<PAGE>
[LOGO]
FORTIS
Solid partners, flexible solutions-SM-
A disciplined, consistent
approach to investing
Fortis Securities, Inc.
semiannual report
JANUARY 31, 2000
Fortis Financial Group
<PAGE>
FORTIS SECURITIES, INC. SEMIANNUAL REPORT
CONTENTS
LETTER TO SHAREHOLDERS 1
SCHEDULE OF INVESTMENTS 2
STATEMENT OF ASSETS AND LIABILITIES 9
STATEMENT OF OPERATIONS 9
STATEMENTS OF CHANGES IN NET ASSETS 10
NOTES TO FINANCIAL STATEMENTS 11
BOARD OF DIRECTORS AND OFFICERS 13
- - TOLL-FREE PERSONAL ASSISTANCE
- Shareholder Services
- (800) 800-2000, 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, 2000:
TOTAL NET ASSETS............................. $ 105,474,702
MARKET PRICE PER SHARE....................... $ 7.125
SHARES OUTSTANDING........................... 12,665,130
FOR THE SIX-MONTH PERIOD ENDED JANUARY 31,
2000:
NET ASSET VALUE PER SHARE:
Beginning of period........................ $ 8.60
End of period.............................. $ 8.33
DISTRIBUTION FROM NET INVESTMENT INCOME:
Total dividends paid....................... $ 4,266,962
Dividends per share........................ $ .339
</TABLE>
<PAGE>
PORTFOLIO COMPOSITION BY SECTOR
AS OF 1/31/2000
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Corporate Bonds-Non-Investment Grade 25.4%
Asset Backed Securities 5.5%
U.S. Government Agencies 4.7%
Cash Equivalents/Receivables 3.0%
U.S. Treasury Securities 1.8%
Corporate Bonds-Investment Grade 59.6%
</TABLE>
TOP TEN HOLDINGS AS OF 1/31/2000
<TABLE>
<CAPTION>
Percent of
Bonds Net Assets
- -------------------------------------------------------------------
<C> <S> <C>
1. DLJ Mortgage Acceptance Corp.
(8.50%) 2001 ABS 2.8%
2. Nationsbank Corp.
(7.25%) 2025 2.1%
3. Georgia-Pacific Corp.
(9.625%) 2022 2.1%
4. United Airlines
(10.02%) 2014 2.0%
5. GTE Corp.
(7.90%) 2027 1.8%
6. Time Warner Entertainment
(8.375%) 2033 1.7%
7. Telecommunications, Inc.
(9.80%) 2012 1.6%
8. News America Holdings
(8.875%) 2023 1.5%
9. Quebec (Province of)
(8.80%) 2003 1.5%
10. Noranda, Inc.
(8.625%) 2002 1.4%
</TABLE>
DEAR SHAREHOLDER:
Interest rates continued to trend upward during the six months ended
January 31, 2000. Fueled by a 40% increase in oil prices, further signs that the
global economic recovery is now on solid footing, and two 0.25% increases in
short rates by the Federal Reserve, the 30-Year Treasury increased in yield
0.40% to 6.50%. Shorter maturities suffered even more, as 2-Year Treasury yields
rose by 0.97% to 6.59%, resulting in an inverted yield curve (yield on shorter
maturities exceeding yields on longer maturities) for the first time since 1994.
The sharp rise in yields, however, was not enough to slow the economy, which
posted consecutive quarters of GDP growth in excess of 5% to end the year.
The rise in interest rates gave us the opportunity to increase the yield on the
portfolio. We also took advantage of the temporary rise in yield premiums
(spreads) on Non-Treasury securities that occurred towards the end of the third
quarter of 1999. During that time, fears of increased corporate bond issuance
prior to Y2K caused spreads to widen significantly - in some cases to levels
comparable to those seen during the 1998 global financial crisis. Believing that
these investments were attractive, we repositioned the portfolio, selling lower
yielding asset-backed securities and buying higher yielding investment grade
corporate bonds, thus increasing the yield in the fund. The increased issuance
never occurred, and spreads returned to their mid 1999 levels by year-end.
For the six-month period ended January 31, 2000, Fortis Securities, Inc.
returned 1.27% at net asset value and -12.19% at market value. Going forward, we
believe that the Federal Reserve will raise short term interest rates at least
two more times, which will eventually slow economic growth to the Fed's
3.0%-3.5% GDP target. We also expect that technology driven productivity gains
will keep inflation low, while enabling companies to remain profitable. As a
result, while interest rates may rise further in the first half of 2000, we are
looking for lower rates by year-end.
