<PAGE>
[LOGO]
Semi-Annual Report to Shareholders
Advantus Horizon Fund
March 31, 1998
<PAGE>
ADVANTUS HORIZON FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND LIABILITIES 10
STATEMENT OF OPERATIONS 11
STATEMENTS OF CHANGES IN NET ASSETS 12
NOTES TO FINANCIAL STATEMENTS 13
SHAREHOLDER SERVICES 18
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholders:
Investors experienced a positive financial environment with moderate economic
growth and low inflation throughout the six-month reporting period. Fears of
inflation in our economy have dissipated as negative economic events in Asia
unfolded and took on global implications earlier in the reporting period.
The "Asian Flu" severely affected several Far Eastern currencies and stock
markets, leaving a trail of bankruptcies, uncertainties, and fears in its wake.
In fact, a "flight to quality" poured assets into U.S. markets, particularly the
bond market, which is a popular destination for investors during periodic
flights to quality.
Broadly speaking, both equity and fixed income securities have demonstrated
notable results this reporting period. Indices, such as the S&P 500,* which
returned 16.3 percent at the end of the six-month period; and the Lehman
Brothers Government Corporate Bond Index,** which returned 4.8 percent for the
same period, reflected the GENERAL strength of the equity and fixed income
markets respectively.
As investors, we all enjoy "market watching." We have witnessed the financial
markets change, sometimes significantly, because of actual events or because of
mere perceptions in those markets. Keeping a long-range view of investing is
important because it smoothes out the highs and lows. We believe that investors
derive the greatest benefit by maintaining a long-range perspective on
investing.
The investment professionals at Advantus Capital Management continue to put
their money management expertise to work on your behalf. We appreciate your
continued participation in the Advantus Funds and urge you to maintain a
long-term investment perspective.
Sincerely,
[SIGNATURE]
Robert E. Hunstad, President
Advantus Funds
*The S&P 500 is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall. The Index includes
approximately 380 industrials, 10 transportations, 45 financials, and 65
utilities.
**The Lehman Brothers Government Corporate Bond Index is an unmanaged benchmark
composite of the Lehman Brothers Government Bond Index which includes all
publicly issued debt of the U.S. Government and Agencies and The Lehman Brothers
Corporate Bond Index which includes all publicly issued, fixed rate,
nonconvertible investment grade dollar-denominated, SEC registered corporate
debt.
<PAGE>
ADVANTUS HORIZON FUND
PERFORMANCE UPDATE
[PHOTO]
THOMAS A. GUNDERSON, CFA AND JEFFREY
R. ERICKSON, CFA
PORTFOLIO MANAGERS
The Advantus Horizon Fund is a mutual
fund designed for investors seeking
long-term growth of capital combined with
a moderate level of current income. The
Fund plans to achieve its objective by
investing in equity securities
diversified among individual companies
and industries. The Fund invests
primarily in dividend-paying common
stocks of established companies with
strong long-term outlooks--but may also
invest in companies perceived to be
temporarily undervalued or which because
of new management, products or markets,
show promise of substantially improved
results.
-Dividends paid quarterly.
-Capital gains distributions paid annually.
PERFORMANCE
The Advantus Horizon Fund's performance for the six month period ended March 31,
1998 for each class of shares offered was as follows:
<TABLE>
<S> <C>
Class A.......................... 18.8 percent*
Class B.......................... 18.3 percent*
Class C.......................... 19.1 percent*
</TABLE>
The Fund's benchmark index, the Russell 1000 Growth Index,** earned 16.9 percent
for the same period.
In prior reporting periods, the S&P 500 Index+ was used as the Fund's benchmark.
The current benchmark, the Russell 1000 Growth Index,** better fits our stated
investment objective than did the S&P 500 Index.+
PORTFOLIO ANALYSIS
A robust economy contributes to the strong money flows that continued to propel
the stock market to record highs, with the mega-cap stocks again providing the
highest returns*. Mega-cap stocks are the largest 25 stocks in the Russell 1000
Growth Index.** We believe the overall market has done exceptionally well,
despite several companies that reported earnings disappointments.
The continued economic crisis in Asia affected technology stocks, making the
Technology sector one of the worst-performing sectors in the U.S. stock market.
