<PAGE>
[FORTIS LOGO] -REGISTERED TRADEMARK-
[GRAPHIC]
A DISCIPLINED, CONSISTENT
APPROACH TO INVESTING . . .
FORTIS
SECURITIES FUND, INC.
SEMI-ANNUAL REPORT
January 31, 1999
<PAGE>
FORTIS SECURITIES, INC. SEMI-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
BOARD OF DIRECTORS AND OFFICERS 12
- - TOLL-FREE PERSONAL ASSISTANCE
- Shareholder Services
- (800) 800-2000, 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) 800-2000, 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) 800-2000.
TO ORDER PROSPECTUSES OR SALES LITERATURE FOR ANY FORTIS PRODUCT, CALL (800)
800-2000, 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 chart shows 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>
JANUARY 31, 1999:
TOTAL NET ASSETS............................. $ 116,890,098
MARKET PRICE PER SHARE....................... $ 8.750
SHARES OUTSTANDING........................... 12,643,661
FOR THE SIX-MONTH PERIOD ENDED JANUARY 31,
1999:
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 9.55
End of period.............................. $ 9.24
DISTRIBUTIONS FROM NET INVESTMENT INCOME:
Total dividends paid....................... $ 4,551,434
Dividends per share........................ $ .360
</TABLE>
<PAGE>
PORTFOLIO ALLOCATION AS OF 1/31/99
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds - Investment Grade 51.8%
Corporate Bonds - Non-Investment Grade 19.9%
Asset Backed Securities 12.6%
U.S. Government Agencies 11.4%
U.S. Treasury Securities 3.9%
Cash Equivalents/Receivables 0.3%
Other 0.1%
</TABLE>
TOP 10 HOLDINGS AS OF 1/31/99
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. FNMA (6.00%) 2029 3.3%
2. Green Tree Financial Corp. (7.65%) 2019 ABS 2.7%
3. DLJ Mortgage Acceptance Corp. (8.50%) 2001 ABS 2.6%
4. Nationsbank Corp. (7.25%) 2025 2.3%
5. Georgia-Pacific Corp. (9.625%) 2022 2.1%
6. United Airlines (10.02%) 2014 2.1%
7. U.S. Treasury Note (5.25%) 2003 2.0%
8. Time Warner Entertainment (8.375%) 2033 1.9%
9. GTE Corp. (7.90%) 2027 1.9%
10. Midland Reality Acceptance Corp. (7.635%) 2028 1.9%
</TABLE>
DEAR SHAREHOLDER,
The second half of 1998 was marked by a turbulent summer that prompted a radical
change in investors behavior as well as in the Federal Reserve's monetary
policy. Asia's problems which seemed in the first half of the year to have been
somewhat contained, resurfaced in August in a more dramatic way. Russia
defaulted on its foreign debt and Latin America looked like it was catching the
wave of the global economic slowdown. Investors "flight to quality" (expressed
as a greater demand for safety and liquidity) and their lack of appetite for
what became viewed as riskier investments, pushed the yield on U.S. Treasuries
lower, and the premium on corporate bond yields to historic highs. This swift
shift in demand shocked the markets and drained liquidity from the financial
system, prompting the Federal Reserve to reverse its tightening bias and to
lower the federal funds rate in a series of three .25% moves. By the first week
of October the yield on the 30-year Treasury fell to 4.72%, a full 1% from the
end of July, the end of our prior fiscal year. However, by the end of January
1999, the bond had moved back up to 5.10%.
Fortis Securities Fund has income as a primary objective, with a large
concentration in higher yielding securities and virtually no U.S. Treasuries.
This environment had a negative impact on the valuation of the portfolio, the
fund had a market value total return of 1.14% and a net asset value total return
of .62% for the six months ended January 31, 1999. However, the moderate credit
risk profile of the funds' corporate bonds and the limited prepayments of our
mortgage-backed securities despite lower Treasury yields, shielded the portfolio
and kept the income stream sustained at a highly competitive level. For the six
months ended January 31, 1999, Fortis Securities Fund provided a distribution
yield of 8.23% on market value, the highest in its competitive universe (Lipper
Closed-End Investment Grade Bond Funds).
Looking ahead to the second half of the fiscal year, we anticipate that the U.S
economy will continue to grow, but at a moderate pace, as production is impacted
by ailing economies in Asia and Latin America. Reduction in exports will be
associated with further reduction in prices, leading to a moderate inflation
level. This environment is favorable for the bond market as it supports low
interest rates and good performance from corporate bonds which currently offer
historically wide spread to yields of comparable government obligations.
Sincerely,
/s/ Dean C. Kopperud /s/ Howard G. Hudson
Dean C. Kopperud Howard G. Hudson
President Vice President
March 12, 1999
1
<PAGE>
FORTIS SECURITES, INC.
