<PAGE>
[LOGO]
SEMI-ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS BOND FUND
MARCH 31, 1995
<PAGE>
ADVANTUS BOND FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 6
STATEMENT OF ASSETS AND
LIABILITIES 8
STATEMENT OF OPERATIONS 9
STATEMENT OF CHANGES IN
NET ASSETS 10
NOTES TO FINANCIAL
STATEMENTS 11
SHAREHOLDER VOTING RESULTS 16
SHAREHOLDER SERVICES 17
<PAGE>
May 15, 1995
[PHOTO]
Dear Shareholders:
Practically everyone would like to annualize the first quarter results. Both
bonds and equities provided excellent returns for investors according to
Ibbotson Associates. For now, investors seem to have positive expectations on
interest rates and are enjoying the benefits on earnings attributed to the
declining dollar. Additionally, they have become increasingly confident in the
ability of the Federal Reserve to engineer a soft landing (i.e., low inflation
without a recession) for the economy.
For the last six months there was even more good news for the markets. The
November election results combined with two additional Federal Reserve moves to
raise short term interest rates and good news on inflation amid signs of slower
economic growth all helped restore investor confidence.
What can be confusing is that a soft landing and a recession often look very
much the same. The economy is on an unpredictable course, and experts seem to be
particularly divided in their opinions. (Opinions always seem to get farther
apart when markets set new highs.) Bulls argue that earnings are excellent and
will remain healthy because of stringent cost controls and improving overseas
operations. Bears believe the Dow is at its peak for the cycle. Also, the
consensus of a soft landing can be shaken badly if the Fed has to raise interest
rates to protect the dollar. Finally, all signs do not indicate inflation can
remain under control.
There is much evidence that we have entered a period where interest rates,
whether increasing or decreasing, are likely to trade in a narrower range.
Slower but steady economic growth, coupled with a moderate inflationary
environment should prove to be positive for fixed income investments. The
uncertainty in the economy over whether we are heading toward a recession or a
soft landing should create buying opportunities in the equity markets.
The saga of the dollar reaffirms the fact that most events are neither totally
positive nor totally negative. The dollar will buy less in Europe and Japan, but
will buy more in Mexico and Canada than a year ago. However, determining which
investments benefit and which suffer from any event is very difficult and
requires experienced professionals to make the best decisions.
Finally, as always, it is important to remember not to vary from your investment
plan and that diversification across asset types and geographic regions is
important because asset classes tend to perform differently from each other in
different market conditions.
Sincerely,
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS BOND FUND
PERFORMANCE UPDATE
[PHOTO]
WAYNE SCHMIDT, CFA
PORTFOLIO MANAGER
The Advantus Bond Fund is a mutual fund
designed for investors seeking a high
level of current income consistent with
prudent investment risk. The Fund plans
to achieve its objective primarily by
investing in a diversified portfolio of
investment grade short, intermediate and
long-term debt securities. The Fund
manager varies the proportion of assets
invested in each maturity category
depending upon the evaluation of market
patterns and economic trends by the
Fund's investment adviser.
-Dividends declared daily and paid monthly.
-Capital gains distributions paid annually.
PERFORMANCE
The Fund returned 5.03 percent for the six month period ended March 31, 1995
(Class B returned 4.45 percent for the same period).* The Lehman Brothers
Corporate Bond Index** returned 6.38 percent, while our peer group, the Lipper
A-rated Bond Fund+ universe averaged a 4.98 percent return over the same period.
It took seven Federal Reserve tightening moves and a year of pain, but the bond
market seems convinced that the worst is over. Signs of slower economic growth
coupled with continued moderate inflation have given bond investors cause for
celebration. Corporate bonds outperformed the other sectors as credit spreads
tightened due to improved corporate earnings and a low volume of corporate debt
issuance. The significant flattening of the yield curve also aided longer
maturity bonds. The 30 year U.S. Treasury bond yield decreased 38 basis points
to yield 7.43 percent, while yields on the three month Treasury Bill increased
108 basis points to yield 5.85 percent.