We underweighted the Fund in technology, in part, to protect the Fund from the
bumpy ride recently experienced by many technology-related companies with
business interests in economically troubled Asia. Our outperformance in the
Technology sector had the most significant impact on the Fund's performance
versus the Russell 1000 Growth Index.** More specifically our carefully chosen
technical stocks gained nearly 8 percent, while those in the broad index rose
only 4 percent during this six month period.
Energy was the worst performing market sector during this period. The Energy
sector's negative performance was due to a dramatic drop in the price of oil.
The Fund had such a small exposure to Energy, that we escaped the Energy
sector's drop unscathed.
Strong performance over the past six months came from a variety of areas. The
consumer related stocks have gained nicely over the past six months. Retail
stocks in the Fund, such as Family Dollar Stores and Wal-Mart Stores did very
well. Additionally, Carnival Corporation was up over 50 percent* during the
period. Selected technology stocks in the Fund did very well, although that
sector overall was down this period. Strong performers in the Technology sector
included Paychex Incorporated (payroll processing, up 66 percent*), Automatic
Data Processing, Inc. (payroll processing, up
2
<PAGE>
ADVANTUS
HORIZON FUND
MARCH 31, 1998
36 percent*), Parametric Technology Corporation (design software, up 50
percent*) and Galileo International, Inc. (airline reservation systems, up 39
percent*).
Weaker performers, all of which were sold during the reporting period, included
First Data Corporation, Gtech Holdings Corporation, Nine West Group, Inc., and
ADC Telecommunications, Inc. As is our style, we are not tolerant of companies
that do not meet our earnings growth expectations.
OUTLOOK
Earnings growth for the market will be more and more difficult to achieve going
forward. This will likely lead the market to place an even greater premium on
companies that continue to show strong earnings growth. As always, these are the
companies we choose to put into the Fund.
Our consistent style and management approach continues to work well, so we see
no major changes upcoming. We are always watchful of cycles and events, and
believe that we have not seen the end of the revenue impact from the Asian
economic crisis. The devalued currencies of these countries have forced them to
be much more competitive in the world market. Companies that will benefit this
competition are those who can take advantage of these trends by purchasing
facilities in these Asian countries or expanding into their less expensive
markets.
*Historical results are not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge. Investment returns and principal values will fluctuate so that shares
upon redemption may be worth more or less than their original cost.
**The Russell 1000 Growth Index contains stock from the Russell 1000 with
greater than average growth orientation. The Russell 1000 are 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.
+The S&P 500 is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall. The index includes
approximately 380 industrials, 10 transportations, 45 financials and 65
utilities.
3
<PAGE>
ADVANTUS
HORIZON FUND
MARCH 31, 1998
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN ADVANTUS
HORIZON FUND, S&P 500, RUSSELL 1000 GROWTH, AND CONSUMER PRICE INDEX
On the following three charts you can see how the total return for each of the
three classes of shares of the Advantus Horizon Fund compared to the S&P 500 (as
adjusted for dividend reinvestment), the Russell 1000 Growth Index, and the
Consumer Price Index. The lines in the Class A graph represent the cumulative
total return of a hypothetical $10,000 investment made on March 31, 1988 through
March 31, 1998. The lines in the Class B and Class C graphs represent the
cumulative total return of a hypothetical $10,000 investment made on the
inception date of Class B and Class C shares of the Advantus Horizon Fund
(August 19, 1994 and March 1, 1995, respectively) through March 31, 1998.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS A S&P 500 CPI RUSSELL 1000 GROWTH
<S> <C> <C> <C> <C>
3/31/88 $10,000 $10,000 $10,000 $10,000
10/31/88 10,149 11,013 10,292 10,695
