<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
SEMI-ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS INTERNATIONAL BALANCED FUND
March 31, 1996
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND
LIABILITIES 17
STATEMENT OF OPERATIONS 18
STATEMENT OF CHANGES IN
NET ASSETS 19
NOTES TO FINANCIAL
STATEMENTS 20
SHAREHOLDER SERVICES 26
<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,
[SIGNATURE]
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. While
Advantus Capital Management, Inc. acts as
the 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
The Advantus International Balanced Fund's performance for the six months ended
March 31, 1996 for each class of shares offered is as follows:
<TABLE>
<S> <C>
Class A 5.1 percent*
Class C 4.7 percent*
</TABLE>
By comparison, the returns for the same period for the Morgan Stanley Capital
International EAFE Index** and the J.P. Morgan Non-U.S. Government Bond Index+
were 7.3 percent and 1.0 percent, respectively.
Your Fund's half-year return is lower than the previous six months despite
resilient international stock markets. Performance was adversely affected by the
Fund's underweighted overseas fixed income exposure. More specifically,
international bond markets were volatile due to adverse foreign exchange
movements. The U.S. Dollar since the middle of last year has had a propensity to
strengthen vis-a-vis currencies of major trading partners after having devalued
for several years. Furthermore, although interest rates are generally falling
overseas, the resulting benefits of bond price appreciation was not significant
compared to unrealized losses attributed to foreign currency translation of
international bonds into U.S. Dollars. The international stock markets, however,
have delivered better returns for U.S. investors than bonds. This is due to the
stronger relative capital appreciation in local currency terms. Another positive
contributor to performance was the portfolio's participation in emerging market
stocks which recently experienced above-average returns after underperforming
other asset classes last year.
PORTFOLIO RECAP
The international stock markets continued their recovery in 1995 after a
difficult year in 1994. Last year, most markets including those in the U.S.,
benefited from low inflation, stable or declining interest rates and better than
expected corporate earnings results. This resulting investment environment
generally produced comparable performances for overseas stock and bond markets.
Unfortunately, despite improving market fundamentals, many international
financial markets significantly underperformed compared to U.S. markets. This
year, however, international stock markets are performing much better in
relative terms, given good long-term fundamentals and reasonable valuations.
2
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
MARCH 31, 1996
The international bond markets, however, as already noted, are underperforming
last year's results despite falling interest rates overseas. This development is
easily explained given that U.S. Dollar strengthening was not a significant
factor last year. More specifically, in 1995, U.S. Dollar strength in the last
half of the year was offset by U.S. Dollar weakness earlier in the year.
OUTLOOK
We expect the international stock markets to offer better investment
opportunities than their U.S. counterparts over the next five years.
Furthermore, in the near term, foreign exchange volatility may also subdue these
effects with the net result being somewhat unpredictable. This volatility should
also continue to affect non-U.S. bonds more significantly than non-U.S. stocks.
Nevertheless we remain, as always, optimistic about future prospects for current
holdings and the identification of new opportunities. It is our anticipation
that the Fund's stock/bond & cash ratio for the portfolio will remain
approximately 70 percent/30 percent.
