<PAGE>
[Logo]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS HORIZON FUND
SEPTEMBER 30, 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
INDEPENDENT AUDITORS' REPORT 19
FEDERAL INCOME TAX INFORMATION 20
SHAREHOLDER SERVICES 21
<PAGE>
October 31, 1996 [PHOTO]
Dear Shareholders:
The nation's economic expansion, noted for its longevity, breadth and strength,
pressed forward in the third quarter of 1996. The Federal Reserve's decision not
to raise interest rates, coupled with the long awaited upswing of several key
foreign economies, offers new signs that the expansion, currently in its 23rd
quarter, will extend well into next year.
The financial markets shrugged off concerns about an overheated economy to post
record highs for both the Dow Jones Industrial Average and the NASDAQ. The
current optimism is based partly on a relatively unique phenomenon of this
expansion; industrial production, a harbinger of future economic activity, is
actually rebuilding depleted inventories. Normally associated with the early
stages of an economic recovery, this activity is unusual for a mature expansion
and indicates continued economic strength.
Gross Domestic Product (GDP), clipping along at 2.5 - 3.0 percent annually, is
hovering above the Fed's comfort level. However, consumer confidence is very
high and plays a definite role in our forecast. After experiencing the lowest
unemployment rates in nearly seven years, consumers today are employed,
confident and spending money which bodes well for continued growth. This higher
level of consumer spending is capable of sustaining a strong GDP without risk of
exhausting the recovery.
Inflation, a primary concern of a heated up economy, is playing only a minor
role in the current recovery. The abundance of material resources supplied from
the former communist countries in Eastern Europe and the Soviet Union has
mitigated the resource demands of the U.S. economy's strength. In addition, the
increase of the world's labor force, in China and elsewhere, provides lower cost
production options for many manufacturers, eliminating the need to raise prices.
Consequently, we can envision a scenario in which inflation and interest rates
actually edge lower in the coming months.
The Advantus Funds took full advantage of the extended expansion and recorded
impressive gains across broad industrial segments this year. While mandated wage
accelerations will affect many service related industries in the months ahead,
we remain cautiously optimistic that most sectors will experience strong growth
well into 1997. Further buttressing this report is the fact that in the first
year of every Presidential term since 1948, the markets have returned positive
performance.
The Advantus family of mutual funds offers a wide array of investment objectives
to capture growth potential in many different market segments. Our experienced
and dedicated portfolio managers will make the most of each opportunity.
Sincerely,
[SIGNATURE]
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS HORIZON FUND
PERFORMANCE UPDATE
[PHOTOS]
THOMAS A. GUNDERSON, CFA AND JEFFREY R.
ERICKSON, CFA
PORTFOLIO MANAGERS
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 works 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 Advantus Horizon Fund's performance for the year ended September 30, 1996
for each class of shares offered was as follows:
<TABLE>
<S> <C>
Class A 17.2 percent*
Class B 16.3 percent*
Class C 16.3 percent*
</TABLE>
The year finished with strong momentum as the Advantus Horizon Fund Class A
shares gained 9.1 percent* during the past six months, a performance ranking it
in the top 13 percent of 572 Growth and Income mutual funds according to Lipper
Analytical Services** for the six months ended September 30, 1996+. For the year
ended September 30, 1996, the Advantus Horizon Fund returns exceeded the average
Lipper Growth fund return of 16.0 percent***.
PORTFOLIO RECAP
The stock market soared to record heights and the S&P 500++ posted a 20.3
percent gain. The Horizon Fund's focus on investing in companies with an
established track record of growth and prospects for continued above average
growth was beneficial over the past twelve months. With investor fears of a
slowing economy and slowing growth rates for corporate earnings, the market was
willing to pay premium prices for companies that could sustain earnings growth.
Companies exhibiting such characteristics and meaningfully contributing to
performance over the past year included Computer Associates (computer software),
The Gartner Group (technology consulting), Tommy Hilfiger (apparel), General
Electric (conglomerate) and United Waste Systems (waste services).
The Horizon Fund took advantage of broad market strength during the year. The
capital goods, consumer non-durables, finance, energy and technology sectors all
gained over 20 percent in the past year. Weak sectors were the utilities and
transportation sectors of the market.
