<PAGE>
[LOGO]
Semi-Annual Report to Shareholders
Advantus Bond Fund
March 31, 1998
<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
SHAREHOLDER SERVICES 18
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholders:
Investors experienced a positive financial environment with moderate economic
growth and low inflation throughout the six-month reporting period. Fears of
inflation in our economy have dissipated as negative economic events in Asia
unfolded and took on global implications earlier in the reporting period.
The "Asian Flu" severely affected several Far Eastern currencies and stock
markets, leaving a trail of bankruptcies, uncertainties, and fears in its wake.
In fact, a "flight to quality" poured assets into U.S. markets, particularly the
bond market, which is a popular destination for investors during periodic
flights to quality.
Broadly speaking, both equity and fixed income securities have demonstrated
notable results this reporting period. Indices, such as the S&P 500,* which
returned 16.3 percent at the end of the six-month period; and the Lehman
Brothers Government Corporate Bond Index,** which returned 4.8 percent for the
same period, reflected the GENERAL strength of the equity and fixed income
markets respectively.
As investors, we all enjoy "market watching." We have witnessed the financial
markets change, sometimes significantly, because of actual events or because of
mere perceptions in those markets. Keeping a long-range view of investing is
important because it smoothes out the highs and lows. We believe that investors
derive the greatest benefit by maintaining a long-range perspective on
investing.
The investment professionals at Advantus Capital Management continue to put
their money management expertise to work on your behalf. We appreciate your
continued participation in the Advantus Funds and urge you to maintain a
long-term investment perspective.
Sincerely,
[SIGNATURE]
Robert E. Hunstad, President
Advantus Funds
*The S&P 500 is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall. The Index includes
approximately 380 industrials, 10 transportations, 45 financials, and 65
utilities.
**The Lehman Brothers Government Corporate Bond Index is an unmanaged benchmark
composite of the Lehman Brothers Government Bond Index which includes all
publicly issued debt of the U.S. Government and Agencies and The Lehman Brothers
Corporate Bond Index which includes all publicly issued, fixed rate,
nonconvertible investment grade dollar-denominated, SEC registered corporate
debt.
<PAGE>
ADVANTUS 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 six month period ended March 31,
1998, for each class of shares offered was as follows:
<TABLE>
<S> <C>
Class A.......................... 4.1 percent*
Class B.......................... 3.6 percent*
Class C.......................... 3.7 percent*
</TABLE>
Its benchmark, the Lehman Brothers Government Corporate Bond Index,** returned
4.8 percent for the same period.
In prior reporting periods, the Lehman Brothers Corporate Bond Index+ was used
as the Fund's benchmark. The current benchmark, the Lehman Brothers Government
Corporate Bond Index,** better fits our stated investment objective than did the
Lehman Brothers Corporate Bond Index.+
PORTFOLIO ANALYSIS
The fixed income markets continue to be locked in battle between strong economic
growth and low inflation. The past six months saw interest rates trade in a
tight range, and they finished the period at the lower end of the range. The
two-, five- and 10-year U.S. Treasury notes declined between 22 and 45 basis
points to yield 5.56 percent, 5.61 percent and 5.65 percent, respectively, while
the 30-year bond declined 47 basis points to yield 5.93 percent.
Among the three major sectors in the bond market; corporates, mortgages and
treasuries, performance was quite even for the period. Corporate bonds overcame
a difficult fourth quarter in calendar year 1997 and a poor January 1998
performance as credit spreads widened due the Asian crisis, a heavy new supply
of corporate bonds and an overall lack of liquidity. Corporate bond buyers
returned to the market in early February, and by the end of March, corporate
bonds had regained much of their spread widening. Mortgage-backed securities
tend to perform well in a stable interest rate environment, as was the case
during this period. U.S. Treasuries continue to be in strong demand as a
balanced fiscal budget and talk of reduced treasury supply in the upcoming
months have created a strong bid for that market.
