<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS BOND FUND
SEPTEMBER 30, 1997
<PAGE>
ADVANTUS BOND FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND
LIABILITIES 10
STATEMENT OF OPERATIONS 11
STATEMENTS OF CHANGES IN
NET ASSETS 12
NOTES TO FINANCIAL
STATEMENTS 13
INDEPENDENT AUDITORS'
REPORT 18
FEDERAL INCOME TAX
INFORMATION 19
SHAREHOLDER SERVICES 21
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholders:
The 1997 fiscal year has been a rewarding one for investors. On the equity side,
despite the anticipation of a market downturn, the equity market continued to
climb. Over the twelve month period ending September 30, 1997, the S&P 500*
gained 40.5 percent; over 26 percent of that gain was for the trailing six
months. We saw a slight market decline of 5.5 percent in August, but stocks
bounced back by the end of September.
As the stock market continues to push forward, some investors lose sight of the
importance of maintaining a position of their assets in bonds. Investors who
diversify their portfolio assets between stocks and bonds can better position
their portfolio in the event of stock market downturns. There was not a stock
market correction of major significance during this reporting period.
The bond market demonstrated strong performance throughout 1997. For the twelve
month period ending September 30, 1997, the Lehman Corporate Bond Index**
returned 10.8 percent. This is a 6 percent increase over last year's return.
Stable interest rates and low inflation have contributed to the bond market's
stellar performance.
Your Advantus Family of Funds includes a range of equity and bond offerings. I
recommend that you talk with your Ascend financial representative to ensure that
your portfolio has an appropriate balance for your situation. As we continue to
watch the stock market hit new highs, we cannot assume that upward moves are a
continuing trend.
In the pages that follow, the Fund's manager will give you more information
about the economy and conditions within the market that may have 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.
We assert that a long-range view of investing provides the greatest benefit to
our shareholders. We encourage you to maintain a long-range view, and we believe
that you will derive the greatest benefit by doing so.
Sincerely,
/s/ Paul Gooding
Paul Gooding, President
Advantus Capital Management, Inc.
*The S&P 500 is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall. The Index includes
approximately 380 industrials, 10 transportations, 45 financials, and 65
utilities.
**The Lehman Corporate Bond Index includes all fixed-rate, publicly traded,
investment grade corporate debt with at least one year to maturity and $50
million par value outstanding.
<PAGE>
ADVANTUS BOND FUND
PERFORMANCE UPDATE
[PHOTO]
WAYNE SCHMIDT, CFA
PORTFOLIO MANAGER
The Advantus Bond Fund is a mutual fund
designed for investors seeking a high
level of current income consistent with
prudent investment risk. The Fund plans
to achieve its objective primarily by
investing in a diversified portfolio of
investment grade short, intermediate and
long-term debt securities. The Fund
manager varies the proportion of assets
invested in each maturity category
depending upon the evaluation of market
patterns and economic trends by the
Fund's investment adviser.
- Dividends declared daily and paid
monthly.
- Capital gains distributions paid
annually.
PERFORMANCE
The Advantus Bond Fund's performance for the year ended September 30, 1997, for
each class of shares offered was as follows:
<TABLE>
<S> <C>
Class A.......................... 10.6 percent*
Class B.......................... 9.7 percent*
Class C.......................... 9.6 percent*
</TABLE>
For the same period, the Lehman Corporate Bond Index** returned 10.8 percent.
The Fund's peer group, the Lipper A-Rated Bond Funds,+ returned 9.6 percent for
the same period.
Interest rates continued to be range bound over the past year, but began to test
the lower end of the range as signs of low inflation and a sidelined Federal
Reserve encouraged bond investors. When the twelve month period ended, the
interest rate on the two-year U.S. Treasury Note had decreased 32 basis points
to yield 5.78 percent. The thirty-year U.S. Treasury Bond closed the period
yielding 6.40 percent, 52 basis points lower. Bond prices rise when interest
rates fall, so the movement to lower interest rates had a positive impact on the
total returns for the period.
PORTFOLIO RECAP
The themes for the year were active interest rate management and finding the
best relative value in the corporate bond market. When interest rates peaked
north of seven percent in early April and then again in late May, duration was
extended. As rates declined into late April and then again in June, the Fund's
maturity was shortened. Thirty-year U.S. Treasury Bonds were bought and sold to
adjust the duration targets. These moves benefited the Fund as capital gains
were realized on the price appreciation. The price appreciation coupled with
interest income produced above average returns for the period. On the corporate
bond side, our exposure to cable/media and the brokerage sectors was a positive
contributor to the overall portfolio performance as their credit spreads
tightened, driving their prices higher. Our holdings in some U.S. pay
international bonds detracted from the overall total return as their credit
spreads widened late in the year due to financial uncertainties in the Southeast
Asia. The volatility in this sector has created an opportunity for future
periods.