Sincerely,
<TABLE>
<S> <C>
/s/ Dean C. Kopperud /s/ Howard G. Hudson
Dean C. Kopperud Howard G. Hudson
President Vice President
</TABLE>
1
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments
January 31, 2000 (Unaudited)
ASSET BACKED SECURITIES-5.49%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
---------- ----------- ------------ ------------
<C> <S> <C> <C> <C>
COMMERCIAL LOANS - 1.03%
$1,100,000 Midland Realty Acceptance Corp., 7.73%
Variable Rate Ser 1996-C1 Class B
8-25-2028.................................. AA $ 1,110,693 $ 1,088,967
------------ ------------
MULTI-FAMILY LOANS - 3.80%
1,000,000 DLJ Mortgage Acceptance Corp., 8.80%
Multifamily Mtg Pass Thru Certificate Ser
1993-12 Class B1 9-18-2003................. BBB** 982,500 1,000,940
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 3,005,700
------------ ------------
4,006,406 4,006,640
------------ ------------
WHOLE LOAN RESIDENTIAL - 0.66%
749,329 Mid-State Trust, 7.54% Ser 6 Class A3
7-1-2035................................... AA 748,867 695,422
------------ ------------
TOTAL ASSET BACKED SECURITIES................ $ 5,865,966 $ 5,791,029
============ ============
</TABLE>
CORPORATE BONDS-INVESTMENT GRADE-59.59%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
---------- ----------- ------------ ------------
<C> <S> <C> <C> <C>
AEROSPACE AND EQUIPMENT - 1.65%
$1,000,000 Lockheed Corp., 7.875% 3-15-2023............. BBB- $ 947,590 $ 872,529
1,000,000 Raytheon Co., 7.20% Deb 8-15-2027............ BBB- 881,386 866,572
------------ ------------
1,828,976 1,739,101
------------ ------------
AIR FREIGHT - 0.89%
1,000,000 Federal Express, 7.84% Pass Thru Certificate
Ser 1996-B2 1-30-2018...................... BBB+ 1,000,000 937,200
------------ ------------
AIRLINES - 4.37%
1,000,000 AMR Corp., 10.00% Deb 4-15-2021.............. BBB- 1,160,926 1,118,404
1,200,000 Delta Air Lines, 10.50% Pass Thru Certificate
4-30-2016.................................. BBB 1,444,437 1,371,240
2,000,000 United Airlines, 10.02% Deb 3-22-2014........ BBB 2,376,630 2,122,960
------------ ------------
4,981,993 4,612,604
------------ ------------
AUTOMOBILE AND MOTOR VEHICLE PARTS - 0.90%
1,000,000 TRW, Inc., 7.75% Sr Deb 6-1-2029............. BBB 990,865 946,986
------------ ------------
BANKS - 3.90%
1,000,000 Comerica Bank, 7.875% 9-15-2026.............. A- 988,361 967,906
1,000,000 National City Corp., 6.875% Sub Note
5-15-2019.................................. A- 889,300 883,985
2,500,000 Nationsbank Corp., 7.25% Sub Note
10-15-2025................................. A 2,332,565 2,266,577
------------ ------------
4,210,226 4,118,468
------------ ------------
BROKERAGE AND INVESTMENT - 3.24%
1,500,000 Goldman Sachs Group, Inc., 7.80% Sr Ser B
1-28-2010.................................. A+ 1,489,950 1,481,130
1,000,000 Lehman Brothers Holdings, 7.875% Note
11-1-2009.................................. A 1,021,831 981,550
1,000,000 Paine Webber Group, Inc., 7.625% Note
12-1-2009.................................. BBB+ 996,451 958,769
------------ ------------
3,508,232 3,421,449
------------ ------------
BUILDING MATERIALS - 2.23%
1,000,000 Armstrong World, 7.45% Sr Note 5-15-2029..... A- 998,828 896,067
1,500,000 Masco Corp., 7.75% Sr Sub Note 8-1-2029...... A- 1,482,032 1,453,207
------------ ------------
2,480,860 2,349,274
------------ ------------
CABLE TELEVISION - 5.17%
1,000,000 Comcast Cable Communications, Inc., 8.50%
Note 5-1-2027 (with rights)................ BBB 998,330 1,029,266
1,000,000 Paramount Communications, 7.50% 7-15-2023.... BBB- 952,398 885,956
1,500,000 Telecommunications, Inc., 9.80% Sr Note
2-1-2012................................... AA- 1,658,835 1,720,324
1,800,000 Time Warner Entertainment, 8.375% Sr Note
7-15-2033.................................. BBB 1,732,894 1,822,223
------------ ------------
5,342,457 5,457,769
------------ ------------
</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 - 1.89%
$ 600,000 Agrium, Inc., 7.70% Deb 2-1-2017............. BBB $ 594,589 $ 527,002
1,500,000 Equistar Chemicals, L.P., 8.75% Sr Note
2-15-2009.................................. BBB- 1,571,038 1,464,948
------------ ------------
2,165,627 1,991,950
------------ ------------
DIVERSIFIED FINANCE - 0.92%
1,000,000 Finova Capital Corp., 7.625% Sr Note
9-21-2009.................................. A- 993,623 970,585
------------ ------------
ENERGY - 2.70%
1,500,000 Apache Corp, 7.70% Note 3-15-2026............ BBB+ 1,494,698 1,426,912
500,000 NGC Corp. Capital Trust, 8.316% Deb
6-1-2027................................... BBB- 500,000 441,373
1,000,000 NRG Energy, Inc., 8.00% 11-1-2003............ BBB- 997,958 979,866
------------ ------------
2,992,656 2,848,151
------------ ------------
ENTERTAINMENT - 0.93%