OUTLOOK
As usual, there are many events that may affect the market in the short term.
Will the Federal Reserve increase interest rates following the election? Will
that bring on the next recession? Will the November elections bring about a
shift in power in Washington that will have lasting repercussions? The stock
market could negatively react to any of these factors over the near
2
<PAGE>
ADVANTUS HORIZON FUND
SEPTEMBER 30, 1996
term. However, the long term outlook is positive for stocks. The U.S. economy is
strong, inflation is low and the Federal Reserve is standing firm on its mission
to keep inflation under control. Additionally, our focus on investing in well
managed companies that exhibit strong growth over a business cycle allows us to
look through the short term issues and focus on long term capital appreciation
for you and the Fund.
Slower rates of earnings growth for the overall market could make traditional
growth stocks attractive. Corporate earnings were essentially flat for the
second quarter of 1996 and are expected to be flat again for the third quarter.
New capacity expansions, along with intense competition, have resulted in weak
pricing power throughout the economy. As a result, the good growth in GDP has
not led to growth in overall corporate earnings. The Horizon Fund invests in
companies with strong growth prospects due to significant competitive
advantages. This strategy may be rewarded by the market as earnings growth
becomes more difficult to find.
We will continue to seek out and invest in the established and larger companies
that are the most successful, best managed and fastest growing to maximize your
long term capital gains. We appreciate your trust in the Advantus family of
Mutual Funds and are looking forward to helping you meet your financial goals.
*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. Investment returns and principal values will fluctuate so that shares
upon redemption may be worth more or less than their original cost.
**Average return of 572 Growth and Income funds according to Lipper Analytical
Services, Inc.
***Average return of 643 Growth Funds according to Lipper Analytical Services,
Inc.
+During the year ended September 30, 1996, the Fund's distributor waived Class A
distributions fees which were otherwise payable by Class A shares. Absent the
fee waiver by the distributor, the total return for the six months ended
September 30, 1996 for Class A would have been 9.0 percent.
++The S&P 500 is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall.
3
<PAGE>
ADVANTUS HORIZON FUND
SEPTEMBER 30, 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 September 30, 1986 through September 30, 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 of Class B and Class
C shares of the Advantus Horizon Fund (August 19, 1994 and March 1, 1995,
respectively) through September 30, 1996.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 11.4%
Five year 11.0%
Ten year 12.6%
Class A S&P 500 CPI
9/30/1986 10,000 10,000 10,000
10/31/1986 10,377 10,425 10,101
10/31/1987 11,019 11,089 10,550
10/31/1988 12,260 12,742 10,999
10/31/1989 14,997 16,093 11,503
10/31/1990 14,125 14,886 12,227
10/31/1991 19,615 19,872 12,585
10/31/1992 21,637 21,848 12,988
10/31/1993 23,273 25,105 13,336
9/30/1994 23,606 25,468 13,740
9/30/1995 29,452 33,029 14,042
9/30/1996 32,789 39,284 14,464
</TABLE>
4
<PAGE>
ADVANTUS HORIZON FUND
SEPTEMBER 30, 1996
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 11.3%
Since inception (8/19/94) 18.1%
Class B S&P 500 CPI
8/19/94 10,000 10,000 10,000
9/30/94 9,629 9,951 10,067
9/30/95 12,074 12,905 10,289
9/30/96 14,221 15,349 10,598
</TABLE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 16.3%
Since inception (3/1/95) 22.4%
Class C S&P 500 CPI
3/1/95 10,000 10,000 10,000
9/30/95 11,844 12,169 10,146
9/30/96 13,778 14,474 10,450
</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
5
<PAGE>
ADVANTUS HORIZON FUND
SEPTEMBER 30, 1996
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.