The overall credit quality of the Bond Fund is high single A, with all of the
securities possessing an investment grade rating by either Moody's or S&P. At
period end, 80 percent of the Fund's securities were invested in corporate
bonds, 12 percent in mortgaged backed securities, 7 percent in U.S. Government
bonds, and 1 percent in money market instruments.
2
<PAGE>
ADVANTUS BOND FUND
SEPTEMBER 30, 1997
OUTLOOK
At the beginning of the calendar year, our expectation was that 1997 bond market
would be very similar to the bond market experienced in 1996. Through the first
nine months of the calendar year this statement has held true, and we expect the
trend of range bound interest rates to continue. There are two main forces at
work in the bond market that will keep interest rates range bound for the
foreseeable future. The force pushing interest rates lower (bond prices higher)
is low inflation. The force pulling interest rates higher (bond prices lower) is
strong economic growth. As the economy is likely to continue producing solid
economic growth with low inflation, long-term interest rates will likely
fluctuate between six and seven percent. These boundaries will hold until
economic growth slows to below 1.5 percent or inflation rises above 3.5 percent.
We believe future quarterly economic growth will fluctuate between 1 percent and
4 percent, while maintaining at least a 2.5 percent average. Long-term inflation
will likely be contained by the forces of cheap global labor, technology and
productivity enhancements, and remain below 3 percent. These factors could then
reduce price volatility and allow fixed income investors to earn an attractive
coupon payment as we move forward into 1998.
We will continue to take advantage of opportunities to buy undervalued
securities and extend duration during periods of market weakness and reduce the
Fund's exposure to interest rate risk during periods of market strength.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge.
**The Lehman Brother's Corporate Bond Index includes all fixed-rate, publicly
traded, investment grade corporate debt with at least one year to maturity and
$50 million par value outstanding.
+Average return of 126 A-rated bond funds according to Lipper Analytical
Services, Inc.
3
<PAGE>
ADVANTUS BOND FUND
SEPTEMBER 30, 1997
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL
$10,000 INVESTMENT IN ADVANTUS BOND FUND, LEHMAN BROTHER'S
CORPORATE BOND INDEX AND CONSUMER PRICE INDEX
On the following charts you can see how the total return for each of the three
classes of shares of the Advantus Bond Fund compared to the Lehman Brother's
Corporate Bond Index and the Consumer Price Index. The three lines in the Class
A graph represent the cumulative total return of a hypothetical $10,000
investment made on September 30, 1987 through September 30, 1997. The three
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 Bond Fund (August 19, 1994 and March 1, 1995 for
Class B and C, respectively) through September 30, 1997.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 5.0%
Five year 5.7%
Ten year 7.7%
(Thousands) Class A Lehman Brother's Index CPI
9/30/87 $10,000 $10,000 $10,000
10/31/87 $9,543 $10,014 $10,083
10/31/88 $10,163 $11,343 $10,512
10/31/89 $11,267 $12,751 $10,994
10/31/90 $11,769 $13,295 $11,686
10/31/91 $13,493 $15,639 $12,028
10/31/92 $14,942 $17,376 $12,413
10/31/93 $17,041 $20,011 $12,746
9/30/94 $15,904 $19,020 $13,132
9/30/95 $18,298 $22,252 $13,421
9/30/96 $19,034 $23,308 $13,824
9/30/97 $21,047 $25,835 $14,131
</TABLE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 4.7%
Since inception (8/19/94) 7.4%
(Thousands) Class B Lehman Brother's Index CPI
8/19/94 $10,000 $10,000 $10,000
9/30/94 $9,876 $9,819 $10,067
9/30/95 $10,801 $11,488 $10,289
9/30/96 $11,252 $12,033 $10,598
9/30/97 $12,480 $13,337 $10,833
</TABLE>
4
<PAGE>
ADVANTUS BOND FUND
SEPTEMBER 30, 1997
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C>
One year 9.6%
Since inception (3/1/95) 8.5%
(Thousands) Class C Lehman Brother's Index CPI
3/01/95 $10,000 $10,000 $10,000