10/31/89 12,415 13,909 10,763 14,034
10/31/90 11,693 12,866 11,441 13,240
10/31/91 16,238 17,176 11,775 18,570
10/31/92 17,911 18,884 12,153 20,578
10/31/93 19,266 21,699 12,479 22,079
9/30/94 19,541 22,012 12,856 24,005
9/30/95 24,380 28,548 13,139 31,735
9/30/96 28,581 33,954 13,533 38,524
9/30/97 35,715 47,219 13,834 52,504
3/31/98 42,445 55,359 13,894 61,377
Average annual total
return:
One year 40.7%
Five year 16.7%
Ten year 15.6%
</TABLE>
4
<PAGE>
ADVANTUS
HORIZON FUND
MARCH 31, 1998
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS B S&P 500 CPI RUSSELL 1000 GROWTH
<S> <C> <C> <C> <C>
8/19/94 $10,000 $10,000 $10,000 $10,000
9/30/94 9,629 9,951 10,067 10,125
9/30/95 12,074 12,905 10,289 13,386
9/30/96 14,221 15,349 10,598 16,249
9/30/97 17,855 21,345 10,833 22,146
3/31/98 21,174 25,025 10,880 25,889
Average annual total
return:
One year 41.8%
Since inception (8/19/94) 23.0%
</TABLE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
CLASS C S&P 500 CPI RUSSELL 1000 GROWTH
<S> <C> <C> <C> <C>
3/1/95 $10,000 $10,000 $10,000 $10,000
9/30/95 11,844 12,169 10,146 12,331
9/30/96 13,778 14,474 10,450 14,969
9/30/97 17,089 20,128 10,682 20,402
3/31/98 20,349 23,598 10,728 23,850
Average annual total
return:
One year 47.8%
Since inception (3/1/95) 25.9%
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial professional's investment advice. Individuals cannot buy even an
unmanaged index fund without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS
HORIZON FUND
MARCH 31, 1998
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------ ------ ----------- -----------
<S> <C> <C> <C>
General Electric Company...... 44,476 $ 3,833,275 5.9%
Coca-Cola Company............. 32,300 2,501,231 3.9%
Tyco International, Ltd....... 38,124 2,082,523 3.2%
Service Corporation
International................ 46,600 1,977,587 3.1%
Intel......................... 25,200 1,967,175 3.0%
Omnicom Group................. 40,412 1,901,890 2.9%
Microsoft Corporation......... 21,000 1,879,500 2.9%
Bristol-Myers Squibb
Company...................... 18,000 1,877,625 2.9%
Procter & Gamble Company...... 19,700 1,662,187 2.6%
Carnival Corporation.......... 20,900 1,457,775 2.3%
----------- ---
$21,140,768 32.7%
----------- ---
----------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities 1.8%
Transportation 0.8%
Communication Services 1.5%
Energy 1.6%
Financial 10.1%
Capital Goods 10.6%
Consumer Staples 16.7%
Health Care 17.8%
Consumer Cyclical 18.3%
Technology 20.8%
</TABLE>
6
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1998
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- -----------
<C> <S> <C>
COMMON STOCK (98.2%)
CAPITAL GOODS (10.6%)
Electrical Equipment (5.8%)
44,476 General Electric Company......................... $ 3,833,275
-----------
Manufacturing (3.2%)
38,124 Tyco International, Ltd.......................... 2,082,523
-----------
Waste Management (1.6%)
23,023 USA Waste Services Incorporated (b).............. 1,025,962
-----------
COMMUNICATION SERVICES (1.5%)
Telecommunication (1.5%)
19,600 MCI Communications............................... 970,200
-----------
CONSUMER CYCLICAL (18.3%)
Auto (1.3%)
10,900 Danaher Corporation.............................. 827,719
-----------
Building Materials (1.3%)
14,000 Masco Corporation................................ 833,000
-----------
Houseware (1.5%)
19,800 Leggett & Platt Incorporated..................... 1,018,462
-----------
Lodging-Hotel (2.2%)
20,900 Carnival Corporation............................. 1,457,775
-----------
Retail (4.0%)
25,900 Family Dollar Stores............................. 984,200
20,700 Tandy Corporation................................ 972,900
13,900 Wal-Mart Stores.................................. 706,294
-----------
2,663,394
-----------
Service (8.0%)
34,170 Cendant Corporation (b).......................... 1,353,986
40,412 Omnicom Group.................................... 1,901,890
46,600 Service Corporation International................ 1,977,587
-----------
5,233,463
-----------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- -----------
<C> <S> <C>
CONSUMER STAPLES (16.7%)
Beverage (5.3%)
32,300 Coca-Cola Company................................ $ 2,501,231
23,500 Pepsico, Inc..................................... 1,003,156
-----------
3,504,387
-----------
Household Product (4.5%)