PORTFOLIO RECAP
There are four key components to review when evaluating a bond portfolio. First,
the portfolio's overall duration (i.e., are average maturities longer or shorter
than the market?); second, the duration owned along the yield curve; third, the
sectors held; and fourth, the specific issues owned within the sectors.
Our view on the market at the beginning of the period can be best described as
cautiously optimistic. Bonds suffered huge losses during 1994, and there was
still reason to be concerned. The U.S. dollar was weak, the Latin America crisis
concerned investors and the U.S. economy was strengthening. In early 1995, the
seventh move to raise short term rates, good news on inflation, and signs of
slower economic growth were enough to change investor sentiment. During the six
month period we extended the duration of the portfolio by one half of a year to
a duration neutral 6.13 years. We accomplished this by reducing cash from 12
percent to 5 percent of the portfolio and increasing our ten year exposure to 22
percent from 7 percent. The added duration benefited the fund's return as
interest rates began to move lower in mid-November.
2
<PAGE>
ADVANTUS BOND FUND
MARCH 31, 1995
In terms of sector and issue selection, our emphasis continued to be on
corporate bonds. However, we added exposure to U.S. Treasury securities with
longer maturities, mortgage backed securities and U.S. agency issuers. Within
the corporate sector, our focus was on owning the best relative value. With
corporate credit spreads generally tight we were able to find value in some low
BBB rated names in cyclical industries. We purchased Lyondell Petrochemical,
Royal Caribbean, Methanex, and News America Corp., to go along with our
positions in Black and Decker and United Dominion. The corporate bonds in the
portfolio performed extremely well. Improved corporate earnings and cash flows
have increased the likelihood for those companies to receive an upgraded credit
rating. If this happens, their credit spreads should tighten causing the bond
values to increase.
In keeping with our emphasis on quality, the portfolio currently has an average
quality rating of AA-. At the end of the period, 58 percent of the portfolio was
invested in investment grade corporate bonds, 27 percent in U.S. Government
securities, 10 percent in mortgage backed securities, and the remaining 5
percent cash was invested in money market instruments.
OUTLOOK
The bond market ended 1994 in an oversold position. The seventh Fed move to
raise short term rates combined with evidence of slower economic growth and
continued low inflation has rallied the bond market. Despite the recent drop in
yields, bonds still offer good long term value at these levels.
While our long term outlook is positive, the near term outlook is not without
risk. Today, the consensus is that the Fed is through raising rates and has
engineered the perfect "soft landing" for the economy. This perception could
change. Also, there is concern on the international scene. A debt default in
Mexico, deflationary pressures in Japan, and further erosion of the U.S. dollar
could send shock waves through the financial markets.
Despite these issues, the overall tone of the market is positive. Slower, but
steady economic growth coupled with a moderate inflationary environment should
provide a positive backdrop for the U.S. 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. Class C commenced operations March 1, 1995, accordingly, performance is
not presented.
**The Lehman Brother's Corporate Bond Index includes all publicly issued, fixed
rate, nonconvertible investment grade dollar-denominated, SEC-registered
corporate debt.
+Average return of 99 A-rated bond funds according to Lipper Analytical
Services, Inc.
