<PAGE>
[ADVANTUS LOGO]
Semi-Annual Report to Shareholders
Advantus International Balanced Fund
March 31, 1997
<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
STATEMENTS OF CHANGES IN
NET ASSETS 18
NOTES TO FINANCIAL
STATEMENTS 19
SHAREHOLDER SERVICES 26
<PAGE>
April 30, 1997 [PHOTO]
Dear Shareholders:
The last six months have provided investors with some high points and some low.
At year end 1996, the stock market exceeded nearly all expectations. Driven by
ideal fundamentals, combined with unprecedented levels of money flowing into the
market, S&P 500 operating earnings grew by nine percent, while the total return
for the S&P 500 Index was over 20 percent. This trend continued into the first
quarter 1997.
Investors started reacting to possible Federal Reserve action to curb the
economy in the second half of February. Even before short-term money rates were
raised by 1/4 percent at the end of March, the stock market started to drop.
After reaching a high on February 19, the S&P 500 declined by 7.3 percent
resulting in a 2.7 percent increase for the quarter. The largest companies in
the S&P 500 outperformed all other companies and were the driving force behind
the Index.
The investment grade bond market posted low single digit returns at the end of
1997. The Fed's increase in money rates had a negative impact on bond prices. At
the end of the first quarter 1997, the interest rate on the two year Treasury
note increased 54 basis points to yield 6.41 percent. The 30-year U.S. Treasury
Bond closed the period yielding 7.10 percent, 46 basis points higher for the
quarter.
The long-term outlook continues to be favorable. We expect economic growth to
slow to around 2.5 percent from 3.2 percent last year as the result of the
tighter money policy. In this environment, the current level of interest rates
should reward bond investors with historically higher real rates of return which
may eventually translate into bond price appreciation. For 1997, we still
believe investors may see high single digit bond returns. The growth in equity
values should slow as corporate profits decline during the year, to
approximately half the rate of 1996.
Moderate economic growth, low inflation, rising corporate profits, a declining
Federal deficit and strong corporate cash flow provide the catalyst for what we
believe will be a positive financial environment for the balance of the year.
Determining which investments will perform well in both the near and long-term
requires professional experience. Advantus Capital Management, Inc. offers a
family of ten 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]
MARC JOSEPHS 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, primarily 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
The Advantus International Balanced Fund's performance for the six months ending
March 31, 1997 (period from January 31, 1997, commencement of operations, to
March 31, 1997 for Class B) is as follows:
<TABLE>
<S> <C>
Class A.......................... 10.2 percent*
Class B.......................... 1.1 percent*
Class C.......................... 9.8 percent*
</TABLE>
By comparison, the unmanaged Morgan Stanley Capital International ("MSCI") EAFE
Index** returned .2 percent for the same period.
The Fund benefited from a 69 percent stock weighting, strong performance from
the European equity markets and an underweighting in Japanese stocks. The Fund's
lack of holdings in Japan was especially helpful, as Japan registered poor
performance relative to other markets.
PORTFOLIO RECAP
The past six months have been a rewarding period for investors in the world's
international stock markets. In Europe, all the major stock markets moved
sharply higher: Spanish, Swedish, Dutch, Swiss, French and German markets posted
gains in excess of 20 percent in local currency terms. Returns in dollar terms,
however, were less spectacular, as the dollar strengthened against nearly all
European currencies over uncertainty surrounding the European Monetary Union's
proposed single currency. For example, Italian stocks rose nearly 13 percent in
local terms, but climbed only 3 percent in dollar terms as the lira weakened
relative to the U.S. dollar.
In Asia, the Japanese market tumbled 22 percent in dollar terms. The performance
of other Asian markets was mixed, with disappointing results from Korea,
Thailand and Singapore and solid returns from China and Indonesia. While the
Hong Kong market rose to new highs during the six month period, it gave back
much of its gains in March, amid concerns over rising interest rates, the death
of Chinese leader Deng Xiaoping, and reversion to Chinese control later this
year. Although the outcome of Hong Kong's return to Chinese rule remains
uncertain, we believe this uncertainty has been more than reflected in stock
prices.
The circumstance of overriding importance in the global bond markets over the
last six months was the surprising strength of the U.S. economy and of the
growing necessity for the Federal Reserve to tighten monetary policy. This
environment led directly to a material rise in U.S. interest rates, a rise in
the U.S. dollar against most foreign currencies, and to a more modest increase
in most foreign interest rates.
One of the biggest surprises during the period was the degree to which European
interest rates rose in response to the Federal Reserve action. With
simultaneously lower inflation and growth, and nearly double the
2
<PAGE>
ADVANTUS INTERNATIONAL
BALANCED FUND
MARCH 31, 1997
unemployment rate of the U.S., the European continent was not a place where
higher interest rates were either desired or expected. Although interest rates
may continue to rise over the balance of 1997, the higher European rates
represent an opportunity for investors seeking good relative value on a global
basis.
In response to the increased global bond and currency volatility, Templeton's
bond managers decreased the Fund's fixed income risk posture during the period.
This was accomplished through a more conservative duration position (3.1 years)
and an increased net exposure to the U.S. dollar via hedges on the foreign
currency portion of the Fund (41 percent of the bond portion of the fund is
hedged back to U.S. dollars).
