<PAGE>
VENTURE
ADVANTUS VENTURE FUND, INC.
SEMI-ANNUAL REPORT DATED JANUARY 31, 1999
[ADVANTUS -TM- FAMILY OF FUNDS]
EQUITY
<PAGE>
ADVANTUS Venture Fund
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 6
STATEMENT OF ASSETS AND LIABILITIES 9
STATEMENT OF OPERATIONS 10
STATEMENTS OF CHANGES IN NET ASSETS 11
NOTES TO FINANCIAL STATEMENTS 12
SHAREHOLDER SERVICES 17
<PAGE>
Letter from the President [PHOTO]
Dear Shareholders:
Throughout 1998, the global economy was steeped in volatility, uncertainty, and
- - in some cases - utter chaos. Some of the bleak economic realities that
permeated the global economy throughout most of the year brightened in the
fourth quarter. The U.S. economy and markets remained strong despite periodic
volatility and several out-of-the-ordinary events.
To hold the line against continued global economic ills, central banks based in
the United States and Europe pumped tremendous liquidity into world markets.
This strategy drove down interest rates and calmed some erratic world markets.
Keep in mind that the problems did not disappear, but the swift and concerted
efforts of the United States and several Western European countries and their
central banks averted increasing global problems.
We believe the United States' economy remains very strong. The fourth quarter
1998 marked the longest period of economic expansion in our country's history,
28 quarters (as measured by positive GDP). Low inflation continues, as well. The
Federal Reserve has been vigilant and deserves much credit for our country's
excellent economic status. The Fed's proactive, accommodating stance has
bolstered confidence in our economy to investors both here and abroad.
The year ending December 31, 1998 marked four years of double-digit returns in
the major stock market indices. We finished 1998 with new highs in the large cap
indices and with investment inflows returning to the market - all on the heels
of a litany of serious issues, including presidential impeachment. The bond
market was strong and delivered high single-digit returns for much of the year,
but was fraught with volatility.
We see the long-term fundamentals for the U.S. stock and bond markets remaining
positive. However, much of the world remains in economic and political tumult.
In Asia, we believe a slow recovery is underway and will likely progress
throughout 1999; the exception to recovery is Japan. On the European continent,
the euro appears to have gotten off to a strong start. The euro will likely
allow producers to sell efficiently across borders without the expense and
burden of currency exchanges. In the U.S., we expect strong economic conditions
to continue. Growth will likely slow, but it will likely continue, and we
believe inflation will likely stay at a low level.
In the following pages, the Fund's manager will update you on how the economy
and the market affected the Fund during this reporting period. The manager will
discuss the Fund's performance and some strategies used to maximize performance.
We assert that a long-range view of investing provides the greatest benefit to
our shareholders. We encourage you to maintain a long-range view of investing,
and we believe that you will derive the greatest benefit by doing so.
Thank you for investing with Advantus.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, President
Advantus Funds
<PAGE>
ADVANTUS Venture Fund
PERFORMANCE UPDATE
[PHOTO]
MARK HENNEMAN, 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, 1999, the Advantus Venture Fund returned
the following for each class of shares currently offered:
<TABLE>
<S> <C>
CLASS A.......................... -10.03 PERCENT*
CLASS B.......................... -10.41 PERCENT*
CLASS C.......................... -10.40 PERCENT*
</TABLE>
The Russell 2000 Value Index** returned -5.01 percent for the same reporting
period.
Performance Analysis
Small company value stocks had a wild and largely unprofitable period. After
posting reasonable returns through the first three months of the fiscal year
(through October 1998), fears of an Asian economic meltdown and its effect on
domestic companies continued to cause a steep correction. Since early October
several important things happened that caused the market to recover: 1) the Fed
cut interest rates further, which increased confidence on the part of investors
that the United States would avoid a recession. 2) Asian and Latin American
economies, while not out of the woods, appear to have stabilized. 3) Fund flows
into domestic equity funds continues.
