<PAGE>
[Logo]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS SPECTRUM FUND
SEPTEMBER 30, 1995
<PAGE>
ADVANTUS SPECTRUM FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND
LIABILITIES 13
STATEMENT OF OPERATIONS 14
STATEMENT OF CHANGES IN NET
ASSETS 15
NOTES TO FINANCIAL STATEMENTS 16
INDEPENDENT AUDITORS' REPORT 21
FEDERAL INCOME TAX INFORMATION 22
SHAREHOLDER SERVICES 24
<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 SPECTRUM FUND
PERFORMANCE UPDATE
[PHOTO]
THOMAS A. GUNDERSON, CFA
PORTFOLIO MANAGER
The Advantus Spectrum Fund is a mutual
fund seeking the most favorable total
return (including interest, dividends and
capital appreciation) consistent with
preservation of capital. To achieve this
objective, the Fund will vary the
composition of its portfolio with
prevailing economic conditions. At any
given time, the Fund's portfolio may be
primarily composed of equity securities
(common stock, preferred stock and
securities convertible into equity
securities), mortgage-related securities,
debt securities, money market securities
or any combination of these securities.
The investment adviser's positioning of
the portfolio is determined by the
intermediate term outlook for economic
trends and market momentum.
-Dividends paid quarterly.
-Capital gains distributions paid annually.
PERFORMANCE
The Advantus Spectrum Fund's performance for the year ended September 30, 1996
for each class of shares offered was as follows:
<TABLE>
<S> <C>
13.7
Class A percent*
13.1
Class B percent*
12.9
Class C percent*
</TABLE>
This compares favorably to the 12.9 percent return of the Merrill
Lynch--Wilshire Capital Markets Index over the same period**. According to
Lipper Analytical Services+, the Fund's Class A performance places it in the top
third of all comparable funds for the year ended September 30, 1996.
PORTFOLIO RECAP
The stock market's strong performance mitigated much of the volatility in the
bond market over the past year and allowed the Spectrum Fund to capture
favorable returns in each quarter. A distinct advantage of a diversified
portfolio is its ability to capture growth with reduced volatility. The Spectrum
Fund performed as designed. Throughout the year, we maintained a high degree of
consistency in the asset allocation mix. Stocks ranged from 50-60 percent of the
portfolio, bonds varied between 30-40 percent of the mix while the cash
component varied anywhere from 5-10 percent at a given time.
We outperformed our peer group funds, in part through favorable stock selection.
Opportunistic investments in the fixed income area also contributed to the past
year's excellent performance.
Our stock portfolio benefited from a strategy of holding a relatively high
quality mix of companies with strong earnings growth. Since many companies
experienced lower earnings growth, investors were willing to pay a premium to
park their funds in higher quality holdings. Individual stocks which performed
admirably during the year were Computer Associates (software), United Waste
Management (waste services) and Parametric Technology (design software).
The bond market had a relatively disappointing year. However, our conservative
investment philosophy and disciplined asset allocation process enabled us to
move assets out of the bond market early and avoid some of the slide
precipitated by a rising interest rate environment and inflation fears. These
concerns considerably slowed the bond market's first quarter
2
<PAGE>
ADVANTUS SPECTRUM FUND
SEPTEMBER 30, 1996
growth. We took advantage by reducing the portfolio's bond weight to only 30
percent when the ten year U.S. Treasury was yielding 5.6 - 5.7 percent. This
ability to reduce the probability of a capital loss helped us achieve better
year-end results than many of our peer group. Higher interest rates this past
spring pushed the ten year U.S. Treasury bond into the 6.1 - 6.5 percent range,
enabling us to again increase the weight of our bond portfolio to 40 percent.
This moved allowed us to recoup earlier losses, giving the bond market portion
of the fund a five percent return for the year.
OUTLOOK
Inflation remains relatively in check despite the strength of the U.S. economy
and any Federal Reserve interest rate hike should be relatively modest. Many
foreign markets are finally turning the corner and gaining strength while the
U.S. economy continues to benefit from increased productivity levels. In
addition, the baby boomers are reaching their prime earning years and are more
cognizant than ever about the need to put money away for retirement. Therefore,
we are optimistic about the long-term outlook for both the stock and bond
markets.
