<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
SEMI-ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS VENTURE FUND
JANUARY 31, 1998
<PAGE>
ADVANTUS VENTURE FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 6
STATEMENT OF ASSETS AND LIABILITIES 8
STATEMENT OF OPERATIONS 9
STATEMENTS OF CHANGES IN NET ASSETS 10
NOTES TO FINANCIAL STATEMENTS 11
SHAREHOLDER SERVICES 15
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholders:
Throughout this reporting period, investors continued to experience a positive
financial environment with moderate economic growth and low inflation. Low
inflation expectations continued to provide a favorable backdrop for earnings
growth. Productivity gains remained important in this environment. The inflation
fears experienced in the first half of 1997 dissipated in the second half of
1997, largely due to the impact of the Asian currency crisis.
Negative economic events in Asia took on global implications during the fourth
calendar quarter. The "Asian Flu" severely affected several Far Eastern
currencies and stock markets, leaving a trail of bankruptcies, uncertainties,
and fears in its wake. It is likely that the U.S. equity market may feel the
effect of the Asian crisis for several months to come due to companies
experiencing less-than-expected earnings, and tracing those results back to the
fallout from the problems in Asia. We will keep you posted as to how the
situation in Asia unfolds and how it may affect your Advantus Fund.
Broadly speaking, equity securities have demonstrated favorable results this
reporting period. As of January 31, 1998, the Russell 2000 Value Index* rose by
8.2 percent since your last report (dated July 31, 1997). In this report the
portfolio manager for the Advantus Venture Fund will share his insights about
the Fund's performance during the reporting period.
As investors, we all enjoy following the stock market. We have seen the market
change, sometimes significantly, because of actual events or because of mere
perceptions in the markets. Keeping a long-range view of investing is important
because it smoothes out market highs and lows. We believe that investors derive
the greatest benefit by maintaining a long-range perspective on investing.
Thank you for investing with Advantus.
Sincerely,
[SIGNATURE]
Robert E. Hunstad, President
Advantus Funds
*The Russell 2000 Value Index contains stock from the Russell 2000 with low
price to book ratios. The Russell 2000 are the 2,000 largest companies in the
Russell 3000. The Russell 3000 is an unmanaged index of 3,000 common stocks
which represents approximately 98 percent of the U.S. market.
<PAGE>
ADVANTUS VENTURE FUND
PERFORMANCE UPDATE
[PHOTO]
MATHEW FINN, CFA
PORTFOLIO MANAGER
The Advantus Venture Fund is a mutual
fund designed for investors seeking
long-term accumulation of capital. The
Fund hopes to achieve its objective by
investing primarily in value common
stocks issued by small companies, defined
in terms of market capitalization.
- Dividends paid quarterly.
- Capital gains distributions paid annually.
PERFORMANCE
For the six months ended January 31, 1998, the Advantus Venture Fund returned
the following for each class of shares currently offered:
<TABLE>
<S> <C>
Class A.......................... 8.8 percent*
Class B.......................... 8.1 percent*
Class C.......................... 8.2 percent*
</TABLE>
The Russell 2000 Value Index** increased 8.2 percent over the same reporting
period.
PORTFOLIO RECAP
The small cap market continues to soar as the Russell 2000 Value Index** sets
new highs. A strong economy and low inflationary pressure are principally
driving this strong market performance. This will not last forever, but it is
impossible to precisely determine when the market will turn. For that reason,
the Fund will remain diversified across sectors and industries and will stick to
the discipline of finding undervalued companies with the potential to improve
operating performance.
The Fund is currently under weighted in consumer cyclicals, health care and
technology and over weighted in consumer staples, energy and capital goods. Over
and under weights are driven by bottom-up stock selection. This means that we
thoroughly research companies that we consider adding to the Fund. The opposite
investment practice is called top down, which first considers broad economic
factors--and sometimes economic predictions, that can, at times, unduly affect
the investing environment--then the economy, and finally companies.
