<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS HORIZON FUND
SEPTEMBER 30, 1998
<PAGE>
ADVANTUS HORIZON FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND LIABILITIES 9
STATEMENT OF OPERATIONS 10
STATEMENTS OF CHANGES IN NET ASSETS 11
NOTES TO FINANCIAL STATEMENTS 12
INDEPENDENT AUDITORS' REPORT 18
FEDERAL INCOME TAX INFORMATION 19
SHAREHOLDER SERVICES 20
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholder:
Economic prosperity and record-setting U.S. markets over the last few years have
lulled many Americans into dreaming of perpetual gain. In this year, the effects
of global economic turmoil and market volatility have awakened us.
The global economy has been exposed to the negative effects of Asia's economic
debacle for over a year, and this negative growth is highly contagious. About 40
percent of the world's economies are in recession. Japan continues to seek the
financial stimulus necessary to recover. In Russia, a backlash against
capitalism continues to unfold. Also, Latin America, Brazil in particular, has
seen its competitive position deteriorate sharply. We anticipate that world
growth will slow to an annual rate of 1 percent by the end of 1998. This is a
dramatic change from one year ago (down 3 percent).
As expected, the U.S. economy is slowing. The growth forecast for our country at
the end of this reporting period (September 30, 1998) was 1.5 to 2 percent, a
drop from the 3 percent experienced a year ago. Current economic conditions
favor bonds, as yields will likely decline in light of slowing economic
conditions. Deflation fears have sustained a global "flight to quality" as
investors dumped the riskier assets of developing countries and sought the
relative safety of high quality bonds in the major countries.
We anticipate that there will be a continuation of tight fiscal policy. However,
monetary policy will change. We expect interest rates to move lower in the
upcoming quarters, as we believe it is likely that the Federal Reserve Board
will aggressively lower the Fed Funds rate to inject liquidity into a globally
stressed financial system.
The yield curve should steepen, with short-term interest rates declining further
than long-term interest rates. We expect the corporate bond sector will
stabilize and spreads will recover as the Fed acts to provide liquidity.
Many stocks have declined significantly in response to reduced earnings
expectations, and many stocks are now attractively valued. Interest rates have
declined, which improves the relative value of stocks. However, we expect that
stocks may remain volatile for the near term.
We have witnessed a significantly higher level of volatility in the U.S. stock
markets as most indices and stock funds came under pressure. The flight to
quality in all kinds of securities was reinforced and magnified by more visible
risks in a number of sectors.
A declining equity market hurt corporate bonds as investors began worrying about
the likelihood of lower earnings. Companies with international exposure became a
concern. Liquidity in the corporate bond market began to evaporate, as traders
became reluctant to bid on corporate bonds. These factors pushed corporate bond
spreads even wider, causing them to underperform U.S. Treasury securities.
In the pages that follow, the Fund's manager will give you information about how
the economy and conditions within the market affected the Fund during this
reporting period. The manager will specifically discuss your Advantus Fund's
performance and share some strategies that were used to manage the Fund.
Meanwhile, continue investing for the long term. We believe that you will derive
the greatest benefit by doing so. Be thoughtful about the diversification of
your portfolio, and maintain a high quality portfolio. Consider putting a
periodic investment program in place. It will help you weather volatility in the
markets.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, President
Advantus Funds
<PAGE>
ADVANTUS HORIZON FUND
PERFORMANCE UPDATE
[TOM GUNDERSON PHOTO]
[JEFFREY ERICKSON 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 year ended September 30, 1998
for each class of shares offered was as follows:
<TABLE>
<S> <C>
Class A.......................... 16.38 percent*
Class B.......................... 15.48 percent*
Class C.......................... 15.74 percent*
</TABLE>
The Fund exceeded its benchmark, the Russell 1000 Growth Index,** which earned
11.11 percent for the same period. The S&P 500 Index returned 9.00 percent for
the year ended September 30, 1998.
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.+
PERFORMANCE ANALYSIS
The Fund successfully navigated its way through the rough and volatile financial
markets this year. Our investment strategy, which relies on fundamental research
leading to strong stock selection, contributed to the Fund's strong performance
for the reporting period. Evidence of the Fund's successful performance shows in
the total return for the fiscal year and in the significant outperformance of
the Fund's benchmark. The Fund also posted in the top 7 percent of funds with a
similar investment objective according to Morningstar, Inc. for the one-year
period ending September 30, 1998. (Percentile ranking for the Fund was based on
303 mutual funds in the Morningstar Large Cap universe. Criteria for percentile
ranking is the following: 1=Best / 100=Worst. Morningstar rankings are based on
total return and do not include the effect of sales charges.)
