<PAGE>
[GRAPHIC]
ADVANTUS VENTURE FUND, INC.
ANNUAL REPORT TO SHAREHOLDERS DATED JULY 31, 2000
[LOGO]
[PHOTO]
<PAGE>
ADVANTUS VENTURE FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 6
STATEMENT OF ASSETS AND LIABILITIES 11
STATEMENT OF OPERATIONS 12
STATEMENTS OF CHANGES IN NET ASSETS 13
NOTES TO FINANCIAL STATEMENTS 14
INDEPENDENT AUDITORS' REPORT 19
FEDERAL INCOME TAX INFORMATION 20
SHAREHOLDER VOTING RESULTS 21
SHAREHOLDER SERVICES 22
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholder:
The U.S. has been enjoying an exceptional economic environment. Over the past
10 years, we have seen booming capital markets bolstered by robust economic
growth and low, but rising inflation. Since June 1999, six interest rate
increases engineered by the inflation-fighting Federal Reserve, have resulted in
some early signs of an economic slowdown. Recent economic data (housing starts,
auto sales and unemployment) indicate that the breakneck growth rate may be
slowing.
We still contend that the Fed holds a bias towards tightening the money supply.
As you know, the Federal Funds Rate, the overnight rate at which Federal Reserve
member banks loan each other money, is a powerful tool for the Fed. Currently,
short-term interest rates are higher than long-term rates, which clearly shows
that the economy is in a tightening mode.
Our country's economic strength is very broad, and there are very few weak
spots. The U.S. has also benefited from the expanding global economy. Large,
diversified companies are doing well in the current economic climate. As capital
spending remains strong, underlying support for technology grows. Companies
everywhere continue to build their technology base and infrastructure.
In the equity market, valuations do matter, as evidenced by the latest series of
market corrections early in the second quarter. Capitalism has a way of bringing
things back into balance. Market corrections tend to be quick and sharp.
Investors may need to adjust their expectations, as double-digit equity returns
may not be as commonplace as they have been over the last few years. Even though
recent corrections have reigned in many stocks - particularly in the technology
sector - the stock market is still strong.
So far this year, U.S. Treasury securities have been the star performers within
the fixed income universe. U.S. Treasuries have benefited from a relatively low
inflationary environment, the strong fiscal situation in the U.S., and the
government's decision to buy back its longer-maturity debt. Corporate bonds have
been the weakest performing fixed income sector in 2000. An inverted yield curve
(i.e., short-term bonds have higher yields than long-term bonds), several Fed
tightening moves, increased event risk and equity market volatility have all
negatively impacted corporate bond performance. Mortgage-backed securities have
outperformed corporate bonds to date this year, but have lagged U.S. Treasuries.
Whenever we have a change in interest rate direction, volatility and uncertainty
surface. We have witnessed volatility in the capital markets throughout the
first half of 2000, and we believe this will continue through the remainder of
the year. In this election year, we will witness the political posturing of both
parties. It is likely, however, that whoever the presidential election in
November brings to office, Americans will still enjoy a healthy, recession-free
economy.
Thank you for your continued confidence and investment in the Advantus Family of
Funds.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, President
Advantus Funds
<PAGE>
ADVANTUS VENTURE FUND
PERFORMANCE UPDATE
[PHOTO]
RUDOLPH K. KLUIBER, CFA
STATE STREET RESEARCH
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. Investments
in smaller company and micro
cap stocks generally carry a
higher level of volatility
and risk over the short term.
Refer to the Fund's
prospectus for specific
information about risks
associated with the
investment, as well as
charges and expenses.
- Dividends paid quarterly.
- Capital gains distributions paid annually.
PERFORMANCE
For the year ended July 31, 2000, the Advantus Venture Fund returned the
following for each class of shares currently offered:
<TABLE>
<S> <C>
CLASS A.......................... 3.74 PERCENT*
CLASS B.......................... 2.89 PERCENT*
CLASS C.......................... 2.95 PERCENT*
</TABLE>
By comparison, the Russell 2000 Value Index** returned 4.85 percent for the same
period.
PERFORMANCE ANALYSIS
During the full reporting period, investing in small-capitalization value stocks
was not particularly rewarding. The Russell 2000 Value Index** returned only
4.85 percent; among the major style indexes, only large-capitalization value
stocks were weaker (the Russell 1000 Value Index+ lost 5.00 percent). The
results for the full reporting period mask two very different environments for
small-cap value stocks. For the first six months of the reporting period, small
cap value stocks represented the worst performing style sector (the Russell 2000
Value Index** lost 6.64 percent), while in the second half small cap value
stocks were the best performing style sector (the Russell 2000 Value Index**
rose 12.31 percent).
During the period, small-cap investors experienced huge swings in relative
performance between growth and value stocks; in seven of the past 12 months, the
divergence was 10 percent or more. This is just one more sign of the high levels
of volatility seen throughout the U.S. stock market over the last 12 to 18
months.
Within small-cap value stocks, the economic sectors showing the strongest
performance were Technology, Healthcare, and Energy (other than the large
integrated oil stocks). The worst performing economic sectors were integrated
oil stocks and autos & transportation. Once again, the results for the full
period frequently masked quite different results for the two halves. For
example, the Financial Services sector lost a modest 2.08 percent for the full
reporting period, but dropped 13.95 percent in the first half and rose
13.80 percent in the second half.
