<PAGE>
ADVANTUS VENTURE FUND, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS
JANUARY 31, 1997
(UNAUDITED)
<PAGE>
ADVANTUS VENTURE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1997
(UNAUDITED)
ASSETS
Investments in securities, at value - see accompanying
schedule for detailed listing (identified cost: $25,396,227) . $ 25,816,214
Cash in bank on demand deposit . . . . . . . . . . . . . . . . . 75,051
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . 15,828
Organizational costs . . . . . . . . . . . . . . . . . . . . . . 84,474
-------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . 25,991,567
-------------
LIABILITIES
Payable for investment securities purchased. . . . . . . . . . . 307,741
Payable to Adviser . . . . . . . . . . . . . . . . . . . . . . . 110,474
-------------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . 418,215
-------------
Net assets applicable to outstanding capital stock . . . . . . . $ 25,573,352
-------------
-------------
REPRESENTED BY:
Capital stock - authorized 10 billion shares
(Class A--2 billion shares, Class B--2 billion shares,
Class C--2 billion shares and 4 billion shares unallocated)
of $.01 par value (note 1) . . . . . . . . . . . . . . . . . $ 25,152
Additional paid-in capital . . . . . . . . . . . . . . . . . . 25,126,748
Accumulated net realized losses from investments . . . . . . . (22,009)
Undistributed net investment income. . . . . . . . . . . . . . 23,474
Unrealized appreciation of investments . . . . . . . . . . . . 419,987
-------------
Total - representing net assets applicable to
outstanding capital stock. . . . . . . . . . . . . . . . . $ 25,573,352
-------------
-------------
Net assets applicable to outstanding Class A Shares. . . . . . . $ 25,470,366
-------------
-------------
Net assets applicable to outstanding Class B Shares . . . . . . $ 51,493
-------------
-------------
Net assets applicable to outstanding Class C Shares . . . . . . $ 51,493
-------------
-------------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 2,505,063 . . . . . . . . . . . . $ 10.17
-------------
-------------
Class B - Shares outstanding 5,063 . . . . . . . . . . . . . . $ 10.17
-------------
-------------
Class C - Shares outstanding 5,063 . . . . . . . . . . . . . . $ 10.17
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-------------
See accompanying notes to financial statements.
<PAGE>
ADVANTUS VENTURE FUND, INC.
STATEMENT OF OPERATIONS
PERIOD FROM SEPTEMBER 4, 1996 TO JANUARY 31, 1997
(UNAUDITED)
Investment income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,472
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . 20,902
---------
Total investment income. . . . . . . . . . . . . . . . . . . 51,374
---------
Expenses:
Investment advisory fee. . . . . . . . . . . . . . . . . . . . 16,640
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . 500
Administrative service fee.. . . . . . . . . . . . . . . . . . 18,000
Directors' fees. . . . . . . . . . . . . . . . . . . . . . . . 96
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 2,652
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 145
---------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . 38,033
Less fees and expenses waived or absorbed by Adviser:
Other fund expenses. . . . . . . . . . . . . . . . . . . . . (12,033)
---------
Total net expenses . . . . . . . . . . . . . . . . . . . . . 26,000
---------
Investment income - net. . . . . . . . . . . . . . . . . . . 25,374
---------
Realized and unrealized gains (losses) on investments:
Net realized losses on investments (note 3). . . . . . . . . . (22,009)
Net change in unrealized appreciation or depreciation
on investments . . . . . . . . . . . . . . . . . . . . . . . 419,987
---------
Net gains on investments . . . . . . . . . . . . . . . . . . 397,978
---------
Net increase in net assets resulting from operations . . . . . . $ 423,352
---------
---------
See accompanying notes to financial statements.
<PAGE>
ADVANTUS VENTURE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM SEPTEMBER 4, 1996 TO JANUARY 31, 1997
(UNAUDITED)
Operations:
Investment income - net. . . . . . . . . . . . . . . . . . . $ 25,374
Net realized losses on investments . . . . . . . . . . . . . (22,009)
Net change in unrealized appreciation or depreciation
of investments . . . . . . . . . . . . . . . . . . . . . . 419,987
-----------
Increase in net assets resulting from operations . . . . . 423,352
-----------
Distributions to shareholders from net investment income:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . (634)
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . (633)
Class C. . . . . . . . . . . . . . . . . . . . . . . . . . (633)
-----------
Total distributions. . . . . . . . . . . . . . . . . . . . (1,900)
-----------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . 25,050,000
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Class C. . . . . . . . . . . . . . . . . . . . . . . . . . 50,000
Shares issued as a result of reinvested dividends:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . 634
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . 633
Class C. . . . . . . . . . . . . . . . . . . . . . . . . . 633
-----------
Increase (decrease) in net assets from capital
share transactions . . . . . . . . . . . . . . . . . . . 25,151,900
-----------
Total increase in net assets . . . . . . . . . . . . . . . 25,573,352
Net assets at beginning of period. . . . . . . . . . . . . . . --
-----------
Net assets at end of period. . . . . . . . . . . . . . . . . . $25,573,352
-----------
-----------
See accompanying notes to financial statements.