While the Fund's recovery started in October, its rebound fell short of showing
positive returns for the six-month period ended January 31, 1999. As the market
recovered, investors favored the largest capitalization companies because of
their liquidity and perceived lower risk. The best performing sectors in the
Fund were Consumer Staples and Transportation. Each of these sectors produced
positive double-digit returns. The worst performing sectors were Energy, down
more than 30 percent,* and Technology and Finance, each down more than 20
percent.*
Relative to the Russell 2000 Value Index,** the Fund's best performing sectors
were Consumer Staples and Transportation. Finance was the worst-performing
sector relative to the benchmark. The Fund was overexposed to companies with
yield curve risk. As the yield curve flattened, these stocks performed poorly.
This issue has since been corrected and relative performance of the Finance
Sector has stabilized.
The Fund held several stocks that performed well. First Brands was acquired by
Clorox Company and the stock performed well. Tropical Sportswear International
produces high quality casual and dress men's apparel and provides major apparel
retailers with comprehensive brand management programs. The company made a great
acquisition of Savane International Corporation (formerly Farah, Inc.) for $98.5
million. Tropical Sportswear International has been able to leverage this
acquisition very successfully, and has landed some significant new accounts. The
stock was up 57 percent* in
2
<PAGE>
the six months ended January 31, 1999. The stock continues to be a core holding
in the Fund, but has trimmed back several times during this reporting period.
A recent addition to the Fund was Robert Mondavi Corporation, which produces and
sells premium table wines. In 1997 and early 1998, the company did a poor job of
purchasing the grapes necessary to meet the strong demand for its product. Its
relationship with the retail trade and its earnings suffered. We recognized
early that the company had solved its problem and that its brand name
recognition continued to be strong with customers despite recent problems. The
stock appreciated 47 percent* since it was purchased in October.
Late in the reporting period, investors again became worried about earnings
prospects for 1999 and also possibly about the Year 2000 issues. While the broad
market continued to rally, small cap value stocks showed negative returns in
January. We continue to monitor our holdings and feel comfortable that the
companies we own are adequately addressing the Year 2000 issues. However, many
of these companies indicate that it is difficult for them to assess the
readiness of their suppliers and customers. There is a risk of some disruption
in early 2000.
Outlook
Since becoming the portfolio manager on October 1, 1998, focusing on
diversifying the portfolio to include more stocks was a priority for me. The
Fund's holdings have increased from 50 stocks to more than 80 stocks. Since
small companies tend to have limited product or geographic diversification, we
added greater diversity, thus further limiting certain risks. We will continue
to look for undervalued companies with stable to improving fundamentals. We will
also maintain a diversified portfolio to protect against unforeseen
macroeconomic events.
While Asia is by no means thriving, the economic problems appear to have
stabilized, and the region's impact on domestic companies appears to be well
quantified. We know more about President Clinton's problems than we would
probably like, but the impeachment proceedings are at an end and not likely to
affect the market going forward. On the positive side, the fed funds rate is 75
basis points lower than it was in the last report to you. This tends to be very
positive for small stocks. Small stocks are inexpensive relative to the large
stocks by virtually any measure. While it is impossible to predict when a rally
will begin for the small stocks, it is likely that a rally could be very
substantial because of the relative undervaluation of small stocks.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5.5 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 smallest 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>
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- -------------------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
Sierra Pacific Resources.................... 22,600 $ 836,200 2.5%
Tropical Sportswear International........... 21,500 728,312 2.2%
Swift Transportation Company................ 19,700 657,488 2.0%
Peoples Heritage Financial Group, Inc....... 35,600 640,800 2.0%
Piedmont Natural Gas Company................ 20,500 632,938 1.9%
International Multifoods Corporation........ 26,200 632,075 1.9%
Wicor, Inc.................................. 30,300 607,894 1.9%
Intermet Corporation........................ 44,600 607,675 1.8%
Pacific Gulf Properties, Inc................ 28,900 603,288 1.8%
WPS Resources Corporation................... 18,200 596,050 1.8%
---------- ---
$6,542,720 19.8%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities 4.2%
Health Care 1.7%
Energy 2.9%
Transportation 3.9%
Basic Materials 6.1%
Technology 6.3%
Consumer Staples 8.6%
Capital Goods 8.9%
Utilities 11.2%
Consumer Cyclical 14.5%
Financial 31.7%
</TABLE>
4
<PAGE>
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, 1999.