What factors have driven investors to take such varied and shifting views of
small-cap value stocks over the last 12 months? Interestingly, some of the same
factors that were important in the previous reporting period. In recent months,
investors have overcome their fears about the risks and lower liquidity of
small-cap value stocks to focus on the fact that this sector has very attractive
valuations relative to both large stocks and growth stocks. In addition,
investors came to realize that internet stocks with stratospheric valuations
don't always continue to rocket higher; in fact, many have now
2
<PAGE>
fallen to earth. Put another way, investors now understand that there can be
substantial risks to investing in stocks with fast-growing revenues, but little
or no earnings.
The Federal Reserve's actions over the last 12 months have also been important
to shifting investor enthusiasm for small-cap value stocks. Late in 1999, the
Fed substantially expanded the money supply to provide additional liquidity to
the economy in the face of the uncertainty generated by Y2K (uncertainty that is
difficult to remember just a few months after the non-event). Then, in early
2000, the Fed acted to remove this extra liquidity. At the same time, the
Federal Reserve has been cautiously raising interest rates (in the form of the
Fed Funds Rate) in order to slow the economy. Fears of an overheated economy and
inflation have competed with fears of a recession. Investors have reacted to
these shifts in policy and economic outlook with shifts in their investments.
Finally, merger and acquisition activity has played an important role.
Corporations have recognized the attractive valuations available among small-cap
value stocks and concluded that it was cheaper to buy such firms rather than
build the business internally. The Fund has benefited from owning a number of
firms that were acquired.
OUTLOOK
We feel that small-capitalization stocks, particularly small-capitalization
value stocks, remain attractively valued. However, despite high levels of
trading activity, true liquidity (the ability to buy or sell stocks without
substantially affecting the price) is quite poor. The overall market environment
remains quite volatile, something that has been quite pronounced since the
second half of 1999. We believe this volatility is likely to continue and only
increases the critical need for investors to have strong conviction in their
portfolio holdings. This plays to our strengths; we must have confidence in a
firm, its management, and its business outlook in order for its stock to become
a significant holding in the Fund.
The economy is clearly slowing, but remains healthy. The Federal Reserve seems
to have completed most of its current round of interest rate hikes, at least
until after the presidential elections. However, if the Federal Reserve is
indeed near the end of this current cycle of rising interest rates, it is only
because the economy is showing signs of slowing. This is a double-edged sword
for small-cap stocks, especially small-cap value stocks. Any slacking in the
pace of rising interest rates is helpful, but an environment of slower economic
growth can be difficult for many firms. This environment only increases the
importance of remaining true to our investment strategy: invest in stocks with
good valuations, quality management, and strong opportunities to grow their
businesses and provide strong returns to investors.
*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.
+The Russell 1000 Value Index contains those stocks from the Russell 1000 with
low book to price ratio. The Russell 1000 is the 1,000 largest companies in the
Russell 3000. The Russell 3000 is an unmanaged index of 3,000 common stocks
which represents approximately 98 percent of the U.S. market.
3
<PAGE>
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, 2000.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
CLASS A:
<S> <C>
One year -1.97%
Since inception (1/31/97) 5.05%
Class B:
One year -2.11%
Since inception (1/31/97) 5.14%
Class C:
One year 2.95%
Since inception (1/31/97) 5.86%
</TABLE>
(Thousands)
<TABLE>
<CAPTION>
RUSSELL 2000
CLASS A CLASS B CLASS C VALUE INDEX CPI
<S> <C> <C> <C> <C> <C>
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
7/31/00 11,884 11,916 12,199 13,090 10,834
</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 perfomance 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>
ACE, Ltd. .................................. 39,700 $1,429,200 4.2%
Harrahs Entertainment, Inc. ................ 44,500 1,115,281 3.3%
International Game Technology............... 35,244 1,046,306 3.1%
Borg-Warner Automotive, Inc. ............... 29,677 1,007,163 3.0%
Anchor Gaming............................... 17,400 942,862 2.8%
Hollinger International, Inc. .............. 53,200 864,500 2.6%
Western Gas Resources, Inc. ................ 44,500 812,125 2.4%
Coherent, Inc. ............................. 12,700 760,413 2.2%
Agrium, Inc. ............................... 85,356 730,861 2.2%
Lilly Industries, Inc. ..................... 22,900 691,294 2.0%
---------- ----
$9,400,005 27.8%
========== ====
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other Assets/Liabilities 0.8%
Communication Services 0.5%
Utilities 0.9%
Transportation 2.0%
Health Care 2.3%
Consumer Staples 4.3%
Energy 8.1%
Financial 10.7%
Basic Materials 11.9%
Technology 14.1%
Capital Goods 15.0%
Consumer Cyclical 29.5%
</TABLE>
5
<PAGE>
ADVANTUS VENTURE FUND
INVESTMENTS IN SECURITIES
JULY 31, 2000
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
------ -----------
<C> <S> <C>
COMMON STOCK (99.2%)
BASIC MATERIALS (11.9%)
Agriculture Products (.8%)
10,600 Corn Products International, Inc................. $ 265,000
-----------
Chemicals (10.0%)
85,356 Agrium, Inc. (c)................................. 730,861
46,455 American Pacific Corporation (b)................. 296,151
