<PAGE>
[FORTIS LOGO] -REGISTERED TRADEMARK-
[GRAPHIC]
A DISCIPLINED, CONSISTENT
APPROACH TO INVESTING . . .
FORTIS
SECURITIES FUND, INC.
SEMI-ANNUAL REPORT
January 31, 1998
<PAGE>
FORTIS SECURITIES, INC. SEMI-ANNUAL REPORT
CONTENTS
LETTER TO SHAREHOLDERS 1
SCHEDULES OF INVESTMENTS 2
STATEMENT OF ASSETS AND LIABILITIES 8
STATEMENT OF OPERATIONS 8
STATEMENT OF CHANGES IN NET ASSETS 9
NOTES TO FINANCIAL STATEMENTS 10
BOARD OF DIRECTORS AND OFFICERS 12
OTHER PRODUCTS AND SERVICES 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, 1998:
TOTAL NET ASSETS............................. $ 121,833,175
MARKET PRICE PER SHARE....................... $ 9.563
SHARES OUTSTANDING........................... 12,622,518
FOR THE SIX-MONTH PERIOD ENDED JANUARY 31,
1998:
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 9.45
End of period.............................. $ 9.65
DISTRIBUTION FROM NET INVESTMENT INCOME:
TOTAL DIVIDENDS PAID....................... $ 4,749,928
DIVIDENDS PER SHARE........................ $ .376
</TABLE>
<PAGE>
PORTFOLIO ALLOCATION AS OF 1/31/98
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds - Investment Grade 46.8%
Corporate Bonds - Non-Investment Grade 24.5%
Asset Backed Securities 10.0%
FNMAs 6.7%
FHLMCs 2.7%
GNMAs 3.0%
Cash Equivalent/Receivables 2.4%
U.S. Treasury Securities 3.9%
</TABLE>
GLOSSARY OF TERMS
Terms defined are in ITALICS in the shareholder letter
DURATION: 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.
GROSS DOMESTIC PRODUCT (GDP): The market value of a countries total output of
goods and services.
SECTOR ALLOCATION STRATEGY: Determination of the industry allocation throughout
the portfolio.
TOP 10 HOLDINGS AS OF 1/31/98
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. Green Tree Financial Corp. (7.65%) 2019 2.6%
2. DLJ Mortgage Acceptance Corp. (8.50%) 2001 2.6%
3. U.S. Treasury Note (6.25%) 2002 2.2%
4. Nationsbank Corp. (7.25%) 2025 2.2%
5. United Air Lines (10.02%) 2014 2.1%
6. Georgia-Pacific Corp. (9.625%) 2022 2.0%
7. FNMA (7.50%) 2028 2.0%
8. GTE Corp. (7.90%) 2027 1.8%
9. Lyondell Petrochemical (7.55%) 2026 1.7%
10. Time Warner Entertainment (8.375%) 2033 1.7%
</TABLE>
DEAR SHAREHOLDER,
We are pleased to present the Fortis Securities semi-annual report for the
period ended January 31, 1998.
REVIEW
The U.S. economy stayed on the path of above average growth and low inflation
during the past six months, stretching the current economic expansion late into
its seventh year. The fundamentals of the U.S. economy remain extraordinarily
strong. Inflation and the fiscal deficit are at 30-year lows, (with a budget
surplus projected for 1998) and the unemployment rate is at 4.7 percent. In
1997, GROSS DOMESTIC PRODUCT (GDP) grew at a 3.9 percent pace, finishing the
year robustly with a 4.3 percent gain in the fourth quarter. A potential
negative for the U.S. economy is the ongoing disruptions in the Asian economies.
In the fourth quarter of 1997, it became apparent that the Asian economies were
much weaker than previously thought and their currencies and financial markets
came under pressure. So far, the impact on the U.S. market has been small and
bond markets have reacted favorably.
For the six months ended January 31, 1998, the Fortis Securities Fund provided a
distribution yield of 7.87 percent based on market value, among the highest in
its competitive universe (Lipper Closed-End Investment Grade Bond Funds). The
Fund had a market value total return of 14.64 percent and a net asset value
total return of 6.40 percent in the same period. The Fund's better than average
return was primarily due to the decline in bond yields and our 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. Given an
investment climate that was little changed over the past six months, our current
investment strategies are similar to those we employed last year. Specifically,
we have maintained a maximum 25 percent allocation in lower-rated corporate debt
and have kept the Fund's DURATION close to six years to take advantage of
declining interest rates.
OUTLOOK
We expect the U.S. economy to remain strong in the near future, although the
problems in Asia may impede growth to some extent. The magnitude of Asia's
troubles and their impact on the U.S. economy is still not known. Our feeling is
that it will have a modest dampening effect on our economy causing GDP growth to
slow to a 2.0 - 2.5 percent range. The impact on inflation ought to be positive
and we anticipate inflation to remain at its current levels. Low inflation and
slower growth should keep monetary policy on hold for the earlier part of the
year. Although Asia has increased the level of uncertainty in U.S. markets, we
continue to think that interest rates are headed lower in the long term. Our
outlook for investment grade and lower grade corporate bonds is tempered
somewhat by Asia, but is still favorable and we will maintain an slight
overweight position in both sectors.
