<PAGE>
HORIZON
ADVANTUS HORIZON FUND, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS DATED MARCH 31, 1999
[LOGO]
ADVANTUS -TM-
FAMILY OF FUNDS
EQUITY
[ART]
<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
SHAREHOLDER SERVICES 18
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholders:
U.S. economic expansion, in its longevity and in vigor, is the envy of the rest
of the world. While growth in Europe and the United Kingdom is falling, we are
finally seeing some small improvements in Asia's economic angst; it also appears
that Japan's economic free fall has stopped. However, a working plan for a
sustainable recovery in Japan is still forthcoming. As you can see, growth
patterns around the globe are mixed, but overall, world growth is forecasted to
decline by about one percent over the course of 1999. (World growth is
forecasted to be two percent in 1999.)
In this six-month reporting period, U.S. Gross Domestic Product (GDP) in the
fourth quarter 1998 was 6.0 percent. This phenomenal result was fueled by strong
consumer demand and spending. GDP figures for the first quarter 1999 are
estimated at a respectable 4 percent. This economic growth was very broad based,
despite some export difficulties. Above-trend growth is expected for the
remainder of the year.
Will inflation spoil the party? It's unlikely. Weak commodity prices coupled
with excess global capital and labor has created an inflation-benign
environment. The inflation outlook in the U.S. continues to be positive, as
well.
The strong momentum in top-tier large cap growth stocks continues to drive the
equity market. Some trends have continued, such as large cap stocks
outperforming small caps and growth stocks outperforming value stocks. The
breadth of leadership of the equity market has continued to narrow, with only
26.3 percent of the issues in the S&P 500* able to outperform their index over
the last twelve months. The average equity mutual fund has lagged the market
unless it has been overweighted in growth and technology investments. Valuations
in the marketplace continue to be high, particularly in the large cap growth
weighted indices.
Stronger economic growth increased investors' comfort with corporate bonds and
thus the spread to Treasury bonds narrowed. In the fixed-income market,
mortgage-backed securities were the star performers this period, followed by
corporate bonds, and then Treasuries.
The economic and market outlook for the U.S. remains strong. Looking ahead, we
are cautiously optimistic for stock and bond prices, but valuations for
large-cap growth issues are high. Economic growth is forecasted, albeit slower
than in the past. With much of the world still in recession, commodity prices
low, and rapid increases in technology and productivity, high inflation is
unlikely. The Federal Reserve and other central banks stand ready to intervene
if necessary. We are watchful of Y2K issues. Certain countries that are mired in
prolonged recessions lack the money to solve these technology-related problems.
We are - along with the rest of the world - watching the political strife in the
Balkans. The military action in Kosovo has commanded world attention. Escalation
will prove costly in money and human resources.
In the pages that follow, the Fund's managers will update you on how the economy
and the market affected the Fund during this reporting period. The managers will
discuss the Fund's performance and some strategies used to maximize performance.
As always, we thank you for investing with Advantus. We encourage you to
maintain a long-range view of investing; we believe you will derive the greatest
benefit by doing so.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, 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.
<PAGE>
ADVANTUS HORIZON FUND
PERFORMANCE UPDATE
[PHOTO]
[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 and
non-dividend-paying common
stocks of established
companies with strong
long-term outlooks. Because
dividend yields of these
types of companies have
fallen below average yield
for all companies, however,
the Fund has not paid
dividends from current income
since 1993.
- Dividends paid quarterly.
- Capital gains distributions paid annually.
PERFORMANCE
The Advantus Horizon Fund's performance for the six-month period ended March 31,
1999 for each class of shares offered was as follows:
<TABLE>
<S> <C>
CLASS A.......................... 24.50 PERCENT*
CLASS B.......................... 24.17 PERCENT*
CLASS C.......................... 24.07 PERCENT*
</TABLE>
The Fund's benchmark, the Russell 1000 Growth Index,** returned 34.80 percent
for the same period.
PERFORMANCE ANALYSIS
This six-month reporting period began with great fear but ended with apparent
optimism as the markets closed the year near record highs. The cascading
ramifications of the Asian crisis and its impact on the hedge funds caused a
liquidity crisis and some panic selling resulted in heightened expectations for
an upcoming recession and the related sell off of cyclical companies, including
those in the Fund. Following these tumultuous events, we refocused our attention
on companies that would continue to post solid earnings growth through an
economic cycle.