Schedule of Investments
January 31, 1999 (Unaudited)
ASSET BACKED SECURITIES - 12.57%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- --------- ------------- -------------
<C> <S> <C> <C> <C>
COMMERCIAL LOANS - 2.94%
$2,000,000 Midland Realty Acceptance Corp., 7.635% Ser
1996-C1 Class A3 8-15-2028................. AAA $ 2,143,438 $ 2,219,120
1,100,000 Midland Realty Acceptance Corp., 7.76% Ser
1996-C1 Class B 7-25-2008.................. AA 1,109,525 1,212,662
------------- -------------
3,252,963 3,431,782
------------- -------------
HOUSING - 0.73%
826,631 Green Tree Recreational, Equipment & Consumer
Trust, 6.71% Ser 1998-A Class A1H
5-15-2029.................................. AAA 823,172 853,198
------------- -------------
MANUFACTURED HOMES - 3.39%
3,000,000 Green Tree Financial Corp., 7.65% Ser 1994-1
Class A5 4-15-2019......................... Aa2* 2,988,281 3,115,641
1,000,000 Green Tree Financial Corp., 7.76% Ser 1997-1
Class B2 3-15-2028......................... Ba1* 999,846 843,594
------------- -------------
3,988,127 3,959,235
------------- -------------
MULTI-FAMILY LOANS - 4.76%
1,000,000 DLJ Mortgage Acceptance Corp., 8.80%
Multifamily Mtg Pass Thru Certificate Ser
1993-12 Class B1 9-18-2003................. NR 982,500 1,020,760
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 3,067,830
1,500,000 J.P. Morgan Commercial Mtg Finance Corp.,
7.35% Ser 1997-C5 Class D 9-15-2029........ BBB 1,543,359 1,479,300
------------- -------------
5,549,765 5,567,890
------------- -------------
WHOLE LOAN RESIDENTIAL - 0.75%
841,660 Mid-State Trust, 7.54% Ser 6 Class A3
7-1-2035................................... AA 841,138 878,524
------------- -------------
TOTAL ASSET BACKED SECURITIES................ $ 14,455,165 $ 14,690,629
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS - INVESTMENT GRADE - 51.80%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- --------- ------------- -------------
<C> <S> <C> <C> <C>
AIR FREIGHT - 1.79%
$ 972,621 Federal Express, 7.50% Pass Thru Certificate
Ser 1997-A 1-15-2018....................... AAA $ 972,621 $ 1,035,433
1,000,000 Federal Express, 7.84% Pass Thru Certificate
Ser 1996-B2 1-30-2018...................... BBB+ 1,000,000 1,062,400
------------- -------------
1,972,621 2,097,833
------------- -------------
AIRLINES - 4.48%
1,000,000 AMR Corp., 10.00% Deb 4-15-2021.............. BBB- 1,163,626 1,276,397
1,200,000 Delta Airlines, 10.50% Pass Thru Certificate
4-30-2016.................................. BBB 1,451,442 1,558,608
2,000,000 United Airlines, 10.02% Deb 3-22-2014........ BBB 2,390,833 2,406,420
------------- -------------
5,005,901 5,241,425
------------- -------------
AUTOMOBILE MANUFACTURERS - 0.98%
1,000,000 Chrysler Corp., 7.40% Deb 8-1-2097........... A+ 999,140 1,149,661
------------- -------------
BANKS - 4.66%
1,000,000 Comerica Bank, 7.875% 9-15-2026.............. A- 988,240 1,119,309
1,500,000 Keystone Financial Funding Corp., 7.30%
Medium Term Note 5-15-2004................. BBB+ 1,497,058 1,592,541
2,500,000 Nationsbank Corp., 7.25% Sub Note
10-15-2025................................. A 2,330,582 2,733,430
------------- -------------
4,815,880 5,445,280
------------- -------------
BROKERAGE AND INVESTMENT - 1.33%
1,500,000 Lehman Brothers Holdings, Inc., 7.375% Sr
Note 5-15-2004............................. A 1,495,275 1,558,434
------------- -------------
CABLE TELEVISION - 5.39%
1,000,000 Comcast Cable Communications, Inc., 8.50%
Note 5-1-2027 (with rights)................ BBB- 998,314 1,200,965
750,000 Cox Communications, Inc., 6.95% 1-15-2028.... A- 747,247 811,561
1,500,000 Telecommunications, Inc., 9.80% Sr Note
2-1-2012................................... AA- 1,658,835 2,035,174
