<PAGE>
[GRAPHIC]
ADVANTUS VENTURE FUND, INC.
ANNUAL REPORT TO SHAREHOLDERS DATED JULY 31, 1999
[LOGO]
[PHOTO]
<PAGE>
ADVANTUS VENTURE FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 6
STATEMENT OF ASSETS AND LIABILITIES 10
STATEMENT OF OPERATIONS 11
STATEMENTS OF CHANGES IN NET ASSETS 12
NOTES TO FINANCIAL STATEMENTS 13
INDEPENDENT AUDITORS' REPORT 18
FEDERAL INCOME TAX INFORMATION 19
SHAREHOLDER SERVICES 20
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholder:
The United States still leads the world's growth, albeit growth has slowed from
past quarters. The broad base of the U.S. economy is a contributing factor to
our country's sustained health in world markets. The Federal Reserve (Fed)
remains vigilant in its quest to maintain a healthy U.S. economy.
The Fed adjusted the federal funds rate, the rate at which banks lend one
another money overnight, four times in this reporting period (August 1, 1998 -
July 31, 1999 and once more in late August, 1999). These adjustments of one
quarter percent (25 basis points) each since August of 1998, moved rates down 75
basis points in 1998 and up 50 basis points in 1999. These actions, which
individually had little effect on the markets, demonstrated the Fed's neutral
bias, which simply means the Fed plans to wait and watch how the economy
develops. This neutral bias could, however, change at any time - and likely
will.
The U.S. stock market continues to soar, although we have witnessed an extremely
volatile market during this reporting period. Early in the second quarter 1999,
the leadership in the marketplace changed dramatically for a time. There was a
move away from the "nifty twenty" stocks (the largest, most highly capitalized
blue chip companies) and the internet stocks. These mega-stocks and internet
stocks broke their steep up-trends when the weight of relatively high valuations
and some earnings disappointments, caused investors to rethink their investment
strategies. The news that the market was finally broadening was very welcome. In
hindsight, the market has broadened, but large cap growth stocks continue to
lead the market.
During this period, bond performance was lackluster due to the rise in the level
of interest rates. Higher interest rates and lower bond prices have been the
bond market theme for the past eight months. In June, for example, yields on the
ten-year bond rose above six percent, as fixed income investors continued to
worry about strong economic growth in the U.S., higher oil prices, the Federal
Reserve's bias to raise interest rates, and seeds of a global economic recovery.
At the end of the reporting period, yields were roughly one percent higher
across the yield curve from the beginning of the year. This sharp increase in
interest rates in a short period of time caused most major bond indices to show
negative total returns for the first half of 1999.
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 equity
securities of small
capitalization companies
(i.e., companies with a
market capitalization of less
than $1.5 billion) at the
time of purchase.
- Dividends paid quarterly.
- Capital gains distributions paid annually.
PERFORMANCE
For the year ended July 31, 1999, the Advantus Venture Fund returned the
following for each class of shares currently offered:
<TABLE>
<S> <C>
CLASS A.......................... -3.89 PERCENT*
CLASS B.......................... -4.77 PERCENT*
CLASS C.......................... -4.81 PERCENT*
</TABLE>
The Russell 2000 Value Index** returned -.13 percent for the same period.
PERFORMANCE ANALYSIS
Small company value stocks have struggled for most of the reporting period.
After a disappointing first half, both small cap and value investing have worked
their way back into favor in recent months. After reading countless articles
late in 1998 and early this year about the death of traditional value investing
and justifications for the massive valuations being placed on the very largest
companies, it was reassuring to see once again that the market never changes.
Time-honored investment techniques such as value investing can go out of favor
(sometimes for years at a time) but will eventually return.
For the quarter ended June 30, 1999, the Russell 2000 Value Index,** the Fund's
benchmark index, returned 16.55 percent. In comparison, Class A, B and C shares
returned 16.23 percent,* 16.00 percent* and 15.93 percent,* respectively, for
the same period.