9/30/95 $10,925 $11,087 $10,146
9/30/96 $11,265 $11,613 $10,450
9/30/97 $12,348 $12,872 $10,682
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial professional's investment advice. Individuals cannot buy even an
unmanaged index fund without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS BOND FUND
SEPTEMBER 30, 1997
TEN LARGEST BOND HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF BOND
COMPANY VALUE PORTFOLIO
- -------------------------------------------------- ------------ -----------
<S> <C> <C>
Lehman Brothers Inc--7.360%, 12/15/03............. $ 1,029,326 4.6%
Federal Home Loan Bank--7.105%, 05/06/02.......... 1,018,753 4.6%
PNC Bank Corporation--6.728%, 01/25/07............ 912,938 4.1%
Morgan Stanley--6.875%, 03/01/07.................. 906,279 4.0%
Midland Bank PLC--7.625%, 06/15/06................ 846,018 3.8%
Premark International Inc--10.500%, 09/15/00...... 832,597 3.7%
TCI Communications--8.750%, 08/01/15.............. 827,085 3.7%
Joy Technologies Incorporated--10.250%,
09/01/03......................................... 812,581 3.6%
Associates Corporation of North America-- 6.625%,
05/15/01......................................... 809,093 3.6%
General Electric Capital Corporation--6.660%,
05/01/18......................................... 758,231 3.4%
------------ ---
$ 8,752,901 39.1%
------------ ---
------------ ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Preferred Stock 5.1%
Cash and Other
Assets/Liabilities 2.8%
U.S. Treasury .8%
U.S. Government Agencies 12.6%
AAA Rated 14.7%
AA Rated 8.7%
A Rated 25.7%
BBB Rated 27.5%
BB Rated 2.1%
</TABLE>
6
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1997
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ------------- ------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (92.1%)
GOVERNMENT OBLIGATIONS (17.2%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (13.4%)
$ 1,000,000 Federal Home Loan Bank........................... 7.105% 05/06/02 $ 1,018,753
355,380 Federal National Mortgage Association............ 7.000% 09/01/17 358,216
500,000 Federal Home Loan Mortgage Corporation........... 7.030% 04/05/04 502,998
272,000 FHR PAC Bond..................................... 5.000% 04/15/23 264,139
268,108 Government National Mortgage Association......... 7.000% 04/15/22 269,548
411,037 Government National Mortgage Association......... 8.000% 04/15/25 424,966
208,663 Government National Mortgage Association......... 7.000% 03/15/23 209,368
200,000 U.S. Treasury Bond............................... 6.625% 02/15/27 204,750
------------
3,252,738
------------
STATE AND LOCAL GOVERNMENT OBLIGATIONS (3.8%)
400,000 California Housing Finance Agency................ 7.760% 08/01/25 406,625
250,000 California Housing Finance Agency................ 8.160% 02/01/28 260,391
253,772 Wyoming Community Development Authority.......... 6.850% 06/01/10 254,169
------------
921,185
------------
Total government obligations (cost: $4,055,583)........................ 4,173,923
------------
CORPORATE OBLIGATIONS (74.9%)
BASIC MATERIALS (2.2%)
Chemicals (2.2%)
518,621 Ciba Geigy Corporation 144A Issue (c)............ 7.240% 01/02/16 532,214
------------
CAPITAL GOODS (3.4%)
Engineering/Construction (3.4%)
750,000 Joy Technologies Incorporated.................... 10.250% 09/01/03 812,581
------------
COMMUNICATION SERVICES (2.9%)
Telephone (2.9%)
700,000 Bellsouth Telecommunications..................... 6.250% 05/15/03 697,773
------------
CONSUMER CYCLICAL (1.8%)
Building Materials (1.8%)
450,000 Masco Corporation................................ 6.125% 09/15/03 440,425
------------
CONSUMER STAPLES (12.0%)
Beverage (2.1%)
500,000 Anheuser-Busch Companies, Inc.................... 7.100% 06/15/07 512,164
------------
Broadcasting (3.4%)
750,000 TCI Communications............................... 8.750% 08/01/15 827,085
------------
Entertainment (3.0%)
750,000 Time Warner Incorporated 144A Issue (c).......... 6.100% 12/30/01 730,028
------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ------------- ------------
