<PAGE>
[LOGO]
SEMI-ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS SPECTRUM FUND
March 31, 1997
[LOGO]
<PAGE>
ADVANTUS SPECTRUM FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND LIABILITIES 13
STATEMENT OF OPERATIONS 14
STATEMENTS OF CHANGES IN NET ASSETS 15
NOTES TO FINANCIAL STATEMENTS 16
SHAREHOLDER SERVICES 21
<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,
[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
After a sustained bull market rally over the past couple of years the stock
market settled down during the month of March. Even after this market
correction, the Advantus Spectrum Fund was able to post the following
returns for the six month period ended March 31, 1997:
<TABLE>
<S> <C>
Class A.......................... 1.0 percent*
Class B.......................... .7 percent*
Class C.......................... .6 percent*
</TABLE>
Over the same time period the return for the Merrill Lynch-Wilshire Capital
Markets Index** was 5.6 percent, while 4.8 percent was the average return
for the peer group of managers called the Lipper Flexible Funds.+
PORTFOLIO RECAP
The asset mix between stocks, bonds, and cash did not change much during the
past six months. Stocks have ranged from 50 percent to 55 percent of the
portfolio, bonds have been between 35 percent to 40 percent, while cash has
been generally around 10 percent of the portfolio. This has been a somewhat
conservative stock allocation as our work indicates that stocks are not
cheap. As bond yield rose some money was put into the bond market, with the
weighting going from 35 percent to 38 percent in March. Stocks started the
six month period at a 50 percent weight, increased to near 55 percent, then
ended March at about 52 percent of the portfolio. March ends with 52 percent
stocks, 38 percent bonds, and 10 percent cash.
The stocks in the portfolio generally performed along with the overall stock
market, but lagged the market major market indices. This was in large part due
to the strong out performance of the largest companies which constitute far more
of these indices than that of the Spectrum Fund's stock portfolio. Contributing
to the Spectrum Fund's performance over the past six months were stocks such as
Philip Morris (tobacco), Microsoft (software), Procter & Gamble (consumer
products), and Kohl's (retailing). The weak sectors of the stock market included
technology along with other capital goods industries. Likewise, the weak stocks
in our portfolio included our meaningful investment in the computer services
companies. Long-term growth stocks such as Computer Associates, Computer
Sciences, and First Data have been caught up in the sell off. Given their
long-term strong market position along with growing end markets, the current
prices of these stocks offer attractive long-term potential.
2
<PAGE>
ADVANTUS SPECTRUM
FUND
MARCH 31, 1997
The stock market severely sold off many of the higher growth medium sized
companies, in many cases despite continued strong fundamentals during the March.
We have taken advantage of this by adding a couple new stocks, such as Dell
Computer (PC manufacturer), Gartner Group (technology research), and Paychex
(payroll processing). These are all high growth stocks with the fundamentals
still strong, now selling at much more attractive valuations.
The continued strength in the economy though the first quarter of 1997 has
caused the bond market to worry about possible Federal Reserve actions that may
be taken to avoid an over-heated economy. In the last week of the March we
witnessed the Fed's preemptive strike as they raised the Fed Funds rate from
5.25 percent to 5.5 percent. While this was largely anticipated, it did cause a
continued increase in interest rates and declines in the stock market. The
increase in interest rates has given us the opportunity of modestly increasing
the duration, or maturity, of the fixed income investments. This will likely
benefit total returns should interest rates fall in the future.
OUTLOOK
The current correction in the financial markets is good medicine for the long
term. With a proactive Federal Reserve, investors will have higher confidence
that inflation will stay under control looking out well into the future.
The current stock market correction is allowing the opportunity to purchase
solid long-term growth companies at attractive valuation levels. Doing this
should position the portfolio to do well during the next market rally.
*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 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 222 stock and bond blend funds according to
Lipper Analytical Services, Inc.