We appreciate your investment with Fortis. If you have any questions, please
call us or your investment professional.
Sincerely,
[SIGNATURE] [SIGNATURE]
Dean C. Kopperud Howard G. Hudson
President Vice President
March 12, 1998
1
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
(Unaudited)
January 31, 1998
ASSET BACKED SECURITIES-9.96%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
COMMERCIAL LOANS-0.98%
$1,100,000 Midland Realty Acceptance Corp., 7.76% Ser
1996-C1 Class B 7-25-2008.................. AA $ 1,110,185 $ 1,186,969
------------- -------------
MANUFACTURED HOMES-3.43%
3,000,000 Green Tree Financial Corp., 7.65% Ser 1994-1
Class A5 4-15-2019......................... Aa2* 2,988,281 3,185,841
1,000,000 Green Tree Financial Corp., 7.76% Ser 1997-1
Class B2 3-15-2028......................... Baa* 999,845 996,562
------------- -------------
3,988,126 4,182,403
------------- -------------
MULTI-FAMILY LOANS-4.71%
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 3,125,160
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 1,053,960
1,500,000 J.P. Morgan Commercial Mtg Finance Corp.,
7.35% Ser 1997-C5 Class D 9-15-2029........ BBB 1,543,740 1,559,531
------------- -------------
5,550,146 5,738,651
------------- -------------
WHOLE LOAN RESIDENTIAL-0.84%
966,654 Mid-State Trust, 7.54% Ser 6 Class A3
7-1-2035................................... AA 966,052 1,028,153
------------- -------------
TOTAL ASSET BACKED SECURITIES................ $ 11,614,509 $ 12,136,176
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-46.83%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AIR FREIGHT-1.79%
$1,000,000 Federal Express, 7.50% Pass Thru Certificate
Ser 1997-A 1-15-2018....................... AAA $ 1,000,000 $ 1,079,320
1,000,000 Federal Express, 7.84% Pass Thru Certificate
Ser 1996-B2 1-30-2018...................... BBB+ 1,000,000 1,105,850
------------- -------------
2,000,000 2,185,170
------------- -------------
AIRLINES-4.47%
1,000,000 AMR Corp., 10.00% Deb 4-15-2021.............. BBB- 1,166,117 1,338,490
1,200,000 Delta Airlines, 10.50% Pass Thru Certificate
4-30-2016.................................. BBB 1,457,915 1,597,667
2,000,000 United Air Lines, 10.02% Deb 3-22-2014....... BBB 2,404,018 2,515,840
------------- -------------
5,028,050 5,451,997
------------- -------------
AUTOMOBILE MANUFACTURERS-0.86%
1,000,000 Chrysler Corp., 7.40% Deb 8-1-2097........... A 999,140 1,053,313
------------- -------------
BANKS-4.42%
1,000,000 Comerica Bank, 7.875% 9-15-2026.............. A- 988,125 1,130,871
1,500,000 Keystone Financial Funding Corp., 7.30%
Medium Term Note 5-15-2004................. Baa2* 1,496,616 1,583,242
2,500,000 Nationsbank Corp., 7.25% Sub Note
10-15-2025................................. A 2,328,742 2,667,547
------------- -------------
4,813,483 5,381,660
------------- -------------
BROKERAGE AND INVESTMENT-1.30%
1,500,000 Lehman Brothers Holdings, 7.375% Sr Note
5-15-2004.................................. A 1,494,568 1,581,612
------------- -------------
CABLE TELEVISION-4.88%
1,000,000 Comcast Cable Communications, Inc., 8.50%
Note 5-1-2027 (with rights)................ BBB- 998,300 1,202,138
750,000 Cox Communications, Inc., 6.95% 1-15-2028.... Baa2* 747,218 751,875
1,500,000 Telecommunications, Inc., 9.80% Sr Note
2-1-2012................................... BBB- 1,658,835 1,919,272
1,800,000 Time Warner Entertainment, 8.375% Sr Note
7-15-2033.................................. Baa3* 1,732,251 2,070,722
------------- -------------
5,136,604 5,944,007
------------- -------------
CHEMICALS-2.27%
600,000 Agrium, Inc., 7.70% 2-1-2017................. BBB 594,302 653,728
2,000,000 Lyondell Petrochemical, 7.55% Deb
2-15-2026.................................. BBB- 1,871,016 2,108,134
------------- -------------
2,465,318 2,761,862
------------- -------------
</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>
ENERGY-1.84%
$1,500,000 Apache Corp, 7.70% 3-15-2026................. BBB $ 1,494,579 $ 1,666,800
500,000 NGC Corp. Capital Trust, 8.32% 6-1-2027...... Baa3* 500,000 571,064
------------- -------------
1,994,579 2,237,864
------------- -------------
FOREIGN-GOVERNMENT-1.38%
1,500,000 Quebec (Province of), 8.80% Bond 4-15-2003... A+ 1,637,670 1,679,460
------------- -------------
FOREST PRODUCTS-3.38%
2,150,000 Georgia-Pacific Corp., 9.625% Deb
3-15-2022.................................. BBB- 2,169,818 2,485,802