4,552 Bush Boake Allen, Inc. (b)....................... 192,606
3,200 Cabot Microcelectronics Corporation (b).......... 150,400
11,600 Cambrex Corporation.............................. 524,175
7,316 Geon Company..................................... 120,257
22,900 Lilly Industries, Inc............................ 691,294
30,632 Stepan Company................................... 673,904
-----------
3,379,648
-----------
Iron and Steel (.5%)
6,964 Belden, Inc...................................... 174,971
-----------
Paper and Forest (.6%)
18,209 Packaging Corporation of America (b)............. 207,127
-----------
CAPITAL GOODS (14.9%)
Aerospace/Defense (2.5%)
38,300 BE Aerospace, Inc. (b)........................... 461,994
4,195 Curtiss Wright Corporation....................... 162,818
9,900 Primex Technologies, Inc......................... 228,319
-----------
853,131
-----------
Electrical Equipment (.1%)
900 Capstone Turbine Corporation (b)................. 49,500
-----------
Machinery (4.2%)
24,831 CTB International Corporation (b)................ 186,232
34,000 Denison International PLC (b)(c)................. 442,000
42,141 JLG Industries, Inc.............................. 429,311
38,300 Wabtec Corporation............................... 385,394
-----------
1,442,937
-----------
<CAPTION>
MARKET
SHARES VALUE(A)
-----------------------------------------------------------------------
CAPITAL GOODS--CONTINUED
<C> <S> <C>
Manufacturing (4.5%)
28,256 Gentek, Inc...................................... $ 324,944
4,100 GSI Group, Inc. (b)(c)........................... 112,237
20,485 Hawk Corporation (b)............................. 157,478
22,097 Specialty Equipment Companies, Inc. (b).......... 602,143
13,400 Steelcase, Inc................................... 227,800
7,338 Wolverine Tube, Inc. (b)......................... 127,498
-----------
1,552,100
-----------
Metal Fabrication (3.6%)
22,800 ABC-NACO, Inc. (b)............................... 149,625
48,201 Ladish Company, Inc. (b)......................... 524,186
15,860 Lindberg Corporation............................. 113,002
13,252 Penn Engineering & Manufacturing Corporation..... 449,740
-----------
1,236,553
-----------
COMMUNICATION SERVICES (.5%)
Cellular ( -- )
100 Airspan Networks, Inc. (b)(c).................... 2,237
300 Triton Network Systems, Inc...................... 8,287
-----------
10,524
-----------
Telecommunication (.5%)
5,717 Allied Riser Communications Corporation (b)...... 58,599
8,060 Channell Commercial Corporation (b).............. 100,750
-----------
159,349
-----------
Telephone ( -- )
300 Lexent, Inc. (b)................................. 7,987
-----------
CONSUMER CYCLICAL (29.5%)
Auto (8.0%)
11,174 American Axle & Manufacturing Holdings (b)....... 168,308
29,677 Borg-Warner Automotive, Inc...................... 1,007,163
28,640 Dura Automotive Systems, Inc. (b)................ 295,350
</TABLE>
See accompanying notes to investments in securities.
6
<PAGE>
ADVANTUS VENTURE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
-----------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
<C> <S> <C>
39,158 Federal Mogul Corporation........................ $ 357,317
6,410 Intermet Corporation............................. 46,472
3,300 Lear Corporation (b)............................. 76,931
67,000 Simpson Industries, Inc.......................... 544,375
44,293 Titan International, Inc......................... 235,307
-----------
2,731,223
-----------
Building Materials (.4%)
7,495 Nortek, Inc. (b)................................. 147,089
-----------
Leisure (4.9%)
35,244 International Game Technology (b)................ 1,046,306
33,220 Steinway Musical Instruments, Inc. (b)........... 610,417
-----------
1,656,723
-----------
Lodging-Hotel (.8%)
7,611 MGM Grand, Inc................................... 273,520
-----------
Photography/Imagery (.5%)
6,319 CPI Corporation.................................. 156,790
-----------
Publishing (4.6%)
15,300 A.H. Belo Corporation............................ 295,481
53,200 Hollinger International, Inc..................... 864,500
13,800 R.H. Donnelley Corporation....................... 407,962
-----------
1,567,943
-----------
Retail (2.3%)
42,384 Bradlees, Inc. (b)............................... 153,642
15,775 Consolidated Stores Corporation (b).............. 188,314
7,994 OshKosh BGosh, Inc............................... 126,905
3,060 Ritchie Brothers Auctioneers, Inc. (b)(c)........ 68,085
15,240 Whitehall Jewelers, Inc. (b)..................... 135,255
6,214 Wilsons The Leather Experts, Inc. (b)............ 114,182
-----------
786,383
-----------
<CAPTION>
MARKET
SHARES VALUE(A)
-----------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
<C> <S> <C>
Service (7.8%)
17,400 Anchor Gaming (b)................................ $ 942,862
20,400 Argosy Gaming Company (b)........................ 284,325
6,800 Exult, Inc. (b).................................. 60,350
44,500 Harrahs Entertainment, Inc. (b).................. 1,115,281
10,642 Mandalay Resort Group (b)........................ 260,064
600 ValueClick, Inc. (b)............................. 6,375
-----------
2,669,257
-----------
Textiles (.2%)
10,329 Polymer Group, Inc............................... 79,404
-----------
CONSUMER STAPLES (4.3%)
Beverage (.5%)
4,246 Beringer Wine Estates Holdings, Inc. (b)......... 156,040
-----------
Broadcasting (.7%)
25,000 Interep National Radio Sales, Inc. (b)........... 162,500
6,146 Salem Communications Corporation (b)............. 74,520
-----------
237,020
-----------
Entertainment (1.8%)
24,339 Championship Auto Racing Teams, Inc. (b)......... 606,954
-----------
Restaurants (.5%)
51,080 Zapata Corporation (b)........................... 156,433
-----------
Service (.8%)
14,047 Amerco, Inc. (b)................................. 277,428
-----------
ENERGY (8.1%)
Oil & Gas (8.1%)