3
<PAGE>
ADVANTUS SPECTRUM
FUND
MARCH 31, 1997
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 March 31, 1997.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 2.4%
Five year 8.0%
Since inception (11/16/87) 10.2%
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
3/31/97 24,754 28,538 13,892
</TABLE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 2.3%
Since inception (8/19/94) 10.7%
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
3/31/97 13,051 14,506 10,739
</TABLE>
4
<PAGE>
ADVANTUS SPECTRUM
FUND
MARCH 31, 1997
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 7.0%
Since inception (3/1/95) 12.5%
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
3/31/97 12,793 13,867 10,589
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial adviser's investment advice. Individuals cannot buy even an unmanaged
index fund without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS SPECTRUM
FUND
MARCH 31, 1997
FIVE LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------------- ---------- ---------- -----------
<S> <C> <C> <C>
General Electric Company............. 16,326 $1,620,356 4.5%
Intel................................ 9,700 1,349,513 3.7%
Phillip Morris Companies, Inc........ 10,300 1,175,488 3.3%
Columbia/HCA Healthcare
Corporation........................ 33,260 1,118,368 3.1%
Service Corporation International.... 34,900 1,038,275 2.9%
---------- ---
$6,302,000 16.9%
---------- ---
---------- ---
</TABLE>
BOND PORTFOLIO CHARACTERISTICS--QUALITY BREAKDOWN
<TABLE>
<CAPTION>
% OF BOND
RATING PORTFOLIO
- ------------------------------------------------------- -----------
<S> <C>
U.S. Treasury.......................................... 23.9%
U.S. Government Agencies............................... 13.8%
AAA rated.............................................. 11.4%
AA rated............................................... 7.6%
A rated................................................ 30.0%
BBB rated.............................................. 13.3%
-----
100.0%
-----
-----
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Common Stocks 51.6%
Cash and Other
Assets/Liabilities 9.5%
Bonds 38.2%
Preferred Stocks 0.7%
</TABLE>
6
<PAGE>
ADVANTUS SPECTRUM 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 (51.6%)
CAPITAL GOODS (4.6%)
Machinery (4.6%)
6,900 ADT Limited (b)(c)........................... $ 172,500
16,326 General Electric Company..................... 1,620,356
11,000 Tyco International Ltd. (b).................. 605,000
21,910 United Waste Systems, Inc. (b)............... 816,148
------------
3,214,004
------------
CONSUMER GOODS AND SERVICES (27.4%)
Consumer Goods (12.3%)
15,800 Coca-Cola Company............................ 882,825
33,260 Columbia/HCA Healthcare Corporation.......... 1,118,368
13,400 Johnson & Johnson Common Stock............... 708,525
7,900 Medtronic, Inc............................... 491,775
10,500 Merck & Co., Inc............................. 884,625
8,520 Pfizer, Inc.................................. 716,745
10,300 Philip Morris Companies, Inc. ............... 1,175,488
4,595 Procter & Gamble Company..................... 528,425
34,900 Service Corporation International............ 1,038,275
13,100 Smithkline Beecham (c)....................... 917,000
------------
8,462,051
------------
Consumer Services (5.5%)
21,900 Carnival Corporation......................... 810,300
33,649 CUC International, Inc. (b).................. 757,103
9,800 Gartner Group, Incorporated (b).............. 211,924
17,180 GTECH Holdings Corporation (b)............... 517,548
5,800 HFS Incorporated (b)......................... 341,474
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
16,510 Manpower..................................... $ 594,360
16,900 Wallace Computer Services, Incorporated...... 559,813
------------
3,792,522
------------
Food (2.0%)
10,700 Conagra, Inc................................. 580,475
16,991 Safeway, Incorporated (b).................... 787,957
------------
1,368,432
------------
Retail (2.7%)
13,820 Home Depot, Inc.............................. 739,370
15,000 Kohl's, Inc. (b)............................. 635,625
27,100 Viking Office Products, Inc. (b)............. 525,062
------------
1,900,057
------------
Consumer Cyclicals (4.9%)
13,700 Autozone, Inc. (b)........................... 308,250
10,000 Leggett and Platt, Incorporated (b).......... 325,000