OUTLOOK
While we are optimistic in our outlook, today's relatively high market valuation
levels make identifying investment bargains a particular challenge. Although no
one can reliably predict the direction of the markets in the near-term, we are
confident that our disciplined approach to identifying undervalued stocks and
bonds will reward long-term investors.
*Historical performance is 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 and Class B's maximum 5 percent contingent deferred sales
charge.
**The EAFE Index is an unmanaged index of common stocks from European, Asian,
and Far Eastern markets.
3
<PAGE>
ADVANTUS INTERNATIONAL
BALANCED FUND
MARCH 31, 1997
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 charts you can see how the total return for Class A and Class C
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 Class A and March 31,
1995 for Class C) through March 31, 1997.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A EAFE INDEX J.P. MORGAN INDEX CPI
<S> <C> <C> <C> <C>
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
9/30/96 11,089 11,399 12,605 10,584
3/31/97 12,222 11,416 12,202 10,724
Average annual total return:
One year 10.4%
Since inception (9/16/94)
8.2%
</TABLE>
4
<PAGE>
ADVANTUS INTERNATIONAL
BALANCED FUND
MARCH 31, 1997
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS C EAFE INDEX J.P. MORGAN INDEX CPI
<S> <C> <C> <C> <C>
3/1/95 $10,000 $10,000 $10,000 $10,000
9/30/95 11,026 11,175 11,198 10,146
9/30/96 12,120 12,179 11,791 10,450
3/31/97 13,311 12,197 11,413 10,589
Average annual total return:
One year 15.4%
Since inception (3/1/95)
14.7%
</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 performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS INTERNATIONAL
BALANCED FUND
MARCH 31, 1997
FIVE LARGEST COMMON STOCK HOLDINGS
<TABLE>
<CAPTION>
% OF
COMMON
MARKET STOCK
COMPANY SHARES VALUE PORTFOLIO
- -------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
Deutsche Bank................... 17,950 $1,016,713 3.1%
Volvo........................... 37,000 992,079 3.1%
Regie Nationale Des Usines
Renault....................... 34,053 860,324 2.7%
Pioneer International........... 248,995 857,398 2.6%
BTR PLC......................... 170,400 745,659 2.3%
---------- ---
$4,472,173 13.8%
---------- ---
---------- ---
</TABLE>
FIVE LARGEST BOND HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF BOND
COMPANY VALUE PORTFOLIO
- --------------------------------------------- ---------- -----------
<S> <C> <C>
Canadian Government, 10.25%, 02/01/04........ $1,374,982 11.8%
Denmark Kingdom, 9.00%, 11/15/00............. 1,342,550 11.6%
Treuhandanstalt, 7.75%, 10/01/02............. 1,291,747 11.1%
United Kingdom, 9.75%, 08/27/02.............. 812,329 7.0%
International Bank, 5.25%, 03/20/02.......... 786,861 6.8%
---------- ---
$5,608,469 48.3%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Consumer Goods and Services 14.1%
Credit Sensitive 30.3%
Intermediate Goods and
Services 21.3%
Technology 6.6%
Foreign Government Debt 19.7%
Cash and Other
Assets/Liabilities 8.0%
</TABLE>
6
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1997
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
COMMON STOCKS (65.9%)
AUSTRALIA (2.3%)
Banking (.5 %)
20,853 National Australia Bank............................................. $ 263,980
Building Materials and Components (1.8%)
248,995 Pioneer International............................................... 857,398
1,000 David Jones, Ltd.................................................... 1,333
------------
1,122,711
------------
AUSTRIA (1.0%)
Electrical and Electronics (.5%)
1,900 VA Technologie (e).................................................. 281,385
Utilities - Gas and Electric (.5%)
1,650 EVN Energie-Versorung............................................... 239,443
------------
520,828
------------
BELGIUM (1.4%)
Chemicals (1.4%)
590 Solvay.............................................................. 355,860
4,300 Union Miniere NPV (b)............................................... 338,534
------------
694,394
------------
BRAZIL (1.5%)
Telecommunications (1.5%)
7,100 Telecomunicacoes Brasileiras ADR.................................... 726,863
------------
CANADA (1.6%)
Banking (.9%)
20,000 Canadian Imperial Bank of Commerce.................................. 453,155
Mining and Metals--Container (.7%)
32,000 Metal Mining Corporation............................................ 185,316
10,300 Oshawa Group, Ltd................................................... 152,849
------------
791,320
------------
CHILE (.2%)
Telecommunications (.2%)
3,725 Compania de Telefonos de Chile ADR.................................. 107,094
------------
CHINA (.4%)
Chemicals (.4%)
958,000 Yizheng Chemical Fibre Company...................................... 205,223
------------
CZECH REPUBLIC (2.0%)
Banking (.5%)
8,000 Komercni Banka 144A (e)............................................. 252,400
</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>
CZECH REPUBLIC--CONTINUED
Energy Services (1.5%)
9,465 Ceske Energeticke................................................... $ 344,116
3,200 SPT Telecom (b)..................................................... 380,453
------------
976,969
------------
FINLAND (2.6%)
Telecommunications (.8%)
6,800 Nokia............................................................... 409,829
Banking (.8%)
118,000 Merita, Ltd......................................................... 405,023
Wholesale and International Trade (1.0%)
15,000 Amer Group (b)...................................................... 311,945
23,500 Metsa-Serla......................................................... 170,812
------------
1,297,609
------------
FRANCE (7.2%)
Banking (1.2%)
9,687 Banque Nationale de Paris........................................... 430,438
3,300 Banque Nationale de Paris ADR 144A (e).............................. 146,634