1,800,000 Time Warner Entertainment, 8.375% Sr Note
7-15-2033.................................. BBB 1,732,559 2,250,805
------------- -------------
5,136,955 6,298,505
------------- -------------
</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>
CHEMICALS - 2.08%
$ 600,000 Agrium, Inc., 7.70% 2-1-2017................. BBB $ 594,440 $ 595,331
2,000,000 Equistar Chemical, 7.55% 2-15-2026........... BBB- 1,872,308 1,830,550
------------- -------------
2,466,748 2,425,881
------------- -------------
DIVERSIFIED FINANCE - 1.31%
1,500,000 AT&T Capital Corp., 7.50% 11-15-2000......... BBB 1,498,750 1,528,752
------------- -------------
ENERGY - 1.77%
1,500,000 Apache Corp, 7.70% 3-15-2026................. BBB+ 1,494,637 1,558,983
500,000 NGC Corp. Capital Trust, 8.32% 6-1-2027...... BBB 500,000 510,037
------------- -------------
1,994,637 2,069,020
------------- -------------
FINANCIAL SERVICES - 0.40%
406,000 Homeside, Inc., 11.25% Second Priority Sr
Secured Note 5-15-2003..................... A+ 417,408 466,900
------------- -------------
FOOD SERVICE - 0.89%
1,000,000 Sysco Corp., 6.50% 8-1-2028.................. AA- 996,868 1,035,284
------------- -------------
FOREIGN - GOVERNMENT - 1.44%
1,500,000 Quebec (Province of), 8.80% Bond 4-15-2003... A+ 1,637,670 1,683,660
------------- -------------
FOREST PRODUCTS - 3.42%
2,150,000 Georgia-Pacific Corp., 9.625% Deb
3-15-2022.................................. BBB- 2,169,818 2,413,018
1,500,000 Noranda, Inc., 8.625% Deb 7-15-2002.......... BBB 1,494,960 1,583,218
------------- -------------
3,664,778 3,996,236
------------- -------------
HOUSING - 1.26%
1,500,000 Pulte Corp., 7.625% Note 10-15-2017.......... BBB 1,478,880 1,470,477
------------- -------------
INDUSTRIAL - 1.64%
800,000 CBS Corp., 7.875% Deb 9-1-2023............... BBB- 884,594 891,134
1,000,000 Monsanto Co., 6.60% 12-1-2028 (i)............ A 996,406 1,030,200
------------- -------------
1,881,000 1,921,334
------------- -------------
MEDIA - 2.28%
750,000 Belo (A.H.) Corp., 7.25% Note 9-15-2027...... BBB- 745,635 779,402
1,500,000 News America Holdings, 8.875% Deb
4-26-2023.................................. BBB- 1,488,956 1,880,517
------------- -------------
2,234,591 2,659,919
------------- -------------
MISCELLANEOUS - 2.06%
1,150,000 Minneapolis MN Community Development Agency,
11.25% Ltd Tax Dev Rev Bond Ser 1990-6B
6-1-2007................................... A- 1,176,875 1,261,705
1,000,000 New York (City of), 10.00% General Obligation
Taxable Bond Ser D 8-1-2005 (Prerefunded
8-1-2001 @103)............................. A- 995,453 1,144,684
------------- -------------
2,172,328 2,406,389
------------- -------------
NATURAL GAS TRANSMISSIONS - 4.02%
1,500,000 Columbia Gas Systems, 7.62% 11-28-2025....... BBB+ 1,422,209 1,578,510
1,500,000 Tennessee Gas Pipeline, 7.625% 4-1-2037...... BBB 1,481,902 1,596,938
500,000 Trans-Canada Pipelines Ltd., 7.06% Note
10-14-2025................................. A- 500,000 524,921
1,000,000 Williams Holdings, 6.50%, 12-1-2008.......... BBB- 995,444 1,002,458
------------- -------------
4,399,555 4,702,827
------------- -------------
OIL-CANADIAN - 0.83%
1,000,000 Talisman Energy, Inc., 7.25% 10-15-2027...... BBB+ 993,217 971,747
------------- -------------
OIL-OFFSHORE DRILLING - 0.71%
1,000,000 Seagull Energy Corp., 7.50% Sr Note
9-15-2027.................................. BBB- 995,498 827,670
------------- -------------
OIL-REFINING - 1.35%
1,500,000 Coastal Corp., 7.42% Note 2-15-2037.......... BBB- 1,427,302 1,576,937
------------- -------------
RAILROAD AND RAILROAD EQUIPMENT - 0.74%
750,000 CSX Corp., 7.90% Deb 5-1-2017................ BBB 749,582 860,252
------------- -------------
</TABLE>
3
<PAGE>
FORTIS SECURITES, INC.