<PAGE>
ADVANTUS VENTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1997
(UNAUDITED)
(1) ORGANIZATION
Advantus Venture Fund, Inc. (the Fund) was incorporated on July 3, 1996.
The Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class
A shares at net asset value after a specified holding period. Such holding
periods decline as the amount of the purchase increases and range from 28 to 84
months after purchase for Class B shares and 40 to 96 months after purchase for
Class C shares. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that the
level of distribution fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than distribution fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon its
relative net assets.
On September 4, 1996, Advantus Capital Management, Inc. (Advantus Capital
or the Adviser) purchased 5,000 Class A shares, 5,000 Class B shares and 5,000
Class C shares. Advantus Capital is a wholly-owned subsidiary of MIMLIC Asset
Management Company (MIMLIC Management) which is a wholly owned subsidiary of the
Minnesota Mutual Life Insurance Company (Minnesota Mutual). Operations of the
Fund did not formally commence until January 31, 1997 when the shares became
effectively registered under the Securities Exchange Act of 1933. Prior to
commencement of operations, Minnesota Mutual purchased 2,500,000 Class A shares
for $25 million.
(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.
<PAGE>
ADVANTUS VENTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at
the last sales price on that exchange prior to the time when assets are
valued; securities traded in the over-the-counter market and listed
securities for which no sale was reported on that date are valued on the
basis of the last current bid price. When market quotations are not
readily available, securities are valued at fair value as determined in
good faith by the Board of Directors. Such fair values are determined using
pricing services or prices quoted by independent brokers. Short-term
securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend
date and interest income, including amortization of bond premium and
discount computed on a level yield basis, is accrued daily.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to shareholders. Therefore, no income tax
provision is required. The Fund's policy is to make required minimum
distributions prior to December 31, in order to avoid federal excise tax.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary
book-to-tax differences. The character of distributions made during the
year from net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains
(losses) were recorded by the Fund.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from September 4, 1996 to January 31, 1997, purchases of
securities and proceeds from sales, other than temporary investments in short-
term securities aggregated $23,171,712 and $818,585, respectively.
<PAGE>
ADVANTUS VENTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital.
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 .80 percent.
The Fund has adopted separate Plans of Distribution applicable to
Class A, Class B and Class C shares, respectively, relating to the payment
of certain distribution expenses pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (as amended). The Fund pays distribution
fees to MIMLIC Sales Corporation (MIMLIC Sales), the underwriter of the
Fund and wholly-owned subsidiary of MIMLIC Management, to be used to pay
certain expenses incurred in the distribution, promotion and servicing of
the Fund's shares. The Class A Plan provides for a fee up to .30 percent
of average daily net assets of Class A shares. The Class B and Class C
Plans provide for a fee up to 1.00 percent of average daily net assets of
Class B and Class C shares, respectively. The Class B and Class C 1.00
percent fee is comprised of a .75 percent distribution fee and a .25
percent service fee. Distribution fees will begin on January 31, 1997, the
commencement of operations of the Fund.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and
shareholder reports, legal, auditing and accounting services,
organizational costs and other miscellaneous expenses.
The Fund pays an administrative services fee to Minnesota Mutual for
accounting, auditing, legal and other administrative services which
Minnesota Mutual provides. The administrative service fee is $3,600 per
month.
Advantus Capital directly incurs and pays the above operating expenses
and the Fund in turn reimburses Advantus Capital. During the period ended
January 31, 1997, Advantus Capital voluntarily agreed to absorb $12,033 in
expenses which were otherwise payable by the Fund.
As of January 31, 1997, Minnesota Mutual and subsidiaries and the
directors and officers of the Fund as a whole own the following shares:
NUMBER OF SHARES PERCENTAGE OWNED
---------------- ----------------
Class A . . . . . . . . . 2,505,063 100.0%
Class B . . . . . . . . . 5,063 100.0%
Class C . . . . . . . . . 5,063 100.0%
During the period ended January 31, 1997, legal fees, which are included in
organizational costs, were paid to a law firm of which the Fund's secretary is
a partner in the amount of 23,961.
<PAGE>
ADVANTUS VENTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs will be amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or
all of the shares held by Advantus Capital, or any other holder, representing
initial capital of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by the pro rata portion (based on the ratio
that the number of initial shares redeemed bears to the total number of
outstanding initial shares of the Fund at the date of redemption) of the
unamortized organizational cost balance.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from September 4, 1996 to January 31,
1997 were as follows:
Class A Class B Class C
--------- ------- -------
Sold . . . . . . . . . . . . . . . . . . . . 2,505,000 5,000 5,000
Issued for reinvested distributions. . . . . 63 63 63
Redeemed . . . . . . . . . . . . . . . . . . -- -- --
--------- ----- -----
2,505,063 5,063 5,063
--------- ----- -----
--------- ----- -----
(7) FINANCIAL HIGHLIGHTS
The inception of the Fund was July 3, 1996. Operations did not commence
until January 31, 1997 when the shares of the Fund became effectively registered
under the Securities Act of 1933. Accordingly, financial highlights are not
presented for the period from July 3, 1996 to January 31, 1997.
