<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS INTERNATIONAL BALANCED FUND
SEPTEMBER 30, 1995
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND
LIABILITIES 16
STATEMENT OF OPERATIONS 17
STATEMENT OF CHANGES IN
NET ASSETS 18
NOTES TO FINANCIAL
STATEMENTS 19
INDEPENDENT AUDITORS'
REPORT 26
FEDERAL INCOME TAX
INFORMATION 27
SHAREHOLDER SERVICES 29
<PAGE>
October 31, 1995
[PHOTO]
Dear Shareholders:
The first nine months of 1995 produced exceptional returns for both stock and
bond investors. Subdued inflation and a growing economy combined to create a
positive secular environment for financial assets.
A 140 basis point reduction in the 30-year Treasury Bond produced a 21 percent
return since the beginning of the year. Corporate bonds returned 16.5 percent
according to Lehman Corporate Bond Index. If this pace continues, the bond
market will finish off one of its best years ever - a sharp reversal from 1994.
Investors reacted strongly to every actual and perceived economic shift creating
unusual volatility in the bond market. The sharp sell off in July and August was
just such an over reaction. Long term yields will be driven by continuing
concerns about the budget process in Washington, the near term direction of the
economy and the dollar's performance. Nonetheless, we expect Treasury Bills to
remain trading in the 6-7 percent range.
Technology, financial and consumer companies drove the stock market to all-time
record highs in the third quarter as measured by the S&P 500. While this
produced spectacular results, the extended run may create additional
vulnerability in the market. The chief concerns are disappointing earnings
announcements and a general slow down in profitability. According to Ibbotson
Associates, there have only been four times since 1927 that stock prices have
risen more in the first nine months of the year. In each instance, the market
cooled off in the final quarter. Factors which could push the market up in the
short term, however, are a significant interest rate reduction or a surge in
foreign portfolio inflows.
The current economic expansion is displaying the mixed signals of maturation.
However, we do not expect an early end to the recovery. The economy's recent
slow growth pattern should lengthen the life of the expansion by reducing
inflationary pressures and consequently, the need for money tightening measures.
It is unlikely that the economy will regain the robust pace of the early stages
of the expansion.
The market does hold opportunity for investors. Diversification across
industries and geographic regions remains a key element to successful investing.
However, determining which investments will benefit in both the near and long
term requires professional experience. Advantus Capital Management, Inc. offers
a family of eight funds which are designed to help you reach your goals with a
thoughtful, well conceived investment strategy.
Sincerely,
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
PERFORMANCE UPDATE
[PHOTO]
JIM CHANEY AND NEIL DEVLIN
TEMPLETON INVESTMENT COUNSEL, INC.
PORTFOLIO MANAGERS
The Advantus International Balanced Fund
is a mutual fund designed for investors
seeking a high level of total return. The
Fund hopes to achieve its objective by
investing in both stocks and debt
securities issued by companies, large and
small, outside the United States and in
debt securities of governments outside
the United States. While Advantus Capital
Management, Inc. acts as investment
adviser for the Fund, Templeton
Investment Counsel, Inc. provides
investment advice to the Fund under a
subadvisory agreement.
-Dividends paid quarterly.
-Capital gains distributions paid annually.
PERFORMANCE
Your Fund's first year return is attributed to comparable performance for both
the stock and bond portions of your portfolio. The Fund's performance for the
year ended September 30, 1995 for each class of shares offered is as follows:
<TABLE>
<S> <C>
Class A* 7.4%
Class C (since 3/1/95
inception)* 10.3%
</TABLE>
In absolute terms the Fund's performance generally benefited from a lower U.S.
Dollar vis-a-vis many overseas currencies. Performance relative to benchmark
indices was also helped by lower interest rates, and an under weighting in
Japanese shares. The returns for the Morgan Stanley Capital International EAFE
Index** and the J.P. Morgan Non-U.S. Government Bond Index+ are 6.2% and 18.6%,
respectively. Alternatively, these positive factors were partially offset by
your emerging markets' investments which continue to underperform. These
holdings, however, represent less than 15% of your portfolio and despite
near-term volatility probably continue to offer good long-term value.
MARKET RECAP
The international stock markets have mildly recovered after a difficult year in
1994. The magnitude of the recovery, however, remains dwarfed compared to the
1993 international bull market which is attributed to falling interest rates,
strong global economic recovery and emerging markets "euphoria." Today, however,
many markets are plagued by existing or proposed government policies which may
adversely affect earnings. Furthermore, there remains uncertainty regarding the
current position of the global economic cycle which is now generally interpreted
as a "pause" or a protracted "slowdown." Nevertheless, this environment has
proven favorable for fundamental investors who can correctly discern winners and
losers.
The international bond markets, however, have been more predictable given a
recent fall in interest rates in the U.S. and abroad. The overall level of
global growth is also not generally a concern provided issuers remain solvent.
Furthermore, global inflation remains subdued at reasonable levels.
OUTLOOK
The international stock markets have generally underperformed the U.S. stock
markets for two years yet on a stock-by-stock basis probably offer better
long-term value given above average long-term economic growth prospects. It is
for this reason that we remain optimistic. Nevertheless in the near-term, as
2
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
SEPTEMBER 30, 1995
expected, the investment environment outside the U.S. has been challenging. It
is during these periods of volatility, however, that good investment
opportunities are identified and are eventually realized.
We continue to selectively invest in the Far East, Eastern Europe and France and
remain less enthusiastic about the United Kingdom. Latin America is also being
closely watched without significant buying or selling activity.
