<PAGE>
[Logo]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS BOND FUND
SEPTEMBER 30, 1996
<PAGE>
ADVANTUS BOND FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND
LIABILITIES 11
STATEMENT OF OPERATIONS 12
STATEMENT OF CHANGES IN
NET ASSETS 13
NOTES TO FINANCIAL
STATEMENTS 14
INDEPENDENT AUDITORS'
REPORT 20
FEDERAL INCOME TAX
INFORMATION 21
SHAREHOLDER SERVICES 23
<PAGE>
October 31, 1996 [PHOTO]
Dear Shareholders:
The nation's economic expansion, noted for its longevity, breadth and strength,
pressed forward in the third quarter of 1996. The Federal Reserve's decision not
to raise interest rates, coupled with the long awaited upswing of several key
foreign economies, offers new signs that the expansion, currently in its 23rd
quarter, will extend well into next year.
The financial markets shrugged off concerns about an overheated economy to post
record highs for both the Dow Jones Industrial Average and the NASDAQ. The
current optimism is based partly on a relatively unique phenomenon of this
expansion; industrial production, a harbinger of future economic activity, is
actually rebuilding depleted inventories. Normally associated with the early
stages of an economic recovery, this activity is unusual for a mature expansion
and indicates continued economic strength.
Gross Domestic Product (GDP), clipping along at 2.5 - 3.0 percent annually, is
hovering above the Fed's comfort level. However, consumer confidence is very
high and plays a definite role in our forecast. After experiencing the lowest
unemployment rates in nearly seven years, consumers today are employed,
confident and spending money which bodes well for continued growth. This higher
level of consumer spending is capable of sustaining a strong GDP without risk of
exhausting the recovery.
Inflation, a primary concern of a heated up economy, is playing only a minor
role in the current recovery. The abundance of material resources supplied from
the former communist countries in Eastern Europe and the Soviet Union has
mitigated the resource demands of the U.S. economy's strength. In addition, the
increase of the world's labor force, in China and elsewhere, provides lower cost
production options for many manufacturers, eliminating the need to raise prices.
Consequently, we can envision a scenario in which inflation and interest rates
actually edge lower in the coming months.
The Advantus Funds took full advantage of the extended expansion and recorded
impressive gains across broad industrial segments this year. While mandated wage
accelerations will affect many service related industries in the months ahead,
we remain cautiously optimistic that most sectors will experience strong growth
well into 1997. Further buttressing this report is the fact that in the first
year of every Presidential term since 1948, the markets have returned positive
performance.
The Advantus family of mutual funds offers a wide array of investment objectives
to capture growth potential in many different market segments. Our experienced
and dedicated portfolio managers will make the most of each opportunity.
Sincerely,
[SIGNATURE]
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS 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 works
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 Advantus Bond Fund's performance for the year ended September 30, 1996 for
each class of shares offered was as follows:
<TABLE>
<S> <C>
Class A 4.0 percent*
Class B 3.1 percent*
Class C 3.1 percent*
</TABLE>
The Bond Fund's peer group (Lipper A-Rated Bond Funds+) returned 3.9 percent for
the year ended September 30, 1996. The Lehman Brothers Corporate Bond Index**
returned 4.8 percent for the same period.
The bond market's mood changed in February as fixed income investors began
worrying about a strong economy and building inflationary pressures. These
expectations sent interest rates higher and plagued the bond market the
remainder of the period. Over the past twelve months, the interest rate on the
two year U.S. Treasury Note increased 24 basis points to yield 6.09 percent,
while the thirty year U.S. Treasury Bond increased 41 basis points to yield 6.92
percent. The fluctuation of interest rates (volatility) in the bond market
remains high. The yield range on the thirty year U.S. Treasury Bond for the past
year was 127 basis points, from a low of 5.95 percent to a high of 7.24 percent.
That move equates to a sixteen percent decline in price.
Bond market volatility was also affected by expanding global economies and low
unemployment. In this volatile higher rate environment, cash, short maturity
bonds, callable bonds, and mortgage-backed securities were the best performing
sectors. Non-call corporate bonds and U.S. Treasuries underperformed because of
their longer maturities.
PORTFOLIO RECAP
Security selection and active duration management were key factors to the Fund's
performance.