1,500,000 Noranda, Inc., 8.625% Deb 7-15-2002.......... BBB 1,494,960 1,629,129
------------- -------------
3,664,778 4,114,931
------------- -------------
HOUSING-1.29%
1,500,000 Pulte Corp., 7.625% Note 10-15-2017.......... BBB 1,478,390 1,570,680
------------- -------------
MEDIA-2.09%
750,000 Belo (A.H.) Corp., 7.25% Note 9-15-2027...... BBB- 745,590 777,903
1,500,000 News America Holdings, 8.875% Deb
4-26-2023.................................. BBB- 1,488,501 1,767,174
------------- -------------
2,234,091 2,545,077
------------- -------------
MISCELLANEOUS-2.05%
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 1,371,661
1,000,000 New York (City of), 10.00% General Obligation
Taxable Bond Fiscal 1991 Ser D 8-1-2005.... BBB+ 952,132 1,133,158
------------- -------------
2,194,007 2,504,819
------------- -------------
NATURAL GAS TRANSMISSIONS-3.06%
1,500,000 Columbia Gas Systems, 7.62% 11-28-2025....... BBB+ 1,421,408 1,566,678
1,500,000 Tennessee Gas Pipeline, 7.625% 4-1-2037...... BBB 1,481,824 1,643,485
500,000 Trans-Canada Pipelines Ltd., 7.06% Note
10-14-2025................................. A- 500,000 519,155
------------- -------------
3,403,232 3,729,318
------------- -------------
OIL-CANADIAN-0.86%
1,000,000 Talisman Energy, Inc., 7.25% 10-15-2027...... Baa1* 993,149 1,042,911
------------- -------------
OIL-OFFSHORE DRILLING-0.83%
1,000,000 Seagull Energy Corp., 7.50% Sr Note
9-15-2027.................................. BBB- 995,454 1,017,232
------------- -------------
OIL-REFINING-1.30%
1,500,000 Coastal Corp., 7.42% Note 2-15-2037.......... BBB- 1,426,995 1,586,951
------------- -------------
RAILROAD AND RAILROAD EQUIPMENT-0.69%
750,000 CSX Corp., 7.90% Deb 5-1-2017................ Baa2* 749,572 845,750
------------- -------------
REAL ESTATE-INVESTMENT TRUST-0.91%
1,000,000 Meditrust, 7.82% Note 9-10-2026.............. BBB- 1,000,000 1,104,656
------------- -------------
RETAIL-DEPARTMENT STORES-1.24%
1,400,000 Dayton Hudson Co., 7.875% 6-15-2023.......... BBB+ 1,410,380 1,506,189
------------- -------------
TELECOMMUNICATIONS-2.22%
1,000,000 360 Communications Co., 7.50% Sr Note
3-1-2006................................... BBB- 998,010 1,052,183
1,500,000 U.S. West Capital Funding, Inc., 7.90%
2-1-2027................................... BBB+ 1,500,000 1,651,779
------------- -------------
2,498,010 2,703,962
------------- -------------
TELEPHONE SERVICES-1.76%
2,000,000 GTE Corp., 7.90% 2-1-2027.................... A 2,000,000 2,141,260
------------- -------------
UTILITIES-ELECTRIC-1.94%
750,000 Puget Sound Energy, Inc., 7.02% Medium Term
Note 12-1-2027............................. A- 750,000 735,040
1,500,000 Texas Utilities Electric Capital V, 8.175%
1-30-2037.................................. BBB 1,500,000 1,633,428
------------- -------------
2,250,000 2,368,468
------------- -------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $ 51,867,470 $ 57,059,149
------------- -------------
------------- -------------
</TABLE>
3
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
(Unaudited)
January 31, 1998
CORPORATE BONDS-NON-INVESTMENT GRADE-24.48%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- ------------- ------------- -------------
<C> <S> <C> <C> <C>
AIRLINES-0.92%
$ 500,000 Northwest Airlines Trust No. 2, 13.875% Sub
Aircraft Note Ser D 6-21-2008.............. BB+ $ 500,000 $ 606,074
500,000 Trans World Airlines, 11.50% Sr Secured Note
12-15-2004 (e)............................. CCC 494,192 515,000
------------- -------------
994,192 1,121,074
------------- -------------
APPAREL-0.45%
500,000 Hosiery Corp. of America, Inc., 13.75% Sr Sub
Note 8-1-2002.............................. B- 489,450 546,250
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.82%
500,000 Highwaymaster, Inc., 13.75% Sr Note
9-15-2005.................................. B- 520,399 521,250
500,000 J.B. Poindexter & Co., 12.50% Sr Note
5-15-2004.................................. B- 481,218 475,000
------------- -------------
1,001,617 996,250
------------- -------------
BUSINESS SERVICES AND SUPPLIES-0.41%
500,000 T/SF Communications Corp., 10.375% Sr Sub
Note 11-1-2007 (f)......................... B- 490,138 496,250
------------- -------------
CABLE TELEVISION-1.28%
260,000 Adelphia Communications Corp., 12.50% Sr Note
5-15-2002.................................. B 269,567 275,600
527,500 Falcon Holding Group, L.P., 11.00% Sr Sub