In the near-term, we expect the stock market to return to a more normal growth
mode after eighteen months of an extended upswing. This does not mean that the
market is overvalued. It simply means we believe the market has reached a
comfortable point of equilibrium. The election results will have a short- to
near-term impact on the markets as we learn more about Washington's attitude
toward cutting deficits and the federal budget.
Bonds currently offer an attractive return compared to inflation. The ten year
Treasury Bond is yielding about 6.6 percent while inflation is running about 3.0
- -3.5 percent. While we remain cautious about a near-term bump in interest rates,
any Fed move to counter inflationary pressures is a positive sign for the long
bond market.
*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.
**The Merrill Lynch-Wilshire Capital Markets Index is a market value-weighted
index measuring the total return performance of the combined domestic taxable
fixed income and equity markets. It includes the entire domestic common stock
universe for which daily pricing is available, as well as all publicly placed
domestic taxable debt issues with at least one year remaining to maturity and at
least ten million dollars par value outstanding.
+Based on the average return of 177 stock and bond flexible funds according to
Lipper Analytical Services, Inc. Fees and expenses of the Fund were not waived
or absorbed by the Adviser during the year ended September 30, 1996;
accordingly, total return of the Fund was not affected.
3
<PAGE>
ADVANTUS SPECTRUM FUND
SEPTEMBER 30, 1996
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN ADVANTUS
SPECTRUM FUND, MERRILL LYNCH-WILSHIRE CAPITAL MARKETS INDEX AND CONSUMER PRICE
INDEX
On the following three charts you can see how the total return for each of the
three classes of shares of the Advantus Spectrum Fund compared to the Merrill
Lynch-Wilshire Capital Markets Index and the Consumer Price Index. The three
lines in each graph represent the cumulative total return of a hypothetical
$10,000 investment made on the inception date of each class of shares of the
Advantus Spectrum Fund (November 16, 1987, August 19, 1994 and March 1, 1995 for
Class A, B, and C, 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 8.0%
Five year 8.9%
Since inception (11/16/87) 10.6%
ML-Wilshire Capital
Class A Markets Index CPI
11/16/87 10,000 10,000 10,000
10/31/88 10,505 10,762 10,426
10/31/89 12,273 12,740 10,904
10/31/90 12,208 12,341 11,590
10/31/91 15,382 15,647 11,929
10/31/92 17,086 17,215 12,311
10/31/93 18,569 19,809 12,641
9/30/94 18,213 19,578 13,023
9/30/95 21,561 23,927 13,310
9/30/96 24,518 27,022 13,710
</TABLE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 8.1%
Since inception (8/19/94) 13.0%
ML-Wilshire Capital
Class B Markets Index CPI
8/19/94 10,000 10,000 10,000
9/30/94 10,003 9,952 10,067
9/30/95 11,316 12,162 10,289
9/30/96 12,953 13,735 10,598
</TABLE>
4
<PAGE>
ADVANTUS SPECTRUM FUND
SEPTEMBER 30, 1996
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 12.9%
Since inception (3/1/95) 16.3%
ML-Wilshire Capital
Class C Markets Index CPI
3/01/95 10,000 10,000 10,000
9/30/95 11,263 11,626 10,146
9/30/96 12,713 13,130 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 Class B shares. Sales charges pay for your
financial adviser's investment advice. Individuals cannot buy even an unmanaged
index fund without incurring some charges and expenses.