During this reporting period, the economic situation in Asia played a role in
the Fund's performance. For example, one stock, DuPont Photomasks (semiconductor
supplies), had substantial business in Asia. We reduced our position in this
stock in anticipation of lower earnings.
Stock selection in the Energy, Finance, Technology and Basic Materials sectors
contributed most significantly to positive relative performance versus the
Russell 2000 Value Index.** However, Consumer Cyclical and Capital Goods stock
selection hurt relative performance. The Fund was also negatively impacted by
Brown Group's (shoe manufacturing and retailing) announcement of an earnings
shortfall in their Brazilian operations.
2
<PAGE>
ADVANTUS VENTURE
FUND
JANUARY 31, 1998
OUTLOOK
During the first half of 1998, we expect that the market and the Fund will
continue to be impacted by sentiment swings regarding economic activity and
Asia-related economic issues. No segments of the market stand out as offering
value and rapid improvement in operating performance. The holdings in the Fund
represent investments in companies that are attractive, rather than sector bets.
At this time, no substantial changes are planned within the Fund's holdings.
However, we will be watchful of buying opportunities as companies report
earnings disappointments related to their Asian operations.
*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 or Class B's maximum 5 percent contingent deferred sales
charge.
**The Russell 2000 Value Index contains stock from the Russell 2000 with low
price to book ratios. The Russell 2000 are the 2,000 largest companies in the
Russell 3000. The Russell 3000 is an unmanaged index of 3,000 common stocks
which represents approximately 98 percent of the U.S. market.
3
<PAGE>
ADVANTUS VENTURE
FUND
JANUARY 31, 1998
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
Bay View Capital Corporation... 52,400 $1,598,200 4.5%
Journal Register Company....... 74,600 1,468,688 4.1%
Amerus Life Holdings........... 41,851 1,438,628 4.1%
Learning Company, Inc.......... 89,900 1,393,450 3.9%
RLI Corporation................ 27,200 1,348,100 3.8%
Wicor, Inc..................... 30,200 1,338,238 3.8%
Peoples Heritage Financial
Group, Inc................... 29,400 1,264,200 3.6%
Sierra Pacific Resources....... 35,600 1,259,350 3.6%
Sovereign Bancorp
Incorporated................. 66,960 1,247,130 3.5%
First Brands Corporation....... 44,900 1,243,169 3.5%
---------- ---
$13,599,153 38.4%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities 5.50%
Energy 1.90%
Transportation 3.80%
Basic Materials 6.30%
Technology 6.90%
Consumer Staples 7.50%
Utilities 10.70%
Capital Goods 10.80%
Consumer Cyclical 10.90%
Financial 35.70%
</TABLE>
4
<PAGE>
ADVANTUS VENTURE
FUND
JANUARY 31, 1998
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT IN THE ADVANTUS VENTURE FUND,
RUSSELL 2000 VALUE INDEX AND CONSUMER PRICE INDEX
On the following chart you can see how the total return for each of the three
classes of shares of the Advantus Venture Fund compared to the Russell 2000
Value Index and the Consumer Price Index. The lines represent the cumulative
total return of a hypothetical $10,000 investment made on the inception date of
each class of shares of the Advantus Venture Fund (January 31, 1997) through
January 31, 1998.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C> <C> <C>
Class A:
One year 19.6%
Since inception (1/31/97) 19.6%
Class B:
One year 19.7%
Since inception (1/31/97) 20.1%
Class C:
One year 24.9%
Since inception (1/31/97) 24.8%
(Thousands)
Class A Class B Class C Russell 2000 Value Index CPI
1/31/97 $10,000 $10,000 $10,000 $10,000 $10,000
2/28/97 9,290 9,774 9,774 10,102 10,025
3/31/97 9,244 9,727 9,732 9,831 10,031
4/30/97 9,366 9,845 9,840 9,976 10,038
5/31/97 9,965 10,475 10,470 10,770 10,044
6/30/97 10,573 11,100 11,095 11,315 10,056
7/31/97 10,995 11,533 11,538 11,790 10,075
8/31/97 11,276 11,819 11,813 11,977 10,157
9/30/97 11,907 12,767 12,758 12,774 10,119
10/31/97 12,189 12,403 12,404 12,427 10,138
11/30/97 11,851 12,521 12,522 12,563 10,151
12/31/97 11,973 12,922 12,266 12,989 10,157
1/31/98 11,966 12,015 12,486 12,754 10,157
</TABLE>
The preceding chart is useful because it provides you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial professional'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 VENTURE FUND
INVESTMENTS IN SECURITIES
JANUARY 31, 1998
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- -------------
<C> <S> <C>
COMMON STOCK (94.5%)
BASIC MATERIALS (6.3%)
Aluminum (2.2%)
58,400 Century Aluminum Company......................... $ 824,900
-------------
Chemicals (4.1%)
33,900 A. Schulman, Inc................................. 822,075
42,400 Quest Diagnostic, Inc. (b)....................... 704,900
-------------
1,526,975
-------------
CAPITAL GOODS (10.8%)
Manufacturing (5.1%)
39,800 United Dominion Industries....................... 1,024,850
47,700 Walter Industries Incorporated (b)............... 900,337
-------------
1,925,187
-------------
Metal Fabrication (5.7%)
24,500 Gibraltar Steel Corporation (b).................. 511,437
41,100 Shaw Group Incorporated (b)...................... 901,631
19,900 Triumph Group Incorporated (b)................... 741,275
-------------
2,154,343
-------------
CONSUMER CYCLICAL (10.9%)
Auto (2.6%)
59,600 Intermet Corporation............................. 990,850
-------------
Publishing (3.9%)
74,600 Journal Register Company (b)..................... 1,468,688
-------------
Retail (3.1%)
38,100 Michaels Stores Incorporated (b)................. 1,171,575
-------------
Textiles (1.3%)
43,600 Tropical Sportswear International (b)............ 485,050
-------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- -------------
<C> <S> <C>
CONSUMER STAPLES (7.5%)
Food (2.3%)
18,800 Earthgrains Company.............................. $ 864,800
-------------
Food and Health (1.9%)
28,100 International Multifoods Corporation............. 716,550
-------------
Household Product (3.3%)
44,900 First Brands Corporation......................... 1,243,169
-------------
ENERGY (1.9%)
Oil and Gas (1.9%)
43,700 Tesoro Petroleum Corporation..................... 699,200
-------------
FINANCIAL (35.7%)
Banks (6.5%)
36,000 Commercial Federal Corporation................... 1,170,000
29,400 Peoples Heritage Financial Group, Inc............ 1,264,200
-------------
2,434,200
-------------
Insurance (10.0%)
24,600 Allied Group Incorporated (b).................... 676,500
41,851 Amerus Life Holdings............................. 1,438,628
11,900 Frontier Insurance Group, Inc.................... 284,113
27,200 RLI Corporation.................................. 1,348,100
-------------
3,747,341
-------------
Real Estate Investment Trust (11.6%)
12,500 Apartment Investment and Management Company...... 464,063
30,300 Glenborough Realty Trust, Inc.................... 962,025
14,548 Kilroy Realty.................................... 414,618
</TABLE>
See accompanying notes to financial statements.
