<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS MORTGAGE SECURITIES FUND
SEPTEMBER 30, 1995
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND
LIABILITIES 10
STATEMENT OF OPERATIONS 11
STATEMENT OF CHANGES IN NET
ASSETS 12
NOTES TO FINANCIAL STATEMENTS 13
INDEPENDENT AUDITORS' REPORT 19
FEDERAL INCOME TAX INFORMATION 20
SHAREHOLDER SERVICES 22
<PAGE>
October 31, 1995
[PHOTO]
Dear Shareholders:
The first nine months of 1995 produced exceptional returns for both stock and
bond investors. Subdued inflation and a growing economy combined to create a
positive secular environment for financial assets.
A 140 basis point reduction in the 30-year Treasury Bond produced a 21 percent
return since the beginning of the year. Corporate bonds returned 16.5 percent
according to the Lehman Corporate Bond Index. If this pace continues, the bond
market will finish off one of its best years ever - a sharp reversal from 1994.
Investors reacted strongly to every actual and perceived economic shift creating
unusual volatility in the bond market. The sharp sell off in July and August was
just such an over reaction. Long term yields will be driven by continuing
concerns about the budget process in Washington, the near term direction of the
economy and the dollar's performance. Nonetheless, we expect Treasury Bills to
remain trading in the 6-7 percent range.
Technology, financial and consumer companies drove the stock market to all-time
record highs in the third quarter as measured by the S&P 500. While this
produced spectacular results, the extended run may create additional
vulnerability in the market. The chief concerns are disappointing earnings
announcements and a general slow down in profitability. According to Ibbotson
Associates, there have only been four times since 1927 that stock prices have
risen more in the first nine months of the year. In each instance, the market
cooled off in the final quarter. Factors which could push the market up in the
short term, however, are a significant interest rate reduction or a surge in
foreign portfolio inflows.
The current economic expansion is displaying the mixed signals of maturation.
However, we do not expect an early end to the recovery. The economy's recent
slow growth pattern should lengthen the life of the expansion by reducing
inflationary pressures and consequently, the need for money tightening measures.
It is unlikely that the economy will regain the robust pace of the early stages
of the expansion.
The market does hold opportunity for investors. Diversification across
industries and geographic regions remains a key element to successful investing.
However, determining which investments will benefit in both the near and long
term requires professional experience. Advantus Capital Management, Inc. offers
a family of eight funds which are designed to help you reach your goals with a
thoughtful, well conceived investment strategy.
Sincerely,
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
PERFORMANCE UPDATE
[PHOTO]
KENT WEBER, CFA
PORTFOLIO MANAGER
The Advantus Mortgage Securities Fund is
a mutual fund designed for investors
seeking a high level of current income
consistent with prudent investment risk.
The Fund hopes to achieve its income
objective by investing primarily in a
diversified portfolio of mortgage-related
securities. The Fund expects, under
normal circumstances, to have most of its
assets in high quality mortgage-related
securities such as those issued by U.S.
Government owned (GNMA) or sponsored
corporations (FNMA and FHLMC) or rated
"A" or better by Moody's or Standard &
Poor's.
-Dividends declared daily and paid monthly.
-Capital gains distributions paid annually.
PERFORMANCE
Interest rates reached their cyclical peak (for this business cycle) in the
fourth quarter of 1994. Since then, interest rates have drifted lower in tandem
with uneven economic conditions and diminishing inflationary pressures. Patient
investors that endured the Federal Reserve's numerous pre-emptive strikes
against the relatively nonexistent threat of inflation have been rewarded
generously with healthy one year total returns.
The annual performance of your Advantus Mortgage Securities Fund was as follows
for the three classes of shares currently outstanding:
<TABLE>
<S> <C>
Class A* 13.5 percent
Class B* 12.7 percent
Class C (since 3/1/95 inception)* 7.9 percent
</TABLE>
Our returns compare favorably with the Lehman Brother's Ginnie Mae Index** and
Lipper Analytical's Ginnie Mae Fund Category+ which returned 14.07 percent and
12.59 percent respectively over the same period.
PORTFOLIO RECAP
Intermediate interest rates now stand 1.75 percent below their year ago levels.
A rally of this magnitude in the bond market has shortened the effective
duration (duration is used to measure price volatility for a given change in
interest rates) of the Lehman Ginnie Mae Index to approximately 3.6 years from
4.7 years. Comparatively, your Fund's duration stands at 4.1 years, down from
4.7 years where we began the fiscal year. With an average maturity of 7.2 years,
your Fund is comfortably positioned as an intermediate maturity fixed income
mortgage portfolio.