Our goal is to buy bonds whose inherent value is not fully reflected in their
current market price. In the corporate and mortgage-backed sectors this means
buying bonds at a wide yield pick-up to U.S. Treasury securities and selling
them after yield spreads tighten and prices appreciate in value. With this in
mind, we added some international bonds to the Fund such as Reliance Industries,
Midland Bank PLC, Telekom Malaysia and CTC (Chilean Telephone Company). We also
added bonds of Colonial Realty, Continental Cablevision (expected to be taken
over by U.S. West in the fourth quarter), GE Capital, GMAC, Joy Technologies,
Loral and Time
2
<PAGE>
ADVANTUS BOND FUND
SEPTEMBER 30, 1996
Warner Entertainment, Inc. We sold, and recognized yield spread tightening, in
our positions of Consolidated Natural Gas, Waste Management, Royal Caribbean,
Chrysler, Franchise Finance and Fisher Scientific.
Portfolio duration (a measure of interest rate risk) is another key performance
driver. We became more defensive (shortened duration) in the portfolio as the
economic evidence continued to mount against the bond market. The portfolio
duration was 6.0 years at the start of the calendar year and we reduced it to
4.6 years with 14 percent cash in early June. By September, the cash component
was reduced and the duration was extended to 5.4 years. This is .3 years shorter
than the 5.7 years duration of the Lehman Brother's Corporate Bond Index. The
Fund is overweighted in cash and notes maturing within ten years and
underweighted in thirty year bonds when compared against the Lehman Brother's
Corporate Bond Index.
We emphasize quality and the Fund maintained its average quality rating of
single A. On September 30, 1996, 72 percent of the Fund's securities were
invested in investment grade corporate bonds, 17 percent in mortgage backed
securities, four percent in U.S. Government securities and the remaining seven
percent in money market instruments.
OUTLOOK
The keys to fourth quarter and beyond will be the election results, the economic
landscape, and the Federal Reserve's future monetary policy. Fixed income
investors expect the November elections to maintain the two party balance of
power in Washington. The market is comfortable with current Democratic versus
Republican gridlock. A sweep by either party would be taken negatively by the
bond market. Economic growth has been strong in recent quarters but should slow
to the Federal Reserve's target growth rate of 2.5 percent as we move into 1997.
Stronger growth or the threat of higher inflation may force the Fed to tighten
monetary policy after the election. A move by the Fed to raise rates would drive
short term interest rates higher but the longer end of the yield curve would
benefit from Fed's inflation fighting resolve.
We are optimistic that inflation and economic growth will be contained within
levels necessary for a positive bond market. With a majority of the bond market
damage already done, the next six months should bring more price stability to
fixed income investors. As the market finds its trading range, we will look for
opportunities to buy cheap bonds on market weakness and sell overvalued
securities during periods of market strength.
*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.
**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 113
A-rated bond funds according to Lipper Analytical Services, Inc.
3
<PAGE>
ADVANTUS BOND FUND
SEPTEMBER 30, 1996
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
On the following charts you can see how the total return for each of the three
clases of shares of the Advantus Bond Fund compared to the Lehman Brother's
Corporate Bond 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 Bond Fund (August
14, 1987, August 19, 1994 and March 1, 1995 for Class A, B and C, respectively)
through September 30, 1996.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year (1.2)%
Five year 6.2%
Since inception (8/14/87) 7.4%
Class A Lehman Brother's Index CPI
8/14/87 10,000 10,000 10,000
10/31/87 9,618 10,014 10,083
10/31/88 10,243 11,343 10,512
10/31/89 11,355 12,751 10,994
10/31/90 11,861 13,295 11,686
10/31/91 13,598 15,639 12,028
10/31/92 15,060 17,376 12,413
10/31/93 17,175 20,011 12,746
9/30/94 16,028 19,020 13,132
9/30/95 18,441 22,252 13,421
9/30/96 19,183 23,258 13,824
</TABLE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year (1.9)%
Since inception (8/19/94) 5.7%
Class B Lehman Brother's Index CPI
8/19/94 10,000 10,000 10,000
9/30/94 9,876 9,819 10,067
9/30/95 10,801 11,488 10,289
9/30/96 11,252 12,007 10,598
</TABLE>
4
<PAGE>
ADVANTUS BOND FUND
SEPTEMBER 30, 1996
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 3.1%
Since inception (3/1/95) 7.8%
Class C Lehman Brother's Index CPI
3/01/95 10,000 10,000 10,000
9/30/95 10,925 11,087 10,146
9/30/96 11,265 11,588 10,450
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial adviser's investment advice. Individuals cannot buy even an unmanaged
index fund without incurring some charges and expenses.