Note Ser B 9-15-2003 (Interest is
Payable-in-Kind)........................... NR 524,346 562,027
500,000 Rifkin Aquisition Partners L.P., 11.125% Sr
Sub Note 1-15-2006......................... B3* 554,323 551,875
500,000 Wireless One, Inc., 13.00% Sr Note
10-15-2003................................. B- 493,366 170,000
------------- -------------
1,841,602 1,559,502
------------- -------------
CHEMICALS-0.88%
500,000 NL Industries, Inc., 11.75% Sr Secured Note
10-15-2003................................. B 513,119 556,250
500,000 Sterling Chemicals, Inc., 11.75% Sr Sub Note
8-15-2006.................................. B+ 524,807 515,000
------------- -------------
1,037,926 1,071,250
------------- -------------
CONSUMER GOODS-0.23%
250,000 Chattem, Inc., 12.75% Sr Sub Note Ser B
6-15-2004.................................. B- 230,312 283,750
------------- -------------
FINANCE COMPANIES-0.40%
406,000 Homeside, Inc., 11.25% Second Priority Sr
Secured Note 5-15-2003..................... BB+ 419,429 483,140
------------- -------------
FOOD-MISCELLANEOUS-0.44%
500,000 Envirodyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000......... B+ 496,982 533,125
------------- -------------
FOREST PRODUCTS-1.24%
1,000,000 Riverwood International, Inc., 10.875% Sr Sub
Note 4-1-2008.............................. CCC+ 927,207 980,000
500,000 Stone Container Corp., 12.58% Sr Note
8-1-2016................................... B 500,000 535,000
------------- -------------
1,427,207 1,515,000
------------- -------------
HOUSING-0.91%
1,000,000 MDC Holding, Inc., 11.125% Note 12-15-2003... BB- 1,009,773 1,105,000
------------- -------------
INDUSTRIAL-0.96%
1,500,000 Intelcom Group , Inc., 10.26% Sr Disc Note
5-1-2006 (Zero coupon through 5-1-2001,
thereafter 12.50%) (g)..................... NR 1,128,607 1,177,500
------------- -------------
LEISURE TIME-AMUSEMENTS-0.90%
500,000 Kloster Cruise, Inc., 13.00% Sr Secured Note
5-1-2003 (e)............................... B 389,198 500,000
500,000 Showboat Marina Casino & Finance Corp.,
13.50% First Mtg Bond 3-15-2003............ B 500,000 592,500
------------- -------------
889,198 1,092,500
------------- -------------
MORTGAGE BACKED SECURITIES-0.50%
813,015 Sandia Mtg Corp., 9.14% Variable Rate Pass
Thru Certificate Ser 1991-A Class B
8-1-2018 (e)............................... NR 612,037 609,761
------------- -------------
PUBLISHING-0.90%
500,000 Affinity Group Holding, 11.00% Sr Note
4-1-2007................................... NR 504,164 540,000
500,000 Garden State Newspapers, 12.00% Sr Sub Note
7-1-2004................................... B+ 565,406 560,000
------------- -------------
1,069,570 1,100,000
------------- -------------
</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>
RESTAURANTS AND FRANCHISING-0.76%
$ 370,000 Advantica Restaurant Group, Inc., 11.25% Sr
Note 1-15-2008............................. B2* $ 400,470 $ 395,900
500,000 Friendly Ice Cream, 10.50% Sr Note
12-1-2007.................................. B 504,346 527,500
------------- -------------
904,816 923,400
------------- -------------
RETAIL-GROCERY-0.86%
1,000,000 Big V Supermarkets, 11.00% Sr Sub Note
2-15-2004.................................. B- 1,017,432 1,045,000
500,000 Pay 'N' Pak Stores, Inc., 13.50% Sr Sub Deb
6-1-1998 (a)............................... NR 498,687 2,500
------------- -------------
1,516,119 1,047,500
------------- -------------
RETAIL-MISCELLANEOUS-0.01%
1,000,000 Color Tile, Inc., 10.75% Sr Note 12-15-2001
(a)........................................ NR 700,000 10,000
------------- -------------
STEEL AND IRON-0.44%
500,000 Weirton Steel Corp., 11.375% Sr Note
7-1-2004................................... B 502,244 532,500
------------- -------------
TECHNOLOGY-0.44%
500,000 Advanced Micro Devices, 11.00% Sr Secured
Note 8-1-2003.............................. B 500,000 537,500
------------- -------------
TELECOMMUNICATIONS-9.86%
1,000,000 American Communications Services, Inc.,
13.75% Sr Note 7-15-2007 (e)............... NR 1,102,428 1,205,000
1,000,000 Dobson Communications Corp., 11.75% Sr Note
4-15-2007.................................. NR 954,377 1,090,000
500,000 Fonorola, Inc., 12.50% Sr Secured Note
8-15-2002.................................. BB- 500,000 558,750
500,000 Globalstar L.P. Capital Corp., 10.75% Sr Note
11-1-2004 (e).............................. NR 494,148 498,750
