<PAGE>
[LOGO]
SEMI-ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS MORTGAGE SECURITIES FUND
MARCH 31, 1997
[LOGO]
<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
STATEMENTS OF CHANGES IN NET ASSETS 12
NOTES TO FINANCIAL STATEMENTS 13
SHAREHOLDER SERVICES 19
<PAGE>
April 30, 1997 [PHOTO]
Dear Shareholders:
The last six months have provided investors with some high points and some low.
At year end 1996, the stock market exceeded nearly all expectations. Driven by
ideal fundamentals, combined with unprecedented levels of money flowing into the
market, S&P 500 operating earnings grew by nine percent, while the total return
for the S&P 500 Index was over 20 percent. This trend continued into the first
quarter 1997.
Investors started reacting to possible Federal Reserve action to curb the
economy in the second half of February. Even before short-term money rates were
raised by 1/4 percent at the end of March, the stock market started to drop.
After reaching a high on February 19, the S&P 500 declined by 7.3 percent
resulting in a 2.7 percent increase for the quarter. The largest companies in
the S&P 500 outperformed all other companies and were the driving force behind
the Index.
The investment grade bond market posted low single digit returns at the end of
1997. The Fed's increase in money rates had a negative impact on bond prices. At
the end of the first quarter 1997, the interest rate on the two year Treasury
note increased 54 basis points to yield 6.41 percent. The 30-year U.S. Treasury
Bond closed the period yielding 7.10 percent, 46 basis points higher for the
quarter.
The long-term outlook continues to be favorable. We expect economic growth to
slow to around 2.5 percent from 3.2 percent last year as the result of the
tighter money policy. In this environment, the current level of interest rates
should reward bond investors with historically higher real rates of return which
may eventually translate into bond price appreciation. For 1997, we still
believe investors may see high single digit bond returns. The growth in equity
values should slow as corporate profits decline during the year, to
approximately half the rate of 1996.
Moderate economic growth, low inflation, rising corporate profits, a declining
Federal deficit and strong corporate cash flow provide the catalyst for what we
believe will be a positive financial environment for the balance of the year.
Determining which investments will perform well in both the near and long-term
requires professional experience. Advantus Capital Management, Inc. offers a
family of ten funds designed to help you reach your financial goals with a
thoughtful, well-conceived investment strategy.
Sincerely,
/s/Paul Gooding
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
The Advantus Mortgage Securities Fund turned in the following semi-annual
returns for the period ending March 31, 1997 for the three classes of shares
currently offered:
<TABLE>
<S> <C>
Class A.......................... 2.9 percent*
Class B.......................... 2.5 percent*
Class C.......................... 2.6 percent*
</TABLE>
The Fund's returns were right in line with the 3.0 percent return by Lehman
Brothers Mortgage-Backed Securities Index** for the six months ending March 31,
1997. Over the same period, Lipper Analytical's Mortgage Fund Category+ returned
2.7 percent.
PORTFOLIO RECAP
While interest rates have felt like a roller coaster ride over the last six
months, the actual range of movement has been relatively mild. Interest rates
did make their way lower during the fourth quarter 1996 as growth slowed due to
the higher interest rates that prevailed during the spring and summer. However,
by the time 1997 was underway, growth had reaccelerated to a point where the
Federal Reserve felt compelled to nudge short-term rates higher. Ultimately,
interest rates ended the period very close to where they started, which left
coupon income playing a lead role in returns over the last six months.
Meanwhile, the mortgage market extended its stretch of strong performance and
entered the club house solidly ranked on the fixed income leader board. The
market conditions--low volatility and moderate interest rates--are ideal for
mortgage investors and reflect the solid fundamentals that saturate the market.
Globally, we continue to see all fixed income markets benefiting from a late
business cycle rush that is forcing the risk premiums paid over treasuries to
grind lower. The incremental income investors receive for accepting and managing
normal fixed income risks (i.e. credit, prepayments and liquidity) continues to
shrink. We view this trend as an opportunity to systematically upgrade the
quality of our portfolio while giving up only a small amount of yield.
Ultimately, these efforts should bear fruit by strengthening our competitive
risk-adjusted returns.