There were several factors that caused small cap value stocks to perform well
later in this reporting period, thus turning the corner. In the second quarter
of 1999, significant factors were:
- SMALL CAP STOCKS HAD LOW VALUATIONS RELATIVE TO LARGE CAP STOCKS.
Valuations of many large cap stocks remained unreasonably high. The
marketplace took a step back and looked at valuations, some stocks - such
as internet stocks - have been rocketing for many months for no apparent
reason other than being internet or internet-related stocks. Over the
last few years, small cap stocks, with low to reasonable valuations have
been virtually ignored. Toward the end of this reporting period, small
cap stocks, with their reasonable valuations, came to light in the
marketplace.
- FEDERAL RESERVE'S (FED) VIGILANCE. Investors became comfortable with the
idea that the Fed will not end the economic expansion. The market got a
strong confirmation of that on June 30, 1999 when the Fed raised rates by
only 25 basis points (.25 percent) and changed its bias to neutral.
(Note: Fed Funds rates notched up another 25 basis points after the
reporting period in late August.)
- MERGER AND ACQUISITION ACTIVITY. Merger and acquisition activity has
picked up as larger corporations recognized the undervaluation of small
companies. The Fund held three stocks that were acquired this year:
Westinghouse Air Brakes, BankNorth Group and UST Corp.
2
<PAGE>
We would like to highlight a purchase, which has demonstrated a positive impact
on the Fund. ABC Rail had been a perennial poor performer through the years.
Then ABC Rail acquired Naco, a well-run private company. The management from
Naco was retained to run ABC-Naco and has vastly improved the operating
efficiency of the company. Investors noticed this improvement and drove the
stock up 62 percent* since we purchased it.
The Fund continues to benefit from its Real Estate Investment Trust (REIT)
holdings. At the end of the reporting period, REITS made up 14 percent of the
Fund's total net assets. We hold high quality companies that continue to trade
at attractive valuations.
We don't expect any major shifts in the Fund going forward. However, we are
becoming uncomfortable with the valuations in the Technology sector and are
likely to be net sellers of technology stocks.
OUTLOOK
We continue to have a constructive view of small cap value stocks. We expect the
same factors that drove recent performance (i.e., second quarter 1999) to
continue to influence the market. Small cap value stocks still have unusually
low valuations relative to large cap stocks. The Fed's recent stance could
likely send the broad market to new highs and we expect merger and acquisition
activity to continue, if not accelerate.
Three months of improved performance by small cap value stocks does not
guarantee that we are poised for a major leadership change in the market.
However, many investors have achieved significant gains in their large cap funds
over the last several years and have portfolios heavily skewed toward large cap
funds. We believe this is a good time to look at asset allocation and point out
that small cap value stocks can play an important role in a total equity
portfolio.
*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 those stocks 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>
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
July 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 -9.18%
Since inception
(1/31/97) 5.58%
Class B:
One year -9.53%
Since inception
(1/31/97) 5.66%
Class C:
One year -4.81%
Since inception
(1/31/97) 7.03%
(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 11,033 11,533 11,790 10,075
7/31/98 11,919 11,965 12,449 12,503 10,245
7/31/99 11,456 11,474 11,850 12,487 10,458
</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.