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 -14.85%
Since inception
(1/31/97) 3.54%
Class B:
One year -15.23%
Since inception
(1/31/97) 3.79%
Class C:
One year -10.66%
Since inception
(1/31/97) 5.61%
(Thousands)
Class A Class B Class C Russell 2000 CPI
Value Index
1/31/97 $10,000 $10,000 $10,000 $10,000 $10,000
7/31/97 10,944 11,533 11,533 11,790 10,075
7/31/98 11,919 11,965 12,449 12,503 10,245
1/31/99 10,724 11,123 11,155 11,876 10,326
</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 5.5 percent front-end sales charge for Class A and the maximum
applicable contingent deferred sales charge for Class B shares. The maximum
initial sales charge for Class A shares was 5.0 percent prior to February 1,
1999. Sales charges pay for your financial professional's investment advice.
Individuals cannot invest in the index itself, nor can they invest in any fund
which seeks to track the performance of the index 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, 1999
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
COMMON STOCK (95.8%)
BASIC MATERIALS (6.1%)
Aluminum (.5%)
20,000 Century Aluminum Company......................... $ 167,500
----------------
Chemicals (3.8%)
25,400 A. Schulman, Inc................................. 441,325
10,600 Minerals Technologies, Inc....................... 419,362
23,300 Quest Diagnostic, Inc. (b)....................... 441,244
----------------
1,301,931
----------------
Iron and Steel (.6%)
12,600 Steel Dynamics, Inc. (b)......................... 209,475
----------------
Paper and Forest (1.2%)
27,000 Wausau-Mosinee Paper Corporation................. 426,937
----------------
CAPITAL GOODS (8.9%)
Aerospace/Defense (.5%)
10,500 BE Aerospace, Inc. (b)........................... 162,094
----------------
Electrical Equipment (1.1%)
24,800 Watsco, Inc...................................... 381,300
----------------
Machinery (1.3%)
2,400 Tecumseh Products Company........................ 107,250
17,100 Westinghouse Air Brake Company................... 324,900
----------------
432,150
----------------
Manufacturing (2.2%)
19,500 A.O. Smith Corporation........................... 468,000
14,399 United Dominion Industries....................... 287,080
----------------
755,080
----------------
Metal Fabrication (3.8%)
10,300 General Cable Corporation........................ 194,412
26,000 Gibraltar Steel Corporation (b).................. 546,000
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
CAPITAL GOODS--CONTINUED
23,000 Tower Automotive, Inc. (b)....................... $ 580,750
----------------
1,321,162
----------------
CONSUMER CYCLICAL (14.5%)
Auto (2.1%)
3,300 Arvin Industries, Inc............................ 130,556
44,600 Intermet Corporation............................. 607,675
----------------
738,231
----------------
Building Materials (2.5%)
24,800 D.R. Horton, Inc................................. 523,900
11,700 Kaufman & Broad Home Corporation................. 329,794
----------------
853,694
----------------
Lodging-Hotel (1.1%)
19,100 Meristar Hospitality Corporation................. 367,675
----------------
Publishing (1.2%)
26,200 Journal Register Company (b)..................... 399,550
----------------
Retail (4.2%)
29,300 Just For Feet, Inc. (b).......................... 439,500
13,700 Shopko Stores (b)................................ 434,975
17,500 Zale Corporation (b)............................. 574,219
----------------
1,448,694
----------------
Textiles (3.4%)
7,000 American Woodmark Corporation.................... 265,125
7,600 Pillowtex Corporation............................ 166,725
21,500 Tropical Sportswear International (b)............ 728,312
----------------
1,160,162
----------------
CONSUMER STAPLES (8.6%)
Beverage (2.4%)
3,900 Adolph Coors Company............................. 249,844
14,800 Robert Mondovi Corporation (b)................... 588,300
----------------
838,144
----------------
</TABLE>
See accompanying notes to investments in securities.