6
<PAGE>
ADVANTUS VENTURE FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- -------------
FINANCIAL--CONTINUED
<C> <S> <C>
23,100 Pacific Gulf Properties, Inc..................... $ 529,856
13,600 Prentiss Properties Trust........................ 370,600
33,200 Storage Trust Realty............................. 856,975
43,600 Sunstone Hotel Investors......................... 733,025
-------------
4,331,162
-------------
Savings and Loans (7.6%)
52,400 Bay View Capital Corporation..................... 1,598,200
66,960 Sovereign Bancorp Incorporated................... 1,247,130
-------------
2,845,330
-------------
TECHNOLOGY (6.9%)
15,400 DuPont Photomasks Incorporated (b)............... 450,450
89,900 Learning Company, Inc. (b)....................... 1,393,450
31,600 Photronics Incorporated (b)...................... 726,800
-------------
2,570,700
-------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- -------------
<C> <S> <C>
TRANSPORTATION (3.8%)
Shipping (1.1%)
14,500 Teekay Shipping Corporation (c).................. $ 428,656
-------------
Trucking (2.7%)
29,100 US Freightways Corporation....................... 1,018,500
-------------
UTILITIES (10.7%)
Electric Companies (5.4%)
35,600 Sierra Pacific Resources......................... 1,259,350
23,600 WPS Resources Corporation........................ 761,100
-------------
2,020,450
-------------
Natural Gas (5.3%)
21,200 Piedmont Natural Gas Company..................... 642,625
30,200 Wicor, Inc....................................... 1,338,238
-------------
1,980,863
-------------
Total common stock
(cost: $30,275,793)........................................... 35,448,489
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (5.4%)
$1,925,000 US Treasury Bill................................. 5.141% 03/19/98 1,912,969
120,000 US Treasury Bill................................. 5.131% 04/23/98 118,645
-------------
Total short-term securities (cost: $2,031,330)..................... 2,031,614
-------------
Total investments in securities (cost: $32,307,123)(d)............. $37,480,103
-------------
-------------
</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) The Fund held 1.1% of net assets in foreign securities as of January 31,
1998.
(d) At January 31, 1998 the cost of securities for federal income tax purposes
was $32,325,903. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $6,005,449
Gross unrealized depreciation.......... (851,249)
----------
Net unrealized appreciation............ $5,154,200
----------
----------
</TABLE>
7
<PAGE>
ADVANTUS VENTURE FUND
STATEMENT OF ASSETS AND LIABILITIES
JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value--see accompanying
schedule for detailed listing (identified cost:
$32,307,123)............................................... $ 37,480,103
Cash in bank on demand deposit.............................. 42,939
Receivable for Fund shares sold............................. 14,638
Dividends receivable........................................ 28,264
Organizational costs........................................ 71,569
------------
Total assets............................................ 37,637,513
------------
LIABILITIES
Payable for Fund shares redeemed............................ 13,194
Payable to Adviser.......................................... 117,584
------------
Total liabilities....................................... 130,778
------------
Net assets applicable to outstanding capital stock.......... $ 37,506,735
------------
------------
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)....................................... $ 31,133
Additional paid-in capital................................ 32,167,051
Undistributed net investment income....................... 14,584
Accumulated net realized gains from investments........... 120,987
Unrealized appreciation on investments.................... 5,172,980
------------
Total--representing net assets applicable to outstanding
capital stock.......................................... $ 37,506,735
------------
------------
Net assets applicable to outstanding Class A Shares......... $ 34,708,918
------------
------------
Net assets applicable to outstanding Class B Shares......... $ 2,438,885
------------
------------
Net assets applicable to outstanding Class C Shares......... $ 358,932
------------
------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 2,880,046..................... $ 12.05
------------
------------
Class B--Shares outstanding 203,396....................... $ 11.99
------------
------------
Class C--Shares outstanding 29,854........................ $ 12.02
------------
------------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
ADVANTUS VENTURE FUND
STATEMENT OF OPERATIONS
PERIOD FROM AUGUST 1, 1997 TO JANUARY 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest......................................................................... $ 44,450
Dividends........................................................................ 289,102
---------
Total investment income...................................................... 333,552
---------
Expenses (note 4):
Investment advisory fee.......................................................... 146,253
Distribution fees--Class A....................................................... 51,742
Distribution fees--Class B....................................................... 8,947
Distribution fees--Class C....................................................... 1,395
Administrative service fee....................................................... 21,600
Amortization of organizational costs............................................. 8,946
Custodian fees................................................................... 1,257
Auditing and accounting services................................................. 4,500