The Technology sector led the market with Internet stocks at the forefront.
Explosive growth of Internet usage and potential demand for applications are
expected to fuel continued capital spending, as well as growth for Internet-
related companies. The Fund had a meaningful position in the Technology sector
and was a beneficiary of the strong technology rally. However, minimal exposure
to "pure" Internet investments was the primary reason the Fund's performance
lagged that of its Index during the six-month period. The Fund did benefit,
however, from a 30 percent weighting in the Technology sector. This large
allocation is about equal to that of the Russell 1000 Growth Index.** The Fund's
holdings in technology (e.g., America Online, EMC, and Microsoft Corporation)
gained about 12 percent* during the first quarter of 1999.
The Consumer Staples sector did not fare so well, and this sector continued to
lag the market. Companies like Coca-Cola and Philip Morris disappointed
investors with lower-than-anticipated results. The Fund was significantly
underweighted in the Consumer Staples sector, which aided the Fund's performance
during this period.
Our fundamental stock selection approach has resulted in relatively more
investments in the mid-capitalization arena - those stocks in the range of $5 to
$15 billion. One of the key reasons the Fund has lagged the performance of the
Russell 1000 Growth Index** is that it owns fewer of the largest companies.
However, we are uncovering many attractive investments in the mid-cap sector and
believe that their lower valuations will likely be rewarded in the marketplace.
2
<PAGE>
Companies that boosted performance were America Online, EMC (computer storage),
and Microsoft Corporation, all from the Technology sector. Other winners for the
Fund included world advertising leader Omnicom Group, and Tandy Corporation, an
electronic retailer. The weak performers during the period included Service
Corporation International (funeral home and operator), Health Management
Associates (small market hospitals), and Philip Morris. Poor fundamentals
deteriorated the outlook for Service Corporation International, and it was sold
from the Fund during first quarter 1999. Health Management Associates and Philip
Morris provide attractive valuations and remain in the Fund despite near-term
risks.
We added several new companies to the Fund during this reporting period,
including America Online, Nokia Corporation (leader in the wireless handsets and
infrastructure), Sun Microsystems (computer hardware), and Nova Corporation
(credit card processing). America Online was added due to its leadership
position on the Internet. We chose Sun Microsystems because the scalability of
its products appears to be ideally suited for the Internet. Nokia Corporation
was added to the Fund because it continues to gain market share and is well
positioned in this high-growth industry.
OUTLOOK
Prior to 1997, the stock market never gained more than 20 percent beyond two
consecutive years. Remarkably, 1998 was the fourth consecutive year in which the
market (as measured by the S&P 500+) gained more than 20 percent.
If history is any indication, the stock market is unlikely to post 20+ percent
returns during 1999. However, this does not mean that stocks are an unattractive
investment. More moderate gains in the high single-digit or low double-digit
range for 1999 would be favorable in our low-inflation economy. We will continue
to invest in companies that we believe can sustain above-average earnings growth
through an economic cycle. This strategy will allow us to maximize the long-term
capital appreciation of the Fund.
*Historical results are not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5.5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge. 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 is the 1,000 largest
companies in the Russell 3000. The Russell 3000 is an unmanaged index of 3,000
common stocks, which represents approximately 98 percent of the U.S. market.
+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>
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT IN ADVANTUS HORIZON FUND,
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 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, 1989 through March 31, 1999. 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, 1999.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C>
One year 15.22%
Five year 21.03%
Ten year 16.25%
Class A CPI Russell 1000 Index
3/31/89 $10,000 $10,000 $10,000
10/31/89 10,869 10,253 12,158
10/31/90 10,237 10,899 11,470
10/31/91 14,216 11,217 16,088
10/31/92 15,681 11,577 17,828
10/31/93 16,867 11,887 19,128
9/30/94 17,109 12,247 20,797
9/30/95 21,345 12,516 27,493
9/30/96 25,023 12,892 33,375
9/30/97 31,268 13,178 45,487
9/30/98 36,389 13,366 50,537
3/31/99 45,306 13,480 68,124
</TABLE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C>
One year 16.18%
Since inception
(8/19/94) 22.80%
Class B CPI Russell 1000 Growth Index
8/19/94 $10,000 $10,000 $10,000
9/30/94 9,629 10,067 10,125
9/30/95 12,074 10,289 13,386
9/30/96 14,221 10,598 16,249
9/30/97 17,855 10,833 22,146
9/30/98 20,757 10,987 24,605
3/31/99 25,810 11,081 33,168
</TABLE>
4
<PAGE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C>
One year 21.14%
Since inception
(3/1/95) 24.53%
Class C CPI Russell 1000 Growth Index
3/1/95 $10,000 $10,000 $10,000
9/30/95 11,844 10,146 12,331
9/30/96 13,778 10,450 14,969
9/30/97 17,089 10,682 20,402
9/30/98 19,869 10,834 22,667
3/31/99 24,499 10,927 30,555
</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 5.5 percent front-end sales charge for Class A and the maximum