Historical results are not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS SPECTRUM FUND
SEPTEMBER 30, 1996
FIVE LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
% OF
MARKET STOCK
COMPANY SHARES VALUE PORTFOLIO
- ----------------------------- ----------- --------- ---------------
<S> <C> <C> <C>
Computer Associates
International.............. 20,988 $1,254,033 3.6%
General Electric Company..... 13,626 1,239,966 3.6%
Pfizer Inc................... 14,420 1,140,983 3.3%
First Data Corp.............. 13,572 1,107,815 3.2%
Columbia/HCA Healthcare
Corporation................ 19,160 1,089,725 3.2%
--------- ---
$5,832,522 16.9%
--------- ---
--------- ---
</TABLE>
BOND PORTFOLIO CHARACTERISTICS--QUALITY BREAKDOWN
<TABLE>
<CAPTION>
% OF BOND
RATING PORTFOLIO
- ----------------------------------------------------- -------------
<S> <C>
U.S. Treasury........................................ 15.1%
U.S. Government Agencies............................. 17.7%
AAA rated............................................ 7.6%
AA rated............................................. 4.9%
A rated.............................................. 30.8%
BBB rated............................................ 23.9%
-----
100.0%
-----
-----
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Common Stocks (50.8%) 50.8%
Bonds (40.5%) 40.5%
Cash and Other Assets/Liabilities
(8.7%) 8.7%
</TABLE>
6
<PAGE>
ADVANTUS SPECTRUM 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 (50.8%)
CAPITAL GOODS (5.0%)
Machinery (5.0%)
13,626 General Electric
Company........... $ 1,239,966
17,100 Millipore
Corporation....... 675,450
19,410 United Waste
Systems, Inc
(b)............... 674,498
16,419 York International
Corp.............. 794,269
------------
3,384,183
------------
CONSUMER GOODS AND SERVICES (24.4%)
Consumer Goods (10.6%)
13,000 Coca-Cola Company.. 661,375
19,160 Columbia/HCA
Healthcare
Corporation....... 1,089,725
16,800 Johnson &
Johnson........... 861,000
14,420 Pfizer Inc......... 1,140,983
9,200 Philip Morris
Companies, Inc.... 825,700
8,895 Procter & Gamble
Company........... 867,263
35,200 Service Corporation
International..... 1,064,800
12,000 Smithkline Beecham
(c)............... 730,500
------------
7,241,346
------------
Consumer Services (3.5%)
21,433 CUC International
Inc (b)........... 854,641
17,180 GTECH Holdings
Corporation (b)... 551,908
14,119 Manpower........... 469,457
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
17,900 Wallace Computer
Services,
Incorporated...... $ 505,675
------------
2,381,681
------------
Food (2.5%)
15,100 Conagra, Inc....... 743,675
20,591 Kroger Company
(b)............... 921,447
------------
1,665,122
------------
Retail (3.7%)
6,800 Cardinal Health
Incorporated...... 561,850
12,220 Home Depot, Inc.... 695,012
20,600 Kohl's, Inc (b).... 741,600
34,300 Officemax (b)...... 480,200
------------
2,478,662
------------
Consumer Cyclicals (4.1%)
23,800 Autozone, Inc
(b)............... 690,200
13,700 Magna
International, Inc
(c)............... 661,025
23,000 Newell Co.......... 690,000
16,405 Omnicom Group...... 766,934
------------
2,808,159
------------
CREDIT SENSITIVE (7.5%)
Finance (7.5%)
6,767 American
International
Group, Inc........ 681,775
13,200 Associates First
Capital Corp...... 541,200
7,750 Federal Home Loan
Mortgage
Corporation....... 758,531
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
CREDIT SENSITIVE--CONTINUED
<C> <S> <C>
13,572 First Data Corp.... $ 1,107,815
11,500 MGIC Investment
Corporation....... 774,812
10,300 Norwest
Corporation....... 421,012
25,000 T. Rowe Price
Associates........ 812,500
------------
5,097,645
------------
INTERMEDIATE GOODS AND SERVICES (2.8%)
Energy (1.9%)
6,800 Kimberly-Clark
Corporation....... 599,250
15,693 Praxair, Inc....... 674,799
------------
1,274,049
------------
Transportation (.9%)
7,600 Burlington Northern
Santa Fe.......... 641,250
------------
TECHNOLOGY (11.1%)
18,600 Automatic Data
Processing, Inc... 811,425
11,700 Cisco Systems, Inc
(b)............... 726,131
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
20,988 Computer Associates
International..... $ 1,254,033
9,900 Computer Sciences
Corporation (b)... 761,063
15,500 Danka Business
Systems PLC (c)... 616,125
11,700 Electronic Data