2
<PAGE>
ADVANTUS MORTGAGE
SECURITIES FUND
MARCH 31, 1997
As we continue our quest for solid investment opportunities, we find it
appropriate to participate in numerous sectors of the mortgage market. To this
end, we remain well diversified and active. Throughout most of the period, we
held our duration in line with the Lehman Brothers Mortgage-Backed Securities
Index** (4.0 years). However, with interest rates now approaching the higher end
of their recent trading range, we have added a little duration to the Fund (4.25
years). We consider net yields above 6.5 percent attractive because inflation
remains well-behaved.
OUTLOOK
After 20 years of practicing monetary policy, it appears as if the Federal
Reserve may actually have it right. With a clear vision of the benefits of price
stability and a proactive mission statement on monetary policy, we look for the
business cycles to remain tame but not be repealed. Therefore, interest rates
may drift a little higher near term, but the market has already priced in the
arrival of further Fed tightening through the summer. With this backdrop,
mortgage securities should remain an attractive asset class and we believe the
Advantus Mortgage Securities Fund is well positioned to participate in this
environment.
*Historical performance is 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 Brothers Mortgage-Backed Securities Index is an unmanaged benchmark
composite which includes all fixed-rate securities backed by mortgage pools of
the Government National Mortgage Association (GNMA), Federal Home Loan Mortgage
Corporation (FHLMC) and Federal National Mortgage Association (FNMA).
+Average return of 59 mortgage-backed securities funds according to Lipper
Analytical Services.
3
<PAGE>
ADVANTUS MORTGAGE
SECURITIES FUND
MARCH 31, 1997
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN ADVANTUS
MORTGAGE SECURITIES FUND, LEHMAN BROTHER'S GNMA INDEX AND CONSUMER PRICE INDEX
On the following three charts you can see how the total return for each of the
three classes of shares of the Advantus Mortgage Securities Fund compared to the
Lehman Brother's GNMA Index and the Consumer Price Index. The three lines in the
Class A graph represent the cumulative total return of a hypothetical $10,000
investment made on March 31, 1987 through March 31, 1997. The three lines in the
Class B and Class C graphs represent the cumulative total return of a
hypothetical $10,000 investment made on the inception date of Class B and Class
C shares (August 19, 1994 and March 1, 1995, respectively) through March 31,
1997.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 0.3%
Five year 5.7%
ten year 7.2%
Lehman Brother's
Class A GNMA Index CPI
3/31/87 $ 10,000 $ 10,000 $ 10,000
10/31/87 9,237 9,950 10,550
10/31/88 10,462 11,321 10,999
10/31/89 11,490 12,613 11,503
10/31/90 12,227 13,659 12,227
10/31/91 14,185 15,993 12,585
10/31/92 15,347 17,400 12,988
10/31/93 17,101 18,717 13,336
9/30/94 16,359 18,595 13,740
9/30/95 18,572 21,212 14,042
9/30/96 19,468 22,458 14,464
3/31/97 20,036 23,152 14,656
</TABLE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year (.2)%
Since inception (8/19/94) 5.8%
Lehman Brother's
Class B 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
9/30/96 11,297 11,926 10,598
3/31/97 11,592 12,294 10,739
</TABLE>
4
<PAGE>
ADVANTUS MORTGAGE
SECURITIES FUND
MARCH 31, 1997
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 5.0%
Since inception (3/1/95) 7.1%
Lehman Brother's
Class C GNMA Index CPI
3/1/95 $ 10,000 $ 10,000 $ 10,000
9/30/95 10,791 10,817 10,146
9/30/96 11,230 11,452 10,450
3/31/97 11,526 11,806 10,589
</TABLE>
The preceding 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 deduction 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 performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS MORTGAGE
SECURITIES FUND
MARCH 31, 1997
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PRUDENT SECTOR DIVERSIFICATION
<S> <C>
Vendee Mortgage Trust 14.2%
FHLMC 6.7%
GNMA 31.5%
Mortgage-Backed Bonds 40.9%
Cash and Other Assets/Liabilities 6.7%
High Quality Assets
AAA rated 71.3%
AA rated 5.6%
A rated 7.6%
BBB rated 8.8%
Cash and Other Assets/Liabilities 6.7%
Solid Liquidity
Public Issues 87.7%
Private 144A Issues 5.6%
Cash and Other Assets/Liabilities 6.7%
</TABLE>
6
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1997
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- -----------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (93.3%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (52.4%)
Federal Home Loan Mortgage Corporation (6.7%)
$ 397,754 Bi-weekly......................................... 7.00% 12/01/22 $ 384,783
644,967 Bi-weekly......................................... 6.50% 12/01/23 607,326
1,094,648 30 Year Gold...................................... 6.00% 11/01/26 994,968
-----------
1,987,077
-----------
Government National Mortgage Association (31.5%)
313,862 .................................................. 8.00% 12/15/15 317,572
549,273 .................................................. 8.00% 03/15/16 557,083
244,847 .................................................. 7.00% 04/15/16 235,728
304,626 .................................................. 8.00% 07/15/16 308,957
542,071 .................................................. 7.00% 09/15/16 525,830