As evidence mounted that the Federal Reserve had succeeded in slowing economic
activity, we gradually started to adjust our duration from neutral the Index to
slightly long the Index. By slowly increasing the Fund's duration, we were able
to enhance our returns through incremental price appreciation during this
falling rate environment. Looking forward, we do not envision lengthening the
duration of the Fund to much more than 20 percent longer than the Index
(currently 14 percent) even if the economy continues to limp along. In fact, if
today's lower interest rates start to work their magic and economic activity
moves above trend line growth (about 2.5 percent), we will look for
opportunities to reel our duration back on top of the Index. These parameters
are consistent with our goal of maintaining reasonable potential price
volatility relative to the Index.
2
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
SEPTEMBER 30, 1995
With duration management confined to a range, we concentrated our efforts on
adding value by actively managing securities and rotating our sector weightings.
This process emphasizes actively managing prepayment risk and behaving like a
stock picker in a bond market. To this extent, we continue to avoid the
ownership of generic, newly originated higher coupon mortgage securities.
Instead, we see more value in overweighing Mortgage Securities and
Collateralized Mortgage Obligations backed by vintage (issue-year specific)
seasoned mortgage securities. These specified securities have proven to generate
predictable cash flow and steady yields.
Likewise, we have slowly reduced our ownership of Collateralized Mortgage
Obligations as the fundamentals changed and better investment opportunities were
found in off-the-run straight mortgage securities. Such security swaps included
bi-weekly pay mortgages, Ginnie Mae IIs, and 20 year fully amortizing mortgages.
Finally, the turnover rate on the Portfolio was above average but not
unreasonable given the magnitude of change in interest rates and the
exceptionally large number of investment opportunities we identified.
OUTLOOK
At current interest rates, the mortgage market once again finds itself faced
with the prospect of accelerating prepayments. While we are cautious with
respect to pending prepayments and do expect isolated flare ups, we do not
expect a full fledged refinancing wave to unfold unless rates fall substantially
from here.
Nevertheless, the yield advantage on most mortgage securities relative to
Treasury securities stand near their widest levels in the past three years
(about 1.25 percent for current coupon mortgage securities). Mortgage securities
now offer quality conscience fixed income investors some of the highest yields
available in the fixed income market today. With the outlook for further price
appreciation limited near term, we expect investors to renew their affection for
mortgage securities (with limited prepayment risk). As the search intensifies
for higher yielding investment opportunities in this lower rate environment, the
type of mortgage securities we hold in the Portfolio should benefit.
*Historical results are not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge.
**The Lehman Brother's GNMA Index includes 15 and 30 year fixed rate securities
backed by mortgage pools of the Government National Mortgage Association.
+Average return of 56 Ginnie Mae funds according to Lipper Analytical Services,
Inc.
3
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
SEPTEMBER 30, 1995
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Other Government Agencies 24.6%
FHLMC 11.6%
Mortgage-Backed Bonds 14.2%
FNMA 4.2%
GNMA 27.0%
Cash and Other
Assets/Liabilities 1.7%
CMOs 16.7%
</TABLE>
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN ADVANTUS
MORTGAGE SECURITIES INCOME FUND, LEHMAN BROTHER'S GNMA INDEX AND CONSUMER PRICE
INDEX
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 7.9%
Five year 7.8%
Ten year 8.4%
Class A Lehman Brother's GNMA Index CPI
10/31/85 10,000 10,000 10,000
10/31/86 10,719 11,653 10,157
10/31/87 10,930 12,122 10,608
10/31/88 12,380 13,793 11,060
10/31/89 13,597 15,367 11,567
10/31/90 14,469 16,641 12,295
10/31/91 16,786 19,485 12,654
10/31/92 18,162 21,199 13,060
10/31/93 20,237 22,804 13,410
9/30/94 19,358 22,655 13,816
9/30/95 22,391 25,843 14,120
</TABLE>
On the chart above you can see how the Advantus Mortgage Securities Fund Class A
shares' total return compared to the Lehman Brother's GNMA Index and the
Consumer Price Index. The three lines represent the cumulative total return of a
hypothetical $10,000 investment made on September 30, 1985 in the Advantus
Mortgage Securities Fund Class A shares through September 30, 1995.
4
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
SEPTEMBER 30, 1995
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 7.7%
Since inception (8/19/94) 6.6%
Class B Lehman Brother's GNMA Index CPI
8/19/94 10,000 10,000 10,000
9/30/94 9,928 9,874 10,067
9/30/95 10,742 11,264 10,289
</TABLE>
On the chart above you can see how the Advantus Mortgage Securities Fund Class B
shares' total return compared to the Lehman Brother's GNMA Index and the
Consumer Price Index. The three lines represent the cumulative total return of a
hypothetical $10,000 investment made on the inception date of the Advantus
Mortgage Securities Fund Class B shares (August 19, 1994) through September 30,
1995.
