ADVANTUS BOND FUND INC, N-30D, 1999-12-03

ADVANTUS BOND FUND INC
N-30D, 1999-12-03

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<PAGE>

BOND

ADVANTUS BOND FUND, INC.

ANNUAL REPORT TO SHAREHOLDERS DATED SEPTEMBER 30, 1999
[LOGO]

[ART]

<PAGE>
ADVANTUS BOND FUND

TABLE OF CONTENTS

<TABLE>
<S> <C>
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
</TABLE>
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]

Dear Shareholder:

Growth has been the economic story throughout this fiscal year. The domestic
growth story continues, albeit growth is slower than in the past. The Federal
Reserve's proactive stance (i.e., raising rates BEFORE reported inflation)
demonstrates the Fed's continuing resolve to control inflation by reigning in
domestic growth. So far, the Fed has achieved this delicate economic balance.

World growth is slowly accelerating. The global economic picture is vastly
different than it was one year ago. Japan has worked its way back from a
devastating recession and financial crisis. Emerging markets are surging and
international markets, overall, are strong. The world's central banks have
played critical roles in getting their respective countries back on track. Like
the Fed, the world's central banks plotted a course of action, and like the Fed,
these banks espoused an expansionary bias. Relative to conditions, each bank
aggressively used its monetary policy to lower interest rates. These actions
have contributed to global economic recovery, country by country.

As the rest of the world rallies, the conditions in the U.S. will likely put
more pressures on our economic systems. The fixed income market may feel some
pressure too due to higher commodity prices, global economic growth, a weaker
dollar, tight labor market, and a Fed poised to tighten. Conditions may also
bode poorly for the stock market. After several years of good equity markets -
driven by both robust growth and higher valuation levels - investors are acutely
aware that the environment is changing. The markets will continue under pressure
if interest rates move higher and valuations peak, challenging the long-running
bull market. On a brighter note, the loss of price momentum in the U.S. equity
market will allow earnings growth to catch up with multiples, thus building the
base for the next leg up in the secular bull market for equities.

If at any time you have questions about your Advantus mutual fund investments, I
encourage you to contact your financial professional or call Advantus
Shareholders Services at 1-800-665-6005. This number allows you 24-hour access,
seven days a week, to your mutual fund account information via an automated
voice-response system. Or you can speak directly to an Advantus Shareholder
Services Representative during business hours, 8 A.M. to 4:45 P.M. (Central
Time) any day that the New York Stock Exchange is open for business.

We appreciate your continued patronage of Advantus Funds. Helping you move
closer to your investment goals is important to us, and we look forward to
working long-term with you and your financial professional. Thank you for
investing with Advantus.

Sincerely,

/s/ William N. Westhoff

William N. Westhoff, President
Advantus Funds
<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, 1999, for
each class of shares offered was as follows:

<TABLE>
<S> <C>
CLASS A.......................... -2.36 PERCENT*
CLASS B.......................... -2.98 PERCENT*
CLASS C.......................... -3.10 PERCENT*
</TABLE>

The Fund's benchmark, the Lehman Brothers Government/Corporate Bond Index,**
returned -1.62 percent for the same period.

PERFORMANCE ANALYSIS

Interest rates moved steadily higher over the past twelve months. Concerns over
a global financial crisis faded and were replaced by a global recovery, strong
domestic growth and higher commodity prices. At the beginning of the period, the
Federal Reserve had cut the Fed Funds rate twice by 25 basis points (for a total
of .50 percent) to provide liquidity to nervous financial markets. By the end of
the period, the Federal Reserve had reversed these two moves in an effort to
cool the economy and combat inflationary pressures.
When the twelve months ended, the yield on the 10-year U.S. Treasury note rose
147 basis points (1.47 percent) to yield 5.88 percent. The 2-year, 5-year and
30-year Treasury notes also finished the period over 100 basis points
(1 percent) higher resulting in lower bond prices. Over the past year, the
significantly higher interest rates created negative bond returns, a rare
occurrence in the investment grade bond universe.
When interest rates rise, the best way to preserve principal and defend against
a decline in market value is to own short maturity bonds. The Fund's performance
was adversely affected in the fourth quarter of 1998 because of the portfolio's
longer-than-market duration. As the year progressed, the portfolio's duration
was shortened to market-neutral keeping performance in line with the market
during 1999.
Corporate bonds and U.S. Treasury securities were both negatively affected by
the rising interest rate environment. In the fixed income market, corporate
bonds returned -1.40 percent for the trailing twelve months ended September 30,
1999, and U.S. Treasury securities returned -1.97 percent for the same period.
The Fund maintained a significant overweight to the corporate sector throughout
the year providing incremental returns to the portfolio.
Recent portfolio purchases have included short duration (2-3 year maturity)
corporate bonds with attractive yields over U.S. Treasury securities. Purchases
include: Cox Communication two year notes to yield 7.06 percent,* Crown Cork and
Seal three year notes to yield 7.21 percent* and Edison International five year
notes to yield 7.06 percent.* These are examples of taking advantage of wide
spread in the corporate bond market to add significant yield to the overall
portfolio.