4
<PAGE>
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- -------------------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
Wicor, Inc.................................. 27,300 $ 791,700 2.4%
Pacific Gulf Properties, Inc................ 30,600 703,800 2.1%
Sierra Pacific Resources.................... 25,920 673,920 2.0%
Shopko Stores............................... 17,000 651,312 1.9%
Vishay Intertechnology, Inc................. 28,375 606,516 1.8%
A.O. Smith Corporation...................... 20,700 602,887 1.8%
Tecumseh Products Company................... 9,300 601,012 1.8%
Radian Group Incorporated................... 11,412 588,431 1.8%
Gibraltar Steel Corporation................. 23,300 585,412 1.8%
Parkway Properties.......................... 17,300 575,225 1.7%
---------- ---
$6,380,215 19.1%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities 5.1%
Health Care 2.3%
Basic Materials 3.4%
Transportation 3.6%
Energy 6.3%
Technology 6.9%
Consumer Staples 8.0%
Utilities 9.3%
Consumer Cyclical 9.8%
Capital Goods 15.0%
Financial 30.3%
</TABLE>
5
<PAGE>
ADVANTUS VENTURE FUND
INVESTMENTS IN SECURITIES
JULY 31, 1999
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ------------------
<C> <S> <C>
COMMON STOCK (94.9%)
BASIC MATERIALS (3.4%)
Chemicals (1.7%)
8,100 Minerals Technologies, Inc....................... $ 434,362
6,600 Quest Diagnostic, Inc. (b)....................... 169,950
------------------
604,312
------------------
Iron and Steel (1.2%)
24,200 Steel Dynamics, Inc. (b)......................... 429,550
------------------
Paper and Forest (.5%)
10,400 Wausau-Mosinee Paper Corporation................. 167,700
------------------
CAPITAL GOODS (15.0%)
Aerospace/Defense (.5%)
9,900 BE Aerospace, Inc. (b)........................... 187,481
------------------
Containers-Metal/Glass (.6%)
12,400 American National Can Group, Inc. (b)............ 206,925
------------------
Electrical Equipment (2.4%)
28,375 Vishay Intertechnology, Inc. (b)................. 606,516
17,100 Watsco, Inc...................................... 249,019
------------------
855,535
------------------
Machinery (2.7%)
9,300 Tecumseh Products Company........................ 601,012
14,100 Westinghouse Air Brake Company................... 334,875
------------------
935,887
------------------
Manufacturing (4.2%)
20,700 A.O. Smith Corporation........................... 602,887
15,500 Aptargroup, Inc.................................. 448,531
17,299 United Dominion Industries....................... 425,988
------------------
1,477,406
------------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ------------------
<C> <S> <C>
CAPITAL GOODS--CONTINUED
Metal Fabrication (4.6%)
24,900 ABC-NACO, Inc. (b)............................... $ 498,000
23,300 Gibraltar Steel Corporation (b).................. 585,412
23,300 Tower Automotive, Inc. (b)....................... 554,831
------------------
1,638,243
------------------
CONSUMER CYCLICAL (9.8%)
Auto (2.0%)
6,000 Arvin Industries, Inc............................ 224,250
15,800 Dura Automotive Systems, Inc. (b)................ 466,100
------------------
690,350
------------------
Building Materials (1.5%)
31,700 D.R. Horton, Inc. ............................... 515,125
------------------
Publishing (.4%)
9,400 Journal Register Company (b)..................... 158,037
------------------
Retail (4.5%)
8,900 Ames Department Stores (b)....................... 364,900
17,000 Shopko Stores (b)................................ 651,312
13,900 Zale Corporation (b)............................. 556,000
------------------
1,572,212
------------------
Textiles (1.4%)
7,300 American Woodmark Corporation.................... 239,987
14,200 Tropical Sportswear International (b)............ 246,725
------------------
486,712
------------------
CONSUMER STAPLES (8.0%)
Beverage (2.0%)
4,900 Adolph Coors Company............................. 260,925
12,500 Robert Mondavi Corporation (b)................... 456,250
------------------
717,175
------------------
</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 (1.5%)
20,600 Earthgrains Company.............................. $ 538,175
------------------
Food & Health (1.7%)
18,700 International Multifoods Corporation............. 437,112
15,500 Merket American Corporation (b).................. 158,875
------------------
595,987
------------------
Household Products (.9%)
8,400 National Presto Industries, Inc. (b)............. 325,500
------------------
Restaurants (1.1%)
17,800 Bob Evans Farms.................................. 376,581
------------------
Retail (.3%)
3,200 Longs Drug Stores Corporation.................... 110,200
------------------
Service (.5%)
17,000 Personnel Group of America (b)................... 160,437
------------------
ENERGY (6.3%)