16,946 Basin Exploration, Inc. (b)...................... 269,018
4,600 Cabot Oil & Gas Corporation...................... 85,100
58,200 Canadian 88 Energy Corporation (b)(c)............ 109,125
6,000 Core Laboratories NV (b)(c)...................... 119,625
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS VENTURE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
-----------------------------------------------------------------------
ENERGY--CONTINUED
<C> <S> <C>
4,700 Cross Timbers Oil Company........................ $ 77,256
7,900 HS Resources, Inc. (b)........................... 218,237
36,879 Ocean Energy, Inc. (b)........................... 447,158
7,600 OSC, Inc. (b).................................... 95,000
18,294 Plains Resources, Inc. (b)....................... 269,836
17,627 Pure Resources, Inc. (b)......................... 263,303
44,500 Western Gas Resources, Inc....................... 812,125
-----------
2,765,783
-----------
FINANCIAL (10.7%)
Banks (1.0%)
18,983 Staten Island Bancorp, Inc....................... 341,694
-----------
Finance-Diversified (.6%)
10,688 Dollar Thrifty Auto Group, Inc. (b).............. 201,068
-----------
Insurance (6.5%)
39,700 ACE, Ltd. (c).................................... 1,429,200
4,500 Everest Re Group, Ltd. (c)....................... 178,594
4,916 PartnerRe, Ltd. (c).............................. 194,797
9,200 RenaissanceRe Holding, Ltd (c)................... 428,375
-----------
2,230,966
-----------
Real Estate Investment Trust (.5%)
13,053 Entertainment Properties Trust................... 160,715
-----------
Savings and Loans (2.1%)
44,695 PBOC Holdings, Inc. (b).......................... 354,767
18,765 Richmond County Financial Corporation............ 356,535
-----------
711,302
-----------
HEALTH CARE (2.3%)
Biotechnology (1.3%)
900 Applied Molecular Evolution (b).................. 23,738
800 Arena Pharmaceuticals, Inc. (b).................. 19,000
3,626 Aviron (b)....................................... 104,248
<CAPTION>
MARKET
SHARES VALUE(A)
-----------------------------------------------------------------------
HEALTH CARE--CONTINUED
<C> <S> <C>
1,500 Genencor International, Inc...................... $ 31,500
1,800 Illumina, Inc. (b)............................... 63,000
1,900 Intermune Pharmaceuticals, Inc. (b).............. 78,375
10,688 Invivo Corporation (b)........................... 110,220
-----------
430,081
-----------
Drugs (.2%)
3,700 Sangstat Medical Corporation (b)................. 69,375
-----------
Hospital Management (.2%)
4,200 Community Health Systems (b)..................... 72,450
-----------
Medical Products/Supplies (.6%)
6,900 Aradigm Corporation (b).......................... 104,363
800 Argonaut Technologies, Inc. (b).................. 15,788
3,000 Conmed Corporation (b)........................... 40,125
1,500 Rita Medical Systems, Inc. (b)................... 18,656
700 Transgenomic, Inc................................ 13,300
1,400 Vascular Solutions, Inc.......................... 19,425
-----------
211,657
-----------
Special Services ( -- )
300 Discovery Partners International................. 5,400
-----------
TECHNOLOGY (14.1%)
3,800 Accord Networks, Inc. (b)(c)..................... 31,350
3,299 ADC Telecommunications, Inc. (b)................. 138,352
2,308 Alamosa PCS Holdings, Inc. (b)................... 46,160
2,000 Alliant Techsystems, Inc. (b).................... 141,500
3,700 ASAT Holdings, Ltd. (b).......................... 31,450
4,100 August Technology Corporation (b)................ 53,300
200 Avici Systems, Inc. (b).......................... 19,675
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS VENTURE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
-----------------------------------------------------------------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
2,200 Axcelis Technologies, Inc. (b)................... $ 40,700
19,400 BEI Technologies, Inc............................ 663,844
21,400 Bell & Howell Company (b)........................ 438,700
400 Blue Martini Software, Inc....................... 23,775
7,600 Camtek, Ltd. (b)(c).............................. 46,075
700 Click Commerce, Inc. (b)......................... 22,006
12,700 Coherent, Inc. (b)............................... 760,413
300 Corvis Corporation (b)........................... 24,698
8,600 Entegris Incorporated (b)........................ 82,775
7,000 Evoke, Inc....................................... 56,000
5,300 Fair Issac & Company............................. 264,006
1,000 FairMarket, Inc. (b)............................. 5,000
16,457 Hutchinson Technology, Inc. (b).................. 244,798
1,100 I-many, Inc...................................... 16,088
7,800 Imation Corporation (b).......................... 189,150
1,400 Infineon Technologies Ag (b)(c).................. 95,200
2,800 Interland, Inc. (b).............................. 26,600
7,316 L-3 Communications Holdings, Inc. (b)............ 430,730
2,899 Lifeminders.com, Inc. (b)........................ 65,228
200 Mainspring, Inc. (b)............................. 3,000
1,300 Mobility Electronics, Inc. (b)................... 11,863
2,260 Nogatech, Inc. (b)............................... 13,701
8,900 Nova Measuring Instruments, Ltd. (b)(c).......... 136,838
<CAPTION>
MARKET
SHARES VALUE(A)
-----------------------------------------------------------------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
200 Omnivision Technologies, Inc..................... $ 4,550
3,800 Pixelworks, Inc. (b)............................. 145,588
1,100 SMTC Corporation (b)(c).......................... 19,869
5,255 Spectrasite Holdings, Inc. (b)................... 111,669
200 Sunrise Telecom, Inc............................. 9,300
300 Talarian Corporation (b)......................... 3,806
10,100 Thomas and Betts Corporation..................... 196,950
