<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
SEMI-ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS ENTERPRISE FUND
March 31, 1996
<PAGE>
ADVANTUS ENTERPRISE FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 6
STATEMENT OF ASSETS AND LIABILITIES 9
STATEMENT OF OPERATIONS 10
STATEMENT OF CHANGES IN NET ASSETS 11
NOTES TO FINANCIAL STATEMENTS 12
SHAREHOLDER SERVICES 18
<PAGE>
May 15, 1996
[PHOTO]
Dear Shareholders:
The stock market continued making impressive gains in the first quarter of 1996
- -- up 5.4 percent, as measured by the S&P 500, after finishing 1995 at record
levels. The bond market, however, retreated from year-end highs, yielding a
negative 2.6 percent return according to the Lehman Corporate Bond Index.
Concerns about strong economic growth and full employment were the primary
factors in the bond market's slump, while strong corporate earnings and profits
led the stock market's charge. Retail stocks helped pace the market's first
quarter performance while technology companies returned widely fluctuating
results.
In the near-term, we believe that many large company earnings expectations will
be revised downward. This downward pressure should benefit higher quality
securities. Many small cap companies continue to demonstrate strong earnings
growth and their relative valuations maintain significant upside potential.
While growth in the U.S. market may slow, we maintain confidence that the equity
market holds opportunity for investors.
Improving economic growth and increased inflation have bond investors concerned
about the course of future interest rates. Higher commodity prices and strong
employment caused rates to jump in recent months. Rising interest rates offer
investors the chance to buy fixed income investments at attractive levels but
will keep the bond market in check until rates stabilize.
Diversification across industries and geographic regions remains a key element
of our success. However, determining which investments will perform well in both
the near and long-term requires professional experience. Advantus Capital
Management, Inc. offers a family of eight funds designed to help you reach your
financial goals with a thoughtful, well conceived investment strategy.
Sincerely,
[SIG]
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS ENTERPRISE FUND
PERFORMANCE UPDATE
[PHOTO]
JAMES P. TATERA, CFA
SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER
The Advantus Enterprise Fund is a mutual
fund designed for investors seeking
long-term accumulation of capital. In
pursuit of this objective, the Fund will
invest primarily in common and preferred
stocks issued by small companies, defined
in terms of either market capitalization
or gross revenues.
-Dividends paid quarterly.
-Capital gains distributions paid annually.
PERFORMANCE
The Advantus Enterprise Fund invests in smaller companies with excellent
prospects for growth in revenues and earnings. Many of these companies have been
trailing the larger companies in performance over the past two years as
investors have focused their attention on a narrowly focused list of larger
companies. The last three months may be the start of a change in the winds as
smaller companies outperformed large ones.
The Advantus Enterprise Fund has also shown strong performance for the six
months ended March 31, 1996, returning the following for each of the three
classes of shares offered:
<TABLE>
<S> <C>
Class A 8.9 percent *
Class B 8.5 percent *
Class C 8.4 percent *
</TABLE>
These returns compare favorably to the S&P Small Cap Index's** return of
7.7 percent for the same period.
PORTFOLIO RECAP
A few sectors outperformed significantly in the period led by consumer services
(retail) and business services. Other strong performing areas included consumer
cyclicals and basic industry, both beneficiaries of a stronger economy.
Overall portfolio performance was impacted both positively and negatively by our
technology holdings. Some of our best and worst performers were technology
companies which were impacted by the slowing of corporate spending. Companies
whose products continue to be in demand or who use technology effectively in
their businesses performed well.
Standout performers came from an eclectic group including Gartner Group
(technology consultants), Paramount Corporation (telecommunications), Borders
Group (retailing), and United Waste Systems (waste disposal).
OUTLOOK
With the first quarter of 1996 behind us, we feel positive about the outlook for
smaller companies the rest of the year. This relative optimism comes as larger
companies in particular have had problems meeting earnings
2
<PAGE>
ADVANTUS ENTERPRISE FUND
MARCH 31, 1996
expectations, as overall demand has been impacted by slower activity both here
and abroad, as well as less positive contributions from currency translations.
On a comparative basis many smaller companies continue to show decent earnings
growth. Therefore, as investors compare those gains to the slower growth of
larger companies, relative valuations should be enhanced.
We continue to find companies where earnings and revenues are expanding in a
diverse set of industries. Our discipline to finding these growing companies
should provide for solid gains the rest of the year.