Historical results are not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS BOND FUND
SEPTEMBER 30, 1996
TEN LARGEST BOND HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF BOND
COMPANY VALUE PORTFOLIO
- -------------------------------------------------- ---------- ---------
<S> <C> <C>
Joy Technologies Incorporated--10.250%, 09/01/03.. $ 827,159 4.3%
Telekom Malaysia--7.875%, 08/01/25................ 802,134 4.2%
General Electric Capital Corporation--6.660%,
05/01/18........................................ 749,005 3.9%
Premark International Inc--10.500%, 09/15/00...... 672,630 3.5%
News America Holdings Inc--7.750%, 12/01/45....... 640,184 3.4%
Commercial Credit Company--7.375%, 03/15/02....... 611,119 3.2%
Midland Bank PLC--7.625%, 06/15/06................ 609,620 3.2%
Reynolds Metals Company--9.375%, 06/15/99......... 564,420 3.0%
U.S. Treasury Bond--8.000%, 11/15/21.............. 553,593 2.9%
GMAC--9.000%, 10/15/02............................ 545,128 2.9%
---------- ---
$6,574,992 34.5%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
U.S. Treasury 3.6%
U.S. Government Agencies 12.5%
AA Rated 4.8%
AAA Rated 6.1%
A Rated 29.3%
Not Rated 1.6%
BBB Rated 34.1%
Cash and Other
Assets/Liabilities 8.0%
</TABLE>
6
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1996
(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 (92.0%)
GOVERNMENT OBLIGATIONS (24.1%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (16.1%)
$ 437,145 Federal National Mortgage Association............ 7.000% 09/01/17 $ 424,774
496,527 Federal National Mortgage Association............ 6.500% 03/01/26 466,268
500,000 Federal Home Loan Mortgage Corporation........... 7.030% 04/05/04 491,650
272,000 Federal Home Loan Mortgage Corporation........... 5.000% 04/15/23 253,417
229,838 Government National Mortgage Association......... 7.000% 03/15/23 222,377
290,305 Government National Mortgage Association......... 7.000% 04/15/22 281,201
445,716 Government National Mortgage Association......... 8.000% 04/15/25 449,892
200,000 U.S. Treasury Bond............................... 6.750% 08/15/26 195,437
500,000 U.S. Treasury Bond............................... 8.000% 11/15/21 553,593
------------
3,338,609
------------
OTHER GOVERNMENT OBLIGATIONS (4.0%)
500,000 Quebec Province of Canada(b)..................... 9.125% 03/01/00 534,919
300,000 Quebec Province of Canada(b)..................... 7.500% 07/15/23 287,472
------------
822,391
------------
LOCAL AND STATE GOVERNMENT OBLIGATIONS (4.0%)
500,000 California Housing Finance Agency(c)............. 8.160% 02/01/28 506,875
332,000 Wyoming Community Development Authority.......... 6.850% 06/01/10 323,285
------------
830,160
------------
Total government obligations (cost: $5,016,984)........................ 4,991,160
------------
CORPORATE OBLIGATIONS (67.9%)
BASIC INDUSTRIES (5.1%)
Chemicals (2.4%)
500,000 Sociedad Quimica de Chile(b)(d).................. 7.700% 09/15/06 501,515
------------
Primary Metals (2.7%)
530,000 Reynolds Metals Company.......................... 9.375% 06/15/99 564,420
------------
CAPITAL GOODS (9.1%)
Aerospace/Defense (1.2%)
250,000 Loral Corporation................................ 7.625% 06/15/04 255,896
------------
Machinery (4.0%)
750,000 Joy Technologies Incorporated.................... 10.250% 09/01/03 827,159
------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- --------- ------------
<C> <S> <C> <C> <C>
CORPORATE OBLIGATIONS--CONTINUED
Telecommunications (3.9%)
$ 800,000 Telekom Malaysia(b)(d)........................... 7.875% 08/01/25 $ 802,134
------------
CONSUMER CYCLICAL (2.0%)
Textiles (2.0%)
400,000 Reliance Industries(b)(d)........................ 10.375% 06/24/16 408,512
------------
CONSUMER STAPLES (13.7%)
Entertainment (3.8%)
250,000 Time Warner...................................... 8.875% 10/01/12 266,943