<C> <S> <C> <C> <C>
CORPORATE OBLIGATIONS--CONTINUED
Household Product (3.5%)
$ 750,000 Premark International Inc........................ 10.500% 09/15/00 $ 832,597
------------
ENERGY (5.2%)
Oil and Gas (5.2%)
500,000 Dresser Industries Inc........................... 8.000% 04/15/03 535,128
700,000 Petroleum Geo-Services ASA (b)................... 7.500% 03/31/07 726,916
------------
1,262,044
------------
FINANCIAL (41.2%)
Auto Finance (2.0%)
500,000 Ford Motor Credit Company........................ 6.250% 12/08/05 485,979
------------
Banks (13.7%)
700,000 Banco Santiago Bank (b).......................... 7.000% 07/18/07 700,879
800,000 Midland Bank PLC (b)............................. 7.625% 06/15/06 846,018
300,000 Norwest Corporation.............................. 7.680% 05/10/02 304,367
700,000 St. George Bank 144A Issue (b) (c)............... 8.485% 12/31/49 748,047
700,000 Wells Fargo Capital.............................. 7.960% 12/15/26 714,322
------------
3,313,633
------------
Collateralized Mortgage Obligations/Asset Backed Securities (5.6%)
300,000 CFSB Finance Company 144A Issue (c).............. 7.542% 11/15/05 304,781
150,578 Green Tree Financial Corporation, Series
1995-A.......................................... 7.250% 07/15/05 151,323
900,000 PNC Bank Corporation............................. 6.728% 01/25/07 912,938
------------
1,369,042
------------
Commercial Finance (3.1%)
750,000 General Electric Capital Corporation............. 6.660% 05/01/18 758,231
------------
Consumer Finance (3.3%)
800,000 Associates Corporation of North America.......... 6.625% 05/15/01 809,092
------------
Finance--Diversified (2.1%)
500,000 Guangdong Enterprises 144A Issue (b) (c)......... 8.875% 05/22/07 506,835
------------
Insurance (1.5%)
350,000 URC Holdings Corporation 144A Issue (c).......... 7.875% 06/30/06 369,250
------------
Investment Bankers/Brokers (7.8%)
1,000,000 Lehman Brothers Inc.............................. 7.360% 12/15/03 1,029,326
900,000 Morgan Stanley................................... 6.875% 03/01/07 906,279
------------
1,935,605
------------
Real Estate Investment Trust (2.1%)
500,000 Security Capital Pacific Trust................... 7.500% 02/15/14 513,228
------------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ------------- ------------
<C> <S> <C> <C> <C>
CORPORATE OBLIGATIONS--CONTINUED
UTILITES (6.2%)
Electric Companies (6.2%)
$ 750,000 Enersis S.A. (b)................................. 6.900% 12/01/06 $ 749,400
750,000 Wisconsin Electric Power Company................. 5.125% 09/15/98 744,810
------------
1,494,210
------------
Total corporate obligations (cost: $17,915,258)........................ 18,202,016
------------
Total long-term debt securities (cost: $21,970,841).................... 22,375,939
------------
<CAPTION>
SHARES
- -------------
<C> <S> <C> <C> <C>
PREFERRED STOCKS (5.1%)
FINANCIAL (5.1%)
Real Estate Investment Trust (5.1%)
14,000 Duke Realty Investments Inc.--7.99%.................................... 705,250
10,000 Security Capital Industrial, Series C--8.54%........................... 534,380
------------
Total preferred stock (cost: $1,200,000)............................... 1,239,630
------------
<CAPTION>
PRINCIPAL
- -------------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (2.5%)
$ 200,000 PPG Industries, Inc. CP.......................... 5.613% 10/29/97 199,134
250,000 Wal-Mart Stores CP............................... 5.571% 10/15/97 249,428
150,000 U.S. Treasury Bill............................... 4.945% 12/11/97 148,550
------------
Total short-term securities (cost: $597,180)........................... 597,112
------------
Total investments in securities (cost: $23,768,021) (d)................ $ 24,212,681
------------
------------
</TABLE>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) The Fund held 17.6% of the net assets in foreign securities as of September
30, 1997.
(c) Represents ownership in a restricted security which has not been registered
with the Security and Exchange Commission under the Securities Act of 1933.
