<PAGE>
[LOGO]
ADVANTUS
Family of Funds
Semi-Annual Report to Shareholders
Advantus Horizon Fund
March 31, 1997
<PAGE>
ADVANTUS HORIZON FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND LIABILITIES 10
STATEMENT OF OPERATIONS 11
STATEMENTS OF CHANGES IN NET ASSETS 12
NOTES TO FINANCIAL STATEMENTS 13
SHAREHOLDER SERVICES 18
<PAGE>
April 30, 1997 [PHOTO]
Dear Shareholders:
The last six months have provided investors with some high points and some low.
At year end 1996, the stock market exceeded nearly all expectations. Driven by
ideal fundamentals, combined with unprecedented levels of money flowing into the
market, S&P 500 operating earnings grew by nine percent, while the total return
for the S&P 500 Index was over 20 percent. This trend continued into the first
quarter 1997.
Investors started reacting to possible Federal Reserve action to curb the
economy in the second half of February. Even before short-term money rates were
raised by 1/4 percent at the end of March, the stock market started to drop.
After reaching a high on February 19, the S&P 500 declined by 7.3 percent
resulting in a 2.7 percent increase for the quarter. The largest companies in
the S&P 500 outperformed all other companies and were the driving force behind
the Index.
The investment grade bond market posted low single digit returns at the end of
1997. The Fed's increase in money rates had a negative impact on bond prices. At
the end of the first quarter 1997, the interest rate on the two year Treasury
note increased 54 basis points to yield 6.41 percent. The 30-year U.S. Treasury
Bond closed the period yielding 7.10 percent, 46 basis points higher for the
quarter.
The long-term outlook continues to be favorable. We expect economic growth to
slow to around 2.5 percent from 3.2 percent last year as the result of the
tighter money policy. In this environment, the current level of interest rates
should reward bond investors with historically higher real rates of return which
may eventually translate into bond price appreciation. For 1997, we still
believe investors may see high single digit bond returns. The growth in equity
values should slow as corporate profits decline during the year, to
approximately half the rate of 1996.
Moderate economic growth, low inflation, rising corporate profits, a declining
Federal deficit and strong corporate cash flow provide the catalyst for what we
believe will be a positive financial environment for the balance of the year.
Determining which investments will perform well in both the near and long-term
requires professional experience. Advantus Capital Management, Inc. offers a
family of ten funds designed to help you reach your financial goals with a
thoughtful, well-conceived investment strategy.
Sincerely,
/s/Paul Gooding
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS HORIZON FUND
PERFORMANCE UPDATE
[PHOTO]
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 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 performance of the Advantus Horizon Fund for the six month period ending
March 31, 1997 for each class of shares currently offered is as follows:
<TABLE>
<S> <C>
Class A.......................... .3 percent*
Class B.......................... .1 percent*
Class C.......................... -.1 percent*
</TABLE>
The average Lipper Growth Fund** returned 4.1 percent over the six month period
ending March 31, 1997. For the same period, the Russell 1000 Growth Index+
gained 6.6 percent. Due in large part to the strong performance of the
mega-large companies, the indices have outperformed the majority of growth funds
over the past six months.
PORTFOLIO RECAP
The S&P 500++ endured a rough ride, but rose during the last two quarters to
continue the six-year market expansion. The market fell 7.2 percent from its
February peak, after anticipating the Federal Reserve's move to raise short-term
interest rates. The value style of investing outperformed growth investing with
the Russell 1000 Value Index+ gaining 2.6 percent versus .5 percent for the
Russell 1000 Growth Index+ for the three month period ending March 31, 1997.
However, the real story of the index continued to be that the largest companies
were the driving force behind the index, outperforming all other companies.
During the quarter ending March 31, 1997, on a price basis, the largest quintile
(largest 100 companies) of the S&P 500++ rose 3.3 percent, while the smallest
quintile fell 3.1 percent, creating a spread of 6.4 percent. This continued the
trend established in 1996 and 1995, when the spread was 22.7 percent and 30.5
percent, respectively. This is important because the largest quintile represents
almost two thirds of the S&P 500,++ which explains how a small percentage of
companies in the S&P 500++ drive the price performance of the entire index.