500,000 Time Warner...................................... 7.950% 02/01/00 512,620
------------
779,563
------------
Food (.9%)
182,143 General Mills Inc................................ 6.235% 03/15/97 182,461
------------
Household Products (3.2%)
600,000 Premark International Inc........................ 10.500% 09/15/00 672,630
------------
Media (4.6%)
700,000 News America Holdings Inc........................ 7.750% 12/01/45 640,184
300,000 TCI Communications Inc........................... 8.650% 09/15/04 306,899
------------
947,083
------------
Retail (1.2%)
250,000 Heilig-Meyers Company............................ 7.875% 08/01/03 247,734
------------
CREDIT SENSITIVE (2.0%)
Building Materials (2.0%)
450,000 Masco Corporation................................ 6.125% 09/15/03 425,088
------------
FINANCIAL (31.8%)
Auto Finance (4.9%)
500,000 Ford Motor Credit Company........................ 6.250% 12/08/05 463,056
500,000 GMAC............................................. 9.000% 10/15/02 545,128
------------
1,008,184
------------
Banks/Savings and Loan (4.4%)
600,000 Midland Bank PLC(b).............................. 7.625% 06/15/06 609,620
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- --------- ------------
<C> <S> <C> <C> <C>
CORPORATE OBLIGATIONS--CONTINUED
$ 300,000 Norwest Corporation.............................. 7.680% 05/10/02 $ 305,964
------------
915,584
------------
Collaterized Mortgage Obligations/Asset Backed (4.0%)
378,243 Chase 1994-1 B2 CMO(d)........................... 6.611% 03/28/25 343,847
300,000 CSFB Finance Company Limited, Series 95-A, Class
A 144A Issue(d)................................. 7.500% 11/15/05 292,875
189,138 Green Tree Financial, Net Interest Margin CMO,
Series 1995-A, Class A.......................... 7.250% 07/15/05 188,978
------------
825,700
------------
Consumer Finance (5.4%)
600,000 Commercial Credit Company........................ 7.375% 03/15/02 611,119
500,000 Lehman Brothers Holdings......................... 7.375% 05/15/07 506,637
------------
1,117,756
------------
Commercial Finance (3.6%)
750,000 General Electric Capital Corporation............. 6.660% 05/01/18 749,005
------------
Real Estate (9.5%)
500,000 Colonial Realty Limited Partnership.............. 8.050% 07/15/06 503,605
500,000 Developers Diversified........................... 7.400% 09/18/01 499,685
500,000 Security Capital Industrial Trust................ 7.875% 05/15/09 498,812
500,000 Security Capital Pacific Trust................... 7.500% 02/15/14 472,986
------------
1,975,088
------------
UTILITIES (4.2%)
Telephones (4.2%)
350,000 AT&T Corporation................................. 8.350% 01/15/25 362,516
500,000 Compania de Telecomunicaciones de Chile(b)....... 7.625% 07/15/06 505,226
------------
867,742
------------
Total corporate obligations (cost: $14,233,990)........................ 14,073,254
------------
Total long-term debt securities (cost: $19,250,974).................... 19,064,414
------------
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- --------- ------------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (6.6%)
$ 420,000 U.S. Treasury Bill............................... 5.39% 01/23/97 $ 413,278
550,000 American Home Products CP(d)..................... 5.46% 10/11/96 549,114
400,000 New Jersey Gas CP................................ 5.45% 10/02/96 399,881
------------
Total short-term securities (cost: $1,361,988)......................... 1,362,273
------------
Total investments in securities (cost: $20,612,962)(e)................. $ 20,426,687
------------
------------
</TABLE>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) The Fund held 17.6% of net assets in foreign securities as of September 30,
1996.
(c) At September 30, 1996 the total cost of investments issued on a when-issued
or forward commitment basis is $500,000.