12,200 Magna International, Inc. (c)................ 605,424
19,100 Newell Company............................... 639,850
13,900 Nine West Group, Incorporated (b)............ 622,025
18,005 Omnicom Group................................ 897,999
------------
3,398,548
------------
CREDIT SENSITIVE (7.8%)
Finance (6.8%)
6,334 American International Group, Inc............ 743,453
11,400 Associates First Capital Corp................ 490,200
12,800 Federal Home Loan Mortgage Corporation....... 348,800
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CREDIT SENSITIVE--CONTINUED
5,500 Finova Group, Inc. (b)....................... $ 371,937
26,343 First Data Corp.............................. 892,369
9,600 Norwest Corporation.......................... 444,000
17,600 Sunamerica, Incorporated..................... 662,200
19,000 T. Rowe Price Associates..................... 705,375
------------
4,658,334
------------
Utilities (1.0%)
12,200 Cincinnati Bell, Incorporated................ 689,300
------------
INTERMEDIATE GOODS AND SERVICES (2.1%)
Materials (2.1%)
7,100 Kimberly-Clark Corporation................... 705,563
16,393 Praxair, Inc. ............................... 735,636
------------
1,441,199
------------
TECHNOLOGY (9.7%)
20,500 Automatic Data Processing, Inc. ............. 858,437
6,900 Cisco Systems, Inc. (b)...................... 332,063
8,988 Computer Associates International............ 349,408
8,700 Computer Sciences Corporation (b)............ 537,225
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
11,800 Danka Business Systems PLC (c)............... $ 370,963
6,000 Dell Computer Corporation (b)................ 405,750
23,100 Equifax, Incorporated........................ 629,475
9,700 Intel........................................ 1,349,513
8,400 Microsoft Corporation (b).................... 770,175
16,200 Parametric Technology Corporation (b)........ 731,025
8,900 Paychex, Incorporated (b).................... 366,013
------------
6,700,047
------------
Total common stocks
(cost: $30,889,516)...................................... 35,624,494
------------
PREFERRED STOCKS (.7%)
FINANCIAL (.7%)
Real Estate Investment Trust (.7%)
10,000 Security Capital Industrial, Series
C--8.54%.................................... 477,100
------------
Total preferred stocks
(cost: $500,000)......................................... 477,100
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ---------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (38.2%)
GOVERNMENT OBLIGATIONS (15.5%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (14.4%)
U.S. Treasury (9.1%)
$ 200,000 U.S. Treasury Bond........................... 8.000% 11/15/21 217,125
1,675,000 U.S. Treasury Bond........................... 6.500% 11/15/26 1,541,000
500,000 U.S. Treasury Note........................... 6.500% 08/15/05 485,938
900,000 U.S. Treasury Note........................... 6.125% 09/30/00 884,531
2,150,000 U.S. Treasury Note........................... 5.250% 12/31/97 2,138,577
1,000,000 U.S. Treasury Strip (d)...................... 5.875% 08/15/99 858,819
</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>
GOVERNMENT OBLIGATIONS--CONTINUED
$1,000,000 U.S. Treasury Strip (d)...................... 7.088% 11/15/21 $ 169,109
------------
6,295,099
------------
Government National Mortgage Association (1.3%)
457,277 ............................................. 6.500% 11/15/23 427,480
470,519 ............................................. 7.000% 10/15/25 449,825
------------
877,305
------------
Federal National Mortgage Association (2.9%)
367,421 ............................................. 6.500% 05/01/11 353,683
379,957 ............................................. 6.000% 05/01/11 357,570
389,945 ............................................. 7.000% 05/01/11 383,167
243,619 ............................................. 6.500% 09/01/25 226,811
735,323 ............................................. 7.000% 02/01/26 704,740
------------
2,025,971
------------
Other U.S. Government Agencies (1.1%)
500,000 Federal Home Loan Mortgage................... 7.030% 04/05/04 488,452
250,000 Federal Farm Credit Bank..................... 6.960% 06/06/00 249,615
------------
738,067
------------
OTHER GOVERNMENT OBLIGATIONS (0.3%)
200,000 Quebec Province of Canada (c)................ 7.500% 07/15/23 189,578
------------
STATE AND LOCAL GOVERNMENT OBLIGATIONS (0.8%)