The Fund's relative overweighting in corporate bonds was a drag on performance
during the first four months of the period. We maintained the corporate
positions and were rewarded in February and March as credit spreads began to
tighten. Improving credit trends in Time Warner Incorporated, Lehman Brothers,
Inc., and Morgan Stanley Dean Witter helped these positions appreciate as their
credit spreads tightened. The U.S. Treasury portion of the Fund was used to
adjust the duration of the Fund from a neutral position of 5.4 years to 5.8
years at the end of the period. Exposure to cash was kept below 5 percent of the
Fund.
2
<PAGE>
ADVANTUS BOND FUND
MARCH 31, 1998
OUTLOOK
In the Fund, we will maintain the overweighting in the corporate bond sector. We
believe the fundamentals of this market should continue to be as attractive as
they were during the last eight weeks of the period. Corporate cash flows and
profits appear to be strong again thus far in 1998. This will set the stage for
credit rating agencies to issue more credit upgrades than downgrades.
We will continue to use the U.S. Treasury market to adjust the duration of the
Fund. We believe that 30-year U.S. Treasury Bonds will trade this year in a
range between 5.4 percent and 6.2 percent. As either extreme is approached, we
will use this as an opportunity to shorten or lengthen the Fund duration. This
will provide an opportunity to turn interest rate volatility into incremental
returns for the Fund.
Growth and inflation will likely drive the overall interest rate environment in
the U.S. Currently we have strong growth with low inflation, and the market is
at equilibrium. If growth slows and inflation remains low, we believe long bond
yields will be at 5 percent. If growth continues to be strong and inflation
rises, bond yields will likely spike higher, potentially reaching 6.5 to 7
percent. Our view, given the Asian crisis, the strong U.S. dollar, a recession
in Japan, and the coming of the European Monetary Union, is that U.S. economic
growth will likely begin to slow during the second half of 1998, paving the way
for lower interest rates. This will be positive for bond fund investors who may
expect to achieve mid to high single-digit return potential for the year.
*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. Investment returns and principal values will fluctuate so that shares
upon redemption may be worth more or less than their original cost.
**The Lehman Brothers Government Corporate Bond Index is an unmanaged benchmark
composite of the Lehman Brothers Government Bond Index which includes all
publicly issued debt of the U.S. Government and Agencies and The Lehman Brothers
Corporate Bond Index which includes all publicly issued, fixed rate,
nonconvertible investment grade dollar-denominated, SEC registered corporate
debt.
+The Lehman Brothers Corporate Bond Index includes all publicly issued, fixed
rate, nonconvertible investment grade dollar-denominated, SEC registered
corporate debt.
3
<PAGE>
ADVANTUS BOND FUND
MARCH 31, 1998
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL
$10,000 INVESTMENT IN ADVANTUS BOND FUND,
LEHMAN BROTHERS CORPORATE BOND INDEX,
LEHMAN BROTHERS GOVERNMENT 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 Brothers
Corporate Bond Index, Lehman Brothers Government Corporate Bond Index, and the
Consumer Price Index. The four lines in the Class A graph represent the
cumulative total return of a hypothetical $10,000 investment made on March 31,
1988 through March 31, 1998. The four 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 Advantus Bond Fund
(August 19, 1994 and March 1, 1995 for Class B and C, respectively) through
March 31, 1998.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C> <C>
One year 6.6%
Five year 5.4%
Ten year 7.8%
(Thousands)
Lehman Brothers Lehman Brothers
Corporate Government
Class A Bond Index CPI Corporate Index
3/31/88 $10,000 $10,000 $10,000 $10,000
10/31/88 9,788 10,532 10,292 10,470
10/31/89 10,851 11,839 10,763 11,741
10/31/90 11,335 12,344 11,441 12,387