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ---------------------------- ----------- ---------- ---------------
<S> <C> <C> <C>
General Electric Company.... 16,988 $1,545,908 3.8%
Computer Associates
International............. 25,236 1,507,851 3.7%
Columbia/HCA Healthcare
Corporation............... 23,981 1,363,919 3.3%
Pfizer, Inc................. 16,200 1,281,825 3.1%
First Data Corporation...... 15,452 1,261,269 3.1%
Kroger Company.............. 25,191 1,127,297 2.8%
Procter & Gamble Company.... 11,100 1,082,250 2.7%
Philip Morris Companies,
Inc....................... 12,000 1,077,000 2.6%
Johnson & Johnson........... 21,000 1,076,250 2.6%
United Waste Systems,
Inc....................... 29,810 1,035,898 2.5%
---------- ---
$12,359,467 30.2%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Goods 9.2%
Consumer Goods and Services 47.7%
Intermediate Goods and
Services 5.6%
Credit Sensitive 13.8%
Technology 22.0%
Cash and Other
Assets/Liabilites 1.7%
</TABLE>
6
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1996
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------- ----------
<C> <S> <C>
COMMON STOCKS (98.3%)
CAPITAL GOODS (9.2%)
Machinery (9.2%)
16,988 General Electric Company............................... $1,545,908
21,100 Millipore Corporation.................................. 833,450
29,810 United Waste Systems, Inc (b).......................... 1,035,898
8,985 York International Corp................................ 434,649
----------
3,849,905
----------
CONSUMER GOODS AND SERVICES (47.7%)
Consumer Goods (20.9%)
16,700 Coca-Cola Company...................................... 849,613
23,981 Columbia/HCA Healthcare Corporation.................... 1,363,919
21,000 Johnson & Johnson...................................... 1,076,250
16,200 Pfizer, Inc............................................ 1,281,825
12,000 Philip Morris Companies, Inc........................... 1,077,000
11,100 Procter & Gamble Company............................... 1,082,250
34,000 Service Corporation International...................... 1,028,500
15,500 Smithkline Beecham (c)................................. 943,563
----------
8,702,920
----------
Consumer Services (6.3%)
21,647 CUC International, Inc (b)............................. 863,174
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------- ----------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
20,711 GTECH Holdings Corporation (b)......................... $ 665,341
14,060 Manpower............................................... 467,495
21,700 Wallace Computer Services, Incorporated................ 613,025
----------
2,609,035
----------
Food (4.9%)
18,400 Conagra, Inc........................................... 906,200
25,191 Kroger Company (b)..................................... 1,127,297
----------
2,033,497
----------
Retail (7.5%)
8,300 Cardinal Health Incorporated........................... 685,787
16,500 Home Depot, Inc........................................ 938,438
25,800 Kohl's, Inc (b)........................................ 928,800
41,600 Officemax (b).......................................... 582,400
----------
3,135,425
----------
Consumer Cyclicals (8.1%)
28,800 Autozone, Inc (b)...................................... 835,200
17,200 Magna International, Inc (c)........................... 829,900
26,200 Newell Co.............................................. 786,000
20,206 Omnicom Group.......................................... 944,630
----------
3,395,730
----------
</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 (13.8%)
Finance (13.8%)
6,552 American International Group........................... $ 660,114
11,799 Associates First Capital Corporation................... 483,759
9,600 Federal Home Loan Mortgage Corporation................. 939,600
15,452 First Data Corporation................................. 1,261,269
14,200 MGIC Investment Corporation............................ 956,725
11,350 Norwest Corporation.................................... 463,931
30,400 T. Rowe Price Associates............................... 988,000
----------
5,753,398
----------
INTERMEDIATE GOODS AND SERVICES (5.6%)
Materials (3.5%)
7,400 Kimberly-Clark Corporation............................. 652,125
18,893 Praxair, Inc........................................... 812,399
----------
1,464,524
----------
Transportation (2.1%)
10,100 Burlington Northern Santa Fe........................... 852,187
----------
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------- ----------
<C> <S> <C>
TECHNOLOGY (22.0%)
21,700 Automatic Data Processing, Inc......................... $ 946,662
14,700 Cisco Systems, Inc (b)................................. 912,319
25,236 Computer Associates International...................... 1,507,851
11,500 Computer Sciences Corporation (b)...................... 884,062
18,700 Danka Business Systems PLC (c)......................... 743,325
14,300 Electronic Data Systems Corporation.................... 877,663
23,800 Equifax Incorporated................................... 627,725
10,800 Lucent Technologies Incorporated....................... 495,450
5,500 Microsoft Corporation (b).............................. 725,313
13,425 Oracle Corporation (b)................................. 571,402
17,600 Parametric Technology Corporation (b).................. 869,000
----------
9,160,772
----------
Total common stocks (cost: $30,195,429).............................