1,000,000 Liberty Media, 8.25% Note 2-1-2030 (h)....... BBB- 991,990 984,184
------------ ------------
FINANCIAL SERVICES - 0.42%
406,000 Homeside, Inc., 11.25% Second Priority Sr
Secured Note 5-15-2003..................... A+ 415,174 446,092
------------ ------------
FOOD - 0.90%
1,000,000 Kroger Co., 7.70% 6-1-2029................... BBB- 969,235 945,039
------------ ------------
FOREIGN - GOVERNMENT - 1.47%
1,500,000 Quebec (Province of), 8.80% Bond 4-15-2003... A+ 1,637,670 1,553,385
------------ ------------
FOREST PRODUCTS - 3.57%
2,150,000 Georgia-Pacific Corp., 9.625% Deb
3-15-2022.................................. BBB- 2,169,818 2,249,717
1,500,000 Noranda, Inc., 8.625% Deb 7-15-2002.......... BBB 1,494,960 1,514,370
------------ ------------
3,664,778 3,764,087
------------ ------------
HOUSING - 1.21%
1,500,000 Pulte Corp., 7.625% Note 10-15-2017.......... BBB 1,479,409 1,271,987
------------ ------------
INSURANCE - 0.94%
1,000,000 ReliaStar Financial Corp., 8.00% Note
10-30-2006................................. A 996,513 988,474
------------ ------------
LEISURE TIME-AMUSEMENTS - 1.17%
1,250,000 Park Place Entertainment, 8.50% Sr Note
11-15-2006................................. BBB- 1,238,015 1,229,573
------------ ------------
MEDIA - 1.48%
1,500,000 News America Holdings, 8.875% Deb
4-26-2023.................................. BBB- 1,489,412 1,562,816
------------ ------------
MISCELLANEOUS - 2.09%
1,075,000 Minneapolis MN Community Development Agency,
11.25% Ltd Tax Dev Rev Bond Ser 1990-6B
6-1-2007 NR 1,101,875 1,123,321
1,000,000 New York (City of), 10.00% General Obligation
Taxable Bond Ser D 8-1-2005................ A- 1,008,146 1,078,764
------------ ------------
2,110,021 2,202,085
------------ ------------
NATURAL GAS TRANSMISSIONS - 3.91%
1,500,000 Columbia Gas Systems, 7.62% Note
11-28-2025................................. BBB+ 1,423,076 1,350,218
500,000 Enron Corp., 6.95% Note 7-15-2028............ BBB+ 451,848 436,528
1,500,000 Tennessee Gas Pipeline, 7.625% Deb
4-1-2037................................... BBB+ 1,481,985 1,383,698
1,000,000 Williams Companies, Inc., 7.625% Note
7-15-2019.................................. BBB- 970,115 953,807
------------ ------------
4,327,024 4,124,251
------------ ------------
OIL-CRUDE PETROLEUM AND GAS - 0.84%
1,000,000 Conoco Inc., 6.95% Sr Note 4-15-2029......... A- 881,460 889,347
------------ ------------
OIL-REFINING - 1.30%
1,500,000 Coastal Corp., 7.42% Note 2-15-2037.......... BBB 1,427,633 1,372,386
------------ ------------
RAILROAD AND RAILROAD EQUIPMENT - 1.19%
750,000 CSX Corp., 7.90% Deb 5-1-2017................ BBB 749,593 732,953
500,000 CSX Corp., 8.625% Deb 5-15-2022.............. BBB 524,055 520,018
------------ ------------
1,273,648 1,252,971
------------ ------------
</TABLE>
3
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
January 31, 2000 (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 - 1.64%
$1,000,000 EOP Operating LP, 7.50% 4-19-2029............ BBB+ $ 923,237 $ 870,143
1,000,000 Spieker Properties, 7.50% 10-1-2027.......... BBB 906,489 862,523
------------ ------------
1,829,726 1,732,666
------------ ------------
RETAIL-DEPARTMENT STORES - 2.94%
1,400,000 Dayton Hudson Co., 7.875% Deb 6-15-2023...... A- 1,410,092 1,364,734
1,000,000 Federated Department Store, 7.00%
2-15-2028.................................. BBB+ 906,493 876,325
1,000,000 Saks, Inc., 7.375% Deb 2-15-2019............. Baa3* 923,857 860,711
------------ ------------
3,240,442 3,101,770
------------ ------------
TELECOMMUNICATIONS - 1.64%
1,000,000 ALLTEL Corp., 6.80% Deb 5-1-2029............. A- 865,463 860,071
1,000,000 Sprint Capital Corp., 6.875% 11-15-2028...... BBB+ 900,641 866,732
------------ ------------
1,766,104 1,726,803
------------ ------------
TELEPHONE SERVICES - 1.79%
2,000,000 GTE Corp., 7.90% Deb 2-1-2027................ A 2,000,000 1,884,542
------------ ------------
UTILITIES-ELECTRIC - 2.30%
1,000,000 Duke Capital Corp., 8.00% Sr Note
10-1-2019.................................. A 993,628 1,003,604
1,500,000 TXU Electric Capital V, 8.175% Deb
1-30-2037.................................. BBB- 1,513,504 1,421,834
------------ ------------
2,507,132 2,425,438
------------ ------------
TOTAL CORPORATE BONDS - INVESTMENT GRADE..... $ 64,740,901 $ 62,851,433
============ ============
</TABLE>
CORPORATE BONDS-NON-INVESTMENT GRADE-25.39%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
---------- ----------- ------------ ------------
<C> <S> <C> <C> <C>
AIRLINES - 0.51%
$ 500,000 Northwest Airlines Trust No. 2, 13.875% Sub
Aircraft Note Ser D 6-21-2008.............. Ba1* $ 500,000 $ 536,000
------------ ------------
APPAREL - 0.49%
500,000 Hosiery Corp. of America, Inc., 13.75% Sr Sub
Note 8-1-2002.............................. B- 493,215 520,000