Health Care was clearly the strongest sector within the stock market as it
reacted positively to excellent fundamentals. Some factors that drove this
strong growth in the Health Care sector were favorable aging demographics
combined with medical advances, as well as the ability of pharmaceutical
companies to engage in mass-market advertising. Pfizer, Inc., Merck & Co., Inc.,
Bristol Myers Squibb Company, and Guidant Corporation were some of the health
care stocks that helped performance of the Fund over the past year.
A mixture of other growth companies with solid long-term fundamentals also
contributed favorably to performance. Stocks such as Paychex Incorporated, a
market leader in payroll processing in the small-employer market, gained over
100 percent* in the past year as it continued its excellent growth rate.
Carnival Corporation (cruise line) and Safeway, Inc. (grocery retailer)
continued to meet or exceed our expectations of revenue and earnings growth and
posted strong performance. Large technology companies also had a positive impact
on the portfolio with Cisco Systems, Inc., Microsoft
2
<PAGE>
ADVANTUS
HORIZON FUND
SEPTEMBER 30, 1998
Corporation, and Lucent Technologies Incorporated leading the way with 12-month
appreciation of 90 percent,* 66 percent,* and 70 percent,* respectively for the
year ending September 30, 1998.
Energy was the weakest sector of the market over the past year. Energy's lag was
due to the falling price of oil from the low $20s per barrel to the $13-14 per
barrel range. The Fund's single investment in energy, Anadarko Petroleum
Corporation, actually posted a positive return, as they were able to make major
new discoveries at a reasonable cost.
Overall, our stock approach of investing in established companies with above
average sustainable earnings growth was the right place to be over the past
year. An overall slowing in corporate earnings growth led to higher valuations
on companies that proved their ability to continue their growth trend.
OUTLOOK
The cascading economic impact that started with emerging countries in the fall
of 1997 has not yet fully run its course. The well-documented problems in Asia
and Japan along with the collapse in the Russian market may have further
ramifications on the U.S. economy and our financial markets. The next wave is
likely to be a weakened demand for U.S. products causing layoffs in the U.S.
with the possibility of a recession in 1999. While few people expect an end to
economic cycles, it comes as a negative surprise when we are looking into the
teeth of the down side of the cycle.
While the current economic concerns are real, there are many financial weapons
available to keep us out of a recession, including stimulating the country's
economy through monetary policy (i.e., Federal Reserve Board lowers interest
rates), as well as through U.S. fiscal policy. Over the long-term, U.S. based
companies continue to show that they are the best managed in the world and have
access to financial capital in possibly the most solid financial markets in the
world. Throughout an economic cycle many of these U.S. companies still have the
ability to offer attractive financial gain--a concept we should not dismiss in
weaker periods of the economic cycle. We will continue to invest in established
growth companies that "have what it takes" to provide sustainable above average
earnings growth.
*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.
3
<PAGE>
ADVANTUS
HORIZON FUND
SEPTEMBER 30, 1998
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL
$10,000 INVESTMENT IN ADVANTUS HORIZON FUND,
S&P 500 INDEX, RUSSELL 1000 GROWTH INDEX,
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
Index (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 September
30, 1988 through September 30, 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 September 30, 1998.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C> <C>
(Thousands)
Class A S&P 500 Index CPI Russell 1000 Growth Index
9/30/88 $10,000 $10,000 $10,000 $10,000
10/31/88 $9,552 $10,290 $10,033 $10,195
10/31/89 $11,684 $12,996 $10,493 $13,378
10/31/90 $11,005 $12,022 $11,154 $12,620
10/31/91 $15,282 $16,048 $11,480 $17,701
10/31/92 $16,857 $17,644 $11,848 $19,615
10/31/93 $18,132 $20,274 $12,166 $21,046
9/30/94 $18,391 $20,567 $12,533 $22,882
9/30/95 $22,946 $26,673 $12,809 $30,250
9/30/96 $26,899 $31,725 $13,194 $36,722
9/30/97 $33,613 $44,118 $13,487 $50,048
9/30/98 $39,118 $48,093 $13,679 $55,604
One year 10.56%
Five year 15.55%
Ten year 14.61%
</TABLE>
4
<PAGE>
ADVANTUS
HORIZON FUND
SEPTEMBER 30, 1998
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C> <C>
(Thousands)
Class B S&P 500 Index CPI Russell 1000 Growth Index
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
9/30/98 $20,757 $23,268 $10,987 $24,605
One year 10.48%
Since inception (8/19/94) 19.40%
</TABLE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C> <C>
(Thousands)
Class C S&P 500 Index CPI Russell 1000 Growth Index
