<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
SEMI-ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS HORIZON FUND
March 31, 1996
<PAGE>
ADVANTUS HORIZON 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
SHAREHOLDER SERVICES 19
<PAGE>
May 15, 1996
[PHOTO]
Dear Shareholders:
The stock market continued making impressive gains in the first quarter of
1996--up 5.4 percent, as measured by the S&P 500, after finishing 1995 at record
levels. The bond market, however, retreated from year-end highs, yielding a
negative 2.6 percent return according to the Lehman Corporate Bond Index.
Concerns about strong economic growth and full employment were the primary
factors in the bond market's slump, while strong corporate earnings and profits
led the stock market's charge. Retail stocks helped pace the market's first
quarter performance while technology companies returned widely fluctuating
results.
In the near-term, we believe that many large company earnings expectations will
be revised downward. This downward pressure should benefit higher quality
securities. Many small cap companies continue to demonstrate strong earnings
growth and their relative valuations maintain significant upside potential.
While growth in the U.S. market may slow, we maintain confidence that the equity
market holds opportunity for investors.
Improving economic growth and increased inflation have bond investors concerned
about the course of future interest rates. Higher commodity prices and strong
employment caused rates to jump in recent months. Rising interest rates offer
investors the chance to buy fixed income investments at attractive levels but
will keep the bond market in check until rates stabilize.
Diversification across industries and geographic regions remains a key element
of our success. However, determining which investments will perform well in both
the near and long-term requires professional experience. Advantus Capital
Management, Inc. offers a family of eight funds designed to help you reach your
financial goals with a thoughtful, well conceived investment strategy.
Sincerely,
[SIGNATURE]
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS HORIZON FUND
PERFORMANCE UPDATE
[PHOTO]
JAMES P. TATERA, CFA
SENIOR VICE PRESIDENT
AND PORTFOLIO MANAGER
The Advantus Horizon Fund is a mutual
fund designed for investors seeking
long-term growth of capital combined with
a moderate level of current income. The
Fund plans to achieve its objective by
investing in equity securities
diversified among individual companies
and industries. The Fund invests
primarily in dividend-paying common
stocks of established companies with
strong long-term outlooks--but may also
invest in companies perceived to be
temporarily undervalued or which because
of new management, products or markets,
show promise of substantially improved
results.
-Dividends paid quarterly.
-Capital gains distributions paid annually.
PERFORMANCE
The first quarter of 1996 marks the fifth consecutive quarter of strong returns
for the stock market. The Advantus Horizon Fund returned the following for each
class of shares currently offered:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDING 3/31/96 ENDING 3/31/96
-------------- --------------
<S> <C> <C>
Class A 3.7%* 7.4%*
Class B 3.5%* 7.0%*
Class C 3.5%* 7.0%*
</TABLE>
PORTFOLIO RECAP
If you would have foreseen in January the relative negative events of the past
three months, you never would have expected strong stock market performance.
Given the budget impasse, the lack of Federal Reserve easing, and the rise in
bond yields, the strength in stocks was significant. With the apparent stronger
economic results, those companies which benefit from a strong economy have
performed the best, notably basic industry, consumer cyclicals, and capital
goods. Obvious laggards were the consumer staples (like foods and beverages) and
health care stocks, along with typical growth stocks.
Technology oriented stocks provided some of the Fund's best and worst performers
for the period. Individual companies which showed continued earnings momentum
performed well while those where results slipped performed poorly. Selected
retailers like Autozone (auto parts), Tommy Hilfiger (apparel), and Kohls
(department store) performed well as expectations for consumer spending have
improved. Other economically sensitive issues also faired well--United Waste
Systems (waste removal), Kaydon Corp (bearings/filtrations), and McWhorter
Technologies (industrial resins).
A few companies which have had significant outperformance over the past few
years were impacted by profit takers in the period and have underperformed.
Companies like Fritz Companies (freight forwarding) and Idexx Labs (animal
biomedical) have come down in price as investors have switched to more cyclical
companies even though their operating results continue strong.
2
<PAGE>
ADVANTUS HORIZON FUND
MARCH 31, 1996
OUTLOOK
With investors' preoccupation on first quarter earnings results being announced,
volatility in the overall market is likely to increase. During recent years,
earnings growth has been relatively strong. Nonetheless, the rate of increase of
profits growth is beginning to moderate. In fact, Merrill Lynch says that it's
analysts are revising earnings estimates downward at the fastest pace in three
years.