------------ ------------
AUTOMOBILE AND MOTOR VEHICLE PARTS - 0.93%
500,000 Holley Performance Products, Inc., 12.25% Sr
Note 9-15-2007 (h)......................... B+ 485,179 475,625
500,000 Tenneco Automotive, Inc., 11.625% Sr Sub Note
10-15-2009 (h)............................. B+ 501,293 510,625
------------ ------------
986,472 986,250
------------ ------------
BANKS - 0.47%
500,000 Sovereign Bancorp, 10.50% Sr Note
11-15-2006................................. BB+ 500,000 497,500
------------ ------------
BROADCASTING - 0.42%
500,000 Sinclair Broadcasting Group, Inc., 8.75% Sr
Sub Note 12-15-2007........................ B 510,446 447,500
------------ ------------
BUILDING EQUIPMENT - 0.09%
100,000 Better Minerals & Aggregates, 13.00% Sr Sub
Note 9-15-2009 (h)......................... B- 100,319 100,000
------------ ------------
BUSINESS SERVICES - 0.98%
1,000,000 Avis Rent A Car, Inc., 11.00% Sr Sub Note
5-1-2009................................... BB- 1,005,287 1,031,250
------------ ------------
CABLE TELEVISION - 2.24%
250,000 Adelphia Communications, 9.375% Sr Note
11-15-2009................................. B+ 248,036 237,500
1,625,000 Charter Communications Holdings LLC, 9.92% Sr
Disc Note 4-1-2011 (Zero coupon through
4-1-2004, thereafter 9.92%) (f)............ B+ 1,096,557 948,594
1,000,000 United International Holdings, 10.75% Sr Disc
Note Ser B 2-15-2008 (Zero coupon through
2-15-2003, thereafter 10.75%) (f).......... B- 743,650 660,000
250,000 United Pan-Europe Communications, 11.25% Sr
Note 11-1-2009 (h)......................... B 248,770 248,125
</TABLE>
4
<PAGE>
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
---------- ----------- ------------ ------------
<C> <S> <C> <C> <C>
$ 500,000 United Pan-Europe Communications, 13.75% Sr
Disc Note 2-1-2010 (Zero coupon through
8-1-2005, thereafter 13.75%) (e) (f)....... B $ 257,343 $ 266,250
------------ ------------
2,594,356 2,360,469
------------ ------------
CHEMICALS - 0.49%
500,000 NL Industries, Inc., 11.75% Sr Secured Note
10-15-2003................................. B 509,406 515,000
------------ ------------
CONSUMER GOODS - 0.25%
250,000 Chattem, Inc., 12.75% Sr Sub Note Ser B
6-15-2004.................................. B- 231,566 265,000
------------ ------------
ENTERTAINMENT - 1.11%
500,000 Argosy Gaming Co., 10.75% Sr Sub Note
6-1-2009................................... B 502,764 516,250
250,000 Circus Circus (Mandalay Resort Group), 7.625%
Sr Sub Deb 7-15-2013....................... BB+ 215,294 206,875
500,000 Isle of Capri Casinos, 8.75% Sr Sub Note
4-15-2009.................................. B 454,468 447,500
------------ ------------
1,172,526 1,170,625
------------ ------------
FOOD-MISCELLANEOUS - 0.32%
500,000 Fresh Foods, Inc., 10.75% Sr Sub Note
6-1-2006................................... B 499,985 340,000
------------ ------------
FOREIGN - GOVERNMENT - 0.64%
300,000 Brazil (Republic of), 11.625% Global Bond
4-15-2004.................................. B+ 297,540 286,800
500,000 United Mexican States, 6.25% Secured Note Ser
W-B 12-31-2019............................. BB 379,728 386,926
------------ ------------
677,268 673,726
------------ ------------
FOREST PRODUCTS - 0.50%
500,000 Stone Container Corp., 12.58% Sr Note
8-1-2016................................... B 500,000 525,000
------------ ------------
HEALTH CARE SERVICES - 0.30%
250,000 Concentra Operating Corp., 13.00% Sr Sub Note
8-15-2009 (h).............................. B- 251,074 212,500
100,000 Unilab Finance Corp., 12.75% Sr Sub Note
10-1-2009 (h).............................. B- 97,711 101,500
------------ ------------
348,785 314,000
------------ ------------
INDUSTRIAL - 0.38%
500,000 Intelcom Group (USA), Inc., 10.88%
5-1-2006 (Zero coupon through 5-1-2001,
thereafter 12.50%) (f)..................... B- 465,369 401,250
------------ ------------
MORTGAGE BACKED SECURITIES - 0.31%
508,673 Sandia Mtg Corp., 9.14% 1991-A Variable Rate
Pass Thru Certificate Class B 8-1-2018
(e)........................................ NR 404,000 330,638
------------ ------------
OIL-CRUDE PETROLEUM AND GAS - 0.42%
200,000 Ocean Energy, Inc., 8.875% Sr Sub Note Ser B
7-15-2007.................................. BB- 199,657 196,000
250,000 Swift Energy Co., 10.25% Sr Sub Note
8-1-2009................................... B- 255,173 245,000
------------ ------------
454,830 441,000
------------ ------------
PAPER - 0.48%
500,000 Packaging Corp. of America, 9.625% Sr Sub
Note 4-1-2009.............................. B 515,153 501,875
------------ ------------
PRINTING - 0.46%
500,000 Cadmus Communication Corp., 9.75% Sr Sub Note
6-1-2009................................... B 502,638 485,000
------------ ------------
PUBLISHING - 0.45%
500,000 Affinity Group Holding, 11.00% Sr Note