500,000 Iridium LLC/Capital Corp., 14.00% Sr Note
7-15-2005.................................. B- 478,024 560,000
500,000 IXC Communications, Inc., 12.50% Sr Note
10-1-2005.................................. B 513,461 578,125
500,000 Metrocall, Inc., 10.375% Sr Sub Note
10-1-2007.................................. CCC 435,549 511,250
500,000 Microcell Telecommunications, Inc., 12.30% Sr
Disc Note 6-1-2006 (Zero coupon through
12-1-2001, thereafter 14.00%) (g).......... B3* 330,068 360,000
1,000,000 Nextel Communications, Inc., 9.58% Sr Disc
Note 9-15-2007 (Zero coupon through
9-15-2002, thereafter 10.65%) (g).......... CCC+ 663,711 665,000
500,000 Nextlink Communications, L.L.C., 12.50% Sr
Note 4-15-2006............................. B 500,000 576,250
1,000,000 Omnipoint Corp., 11.625% Sr Note 8-15-2006
Ser A...................................... CCC+ 972,659 1,095,000
1,000,000 Orbcomm Global LP Capital, 14.00% Sr Note
8-15-2004.................................. NR 1,035,913 1,130,000
1,000,000 Paging Network, 10.00% Sr Sub Note
10-15-2008................................. B 1,042,462 1,040,000
1,000,000 Phonetel Technologies, Inc., 12.00% Sr Note
12-15-2006................................. B3* 1,002,394 1,050,000
500,000 Poland Telecommunications Finance Corp.,
14.00% Sr Note 12-1-2007 (and warrants)
(e)........................................ NR 500,000 527,500
500,000 RSL Communications Ltd., 12.25% Sr Note
11-15-2006................................. B- 499,537 571,250
------------- -------------
11,024,731 12,016,875
------------- -------------
TEXTILE MANUFACTURING-0.87%
500,000 Anvil Knitwear, Inc., 10.875% Sr Note
3-15-2007.................................. B+ 515,996 518,750
500,000 Pillowtex Corp., 10.00% Sr Sub Note
11-15-2006................................. B+ 524,756 546,250
------------- -------------
1,040,752 1,065,000
------------- -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $ 29,326,702 $ 29,823,127
------------- -------------
------------- -------------
</TABLE>
U.S. GOVERNMENT SECURITIES-16.26%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION -
2.69%
MORTGAGE BACKED SECURITIES:
$ 896,617 8.00% 2001................................... $ 919,033 $ 917,071
353,864 9.00% 2022................................... 376,312 376,644
586,499 10.50% 2017.................................. 625,571 642,033
286,545 11.25% 2010.................................. 309,916 319,319
256,611 11.50% 2014-2015............................. 282,174 287,644
</TABLE>
5
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
(Unaudited)
January 31, 1998
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
$ 258,468 11.75% 2010.................................. $ 273,976 $ 291,019
------------- -------------
2,786,982 2,833,730
------------- -------------
REMIC-IO & IO-ETTE:
13,180 10.00% Trust #1404-E Interest Only Strip I/O
ette 2006 (h).............................. 7,107 162,373
------------- -------------
REMIC-PAC'S:
283,609 9.00% Trust #136D 2020....................... 285,028 286,735
------------- -------------
TOTAL FEDERAL HOME LOAN MORTGAGE
CORPORATION................................ 3,079,117 3,282,838
------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 6.68%
MORTGAGE BACKED SECURITIES:
2,418,333 7.50% 2028 (i)............................... 2,488,332 2,485,592
3,031,062 8.00% 2024-2025.............................. 3,069,476 3,142,832
1,240,035 10.50% 2014-2020............................. 1,301,706 1,357,451
772,051 11.00% 2011-2018............................. 795,390 854,804
32,688 11.25% 2011.................................. 33,934 36,406
93,203 12.00% 2014.................................. 99,232 105,407
132,820 12.50% 2015.................................. 150,004 151,291
------------- -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ 7,938,074 8,133,783
------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -
3.03%
MORTGAGE BACKED SECURITIES:
1,154,735 9.00% 2021................................... 1,163,937 1,238,453
313,225 9.125% Fleet Mtg Securities, Series 1989-3
Class D 2018(GNMA Backed).................. 320,076 313,616
1,987,919 9.50% 2019-2020.............................. 2,066,993 2,141,733
------------- -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 3,551,006 3,693,802
------------- -------------
U.S. TREASURY SECURITIES - 3.86%
NOTES:
2,000,000 5.875% 1999.................................. 2,004,639 2,015,624