Oil & Gas (6.3%)
9,800 Equitable Resources, Inc......................... 363,213
21,900 Houston Exploration Company (b).................. 439,369
17,500 Louis Dreyfus Natural Gas Corporation (b)........ 334,688
25,700 Nuevo Energy Company (b)......................... 403,169
5,300 Oceaneering International, Inc. (b).............. 93,413
8,200 Precision Drilling Corporation (b)(c)............ 187,575
24,900 Tesoro Petroleum Corporation (b)................. 392,175
------------------
2,213,602
------------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ------------------
<C> <S> <C>
FINANCIAL (30.3%)
Banks (7.1%)
9,800 BankNorth Group, Inc............................. $ 317,275
20,600 Commercial Federal Corporation................... 478,950
8,600 Corus Bankshares, Inc............................ 266,600
14,300 Hudson United Bancorp, Inc....................... 464,750
21,800 Peoples Heritage Financial Group, Inc............ 393,763
29,000 Republic Bancorp, Inc............................ 407,813
5,700 UST Corporation.................................. 173,138
------------------
2,502,289
------------------
Finance-Diversified (1.3%)
21,100 Dollar Thrifty Automotive Group, Inc. (b)........ 453,650
------------------
Insurance (5.6%)
4,951 Amerus Life Holdings............................. 136,462
7,278 Delphi Financial Group, Inc. (b)................. 272,925
4,500 Enhance Financial Services Group................. 93,375
11,412 Radian Group Incorporated........................ 588,431
11,850 RLI Corporation.................................. 438,450
17,200 Stancorp Financial Group, Inc. (b)............... 434,300
------------------
1,963,943
------------------
Real Estate Investment Trust (14.0%)
11,400 Apartment Investment & Management Company........ 465,263
15,400 Camden Property Trust............................ 433,125
16,800 First Industrial Realty Trust.................... 434,700
9,300 Glenborough Realty Trust, Inc.................... 162,750
15,448 Kilroy Realty Corporation........................ 347,580
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS VENTURE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ------------------
FINANCIAL--CONTINUED
<C> <S> <C>
20,900 Meristar Hospitality Corporation................. $ 399,713
30,600 Pacific Gulf Properties, Inc..................... 703,800
18,000 Pan Pacific Retail Properties.................... 353,250
17,300 Parkway Properties............................... 575,225
20,500 Prentiss Properties Trust........................ 472,781
12,800 Reckson Associates Realty Corporation............ 285,600
14,200 Regency Realty Corporation....................... 299,975
------------------
4,933,762
------------------
Savings and Loans (2.3%)
25,200 FirstFed Financial Corporation................... 403,200
34,452 Sovereign Bancorp, Inc........................... 415,577
------------------
818,777
------------------
HEALTH CARE (2.3%)
Drugs (.8%)
11,700 Kendle International, Inc. (b)................... 175,500
4,000 Roberts Pharmaceutical Corporation (b)........... 109,750
------------------
285,250
------------------
Medical Products/Supplies (1.5%)
17,500 Conmed Corporation (b)........................... 542,500
------------------
TECHNOLOGY (6.9%)
8,300 ANADIGICS, Inc. (b).............................. 257,300
11,700 ANTEC Corporation (b)............................ 490,669
9,800 DII Group, Inc. (b).............................. 363,213
25,600 GaSonics International Corporation (b)........... 355,200
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ------------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
44,000 Infinium Software, Inc. (b)...................... $ 222,750
27,800 International Rectifier Corporation (b).......... 403,100
17,900 SMART Modular Technologies, Inc. (b)............. 333,388
------------------
2,425,620
------------------
TRANSPORTATION (3.6%)
Airlines (1.1%)
11,700 Midwest Express Holdings (b)..................... 389,025
------------------
Transport Services (1.3%)
19,650 Swift Transportation Company (b)................. 449,494
------------------
Trucking (1.2%)
8,800 U.S. Freightways Corporation..................... 434,500
------------------
UTILITIES (9.3%)
Electric Companies (6.1%)
23,900 Minnesota Power, Inc............................. 452,606
19,100 Northwestern Corporation......................... 477,500
25,920 Sierra Pacific Resources (b)..................... 673,920
19,300 WPS Resources Corporation........................ 559,700
------------------
2,163,726
------------------
Natural Gas (3.2%)
10,100 Piedmont Natural Gas Company..................... 344,031
27,300 Wicor, Inc. ..................................... 791,700
------------------
1,135,731
------------------