3
<PAGE>
ADVANTUS BOND FUND
MARCH 31, 1995
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL
$10,000 INVESTMENT IN ADVANTUS BOND FUND, LEHMAN BROTHER'S
CORPORATE BOND INDEX AND CONSUMER PRICE INDEX
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A SHARES' AVERAGE ANNUAL TOTAL
CLASS A LEHMAN INDEX CPI RETURN:
<S> <C> <C> <C> <C> <C> <C>
8/14/87 10000 10000 10000 One year -1.22%
10/31/87 9621 10014 10083 Five year 7.22%
10/31/88 10246 11343 10512 Since inception (8/14/87) 3.15%
10/31/89 11359 12751 10994
10/31/90 11865 13295 11686
10/31/91 13603 15639 12028
10/31/92 15065 17376 12413
10/31/93 17089 20011 12746
9/30/94 16034 19020 13132
3/31/95 16839 20235 13263
</TABLE>
On the chart above you can see how the Advantus Bond Fund Class A shares' total
return compared to the Lehman Brother's Corporate Bond Index and the Consumer
Price Index. The three lines represent the cumulative total return of a
hypothetical $10,000 investment made on the inception date of the Advantus Bond
Fund Class A shares (August 14, 1987) through March 31, 1995.
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS B SHARES' TOTAL
CLASS B LEHMAN INDEX CPI RETURN:
<S> <C> <C> <C> <C> <C> <C>
8/19/94 10000 10000 10000 Since inception (8/19/94) 3.15%
9/30/94 9382 9819 10067
3/31/95 9815 10446 10168
</TABLE>
On the chart above you can see how the Advantus Bond Fund Class B shares' total
return compared to the Lehman Brother's Corporate Bond Index and the Consumer
Price Index. The three lines represent the cumulative total return of a
hypothetical $10,000 investment made on the inception date of the Advantus Bond
Fund Class B shares (August 19, 1994) through March 31, 1995.
The above 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
4
<PAGE>
ADVANTUS BOND FUND
MARCH 31, 1995
expenses, whereas you 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 5 percent contingent deferred sales charge for Class B. 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.
TEN LARGEST BOND HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF BOND
COMPANY VALUE PORTFOLIO
- - -------------------------------------------------- ---------- ---------
<S> <C> <C> <C>
U.S. Treasury Bond--12.00%, 08/15/13.............. $1,719,531 12.6%
Green Tree Financial--10.25%, 06/01/02............ 669,549 4.9%
U.S. Treasury Bond--8.13%, 08/15/19............... 636,000 4.6%
Consolidated Natural Gas Company--8.75%,
06/01/99........................................ 626,194 4.6%
Federal National Mortgage Association--8.59%,
02/03/05........................................ 608,477 4.5%
Lyondell Petrochemical--10.25%, 02/01/00.......... 534,780 3.9%
Alltel--10.38%, 04/01/09.......................... 530,154 3.9%
General Motors Acceptance--5.50%, 12/15/01........ 524,407 3.8%
Federal Home Loan Bank--8.46%, 12/20/99........... 502,578 3.7%
Hydro-Quebec--8.05%, 07/07/24..................... 499,170 3.7%
---------- ---
$6,850,840 50.2%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ADVANTUS BOND FUND PIE CHART
<S> <C>
U.S. Treasury 16.1
U.S. Government Agencies 18
AAA Rated 3.2
AA Rated 10.9
A Rated 16.5
BBB Rated 28.9
Cash and other
assets/liabilities 6.4
</TABLE>
5
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1995
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- - --------- ------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (93.5%)
GOVERNMENT OBLIGATIONS (40.7%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (34.1%)
$ 500,000 Federal Home Loan Bank........................... 8.460% 12/20/99 $ 502,578
600,000 Federal National Mortgage Association............ 8.590% 02/03/05 608,477
487,375 Federal National Mortgage Association............ 7.000% 09/01/17 465,676