564,000 Wyoming Community Development Authority...... 6.850% 06/01/10 552,896
------------
Total government obligations (cost: $10,945,129)..................... 10,678,916
------------
CORPORATE OBLIGATIONS (22.7%)
CAPITAL GOODS (4.1%)
Electronics (1.1%)
750,000 Xerox Capital I Bond 144A (e)................ 8.000% 02/01/27 722,754
------------
Machinery (1.2%)
750,000 Joy Technologies Incorporated................ 10.250% 09/01/03 816,467
------------
Telecommunications (1.8%)
800,000 Telekom Malaysia 144A (c)(e)................. 7.875% 08/01/25 789,597
500,000 Total Access Communications 144A (e)......... 8.375% 11/04/06 487,305
------------
1,276,902
------------
CONSUMER CYCLICAL (.5%)
Textiles (.5%)
350,000 Reliance Industries Limited 144A (c)(e)...... 10.375% 06/24/16 374,455
------------
</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>
CORPORATE OBLIGATIONS--CONTINUED
CONSUMER STAPLES (4.3%)
Business Services (1.0%)
$ 700,000 PHH Corporation.............................. 6.500% 02/01/00 $ 692,080
------------
Drugs (.7%)
500,503 Ciba-Geigy Corp 144A (e)..................... 7.240% 01/02/16 478,421
------------
Entertainment (.7%)
500,000 Time Warner Incorporated..................... 6.100% 12/30/01 470,350
------------
Media (1.2%)
300,000 News America Holdings........................ 9.250% 02/01/13 329,090
550,000 News America Holdings........................ 8.150% 10/17/36 527,202
------------
856,292
------------
Retail (.7%)
500,000 Fingerhut Company............................ 7.375% 09/15/99 500,895
------------
ENERGY (1.8%)
Oil and Gas Production (.7%)
500,000 Petronas (c)................................. 7.125% 10/18/06 489,017
------------
Oilfield Services (1.1%)
750,000 Baroid Corporation........................... 8.000% 04/15/03 777,650
------------
FINANCIAL (9.1%)
Auto Finance (.4%)
250,000 Ford Motor Credit............................ 5.740% 03/18/99 248,125
------------
Banks/Savings and Loan (2.2%)
800,000 Midland Bank PLC (c)......................... 7.625% 06/15/06 804,888
700,000 Norwest Corporation.......................... 7.680% 05/10/02 703,850
------------
1,508,738
------------
Collateralized Mortgage Obligations/Asset-Backed (1.4%)
498,845 Bear Stearns Mortgage Securities, Inc.,
Series 1996-6............................... 8.000% 11/25/29 489,024
499,558 Case Equipment Loan Trust, Series 1996/A..... 5.500% 02/15/03 494,891
------------
983,915
------------
Commercial Finance (1.2%)
800,000 General Electric Capital Corp. .............. 6.660% 05/01/18 795,350
------------
Insurance Companies (1.1%)
750,000 URC Holdings Corporation 144A (e)............ 7.875% 06/30/06 757,935
------------
Real Estate (.7%)
500,000 Security Captial Pacific Trust............... 7.500% 02/15/14 482,614
------------
</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>
CORPORATE OBLIGATIONS--CONTINUED
Real Estate Investment Trust (.7%)
$ 500,000 Wharf International Finance 144A (e)......... 7.625% 03/13/07 $ 484,285
------------
Security Brokers (1.4%)
500,000 Lehman Brothers Holdings, Inc. .............. 7.360% 12/15/03 498,098
250,000 Morgan Stanley Group, Inc. .................. 6.450% 05/15/01 249,352
250,000 Morgan Stanley Group, Inc. .................. 6.875% 03/01/07 238,727
------------
986,177
------------
UTILITIES (2.9%)
Electric (1.8%)
500,000 Enersis S.A. (c)............................. 6.900% 12/01/06 474,970
750,000 Wisconsin Electric Power..................... 5.125% 09/15/98 735,437
------------
1,210,407
------------
Telephones (1.1%)
800,000 Bellsouth Telecommunications, Inc. .......... 6.250% 05/15/03 766,233
------------
Total corporate obligations (cost: $15,913,525)...................... 15,679,062
------------
Total long-term debt securities (cost: $26,858,654).................. 26,357,978
------------
SHORT-TERM SECURITIES (8.6%)
2,940,000 U.S. Treasury Bills.......................... 5.10%-5.18% 05/22/97 2,918,044
1,850,000 U.S. Treasury Bills.......................... 5.01%-5.08% 04/24/97 1,844,437
1,150,000 U.S. Treasury Bills.......................... 5.13%-5.24% 05/22/97 1,141,413
------------
Total short-term securities (cost: $5,904,137)....................... 5,903,894
------------
Total investments in securities (cost: $64,152,307) (f).............. $ 68,363,466
------------
------------
</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 March 31, 1997.