26,900 Newell Company................................... 1,302,969
19,700 Procter & Gamble Company......................... 1,662,187
-----------
2,965,156
-----------
Personal Care (1.4%)
8,000 Gillette Company................................. 949,500
-----------
Retail (2.0%)
34,782 Safeway, Inc. (b)................................ 1,284,760
-----------
Service (1.4%)
13,900 Automatic Data Processing, Inc................... 946,069
-----------
Tobacco (2.1%)
33,600 Philip Morris Companies, Inc..................... 1,400,700
-----------
ENERGY (1.6%)
Oil & Gas (1.6%)
15,500 Anadarko Petroleum Corporation................... 1,069,500
-----------
FINANCIAL (10.1%)
Banks (1.6%)
24,600 Norwest Corporation.............................. 1,022,437
-----------
Commercial Finance (1.4%)
16,000 Finova Finance Trust............................. 942,000
-----------
Consumer Finance (.9%)
7,599 Associates First Capital Corporation............. 600,321
-----------
Finance-Diversified (1.1%)
15,200 Federal Home Loan Mortgage Corporation........... 721,050
-----------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- -----------
FINANCIAL--CONTINUED
<C> <S> <C>
Insurance (4.1%)
5,228 American International Group..................... $ 658,401
14,200 Hartford Life.................................... 661,187
15,800 Nationwide Financial Services.................... 685,325
14,350 Sunamerica Incorporated.......................... 687,006
-----------
2,691,919
-----------
Savings and Loans (1.0%)
9,000 Washington Mutual Incorporated................... 645,469
-----------
HEALTH CARE (17.8%)
Drugs (8.2%)
8,800 American Home Products Corporation............... 839,300
10,500 Eli Lilly & Company.............................. 626,062
8,700 Merck & Co., Inc................................. 1,116,863
11,700 Pfizer, Inc...................................... 1,166,344
10,900 Schering Plough Corporation...................... 890,394
12,000 Smithkline Beecham (c)........................... 750,750
-----------
5,389,713
-----------
Health Care - Diversified (7.9%)
12,600 Abbott Laboratories.............................. 948,938
18,000 Bristol-Myers Squibb Company..................... 1,877,625
19,100 Johnson & Johnson................................ 1,400,269
5,800 Warner-Lambert Company........................... 987,813
-----------
5,214,645
-----------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- -----------
<C> <S> <C>
HEALTH CARE--CONTINUED
Medical Products/Supplies (1.7%)
42,200 Sybron International Corporation (b)............. $ 1,102,475
-----------
TECHNOLOGY (20.8%)
8,500 BMC Software, Inc. (b)........................... 712,406
18,900 Cadence Design Systems, Inc. (b)................. 654,413
13,800 Cisco Systems, Inc. (b).......................... 943,575
12,400 Computer Associates International................ 716,100
17,100 EMC Corporation (b).............................. 646,594
30,100 Equifax Incorporated............................. 1,098,650
32,000 Galileo International, Inc....................... 1,242,000
25,200 Intel............................................ 1,967,175
9,100 Lucent Technologies Incorporated................. 1,163,663
21,000 Microsoft Corporation (b)........................ 1,879,500
40,000 Parametric Technology Corporation (b)............ 1,332,500
22,650 Paychex Incorporated............................. 1,306,622
-----------
13,663,198
-----------
TRANSPORTATION (.8%)
Air Freight (.8%)
14,600 CNF Transportation............................... 524,688
-----------
Total common stock (cost: $43,860,664)........................ 64,583,760
-----------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- -----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (2.3%)
$ 150,000 US Treasury Bill................................. 5.111% 04/23/98 $ 149,510
315,000 US Treasury Bill................................. 5.111% 05/21/98 312,799
1,060,000 US Treasury Bill................................. 5.186% 06/25/98 1,047,335
-----------
Total short-term securities (cost: $1,509,687)..................... 1,509,644
-----------
Total investments in securities (cost: $45,370,351)(d)............. $66,093,404
-----------
-----------
</TABLE>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 1.1% of the net assets in foreign securities as of March 31,
1998.