324,967 Government National Mortgage Association......... 7.000% 04/15/22 304,591
267,821 Government National Mortgage Association......... 7.000% 03/15/23 250,919
500,000 Tennessee Valley Authority....................... 6.870% 09/19/97 494,885
1,250,000 U.S. Treasury Bond............................... 12.000% 08/15/13 1,719,531
600,000 U.S. Treasury Bond............................... 8.125% 08/15/19 636,000
------------
4,982,657
------------
OTHER GOVERNMENT OBLIGATIONS (3.4%)
500,000 Hydro-Quebec(b).................................. 8.050% 07/07/24 499,170
------------
LOCAL AND STATE GOVERNMENT OGLIGATIONS (3.2%)
487,000 Wyoming Community Development Authority.......... 6.849% 06/01/10 463,868
------------
Total government obligations (cost: $5,894,333)........................ 5,945,695
------------
CORPORATE OBLIGATIONS (52.8%)
BASIC INDUSTRIES (2.8%)
Chemicals (2.8%)
400,000 Methanex Corporation............................. 8.875% 11/15/01 413,000
------------
CAPITAL GOODS (3.3%)
Aerospace/Defense (3.3%)
500,000 Rockwell International........................... 6.750% 09/15/02 476,362
------------
CONSUMER STAPLES (14.1%)
Drugs (3.2%)
500,000 American Home Products........................... 6.500% 10/15/02 468,193
------------
Entertainment (3.4%)
500,000 Royal Caribbean Cruises Limited.................. 8.250% 04/01/05 493,561
------------
Food (3.1%)
455,357 General Mills Inc................................ 6.235% 03/15/97 451,848
------------
Media (1.4%)
200,000 News America Holdings Inc........................ 8.500% 02/23/25 202,652
------------
Printing and Publishing (3.0%)
500,000 News Corporation Limited......................... 7.750% 01/20/24 436,732
------------
</TABLE>
See accompanying notes to investments in securities.
6
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- - --------- ------------
<C> <S> <C> <C> <C>
CREDIT SENSITIVE (3.1%)
Hardware and Tools (3.1%)
$ 500,000 Black & Decker Corporation....................... 7.000% 02/01/06 $ 452,141
------------
ENERGY (7.9%)
Natural Gas Distribution (4.3%)
600,000 Consolidated Natural Gas......................... 8.750% 06/01/99 626,194
------------
Petroleum Refining (3.6%)
500,000 Lyondell Petrochemical Company................... 10.250% 02/01/00 534,780
------------
FINANCIAL (18.0%)
Banks/Savings and Loans (3.4%)
500,000 Citicorp......................................... 8.000% 02/01/03 497,899
------------
Commercial Finance (3.6%)
600,000 GMAC............................................. 5.500% 12/15/01 524,407
------------
Real Estate (11.0%)
600,000 Green Tree Financial Corp Inc.................... 10.250% 06/01/02 669,549
500,000 Property Trust of America........................ 7.500% 02/15/14 436,084
500,000 United Dominion Realty Trust..................... 8.500% 09/15/24 498,674
------------
1,604,307
------------
UTILITIES (3.6%)
Telephones (3.6%)
500,000 Alltel Corporation............................... 10.375% 04/01/09 530,154
------------
Total corporate obligations (cost: $7,900,329)......................... 7,712,230
------------
Total long-term debt securities (cost: $13,794,662).................... 13,657,925
------------
SHORT-TERM SECURITIES (4.3%)
230,000 U.S. Treasury Bill............................... 5.820% 04/06/95 229,779
400,000 U.S. Treasury Bill............................... 5.830% 05/11/95 397,403
------------
Total short-term securities (cost: $627,189)........................... 627,182
------------
Total investments in securities (cost: $14,421,851)(c)................. $ 14,285,107
------------
------------
<FN>
Notes to Investments in Securities
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) The Fund held 3.4% of net assets in foreign securities as of March 31,
1995.