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN ADVANTUS
ENTERPRISE FUND, WILSHIRE MIDCAP INDEX+ AND CONSUMER PRICE INDEX
On the following two charts you can see how the total return for each of the
three classes of shares of the Advantus Enterprise Fund compared to the Wilshire
Midcap Index and the Consumer Price Index. The 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 Enterprise Fund
(September 16, 1994 for Class A and Class B and March 1, 1995 for Class C)
through March 31, 1996.
CLASS A AND B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C> <C>
Class A:
One year 22.4%
Since inception (9/16/94) 19.3%
Class B:
One year 22.7%
Since inception (9/16/94) 19.6%
Date Class A Class B Wilshire CPI
9/16/94 10,000 10,000 10,000 10,000
9/30/94 9,419 9,910 9,942 10,128
9/30/95 12,044 12,107 12,439 10,351
3/31/96 13,115 13,171 13,671 10,514
</TABLE>
*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 S&P Small Cap Index is comprised by Standard & Poor's and contains
companies chosen for their size, as measured by market capitalization, industry
and liquidity.
+The Wilshire Midcap Index is comprised of the bottom 750 companies of the
largest 1,250 U.S. domicile companies as measured by market capitalization.
3
<PAGE>
ADVANTUS ENTERPRISE FUND
MARCH 31, 1996
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 27.7%
Since inception (3/1/95) 27.8%
Fund Wilshire CPI
3/01/95 10,000 10,000 10,000
9/30/95 12,038 12,157 10,146
3/31/96 13,049 13,360 10,305
</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.
4
<PAGE>
ADVANTUS ENTERPRISE FUND
MARCH 31, 1996
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------ ------ ---------- ----------
<S> <C> <C> <C>
Computer Associates
International................ 23,308 $1,669,436 5.2%
Tommy Hilfiger Corporation.... 31,200 1,431,300 4.5%
First Data Corporation........ 18,055 1,272,878 4.0%
Danka Business Systems........ 26,000 1,098,500 3.4%
Columbia/HCA Healthcare
Corporation.................. 16,487 952,124 3.0%
Gartner....................... 15,500 945,500 2.9%
Pansamsat Corporation......... 27,900 850,950 2.6%
Indexx Laboratories Inc....... 18,600 781,200 2.4%
Borders Group Incorporated.... 27,020 770,070 2.4%
Oracle Corporation............ 15,800 744,575 2.3%
---------- ---
$10,516,533 32.7%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Goods 6.6%
Consumer Goods and Services 36.9%
Credit Sensitive 11.4%
Intermediate Goods and
Services 6.9%
Technology 23.5%
Cash and Other
Assets/Liabilites 14.7%
</TABLE>
5
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1996
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (85.3%)
CAPITAL GOODS (6.6%)
15,000 AES China Generating Co Ltd (b)(c)........... $ 125,625
18,600 Blount International, Incorporated........... 571,950
14,300 Millipore Corporation........................ 546,975
20,300 MSC Industrial Direct Co (c)................. 586,162
13,271 United Waste Systems, Inc (c)................ 663,550
------------
2,494,262
------------
CONSUMER GOODS AND SERVICES (36.9%)
Consumer Goods (8.1%)
16,487 Columbia/HCA Healthcare Corporation.......... 952,124
18,600 Idexx Laboratories Inc (c)................... 781,200
12,400 Medpartners (c).............................. 353,400
8,132 Occusystems, Incorporated (c)................ 185,003
8,000 Teva Pharmaceutical Industries (b)........... 308,000
7,600 United Health Care........................... 467,400
------------
3,047,127
------------
Consumer Services (13.4%)
20,210 Big Flower Press Holdings Incorporated (c)... 257,677
6,000 Boston Chicken Incorporated (c).............. 204,375
<CAPTION>
MARKET
SHARES VALUE(A)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
1,300 Caribiner International Inc (c).............. $ 33,475
21,200 Carmike Cinemas Inc (c)...................... 482,300
18,866 CUC International Inc (c).................... 551,830
15,500 Gartner (c).................................. 945,500
16,000 GTECH Holdings Corporation (c)............... 496,000
14,700 Lone Star Steakhouse & Saloon, Inc (c)....... 562,275
12,501 Manpower..................................... 387,531
19,900 Red Roof Inns Incorporated (c)............... 296,013
13,200 Sola International Inc (c)................... 410,850
11,703 Sun International Hotels Ltd (c)............. 421,308
------------
5,049,134
------------
Retail (11.3%)
29,000 Advanced Lighting Technologies, Inc (c)...... 402,375
2,900 Amerisource Health Corporation (c)........... 95,700
2,900 APAC Teleservices, Incorporated (c).......... 206,625
27,020 Borders Group Incorporated (c)............... 770,070
31,200 Casey's General Stores Inc................... 733,200
15,900 Eastbay Incorporated (c)..................... 262,350
</TABLE>
See accompanying notes to investments in securities.