The best performing sectors in the portfolio were stable growth companies. These
included consumer staple stocks like Johnson and Johnson, Proctor and Gamble and
ConAgra. Another strong sector for the portfolio included service companies like
Omnicom (advertising), Manpower (temporary staffing) and Service Corporation
(funeral homes). The companies in the portfolio that underperformed included
technology and financial companies which were hurt by the rise in interest
rates, and Columbia/HCA.
2
<PAGE>
ADVANTUS HORIZON
FUND
MARCH 31, 1997
The concentration of price strength in a few of the largest companies means that
the market has overlooked many medium-sized companies. Some of these companies
are well managed, fundamentally sound, have strong earnings growth prospects and
are at attractive valuations. Some of these companies were added to the
portfolio, including Carnival Cruise (entertainment), Nine West (shoes), Leggett
and Platt (furniture components) and Tyco International (diversified
manufacturing). Technology stocks have experienced a significant correction. In
this sector the fund added Gartner Group (technology research) and Paychex
(payroll processing), companies with stable, recurring revenues.
OUTLOOK
The Federal Reserve has signaled its intention to slow economic growth through
higher short-term interest rates. This will likely slow the growth of corporate
earnings and may increase stock market volatility. The positive aspect of the
Fed's action is to assure the markets that inflation will not jump up, which
means that there is little reason for long-term interest rates to rise. While
the S&P 500++ is not cheap, the index masks a dichotomy between the largest
companies, which are expensive, and the rest of the market, which is not
expensive. If long term interest rates do not rise significantly from here,
valuations for most stocks are reasonable, and companies with earnings growth
should be rewarded with rising stock prices. The trick will be finding companies
with rising earnings in a slowing economy, and avoiding earnings
disappointments. In this environment stock selection will be crucial, and the
bottom up stock selection strategy used to construct the Horizon Fund should
work to its benefit.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred
sales charge.
**The average return of 843 Growth Funds according
to Lipper Analytical
Services, Inc.
+The Russell 1000 Growth Index and the Russell 1000 Value Index contain stock
from the Russell 1000 with greater than average growth orientation and low price
to book ratios, respectively. The Russell 1000 are the 1,000 largest companies
in the Russell 3000. The Russell 3000 is an unmanaged index of 3,000 common
stocks which represents approximately 98 percent of the U.S. market.
++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
MARCH 31, 1997
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 S&P 500 (as
adjusted for dividend reinvestment) and the Consumer Price Index. The three
lines in the Class A graph represent the cumulative total return of a
hypothetical $10,000 investment made on March 31, 1987 through March 31, 1997.
The three lines in the Class B and Class C graphs represent the cumulative total
return of a hypothetical $10,000 investment made on the inception date of Class
B and Class C shares of the Advantus Horizon Fund (August 19, 1994 and March 1,
1995, respectively) through March 31, 1997.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A S&P 500 CPI
<S> <C> <C> <C>
3/31/87 $10,000 $10,000 $10,000
10/31/87 8,340 8,784 10,249
10/31/88 9,279 10,093 10,686
10/31/89 11,351 12,748 11,175
10/31/90 10,690 11,792 11,879
10/31/91 14,846 15,741 12,226
10/31/92 16,375 17,306 12,618
10/31/93 17,614 19,887 12,956
9/30/94 17,866 20,174 13,348
9/30/95 22,290 26,163 13,642
9/30/96 26,130 31,118 14,052
3/31/97 26,210 34,279 14,239
Average annual total
return:
One year 4.0%
Five year 9.7%
Ten year 10.1%
</TABLE>
4
<PAGE>
ADVANTUS HORIZON
FUND
MARCH 31, 1997
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS B S&P 500 CPI
<S> <C> <C> <C>
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
3/31/97 14,240 16,908 10,739
Average annual total
return:
One year 3.9%
Since inception (8/19/94) 14.5%
</TABLE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS C S&P 500 CPI
<S> <C> <C> <C>
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
3/31/97 13,767 15,944 10,589
Average annual total
return:
One year 8.7%
Since inception (3/1/95) 16.6%
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial adviser's investment advice. Individuals cannot buy even an unmanaged