10/31/91 12,995 14,520 11,775 14,291
10/31/92 14,391 16,132 12,153 15,796
10/31/93 16,413 18,579 12,479 17,990
9/30/94 15,317 17,659 12,856 17,178
9/30/95 17,623 20,660 13,139 19,351
9/30/96 18,332 21,640 13,533 20,222
9/30/97 20,270 23,986 13,834 22,163
3/31/98 21,101 25,063 13,894 24,806
</TABLE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
<S> <C> <C> <C> <C>
Lehman Brothers Government
Class B Corporate Index CPI Corporate Index
8/19/94 $10,000 $10,000 $10,000 $10,000
9/30/94 9,876 9,819 10,067 9,853
9/30/95 10,801 11,488 10,289 11,099
9/30/96 11,252 12,033 10,598 11,599
9/30/97 12,480 13,337 10,833 12,712
3/31/98 12,934 13,936 10,880 14,228
Average annual total
return:
One year 6.1%
Since inception (8/19/94) 7.4%
(Thousands)
</TABLE>
4
<PAGE>
ADVANTUS BOND FUND
MARCH 31, 1998
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
LEHMAN BROTHERS
<S> <C> <C> <C> <C>
Lehman Brothers Government
Class C Corporate Index CPI Corporate Index
3/01/95 $10,000 $10,000 $10,000 $10,000
9/30/95 10,925 11,087 10,146 10,939
9/30/96 11,265 11,613 10,450 11,431
9/30/97 12,348 12,872 10,682 12,529
3/31/98 12,801 13,450 10,728 14,023
Average annual total
return:
One year 11.3%
Since inception (3/1/95) 8.3%
(Thousands)
</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 shares 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
MARCH 31, 1998
TEN LARGEST BOND HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF BOND
COMPANY VALUE PORTFOLIO
- ------------------------------ ----------- -----------
<S> <C> <C>
US Treasury Note--6.375%,
09/30/01..................... $ 2,604,983 11.0%
US Treasury Note--6.125%,
11/15/27..................... 1,640,499 6.9%
Lehman Brothers, Inc.--6.625%,
02/15/08..................... 995,520 4.2%
FNMA--6.140%, 03/24/03........ 995,267 4.2%
Time Warner Incorporated-144A
Issue-- 6.100%, 12/30/01..... 989,220 4.2%
PNC Bank Corporation--6.728%,
01/25/07..................... 931,370 3.9%
Morgan Stanley Dean
Witter--6.875%, 03/01/07..... 923,167 3.9%
Sony Corporation--6.125%,
03/04/03..................... 897,278 3.8%
TCI Communications--8.750%,
08/01/15..................... 872,055 3.7%
Bradley Operating LP--7.000%,
11/15/04..................... 855,303 3.6%
----------- ---
$11,704,662 49.4%
----------- ---
----------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
U.S. TREASURY 15.7%
<S> <C>
U.S. Government Agencies 6.5%
AAA Rated 10.6%
AA Rated 3.9%
A Rated 22.8%
BBB Rated 26.2%
BB Rated 1.7%
Preferred Stock 8.0%
Cash & Other
Assets/Liabilities 4.6%
</TABLE>
6
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1998
(UNAUDITED)
(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 (87.4%)
GOVERNMENT OBLIGATIONS (25.5%)
U.S. TREASURY (15.7%)
$1,600,000 US Treasury Note................................. 6.125% 11/15/27 $ 1,640,499
2,550,000 US Treasury Note................................. 6.375% 09/30/01 2,604,983
-----------
4,245,482
-----------
FEDERAL NATIONAL MORTGAGE ASSOCIATION (4.9%)
1,000,000 FNMA............................................. 6.140% 03/24/03 995,267
318,888 FNMA............................................. 7.000% 09/01/17 325,530
-----------
1,320,797
-----------
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION (1.6%)
217,800 GNMA............................................. 7.000% 04/15/22 220,664
199,959 GNMA............................................. 7.000% 03/15/23 202,467
-----------
423,131
-----------
STATE AND LOCAL GOVERNMENT OBLIGATIONS (3.3%)
400,000 California Housing Finance Agency................ 7.760% 08/01/25 411,000
250,000 California Housing Finance Agency................ 8.160% 02/01/28 262,500
236,613 Wyoming Community Development.................... 6.850% 06/01/10 237,205
-----------
910,705
-----------
Total government obligations (cost: $6,801,506)..................... 6,900,115
-----------
CORPORATE OBLIGATIONS (61.9%)
CAPITAL GOODS (2.8%)
Waste Management (2.8%)
750,000 WMX Technologies, Inc............................ 6.250% 10/15/00 747,769
-----------
COMMUNICATION SERVICES (2.8%)