6
<PAGE>
ADVANTUS Venture Fund
Investments in Securities - continued
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
CONSUMER STAPLES--CONTINUED
<C> <S> <C>
Food (2.0%)
25,500 Chiquita Brands International.................... $ 251,812
17,000 Earthgrains Company.............................. 437,750
----------------
689,562
----------------
Food & Health (2.4%)
26,200 International Multifoods Corporation............. 632,075
12,500 Merket American Corporation (b).................. 179,687
----------------
811,762
----------------
Household Products (.7%)
1,909 Clorox Company................................... 238,839
----------------
Restaurants (.8%)
11,700 Bob Evans Farms.................................. 272,025
----------------
Retail (.3%)
2,500 Longs Drug Stores Corporation.................... 95,781
----------------
ENERGY (2.9%)
Oil & Gas (2.9%)
15,300 Houston Exploration Company (b).................. 218,025
27,500 Oceaneering International, Inc. (b).............. 264,687
6,700 Seacor Smit, Inc. (b)............................ 298,150
20,500 Tesoro Petroleum Corporation (b)................. 222,937
----------------
1,003,799
----------------
FINANCIAL (31.7%)
Banks (8.0%)
11,700 BankNorth Group, Inc............................. 349,537
25,800 Commercial Federal Corporation................... 590,175
8,300 Corus Bankshares, Inc............................ 282,200
14,300 HUBCO, Inc....................................... 462,962
35,600 Peoples Heritage Financial Group, Inc............ 640,800
26,500 Republic Bancorp, Inc............................ 316,344
5,700 UST Corporation.................................. 131,456
----------------
2,773,474
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
FINANCIAL--CONTINUED
Finance-Diversified (2.9%)
21,400 Avis Rent A Car, Inc. (b)........................ $ 572,450
32,700 Dollar Thrifty Automotive Group, Inc. (b)........ 416,925
----------------
989,375
----------------
Insurance (6.4%)
20,300 Amerin (b)....................................... 471,975
23,851 Amerus Life Holdings............................. 469,567
7,600 Delphi Financial Group, Inc. (b)................. 380,950
7,800 LandAmerica Financial Group, Inc................. 389,513
2,800 NAC Re Corporation............................... 136,850
10,950 RLI Corporation.................................. 365,456
----------------
2,214,311
----------------
Real Estate Investment Trust (12.7%)
10,800 Apartment Investment & Management Company........ 403,650
14,400 Camden Property Trust............................ 358,200
15,500 First Industrial Realty Trust.................... 398,156
24,800 Glenborough Realty Trust, Inc.................... 435,550
15,248 Kilroy Realty.................................... 332,597
28,900 Pacific Gulf Properties, Inc..................... 603,288
16,300 Pan Pacific Retail Properties.................... 317,850
14,000 Parkway Properties............................... 443,625
19,000 Prentiss Properties Trust........................ 402,563
12,700 Reckson Associates Realty Corporation............ 279,400
12,400 Regency Realty Corporation....................... 264,275
16,800 Sunstone Hotel Investors......................... 139,650
----------------
4,378,804
----------------
Savings and Loans (1.7%)
45,552 Sovereign Bancorp, Inc........................... 577,941
----------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS Venture Fund
Investments in Securities - continued
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
HEALTH CARE (1.7%)
<C> <S> <C>
Drugs (.2%)
3,900 Roberts Pharmaceutical Corporation (b)........... $ 76,050
----------------
Medical Products/Supplies (1.5%)
16,000 Conmed Corporation (b)........................... 524,000
----------------
TECHNOLOGY (6.3%)
18,600 DII Group, Inc. (b).............................. 527,775
11,100 GaSonics International Corporation (b)........... 135,975
28,000 Infinium Software, Inc. (b)...................... 150,500
24,800 International Rectifier Corporation.............. 248,000
16,500 Learning Company, Inc. (b)....................... 400,125
14,900 Norstan, Inc. (b)................................ 184,388
17,200 SMART Modular Technologies, Inc. (b)............. 352,600
8,900 SpeedFam International, Inc. (b)................. 185,788
----------------
2,185,151
----------------
TRANSPORTATION (3.9%)
Airlines (.6%)
7,600 Midwest Express Holdings (b)..................... 221,350
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
TRANSPORTATION--CONTINUED
Railroads (1.4%)
29,000 U.S. Xpress Enterprises (b)...................... $ 485,750
----------------
Transport Services (1.9%)
19,700 Swift Transportation Company (b)................. 657,488
----------------
UTILITIES (11.2%)
Electric Companies (7.1%)
13,200 Minnesota Power, Inc............................. 533,775
17,800 Northwestern Corporation......................... 473,925
22,600 Sierra Pacific Resources......................... 836,200
18,200 WPS Resources Corporation........................ 596,050
----------------
2,439,950
----------------
Natural Gas (4.1%)
6,200 Atmos Energy Corporation......................... 184,838
20,500 Piedmont Natural Gas Company..................... 632,938