(c) At March 31, 1995 the cost of securities for federal income tax purposes
was $14,421,851. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation..................... $ 100,215
Gross unrealized depreciation..................... (236,959)
---------
Net unrealized depreciation....................... $(136,744)
---------
---------
</TABLE>
7
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying schedule for
detailed listing (identified cost: $14,421,851)................................ $14,285,107
Cash in bank on demand deposit.................................................. 92,640
Receivable for Fund shares sold................................................. 48,159
Receivable for investment securities sold....................................... 28,571
Accrued interest receivable..................................................... 228,880
-----------
Total assets................................................................ 14,683,357
-----------
LIABILITIES
Cash portion of dividends payable to shareholders............................... 33,021
Payable for investment securities purchased..................................... 33,844
Payable to Adviser.............................................................. 12,590
-----------
Total liabilities........................................................... 79,455
-----------
Net assets applicable to outstanding capital stock.............................. $14,603,902
-----------
-----------
Represented by:
Capital stock--$.01 par value (note 1)........................................ $ 15,135
Additional paid-in capital.................................................... 15,688,894
Undistributed net investment income........................................... 2,601
Accumulated net realized losses from investments.............................. (965,984)
Unrealized depreciation of investments........................................ (136,744)
-----------
Total--representing net assets applicable to outstanding capital stock...... $14,603,902
-----------
-----------
Net assets applicable to outstanding Class A Shares............................. $14,200,366
-----------
-----------
Net assets applicable to outstanding Class B Shares............................. $ 393,503
-----------
-----------
Net assets applicable to outstanding Class C Shares............................. $ 10,033
-----------
-----------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 1,471,442......................................... $ 9.65
-----------
-----------
Class B--Shares outstanding 40,803............................................ $ 9.64
-----------
-----------
Class C--Shares outstanding 1,040............................................. $ 9.64
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1994 TO MARCH 31, 1995
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest......................................................................... $ 541,390
---------
Expenses (note 4):
Investment advisory fee.......................................................... 49,002
Distribution fees--Class A....................................................... 20,629
Distribution fees--Class B....................................................... 1,233
Distribution fees--Class C....................................................... 8
Administrative services fee...................................................... 20,600
Custodian fees................................................................... 1,759
Auditing and accounting services................................................. 5,275
Legal fees....................................................................... 2,697
Directors' fees.................................................................. 162
Registration fees................................................................ 17,888
Printing and shareholder reports................................................. 5,637
Insurance........................................................................ 2,980
Other............................................................................ 3,822
---------
Total expenses............................................................... 131,692
Less fees and expenses waived or absorbed:
Class A distribution fees...................................................... (13,752)
Other fund expenses............................................................ (46,820)
---------
Total fees and expenses waived or absorbed................................... (60,572)
---------
Total net expenses........................................................... 71,120
---------
Investment income--net....................................................... 470,270
---------
Realized and unrealized gains (losses) on investments:
Net realized losses on investments (note 3)...................................... (627,706)
Net change in unrealized appreciation or depreciation on investments............. 860,300
---------
Net gains on investments..................................................... 232,594
---------
Net increase in net assets resulting from operations............................... $ 702,864
---------
---------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1994 TO MARCH 31, 1995
AND PERIOD FROM NOVEMBER 1, 1993 TO SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Operations:
Investment income--net........................................................ $ 470,270 $ 750,863
Net realized losses on investments............................................ (627,706) (338,278)
Net change in unrealized appreciation or depreciation of investments.......... 860,300 (1,403,507)
----------- -----------
Increase in net assets resulting from operations............................ 702,864 (990,922)
----------- -----------
Distributions to shareholders from:
Investment income--net:
Class A..................................................................... (462,525) (750,510)
Class B..................................................................... (7,237) (312)
Class C..................................................................... (48) --
Net realized gains on investments:
Class A..................................................................... -- 622,857
----------- -----------
Total distributions......................................................... (469,810) (1,373,679)
----------- -----------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A..................................................................... 885,091 3,127,259
Class B..................................................................... 329,753 51,433
Class C..................................................................... 10,000 --
Shares issued as a result of reinvested dividends:
Class A..................................................................... 269,891 806,836
Class B..................................................................... 7,247 312
Class C..................................................................... 48 --
Payments for redemption of shares:
Class A..................................................................... (1,059,125) (2,185,713)
Class B..................................................................... (1,793) --
----------- -----------
Increase in net assets from capital share transactions...................... 441,112 1,800,127
----------- -----------
Total increase (decrease) in net assets..................................... 674,166 (564,474)
Net assets at beginning of period............................................... 13,929,736 14,494,210
----------- -----------
Net assets at end of period (including undistributed net investment income of
$2,601 and $2,141, respectively)............................................... $14,603,902 $13,929,736
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1995
(UNAUDITED)
(1) ORGANIZATION
The Advantus Bond 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 Bond Fund, Inc. (effective March 1, 1995). Prior to
March 1, 1995 the Fund was known as MIMLIC Fixed Income Securities 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 period
declines as the amount of the purchase increases and ranges 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.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
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. 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.