Telecommunication (2.8%)
750,000 Cable and Wireless Communication (b)............. 6.625% 03/06/05 753,904
-----------
CONSUMER CYCLICAL (5.0%)
Building Materials (1.7%)
450,000 Masco Corporation................................ 6.125% 09/15/03 447,977
-----------
Leisure (3.3%)
900,000 Sony Corporation (b)............................. 6.125% 03/04/03 897,278
-----------
CONSUMER STAPLES (11.7%)
Beverage (1.9%)
500,000 Anheuser-Busch Companies, Inc.................... 7.100% 06/15/07 520,109
-----------
Broadcasting (3.2%)
750,000 TCI Communications............................... 8.750% 08/01/15 872,055
-----------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- -----------
CORPORATE OBLIGATIONS--CONTINUED
<C> <S> <C> <C> <C>
Entertainment (3.6%)
$1,000,000 Time Warner Incorporated-144A Issue (c).......... 6.100% 12/30/01 $ 989,220
-----------
Household Product (3.0%)
750,000 Premark International, Inc....................... 10.500% 09/15/00 823,033
-----------
ENERGY (2.0%)
Oil & Gas (2.0%)
500,000 Baroid Corporation............................... 8.000% 04/15/03 540,043
-----------
FINANCIAL (34.9%)
Banks (5.8%)
700,000 St. George Bank-144A Issue (b)(c)................ 8.485% 12/31/49 734,090
800,000 Wells Fargo Capital.............................. 7.960% 12/15/26 836,186
-----------
1,570,276
-----------
Collateralized Mortgage Obligations/Asset-Backed Securities (4.5%)
300,000 CFSB Finance Company-144A Issue (c).............. 7.180% 11/15/05 298,875
900,000 PNC Bank Corporation............................. 6.728% 01/25/07 931,370
-----------
1,230,245
-----------
Commercial Finance (2.8%)
750,000 General Electric Capital Corporation............. 6.660% 05/01/18 760,362
-----------
Consumer Finance (3.0%)
800,000 Associates Corporation of North America.......... 6.625% 05/15/01 812,312
-----------
Finance-Diversified (3.6%)
500,000 Guangdong Enterprises-144A Issue (b) (c)......... 8.875% 05/22/07 451,080
525,000 National Collegiate.............................. 7.240% 09/20/14 527,625
-----------
978,705
-----------
Insurance (3.0%)
800,000 Provident Companies, Inc......................... 7.250% 03/15/28 801,808
-----------
Investment Bankers/Brokers (7.1%)
1,000,000 Lehman Brothers, Inc............................. 6.625% 02/15/08 995,520
900,000 Morgan Stanley Dean Witter....................... 6.875% 03/01/07 923,167
-----------
1,918,687
-----------
Real Estate Investment Trust (5.1%)
850,000 Bradley Operating LP............................. 7.000% 11/15/04 855,303
500,000 Security Capital Pacific Trust................... 7.500% 02/15/14 517,847
-----------
1,373,150
-----------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- -----------
CORPORATE OBLIGATIONS--CONTINUED
<C> <S> <C> <C> <C>
UTILITIES (2.7%)
Electric Companies (2.7%)
$ 750,000 Enersis S.A. (b)................................. 6.900% 12/01/06 $ 735,773
-----------
Total corporate obligations (cost: $16,530,436)..................... 16,772,706
-----------
Total long-term debt securities (cost: $23,331,942)................. 23,672,821
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ----------
<C> <S> <C>
PREFERRED STOCK (8.0%)
FINANCIAL (8.0%)
Real Estate Investment Trust (8.0%)
16,000 Duke Realty Investments, Inc.--7.99%............. 836,000
8,000 Nationwide Health Property, Inc.--7.68%.......... 809,000
10,000 Security Capital Industrial, Series C--8.54%..... 532,810
-----------
Total preferred stock (cost: $2,091,552)......... 2,177,810
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (2.6%)
$ 465,000 US Treasury Bill................................. 5.125% 05/21/98 461,751
235,000 US Treasury Bill................................. 5.168% 06/25/98 232,192
-----------
Total short-term securities (cost: $693,959)........................ 693,943
-----------
Total investments in securities (cost: $26,117,453) (d)............. $26,544,574
-----------
-----------
</TABLE>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) The Fund held 13.2% of the net assets in foreign securities as of March 31,
1998.