5
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
SEPTEMBER 30, 1995
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
Total return:
Since inception
(3/1/95) 7.9%
Class C Lehman Brother's GNMA Index CPI
3/01/95 10,000 10,000 10,000
9/30/95 10,791 10,817 10,146
</TABLE>
On the chart above you can see how the Advantus Mortgage Securities Fund Class C
shares' total return compared to the Lehman Brother's GNMA Index and the
Consumer Price Index. The three lines represent the cumulative total return of a
hypothetical $10,000 investment made on the inception date of the Advantus
Mortgage Securities Fund Class C shares (March 1, 1995) through September 30,
1995.
The above charts are useful because they provide you with more information about
your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deductions of
the maximum 5 percent front-end sales charge for Class A and the maximum
applicable contingent deferred sales charge for Class B shares. Sales charges
pay for your financial adviser's investment advice. Individuals cannot buy even
an unmanaged index fund without incurring some charges and expenses.
Historical results are not an indication of future performance.
6
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1995
(Percentages of each category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- ---------- -----------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (98.3%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (75.3%)
Federal Home Loan Mortgage Corporation (12.4%)
$ 207,512 CMO Series L, Class 5....................................... 7.900% 05/01/01 $ 211,532
445,524 Bi-weekly................................................... 7.000% 12/01/22 441,095
740,122 Bi-weekly................................................... 6.500% 12/01/23 716,682
1,000,000 20 Year Gold................................................ 6.500% 07/01/13 974,259
1,000,000 Targeted Amortization Class CMO, Series 1640, Class B....... 6.500% 12/15/08 975,720
-----------
3,319,288
-----------
Federal National Mortgage Association (11.3%)
1,085,352 Bi-weekly................................................... 6.000% 07/01/07 1,051,933
1,400,000 CMO Sequential Payer, Series G92-45, Class D................ 6.000% 04/25/19 1,346,630
568,000 CMO PAC Targeted Amortization Class, Series G93-11, Class
H.......................................................... 6.000% 12/25/08 549,185
72,147 Principal only PAC, Series G93-28, Class A (b).............. 7.000% 07/25/22 71,667
-----------
3,019,415
-----------
Government National Mortgage Association (27.0%)
402,203 ............................................................ 8.000% 12/15/15 413,967
567,416 ............................................................ 8.000% 03/15/16 583,905
342,089 ............................................................ 8.000% 07/15/16 352,029
300,000 (e)......................................................... 8.000% 12/01/17 308,437
250,000 (e)......................................................... 7.000% 05/15/24 246,874
598,390 ............................................................ 7.000% 09/15/16 596,702
152,640 ............................................................ 7.000% 09/15/16 152,209
401,997 ............................................................ 7.500% 05/15/17 407,271
321,586 ............................................................ 7.500% 03/15/17 325,805
378,267 ............................................................ 7.000% 05/15/17 376,939
295,506 ............................................................ 7.000% 05/15/17 294,469
354,580 ............................................................ 7.000% 12/15/16 353,580
407,647 ............................................................ 7.000% 04/15/17 406,216
337,641 ............................................................ 7.000% 04/15/17 336,456
91,339 ............................................................ 7.000% 02/15/17 91,018
401,523 ............................................................ 7.000% 04/15/17 400,113
399,719 ............................................................ 7.000% 10/15/17 398,315
459,045 ............................................................ 7.000% 10/15/17 457,434
234,735 GNMA II..................................................... 9.000% 08/20/16 247,059
215,548 GNMA II..................................................... 9.000% 05/20/16 225,885
225,477 GNMA II..................................................... 9.000% 06/20/16 236,291
-----------
7,210,974
-----------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- ---------- -----------
<C> <S> <C> <C> <C>
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS--CONTINUED
Other U.S. Government Agency Obligations (24.6%)
$1,134,082 Vendee Mortgage Trust, Series 1994-2, Class 2 (c)........... 8.447% 05/15/24 $ 1,186,888
740,191 Vendee Mortgage Trust, Series 1995-1A, Class 1 (c).......... 7.207% 02/15/25 729,782
1,038,009 Vendee Mortgage Trust, Series 1995-1B, Class 2 (c).......... 7.793% 02/15/25 1,064,283
1,486,053 Vendee Mortgage Trust, Series 1995-2C, Class 3A (c)......... 8.793% 06/15/25 1,580,324
1,000,000 Vendee Mortgage Trust, Series 1995-3, Class 1C (c).......... 7.250% 07/15/14 1,012,813
1,000,000 Vendee Mortgage Trust, Series 1995-3, Class 1D (c).......... 7.250% 07/15/16 1,001,875
-----------
6,575,965
-----------
Total U.S. government and agencies obligations (cost: $19,644,821)............ 20,125,642
-----------
OTHER MORTGAGE-BACKED SECURITIES (23.0%)
1,302,883 Collaterized Mortgage Obligation Trust, Sequential Accrual,
Z Tranche, Series 14, Class Z (d).......................... 8.000% 01/01/17 1,325,435
1,000,000 CSFB Financial Corporation Senior Performance Note Mortgage
Revenue Series 1995-A, Class A (f)......................... 7.000% 11/15/05 1,000,938
115,244 FBC Mortgage Securities Trust 8, Series A, Class A.......... 5.000% 10/01/16 112,289
284,526 Green Tree Finance Company Limited Net Interest Margin
Trust, Series 1995-A, Class A.............................. 7.250% 07/15/05 284,518
1,041,946 International Capital Markets Acceptance Corporation (f).... 8.250% 09/01/15 1,050,412
304,793 Morgan Stanley Mortgage Trust CMO, Sequential Payer, Series
W, Class 5................................................. 9.050% 05/01/18 316,037
621,085 Salomon Brothers Mortgage Securities VI CMO, Sequential