The stock/bond & cash ratio for the portfolio is also expected to remain about
70/30. The bond portion of the portfolio continues to favor Australia, Canada
and New Zealand and higher yielding European markets which include Italy, Spain
and Sweden. Alternatively, the hard-currency markets, the United States, Germany
and Japan are considered less attractive.
*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.
**The EAFE Index is an unmanaged index of common stocks from European, Asian and
Far Eastern markets.
+The J.P. Morgan Non-U.S. Government Bond Index includes all liquid foreign
government issues of Australia, Belgium, Canada, Denmark, France, Germany,
Italy, Japan, Netherlands, Spain, Sweden and United Kingdom.
3
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
SEPTEMBER 30, 1995
FIVE LARGEST COMMON STOCK HOLDINGS
<TABLE>
<CAPTION>
% OF
COMMON
MARKET STOCK
COMPANY SHARES VALUE PORTFOLIO
- -------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
Svenska Handelsbanken........... 26,300 $ 455,595 2.3%
Volvo........................... 18,500 454,007 2.2%
Societe Generale de
Surveillance.................. 230 428,354 2.1%
Aegon........................... 11,015 400,379 2.0%
Astra........................... 11,000 387,457 1.9%
---------- ---
$2,125,792 10.5%
---------- ---
---------- ---
</TABLE>
FIVE LARGEST BOND HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF BOND
COMPANY VALUE PORTFOLIO
- --------------------------------------------- ---------- -----------
<S> <C> <C>
International Bank of Reconstruction and
Development, 6.125%, 09/27/02.............. $ 997,427 11.6%
Queensland Treasury Corporation, 8.0%,
05/14/03................................... 926,390 10.8%
Denmark Kingdom, 7.0%, 12/15/04.............. 794,385 9.3%
European Investment Bank, 5.875%, 11/26/99... 569,285 6.9%
Canadian Government, 9.5%, 10/01/98.......... 532,708 6.2%
---------- ---
$3,820,195 44.6%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Consumer Goods and Services 16.3%
Capital Goods 1.6%
Intermediate Goods and
Services 12.6%
Credit Sensitive 39.4%
Technology 8.7%
Foreign Government Debt 21.4%
</TABLE>
4
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
SEPTEMBER 30, 1995
COMPARISON OF CHANGE IN VALUE OF A
HYPOTHETICAL $10,000 INVESTMENT IN
ADVANTUS INTERNATIONAL BALANCED FUND, EAFE INDEX,
J.P. MORGAN NON-U.S. GOVERNMENT BOND INDEX AND
CONSUMER PRICE INDEX
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C> <C>
One year 2.0%
Since inception (9/16/94) .1%
Class A EAFE J.P. Morgan CPI
9/16/94 10,000 10,000 10,000 10,000
9/30/94 9,324 9,845 10,094 10,054
9/30/95 10,014 10,460 11,972 10,275
</TABLE>
On the chart above you can see how the Advantus International Balanced Fund
Class A shares' total return compared to the EAFE Index, J.P. Morgan Non-U.S.
Government Bond Index and Consumer Price Index. The four lines represent the
cumulative total return of a hypothetical $10,000 investment made on inception
date of the Advantus International Balanced Fund Class A shares (September 16,
1994) through September 30, 1995.
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL RETURN:
<S> <C> <C> <C> <C>
Since inception
(3/1/95) 10.3%
Class C EAFE J.P. Morgan CPI
03/01/95 10000 10000 10000 10000
09/30/95 11026 11175 11198 10146
</TABLE>
On the chart above you can see how the Advantus International Balanced Fund
Class C shares' total return compared to the EAFE Index, J.P. Morgan Non-U.S.
Government Bond Index and Consumer Price Index. The four lines represent
5
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
SEPTEMBER 30, 1995
the cumulative total return of a hypothetical $10,000 investment made on
inception date of the Advantus International Balanced Fund Class C shares (March
1, 1995) through September 30, 1995.
The above charts are useful because they provide you with more information about
your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund 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. Individuals cannot buy
even an unmanaged index fund without incurring some charges and expenses. Sales
charges pay for your financial adviser's investment advice.