index fund without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS HORIZON
FUND
MARCH 31, 1997
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------ ------ ----------- -----------
<S> <C> <C> <C>
General Electric Company...... 18,588 $ 1,844,859 4.6%
Intel......................... 11,400 1,586,025 3.9%
Columbia/HCA Healthcare
Corporation.................. 38,291 1,287,535 3.2%
Philip Morris Companies,
Inc.......................... 11,200 1,278,200 3.2%
Service Corporation
International................ 41,100 1,222,725 3.0%
First Data Corp............... 30,504 1,033,323 2.6%
The Coca-Cola Company......... 18,400 1,028,100 2.5%
Merck & Company............... 12,000 1,011,000 2.5%
Omnicon Group................. 20,206 1,007,774 2.5%
Automatic Data Processing..... 23,600 988,250 2.4%
----------- ---
$12,287,791 30.4%
----------- ---
----------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Goods 8.9%
Consumer Goods and Services 52.0%
Intermediate Goods and
Services 3.8%
Credit Sensitive 14.4%
Technology 18.4%
Cash and Other
Assets/Liabilities 2.5%
</TABLE>
6
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1997
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
COMMON STOCKS (97.5%)
CAPITAL GOODS (8.9%)
8,100 ADT Limited (b)(c)........................... $ 202,500
18,588 General Electric Company..................... 1,844,859
12,700 Tyco International, Ltd (b).................. 698,500
25,510 United Waste Systems, Incorporated (b)....... 950,248
------------
3,696,107
------------
CONSUMER GOODS AND SERVICES (52.0%)
Consumer Goods (23.1%)
18,400 Coca-Cola Company............................ 1,028,100
38,291 Columbia/HCA Healthcare Corporation.......... 1,287,535
15,100 Johnson & Johnson............................ 798,413
8,400 Medtronic, Incorporated...................... 522,900
12,000 Merck & Co., Incorporated.................... 1,011,000
10,000 Pfizer, Incorporated......................... 841,250
11,200 Philip Morris Companies, Incorporated........ 1,278,200
5,400 Procter & Gamble Company..................... 621,000
41,100 Service Corporation International............ 1,222,725
13,900 Smithkline Beecham (c)....................... 973,000
------------
9,584,123
------------
Consumer Services (10.7%)
25,700 Carnival Corporation......................... 950,900
37,670 CUC International, Incorporated (b).......... 847,575
11,400 Gartner Group, Incorporated (b).............. 246,525
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
20,711 GTECH Holdings Corporation (b)............... $ 623,919
6,800 HFS, Incorporated (b)........................ 400,350
20,252 Manpower..................................... 729,072
19,200 Wallace Computer Services, Incorporated...... 636,000
------------
4,434,341
------------
Food (3.8%)
12,600 Conagra, Incorporated........................ 683,550
19,091 Safeway, Incorporated (b).................... 885,345
------------
1,568,895
------------
Retail (5.3%)
16,200 Home Depot, Incorporated..................... 866,700
17,100 Kohl's, Incorporated (b)..................... 724,613
31,400 Viking Office Products, Incorporated (b)..... 608,375
------------
2,199,688
------------
Consumer Cyclicals (9.1%)
16,100 Autozone, Incorporated (b)................... 362,250
12,300 Leggett & Platt, Incorporated (b)............ 399,750
11,800 Magna International, Incorporated (c)........ 585,575
21,600 Newell Company............................... 723,600
16,100 Nine West Group, Incorporated (b)............ 720,475
20,206 Omnicom Group................................ 1,007,774
------------
3,799,424
------------
</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 (14.4%)
Finance (12.4%)
6,552 American International Group, Incorporated... $ 769,041
11,499 Associates First Capital Corporation......... 494,457
15,200 Federal Home Loan Mortgage Corporation....... 414,200
6,300 Finova Group, Incorporated (b)............... 426,038
30,504 First Data Corporation....................... 1,033,323
11,150 Norwest Corporation.......................... 515,688
20,800 Sunamerica, Incorporated..................... 782,600
19,200 T. Rowe Price Associates..................... 712,800
------------
5,148,147
------------
Utilities (2.0%)
14,300 Cincinnati Bell, Incorporated................ 807,950
------------
INTERMEDIATE GOODS AND SERVICES (3.8%)
Materials (3.8%)
7,400 Kimberly-Clark Corporation................... 735,375
18,893 Praxair, Incorporated........................ 847,823
------------
1,583,198
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
TECHNOLOGY (18.4%)
23,600 Automatic Data Processing, Incorporated...... $ 988,250
8,200 Cisco Systems, Incorporated (b).............. 394,625