2,600,000 6.25% 2002................................... 2,616,804 2,684,500
------------- -------------
TOTAL U.S. TREASURY SECURITIES............... 4,621,443 4,700,124
------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............. $ 19,189,640 $ 19,810,547
------------- -------------
------------- -------------
</TABLE>
COMMON STOCKS AND WARRANTS-0.06%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
------- ------------- -------------
<C> <S> <C> <C>
APPAREL-0.03%
500 Hosiery Corp. of America Class A (a)(e)...... $ 8,460 $ 35,000
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE PARTS-0.00%
500 Highwaymaster Communications, Inc. (Warrants)
(a)(e)..................................... 9,093 8,750
------------- -------------
LEISURE TIME-AMUSEMENTS-0.00%
6,000 Hemmeter Enterprises, Inc. (Warrants)
(a)(e)..................................... 24,000 0
------------- -------------
TELECOMMUNICATIONS-0.03%
500 RSL (Warrants) (a)(e)........................ 500 35,000
------------- -------------
TOTAL COMMON STOCKS AND WARRANTS............. 42,053 78,750
------------- -------------
------------- -------------
TOTAL LONG-TERM INVESTMENTS.................. $ 112,040,374 $ 118,907,749
------------- -------------
------------- -------------
</TABLE>
6
<PAGE>
SHORT-TERM INVESTMENTS-3.10%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- -------------
<C> <S> <C>
BANKS-2.25%
$2,741,000 First Trust Money Market Variable Rate Time
Deposit, Current rate -- 5.47%............. $ 2,741,000
-------------
DIVERSIFIED FINANCE-0.85%
1,030,000 Associates Corp. Master Variable Rate Note,
Current rate -- 5.53%...................... 1,030,000
-------------
TOTAL SHORT-TERM INVESTMENTS................. 3,771,000
-------------
-------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$115,811,374) (B).......................... $ 122,678,749
-------------
-------------
</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 January 31, 1998, the cost of securities for federal income tax purposes
was $115,811,374 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 8,468,205
Unrealized depreciation........................... (1,600,830)
---------------------------------------------------------------
Net unrealized appreciation....................... $ 6,867,375
---------------------------------------------------------------
</TABLE>
(c) See Note 1 of accompanying Notes to Financial Statements regarding
valuation of securities.
(d) Note: Percentage of investments as shown is the ratio of the total market
value to total net assets. Market value of investments in foreign
securities represents 6.19% of total net assets as of January 31, 1998.
(e) Securities issued within the 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
manangement 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
January 23, 1998 500,000 American Communications Services, due 2007-144A 602,428
October 23, 1997 500,000 Globalstar L.P. Capital Corp., due 2004-144A 494,148
July 11, 1994 6,000 Hemmeter Enterprises, Inc. (Warrants) 24,000
October 7, 1997 500 Highwaymaster Communications, Inc. (Warrants) 9,093
October 7, 1994 500 Hosiery Corp. of America, Class A 8,460
August 3, 1995 500,000 Kloster Cruise, Inc., due 2003 389,198
November 24, 1997 500,000 Poland Telecommunications Finance Corp., due 2007-144A 500,000
September 30, 1996 500 RSL (Warrants) 500
March 8, 1993 708,800 Sandia Mortgage Corp., due 2018-restricted 531,792
October 26, 1993 104,214 Sandia Mortgage Corp., due 2018-restricted 80,245
December 4, 1997 500,000 Trans World Airlines, due 2004-144A 494,192
</TABLE>
The aggregate value of these securities at January 31, 1998, was $3,934,761
which represents 3.23% of total net assets.
(f) Securities issued within the 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 aggregate value of
these securities at January 31, 1998, was $496,250 which represents .41% of
total net assets.
(g) The interest rate disclosed for these securities represents the effective
yield on the date of acquisition.
(h) The interest rate disclosed for interest only strips represents the
effective yield at January 31, 1998, 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 January 31, 1998, was $162,373 which represents .13% of total
net assets.
(i) The cost of securities purchased on a when-issued basis at January 31,
1998, was $2,488,332.
* Moody's Rating
7
<PAGE>
FORTIS SECURITIES, INC.