(d) At March 31, 1998 the cost of securities for federal income tax purposes was
$45,460,314. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $20,887,838
Gross unrealized depreciation.......... (254,748)
-----------
Net unrealized appreciation............ $20,633,090
-----------
-----------
</TABLE>
9
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market
value--see accompanying schedule for
detailed listing
(identified cost: $45,370,351)........ $66,093,404
Cash in bank on demand deposit......... 329,832
Receivable for investment securities
sold.................................. 561,617
Receivable for Fund shares sold........ 17,960
Dividends receivable................... 52,223
-----------
Total assets....................... 67,055,036
-----------
LIABILITIES
Payable for investment securities
purchased............................. 1,109,494
Payable for Fund shares redeemed....... 74,743
Payable to Adviser..................... 89,600
-----------
Total liabilities.................. 1,273,837
-----------
Net assets applicable to outstanding
capital stock......................... $65,781,199
-----------
-----------
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)...................... $ 27,578
Undistributed net investment loss.... (93,114)
Additional paid-in capital........... 41,590,175
Accumulated net realized gains from
investments......................... 3,533,507
Unrealized appreciation on
investments......................... 20,723,053
-----------
Total--representing net assets
applicable to outstanding capital
stock............................. $65,781,199
-----------
-----------
Net assets applicable to outstanding
Class A shares........................ $48,301,998
-----------
-----------
Net assets applicable to outstanding
Class B shares........................ $15,150,179
-----------
-----------
Net assets applicable to outstanding
Class C shares........................ $ 2,329,022
-----------
-----------
Shares outstanding and net asset value
per share:
Class A--Shares outstanding
2,005,234........................... $ 24.09
-----------
-----------
Class B--Shares outstanding
652,775............................. $ 23.21
-----------
-----------
Class C--Shares outstanding 99,771... $ 23.34
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest............................. $ 52,612
Dividends............................ 307,310
-----------
Total investment income.......... 359,922
-----------
Expenses (note 4):
Investment advisory fee.............. 229,339
Distribution fees--Class A........... 63,852
Distribution fees--Class B........... 63,937
Distribution fees--Class C........... 9,898
Administrative service fee........... 21,800
Custodian fees....................... 296
Auditing and accounting services..... 11,850
Legal fees........................... 3,281
Registration fees.................... 18,733
Printing and shareholder reports..... 19,206
Insurance............................ 2,649
Licensing fee........................ 15,004
-----------
Total expenses................... 459,845
Less fees and expenses waived or
absorbed:
Class A distribution fees............ (6,809)
-----------
Total net expenses............... 453,036
-----------
Investment loss--net............. (93,114)
-----------
Realized and unrealized gains on
investments:
Net realized gains on investments
(note 3)............................ 4,593,632
Net change in unrealized appreciation
or depreciation on investments...... 5,805,666
-----------
Net gains on investments......... 10,399,298
-----------
Net increase in net assets resulting
from operations....................... $10,306,184
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS HORIZON FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTH PERIOD ENDED MARCH 31, 1998 AND
YEAR ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Operations:
Investment loss--net................. $ (93,114) $ (254,562)
Net realized gain on investements.... 4,593,632 6,455,409
Net change in unrealized appreciation
or depreciation on investments...... 5,805,666 4,155,265
----------- -----------
Increase in net assets resulting
from operations................. 10,306,184 10,356,112
----------- -----------
Distributions to shareholders from net
realized gains on investments:
Class A............................ (5,149,246) (6,782,073)
Class B............................ (1,594,390) (1,445,269)
Class C............................ (244,774) (225,564)
----------- -----------
Total distributions.............. (6,988,410) (8,452,906)
----------- -----------
Capital share transactions (notes 4 and
5):
Proceeds from sales:
Class A............................ 4,774,342 7,456,668
Class B............................ 2,441,226 4,460,062
Class C............................ 631,753 937,063
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 5,097,234 6,665,984
Class B............................ 1,556,100 1,433,925
Class C............................ 243,267 223,868
Payments for redemption of shares:
Class A............................ (4,273,899) (9,667,961)
Class B............................ (1,219,895) (949,523)
Class C............................ (415,554) (506,920)
----------- -----------
Increase in net assets from
capital share transactions...... 8,834,574 10,053,166
----------- -----------
Total increase in net assets..... 12,152,348 11,956,372
Net assets at beginning of period...... 53,628,851 41,672,479
----------- -----------
Net assets at end of period............ $65,781,199 $53,628,851
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
(1) ORGANIZATION
The Advantus Horizon Fund, Inc. (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 growth of capital combined with a moderate level of current income.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class A
shares at net asset value after a specified holding period. Such holding periods
decline as the amount of the purchase increases and range from 28 to 84 months
after purchase for Class B shares and 40 to 96 months after purchase for Class C
shares. All three classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than distribution fees) and realized and unrealized
gains or losses are allocated to each class of shares based upon its relative
net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price, by an independent pricing service or at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities.