9,536 Computer Associates International............ 370,712
10,100 Computer Sciences Corporation (b)............ 623,674
12,300 Danka Business Systems PLC (c)............... 386,681
7,100 Dell Computer Corporation (d)................ 480,137
23,800 Equifax, Incorporated........................ 648,550
11,400 Intel........................................ 1,586,025
9,500 Microsoft Corporation (b).................... 871,031
18,900 Parametric Technology Corporation (b)........ 852,863
10,500 Paychex, Incorporated (b).................... 431,812
------------
7,634,360
------------
Total common stocks
(cost: $32,732,648).................................... 40,456,233
------------
</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 (2.3%)
$895,000 U.S. Treasury Bill................................ 5.18% 05/22/97 $ 888,316
70,000 U.S. Treasury Bill................................ 5.11% 04/24/97 69,790
-----------
Total short-term securities (cost: $958,233)............................. 958,106
-----------
Total investments in securities (cost: $33,690,881)(d)................... $41,414,339
-----------
-----------
</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 5.2% of net assets in foreign securities as of March 31, 1997.
(d) At March 31, 1997 the cost of securities for federal income tax purposes was
$33,704,390. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C> <C>
Gross unrealized appreciation........... $8,584,070
Gross unrealized depreciation........... (874,121)
----------
Net unrealized appreciation............. $7,709,949
----------
----------
</TABLE>
9
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying
schedule for detailed listing (identified cost:
$33,690,881)............................................... $ 41,414,339
Cash in bank on demand deposit.............................. 163,067
Receivable for Investments sold............................. 306,235
Receivable for Fund shares sold............................. 87,111
Dividends receivable........................................ 58,441
------------
Total assets............................................ 42,029,193
------------
LIABILITIES
Payable for investment securities purchased................. 467,259
Payable for Fund shares redeemed............................ 11,436
Payable to Adviser.......................................... 61,208
------------
Total liabilities....................................... 539,903
------------
Net assets applicable to outstanding capital stock.......... $ 41,489,290
------------
------------
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).................................. $ 22,543
Additional paid-in capital................................ 30,800,664
Accumulated net realized gains from investments........... 2,942,625
Unrealized appreciation on investments.................... 7,723,458
------------
Total--representing net assets applicable to outstanding
capital stock.......................................... $ 41,489,290
------------
------------
Net assets applicable to outstanding Class A Shares......... $ 32,328,781
------------
------------
Net assets applicable to outstanding Class B Shares......... $ 7,995,643
------------
------------
Net assets applicable to outstanding Class C Shares......... $ 1,164,866
------------
------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 1,746,881..................... $ 18.51
------------
------------
Class B--Shares outstanding 442,829....................... $ 18.06
------------
------------
Class C--Shares outstanding 64,578........................ $ 18.04
------------
------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1996 TO MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest.................................................. $ 26,629
Dividends................................................. 204,008
-----------
Total investment income............................... 230,637
-----------
Expenses:
Investment advisory fee................................... 170,943
Distribution fees--Class A................................ 51,424
Distribution fees--Class B................................ 36,611
Distribution fees--Class C................................ 5,654
Administrative services fee............................... 21,600
Custodian fees............................................ 3,633
Auditing and accounting services.......................... 10,625
Legal fees................................................ 1,757
Directors' fees........................................... 354
Registration fees......................................... 18,188