applicable contingent deferred sales charge for Class B shares. The maximum
initial sales charge for Class A shares was 5.0 percent prior to February 1,
1999. Sales charges pay for your financial professional's investment advice.
Individuals cannot invest in the index itself, nor can they invest in any fund
which seeks to track the performance of the index without incurring some charges
and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- --------------------------------------- ------- ----------- ----------
<S> <C> <C> <C>
General Electric Company............... 46,476 $ 5,141,407 6.2%
Microsoft Corporation.................. 41,600 3,728,400 4.5%
Intel.................................. 24,500 2,918,563 3.5%
Omnicom Group.......................... 33,912 2,710,840 3.3%
Tyco International, Ltd................ 37,324 2,677,997 3.2%
Cisco Systems, Inc..................... 22,800 2,498,025 3.0%
Family Dollar Stores................... 96,300 2,214,900 2.7%
Guldant Corporation.................... 34,800 2,105,400 2.5%
Lucent Technologies Incorporated....... 18,700 2,014,925 2.4%
Safeway, Inc........................... 38,782 1,990,001 2.4%
----------- -----
$28,000,458 33.7%
----------- -----
----------- -----
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities 1.3%
Utilities 0.8%
Communication Services 2.2%
Financial 8.4%
Capital Goods 11.2%
Consumer Staples 13.6%
Consumer Cyclical 15.6%
Health Care 18.1%
Technology 28.8%
</TABLE>
6
<PAGE>
ADVANTUS Horizon Fund
Investments in Securities
March 31, 1999
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ------------
<C> <S> <C>
COMMON STOCK (98.7%)
CAPITAL GOODS (11.2%)
Electrical Equipment (6.1%)
46,476 General Electric Company.......................................... $ 5,141,407
------------
Manufacturing (3.2%)
37,324 Tyco International, Ltd........................................... 2,677,997
------------
Office Equipment (1.9%)
14,400 Lexmark International Group, Inc. (b)............................. 1,609,200
------------
COMMUNICATION SERVICES (2.2%)
Telecommunication (2.2%)
21,292 MCI Worldcom, Inc. (b)............................................ 1,885,673
------------
CONSUMER CYCLICAL (15.6%)
Auto (1.5%)
23,800 Danaher Corporation............................................... 1,243,550
------------
Building Materials (1.4%)
42,000 Masco Corporation................................................. 1,186,500
------------
Houseware (.9%)
37,900 Leggett & Platt, Inc.............................................. 758,000
------------
Retail (6.5%)
96,300 Family Dollar Stores.............................................. 2,214,900
22,200 Home Depot, Inc................................................... 1,381,950
20,000 Wal-Mart Stores................................................... 1,843,750
------------
5,440,600
------------
Service (5.3%)
53,800 Cendant Corporation (b)........................................... 847,350
33,912 Omnicom Group..................................................... 2,710,840
23,800 Quintiles Transnational (b)....................................... 898,450
------------
4,456,640
------------
CONSUMER STAPLES (13.6%)
Beverage (.8%)
11,500 Coca-Cola Company................................................. 705,812
------------
Entertainment (2.0%)
34,700 Carnival Corporation.............................................. 1,685,119
------------
Food & Health (1.5%)
27,900 U.S. Foodservice (b).............................................. 1,297,350
------------
Household Products (4.1%)
7,000 Clorox Company.................................................... 820,312
47,200 Dial.............................................................. 1,622,500
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ------------
<C> <S> <C>
CONSUMER STAPLES--CONTINUED
10,000 Procter & Gamble Company.......................................... $ 979,375
------------
3,422,187
------------
Retail (2.4%)
38,782 Safeway, Inc. (b)................................................. 1,990,001
------------
Service (1.3%)
25,400 Automatic Data Processing, Inc.................................... 1,050,925
------------
Tobacco (1.5%)