Payer, Series 1986-1, Class A.............................. 6.000% 12/25/11 600,900
1,479,000 Wyoming Community Development Authority..................... 6.850% 06/01/10 1,456,814
-----------
Total other mortgage-backed securities (cost: $5,834,639)..................... 6,147,343
-----------
Total long-term debt securities (cost: $25,479,460)........................... 26,272,985
-----------
SHORT-TERM SECURITIES (2.0%)
550,000 U.S. Treasury Bill.......................................... 5.42% 12/07/95 544,392
-----------
Total short-term securities (cost: $544,503).................................. 544,392
-----------
Total investments in securities (cost: $26,023,963) (g)....................... $26,817,377
-----------
-----------
<FN>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Represents a debt security that entitles holders to receive only principal
payments on the underlying mortgages. The yield to maturity of a
principal-only security is sensitive to the rate of principal payments on
the underlying mortgage assets. A slower (more rapid) than expected rate of
principal repayments may have an adverse (positive) effect on yield to
maturity. Interest rate disclosed represents current yield based upon the
current cost basis and estimated timing of future cash flows.
(c) Represents a debt security with a weighted average net pass-through rate
which varies based on the pool of underlying collateral. The rate disclosed
is the rate in effect at September 30, 1995.
</TABLE>
8
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<S> <C>
Notes to Investments in Securities - continued
- ----------------------------------------------
(d) Represents a debt security that pays no interest or principal during the
initial accrual period, but accrues additional principal at a specified
rate. Interest rate disclosed represents current yield based upon estimated
timing of future cash flows.
(e) At September 30, 1995 the total cost of investments issued on a when-issued
or forward commitment basis is $555,570.
(f) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
1995 the value of these securities amounted to $2,051,350 or 7.7% of net
assets.
(g) At September 30, 1995 the cost of securities for federal income tax
purposes was $26,023,963. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
Gross unrealized appreciation.................................. $ 828,592
Gross unrealized depreciation.................................. (35,178)
---------
Net unrealized appreciation.................................... $ 793,414
---------
---------
</TABLE>
9
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying schedule for detailed
listing (identified cost: $26,023,963)............................................. $26,817,377
Cash in bank on demand deposit...................................................... 58,034
Receivable for Fund shares sold..................................................... 2,892
Receivable for investment securities sold........................................... 252,959
Accrued interest receivable......................................................... 243,615
-----------
Total assets.................................................................... 27,374,877
-----------
LIABILITIES
Payable for investment securities purchased......................................... 555,570
Payable for Fund shares repurchased................................................. 65,288
Payable to Adviser.................................................................. 28,390
Dividends payable to shareholders................................................... 3,496
-----------
Total liabilities............................................................... 652,744
-----------
Net assets applicable to outstanding capital stock.................................. $26,722,133
-----------
-----------
Represented by:
Capital stock--$.01 par value (note 1)............................................ $ 25,803
Additional paid-in capital........................................................ 27,405,599
Undistributed net investment income............................................... 51,042
Accumulated net realized loss from investments.................................... (1,553,725)
Unrealized appreciation of investments............................................ 793,414
-----------
Total--representing net assets applicable to outstanding capital stock.......... $26,722,133
-----------
-----------
Net assets applicable to outstanding Class A shares................................. $25,316,583
-----------
-----------
Net assets applicable to outstanding Class B shares................................. $ 1,084,219
-----------
-----------
Net assets applicable to outstanding Class C shares................................. $ 321,331
-----------
-----------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 2,444,711............................................. $ 10.36
-----------
-----------
Class B--Shares outstanding 104,594............................................... $ 10.37
-----------
-----------
Class C--Shares outstanding 30,995................................................ $ 10.37
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
Investment income:
Interest.......................................................................... $2,035,149
Expenses (note 4):
Investment advisory fee........................................................... 155,798
Distribution fees--Class A........................................................ 79,816
Distribution fees--Class B........................................................ 3,391
Distribution fees--Class C........................................................ 846
Administrative services fee....................................................... 39,200
Custodian fees.................................................................... 9,920
Auditing and accounting services.................................................. 17,550
Legal fees........................................................................ 5,531
Directors' fees................................................................... 618
Registration fees................................................................. 38,784
Printing and shareholder reports.................................................. 19,611