Historical results are not an indication of future performance
6
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1995
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (64.6%)
AUSTRALIA (3.5%)
Banking (1.1%)
19,500 National Australia Bank........................................... $ 172,203
46,000 Westpac Banking................................................... 186,099
Building Materials and Components (.9%)
102,000 Pioneer International............................................. 269,457
Transportation (1.5%)
115,000 BTR Nylex Ltd..................................................... 308,139
15,000 Brambles Industries............................................... 165,297
------------
1,101,195
------------
AUSTRIA (1.9%)
Electrical and Electronics (.9%)
2,500 VA Technologie (b)(f)............................................. 288,905
Utilities--Gas and Electric (1.0%)
2,400 EVN Energie-Versorgung............................................ 290,773
------------
579,678
------------
BELGIUM (1.9%)
Chemicals (1.9%)
590 Solvay............................................................ 315,386
4,300 Union Miniere (b)................................................. 275,094
------------
590,480
------------
BRAZIL (.9%)
Telecommunications (.9%)
5,900 Telecomunicacoes Brasileiras ADR.................................. 272,875
------------
CANADA (2.2%)
Banking (1.0%)
12,000 Canadian Imperial Bank of Commerce................................ 312,931
Mining and Metals--Container (.8%)
32,000 Inmet Mining (b).................................................. 249,455
Utilities--Gas and Electric (.4%)
15,500 Nova Corporation of Alberta....................................... 122,268
------------
684,654
------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CHILE (.7%)
Utilities--Gas and Electric (.7%)
3,300 Compania de Telefonos de Chile ADR................................ $ 228,113
------------
CZECH REPUBLIC (.9%)
Energy Services (.9%)
7,415 Ceske Energeticke (b)............................................. 293,844
------------
FINLAND (1.5%)
Wholesale and International Trade (1.5%)
15,000 Amer Group........................................................ 288,711
4,700 Metsa-Serla....................................................... 187,545
------------
476,256
------------
FRANCE (4.5%)
Banking (1.0%)
7,500 Banque Nationale de Paris......................................... 294,797
Electrical and Electronics (.5%)
1,950 Alcatel Alsthom................................................... 164,454
Energy Sources (1.1%)
4,920 Societe Nationale Elf Aquitaine................................... 332,966
Health and Personal Care (1.1%)
17,000 Rhone-Poulenc..................................................... 344,490
Transportation (.8%)
8,600 Regie Nationale Des Usines Renault................................ 253,964
------------
1,390,671
------------
GERMANY (2.0%)
Banking (1.0%)
6,650 Deutsche Bank..................................................... 318,165
Chemicals (1.0%)
1,200 Bayer............................................................. 307,727
------------
625,892
------------
HONG KONG (3.3%)
Banking (1.1%)
24,000 Hong Kong and Shanghai Banking.................................... 333,698
Multi-Industry (1.1%)
61,000 Hutchison Whampoa................................................. 330,581
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
HONG KONG--CONTINUED
Transportation (1.1%)
45,000 Swire Pacific..................................................... $ 356,495
------------
1,020,774
------------
INDIA (.5%)
Financial Services (.5%)
90,600 India Fund........................................................ 169,203
------------
INDONESIA (1.1%)
Financial Services (.8%)
200,000 J.F. Indonesia Fund (b)........................................... 243,160
Forest Products and Paper (.3%)
151,500 P.T. Barito Pacific Timber........................................ 111,987
------------
355,147
------------
JAPAN (2.3%)
Building Materials and Components (.4%)
9,000 Daito Trust Construction.......................................... 104,916
Electrical and Electronics (1.8%)
23,000 Hitachi........................................................... 251,799
1,000 Hitachi Koki...................................................... 8,685
6,000 Sony.............................................................. 312,621
Utilities--Gas and Electric (.1%)
3,000 Kyudenko.......................................................... 40,750
------------
718,771
------------
KOREA (.7%)
Financial Services (.7%)
4 Korea International Trust (b)..................................... 230,000
------------
MEXICO (.7%)
Chemicals (.4%)
48,000 Vitro............................................................. 127,748
Utilities--Gas and Electric (.3%)
2,800 Telefonos de Mexico ADR........................................... 88,900
------------
216,648
------------
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
NETHERLANDS (4.1%)
Broadcasting, Advertising and Publishing (1.1%)
5,800 International Nederlanden Group................................... $ 338,261
Building Materials and Components (.7%)
6,850 European Vinyls................................................... 240,817
Insurance (1.3%)
11,015 Aegon............................................................. 400,379
Merchandising (1.0%)
4,200 Koninklijke Bijenkorf Beheer...................................... 308,492
------------
1,287,949
------------
NEW ZEALAND (2.0%)
Forest Products and Paper (1.0%)
108,000 Fletcher Challenge................................................ 291,510
15,323 Fletcher Forest................................................... 20,478
Wholesale and International Trade (1.0%)
417,050 Brierley Investments.............................................. 318,487
------------
630,475
------------
NORWAY (2.6%)
Energy Sources (1.0%)
23,000 Saga Petroleum.................................................... 297,799
Health and Personal Care (1.1%)
13,000 Hafslund Nycomed.................................................. 338,721
Mining and Metals--Container (.5%)
13,000 Elkem............................................................. 158,970
------------
795,490
------------
PHILIPPINES (1.0%)
Telecommunications (1.0%)
4,800 Philippine Long Distance Telephone................................ 320,552
------------
PORTUGAL (.7%)
Financial Services (.7%)
2,500 Capital Portugal Fund (b)......................................... 229,120
------------
SPAIN (6.4%)
Banking (2.2%)
18,000 Argentaria Corporacion Bancari de Espanol ADR..................... 324,000
</TABLE>
See accompanying notes to investments in securities.
10
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
SPAIN--CONTINUED
12,000 Banco Bilbao Vizcaya (e)(f)....................................... $ 370,160
Energy Sources (1.0%)
9,800 Repsol............................................................ 309,059
Telecommunications (1.0%)
22,000 Telefonica de Espana.............................................. 303,596
Utilities--Gas and Electric (2.2%)
6,000 Empresa Nacional de Elecrricidad.................................. 308,791
50,072 Iberdrola......................................................... 379,635
------------
1,995,241
------------
SWEDEN (7.0%)
Banking (.5%)
9,600 Stadshypotek...................................................... 169,072
Business and Public Service (1.1%)
24,000 Esselte........................................................... 344,727
Forest Products and Paper (1.2%)
27,000 Stora Kopparbergs Bergslags....................................... 364,432
Health and Personal Care (2.7%)
11,000 Astra............................................................. 387,457
26,300 Svenska Handelsbanken............................................. 455,595
Transportation (1.5%)
18,500 Volvo............................................................. 454,007
------------
2,175,290
------------
SWITZERLAND (3.9%)
Electrical and Electronics (1.3%)
340 BBC Brown Boveri & Cie............................................ 396,206
Health and Personal Care (1.4%)
230 Societe Generale de Surveillance.................................. 428,354
Insurance (1.2%)
1,370 Zuerich Versicherung.............................................. 386,302
------------
1,210,862
------------
THAILAND (1.0%)
Financial Services (1.0%)
12,834 Thai Fund......................................................... 308,016
------------
</TABLE>
See accompanying notes to investments in securities.