Total common stock (cost: $29,934,545)........................ 33,461,399
------------------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS VENTURE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ------------ ---------------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (5.6%)
$ 1,291,207 Federated Prime Obligation Fund, current rate 4.990%................ $ 1,291,207
700,000 U.S. Treasury Bill............................ 4.606% 8/19/99 698,529
---------------
Total short-term securities (cost: $1,989,620)...................... 1,989,736
---------------
Total investments in securities (cost: $31,924,165)(d).............. $ 35,451,135
---------------
---------------
</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 .5% of net assets in foreign securities as of July 31, 1999.
(d) At July 31, 1999 the cost of securities for federal income tax purposes was
$32,169,916. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $ 4,563,859
Gross unrealized depreciation.......... (1,282,640)
-----------
Net unrealized appreciation............ $ 3,281,219
-----------
-----------
</TABLE>
9
<PAGE>
ADVANTUS Venture Fund
Statement of Assets and Liabilities
July 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at market
value - see accompanying schedule for
detailed listing
(identified cost: $31,924,165)........ $35,451,135
Receivable for Fund shares sold........ 545
Receivable for investment securities
sold.................................. 77,860
Accrued interest receivable............ 4,335
Dividends receivable................... 11,072
Organizational costs (note 5).......... 45,840
-----------
Total assets....................... 35,590,787
-----------
<CAPTION>
LIABILITIES
<S> <C>
Bank overdraft......................... 2,587
Payable for investment securities
purchased............................. 210,801
Payable for Fund shares redeemed....... 22,761
Payable to Adviser..................... 89,919
-----------
Total liabilities.................. 326,068
-----------
Net assets applicable to outstanding
capital stock......................... $35,264,719
-----------
-----------
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)................................... $ 31,517
Additional paid-in capital........... 32,820,377
Accumulated net realized losses from
investments.......................... (1,114,145)
Unrealized appreciation on
investments.......................... 3,526,970
-----------
Total - representing net assets
applicable to outstanding capital
stock.............................. $35,264,719
-----------
-----------
Net assets applicable to outstanding
Class A shares........................ $31,682,899
-----------
-----------
Net assets applicable to outstanding
Class B shares........................ $ 3,115,233
-----------
-----------
Net assets applicable to outstanding
Class C shares........................ $ 466,587
-----------
-----------
Shares outstanding and net asset value
per share:
Class A - Shares outstanding
2,829,307............................ $ 11.20
-----------
-----------
Class B - Shares outstanding
280,417.............................. $ 11.11
-----------
-----------
Class C - Shares outstanding
41,829............................... $ 11.15
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS VENTURE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1999
<TABLE>
<S> <C>
Investment income:
Interest............................. $ 61,873
Dividends............................ 699,341
-----------
Total investment income.......... 761,214
-----------
Expenses (note 4):
Investment advisory fee.............. 275,254
Rule 12b-1 fees - Class A............ 84,272
Rule 12b-1 fees - Class B............ 32,683
Rule 12b-1 fees - Class C............ 5,471
Administrative services fee.......... 56,400
Amortization of organizational
costs.............................. 17,892
Custodian fees....................... 8,991
Auditing and accounting services..... 16,017
Legal fees........................... 12,385
Directors' fees...................... 518
Registration fees.................... 35,984
Printing and shareholder reports..... 34,884
Insurance............................ 3,595
Other................................ 6,968
-----------
Total expenses................... 591,314
-----------
Less fees and expenses waived or
absorbed:
Class A Rule 12b-1 fees.............. (38,385)
Other fund expenses.................. (38,804)
-----------
Total fees and expenses waived or
absorbed........................ (77,189)
-----------
Total net expenses............... 514,125
-----------
Investment income - net.......... 247,089
-----------
Realized and unrealized losses on
investments:
Net realized losses on investments
(note 3)........................... (1,025,483)
Net change in unrealized appreciation