11
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
For federal income tax purposes, the Fund had a capital loss carryover at
March 31, 1995 of $965,984 which, if not offset by subsequent capital gains,
will expire September 30, 2003 and 2004. It is unlikely the board of directors
will authorize a distribution of any net realized capital gains until the
available capital loss carryover has been offset or expired.
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 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 daily and paid monthly in
cash or reinvested in additional shares. Realized gains, if any, are paid
annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from October 1, 1994 to March 31, 1995, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $17,457,831 and $16,082,198, 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 or
the Adviser). 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 .70 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, to be used to pay certain expenses
incurred in the distribution, promotion and servicing of the Fund's shares. The
Class A Plan provides for a fee up to .30 percent of average daily net assets of
Class A shares. The Class B Plan provides for a fee up to 1.00 percent of
average daily net assets of Class B shares. The Class B 1.00 percent fee is
comprised of a .75 percent distribution fee and a .25 percent service fee. The
Class C Plan provides for a fee of up to 1.00 percent of
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
average daily net assets of Class C shares. The Class C 1.00 percent fee is
comprised of a .75 percent distribution fee and a .25 percent service fee.
MIMLIC Sales is currently waiving that portion of Class A distribution fees
which exceeds, as a percentage of average daily net assets, .10 percent.
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, 1995, the administrative services fee was
$3,600 per month. Effective February 1, 1995, the administrative services fee is
$3,100 per month.
Advantus Capital (MIMLIC Management prior to March 1, 1995) directly incurs
and pays the above operating expenses and the Fund in turn reimburses Advantus
Capital. During the period from October 1, 1994 to March 31, 1995, Advantus
Capital voluntarily agreed to absorb $46,820 in expenses that were otherwise
payable by the Fund.
Sales charges received by MIMLIC Sales for distributing the Fund's three
classes of shares amounted to $29,928.
As of March 31, 1995, Minnesota Mutual Life and subsidiaries, and the
directors and officers of the Fund as a whole own the following shares:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OWNED
------------------ ---------------------
<S> <C> <C>
Class A..................................................................... 370,304 25.2%
Class B..................................................................... 5,347 13.1%
Class C..................................................................... 1,040 100.0%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $2,312.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1994 to March 31, 1995
and the period from November 1, 1993 to September 30, 1994 for Class A shares,
the period from October 1, 1994 to March 31, 1995 and the period from August 19,
1994 to September 30, 1994 for Class B shares and the period from March 1, 1995
to March 31, 1995 for Class C shares were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- -------------------- -----------
1995 1994 1995 1994 1995
---------- ---------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Sold.................................................... 93,430 307,605 34,702 5,310 1,035
Issued for reinvested distributions..................... 28,482 78,367 762 33 5
Redeemed................................................ (112,238) (217,456) (4) -- --
---------- ---------- --------- --------- -----