(See note 6 to the financial statements.) Information concerning the
restricted securities held at September 30, 1997, which includes acquisition
date and cost, is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY: DATE COST
-------------------------------------------------- ---------- ------------
<S> <C> <C>
St. George Bank 144A Issue........................ 06/12/97 $ 700,000
CFSB Finance Company 144A Issue................... 05/15/96 291,938
Guangdong Enterprises 144A Issue.................. 08/06/97 516,090
URC Holdings Corporation 144A Issue............... 09/26/97 367,392
Ciba Geigy Corporation 144A Issue................. Various 518,621
Time Warner Incorporated 144A Issue............... 05/06/97 710,603
------------
$ 3,104,644
------------
------------
</TABLE>
(d) At September 30, 1997 the cost of securities for federal income tax purposes
was $23,768,021. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation..................... $ 474,950
Gross unrealized depreciation..................... (30,290)
------------
Net unrealized appreciation....................... $ 444,660
------------
------------
</TABLE>
9
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1997
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying
schedule for detailed listing (identified cost: $23,768,021)..... $ 24,212,681
Cash in bank on demand deposit.................................... 128,145
Receivable for Fund shares sold................................... 58,633
Accrued interest receivable....................................... 375,257
-------------
Total assets.................................................. 24,774,716
-------------
LIABILITIES
Payable for Fund shares repurchased............................... 91,373
Payable for investment securities purchased....................... 374,359
Payable to Adviser................................................ 24,725
-------------
Total liabilities............................................. 490,457
-------------
Net assets applicable to outstanding capital stock................ $ 24,284,259
-------------
-------------
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)... $ 23,291
Additional paid-in capital...................................... 23,979,164
Undistributed net investment income............................. 15,801
Accumulated net realized losses from investments................ (178,657)
Unrealized appreciation of investments.......................... 444,660
-------------
Total--representing net assets applicable to outstanding
capital stock................................................ $ 24,284,259
-------------
-------------
Net assets applicable to outstanding Class A Shares............... $ 17,121,871
-------------
-------------
Net assets applicable to outstanding Class B Shares............... $ 6,263,466
-------------
-------------
Net assets applicable to outstanding Class C Shares............... $ 898,922
-------------
-------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 1,642,025........................... $ 10.43
-------------
-------------
Class B--Shares outstanding 600,784............................. $ 10.43
-------------
-------------
Class C--Shares outstanding 86,285.............................. $ 10.42
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1997
<TABLE>
<S> <C>
Investment income:
Interest........................................................ $ 1,535,196
Dividends....................................................... 50,146
-------------
Total investment income..................................... 1,585,342
-------------
Expenses (note 4):
Investment advisory fee......................................... 154,304
Distribution fees--Class A...................................... 49,460
Distribution fees--Class B...................................... 47,412
Distribution fees--Class C...................................... 8,158
Administrative services fee..................................... 43,200
Custodian fees.................................................. 8,889
Auditing and accounting services................................ 9,284
Legal fees...................................................... 2,767
Directors' fees................................................. 445
Registration fees............................................... 33,292
Printing and shareholder reports................................ 28,329
Insurance....................................................... 4,894
Other........................................................... 9,044
-------------
Total expenses.............................................. 399,478
Less fees and expenses waived or absorbed:
Class A distribution fees..................................... (32,973)
Other fund expenses........................................... (96,058)
-------------
Total fees and expenses waived or absorbed.................. (129,031)
-------------
Total net expenses.......................................... 270,447
-------------
Investment income--net...................................... 1,314,895
-------------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)...................... 239,770
Net change in unrealized appreciation or depreciation on
investments.................................................... 630,935
-------------
Net gains on investments...................................... 870,705
-------------
Net increase in net assets resulting from operations.............. $ 2,185,600
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Operations:
Investment income--net.................................... $ 1,314,895 $ 1,109,617
Net realized gains (losses) on investments................ 239,770 (23,772)
Net change in unrealized appreciation or depreciation on
investments.............................................. 630,935 (375,184)
------------- -------------
Increase in net assets resulting from operations...... 2,185,600 710,661
------------- -------------
Distributions to shareholders from investment income--net:
Class A................................................. (1,017,311) (965,303)
Class B................................................. (251,336) (120,874)
Class C................................................. (43,228) (17,365)
------------- -------------
Total distributions................................... (1,311,875) (1,103,542)
------------- -------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A................................................. 3,674,438 3,513,269
Class B................................................. 3,408,787 2,681,828
Class C................................................. 541,433 678,300
Proceeds from shares issued as a result of reinvested
dividends:
Class A................................................. 648,833 569,404
Class B................................................. 216,906 108,590
Class C................................................. 38,398 16,513
Payments for redemption of shares:
Class A................................................. (4,367,419) (2,541,805)
Class B................................................. (1,099,162) (342,179)
Class C................................................. (375,711) (136,300)
------------- -------------
Increase in net assets from capital share
transactions......................................... 2,686,503 4,547,620
------------- -------------
Total increase in net assets.......................... 3,560,228 4,154,739
Net assets at beginning of year............................. 20,724,031 16,569,292
------------- -------------
Net assets at end of year (including undistributed net
investment income of $15,801 and $12,781, respectively).... $ 24,284,259 $ 20,724,031
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(1) ORGANIZATION
The Advantus Bond 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 prudent investment risk.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class A
shares at net asset value after a specified holding period. Such holding periods
decline as the amount of the purchase increases and range from 28 to 84 months
after purchase for Class B shares and 40 to 96 months after purchase for Class C
shares. All three classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than distribution fees) and realized and unrealized
gains or losses are allocated to each class of shares based upon its relative
net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price, by an independent pricing service or at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities.