30,300 Wicor, Inc....................................... 607,894
----------------
1,425,670
----------------
Total common stock (cost: $32,117,589)...................... 33,024,861
----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (2.3%)
$ 811,078 Federated Prime Obligation Fund, current rate 4.920%............... 811,078
------------
Total short-term securities (cost: $811,078)....................... 811,078
------------
Total investments in securities (cost: $32,928,667)(c)............. $ 33,835,939
------------
------------
</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) At January 31, 1999 the cost of securities for federal income tax purposes
was $32,990,812. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $ 3,653,911
Gross unrealized depreciation.......... (2,808,784)
-----------
Net unrealized appreciation............ $ 845,127
-----------
-----------
</TABLE>
8
<PAGE>
ADVANTUS Venture Fund
Statement of Assets and Liabilities
JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value - see accompanying schedule for detailed listing
(identified cost: $32,928,667)............................................................ $ 33,835,939
Cash in bank on demand deposit............................................................. 5
Receivable for Fund shares sold............................................................ 11,679
Receivable for investment securities sold.................................................. 1,311,400
Accrued interest receivable................................................................ 2,678
Dividends receivable....................................................................... 27,464
Organizational costs (note 5).............................................................. 53,677
------------
Total assets........................................................................... 35,242,842
------------
LIABILITIES
Payable for investment securities purchased................................................ 497,572
Payable for Fund shares redeemed........................................................... 91,794
Payable to Adviser......................................................................... 144,612
Other payables............................................................................. 21,303
------------
Total liabilities...................................................................... 755,281
------------
Net assets applicable to outstanding capital stock......................................... $ 34,487,561
------------
------------
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).......................................................................... $ 32,705
Additional paid-in capital............................................................... 34,093,511
Undistributed net investment income...................................................... 6,727
Accumulated net realized losses from investments......................................... (552,654)
Unrealized appreciation on investments................................................... 907,272
------------
Total - representing net assets applicable to outstanding capital stock................ $ 34,487,561
------------
------------
Net assets applicable to outstanding Class A shares........................................ $ 30,482,228
------------
------------
Net assets applicable to outstanding Class B shares........................................ $ 3,446,777
------------
------------
Net assets applicable to outstanding Class C shares........................................ $ 558,556
------------
------------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 2,888,111................................................... $ 10.55
------------
------------
Class B - Shares outstanding 329,277..................................................... $ 10.47
------------
------------
Class C - Shares outstanding 53,139...................................................... $ 10.51
------------
------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
ADVANTUS Venture Fund
Statement of Operations
FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest................................................................................. $ 28,738
Dividends................................................................................ 393,826
------------
Total investment income.............................................................. 422,564
------------
Expenses (note 4):
Investment advisory fee.................................................................. 142,198
Distribution fees - Class A.............................................................. 47,178
Distribution fees - Class B.............................................................. 17,068
Distribution fees - Class C.............................................................. 3,141
Administrative services fee.............................................................. 21,600
Amortization of organizational costs..................................................... 8,946
Custodian fees........................................................................... 3,295
Auditing and accounting services......................................................... 7,250