We have positioned the portfolio to benefit from reduced earnings expectations
by holding high quality companies with the best opportunities for sustained
earnings growth. We believe these companies will deserve a premium valuation to
the market overall, thus leading to continued strength in the Fund's
performance.
*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.
3
<PAGE>
ADVANTUS HORIZON FUND
MARCH 31, 1996
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT IN ADVANTUS HORIZON FUND, S&P 500
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 Horizon Fund compared to the Dividend
Adjusted S&P 500 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, 1986 through March 31, 1996. 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 (August 19, 1994 for Class B and
March 1, 1995 for Class C) through March 31, 1996.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 18.7%
Five year 10.3%
Ten year 10.5%
Class A S&P 500 CPI
3/31/86 10,000 10,000 10,000
10/31/86 9,349 10,425 10,101
10/31/87 9,928 11,089 10,550
10/31/88 11,046 12,742 10,999
10/31/89 13,511 16,093 11,503
10/31/90 12,725 14,886 12,227
10/31/91 17,672 19,872 12,585
10/31/92 19,493 21,848 12,988
10/31/93 20,967 25,105 13,336
9/30/94 21,267 25,468 13,740
9/30/95 26,533 33,029 14,042
3/31/96 28,503 36,893 14,262
</TABLE>
4
<PAGE>
ADVANTUS HORIZON FUND
MARCH 31, 1996
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 18.9%
Since inception (8/19/94) 17.3%
Class B S&P 500 CPI
8/19/94 10,000 10,000 10,000
9/30/94 10,129 9,951 10,067
9/30/95 12,074 12,905 10,289
3/31/96 12,951 14,415 10,450
</TABLE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C>
Average annual total
return:
One year 24.0%
Since inception (3/1/95) 24.3%
Class C S&P 500 CPI
3/01/95 10,000 10,000 10,000
9/30/95 11,844 12,169 10,146
3/31/96 12,672 13,593 10,305
</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 results are 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 HORIZON FUND
MARCH 31, 1996
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ---------------------------- ----------- ---------- ---------------
<S> <C> <C> <C>
Computer Associates
International............. 25,324 $1,813,832 4.6%
Columbia/HCA Healthcare
Corporation............... 30,381 1,754,503 4.4%
General Electric Company.... 16,988 1,322,940 3.3%
First Data Corporation...... 18,052 1,272,666 3.2%
Tommy Hilfiger
Corporation............... 27,100 1,243,213 3.1%
Pfizer Inc.................. 16,200 1,085,400 2.7%
United Health Care.......... 17,400 1,070,100 2.7%
Home Depot Inc.............. 22,100 1,058,038 2.7%
Casey's General Stores
Inc....................... 44,200 1,038,700 2.6%
Gartner..................... 16,100 982,100 2.5%
---------- ---
$12,641,492 31.8%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Goods 8.4%
Consumer Goods and Services 43.9%
Credit Sensitive 15.0%
Intermediate Goods and
Services 6.1%
Technology 25.3%
Cash and Other
Assets/Liabilites 1.3%
</TABLE>
6
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1996
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------- ----------
<C> <S> <C>
COMMON STOCKS (98.7%)
CAPITAL GOODS (8.4%)
Machinery (8.4%)
16,988 General Electric Company............................... $1,322,940
13,400 Kaydon Corporation..................................... 469,000
10,700 Millipore Corporation.................................. 409,275
14,905 United Waste Systems, Inc (b).......................... 745,250
8,985 York International Corp................................ 440,265
----------
3,386,730
----------
CONSUMER GOODS AND SERVICES (43.9%)
Consumer Goods (17.9%)
30,381 Columbia/HCA Healthcare Corporation.................... 1,754,503
19,700 Idexx Laboratories Inc (b)............................. 827,400
13,800 Medpartners (b)........................................ 393,300
11,941 Pepsico, Inc........................................... 755,268
16,200 Pfizer Inc............................................. 1,085,400
11,100 Procter & Gamble Company............................... 940,725
9,900 Teva Pharmaceutical Industries (c)..................... 381,150
17,400 United Health Care..................................... 1,070,100
----------
7,207,846
----------
Consumer Services (10.5%)
6,400 Boston Chicken Incorporated (b)........................ 218,000
24,500 Carmike Cinemas Inc (b)................................ 557,375
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------- ----------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
20,947 CUC International Inc (b).............................. $ 612,700
16,100 Gartner (b)............................................ 982,100
16,600 GTECH Holdings Corporation (b)......................... 514,600
