<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS MONEY MARKET FUND
SEPTEMBER 30, 1998
<PAGE>
ADVANTUS MONEY MARKET FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 4
STATEMENT OF ASSETS AND LIABILITIES 7
STATEMENT OF OPERATIONS 8
STATEMENTS OF CHANGES IN NET ASSETS 9
NOTES TO FINANCIAL STATEMENTS 10
INDEPENDENT AUDITORS' REPORT 13
FEDERAL INCOME TAX INFORMATION 14
SHAREHOLDER SERVICES 15
<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 MONEY MARKET FUND
PERFORMANCE UPDATE
[PHOTO]
WAYNE SCHMIDT, CFA
PORTFOLIO MANAGER
The Advantus Money Market Fund is a
mutual fund designed for investors
seeking a high level of current income
consistent with preservation of capital
and liquidity. The Fund seeks to achieve
its objective by concentrating
investments in short-term money market
instruments including U.S. Treasury
Bills, high grade commercial paper and
bank certificates of deposit.
-Seeks to maintain stable net asset value.
-Free checkwriting and telephone redemption.
-Dividends declared daily and paid monthly.
INVESTMENT IN THE ADVANTUS MONEY MARKET FUND IS NEITHER INSURED NOR GUARANTEED
BY THE U.S. GOVERNMENT, AND THERE CAN BE NO ASSURANCE THAT THE FUND WILL BE ABLE
TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE.
PERFORMANCE
For the year ended September 30, 1998, the Advantus Money Market Fund earned a
total return of 4.78 percent.* The seven-day compound annual yield of the Fund
was 4.71 percent* for the same period.
PERFORMANCE ANALYSIS
Under the weight of global financial stress U.S interest rates moved sharply
lower for the year ended September 30, 1998. The yield on the three-month U.S.
Treasury Bill declined 74 basis points, to yield just 4.36 percent at the Fund's
fiscal year end. The Federal Reserve was forced into action in late September
and lowered the Federal Funds rate by 25 basis points to 5.25 percent. This was
their first change in monetary policy since their decision to raise rates by 25
basis points in March 1997. The decline in interest rates has lowered yields on
money market portfolios, but they continue to provide excellent liquidity and
stability in an otherwise volatile market.
Despite the global credit deterioration of Japanese banks, Asian issuers,
European banks, Latin America bonds, and high yield U.S. corporate bonds; high
quality U.S. corporate commercial paper issuers continue to offer excellent
safety and liquidity. The Advantus Money Market Fund has 91 percent of assets
invested in high quality corporate commercial paper.
The Fund holdings are well diversified over a variety of stable industries. The
Fund is void of holdings in the much more volatile bank and brokerage sectors.
Our goal throughout the period has been to maintain or extend the average days
to maturity of the portfolio. In the Fund, the average days to maturity at
period end was 56 days.
OUTLOOK
We will continue to purchase the highest quality commercial paper and seek to
extend the average days to maturity in the Fund. In a falling interest rate
environment, it is advantageous to lock in today's higher rates for as long a
period as possible. The average days to maturity of the Fund will range from 55
to 70 days.
The Federal Reserve has made its initial move to lower short-term interest rates
and this will be followed by quicker, more aggressive moves to lower rates. The
Federal Reserve will need to pump liquidity into a deteriorating global
financial situation to provide stability to nervous markets. The U.S. economic
situation is beginning to show signs of slowing as both the global recession and
the correction in the equity market begins to take its toll on U.S. growth. Over
the next three to six months, money market yields will likely fall below 4.00
percent, but will offer investors the safe haven they may be looking for.