Electrical and Electronics (.8%)
3,205 Alcatel Alsthom..................................................... 386,069
Multi-Industry (.5%)
1,000 Marine Wendel....................................................... 113,707
2,000 Pechiney SA......................................................... 81,194
610 Bertrand Faure (b).................................................. 31,050
Energy Sources (1.3%)
6,470 Societe Nationale Elf Aquitaine..................................... 663,265
Health and Personal Care (1.4%)
20,735 Rhone-Poulenc....................................................... 701,052
Insurance (.3%)
2,365 Axa................................................................. 156,434
Transportation (1.7%)
34,053 Regie Nationale Des Usines Renault.................................. 860,324
------------
3,570,167
------------
GERMANY (2.1%)
Banking (2.1%)
17,950 Deutsche Bank....................................................... 1,016,713
------------
HONG KONG (4.5%)
Banking (.3%)
7,250 HSBC Holdings....................................................... 168,408
</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
Multi-Industry (2.1%)
61,000 Hutchison Whampoa................................................... $ 458,542
245,600 C. P. Pokphand Co., Ltd............................................. 79,236
86,600 Jardine Matheson.................................................... 502,280
Electrical and Electronics (.2%)
29,100 Hong Kong Aircraft Engineering Co. Ltd.............................. 92,005
Transportation (1.9%)
45,000 Swire Pacific Class A............................................... 354,238
158,900 Swire Pacific Class B............................................... 201,982
102,628 Jardine Strategic Holdings.......................................... 355,093
------------
2,211,784
------------
INDIA (.3%)
Financial Services (.3%)
90,600 India Fund (b)...................................................... 141,327
------------
INDONESIA (.8%)
Financial Services (.5%)
20,000 J.F. Indonesia Fund (b)............................................. 258,097
Forest Products and Paper (.3%)
151,500 P.T. Barito Pacific Timber.......................................... 132,507
------------
390,604
------------
ITALY (1.7%)
Telecommunications (.9%)
193,000 Seat Spa Di Risp (b)................................................ 43,268
63,000 Sirti Spa........................................................... 390,292
Transportation (.8%)
126,700 Fiat Spa............................................................ 402,524
------------
836,084
------------
KOREA (.3%)
Financial Services (.3%)
4 Korea International Trust........................................... 126,000
------------
MEXICO (1.0%)
Chemicals (.2%)
48,000 Vitro............................................................... 120,197
Mining and Metals (.6%)
87,200 Grupo Mexico (b).................................................... 291,363
</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
Telecommunications (.2%)
2,800 Telefonos de Mexico ADR............................................. $ 107,800
------------
519,360
------------
NETHERLANDS (3.4%)
Broadcasting, Advertising and Publishing (1.2%)
14,500 International Nederlanden Group..................................... 571,261
Building Materials and Components (.5%)
6,850 European Vinyls..................................................... 227,876
Electrical and Electronics (1.1%)
12,200 Philips Electronics................................................. 569,102
Merchandising (.6%)
4,320 Koninklijke Bijenkorf Beheer........................................ 325,884
------------
1,694,123
------------
NEW ZEALAND (2.7%)
Building Materials and Components (.2%)
27,000 Fletcher Challenge Building......................................... 80,290
Energy Services (.1%)
27,000 Fletcher Challenge Energy........................................... 72,786
Forest Products and Paper (1.0%)
54,000 Fletcher Challenge Paper............................................ 109,180
15,323 Fletcher Challenge Forestry......................................... 20,015
171,400 Carter Holt Harvey, Ltd............................................. 363,216
Transportation (.6%)
100,000 Air New Zealand Ltd................................................. 272,358
Wholesale and International Trade (.8%)
438,750 Brierley Investments................................................ 408,485
------------
1,326,330
------------
NORWAY (2.5%)
Energy Sources (.8%)
23,000 Saga Petroleum...................................................... 397,398
Health and Personal Care (1.2%)
11,700 Nycomed (b)......................................................... 185,308
25,900 Hafslund Nycomed.................................................... 386,659
Mining and Metals--Container (.5%)
13,000 Elkem............................................................... 244,319
------------
1,213,684
------------
</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 (.3%)
Telecommunications (.3%)
2,650 Philippine Long Distance Telephone.................................. $ 159,311
------------
PORTUGAL (.3%)
Banking (.3%)
9,660 Banco Portugues de Investimento..................................... 145,453
------------
SOUTH AFRICA (1.0%)
Forest Products and Paper (.4%)
27,478 Sappi, Ltd.......................................................... 213,520
Mining and Metals (.6%)
17,400 Rustemburg Platinum Holdings, Ltd................................... 281,437
------------
494,957
------------
SPAIN (5.4%)
Banking (1.6%)
19,600 Argentaria Corporacion Bancaria de Espanol ADR...................... 426,300
5,600 Banco Bilbao Vizcaya................................................ 338,915
Energy Sources (.9%)
10,800 Repsol.............................................................. 449,460
Telecommunications (1.3%)
27,000 Telefonica de Espana................................................ 650,385