40,957,393
----------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- ---------- -----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (1.6%)
$ 50,000 U.S. Treasury Bill............................................ 5.28% 10/17/96 $ 49,886
50,000 U.S. Treasury Bill............................................ 5.11% 11/14/96 49,692
575,000 U.S. Treasury Bills.................................... 5.21%-5.28% 12/12/96 569,193
-----------
Total short-term securities (cost: $668,613)........................................ 668,771
-----------
Total investments in securities (cost: $30,864,042)(d).............................. $41,626,164
-----------
-----------
</TABLE>
Notes to Investments in Securities
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 6.0% of net assets in foreign securities as of September 30,
1996.
(d) At September 30, 1996 the cost of securities for federal income tax
purposes was $30,866,812. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
<TABLE>
<S> <C> <C>
Gross unrealized appreciation................................................................... $ 10,971,131
Gross unrealized depreciation................................................................... (211,779)
------------
Net unrealized appreciation..................................................................... $ 10,759,352
------------
------------
</TABLE>
9
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying schedule for
detailed listing (identified cost: $30,864,042)................................ $ 41,626,164
Cash in bank on demand deposit.................................................. 56,916
Receivable for Fund shares sold................................................. 56,789
Dividends receivable............................................................ 49,338
------------
Total assets................................................................ 41,789,207
------------
LIABILITIES
Payable for investment securities purchased..................................... 57,553
Payable for Fund shares repurchased............................................. 9,270
Payable to Adviser.............................................................. 49,905
------------
Total liabilities........................................................... 116,728
------------
Net assets applicable to outstanding capital stock.............................. $ 41,672,479
------------
------------
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)...................................... $ 18,118
Additional paid-in capital.................................................... 22,711,883
Accumulated net realized gains from investments............................... 8,180,356
Unrealized appreciation of investments........................................ 10,762,122
------------
Total--representing net assets applicable to outstanding capital stock...... $ 41,672,479
------------
------------
Net assets applicable to outstanding Class A Shares............................. $ 34,435,290
------------
------------
Net assets applicable to outstanding Class B Shares............................. $ 6,219,403
------------
------------
Net assets applicable to outstanding Class C Shares............................. $ 1,017,786
------------
------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 1,492,347......................................... $ 23.07
------------
------------
Class B--Shares outstanding 274,555........................................... $ 22.65
------------
------------
Class C--Shares outstanding 44,904............................................ $ 22.67
------------
------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<S> <C>
Investment income:
Interest...................................................................... $ 57,386
Dividends..................................................................... 336,002
-----------
Total investment income..................................................... 393,388
-----------
Expenses:
Investment advisory fee....................................................... 319,371
Distribution fees--Class A.................................................... 105,003
Distribution fees--Class B.................................................... 43,537
Distribution fees--Class C.................................................... 5,667
Administrative services fee................................................... 41,200
Custodian fees................................................................ 6,987
Auditing and accounting services.............................................. 9,177
Legal fees.................................................................... 3,618
Directors' fees............................................................... 626
Registration fees............................................................. 32,536
Printing and shareholder reports.............................................. 34,328
Insurance..................................................................... 5,844
Other......................................................................... 23,839
-----------
Total expenses.............................................................. 631,733
Less fees and expenses waived or absorbed:
Class A distribution fees................................................... (28,836)
-----------
Total net expenses.......................................................... 602,897
-----------
Investment loss--net........................................................ (209,509)
-----------
Realized and unrealized gains (losses) on investments:
Net realized gains on investments (note 3).................................... 8,181,489
Net change in unrealized appreciation or depreciation on investments.......... (1,636,711)
-----------
Net gains on investments.................................................... 6,544,778
-----------
Net increase in net assets resulting from operations............................ $ 6,335,269
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Operations:
Investment loss--net...................................... $ (209,509) $ (65,744)
Net realized gains on investments......................... 8,181,489 2,609,672
Net change in unrealized appreciation or depreciation of
investments.............................................. (1,636,711) 5,347,200
------------- -------------
Increase in net assets resulting from operations........ 6,335,269 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................................................. 6,636,439 3,817,143
Class B................................................. 3,313,209 2,211,285
Class C................................................. 853,733 96,617
Shares issued as a result of reinvested dividends:
Class A................................................. 2,076,351 973,291
Class B................................................. 190,286 16,148
Class C................................................. 19,544 --
Payments for redemption of shares:
Class A................................................. (13,750,830) (6,723,485)
Class B................................................. (377,718) (32,497)
Class C................................................. (32,264) (1,043)
------------- -------------
Increase (decrease) in net assets from capital share
transactions........................................... (1,071,250) 357,459
------------- -------------
Total increase in net assets............................ 2,937,621 7,250,558
Net assets at beginning of year............................. 38,734,858 31,484,300
------------- -------------
Net assets at end of year................................... $ 41,672,479 $ 38,734,858
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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 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.