Systems
Corporation....... 718,088
22,100 Equifax
Incorporated...... 582,887
9,300 Lucent Technologies
Incorporated...... 426,637
4,000 Microsoft
Corporation (b)... 527,500
10,998 Oracle Corporation
(b)............... 468,102
13,800 Parametric
Technology
Corporation (b)... 681,375
------------
7,573,366
------------
Total common stocks
(cost:
$27,051,149)...... 34,545,463
------------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- --------- ------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (40.5%)
GOVERNMENT OBLIGATIONS (15.1%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (13.2%)
U.S. Treasury (6.1%)
$ 350,000 U.S. Treasury Bond............................... 6.750% 08/15/26 $ 342,015
1,300,000 U.S. Treasury Bond............................... 8.000% 11/15/21 1,439,342
1,000,000 U.S. Treasury Interest Strip (d)............. 5.660%-5.710% 02/15/04 614,739
2,100,000 U.S. Treasury Interest Strip (d)............. 5.175%-5.580% 08/15/99 1,757,782
------------
4,153,878
------------
Government National Mortgage Association (2.2%)
420,145 ................................................. 7.500% 10/15/23 416,875
467,284 ................................................. 6.500% 11/15/23 439,877
207,050 ................................................. 7.500% 02/15/24 205,321
484,013 ................................................. 7.000% 10/15/25 466,075
------------
1,528,148
------------
Federal National Mortgage Association (3.1%)
392,839 ................................................. 6.500% 05/01/11 380,684
388,901 ................................................. 6.000% 05/01/11 368,728
400,073 ................................................. 7.000% 05/01/11 395,324
245,171 ................................................. 6.500% 09/01/25 230,448
755,749 ................................................. 7.000% 02/01/26 729,395
------------
2,104,579
------------
Other U.S. Government Agencies(1.8%)
250,000 Federal Home Loan Mortgage Corporation........... 6.550% 04/19/99 251,905
500,000 Federal Home Loan Mortgage Corporation........... 7.030% 04/05/04 491,650
500,000 Federal Farm Credit Bank......................... 6.960% 06/06/00 500,011
------------
1,243,566
------------
OTHER GOVERNMENT OBLIGATIONS (.9%)
300,000 Quebec Province of Canada (c).................... 9.125% 03/01/00 320,952
300,000 Quebec Province of Canada (c).................... 7.500% 07/15/23 287,472
------------
608,424
------------
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- --------- ------------
<C> <S> <C> <C> <C>
GOVERNMENT OBLIGATIONS--CONTINUED
STATE AND LOCAL GOVERNMENT OBLIGATIONS (1.0%)
$ 664,000 Wyoming Community Development Authority.......... 6.850% 06/01/10 $ 646,570
------------
Total government obligations (cost: $10,556,783)....................... 10,285,165
------------
CORPORATE OBLIGATIONS (25.4%)
CAPITAL GOODS (4.1%)
Aerospace/Defense (.6%)
400,000 Loral Corporation................................ 7.625% 06/15/04 409,434
------------
Machinery (1.2%)
750,000 Joy Technologies Incorporated.................... 10.250% 09/01/03 827,159
------------
Pollution Control (.7%)
500,000 WMX Technologies, Inc............................ 6.700% 05/01/01 497,331
------------
Telecommunications (1.6%)
250,000 Continental Cablevision, Inc..................... 8.300% 05/15/06 259,683
800,000 Telekom Malaysia 144A (c)(e)..................... 7.875% 08/01/25 802,134
------------
1,061,817
------------
CONSUMER CYCLICAL (.6%)
Textiles (.6%)
350,000 Reliance Industries Limited 144A (c)(e).......... 10.375% 06/24/16 357,448
------------
CONSUMER STAPLES (6.7%)
Business Services (.6%)
400,000 PHH Corporation.................................. 6.500% 02/01/00 397,128
------------
Drugs (.9%)
600,000 American Home Products Corporation............... 6.500% 10/15/02 588,008
------------
Entertainment (1.3%)
350,000 Time Warner Entertainment........................ 8.875% 10/01/12 373,721
500,000 Time Warner Incorporated......................... 7.950% 02/01/00 512,620
------------
886,341
------------
Food (.2%)
171,429 General Mills, Inc............................... 6.235% 03/15/97 171,728
------------
</TABLE>
See accompanying notes to investments in securities.