Insurance......................................................................... 5,740
Other............................................................................. 11,411
----------
Total expenses.................................................................. 388,216
Less fees and expenses waived or absorbed:
Class A distribution fees....................................................... (26,473)
Other fund expenses............................................................. (9,655)
----------
Total fees and expenses waived or absorbed.................................... (36,128)
----------
Total net expenses............................................................ 352,088
----------
Investment income--net........................................................ 1,683,061
----------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)........................................ 140,686
Net change in unrealized appreciation or depreciation on investments.............. 1,594,464
----------
Net gains on investments........................................................ 1,735,150
----------
Net increase in net assets resulting from operations................................ $3,418,211
----------
----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30, 1995 AND
PERIOD FROM NOVEMBER 1, 1993 TO SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Operations:
Investment income--net................................................... $ 1,683,061 $ 1,439,948
Net realized gains (losses) on investments............................... 140,686 (1,694,411)
Net change in unrealized appreciation or depreciation of investments..... 1,594,464 (983,565)
----------- -----------
Increase (decrease) in net assets resulting from operations............ 3,418,211 (1,238,028)
----------- -----------
Distributions to shareholders from:
Investment income--net
Class A................................................................ (1,636,844) (1,437,598)
Class B................................................................ (17,742) (316)
Class C................................................................ (4,382) --
Net realized gains on investments:
Class A................................................................ -- (915,257)
----------- -----------
Total distributions.................................................... (1,658,968) (2,353,171)
----------- -----------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A................................................................ 2,594,530 6,429,016
Class B................................................................ 990,008 60,000
Class C................................................................ 340,021 --
Shares issued as a result of reinvested dividends:
Class A................................................................ 969,887 1,530,031
Class B................................................................ 15,797 316
Class C................................................................ 2,840 --
Payments for redemption of shares:
Class A................................................................ (7,089,593) (4,337,552)
Class B................................................................ (2,536) --
Class C................................................................ (22,144) --
----------- -----------
Increase (decrease) in net assets from capital share transactions...... (2,201,190) 3,681,811
----------- -----------
Total increase (decrease) in net assets................................ (441,947) 90,612
Net assets at beginning of period.......................................... 27,164,080 27,073,468
----------- -----------
Net assets at end of period (including undistributed net investment income
of $51,042 and $26,949, respectively)..................................... $26,722,133 $27,164,080
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(1) ORGANIZATION
The Advantus Mortgage Securities Fund, Inc. (the Fund) is registered under
the Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. On February 14, 1995 shareholders of the Fund
approved a name change to Advantus Mortgage Securities Fund, Inc. (effective
March 1, 1995). Prior to March 1, 1995 the Fund was known as MIMLIC Mortgage
Securities Income Fund, Inc.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C shares are subject to a higher Rule 12b-1 fee
than Class A shares. Both Class B and Class C shares automatically convert to
Class A shares at net asset value after a specified holding period. Such holding
period declines as the amount of the purchase increases and ranges from 28 to 84
months after purchase for Class B shares and 40 to 96 months after purchase for
Class C shares. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that the
level of distribution fees and sales charges charged differs between Class A,
Class B and Class C shares. Income, expenses (other than distribution fees) and
realized and unrealized gains or losses on investments are allocated to each
class of shares based upon its relative net assets.
On January 18, 1994, the Board of Directors elected to change the fiscal
year end of the Fund from October 31 to September 30.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price. When market quotations are not readily available, securities are
valued at fair value as determined in good faith by the Board of Directors. Such
fair values are determined using pricing services or prices quoted by
independent brokers. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date and
interest income, including amortization of bond premium and discount computed on
a level yield basis, is accrued daily.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities which have been purchased by the 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. As of September 30, 1995, the Fund had entered into outstanding
when-issued or forward commitments of $555,570. The Fund has segregated assets,
with the Fund's custodian, to cover such when-issued and forward commitment
transactions.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to December
31, in order to avoid federal excise tax.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary book-to-tax
differences. The character of distributions made during the year from net
investment income or net realized gains may 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.