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
CORPORATE BONDS - INVESTMENT GRADE - CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- --------- ------------- -------------
<C> <S> <C> <C> <C>
REAL ESTATE-INVESTMENT TRUST - 0.81%
$1,000,000 Meditrust, 7.82% Note 9-10-2026.............. BB $ 1,000,000 $ 951,867
------------- -------------
RETAIL-DEPARTMENT STORES - 1.30%
1,400,000 Dayton Hudson Co., 7.875% 6-15-2023.......... A- 1,410,241 1,524,067
------------- -------------
TELECOMMUNICATIONS - 0.94%
1,000,000 360 Communications Co., 7.50% Sr Note
3-1-2006................................... A 998,197 1,100,290
------------- -------------
TELEPHONE SERVICES - 1.91%
2,000,000 GTE Corp., 7.90% 2-1-2027.................... A 2,000,000 2,229,488
------------- -------------
UTILITIES-ELECTRIC - 2.01%
750,000 Puget Sound Energy, Inc., 7.02% Medium Term
Note 12-1-2027............................. A- 750,000 774,500
1,500,000 Texas Utilities Electric Capital V, 8.175%
1-30-2037.................................. BBB 1,500,000 1,571,567
------------- -------------
2,250,000 2,346,067
------------- -------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $ 56,093,022 $ 60,546,202
------------- -------------
------------- -------------
</TABLE>
CORPORATE BONDS - NON-INVESTMENT GRADE - 19.93%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
----------- --------- ------------- -------------
<C> <S> <C> <C> <C>
AIRLINES - 0.48%
$ 500,000 Northwest Airlines Trust No. 2, 13.875% Sub
Aircraft Note Ser D 6-21-2008.............. Ba1* $ 500,000 $ 561,875
------------- -------------
APPAREL - 0.45%
500,000 Hosiery Corp. of America, Inc., 13.75% Sr Sub
Note 8-1-2002.............................. B- 491,202 530,000
------------- -------------
BROADCASTING - 0.47%
500,000 Chancellor Media, 9.00% 10-1-2008............ B 552,500 550,000
------------- -------------
BUSINESS SERVICES AND SUPPLIES - 0.44%
500,000 T/SF Communications Corp., 10.375% Sr Sub
Note 11-1-2007............................. B- 490,758 507,500
------------- -------------
CABLE TELEVISION - 1.09%
500,000 Rifkin Acquisition Partners L.P., 11.125% Sr
Sub Note 1-15-2006......................... B- 549,425 552,500
1,000,000 United International Holdings, 10.75% Sr Disc
Note 2-15-2008 (Zero coupon through
2-15-2003, thereafter 10.75%) (f).......... B 656,092 663,750
500,000 Wireless One, Inc., 13.00% Sr Note
10-15-2003................................. CC 494,207 62,500
------------- -------------
1,699,724 1,278,750
------------- -------------
CHEMICALS - 1.19%
500,000 NL Industries, Inc., 11.75% Sr Secured Note
10-15-2003................................. B 511,361 535,000
1,000,000 Sterling Chemicals, Inc., 11.75% Sr Sub Note
8-15-2006.................................. B+ 1,036,237 860,000
------------- -------------
1,547,598 1,395,000
------------- -------------
CONSUMER GOODS - 0.24%
250,000 Chattem, Inc., 12.75% Sr Sub Note Ser B
6-15-2004.................................. B- 231,232 276,250
------------- -------------
FOOD-MISCELLANEOUS - 1.29%
172,000 Envirodyne Industries, Inc., 12.00% First
Priority Sr Secured Note 6-15-2000......... B+ 171,365 172,000
500,000 Fresh Foods, Inc., 10.75% Sr Note 6-1-2006... B 500,000 470,000
500,000 Luigino's, Inc., 10.00% Sr Note 2-1-2006
(e)........................................ B- 500,000 500,000
500,000 RAB Holdings, Inc., 13.00% Sr Note 5-1-2008
(e)........................................ CCC 505,408 370,000
------------- -------------
1,676,773 1,512,000
------------- -------------
FOREIGN - GOVERNMENT - 0.33%
500,000 United Mexican States, 6.25% Secured Note Ser
W-B 12-31-2019............................. BB 377,564 381,250
------------- -------------
FOREST PRODUCTS - 0.46%
500,000 Stone Container Corp., 12.58% Sr Note
8-1-2016................................... B 500,000 536,250
------------- -------------