Printing and shareholder reports.......................... 23,185
Insurance................................................. 3,148
-----------
Total expenses........................................ 347,122
Less fees and expenses waived or absorbed:
Class A distribution fees............................... (8,571)
-----------
Total net expenses.................................... 338,551
-----------
Investment loss--net.................................. (107,914)
-----------
Realized and unrealized gains (losses) on investments:
Net realized gains on investments (note 3)................ 3,215,175
Net change in unrealized appreciation or depreciation on
investments.............................................. (3,038,664)
-----------
Net gains on investments.............................. 176,511
-----------
Net increase in net assets resulting from operations........ $ 68,597
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS HORIZON FUND
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1996 TO MARCH 31, 1997 AND
YEAR ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Operations:
Investment loss--net............................ $ (107,914) $ (209,509)
Net realized gains on investments............... 3,215,175 8,181,489
Net change in unrealized appreciation or
depreciation on investments.................... (3,038,664) (1,636,711)
------------ ------------
Increase in net assets resulting from
operations................................. 68,597 6,335,269
------------ ------------
Distributions to shareholders from net realized
gains on investments:
Class A....................................... (6,782,073) (2,112,129)
Class B....................................... (1,445,269) (194,725)
Class C....................................... (225,564) (19,544)
------------ ------------
Total distributions......................... (8,452,906) (2,326,398)
------------ ------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A....................................... 2,913,985 6,636,439
Class B....................................... 2,266,866 3,313,209
Class C....................................... 466,325 853,733
Proceeds from issuance of shares as a result of
reinvested dividends:
Class A....................................... 6,665,485 2,076,351
Class B....................................... 1,433,926 190,286
Class C....................................... 223,868 19,544
Payments for redemption of shares:
Class A....................................... (5,135,140) (13,750,830)
Class B....................................... (325,692) (377,718)
Class C....................................... (308,503) (32,264)
------------ ------------
Increase (decrease) in net assets from
capital share transactions................. 8,201,120 (1,071,250)
------------ ------------
Total increase (decrease) in net assets..... (183,189) 2,937,621
Net assets at beginning of period................. 41,672,479 38,734,858
------------ ------------
Net assets at end of period....................... $ 41,489,290 $ 41,672,479
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(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 increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price. When market quotations are not readily available, securities are
valued at fair value as determined in good faith by the Board of Directors. Such
fair values are determined using pricing services or prices quoted by
independent brokers. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date and
interest income, including amortization of bond premium and discount computed on
a level yield basis, is accrued daily.
13
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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
$107,914.
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 ended March 31, 1997, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$16,919,355 and $17,597,311, 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 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
14
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
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 $8,571 for the period ended March 31, 1997.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reporting fees, legal, auditing and accounting services fees, organizational
costs and other miscellaneous expenses.
The Fund pays an administrative services fee, equal to $3,600 per month, to
Minnesota Mutual for accounting, auditing, legal and other administrative
services which Minnesota Mutual provides.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by MIMLIC Sales for distributing the Fund's three
classes of shares amounted to $114,565.