13
<PAGE>
ADVANTUS HORIZON FUND
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.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income and decrease additional paid-in capital by
$209,509.
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 year ended September 30, 1996, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$32,962,013 and $36,181,414, 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
14
<PAGE>
ADVANTUS HORIZON 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 .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 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 $28,836 for the year ended September 30, 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 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 services fee was
$3,100 per month. Effective February 1, 1996, the administrative services fee is
$3,600 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by MIMLIC Sales for distributing the Fund's three
classes of shares amounted to $247,322.
As of September 30, 1996, 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..................................................................... 97,089 6.5%
Class B..................................................................... 3,221 1.2%
Class C..................................................................... 606 1.3%
</TABLE>
During the year ended September 30, 1996, legal fees were paid to a law firm
of which the Fund's secretary is a partner in the amount of $3,618.
15
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the years ended September 30, 1996 and 1995 for
Class A and Class B shares and the year ended September 30, 1996 and the period
from March 1, 1995 to September 30, 1995 for Class C shares were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- -------------------- --------------------
1996 1995 1996 1995 1996 1995
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold................................................. 311,359 209,657 157,638 119,911 40,501 5,001
Issued for reinvested distributions.................. 104,307 59,591 9,781 1,084 994 --
Redeemed............................................. (644,637) (358,505) (17,831) (1,621) (1,540) (52)
---------- ---------- --------- --------- --------- ---------
(228,971) (89,257) 149,588 119,374 39,955 4,949
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
</TABLE>
16
<PAGE>
ADVANTUS HORIZON FUND
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
YEAR ENDED NOVEMBER 1, YEAR ENDED OCTOBER
SEPTEMBER 30, 1993 TO 31,
------------------- SEPTEMBER 30, ------------------
1996 1995(a) 1994(b) 1993 1992
------- ------- ------------- ------- ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 20.94 $ 17.34 $ 17.64 $ 16.73 $15.65
------- ------- ------------- ------- ------
Income from investment
operations:
Net investment income
(loss)..................... (.10) (.03) -- .05 .10
Net gains or losses on
securities (both realized
and unrealized)............ 3.51 4.17 .25 1.20 1.47
------- ------- ------------- ------- ------
Total from investment
operations............... 3.41 4.14 .25 1.25 1.57
------- ------- ------------- ------- ------
Less distributions:
Dividends from net
investment income.......... -- -- -- (.05) (.12)
Distributions from capital
gains...................... (1.28) (.54) (.55) (.29) (.37)
------- ------- ------------- ------- ------
Total distributions....... (1.28) (.54) (.55) (.34) (.49)
------- ------- ------------- ------- ------
Net asset value, end of
period....................... $ 23.07 $ 20.94 $ 17.34 $ 17.64 $16.73
------- ------- ------------- ------- ------
------- ------- ------------- ------- ------
Total return (c).............. 17.2% 24.8% 1.4%(d) 7.6% 10.3%
Net assets, end of period (in
thousands)................... $34,435 $36,040 $31,387 $30,015 $24,919
Ratio of expenses to average
daily net assets (e)......... 1.41% 1.41% 1.43%(f) 1.31% 1.40%
Ratio of net investment income
(loss) to average daily net
assets (e)................... (.43)% (.15)% (.01)%(f) .27% .61%
Portfolio turnover rate
(excluding short-term
securities).................. 84.7% 46.8% 43.5% 47.0% 20.6%
Average commission rate on
common stock transactions
(g).......................... $ .0763 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) 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) The Fund's Adviser and Distributor voluntarily waived or absorbed $28,836,
$52,961, $51,147, $48,807 and $32,341 in expenses for 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 1.50%, 1.57%, 1.61%, 1.49% and 1.55%, respectively,
and the ratio of net investment income (loss) to average daily net assets
would have been (.52%), (.31%), (.19%), .09% and .46%, respectively.