2
<PAGE>
ADVANTUS MONEY
MARKET FUND
SEPTEMBER 30, 1998
AVERAGE DAYS TO MATURITY
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
NUMBER OF DAYS
<S> <C>
10/7/97 43
10/14/97 44
10/21/97 45
10/28/97 45
11/4/97 43
11/11/97 52
11/18/97 51
11/25/97 49
12/2/97 44
12/9/97 43
12/16/97 47
12/23/97 45
12/30/97 43
1/6/98 37
1/13/98 43
1/20/98 46
1/27/98 48
2/3/98 47
2/10/98 56
2/17/98 55
2/24/98 57
3/3/98 57
3/10/98 52
3/17/98 52
3/24/98 52
3/31/98 51
4/7/98 45
4/14/98 39
4/21/98 36
4/28/98 47
5/5/98 50
5/12/98 53
5/19/98 55
5/26/98 51
6/2/98 47
6/9/98 51
6/16/98 50
6/23/98 51
6/30/98 54
7/7/98 47
7/14/98 46
7/21/98 43
7/28/98 49
8/4/98 48
8/11/98 46
8/18/98 49
8/25/98 43
9/1/98 46
9/8/98 49
9/15/98 54
9/22/98 58
9/29/98 53
9/30/98 56
</TABLE>
SEVEN-DAY COMPOUND YIELD*
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PERCENTAGE
<S> <C>
10/7/97 5.47%
10/14/97 4.86%
10/21/97 4.80%
10/28/97 4.76%
11/4/97 4.77%
11/11/97 4.80%
11/18/97 4.82%
11/25/97 4.84%
12/2/97 4.84%
12/9/97 4.86%
12/16/97 4.91%
12/23/97 4.85%
12/30/97 5.01%
1/6/98 4.98%
1/13/98 4.41%
1/20/98 4.78%
1/27/98 4.90%
2/3/98 4.92%
2/10/98 4.75%
2/17/98 4.82%
2/24/98 4.73%
3/3/98 4.70%
3/10/98 4.77%
3/17/98 4.73%
3/24/98 4.76%
3/31/98 4.74%
4/7/98 4.73%
4/14/98 5.40%
4/21/98 4.09%
4/28/98 4.71%
5/5/98 4.83%
5/12/98 4.75%
5/19/98 4.77%
5/26/98 4.99%
6/2/98 4.62%
6/9/98 4.80%
6/16/98 4.82%
6/23/98 4.77%
6/30/98 4.83%
7/7/98 4.86%
7/14/98 4.81%
7/21/98 4.69%
7/28/98 4.81%
8/4/98 4.83%
8/11/98 4.78%
8/18/98 4.79%
8/25/98 4.81%
9/1/98 4.75%
9/8/98 4.67%
9/15/98 4.82%
9/22/98 4.77%
9/29/98 4.74%
9/30/98 4.71%
</TABLE>
The seven-day compound yield is computed by determining the net change in the
value of a hypothetical account having a balance of one share at the beginning
of a seven calendar day period, dividing that change by seven, adding one to the
quotient, raising the sum to the 365th power and subtracting one from the
result.
*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.
3
<PAGE>
ADVANTUS MONEY MARKET FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1998
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- ----------------
<C> <S> <C> <C> <C>
COMMERCIAL PAPER (91.0%)
BASIC MATERIALS (19.0%)
Agriculture Products (10.0%)
$1,290,000 Archer Daniels................................... 5.64% 11/10/98 $ 1,282,082
1,900,000 Archer Daniels................................... 5.48% 01/13/99 1,870,785
3,000,000 Cargill, Inc..................................... 5.39% 02/12/99 2,941,824
----------------
6,094,691
----------------
Chemicals (4.9%)
1,596,000 EI DuPont De Nemours & Company................... 5.65% 10/23/98 1,590,583
1,405,000 EI DuPont De Nemours & Company................... 5.66% 10/28/98 1,399,143
----------------
2,989,726
----------------
Paper and Forest (4.1%)
400,000 Kimberly Clark Corporation (c)................... 5.57% 11/18/98 397,089
2,110,000 Kimberly Clark Corporation (c)................... 5.54% 12/08/98 2,088,447
----------------
2,485,536
----------------
CAPITAL GOODS (2.4%)
Electrical Equipment (2.4%)
1,460,000 Emerson Electric Company......................... 5.58% 10/09/98 1,458,216
----------------
COMMUNICATION SERVICES (6.7%)
Telephone (6.7%)
1,100,000 Ameritech Corporation............................ 5.51% 11/17/98 1,092,254
3,000,000 Bellsouth Telecommunications..................... 5.57% 10/28/98 2,987,696
----------------
4,079,950
----------------
CONSUMER CYCLICAL (15.3%)
Photography/Imagery (4.3%)
2,615,000 Xerox Corporation................................ 5.60% 10/20/98 2,607,399
----------------
Publishing (9.3%)
400,000 McGraw-Hill Company.............................. 5.63% 11/06/98 397,792
2,400,000 McGraw-Hill Company.............................. 5.53% 02/04/99 2,355,048
2,955,000 Tribune Company (c).............................. 5.48% 12/08/98 2,925,161
----------------
5,678,001
----------------
Retail (1.7%)
1,025,000 Toys R Us........................................ 5.62% 10/22/98 1,021,699
----------------
CONSUMER STAPLES (11.2%)
Beverage (1.6%)
1,010,000 Coca-Cola Company................................ 5.42% 12/09/98 999,747
----------------
</TABLE>
See accompanying notes to investments in securities.