Utilities--Gas and Electric (1.6%)
3,800 Empresa Nacional de Electricidad.................................... 244,720
50,072 Iberdrola........................................................... 550,979
------------
2,660,759
------------
SWEDEN (6.7%)
Broadcasting, Advertising and Publishing (.2%)
3,300 Marieberg Tidnings.................................................. 90,235
Business and Public Service (1.2%)
24,000 Esselte............................................................. 570,239
2,250 Naeckebro (b)....................................................... 28,671
Forest Products and Paper (.8%)
27,000 Stora Kopparbergs Bergslags......................................... 381,686
Health and Personal Care (2.5%)
7,100 Astra............................................................... 334,093
19,300 Svenska Handelsbanken............................................... 589,221
4,600 Electrolux.......................................................... 293,084
Transportation (2.0%)
37,000 Volvo............................................................... 992,079
------------
3,279,308
------------
</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 (.9%)
Electrical and Electronics (.7%)
45 BBC Brown Boveri & Cie.............................................. $ 54,039
225 BBC Brown Boveri Ltd................................................ 270,196
Health and Personal Care (.2%)
51 Societe Generale de Surveillance.................................... 104,434
------------
428,669
------------
THAILAND (.6%)
Building Materials and Components (.2%)
17,400 Siam City Cement Public Co. Ltd..................................... 102,491
Financial Services (.4%)
11,839 Thai Fund........................................................... 190,904
------------
293,395
------------
UNITED KINGDOM (11.2%)
Chemicals (1.7% )
82,000 Courtaulds PLC...................................................... 486,065
124,800 Harrisons & Crosfield PLC........................................... 263,324
22,000 Somerfield PLC...................................................... 64,301
Banking (.2%)
5,681 Barclays Bank....................................................... 95,241
Building Materials and Components (.9%)
93,281 BICC................................................................ 412,786
10,000 Hepworth PLC(b)..................................................... 41,543
Electrical and Electronics (.4%)
22,400 Waste Management International ADR (b).............................. 89,194
15,500 Waste Management Inernational PLC................................... 116,250
Energy Services (3.6%)
220,700 BG PLC.............................................................. 588,883
152,500 Centrica PLC (b).................................................... 159,007
57,000 British Telecommunications.......................................... 416,962
25,833 Hyder............................................................... 335,101
25,510 Thames Water Group.................................................. 277,923
Food and Household Products (1.6%)
531,893 Albert Fisher Group................................................. 397,383
128,429 Hillsdown Holdings.................................................. 406,999
Merchandising (.3%)
30,100 Kwik Save Group..................................................... 152,474
Mining and Metals (--%)
1,400 British Steel PLC................................................... 3,741
Transportation (2.4%)
17,050 BTR Nylex........................................................... 71,902
</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>
UNITED KINGDOM--CONTINUED
128,200 Thorn PLC........................................................... $ 352,595
170,400 BTR PLC............................................................. 745,659
------------
5,477,333
------------
Total common stocks (cost: $27,293,462)............................. 32,428,372
------------
PREFERRED STOCKS (2.5%)
ARGENTINA (.6%)
Multi-Industry (.6 %)
5,010 Compania de Inversiones en Telecomunications convertible preferred--
7.00% (d).......................................................... 293,085
------------
ITALY (2.4%)
Telecommunications (2.4%)
193,000 Stet Spa di Risp.................................................... 684,885
------------
MEXICO (.4%)
Financial (.04%)
5,550 Nacional Financiera ADR--11.25% (d)................................. 224,775
------------
UNITED KINGDOM (.1%)
Energy Services (.1%)
27,900 Hyder............................................................... 47,873
------------
Total preferred stocks (cost: $876,605)............................. 1,250,618
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- -----------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (23.6%)
AUSTRALIA (1.1%)
Government (1.1%)
660,000 Australian Government (Australian Dollar)
(c)........................................... 9.750% 03/15/02 563,133
------------
CANADA (2.8%)
Government (2.8%)
1,575,000 Canadian Government (Canadian Dollar) (c)...... 10.250% 02/01/04 1,374,982
------------
DENMARK (2.7%)
Government (2.7%)
7,585,000 Kingdom of Denmark (Danish Krone) (c).......... 9.000% 11/15/00 1,342,550
------------
GERMANY (5.6%)
Government (5.6%)
740,000 Germany Federal Republic (Deutsch Mark)(c)..... 5.250% 02/21/01 455,383
780,000 Germany Federal Republic (Deutsch Mark)(c)..... 8.750% 08/20/01 540,495
375,000 Germany Federal Republic (Deutsch Mark)(c)..... 6.000% 09/15/03 233,825
1,915,000 Treuhandanstalt (Deutsch Mark)(c).............. 7.750% 10/01/02 1,291,747
</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>
GERMANY--CONTINUED
360,000 Treuhandanstalt (Deutsch Mark)(c).............. 7.125% 01/29/03 $ 236,448
------------
2,757,898
------------
HONG KONG (.7%)
Finance (.7%)
400,000 PIV Investment Finance (U.S. Dollar)(c)........ 4.500% 12/01/00 348,500
------------
ITALY (2.3%)
Government (2.3%)
