHORT-TERM INVESTMENTS................. 122,000
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$110,720,848)(B)........................... $ 115,923,848
-------------
-------------
</TABLE>
(a) Presently non-income producing. For long-term debt securities, items
identified are in default as to payment of interest and/or principal.
(b) At July 31, 1997, the cost of securities for federal income tax purposes
was $110,786,287, and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 6,531,281
Unrealized depreciation........................... (1,393,720)
---------------------------------------------------------------
Net unrealized appreciation....................... $ 5,137,561
---------------------------------------------------------------
</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 4.20% of net assets as of July 31, 1997.
(e) The interest rate disclosed for these securities represents the effective
yield on the date of acquisition.
(f) Securities issued 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:
<TABLE>
<CAPTION>
Date Acquired Shares/Par Security Cost Basis
- ------------------ ----------- ------------------------------------------------------------------------------ ----------
<S> <C> <C> <C>
July 18, 1997 500,000 American Communications Services, due 2007 - 144A $ 500,000
April 8, 1997 500,000 Affinity Group Holding, due 2007 - 144A 504,298
February 3, 1997 1,000,000 CCA Holding, due 1999 - 144A 1,213,048
July 11, 1994 6,000 Hemmeter Enterprises, Inc. (warrants) 24,000
October 7, 1994 500 Hosiery Corp. of America, Class A (warrants) - 144A 8,460
July 11, 1997 500,000 Iridium LLC, due 2005 - 144A 477,211
August 3, 1995 500,000 Kloster Cruise, Inc., due 2003 383,360
June 18, 1997 500,000 North Atlantic, due 2004 - 144A 500,000
June 10, 1997 1,000,000 Precise Tech, due 2007 - 144A 1,000,000
September 30, 1996 500 RSL (Warrants) - 144A 500
March 8, 1993 733,281 Sandia Mortgage Corp., due 2018 - restricted 550,152
October 26, 1993 104,214 Sandia Mortgage Corp., due 2018 - restricted 80,245
</TABLE>
The value of these securities at July 31, 1997, is $5,578,122 which
represents 4.68% of net assets.
(g) The interest rate disclosed for interest only strips represent the
effective yield at July 31, 1997, based upon the estimated timing and
amount of future cash flows. This investment has been identified by
portfolio management as an illiquid security. The aggregate value of this
security at July 31, 1997 is $241,425 which represents .20% of net assets.
(h) Securities issued 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". Pursuant to guidelines adopted by the Board of
Directors, these issues are determined to be liquid. The value of these
securities at July 31, 1997 is $2,482,027 which represents 2.08% of net
assets.
* Moody's Rating
7
<PAGE>
FORTIS SECURITIES, INC.
Statement of Assets and Liabilities
July 31, 1997
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, as detailed in the accompanying
schedules, at market (cost $110,720,848) (Note 1)....... $ 115,923,848
Receivables:
Investment securities sold.............................. 1,869,967
Interest and dividends.................................. 2,361,493
-------------
TOTAL ASSETS................................................ 120,155,308
-------------
LIABILITIES
Bank overdraft............................................ 6,058
Dividends payable ($.061 per share)....................... 769,908
Payable for investment advisory and management fees (Note
2)...................................................... 57,510
Accounts payable and accrued expenses..................... 36,872
-------------
TOTAL LIABILITIES........................................... 870,348
-------------
NET ASSETS
Net proceeds of capital stock, par value $.01 per share-
authorized 15,000,000 shares; outstanding 12,621,450
shares.................................................. 132,852,713
Unrealized appreciation of investments.................... 5,203,000
Undistributed net investment income....................... 287,278
Accumulated net realized loss from sale of investments.... (19,058,031)
-------------
TOTAL NET ASSETS............................................ $ 119,284,960
-------------
NET ASSET VALUE PER SHARE................................... $9.45
-------------
Statement of Operations
For the Year Ended July 31, 1997
- ----------------------------------------------------------------------------
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
Income
Interest income......................................... $ 10,001,845
-------------
Expenses:
Investment advisory and management fees (Note 2)........ 687,241
Legal and auditing fees (Note 2)........................ 26,212
Custodian fees.......................................... 21,974
Shareholders' notices and reports....................... 74,863
Directors' fees and expenses............................ 14,455
Exchange listing fees................................... 28,323
Other................................................... 18,579
-------------
Total expenses............................................ 871,647
-------------
NET INVESTMENT INCOME....................................... 9,130,198
-------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 1):
Net realized gain from security transactions.............. 188,166
Net change in unrealized appreciation of investments in
securities.............................................. 5,994,806
-------------
NET GAIN ON INVESTMENTS..................................... 6,182,972
-------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 15,313,170
-------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
FORTIS SECURITIES, INC.