*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
MARCH 31, 1996
FIVE LARGEST COMMON STOCK HOLDINGS
<TABLE>
<CAPTION>
% OF
COMMON
MARKET STOCK
COMPANY SHARES VALUE PORTFOLIO
- -------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
Rhone-Poulenc................... 20,000 $ 515,983 2.2%
Astra........................... 11,000 506,080 2.2%
Iberdrola....................... 50,072 461,911 2.0%
Aegon........................... 9,515 449,109 1.9%
Banco Bilbao Vizcaya............ 12,000 447,631 1.9%
---------- ---
$2,380,714 10.2%
---------- ---
---------- ---
</TABLE>
FIVE LARGEST BOND HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF BOND
COMPANY VALUE PORTFOLIO
- --------------------------------------------- ---------- -----------
<S> <C> <C>
Denmark Kingdom, 7.0%, 12/15/04.............. $ 806,980 8.4%
Queensland Treasury Corporation, 8.0%,
05/14/03................................... 806,918 8.4%
United Kingdom, 6.75%, 11/26/04.............. 685,108 7.2%
Treuhandanstalt, 7.125%, 01/29/03............ 674,319 7.1%
United Kindgom, 9.5%, 01/15/99............... 573,067 6.0%
---------- ---
$3,546,392 37.1%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Consumer Goods and Services 14.7%
Cash & Other
Assets/Liabilities 6.3%
Foreign Government Debt 23.7%
U.S. Government Securities 0.5%
Technology 9.0%
Intermediate Goods and
Services 14.8%
Credit Sensitive 31.0%
</TABLE>
4
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
MARCH 31, 1996
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT IN
ADVANTUS INTERNATIONAL BALANCED FUND, EAFE INDEX,
J.P. MORGAN NON-U.S. GOVERNMENT BOND INDEX AND
CONSUMER PRICE INDEX
On the following two charts you can see how the total return for each of the two
classes of shares of the Advantus International Balanced Fund compared to the
EAFE Index, the J.P. Morgan Non-U.S. Government Bond Index and the Consumer
Price Index. The four 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 International Balanced Fund (September 16, 1994 for Class
A and March 1, 1995 for Class C) through March 31, 1996.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C> <C>
One year 8.3%
Since inception (9/16/94) 3.3%
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
3/31/96 10,522 11,220 12,097 10,436
</TABLE>
5
<PAGE>
ADVANTUS INTERNATIONAL BALANCED 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> <C>
One year 13.1%
Since inception 3/1/95 14.1%
Class C EAFE J.P. Morgan CPI
3/1/95 10,000 10,000 10,000 10,000
9/30/95 11,026 11,175 11,198 10,146
3/31/96 11,538 11,987 11,315 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 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.
6
<PAGE>
ADVANTUS INTERNATIONAL BALANCED 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 (64.4%)
AUSTRALIA (2.7%)
Banking (1.1 %)
19,500 National Australia Bank........................................... $ 173,887
46,000 Westpac Banking................................................... 216,612
Building Materials and Components (.8%)
102,000 Pioneer International............................................. 304,784
Transportation (.8%)
20,520 BTR Nylex......................................................... 97,109
15,000 Brambles Industries............................................... 198,058
------------
990,450
------------
AUSTRIA (1.9%)
Electrical and Electronics (.8%)
2,500 VA Technologie (b)(f)............................................. 307,739
Utilities--Gas and Electric (1.1%)
2,880 EVN Energie-Versorung............................................. 392,519
------------
700,258
------------
BELGIUM (1.8%)
Chemicals (1.8%)
590 Solvay............................................................ 337,879
4,300 Union Miniere NPV (b)............................................. 313,926
------------
651,805
------------
BRAZIL (.8%)
Telecommunications (.8%)
5,900 Telecomunicacoes Brasileiras ADR.................................. 293,525
------------
CANADA (1.7%)
Banking (1.0%)
12,000 Canadian Imperial Bank of Commerce................................ 361,111
Mining and Metals--Container (.7%)
32,000 Inmet Mining (b).................................................. 255,420
------------
616,531
------------
</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 (.8%)
Utilities--Gas and Electric (.8%)
3,300 Compania de Telefonos de Chile ADR................................ $ 279,675
------------
CZECH REPUBLIC (2.0%)
Energy Services (2.0%)
9,465 Ceske Energeticke (b)............................................. 357,202
3,200 SPT Telecom (b)................................................... 367,010