6
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
17,400 Friedman's (c)............................... $ 348,000
18,600 Global Directmail Corporation (c)............ 648,675
8,100 Home Depot Inc............................... 387,788
3,100 Kohl's Inc (c)............................... 196,462
8,200 Orchard Supply Hardware (c).................. 193,725
------------
4,244,970
------------
Consumer Cyclicals (4.1%)
11,300 Stant Corporation............................ 135,600
31,200 Tommy Hilfiger Corporation (c)............... 1,431,300
------------
1,566,900
------------
CREDIT SENSITIVE (11.4%)
Finance (9.1%)
12,300 Amerin (c)................................... 335,175
18,055 First Data Corporation....................... 1,272,878
3,200 MGIC Investment Corporation.................. 174,400
12,100 Partnerre Ltd (b)............................ 359,975
13,400 T. Rowe Price Associates..................... 710,200
31,900 Roosevelt Financial Group, Inc............... 590,150
------------
3,442,778
------------
Utilities (2.3%)
27,900 Pansamsat Corporation (c).................... 850,950
------------
INTERMEDIATE GOODS AND SERVICES (6.9%)
Materials (3.2%)
9,425 Cambrex Corporation.......................... 434,728
<CAPTION>
MARKET
SHARES VALUE(A)
- ----------- ------------
<C> <S> <C>
INTERMEDIATE GOODS AND SERVICES-- CONTINUED
32,800 Citation Corporation (c)..................... $ 414,100
13,670 McWhorter Technology Inc (c)................. 237,516
2,300 Valspar Corporation.......................... 104,362
------------
1,190,706
------------
Transportation (3.7%)
8,600 Eagle USA Airfreight, Inc (c)................ 238,650
16,000 Fritz Companies (c).......................... 624,000
21,300 Landstar System, Inc (c)..................... 532,500
------------
1,395,150
------------
TECHNOLOGY (23.5%)
14,500 Acxiom Corporation (c)....................... 346,187
11,800 Adtran Incorporated (c)...................... 539,850
13,100 The Bisys Group Inc (c)...................... 433,938
7,400 C-Cube Microsystems Incorporated (c)......... 388,500
1,650 Cascade Communications Inc (c)............... 148,088
700 CKS Group Incorporated (c)................... 17,850
23,308 Computer Associates International............ 1,669,436
31,100 Computron Software (c)....................... 186,600
26,000 Danka Business Systems (b)................... 1,098,500
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
24,000 Data Translation Incorporated (c)............ $ 396,000
336 Datastream Systems, Incorporated (c)......... 7,308
18,100 DSC Communications (c)....................... 488,700
8,074 Fore Systems Inc (c)......................... 577,291
23,600 Informix Corporation (c)..................... 622,450
9,600 J Ray Mcdermott Holdings Incorporated (c).... 186,000
3,000 Macromedia Incorporated (c).................. 128,250
<CAPTION>
MARKET
SHARES VALUE(A)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
23,100 Mercury Interactive Corp (c)................. $ 369,600
3,401 Objective Systems Integrator (c)............. 154,746
15,800 Oracle Corporation (c)....................... 744,575
8,100 Telephone and Data Systems, Inc.............. 374,625
------------
8,878,494
------------
Total common stocks
(cost: $24,404,598) (d).................................. 32,160,471
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (13.6%)
$3,260,000 U.S. Treasury Bills............................... 4.71%-5.07% 04/18/96 3,250,546
700,000 U.S. Treasury Bills............................... 5.00%-5.07% 05/16/96 695,296
1,200,000 U.S. Treasury Bills............................... 5.12%-5.18% 06/13/96 1,187,228
-----------
Total short-term securities (cost: $5,135,700)........................... 5,133,070
-----------
Total investments in securities (cost: $29,540,298) (d).................. $37,293,541
-----------
-----------
</TABLE>
Notes to Investments in Securities
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) The Fund held 5.0% of net assets in foreign securities as of March 31,
1996.
(c) Presently non-income producing.