35,400 Philip Morris Companies, Inc...................................... 1,245,637
------------
FINANCIAL (8.4%)
Commercial Finance (2.0%)
32,751 Finova Finance Trust.............................................. 1,698,958
------------
Finance-Diversified (2.0%)
29,200 Federal Home Loan Mortgage Corporation............................ 1,668,050
------------
Insurance (3.1%)
11,818 American International Group...................................... 1,425,546
10,400 Hartford Life..................................................... 572,000
13,500 Nationwide Financial Services..................................... 567,000
------------
2,564,546
------------
Investment Bankers/Brokers (1.3%)
31,500 T. Rowe Price Associates.......................................... 1,082,813
------------
HEALTH CARE (18.1%)
Drugs (9.7%)
12,600 American Home Products Corporation................................ 822,150
29,000 Bristol-Myers Squibb Company...................................... 1,865,063
8,900 Eli Lilly & Company............................................... 755,388
23,200 Merck & Co., Inc.................................................. 1,860,350
14,100 Pfizer, Inc....................................................... 1,956,375
16,400 Schering Plough Corporation....................................... 907,125
------------
8,166,451
------------
Health Care-Diversified (3.4%)
16,500 Abbott Laboratories............................................... 772,406
14,700 Johnson & Johnson................................................. 1,377,206
</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>
10,600 Warner-Lambert Company............................................ $ 701,588
------------
2,851,200
------------
Hospital Management (1.1%)
78,200 Health Management Associates, Inc. (b)............................ 953,063
------------
Medical Products/Supplies (3.9%)
34,800 Guidant Corporation............................................... 2,105,400
47,400 Sybron International Corporation (b).............................. 1,185,000
------------
3,290,400
------------
TECHNOLOGY (28.8%)
13,400 America Online, Inc. (b).......................................... 1,956,400
16,900 BMC Software, Inc. (b)............................................ 626,356
17,100 Cadence Design Systems, Inc. (b).................................. 440,325
22,800 Cisco Systems, Inc. (b)........................................... 2,498,025
24,800 Compaq Computer Corporation....................................... 785,850
32,400 Dell Computer Corporation (b)..................................... 1,324,350
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
15,500 EMC Corporation (b)............................................... $ 1,980,125
33,000 Galileo Electric Company.......................................... 1,596,375
24,500 Intel............................................................. 2,918,563
18,700 Lucent Technologies Incorporated.................................. 2,014,925
41,600 Microsoft Corporation (b)......................................... 3,728,400
7,100 Nokia Oyj (c)..................................................... 1,105,825
57,800 Nova Corporation (b).............................................. 1,517,250
17,325 Paychex, Inc...................................................... 821,855
7,600 Sun Microsystems, Inc. (b)........................................ 949,525
------------
24,264,149
------------
UTILITIES (.8%)
Electric Companies (.8%)
18,400 AES Corporation (b)............................................... 685,400
------------
Total common stock
(cost: $52,222,754)........................................................... 83,021,628
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (1.6%)
$ 944,959 Federated Prime Obligation Fund, current rate 4.860%.............. 944,959
390,000 U.S. Treasury Note........................ 4.572% 05/20/99 387,638
------------
Total short-term securities (cost: $1,332,580).................... 1,332,597
------------
Total investments in securities (cost: $53,555,334)(d)............ $ 84,354,225
------------
------------
</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 1.3% of the net assets in foreign securities as of March 31,
1999.