136,488 .................................................. 7.00% 09/15/16 132,398
325,490 .................................................. 7.00% 05/15/17 315,572
536,885 .................................................. 7.50% 06/15/17 534,925
213,502 .................................................. 7.00% 05/15/17 206,996
342,468 .................................................. 7.00% 12/15/16 332,208
394,945 .................................................. 7.00% 04/15/17 382,910
532,373 .................................................. 7.50% 05/15/17 530,429
305,211 .................................................. 7.00% 04/15/17 295,911
80,455 .................................................. 7.00% 02/15/17 78,004
344,643 .................................................. 7.00% 04/15/17 334,142
378,374 .................................................. 7.00% 10/15/17 366,845
408,461 .................................................. 7.00% 10/15/17 396,014
292,402 GNMA II........................................... 7.50% 12/20/15 289,223
503,417 GNMA II........................................... 8.00% 10/20/15 510,711
198,530 GNMA II........................................... 9.00% 08/20/16 210,783
167,552 GNMA II........................................... 9.00% 05/20/16 177,893
178,507 GNMA II........................................... 9.00% 06/20/16 189,525
597,691 GNMA II........................................... 7.50% 07/20/16 592,072
733,566 GNMA II........................................... 8.50% 05/20/17 761,691
363,272 GNMA II........................................... 9.00% 08/20/16 385,692
313,817 GNMA II........................................... 8.50% 04/20/17 325,849
-----------
9,294,963
-----------
Other U.S. Government Agency Obligations (14.2%)
999,297 Vendee Mortgage Trust Participation Certificate
(b).............................................. 7.89% 12/15/26 1,021,781
981,027 Vendee Mortgage Trust Participation Certificate
(b).............................................. 7.86% 05/15/24 1,011,990
694,761 Vendee Mortgage Trust Participation Certificate
(b).............................................. 7.95% 02/15/25 667,964
977,358 Vendee Mortgage Trust Participation Certificate
(b).............................................. 7.88% 02/15/25 976,136
</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
$ 500,000 Vendee Mortgage Trust Participation Certificate
(b).............................................. 7.61% 07/15/18 $ 507,500
-----------
4,185,371
-----------
Total U.S. government and agencies obligations (cost: $15,460,370)....... 15,467,411
-----------
OTHER MORTGAGE-BACKED SECURITIES (40.9%)
Asset-Backed Securities (1.6%)
488,364 Green Tree Financial Corporation, Net Interest
Margin, Series 1994.............................. 6.90% 02/15/04 483,458
-----------
Collateralized Mortgage Obligations / Mortgage Revenue Bonds (29.5%)
34,247 American Housing Trust, Series VIII............... 8.50% 07/25/97 34,223
673,443 American Housing Trust, Series I.................. 8.13% 06/25/18 679,756
747,392 Bear Stearns Mortgage Securities Inc., Series
1996-6........................................... 8.00% 11/25/29 732,678
1,100,000 California Housing Finance Authority 97-A2 (d).... 7.76% 08/01/25 1,086,250
1,250,000 California Housing Finance Authority 96-0......... 8.16% 02/01/28 1,259,766
720,205 CMO Trust, Series 44,............................. 5.00% 07/01/18 655,668
550,000 Citicorp Mortgage Securities, Inc., Series
93-13............................................ 6.00% 11/25/08 529,942
659,674 GE Capital Mortgage Services, Inc., Series
1994-15.......................................... 6.00% 04/25/09 598,430
778,207 International Capital Markets Acceptance
Corporation 144A Issue (c)....................... 8.25% 09/01/15 781,612
500,000 Morgan Stanley Capital 97-P1 144A Issue (c)....... 6.97% 06/29/26 460,000
147,269 New Orleans Home Mortgage Authority, Series 1991.. 6.38% 09/15/05 146,717
624,283 Norwest Asset Security Corp 96-8.................. 7.50% 12/25/26 595,214
308,462 Santa Barbara Funding II, Series A................ 5.00% 03/20/18 277,913
902,400 Wyoming Community Development Authority 93-B...... 6.85% 06/01/10 884,634
-----------
8,722,803
-----------
Commercial Mortgage-Backed Securities (3.1%)
914,000 Pleasant Hill Revenue Bond Series 1993-13......... 7.95% 09/20/15 909,587
-----------
Whole Loan Mortgage-Backed Securities (6.7%)
1,150,000 CSFCL 95-A A Performance Notes.................... 7.54% 11/15/05 1,115,500
416,469 Prudential Home Mortgage Securities 92-A 144A
Issue (c)........................................ 7.50% 08/25/07 406,029
490,832 Paine Webber Mortgage Acceptance Corp 94-4........ 6.92% 02/25/24 458,928
-----------
1,980,457
-----------
Total other mortgage-backed securities (cost: $12,162,850)............... 12,096,305
-----------
Total long-term debt securities (cost: $27,623,220)...................... 27,563,716
-----------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- -----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (9.2%)
$1,505,000 U.S. Treasury Bills............................... 5.10%-5.14% 05/22/97 $ 1,493,761
180,000 AT&T Corporation CP............................... 5.28% 04/03/97 179,914