Legal fees............................................................................... 3,681
Directors' fees.......................................................................... 315
Registration fees........................................................................ 18,816
Printing and shareholder reports......................................................... 7,989
Insurance................................................................................ 1,798
Other.................................................................................... 6,297
------------
Total expenses....................................................................... 289,572
Less fees and expenses waived or absorbed by Distributor:
Class A distribution fees.............................................................. (23,547)
------------
Total net expenses................................................................... 266,025
------------
Investment income - net.............................................................. 156,539
------------
Realized and unrealized losses on investments:
Net realized losses on investments (note 3).............................................. (463,992)
Net change in unrealized appreciation or depreciation on investments..................... (3,561,547)
------------
Net losses on investments............................................................ (4,025,539)
------------
Net decrease in net assets resulting from operations....................................... $(3,869,000)
------------
------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS Venture Fund
Statements of Changes in Net Assets
FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 1999 AND YEAR ENDED JULY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Operations:
Investment income - net................................... $ 156,539 $ 189,077
Net realized gain (loss) on investments................... (463,992) 1,979,485
Net change in unrealized appreciation or depreciation on
investments.............................................. (3,561,547) 608,832
------------ ------------
Increase (decrease) in net assets resulting from
operations........................................... (3,869,000) 2,777,394
------------ ------------
Distributions to shareholders from:
Investment income - net:
Class A................................................. (171,055) (236,788)
Class B................................................. (4,339) (931)
Class C................................................. (606) (280)
Net realized gains on investments:
Class A................................................. (668,597) (1,876,127)
Class B................................................. (74,443) (116,012)
Class C................................................. (13,292) (17,054)
------------ ------------
Total distributions................................... (932,332) (2,247,192)
------------ ------------
Capital share transactions (notes 4 and 6):
Proceeds from sales:
Class A................................................. 750,934 6,963,558
Class B................................................. 718,046 2,972,512
Class C................................................. 477,281 879,498
Proceeds from issuance of shares as a result of reinvested
dividends:
Class A................................................. 109,599 231,086
Class B................................................. 78,409 116,943
Class C................................................. 14,878 15,498
Payments for redemption of shares:
Class A................................................. (744,468) (3,887,372)
Class B................................................. (455,655) (493,941)
Class C................................................. (521,343) (355,209)
------------ ------------
Increase in net assets from capital share
transactions......................................... 427,681 6,442,573
------------ ------------
Total increase (decrease) in net assets............... (4,373,651) 6,972,775
Net assets at beginning of period........................... 38,861,212 31,888,437
------------ ------------
Net assets at end of period (including undistributed net
investment income of $6,727 and $17,242, respectively)..... $ 34,487,561 $ 38,861,212
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS Venture Fund
Notes to Financial Statements
JANUARY 31, 1999
(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 accumulation 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 Minnesota Life
Insurance Company (Minnesota Life), formerly known as The Minnesota Mutual Life
Insurance Company. Inception of the Fund was January 31, 1997 when the shares
became effectively registered under the Securities Exchange Act of 1933. Prior
to the date of inception, Minnesota Life 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 in the financial statements. Actual
results could differ from those estimates.
INVESTMENTS IN SECURITIES
The Fund's net asset value is generally calculated as of the close of normal
trading on the New York Stock Exchange (typically 3:00 p.m. Central Time).
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 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.