When market quotations are not readily available, securities are valued at fair
value as determined in good faith under procedures adopted by the Board of
Directors. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Interest income, including amortization of bond premium
and discount computed on a level yield basis, is accrued daily.
13
<PAGE>
ADVANTUS BOND 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.
For federal income tax purposes, the Fund had a capital loss carryover at
September 30, 1997 of $178,657, which, if not offset by subsequent capital
gains, will expire September 30, 2003. It is unlikely the Board of Directors
will authorize a distribution of any net realized capital gains until the
available capital loss carryover has been offset or expired.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary book-to-tax
differences. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (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. Realized gains, if any, are paid
annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the year ended September 30, 1997, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities,
aggregated $40,912,635 and $37,232,538, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital
Management, Inc. (Advantus Capital or the Adviser), a wholly-owned subsidiary of
MIMLIC Asset Management Company (MIMLIC Management). Under the agreement,
Advantus Capital manages the Fund's assets and provides research, statistical
and advisory services and pays related office rental and executive expenses and
salaries. In addition, as part of the advisory fee, Advantus Capital pays the
expenses of the Fund's transfer, dividend disbursing and redemption agent, The
Minnesota Mutual Life Insurance Company (Minnesota Mutual), the parent of MIMLIC
Management. The fee for investment management and advisory services is based on
the average daily net assets of the Fund at the annual rate of .70 percent.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to Ascend Financial Services,
Inc. (Ascend), formerly known as MIMLIC Sales Corporation, the underwriter of
the Fund and wholly-owned subsidiary of MIMLIC Management, to be used to pay
certain expenses incurred in the distribution, promotion and servicing of the
Fund's shares. The Class A Plan provides for a fee up to .30 percent of average
daily net assets of Class A shares. The Class B and Class C Plans provide for a
fee up to 1.00 percent of average daily net assets of Class B and Class C
shares, respectively. The Class B and Class C 1.00 percent fees are comprised of
a .75 percent distribution fee and a .25 percent service fee. Ascend is
14
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
currently waiving that portion of Class A distribution fees which exceeds, as a
percentage of average daily net assets, .10 percent. Ascend waived Class A
distribution fees in the amount of $32,973 for the year ended September 30,
1997.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reporting fees, legal fees, auditing and accounting services fees and other
miscellaneous expenses.
The Fund pays an administrative services fee, equal to $3,600 per month, to
Minnesota Mutual for accounting, auditing, legal and other administrative
services which Minnesota Mutual 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, 1997, Advantus Capital voluntarily agreed to absorb $96,058 in expenses that
were otherwise payable by the Fund.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $132,436.
As of September 30, 1997, Minnesota Mutual and subsidiaries and the
directors and officers of the Fund as a whole owned 380,850 Class A shares which
represents 23.2 percent of the total outstanding Class A shares.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $2,767.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the years ended September 30, 1997 and 1996 were
as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- --------------------- --------------------
1997 1996 1997 1996 1997 1996
---------- ---------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold............................................ 359,147 345,079 335,052 263,964 53,035 67,269
Issued for reinvested distributions............. 63,405 56,247 21,179 10,745 3,757 1,636
Redeemed........................................ (428,519) (249,660) (107,760) (33,988) (36,827) (13,540)
---------- ---------- ---------- --------- --------- ---------
(5,967) 151,666 248,471 240,721 19,965 55,365
---------- ---------- ---------- --------- --------- ---------
---------- ---------- ---------- --------- --------- ---------
</TABLE>
(6) RESTRICTED SECURITIES
At September 30, 1997, investments in securities includes issues which
generally cannot be offered for sale to the public without first being
registered under the Securities Act of 1933 (restricted security). In the event
the securities are registered, those carrying registration rights allow for the
issuer to bear all the related costs; for issues without rights, the Fund may
incur such costs. The Fund currently limits investments in securities that are
not readily marketable, including restricted securities, to 10% of net assets at
the time of the purchase. Securities are valued by procedures described in note
2. The aggregate value of restricted securities held by the Fund at September
30, 1997 was $3,191,155 which represents 13.1% of net assets.