15,100 Lone Star Steakhouse & Saloon, Inc (b)................. 577,575
14,060 Manpower............................................... 435,860
19,600 Quebecor Printing Incorporated (b)..................... 352,800
----------
4,251,010
----------
Retail (7.0%)
44,200 Casey's General Stores Inc............................. 1,038,700
22,100 Home Depot Inc......................................... 1,058,038
3,500 Kohl's Inc (b)......................................... 221,812
20,600 Orchard Supply Hardware (b)............................ 486,675
----------
2,805,225
----------
Consumer Cyclicals (8.5%)
16,600 Autozone Inc (b)....................................... 562,325
26,200 Newell Co.............................................. 700,850
20,206 Omnicom Group.......................................... 909,270
27,100 Tommy Hilfiger Corporation (b)......................... 1,243,213
----------
3,415,658
----------
CREDIT SENSITIVE (15.0%)
Finance (12.5%)
6,552 American International Group, Inc...................... 613,431
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------- ----------
<C> <S> <C>
CREDIT SENSITIVE--CONTINUED
18,052 First Data Corporation................................. $1,272,666
6,205 First Union Corporation................................ 375,402
6,300 MGIC Investment Corporation............................ 343,350
11,350 Norwest Corporation.................................... 417,113
12,900 Partnerre Ltd (c)...................................... 383,775
15,200 T. Rowe Price Associates............................... 805,600
45,200 Roosevelt Financial Group, Inc......................... 836,200
----------
5,047,537
----------
Utilities (2.5%)
11,600 AT&T Corporation....................................... 710,500
8,175 Florida Progress Corporation........................... 278,972
----------
989,472
----------
INTERMEDIATE GOODS AND SERVICES (6.1%)
Energy (2.4%)
4,450 Amoco Corporation...................................... 321,512
3,800 Mobil Corporation...................................... 440,325
5,300 Repsol SA (c).......................................... 198,088
----------
959,925
----------
Materials (2.1%)
9,530 Albany International Corp.............................. 190,600
19,173 McWhorter Technology Inc (b)........................... 333,131
7,240 Valspar Corporation.................................... 328,515
----------
852,246
----------
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------- ----------
<C> <S> <C>
INTERMEDIATE GOODS AND SERVICES-- CONTINUED
Transportation (1.6%)
7,600 Fritz Companies (b).................................... $ 296,400
3,940 Norfolk Southern Corporation........................... 334,900
----------
631,300
----------
TECHNOLOGY (25.3%)
22,600 Automatic Data Processing Inc.......................... 889,875
20,800 Bay Networks Inc (b)................................... 639,600
8,400 Cisco Systems, Inc (b)................................. 389,550
25,324 Computer Associates International...................... 1,813,832
11,500 Computer Sciences Corporation (b)...................... 809,312
19,100 Danka Business Systems PLC (c)......................... 806,975
20,500 DSC Communications (b)................................. 553,500
25,700 Informix Corporation (b)............................... 677,838
3,400 Macromedia Incorporated (b)............................ 145,350
5,500 Microsoft Corporation (b).............................. 567,187
19,150 Oracle Corporation (b)................................. 902,444
17,600 Parametric Technology Corporation (b).................. 688,600
12,700 Worldcom, Incorported (b).............................. 584,200
3,000 Xerox Corporation...................................... 376,500
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------- ----------
<C> <S> <C>
TECHNOLOGY--CONTINUED
8,700 3 Com (b).............................................. $ 346,912
----------
10,191,675
----------
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------- ----------
<C> <S> <C>
TECHNOLOGY--CONTINUED
Total common stocks
(cost: $26,439,188)................................................. $39,738,624
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (1.8%)
$ 725,000 U.S. Treasury Bills.................................... 5.00%-5.09% 05/16/96 720,128
-----------
Total short-term securities (cost: $720,416)........................................ 720,128
-----------
Total investments in securities (cost: $27,159,604) (d)............................. $40,458,752
-----------
-----------
</TABLE>
Notes to Investments in Securities
(a) Securites are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 4.4% of net assets in foreign securities as of March 31,
1996.