190,000 Carolina Power and Light CP....................... 5.39% 04/09/97 189,732
210,000 Idaho Power CP.................................... 5.41% 04/03/97 209,900
480,000 Pepsico, Inc. CP.................................. 5.36% 04/03/97 479,772
150,000 Philip Morris Companies CP........................ 5.37% 04/03/97 149,929
-----------
Total short-term securities (cost: $2,703,437)........................... 2,703,008
-----------
Total investments in securities (cost: $30,326,657) (e).................. $30,266,724
-----------
-----------
</TABLE>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) 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 March 31, 1997.
(c) Represents ownership in a restricted security which has not been registered
with the Securities and Exchange Commission under the Securities Act of
1933. (See note 6 to the financial statements.) Information concerning the
restricted securities held at March 31, 1997, which includes acquisition
date and cost, is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY DATE COST
-------------------------------------------------- ----------- ----------
<S> <C> <C>
Prudential Home Mortgage Securities 92-A 144A
Issue........................................... 10/01/96 $ 407,488
International Capital Markets Acceptance
Corporation 144A Issue.......................... 01/09/95 736,378
Morgan Stanley Capital 97-P1 144A Issue........... 12/19/96 469,063
----------
$1,612,929
----------
----------
</TABLE>
(d) At March 31, 1997 the total cost of investments issued on a when-issued or
forward commitment basis is $1,100,000.
(e) At March 31, 1997 the cost of securities for federal income tax purposes was
$30,326,657. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation..................... $ 318,682
Gross unrealized depreciation..................... (378,615)
----------
Net unrealized depreciation....................... $ (59,933)
----------
----------
</TABLE>
9
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying
schedule for detailed listing (identified cost:
$30,326,657)............................................... $ 30,266,724
Cash in bank on demand deposit.............................. 82,638
Receivable for Fund shares sold............................. 145,838
Receivable for investment securities sold................... 8,800
Accrued interest receivable................................. 252,219
------------
Total assets............................................ 30,756,219
------------
LIABILITIES
Payable for investment securities purchased................. 1,112,382
Payable for Fund shares redeemed............................ 94,070
Payable to Adviser.......................................... 27,491
------------
Total liabilities....................................... 1,233,943
------------
Net assets applicable to outstanding capital stock.......... $ 29,522,276
------------
------------
Represented by:
Capital stock--authorized 10 billion shares (Class A--2
billion shares, Class B--2 billion shares, Class C--2
billion shares and 4 billion shares unallocated) of $.01
par value (note 1)....................................... $ 29,079
Additional paid-in capital................................ 30,678,336
Undistributed net investment income....................... 12,212
Accumulated net realized loss from investments............ (1,137,418)
Unrealized depreciation of investments.................... (59,933)
------------
Total--representing net assets applicable to outstanding
capital stock.......................................... $ 29,522,276
------------
------------
Net assets applicable to outstanding Class A shares......... $ 23,367,005
------------
------------
Net assets applicable to outstanding Class B shares......... $ 4,692,460
------------
------------
Net assets applicable to outstanding Class C shares......... $ 1,462,811
------------
------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 2,294,483..................... $ 10.18
------------
------------
Class B--Shares outstanding 460,331....................... $ 10.19
------------
------------
Class C--Shares outstanding 143,607....................... $ 10.19
------------
------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1996 TO MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest.................................................. $ 1,073,679
-----------
Expenses (note 4):
Investment advisory fee................................... 83,438
Distribution fees--Class A................................ 35,607
Distribution fees--Class B................................ 20,219
Distribution fees--Class C................................ 6,200
Administrative services fee............................... 21,600
Custodian fees............................................ 4,908
Auditing and accounting services.......................... 10,625
Legal fees................................................ 1,742
Directors' fees........................................... 249
Registration fees......................................... 18,463
Printing and shareholder reports.......................... 20,970
Insurance................................................. 3,062
Other..................................................... 4,430
-----------