(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 March 31, 1998, 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
Time Warner Incorporated 144A Issue.... Various 956,508
-----------
$ 2,464,536
-----------
-----------
</TABLE>
(d) At March 31, 1998 the cost of securities for federal income tax purposes was
$26,128,705. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $504,090
Gross unrealized depreciation.......... (88,221)
--------
Net unrealized appreciation............ $415,869
--------
--------
</TABLE>
9
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market
value--see accompanying schedule for
detailed listing
(identified cost: $26,117,453)........ $26,544,574
Cash in bank on demand deposit......... 167,205
Receivable for Fund shares sold........ 126,824
Receivable for investment securities
sold.................................. 793,053
Accrued interest receivable............ 321,386
-----------
Total assets....................... 27,953,042
-----------
LIABILITIES
Payable for investment securities
purchased............................. 723,561
Payable for Fund shares redeemed....... 60,439
Payable to Adviser..................... 71,896
-----------
Total liabilities.................. 855,896
-----------
Net assets applicable to outstanding
capital stock......................... $27,097,146
-----------
-----------
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)...................... $ 25,716
Additional paid-in capital........... 26,533,343
Undistributed net investment
income.............................. 14,160
Accumulated net realized gains from
investments......................... 96,806
Unrealized appreciation on
investments......................... 427,121
-----------
Total--representing net assets
applicable to outstanding capital
stock............................. $27,097,146
-----------
-----------
Net assets applicable to outstanding
Class A shares........................ $18,355,156
-----------
-----------
Net assets applicable to outstanding
Class B shares........................ $ 7,462,727
-----------
-----------
Net assets applicable to outstanding
Class C shares........................ $ 1,279,263
-----------
-----------
Shares outstanding and net asset value
per share:
Class A--Shares outstanding
1,741,661........................... $ 10.54
-----------
-----------
Class B--Shares outstanding
708,387............................. $ 10.53
-----------
-----------
Class C--Shares outstanding
121,518............................. $ 10.53
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest............................. $811,226
Dividends............................ 84,359
--------
Total investment income.......... 895,585
--------
Expenses (note 4):
Investment advisory fee.............. 89,441
Distribution fees--Class A........... 26,598
Distribution fees--Class B........... 33,575
Distribution fees--Class C........... 5,538
Administrative service fee........... 21,800
Custodian fees....................... 4,800
Auditing and accounting services..... 6,145
Legal fees........................... 3,108
Registration fees.................... 16,667
Printing and shareholder reports..... 19,734
Insurance............................ 2,447
Other................................ 3,442
--------
Total expenses................... 233,295
Less fees and expenses waived or
absorbed by Adviser:
Class A distribution fees.......... (13,175)
Other fund expenses................ (52,587)
--------
Total fees and expenses waived or
absorbed......................... (65,762)
--------
Total net expenses............... 167,533
--------
Investment income--net........... 728,052
--------
Realized and unrealized gains (losses)
on investments:
Net realized gains on investments
(note 3)............................ 275,463
Net change in unrealized appreciation
or depreciation on investments...... (17,539)
--------
Net gains on investments......... 257,924
--------
Net increase in net assets resulting
from operations....................... $985,976
--------
--------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTH PERIOD ENDED MARCH 31, 1998 AND YEAR ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Operations:
Investment income--net............... $ 728,052 $ 1,314,895
Net realized gain on investments..... 275,463 239,770
Net change in unrealized appreciation
or depreciation on investments...... (17,539) 630,935
----------- -----------
Increase in net assets resulting
from operations................. 985,976 2,185,600
----------- -----------
Distributions to shareholders from net
investment income:
Class A............................ (528,922) (1,017,311)
Class B............................ (172,364) (251,336)
Class C............................ (28,407) (43,228)
----------- -----------
Total distributions.............. (729,693) (1,311,875)
----------- -----------
Capital share transactions (notes 4 and
6):
Proceeds from sales:
Class A............................ 2,870,262 3,674,438
Class B............................ 2,075,613 3,408,787
Class C............................ 606,164 541,433
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 358,687 648,833
Class B............................ 151,187 216,906
Class C............................ 27,008 38,398
Payments for redemption of shares:
Class A............................ (2,178,894) (4,367,419)
Class B............................ (1,091,458) (1,099,162)
Class C............................ (261,965) (375,711)
----------- -----------
Increase in net assets from
capital share transactions...... 2,556,604 2,686,503
----------- -----------
Total increase in net assets..... 2,812,887 3,560,228
Net assets at beginning of period...... 24,284,259 20,724,031
----------- -----------
Net assets at end of period (including
undistributed net investment income of
$14,160 and $15,801, respectively).... $27,097,146 $24,284,259
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
(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
March 31, 1998 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 period ended March 31, 1998, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities,
aggregated $26,093,745 and $24,117,261, 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
currently waiving that portion of Class A distribution fees which exceeds, as a
percentage of average daily net
14
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
assets, .25 percent. Prior to January 30, 1998, Ascend waived that portion of
Class A distribution fees which exceeded, as a percentage of average daily net
assets, .10%. Ascend waived Class A distribution fees in the amount of $13,175
for the period ended March 31, 1998.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reporting fees, legal, auditing and accounting services fees and other
miscellaneous expenses.
The Fund pays an administrative services fee, equal to $3,700, to Minnesota
Mutual for accounting, auditing, legal and other administrative services which
Minnesota Mutual provides. Prior to February 1, 1998, the administrative
services fee was $3,600.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the period ended March 31,
1998, Advantus Capital voluntarily agreed to absorb $52,587 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 $83,975.
As of March 31, 1998, Minnesota Mutual and subsidiaries and the directors
and officers of the Fund as a whole owned 381,801 Class A shares which
represents 21.9 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 $3,108.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1997 to March 31, 1998
and the year ended September 30, 1997 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- ---------------------- --------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold........................................... 272,370 359,147 196,800 335,052 57,522 53,035
Issued for reinvested distributions............ 34,015 63,405 14,305 21,179 2,559 3,757
Redeemed....................................... (206,749) (428,519) (103,502) (107,760) (24,848) (36,827)
---------- ---------- ---------- ---------- --------- ---------
99,636 (5,967) 107,603 248,471 35,233 19,965
---------- ---------- ---------- ---------- --------- ---------
---------- ---------- ---------- ---------- --------- ---------
</TABLE>
(6) RESTRICTED SECURITIES
At March 31, 1998, 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 March 31, 1998 was
$2,473,265 which represents 9.1% 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 PERIOD FROM
OCTOBER 1, NOVEMBER 1,
1997 TO YEAR ENDED SEPTEMBER 30, 1993 TO YEAR ENDED
MARCH 31, ------------------------------- 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....................... $ 10.43 $ 10.03 $ 10.24 $ 9.50 $ 11.21 $ 10.72
------------ --------- --------- --------- ------- ------------
Income from investment
operations:
Net investment income....... .31 .63 .62 .64 .53 .63
Net gains or losses on
securities (both realized
and unrealized)............ .11 .40 (.22) .74 (1.24) .78
------------ --------- --------- --------- ------- ------------
Total from investment
operations............... .42 1.03 .40 1.38 (.71) 1.41
------------ --------- --------- --------- ------- ------------