6,200 UTStarom, Inc. (b)............................... 157,713
1,700 WebEx Communications, Inc (b).................... 35,488
-----------
4,807,908
-----------
TRANSPORTATION (2.0%)
Air Freight (.4%)
31,516 AirNet Systems, Inc. (b)......................... 149,701
-----------
Airlines (.9%)
55,869 Mesa Air Group, Inc. (b)......................... 314,263
-----------
Railroads (.7%)
12,542 Genesee & Wyoming, Inc. (b)...................... 235,163
-----------
UTILITIES (.9%)
Electric Companies (.9%)
20,200 Western Resources, Inc........................... 319,413
-----------
Total common stock
(cost: $31,610,695)........................................ 33,867,973
-----------
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS VENTURE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
------ -----------
<C> <S> <C>
SHORT-TERM SECURITIES (.4%)
130,218 Wells Fargo & Company - Cash Investment Fund,
current rate 5.82%.............................. $ 130,218
-----------
Total short-term securities (cost: $130,218)..... 130,218
-----------
Total investments in securities (cost:
$31,740,913).................................... $33,998,191
===========
</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 12.1% of net assets in foreign securities as of July 31, 2000.
(d) At July 31, 2000 the cost of securities for federal income tax purposes was
$31,767,827. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<CAPTION>
Gross unrealized appreciation. $ 5,693,049
<S> <C>
Gross unrealized depreciation.......... (3,462,685)
-----------
Net unrealized appreciation............ $ 2,230,364
===========
</TABLE>
10
<PAGE>
ADVANTUS VENTURE FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 2000
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market
value - see accompanying schedule for
detailed listing
(identified cost: $31,740,913)........ $33,998,191
Receivable for Fund shares sold........ 2,209
Receivable for investment securities
sold.................................. 495,372
Accrued interest receivable............ 670
Dividends receivable................... 9,144
Organizational costs................... 26,764
----------
Total assets....................... 34,532,350
----------
LIABILITIES
Payable for Fund shares redeemed....... 7,837
Payable for investment securities
purchased............................. 313,200
Payable to Adviser..................... 68,205
----------
Total liabilities.................. 389,242
----------
Net assets applicable to outstanding
capital stock......................... $34,143,108
==========
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....... $ 29,786
Additional paid-in capital........... 31,002,523
Undistributed net investment
income............................... 2,878
Accumulated net realized gains from
investments.......................... 850,643
Unrealized appreciation on
investments.......................... 2,257,278
----------
Total - representing net assets
applicable to outstanding capital
stock.............................. $34,143,108
==========
Net assets applicable to outstanding
Class A shares........................ $31,370,596
==========
Net assets applicable to outstanding
Class B shares........................ $2,499,616
==========
Net assets applicable to outstanding
Class C shares........................ $ 272,896
==========
Shares outstanding and net asset value
per share:
Class A - Shares outstanding
2,734,565............................ $ 11.47
==========
Class B - Shares outstanding
220,059.............................. $ 11.36
==========
Class C - Shares outstanding
23,921............................... $ 11.41
==========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS VENTURE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 2000
<TABLE>
<S> <C>
Investment income:
Interest............................. $ 102,294
Dividends............................ 521,585
----------
Total investment income.......... 623,879
----------
Expenses (note 4):
Investment advisory fee.............. 250,117
Rule 12b-1 - Class A................. 73,477
Rule 12b-1 - Class B................. 25,869
Rule 12b-1 - Class C................. 3,168
Administrative services fee.......... 74,400
Amortization of organizational
costs.............................. 17,892
Transfer agent and shareholder
services fee....................... 14,997
Custodian fees....................... 10,661
Auditing and accounting services..... 18,582
Legal fees........................... 13,246
Directors' fees...................... 566
Registration fees.................... 28,035
Printing and shareholder reports..... 32,093
Insurance............................ 3,539
Other................................ 7,546
----------
Total expenses................... 574,188
----------
Less fees and expenses waived or
absorbed by Adviser and
Distributor:
Class A distribution fees.......... (29,391)
Other waived fees.................. (67,821)
----------
Total fees and expenses waived or
absorbed........................ (97,212)
----------
Total net expenses............... 476,976
----------
Investment income - net.......... 146,903
----------
Realized and unrealized gains (losses)
on investments:
Net realized gains on investments
(note 3)........................... 2,075,494
Net change in unrealized appreciation
or depreciation on investments..... (1,269,692)
----------
Net gains on investments......... 805,802
----------
Net increase in net assets resulting
from operations...................... $ 952,705
==========
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS VENTURE FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 2000 AND 1999
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Operations:
Investment income - net.............. $ 146,903 $ 247,089
Net realized gain (loss) on
investments........................ 2,075,494 (1,025,483)
Net change in unrealized appreciation
or depreciation on investments..... (1,269,692) (941,849)