------------
724,212
------------
FINLAND (1.1%)
Wholesale and International Trade (1.1%)
15,000 Amer Group........................................................ 239,537
4,700 Metsa-Serla....................................................... 147,067
------------
386,604
------------
FRANCE (6.1%)
Banking (1.3%)
9,500 Banque Nationale de Paris......................................... 371,695
2,800 Banque Nationale de Paris ADR (f)................................. 109,552
Electrical and Electronics (.8%)
2,900 Alcatel Alsthom................................................... 268,917
Energy Sources (1.2%)
6,220 Societe Nationale Elf Aquitaine................................... 421,869
Health and Personal Care (1.4%)
20,000 Rhone-Poulenc..................................................... 515,983
Insurance (.7%)
4,214 Axa............................................................... 259,031
Transportation (.7%)
9,200 Regie Nationale Des Usines Renault................................ 266,770
------------
2,213,817
------------
GERMANY (2.1%)
Banking ( 1.0%)
7,350 Deutsche Bank..................................................... 369,545
Chemicals (1.1%)
1,200 Bayer............................................................. 406,805
------------
776,350
------------
</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 (4.1%)
Banking (1.0%)
24,250 Hong Kong and Shanghai Banking.................................... $ 363,763
Multi-Industry (1.1%)
61,000 Hutchison Whampoa................................................. 384,945
Transportation (2.0%)
45,000 Swire Pacific..................................................... 395,704
102,628 Jardine Strategic Holdings........................................ 324,305
------------
1,468,717
------------
INDIA (.4%)
Financial Services (.4%)
90,600 India Fund........................................................ 157,663
------------
INDONESIA (1.1%)
Financial Services (.7%)
200,000 J.F. Indonesia Fund (b)........................................... 244,406
Forest Products and Paper (.4%)
151,500 P.T. Barito Pacific Timber........................................ 152,310
------------
396,716
------------
JAPAN (3.3%)
Building Materials and Components (.6%)
17,000 Daito Trust Construction.......................................... 205,337
Electrical and Electronics (2.2%)
27,000 Hitachi........................................................... 262,921
20,000 Hitachi Koki...................................................... 182,771
6,000 Sony.............................................................. 358,989
Utilities--Gas and Electric (.5%)
13,000 Kyudenko.......................................................... 170,412
------------
1,180,430
------------
KOREA (.6%)
Financial Services (.6%)
4 Korea International Trust......................................... 210,000
------------
MEXICO (.5%)
Chemicals (.2%)
48,000 Vitro............................................................. 89,755
</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>
MEXICO--CONTINUED
Utilities--Gas and Electric (.3%)
2,800 Telefonos de Mexico ADR........................................... $ 92,050
------------
181,805
------------
NETHERLANDS (3.8%)
Broadcasting, Advertising and Publishing (1.2%)
5,800 International Nederlanden Group................................... 421,170
Building Materials and Components (.7%)
6,850 European Vinyls................................................... 238,346
Insurance (1.2%)
9,515 Aegon............................................................. 449,109
Merchandising (.7%)
4,200 Koninklijke Bijenkorf Beheer...................................... 270,166
------------
1,378,791
------------
NEW ZEALAND (1.8%)
Building Materials and Components (.2%)
27,000 Fletcher Challenge Building (b)................................... 66,388
Energy Services (.2%)
27,000 Fletcher Challenge Energy (b)..................................... 57,744
Forest Products and Paper (.3%)
54,000 Fletcher Challenge Paper (b)...................................... 100,777
15,323 Fletcher Challenge Forest......................................... 20,351
Wholesale and International Trade (1.1%)
438,750 Brierley Investments.............................................. 418,371
------------
663,631
------------
NORWAY (2.3%)
Energy Sources (.8%)
23,000 Saga Petroleum.................................................... 294,089
Health and Personal Care (1.0%)
13,000 Hafslund Nycomed.................................................. 354,746
Mining and Metals--Container (.5%)