(d) At March 31, 1999 the cost of securities for federal income tax purposes was
$53,865,849. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.................................................. $ 32,785,091
Gross unrealized depreciation.................................................. (2,296,715)
------------
Net unrealized appreciation.................................................... $ 30,488,376
------------
------------
</TABLE>
8
<PAGE>
ADVANTUS Horizon Fund
Statement of Assets and Liabilities
March 31, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at market value - see accompanying schedule
for detailed listing
(identified cost: $53,555,334)....................................... $ 84,354,225
Cash in bank on demand deposit........................................ 6
Receivable for Fund shares sold....................................... 46,253
Receivable for investment securities sold............................. 481,589
Accrued interest receivable........................................... 4,823
Dividends receivable.................................................. 66,456
Other receivables..................................................... 10,393
--------------
Total assets...................................................... 84,963,745
--------------
<CAPTION>
LIABILITIES
<S> <C>
Payable for investment securities purchased........................... 426,810
Payable for Fund shares redeemed...................................... 300,851
Payable to Adviser.................................................... 110,921
Other payables........................................................ 755
--------------
Total liabilities................................................. 839,337
--------------
Net assets applicable to outstanding capital stock.................... $ 84,124,408
--------------
--------------
Represented by:
Capital stock - authorized 10 billion shares (Class A - 2 billion
shares, Class B -
2 billion shares, Class C - 2 billion shares and 4 billion shares
unallocated) of $.01 par value (note 1)............................. $ 31,808
Additional paid-in capital.......................................... 51,450,515
Accumulated net realized gains from investments..................... 1,843,194
Unrealized appreciation on investments.............................. 30,798,891
--------------
Total - representing net assets applicable to outstanding capital
stock............................................................. $ 84,124,408
--------------
--------------
Net assets applicable to outstanding Class A shares................... $ 58,483,450
--------------
--------------
Net assets applicable to outstanding Class B shares................... $ 22,687,013
--------------
--------------
Net assets applicable to outstanding Class C shares................... $ 2,953,945
--------------
--------------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 2,179,631.............................. $ 26.83
--------------
--------------
Class B - Shares outstanding 886,411................................ $ 25.59
--------------
--------------
Class C - Shares outstanding 114,746................................ $ 25.74
--------------
--------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
ADVANTUS HORIZON FUND
STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest............................................................ $ 35,740
Dividends........................................................... 251,298
--------------
Total investment income........................................... 287,038
--------------
Expenses (note 4):
Investment advisory fee............................................. 306,670
Rule 12b-1 fees - Class A........................................... 75,864
Rule 12b-1 fees - Class B........................................... 101,131
Rule 12b-1 fees - Class C........................................... 13,403
Administrative services fee......................................... 26,200
Custodian fees...................................................... 379
Auditing and accounting services.................................... 9,275
Legal fees.......................................................... 4,750
Directors' fees..................................................... 542
Registration fees................................................... 21,839
Printing and shareholder reports.................................... 14,706
Insurance........................................................... 1,844
Other............................................................... 5,641
--------------
Total expenses.................................................... 582,244
--------------
Investment loss - net............................................. (295,206)
--------------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3).......................... 1,953,485
Net change in unrealized appreciation or depreciation on
investments....................................................... 14,783,596
--------------
Net gains on investments........................................ 16,737,081
--------------
Net increase in net assets resulting from operations.................. $ 16,441,875
--------------
--------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS HORIZON FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1999 AND YEAR ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
Operations:
Investment loss - net..................................... $ (295,206) $ (369,201)
Net realized gain on investments.......................... 1,953,485 8,034,700
Net change in unrealized appreciation or depreciation on
investments............................................. 14,783,596 1,097,908
-------------- --------------
Increase in net assets resulting from operations........ 16,441,875 8,763,407
-------------- --------------
Distributions to shareholders from net realized gains on
investments:
Class A................................................... (4,668,396) (5,149,246)
Class B................................................... (1,807,953) (1,594,390)
Class C................................................... (239,316) (244,774)
-------------- --------------
Total distributions..................................... (6,715,665) (6,988,410)
-------------- --------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A................................................. 5,016,180 11,805,254
Class B................................................. 3,571,037 7,211,314
Class C................................................. 573,075 1,188,730
Proceeds from issuance of shares as a result of reinvested
dividends:
Class A................................................. 4,609,970 5,098,650
Class B................................................. 1,795,826 1,565,569
Class C................................................. 239,316 243,267
Payments for redemption of shares:
Class A................................................. (5,263,011) (11,437,509)
Class B................................................. (2,239,278) (3,569,106)
Class C................................................. (486,853) (928,081)
-------------- --------------
Increase in net assets from capital share
transactions.......................................... 7,816,262 11,178,088
-------------- --------------
Total increase in net assets............................ 17,542,472 12,953,085
Net assets at beginning of period........................... 66,581,936 53,628,851
-------------- --------------
Net assets at end of period................................. $ 84,124,408 $ 66,581,936
-------------- --------------
-------------- --------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(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
through investment in equity securities.