(d) Represents ownership in a restricted security which has not been registered
with the Securities and Exchange Commission under the Securities Act of
1933. (See note 6 to the financial statements.) Information concerning the
restricted securities held at September 30, 1996, which includes
acquisition date and cost, is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY DATE COST
-------------------------------------------------- ---------- ---------
<S> <C> <C>
American Home Products CP......................... 09/20/96 $ 549,098
Chase 1994-1 B2................................... 03/06/96 354,960
CSFB Finance Company Limited...................... 05/15/96 292,173
Reliance Industries............................... 06/17/96 399,168
Sociedad Quimica de Chile......................... 09/13/96 498,784
Telekom Malaysia.................................. Various 799,478
---------
$2,893,661
---------
---------
</TABLE>
(e) At September 30, 1996 the cost of securities for federal income tax
purposes was $20,634,389. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation................ $ 90,366
Gross unrealized depreciation................ (298,068)
----------
Net unrealized depreciation.................. $ (207,702)
----------
----------
</TABLE>
10
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1996
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying schedule
for detailed listing (identified cost: $20,612,962).................. $ 20,426,687
Cash in bank on demand deposit........................................ 34,465
Receivable for Fund shares sold....................................... 4,210
Receivable for investment securities sold............................. 517,757
Accrued interest receivable........................................... 311,459
-------------
Total assets...................................................... 21,294,578
-------------
LIABILITIES
Payable for Fund shares repurchased................................... 50,727
Payable for investment securities purchased........................... 500,000
Payable to Adviser.................................................... 19,820
-------------
Total liabilities................................................. 570,547
-------------
Net assets applicable to outstanding capital stock.................... $ 20,724,031
-------------
-------------
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)............. $ 20,666
Additional paid-in capital.......................................... 21,295,286
Undistributed net investment income................................. 12,781
Accumulated net realized losses from investments.................... (418,427)
Unrealized depreciation of investments.............................. (186,275)
-------------
Total--representing net assets applicable to outstanding capital
stock............................................................ $ 20,724,031
-------------
-------------
Net assets applicable to outstanding Class A Shares................... $ 16,527,548
-------------
-------------
Net assets applicable to outstanding Class B Shares................... $ 3,531,907
-------------
-------------
Net assets applicable to outstanding Class C Shares................... $ 664,576
-------------
-------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 1,647,992............................... $ 10.03
-------------
-------------
Class B--Shares outstanding 352,313................................. $ 10.02
-------------
-------------
Class C--Shares outstanding 66,320.................................. $ 10.02
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1996
<TABLE>
<S> <C>
Investment income:
Interest........................................................................... $ 1,320,197
------------
Expenses (note 4):
Investment advisory fee............................................................ 130,555
Distribution fees--Class A......................................................... 47,927
Distribution fees--Class B......................................................... 23,386
Distribution fees--Class C......................................................... 3,362
Administrative services fee........................................................ 41,200
Custodian fees..................................................................... 6,294
Auditing and accounting services................................................... 5,958
Legal fees......................................................................... 3,618
Directors' fees.................................................................... 304
Registration fees.................................................................. 28,684
Printing and shareholder reports................................................... 27,949
Insurance.......................................................................... 5,470
Other.............................................................................. 6,623
------------
Total expenses................................................................. 331,330
Less fees and expenses waived or absorbed:
Class A distribution fees........................................................ (31,952)
Other fund expenses.............................................................. (88,798)
------------
Total fees and expenses waived or absorbed..................................... (120,750)
------------
Total net expenses............................................................. 210,580
------------
Investment income--net......................................................... 1,109,617
------------
Realized and unrealized losses on investments:
Net realized losses on investments (note 3)........................................ (23,772)
Net change in unrealized appreciation or depreciation on investments............... (375,184)
------------
Net losses on investments...................................................... (398,956)
------------
Net increase in net assets resulting from operations................................. $ 710,661
------------
------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>
1996 1995
------------- -------------
<S> <C> <C>
Operations:
Investment income--net.................................... $ 1,109,617 $ 974,533
Net realized losses on investments........................ (23,772) (56,377)
Net change in unrealized appreciation or depreciation on
investments.............................................. (375,184) 1,185,953
------------- -------------
Increase in net assets resulting from operations........ 710,661 2,104,109
------------- -------------
Distributions to shareholders from investment income--net:
Class A................................................... (965,303) (939,133)
Class B................................................... (120,874) (28,946)
Class C................................................... (17,365) (1,889)
------------- -------------
Total distributions..................................... (1,103,542) (969,968)
------------- -------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A................................................. 3,513,269 1,777,559
Class B................................................. 2,681,828 1,038,123
Class C................................................. 678,300 116,694
Shares issued as a result of reinvested dividends:
Class A................................................. 569,404 544,661
Class B................................................. 108,590 26,134
Class C................................................. 16,513 1,889
Payments for redemption of shares:
Class A................................................. (2,541,805) (1,973,311)
Class B................................................. (342,179) (16,414)
Class C................................................. (136,300) (9,920)
------------- -------------
Increase in net assets from capital share
transactions........................................... 4,547,620 1,505,415
------------- -------------
Total increase in net assets............................ 4,154,739 2,639,556
Net assets at beginning of year............................. 16,569,292 13,929,736
------------- -------------
Net assets at end of year (including undistributed net
investment income of $12,781 and $6,706, respectively)..... $ 20,724,031 $ 16,569,292
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(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 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.
14
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Interest income, including amortization of bond premium
and discount computed on a level yield basis, is accrued daily.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities which have been purchased by the Fund on
a forward commitment or when-issued basis can take place a month or more after
the transaction date. During this period, such securities are subject to market
fluctuations. As of September 30, 1996, the Fund had entered into outstanding
when-issued or forward commitments of $500,000. The Fund has segregated assets,
with the Fund's custodian, to cover such when-issued and forward commitment
transactions.