13,000 Elkem............................................................. 168,251
------------
817,086
------------
</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>
PHILIPPINES (.8%)
Telecommunications (.8%)
5,400 Philippine Long Distance Telephone................................ $ 292,895
------------
PORTUGAL (1.0%)
Banking (.2%)
7,000 Banco Portugues de Investimento................................... 91,027
Financial Services (.8%)
3,000 Capital Portugal Fund (b)......................................... 275,067
------------
366,094
------------
SPAIN (6.9%)
Banking (2.4%)
19,600 Argentaria Corporacion Bancaria de Espanol ADR.................... 409,150
12,000 Banco Bilbao Vizcaya (e)(f)....................................... 447,631
Energy Sources (1.1%)
10,800 Repsol............................................................ 407,219
Telecommunications (1.1%)
25,000 Telefonica de Espana.............................................. 396,793
Utilities--Gas and Electric (2.3%)
6,600 Empresa Nacional de Electricidad.................................. 378,070
50,072 Iberdrola......................................................... 461,911
------------
2,500,774
------------
SWEDEN (6.4%)
Banking (.5%)
9,600 Stadshypotek...................................................... 200,367
Business and Public Service (1.2%)
24,000 Esselte........................................................... 423,716
Forest Products and Paper (.9%)
27,000 Stora Kopparbergs Bergslags....................................... 345,392
Health and Personal Care (2.6%)
11,000 Astra............................................................. 506,080
22,500 Svenska Handelsbanken............................................. 435,947
Transportation (1.2%)
18,500 Volvo............................................................. 430,411
------------
2,341,913
------------
</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>
SWITZERLAND (2.3%)
Electrical and Electronics (1.1%)
340 BBC Brown Boveri & Cie............................................ $ 413,278
Health and Personal Care (.9%)
150 Societe Generale de Surveillance.................................. 313,121
Insurance (.3%)
350 Zuerich Versicherung.............................................. 100,551
------------
826,950
------------
THAILAND (1.1%)
Financial Services (1.1%)
15,685 Thai Fund......................................................... 388,204
------------
TURKEY (.7%)
Financial Services (.7%)
17,000 Turkish Growth Fund (b)........................................... 240,125
------------
UNITED KINGDOM (6.3%)
Banking (.8%)
27,281 Barclays Bank..................................................... 302,755
Building Materials and Components (1.1%)
74,000 BICC.............................................................. 378,420
Electrical and Electronics (.3%)
10,500 Waste Management International ADR (b)............................ 103,688
Energy Services (1.7%)
89,500 British Gas....................................................... 312,181
25,833 Welsh Water....................................................... 297,333
Food and Household Products (1.9%)
490,000 Albert Fisher Group............................................... 347,813
123,490 Hillsdown Holdings................................................ 348,739
Merchandising (.5%)
27,100 Kwik Save Group................................................... 194,430
------------
2,285,359
------------
Total common stocks (cost: $20,716,003)........................... 23,330,380
------------
</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>
PREFERRED STOCKS AND OTHER (2.9%)
ARGENTINA (.7%)
Multi-Industry (.7%)
4,575 Compania de Inversiones en Telecomunications convertible
preferred-- 7.00% (e)............................................ $ 242,475
------------
GERMANY (.5%)
Energy Services (.5%)
825 Veba (Warrants expiring 04/06/98)................................. 180,562
------------
ITALY (1.1%)
Telecommunications (1.1%)
193,000 Stet Spa di Risp.................................................. 383,596
------------
MEXICO (.5%)
Financial (.5%)
5,550 Nacional Financiera ADR--11.25%................................... 191,475
------------
UNITED KINGDOM (.1%)
Energy Services (.1%)
27,900 Welsh Water....................................................... 43,015
------------
Total preferred stocks and other (cost: $1,006,319)............... 1,041,123
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- -----------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (26.4%)
ARGENTINA (.2%)
Government (.2%)