4
<PAGE>
ADVANTUS MONEY MARKET FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- ----------------
CONSUMER STAPLES--CONTINUED
<C> <S> <C> <C> <C>
Entertainment (4.9%)
$ 295,000 Walt Disney...................................... 5.62% 10/05/98 $ 294,819
2,700,000 Walt Disney...................................... 5.59% 11/06/98 2,685,188
----------------
2,980,007
----------------
Household Products (4.7%)
2,875,000 Colgate-Palmolive Company (c).................... 5.27% 12/04/98 2,848,674
----------------
ENERGY (3.1%)
Oil & Gas (3.1%)
1,885,000 Shell Oil........................................ 5.54% 11/25/98 1,869,381
----------------
FINANCIAL (19.7%)
Auto Finance (3.5%)
2,150,000 General Motors Acceptance Corporation............ 5.64% 11/19/98 2,133,848
----------------
Banks (4.8%)
3,000,000 Norwest Financial................................ 5.63% 02/09/99 2,940,614
----------------
Commercial Finance (2.1%)
1,300,000 GE Capital Corporation........................... 5.72% 01/29/99 1,276,009
----------------
Consumer Finance (9.3%)
2,890,000 American General Finance Corporation............. 5.65% 12/23/98 2,853,353
2,175,000 Associates Corporation of America................ 5.67% 11/25/98 2,156,580
675,000 Ciesco LP (c).................................... 5.65% 10/22/98 672,812
----------------
5,682,745
----------------
TECHNOLOGY (1.9%)
Technology (1.9%)
1,176,000 Motorola, Inc.................................... 5.59% 10/13/98 1,173,844
----------------
UTILITIES (11.7%)
Electric Companies (2.7%)
1,640,000 Florida Power.................................... 5.56% 10/27/98 1,633,530
----------------
Natural Gas (9.0%)
1,400,000 Con Natural Gas.................................. 5.58% 10/05/98 1,399,144
1,315,000 Laclede Gas Company.............................. 5.64% 10/20/98 1,311,152
1,790,000 Laclede Gas Company.............................. 5.59% 11/02/98 1,781,266
</TABLE>
See accompanying notes to investments in securities.
5
<PAGE>
ADVANTUS MONEY MARKET FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- ----------------
UTILITIES--CONTINUED
<C> <S> <C> <C> <C>
$ 975,000 Nicor Incorporated............................... 5.59% 11/02/98 $ 970,248
----------------
5,461,810
----------------
Total commercial paper (cost: $55,415,427)........................ 55,415,427
----------------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
U.S. GOVERMENT OBLIGATIONS (5.7%)
U.S. Treasury (5.7%)
1,835,000 US Treasury Bill................................. 5.078 - 5.166% 10/01/98 1,835,000
1,640,000 US Treasury Bill................................. 4.907 - 4.967% 11/05/98 1,632,396
-----------
Total U.S. goverment obligations (cost: $3,467,396)........................ 3,467,396
-----------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
OTHER SHORT-TERM SECURITIES (2.9%)
1,773,272 Federated Prime Obligation Fund, current rate 5.47%............... 1,773,272
-----------
Total short-term securities (cost: $1,773,272).................... 1,773,272
-----------
Total investments in securities (cost: $60,656,095)(b)............ $60,656,095
-----------
-----------
</TABLE>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 1 to the financial
statements.
(b) Also represents the cost of securities for federal income tax purposes at
September 30, 1998.
(c) Commercial paper sold within terms of a private placement memorandum, exempt
from registration under Section 4(2) of the Securities Act of 1933, as
amended, and may be sold only to dealers in that program or other
"accredited investors." This security has been determined to be liquid under
guidelines established by the Board of Directors.