(d) At March 31, 1996 the cost of securities for federal income tax purposes
was $27,229,902. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C> <C>
Gross unrealized appreciation................................................................... $ 13,599,243
Gross unrealized depreciation................................................................... (370,393)
------------
Net unrealized appreciation..................................................................... $ 13,228,850
------------
------------
</TABLE>
9
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying schedule for
detailed listing (identified cost: $27,159,604)................................ $ 40,458,752
Cash in bank on demand deposit.................................................. 132,114
Receivable for Fund shares sold................................................. 44,229
Receivable for investment securities purchased.................................. 22,950
Dividends receivable............................................................ 30,929
------------
Total assets................................................................ 40,688,974
------------
LIABILITIES
Payable for investment securities purchased..................................... 370,500
Payable to Adviser.............................................................. 51,775
------------
Total liabilities........................................................... 422,275
------------
Net assets applicable to outstanding capital stock.............................. $ 40,266,699
------------
------------
Represented by:
Capital stock--$.01 par value (note 1)........................................ $ 19,090
Additional paid-in capital.................................................... 25,063,358
Undistributed net investment loss............................................. (94,809)
Accumulated net realized gains from investments............................... 1,979,912
Unrealized appreciation of investments........................................ 13,299,148
------------
Total--representing net assets applicable to outstanding capital stock...... $ 40,266,699
------------
------------
Net assets applicable to outstanding Class A Shares............................. $ 35,216,359
------------
------------
Net assets applicable to outstanding Class B Shares............................. $ 4,469,096
------------
------------
Net assets applicable to outstanding Class C Shares............................. $ 581,244
------------
------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 1,666,595......................................... $ 21.13
------------
------------
Class B--Shares outstanding 214,509........................................... $ 20.83
------------
------------
Class C--Shares outstanding 27,891............................................ $ 20.84
------------
------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1995 TO MARCH 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest...................................................................... $ 39,697
Dividends..................................................................... 156,539
-----------
Total investment income..................................................... 196,236
-----------
Expenses:
Investment advisory fee....................................................... 157,516
Distribution fees--Class A.................................................... 53,374
Distribution fees--Class B.................................................... 17,222
Distribution fees--Class C.................................................... 1,758
Administrative services fee................................................... 19,600
Custodian fees................................................................ 3,804
Auditing and accounting services.............................................. 8,492
Legal fees.................................................................... 1,281
Directors' fees............................................................... 317
Registration fees............................................................. 17,849
Printing and shareholder reports.............................................. 17,016
Insurance..................................................................... 2,950
Other......................................................................... 10,097
-----------
Total expenses.............................................................. 311,276
Less fees and expenses waived or absorbed:
Class A distribution fees................................................... (20,231)
-----------
Total net expenses.......................................................... 291,045
-----------
Investment loss--net........................................................ (94,809)
-----------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3).................................... 1,981,045
Net change in unrealized appreciation or depreciation on investments.......... 900,315
-----------
Net gains on investments.................................................... 2,881,360
-----------
Net increase in net assets resulting from operations............................ $ 2,786,551
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1995 TO MARCH 31, 1996 AND
YEAR ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Operations:
Investment loss--net...................................... $ (94,809) $ (65,744)
Net realized gains on investments......................... 1,981,045 2,609,672
Net change in unrealized appreciation or depreciation of
investments.............................................. 900,315 5,347,200
------------- -------------
Increase in net assets resulting from operations........ 2,786,551 7,891,128
------------- -------------
Distributions to shareholders from net realized gains on
investments:
Class A................................................. (2,112,129) (981,881)
Class B................................................. (194,725) (16,148)
Class C................................................. (19,544) --
------------- -------------
Total distributions..................................... (2,326,398) (998,029)
------------- -------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A................................................. 3,431,360 3,817,143
Class B................................................. 1,767,104 2,211,285
Class C................................................. 474,543 96,617
Shares issued as a result of reinvested dividends:
Class A................................................. 2,076,351 973,245
Class B................................................. 190,286 16,194
Class C................................................. 19,547 --
Payments for redemption of shares:
Class A................................................. (6,750,424) (6,723,485)
Class B................................................. (114,678) (32,497)
Class C................................................. (22,401) (1,043)
------------- -------------
Increase in net assets from capital share
transactions........................................... 1,071,688 357,459
------------- -------------
Total increase in net assets............................ 1,531,841 7,250,558
Net assets at beginning of period........................... 38,734,858 31,484,300
------------- -------------
Net assets at end of period [including undistributed net
investment income (loss) of ($94,809) and $0,
respectively].............................................. $ 40,266,699 $ 38,734,858
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
(1) ORGANIZATION
The Advantus Horizon 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 Horizon Fund, Inc. (effective March 1, 1995).