10
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- --------- ------------
<C> <S> <C> <C> <C>
CONSUMER STAPLES--CONTINUED
Household Products (.7%)
$ 400,000 Premark International, Inc....................... 10.500% 09/15/00 $ 448,420
------------
Media (1.9%)
750,000 News America Holdings, Inc....................... 7.750% 12/01/45 685,912
600,000 TCI Communications, Inc.......................... 8.650% 09/15/04 613,798
------------
1,299,710
------------
Retail (1.1%)
250,000 Dayton Hudson Corporation........................ 10.000% 12/01/00 277,051
500,000 Heilig-Meyers Company............................ 7.875% 08/01/03 495,469
------------
772,520
------------
FINANCIAL (13.3%)
Asset-Backed (1.1%)
749,574 Celt 96-A A2..................................... 5.500% 02/15/03 742,692
------------
Auto Finance (2.3%)
250,000 Ford Motor Credit................................ 5.850% 03/18/99 248,125
600,000 Ford Motor Credit................................ 6.250% 12/08/05 555,667
700,000 GMAC............................................. 9.000% 10/15/02 763,179
------------
1,566,971
------------
Banks/Savings and Loan (2.2%)
800,000 Midland Bank PLC (c)............................. 7.625% 06/15/06 812,826
700,000 Norwest Corporation.............................. 7.680% 05/10/02 713,915
------------
1,526,741
------------
Commercial Finance (1.1%)
750,000 General Electric Capital Corp.................... 6.660% 05/01/18 749,005
------------
Consumer Finance (2.2%)
400,000 Commercial Credit Company........................ 5.550% 02/15/01 380,768
600,000 Discover Card Master Trust I 94-3 A.............. 5.612% 04/16/02 600,983
500,000 Lehman Brothers Holdings, Inc.................... 7.375% 05/15/07 506,637
------------
1,488,388
------------
Insurance Companies (1.1%)
750,000 URC Holdings Corporation 144A (e)................ 7.875% 06/30/06 766,965
------------
</TABLE>
See accompanying notes to investments in securities.
11
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- --------- ------------
<C> <S> <C> <C> <C>
FINANCIAL--CONTINUED
Real Estate (3.3%)
$ 750,000 Colonial Realty Limited Partnership.............. 8.050% 07/15/06 $ 755,407
750,000 Developers Diversified........................... 7.400% 09/18/01 749,528
250,000 Security Capital Industrial Trust................ 7.875% 05/15/09 249,406
500,000 Security Capital Pacific Trust................... 7.500% 02/15/14 472,985
------------
2,227,326
------------
UTILITIES (.7%)
Telephones (.7%)
500,000 Compania de Telecomunicaciones de Chile (c)...... 7.625% 07/15/06 505,226
------------
Total corporate obligations (cost: $17,434,584)........................ 17,290,358
------------
Total long-term debt securities (cost: $27,991,367).................... 27,575,523
------------
SHORT-TERM SECURITIES (7.9%)
600,000 U.S. Treasury Bills............................ 5.15%-5.16% 10/17/96 598,628
1,400,000 U.S. Treasury Bills............................ 5.12%-5.27% 11/14/96 1,391,373
775,000 U.S. Treasury Bills............................ 5.21%-5.28% 12/12/96 767,174
2,645,000 GMAC Corporation CP.............................. 5.45% 10/21/96 2,636,838
------------
Total short-term securities (cost: $5,393,348)......................... 5,394,013
------------
Total investments in securities (cost: $60,435,864) (f)................ $ 67,514,999
------------
------------
</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 7.5% of net assets in foreign securities as of September 30,
1996.
(d) For zero coupon issues (strips) the interest rate disclosed is the
effective yield at the date of acquisition.