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
9/30/98 $19,779 $21,941 $10,834 $22,667
One year 15.74%
Since inception (3/1/95) 20.95%
</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
SEPTEMBER 30, 1998
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
% OF
MARKET STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------------------------------- ------- ----------- ---------
<S> <C> <C> <C>
General Electric Company............................... 48,276 $ 3,840,959 5.9%
Microsoft Corporation.................................. 21,600 2,377,350 3.6%
Tyco International, Ltd................................ 40,724 2,250,001 3.4%
Bristol-Myers Squibb Company........................... 21,000 2,181,375 3.3%
Pfizer, Inc............................................ 19,700 2,086,969 3.2%
Carnival Corporation................................... 55,300 1,759,231 2.7%
Safeway, Inc........................................... 35,782 1,659,390 2.5%
Cisco Systems, Inc..................................... 26,700 1,650,394 2.5%
Omnicom Group.......................................... 36,612 1,647,540 2.5%
Family Dollar Stores................................... 103,600 1,631,700 2.5%
----------- ---------
$21,084,909 32.1%
----------- ---------
----------- ---------
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities 1.4%
Transportation 1.1%
Utilities 1.1%
Energy 1.2%
Communication Services 1.6%
Financial 6.2%
Capital Goods 10.7%
Consumer Staples 13.9%
Consumer Cyclical 18.4%
Technology 21.1%
Health Care 23.3%
</TABLE>
6
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1998
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
COMMON STOCK (98.6%)
CAPITAL GOODS (10.7%)
Electrical Equipment (5.8%)
48,276 General Electric Company......................... $ 3,840,959
----------------
Manufacturing (3.4%)
40,724 Tyco International, Ltd.......................... 2,250,001
----------------
Waste Management (1.5%)
21,423 Waste Management, Inc............................ 1,029,643
----------------
COMMUNICATION SERVICES (1.6%)
Telecommunication (1.6%)
21,892 MCI Worldcom, Inc. (b)........................... 1,069,971
----------------
CONSUMER CYCLICAL (18.4%)
Auto (1.3%)
28,100 Danaher Corporation.............................. 843,000
----------------
Building Materials (1.5%)
40,800 Masco Corporation................................ 1,004,700
----------------
Houseware (1.6%)
50,600 Leggett & Platt Incorporated..................... 1,049,950
----------------
Retail (7.3%)
103,600 Family Dollar Stores............................. 1,631,700
22,200 Home Depot, Inc.................................. 876,900
24,300 Tandy Corporation................................ 1,300,050
20,000 Wal-Mart Stores.................................. 1,092,500
----------------
4,901,150
----------------
Service (6.7%)
24,200 Equifax Incorporated............................. 863,637
36,612 Omnicom Group.................................... 1,647,540
18,200 Quintiles Transnational (b)...................... 796,250
36,700 Service Corporation International................ 1,169,812
----------------
4,477,239
----------------
CONSUMER STAPLES (13.9%)
Beverage (2.8%)
23,500 Coca-Cola Company................................ 1,354,188
17,200 Pepsico, Inc..................................... 506,325
----------------
1,860,513
----------------
Entertainment (2.6%)
55,300 Carnival Corporation............................. 1,759,231
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
CONSUMER STAPLES--CONTINUED
Household Products (2.9%)
47,200 Dial............................................. $ 973,500
13,500 Procter & Gamble Company......................... 957,656
----------------
1,931,156
----------------
Retail (2.5%)
35,782 Safeway, Inc. (b)................................ 1,659,390
----------------
Service (1.6%)
14,200 Automatic Data Processing, Inc................... 1,061,450
----------------
Tobacco (1.5%)
21,600 Philip Morris Companies, Inc..................... 994,950
----------------
ENERGY (1.2%)
Oil & Gas (1.2%)
19,700 Anadarko Petroleum Corporation................... 774,456
----------------
FINANCIAL (6.2%)
Commercial Finance (1.4%)
18,700 Finova Finance Trust............................. 933,831
----------------
Finance-Diversified (1.7%)
22,700 Federal Home Loan Mortgage Corporation........... 1,122,231
----------------
Insurance (3.1%)
2,842 American International Group..................... 218,834
11,000 Hartford Life.................................... 464,750
13,700 Nationwide Financial Services.................... 622,494
12,150 SunAmerica Incorporated.......................... 741,150
----------------
2,047,228
----------------
HEALTH CARE (23.3%)
Drugs (13.6%)
26,000 American Home Products Corporation............... 1,361,750
21,000 Bristol-Myers Squibb Company..................... 2,181,375
13,900 Eli Lilly & Company.............................. 1,088,544
9,000 Merck & Co., Inc................................. 1,166,063
19,700 Pfizer, Inc...................................... 2,086,969