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
JULY 31, 1997 JULY 31, 1996
------------- -------------
<S> <C> <C>
OPERATIONS
Net investment income........................... $ 9,130,198 $ 9,773,183
Net realized gain (loss) from security
transactions.................................. 188,166 (2,281,389)
Net change in unrealized appreciation
(depreciation) of investments................. 5,994,806 (130,897)
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 15,313,170 7,360,897
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income...................... (8,824,054) (9,750,940)
Excess distributions of net realized gains (Note
1)............................................ (423,050) (194,644)
------------- -------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (9,247,104) (9,945,584)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from 6,372 and 11,289 shares issued as
a result of reinvested dividends.............. 67,899 93,545
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS........... 6,133,965 (2,491,142)
NET ASSETS:
Beginning of year............................... 113,150,995 115,642,137
------------- -------------
End of year (includes undistributed (excess of
distributions over) net investment income of
$287,278 and $(18,866), respectively)......... $ 119,284,960 $ 113,150,995
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fortis Securities, Inc., ("the
fund") is a closed-end diversified management investment company. The primary
investment objective of the fund is to seek a high level of current income
through investment in a diversified portfolio of debt securities, some of
which may be privately placed and some of which may have equity features.
Capital appreciation is a secondary objective.
SECURITY VALUATION: Investments in securities traded on a national securities
exchange or on the NASDAQ National Market System are valued at the last
reported sales price. Securities for which over-the-counter market quotations
are readily available are valued on the basis of the last current bid price.
An outside pricing service may be utilized to provide such valuations. The
pricing service may employ electronic data processing techniques and/or a
matrix system to determine valuations using methods which include
consideration of yields or prices of bonds of comparable quality, type of
issue, coupon, maturity and rating indications as to value from dealers, and
general market conditions. Securities for which quotations are not readily
available are valued at fair value as determined in good faith by management
under supervision of the Board of Directors. Short-term investments, with
maturities of less than 60 days when acquired, or which subsequently are
within 60 days of maturity, are valued at amortized cost.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS: Delivery and payment for
securities that have been purchased by the Fortis Securities Fund on a
forward commitment or when-issued basis can take place a month or more after
the transaction date. During this period, such securities are subject to
market fluctuations and the fund maintains, in a segregated account with its
custodian, assets with a market value equal to the amount of its purchase
commitments. As of July 31, 1997, there were no outstanding purchases on a
when-issued basis.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security transactions
are accounted for on trade date. Interest income is recorded on the accrual
basis. Realized security gains and losses are determined using the identified
cost method. For the year ended July 31, 1997, the cost of purchases and
proceeds from sales of securities (other than short-term securities)
aggregated $145,988,799 and $149,740,824, respectively.
INCOME TAXES: The fund intends to qualify, under the Internal Revenue Code,
as a regulated investment company and if so qualified, will not have to pay
federal income taxes to the extent its taxable income is distributed. On a
calendar year basis, the fund is subject to a 4% federal excise tax to the
extent it does not distribute substantially all of its net investment income
and realized gains, if any.
Net investment income and net realized gains differ for financial statement
and tax purposes primarily because of bond premium and market discount
recognition policies and wash sale transactions. The character of
distributions made during the year from net investment income or net realized
gains may therefore differ from their ultimate characterization for federal
income tax purposes. 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.
On the statement of Assets and Liabilities; due to permanent book-to-tax
differences, accumulated net realized loss has been decreased $2,087,647;
resulting in a reclassification to reduce paid-in-capital by the same amount.
For federal income tax purposes, the fund had a capital loss carryover of
$18,992,592 at July 31, 1997, which, if not offset by subsequent capital
gains will expire as follows:
<TABLE>
<S> <C>
1998......................................... $ 1,344,644
1999......................................... 5,325,293
2001......................................... 315,226
2002......................................... 258,409
2003......................................... 4,462,090
2004......................................... 7,000,194
2005......................................... 286,736
</TABLE>
It is unlikely the Board of Directors will authorize a distribution of any
net realized gains until the available capital loss carryover has been offset
or expired.
ILLIQUID SECURITIES: At July 31, 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 July 31, 1997, was
$5,819,547 which represents 4.88% 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 15). 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 net investment income.
Legal fees and expenses aggregating $2,596 for the year ended July 31, 1997,
were paid to a law firm of which the secretary of the fund is a partner.
10
<PAGE>
- --------------------------------------------------------------------------------
3. FINANCIAL HIGHLIGHTS: Selected per share historical data was as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
-------------------------------------------------------------
1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of year...... $ 8.97 $ 9.18 $ 9.33 $ 10.24 $ 10.13
--------- --------- --------- --------- ---------
Operations:
Investment income - net............... .72 .78 .84 .93 1.02
Net realized and unrealized gain
(loss) on investments............... .49 (.20) (.11) (.89) .12
--------- --------- --------- --------- ---------
Total from operations................... 1.21 .58 .73 .04 1.14
--------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... (.70) (.78) (.87) (.95) (1.03)
Excess distributions of net realized
gains............................... (.03) (.01) (.01) -- --
--------- --------- --------- --------- ---------
Total distributions to shareholders..... (.73) (.79) (.88) (.95) (1.03)
--------- --------- --------- --------- ---------
Net asset value, end of year............ $ 9.45 $ 8.97 $ 9.18 $ 9.33 $ 10.24
--------- --------- --------- --------- ---------
Per-share market value, end of year..... $ 8.688 $ 7.875 $ 8.75 $ 9.625 $ 11.50
Total investment return, market
value*................................ 20.27% (1.36%) 0.25% (8.16%) 9.91%
Total investment return, net asset
value**............................... 14.83% 6.93% 8.46% 0.01% 11.06%
Net assets end of year (000s omitted)... $ 119,285 $ 113,151 $ 115,642 $ 115,350 $ 123,541
Ratio of expenses to average monthly net
assets................................ 0.76% 0.80% 0.78% 0.76% 0.80%
Ratio of net investment income to
average monthly net assets............ 7.91% 8.47% 9.33% 9.30% 10.12%
Portfolio turnover rate................. 130% 67% 75% 125% 86%
</TABLE>
* Total investment return, market value, is based on the change in
market price of a share during the period and assumes reinvestment of
distributions at actual prices pursuant to the fund's dividend
reinvestment plan.