(d) At March 31, 1996 the cost of securities for federal income tax purposes
was $29,540,298. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C> <C>
Gross unrealized appreciation........... $8,725,863
Gross unrealized depreciation........... (972,620)
----------
Net unrealized appreciation............. $7,753,243
----------
----------
</TABLE>
8
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying
schedule for detailed listing (identified cost: $29,540,298).... $37,293,541
Cash in bank on demand deposit................................... 21,362
Receivable for Fund shares sold.................................. 69,728
Receivable for investment securities sold........................ 606,722
Dividends receivable............................................. 6,735
Organizational costs............................................. 37,183
-----------
Total assets................................................. 38,035,271
-----------
LIABILITIES
Payable for Fund shares repurchased.............................. 3,330
Payable for investment securities purchased...................... 236,550
Payable to Adviser............................................... 80,761
-----------
Total liabilities............................................ 320,641
-----------
Net assets applicable to outstanding capital stock............... $37,714,630
-----------
-----------
Represented by:
Capital stock--$.01 par value (note 1)......................... $ 25,386
Additional paid-in capital..................................... 28,933,808
Undistributed net investment loss.............................. (91,613)
Accumulated net realized gains from investments................ 1,093,806
Unrealized appreciation of investments......................... 7,753,243
-----------
Total--representing net assets applicable to outstanding
capital stock............................................... $37,714,630
-----------
-----------
Net assets applicable to outstanding Class A Shares.............. $34,432,687
-----------
-----------
Net assets applicable to outstanding Class B Shares.............. $ 2,958,602
-----------
-----------
Net assets applicable to outstanding Class C Shares.............. $ 323,341
-----------
-----------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 2,314,743.......................... $ 14.88
-----------
-----------
Class B--Shares outstanding 201,826............................ $ 14.66
-----------
-----------
Class C--Shares outstanding 22,061............................. $ 14.66
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1995 TO MARCH 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest....................................................... $ 107,447
Dividends...................................................... 37,855
----------
145,302
----------
Expenses (note 4):
Investment advisory fee........................................ 138,818
Distribution fees--Class A..................................... 48,467
Distribution fees--Class B..................................... 11,026
Distribution fees--Class C..................................... 939
Administrative services fee.................................... 19,600
Amortization of organizational costs........................... 5,441
Custodian fees................................................. 3,633
Auditing and accounting services............................... 6,642
Legal fees..................................................... 1,281
Directors' fees................................................ 271
Registration fees.............................................. 17,475
Printing and shareholder reports............................... 13,315
Insurance...................................................... 2,750
Other.......................................................... 5,010
----------
Total expenses............................................. 274,668
Less fees and expenses waived or absorbed:
Class A distribution fees.................................... (32,312)
----------
Total net expenses......................................... 242,356
----------
Investment loss--net....................................... (97,054)
----------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)..................... 1,093,809
Net change in unrealized appreciation or depreciation on
investments................................................... 1,930,087
----------
Net gains on investments................................... 3,023,896
----------
Net increase in net assets resulting from operations............. $2,926,842
----------
----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1995 TO MARCH 31, 1996 AND
YEAR ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Operations:
Investment loss--net............................ $ (97,054) $ (108,586)
Net realized gains on investments............... 1,093,809 1,149,528
Net change in unrealized appreciation or
depreciation of investments.................... 1,930,087 4,896,004
----------- -----------
Increase in net assets resulting from
operations................................. 2,926,842 5,936,946
----------- -----------
Distributions to shareholders from:
Net realized gains on investments:
Class A....................................... (938,442) (22,643)
Class B....................................... (62,161) (474)
Class C....................................... (4,437) --
----------- -----------
Total distributions......................... (1,005,040) (23,117)
----------- -----------
Capital share transactions (notes 4 and 6):
Proceeds from sales:
Class A....................................... 2,156,077 11,923,790
Class B....................................... 1,351,461 1,409,271
Class C....................................... 246,027 66,063
Shares issued as a result of reinvested
dividends:
Class A....................................... 467,209 857
Class B....................................... 61,766 474
Class C....................................... 4,437 --
Payments for redemption of shares:
Class A....................................... (439,437) (122,253)
Class B....................................... (289,335) (6,361)
Class C....................................... (10,931) (408)
----------- -----------
Increase in net assets from capital share
transactions............................... 3,547,274 13,271,433
----------- -----------
Total increase in net assets................ 5,469,076 19,185,262
Net assets at beginning of period................. 32,245,554 13,060,292
----------- -----------
Net assets at end of period (including
undistributed net investment income (loss) of
($91,613) and $0, respectively).................. $37,714,630 $32,245,554
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
(1) ORGANIZATION
Advantus Enterprise Fund, Inc. (the Fund) was incorporated on January 27,
1994. 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 Enterprise
Fund, Inc. (effective March 1, 1995). Prior to March 1, 1995 the Fund was known
as MIMLIC Small Company 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.