(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 March 31, 1997, which includes acquisition
date and cost, is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY DATE COST
-------------------------------------------------- ---------- ---------
<S> <C> <C>
Xerox Capital I Bond 144A......................... 01/30/97 $ 743,258
Total Access Communications 144A.................. 11/14/96 510,113
Reliance Industries Limited 144A.................. 06/17/96 349,277
Ciba-Geigy Corp 144A.............................. 12/26/96 500,503
URC Holdings Corporation 144A..................... Various 767,830
Wharf International Finance 144A.................. 03/06/97 496,063
Telekom Malaysia 144A............................. Various 800,302
---------
$4,167,346
---------
---------
</TABLE>
11
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
Notes to Investments in Securities-continued
- -------------------------------------
(f) At March 31, 1997 the cost of securities for federal income tax purposes was
$64,186,870. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation..................... $5,708,736
Gross unrealized depreciation..................... (1,532,140)
----------
Net unrealized appreciation....................... $4,176,596
----------
----------
</TABLE>
12
<PAGE>
ADVANTUS SPECTRUM 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:
$64,152,307)............................................... $ 68,363,466
Cash in bank on demand deposit.............................. 305,993
Receivable for Fund shares sold............................. 69,233
Receivable for investment securities sold................... 255,771
Accrued interest and dividends receivable................... 508,488
------------
Total assets............................................ 69,502,951
------------
LIABILITIES
Payable for investment securities purchased................. 400,190
Payable for Fund shares redeemed............................ 25,110
Payable to Adviser.......................................... 86,141
------------
Total liabilities....................................... 511,441
------------
Net assets applicable to outstanding capital stock.......... $ 68,991,510
------------
------------
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)....................................... $ 48,063
Additional paid-in capital................................ 62,405,135
Undistributed net investment income....................... 5,889
Accumulated net realized gains from investments........... 2,321,264
Unrealized appreciation of investments.................... 4,211,159
------------
Total--representing net assets applicable to outstanding
capital stock.......................................... $ 68,991,510
------------
------------
Net assets applicable to outstanding Class A shares......... $ 57,553,832
------------
------------
Net assets applicable to outstanding Class B shares......... $ 9,645,177
------------
------------
Net assets applicable to outstanding Class C shares......... $ 1,792,501
------------
------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 4,006,710..................... $ 14.36
------------
------------
Class B--Shares outstanding 673,708....................... $ 14.32
------------
------------
Class C--Shares outstanding 125,679....................... $ 14.26
------------
------------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1996 TO MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest.................................................. $ 1,122,422
Dividends................................................. 195,797
-----------
1,318,219
-----------
Expenses (note 4):
Investment advisory fee................................... 211,860
Distribution fees--Class A................................ 104,869
Distribution fees--Class B................................ 45,386
Distribution fees--Class C................................ 8,089
Administrative services fee............................... 21,600
Custodian fees............................................ 7,238
Auditing and accounting services.......................... 21,360
Legal fees................................................ 1,784
Directors' fees........................................... 593
Registration fees......................................... 18,077
Printing and shareholder reports.......................... 21,086
Insurance................................................. 3,252
-----------
Total expenses........................................ 465,194
-----------
Investment income--net................................ 853,025
-----------
Realized and unrealized gains (losses) on investments:
Net realized gains on investments (note 3)................ 2,620,461
Net change in unrealized appreciation or depreciation on
investments.............................................. (2,867,976)
-----------
Net losses on investments............................. (247,515)
-----------
Net increase in net assets resulting from operations........ $ 605,510
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1996 TO
MARCH 31, 1997 AND YEAR ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Operations:
Investment income--net.......................... $ 853,025 $ 1,374,606
Net realized gains on investments............... 2,620,461 5,195,317
Net change in unrealized appreciation or
depreciation on investments.................... (2,867,976) 1,370,663
------------ ------------
Increase in net assets resulting from
operations................................. 605,510 7,940,586
------------ ------------
Distributions to shareholders from:
Investment income--net:
Class A....................................... (767,930) (1,243,462)
Class B....................................... (92,867) (99,271)
Class C....................................... (18,203) (13,267)
Net realized gains on investments:
Class A....................................... (4,361,553) (3,098,381)
Class B....................................... (645,070) (231,470)
Class C....................................... (116,044) (21,070)
------------ ------------
Total distributions......................... (6,001,667) (4,706,921)
------------ ------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A....................................... 3,575,787 9,146,231
Class B....................................... 2,350,808 4,901,705
Class C....................................... 604,893 1,162,223
Proceeds from issuance of shares as a result of
reinvested dividends:
Class A....................................... 4,952,010 4,172,071
Class B....................................... 709,390 324,198
Class C....................................... 132,180 33,486
Payments for redemption of shares:
Class A....................................... (5,365,227) (12,940,081)
Class B....................................... (474,477) (837,113)
Class C....................................... (156,276) (92,242)
------------ ------------
Increase in net assets from capital share
transactions............................... 6,329,088 5,870,478
------------ ------------
Total increase in net assets................ 932,931 9,104,143
Net assets at beginning of period................. 68,058,579 58,954,436
------------ ------------
Net assets at end of period (including
undistributed net investment income of $5,889 and
$31,864, respectively)........................... $ 68,991,510 $ 68,058,579
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
(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
interest income, including amortization of bond premium and discount computed on
a level yield basis, is accrued daily.