Less distributions:
Dividends from net
investment income.......... (.31) (.63) (.61) (.64) (.53) (.63)
Distributions from capital
gains...................... -- -- -- -- (.47) (.29)
------------ --------- --------- --------- ------- ------------
Total distributions....... (.31) (.63) (.61) (.64) (1.00) (.92)
------------ --------- --------- --------- ------- ------------
Net asset value, end of
period....................... $ 10.54 $ 10.43 $ 10.03 $ 10.24 $ 9.50 $ 11.21
------------ --------- --------- --------- ------- ------------
------------ --------- --------- --------- ------- ------------
Total return (d).............. 4.1% 10.6% 4.0% 15.1% (6.7)% 14.0%
Net assets, end of period (in
thousands)................... $ 18,355 $ 17,122 $ 16,528 $ 15,315 $ 13,879 $ 14,494
Ratio of expenses to average
daily net assets (e)......... 1.05%(f) 1.00% 1.00% 1.00% 1.00%(f) 1.00%
Ratio of net investment income
to average daily net assets
(e).......................... 5.95%(f) 6.18% 6.08% 6.58% 5.79%(f) 5.78%
Portfolio turnover rate
(excluding short-term
securities).................. 97.3% 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 C
CLASS B ------------------------
----------------------------------------------------------------- YEAR
PERIOD FROM PERIOD FROM PERIOD FROM ENDED
OCTOBER 1, AUGUST 19, OCTOBER 1, SEPTEMBER
1997 TO YEAR ENDED SEPTEMBER 30, 1994(C) TO 1997 TO 30
MARCH 31, --------------------------------- SEPTEMBER 30, MARCH 31, ---------
1998 1997 1996 1995(A) 1994 1998 1997
------------- --------- --------- ----------- --------------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 10.43 $ 10.02 $ 10.23 $ 9.50 $ 9.68 $ 10.42 $ 10.02
------ --------- --------- ----------- ------ ------ ---------
Income from investment
operations:
Net investment income....... .27 .54 .53 .55 .06 .27 .54
Net gains or losses on
securities (both realized
and unrealized)............ .10 .41 (.21) .73 (.18) .11 .40
------ --------- --------- ----------- ------ ------ ---------
Total from investment
operations............... .37 .95 .32 1.28 (.12) .38 .94
------ --------- --------- ----------- ------ ------ ---------
Less distributions:
Dividends from net
investment income.......... (.27) (.54) (.53) (.55) (.06) (.27) (.54)
Distributions from capital
gains...................... -- -- -- -- -- -- --
------ --------- --------- ----------- ------ ------ ---------
Total distributions....... (.27) (.54) (.53) (.55) (.06) (.27) (.54)
------ --------- --------- ----------- ------ ------ ---------
Net asset value, end of
period....................... $ 10.53 $ 10.43 $ 10.02 $ 10.23 $ 9.50 $ 10.53 $ 10.42
------ --------- --------- ----------- ------ ------ ---------
------ --------- --------- ----------- ------ ------ ---------
Total return (d).............. 3.6% 9.7% 3.1% 13.9% (1.2)% 3.7% 9.6%
Net assets, end of period (in
thousands)................... $ 7,463 $ 6,263 $ 3,532 $ 1,142 $ 51 $ 1,279 $ 899
Ratio of expenses to average
daily net assets (e)......... 1.90%(f) 1.90% 1.90% 1.90% .22%(g) 1.90%(f) 1.90%
Ratio of net investment income
to average daily net assets
(e).......................... 5.12%(f) 5.32% 5.19% 5.61% .69%(g) 5.13%(f) 5.30%
Portfolio turnover rate
(excluding short-term
securities).................. 97.3% 180.5% 222.6% 270.7% 163.5% 97.3% 180.5%
<CAPTION>
PERIOD FROM
MARCH 1,
1995(C) TO
SEPTEMBER 30,
1996 1995
--------- ---------------
<S> <C> <C>
Net asset value, beginning of
period....................... $ 10.23 $ 9.67
--------- ------
Income from investment
operations:
Net investment income....... .52 .33
Net gains or losses on
securities (both realized
and unrealized)............ (.21) .55
--------- ------
Total from investment
operations............... .31 .88
--------- ------
Less distributions:
Dividends from net
investment income.......... (.52) (.32)
Distributions from capital
gains...................... -- --
--------- ------
Total distributions....... (.52) (.32)
--------- ------
Net asset value, end of
period....................... $ 10.02 $ 10.23
--------- ------
--------- ------
Total return (d).............. 3.1% 9.3%
Net assets, end of period (in
thousands)................... $ 665 $ 112
Ratio of expenses to average
daily net assets (e)......... 1.90% 1.90%(f)
Ratio of net investment income
to average daily net assets
(e).......................... 5.20% 5.54%(f)
Portfolio turnover rate
(excluding short-term
securities).................. 222.6% 270.7%
</TABLE>
- ------------
(e) The Fund's Adviser and Distributor voluntarily absorbed or waived $65,762,
$129,031, $120,750, $129,155, $107,448 and $86,877 in expenses for the