<PAGE>
ADVANTUS VENTURE FUND, INC.
INVESTMENTS IN SECURITIES
JANUARY 31, 1997
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
MARKET
SHARES VALUE
----------------- -----------
COMMON STOCKS (89.0%)
CAPITAL GOODS (7.9%)
Machinery (4.8%)
21,800 Shaw Group, Incorporated (b) . . . . . . . . . $ 430,550
31,800 United Dominion Industries . . . . . . . . . . 802,950
----------
1,233,500
----------
Electronics (3.1%)
26,000 Triumph Group, Incorporated (b). . . . . . . . 776,750
----------
CONSUMER GOODS AND SERVICES (29.7%)
Food (11.7%)
27,000 Dominick's Supermarkets, Incorporated (b). . . 540,000
24,200 Earthgrains Company. . . . . . . . . . . . . . 1,128,325
66,800 Hudson Foods, Incorporated . . . . . . . . . . 1,336,000
----------
3,004,325
----------
Retail (12.9%)
38,600 Brown Group, Inc . . . . . . . . . . . . . . . 636,900
92,800 Michael's Stores, Incorporated (b) . . . . . . 1,218,000
49,100 Pier 1 Imports, Incorporated . . . . . . . . . 908,350
57,500 Value City Department Stores, Incorporated (b) 531,875
----------
3,295,125
----------
Consumer Cyclicals (5.1%)
35,300 American Pad and Paper Company (b) . . . . . . 842,787
28,900 Quest Diagnostics, Incorporated (b). . . . . . 455,175
----------
1,297,962
----------
CREDIT SENSITIVE (25.3%)
Finance (16.1%)
18,600 Allied Group, Incorporated . . . . . . . . . . 590,550
18,651 Amerus Life Holdings, Inc (b). . . . . . . . . 368,357
18,300 Commercial Federal Corporation . . . . . . . . 597,038
34,000 Peoples Heritage Financial Group . . . . . . . 986,000
18,200 RLI Corporation. . . . . . . . . . . . . . . . 637,000
66,800 Sovereign Bancorp, Incorporated. . . . . . . . 935,200
----------
4,114,145
----------
Real Estate (9.2%)
9,900 Apartment Investment and Management Company. . 266,063
7,100 Felcor Suite Hotels, Incorporated. . . . . . . 252,050
See accompanying notes to investments in securities
<PAGE>
ADVANTUS VENTURE FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
----------------- ------------
Real Estate - continued
18,348 Kilroy Realty Corporation (b). . . . . . . . . $ 470,167
22,900 Prentiss Properties Trust. . . . . . . . . . . 615,437
24,000 Summit Properties, Incorporated. . . . . . . . 489,000
19,700 Sunstone Hotel Investors, Inc. . . . . . . . . 263,488
-----------
2,356,205
-----------
INTERMEDIATE GOODS AND SERVICES (15.0%)
Energy (4.7%)
35,900 Valero Energy Corporation. . . . . . . . . . . 1,211,625
-----------
Materials (7.3%)
35,000 Century Aluminum Company . . . . . . . . . . . 656,250
30,300 Fort Howard Corporation (b). . . . . . . . . . 962,025
10,800 Gibraltar Steel Corporation (b). . . . . . . . 254,475
-----------
1,872,750
-----------
Transportation (3.0%)
23,600 Teekay Shipping Corporation (c). . . . . . . . 752,250
-----------
TECHNOLOGY (11.1%)
36,900 Control Data Systems (b) . . . . . . . . . . . 627,300
17,500 Dupont Photomasks, Incorporated (b). . . . . . 953,750
58,400 Rohr, Incorporated (b) . . . . . . . . . . . . 1,255,600
-----------
2,836,650
-----------
Total common stocks (cost: $22,331,118) . . . 22,751,287
-----------
PRINCIPAL
----------------------
SHORT-TERM SECURITIES (12.0%)
$3,085,000 U.S. Treasury Bills . . 4.96% - 4.95% 03/20/97 3,064,927
-----------
Total short-term securities
(cost: $3,065,109) . . . . . . . . . . . . 3,064,927
-----------
Total investments in securities
(cost: $25,396,227) (d) . . . . . . . . . . $25,816,214
-----------
-----------
Notes to Investments in Securities
- ----------------------------------
(a) Securites are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 2.9% of net assets in foreign securities as of
January 31, 1997.
(d) At January 31, 1997 the cost of securities for federal income tax purposes
was $25,423,709. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation . . . . $1,274,568
Gross unrealized depreciation . . . . (882,063)
----------
Net unrealized appreciation . . . . $ 392,505
----------
----------