(e) Represents ownership in a restricted security which has not been registered
with the Securities and Exchange Commission under the Securities Act of
1933.(See note 6 to the financial statements.) Information concerning the
restricted securities held at September 30, 1996, which includes
acquisition date and cost, is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY DATE COST
- ----------------------------------------------------------------------------------------- -------------- ---------
<S> <C> <C>
Reliance Industries Limited 144A.................................................... 06/17/96 $ 349,272
URC Holdings Corporation 144A....................................................... Various 768,354
Telekom Malaysia 144A............................................................... Various 800,219
---------
$1,917,845
---------
---------
</TABLE>
(f) At September 30, 1996 the cost of securities for federal income tax
purposes was $60,468,105. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
<TABLE>
<S> <C> <C>
Gross unrealized appreciation..................... $7,596,863
Gross unrealized depreciation..................... (549,969)
----------
Net unrealized appreciation....................... $7,046,894
----------
----------
</TABLE>
12
<PAGE>
ADVANTUS SPECTRUM 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: $60,435,864)........................................... $67,514,999
Cash in bank on demand deposit.................................................... 50,202
Receivable for Fund shares sold................................................... 83,312
Receivable for investment securities sold......................................... 85,714
Accrued interest and dividends receivable......................................... 465,173
----------
Total assets.................................................................. 68,199,400
----------
LIABILITIES
Payable for investment securities purchased....................................... 53,234
Payable for Fund shares repurchased............................................... 21,869
Payable to Adviser................................................................ 65,718
----------
Total liabilities............................................................. 140,821
----------
Net assets applicable to outstanding capital stock................................ $68,058,579
----------
----------
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)........................................ $ 43,850
Additional paid-in capital...................................................... 56,080,260
Undistributed net investment income............................................. 31,864
Accumulated net realized gains from investments................................. 4,823,470
Unrealized appreciation of investments.......................................... 7,079,135
----------
Total--representing net assets applicable to outstanding capital stock........ $68,058,579
----------
----------
Net assets applicable to outstanding Class A shares............................... $58,847,547
----------
----------
Net assets applicable to outstanding Class B shares............................... $7,860,433
----------
----------
Net assets applicable to outstanding Class C shares............................... $1,350,599
----------
----------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 3,789,331........................................... $ 15.53
----------
----------
Class B--Shares outstanding 508,117............................................. $ 15.47
----------
----------
Class C--Shares outstanding 87,506.............................................. $ 15.43
----------
----------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<S> <C>
Investment income:
Interest......................................................................... $1,840,155
Dividends........................................................................ 353,963
---------
2,194,118
---------
Expenses (note 4):
Investment advisory fee.......................................................... 370,684
Distribution fees--Class A....................................................... 195,074
Distribution fees--Class B....................................................... 54,073
Distribution fees--Class C....................................................... 6,379
Administrative services fee...................................................... 41,200
Custodian fees................................................................... 17,087
Auditing and accounting services................................................. 20,328
Legal fees....................................................................... 3,613
Directors' fees.................................................................. 983
Registration fees................................................................ 30,334
Printing and shareholder reports................................................. 41,480
Insurance........................................................................ 6,017
Other............................................................................ 32,260
---------
Total expenses................................................................. 819,512
---------
Investment income--net......................................................... 1,374,606
---------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)....................................... 5,195,317
Net change in unrealized appreciation or depreciation on investments............. 1,370,663
---------
Net gains on investments....................................................... 6,565,980
---------
Net increase in net assets resulting from operations............................... $7,940,586
---------
---------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Operations:
Investment income--net............................................ $ 1,374,606 $ 1,806,174
Net realized gains on investments................................. 5,195,317 3,056,132
Net change in unrealized appreciation or depreciation of
investments...................................................... 1,370,663 4,774,991
----------- -----------
Increase in net assets resulting from operations................ 7,940,586 9,637,297
----------- -----------
Distributions to shareholders from:
Investment income--net:
Class A......................................................... (1,243,462) (1,755,964)
Class B......................................................... (99,271) (40,461)
Class C......................................................... (13,267) (1,580)
Net realized gains on investments:
Class A......................................................... (3,098,381) (1,538,743)
Class B......................................................... (231,470) (10,795)
Class C......................................................... (21,070) --
----------- -----------
Total distributions............................................. (4,706,921) (3,347,543)
----------- -----------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A......................................................... 9,146,231 5,987,210
Class B......................................................... 4,901,705 2,799,440
Class C......................................................... 1,162,223 199,159
Shares issued as a result of reinvested dividends:
Class A......................................................... 4,172,071 3,022,573
Class B......................................................... 324,198 49,410
Class C......................................................... 33,486 1,482
Payments for redemption of shares:
Class A......................................................... (12,940,081) (14,784,420)
Class B......................................................... (837,113) (28,143)
Class C......................................................... (92,242) (7,348)
----------- -----------
Increase (decrease) in net assets from capital share
transactions................................................... 5,870,478 (2,760,637)
----------- -----------
Total increase in net assets.................................... 9,104,143 3,529,117
Net assets at beginning of year..................................... 58,954,436 55,425,319
----------- -----------
Net assets at end of year (including undistributed net investment
income of $31,864 and $13,258, respectively)....................... $68,058,579 $58,954,436
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(1) ORGANIZATION
The Advantus Spectrum 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 Spectrum Fund, Inc. (effective March 1,
1995). Prior to March 1, 1995 the Fund was known as MIMLIC Asset Allocation
Fund, Inc.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class A
shares at net asset value after a specified holding period. Such holding periods
decline as the amount of the purchase increases and range from 28 to 84 months
after purchase for Class B shares and 40 to 96 months after purchase for Class C
shares. All three classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than distribution fees) and realized and unrealized
gains or losses are allocated to each class of shares based upon its relative
net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price. When market quotations are not readily available, securities are
valued at fair value as determined in good faith by the Board of Directors. Such
fair values are determined using pricing services or prices quoted by
independent brokers. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date and
16
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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 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 (losses) may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
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 $80,274,915 and $81,528,565, 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 .60 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
17
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
Fund's shares. The Class A Plan provides for a fee up to .35 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.