9,674 168,516 35,460 5,343 1,040
---------- ---------- --------- --------- -----
---------- ---------- --------- --------- -----
</TABLE>
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(6) FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, NOVEMBER 1,
1994 TO 1993 TO YEAR ENDED OCTOBER 31,
MARCH 31, SEPTEMBER -----------------------------------
1995 30, 1994 1993 1992 1991 1990
----------- ----------- ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 9.50 $ 11.21 $ 10.72 $ 10.38 $ 9.79 $10.15
----- ----------- ------- ------- ------ ------
Income from investment
operations:
Net investment income....... .24 .53 .63 .73 .79 .79
Net gains or losses on
securities (both realized
and unrealized)............ .23 (1.24) .78 .36 .59 (.36)
----- ----------- ------- ------- ------ ------
Total from investment
operations............... .47 (.71) 1.41 1.09 1.38 .43
----- ----------- ------- ------- ------ ------
Less distributions:
Dividends from net
investment income.......... (.32) (.53) (.63) (.73) (.79) (.79)
Distributions from capital
gains...................... -- (.47) (.29) (.02) -- --
----- ----------- ------- ------- ------ ------
Total distributions....... (.32) (1.00) (.92) (.75) (.79) (.79)
----- ----------- ------- ------- ------ ------
Net asset value, end of
period....................... $ 9.65 $ 9.50 $ 11.21 $ 10.72 $10.38 $ 9.79
----- ----------- ------- ------- ------ ------
----- ----------- ------- ------- ------ ------
Total return (b).............. 5.03%(c) (6.68)%(d) 14.04% 10.75% 14.65% 4.46%
Net assets, end of period (in
thousands)................... $14,200 $13,879 $14,494 $9,415 $5,967 $4,453
Ratio of expenses to average
daily net assets (h)......... 1.00%(g) 1.00%(g) 1.00% 1.00% .97% .90%
Ratio of net investment income
to average daily net assets
(h).......................... 6.72%(g) 5.79%(g) 5.78% 6.88% 7.91% 7.99%
Portfolio turnover rate
(excluding short-term
securities).................. 122.59% 163.54% 139.47% 115.60% 92.71% 45.70%
<FN>
- - ----------
(a) Commencement of operations.
(b) Total return figures are based on a share outstanding throughout the
period and assumes reinvestment of distributions at net asset value. Total
return figures do not reflect the impact of sales charges.
(c) Total return is presented for the period from October 1, 1994 to March 31,
1995.
(d) Total return is presented for the period from November 1, 1993 to
September 30, 1994.
(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 March 31, 1995.
(g) Adjusted to an annual basis.
(h) The Fund's Adviser and Distributor voluntarily waived or absorbed $60,572,
$107,448, $86,877, $78,626, $66,537 and $38,783 in expenses for the
periods ended March 31, 1995 and September 30, 1994 and the years ended
October 31, 1993, 1992, 1991 and 1990, respectively. If Class A shares had
been charged for these expenses, the ratio of expenses to average daily
net assets would have been 1.87%, 1.83%, 1.70%, 2.10%, 2.35% and 1.81%,
respectively, and the ratio of net investment income to average daily net
assets would have been 5.85%, 4.95%, 5.08%, 5.78%, 6.53% and 7.08%,
respectively. If Class B shares had been charged for these expenses, the
ratio of expenses to average daily net assets would have been 2.56% and
2.96%, respectively, and the ratio of net investment income to average
daily net assets would have been 5.72% and 4.78%, for the periods ended
March 31, 1995 and September 30, 1994, respectively. If Class C shares had
been charged for these expenses, the ratio of expenses to average daily
net assets would have been 2.41% and the ratio of net investment income to
average daily net assets would have been 5.52% for the period ended March
31, 1995.
(i) Ratios presented for the periods from March 1, 1995 to March 31, 1995 and
August 19, 1994 to September 30, 1994 are not annualized as they are not
indicative of anticipated results.