Statement of Assets and Liabilities
(Unaudited)
January 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
ASSETS
Investments in securities, as detailed in the
accompanying schedules, at market (cost
$115,811,374) (Note 1)........................ $122,678,749
Cash on deposit with custodian.................. 10,106
Receivables:
Investment securities sold.................... 47,948
Interest and dividends........................ 2,476,475
Prepaid expenses................................ 24,525
------------
TOTAL ASSETS...................................... 125,237,803
------------
LIABILITIES
Dividends payable ($.063 per share)............. 795,219
Payable for investment securities purchased..... 2,488,332
Payable for investment advisory and management
fees (Note 2)................................. 58,551
Accounts payable and accrued expenses........... 62,526
------------
TOTAL LIABILITIES................................. 3,404,628
------------
NET ASSETS
Net proceeds of capital stock, par value $.01
per share-authorized 15,000,000 shares
outstanding 12,622,518 shares................. 132,862,314
Unrealized appreciation of investments.......... 6,867,375
Undistributed net investment income............. 183,874
Accumulated net realized loss from sale of
investments................................... (18,080,388)
------------
TOTAL NET ASSETS.................................. $121,833,175
------------
------------
NET ASSET VALUE PER SHARE......................... $9.65
------------
------------
Statement of Operations
(Unaudited)
For the Six-Month Period Ended January 31, 1998
- ----------------------------------------------------------------
- ----------------------------------------------------------------
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
Income
Interest income............................... $5,105,283
----------
Expenses:
Investment advisory and management fees (Note
2)........................................... 374,582
Legal and auditing fees (Note 2).............. 15,133
Custodian fees................................ 7,638
Shareholders' notices and reports............. 28,320
Directors' fees and expenses.................. 7,856
Exchange listing fees......................... 14,348
Other......................................... 10,882
----------
Total expenses.................................. 458,759
----------
NET INVESTMENT INCOME............................. 4,646,524
----------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE
1):
Net realized gain from security transactions.... 977,643
Net change in unrealized appreciation of
investments in securities..................... 1,664,375
----------
NET GAIN ON INVESTMENTS........................... 2,642,018
----------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... $7,288,542
----------
----------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
FORTIS SECURITIES, INC.
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE
SIX-MONTH
PERIOD ENDED FOR THE
JANUARY 31, YEAR ENDED
1998 JULY 31,
(UNAUDITED) 1997
------------ ------------
<S> <C> <C>
OPERATIONS
Net investment income........................... $ 4,646,524 $ 9,130,198
Net realized gain on investments................ 977,643 188,166
Net change in unrealized appreciation of
investments................................... 1,664,375 5,994,806
------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS...................................... 7,288,542 15,313,170
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income...................... (4,749,928) (8,824,054)
Excess distributions of net realized gains (Note
1)............................................ -- (423,050)
------------ ------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS............... (4,749,928) (9,247,104)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from 1,068 and 6,372 shares issued as a
result of reinvested dividends................ 9,601 67,899
------------ ------------
TOTAL INCREASE IN NET ASSETS...................... 2,548,215 6,133,965
NET ASSETS:
Beginning of period............................. 119,284,960 113,150,995
------------ ------------
End of period (includes undistributed net
investment income of $183,874 and $287,278,
respectively)................................. $121,833,175 $119,284,960
------------ ------------
------------ ------------
</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. For
fixed income securities, 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 January 31, 1998, Fortis Securities Fund entered into
outstanding when-issued or forward commitments of $2,488,332 respectively.
Consistent with its ability to purchase securities on a when-issued basis,
Fortis Securities Fund has entered into transactions to defer settlement of
its purchase commitments. As an inducement to defer settlement, the Portfolio
repurchases a similar security for settlement at a later date at a lower
purchase price relative to the current market. This transaction is referred
to as a Dollar Roll.
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 period ended ended January 31, 1998, the cost of
purchases and proceeds from sales of securities (other than short-term
securities) aggregated $34,283,395 and $33,819,512, 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
$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 January 31, 1998, 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, 1998, was
$4,097,134 which represents 3.36% 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 12). 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.
10
<PAGE>
- --------------------------------------------------------------------------------
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 $2,713 for the period ended January 31,
1998, were paid to a law firm of which the secretary of the fund is a
partner.