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 $354,051.
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 $3,613.
(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............................................. 613,576 440,376 329,404 200,130 78,031 13,907
Issued for reinvested distributions.............. 283,583 228,395 22,159 3,579 2,279 103
Redeemed......................................... (867,615) (1,073,619) (55,824) (1,857) (6,302) (512)
---------- ----------- --------- --------- --------- ---------
29,544 (404,848) 295,739 201,852 74,008 13,498
---------- ----------- --------- --------- --------- ---------
---------- ----------- --------- --------- --------- ---------
</TABLE>
(6) RESTRICTED SECURITIES
At September 30, 1996, investments in securities includes issues which
generally cannot be offered for sale to the public without first being
registered under the Securities Act of 1933 (restricted security). In the event
the securities are registered, those carrying registration rights allow for the
issuer to bear all the related costs; for issues without rights, the Fund may
incur such costs. The Fund currently limits investments in securities
18
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(6) RESTRICTED SECURITIES--(CONTINUED)
that are not readily marketable, including restricted securities, to 10% of net
assets at the time of the purchase. Securities are valued by procedures
described in note 2. The aggregate value of restricted securities held by the
Fund at September 30, 1996 was $1,926,547 which represents 2.8% of net assets.
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------
PERIOD FROM
YEAR ENDED NOVEMBER 1, 1993 YEAR ENDED OCTOBER 31,
SEPTEMBER 30, TO
------------------- SEPTEMBER 30, ----------------------
1996 1995(a) 1994(b) 1993 1992
-------- -------- ---------------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 14.79 $ 13.28 $ 13.92 $ 13.63 $ 13.05
-------- -------- ------- -------- -----------
Income from investment operations:
Net investment income........................... .34 .45 .28 .29 .38
Net gains or losses on securities (both realized
and unrealized)................................ 1.59 1.88 (.55) .86 1.01
-------- -------- ------- -------- -----------
Total from investment operations.............. 1.93 2.33 (.27) 1.15 1.39
-------- -------- ------- -------- -----------
Less distributions:
Dividends from net investment income............ (.34) (.44) (.28) (.31) (.38)
Distributions from capital gains................ (.85) (.38) (.09) (.55) (.43)
-------- -------- ------- -------- -----------
Total distributions........................... (1.19) (.82) (.37) (.86) (.81)
-------- -------- ------- -------- -----------
Net asset value, end of period.................... $ 15.53 $ 14.79 $ 13.28 $ 13.92 $ 13.63
-------- -------- ------- -------- -----------
-------- -------- ------- -------- -----------
Total return (c).................................. 13.7% 18.4% (1.9)%(d) 8.7% 11.1%
Net assets, end of period (in thousands).......... $ 54,848 $55,624 $55,286 $ 57,048 $ 38,417
Ratio of expenses to average daily net assets..... 1.26% 1.33% 1.27%(e) 1.22% 1.35%(f)
Ratio of net investment income to average daily
net assets....................................... 2.28% 3.22% 2.24%(e) 2.16% 3.02%(f)
Portfolio turnover rate (excluding short-term
securities)...................................... 140.5% 125.5% 124.5% 92.1% 123.3%
Average commission rate on common stock
transactions (g)................................. $ .0641 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) Adjusted to an annual basis.