11
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
TURKEY (.6%)
Financial Services (.6%)
17,000 Turkish Growth Fund............................................... $ 197,625
------------
UNITED KINGDOM (6.7%)
Banking (1.0%)
27,281 Barclays Bank..................................................... 323,400
Building Materials and Components (.3%)
21,700 BICC.............................................................. 103,721
Energy Services (2.1%)
80,500 British Gas....................................................... 338,266
25,833 Welsh Water....................................................... 317,683
Electrical and Electronics (.3%)
7,200 Waste Management International ADR (b)............................ 79,200
Food and Household Products (2.2%)
415,000 Albert Fisher Group............................................... 348,115
121,844 Hillsdown Holdings................................................ 341,331
Merchandising (.8%)
22,600 Kwik Save Group................................................... 234,645
------------
2,086,361
------------
Total common stocks (cost: $18,765,967)........................... 20,191,182
------------
PREFERRED STOCKS AND OTHER (3.8%)
ARGENTINA (.6%)
Multi-Industry (.6%)
4,010 Compania de Inversiones en Telecomunications convertible
preferred-- 7.00% (e)............................................ 199,498
------------
GERMANY (.4%)
Energy Services (.4%)
825 Veba Warrants (expiring 04/06/98)................................. 110,449
------------
HONG KONG (.9%)
Multi-Industry (.9%)
284,000 Jardine Strategic Holdings LTD cumulative convertible
preferred--7.50%................................................. 293,940
------------
ITALY (1.1%)
Telecommunications (1.1%)
148,000 Stet Spa di Risp.................................................. 345,777
------------
</TABLE>
See accompanying notes to investments in securities.
12
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
MEXICO (.6%)
Financial (.6%)
5,550 Nacional Financiera ADR--11.25%................................... $ 188,700
------------
UNITED KINGDOM (.2%)
Energy Services
27,900 Welsh Water....................................................... 45,592
------------
Total preferred stocks and other (cost: $1,227,929)............... 1,183,956
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- -----------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (25.9%)
AUSTRALIA (3.9%)
Government (3.9%)
1,273,000 Queensland Treasury Corporation (Australian Dollar)
(c)................................................... 8.000% 05/14/03 926,390
200,000 New South Wales Treasury (Australian Dollar) (c)....... 6.500% 05/01/06 126,535
230,000 Queensland Treasury Corporation (Australian Dollar)
(c)................................................... 8.875% 11/08/96 176,082
------------
1,229,007
------------
CANADA (4.6%)
Government (4.6%)
495,000 Canadian Government Bond (Canadian Dollar) (c)......... 10.500% 10/01/04 431,628
660,000 Canadian Government Bond (Canadian Dollar) (c)......... 5.750% 03/01/99 469,126
675,000 Canadian Government Bond (Canadian Dollar) (c)......... 9.500% 10/01/98 532,708
------------
1,433,462
------------
DENMARK (2.6%)
Government (2.6%)
4,672,000 Denmark Kingdom (Danish Krone) (c)..................... 7.000% 12/15/04 794,385
------------
FRANCE (2.7%)
Government (2.7%)
1,100,000 France Government Bond (French Franc) (c).............. 8.500% 11/12/96 229,177
1,026,000 France Government Bond (French Franc) (c).............. 8.500% 03/28/00 222,746
960,000 France Government Bond (French Franc) (c).............. 9.500% 01/25/01 216,981
</TABLE>
See accompanying notes to investments in securities.
13
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- ----------- ------------
<C> <S> <C> <C> <C>
FRANCE--CONTINUED
774,000 France Government Bond (French Franc) (c).............. 10.000% 05/27/00 $ 176,407
------------
845,311
------------
GERMANY (4.6%)
Government (4.6%)
1,435,000 International Bank Reconstruction and Development
(Deutsch Mark) (c).................................... 6.125% 09/27/02 997,427
335,000 Germany Unity Fund (Deutsch Mark) (c).................. 8.000% 01/21/02 255,626
245,000 Germany Unity Fund (Deutsch Mark) (c).................. 8.750% 07/20/00 192,598
------------
1,445,651
------------
HONG KONG (1.0%)
Finance (1.0%)
400,000 PIV Investment Finance (U.S. Dollar) (c)............... 4.500% 12/01/00 323,000
------------
INDIA (.8%)
Finance (.8%)
250,000 Essar Gujarat (U.S. Dollar) (c)(d)(f).................. 7.900% 07/15/99 249,063
------------
ITALY (.8%)
Government (.8%)
430,000,000 Italy Government (Italian Lira) (c).................... 10.500% 07/15/00 259,014
------------
JAPAN (2.5%)
Finance (.7%)
18,000,000 Japan Development Bank (Japanese Yen) (c).............. 6.500% 09/20/01 224,316
Government (1.8%)
48,000,000 European Investment Bank (Japanese Yen) (c)............ 5.875% 11/26/99 569,285
------------
793,601
------------
NEW ZEALAND (1.6%)
Government (1.6%)
140,000 New Zealand Government Bond (New Zealand Dollar) (c)... 6.500% 02/15/00 87,143
430,000 New Zealand Government Bond (New Zealand Dollar) (c)... 10.000% 03/15/02 312,507
</TABLE>
See accompanying notes to investments in securities.