150,000 Republic of Argentina (U.S. Dollar) (c)................ 5.000% 03/31/23 78,000
------------
AUSTRALIA (3.8%)
Government (3.8%)
1,088,000 Queensland Treasury Corporation (Australian Dollar)
(c)................................................... 8.000% 05/14/03 806,918
200,000 New South Wales Treasury (Australian Dollar) (c)....... 6.500% 05/01/06 129,512
500,000 New South Wales Treasury (Australian Dollar) (c)....... 12.000% 12/01/01 444,668
------------
1,381,098
------------
</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>
CANADA (3.7%)
Government (3.7%)
335,000 Canadian Government Bond (Canadian Dollar) (c)......... 10.500% 10/01/01 $ 290,505
150,000 Canadian Government Bond (Canadian Dollar) (c)......... 10.500% 03/01/01 125,871
520,000 Canadian Government Bond (Canadian Dollar) (c)......... 8.750% 12/01/05 410,325
484,000 Canadian Government Bond (Canadian Dollar) (c)......... 7.500% 09/01/00 362,862
230,000 Canadian Government Bond (Canadian Dollar) (c)......... 5.750% 03/01/99 165,368
------------
1,354,931
------------
DENMARK (2.6%)
Government (2.6%)
4,672,000 Denmark Kingdom (Danish Krone) (c)..................... 7.000% 12/15/04 806,980
600,000 Denmark Kingdom (Danish Krone) (c)..................... 9.000% 11/15/00 116,681
------------
923,661
------------
GERMANY (1.9%)
Government (1.9%)
940,000 Treuhandanstalt (Deutsch Mark) (c)..................... 7.125% 01/29/03 674,319
------------
HONG KONG (.9%)
Finance (.9%)
400,000 PIV Investment Finance (U.S. Dollar) (c)............... 4.500% 12/01/00 339,500
------------
INDIA (.7%)
Finance (.7%)
250,000 Essar Gujarat (U.S. Dollar) (c)(d)(f).................. 7.900% 07/15/99 243,750
------------
IRELAND (.6%)
Government (.6%)
150,000 Ireland Republic (Irish Punt) (c)...................... 6.250% 10/18/04 211,703
------------
ITALY (1.7%)
Government (1.7%)
430,000,000 Italy Government (Italian Lira) (c).................... 10.500% 07/15/00 276,719
180,000,000 Buoni Poliennali Del Tes (Italian Lira) (c)............ 8.500% 08/01/99 109,718
385,000,000 Buoni Poliennali Del Tes (Italian Lira) (c)............ 10.500% 09/01/05 243,836
------------
630,273
------------
</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>
JAPAN (1.2%)
Finance (.6%)
18,000,000 Japan Development Bank (Japanese Yen) (c).............. 6.500% 09/20/01 $ 202,142
Government (.6%)
22,000,000 European Investment Bank (Japanese Yen) (c)............ 5.875% 11/26/99 234,316
------------
436,458
------------
MEXICO (.4%)
Government (.4%)
250,000 Mexican Government (U.S. Dollar) (c)................... 6.250% 12/31/19 159,063
------------
NEW ZEALAND (1.2%)
Government (1.2%)
680,000 New Zealand Government Bond (New Zealand Dollar) (c)... 6.500% 02/15/00 435,388
------------
SPAIN (2.0%)
Government (2.0%)
36,460,000 Spain Government (Spanish Peseta) (c).................. 12.250% 03/25/00 323,563
38,030,000 Spain Government (Spanish Peseta) (c).................. 10.000% 02/28/05 311,376
11,400,000 Spain Government (Spanish Peseta) (c).................. 11.300% 01/15/02 99,360
------------
734,299
------------
SWEDEN (.9%)
Government (.9%)
800,000 Sweden Kingdom (Swedish Krona) (c)..................... 13.000% 06/15/01 144,197
1,000,000 Sweden Kingdom (Swedish Krona) (c)..................... 10.250% 05/05/03 166,112
------------
310,309
------------
UNITED KINGDOM (4.1%)
Government (4.1%)
490,000 United Kingdom Treasury (British Sterling Pound) (c)... 6.750% 11/26/04 685,108
135,000 United Kingdom Treasury (British Sterling Pound) (c)... 8.500% 07/16/07 209,491
355,000 United Kingdom Treasury (British Sterling Pound) (c)... 9.500% 01/15/99 573,067
------------
1,467,666
------------
</TABLE>
See accompanying notes to investments in securities.
15
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- ----------- ------------
UNITED STATES (.5%)
<C> <S> <C> <C> <C>
Government (.5%)
192,000 U.S. Treasury Note (U.S. Dollar) (c)................... 5.125% 04/30/98 $ 189,540
------------
Total long-term debt securities (cost: $9,615,231)........................... 9,569,958
------------
SHORT-TERM SECURITIES (2.0%)
NEW ZEALAND (2.0%)
Government (2.0%)
815,000 New Zealand Treasury Bill.............................. 8.360% 09/18/96 533,976
297,000 New Zealand Treasury Bill.............................. 8.050% 12/18/96 190,587
------------
Total short-term securities (cost: $706,903)................................. 724,563
------------
Total investments in securities (cost: $32,044,456) (g)...................... $ 34,666,024
------------
------------
<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 March 31, 1996.