(f) The Fund's Adviser voluntarily absorbed $13,585 in expenses for the year
ended October 31, 1992. If Class A shares had been charged for these
expenses, the ratio of expenses to average daily net assets would have been
1.40% and the ratio of net investment income to average daily net assets
would have been 2.97%.
(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.
19
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------ -------------------------------
PERIOD FROM PERIOD FROM
YEAR ENDED AUGUST 19, MARCH 1,
SEPTEMBER 30, 1994(b) TO YEAR ENDED 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.............. $ 14.74 $13.27 $13.36 $14.74 $13.36
------- ------- ------ ------ ------
Income from investment operations:
Net investment income........................... .27 .39 .03 .28 .24
Net gains or losses on securities (both realized
and unrealized)................................ 1.56 1.84 .(03) 1.52 1.43
------- ------- ------ ------ ------
Total from investment operations.............. 1.83 2.23 -- 1.80 1.67
------- ------- ------ ------ ------
Less distributions:
Dividends from net investment income............ (.25) (.38) (.09) (.26) (.29)
Distributions from capital gains................ (.85) (.38) -- (.85) --
------- ------- ------ ------ ------
Total distributions........................... (1.10) (.76) (.09) (1.11) (.29)
------- ------- ------ ------ ------
Net asset value, end of period.................... $ 15.47 $14.74 $13.27 $15.43 $14.74
------- ------- ------ ------ ------
------- ------- ------ ------ ------
Total return (c).................................. 13.1% 17.6% (.04)%(d) 12.9% 12.6%(e)
Net assets, end of period (in thousands).......... $ 7,860 $3,131 $ 140 $1,351 $ 199
Ratio of expenses to average daily net assets..... 1.90% 1.99% .23%(g) 1.90% 2.00%(f)
Ratio of net investment income to average daily
net assets....................................... 1.67% 2.30% .37%(g) 1.73% 2.17%(f)
Portfolio turnover rate (excluding short-term
securities)...................................... 140.5% 125.5% 124.5% 140.5% 125.5%
Average commission rate on common stock
transactions (h)................................. $ .0641 N/A N/A $.0641 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) Adjusted to an annual basis.
(g) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
(h) 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.
20
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Spectrum Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Spectrum
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
21
<PAGE>
ADVANTUS SPECTRUM 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
Income distributions--taxable as dividend income, 13.2% qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- -------------------------------------------------------------------------------------- -----------
<S> <C>
December 28, 1995..................................................................... $ .3717
March 27, 1996........................................................................ .0785
June 26, 1996......................................................................... .0851
September 25, 1996.................................................................... .0891
-----------
$ .6244
-----------
-----------
Capital gains distribution--taxable as long-term capital gains
December 19, 1995..................................................................... $ .5638
-----------
-----------
</TABLE>
The distribution of $.3717 payable on December 28, 1995 consisted of $.2911
from short-term capital gains (taxable as dividend income) and $.0806 from net
investment income.
CLASS B
Income distributions--taxable as dividend income, 13.2% qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- -------------------------------------------------------------------------------------- -----------
<S> <C>
December 28, 1995..................................................................... $ .3519
March 27, 1996........................................................................ .0578
June 26, 1996......................................................................... .0641
September 25, 1996.................................................................... .0667
-----------
$ .5405
-----------
-----------
Capital gains distribution--taxable as long-term capital gains
December 19, 1995..................................................................... $ .5638
-----------
-----------
</TABLE>
The distribution of $.3519 payable on December 28, 1995 consisted of $.2911
from short-term capital gains (taxable as dividend income) and $.0608 from net
investment income.
22
<PAGE>
CLASS C
Income distributions--taxable as dividend income, 13.2% qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- -------------------------------------------------------------------------------------- -----------
<S> <C>
December 28, 1995..................................................................... $ .3568
March 27, 1996........................................................................ .0595
June 26, 1996......................................................................... .0675
September 25, 1996.................................................................... .0686
-----------
$ .5524
-----------
-----------
Capital gains distribution--taxable as long-term capital gains
December 19, 1995..................................................................... $ .5638
-----------
-----------
</TABLE>
The distribution of $.3568 payable on December 28, 1995 consisted of $.2911
from short-term capital gains (taxable as dividend income) and $.0657 from net
investment income.
23
<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.
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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
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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
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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.48639 11-96