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS HORIZON FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
HEALTH CARE--CONTINUED
<C> <S> <C>
11,100 Schering Plough Corporation...................... $ 1,149,544
----------------
9,034,245
----------------
Health Care- Diversified (5.3%)
21,200 Abbott Laboratories.............................. 920,875
16,400 Johnson & Johnson................................ 1,283,300
17,800 Warner-Lambert Company........................... 1,343,900
----------------
3,548,075
----------------
Medical Products/Supplies (4.1%)
19,000 Guidant Corporation.............................. 1,410,750
10,500 Safeskin Corporation (b)......................... 331,406
50,700 Sybron International Corporation (b)............. 969,638
----------------
2,711,794
----------------
Special Services (.3%)
10,100 Equity Corporation (b)........................... 227,250
----------------
TECHNOLOGY (21.1%)
Technology (21.1%)
20,500 BMC Software, Inc. (b)........................... 1,231,281
35,300 Cadence Design Systems, Inc. (b)................. 902,356
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
26,700 Cisco Systems, Inc. (b).......................... $ 1,650,394
16,200 Dell Computer Corporation (b).................... 1,065,150
17,400 EMC Corporation (b).............................. 995,063
33,000 Galileo Electric Company......................... 1,245,750
21,900 HBO & Company.................................... 632,363
18,300 Intel............................................ 1,569,225
18,700 Lucent Technologies Incorporated................. 1,291,469
21,600 Microsoft Corporation (b)........................ 2,377,350
21,625 Paychex Incorporated............................. 1,115,039
----------------
14,075,440
----------------
TRANSPORTATION (1.1%)
Trucking (1.1%)
25,500 CNF Transportation............................... 742,688
----------------
UTILITIES (1.1%)
Electric Companies (1.1%)
19,500 AES Corporation (b).............................. 722,719
----------------
Total common stock
(cost: $49,657,965)........................................ 65,673,260
----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C>
SHORT-TERM SECURITIES (.6%)
$370,680 Federated Prime Obligation Fund, current rate 5.47%....... 370,680
------------
Total short-term securities (cost: $370,680).............. 370,680
------------
Total investments in securities (cost: $50,028,645) (c)... $ 66,043,940
------------
------------
</TABLE>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) At September 30, 1998 the cost of securities for federal income tax purposes
was $50,138,937. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation........... $17,990,305
Gross unrealized depreciation........... (2,085,302)
-----------
Net unrealized appreciation............. $15,905,003
-----------
-----------
</TABLE>
8
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market
value--see accompanying schedule for
detailed listing (identified cost:
$50,028,645).......................... $66,043,940
Receivable for Fund shares sold........ 121,354
Receivable for investment securities
sold.................................. 661,561
Accrued interest receivable............ 2,735
Dividends receivable................... 62,736
-----------
Total assets....................... 66,892,326
-----------
LIABILITIES
Payable for investment securities
purchased............................. 203,463
Payable for Fund shares redeemed....... 34,450
Payable to Adviser..................... 70,329
Other payables......................... 2,148
-----------
Total liabilities.................. 310,390
-----------
Net assets applicable to outstanding
capital stock......................... $66,581,936
-----------
-----------
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)...................... $ 28,561
Additional paid-in capital........... 43,932,706
Accumulated net realized gains from
investments......................... 6,605,374
Unrealized appreciation on
investments......................... 16,015,295
-----------
Total--representing net assets
applicable to outstanding capital
stock............................. $66,581,936
-----------
-----------
Net assets applicable to outstanding
Class A shares........................ $47,183,071
-----------
-----------
Net assets applicable to outstanding
Class B shares........................ $17,100,015
-----------
-----------
Net assets applicable to outstanding
Class C shares........................ $ 2,298,850
-----------
-----------
Shares outstanding and net asset value
per share:
Class A--Shares outstanding
2,000,290........................... $ 23.59
-----------
-----------
Class B--Shares outstanding
754,926............................. $ 22.65
-----------
-----------
Class C--Shares outstanding
100,891............................. $ 22.79
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
Investment income:
Interest............................. $ 79,915
Dividends............................ 526,356