For federal income tax purposes, the Fund has a capital loss carryover in
the amount of $1,513,301 which, if not offset by subsequent capital gains, will
expire September 30, 2004. It is unlikely the board of directors will authorize
a distribution of any net realized capital gain until the available capital loss
carryover has been offset or expires.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly in
cash or reinvested in additional shares. Realized gains, if any, are paid
annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the year ended September 30, 1995, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$53,904,662 and $55,609,136, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
On February 14, 1995 shareholders of the Fund approved a new investment
advisory agreement with Advantus Capital Management, Inc. (Advantus Capital or
the Adviser). Advantus Capital is a wholly-owned subsidiary of MIMLIC Asset
Management Company (MIMLIC Management) which, prior to March 1, 1995, served as
investment adviser to the Fund. Under the agreement, Advantus Capital manages
the Fund's assets and provides research, statistical and advisory services and
pays related office rental and executive expenses and salaries. In addition, as
part of the advisory fee, Advantus Capital pays the expenses of the Fund's
transfer, dividend disbursing and redemption agent (The Minnesota Mutual Life
Insurance Company [Minnesota
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
Mutual], the parent of MIMLIC Management). The fee for investment management and
advisory services is based on the average daily net assets of the Fund at the
annual rate of .575 percent, which is the same as under the old agreement with
MIMLIC Management.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to MIMLIC Sales Corporation
(MIMLIC Sales), the underwriter of the Fund and a wholly-owned subsidiary of
MIMLIC Management, to be used to pay certain expenses incurred in the
distribution, promotion and servicing of the Fund's shares. The Class A Plan
provides for a fee up to .30 percent of average daily net assets of Class A
shares. The Class B and Class C Plans provide for a fee up to 1.00 percent of
average daily net assets of Class B and Class C shares, respectively. The Class
B and Class C 1.00 percent fee is comprised of a .75 percent distribution fee
and a .25 percent service fee. MIMLIC Sales is currently waiving that portion of
Class A distribution fees which exceeds, as a percentage of average daily net
assets, .20 percent. MIMLIC sales waived Class A distribution fees in the amount
of $26,473 for the year ended September 30, 1995.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services and other miscellaneous
expenses.
The Fund pays an administrative services fee to Minnesota Mutual for
accounting, auditing, legal and other administrative services which Minnesota
Mutual provides. Prior to February 1, 1995, the administrative service fee was
$3,600 per month. Effective February 1, 1995, the administrative service fee is
$3,100 per month.
Advantus Capital (MIMLIC Management prior to March 1, 1995) directly incurs
and pays the above operating expenses and the Fund in turn reimburses Advantus
Capital. During the year ended September 30, 1995, Advantus Capital voluntarily
agreed to absorb $9,655 in expenses that were otherwise payable by the Fund.
Sales charges received by MIMLIC Sales for distributing the Fund's three
classes of shares amounted to $97,402.
As of September 30, 1995, Minnesota Mutual and subsidiaries, and the
directors and officers of the Fund as a whole owned the following shares:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OWNED
---------------- ----------------
<S> <C> <C>
Class A................................... 395,290 16.2%
Class B................................... 5,386 5.2%
Class C................................... 1,045 3.4%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $5,147.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the year ended September 30, 1995 and the period
from November 1, 1993 to September 30, 1994 for Class A shares, the year ended
September 30, 1995 and the period from August 19, 1994 to September 30, 1994 for
Class B shares and the period from March 1, 1995 to September 30, 1995 for Class
C shares were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------ ------------- -------
1995 1994 1995 1994 1995
-------- -------- ------ ----- -------
<S> <C> <C> <C> <C> <C>
Sold......................................... 259,523 622,858 97,026 6,099 32,851
Issued for reinvested distributions.......... 97,409 148,532 1,653 32 276
Redeemed..................................... (704,962) (426,991) (216) -- (2,132)
-------- -------- ------ ----- -------
(348,030) 344,399 98,463 6,131 30,995
-------- -------- ------ ----- -------
-------- -------- ------ ----- -------
</TABLE>
(6) RESTRICTED SECURITIES
At September 30, 1995, investments in securities includes issues which
generally cannot be offered for sale to the public without first being
registered under the Securities Act of 1933 (restricted security). In the event
the securities are registered, those carrying registration rights allow for the
issuer to bear all the related costs; for issues without rights, the Fund may
incur such costs. The Fund currently limits investments in securities that are
not readily marketable, including restricted securities, to 10% of net assets at
the time of the purchase. Securities are valued by procedures described in note
2. The aggregate value of restricted securities held by the Fund at September
30, 1995 was $2,051,350 which represents 7.7% of net assets.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------
PERIOD FROM
NOVEMBER 1,
YEAR ENDED 1993 TO YEAR ENDED OCTOBER 31,
SEPTEMBER SEPTEMBER 30, -----------------------------
30, 1995 1994 1993 1992 1991
----------- -------------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 9.70 $ 11.06 $ 10.94 $ 10.8 $ 10.04
Income from investment operations:
Net investment income........................... .62 .53 .63 .71 .79
Net gains or losses on securities (both realized
and unrealized)................................ .65 (.99) .55 .15 .76
----------- ------ ------- ------- -------
Total from investment operations.............. 1.27 (.46) 1.18 .86 1.55
----------- ------ ------- ------- -------
Less distributions:
Dividends from net investment income............ (.61) (.53) (.63) (.72) (.79)
Distributions from capital gains................ -- (.37) (.43) -- --
----------- ------ ------- ------- -------
Total distributions........................... (.61) (.90) (1.06) (.72) (.79)
----------- ------ ------- ------- -------
Net asset value, end of period.................... $10.36 $9.70 $11.06 $10.94 $10.80
----------- ------ ------- ------- -------
----------- ------ ------- ------- -------
Total return (a).................................. 13.5% (4.3)%(b) 11.4% 8.2% 16.0%
Net assets, end of period (in thousands).......... $25,317 $27,105 $27,073 $20,996 $16,554
Ratio of expenses to average daily net assets
(d).............................................. 1.29% 1.24%(c) 1.17% 1.25% 1.18%
Ratio of net investment income to average daily
net assets (d)................................... 6.23% 5.73%(c) 5.77% 6.56% 7.64%
Portfolio turnover rate (excluding short-term
securities)...................................... 203.7% 236.2% 135.0% 137.3% 48.4%
</TABLE>
- ----------
(a) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of sales charges.