(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. (See note 8 to
the financial statements). Information concerning the illiquid securities
held at March 31, 1996, which includes acquisition date and cost, is as
follows:
</TABLE>
<TABLE>
<CAPTION>
ACQUISITION
SECURITY DATE COST
-------------------------------------------------- ------------ ---------
<S> <C> <C> <C>
Essar Gujarat..................................... 07/07/94 $ 250,000
Banco Bilbao Vizcaya.............................. Various 282,593
Banque Nationale de Paris ADR..................... Various 113,361
VA Technologies................................... Various 233,012
---------
$ 878,966
---------
---------
</TABLE>
(g) At March 31, 1996 the cost of securities for federal income tax purposes was
$32,344,812. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C> <C>
Gross unrealized appreciation..................... $ 3,617,999
Gross unrealized depreciation..................... (1,296,787)
-----------
Net unrealized appreciation....................... $ 2,321,212
-----------
-----------
</TABLE>
16
<PAGE>
ADVANTUS INTERNATIONAL BALANCED 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: $32,044,456)........................................... $34,666,024
Cash in bank on demand deposit (including foreign currencies of $238,189)......... 1,263,550
Receivable for investment securities sold......................................... 20,962
Accrued interest and dividends receivable......................................... 243,785
Unrealized appreciation on forward foreign currency contracts held, at value (note
4)............................................................................... 9,006
Receivable for Fund shares sold................................................... 55,060
Receivable for refundable foreign income taxes withheld........................... 33,095
Organizational costs (note 6)..................................................... 28,266
-----------
Total assets.................................................................. 36,319,748
-----------
LIABILITIES
Payable for Fund shares repurchased............................................... 620
Payable to Adviser................................................................ 87,851
Unrealized depreciation on forward foreign currency contracts held, at value (note
4)............................................................................... 10,254
-----------
Total liabilities............................................................. 98,725
-----------
Net assets applicable to outstanding capital stock................................ $36,221,023
-----------
-----------
Represented by:
Capital stock--$.01 par value (note 1).......................................... $ 32,942
Additional paid-in capital...................................................... 33,611,423
Undistributed net investment income............................................. 27,168
Distributions in excess of net realized gains from investments.................. (68,399)
Unrealized appreciation of investments and translation of assets and liabilities
in foreign currencies.......................................................... 2,617,889
-----------
Total--representing net assets applicable to outstanding capital stock........ $36,221,023
-----------
-----------
Net assets applicable to outstanding Class A shares............................... $35,504,485
-----------
-----------
Net assets applicable to outstanding Class C shares............................... $ 716,538
-----------
-----------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 3,228,994........................................... $ 11.00
-----------
-----------
Class C--Shares outstanding 65,281.............................................. $ 10.98
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1995 TO MARCH 31, 1996
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest........................................................................... $ 350,365
Dividends (net of foreign withholding taxes of $35,420)............................ 242,979
----------
Total investment income.......................................................... 593,344
----------
Expenses (note 5):
Investment advisory fee............................................................ 151,540
Distribution fees--Class A......................................................... 49,021
Distribution fees--Class C......................................................... 2,552
Administrative services fee........................................................ 13,200
Custodian fees..................................................................... 44,398
Auditing and accounting services................................................... 49,404
Legal fees......................................................................... 1,285
Amortization of organizational costs............................................... 4,137
Directors' fees.................................................................... 271
Registration fees.................................................................. 16,642
Printing and shareholder reports................................................... 15,409
Insurance.......................................................................... 2,870
Other.............................................................................. 18,342
----------
Total expenses................................................................... 369,071
Less fees and expenses waived or absorbed:
Class A distribution fees........................................................ (24,511)
----------
Total net expenses............................................................. 344,560
----------
Investment income--net......................................................... 248,784
----------
Realized and unrealized gains (losses) on investments and foreign currencies:
Net realized gains (losses) from:
Investments (note 3)............................................................. 289,738
Foreign currency transactions.................................................... (40,577)
----------
249,161
----------
Net change in unrealized appreciation or depreciation on:
Investments...................................................................... 1,090,568
Translation of assets and liabilities in foreign currencies...................... 43,128