16
<PAGE>
ADVANTUS SPECTRUM 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 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 period from October 1, 1996 to March 31, 1997, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities, aggregated $43,276,958 and $42,691,765, 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 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.
17
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services and other miscellaneous
expenses.
The Fund pays an administrative services fee, equal to $3,600 per month, to
Minnesota Mutual for accounting, auditing, legal and other administrative
services which Minnesota Mutual provides.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by MIMLIC Sales for distributing the Fund's three
classes of shares amounted to $144,097.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $1,784.
(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.............................................. 232,808 613,576 153,495 329,404 39,547 78,031
Issued for reinvested distributions............... 328,379 283,583 47,252 22,159 8,841 2,279
Redeemed.......................................... (343,808) (867,615) (35,156) (55,824) (10,215) (6,302)
---------- ---------- --------- --------- --------- ---------
217,379 29,544 165,591 295,739 38,173 74,008
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
</TABLE>
(6) RESTRICTED SECURITIES
At March 31, 1997, investments in securities includes issues which generally
cannot be offered for sale to the public without first being registered under
the Securities Act of 1933 (restricted 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 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 March 31, 1997 was
$4,094,752 which represents 5.9% of net assets.
18
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, YEAR ENDED SEPTEMBER NOVEMBER 1, YEAR ENDED
1996 TO 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....................... $ 15.53 $ 14.79 $ 13.28 $ 13.92 $ 13.63 $ 13.05
----------- ------- ----------- ------------- ------- -------
Income from investment
operations:
Net investment income....... .19 .34 .45 .28 .29 .38
Net gains or losses on
securities (both realized
and unrealized)............ (.02) 1.59 1.88 (.55) .86 1.01
----------- ------- ----------- ------------- ------- -------
Total from investment
operations............... .17 1.93 2.33 (.27) 1.15 1.39
----------- ------- ----------- ------------- ------- -------
Less distributions:
Dividends from net
investment income.......... (.19) (.34) (.44) (.28) (.31) (.38)
Distributions from capital
gains...................... (1.15) (.85) (.38) (.09) (.55) (.43)
----------- ------- ----------- ------------- ------- -------
Total distributions....... (1.34) (1.19) (.82) (.37) (.86) (.81)
----------- ------- ----------- ------------- ------- -------
Net asset value, end of
period....................... $ 14.36 $ 15.53 $ 14.79 $ 13.28 $ 13.92 $ 13.63
----------- ------- ----------- ------------- ------- -------
----------- ------- ----------- ------------- ------- -------
Total return (d).............. 1.0%(c) 13.7% 18.4% (1.9)%(e) 8.7% 11.1%
Net assets, end of period (in
thousands)................... $57,554 $54,848 $ 55,624 $55,286 $57,048 $38,417
Ratio of expenses to average
daily net assets............. 1.22%(f) 1.26% 1.33% 1.27%(f) 1.22% 1.35%(g)
Ratio of net investment income
to average daily net
assets....................... 2.51%(f) 2.28% 3.22% 2.24%(f) 2.16% 3.02%(g)
Portfolio turnover rate
(excluding short-term
securities).................. 69.0% 140.5% 125.5% 124.5% 92.1% 123.3%
Average commission rate on
stock transactions (h)....... $ .0701 $ .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 is presented for the period from October 1, 1996 to March 31,
1997.