(b) Total return is presented for the period from November 1, 1993 to September
30, 1994.
(c) Adjusted to an annual basis.
(d) The Fund's Adviser and Distributor voluntarily waived or absorbed $36,128,
$43,505, $34,773, $21,104 and $11,682 in expenses for the year ended
September 30, 1995, the period ended September 30, 1994, and the years ended
October 31, 1993, 1992 and 1991, respectively. If Class A shares had been
charged for these expenses, the ratio of expenses to average daily net
assets would have been 1.42%, 1.41%, 1.31%, 1.36% and 1.29%, respectively,
and the ratio of net investment income to average daily net assets would
have been 6.10%, 5.56%, 5.63%, 6.45% and 7.53%, respectively.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
CLASS B CLASS C
-------------------------------- ------------
PERIOD FROM PERIOD FROM
AUGUST 19, MARCH 1,
YEAR ENDED 1994 (A) TO 1995 (A) TO
SEPTEMBER SEPTEMBER 30, SEPTEMBER
30, 1995 1994 30, 1995
------------ -------------- ------------
<S> <C> <C> <C>
Net asset value, beginning of period.............................. $ 9.70 $ 9.83 $ 9.90
Income from investment operations:
Net investment income........................................... .53 .06 .31
Net gains or losses on securities (both realized and
unrealized).................................................... .67 (.13) .47
------ ----- ------
Total from investment operations.............................. 1.20 (.07) .78
------ ----- ------
Less distributions:
Dividends from net investment income............................ (.53) (.06) (.31)
Distributions from capital gains................................ -- -- --
------ ----- ------
Total distributions........................................... (.53) (.06) (.31)
------ ----- ------
Net asset value, end of period.................................... $10.37 $9.70 $10.37
------ ----- ------
------ ----- ------
Total return (b).................................................. 12.7% (.7)%(c) 7.9%(d)
Net assets, end of period (in thousands).......................... $1,084 $60 $321
Ratio of expenses to average daily net assets (f)................. 2.05% .28%(g) 2.05%(e)
Ratio of net investment income to average daily net assets (f).... 5.32% .60%(g) 5.26%(e)
Portfolio turnover rate (excluding short-term securities)......... 203.7% 236.2% 203.7%
</TABLE>
- ----------
(a) Commencement of operations.
(b) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of sales charges.
(c) Total return is presented for the period from August 19, 1994, commencement
of operations, to September 30, 1994.
(d) Total return is presented for the period from March 1, 1995, commencement of
operations, to September 30, 1995.
(e) Adjusted to an annual basis.
(f) The Fund's Adviser and Distributor voluntarily waived or absorbed $36,128,
$43,505, $34,773, $21,104 and $11,682 in expenses for the year ended
September 30, 1995, the period ended September 30, 1994, and the years ended
October 31, 1993, 1992 and 1991, respectively. If Class B shares had been
charged for these expenses, the ratio of expenses to average daily net
assets would have been 2.11% and the ratio of net investment income to
average daily net assets would have been 5.26% for the year ended September
30, 1995. If Class C shares had been charged for these expenses, the ratio
of expenses to average daily net assets would have been 2.11% and the ratio
of net investment income to average daily net assets would have been 5.20%
for the period from March 1, 1995 to September 30, 1995.