When market quotations are not readily available, securities are valued at fair
value as determined in good faith under procedures adopted by the Board of
Directors. Short-term securities are valued at market.
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 HORIZON 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 (loss) 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 (loss) or realized gains (losses) were
recorded by the Fund.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income, if any, are declared and paid
quarterly. Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period ended March 31, 1998, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$29,766,783 and $27,051,128, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital
Management, Inc. (Advantus Capital or the Adviser), a wholly-owned subsidiary of
MIMLIC Asset Management Company (MIMLIC Management). 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, The
Minnesota Mutual Life Insurance Company (Minnesota Mutual), the parent of MIMLIC
Management. The fee for investment management and advisory services is based on
the average daily net assets of the Fund at the annual rate of .80 percent.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to Ascend Financial Services,
Inc. (Ascend), formerly known as MIMLIC Sales Corporation, the underwriter of
the Fund and wholly-owned subsidiary of MIMLIC Management, to be used to pay
certain expenses incurred in the distribution, promotion and servicing of the
Fund's shares. The Class A Plan provides for a fee up to .30 percent of average
daily net assets of Class A shares. The Class B and Class C Plans provide for a
fee up to 1.00 percent of average daily net assets of Class B and Class C
shares, respectively. The Class B and Class C 1.00 percent fee is comprised of a
.75 percent distribution fee and a .25 percent service fee. Prior to January 30,
1998 Ascend waived that portion of Class A distribution fees which exceeded, as
a percentage of average daily net assets, .25 percent. Ascend waived Class A
distribution fees in the amount of $6,809 for the period ended March 31, 1998.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reporting fees, legal, auditing and accounting services fees, organizational
costs and other miscellaneous expenses.
14
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
The Fund pays an administrative services fee, equal to $3,700 per month, to
Minnesota Mutual for accounting, auditing, legal and other administrative
services which Minnesota Mutual provides. Prior to February 1, 1998, the
administrative services fee was $3,600.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $151,049.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $3,281.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1997 to March 31, 1998
and the year ended September 30, 1997 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- -------------------- --------------------
1998 1997 1998 1997 1998 1997
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold............................................. 210,983 343,891 111,110 216,042 28,609 44,666
Issued for reinvested distributions.............. 239,157 344,511 75,680 76,153 11,784 11,895
Redeemed......................................... (187,852) (437,803) (55,327) (45,438) (18,970) (23,117)
---------- ---------- --------- --------- --------- ---------
262,288 250,599 131,463 246,757 21,423 33,444
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
</TABLE>
15
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(6) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------
YEAR
PERIOD FROM PERIOD FROM ENDED
OCTOBER 1, NOVEMBER 1, OCTOBER
1997 TO YEAR ENDED SEPTEMBER 30, 1993 TO 31,
MARCH 31, --------------------------------- SEPTEMBER 30, --------
1998 1997 1996 1995 (A) 1994 (B) 1993
----------- --------- --------- --------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 23.06 $ 23.07 $ 20.94 $ 17.34 $ 17.64 $ 16.73
----------- --------- --------- --------- ------- --------
Income from investment
operations:
Net investment income
(loss)..................... (.01) (.08) (.10) (.03) -- .05
Net gains or losses on
securities (both realized
and unrealized)............ 3.90 4.89 3.51 4.17 .25 1.20
----------- --------- --------- --------- ------- --------
Total from investment
operations............... 3.89 4.81 3.41 4.14 .25 1.25
----------- --------- --------- --------- ------- --------
Less distributions:
Dividends from net
investment income.......... -- -- -- -- -- (.05)
Distributions from capital
gains...................... (2.86) (4.82) (1.28) (.54) (.55) (.29)
----------- --------- --------- --------- ------- --------
Total distributions....... (2.86) (4.82) (1.28) (.54) (.55) (.34)
----------- --------- --------- --------- ------- --------
Net asset value, end of
period....................... $ 24.09 $ 23.06 $ 23.07 $ 20.94 $ 17.34 $ 17.64
----------- --------- --------- --------- ------- --------
----------- --------- --------- --------- ------- --------
Total return (d).............. 18.8% 25.0% 17.2% 24.8% 1.4% 7.6%
Net assets, end of period (in
thousands)................... $48,302 $ 40,192 $ 34,435 $36,040 $31,387 $30,015
Ratio of expenses to average
daily net assets (e)(f)...... 1.39%(g) 1.43% 1.41% 1.41% 1.43%(g) 1.31%
Ratio of net investment income
(loss) to average daily net
assets (e)(f)................ (0.14)%(g) (.39)% (.43)% (.15)% (.01)%(g) .27%
Portfolio turnover rate
(excluding short-term
securities).................. 48.2% 71.5% 84.7% 46.8% 43.5% 47.0%
Average commission rate on
stock transactions (i)....... $ .0584 $ .0661 $ .0763 N/A N/A N/A
</TABLE>
- ------------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995, the
Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) During 1994, the Fund changed its fiscal year end from October 31 to
September 30.