As of March 31, 1997, Minnesota Mutual 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................................................. 36,868 2.1%
Class C................................................. 761 1.2%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $1,757.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1996 to March 31, 1997
and the year ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold.............................................. 138,710 311,359 111,585 157,638 21,600 40,501
Issued for reinvested distributions............... 344,538 104,307 76,152 9,781 11,895 994
Redeemed.......................................... (228,714) (644,637) (19,463) (17,831) (13,821) (1,540)
---------- ---------- --------- --------- --------- ---------
254,534 (228,971) 168,274 149,588 19,674 39,955
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
</TABLE>
15
<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 PERIOD FROM
OCTOBER 1, YEAR ENDED NOVEMBER 1, YEAR ENDED
1996 TO SEPTEMBER 30, 1993 TO OCTOBER 31,
MARCH 31, --------------------- SEPTEMBER 30, -------------------
1997 1996 1995(A) 1994(B) 1993 1992
----------- --------- --------- --------------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 23.07 $ 20.94 $ 17.34 $ 17.64 $ 16.73 $ 15.65
----------- --------- --------- ------- -------- --------
Income from investment
operations:
Net investment income
(loss)..................... (.01) (.10) (.03) -- .05 .10
Net gains or losses on
securities (both realized
and unrealized)............ .27 3.51 4.17 .25 1.20 1.47
----------- --------- --------- ------- -------- --------
Total from investment
operations............... .26 3.41 4.14 .25 1.25 1.57
----------- --------- --------- ------- -------- --------
Less distributions:
Dividends from net
investment income.......... -- -- -- -- (.05) (.12)
Distributions from capital
gains...................... (4.82) (1.28) (.54) (.55) (.29) (.37)
----------- --------- --------- ------- -------- --------
Total distributions....... (4.82) (1.28) (.54) (.55) (.34) (.49)
----------- --------- --------- ------- -------- --------
Net asset value, end of
period....................... $ 18.51 $ 23.07 $ 20.94 $ 17.34 $ 17.64 $ 16.73
----------- --------- --------- ------- -------- --------
----------- --------- --------- ------- -------- --------
Total return (d).............. .3%(h) 17.2% 24.8% 1.4%(e) 7.6% 10.3%
Net assets, end of period (in
thousands)................... $32,329 $ 34,435 $ 36,040 $31,387 $ 30,015 $ 24,919
Ratio of expenses to average
daily net assets (i)......... 1.44%(j) 1.41% 1.41% 1.43%(j) 1.31% 1.40%
Ratio of net investment income
(loss) to average daily net
assets (h)................... (.36)%(j) (.43)% (.15)% (.01)%(j) .27% .61%
Portfolio turnover rate
(excluding short-term
securities).................. 40.76% 84.7% 46.8% 43.5% 47.0% 20.6%
Average commission rate on
stock transactions (l)....... $ .0710 $ .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) Commencement of operations.
(d) 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.
(e) Total return is presented for the period from November 1, 1993 to September
30, 1994.
(f) Total return is presented for the period from August 19, 1994, commencement
of operations, to September 30, 1994.
(g) Total return is presented for the period from March 1, 1995, commencement of
operations, to September 30, 1995.
(h) Total return is presented for the period from October 1, 1996 to March 31,
1997.
16
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, YEAR ENDED AUGUST 19,
1996 TO SEPTEMBER 30, 1994(C) TO
MARCH 31, ---------------------- SEPTEMBER 30,
1997 1996 1995(A) 1994
------------- --------- ----------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 22.65 $ 20.74 $ 17.33 $ 17.11
------ --------- ----------- ------
Income from investment
operations:
Net investment income
(loss)..................... -- (.19) (.10) (.01)
Net gains or losses on
securities (both realized
and unrealized)............ .23 3.38 4.05 .23
------ --------- ----------- ------
Total from investment
operations............... .23 3.19 3.95 .22
------ --------- ----------- ------
Less distributions:
Dividends from net
investment income.......... -- -- -- --
Distributions from capital
gains...................... (4.82) (1.28) (.54) --
------ --------- ----------- ------
Total distributions....... (4.82) (1.28) (.54) --
------ --------- ----------- ------
Net asset value, end of
period....................... $ 18.06 $ 22.65 $ 20.74 $ 17.33
------ --------- ----------- ------
------ --------- ----------- ------
Total return (d).............. .1%(h) 16.3% 23.7% 1.3%(f)
Net assets, end of period (in
thousands)................... $ 7,996 $ 6,219 $ 2,592 $ 97
Ratio of expenses to average
daily net assets (i)......... 2.20%(j) 2.19% 2.24% .30%(k)
Ratio of net investment income
(loss) to average daily net
assets (h)................... (1.10)%(j) (1.19)% (1.05)% (.13)%(k)