or depreciation on investments..... (941,849)
-----------
Net losses on investments........ (1,967,332)
-----------
Net decrease in net assets resulting
from operations...................... $(1,720,243)
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS VENTURE FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Operations:
Investment income - net.............. $ 247,089 $ 189,077
Net realized gain (loss) on
investments........................ (1,025,483) 1,979,485
Net change in unrealized appreciation
or depreciation on investments..... (941,849) 608,832
----------- -----------
Increase (decrease) in net assets
resulting from operations...... (1,720,243) 2,777,394
----------- -----------
Distributions to shareholders from:
Investment income -- net:
Class A............................ (275,602) (236,788)
Class B............................ (5,780) (931)
Class C............................ (841) (280)
Tax return of capital:
Class A............................ (50,758) -
Class B............................ (1,064) -
Class C............................ (155) -
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.............. (1,090,532) (2,247,192)
----------- -----------
Capital share transactions (notes 4 and
6):
Proceeds from sales:
Class A............................ 1,047,296 6,963,558
Class B............................ 1,022,415 2,972,512
Class C............................ 516,115 879,498
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 127,503 231,086
Class B............................ 80,886 116,943
Class C............................ 13,519 15,498
Payments for redemption of shares:
Class A............................ (1,660,697) (3,887,372)
Class B............................ (1,258,927) (493,941)
Class C............................ (673,828) (355,209)
----------- -----------
Increase (decrease) in net assets
from capital share
transactions................... (785,718) 6,442,573
----------- -----------
Total increase (decrease) in net
assets......................... (3,596,493) 6,972,775
Net assets at beginning of year........ 38,861,212 31,888,437
----------- -----------
Net assets at end of year (including
undistributed net investment income
of $0 and $17,242, respectively)..... $35,264,719 $38,861,212
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
(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 shares are subject to a higher Rule 12b-1 fee
than Class A shares. Both Class B and Class C shares automatically convert to
Class A shares at net asset value after a specified holding period. Such holding
periods 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 Rule 12b-1 fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than Rule 12b-1 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). 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.
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.
13
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
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
$17,892.
For federal income tax purposes, the Fund has a capital loss carryover in
the amount of $868,393 which, if not offset by subsequent capital gains, will
expire July 31, 2007 through 2008. It is unlikely the Board of Directors will
authorize a distribution of any net realized capital gain until the available
capital loss carryover has been offset or expires.
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 year ended July 31, 1999, purchases of securities and proceeds from
sales, other than temporary investments in short-term securities aggregated
$34,848,706 and $37,411,532, 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
sevicing fee up to .25 percent of average daily net assets of Class A shares.
Prior to February 1, 1999, the Class A Plan provided for a distribution 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
14
<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 $38,385 for the year ended July 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 $5,700 per month to Minnesota
Life for accounting, auditing, legal and other administrative services which
Minnesota Life provides. Prior to February 1, 1999, the administrative services
fee was $3,700 per month. Effective August 1, 1999, the administrative services
fee is $6,200 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. During the year ended July 31,
1999, Advantus Capital voluntarily agreed to absorb $38,804 in expenses which
were otherwise payable by the Fund.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $22,764.
As of July 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................................. 2,505,572 88.6%
Class B................................. 5,480 2.0%
Class C................................. 5,475 13.1%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $11,739.