4-1-2007................................... B 503,564 471,250
------------ ------------
RESTAURANTS AND FRANCHISING - 0.24%
250,000 Sbarro, Inc., 11.00% Sr Note 9-15-2009 (h)... BB- 246,841 256,875
------------ ------------
RETAIL-GROCERY - 0.93%
1,000,000 Big V Supermarkets, Inc., 11.00% Sr Sub Note
Ser B 2-15-2004............................ B- 1,012,812 981,250
------------ ------------
TECHNOLOGY - 0.95%
1,000,000 Globix Corp., 12.50% Sr Note 2-1-2010 (e).... NR 1,000,000 1,000,000
------------ ------------
TELECOMMUNICATIONS - 8.24%
250,000 Covad Communications Group, 12.00% Sr Note
2-15-2010 (e).............................. B- 250,023 251,250
500,000 e. Spire Communications, Inc., 13.75% Sr Note
7-15-2007.................................. NR 500,000 410,000
500,000 e. Spire Communications, Inc., 13.75% Sr Note
7-15-2007 (e).............................. NR 587,976 410,000
750,000 Global Crossing Holdings Ltd., 9.50% Sr Note
11-15-2009 (h)............................. BB 727,526 723,750
</TABLE>
5
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
January 31, 2000 (Unaudited)
CORPORATE BONDS-NON-INVESTMENT GRADE-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Standard
Principal & Poor's Market
Amount Rating Cost (b) Value (c)
---------- ----------- ------------ ------------
<C> <S> <C> <C> <C>
$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+ $ 899,161 $ 890,000
500,000 Intermedia Communications, Inc., 8.50% Sr
Note Ser B 1-15-2008....................... B 435,285 450,000
750,000 McLeodUSA, Inc., 8.125% Sr Note 2-15-2009.... B+ 749,999 675,000
250,000 Metromedia Fiber Network, Inc., 10.00% Sr
Note 12-15-2009............................ B+ 248,454 250,625
500,000 Microcell Telecommunications, Inc., 12.52% Sr
Disc Note 6-1-2006 (Zero coupon through
12-1-2001, thereafter 14.00%) (f).......... B3* 419,229 445,000
250,000 Nextlink Communications, 12.125% Sr Disc Note
12-1-2009 (Zero coupon through 12-1-2004,
thereafter 12.125%) (f) (h)................ B 141,905 141,250
500,000 Nextlink Communications, L.L.C., 12.50% Sr
Note 4-15-2006............................. B 500,000 527,500
500,000 Nuevo Grupo Iusacell S.A. de C.V., 14.25% Sr
Note 12-1-2006 (e)......................... B+ 523,350 525,000
1,050,000 Omnipoint Corp., 11.625% Sr Note Ser A
8-15-2006.................................. CCC+ 827,201 1,118,250
500,000 PSInet, Inc., 11.00% Sr Note 8-1-2009........ B- 502,260 512,500
500,000 PTC International Finance II S.A., 11.25% Sr
Sub Note 12-1-2009 (e)..................... B+ 498,762 495,000
333,000 RSL Communications Ltd., 12.25% Sr Note
11-15-2006................................. B- 332,737 333,000
500,000 Splitrock Services, Inc., 11.75% Sr Sub Note
Ser B 7-15-2008............................ NR 503,557 528,750
------------ ------------
8,647,425 8,686,875
------------ ------------
TELEPHONE SERVICES - 0.98%
1,000,000 Williams Communications Group, Inc., 10.875%
Sr Note 10-1-2009.......................... BB- 995,504 1,030,000
------------ ------------
UNIT INVESTMENT TRUST - 0.52%
1,000,000 Stena Line AB, 10.625% Sr Note 6-1-2008...... B 1,014,524 550,000
------------ ------------
UTILITIES-ELECTRIC - 0.61%
650,000 AES Corp., 9.50% Sr Note 6-1-2009............ BB 645,510 641,875
------------ ------------
WASTE DISPOSAL - 0.68%
750,000 IT Group, Inc., 11.25% Sr Sub Note
4-1-2009................................... B+ 740,577 716,250
------------ ------------
TOTAL CORPORATE BONDS - NON-INVESTMENT
GRADE...................................... $ 27,778,378 $ 26,776,458
============ ============
</TABLE>
U.S. GOVERNMENT SECURITIES-6.53%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
---------- ------------ ------------
<C> <S> <C> <C>
FEDERAL HOME LOAN MORTGAGE CORPORATION -
1.11%
MORTGAGE BACKED SECURITIES:
$ 240,119 8.00% 2001................................... $ 246,122 $ 241,049
139,210 9.00% 2022................................... 148,041 144,005
300,094 10.50% 2017.................................. 320,350 319,663
141,939 11.25% 2010.................................. 153,516 152,708
148,562 11.50% 2014-2015............................. 162,849 161,002
129,746 11.75% 2010.................................. 137,530 141,321
------------ ------------
1,168,408 1,159,748
------------ ------------
REMIC-IO & IO-ETTE:
1,787 10.90% Trust # 1404-E Interest only Strip
IO-Ette 2006 (e) (g)....................... 449 12,496
------------ ------------
TOTAL FEDERAL HOME LOAN MORTGAGE
CORPORATION................................ 1,168,857 1,172,244
------------ ------------
FEDERAL NATIONAL MORTGAGE ASSOCIATION - 2.14%
MORTGAGE BACKED SECURITIES:
1,109,957 8.00% 2024-2025.............................. 1,123,902 1,107,259
509,191 10.50% 2014-2020............................. 542,412 541,649