----------- -----------
Increase (decrease) in net assets
resulting from operations...... 952,705 (1,720,243)
----------- -----------
Distributions to shareholders from:
Investment income - net:
Class A............................ (143,064) (275,602)
Class B............................ (3,489) (5,780)
Class C............................ (350) (841)
In excess of net investment income:
Class A............................ (125,236) -
Class B............................ (3,055) -
Class C............................ (307) -
Tax return of capital:
Class A............................ - (50,758)
Class B............................ - (1,064)
Class C............................ - (155)
Net realized gains on investments:
Class A............................ - (668,597)
Class B............................ - (74,443)
Class C............................ - (13,292)
----------- -----------
Total distributions.............. (275,501) (1,090,532)
----------- -----------
Capital share transactions (notes 4 and
6):
Proceeds from sales:
Class A............................ 694,580 1,047,296
Class B............................ 323,499 1,022,415
Class C............................ 64,501 516,115
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 26,472 127,503
Class B............................ 6,466 80,886
Class C............................ 644 13,519
Payments for redemption of shares:
Class A............................ (1,705,272) (1,660,697)
Class B............................ (954,805) (1,258,927)
Class C............................ (254,900) (673,828)
----------- -----------
Decrease in net assets from
capital share transactions..... (1,798,815) (785,718)
----------- -----------
Total decrease in net assets..... (1,121,611) (3,596,493)
Net assets at beginning of year...... 35,264,719 38,861,212
----------- -----------
Net assets at end of year (including
undistributed net investment income
of $2,878 and $0, respectively).... $34,143,108 $35,264,719
=========== ===========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 2000
(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.
(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.
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.
14
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
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 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 by $131,476, decrease accumulated net
realized gain by $110,706, and decrease additional paid-in capital by $20,770.
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, 2000, purchases of securities and proceeds from
sales, other than temporary investments in short-term securities, aggregated
$51,354,298 and $51,753,767, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital
Management, Inc. (Advantus Capital) a wholly-owned subsidiary of Minnesota Life
Insurance Company (Minnesota Life). 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. The
Fund has engaged PFPC Global Fund Services to act as its transfer agent,
dividend disbursing agent and redemption agent and bears the expenses of such
services. Prior to May 1, 2000, Advantus Capital paid the expense related to
transfer agent services. The fee for investment and advisory services is based
on the average daily net assets of the Fund at the annual rate of .70 percent on
the first $1 billion in net assets, .68 percent on the next $1 billion and .66
percent on net assets in excess of $2 billion. Prior to May 1, 2000 the fee was
charged at an annual rate of .80 percent.
Advantus Capital has a sub-advisory agreement with State Street Research &
Management Company (State Street Research). The sub-advisory agreement provides
that Advantus Capital shall pay State Street Research a monthly management fee
which will vary depending on the total "small company value" assets sub-advised
by State Street Research for Advantus Capital, including assets of Venture Fund
and small company value assets of other mutual funds and private accounts. Total
assets are measured each March 31, June 30, September 30, and December 31.
Advantus Capital pays State Street Research from the advisory fee at a rate
equal to .65 percent on the first $500 million in assets, .60 percent on the
next $500 million in assets, and .50 percent on assets in excess of $1 billion.
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
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 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.
15
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)
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 $29,391 for the period ended July 31,
2000.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, organizational costs and other
miscellaneous expenses.
The Fund has entered in a shareholder and administrative services agreement
with Minnesota Life. Under this agreement, effective May 1, 2000, the Fund pays
a shareholder services fee, equal to $5 per shareholder account annually, to
Minnesota Life for shareholder services which Minnesota Life provides. The Fund
also pays Minnesota Life an administrative services fee equal to $6,200 per
month for accounting, auditing, legal and other administrative services which
Minnesota Life provides. Prior to August 1, 1999, the administrative services
fee was $5,700 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the year ended July 31,
2000, Advantus Capital voluntarily agreed to absorb $67,821 in expenses which
were otherwise payable by the Fund.
Sales charges received by Ascend for distributing the Funds three classes of
shares amounted to $58,191.
As of July 31, 2000, 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................................. 2,509,497 91.8%
Class B................................. 5,495 2.5%
Class C................................. 5,489 22.9%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $9,451.