12
<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, 1998 to January 31, 1999, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $21,778,185 and $22,724,351, 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 (First Data Investor Services Group). Prior to October 26,
1998, the Fund's transfer agent was Minnesota Life. 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
expenses pursuant to Rule 12b-1 under the Investment Company Act of 1940 (as
amended). The Fund pays fees to Ascend Financial Services, Inc. (Ascend), the
underwriter of the Fund and wholly-owned subsidiary of Advantus Capital, to be
used to pay certain expenses incurred in connection with the distribution,
promotion and servicing of the Fund's shares. The Class A Plan provides for a
distribution fee up to .30 percent of average daily net assets of Class A
shares. Effective February 1, 1999, the Class A Plan provides for a servicing
fee up to .25 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
13
<PAGE>
ADVANTUS Venture Fund
Notes to Financial Statements - continued
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)
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. Ascend is currently
waiving that portion of Class A Rule 12b-1 fees which exceeds, as a percentage
of average daily net assets, .15 percent. Ascend waived Class A Rule 12b-1 fees
in the amount of $23,547 for the period ended January 31, 1999.
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.
Effective October 26, 1998, the Fund entered into a new shareholder and
administrative services agreement with Minnesota Life. Under this agreement, the
Fund pays an administrative services fee equal to $3,700 per month to Minnesota
Life for accounting, auditing, legal and other administrative services which
Minnesota Life provides. Effective February 1, 1999, the administrative services
fee is $5,700 per month. In addition, for shareholder services performed by
Minnesota Life, the Adviser will pay Minnesota Life an annual account servicing
fee as agreed by the Adviser and Minnesota Life.
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 $17,860.
As of January 31, 1999, Minnesota Life 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................................. 2,505,398 86.7%
Class B................................. 5,476 1.7%
Class C................................. 5,470 10.3%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $6,911.
(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.
14
<PAGE>
ADVANTUS Venture Fund
Notes to Financial Statements - continued
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from August 1, 1998 to January 31,
1999 and the year ended July 31, 1998 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------- -------------------- --------------------
1999 1998 1999 1998 1999 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold.......................................... 69,415 548,786 69,644 234,238 43,649 69,307
Issued for reinvested distributions........... 10,095 18,877 7,182 9,780 1,214 1,427
Redeemed...................................... (69,425) (302,671) (43,198) (38,156) (50,374) (27,013)
--------- --------- --------- --------- --------- ---------
10,085 264,992 33,628 205,862 (5,511) 43,721
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
(7) YEAR 2000
In 1995, Minnesota Life began addressing computer systems requirements and
applications to be Year 2000 ready. Based on a current study, Minnesota Life
plans to spend approximately $14 million through 1999 to modify its computer
information systems, enabling proper processing of transactions relating to the
year 2000 and beyond. The Fund will not be charged for these expenses.
15
<PAGE>
ADVANTUS Venture Fund
Notes to Financial Statements - continued
(8) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------------------- ---------------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM
AUGUST 1, JANUARY 31, AUGUST 1, JANUARY 31,
1998 TO YEAR 1997(d) TO 1998 TO YEAR ENDED 1997(d) TO
JANUARY 31, ENDED JULY JULY 31, JANUARY 31, JULY 31, JULY 31,
1999 31, 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 12.03 $ 11.73 $ 10.17 $ 11.94 $ 11.71 $ 10.17
----------- ----------- ----------- ----------- ----------- -----------
Income from investment
operations:
Net investment income
(loss)..................... .05 .06 .05 .01 (.02) .01
Net gains (losses) on
securities (both realized
and unrealized)............ (1.24) .98 1.55 (1.24) .92 1.54
----------- ----------- ----------- ----------- ----------- -----------
Total from investment
operations............... (1.19) 1.04 1.60 (1.23) .90 1.55
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends from net
investment income.......... (.06) (.08) (.04) (.01) (.01) (.01)
Distributions from capital
gains...................... (.23) (.66) -- (.23) (.66) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions....... (.29) (.74) (.04) (.24) (.67) (.01)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of
period....................... $ 10.55 $ 12.03 $ 11.73 $ 10.47 $ 11.94 $ 11.71
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Total return (a).............. (10.03)% 8.92% 15.79% (10.41)% 7.65% 15.33%
Net assets, end of period (in
thousands)................... $30,482 $34,630 $30,662 $3,447 $3,529 $1,052
Ratio of expenses to average