----------
1,133,696
----------
Net gains on investments and foreign currencies.................................. 1,382,857
----------
Net increase in net assets resulting from operations................................. $1,631,641
----------
----------
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
ADVANTUS INTERNATIONAL BALANCED 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 income--net.............................................. $ 248,784 $ 576,072
Net realized gains on investments and foreign currency
transactions....................................................... 249,161 668,642
Net change in unrealized appreciation or depreciation of investments
and translation of assets and liabilities in foreign currencies.... 1,133,696 1,212,767
----------- -----------
Increase in net assets resulting from operations................ 1,631,641 2,457,481
----------- -----------
Distributions to shareholders from:
Investment income--net:
Class A........................................................... (315,136) (530,846)
Class C........................................................... (2,864) (2,174)
Net realized gains on investments:
Class A........................................................... (567,458) (310,236)
Class C........................................................... (7,772) (925)
Excess of net realized gains from investments:
Class A........................................................... (67,475) --
Class C........................................................... (924) --
----------- -----------
Total distributions............................................. (961,629) (844,181)
----------- -----------
Capital share transactions (notes 5 and 7):
Proceeds from sales:
Class A........................................................... 4,188,185 14,280,071
Class C........................................................... 487,179 384,909
Shares issued as a result of reinvested dividends:
Class A........................................................... 241,802 75,357
Class C........................................................... 11,211 5,108
Payments for redemption of shares:
Class A........................................................... (529,474) (443,874)
Class C........................................................... (126,482) (66,528)
----------- -----------
Increase in net assets from capital share transactions.......... 4,272,421 14,235,043
----------- -----------
Total increase in net assets.................................... 4,942,433 15,848,343
Net assets at beginning of period..................................... 31,278,590 15,430,247
----------- -----------
Net assets at end of period (including undistributed net investment
income of $27,168 and $92,247, respectively)......................... $36,221,023 $31,278,590
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
(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 charged differs between Class A 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 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:
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 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.
20
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. 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.
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 then investments in securities, resulting from changes in the
exchange rate.
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, a reclassification adjustment was made to decrease
additional paid-in capital and increase undistributed net investment income by
$4,137.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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 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 $10,830,288 and $7,707,290, respectively.
(4) FORWARD FOREIGN CURRENCY CONTRACTS
On March 31, 1996, the Fund had entered into forward foreign currency
contracts that obligate the Fund to deliver currencies at specified future
dates. Unrealized appreciation and depreciation on these contracts is included
in the accompanying financial statements. The terms of the open contracts were
as follows:
<TABLE>
<CAPTION>
EXCHANGE CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- -------- ----------------- ----------------- ------------ ------------
<C> <C> <S> <C> <C> <C> <C>
4/09/96 590,000 NZD 397,229 US$ $ -- $ 4,624
4/09/96 480,000 NZD 323,136 US$ -- 3,796
4/09/96 250,000,000 ITL 158,796 US$ -- 463
4/10/96 337,177 US$ 500,000 DEM 1,488 --
4/10/96 500,000 DEM 339,167 US$ 502 --
4/11/96 18,500,000 JPY 174,364 US$ 1,143 --
4/12/96 27,200,000 JPY 259,146 US$ 4,465 --
4/15/96 250,000,000 ITL 158,805 US$ -- 454
4/26/96 447,758 US$ 704,000 DEM -- 917
4/26/96 352,000 DEM 238,891 US$ 470 --
4/26/96 352,000 DEM 239,358 US$ 938 --
------ ------------
$9,006 $10,254
------ ------------
------ ------------
</TABLE>
ITL Italian Lira
JPY Japanese Yen
DEM German Deutch Mark
NZD New Zealand Dollar
US$ United States Dollar
(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 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,
22
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
as part of the advisory fee, Advantus Capital pays the expenses of the Fund's
transfer, dividend disbursing and 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 .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 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 are the same
as the old agreement between MIMLIC Management and Templeton.
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 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. 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. MIMLIC Sales waived Class A
distribution fees in the amount of $24,511 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 services fee for
the Fund was $2,050 per month. Effective February 1, 1996 the administrative
services fee is $2,500 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 two
classes of shares amounted to $158,726.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
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................................. 2,499,182 77.4%
Class C................................. 1,051 1.6%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $1,285.
(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.