905,000,000 Italy Government (Italian Lira)(c)............. 10.500% 07/15/00 586,426
705,000,000 Buoni Poliennali Del Tes (Italian Lira)(c)..... 10.500% 04/15/98 434,009
205,000,000 Buoni Poliennali Del Tes (Italian Lira)(c)..... 10.500% 01/17/99 131,608
------------
1,152,043
------------
JAPAN (3.2%)
Finance (3.2%)
80,000,000 Japan Development Bank (Japanese Yen)(c)....... 6.500% 09/20/01 784,670
83,000,000 International Bank (Japanese Yen)(c)........... 5.250% 03/20/02 786,861
------------
1,571,531
------------
NEW ZEALAND (1.3%)
Government (1.3%)
860,000 New Zealand Government (New Zealand
Dollar)(c).................................... 10.000% 03/15/02 647,342
------------
SPAIN (.5%)
Government (.5%)
31,240,000 Government of Spain (Spanish Peseta)(c)........ 12.250% 03/25/00 255,438
------------
SWEDEN (1.3%)
Government (1.3%)
1,400,000 Sweden Kingdom (Swedish Krona)(c).............. 13.000% 06/15/01 233,230
2,400,000 Sweden Kingdom (Swedish Krona)(c).............. 10.250% 05/05/03 375,839
------------
609,069
------------
UNITED KINGDOM (1.7%)
Government (1.7%)
450,000 United Kingdom (British Sterling Pound)(c)..... 9.750% 08/27/02 812,329
------------
UNITED STATES (.4%)
Government (.4%)
192,000 U.S. Treasury Note (U.S. Dollar)(c)............ 5.125% 04/30/98 189,900
------------
Total long-term debt securities (cost: $11,888,456).................. 11,624,715
------------
</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>
SHORT-TERM SECURITIES (5.9%)
$ 836,000 U.S. Treasury Bill (U.S. Dollar)(c)............ 5.030% 05/01/97 $ 832,496
600,000 U.S. Treasury Bill (U.S. Dollar)(c)............ 5.080% 06/05/97 594,367
1,515,000 U.S. Treasury Bill (U.S. Dollar)(c)............ 5.040% 03/06/97 1,497,745
------------
Total short-term securities (cost: $2,925,645)....................... 2,924,608
------------
Total investments in securities (cost: $42,984,168)(f)............... $ 48,228,313
------------
------------
</TABLE>
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) PRIDES-Preferred Redeemed Increased Dividend Equity Securities are
structured as convertible preferred secuities 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.
(e) 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, 1997, which includes acquisition date and cost, is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY DATE COST
-------------------------------------------------- ---------- ---------
<S> <C> <C>
Banque Nationale de Paris ADR..................... Various $ 131,337
Komercni Banka.................................... Various 210,890
VA Technologies................................... Various 180,320
---------
$ 522,547
---------
---------
</TABLE>
(f) At March 31, 1997 the cost of securities for federal income tax purposes was
$43,538,185. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation..................... $6,540,773
Gross unrealized depreciation..................... (1,850,645)
----------
Net unrealized appreciation....................... $4,690,128
----------
----------
</TABLE>
15
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying
schedule for detailed listing (identified cost:
$42,984,168)............................................... $ 48,228,313
Cash in bank on demand deposit.............................. 372,497
Receivable for investment securities sold................... 1,101,986
Accrued interest and dividends receivable................... 387,138
Unrealized depreciation on forward foreign currency
contracts held, at value (note 4).......................... 73,360
Receivable for fund shares sold............................. 58,433
Receivable for refundable foreign income taxes withheld..... 37,178
Organizational costs (note 6)............................... 19,993
------------
Total assets............................................ 50,278,898
------------
LIABILITIES
Payable for investment securities purchased................. 841,801
Payable for fund shares redeemed............................ 2,411
Payable to Adviser.......................................... 82,758
Unrealized depreciation on forward foreign currency
contracts held, at value (note 4).......................... 100,530
Other payables.............................................. 25,664
------------
Total liabilities....................................... 1,053,164
------------
Net assets applicable to outstanding capital stock.......... $ 49,225,734
------------
------------
Represented by:
Capital stock--authorized 10 billion shares (Class A--2
billion shares, Class B--2 billion shares, Class C--2
billion shares and 4 billion unallocated) of $.01 par
value (note 1)........................................... $ 40,931
Additional paid-in capital................................ 42,861,158
Undistributed net investment income....................... 9,255
Accumulated net realized gains from investments........... 1,132,872
Unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies............. 5,181,518
------------
Total--representing net assets applicable to outstanding
capital stock.......................................... $ 49,225,734
------------
------------
Net assets applicable to outstanding Class A shares......... $ 45,454,140
------------
------------
Net assets applicable to outstanding Class B shares......... $ 347,583
------------
------------
Net assets applicable to outstanding Class C shares......... $ 3,424,011
------------
------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 3,780,004..................... $ 12.02
------------
------------
Class B--Shares outstanding 29,021........................ $ 11.98
------------
------------
Class C--Shares outstanding 284,171....................... $ 12.00
------------
------------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1996 TO MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest.................................................. $ 449,889
Dividends (net of foreign withholding taxes of $44,077)... 295,991