(c) Commencement of operations.
(d) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not been
annualized.
(e) The Fund's Adviser and Distributor voluntarily waived or absorbed $52,961 in
expenses for the year ended September 30, 1995. If the Fund had been charged
with these expenses, the ratio of expenses to average daily net assets would
have been 1.57% for Class A, 2.25% for Class B and 2.25% for Class C. The
ratio of net investment income (loss) would have been (.31%) for Class A,
(1.05%) for Class B and (1.13%) for Class C.
(f) The Fund's Distributor voluntarily waived or absorbed $6,809, $18,019,
$28,836, $51,147 and $48,807 in expenses for the period ended March 31,
1998, the years ended September 30, 1997 and 1996, the period ended
September 30, 1994 and the year ended October 31, 1993, respectively. If
Class A shares had been charged for these expenses, the ratio of expenses to
average daily net assets would have been 1.42%, 1.48%, 1.50%, 1.61% and
1.49% , respectively. The ratio of net investment income (loss) to average
daily net assets would have been (.17%), (.44)%, (.52)%, (.19)% and .09%,
respectively.
16
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS B CLASS C
-------------------------------------------------------- ------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM
OCTOBER 1, AUGUST 19, OCTOBER 1, YEAR ENDED
1997 TO YEAR ENDED SEPTEMBER 30, 1994 (C) TO 1997 TO SEPTEMBER 30,
MARCH 31, -------------------------- SEPTEMBER 30, MARCH 31, ----------------
1998 1997 1996 1995 (A) 1994 1998 1997 1996
----------- ------- ------- -------- ------------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 22.41 $ 22.65 $ 20.74 $17.33 $17.11 $ 22.38 $ 22.67 $ 20.75
----------- ------- ------- -------- ------ ----------- ------- -------
Income from investment
operations:
Net investment income
(loss)..................... (.08) (.19) (.19) (.10) (.01) (.08) (.20) (.15)
Net gains or losses on
securities (both realized
and unrealized)............ 3.74 4.77 3.38 4.05 .23 3.90 4.73 3.35
----------- ------- ------- -------- ------ ----------- ------- -------
Total from investment
operations............... 3.66 4.58 3.19 3.95 .22 3.82 4.53 3.20
----------- ------- ------- -------- ------ ----------- ------- -------
Less distributions:
Dividends from net
investment income.......... -- -- -- -- -- -- -- --
Distributions from capital
gains...................... (2.86) (4.82) (1.28) (.54) -- (2.86) (4.82) (1.28)
----------- ------- ------- -------- ------ ----------- ------- -------
Total distributions....... (2.86) (4.82) (1.28) (.54) -- (2.86) (4.82) (1.28)
----------- ------- ------- -------- ------ ----------- ------- -------
Net asset value, end of
period....................... $ 23.21 $ 22.41 $ 22.65 $20.74 $17.33 $ 23.34 $ 22.38 $ 22.67
----------- ------- ------- -------- ------ ----------- ------- -------
----------- ------- ------- -------- ------ ----------- ------- -------
Total return (d).............. 18.3% 24.3% 16.3% 23.7% 1.3% 19.1% 24.0% 16.3%
Net assets, end of period (in
thousands)................... $15,150 $11,684 $ 6,219 $2,592 $ 97 $ 2,329 $ 1,754 $ 1,018
Ratio of expenses to average
daily net assets (e)(f)...... 2.12%(g) 2.18% 2.19% 2.24% .30%(h) 2.12%(g) 2.18% 2.19%
Ratio of net investment income
(loss) to average daily net
assets (e)(f)................ (.86)%(g) (1.13)% (1.19)% (1.05)% .(13)%(h) (.86)%(g) (1.14)% (1.17)%
Portfolio turnover rate
(excluding short-term
securities).................. 48.2% 71.5% 84.7% 46.8% 43.5% 48.2% 71.5% 84.7%
Average commission rate on
stock transactions (i)....... $ .0584 $ .0661 $ .0763 N/A N/A $ .0584 $ .0661 $ .0763
<CAPTION>
PERIOD FROM
MARCH 31,
1995 (C) TO
SEPTEMBER 30,
1995
-------------
<S> <C>
Net asset value, beginning of
period....................... $17.52
------
Income from investment
operations:
Net investment income
(loss)..................... (.06)
Net gains or losses on
securities (both realized
and unrealized)............ 3.29
------
Total from investment
operations............... 3.23
------
Less distributions:
Dividends from net
investment income.......... --
Distributions from capital
gains...................... --
------
Total distributions....... --
------
Net asset value, end of
period....................... $20.75