Legal fees....................................................................... 1,731
Directors' fees.................................................................. 292
Registration fees................................................................ 19,135
Printing and shareholder reports................................................. 16,894
Insurance........................................................................ 3,109
Other............................................................................ 4,803
---------
Total expenses............................................................... 290,604
Less fees and expenses waived or absorbed by Ascend:
Class A distribution fees...................................................... (31,418)
---------
Total net expenses........................................................... 259,186
---------
Investment income--net....................................................... 74,366
---------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)....................................... 1,432,801
Net change in unrealized appreciation or depreciation on investments............. 1,312,993
---------
Net gains on investments..................................................... 2,745,794
---------
Net increase in net assets resulting from operations............................... $2,820,160
---------
---------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
ADVANTUS VENTURE FUND
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM AUGUST 1, 1997 TO JANUARY 31, 1998 AND PERIOD FROM SEPTEMBER 4,
1996, COMMENCEMENT OF OPERATIONS, TO JULY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
------------ ------------
<S> <C> <C>
Operations:
Investment income--net.................................... $ 74,366 $ 146,226
Net realized gains on investments......................... 1,432,801 697,378
Net change in unrealized appreciation or depreciation on
investments.............................................. 1,312,993 3,859,987
------------ ------------
Increase in net assets resulting from operations...... 2,820,160 4,703,591
------------ ------------
Distributions to shareholders from:
Investment income--net:
Class A................................................. (116,641) (105,109)
Class B................................................. (359) (1,057)
Class C................................................. -- (734)
Net realized gains on investments:
Class A................................................. (1,876,127) --
Class B................................................. (116,012) --
Class C................................................. (17,053) --
------------ ------------
Total distributions................................... (2,126,192) (106,900)
------------ ------------
Capital share transactions (notes 4 and 6):
Proceeds from sales:
Class A................................................. 3,819,017 26,193,599
Class B................................................. 1,351,851 957,956
Class C................................................. 197,297 157,336
Proceeds from issuance of shares as a result of reinvested
dividends:
Class A................................................. 215,193 3,158
Class B................................................. 115,953 1,057
Class C................................................. 16,946 734
Payments for redemption of shares:
Class A................................................. (708,330) (21,538)
Class B................................................. (55,088) (556)
Class C................................................. (28,509) --
------------ ------------
Increase in net assets from capital share
transactions......................................... 4,924,330 27,291,746
------------ ------------
Total increase in net assets.......................... 5,618,298 31,888,437
Net assets at beginning of period........................... 31,888,437 --
------------ ------------
Net assets at end of period (including undistributed net
investment income of $14,584 and $48,272, respectively).... $ 37,506,735 $ 31,888,437
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS
JANUARY 31, 1998
(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's investment
objective is to seek long-term appreciation of capital.
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 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 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, by an independent pricing service or at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities.
When market quotations are not readily available, securities are valued at fair
value as determined in good faith under procedures adopted by the Board of
Directors. Short-term securities are valued at market.
11
<PAGE>
ADVANTUS VENTURE 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.
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.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income and decrease additional paid-in capital by
$8,946.
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 August 1, 1997 to January 31, 1998, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $14,731,326 and $12,812,855, respectively.
(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 Ascend Financial Services,
Inc. (Ascend), formerly known as MIMLIC Sales Corporation, 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
12
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
1.00 percent fee is comprised of a .75 percent distribution fee and a .25
percent service fee. Ascend is currently waiving that portion of Class A
distribution fees which exceeds, as a percentage of average daily net assets,
.15 percent. Ascend waived Class A distribution fees in the amount of $31,418
for the period ended January 31, 1998.