-----------
Total investment income............................... 745,880
-----------
Expenses (note 5):
Investment advisory fee................................... 202,147
Distribution fees--Class A................................ 64,872
Distribution fees--Class B................................ 193
Distribution fees--Class C................................ 12,911
Administrative services fee............................... 16,000
Custodian fees............................................ 44,313
Auditing and accounting services.......................... 19,848
Legal fees................................................ 4,794
Amortization of organizational costs...................... 4,137
Directors' fees........................................... 214
Registration fees......................................... 10,251
Printing and shareholder reports.......................... 10,457
Insurance................................................. 1,607
-----------
Total expenses........................................ 391,744
Less fees and expenses waived or absorbed:
Class A distribution fees............................... (32,436)
-----------
Total net expenses.................................... 359,308
-----------
Investment income--net................................ 386,572
-----------
Realized and unrealized gains on investments and foreign
currencies:
Net realized gains from:
Investments (note 3).................................... 2,011,628
Foreign currency transactions........................... 275,025
-----------
2,286,653
-----------
Net change in unrealized appreciation or depreciation on:
Investments............................................. 1,787,382
Translation of assets and liabilities in foreign
currencies............................................. (85,143)
-----------
1,702,239
-----------
Net gains on investments and foreign currencies....... 3,988,892
-----------
Net increase in net assets resulting from operations........ $ 4,375,464
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1996 TO MARCH 31, 1997
AND YEAR ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Operations:
Investment income--net.......................... $ 386,572 $ 857,493
Net realized gains on investments and foreign
currency transactions.......................... 2,286,653 849,245
Net change in unrealized appreciation or
depreciation on investments and translation of
assets and liabilities in foreign currencies... 1,702,239 1,995,086
------------ ------------
Increase in net assets resulting from
operations................................. 4,375,464 3,701,824
------------ ------------
Distributions to shareholders from:
Investment income--net:
Class A....................................... (691,242) (902,736)
Class B....................................... (2,500) --
Class C....................................... (36,062) (19,264)
Net realized gains on investments:
Class A....................................... (1,300,800) (634,933)
Class B....................................... -- --
Class C....................................... (72,329) (8,696)
------------ ------------
Total distributions......................... (2,102,933) (1,565,629)
------------ ------------
Capital share transactions (notes 5 and 7):
Proceeds from sales:
Class A....................................... 3,255,370 7,982,293
Class B....................................... 345,563 --
Class C....................................... 1,615,317 1,560,752
Shares issued as a result of reinvested
dividends:
Class A....................................... 1,114,182 396,003
Class B....................................... 2,500 --
Class C....................................... 99,545 26,804
Payments for redemption of shares:
Class A....................................... (1,460,937) (1,025,826)
Class B....................................... -- --
Class C....................................... (210,139) (163,009)
------------ ------------
Increase in net assets from capital share
transactions............................... 4,761,401 8,777,017
------------ ------------
Total increase in net assets................ 7,033,932 10,913,212
Net assets at beginning of period................. 42,191,802 31,278,590
------------ ------------
Net assets at end of period (including
undistributed net investment income of $9,255 and
$348,350, respectively).......................... $ 49,225,734 $ 42,191,802
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(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 three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C shares are subject to a higher Rule 12b-1 fee
than Class A shares. Both Class B and Class C shares automatically convert to
Class A shares at net asset value after a specified holding period. Such holding
periods declines as the amount of the purchase increases and range from 28 to 84
months after purchase for Class B shares and from 40 to 96 months after purchase
for Class C shares. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that the
level of distribution fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than distribution fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon its
relative net assets.
On June 20, 1994, MIMLIC Asset Management Company (MIMLIC Management)
purchased 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 increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a 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.
19
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. 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.
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.
20
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(3) INVESTMENT SECURITY TRANSACTIONS
For the period ended March 31, 1997 purchases of securities and proceeds
from sales, other than temporary investments in short-term securities,
aggregated $19,411,478 and $17,072,677, respectively.