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.
For federal income tax purposes, the Fund had a capital loss carryover at
September 30, 1996 of $397,000, which, if not offset by subsequent capital
gains, will expire from September 30, 2003 to September 30, 2005. 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 year ended September 30, 1996, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities,
aggregated $43,078,702 and $38,890,019, 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
15
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
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 and wholly-owned subsidiary of
MIMLIC Management, to be used to pay certain expenses incurred in the
distribution, promotion and servicing of the Fund's shares. The Class A Plan
provides for a fee up to .30 percent of average daily net assets of Class A
shares. The Class B and Class C Plans provide for a fee up to 1.00 percent of
average daily net assets of Class B and Class C shares, respectively. The Class
B and Class C 1.00 percent fees are 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. MIMLIC Sales waived Class A distribution fees in the amount
of $31,952 for the year ended September 30, 1996.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services and other miscellaneous
expenses.
The Fund pays an administrative services fee to Minnesota Mutual for
accounting, auditing, legal and other administrative services which Minnesota
Mutual provides. Prior to February 1, 1996, the administrative services fee was
$3,100 per month. Effective February 1, 1996, the administrative services fee is
$3,600 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the year ended September
30, 1996, Advantus Capital voluntarily agreed to absorb $88,798 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 $137,919.
16
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
As of September 30, 1996, Minnesota Mutual and subsidiaries and the
directors and officers of the Fund as a whole owned the following shares:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OWNED
------------------ ---------------------
<S> <C> <C>
Class A..................................................................... 372,749 22.6%
Class B..................................................................... 5,786 1.6%
Class C..................................................................... 1,125 1.7%
</TABLE>
During the year ended September 30, 1996, legal fees were paid to a law firm
of which the Fund's secretary is a partner in the amount of $3,618.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the years ended September 30, 1996 and 1995 for
Class A and Class B shares and the year ended September 30, 1996 and the period
from March 1, 1995 to September 30, 1995 for Class C shares were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- -------------------- --------------------
1996 1995 1996 1995 1996 1995
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold..................................... 345,079 181,987 263,964 105,047 67,269 11,740
Issued for reinvested distributions...... 56,247 55,696 10,745 2,629 1,636 189
Redeemed................................. (249,660) (203,125) (33,988) (1,427) (13,540) (974)
---------- ---------- --------- --------- --------- ---------
151,666 34,558 240,721 106,249 55,365 10,955
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
</TABLE>
(6) RESTRICTED SECURITIES
At September 30, 1996, investments in securities includes issues which
generally cannot be offered for sale to the public without first being
registered under the Securities Act of 1933 (restricted security). In the event
the securities are registered, those carrying registration rights allow for the
issuer to bear all the related costs; for issues without rights, the Fund may
incur such costs. The Fund currently limits investments in securities that are
not readily marketable, including restricted securities, to 10 percent of net
assets at the time of the purchase. Securities are valued by procedures
described in note 2. The aggregate value of restricted securities held by the
Fund at September 30, 1996 was $2,897,997 which represents 14.0 percent of net
assets.
17
<PAGE>
Advantus Bond 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
YEAR ENDED SEPTEMBER NOVEMBER 1, YEAR ENDED OCTOBER
30, 1993 TO 31,
-------------------- SEPTEMBER --------------------
1996 1995(a) 30, 1994(b) 1993 1992
-------- -------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 10.24 $ 9.50 $ 11.21 $ 10.72 $ 10.38
-------- -------- ----------- -------- --------
Income from investment
operations:
Net investment income....... .62 .64 .53 .63 .73
Net gains or losses on
securities (both realized
and unrealized)............ (.22) .74 (1.24) .78 .36
-------- -------- ----------- -------- --------
Total from investment
operations............... .40 1.38 (.71) 1.41 1.09
-------- -------- ----------- -------- --------
Less distributions:
Dividends from net
investment income.......... (.61) (.64) (.53) (.63) (.73)
Distributions from capital
gains...................... -- -- (.47) (.29) (.02)
-------- -------- ----------- -------- --------
Total distributions....... (.61) (.64) (1.00) (.92) (.75)
-------- -------- ----------- -------- --------
Net asset value, end of
period....................... $ 10.03 $ 10.24 $ 9.50 $ 11.21 $ 10.72
-------- -------- ----------- -------- --------
-------- -------- ----------- -------- --------
Total return (d).............. 4.0% 15.1% (6.7)%(e) 14.0% 10.8%
Net assets, end of period (in
thousands)................... $ 16,528 $15,315 $13,879 $ 14,494 $ 9,415
Ratio of expenses to average
daily net assets (h)......... 1.00% 1.00% 1.00%(i) 1.00% 1.00%
Ratio of net investment income
to average daily net assets
(h).......................... 6.08% 6.58% 5.79%(i) 5.78% 6.88%
Portfolio turnover rate
(excluding short-term
securities).................. 222.6% 270.7% 163.5% 139.5% 115.6%
</TABLE>
- ----------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995,
the Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) During 1994, the Fund changed its fiscal year end from October 31 to
September 30.