</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>
HOTEL AND GAMING - 1.24%
$1,500,000 HMH Properties, 7.875% Sr Note 8-1-2008...... BB $ 1,495,864 $ 1,451,250
------------- -------------
INDUSTRIAL - 0.66%
1,000,000 Intelcom Group (USA), Inc., 10.88% 5-1-2006
(Zero coupon through 5-1-2001, thereafter
12.50%) (f)................................ NR 818,460 770,000
------------- -------------
LEISURE TIME-AMUSEMENTS - 0.48%
86,615 Capital Gaming International, Inc., 12.00% Sr
Note 5-15-2001 (e)......................... NR 0 8
500,000 Showboat Marina Casino & Finance Corp.,
13.50% First Mtg Bond 3-15-2003............ BB- 500,000 563,750
------------- -------------
500,000 563,758
------------- -------------
MORTGAGE BACKED SECURITIES - 0.35%
678,404 Sandia Mtg Corp., 9.14% 1991-A Variable Rate
Pass Thru Certificate Class B 8-1-2018
(e)........................................ NR 515,417 407,043
------------- -------------
PUBLISHING - 0.91%
500,000 Affinity Group Holding, 11.00% Sr Note
4-1-2007................................... B 503,880 513,750
500,000 Garden State Newspapers, 12.00% Sr Sub Note
7-1-2004................................... B+ 557,531 545,000
------------- -------------
1,061,411 1,058,750
------------- -------------
RESTAURANTS AND FRANCHISING - 1.13%
370,000 Advantica Restaurant Group, Inc., 11.25% Sr
Note 1-15-2008............................. B 398,560 381,100
900,000 Tricon Global Restaurants, Inc., 7.65% Sr
Note 5-15-2008............................. BB 926,326 941,115
------------- -------------
1,324,886 1,322,215
------------- -------------
RETAIL-GROCERY - 0.88%
1,000,000 Big V Supermarkets, Inc., 11.00% Sr Sub Note
2-15-2004.................................. B- 1,015,241 1,030,000
------------- -------------
TELECOMMUNICATIONS - 6.38%
1,000,000 Dobson Communications Corp., 11.75% Sr Note
4-15-2007.................................. NR 957,230 1,065,000
1,000,000 E Spire Communications, Inc., 13.75%
7-15-2007.................................. NR 1,095,517 900,000
500,000 Globalstar L.P. Capital Corp., 10.75% Sr Note
11-1-2004.................................. B 494,781 367,500
1,000,000 Hyperion Communications, Inc., 10.47% Sr Disc
Note 4-15-2003 (Zero coupon through
4-15-2001, thereafter 13.00%) (f).......... B+ 823,193 770,000
500,000 Iridium LLC/Capital Corp., 14.00% Sr Note
7-15-2005.................................. B- 479,788 462,500
500,000 Microcell Telecommunications, Inc., 12.52% Sr
Disc Note 6-1-2006 (Zero coupon through
12-1-2001, thereafter 14.00%) (f).......... B3* 375,161 388,750
1,000,000 Nextel Communications, Inc., 9.84% Sr Disc
Note 9-15-2007 (Zero coupon through
9-15-2002, thereafter 10.65%) (f).......... CCC+ 723,389 685,000
500,000 Nextlink Communications, L.L.C., 12.50% Sr
Note 4-15-2006............................. B 500,000 538,750
1,050,000 Omnipoint Corp., 11.625% Sr Note Ser A
8-15-2006.................................. CCC+ 811,210 829,500
1,000,000 Orbcomm Global LP Capital, 14.00% Sr Note
8-15-2004.................................. B- 1,032,160 1,100,000
333,000 RSL Communications Ltd., 12.25% Sr Note
11-15-2006................................. B- 332,713 346,320
------------- -------------
7,625,142 7,453,320
------------- -------------
TEXTILE MANUFACTURING - 0.73%
500,000 Anvil Knitwear, Inc., 10.875% Sr Note
3-15-2007.................................. B- 514,869 325,000
500,000 Pillowtex Corp., 10.00% Sr Sub Note
11-15-2006................................. B+ 522,818 532,500
------------- -------------
1,037,687 857,500
------------- -------------
TRANSPORTATION - 0.73%
1,000,000 Stena Line AB, 10.625% Sr Note 6-1-2008...... B+ 1,005,469 855,000
------------- -------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $ 24,466,928 $ 23,297,711
------------- -------------
------------- -------------
</TABLE>
5
<PAGE>
FORTIS SECURITES, INC.