411,576 11.00% 2011-2018............................. 423,477 442,196
17,241 11.25% 2011.................................. 17,899 18,712
42,164 12.00% 2014.................................. 44,892 46,254
90,152 12.50% 2015.................................. 101,816 100,943
------------ ------------
TOTAL FEDERAL NATIONAL MORTGAGE
ASSOCIATION................................ $ 2,254,398 $ 2,257,013
------------ ------------
</TABLE>
6
<PAGE>
U.S. GOVERNMENT SECURITIES-CONTINUED
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Cost (b) Value (c)
---------- ------------ ------------
<C> <S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION -
1.51%
MORTGAGE BACKED SECURITIES:
$ 587,205 9.00% 2021................................... $ 591,885 $ 610,300
937,824 9.50% 2019-2020.............................. 975,144 987,213
------------ ------------
TOTAL GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION................................ 1,567,029 1,597,513
------------ ------------
U.S. TREASURY SECURITIES - 1.77%
NOTES:
1,500,000 6.00% 2009................................... 1,429,511 1,429,687
450,000 6.125% 2007.................................. 455,298 433,547
------------ ------------
TOTAL U.S. TREASURY SECURITIES............... 1,884,809 1,863,234
------------ ------------
TOTAL U.S. GOVERNMENT SECURITIES............. $ 6,875,093 $ 6,890,004
============ ============
</TABLE>
COMMON STOCKS AND WARRANTS-0.07%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Market
Shares Cost (b) Value (c)
------ ------------ ------------
<C> <S> <C> <C>
APPAREL - 0.02%
500 Hosiery Corp. of America, Inc. Class A (a)
(e)........................................ $ 8,460 $ 20,000
------------ ------------
TELECOMMUNICATIONS - 0.05%
500 Highwaymaster Communications, Inc. (a) (e)... 5,000 7,500
500 RSL (a) (e).................................. 500 46,750
------------ ------------
5,500 54,250
------------ ------------
TOTAL COMMON STOCKS AND WARRANTS............. 13,960 74,250
============ ============
TOTAL LONG-TERM INVESTMENTS.................. $105,274,298 $102,383,174
============ ============
</TABLE>
SHORT-TERM INVESTMENTS-2.05%
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Principal Market
Amount Value (c)
---------- ------------
<C> <S> <C>
BANKS - 2.05%
$2,162,890 U.S. Bank N.A. Money Market Variable Rate
Time Deposit, Current rate - 5.62%......... $ 2,162,890
------------
TOTAL INVESTMENTS IN SECURITIES (COST:
$107,437,188)(B)........................... $104,546,064
============
</TABLE>
(a) Presently non-income producing.
(b) At January 31, 2000, the cost of securities for federal income tax purposes
was $107,480,046 and the aggregate gross unrealized appreciation and
depreciation based on that cost was:
<TABLE>
<S> <C>
Unrealized appreciation..................................... $ 1,257,976
Unrealized depreciation..................................... (4,191,958)
- --------------------------------------------------------------------------
Net unrealized depreciation................................. $ (2,933,982)
- --------------------------------------------------------------------------
</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 6.76% of total net assets as of January 31, 2000.
7
<PAGE>
FORTIS SECURITIES, INC.
Schedule of Investments (continued)
January 31, 2000 (Unaudited)
- --------------------------------------------------------------------------------
(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
management as illiquid securities:
<TABLE>
<CAPTION>
Year Acquired Shares/Par Security Cost Basis
- ------------- ---------- -------- ----------
<S> <C> <C> <C>
1999 250,000 Covad Communications Group due 2010 -
144A $ 250,023
1998 500,000 e. Spire Communications, Inc. due 2007 -
144A 587,976
1993 1,787 FHLMC Remic Trust #1404-E IO-ette 2006 449
1999 1,000,000 Globix Corp. due 2010 - 144A 1,000,000
1998 500 Highwaymaster Communications, Inc.
(Warrants) - 144A 5,000
1994 500 Hosiery Corp. of America, Inc. Class A -
144A 8,460
1999 500,000 Nuevo Crupo Iusacell S.A. de C.V. due
2006 - 144A 523,350
1999 500,000 PTC International Finance ll S.A. due
2009 - 144A 498,762
1996 500 RSL (Warrants) - 144A 500
1993 508,673 Sandia Mortgage Corp. due
2018-restricted 404,000
1999 500,000 United Pan-Europe Communications due
2010 - 144A 257,343
The aggregate value of these securities at January 31, 2000, was $3,364,884 which represents 3.19% of
total net assets.
</TABLE>
(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, 2000, based upon the estimated timing and
amount of future cash flows.
(h) 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, 2000, was $ 3,754,434, which represents
3.56% of the total net assets.
* Moody's Rating
** Duff & Phelps
8
<PAGE>
FORTIS SECURITIES, INC.