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs will be amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or all
of the shares held by Advantus Capital, or any other holder, representing
initial capital of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by the pro rata portion (based on the ratio
that the number of initial shares redeemed bears to the total number of
outstanding initial shares of the Fund at the date of redemption) of the
unamortized organizational cost balance.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the year ended July 31, 2000, and 1999 were as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------- ------------------- -------------------
2000 1999 2000 1999 2000 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sold........................................ 65,226 98,016 31,026 99,249 6,131 47,263
Issued for reinvested distributions......... 2,579 11,844 636 7,536 63 1,252
Redeemed.................................... (162,546) (158,579) (92,020) (122,017) (24,102) (65,336)
-------- -------- ------- -------- ------- -------
(94,741) (48,719) (60,358) (15,232) (17,908) (16,821)
======== ======== ======= ======== ======= =======
</TABLE>
16
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------------------- --------------------------------------
PERIOD FROM PERIOD FROM
JANUARY 31, JANUARY 31,
YEAR ENDED JULY 31, 1997(D) TO YEAR ENDED JULY 31, 1997(D) TO
------------------------- JULY 31, ------------------------- JULY 31,
2000 1999 1998 1997 2000 1999 1998 1997
------- ------- ------- ----------- ------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $ 11.20 $ 12.03 $ 11.73 $ 10.17 $11.11 $11.94 $11.71 $10.17
------- ------- ------- ------- ------ ------ ------ ------
Income from investment operations:
Net investment income (loss)......... .05 .10 .06 .05 (.04) - (.02) .01
Net gains (losses) on securities
(both realized and unrealized)..... .32 (.59) .98 1.55 .32 (.58) .92 1.54
------- ------- ------- ------- ------ ------ ------ ------
Total from investment operations... .37 (.49) 1.04 1.60 .28 (.58) .90 1.55
------- ------- ------- ------- ------ ------ ------ ------
Less distributions:
Dividends from net investment
income............................. (.06) (.09) (.08) (.04) (.02) (.02) (.01) (.01)
Dividends in excess of net investment
income............................. (.04) - - - (.01) - - -
Distributions from net realized
gains.............................. - (.23) (.66) - - (.23) (.66) -
Tax return of capital................ - (.02) - - - - - -
------- ------- ------- ------- ------ ------ ------ ------
Total distributions................ (.10) (.34) (.74) (.04) (.03) (.25) (.67) (.01)
------- ------- ------- ------- ------ ------ ------ ------
Net asset value, end of year........... $ 11.47 $ 11.20 $ 12.03 $ 11.73 $11.36 $11.11 $11.94 $11.71
======= ======= ======= ======= ====== ====== ====== ======
Total return (a)....................... 3.74% (3.89)% 8.92% 15.79% 2.89% (4.77)% 7.65% 15.33%
Net assets, end of year (in
thousands)........................... $31,371 $31,683 $34,630 $30,662 $2,500 $3,115 $3,529 $1,052
Ratio of expenses to average daily net
assets (c)........................... 1.40% 1.40% 1.38% 1.35%(b) 2.24% 2.25% 2.25% 2.25%(b)
Ratio of net investment income (loss)
to average daily net assets (c)...... .63% .81% .55% .90%(b) (.24)% (.04)% (.26)% .01%(b)
Portfolio turnover rate (excluding
short-term securities)............... 169.0% 103.9% 45.0% 39.6% 169.0% 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 $97,212,
$77,189, $59,431 and $26,677 in expenses for the years ended July 31, 2000,
1999, and 1998 and the period from January 31, 1997 (commencement of
operations) 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 1.71%, 1.64%, 1.55% and 1.55%, and the ratio of net
investment income to average daily net assets would have been .32%, .57%,
.38%, and .70% for the years ended July 31, 2000, 1999, and 1998 and the
period from January 31, 1997 (commencement of operations) to July 31,
1997, respectively. If Class B shares had been charged for these expenses,
the ratio of expenses to average daily net assets would have been 2.45%,
2.36%, 2.25%, and 2.25% respectively, and the ratio of net investment
income (loss) to average daily net assets would have been (.45)%, (.15)%,
(.26)%, and .01%, respectively. If Class C shares had been charged for
these expenses, the ratio of expenses to average daily net assets would
have been 2.45%, 2.36%, 2.25%, and 2.25% respectively, and the ratio of net
investment income (loss) to average daily net assets would have been
(.45)%, (.15)%, (.26)%, and .01%, respectively.
(d) Commencement of operations.
17
<PAGE>
ADVANTUS VENTURE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------
PERIOD FROM
JANUARY 31,
YEAR ENDED JULY 31, 1997(D) TO
---------------------------- JULY 31,
2000 1999 1998 1997
-------- -------- -------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of year..... $11.15 $11.98 $11.71 $10.17
------ ------ ------ ------
Income from investment operations:
Net investment income (loss)......... (.03) (.01) (.03) .01
Net gains (losses) on securities
(both realized and unrealized)..... .32 (.57) .97 1.54
------ ------ ------ ------
Total from investment operations... .29 (.58) .94 1.55
------ ------ ------ ------
Less distributions:
Dividends from net investment
income............................. (.02) (.02) (.01) (.01)
Dividends in excess of net investment
income............................. (.01) - - -
Distributions from net realized
gains.............................. - (.23) (.66) -
------ ------ ------ ------
Total distributions................ (.03) (.25) (.67) (.01)
------ ------ ------ ------
Net asset value, end of year........... $11.41 $11.15 $11.98 $11.71
====== ====== ====== ======
Total return (a)....................... 2.95% (4.81)% 7.90% 15.38%
Net assets, end of year (in
thousands)........................... $ 273 $ 467 $ 702 $ 175
Ratio of expenses to average daily net
assets (c)........................... 2.24% 2.25% 2.25% 2.25%(b)
Ratio of net investment income (loss)
to average daily net assets (c)...... (.24)% (.04)% (.26)% .01%(b)
Portfolio turnover rate (excluding
short-term securities)............... 169.0% 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 $97,212,
$77,189, $59,431 and $26,677 in expenses for the years ended July 31, 2000,
1999, and 1998 and the period from January 31, 1997 (commencement of
operations) 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 1.71%, 1.64%, 1.55% and 1.55%, and the ratio of net
investment income to average daily net assets would have been .32%, .57%,
.38%, and .70% for the years ended July 31, 2000, 1999, and 1998 and the
period from January 31, 1997 (commencement of operations) to July 31,
1997, respectively. If Class B shares had been charged for these expenses,
the ratio of expenses to average daily net assets would have been 2.45%,
2.36%, 2.25%, and 2.25% respectively, and the ratio of net investment
income (loss) to average daily net assets would have been (.45)%, (.15)%,
(.26)%, and .01%, respectively. If Class C shares had been charged for
these expenses, the ratio of expenses to average daily net assets would
have been 2.45%, 2.36%, 2.25%, and 2.25% respectively, and the ratio of net
investment income (loss) to average daily net assets would have been
(.45)%, (.15)%, (.26)%, and .01%, respectively.