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
CLASS B
---------------------------- CLASS C
PERIOD FROM PERIOD FROM ---------------
OCTOBER 1, AUGUST 19, PERIOD FROM
1994 TO 1994 (A) TO MARCH 1, 1995
MARCH 31, SEPTEMBER (A) TO MARCH
1995 30, 1994 31, 1995
----------- ----------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of
period...................... $ 9.50 $ 9.68 $ 9.67
----- ----- -----
Income from investment
operations:
Net investment income....... .23 .06 .09
Net gains or losses on
securities (both realized
and unrealized)............ .19 (.18) (.07)
----- ----- -----
Total from investment
operations............... .42 (.12) .02
----- ----- -----
Less distributions:
Dividends from net
investment income.......... (.28) (.06) (.05)
Distributions from capital
gains...................... -- -- --
----- ----- -----
Total distributions....... (.28) (.06) (.05)
----- ----- -----
Net asset value, end of
period...................... $ 9.64 $ 9.50 $ 9.64
----- ----- -----
----- ----- -----
Total return (b).............. 4.48%(c) (1.24)%(e) .28%(f)
Net assets, end of period (in
thousands).................. $394 $51 $10
Ratio of expenses to average
daily net assets (h)........ 1.90%(g) .22%(i) .16%(i)
Ratio of net investment income
to average daily net assets
(h)......................... 6.38%(g) .69%(i) .53%(i)
Portfolio turnover rate
(excluding short-term
securities)................. 122.59% 163.54% 122.59%
</TABLE>
15
<PAGE>
SHAREHOLDER VOTING RESULTS
On February 14, 1995, a regular shareholder meeting was held. Shareholders
of record on December 19, 1994 were entitled to vote on the proposals described
below. All classes of shares (only Class A and Class B were in existence on
December 19, 1994) of the Fund were entitled to vote on each proposal, and all
shares were voted in the aggregate for each proposal and not by class.
(1) To elect a board of Directors as follows:
<TABLE>
<CAPTION>
VOTES
DIRECTOR VOTES FOR WITHHELD
------------------------------------------------------- --------- --------
<S> <C> <C>
Paul H. Gooding........................................ 1,001,088 12,938
Frederick P. Feuerherm................................. 1,001,088 11,078
Ralph D. Ebbott........................................ 1,001,088 18,787
Ellen S. Berscheid..................................... 1,001,088 18,793
Charles E. Arner....................................... 1,001,088 24,095
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF SHARES VOTING
-------------------------
FOR AGAINST ABSTAIN
------- ------- -------
<S> <C> <C> <C> <C>
(2) To ratify or reject the selection by the Board of
Directors of KPMG Peat Marwick LLP as the
independent public accountant for the Fund for the
fiscal year ending September 30, 1995............. 998,820 2,508 10,772
(3) To approve or reject the proposal to amend the
Fund's Articles of Incorporation to change the
name of the Fund from MIMLIC Fixed Income
Securities Fund, Inc. to Advantus Bond Fund,
Inc............................................... 989,826 8,207 14,067
(4) To approve or disapprove a new Investment Advisory
Agreement with Advantus Capital Management, Inc.,
a wholly-owned subsidiary of MIMLIC Asset
Management Company, the previous investment
adviser of the Fund............................... 979,288 4,769 28,042
</TABLE>
16
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund:
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value. (Exchanges from the Money Market Fund will incur the
applicable sales charge, if not previously subjected to the charge.)
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account--subject to minimum guidelines.
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 an Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Our special purchase plans enable you to open an
Advantus fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets.) One of these plans--The
Automatic Investment Plan--allows you to invest automatically each month from
your checking or saving account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Individual Retirement Account or other qualified plan including SEPs, profit
sharing, money purchase or defined benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
17
<PAGE>
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. Amounts
over $1,000 will be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Amounts for less
than $1,000 will be mailed to your bank on your behalf. To set this up, please
send a voided check from your bank.
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 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.'s six portfolio managers manage eight
mutual funds containing $215 million in assets in addition to $1.8 billion in
assets for other clients. Advantus Capital's seasoned portfolio managers average
more than 10 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
18
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
[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.48644 5-95