(f) Adjusted to an annual basis.
(g) Beginning in fiscal 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of common
stocks for the period by the total number of related shares purchased and
sold.
17
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(6) FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
CLASS B
----------------------------------------- CLASS C
PERIOD FROM ----------------------------------------
YEAR ENDED AUGUST 19, PERIOD FROM MARCH
SEPTEMBER 30, 1994(b) TO YEAR ENDED 1, 1995(b) TO
------------------- SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995(a) 1994 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 income
(loss)..................... (.19) (.10) (.01) (.15) (.06)
Net gains or losses on
securities (both realized
and unrealized)............ 3.38 4.05 .23 3.35 3.29
------- ------- ------ ------ ------
Total from investment
operations............... 3.19 3.95 .22 3.20 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....................... $ 22.65 $ 20.74 $ 17.33 $ 22.67 $ 20.75
------- ------- ------ ------ ------
------- ------- ------ ------ ------
Total return (c).............. 16.3% 23.7% 1.3%(d) 16.3% 18.4%(e)
Net assets, end of period (in
thousands)................... $6,219 $2,592 $97 $1,018 $103
Ratio of expenses to average
daily net assets (f)......... 2.19% 2.24% .30%(h) 2.19% 2.24%(g)
Ratio of net investment income
(loss) to average daily net
assets (f)................... (1.19)% (1.05)% (.13)%(h) (1.17)% (1.13)%(g)
Portfolio turnover rate
(excluding short-term
securities).................. 84.7% 46.8% 43.5% 84.7% 46.8%
Average commission rate on
common stock transactions
(i).......................... $ .0763 N/A N/A $ .0763 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) Commencement of operations.
(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 contingent deferred sales charges.
(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) The Fund's Adviser and Distributor voluntarily waived or absorbed $52,961
in expenses for 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 2.25%, and the ratio of net investment income (loss)
to average daily net assets would have been (1.05%). If Class C shares had
been charged for these expenses, the ratio of expenses to average daily net
assets would have been 2.25% and the ratio of net investment income (loss)
to average daily net assets would have been (1.13%).
(g) Adjusted to an annual basis.
(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) Beginning in fiscal 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of common
stocks for the period by the total number of related shares purchased and
sold.
18
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Horizon Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Horizon
Fund, Inc. (the Fund) as of September 30, 1996 and the related statement of
operations for the year then ended, the statement of changes in net assets for
the two years then ended and the financial highlights for the two years then
ended, the period from November 1, 1993 to September 30, 1994 and each of the
years in the two-year period ended October 31, 1993. These financial statements
and the financial highlights are the responsibility of the Fund's management.
Our responsibility is to express an opinion on these financial statements and
the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased or sold but not received or delivered, we
request confirmations from brokers, and where replies are not received, we carry
out other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of September 30, 1996 and the results of its operations,
changes in its net assets and financial highlights, for the periods stated in
the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 1, 1996
19
<PAGE>
ADVANTUS HORIZON FUND
FEDERAL INCOME TAX INFORMATION
The following information for federal income tax purposes is presented as an
aid to shareholders in reporting the distributions paid by the Fund in the
fiscal year ended September 30, 1996. Dividends for the 1996 calendar year will
be reported to you on Form 1099-Div in late January 1997. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A, CLASS B AND CLASS C
Capital gains distribution--taxable as long-term capital gains
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ---------------------------------------------------------------------------------------------------------- ---------
<S> <C>
December 19, 1995......................................................................................... $ 1.2753
---------
---------
</TABLE>
20
<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'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 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, profit
sharing, money purchase or defined benefit plans.
21
<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 $346
million in assets in addition to $1.3 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
22
<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.48637 11-96