On June 20, 1994, MIMLIC Asset Management Company (MIMLIC Management)
purchased 7,500 Class A shares and 7,500 Class B shares. Operations of the Fund
did not formally commence until September 16, 1994 when the shares became
effectively registered under the Securities Exchange Act of 1933. The Minnesota
Mutual Life Insurance Company (Minnesota Mutual), the parent of MIMLIC
Management, purchased 1,167,726 Class A shares for $12 million prior to
commencement of operations.
(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 increase and decrease in net assets 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
12
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
for which no sale was reported on that date are valued on the basis of the last
current bid price. When market quotations are not readily available, securities
are valued at fair value as determined in good faith by the Board of Directors.
Such fair values are determined using pricing services or prices quoted by
independent brokers. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date and
interest income, including amortization of bond premium and discount computed on
a level yield basis, is accrued daily.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to December
31, in order to avoid federal excise tax.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary book-to-tax
differences. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income (loss) or realized gains (losses) were
recorded by the Fund.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to decrease
undistributed net investment loss and decrease additional paid-in capital by
$5,441.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from October 1, 1995 to March 31, 1996, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $12,306,086 and $11,934,611, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
On February 14, 1995 shareholders of the Fund approved a new investment
advisory agreement, effective March 1, 1995, with Advantus Capital Management,
Inc. (Advantus Capital or the Adviser). Advantus Capital is a wholly-owned
subsidiary of 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
13
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
redemption agent (Minnesota Mutual). The fee for investment management and
advisory services is based on the average daily net assets of the Fund at the
annual rate of .80 percent, which is the same as under the old agreement with
MIMLIC Management.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to MIMLIC Sales Corporation
(MIMLIC Sales), the underwriter of the Fund and wholly-owned subsidiary of
MIMLIC Management, to be used to pay certain expenses incurred in the
distribution, promotion and servicing of the Fund's shares. The Class A Plan
provides for a fee up to .30 percent of average daily net assets of Class A
shares. The Class B and Class C Plans provide for a fee up to 1.00 percent of
average daily net assets of Class B and Class C shares, respectively. The Class
B and Class C 1.00 percent fee is comprised of a .75 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 $32,312 for the period from October 1, 1995 to March 31, 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, organizational costs 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 service fee was
$3,100 per month. Effective February 1, 1996, the administrative service fee is
$3,600 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by MIMLIC Sales for distributing the Fund's three
classes of shares amounted to $81,966.
As of March 31, 1996, Minnesota Mutual and subsidiaries and the directors
and officers of the Fund as a whole own the following shares:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OWNED
------------------ -------------------
<S> <C> <C>
Class A................................................. 2,040,421 88.2%
Class B................................................. 7,740 3.8%
Class C................................................. 889 4.0%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $1,281.
14
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs will be amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or all
of the shares held by MIMLIC Management, or any other holder, representing
initial capital of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by the pro rata portion (based on the ratio
that the number of initial shares redeemed bears to the total number of
outstanding initial shares of the Fund at the date of redemption) of the
unamortized organizational cost balance.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1995 to March 31, 1996
and the year ended September 30, 1995 for Class A and Class B shares and the
period from October 1, 1995 to March 31, 1996 and 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...................................... 148,266 997,759 89,460 115,168 17,415 5,124
Issued for reinvested distributions....... 33,982 79 9,200 44 316 --
Redeemed.................................. (30,727) (9,842) (20,237) (508) (762) (32)
--------- --------- ---------- --------- --------- ---------
151,521 987,996 78,423 114,704 16,969 5,092
--------- --------- ---------- --------- --------- ---------
--------- --------- ---------- --------- --------- ---------
</TABLE>
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, SEPTEMBER 16,
1995 TO YEAR ENDED 1994(A) TO
MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1996 1995(I) 1994
------------- --------------- ---------------
<S> <C> <C> <C>
Net asset value, beginning of
period....................... $ 14.08 $ 11.03 $ 11.12
------------- ------- -------
Income from investment
operations:
Net investment income
(loss)..................... (.03) (.04) --
Net gains or losses on
securities (both realized
and unrealized)............ 1.25 3.11 (.09)
------------- ------- -------
Total from investment
operations............... 1.22 3.07 (.09)
------------- ------- -------
Less distributions:
Dividends from net
investment income.......... -- -- --
Distributions from capital
gains...................... (.42) (.02) --
------------- ------- -------
Total distributions....... (.42) (.02) --
------------- ------- -------
Net asset value, end of
period....................... $ 14.88 $ 14.08 $ 11.03
------------- ------- -------
------------- ------- -------
Total return (b).............. 8.9%(c) 27.9% (.8)%(d)
Net assets, end of period (in
thousands)................... $ 34,433 $ 30,454 $ 12,964
Ratio of expenses to average
daily net assets (f)......... 1.33%(g) 1.34% .05%(h)
Ratio of net investment income
(loss) to average daily net
assets (f)................... (.50)%(g) (.48)% (.02)%(h)
Portfolio turnover rate
(excluding short-term
securities).................. 38.8% 48.8% 5.0%
Average commission rate on
common stock transactions.... $ .1217 N/A N/A
</TABLE>
- ----------
(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 front-end and contingent deferred sales
charges.