15
<PAGE>
ADVANTUS BOND 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
NOVEMBER 1,
YEAR ENDED SEPTEMBER 30, 1993 TO YEAR ENDED
--------------------------------- SEPTEMBER 30, OCTOBER 31,
1997 1996 1995(a) 1994(b) 1993
--------- --------- ----------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 10.03 $ 10.24 $ 9.50 $ 11.21 $ 10.72
--------- --------- ----------- ------- ------------
Income from investment
operations:
Net investment income....... .63 .62 .64 .53 .63
Net gains or losses on
securities (both realized
and unrealized)............ .40 (.22) .74 (1.24) .78
--------- --------- ----------- ------- ------------
Total from investment
operations............... 1.03 .40 1.38 (.71) 1.41
--------- --------- ----------- ------- ------------
Less distributions:
Dividends from net
investment income.......... (.63) (.61) (.64) (.53) (.63)
Distributions from capital
gains...................... -- -- -- (.47) (.29)
--------- --------- ----------- ------- ------------
Total distributions....... (.63) (.61) (.64) (1.00) (.92)
--------- --------- ----------- ------- ------------
Net asset value, end of
period....................... $ 10.43 $ 10.03 $ 10.24 $ 9.50 $ 11.21
--------- --------- ----------- ------- ------------
--------- --------- ----------- ------- ------------
Total return (d).............. 10.6% 4.0% 15.1% (6.7)% 14.0%
Net assets, end of period (in
thousands)................... $ 17,122 $ 16,528 $ 15,315 $ 13,879 $ 14,494
Ratio of expenses to average
daily net assets (e)......... 1.00% 1.00% 1.00% 1.00%(f) 1.00%
Ratio of net investment income
to average daily net assets
(e).......................... 6.18% 6.08% 6.58% 5.79%(f) 5.78%
Portfolio turnover rate
(excluding short-term
securities).................. 180.5% 222.6% 270.7% 163.5% 139.5%
</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) During 1994, the Fund changed its fiscal year end from October 31 to
September 30.
(c) Commencement of operations.
(d) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not been
annualized.
16
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------------------- -------------------------------------
PERIOD FROM PERIOD FROM
AUGUST 19, YEAR ENDED MARCH 1,
YEAR ENDED SEPTEMBER 30, 1994(c) TO SEPTEMBER 30, 1995(c) TO
--------------------------------- SEPTEMBER 30, -------------------- SEPTEMBER 30,
1997 1996 1995(a) 1994 1997 1996 1995
--------- --------- ----------- ----------------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 10.02 $ 10.23 $ 9.50 $ 9.68 $ 10.02 $ 10.23 $ 9.67
--------- --------- ----------- ----- --------- --------- ------
Income from investment
operations:
Net investment income....... .54 .53 .55 .06 .54 .52 .33
Net gains or losses on
securities (both realized
and unrealized)............ .41 (.21) .73 (.18) .40 (.21) .55
--------- --------- ----------- ----- --------- --------- ------
Total from investment
operations............... .95 .32 1.28 (.12) .94 .31 .88
--------- --------- ----------- ----- --------- --------- ------
Less distributions:
Dividends from net
investment income.......... (.54) (.53) (.55) (.06) (.54) (.52) (.32)
Distributions from capital
gains...................... -- -- -- -- -- -- --
--------- --------- ----------- ----- --------- --------- ------
Total distributions....... (.54) (.53) (.55) (.06) (.54) (.52) (.32)
--------- --------- ----------- ----- --------- --------- ------
Net asset value, end of
period....................... $ 10.43 $ 10.02 $ 10.23 $ 9.50 $ 10.42 $ 10.02 $ 10.23
--------- --------- ----------- ----- --------- --------- ------
--------- --------- ----------- ----- --------- --------- ------
Total return (d).............. 9.7% 3.1% 13.9% (1.2)% 9.6% 3.1% 9.3%
Net assets, end of period (in
thousands)................... $ 6,263 $ 3,532 $ 1,142 $ 51 $ 899 $ 665 $ 112
Ratio of expenses to average
daily net assets (e)......... 1.90% 1.90% 1.90% .22%(g) 1.90% 1.90% 1.90%(f)
Ratio of net investment income
to average daily net assets
(e).......................... 5.32% 5.19% 5.61% .69%(g) 5.30% 5.20% 5.54%(f)
Portfolio turnover rate
(excluding short-term
securities).................. 180.5% 222.6% 270.7% 163.5% 180.5% 222.6% 270.7%
</TABLE>
- ------------
(e) The Fund's Adviser and Distributor voluntarily absorbed or waived $129,031,
$120,750, $129,155, $107,448 and $86,877 in expenses for the years ended
September 30, 1997, 1996, 1995, 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 1.64%, 1.68%, 1.88%, 1.83% and 1.70%, respectively,
and the ratio of net investment income to average daily net assets would
have been 5.54%, 5.40%, 5.70%, 4.95% and 5.08%, respectively. If Class B
shares had been charged for these expenses, the ratio of expenses to average
daily net assets would have been 2.34%, 2.38%, 2.56% and .35%, respectively,
and the ratio of net investment income to average daily net assets would
have been 4.88%, 4.71%, 4.95% and .56%, respectively, the years ended
September 30, 1997, 1996, 1995 and the period ended September 30, 1994. If
Class C shares had been charged for these expenses, the ratio of expenses to
average daily net assets would have been 2.34%, 2.38% and 2.56%,
respectively, and the ratio of net investment income to average daily net
assets would have been 4.86%, 4.72% and 4.88%, respectively, the years ended
September 30, 1997 and 1996 and the period ended September 30, 1995.