3. FINANCIAL HIGHLIGHTS: Selected per share historical data for each of the
Portfolios was as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
------------------------------------------------------------------------------
1998** 1997 1996 1995 1994 1993
<S> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 9.45 $ 8.97 $ 9.18 $ 9.33 $ 10.24 $ 10.13
--------- --------- ----------- --------- ----------- ---------
Operations:
Investment income - net............... .37 .72 .78 .84 .93 1.02
Net realized and unrealized gains
(losses) on investments............. .21 .49 (.20) (.11) (.89) .12
--------- --------- ----------- --------- ----------- ---------
Total from operations................... .58 1.21 .58 .73 .04 1.14
--------- --------- ----------- --------- ----------- ---------
Distributions to shareholders:
From investment income - net.......... (.38) (.70) (.78) (.87) (.95) (1.03)
Excess distributions of net realized
gains............................... -- (.03) (.01) (.01) -- --
--------- --------- ----------- --------- ----------- ---------
Total distributions to shareholders..... (.38) (.73) (.79) (.88) (.95) (1.03)
--------- --------- ----------- --------- ----------- ---------
Net asset value, end of period.......... $ 9.65 $ 9.45 $ 8.97 $ 9.18 $ 9.33 $ 10.24
--------- --------- ----------- --------- ----------- ---------
Per-share market value, end of period... $ 9.563 $ 8.688 $ 7.875 $ 8.750 $ 9.625 $ 11.500
Total investment return, market value
@..................................... 14.64% 20.27% (1.36%) .25% (8.16%) 9.91%
Total investment return, net asset value
@@.................................... 6.40% 14.83% 6.93% 8.46% .01% 11.06%
Net assets end of period (000s
omitted).............................. $ 121,833 $ 119,285 $ 113,151 $ 115,642 $ 115,350 $ 123,541
Ratio of expenses to average monthly net
assets................................ .76%* .76% .80% .78% .76% .80%
Ratio of net investment income to
average monthly net assets............ 7.70%* 7.91% 8.47% 9.33% 9.30% 10.12%
Portfolio turnover rate................. 27% 130% 67% 75% 125% 86%
</TABLE>
* Annualized
** For the six-month period ended January 31, 1998.
@ Total investment return, market value, is based on the change in
market price of a share duirng the period and assumses 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>
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 U.S. 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.
12
<PAGE>
FORTIS FINANCIAL GROUP'S OTHER PRODUCTS AND SERVICES
MUTUAL Fortis Bond Funds MONEY FUND
FUNDS/PORTFOLIOS U.S. GOVERNMENT
CONVENIENT ACCESS TO SECURITIES FUND
A BROAD RANGE OF TAX-FREE NATIONAL
SECURITIES PORTFOLIO
TAX-FREE MINNESOTA
PORTFOLIO
STRATEGIC INCOME FUND
HIGH YIELD PORTFOLIO
Fortis Stock Funds ASSET ALLOCATION
PORTFOLIO
VALUE FUND
GROWTH & INCOME FUND
CAPITAL FUND
FIDUCIARY FUND
GLOBAL GROWTH PORTFOLIO
GROWTH FUND
INTERNATIONAL EQUITY
PORTFOLIO
CAPITAL APPRECIATION
PORTFOLIO
FIXED AND VARIABLE Fortis Opportunity Fixed FIXED ACCOUNT
ANNUITIES & Variable Annuity MONEY MARKET SUBACCOUNT
TAX-DEFERRED Masters Variable Annuity U.S. GOVERNMENT
INVESTING SECURITIES SUBACCOUNT
DIVERSIFIED INCOME
SUBACCOUNT
GLOBAL BOND SUBACCOUNT
HIGH YIELD SUBACCOUNT
ASSET ALLOCATION
SUBACCOUNT
GLOBAL ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
GROWTH STOCK SUBACCOUNT
INTERNATIONAL STOCK
SUBACCOUNT
AGGRESSIVE GROWTH
SUBACCOUNT
Fortune Fixed Annuities SINGLE PREMIUM ANNUITY
FLEXIBLE PREMIUM ANNUITY
Income Annuities GUARANTEED FOR LIFE
GUARANTEED FOR A
SPECIFIED PERIOD
LIFE Wall Street Series FIXED ACCOUNT
INSURANCE PROTECTION Variable Universal Life MONEY MARKET SUBACCOUNT
AND TAX-DEFERRED Insurance U.S. GOVERNMENT
INVESTMENT SECURITIES SUBACCOUNT
OPPORTUNITY DIVERSIFIED INCOME
SUBACCOUNT
GLOBAL BOND SUBACCOUNT
HIGH YIELD SUBACCOUNT
ASSET ALLOCATION
SUBACCOUNT
GLOBAL ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
GROWTH STOCK SUBACCOUNT
INTERNATIONAL STOCK
SUBACCOUNT
AGGRESSIVE GROWTH
SUBACCOUNT
Adaptable Life
Universal Life
FORTIS FINANCIAL GROUP manages and distributes mutual funds, annuities and life
insurance products. The mutual funds, variable life and variable annuity
products are distributed through FORTIS INVESTORS, INC. and managed by FORTIS
ADVISERS, INC. The insurance products are issued by FORTIS BENEFITS INSURANCE
COMPANY, FIRST FORTIS LIFE INSURANCE COMPANY and TIME INSURANCE COMPANY.
FOR MORE COMPLETE INFORMATION, INCLUDING CHARGES AND EXPENSES, SEND FOR A
PROSPECTUS. WRITE TO: FORTIS INVESTORS, INC., P.O. BOX 64284, ST. PAUL, MN
55164. READ IT CAREFULLY BEFORE INVESTING OR SENDING MONEY.
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 investments. 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 servicemarks of Fortis AMEV and Fortis AG.
95351 (3/98)