6
<PAGE>
ADVANTUS MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at
value--see accompanying schedule for
detailed listing
(identified cost: $60,656,095)........ $60,656,095
Cash in bank on demand deposit......... 85,962
Receivable for Fund shares sold........ 511,533
Accrued interest receivable............ 11,686
-----------
Total assets....................... 61,265,276
-----------
LIABILITIES
Payable for Fund shares redeemed....... 301,643
Payable to Adviser..................... 49,932
Other payables......................... 12,417
-----------
Total liabilities.................. 363,992
-----------
Net assets applicable to outstanding
capital stock......................... $60,901,284
-----------
-----------
Represented by:
Capital stock--authorized 10 billion
shares of $.01 par value;
outstanding 60,901,284 shares....... $ 609,013
Additional paid-in capital........... 60,292,271
-----------
Total--representing net assets
applicable to outstanding capital
stock............................. $60,901,284
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
7
<PAGE>
ADVANTUS MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
Investment income:
Interest............................. $3,185,849
----------
Expenses (note 3):
Investment advisory fee.............. 288,221
Distribution fees.................... 172,928
Administrative services fee.......... 36,800
Transfer agent fees.................. 149,913
Custodian fees....................... 17,569
Auditing and accounting services..... 16,500
Legal fees........................... 5,325
Bank fees............................ 18,701
Directors' fees...................... 1,039
Registration fees.................... 46,902
Printing and shareholder reports..... 46,135
Insurance............................ 4,950
Other................................ 8,619
----------
Total expenses................... 813,602
Less fees and expenses waived or
absorbed:
Distribution fees.................. (172,928)
Other fund expenses................ (150,711)
----------
Total fees and expenses waived or
absorbed......................... (323,639)
----------
Total net expenses............... 489,963
----------
Investment income--net........... 2,695,886
----------
Net increase in net assets resulting
from operations..................... $2,695,886
----------
----------
</TABLE>
See accompanying notes to financial statements.
8
<PAGE>
ADVANTUS MONEY MARKET 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 income--net............... $ 2,695,886 $ 2,298,424
------------ ------------
Increase in net assets resulting
from operations................. 2,695,886 2,298,424
------------ ------------
Distributions to shareholders from
net investment income............... (2,695,886) (2,298,424)
------------ ------------
Capital share transactions at a
constant net asset value of $1.00:
Proceeds from sales.................... 90,768,754 95,544,918
Proceeds from issuance of shares as a
result of reinvested dividends........ 2,664,950 2,270,394
Payments for redemption of shares...... (87,023,337) (87,277,056)
------------ ------------
Increase in net assets from
capital share transactions...... 6,410,367 10,538,256
------------ ------------
Total increase in net assets..... 6,410,367 10,538,256
Net assets at beginning of year........ 54,490,917 43,952,661
------------ ------------
Net assets at end of year.............. $ 60,901,284 $ 54,490,917
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
9
<PAGE>
ADVANTUS MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Advantus Money Market 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 a high
level of current income consistent with preservation of capital and maintenance
of liquidity.
The significant accounting policies of 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
All securities are valued at the close of each business day. Pursuant to
Rule 2a-7 of the Investment Company Act of 1940 (as amended), all securities are
valued at amortized cost which approximates market value, in order to maintain a
constant net asset value of $1.00.
Security transactions are accounted for on the date the securities are
purchased or sold. 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.
Net investment income 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 may differ from
their ultimate characterization for federal income tax purposes. Also, due to
the timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains (losses)
were recorded by the Fund.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared daily and paid monthly in
cash or reinvested in additional shares. Capital gains, if any, are paid
annually.
(2) INVESTMENT SECURITY TRANSACTIONS
For the year ended September 30, 1998, purchases of securities and proceeds
from sales aggregated $302,824,661 and $295,937,921, respectively.
(3) 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
10
<PAGE>
ADVANTUS MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(3) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
manages the Fund's assets and provides research, statistical and advisory
services and pays related office rental and executive expenses and salaries. The
fee for investment management and advisory services is based on the average
daily net assets of the Fund at the annual rate of .50 percent.
The Fund pays Minnesota Life a flat fee of $977 per month plus $1.50 per
month per account for transfer agent fees and expenses. Effective October 26,
1998, the Fund's transfer agent is First Data Investor Services Group, Inc.,
(First Data).
The Fund has adopted a Plan of Distribution relating to the payment of
certain distribution expenses pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (as amended). The Plan provides for a fee up to .30 percent
of average daily net assets to be paid 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. Ascend is currently waiving all of
the distribution fees from the Fund.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, organizational costs and other
miscellaneous expenses.