Schedule of Investments (continued)
January 31, 1999 (Unaudited)
U.S. GOVERNMENT SECURITIES - 15.27%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION -
1.55%
MORTGAGE BACKED SECURITIES:
$ 434,076 8.00% 2001................................... $ 444,928 $ 443,978
212,681 9.00% 2022................................... 226,173 224,578
413,066 10.50% 2017.................................. 440,948 455,405
202,321 11.25% 2010.................................. 218,823 226,284
183,699 11.50% 2014-2015............................. 201,643 206,662
180,049 11.75% 2010.................................. 190,852 203,456
------------- -------------
1,723,367 1,760,363
------------- -------------
REMIC-IO & IO-ETTE:
7,374 10.90% Trust #1404-E Interest Only Strip
IO-ette 2006 (e)(g)........................ 1,854 55,621
------------- -------------
TOTAL FEDERAL HOME LOAN MORTGAGE
CORPORATION................................ 1,725,221 1,815,984
------------- -------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 7.86%
MORTGAGE BACKED SECURITIES:
4,000,000 6.00% 2029 (h)............................... 3,954,688 3,958,304
1,761,289 7.50% 2027................................... 1,807,133 1,812,477
1,623,892 8.00% 2024-2025.............................. 1,644,435 1,685,804
854,367 10.50% 2014-2020............................. 899,731 925,120
532,152 11.00% 2011-2018............................. 547,560 581,542
24,309 11.25% 2011.................................. 25,236 26,702
68,071 12.00% 2014.................................. 72,474 75,814
105,121 12.50% 2015.................................. 118,721 118,261
------------- -------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ 9,069,978 9,184,024
------------- -------------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -
1.96%
MORTGAGE BACKED SECURITIES:
790,573 9.00% 2021................................... 796,873 843,443
1,350,675 9.50% 2019-2020.............................. 1,404,376 1,446,715
------------- -------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 2,201,249 2,290,158
------------- -------------
U.S. TREASURY SECURITIES - 3.89%
BONDS:
550,000 5.27% Zero Coupon Strip 2009 (f)............. 314,020 318,510
270,000 8.125% 2021.................................. 348,556 366,188
------------- -------------
662,576 684,698
------------- -------------
NOTES:
2,300,000 5.25% 2003................................... 2,358,824 2,359,657
1,500,000 5.875% 1999.................................. 1,501,315 1,509,845
------------- -------------
3,860,139 3,869,502
------------- -------------
TOTAL U.S. TREASURY SECURITIES............... 4,522,715 4,554,200
------------- -------------
TOTAL U.S. GOVERNMENT SECURITIES............. $ 17,519,163 $ 17,844,366
------------- -------------
------------- -------------
</TABLE>
COMMON STOCKS AND WARRANTS - 0.07%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
APPAREL - 0.03%
500 Hosiery Corp. of America, Inc. Class A
(a)(e)..................................... $ 8,460 $ 32,000
------------- -------------
AUTOMOBILE AND MOTOR VEHICLE PARTS - 0.00%
500 Highwaymaster Communications, Inc. (Warrants)
(a)(e)..................................... 5,000 45
------------- -------------
LEISURE TIME-AMUSEMENTS - 0.00%
6,000 Hemmeter Enterprises, Inc. (Warrants)
(a)(e)..................................... 24,000 1
------------- -------------
</TABLE>
6
<PAGE>
COMMON STOCKS AND WARRANTS - CONTINUED
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Market
Shares Cost (b) Value (c)
----------- ------------- -------------
<C> <S> <C> <C>
TELECOMMUNICATIONS - 0.04%
500 RSL (Warrants) (a)(e)........................ $ 500 $ 45,030
------------- -------------
TOTAL COMMON STOCKS AND WARRANTS............. 37,960 77,076
------------- -------------
------------- -------------
TOTAL LONG-TERM INVESTMENTS.................. $ 112,572,238 $ 116,455,984
------------- -------------
------------- -------------
</TABLE>
SHORT-TERM INVESTMENTS - 1.85%
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Principal Market
Amount Value (c)
----------- -------------
<C> <S> <C>
BANKS - 1.85%
$2,162,000 U.S. Bank N.A. Money Market Variable Rate Time Deposit,
Current rate - 4.86%........................................ $ 2,162,000
-------------
TOTAL INVESTMENTS IN SECURITIES (COST: $114,734,238) (B)...... $ 118,617,984
-------------
-------------
</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, 1999, the cost of securities for federal income tax purposes
was $114,734,238 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation........................... $ 6,265,891
Unrealized depreciation........................... (2,382,145)
---------------------------------------------------------------
Net unrealized appreciation....................... $ 3,883,746
---------------------------------------------------------------
</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 5.54% of total net assets as of January 31, 1999.
(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>
Period Acquired Shares/Par Security Cost Basis
- ------------------ ----------- ------------------------------------------------------------------------------ -----------
<S> <C> <C> <C>
1999 86,615 Capital Gaming International, Inc., 12.00% 5-15-2001 $ 0
1993 7,374 FHLMC Remic Trust #1404-E IO-ette 2006 1,854
1994 6,000 Hemmeter Enterprises, Inc. (Warrants) - 144A 24,000
1998 500 Highwaymaster Communications, Inc. (Warrants) - 144A 5,000
1994 500 Hosiery Corp. of America, Class A - 144A 8,460
1998 500,000 Luigino's Inc., 10.00% Sr Note 2-1-2006 - 144A 500,000
1998 500,000 RAB Holdings, Inc., 13.00% Sr Note 5-1-2008 505,408
1996 500 RSL (Warrants) - 144A 500
1993 678,404 Sandia Mortgage Corp., 2018-restricted 515,417
</TABLE>
The aggregate value of these securities at January 31, 1999, was $1,409,748
which represents 1.21% of total net assets.