Total expenses........................................ 231,513
Less fees and expenses waived or absorbed:
Class A distribution fees............................... (5,935)
Other fund expenses..................................... (67,909)
-----------
Total fees and expenses waived or absorbed............ (73,844)
-----------
Total net expenses.................................... 157,669
-----------
Investment income--net................................ 916,010
-----------
Realized and unrealized gains (losses) on investments:
Net realized gains on investments (note 3)................ 65,376
Net change in unrealized appreciation or depreciation on
investments.............................................. (163,638)
-----------
Net losses on investments............................. (98,262)
-----------
Net increase in net assets resulting from operations........ $ 817,748
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1996 TO MARCH 31, 1997 AND
YEAR ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Operations:
Investment income--net.......................... $ 916,010 $ 1,604,960
Net realized gains on investments............... 65,376 350,931
Net change in unrealized appreciation or
depreciation on investments.................... (163,638) (689,709)
------------ ------------
Increase in net assets resulting from
operations................................. 817,748 1,266,182
------------ ------------
Distributions to shareholders from investment
income--net:
Class A....................................... (803,100) (1,434,649)
Class B....................................... (121,904) (125,313)
Class C....................................... (37,237) (37,597)
------------ ------------
Total distributions......................... (962,241) (1,597,559)
------------ ------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A....................................... 1,732,995 4,801,997
Class B....................................... 1,758,932 2,787,439
Class C....................................... 671,149 1,182,431
Proceeds from issuance of shares as a result of
reinvested dividends:
Class A....................................... 573,424 976,397
Class B....................................... 96,806 103,411
Class C....................................... 30,463 31,389
Payments for redemption of shares:
Class A....................................... (2,594,293) (7,130,212)
Class B....................................... (440,932) (555,653)
Class C....................................... (367,627) (382,103)
------------ ------------
Increase in net assets from capital share
transactions............................... 1,460,917 1,815,096
------------ ------------
Total increase in net assets................ 1,316,424 1,483,719
Net assets at beginning of period................. 28,205,852 26,722,133
------------ ------------
Net assets at end of period (including
undistributed net investment income of $12,212
and $58,443, respectively)....................... $ 29,522,276 $ 28,205,852
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
(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 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 periods
decline as the amount of the purchase increases and range 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 charged differs between Class A, Class B and Class C shares.
Income, expenses (other than distribution fees) and realized and unrealized
gains or losses are allocated to each class of shares based upon its relative
net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
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 increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
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>
ADVANTUS MORTGAGE SECURITIES FUND
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 March 31, 1997, the Fund had entered into outstanding
when-issued or forward commitments of $1,100,000. 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 $1,137,147 which, if not offset by subsequent capital gains, will
expire September 30, 2003. 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 period ended March 31, 1997, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$13,751,254 and $13,322,071, 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>
ADVANTUS MORTGAGE SECURITIES FUND
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 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, .25 percent. MIMLIC Sales waived Class A distribution fees in the amount
of $5,935 for the period ended March 31, 1997.
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, equal to $3,600 per month, to
Minnesota Mutual for accounting, auditing, legal and other administrative
services which Minnesota Mutual provides.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the period ended March 31,
1997, Advantus Capital voluntarily agreed to absorb $67,909 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 $72,035.
As of March 31, 1997, 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................................................. 235,580 10.27%
Class C................................................. 1,135 0.79%
</TABLE>
During the period ended March 31, 1997, legal fees were paid to a law firm
of which the Fund's secretary is a partner in the amount of $1,742.