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
Rule 12b-1 fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than Rule 12b-1 fees) and realized and unrealized gains
or losses are allocated to each class of shares based upon its relative net
assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements. Actual
results could differ from those estimates.
INVESTMENTS IN SECURITIES
The Fund's net asset value is generally calculated as of the close of normal
trading on the New York Stock Exchange (typically 3:00 p.m. Central Time).
Investments in securities traded on a national exchange are valued at the last
sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price, by an independent pricing service or at 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.
12
<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.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income and decrease additional paid-in-capital by
$295,206.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from October 1, 1998 to March 31, 1999, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $23,888,650 and $23,277,345, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital
(Advantus Capital or the Adviser), a wholly owned subsidiary of Minnesota Life
Insurance Company (Minnesota Life), formerly 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 (First Data Investor Services Group). Prior to
October 26, 1998, the Fund's transfer agent was Minnesota Life. The fee for
investment management and advisory services is based on the average daily net
assets of the Fund at the annual rate of .80 percent.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
expenses pursuant to Rule 12b-1 under the Investment Company Act of 1940 (as
amended). The Fund pays fees to Ascend Financial Services, Inc. (Ascend), the
underwriter of the Fund and wholly-owned subsidiary of Advantus Capital, to be
used to pay certain expenses incurred in the distribution, promotion and
servicing of the Fund's shares. The Class A Plan provides for a service fee up
to .25 percent of average daily net assets of Class A shares. Prior to February
1, 1999, the Class A Plan provided for a distribution fee up to .30 percent of
average daily net assets of Class A shares. The Class B and Class C Plans
provide for a fee up to 1.00 percent of average daily net assets of Class B and
Class C 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.
13
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)
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.
Effective October 26, 1998, the Fund entered into a new shareholder and
administrative services agreement with Minnesota Life. Under this agreement, the
Fund pays an administrative services fee equal to $5,700 per month to Minnesota
Life for accounting, auditing, legal and other administrative services which
Minnesota Life provides. Prior to February 1, 1999, the administrative services
fee was $3,700 per month. In addition, for shareholder services performed by
Minnesota Life, the Adviser will pay Minnesota Life an annual account servicing
fee as agreed by the Adviser and Minnesota Life.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $101,796.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $4,750.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1998 to March 31, 1999
and the year ended September 30, 1998 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------- -------------------- --------------------
1999 1998 1999 1998 1999 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold....................................... 196,957 498,136 145,772 312,837 23,495 51,773
Issued for reinvested distributions........ 188,094 239,004 76,587 75,735 10,136 11,784
Redeemed................................... (205,710) (479,796) (90,874) (154,958) (19,776) (41,014)
--------- --------- --------- --------- --------- ---------
179,341 257,344 131,485 233,614 13,855 22,543
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
(6) YEAR 2000
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 PERIOD FROM
OCTOBER 1, NOVEMBER 1,
1998 TO YEAR ENDED SEPTEMBER 30, 1993 TO
MARCH 31, ------------------------------------------------------ SEPTEMBER 30,
1999 1998 1997 1996 1995(A) 1994(B)
------------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $ 23.59 $ 23.06 $ 23.07 $ 20.94 $ 17.34 $ 17.64
------------- --------- --------- --------- --------- ---------------
Income from investment
operations:
Net investment loss...... (.07) (.09) (.08) (.10) (.03) --
Net gains on securities
(both realized and
unrealized)............ 5.63 3.48 4.89 3.51 4.17 .25
------------- --------- --------- --------- --------- ---------------
Total from investment
operations........... 5.56 3.39 4.81 3.41 4.14 .25
------------- --------- --------- --------- --------- ---------------
Less distributions:
Dividends from net
investment income...... -- -- -- -- -- --
Distributions from
capital gains.......... (2.32) (2.86) (4.82) (1.28) (.54) (.55)