(g) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
18
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Mortgage Securities Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Mortgage
Securities Fund, Inc. (the Fund) as of September 30, 1995 and the related
statement of operations for the year then ended, the statement of changes in net
assets for the year ended September 30, 1995 and the period from November 1,
1993 to September 30, 1994 and the financial highlights for the year ended
September 30, 1995, the period from November 1, 1993 to September 30, 1994 and
each of the years in the three-year period ended October 31, 1993. These
financial statements and the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased or sold but not received or delivered, we
request confirmations from brokers, and where replies are not received, we carry
out other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of September 30, 1995 and the results of its operations,
changes in its net assets and financial highlights, for the periods stated in
the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 3, 1995
19
<PAGE>
FEDERAL INCOME TAX INFORMATION
The following information for federal income tax purposes is presented as an
aid to shareholders in reporting the distributions paid by the Fund in the
fiscal year ended September 30, 1995. Dividends for the 1995 calendar year will
be reported to you on Form 1099-Div in late January 1996. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A
Income distributions - taxable as dividend income, none qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------ -----
<S> <C>
October 31, 1994..................................................................... $ 0.0474
November 30, 1994.................................................................... 0.0483
December 31, 1994.................................................................... 0.0508
January 31, 1995..................................................................... 0.0508
February 28, 1995.................................................................... 0.0518
March 31, 1995....................................................................... 0.0539
April 30, 1995....................................................................... 0.0508
May 30, 1995......................................................................... 0.0514
June 30, 1995........................................................................ 0.0526
July 31, 1995........................................................................ 0.0505
August 31, 1995...................................................................... 0.0514
September 30, 1995................................................................... 0.0509
---------
$ 0.6106
---------
---------
</TABLE>
20
<PAGE>
CLASS B
Income distributions - taxable as dividend income, none qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------ -----
<S> <C>
October 31, 1994..................................................................... $ 0.0414
November 30, 1994.................................................................... 0.0427
December 31, 1994.................................................................... 0.0443
January 31, 1995..................................................................... 0.0443
February 28, 1995.................................................................... 0.0458
March 31, 1995....................................................................... 0.0472
April 30, 1995....................................................................... 0.0442
May 30, 1995......................................................................... 0.0446
June 30, 1995........................................................................ 0.0459
July 31, 1995........................................................................ 0.0435
August 31, 1995...................................................................... 0.0445
September 30, 1995................................................................... 0.0442
---------
$ 0.5326
---------
---------
</TABLE>
CLASS C
Income distributions - taxable as dividend income, none qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------ -----
<S> <C>
March 31, 1995....................................................................... $ 0.0471
April 30, 1995....................................................................... 0.0442
May 30, 1995......................................................................... 0.0446
June 30, 1995........................................................................ 0.0458
July 31, 1995........................................................................ 0.0435
August 31, 1995...................................................................... 0.0445
September 30, 1995................................................................... 0.0441
---------
$ 0.3138
---------
---------
</TABLE>
21
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value. (Exchanges from the Money Market Fund will incur the
applicable sales charge, if not previously subjected to the charge.)
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account--subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the cash
value may be worth more or less than the original amount invested when
withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE TRANSFER: You may transfer money from one Advantus account to any
other Advantus account you own just by calling our toll free number. Sign up for
telephone exchanges on the Advantus Application or complete the telephone
authorization form.
SYSTEMATIC TRANSFER: If you have an Advantus Money Market account you may
transfer a set amount of money to another Advantus Fund to diversify your
investment portfolio and take advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums out of your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Our special purchase plans enable you to open an
Advantus fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets.) One of these plans--The
Automatic Investment Plan--allows you to invest automatically each month from
your checking or saving account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Individual Retirement Account or other qualified plan including SEPs, profit
sharing, money purchase or defined benefit plans.
22
<PAGE>
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. Amounts
over $1,000 will be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Amounts for less
than $1,000 will be mailed to your bank on your behalf. To set this up, please
send a voided check from your bank. Depending upon the performance of the
underlying investment options, the cash value may be worth more or less than the
original amount invested upon redemption.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, and annual tax statements. Semiannual and annual reports will provide you
with portfolio information, fund performance data and the current investment
outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from MIMLIC Sales Corporation, call 1-800-443-3677. Our
voice response system is available from 7 a.m. to 3 a.m. Monday through Friday,
and 8 a.m. to 5 p.m. on Saturday. This system allows you to access current net
asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the eight Advantus Funds through your local
registered representative of MIMLIC Sales Corporation, distributor of the Funds.
Contact your representative for information and a prospectus for any of the
Advantus Funds you are interested in.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects and
reviews the Fund's investments and provides executive and other personnel for
the Fund's management.
Advantus Capital Management, Inc.'s six portfolio managers manage eight
mutual funds containing $272 million in assets in addition to $1.8 billion in
assets for other clients. Advantus Capital's seasoned portfolio managers average
more than 11 years of investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
23
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[LOGO]
ADVANTUS
FAMILY OF FUNDS
MIMLIC SALES CORPORATION
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-443-3677
<PAGE>
MIMLIC SALES CORPORATION BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
FORWARDING AND RETURN POSTAGE GUARANTEED,
ADDRESS CORRECTION REQUESTED
F.48641 11-95