15
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1996 to March 31, 1997
and the year ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold............................................. 172,325 464,458 175,404 269,093 64,849 114,493
Issued for reinvested distributions.............. 55,360 94,676 9,357 10,057 2,945 3,094
Redeemed......................................... (249,594) (687,451) (54,090) (54,084) (35,485) (37,284)
---------- ---------- --------- --------- --------- ---------
(21,909) (128,317) 130,671 225,066 32,309 80,303
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
</TABLE>
(6) RESTRICTED SECURITIES
At March 31, 1997, 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 securities). 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 percent 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 March 31, 1997
was $1,647,638 which represents 5.6 percent of net assets.
16
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
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 PERIOD FROM
OCTOBER 1, YEAR ENDED NOVEMBER 1, YEAR ENDED
1996 TO SEPTEMBER 30, 1993 TO OCTOBER 31,
MARCH 31, ----------------- SEPTEMBER 30, ----------------
1997 1996 1995(A) 1994(B) 1993 1992
----------- ------- -------- ------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 10.23 $ 10.36 $ 9.70 $ 11.06 $ 10.94 $ 10.80
----------- ------- -------- ------------- ------- -------
Income from investment
operations:
Net investment income....... .33 .62 .62 .53 .63 .71
Net gains or losses on
securities (both realized
and unrealized)............ (.03) (.13) .65 (.99) .55 .15
----------- ------- -------- ------------- ------- -------
Total from investment
operations............... .30 .49 1.27 (.46) 1.18 .86
----------- ------- -------- ------------- ------- -------
Less distributions:
Dividends from net
investment income.......... (.35) (.62) (.61) (.53) (.63) (.72)
Distributions from capital
gains...................... -- -- -- (.37) (.43) --
----------- ------- -------- ------------- ------- -------
Total distributions....... (.35) (.62) (.61) (.90) (1.06) (.72)
----------- ------- -------- ------------- ------- -------
Net asset value, end of
period....................... $ 10.18 $ 10.23 $ 10.36 $ 9.70 $ 11.06 $ 10.94
----------- ------- -------- ------------- ------- -------
----------- ------- -------- ------------- ------- -------
Total return (c).............. 2.9%(e) 4.8% 13.5% (4.3)%(d) 11.4% 8.2%
Net assets, end of period (in
thousands)................... $23,367 $23,692 $25,317 $27,105 $27,073 $20,996
Ratio of expenses to average
daily net assets (f)......... .95%(g) 1.26% 1.29% 1.24%(g) 1.17% 1.25%
Ratio of net investment income
to average daily net assets
(f).......................... 7.06%(g) 6.05% 6.23% 5.73%(g) 5.77% 6.56%
Portfolio turnover rate
(excluding short-term
securities).................. 47.22% 125.2% 203.7% 236.2% 135.0% 137.3%
</TABLE>
- ----------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995, the
Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) During 1994, the Fund changed its fiscal year end from October 31 to
September 30.
(c) 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 front-end sales charges.
(d) Total return is presented for the period from November 1, 1993 to September
30, 1994.
(e) Total return is presented for the period from October 1, 1996 to March 31,
1997.
(f) The Fund's Adviser and Distributor voluntarily waived or absorbed $73,844,
$35,718, $36,128, $43,505, $34,773 and $21,104 in expenses for the period
ended March 31, 1997, the years ended September 30, 1996 and 1995, the
period ended September 30, 1994 and the years ended October 31, 1993 and
1992, respectively. If Class A shares had been charged for these expenses,
the ratio of expenses to average daily net assets would have been 1.47%,
1.40%, 1.42%, 1.41%, 1.31% and 1.36%, respectively, and the ratio of net
investment income to average daily net assets would have been 5.92%, 5.91%,
6.10%, 5.56%, 5.63% and 6.45%, respectively.
(g) Adjusted to an annual basis.