14
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- ----------- ------------
<C> <S> <C> <C> <C>
NEW ZEALAND--CONTINUED
125,000 New Zealand Government Bond (New Zealand Dollar) (c)... 8.000% 04/15/04 $ 83,468
------------
483,118
------------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
SPAIN (.8%)
Government (.8%)
29,350,000 Government of Spain (Spanish Peseta) (c)............... 12.250% 03/25/00 251,234
------------
Total long-term debt securities (cost: $7,971,498)........................... 8,106,846
------------
SHORT-TERM SECURITIES (1.5%)
AUSTRALIA (1.5%)
600,000 IBM Australia (Australian Dollar) (c).................. 12.000% 03/26/96 460,228
------------
Total short-term securities (cost: $445,818)................................. 460,228
------------
Total investments in securities (cost: $28,411,212) (g)...................... $ 29,942,212
------------
------------
<FN>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) Principal amounts for foreign debt securities are denominated in the
currencies indicated.
(d) Represents a debt security with a variable rate. The interest rate
disclosed is the rate in effect at September 30, 1995.
(e) PRIDES--Preferred Redeemed Increased Dividend Equity Securities are
structured as convertible preferred securities issued by a company.
Investors receive an enhanced yield but based upon a specific formula,
potential appreciation is limited. PRIDES pay dividends, have voting
rights, are noncallable for three years and upon maturity, convert into
shares of common stock.
(f) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. The Fund
currently limits investments in illiquid securities to 10% of net assets at
the time of purchase. At September 30, 1995, the Fund held illiquid
securities in the amount of $908,128 which represents 2.9% of net assets.
(g) At September 30, 1995 the cost of securities for federal income tax
purposes was $28,721,915. The aggregate unrealized appreciation and
depreciation of investments in securities based on this cost were:
</TABLE>
<TABLE>
<S> <C> <C>
Gross unrealized appreciation..................... $2,469,529
Gross unrealized depreciation..................... (1,249,232)
----
Net unrealized appreciation....................... $1,220,297
----
----
</TABLE>
15
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying schedule for detailed
listing (identified cost: $28,411,212)........................................... $ 29,942,212
Cash in bank on demand deposit.................................................... 1,610,358
Receivable for investment securities sold......................................... 409,266
Accrued interest and dividends receivable......................................... 291,457
Receivable for forward foreign currency contracts held, at value (note 4)......... 4,497,966
Receivable for fund shares sold................................................... 20,985
Receivable for refundable foreign income taxes withheld........................... 35,400
Organizational costs (note 6)..................................................... 32,403
-------------
Total assets.................................................................. 36,840,047
-------------
LIABILITIES
Payable for investment securities purchased....................................... 933,484
Payable to Adviser................................................................ 53,022
Payable for organizational costs (note 6)......................................... 32,403
Payable for forward foreign currency contracts held, at value (note 4)............ 4,542,548
-------------
Total liabilities............................................................. 5,561,457
-------------
Net assets applicable to outstanding capital stock................................ $ 31,278,590
-------------
-------------
Represented by:
Capital stock--$.01 par value (note 1).......................................... $ 28,989
Additional paid-in capital...................................................... 29,347,092
Undistributed net investment income............................................. 92,247
Accumulated net realized gains from investments................................. 326,069
Unrealized appreciation of investments and translation of assets and liabilities
in foreign currencies.......................................................... 1,484,193
-------------
Total--representing net assets applicable to outstanding capital stock........ $ 31,278,590
-------------
-------------
Net assets applicable to outstanding Class A shares............................... $ 30,948,777
-------------
-------------
Net assets applicable to outstanding Class C shares............................... $ 329,813
-------------
-------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 2,868,246........................................... $ 10.79
-------------
-------------
Class C--Shares outstanding 30,622.............................................. $ 10.77
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1995
<TABLE>
<S> <C>
Investment income:
Interest........................................................................... $ 557,282
Dividends (net of foreign withholding taxes of $80,025)............................ 560,024
------------
Total investment income.......................................................... 1,117,306
------------
Expenses (note 5):
Investment advisory fee............................................................ 241,970
Distribution fees--Class A......................................................... 77,712
Distribution fees--Class C......................................................... 1,119
Administrative services fee........................................................ 26,200
Custodian fees..................................................................... 83,425
Auditing and accounting services................................................... 88,675
Legal fees......................................................................... 11,459
Amortization of organizational costs............................................... 8,273
Directors' fees.................................................................... 562
Registration fees.................................................................. 31,012
Printing and shareholder reports................................................... 15,233
Insurance.......................................................................... 5,740
Other.............................................................................. 6,336
------------
Total expenses................................................................... 597,716
Less fees and expenses waived or absorbed:
Class A distribution fees........................................................ (38,856)
Other fund expenses.............................................................. (17,626)
------------
Total fees and expenses waived or absorbed..................................... (56,482)
------------
Total net expenses............................................................. 541,234
------------
Investment income--net......................................................... 576,072
------------
Realized and unrealized gains (losses) on investments and foreign currencies:
Net realized gains (losses) from:
Investments (note 3)............................................................. 741,899
Foreign currency transactions.................................................... (73,257)
------------
668,642
------------
Net change in unrealized appreciation or depreciation on:
Investments...................................................................... 1,261,251
Translation of assets and liabilities in foreign currencies...................... (48,484)
------------
1,212,767
------------
Net gains on investments and foreign currencies.................................. 1,881,409
------------
Net increase in net assets resulting from operations................................. $ 2,457,481
------------
------------
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
STATEMENT OF CHANGES IN NET ASSETS
YEAR ENDED SEPTEMBER 30, 1995 AND
PERIOD FROM JUNE 20, 1994 TO SEPTEMBER 30, 1994
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Operations:
Investment income--net.............................................. $ 576,072 $ 18,405
Net realized gains (losses) on investments and foreign currency
transactions....................................................... 668,642 (9,584)
Net change in unrealized appreciation or depreciation of investments
and translation of assets and liabilities in foreign currencies.... 1,212,767 271,426
------------- -------------
Increase in net assets resulting from operations.................. 2,457,481 280,247
------------- -------------
Distributions to shareholders from:
Investment income--net:
Class A........................................................... (530,846) --
Class C........................................................... (2,174) --
Net realized gains on investments:
Class A........................................................... (310,236) --
Class C........................................................... (925) --
------------- -------------
Total distributions............................................. (844,181) --
------------- -------------
Capital share transactions (notes 5 and 7):
Proceeds from sales:
Class A........................................................... 14,280,071 15,150,000
Class C........................................................... 384,909 --
Shares issued as a result of reinvested dividends:
Class A........................................................... 75,357 --
Class C........................................................... 5,108 --
Payments for redemption of shares:
Class A........................................................... (443,874) --
Class C........................................................... (66,528) --
------------- -------------
Increase in net assets from capital share transactions.......... 14,235,043 15,150,000
------------- -------------
Total increase in net assets.................................... 15,848,343 15,430,247
Net assets at beginning of period..................................... 15,430,247 --
------------- -------------
Net assets at end of period including (undistributed net investment
income of $92,247 and $99,393, respectively)......................... $ 31,278,590 $ 15,430,247
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995
(1) ORGANIZATION
The Advantus International Balanced 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
International Balanced Fund, Inc. (effective March 1, 1995). Prior to March 1,
1995 the Fund was known as MIMLIC International Balanced Fund, Inc.