(c) Commencement of operations.
(d) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges.
(e) Total return is presented for the period from November 1, 1993 to September
30, 1994.
(f) Total return is presented for the period from August 19, 1994, commencement
of operations, to September 30, 1994.
(g) Total return is presented for the period from March 1, 1995, commencement
of operations, to September 30, 1995.
18
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------- ---------------------------------
PERIOD FROM PERIOD FROM
YEAR ENDED AUGUST 19, MARCH 1,
SEPTEMBER 30, 1994(c) TO YEAR ENDED 1995(c) TO
------------------ SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995(a) 1994 1996 1995
------- ------- ------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 10.23 $ 9.50 $ 9.68 $ 10.23 $ 9.67
------- ------- ------ ------ ------
Income from investment
operations:
Net investment income....... .53 .55 .06 .52 .33
Net gains or losses on
securities (both realized
and unrealized)............ (.21) .73 (.18) (.21) .55
------- ------- ------ ------ ------
Total from investment
operations............... .32 1.28 (.12) .31 .88
------- ------- ------ ------ ------
Less distributions:
Dividends from net
investment income.......... (.53) (.55) (.06) (.52) (.32)
Distributions from capital
gains...................... -- -- -- -- --
------- ------- ------ ------ ------
Total distributions....... (.53) (.55) (.06) (.52) (.32)
------- ------- ------ ------ ------
Net asset value, end of
period....................... $ 10.02 $10.23 $ 9.50 $ 10.02 $ 10.23
------- ------- ------ ------ ------
------- ------- ------ ------ ------
Total return (d).............. 3.1% 13.9% (1.2)%(f) 3.1% 9.3%(g)
Net assets, end of period (in
thousands)................... $ 3,532 $1,142 $ 51 $ 665 $ 112
Ratio of expenses to average
daily net assets (h)......... 1.90% 1.90% .22%(j) 1.90% 1.90%(i)
Ratio of net investment income
to average daily net assets
(h).......................... 5.19% 5.61% .69%(j) 5.20% 5.54%(i)
Portfolio turnover rate
(excluding short-term
securities).................. 222.6% 270.7% 163.5% 222.6% 270.7%
</TABLE>
- ----------
(h) The Fund's Adviser and Distributor voluntarily absorbed or waived $120,750,
$129,155, $107,448, $86,877 and $78,626 in expenses for the years ended
September 30, 1996 and 1995, and the period ended September 30, 1994 and
the years ended October 31, 1993 and 1992, respectively. If Class A shares
had been charged for these expenses, the ratio of expenses to average daily
net assets would have been 1.68%, 1.88%, 1.83%, 1.70% and 2.10%,
respectively, and the ratio of net investment income to average daily net
assets would have been 5.40%, 5.70%, 4.95%, 5.08% and 5.78%, respectively.
If Class B shares had been charged for these expenses, the ratio of
expenses to average daily net assets would have been 2.38%, 2.56% and .35%,
respectively, and the ratio of net investment income to average daily net
assets would have been 4.71%, 4.95% and .56%, respectively, for the years
ended September 30, 1996 and 1995 and the period ended September 30, 1994.
If Class C shares had been charged for these expenses, the ratio of
expenses to average daily net assets would have been 2.38% and 2.56%,
respectively, and the ratio of net investment income to average daily net
assets would have been 4.72% and 4.88%, respectively, for the year ended
September 30, 1996 and the period ended September 30, 1995.
(i) Adjusted to an annual basis.