------------- --------- --------- --------- --------- ---------------
Total distributions.... (2.32) (2.86) (4.82) (1.28) (.54) (.55)
------------- --------- --------- --------- --------- ---------------
Net asset value, end of
period................... $ 26.83 $ 23.59 $ 23.06 $ 23.07 $ 20.94 $ 17.34
------------- --------- --------- --------- --------- ---------------
------------- --------- --------- --------- --------- ---------------
Total return(c)............ 24.50% 16.38% 24.96% 17.23% 24.76% 1.42%
Net assets, end of period
(in thousands)........... $58,483 $ 47,183 $ 40,192 $ 34,435 $ 36,040 $31,387
Ratio of expenses to
average daily net
assets(d)(e)............. 1.30%(f) 1.36% 1.43% 1.41% 1.41% 1.43%(f)
Ratio of net investment
income (loss) to average
daily net assets(d)(e)... (.56)%(f) (.39)% (.39)% (.43)% (.15)% (.01)%(f)
Portfolio turnover rate
(excluding short-term
securities).............. 30.6% 72.6% 71.5% 84.7% 46.8% 43.5%
<CAPTION>
YEAR ENDED
OCTOBER 31,
1993
-------------
<S> <C>
Net asset value, beginning
of period................ $ 16.73
-------------
Income from investment
operations:
Net investment loss...... .05
Net gains on securities
(both realized and
unrealized)............ 1.20
-------------
Total from investment
operations........... 1.25
-------------
Less distributions:
Dividends from net
investment income...... (.05)
Distributions from
capital gains.......... (.29)
-------------
Total distributions.... (.34)
-------------
Net asset value, end of
period................... $ 17.64
-------------
-------------
Total return(c)............ 7.56%
Net assets, end of period
(in thousands)........... $30,015
Ratio of expenses to
average daily net
assets(d)(e)............. 1.31%
Ratio of net investment
income (loss) to average
daily net assets(d)(e)... .27%
Portfolio turnover rate
(excluding short-term
securities).............. 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 assume 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 annual basis.
15
<PAGE>
ADVANTUS HORIZON FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, AUGUST 19,
1998 TO YEAR ENDED SEPTEMBER 30, 1994(B) TO
MARCH 31, ------------------------------------------------------ SEPTEMBER 30,
1999 1998 1997 1996 1995(A) 1994
------------- --------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $ 22.65 $ 22.41 $ 22.65 $ 20.74 $ 17.33 $ 17.11
------------- --------- --------- --------- --------- -------
Income from investment
operations:
Net investment loss...... (.15) (.22) (.19) (.19) (.10) (.01)
Net gains on securities
(both realized and
unrealized)............ 5.41 3.32 4.77 3.38 4.05 .23
------------- --------- --------- --------- --------- -------
Total from investment
operations........... 5.26 3.10 4.58 3.19 3.95 .22
------------- --------- --------- --------- --------- -------
Less distributions:
Dividends from net
investment income...... -- -- -- -- -- --
Distributions from
capital gains.......... (2.32) (2.86) (4.82) (1.28) (.54) --
------------- --------- --------- --------- --------- -------
Total distributions.... (2.32) (2.86) (4.82) (1.28) (.54) --
------------- --------- --------- --------- --------- -------
Net asset value, end of
period................... $ 25.59 $ 22.65 $ 22.41 $ 22.65 $ 20.74 $ 17.33
------------- --------- --------- --------- --------- -------
------------- --------- --------- --------- --------- -------
Total return(c)............ 24.17% 15.48% 24.25% 16.34% 23.65% 1.29%
Net assets, end of period
(in thousands)........... $22,687 $ 17,100 $ 11,684 $ 6,219 $ 2,592 $ 97
Ratio of expenses to
average daily net
assets................... 2.02%(e) 2.07% 2.18% 2.19% 2.24%(d) .30%(f)
Ratio of net investment
income (loss) to average
daily net assets......... (1.27)%(e) (1.11)% (1.13)% (1.19)% (1.05)%(d) (.13)%(f)
Portfolio turnover rate
(excluding short-term
securities).............. 30.6% 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 assume 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 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 PERIOD FROM
OCTOBER 1, MARCH 1,
1998 TO YEAR ENDED SEPTEMBER 30, 1995(B) TO
MARCH 31, --------------------------------------- SEPTEMBER 30,
1999 1998 1997 1996 1995
------------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $ 22.79 $ 22.38 $ 22.67 $ 20.75 $ 17.52
------------- --------- --------- --------- -------
Income from investment
operations:
Net investment loss...... (.15) (.24) (.20) (.15) (.06)
Net gains on securities
(both realized and
unrealized)............ 5.42 3.51 4.73 3.35 3.29
------------- --------- --------- --------- -------
Total from investment
operations........... 5.27 3.27 4.53 3.20 3.23
------------- --------- --------- --------- -------
Less distributions:
Dividends from net
investment income...... -- -- -- -- --
Distributions from
capital gains.......... (2.32) (2.86) (4.82) (1.28) --
------------- --------- --------- --------- -------