(c) Total return is presented for the period from October 1, 1995 to March 31,
1996.
(d) Total return is presented for the period from September 16, 1994,
commencement of operations, to September 30, 1994.
(e) Total return is presented for the period from March 1, 1995, commencement of
operations, to September 30, 1995.
(f) The Fund's Distributor and Adviser voluntarily waived or absorbed $32,312,
$83,999 and $1,430 in expenses for the period from October 1, 1995 to March
31, 1996, the year ended September 30, 1995 and the period ended September
30, 1994, respectively. If the Fund had been charged for these expenses, the
ratio of expenses to average daily net assets would have been 1.53%, 1.75%
and .06% for Class A shares, respectively, 2.23%, 2.39% and .10% for Class B
shares, respectively, and 1.90% and 2.32% for Class C shares, respectively.
The ratios of net investment income (loss) to average daily net assets would
have been (.70)%, (.89)% and (.03)% for Class A shares, respectively,
(1.39)%, (1.60)% and (.07)% for Class B shares, respectively and (1.38)% and
(1.65)% for Class C shares, respectively.
16
<PAGE>
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------------- --------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM
OCTOBER 1, SEPTEMBER 16, OCTOBER 1, PERIOD FROM MARCH
1995 YEAR ENDED 1994(A) TO 1995 TO MARCH 1, 1995(A) TO
TO MARCH 31, SEPTEMBER 30, SEPTEMBER 30, 31, SEPTEMBER 30,
1996 1995(I) 1994 1996 1995
----------------- ----------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 13.94 $ 11.02 $ 11.12 $ 13.94 $ 11.58
------ ------ ------ ------ ------
Income from investment
operations:
Net investment income
(loss)..................... (.07) (.09) (.01) (.06) (.06)
Net gains or losses on
securities (both realized
and unrealized)............ 1.21 3.03 (.09) 1.20 2.42
------ ------ ------ ------ ------
Total from investment
operations............... 1.14 2.94 (.10) 1.14 2.36
------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment income.......... -- -- -- -- --
Distributions from capital
gains...................... (.42) (.02) -- (.42) --
------ ------ ------ ------ ------
Total distributions....... (.42) (.02) -- (.42) --
------ ------ ------ ------ ------
Net asset value, end of
period....................... $ 14.66 $ 13.94 $ 11.02 $ 14.66 $ 13.94
------ ------ ------ ------ ------
------ ------ ------ ------ ------
Total return (b).............. 8.5%(c) 26.7% (.9)%(d) 8.4%(c) 20.4%(e)
Net assets, end of period (in
thousands)................... $ 2,959 $ 1,720 $ 96 $ 323 $ 71
Ratio of expenses to average
daily net assets (f)......... 2.23%(g) 2.24% .09%(h) 2.23%(g) 2.24%(g)
Ratio of net investment income
(loss) to average daily net
assets (f)................... (1.39)%(g) (1.45)% (.06)%(h) (1.38)%(g) (1.57)%(g)
Portfolio turnover rate
(excluding short-term
securities).................. 38.8% 48.8% 5.0% 38.8% 48.8%
Average commission rate on
common stock transactions.... $ .1217 N/A N/A $ .1217 N/A
</TABLE>
- ----------
(g) Adjusted to an annual basis.
(h) Ratios presented for the period from September 16, 1994 to September 30,
1994 are not annualized as they are not indicative of anticipated results.
(i) 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.
17
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value. (Exchanges from the 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 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.
18
<PAGE>
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 $301
million in assets in addition to $1.2 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
19
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[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.48646 5-96