period ended March 31, 1998, the years ended September 30, 1997, 1996 and
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 1.61%,
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 5.39%, 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 2.31%, 2.34%, 2.38%, 2.56% and .35%, respectively,
and the ratio of net investment income to average daily net assets would
have been 4.71%, 4.88%, 4.71%, 4.95% and .56%, respectively, for the period
ended March 31, 1998, the years ended September 30, 1997, 1996 and 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 2.31%, 2.34%, 2.38% and 2.56%, respectively, and the ratio of net
investment income to average daily net assets would have been 4.72%, 4.86%,
4.72% and 4.88%, respectively, for the period ended March 31, 1998, 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>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year. Systematic Exchange Plans are
exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account-subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE EXCHANGE: You can move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same class)
just by calling our toll free number. The Telephone Exchange and Telephone
Redemption privilege will automatically be established unless otherwise
indicated on the Account Application. Telephone Exchange and Redemption may be
changed (added/deleted) at any time by submitting a request in writing or by
completing a Service Request Form.
SYSTEMATIC EXCHANGE: You can move a set amount of money monthly from one
Advantus Fund to another Advantus Fund (with identical registrations within the
same class) to diversify your investment portfolio and take advantage of
dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums from your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Special purchase plans enable you to open an Advantus
Fund account for as little as $25 and lower your average share cost through
"dollar-cost averaging." (Dollar-cost averaging does not assure a profit, nor
does it prevent loss in declining markets.) The Automatic Investment Plan allows
you to invest automatically each month from your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Traditional or Roth Individual Retirement Account or other qualified plan
including: SEP IRA's, SIMPLE IRA's, profit sharing, money purchase or defined
benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
18
<PAGE>
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 Exchange and Telephone Redemption privilege will
automatically be established unless otherwise indicated on the Account
Application. Telephone Exchange and Redemption may be changed (added/deleted) at
any time by submitting a request in writing or by completing a Service Request
Form. To have the redemption automatically deposited into your checking account,
please send a voided check from your bank. Depending on the performance of the
underlying investment options, the value may be worth more or less than the
original amount invested upon redemption. Some limitations apply, please refer
to the prospectus for details.
ACCOUNT UPDATES: You will receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
statements to help you track all of your Advantus Fund investments and annual
tax statements. Semi-annual and annual reports will provide you with portfolio
information, fund performance data and the current investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining personal information
and assistance directly from Advantus Shareholder Services, call
(1-800-665-6005). Advantus Account Representatives are available Monday through
Friday from 8 a.m. to 4:45 p.m. Central Time. Our voice response system is
available from 7 a.m. to 3 a.m. Central Time Monday through Friday, and 8 a.m.
to 5 p.m. on Saturday. This system allows you to access current net asset values
and account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc. (formerly known as
MIMLIC Sales Corporation), distributor of the Funds. Contact your representative
for information and a prospectus for any of the Advantus Funds you are
interested in. To find a Registered Representative near you, call the toll-free
service line (1-800-665-6005).
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use the Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages twelve mutual funds containing
$2.7 billion in assets in addition to $2.1 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
19
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-AFS-1838
(1-800-237-1838)
<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.48644 Rev. 5-1998