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.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $110,905.
As of January 31, 1998, 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................................. 2,505,381 87.0%
Class B................................. 5,353 2.6%
Class C................................. 5,349 17.9%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $1,731.
(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 periods from August 1, 1997 to January 31,
1998 and September 4, 1996 to July 31, 1997 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------- -------------------- --------------------
1998 1997 1998 1997 1998 1997
--------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold............................................... 307,485 2,614,604 108,426 89,705 15,907 14,856
Issued for reinvested distributions................ 17,683 303 9,653 102 1,406 73
Redeemed........................................... (58,156) (1,873) (4,470) (20) (2,388) --
--------- ---------- --------- --------- --------- ---------
267,012 2,613,034 113,609 89,787 14,925 14,929
--------- ---------- --------- --------- --------- ---------
--------- ---------- --------- --------- --------- ---------
</TABLE>
13
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for the
period from August 1, 1997 to January 31, 1998 and the period from January 31,
1997 (date of inception) to July 31, 1997 are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------- --------------------- ---------------------
1998 1997 1998 1997 1998 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 11.73 $ 10.17 $ 11.71 $ 10.17 $ 11.71 $ 10.17
--------- --------- --------- --------- --------- ---------
Income from investment operations:
Net investment income................. .03 .05 (.02) .01 (.02) .01
Net gains or losses on securities
(both realized and unrealized)....... .99 1.55 .96 1.54 .99 1.54
--------- --------- --------- --------- --------- ---------
Total from investment operations.... 1.02 1.60 .94 1.55 .97 1.55
--------- --------- --------- --------- --------- ---------
Less distributions:
Dividends from net investment
income............................... (.04) (.04) -- (.01) -- (.01)
Distributions from capital gains...... (.66) -- (.66) -- (.66) --
--------- --------- --------- --------- --------- ---------
Total distributions................. (.70) (.04) (.66) (.01) (.66) (.01)
--------- --------- --------- --------- --------- ---------
Net asset value, end of period.......... $ 12.05 $ 11.73 $ 11.99 $ 11.71 $ 12.02 $ 11.71
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Total return (a)........................ 8.8% 15.8% 8.1% 15.3% 8.2% 15.4%
Net assets, end of period (in
thousands)............................. $34,709 $30,662 $2,439 $1,052 $359 $175
Ratio of expenses to average daily net
assets (b)(c).......................... 1.36% 1.35% 2.24% 2.25% 2.24% 2.25%
Ratio of net investment income to
average daily net assets (b)(c)........ .45% .90% (.35)% .01% (.35)% .01%
Portfolio turnover rate (excluding
short-term securities)................. 36.0% 39.6% 36.0% 39.6% 36.0% 39.6%
Average commission rate on common stock
transactions (d)....................... $ .0491 $ .0545 $ .0491 $ .0545 $ .0491 $ .0545
</TABLE>
- ------------
(a) 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. For periods less than one year, total return presented has not been
annualized.
(b) Adjusted to an annual basis.
(c) The Fund's Distributor voluntarily waived $31,418 and $26,677 in expenses
for the period from August 1, 1997 to January 31, 1998 and the period from
January 31, 1997 to July 31, 1997, respectively. If Class A shares had been
charged for these expenses, the ratio of expenses to average daily net
assets would have been 1.54% and 1.55%, respectively, and the ratio of net
investment income to average daily net assets would have been .27% and .70%,
respectively.
(d) Average commission rate is calculated by dividing the total brokerage
commissions paid on applicable purchases and sales of common stocks for the
period by the total number of related shares purchased and sold.
14
<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'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 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
15
<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. Semi-annual 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. 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 Ascend Financial Services, Inc. (formerly known as
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 twelve mutual funds containing
$2.5 billion in assets in addition to $1.9 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
16
<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]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-AFS-1838
(1-800-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
F.52034 Rev. 3-1998