(4) FORWARD FOREIGN CURRENCY CONTRACTS
On March 31, 1997, the Fund had entered into forward foreign currency
contracts that obligate the Fund to deliver currencies at specified future
dates. Unrealized appreciation and depreciation on these contracts is included
in the accompanying financial statements. The terms of the open contracts were
as follows:
<TABLE>
<CAPTION>
EXCHANGE CURRENCY TO CURRENCY TO UNREALIZED UNREALIZED
DATE BE DELIVERED BE RECEIVED APPRECIATION DEPRECIATION
- ---------- ------------------------ ------------------------ ------------- -------------
<C> <C> <S> <C> <C> <C> <C>
4/7/97 360,545 US$ 459,000 AUD $ 220 $ --
4/8/97 446,830 US$ 766,000 DEM 11,441 --
4/14/97 587,294 US$ 1,000,000 DEM 13,523 --
4/21/97 231,303 US$ 390,000 DEM 2,020 --
4/8/97 232,039 US$ 390,000 DEM 1,284 --
4/7/97 326,419 US$ 470,000 NZD 1,632 --
4/15/97 547,635 US$ 700,000 AUD 2,550 --
4/2/97 2,215 US$ 2,822 AUD 4 --
4/2/97 547,736 US$ 700,000 AUD 2,449 --
4/7/97 472,000 NZD 330,362 US$ 2,311 --
4/7/97 459,000 AUD 360,049 US$ -- 715
4/8/97 3,867,000 DEM 2,261,404 US$ -- 52,087
4/14/97 200,011,000 JPY 1,647,741 US$ 31,490 --
4/14/97 1,000,000 DEM 585,172 US$ -- 13,093
4/15/97 700,000 AUD 553,700 US$ 3,515 --
4/8/97 1,700,000 DEM 1,001,178 US$ -- 15,873
4/21/97 390,000 DEM 233,449 US$ 126 --
4/24/97 1,300,000 DEM 769,550 US$ -- 8,195
7/7/97 774,000 DEM 463,418 US$ -- 7,385
7/8/97 1,000,000 DEM 601,612 US$ 795 --
7/7/97 400,000 DEM 239,507 US$ -- 820
4/2/97 700,000 AUD 547,824 US$ -- 2,362
------------- -------------
$ 73,360 $ 100,530
------------- -------------
------------- -------------
</TABLE>
AUD Australian Dollar
JPY Japanese Yen
DEM German Deutch Mark
NZD New Zealand Dollar
US$ United States Dollar
21
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(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, 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, Class B and Class
C shares, respectively, relating to the payment of certain distribution expenses
pursuant to Rule 12b-1 under the Investment Company Act of 1940 (as amended).
The Fund pays distribution fees to MIMLIC Sales Corporation (MIMLIC Sales), the
underwriter of the Fund and wholly-owned subsidiary of MIMLIC Management, to be
used to pay certain expenses incurred in the distribution, promotion and
servicing of the Fund's shares. The Class A Plan provides for a fee up to .30
percent of average daily net assets of Class A shares. The Class B and Class C
Plan provides for a fee of up to 1.00 percent of average daily net assets of
Class B and Class C shares, respectively. The Class B and Class C 1.00 percent
fee is comprised of a .75 percent distribution fee and a .25 percent service
fee. MIMLIC Sales is currently waiving that portion of Class A distribution fees
which exceeds, as a percentage of average daily net assets, .15 percent. MIMLIC
Sales waived Class A distribution fees in the amount of $53,123 for the year
ended September 30, 1996.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, 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, 1997 the administrative services fee for
the Fund was $2,500 per month. Effective February 1, 1997 the administrative
services fee is $3,000 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by MIMLIC Sales for distributing the Fund's three
classes of shares amounted to $133,158.
22
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
As of March 31, 1997, 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................................. 2,547,118 67.4%
Class B................................. 839 2.9%
Class C................................. 1,109 .4%
</TABLE>
During the period ended March 31, 1997, legal fees were paid to a law firm
of which the Fund's secretary is a partner in the amount of $4,794.
(6) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs wilt 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, 1996 to March 31, 1997
and the year ended September 30, 1996 (period from January 31, 1997,
commencement of operations, to March 31, 1997 for Class B):
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------- ----------- --------------------
1997 1996 1997 1997 1996
---------- --------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C>
Sold.......................................................... 272,818 724,776 28,812 134,415 140,775
Issued for reinvested distributions........................... 94,509 36,110 209 8,510 2,460
Redeemed...................................................... (122,770) (93,685) -- (17,626) (14,985)
---------- --------- ----------- --------- ---------
244,557 667,201 29,021 125,299 128,250
---------- --------- ----------- --------- ---------
---------- --------- ----------- --------- ---------
</TABLE>
(8) ILLIQUID SECURITIES
At March 31, 1997, 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, 1997
was $680,419 which represents 1.4% of net assets.
23
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
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
------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, YEAR ENDED SEPTEMBER SEPTEMBER 16,
1996 TO 30, 1994(B) TO
MARCH 31, ---------------------- SEPTEMBER 30,
1997 1996 1995(A) 1994
------------- --------- ----------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 11.42 $ 10.79 $ 10.34 $ 10.54
------------- --------- ----------- ---------------
Income from investment
operations:
Net investment income....... .10 .25 .20 .01
Net gains or losses on
securities (both realized
and unrealized)............ 1.05 .87 .56 (.21)
------------- --------- ----------- ---------------
Total from investment
operations............... 1.15 1.12 .76 (.20)
------------- --------- ----------- ---------------
Less distributions:
Dividends from net
investment income.......... (.27) (.28) (.19) --
Distributions from capital
gains...................... (.28) (.21) (.12) --
------------- --------- ----------- ---------------
Total distributions....... (.55) (.49) (.31) --
------------- --------- ----------- ---------------
Net asset value, end of
period....................... $ 12.02 $ 11.42 $ 10.79 $ 10.34
------------- --------- ----------- ---------------
------------- --------- ----------- ---------------
Total return(c)............... 10.2%(j) 10.7% 7.4% (1.9)%(d)
Net assets, end of period (in
thousands)................... $ 45,454 $ 40,381 $ 30,949 $ 15,430
Ratio of expenses to average
daily net assets (f)......... 1.51%(h) 1.85% 2.08% .47%(g)
Ratio of net investment income
to average daily net assets
(f).......................... 1.72%(h) 2.39% 2.22% .14 %(g)
Portfolio turnover rate
(excluding short-term
securities).................. 39.6% 56.1% 52.0% 12.1 %
Average commission rate on
common stock
transactions (i)............. $ .0135 $ .0189 N/A N/A
</TABLE>
- ----------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995, the
Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) Commencement of operations.