The Fund currently issues two classes of shares: Class A and Class C shares.
Class A shares are sold subject to a front-end sales charge. Class C shares are
sold without a front-end sales charge, but are subject to a higher Rule 12b-1
fee than Class A shares. Class C shares automatically convert to Class A shares
at net asset value after a specified holding period. Such holding period
declines as the amount of the purchase increases and ranges from 40 to 96 months
after purchase for Class C shares. Both classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that the level of distribution fees and sales charges charged differs between
Class A and Class C shares. Income, expenses (other than distribution fees) and
realized and unrealized gains or losses on investments are allocated to each
class of shares based upon its relative net assets.
On June 20, 1994, MIMLIC Asset Management Company (MIMLIC Management)
purchased 15,000 Class A shares for $150,000. 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
1,476,997 Class A shares for $15 million prior to commencement of operations.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
INVESTMENTS IN SECURITIES
Investments in securities traded on a U.S. or foreign securities 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 with maturities of less
than 60 days when acquired, or which subsequently are within 60 days of
maturity, are valued at amortized cost which approximates market value.
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.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities, income and expenses are translated at the exchange rate on the
transaction date. The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with net realized and unrealized gains or losses from
investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized between trade and settlement dates on securities
transactions, the difference between the amounts of dividends, interest and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities, other than investments in securities, resulting from changes in
exchange rates.
The Fund also may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuations.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation and
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete the obligations of the contract.
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, adjustments have been made to decrease additional
paid-in capital in the amount $8,273, decrease undistributed net investment
income in the amount of $50,198 and increase accumulated realized gains in the
amount of $58,471.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly in cash
or reinvested in additional shares. Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the year ended September 30, 1995, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$27,063,595 and $12,213,083, respectively.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) FORWARD FOREIGN CURRENCY CONTRACTS
On September 30, 1995, the Fund had entered into forward foreign currency
exchange contracts that obligate the Fund to deliver currencies at specified
future dates. The unrealized depreciation of $44,582 on these contracts is
included in the accompanying financial statements. The terms of the open
contracts were as follows:
<TABLE>
<CAPTION>
EXCHANGE CURRENCY TO U.S. $ VALUE CURRENCY TO U.S. $ VALUE
DATE BE DELIVERED 9/30/95 BE RECEIVED 9/30/95
- ---------- ----------------------- ------------ ------------------------ ------------
<C> <C> <S> <C> <C> <C> <C>
10/31/95 30,400 US$ $ 30,400 48,988,827 ITL $ 30,400
10/04/95 14,379 US$ 14,379 9,082 GBP 14,374
10/02/95 12,331 US$ 12,331 1,231,259 JPY 12,481
10/05/95 28,908 US$ 28,908 123,668 FIM 29,028
10/31/95 35,233 US$ 35,233 173,364 FRF 35,307
10/05/95 12,404 US$ 12,404 7,809 GBP 12,359
10/06/95 5,360 US$ 5,360 3,369 GBP 5,332
10/06/95 13,994 US$ 13,994 21,140 NZD 13,917
10/06/95 31,674 US$ 31,674 19,940 GBP 31,558
10/04/95 31,157 US$ 31,157 193,720 NOK 30,966
10/06/95 31,115 US$ 31,115 19,555 GBP 30,949
10/04/95 8,663 US$ 8,663 868,082 JPY 8,800
10/03/95 13,282 US$ 13,282 1,306,960 JPY 13,248
10/04/95 13,160 US$ 13,160 1,323,635 JPY 13,417
10/09/95 31,258 US$ 31,258 40,994 AUD 30,942
10/31/95 30,038 US$ 30,038 147,802 FRF 30,101
10/31/95 33,415 US$ 33,415 164,417 FRF 33,485
10/04/95 15,412 GBP 24,393 24,266 US$ 24,266
10/04/95 26,434 CHF 23,005 22,896 US$ 22,896
10/03/95 133,529 US$ 133,529 214,368,223 ITL 133,024
10/02/95 133,927 US$ 133,927 214,979,855 ITL 133,404
10/25/95 96,623 US$ 96,623 137,500 DEM 96,630
10/23/95 192,582 US$ 192,582 275,000 DEM 193,261
10/02/95 266,412 US$ 266,412 32,869,875 ESP 266,822
10/05/95 18,500,000 JPY 187,532 190,649 US$ 190,649
10/23/95 18,500,000 JPY 187,532 178,399 US$ 178,399
10/23/95 21,000,000 JPY 212,874 202,098 US$ 202,098
10/23/95 550,000 DEM 386,522 373,253 US$ 373,253
10/25/95 275,000 DEM 193,261 188,627 US$ 188,627
10/06/95 1,000,000 CAD 742,424 737,208 US$ 737,208
10/06/95 460,000 CAD 341,515 339,033 US$ 339,033
10/23/95 275,000 DEM 193,261 194,045 US$ 194,045
10/25/95 137,500 DEM 96,630 97,428 US$ 97,428
10/12/95 550,000 DEM 386,522 382,569 US$ 382,569
10/04/95 522,554 DEM 367,233 367,690 US$ 367,690
------------ ------------
$4,542,548 $4,497,966
------------ ------------
------------ ------------
</TABLE>
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) FORWARD FOREIGN CURRENCY CONTRACTS--(CONTINUED)