----------
Total investment income.......... 606,271
----------
Expenses (note 4):
Investment advisory fee.............. 503,499
Distribution fees--Class A........... 137,696
Distribution fees--Class B........... 148,623
Distribution fees--Class C........... 21,764
Administrative services fee.......... 44,000
Custodian fees....................... 1,796
Auditing and accounting services..... 22,800
Legal fees........................... 6,597
Directors' fees...................... 1,080
Registration fees.................... 43,306
Printing and shareholder reports..... 38,427
Insurance............................ 4,916
Other................................ 7,777
----------
Total expenses................... 982,281
Less fees and expenses waived or
absorbed:
Class A distribution fees............ (6,809)
----------
Total net expenses............... 975,472
----------
Investment loss--net............. (369,201)
----------
Realized and unrealized gains on
investments:
Net realized gains on investments
(note 3)............................ 8,034,700
Net change in unrealized appreciation
or depreciation on investments...... 1,097,908
----------
Net gains on investments......... 9,132,608
----------
Net increase in net assets resulting
from operations....................... $8,763,407
----------
----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS HORIZON FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Operations:
Investment loss--net................. $ (369,201) $ (254,562)
Net realized gain on investments..... 8,034,700 6,455,409
Net change in unrealized appreciation
or depreciation on investments...... 1,097,908 4,155,265
------------ -----------
Increase in net assets resulting
from operations................. 8,763,407 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............................ 11,805,254 7,456,668
Class B............................ 7,211,314 4,460,062
Class C............................ 1,188,730 937,063
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 5,098,650 6,665,984
Class B............................ 1,565,569 1,433,925
Class C............................ 243,267 223,868
Payments for redemption of shares:
Class A............................ (11,437,509) (9,667,961)
Class B............................ (3,569,106) (949,523)
Class C............................ (928,081) (506,920)
------------ -----------
Increase in net assets from
capital share transactions...... 11,178,088 10,053,166
------------ -----------
Total increase in net assets..... 12,953,085 11,956,372
Net assets at beginning of year........ 53,628,851 41,672,479
------------ -----------
Net assets at end of year.............. $ 66,581,936 $53,628,851
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(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 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 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 in the financial statements. 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.
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.
12
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income and decrease accumulated net realized gains
from investments by $369,201.
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 September 30, 1998, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$49,571,429 and $44,498,884, 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
Minnesota Life Insurance Company (Minnesota Life), formerly known as The
Minnesota Mutual Life Insurance Company. Under the agreement, Advantus Capital
manages the Fund's assets and provides research, statistical and advisory
services and pays related office rental and executive expenses and salaries. In
addition, as part of the advisory fee, Advantus Capital pays the expenses of the
Fund's transfer, dividend disbursing and redemption agent, Minnesota Life.
Effective October 26, 1998, the Fund's transfer agent is First Data Investor
Services Group, Inc. 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-I under the Investment Company Act of
1940 (as amended). The Fund pays distribution 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 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 year ended September 30, 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 and other
miscellaneous expenses.
13
<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 Life for accounting, auditing, legal and other administrative services
which Minnesota Life provides. Prior to February 1, 1998, the administrative
services fee was $3,600 per month. Effective October 26, 1998, Minnesota Life
became the shareholder services agent for the Fund. Under the new shareholder
and administrative services agreement, the administrative services fee remains
unchanged, and for shareholder services performed by Minnesota Life, the Adviser
will pay Minnesota Life an annual account servicing fee as agreed by the Adviser
and Minnesota Life.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $321,515.