daily net assets (c)......... 1.40%(b) 1.38% 1.35%(b) 2.25%(b) 2.25% 2.25%(b)
Ratio of net investment income
to average daily net assets
(c).......................... .98%(b) .55% .90%(b) .13%(b) (.26)% .01%(b)
Portfolio turnover rate
(excluding short-term
securities).................. 63.0% 45.0% 39.6% 63.0% 45.0% 39.6%
<CAPTION>
CLASS C
---------------------------------------
PERIOD FROM PERIOD FROM
AUGUST 1, JANUARY 31,
1998 TO YEAR 1997(d) TO
JANUARY 31, ENDED JULY JULY 31,
1999 31, 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of
period....................... $ 11.98 $ 11.71 $ 10.17
----------- ----------- -----------
Income from investment
operations:
Net investment income
(loss)..................... .01 (.03) .01
Net gains (losses) on
securities (both realized
and unrealized)............ (1.24) .97 1.54
----------- ----------- -----------
Total from investment
operations............... (1.23) .94 1.55
----------- ----------- -----------
Less distributions:
Dividends from net
investment income.......... (.01) (.01) (.01)
Distributions from capital
gains...................... (.23) (.66) --
----------- ----------- -----------
Total distributions....... (.24) (.67) (.01)
----------- ----------- -----------
Net asset value, end of
period....................... $ 10.51 $ 11.98 $ 11.71
----------- ----------- -----------
----------- ----------- -----------
Total return (a).............. (10.40)% 7.90% 15.38%
Net assets, end of period (in
thousands)................... $559 $702 $175
Ratio of expenses to average
daily net assets (c)......... 2.25%(b) 2.25% 2.25%(b)
Ratio of net investment income
to average daily net assets
(c).......................... .13%(b) (.26)% .01%(b)
Portfolio turnover rate
(excluding short-term
securities).................. 63.0% 45.0% 39.6%
</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 $23,547, $59,431 and $26,677 in
Class A distribution fees for the period from August 1, 1998 to January 31,
1999, the year ended July 31, 1998 and the period from January 31, 1997
(date of inception) 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 1.55%, 1.55% and 1.55%, respectively, and the ratio
of net investment income to average daily net assets would have been .83%,
.38% and .70%, respectively.
(d) Commencement of operations.
16
<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 share 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 twelve exchanges each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year.
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 a check 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 DIVIDEND 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 EXCHANGE: You may move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same share
class) just by calling our toll-free number. The Telephone Exchange privilege
will automatically be established unless otherwise indicated on the Account
Application. Telephone Exchange may be changed (added/deleted) at any time by
submitting a request in writing.
SYSTEMATIC EXCHANGE: You may move a set amount of money monthly or quarterly
from one Advantus Fund to another Advantus Fund (with identical registrations
within the same share class) to diversify your investment portfolio and take
advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Life insurance premiums from 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, if any.
SPECIAL PURCHASE PLANS: 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). The Automatic Investment Plan allows
you to invest automatically monthly, semi-monthly or quarterly from your
checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Traditional or Roth Individual Retirement Account or other qualified plan
including: SEP IRA's, SIMPLE IRA's, Profit Sharing, 401(k) 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 or wire
transferred to your bank of record for the Account. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Redemption privilege will automatically be established
unless otherwise indicated on the Account
17
<PAGE>
Application. Telephone Redemption may be changed (added/deleted) at any time by
submitting a request in writing. 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 and quarterly statements to help you track all of your Advantus Fund
investments 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.
Advantus Account Representatives are available Monday through Friday from 8 a.m.
to 4:45 p.m. Central Time. Our voice response system is available 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc., distributor of the
Funds. Contact your representative for information and a prospectus for any of
the Advantus Funds you are interested in. To find a Registered Representative
near you, call the toll-free service line (1-800-665-6005).
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. (For the Advantus International Balanced Fund, Inc., the
sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)
Advantus Capital Management, Inc. manages thirteen mutual funds containing $3.2
billion in assets in addition to $11.0 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 13 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
Advantus Real Estate Securities Fund
18
<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. 3-1999
<PAGE>
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