Total distributions.... (2.32) (2.86) (4.82) (1.28) --
------------- --------- --------- --------- -------
Net asset value, end of
period................... $ 25.74 $ 22.79 $ 22.38 $ 22.67 $ 20.75
------------- --------- --------- --------- -------
------------- --------- --------- --------- -------
Total return(c)............ 24.07% 15.74% 24.03% 16.33% 18.44%
Net assets, end of period
(in thousands)........... $ 2,954 $ 2,299 $ 1,754 $ 1,018 $ 103
Ratio of expenses to
average daily net
assets................... 2.02%(e) 2.07% 2.18% 2.19% 2.24%(d)(e)
Ratio of net investment
income (loss) to average
daily net assets......... (1.27)%(e) (1.10)% (1.14)% (1.17)% (1.13)%(d)(e)
Portfolio turnover rate
(excluding short-term
securities).............. 30.6% 72.6% 71.5% 84.7% 46.8%
</TABLE>
- ------------
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 share class) at any time as your needs change. Exchanges are at the
then current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make twelve exchanges each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive a check at
specified intervals from your fund account - subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DIVIDEND DEPOSITS: At your request we will deposit your dividends or
systematic withdrawals directly into your checking or savings account instead of
sending you a check.
TELEPHONE EXCHANGE: You may move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same share
class) just by calling our toll-free number. The Telephone Exchange privilege
will automatically be established unless otherwise indicated on the Account
Application. Telephone Exchange may be changed (added/deleted) at any time by
submitting a request in writing.
SYSTEMATIC EXCHANGE: You may move a set amount of money monthly or quarterly
from one Advantus Fund to another Advantus Fund (with identical registrations
within the same share class) to diversify your investment portfolio and take
advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Life insurance premiums from your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge, if any.
SPECIAL PURCHASE PLANS: Special purchase plans enable you to open an Advantus
Fund account for as little as $25 and lower your average share cost through
"dollar-cost averaging." (Dollar-cost averaging does not assure a profit, nor
does it prevent loss in declining markets.) The Automatic Investment Plan allows
you to invest automatically monthly, semi-monthly or quarterly from your
checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Traditional or Roth Individual Retirement Account or other qualified plan
including: SEP IRA's, SIMPLE IRA's, Profit Sharing, 401(k) Money Purchase or
Defined Benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the Account. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Redemption privilege will automatically be established
unless otherwise indicated on the Account
18
<PAGE>
Application. Telephone Redemption may be changed (added/deleted) at any time by
submitting a request in writing. To have the redemption automatically deposited
into your checking account, please send a voided check from your bank. Depending
on the performance of the underlying investment options, the value may be worth
more or less than the original amount invested upon redemption. Some limitations
apply, please refer to the prospectus for details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate and quarterly statements to help you track all of your Advantus Fund
investments and annual tax statements. Semi-annual and annual reports will
provide you with portfolio information, fund performance data and the current
investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005.
Advantus Account Representatives are available Monday through Friday from 8 a.m.
to 4:45 p.m. Central Time. Our voice response system is available 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.
HOW TO INVEST
You can invest in one or more of the eleven Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc., distributor of the
Funds. Contact your representative for information and a prospectus for any of
the Advantus Funds you are interested in. To find a Registered Representative
near you, call the toll-free service line (1-800-665-6005).
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects and
reviews the Fund's investments and provides executive and other personnel for
the Fund's management. (For the Advantus International Balanced Fund, Inc., the
sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)
Advantus Capital Management, Inc. manages thirteen mutual funds containing $3.2
billion in assets in addition to $10.8 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 13 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
Advantus Real Estate Securities Fund
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.
400 ROBERT STREET NORTH [LOGO]
ST. PAUL, MN 55101-2098
ADDRESS SERVICE REQUESTED
F.48636 Rev. 5-1999