As of September 30, 1998, Minnesota Life and subsidiaries and the directors
and officers of the Fund as a whole owned 41,610 Class A shares which represents
2.1 percent of the total outstanding Class A shares.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $6,554.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the years ended September 30, 1998 and 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................................................... 498,136 343,891 312,837 216,042 51,773 44,666
Issued for reinvested distributions.................... 239,004 344,511 75,735 76,153 11,784 11,895
Redeemed............................................... (479,796) (437,803) (154,958) (45,438) (41,014) (23,117)
----------- ----------- ----------- ---------- --------- ---------
257,344 250,599 233,614 246,757 22,543 33,444
----------- ----------- ----------- ---------- --------- ---------
----------- ----------- ----------- ---------- --------- ---------
</TABLE>
(6) YEAR 2000 (UNAUDITED)
In 1995, Minnesota Life began addressing computer system requirements and
applications to be Year 2000 ready. Based on a current study, Minnesota Life
plans to spend approximately $14 million through 1999 to modify its computer
information systems, enabling proper processing of transactions relating to the
year 2000 and beyond. The Fund will not be charged for these expenses.
14
<PAGE>
ADVANTUS HORIZON 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
----------------------------------------------------------------------------------------
PERIOD FROM
YEAR ENDED SEPTEMBER 30, NOVEMBER 1, 1993 YEAR ENDED
------------------------------------------------ TO SEPTEMBER 30, OCTOBER 31,
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)...... (.09) (.08) (.10) (.03) -- .05
Net gains or losses on securities
(both realized and
unrealized)..................... 3.48 4.89 3.51 4.17 .25 1.20
------- --------- --------- --------- ------- ------------
Total from investment
operations.................... 3.39 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...... $ 23.59 $ 23.06 $ 23.07 $ 20.94 $ 17.34 $ 17.64
------- --------- --------- --------- ------- ------------
------- --------- --------- --------- ------- ------------
Total return (c).................... 16.38% 24.96% 17.23% 24.76% 1.42% 7.56%
Net assets, end of period (in
thousands)........................ $47,183 $ 40,192 $ 34,435 $ 36,040 $31,387 $30,015
Ratio of expenses to average daily
net assets (d)(e)................. 1.36% 1.43% 1.41% 1.41% 1.43%(f) 1.31%
Ratio of net investment income
(loss) to average daily net assets
(d)(e)............................ (.39)% (.39)% (.43)% (.15)% (.01)%(f) .27%
Portfolio turnover rate (excluding
short-term securities)............ 72.6% 71.5% 84.7% 46.8% 43.5% 47.0%
</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) 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.
(d) 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% and the ratio of net investment income (loss)
would have been (.31)% for Class A shares.
(e) The Fund's Distributor voluntarily waived $6,809, $18,019, $28,836, $51,147
and $48,807 in Class A distribution fees for the years ended September 30,
1998, 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 1.37%, 1.48%, 1.50%, 1.61% and 1.49%, respectively, and the ratio
of net investment income (loss) to average daily net assets would have been
(.40)%, (.44)%, (.52)%, (.19)% and .09%, respectively.
(f) Adjusted to an annual basis.
15
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------------
PERIOD FROM
AUGUST 19,
YEAR ENDED SEPTEMBER 30, 1994(b) TO
------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995(a) 1994
--------- --------- -------- -------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 22.41 $ 22.65 $ 20.74 $17.33 $17.11
--------- --------- -------- -------- ------
Income from investment operations:
Net investment income (loss).......... (.22) (.19) (.19) (.10) (.01)
Net gains or losses on securities
(both realized and unrealized)...... 3.32 4.77 3.38 4.05 .23
--------- --------- -------- -------- ------
Total from investment operations.... 3.10 4.58 3.19 3.95 .22
--------- --------- -------- -------- ------
Less distributions:
Dividends from net investment
income.............................. -- -- -- -- --
Distributions from capital gains...... (2.86) (4.82) (1.28) (.54) --
--------- --------- -------- -------- ------
Total distributions................. (2.86) (4.82) (1.28) (.54) --
--------- --------- -------- -------- ------
Net asset value, end of period.......... $ 22.65 $ 22.41 $ 22.65 $20.74 $17.33
--------- --------- -------- -------- ------
--------- --------- -------- -------- ------
Total return (c)........................ 15.48% 24.25% 16.34% 23.65% 1.29%
Net assets, end of period (in
thousands)............................ $ 17,100 $ 11,684 $ 6,219 $2,592 $ 97
Ratio of expenses to average daily net
assets (d)............................ 2.07% 2.18% 2.19% 2.24% .30%(f)
Ratio of net investment income (loss) to
average daily net assets (d).......... (1.11)% (1.13)% (1.19)% (1.05)% (.13)%(f)
Portfolio turnover rate (excluding
short-term securities)................ 72.6% 71.5% 84.7% 46.8% 43.5%
</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) Commencement of operations.