Prior to March 1, 1995 the Fund was known as MIMLIC Investors Fund I, 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 increase and decrease in net assets 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.
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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.
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 (loss) 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 (loss) or realized gains (losses) were
recorded by the Fund.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from October 1, 1995 to March 31, 1996, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $13,011,701 and $13,786,899, 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).
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 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 .80 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
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
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 $20,231 for the period from October 1, 1995 to March 31, 1996.
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, organizational costs 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, 1996, the administrative service fee was
$3,100 per month. Effective February 1, 1996, the administrative service fee is
$3,600 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the period from October 1,
1995 to March 31, 1996, Advantus Capital voluntarily agreed to absorb $20,231 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 $125,292.
As of March 31, 1996, Minnesota Mutual Life and subsidiaries and the
directors and officers of the Fund as a whole own the following shares:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OWNED
------------------ -------------------
<S> <C> <C>
Class A..................................................................... 323,755 19.4%
Class B..................................................................... 3,221 1.5%
Class C..................................................................... 606 2.2%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $1,281.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1995 to March 31, 1996
and the year ended September 30, 1995 for Class A and Class B shares and the
periods from October 1, 1995 to March 31, 1996 and March 1, 1995 to September
30, 1995 for Class C shares were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- -------------------- --------------------
1996 1995 1996 1995 1996 1995
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold.................................................. 164,031 209,657 85,384 119,911 23,025 5,001
Issued for reinvested distributions................... 104,307 59,591 9,673 1,084 943 --
Redeemed.............................................. (323,061) (358,505) (5,515) (1,621) (1,024) (52)
---------- ---------- --------- --------- --------- ---------
(54,723) (89,257) 89,542 119,374 22,944 4,949
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
</TABLE>
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(6) 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, 1993 YEAR ENDED OCTOBER 31,
1995 TO MARCH SEPTEMBER 30, TO SEPTEMBER 30, -------------------------
31, 1996 1995(A) 1994(G) 1993 1992 1991
------------- ---------------- ---------------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 20.94 $ 17.34 $ 17.64 $ 16.73 $15.65 $11.41
------------- ------- ------- ------- ------ ------
Income from investment
operations:
Net investment income
(loss)..................... (.04) (.03) -- .05 .10 .17
Net gains or losses on
securities (both realized
and unrealized)............ 1.51 4.17 .25 1.20 1.47 4.25
------------- ------- ------- ------- ------ ------
Total from investment
operations............... 1.47 4.14 .25 1.25 1.57 4.42
------------- ------- ------- ------- ------ ------
Less distributions:
Dividends from net
investment income.......... -- -- -- (.05) (.12) (.18)
Distributions from capital
gains...................... (1.28) (.54) (.55) (.29) (.37) --
------------- ------- ------- ------- ------ ------
Total distributions....... (1.28) (.54) (.55) (.34) (.49) (.18)
------------- ------- ------- ------- ------ ------
Net asset value, end of
period....................... $ 21.13 $ 20.94 $ 17.34 $ 17.64 $16.73 $15.65
------------- ------- ------- ------- ------ ------
------------- ------- ------- ------- ------ ------
Total return (b).............. 7.4%(c) 24.8% 1.4%(d) 7.6% 10.3% 38.9%
Net assets, end of period (in
thousands)................... $35,216 $36,040 $31,387 $30,015 $24,919 $17,608
Ratio of expenses to average
daily net assets (f)......... 1.40%(e) 1.41% 1.43%(e) 1.31% 1.40% 1.36%
Ratio of net investment income
(loss) to average daily net
assets (f)................... (.40)%(e) (.15)% (.01)%(e) .27% .61% 1.20%
Portfolio turnover rate
(excluding short-term
securities).................. 34.3% 46.8% 43.5% 47.0% 20.6% 16.9%
Average commission rate on
common stock transactions.... $ .0698 N/A N/A N/A N/A N/A
</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 front-end or contingent deferred sales
charges.