(j) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
19
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Bond Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Bond Fund,
Inc. (the Fund) as of September 30, 1996 and the related statement of operations
for the year then ended, the statement of changes in net assets for the two
years then ended and the financial highlights for the two years then ended, the
period from November 1, 1993 to September 30, 1994 and each of the years in the
two-year period ended October 31, 1993. These financial statements and the
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and the
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased or sold but not received or delivered, we
request confirmations from brokers, and where replies are not received, we carry
out other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of September 30, 1996 and the results of its operations,
changes in its net assets and financial highlights, for the periods stated in
the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 1, 1996
20
<PAGE>
ADVANTUS BOND FUND
FEDERAL INCOME TAX INFORMATION
The following information for federal income tax purposes is presented as an
aid to shareholders in reporting the distributions paid by the Fund in the
fiscal year ended September 30, 1996. Dividends for the 1996 calendar year will
be reported to you on Form 1099-Div in late January 1997. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A
Income distributions--taxable as dividend income, none qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- -------------------------------------------------------------------------------------- -----------
<S> <C>
October 31, 1995...................................................................... $ .0557
November 30, 1995..................................................................... .0521
December 31, 1995..................................................................... .0523
January 31, 1996...................................................................... .0487
February 29, 1996..................................................................... .0481
March 31, 1996........................................................................ .0523
April 30, 1996........................................................................ .0492
May 31, 1996.......................................................................... .0504
June 30, 1996......................................................................... .0494
July 31, 1996......................................................................... .0523
August 31, 1996....................................................................... .0527
September 30, 1996.................................................................... .0502
-----------
$ .6134
-----------
-----------
</TABLE>
CLASS B
Income distributions--taxable as dividend income, none qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- -------------------------------------------------------------------------------------- -----------
<S> <C>
October 31, 1995...................................................................... $ .0479
November 30, 1995..................................................................... .0444
December 31, 1995..................................................................... .0451
January 31, 1996...................................................................... .0431
February 29, 1996..................................................................... .0407
March 31, 1996........................................................................ .0445
April 30, 1996........................................................................ .0418
May 31, 1996.......................................................................... .0428
June 30, 1996......................................................................... .0421
July 31, 1996......................................................................... .0448
August 31, 1996....................................................................... .0450
September 30, 1996.................................................................... .0429
-----------
$ .5251
-----------
-----------
</TABLE>
21
<PAGE>
ADVANTUS BOND FUND
FEDERAL INCOME TAX INFORMATION--CONTINUED
CLASS C
Income distributions--taxable as dividend income, none qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- -------------------------------------------------------------------------------------- -----------
<S> <C>
October 31, 1995...................................................................... $ .0479
November 30, 1995..................................................................... .0444
December 31, 1995..................................................................... .0442
January 31, 1996...................................................................... .0422
February 29, 1996..................................................................... .0406
March 31, 1996........................................................................ .0445
April 30, 1996........................................................................ .0418
May 31, 1996.......................................................................... .0428
June 30, 1996......................................................................... .0420
July 31, 1996......................................................................... .0447
August 31, 1996....................................................................... .0450
September 30, 1996.................................................................... .0429
-----------
$ .5230
-----------
-----------
</TABLE>
22
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account-subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE TRANSFER: You may transfer money from one Advantus account to any
other Advantus account you own just by calling our toll free number. Sign up for
telephone exchanges on the Advantus Application or complete the telephone
authorization form.
SYSTEMATIC TRANSFER: If you have an Advantus Money Market account you may
transfer a set amount of money to another Advantus Fund to diversify your
investment portfolio and take advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums out of your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Our special purchase plans enable you to open an
Advantus Fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets). One of these plans--The
Automatic Investment Plan--allows you to invest automatically each month from
your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Individual Retirement Account or other qualified plan including SEPS, profit
sharing, money purchase or defined benefit plans.
23
<PAGE>
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account. Amounts
over $1,000 may be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. To set this up,
please send a voided check from your bank. Depending on the performance of the
underlying investment options, the value may be worth more or less than the
original amount invested upon redemption.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, and annual tax statements. Semiannual and annual reports will provide you
with portfolio information, fund performance data and the current investment
outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from MIMLIC Sales Corporation, call 1-800-443-3677. Our
voice response system is available from 7 a.m. to 3 a.m. Monday through Friday,
and 8 a.m. to 5 p.m. on Saturday. This system allows you to access current net
asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the eight Advantus Funds through your local
registered representative of MIMLIC Sales Corporation, distributor of the Funds.
Contact your representative for information and a prospectus for any of the
Advantus Funds you are interested in.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages eight mutual funds containing $346
million in assets in addition to $1.3 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
24
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS]
MIMLIC SALES CORPORATION
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-443-3677
<PAGE>
MIMLIC SALES CORPORATION BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
FORWARDING AND RETURN POSTAGE GUARANTEED,
ADDRESS CORRECTION REQUESTED
F.48645 Rev 11-96