(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 sales charges.
(e) Total return is presented for the period from November 1, 1993 to September
30, 1994.
(f) Adjusted to an annual basis.
(g) 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%.
(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 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 PERIOD FROM PERIOD FROM
OCTOBER 1, YEAR ENDED AUGUST 19, OCTOBER 1, MARCH 1, 1995
1996 TO SEPTEMBER 30, 1994(b) TO 1996 TO YEAR ENDED (b) TO
MARCH 31, --------------- SEPTEMBER 30, MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1995(a) 1994 1997 1996 1995
----------- ------ ------- ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $15.47 $14.74 $13.27 $13.36 $15.43 $14.74 $13.36
----------- ------ ------- ------ ----------- ------ ------
Income from investment
operations:
Net investment income....... .15 .27 .39 .03 .14 .28 .24
Net gains or losses on
securities (both realized
and unrealized)............ -- 1.56 1.84 .(03) (.01) 1.52 1.43
----------- ------ ------- ------ ----------- ------ ------
Total from investment
operations............... .15 1.83 2.23 -- .13 1.80 1.67
----------- ------ ------- ------ ----------- ------ ------
Less distributions:
Dividends from net
investment income.......... (.15) (.25) (.38) (.09) (0.15) (.26) (.29)
Distributions from capital
gains...................... (1.15) (.85) (.38) -- (1.15) (.85) --
----------- ------ ------- ------ ----------- ------ ------
Total distributions....... (1.30) (1.10) (.76) (.09) (1.30) (1.11) (.29)
----------- ------ ------- ------ ----------- ------ ------
Net asset value, end of
period....................... $14.32 $15.47 $14.74 $13.27 $14.26 $15.43 $14.74
----------- ------ ------- ------ ----------- ------ ------
----------- ------ ------- ------ ----------- ------ ------
Total return (c).............. .7%(d) 13.1% 17.6% (.04)%(e) .6%(d) 12.9% 12.6%(f)
Net assets, end of period (in
thousands)................... $9,645 $7,860 $3,131 $ 140 $1,793 $1,351 $ 199
Ratio of expenses to average
daily net assets............. 1.87%(g) 1.90% 1.99% .23%(h) 1.88%(g) 1.90% 2.00%(g)
Ratio of net investment income
to average daily net
assets....................... 1.86%(g) 1.67% 2.30% .37%(h) 1.86%(g) 1.73% 2.17%(g)
Portfolio turnover rate
(excluding short-term
securities).................. 69.0% 140.5% 125.5% 124.5% 69.0% 140.5% 125.5%
Average commission rate on
stock transactions (i)....... $.0701 $.0641 N/A N/A $.0701 $.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 October 1, 1996 to March 31,
1997.
(e) Total return is presented for the period from August 19, 1994, commencement
of operations, to September 30, 1994.
(f) Total return is presented for the period from March 1, 1995, commencement of
operations to September 30, 1995.
(g) Adjusted to an annual basis.
(h) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
(i) Beginning in fiscal 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of stocks for
the period by the total number of related shares purchased and sold.
20
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account--subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE TRANSFER: You may transfer money from one Advantus account to any
other Advantus account you own just by calling our toll free number. Sign up for
telephone exchanges on the Advantus Application or complete the telephone
authorization form.
SYSTEMATIC TRANSFER: If you have an Advantus Money Market account you may
transfer a set amount of money to another Advantus Fund to diversify your
investment portfolio and take advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums out of your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus' 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
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.
21
<PAGE>
Depending on the performance of the underlying investment options, the value may
be worth more or less than the original amount invested upon redemption. Some
limitations apply, please refer to the prospectus for details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, and annual tax statements. Semiannual and annual reports will provide you
with portfolio information, fund performance data and the current investment
outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005. Our
voice response system is available from 7 a.m. to 3 a.m. Central Time Monday
through Friday, and 8 a.m. to 5 p.m. Central Time on Saturday. This system
allows you to access current net asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through your local
registered representative of MIMLIC Sales Corporation, distributor of the Funds.
Contact your representative for information and a prospectus for any of the
Advantus Funds you are interested in.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages eleven mutual funds containing
$2.3 billion in assets in addition to $1.4 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
22
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[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.48638 5-97