(f) The interest rate disclosed for these securities represents the effective
yield on the date of acquisition.
(g) The interest rate disclosed for interest only strips represents the
effective yield at January 31, 1999, based upon the estimated timing and
amount of future cash flows.
(h) The cost of securities purchased on a when-issued basis at January 31,
1999, was $3,954,688.
(i) Securities sold 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 deemed to be liquid. The aggregate value of
these securities at January 31, 1999, was 1,030,200, which represents .88%
of the total net assets.
* Moody's Rating
7
<PAGE>
FORTIS SECURITIES, INC.
Statement of Assets and Liabilities
(Unaudited)
January 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments in securities, as detailed in the accompanying
schedules, at market (cost $114,734,238)................ $118,617,984
Cash on deposit with custodian............................ 21,415
Receivables:
Investment securities sold.............................. 1,770,706
Interest and dividends.................................. 2,357,234
Prepaid expenses.......................................... 6,714
------------
TOTAL ASSETS................................................ 122,774,053
------------
LIABILITIES:
Cash portion of dividends payable ($.060 per share)....... 758,620
Payable for investment securities purchased............... 5,007,188
Payable for investment advisory and management fees....... 72,193
Accounts payable and accrued expenses..................... 45,954
------------
TOTAL LIABILITIES........................................... 5,883,955
------------
NET ASSETS:
Net proceeds of capital stock, par value $.01 per
share-authorized 15,000,000 shares outstanding
12,643,661 shares....................................... 132,751,440
Unrealized appreciation of investments.................... 3,883,746
Undistributed net investment income....................... 181,206
Accumulated net realized loss from sale of investments.... (19,926,294)
------------
TOTAL NET ASSETS............................................ $116,890,098
------------
------------
NET ASSET VALUE PER SHARE................................... $9.24
------------
------------
</TABLE>
FORTIS SECURITIES, INC.
Statement of Operations
(Unaudited)
For the Six-Month Period Ended January 31, 1999
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
<S> <C>
NET INVESTMENT INCOME:
Income
Interest income......................................... $ 4,950,613
------------
Expenses:
Investment advisory and management fees................. 360,151
Legal and auditing fees................................. 13,107
Custodian fees.......................................... 3,630
Shareholders' notices and reports....................... 27,726
Directors' fees and expenses............................ 9,326
Exchange listing fees................................... 13,611
Other................................................... 10,182
------------
Total expenses............................................ 437,733
------------
NET INVESTMENT INCOME....................................... 4,512,880
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 1):
Net realized loss on investments.......................... (2,278,346)
Net change in unrealized depreciation of investments in
securities.............................................. (1,516,543)
------------
NET LOSS ON INVESTMENTS..................................... (3,794,889)
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS........ $ 717,991
------------
------------
</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
JANUARY 31, FOR THE
1999 YEAR ENDED
(UNAUDITED) JULY 31, 1998
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income................................ $ 4,512,880 $ 9,262,695
Net realized gain (loss) on investments.............. (2,278,346) 1,120,419
Net change in unrealized appreciation (depreciation)
of investments in securities....................... (1,516,543) 197,289
------------- -------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS... 717,991 10,580,403
------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income........................... (4,551,434) (9,334,311)
------------- -------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from 1,481 and 20,730 shares issued as a
result of reinvested dividends..................... 2,623 189,866
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS................ (3,830,820) 1,435,958
NET ASSETS:
Beginning of period.................................. 120,720,918 119,284,960
------------- -------------
End of period (includes undistributed net investment
income of $181,206 and $219,760, respectively)..... $ 116,890,098 $ 120,720,918
------------- -------------
------------- -------------
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements
(Unaudited)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fortis Securities, Inc., ("the
fund") is a closed-end diversified management investment company. The primary
investment objective of the fund is to seek a high level of current income
through investment in a diversified portfolio of debt securities, some of
which may be privately placed and some of which may have equity features.
Capital appreciation is a secondary objective.
SECURITY VALUATION: Investments in securities traded on 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, 1999, Fortis Securities Fund entered into
outstanding when-issued or forward commitments of $3,954,688.
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. As of January 31, 1999, there were no outstanding Dollar
Rolls.