<TABLE>
<S> <C>
CAD Canadian Dollar
CHF Swiss Franc
ESP Spanish Peseta
FIM Finnish Mark
FRF French Franc
ITL Italian Lira
JPY Japanese Yen
AUD Australian Dollar
DEM German Deutch Mark
GBP British Pound Sterling
CAD Canadian Dollar
NZD New Zealand Dollar
NOK Norwegian Krone
US$ United States Dollar
</TABLE>
(5) 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 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 .95 percent on
the first $25 million in net assets, .80 percent on the next $25 million, .75
percent on the next $50 million and .65 percent on net assets in excess of $100
million. Fees under the new agreement with Advantus Capital are the same as
under the old agreement with MIMLIC Management.
On February 14, 1995 shareholders of the Fund also approved a new
sub-advisory agreement between Advantus Capital and Templeton Investment
Counsel, Inc. (Templeton). From its advisory fee, Advantus Capital pays
Templeton, Inc. a fee equal to an annual rate of .70 percent on the first $25
million in net assets, .55 percent on the next $25 million, .50 percent on the
next $50 million and .40 percent on net assets in excess of $100 million. Fees
under the new sub-advisory agreement between Advantus Capital and Templeton
Investment Counsel, Inc. are the same as the old agreement between MIMLIC
Management and Templeton Investment Counsel, Inc.
The Fund has adopted separate Plans of Distribution applicable to Class A
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 a 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 C Plan provides for a fee of up to 1.00 percent of average
daily net assets of Class C shares.
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
The Class C 1.00 percent fee is comprised of a .75 percent distribution fee and
a .25 percent service fee. MIMLIC Sales is currently waiving that portion of
Class A distribution fees which exceeds, as a percentage of average daily net
assets, .15 percent for the Fund.
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, 1995 the administrative services fee for
the Fund was $2,450 per month. Effective February 1, 1995 the administrative
services fee is $2,050 per month.
Advantus Capital (MIMLIC Management prior to March 1, 1995) directly incurs
and pays the above operating expenses and the Fund in turn reimburses Advantus
Capital. During the year ended September 30, 1995, Advantus Capital voluntarily
agreed to absorb $17,626 in expenses that were otherwise payable by the Fund.
Sales charges received by MIMLIC Sales for distributing the Fund's two
classes of shares amounted to $150,769.
As of September 30, 1995, 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................................. 2,490,726 86.8%
Class C................................. 1,024 3.3%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $9,835.
(6) 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.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the year ended September 30, 1995 and the period
from June 20, 1994 to September 30, 1994 for Class A shares and the period from
March 1, 1995 to September 30, 1995 for Class C shares were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS C
---------------------- -----------
1995 1994 1995
---------- ---------- -----------
<S> <C> <C> <C>
Sold.................................... 1,411,085 1,491,997 36,260
Issued for reinvested distributions..... 7,265 -- 481
Redeemed................................ (42,101) -- (6,119)
---------- ---------- -----------
1,376,249 1,491,997 30,622
---------- ---------- -----------
---------- ---------- -----------
</TABLE>
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(8) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS C
--------------------------------- -------------
PERIOD FROM PERIOD FROM
SEPTEMBER 16, MARCH 1,
YEAR ENDED 1994(A) TO 1995(A) TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1995 1994 1995
------------- ------------- -------------
<S> <C> <C> <C>
Net asset value, beginning of period................... $ 10.34 $ 10.54 $ 9.95
------------- ------------- ------
Income from investment operations:
Net investment income................................ .20 .01 .11
Net gains or losses on securities (both realized and
unrealized)......................................... .56 (.21) .91
------------- ------------- ------
Total from investment operations................... .76 (.20) 1.02
------------- ------------- ------
Less distributions:
Dividends from net investment income................. (.19) -- (.13)
Distributions from capital gains..................... (.12) -- (.07)
------------- ------------- ------
Total distributions................................ (.31) -- (.20)
------------- ------------- ------
Net asset value, end of period......................... $ 10.79 $ 10.34 $ 10.77
------------- ------------- ------
------------- ------------- ------
Total return (b)....................................... 7.4% (1.9)%(c) 10.3%(d)
Net assets, end of period (in thousands)............... $30,949 $15,430 $ 330
Ratio of expenses to average daily net assets (e)...... 2.08% .47%(f) 2.93%(g)
Ratio of net investment income to average daily net
assets (e)............................................ 2.22% .14%(f) 1.39%(g)
Portfolio turnover rate (excluding short-term
securities)........................................... 52.0% 12.1% 52.0%
<FN>
- ----------
(a) Commencement of operations.