------
------
Total return (d).............. 18.4%
Net assets, end of period (in
thousands)................... $ 103
Ratio of expenses to average
daily net assets (e)(f)...... 2.24%(g)
Ratio of net investment income
(loss) to average daily net
assets (e)(f)................ (1.13)%(g)
Portfolio turnover rate
(excluding short-term
securities).................. 46.8%
Average commission rate on
stock transactions (i)....... N/A
</TABLE>
- ------------
(g) Adjusted to an annual basis.
(h) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
(i) Beginning in fiscal 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of stocks for
the period by the total number of related shares purchased and sold.
17
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges 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. Systematic Exchange Plans are
exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account--subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE EXCHANGE: You can move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same class)
just by calling our toll free number. The Telephone Exchange and Telephone
Redemption privilege will automatically be established unless otherwise
indicated on the Account Application. Telephone Exchange and Redemption may be
changed (added/deleted) at any time by submitting a request in writing or by
completing a Service Request Form.
SYSTEMATIC EXCHANGE: You can move a set amount of money monthly from one
Advantus Fund to another Advantus Fund (with identical registrations within the
same class) to diversify your investment portfolio and take advantage of
dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums 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 on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Special purchase plans enable you to open an Advantus
Fund account for as little as $25 and lower your average share cost through
"dollar-cost averaging." (Dollar-cost averaging does not assure a profit, nor
does it prevent loss in declining markets.) The Automatic Investment Plan allows
you to invest automatically each month from your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Traditional or Roth Individual Retirement Account or other qualified plan
including: SEP IRA's, SIMPLE IRA's, profit sharing, money purchase or defined
benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the account.
18
<PAGE>
Wire transfers are for amounts over $500. The prevailing wire charge will be
added to the withdrawal amount. The Telephone Exchange and Telephone Redemption
privilege will automatically be established unless otherwise indicated on the
Account Application. Telephone Exchange and Redemption may be changed
(added/deleted) at any time by submitting a request in writing or by completing
a Service Request Form. To have the redemption automatically deposited into your
checking account, please send a voided check from your bank. Depending on the
performance of the underlying investment options, the value may be worth more or
less than the original amount invested upon redemption. Some limitations apply,
please refer to the prospectus for details.
ACCOUNT UPDATES: You will receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) 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 personal 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 from 7 a.m. to 3 a.m. Central Time Monday through Friday, and 8 a.m.
to 5 p.m. on Saturday. This system allows you to access current net asset values
and account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc. (formerly known as
MIMLIC Sales Corporation), distributor of the Funds. Contact your representative
for information and a prospectus for any of the Advantus Funds you are
interested in. 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 the 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.
Advantus Capital Management, Inc. manages twelve mutual funds containing
$2.7 billion in assets in addition to $2.1 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
19
<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
1-888-AFS-1838
(1-888-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES, INC. BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
F.48636 Rev. 5-1998