The Fund pays an administrative services fee, equal to $3,100 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 $3,000 per month. Effective October 26, 1998, Minnesota Life
became the shareholder services agent for the fund. Under the new shareholder
and administrative services agreement, in addition to the administrative
services fee, the Fund pays a shareholder services fee, equal to $5 per
shareholder account annually, to Minnesota Life for shareholder services which
Minnesota Life provides.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the year ended September
30, 1998, Advantus Capital voluntarily agreed to absorb $150,711 in expenses
which were otherwise payable by the Fund.
As of September 30, 1998, Minnesota Life and subsidiaries and the directors
and officers of the Fund as a whole own 23,755,139 shares or 39.0 percent of the
Fund's total shares outstanding.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $5,285.
(4) YEAR 2000 (UNAUDITED)
In 1995, Minnesota Life began addressing computer systems requirements and
applications to be Year 2000 ready. Based on a current study, Minnesota Life
plans to spend approximately $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.
11
<PAGE>
ADVANTUS MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
PERIOD FROM
NOVEMBER 1,
YEAR ENDED SEPTEMBER 30, 1993 TO YEAR ENDED
------------------------------------------ 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........ $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- --------- ------- ------------
Income from investment operations:
Net investment income..................... .047 .046 .046 .049 .027 .025
--------- --------- --------- --------- ------- ------------
Total from investment operations........ .047 .046 .046 .049 .027 .025
--------- --------- --------- --------- ------- ------------
Less distributions:
Dividends from net investment income...... (.047) (.046) (.046) (.049) (.027) (.025)
--------- --------- --------- --------- ------- ------------
Total distributions..................... (.047) (.046) (.046) (.049) (.027) (.025)
--------- --------- --------- --------- ------- ------------
Net asset value, end of period.............. $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000 $ 1.000
--------- --------- --------- --------- ------- ------------
--------- --------- --------- --------- ------- ------------
Total return (c)............................ 4.78% 4.69% 4.74% 5.02% 2.73% 2.45%
Net assets, end of period (in thousands).... $ 60,901 $ 54,491 $ 43,953 $ 36,107 $ 25,719 $ 23,106
Ratio of expenses to average daily net
assets (d)................................. .85% .85% .85% .85% .85%(e) .85%
Ratio of net investment income to average
daily net assets (d)....................... 4.68% 4.61% 4.64% 4.93% 2.95%(e) 2.45%
</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. For periods
less than one year, total return presented has not been annualized.
(d) The Fund's Adviser and Distributor voluntarily waived or absorbed $323,639,
$288,928, $261,733, $240,231, $222,862 and $210,392 in expenses for the
years ended September 30, 1998, 1997, 1996 and 1995, the period ended
September 30, 1994, and the year ended October 31, 1993, respectively. If
the Fund had been charged for these expenses, the ratio of expenses to
average daily net assets would have been 1.41%, 1.43%, 1.51%, 1.66%, 1.86%
and 1.74%, respectively, and the investment income to average daily net
assets would have been 4.12%, 4.03%, 3.98%, 4.12%, 1.94% and 1.56%,
respectively.
(e) Adjusted to annual basis.
12
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Advantus Money Market Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Money
Market 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. 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
13
<PAGE>
ADVANTUS MONEY MARKET 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.
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
Income distributions--taxable as dividend income, none qualifying for deduction by corporations
October 31, 1997............................................................................................ $ .0040
November 30, 1997........................................................................................... .0039
December 31, 1997........................................................................................... .0041
January 31, 1998............................................................................................ .0040
February 28, 1998........................................................................................... .0036
March 31, 1998.............................................................................................. .0039
April 30, 1998.............................................................................................. .0038
May 31, 1998................................................................................................ .0040
June 30, 1998............................................................................................... .0039
July 31, 1998............................................................................................... .0040
August 31, 1998............................................................................................. .0040
September 30, 1998.......................................................................................... .0038
---------
$ .0470
---------
---------
</TABLE>
14
<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
15
<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. Contact your representative for information and a prospectus for any of
the Advantus Funds you are interested in. To find a Registered Representative
near you, call the toll-free service line (1-800-665-6005).
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use the Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management. (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
16
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-888-AFS-1838
(1-888-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES, INC. BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
F.48643 Rev. 11-1998