(f) Adjusted to an annual basis.
(g) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Bond Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Bond Fund,
Inc. (the Fund) as of September 30, 1997 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 three years then ended,
the period from November 1, 1993 to September 30, 1994 and for the year ended
October 31, 1993. These financial statements and the financial highlights are
the responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and the financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased but not received, we request confirmations
from brokers, and where replies are not received, we carry out other appropriate
auditing procedures. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of September 30, 1997 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 7, 1997
18
<PAGE>
ADVANTUS BOND 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, 1997. Dividends for the 1997 calendar year will
be reported to you on Form 1099-Div in late January 1998. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A
Income distributions--taxable as dividend income, 3.8% qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ---------------------------------------- ---------
<S> <C>
October 31, 1996........................ $ .0527
November 30, 1996....................... .0501
December 31, 1996....................... .0537
January 31, 1997........................ .0539
February 28, 1997....................... .0469
March 31, 1997.......................... .0553
April 30, 1997.......................... .0440
May 31, 1997............................ .0556
June 30, 1997........................... .0539
July 31, 1997........................... .0483
August 31, 1997......................... .0506
September 30, 1997...................... .0646
---------
$ .6296
---------
---------
</TABLE>
CLASS B
Income distributions--taxable as dividend income, 3.8% qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ---------------------------------------- ---------
<S> <C>
October 31, 1996........................ $ .0449
November 30, 1996....................... .0425
December 31, 1996....................... .0459
January 31, 1997........................ .0461
February 28, 1997....................... .0398
March 31, 1997.......................... .0476
April 30, 1997.......................... .0367
May 31, 1997............................ .0479
June 30, 1997........................... .0466
July 31, 1997........................... .0404
August 31, 1997......................... .0427
September 30, 1997...................... .0584
---------
$ .5395
---------
---------
</TABLE>
19
<PAGE>
ADVANTUS BOND FUND
FEDERAL INCOME TAX INFORMATION--CONTINUED
CLASS C
Income distributions--taxable as dividend income, 3.8% qualifying for deduction
by corporations
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ---------------------------------------- ---------
<S> <C>
October 31, 1996........................ $ .0449
November 30, 1996....................... .0424
December 31, 1996....................... .0459
January 31, 1997........................ .0461
February 28, 1997....................... .0398
March 31, 1997.......................... .0476
April 30, 1997.......................... .0366
May 31, 1997............................ .0479
June 30, 1997........................... .0463
July 31, 1997........................... .0404
August 31, 1997......................... .0427
September 30, 1997...................... .0584
---------
$ .5390
---------
---------
</TABLE>
20
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account--subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE TRANSFER: You may transfer money from one Advantus account to any
other Advantus account you own just by calling our toll free number. Sign up for
telephone exchanges on the Advantus Application or complete the telephone
authorization form.
SYSTEMATIC TRANSFER: If you have an Advantus Money Market account you may
transfer a set amount of money to another Advantus Fund to diversify your
investment portfolio and take advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums 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 on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Our 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). One of these plans--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
Individual Retirement Account or other qualified plan including SEPS, SIMPLE,
profit sharing, money purchase or defined benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account. Amounts
over $1,000 may be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Sign up for
21
<PAGE>
telephone redemption on the Advantus Application or complete a Service Request
Form. To have the redemption automatically deposited into your checking account,
please send a voided check from your bank. Depending on the performance of the
underlying investment options, the value may be worth more or less than the
original amount invested upon redemption. Some limitations apply, please refer
to the prospectus for details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, 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).
Our voice response system is available from 7 a.m. to 3 a.m. Central Time Monday
through Friday, and 8 a.m. to 5 p.m. on Saturday. This system allows you to
access current net asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through your local
registered representative of Ascend Financial Services, Inc. (formerly known as
MIMLIC Sales Corporation), distributor of the Funds. Contact your representative
for information and a prospectus for any of the Advantus Funds you are
interested in.
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.
Advantus Capital Management, Inc. manages twelve mutual funds containing
$2.5 billion in assets in addition to $1.8 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
22
<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
FORWARDING AND RETURN POSTAGE GUARANTEED,
ADDRESS CORRECTION REQUESTED
F.48645 Rev 11-1997