** Total investment return, net asset value, is based on the change in
net asset value of a share during the period and assumes reinvestment
of distributions at actual prices pursuant to the fund's dividend
reinvestment plan.
11
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Fortis Securities, Inc.:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of Fortis Securities, Inc. as of July
31, 1997 and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two-year period
ended July 31, 1997 and the financial highlights for each of the years in the
five-year period ended July 31, 1997. These financial statements and the
financial highlights are the responsibility of fund management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities sold but not delivered, we request confirmations
from brokers, and where replies are not received, we carry out other appropriate
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Fortis
Securities, Inc. as of July 31, 1997 and the results of its operations, changes
in its net assets and the financial highlights for each of the periods stated in
the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
September 5, 1997
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 PRESIDENT, CRANBROOK EDUCATION
COMMUNITY. PRIOR TO JULY 1996,
PRESIDENT MACALESTER COLLEGE
Benjamin S. Jaffray CHAIRMAN, SHEFFIELD GROUP, LTD.
Jean L. King PRESIDENT, COMMUNI-KING
Dean C. Kopperud CHIEF EXECUTIVE OFFICER AND DIRECTOR,
FORTIS ADVISERS, INC. PRESIDENT AND
DIRECTOR, FORTIS INVESTORS, INC.
SENIOR VICE PRESIDENT AND DIRECTOR,
FORTIS BENEFITS INSURANCE COMPANY AND
TIME INSURANCE COMPANY
Edward M. Mahoney PRIOR TO JANUARY, 1995, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER, FORTIS
ADVISERS, INC., FORTIS INVESTORS,
INC.
Robb L. Prince FINANCIAL AND EMPLOYEE BENEFIT
CONSULTANT PRIOR TO JULY, 1995, VICE
PRESIDENT AND TREASURER, JOSTENS,
INC.
Leonard J. Santow PRINCIPAL, GRIGGS & SANTOW, INC.
Noel Shadko MARKETING CONSULTANT. PRIOR TO MAY,
1996, SENIOR VICE PRESIDENT OF
MARKETING & STRATEGIC PLANNING,
ROLLERBLADE, INC.
Joseph M. Wikler INVESTMENT CONSULTANT AND PRIVATE
INVESTOR. PRIOR TO JANUARY, 1994,
DIRECTOR OF RESEARCH, CHIEF
INVESTMENT OFFICER, PRINCIPAL, AND
DIRECTOR, THE ROTHSCHILD CO.
OFFICERS
Dean C. Kopperud
PRESIDENT AND DIRECTOR
Robert W. Beltz, Jr.
VICE PRESIDENT
James S. Byrd
VICE PRESIDENT
Tamara L. Fagely
VICE PRESIDENT AND TREASURER
Howard G. Hudson
VICE PRESIDENT
David A. Peterson
VICE PRESIDENT
Scott R. Plummer
VICE PRESIDENT
Rhonda J. Schwartz
VICE PRESIDENT
Gary N. Yalen
VICE PRESIDENT
Michael J. Radmer
SECRETARY
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 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.
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 with nationwide sales and marketing
influence. The guarantees in our insurance products are underwritten by Fortis
Benefits Insurance Company and Time Insurance Company.
[PHOTO]
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 investments. Fortis is jointly
owned by Fortis AMEV of The Netherlands and Fortis AG of Belgium.
- - FOR MORE INFORMATION, CALL YOUR INVESTMENT REPRESENTATIVE OR FORTIS AT
(800) 800-2638.
- -------------------------------------------------------------------------------
---------------
[LOGO] Bulk Rate
U.S. Postage
FORTIS FINANCIAL GROUP PAID
P.O. BOX 64284 Permit No. 3794
ST. PAUL, MN 55164 Minneapolis, MN
---------------
FORTIS SECURITIES FUND, INC.
- - Printed on recycled paper with
40% preconsumer waste and 10%
post consumer waste. Please recycle.
FORTIS-Registered Trademark- and Fortis-Registered Trademark- are registered
servicemarks of Fortis AMEV and Fortis AG.
95387 (9/97)