17
<PAGE>
ADVANTUS MORTGAGE SECURITIES FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
CLASS B CLASS C
--------------------------------------------- -------------------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM
OCTOBER 1, YEAR ENDED AUGUST 19, OCTOBER 1, MARCH 1,
1996 TO SEPTEMBER 30, 1994(C) TO 1996 TO YEAR ENDED 1995(C) TO
MARCH 31, --------------- SEPTEMBER 30, MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1995(A) 1994 1997 1996 1995
----------- ------ ------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $10.24 $10.37 $ 9.70 $ 9.83 $10.23 $10.37 $ 9.90
----------- ------ ------- ------ ----------- ------ ------
Income from investment
operations:
Net investment income....... 0.30 .54 .53 .06 0.30 .54 .31
Net gains or losses on
securities (both realized
and unrealized)............ (0.04) (.13) .67 (.13) (0.03) (.14) .47
----------- ------ ------- ------ ----------- ------ ------
Total from investment
operations............... 0.26 .41 1.20 (.07) 0.27 .40 .78
----------- ------ ------- ------ ----------- ------ ------
Less distributions:
Dividends from net
investment income.......... (0.31) (.54) (.53) (.06) (0.31) (.54) (.31)
Distributions from capital
gains...................... -- -- -- -- -- -- --
----------- ------ ------- ------ ----------- ------ ------
Total distributions....... (0.31) (.54) (.53) (.06) (0.31) (.54) (.31)
----------- ------ ------- ------ ----------- ------ ------
Net asset value, end of
period....................... $10.19 $10.24 $10.37 $ 9.70 $10.19 $10.23 $10.37
----------- ------ ------- ------ ----------- ------ ------
----------- ------ ------- ------ ----------- ------ ------
Total return (b).............. 2.5%(f) 4.1% 12.7% (.7)%(d) 2.6%(f) 4.1% 7.9%(e)
Net assets, end of period (in
thousands)................... $4,692 $3,375 $1,084 $ 60 $1,463 $1,139 $ 321
Ratio of expenses to average
daily net assets (g)......... 1.69%(i) 2.01% 2.05% .28%(h) 1.70%(i) 2.01% 2.05%(i)
Ratio of net investment income
to average daily net assets
(g).......................... 2.97%(i) 5.38% 5.32% .60%(h) 2.87%(i) 5.39% 5.26%(i)
Portfolio turnover rate
(excluding short-term
securities).................. 47.22% 125.2% 203.7% 236.2% 47.22% 125.2% 203.7%
</TABLE>
- ------------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995, the
Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(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 contingent deferred sales charges.
(c) Commencement of operations.
(d) Total return is presented for the period from August 19, 1994, commencement
of operations, to September 30, 1994.
(e) Total return is presented for the period from March 1, 1995, commencement of
operations, to September 30, 1995.
(f) Total return is presented for the period from October 1, 1996 to March 31,
1997.
(g) The Fund's Adviser and Distributor voluntarily waived or absorbed $73,844,
$35,718 and $36,128 for the period from October 1, 1996 to March 31, 1997
and for the years ended September 30, 1996 and 1995, respectively. If Class
B shares had been charged for these expenses, the ratio of expenses to
average daily net assets would have been 2.16%, 2.09% and 2.11%,
respectively, and the ratio of net investment income to average daily net
assets would have been 5.23%, 5.30% and 5.26%, respectively. If Class C
shares had been charged for these expenses, the ratio of expenses to average
daily net assets would have been 2.16%, 2.08% and 2.11%, respectively, and
the ratio of net investment income to average daily net assets would have
been 5.23%, 5.32% and 5.20%, respectively.
(h) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
(i) Adjusted to an annual basis.
18
<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 Advantus 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 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' 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 savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Individual Retirement Account or other qualified plan including SEPS, SIMPLE,
profit sharing, money purchase or defined benefit plans.
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. The
proceeds will be sent by check to the address of record for the account. Amounts
over $1,000 may be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Sign up for
19
<PAGE>
telephone redemption on the Advantus Application or complete a Service Request
Form. To have the redemption automatically deposited into your checking account,
please send a voided check from your bank. Depending on the performance of the
underlying investment options, the value may be worth more or less than the
original amount invested upon redemption. Some limitations apply, please refer
to the prospectus for details.
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 Advantus Shareholder Services, call 1-800-665-6005. Our
voice response system is available from 7 a.m. to 3 a.m. Central Time Monday
through Friday, and 8 a.m. to 5 p.m. Central Time 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 ten 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. manages eleven mutual funds containing
$2.3 billion in assets in addition to $1.4 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
Advantus Venture Fund
Advantus Index 500 Fund
20
<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.
[ADVANTUS -TM- 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.48640 5-97