(d) Commencement of operations.
18
<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, 2000 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 three-year period then ended and the period from
January 31, 1997, commencement of operations, 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 auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit 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, 2000, by correspondence with the custodian 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, 2000 and the results of its operations,
changes in its net assets and financial highlights for the periods stated in the
first paragraph above, in conformity with accounting principles generally
accepted in the United States of America.
KPMG LLP
Minneapolis, Minnesota
September 8, 2000
19
<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, 2000. Dividends for the 2000 calendar year will be
reported to you on Form 1099-Div in late January 2001. 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 deductions by corporations
September 23, 1999.......................................... $.0228
December 21, 1999........................................... .0272
March 23, 2000.............................................. .0463
------
$.0963
======
</TABLE>
CLASS B
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
------------ -----
<S> <C>
Income distribution - taxable as dividend income, 100%
qualifying for deductions by corporations
December 21, 1999........................................... $.0042
March 23, 2000.............................................. .0237
------
$.0279
======
</TABLE>
CLASS C
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
------------ --------
<S> <C>
Income distribution - taxable as dividend income, 100%
qualifying for deductions by corporations
December 21, 1999........................................... $.0030
March 23, 2000.............................................. .0227
------
$.0257
======
</TABLE>
20
<PAGE>
ADVANTUS VENTURE FUND
SHAREHOLDER VOTING RESULTS
On April 17, 2000, a special meeting of shareholders of Advantus Venture
Fund, Inc. was held. Shareholders of record on February 28, 2000, were entitled
to vote on the proposals described below.
(1) To elect a Board of Directors as follows:
<TABLE>
<CAPTION>
VOTES VOTES
DIRECTOR FOR WITHHELD
-------- --------- --------
<S> <C> <C>
Charles E. Arner....................... 2,776,409 551
Ellen S. Berscheid..................... 2,776,409 551
Ralph D. Ebbott........................ 2,776,277 683
Frederick P. Feuerherm................. 2,776,277 683
William N. Westhoff.................... 2,776,277 683
</TABLE>
(2) To approve the elimination or modification of the following investment
policies for:
<TABLE>
<CAPTION>
VOTES VOTES VOTES
FOR AGAINST WITHHELD
--------- ------- --------
<S> <C> <C> <C>
A. Modify policy regarding borrowing
and the issuance of senior
securities............................ 2,640,355 3,101 2,926
B. Modify policy regarding
concentration in a particular
industry.............................. 2,640,200 3,303 2,879
C. Modify policy regarding investments
in real estate and commodities........ 2,640,882 2,621 2,879
D. Modify policy regarding lending..... 2,640,355 3,101 2,926
E. Eliminate policy restricting the
pledging of assets.................... 2,640,058 2,658 3,665
F. Eliminate policy restricting margin
purchases and short sales............. 2,640,876 2,580 2,926
G. Eliminate policy prohibiting
transactions with affiliates.......... 2,641,031 2,471 2,880
H. Eliminate policy prohibiting
participation in a joint trading
account............................... 2,640,200 3,303 2,879
I. Eliminate policy prohibiting options
transactions.......................... 2,640,200 2,517 3,665
</TABLE>
(3) To approve an amendment to the investment advisory agreement between the
Fund and Advantus Capital Management, Inc., as described in the proxy
statement.
<TABLE>
<CAPTION>
VOTES VOTES VOTES
FOR AGAINST WITHHELD
--------- ------- --------
<S> <C> <C> <C>
2,641,287 2,168 2,926
</TABLE>
(4) To approve a new sub-advisory agreement with State Street Research Company,
as described in the proxy statement.
<TABLE>
<CAPTION>
VOTES VOTES VOTES
FOR AGAINST WITHHELD
--------- ------- --------
<S> <C> <C> <C>
2,640,548 2,168 3,665
</TABLE>
(5) To ratify the selection of KPMG LLP as independent public accountants for
the Fund.
<TABLE>
<CAPTION>
VOTES VOTES VOTES
FOR AGAINST WITHHELD
--------- ------- --------
<S> <C> <C> <C>
2,771,850 2,168 2,942
</TABLE>
21
<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
22
<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 $11.1 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
23
<PAGE>
(This page has been left blank intentionally.)
<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>
<TABLE>
<S> <C>
ASCEND FINANCIAL SERVICES PRESORTED STANDARD
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
</TABLE>
F. 51519 Rev. 9-2000