(b) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of sales charges.
(c) Total return is presented for the period from September 16, 1994,
commencement of operations, to September 30, 1994.
(d) Total return is presented for the period from March 1, 1995, commencement
of operations, to September 30, 1995.
(e) The Fund's Distributor and Adviser voluntarily waived or absorbed $56,482
and $4,034 in expenses for the year ended September 30, 1995 and the period
ended September 30, 1994, respectively. If the Fund had been charged for
theses expenses, the ratio of expenses to average daily net assets would
have been 2.30% and .49% for Class A shares, respectively, and 3.00% for
Class C shares. The ratios of net investment income to average daily net
assets would have been 2.00% and .12% for Class A shares, respectively, and
1.32% for Class C shares.
(f) Ratios presented for the period from September 16, 1994 to September 30,
1994 are not annualized as they are not indicative of anticipated results.
(g) Adjusted to an annual basis.
</TABLE>
25
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus International Balanced Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus
International Balanced Fund, Inc. (the Fund) as of September 30, 1995 and the
related statement of operations for the year then ended, the statement of
changes in net assets for the year ended September 30, 1995 and the period from
June 20, 1994 to September 30, 1994 and the financial highlights for the year
ended September 30, 1995 and the period from September 16, 1994 to September 30,
1994. 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, 1995 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 3, 1995
26
<PAGE>
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, 1995. Dividends for the 1995 calendar year will
be reported to you on Form 1099-Div in late January 1996. 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>
PAYABLE DATE PER SHARE
- --------------------------------------------------------------------------------------------------------- -----------
<S> <C>
December 28, 1994........................................................................................ $ 0.0831
March 28, 1995........................................................................................... 0.0786
June 28, 1995............................................................................................ 0.1465
September 28, 1995....................................................................................... 0.0286
-----------
$ 0.3368
-----------
-----------
Capital gains distribution--taxable as long-term capital gains
December 19, 1994........................................................................................ $ .0016
-----------
-----------
</TABLE>
The distributions of $.0759 payable on December 28, 1994 consist of $.0016
from short-term capital gains (taxable as dividend income) and $.0743 from net
investment income. The total Class A income distributions include $.1126 which
are classified as capital gains for financial statement purposes, but are taxed
as ordinary income.
CLASS C
Income distributions--taxable as dividend income, none qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- --------------------------------------------------------------------------------------------------------- -----------
<S> <C>
March 28, 1995........................................................................................... $ 0.0702
June 28, 1995............................................................................................ 0.1351
September 28, 1995....................................................................................... .0191
-----------
$ .2244
-----------
-----------
</TABLE>
The total Class C income distributions include $.0690 which are classified
as capital gains for financial statement purposes, but are taxed as ordinary
income.
27
<PAGE>
FEDERAL INCOME TAX INFORMATION--CONTINUED
FOREIGN INCOME AND TAXES PAID
The Fund has elected to pass-through foreign tax credits to its
shareholders. The following information will aid you in filing for your foreign
tax credit.
<TABLE>
<CAPTION>
CLASS A CLASS A CLASS C CLASS C
FOREIGN INCOME FOREIGN TAX FOREIGN INCOME FOREIGN TAX
COUNTRY PER SHARE PAID PER SHARE PER SHARE PAID PER SHARE
- ------------------------------------------------ --------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
Argentina....................................... $ 0.004927 $ -- $ 0.003093 $ --
Australia....................................... 0.015746 0.002199 0.009885 0.001380
Austria......................................... 0.003236 0.000405 0.002032 0.000254
Belgium......................................... 0.004951 0.000743 0.003108 0.000466
Brazil.......................................... 0.000696 0.000104 0.000437 0.000066
Canada.......................................... 0.005716 0.000857 0.003589 0.000538
Chile........................................... 0.002132 -- 0.001338 --
Finland......................................... 0.005384 0.000808 0.003380 0.000507
France.......................................... 0.017339 0.002865 0.010885 0.001798
Germany......................................... 0.013339 0.001334 0.008374 0.000837
Hong Kong....................................... 0.017146 -- 0.010764 --
Indonesia....................................... 0.001235 0.000219 0.000775 0.000138
Italy........................................... 0.003875 0.000581 0.002432 0.000365
Japan........................................... 0.001342 0.000201 0.000843 0.000126
Mexico.......................................... 0.006317 0.000791 0.003966 0.000497
Netherlands..................................... 0.013700 0.002055 0.008600 0.001290
New Zealand..................................... 0.008367 0.001625 0.005253 0.001020
Norway.......................................... 0.006423 0.000963 0.004032 0.000605
Phillipines..................................... 0.000289 -- 0.000182 --
Spain........................................... 0.023838 0.003564 0.014965 0.002237
Sweden.......................................... 0.015448 0.002317 0.009698 0.001455
Switzerland..................................... 0.008496 0.001771 0.005333 0.001112
Thailand........................................ 0.011486 -- 0.007211 --
United Kingdom.................................. 0.038326 0.005749 0.024060 0.003609
--------------- -------------- --------------- --------------
$ 0.229754 $ 0.029152 $ 0.144234 $ 0.018301
--------------- -------------- --------------- --------------
--------------- -------------- --------------- --------------
</TABLE>
28
<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 you fund account--subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the cash
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.
29
<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. Amounts
over $1,000 will be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Amounts for less
than $1,000 will be mailed to your bank on your behalf. To set this up, please
send a voided check from your bank. Depending upon the performance of the
underlying investment options, the cash 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.'s six portfolio managers manage eight
mutual funds containing $272 million in assets in addition to $1.8 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
30
<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.48651 11-95