(c) 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.
(d) 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 2.25% for Class B and 2.25% for Class C. The ratio
of net investment income (loss) would have been (1.05)% for Class B and
(1.13)% for Class C.
(e) Adjusted to an annual basis.
(f) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
16
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------
PERIOD FROM
MARCH 1,
YEAR ENDED SEPTEMBER 30, 1995(b) TO
------------------------------------ SEPTEMBER 30,
1998 1997 1996 1995
---------- ---------- ---------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 22.38 $ 22.67 $ 20.75 $17.52
---------- ---------- ---------- ------
Income from investment operations:
Net investment income (loss).......... (.24) (.20) (.15) (.06)
Net gains or losses on securities
(both realized and unrealized)...... 3.51 4.73 3.35 3.29
---------- ---------- ---------- ------
Total from investment operations.... 3.27 4.53 3.20 3.23
---------- ---------- ---------- ------
Less distributions:
Dividends from net investment
income.............................. -- -- -- --
Distributions from capital gains...... (2.86) (4.82) (1.28) --
---------- ---------- ---------- ------
Total distributions................. (2.86) (4.82) (1.28) --
---------- ---------- ---------- ------
Net asset value, end of period.......... $ 22.79 $ 22.38 $ 22.67 $20.75
---------- ---------- ---------- ------
---------- ---------- ---------- ------
Total return (c)........................ 15.74% 24.03% 16.33% 18.44%
Net assets, end of period (in
thousands)............................ $ 2,299 $ 1,754 $ 1,018 $ 103
Ratio of expenses to average daily net
assets................................ 2.07% 2.18% 2.19% 2.24%(e)
Ratio of net investment income (loss) to
average daily net assets.............. (1.10)% (1.14)% (1.17)% (1.13)%(e)
Portfolio turnover rate (excluding
short-term securities)................ 72.6% 71.5% 84.7% 46.8%
</TABLE>
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Horizon Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Horizon
Fund, Inc. (the Fund) as of September 30, 1998 and the related statement of
operations for the year then ended, the statement of changes in net assets for
the two years then ended and the financial highlights for the four years then
ended, the period from November 1, 1993 to September 30, 1994 and for the year
ended October 31, 1993. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased or sold but not received or delivered, we
request confirmations from brokers, and where replies are not received, we carry
out other appropriate auditing procedures. 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 September 30, 1998 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 generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 6, 1998
18
<PAGE>
ADVANTUS HORIZON 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 year ended September 30, 1998. Dividends for the 1998 calendar year will
be reported to you on Form 1099-Div in late January 1999. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A, CLASS B AND CLASS C
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- --------------------------------------------------------------------------------------------------------- -----------
<S> <C>
Income distributions--taxable as dividend income, 100% qualifying for deduction by corporations
December 23, 1997........................................................................................ $ .6592
-----------
-----------
Capital gains distribution--taxable as long-term capital gains, 28% rate--39.72%, 20% rate--60.28%
December 17, 1997........................................................................................ $ 2.1983
-----------
-----------
</TABLE>
The distribution of $.6592 payable on December 23, 1997 represents
short-term capital gains (taxable as dividend income).
19
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that 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 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 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 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 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 Life insurance premiums out of your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge, if any.
SPECIAL PURCHASE PLANS: Special purchase plans enable you to open an Advantus
Fund account for as little as $25 and lower your average share cost through
"dollar-cost averaging." (Dollar-cost averaging does not assure a profit, nor
does it prevent loss in declining markets). The Automatic Investment Plan allows
you to invest automatically 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, 401(k), Money Purchase or
Defined Benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the account. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Redemption privilege will automatically be established
unless otherwise indicated on the
20
<PAGE>
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 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 transaction you
initiate and quarterly statements to help you track all of your Advantus Fund
investments and annual tax statements. Semi-annual and annual reports will
provide you with portfolio information, fund performance data and the current
investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005.
Advantus Account Representatives are available Monday through Friday from 8 a.m.
to 4:45 p.m. Central Time. Our voice response system is available 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc., distributor of the
Funds. 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. (For the Advantus International Balanced Fund, Inc.,
the sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)
Advantus Capital Management, Inc. manages twelve mutual funds containing
$2.6 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
21
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS-TM- FAMILY OF FUNDS LOGO]
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.48637 Rev. 11-1998