SECURITY TRANSACTIONS AND RELATED INVESTMENT INCOME: Security transactions
are accounted for on the trade date. Interest income is recorded on the
accrual basis. Realized security gains and losses are determined using the
identified cost method. For the period ended January 31, 1999, the cost of
purchases and proceeds from sales of securities (other than short-term
securities) aggregated $17,287,315 and $15,074,152, 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. 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
$17,647,948 at July 31, 1998, which, if not offset by subsequent capital
gains, will expire in 1999 through 2005. 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, 1999, 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, 1999, was
$1,409,748 which represents 1.21% 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.
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 $2,520 for the period ended January 31,
1999, 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,
1999** -------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 9.55 $ 9.45 $ 8.97 $ 9.18 $ 9.33 $ 10.24
--------- --------- --------- --------- --------- ---------
Operations:
Investment income - net............... .36 .73 .72 .78 .84 .93
Net realized and unrealized income
(loss) on investments and foreign
currency transactions............... (.31) .11 .49 (.20) (.11) (.89)
--------- --------- --------- --------- --------- ---------
Total from operations................... .05 .84 1.21 .58 .73 .04
--------- --------- --------- --------- --------- ---------
Distributions to shareholders:
From investment income - net.......... (.36) (.74) (.70) (.78) (.87) (.95)
Excess distributions of net realized
gains............................... -- -- (.03) (.01) (.01) --
--------- --------- --------- --------- --------- ---------
Total distributions to shareholders..... (.36) (.74) (.73) (.79) (.88) (.95)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 9.24 $ 9.55 $ 9.45 $ 8.97 $ 9.18 $ 9.33
--------- --------- --------- --------- --------- ---------
Per-share market value, end of period... $ 8.750 $ 9.000 $ 8.688 $ 7.875 $ 8.750 $ 9.625
Total investment return, market value
@..................................... 1.14% 12.29% 20.27% (1.36%) .25% (8.16%)
Total investment return, net asset value
@ @.................................... .62% 9.50% 14.83% 6.93% 8.46% .01%
Net assets end of period (000s
omitted).............................. $116,890 $ 120,721 $ 119,285 $ 113,151 $ 115,642 $ 115,350
Ratio of expenses to average daily net
assets................................ .74%* .76% .76% .80% .78% .76%
Ratio of net investment income to
average daily net assets.............. 7.62%* 7.68% 7.91% 8.47% 9.33% 9.30%
Portfolio turnover rate................. 13% 44% 130% 67% 75% 125%
</TABLE>
* Annualized.
** For the six-month period ended January 31, 1999.
@ Total investment return, market value, is based on the change in
market price of a share durning 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 durning 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
Peggy L. Ettestad
VICE PRESIDENT
Tamara L. Fagely
VICE PRESIDENT AND TREASURER
Howard G. Hudson
VICE PRESIDENT
Dickson W. Lewis
VICE PRESIDENT
Lucinda S. Mezey
VICE PRESIDENT
David A. Peterson
VICE PRESIDENT
Scott R. Plummer
VICE PRESIDENT
Rhonda J. Schwartz
VICE PRESIDENT
Melinda S. Urion
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
GLOBAL GROWTH PORTFOLIO
GROWTH FUND
INTERNATIONAL EQUITY
PORTFOLIO
CAPITAL APPRECIATION
PORTFOLIO
FIXED AND VARIABLE Fortis Opportunity Fixed
ANNUITIES & Variable Annuity
TAX-DEFERRED Masters Variable Annuity FIXED ACCOUNT
INVESTING MONEY MARKET SUBACCOUNT
Empower Variable U.S. GOVERNMENT
Annuity SECURITIES SUBACCOUNT
DIVERSIFIED INCOME
SUBACCOUNT
GLOBAL BOND SUBACCOUNT
HIGH YIELD SUBACCOUNT
GLOBAL ASSET ALLOCATION
SUBACCOUNT
ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
INTERNATIONAL STOCK
SUBACCOUNT
MID CAP STOCK SUBACCOUNT
SMALL CAP VALUE
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
LARGE CAP GROWTH
SUBACCOUNT
GROWTH 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
GLOBAL ASSET ALLOCATION
SUBACCOUNT
ASSET ALLOCATION
SUBACCOUNT
VALUE SUBACCOUNT
GROWTH & INCOME
SUBACCOUNT
S&P 500 INDEX SUBACCOUNT
BLUE CHIP STOCK
SUBACCOUNT
INTERNATIONAL STOCK
SUBACCOUNT
MID CAP STOCK SUBACCOUNT
SMALL CAP VALUE
SUBACCOUNT
GLOBAL GROWTH SUBACCOUNT
LARGE CAP GROWTH
SUBACCOUNT
GROWTH 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 FORTIS 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 (3/99)