(c) Total return is presented for the period from October 1, 1995 to March 31,
1996.
(d) Total return is presented for the period from November 1, 1993 to September
30, 1994.
(e) Adjusted to an annual basis.
(f) The Fund's Adviser and Distributor voluntarily waived or absorbed $20,231,
$52,961, $51,147, $48,807, $32,341 and $22,098 in expenses for the period
ended March 31, 1996, 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 1.51%, 1.57%,
1.61%, 1.49%, 1.55% and 1.54%, respectively, and the ratio of net
investment income to average daily net assets would have been (.51)%,
(.31)%, (.19)%, .09%, .46% and 1.02%, respectively.
(g) During 1994, the Fund changed its fiscal year end from October 31 to
September 30.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(6) FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------ -----------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM MARCH
OCTOBER 1, AUGUST 19, PERIOD FROM 1,
1995 TO YEAR ENDED 1994(A) TO OCTOBER 1, 1995 1995(A) TO
MARCH 31, SEPTEMBER 30, SEPTEMBER 30, TO MARCH 31, SEPTEMBER 30,
1996 1995(D) 1994(J) 1996 1995
----------- ----------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 20.74 $ 17.33 $ 17.11 $ 20.75 $ 17.52
----------- ------ ------ ------ ------
Income from investment
operations:
Net investment loss......... (.09) (.10) (.01) (.07) (.06)
Net gains or losses on
securities (both realized
and unrealized)............ 1.46 4.05 .23 1.44 3.29
----------- ------ ------ ------ ------
Total from investment
operations............... 1.37 3.95 .22 1.37 3.23
----------- ------ ------ ------ ------
Less distributions:
Dividends from net
investment income.......... -- -- -- -- --
Distributions from capital
gains...................... (1.28) (.54) -- (1.28) --
----------- ------ ------ ------ ------
Total distributions....... (1.28) (.54) -- (1.28) --
----------- ------ ------ ------ ------
Net asset value, end of
period....................... $ 20.83 $ 20.74 $ 17.33 $ 20.84 $ 20.75
----------- ------ ------ ------ ------
----------- ------ ------ ------ ------
Total return (b).............. 7.0%(c) 23.7% 1.3%(e) 7.0%(c) 18.4%(f)
Net assets, end of period (in
thousands)................... $4,469 $2,592 $97 $581 $103
Ratio of expenses to average
daily net assets (h)......... 2.21%(g) 2.24% .30%(i) 2.20%(g) 2.24%(g)
Ratio of net investment income
(loss) to average daily net
assets (h)................... (1.20)%(g) (1.05)% (.13)%(i) (1.19)%(g) (1.13)%(g)
Portfolio turnover rate
(excluding short-term
securities).................. 34.3% 46.8% 43.5% 34.3% 46.8%
Average commission rate on
common stock transactions.... $ .0698 N/A N/A $ .0698 N/A
</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 front-end or contingent deferred sales
charges.
(c) Total return is presented for the period from October 1, 1995 to March 31,
1996.
(d) 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.
(e) Total return is presented for the period from August 19, 1994, commencement
of operations, to September 30, 1994.
(f) Total return is presented for the period from March 1, 1995, commencement
of operations, to September 30, 1995.
(g) Adjusted to an annual basis.
(h) The Fund's Adviser and Distributor voluntarily waived or absorbed $20,231
and $52,961 in expenses for the period ended March 31, 1996 and the year
ended September 30, 1995. If Class B shares had been charged for these
expenses, the ratio of expenses to average daily net assets would have been
2.21% and 2.25%, respectively, and the ratio of net investment loss to
average daily net assets would have been (1.20)% and (1.05)% for the period
ended March 31, 1996 and the year ended September 30, 1995, respectively.
If Class C shares had been charged for these expenses, the ratio of
expenses to average daily net assets would have been 2.20% and 2.25%,
respectively, and the ratio of net investment loss to average daily net
assets would have been (1.19)% and (1.13)% for the period ended March 31,
1996 and the period ended September 30, 1995, respectively.
(i) 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>
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 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.
19
<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. 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. To set this up,
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.
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. manages eight mutual funds containing $301
million in assets in addition to $1.2 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
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.48636 5/96