(7) 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 shares and the period from
October 1, 1995 to March 31, 1996 and the period from March 1, 1995 to September
30, 1995 for Class C shares were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS C
--------------------- --------------------
1996 1995 1996 1995
--------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Sold.................................... 387,097 1,411,085 45,332 36,260
Issued for reinvested distributions..... 22,539 7,265 1,079 481
Redeemed................................ (48,888) (42,101) (11,752) (6,119)
--------- ---------- --------- ---------
360,748 1,376,249 34,659 30,622
--------- ---------- --------- ---------
--------- ---------- --------- ---------
</TABLE>
(8) ILLIQUID SECURITIES
At March 31, 1996, investments in securities includes issues which generally
cannot be offered for sale to the public without first being registered under
the Securities Act of 1933 (illiquid security). In the event the securities are
registered, those carrying registration rights allow for the issuer to bear all
the related costs; for issues without rights, the Fund may incur such costs. The
Fund currently limits investments in illiquid securities to 10% of net assets at
the time of the purchase. Securities are valued by procedures described in note
2. The aggregate value of illiquid securities held by the Fund at March 31, 1996
was $1,108,672 which represents 3.1% of net assets.
24
<PAGE>
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(9) 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 PERIOD FROM PERIOD FROM
OCTOBER 1, SEPTEMBER 16, OCTOBER 1, MARCH 1,
1995 TO YEAR ENDED 1994(A) TO 1995 TO 1995(A) TO
MARCH 31, SEPTEMBER 30, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1996 1995(I) 1994 1996 1995
----------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period......... $ 10.79 $ 10.34 $ 10.54 $10.77 $ 9.95
----------- ------------- ------------- ----------- ------
Income from investment operations:
Net investment income...................... .09 .20 .01 .05 .11
Net gains or losses on securities (both
realized and unrealized).................. .43 .56 (.21) .44 .91
----------- ------------- ------------- ----------- ------
Total from investment operations......... .52 .76 (.20) .49 1.02
----------- ------------- ------------- ----------- ------
Less distributions:
Dividends from net investment income....... (.10) (.19) -- (.07) (.13)
Distributions from capital gains........... (.19) (.12) -- (.19) (.07)
Distributions in excess of capital gains... (.02) -- -- (.02) --
----------- ------------- ------------- ----------- ------
Total distributions...................... (.31) (.31) -- (.28) (.20)
----------- ------------- ------------- ----------- ------
Net asset value, end of period............... $ 11.00 $ 10.79 $ 10.34 $10.98 $10.77
----------- ------------- ------------- ----------- ------
----------- ------------- ------------- ----------- ------
Total return (b)............................. 5.1%(c) 7.4% (1.9)%(d) 4.7%(c) 10.3%(e)
Net assets, end of period (in thousands)..... $35,504 $30,949 $15,430 $ 717 $ 330
Ratio of expenses to average daily net assets
(f)......................................... 2.06%(g) 2.08% .47%(h) 2.91%(g) 2.93%(g)
Ratio of net investment income to average
daily net assets (f)........................ 1.51%(g) 2.22% .14%(h) .66%(g) 1.39%(g)
Portfolio turnover rate (excluding short-term
securities)................................. 23.8% 52.0% 12.1% 23.8% 52.0%
Average commission rate on stock
transactions................................ $ .0170 N/A N/A $.0170 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 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 $24,511,
$56,482 and $4,034 in expenses for the period ended 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 2.21%, 2.30% and .49%
for Class A shares, respectively, and 2.91% and 3.00% for Class C shares,
respectively. The ratios of net investment income to average daily net
assets would have been 1.36%, 2.00% and .12% for Class A shares,
respectively, and .66% and 1.32% for Class C shares, respectively.
(g) Adjusted to an annual basis.
(h) Ratios presented for the periods 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. Also effective March 1, 1995, Advantus Capital Management entered
into a new sub-advisory agreement with Templeton Investment Counsel, Inc.
25
<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.
26
<PAGE>
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account. Amounts
over $1,000 may be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. To set this up,
please send a voided check from your bank. Depending on the performance of the
underlying investment options, the value may be worth more or less than the
original amount invested upon redemption.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, and annual tax statements. Semiannual and annual reports will provide you
with portfolio information, fund performance data and the current investment
outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from MIMLIC Sales Corporation, call 1-800-443-3677. Our
voice response system is available from 7 a.m. to 3 a.m. Monday through Friday,
and 8 a.m. to 5 p.m. on Saturday. This system allows you to access current net
asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the eight Advantus Funds through your local
registered representative of MIMLIC Sales Corporation, distributor of the Funds.
Contact your representative for information and a prospectus for any of the
Advantus Funds you are interested in.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages eight mutual funds containing $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
27
<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.48650 5-96