Statement of Assets and Liabilities (Unaudited)
January 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
ASSETS
Investments in securities, as detailed in the accompanying
schedules, at market (cost $107,437,188) (Note 1)............. $104,546,064
Receivables:
Investment securities sold.................................... 4,570,828
Interest and dividends........................................ 2,409,452
Prepaid expenses................................................ 11,255
------------
TOTAL ASSETS...................................................... 111,537,599
------------
LIABILITIES:
Dividends payable ($0.058 per share)............................ 734,577
Payable for investment securities purchased..................... 5,235,427
Payable for investment advisory and management fees (Note 2).... 52,330
Accounts payable and accrued expenses........................... 40,563
------------
TOTAL LIABILITIES................................................. 6,062,897
------------
NET ASSETS:
Net proceeds of capital stock, par value $.01 per
share--authorized 15,000,000 shares outstanding 12,665,130
shares........................................................ 127,627,506
Unrealized depreciation of investments.......................... (2,891,124)
Undistributed net investment income............................. 242,345
Accumulated net realized loss from sale of investments.......... (19,504,025)
------------
TOTAL NET ASSETS.................................................. $105,474,702
============
NET ASSET VALUE PER SHARE......................................... $8.33
============
</TABLE>
Statement of Operations (Unaudited)
For the Six-Month Period Ended January 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
NET INVESTMENT INCOME:
Income
Interest income................................................ $ 4,988,322
-----------
Expenses:
Investment advisory and management fees (Note 2)............... 333,898
Legal and auditing fees (Note 2)............................... 13,222
Custodian fees................................................. 3,016
Shareholders' notices and reports.............................. 27,801
Directors' fees and expenses................................... 9,049
Exchange listing fees.......................................... 13,322
Other.......................................................... 10,056
-----------
Total expenses................................................... 410,364
-----------
NET INVESTMENT INCOME.............................................. 4,577,958
-----------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS (NOTE 1):
Net realized loss on investments:................................ (2,685,066)
Net change in unrealized depreciation of investments in
securities..................................................... (1,130,570)
-----------
NET LOSS ON INVESTMENTS............................................ (3,815,636)
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS............... $ 762,322
===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
FORTIS SECURITIES, INC.
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE
JANUARY 31, 2000 YEAR ENDED
(UNAUDITED) JULY 31, 1999
----------------- -------------
<S> <C> <C>
OPERATIONS
Net investment income............................. $ 4,577,958 $ 8,812,593
Net realized loss on investments.................. (2,685,066) (4,496,304)
Net change in unrealized depreciation on
investments..................................... (1,130,570) (7,160,843)
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS........................................ 762,322 (2,844,554)
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS:
From net investment income........................ (4,266,962) (9,104,432)
------------ ------------
CAPITAL STOCK TRANSACTIONS:
Proceeds from 3,428 and 19,522 shares issued as a
result of reinvested dividends.................. 28,550 178,860
------------ ------------
TOTAL DECREASE IN NET ASSETS........................ (3,476,090) (11,770,126)
NET ASSETS:
Beginning of period............................... 108,950,792 120,720,918
------------ ------------
End of period (includes undistributed (excess of
distributions over) net investment income of
$242,345 and ($68,651), respectively)........... $105,474,702 $108,950,792
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
10
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Fortis Securities, Inc., ("the
fund") is a closed-end diversified management investment company. The primary
investment objective of the fund is to seek a high level of current income
through investment in a diversified portfolio of debt securities, some of
which may be privately placed and some of which may have equity features.
Capital appreciation is a secondary objective.
SECURITY VALUATION: Investments in securities traded on 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, 2000, there were no outstanding purchases on a
when-issued basis.
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, 2000, the cost of
purchases and proceeds from sales of securities (other than short-term
securities) aggregated $37,465,369 and $38,643,161, 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
$16,776,101 at July 31, 1999, which, if not offset by subsequent capital
gains, will expire in 2000 through 2008. 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, 2000, 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, 2000, was
$3,364,884 which represents 3.19% of net assets. Pursuant to guidelines
adopted by the Board of Directors, certain unregistered securities are
determined to be liquid and are not included within the 15% limitation
specified above.
DIVIDEND REINVESTMENT PLAN: A shareholder may choose to have their dividends
and capital gains distributions reinvested in additional whole and fractional
shares. Although reinvested, this distribution will still be taxable. Under
this plan, when the market price is greater than the net asset value, the
reinvestment price will be the greater of 95 percent of the month-end market
price (plus brokerage commissions) or the month-end net asset value. When the
market price is less than the net asset value, the reinvestment price will be
the market price (plus brokerage commissions) to the extent that shares can
be purchased in the open market.
A shareholder will receive his dividends and capital gains distributions in
cash automatically, unless they inform the fund in writing that they desire
to have their distributions reinvested in additional shares. This may be done
by contacting Fortis Advisers, Inc. (see page 13). Notice to initiate or to
terminate this Plan must be received by Advisers 15 days prior to the
dividend date for which it is to become effective.
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 $2,514 for the year ended January 31,
2000, were paid to a law firm of which the secretary of the fund is a
partner.
11
<PAGE>
FORTIS SECURITIES, INC.