Portfolio turnover rate
(excluding short-term
securities).................. 40.76% 84.7% 46.8% 43.5%
Average commission rate on
stock transactions (l)....... $ .0710 $ .0763 N/A N/A
<CAPTION>
CLASS C
--------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, MARCH 1,
1996 TO YEAR ENDED 1995(C) TO
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1995
----------- ----------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of
period....................... $22.67 $ 20.75 $ 17.52
----------- ------ ------
Income from investment
operations:
Net investment income
(loss)..................... (.05) (.15) (.06)
Net gains or losses on
securities (both realized
and unrealized)............ .24 3.35 3.29
----------- ------ ------
Total from investment
operations............... .19 3.20 3.23
----------- ------ ------
Less distributions:
Dividends from net
investment income.......... -- -- --
Distributions from capital
gains...................... (4.82) (1.28) --
----------- ------ ------
Total distributions....... (4.82) (1.28) --
----------- ------ ------
Net asset value, end of
period....................... $18.04 $ 22.67 $ 20.75
----------- ------ ------
----------- ------ ------
Total return (d).............. (.1)%(h) 16.3% 18.4%(g)
Net assets, end of period (in
thousands)................... $1,165 $ 1,018 $ 103
Ratio of expenses to average
daily net assets (i)......... 2.20%(j) 2.19% 2.24%(j)
Ratio of net investment income
(loss) to average daily net
assets (h)................... (1.11)%(j) (1.17)% (1.13)%(j)
Portfolio turnover rate
(excluding short-term
securities).................. 40.76% 84.7% 46.8%
Average commission rate on
stock transactions (l)....... $.0710 $ .0763 N/A
</TABLE>
- ----------
(i) The Fund's Adviser and Distributor voluntarily waived or absorbed $8,571,
$28,836, $52,961, $51,147, $48,807 and $32,341 in expenses for the period
ended March 31, 1997, the years ended September 30, 1996 and 1995, the
period ended September 30, 1994 and the years ended October 31, 1993 and
1992, respectively. If Class A shares had been charged for these expenses,
the ratio of expenses to average daily net assets would have been .37%,
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 (.10)%,
(.52)%, (.31)%, (.19)%, .09% and .46%, respectively. If Class B shares had
been charged for these expenses, the ratio of expenses to average daily net
assets would have been 2.19% and 2.25%, respectively, and the ratio of net
investment income (loss) to average daily net assets would have been (1.19)%
and (1.05)% for the years ended September 30, 1996 and 1995, respectively.
If Class C shares had been charged for these expenses, the ratio of expenses
to average daily net assets would have been 2.19% and 2.25%, respectively,
and the ratio of net investment income (loss) to average daily net assets
would have been (1.17)% and (1.13)% for the year ended September 30, 1996
and the period ended September 30, 1995, respectively.
(j) Adjusted to an annual basis.
(k) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
(l) Beginning is 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 stocks for
the period by the total number of related shres purchased and sold.
17
<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, SIMPLE,
profit sharing, money purchase or defined benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account. Amounts
over $1,000 may be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Sign up for
18
<PAGE>
telephone redemption on the Advantus Application or complete a Service Request
Form. To have the redemption automatically deposited into your checking account,
please send a voided check from your bank. Depending on the performance of the
underlying investment options, the value may be worth more or less than the
original amount invested upon redemption. Some limitations apply, please refer
to the prospectus for details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, and annual tax statements. Semiannual and annual reports will provide you
with portfolio information, fund performance data and the current investment
outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005. Our
voice response system is available from 7 a.m. to 3 a.m. Central Time Monday
through Friday, and 8 a.m. to 5 p.m. on Saturday. This system allows you to
access current net asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through your local
registered representative of MIMLIC Sales Corporation, distributor of the Funds.
Contact your representative for information and a prospectus for any of the
Advantus Funds you are interested in.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages eleven mutual funds containing
$2.3 billion in assets in addition to $1.4 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
19
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[LOGO]
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 5-97