(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.
15
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the years ended July 31, 1999 and 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.......................... 98,016 548,786 99,249 234,238 47,263 69,307
Issued for reinvested
distributions................ 11,844 18,877 7,536 9,780 1,252 1,427
Redeemed...................... (158,579) (302,671) (122,017) (38,156) (65,336) (27,013)
-------- -------- -------- ------- ------- -------
(48,719) 264,992 (15,232) 205,862 (16,821) 43,721
-------- -------- -------- ------- ------- -------
-------- -------- -------- ------- ------- -------
</TABLE>
(7) YEAR 2000 (UNAUDITED)
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 $12 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.
16
<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 CLASS C
--------------------------------- ------------------------------- -------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM
YEAR ENDED JANUARY 31, YEAR ENDED JANUARY 31, YEAR ENDED JANUARY 31,
JULY 31, 1997(d) TO JULY 31, 1997(d) TO JULY 31, 1997(d) TO
------------------- JULY 31, ----------------- JULY 31, ----------------- JULY 31,
1999 1998 1997 1999 1998 1997 1999 1998 1997
-------- -------- ----------- ------- ------- ----------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period.... $ 12.03 $ 11.73 $ 10.17 $ 11.94 $ 11.71 $10.17 $ 11.98 $ 11.71 $10.17
-------- -------- ----------- ------- ------- ----------- ------- ------- -----------
Income from investment
operations:
Net investment income
(loss)............... .10 .06 .05 - (.02) .01 (.01) (.03) .01
Net gains (losses) on
securities (both
realized and
unrealized).......... (.59) .98 1.55 (.58) .92 1.54 (.57) .97 1.54
-------- -------- ----------- ------- ------- ----------- ------- ------- -----------
Total from investment
operations......... (.49) 1.04 1.60 (.58) .90 1.55 (.58) .94 1.55
-------- -------- ----------- ------- ------- ----------- ------- ------- -----------
Less distributions:
Dividends from net
investment income.... (.09) (.08) (.04) (.02) (.01) (.01) (.02) (.01) (.01)
Distributions from
capital gains........ (.23) (.66) - (.23) (.66) - (.23) (.66) -
Tax return of
capital.............. (.02) - - - - - - - -
-------- -------- ----------- ------- ------- ----------- ------- ------- -----------
Total
distributions...... (.34) (.74) (.04) (.25) (.67) (.01) (.25) (.67) (.01)
-------- -------- ----------- ------- ------- ----------- ------- ------- -----------
Net asset value, end of
period................. $ 11.20 $ 12.03 $ 11.73 $ 11.11 $ 11.94 $11.71 $ 11.15 $ 11.98 $11.71
-------- -------- ----------- ------- ------- ----------- ------- ------- -----------
-------- -------- ----------- ------- ------- ----------- ------- ------- -----------
Total return (a)......... (3.89)% 8.92% 15.79% (4.77)% 7.65% 15.33% (4.81)% 7.90% 15.38%
Net assets, end of period
(in thousands)......... $ 31,683 $ 34,630 $30,662 $ 3,115 $ 3,529 $1,052 $ 467 $ 702 $ 175
Ratio of expenses to
average daily net
assets (c)............. 1.40% 1.38% 1.35%(b) 2.25% 2.25% 2.25%(b) 2.25% 2.25% 2.25%(b)
Ratio of net investment
income (loss) to
average daily net
assets (c)............. .81% .55% .90%(b) (.04)% (.26)% .01%(b) (.04)% (.26)% .01%(b)
Portfolio turnover rate
(excluding short-term
securities)............ 103.9% 45.0% 39.6% 103.9% 45.0% 39.6% 103.9% 45.0% 39.6%
</TABLE>
- ------------
(a) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charge. For periods less than one year, total return presented has not been
annualized.
(b) Adjusted to an annual basis.