Notes to Financial Statements (Unaudited) (continued)
- --------------------------------------------------------------------------------
3. FINANCIAL HIGHLIGHTS: Selected per share historical data was as follows:
<TABLE>
<CAPTION>
Year Ended July 31,
---------------------------------------------------------------
2000** 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
Net asset value, beginning of period.... $ 8.60 $ 9.55 $ 9.45 $ 8.97 $ 9.18 $ 9.33
-------- -------- -------- -------- -------- --------
Operations:
Investment income - net............... .36 .70 .73 .72 .78 .84
Net realized and unrealized gain
(loss) on investments............... (.29) (.93) .11 .49 (.20) (.11)
-------- -------- -------- -------- -------- --------
Total from operations................... .07 (.23) .84 1.21 .58 .73
-------- -------- -------- -------- -------- --------
Distributions to shareholders:
From investment income - net.......... (.34) (.72) (.74) (.70) (.78) (.87)
Excess distributions of net realized
gains............................... -- -- -- (.03) (.01) (.01)
-------- -------- -------- -------- -------- --------
Total distributions to shareholders..... (.34) (.72) (.74) (.73) (.79) (.88)
-------- -------- -------- -------- -------- --------
Net asset value, end of period.......... $ 8.33 $ 8.60 $ 9.55 $ 9.45 $ 8.97 $ 9.18
-------- -------- -------- -------- -------- --------
Per-share market value, end of period... $ 7.125 $ 8.500 $ 9.000 $ 8.688 $ 7.875 $ 8.750
Total investment return, market value
@..................................... (12.19%) 2.34% 12.29% 20.27% (1.36%) .25%
Total investment return, net asset value
@@.................................... 1.27% (2.43%) 9.50% 14.83% 6.93% 8.46%
Net assets end of period (000s
omitted).............................. $105,475 $108,951 $120,721 $119,285 $113,151 $115,642
Ratio of expenses to average daily net
assets................................ .76%* .73% .76% .76% .80% .78%
Ratio of net investment income to
average daily net assets.............. 8.47%* 7.65% 7.68% 7.91% 8.47% 9.33%
Portfolio turnover rate................. 36% 33% 44% 130% 67% 75%
</TABLE>
* Annualized.
** For the six-month period ended January 31, 2000.
@ Total investment return, market value, is based on the change in
market price of a share during the period and assumes reinvestment of
distributions at actual prices pursuant to the fund's dividend
reinvestment plan.
@@ Total investment return, net asset value, is based on the change in
net asset value of a share during the period and assumes reinvestment
of distributions at actual prices pursuant to the fund's dividend
reinvestment plan.
12
<PAGE>
DIRECTORS AND OFFICERS
DIRECTORS Richard W. Cutting CPA AND FINANCIAL CONSULTANT
Allen R. Freedman CHAIRMAN AND CHIEF EXECUTIVE OFFICER,
FORTIS, INC. MANAGING DIRECTOR OF
FORTIS INTERNATIONAL, N.V.
Dr. Robert M. Gavin PRESIDENT, CRANBROOK EDUCATION
COMMUNITY. PRIOR TO JULY 1996,
PRESIDENT MACALESTER COLLEGE
Jean L. King PRESIDENT, COMMUNI-KING
Dean C. Kopperud CHIEF EXECUTIVE OFFICER AND DIRECTOR,
FORTIS ADVISERS, INC. PRESIDENT AND
DIRECTOR, FORTIS INVESTORS, INC.
PRESIDENT - FORTIS FINANCIAL GROUP,
FORTIS BENEFITS INSURANCE COMPANY AND
SENIOR VICE PRESIDENT, FORTIS
INSURANCE COMPANY
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 Schenker 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 LLP
MINNEAPOLIS, MINNESOTA
MARKET PRICE Fortis Securities, Inc. is listed on the New York Stock Exchange
with the Ticker symbol "FOR." The market price is carried daily
in the financial pages of most newspapers in the New York Stock
Exchange Composite Transactions listings under the abbreviation
FortisSec.
In addition, each Monday THE WALL STREET JOURNAL and other
financial publications include a "Closed-End Funds" table which
sets forth on a per share basis the previous week's net asset
value, market price and the percentage difference between net
asset value and market price for the fund under the name Fortis
Securities.
13
<PAGE>
[LOGO]
FORTIS
Solid partners, flexible solutions-SM-
FORTIS MEANS STEADFAST
Fortis means "steadfast" in Latin. The worldwide Fortis family of companies
lives up to the name, and has each day since the 1800s, with flexible
solutions tailored to our customers' individual needs. We deliver the
stability you require today ... and tomorrow. You can count on it.
Fortis Financial Group offers annuities, life insurance and mutual funds
through its broker/dealer Fortis Investors, Inc. We're part of Fortis, Inc.,
a financial services company that provides specialty insurance and investment
products to individuals, businesses, associations and other financial
services organizations throughout the United States.
Fortis, Inc. is part of the international Fortis group, which operates in the
fields of insurance, banking, and investments. Fortis listed companies are
Fortis (B) of Belgium and Fortis (NL) of the Netherlands.
Fortis: steadfast for YOU!
FORTIS FINANCIAL GROUP
Fund management offered through
Fortis Advisers, Inc. since 1949
Securities offered through Fortis
Investors, Inc., member NASD, SIPC
Insurance products issued by
Fortis Benefits Insurance Company &
Fortis Insurance Company
P.O. Box 64284, St. Paul, MN 55164-0284
Telephone (800) 800-2000
http://www.ffg.us.fortis.com
FORTIS FINANCIAL GROUP ----------------------
P.O. Box 64284 Bulk Rate
St. Paul, MN 55164-0284 U.S. Postage
PAID
Fortis Securities, Inc. Permit No. 3794
Minneapolis, MN
----------------------
[RECYCLE LOGO] Printed on recycled paper with
40% preconsumer waste and 10%
post consumer waste. Please recycle.
The Fortis brandmark and Fortis-Registered Trademark- are
servicemarks of Fortis (B) and Fortis (NL).
95351 -C-Fortis, Inc. 3/00