(c) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges.
(d) Total return is presented for the period from September 16, 1994,
commencement of operations, to September 30, 1994.
(e) Total return is presented for the period from March 1, 1995, commencement of
operations, to September 30, 1995.
(f) The Fund's Distributor and Adviser voluntarily waived or absorbed $32,436,
$53,123, $56,482 and $4,034 in expenses for the period ended March 31, 1997,
the years ended September 30, 1996 and 1995 and the period ended September
30, 1994, respectively. If Class A shares had been charged for these
expenses, the ratio of expenses to average daily net asses would have been
1.66%, 2.00%, 2.30% and .49%, respectively, and the ratio of net investment
income to average daily net assets would have been 1.57%, 2.24%, 2.00% and
.12%, respectively. If Class C shares had
been charged for these expenses, the ratio of expenses to average daily net
assets would have been 2.61% and 3.00%, respectively and the ratio of net
investment income to average daily net assets would have been 1.15% and
1.32% shares, respectively for the year ended September 30,1996 and the
period ended September 30, 1995.
24
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS B CLASS C
------------ -----------------------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 31, OCTOBER 1, MARCH 1,
1997(B) TO 1996 TO YEAR ENDED 1995(B) TO
MARCH 31 MARCH 31 SEPTEMBER 30, SEPTEMBER 30,
1997 1997 1996 1995
------------ ------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 11.95 $ 11.40 $ 10.77 $ 9.95
------------ ------------- ------- -------
Income from investment
operations:
Net investment income....... .42 .42 .15 .11
Net gains or losses on
securities (both realized
and unrealized)............ (.17) .68 .89 .91
------------ ------------- ------- -------
Total from investment
operations............... .25 1.10 1.04 1.02
------------ ------------- ------- -------
Less distributions:
Dividends from net
investment income.......... (.22) (.22) (.20) (.13)
Distributions from capital
gains...................... -- (.28) (.21) (.07)
------------ ------------- ------- -------
Total distributions....... (.22) (.50) (.41) (.20)
------------ ------------- ------- -------
Net asset value, end of
period....................... $ 11.98 $ 12.00 $ 11.40 $ 10.77
------------ ------------- ------- -------
------------ ------------- ------- -------
Total return(c)............... 1.1%(k) 9.8%(j) 9.9% 10.3%(e)
Net assets, end of period (in
thousands)................... $ 348 $ 3,424 $ 1,811 $ 330
Ratio of expenses to average
daily net assets (f)......... 2.36%(h) 2.36%(h) 2.61% 2.93%(h)
Ratio of net investment income
to average daily net assets
(f).......................... .95%(h) .95%(h) 1.15% 1.39%(h)
Portfolio turnover rate
(excluding short-term
securities).................. 39.6% 39.6% 56.1% 52.0%
Average commission rate on
common stock
transactions (i)............. $ .0135 $ .0135 $ .0189 N/A
</TABLE>
- ----------
(g) Ratios presented for the periods from September 16, 1994 to September 30,
1994 are not annualized as they are not indicative of anticipated results.
(h) Adjusted to an annual basis.
(i) Beginning in fiscal 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing total
brokerage commissions paid on purchases and sales of common stocks by the
total number of related shares purchased and sold. The comparability of this
information may be effected by the fact that commission rates per share vary
significantly among foreign countries.
(j) Total return is presented for the period from October 1, 1996 to March 31,
1997.
(k) Total return is presented for the period from January 31, 1997, commencement
of operations, to March 31, 1997.
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 Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account-subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE TRANSFER: You may transfer money from one Advantus account to any
other Advantus account you own just by calling our toll free number. Sign up for
telephone exchanges on the Advantus Application or complete the telephone
authorization form.
SYSTEMATIC TRANSFER: If you have an Advantus Money Market account you may
transfer a set amount of money to another Advantus Fund to diversify your
investment portfolio and take advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums out of your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus' non-money market funds.
SPECIAL PURCHASE PLANS: Our special purchase plans enable you to open an
Advantus Fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets). One of these plans-The
Automatic Investment Plan-allows you to invest automatically each month from
your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Individual Retirement Account or other qualified plan including SEPS, SIMPLE,
profit sharing, money purchase or defined benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
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. Sign up for
26
<PAGE>
telephone redemption on the Advantus Application or complete a Service Request
Form. To have the redemption automatically deposited into your checking account,
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. Some limitations apply, please refer
to the prospectus for details.
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 Advantus Shareholder Services, call 1-800-665-6005. Our
voice response system is available from 7 a.m. to 3 a.m. Central Time Monday
through Friday, and 8 a.m. to 5 p.m. Central Time 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 ten 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 eleven mutual funds containing
$2.3 billion in assets in addition to $1.4 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
Advantus Venture Fund
Advantus Index 500 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.
[LOGO]
MIMLIC SALES CORPORATION
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-443-3677
<PAGE>
MIMLIC SALES CORPORATION BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
FORWARDING AND RETURN POSTAGE GUARANTEED,
ADDRESS CORRECTION REQUESTED
F.48650 5-97