(c) The Fund's Adviser and Distributor voluntarily waived or absorbed $77,189,
$59,431 and $26,677 in expenses for the years ended July 31, 1999 and 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 1.64%, 1.55%
and 1.55%, and the ratio of net investment income to average daily net
assets would have been .57%, .38% and .70% for the years ended July 31,
1999 and 1998 and the period from January 31, 1997 (date of inception) to
July 31, 1997, respectively. If Class B and Class C shares had been charged
for these expenses, the ratio of expenses to average daily net assets would
have been 2.36% and 2.36%, respectively, and the ratio of net investment
income (loss) to average daily net assets would have been (.15)% and
(.15)%, respectively, for the year ended July 31, 1999.
(d) Inception date of the fund.
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Venture Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Venture
Fund, Inc. (the Fund) as of July 31, 1999 and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two year period then ended and the financial highlights
for each of the years in the two year period then ended and the period from
January 31, 1997, date of inception, to July 31, 1997. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of July
31, 1999, by correspondence with the custodians and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of July 31, 1999 and the results of its operations,
changes in its net assets and the financial highlights, for the periods stated
in the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG LLP
Minneapolis, Minnesota
September 3, 1999
18
<PAGE>
ADVANTUS VENTURE FUND
FEDERAL INCOME TAX INFORMATION
The following information for federal income tax purposes is presented as an
aid to shareholders in reporting the distributions paid by the Fund in the
fiscal period ended July 31, 1999. Dividends for the 1999 calendar year will be
reported to you on Form 1099-Div in late January 2000. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ----------------------------------------------------------------------------------------------- ---------
<S> <C>
Income distribution - taxable as dividend income, 100% qualifying for deduction by
corporations.
September 24, 1998............................................................................. $ .0249
December 4, 1998*.............................................................................. .2313
December 22, 1998.............................................................................. .0342
March 19, 1999................................................................................. .0268
June 24, 1999.................................................................................. .0278
---------
$ .3450**
---------
---------
</TABLE>
*Represents short-term capital gains (taxable as dividend income).
**The total distribution of $.3450 includes $.0177 from tax return of
capital.
CLASS B
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ----------------------------------------------------------------------------------------------- ---------
<S> <C>
Income distribution - taxable as dividend income, 100% qualifying for deduction by
corporations.
September 24, 1998............................................................................. $ .0007
December 4, 1998*.............................................................................. .2313
December 22, 1998.............................................................................. .0125
March 19, 1999................................................................................. .0037
June 24, 1999.................................................................................. .0048
---------
$ .2530**
---------
---------
</TABLE>
*Represents short-term capital gains (taxable as dividend income).
**The total distribution of $.2530 includes $.0033 from tax return of
capital.
CLASS C
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ----------------------------------------------------------------------------------------------- ---------
<S> <C>
Income distribution - taxable as dividend income, 100% qualifying for deduction by
corporations.
September 24, 1998............................................................................. $ .0003
December 4, 1998*.............................................................................. .2313
December 22, 1998.............................................................................. .0104
March 19, 1999................................................................................. .0043
June 24, 1999.................................................................................. .0044
---------
$ .2507**
---------
---------
</TABLE>
*Represents of short-term capital gains (taxable as dividend income).
**The total distribution of $.2507 includes $.0031 from tax return of
capital.
19
<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 may apply.
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.
AUTOMATIC INVESTMENT PLAN: This special purchase plan enables 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 PLANS: You can use the Advantus Family of Funds for your
Traditional, Roth or Education Individual Retirement Account or other qualified
plans including: SEP IRA's, SIMPLE IRA's, Profit Sharing, 401(k) Money Purchase
or Defined Benefit plans.
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 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
20
<PAGE>
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 eleven 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 Automatic 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 $12.8 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
21
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[LOGO]
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 PRESORTED STANDARD
400 ROBERT STREET NORTH U.S. POSTAGE
ST. PAUL, MN 55101-2098 PAID
ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
F. 51519 Rev. 9-1999