2
<PAGE>
OUTLOOK
The move to higher interest rates over the past year reflected investors'
changing expectations on inflation, economic growth, and the Federal Reserve's
monetary policy. Looking ahead to next year, these same key variables, along
with Y2K concerns, will influence the direction of interest rates. The majority
of the damage (i.e., higher interest rates) has already been done but the market
is at risk for further downside price action. We believe the fixed income market
will be pressured by higher commodity prices, worldwide economic growth, a
weaker dollar, tight labor markets, and a Federal Reserve poised to raise
interest rates. At some point, the higher level of interest rates will look very
attractive in a low inflation environment. Ten-year U.S. Treasury yields north
of six percent and corporate bond yields between seven and eight percent make
for very compelling value with two percent inflation. Next year is setting up to
be a much better year for fixed income investors.
The Fund is positioned to take advantage of the relatively wide spreads in the
corporate bond market. The overweight position in corporate bonds reflects our
view that credit spreads should tighten, as the fundamental factors driving
corporate profits are still intact. Solid credit stories offering yields near
eight percent are excellent values and will be selectively added to the
portfolio. Further price weakness (higher interest rates) in the bond market
will create an excellent opportunity to buy longer maturity bonds and extend the
portfolio duration. We will take advantage of these opportunities in the
upcoming year.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 4.5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge.
**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 domestic corporate debt.

3
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT IN ADVANTUS BOND FUND, 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
Government/Corporate Bond Index and the Consumer Price Index. The lines in the
Class A graph represent the cumulative total return of a hypothetical $10,000
investment made on September 30, 1989 through September 30, 1999. The lines in
the Class B and Class C graphs represent the cumulative total return of a
hypothetical $10,000 investment made on the inception date of Class B and
Class C shares of the Advantus Bond Fund (August 19, 1994 and March 1, 1995 for
Class B and C, respectively) through September 30, 1999.

CLASS A

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C>
One year -6.76%
Five year 6.06%
Ten year 6.79%
(Thousands)
Class A CPI Lehman Brothers
Govt/Corp Bond Index
9/30/89 $10,000 $10,000 $10,000
10/31/89 $9,732.00 $10,253.00 $10,253.00
10/31/90 $10,166.00 $10,899.00 $10,817.00
10/31/91 $11,654.00 $11,217.00 $12,480.00
10/31/92 $12,907.00 $11,577.00 $13,795.00
10/31/93 $14,719.00 $11,887.00 $15,710.00
9/30/94 $13,737.00 $12,247.00 $15,001.00
9/30/95 $15,805.00 $12,516.00 $16,898.00
9/30/96 $16,441.00 $12,892.00 $17,659.00
9/30/97 $18,179.00 $13,178.00 $19,354.00
9/30/98 $19,769.00 $13,366.00 $23,331.00
9/30/99 $19,302.00 $13,717.00 $23,226.00
</TABLE>

4
<PAGE>
CLASS B

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C>
One year -7.83%
Five year 5.98%
Since Inception (8/19/94) 5.57%
(Thousands)
Class B CPI Lehman Brothers
Govt/Corp Bond Index
8/19/94 $10,000.00 $10,000.00 $10,000.00
9/30/94 $9,876.00 $10,067.00 $9,853.00
9/30/95 $10,801.00 $10,289.00 $11,099.00
9/30/96 $11,252.00 $10,598.00 $11,599.00
9/30/97 $12,480.00 $10,833.00 $12,712.00
9/30/98 $13,610.00 $10,987.00 $14,228.00
9/30/99 $13,200.00 $11,276.00 $14,164.00
</TABLE>

CLASS C

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C>
One year -3.10%
Since Inception (3/1/95) 5.72%
(Thousands)
Class C CPI Lehman Brothers
Govt/Corp Bond Index
3/1/95 $10,000.00 $10,000.00 $10,000.00
9/30/95 $10,925.00 $10,146.00 $10,939.00
9/30/96 $11,265.00 $10,450.00 $11,431.00
9/30/97 $12,348.00 $10,682.00 $12,529.00
9/30/98 $13,323.00 $10,834.00 $14,023.00
9/30/99 $12,909.00 $11,119.00 $13,960.00
</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 4.5 percent front-end sales charge for Class A and the maximum
applicable contingent deferred sales charge for Class B shares. The maximum
initial sales charge for Class A shares was 5.0 percent prior to February 1,
1999. Sales charges pay for your financial professional's investment advice.
Individuals cannot invest in the index itself, nor can they invest in any fund
which seeks to track the performance of the index without incurring some charges
and expenses.

Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.

5
<PAGE>
TEN LARGEST BOND HOLDINGS

<TABLE>
<CAPTION>
MARKET % OF BOND
COMPANY VALUE PORTFOLIO
- ------- ------------ ---------
<S> <C> <C>
U.S. Treasury Note--5.250%, 08/15/03............... $ 1,617,516 6.6%
Lyondell Chemical Company--9.625%, 05/01/07........ 1,290,250 5.2%
U.S. Treasury Note--6.625%, 03/31/02............... 1,276,172 5.2%
General Electric Capital Corporation--6.290%,
12/15/01......................................... 999,945 4.0%
Meritor Automotive, Inc.--6.800%, 02/15/09......... 930,252 3.8%
Conoco, Inc.--6.950%, 04/15/29..................... 928,065 3.8%
GNMA--6.500%, 09/15/28............................. 926,174 3.7%
British Sky Broadcasting--6.875%, 02/23/09......... 905,637 3.7%
PNC Bank Corporation--6.728%, 01/25/07............. 900,522 3.6%
AT&T Corporation--6.500%, 03/15/29................. 883,336 3.6%
----------- ----
$10,657,869 43.2%
=========== ====
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
U.S. Treasury (14.4%)
U.S. Government Agencies (5.0%)
AAA rated (11.0%)
AA rated (3.6%)
A rated (18.9%)
BBB rated (31.8%)
BB rated (4.7%)
Preferred Stock (6.9%)
Cash and Other Assets/Liabilities (3.7%)
</TABLE>

6
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1999

(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 (89.4%)
GOVERNMENT OBLIGATIONS (22.2%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (19.4%)
U.S. Treasury (14.4%)
$ 500,000 Bond..................................................... 6.000% 07/31/02 $ 503,594
1,650,000 Note..................................................... 5.250% 08/15/03 1,617,516
600,000 Note..................................................... 6.000% 02/15/26 572,063
1,250,000 Note..................................................... 6.625% 03/31/02 1,276,172
-----------
3,969,345
-----------
Federal National Mortgage Association (FNMA) (.9%)
248,624 ......................................................... 7.000% 07/01/29 244,434
-----------
Government National Mortgage Association (GNMA) (4.1%)
968,343 ......................................................... 6.500% 09/15/28 926,174
73,023 ......................................................... 7.000% 04/15/22 72,138
141,299 ......................................................... 7.000% 03/15/23 139,558
-----------
1,137,870
-----------
STATE AND LOCAL GOVERNMENT OBLIGATIONS (2.8%)
400,000 California Housing Finance Agency........................ 7.760% 08/01/25 409,794
230,000 California Housing Finance Agency........................ 8.160% 02/01/28 235,324
124,500 Wyoming Community Development............................ 6.850% 06/01/10 124,500
-----------
769,618
-----------
Total government obligations (cost: $6,194,675)................................. 6,121,267
-----------
CORPORATE OBLIGATIONS (67.2%)
BASIC MATERIALS (10.9%)
Chemicals (9.1%)
500,000 BF Goodrich Company...................................... 6.600% 05/15/09 475,820
750,000 IMC Global, Inc.......................................... 6.625% 10/15/01 744,770
1,300,000 Lyondell Chemical Company................................ 9.625% 05/01/07 1,290,250
-----------
2,510,840
-----------
Paper and Forest (1.8%)
500,000 International Paper Company.............................. 6.875% 07/10/00 501,974
-----------
CAPITAL GOODS (6.8%)
Aerospace/Defense (2.3%)
750,000 Raytheon Company......................................... 6.400% 12/15/18 648,709
-----------
Containers-Metal/Glass (2.9%)
800,000 Crown Cork & Seal Company, Inc........................... 7.125% 09/01/02 799,171
-----------
Manufacturing (1.6%)
500,000 Tyco International Group (b)............................. 6.875% 01/15/29 447,115
-----------
</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>
COMMUNICATION SERVICES (3.2%)
Telephone (3.2%)
$1,000,000 AT&T Corporation......................................... 6.500% 03/15/29 $ 883,336
-----------
CONSUMER CYCLICAL (5.0%)
Auto (3.4%)
1,000,000 Meritor Automotive, Inc.................................. 6.800% 02/15/09 930,252
-----------
Building Materials (1.6%)
450,000 Masco Corporation........................................ 6.125% 09/15/03 443,522
-----------
CONSUMER STAPLES (13.5%)
Beverage (1.8%)
500,000 Anheuser-Busch Companies, Inc............................ 7.100% 06/15/07 503,828
-----------
Broadcasting (5.8%)
1,000,000 British Sky Broadcasting (b)............................. 6.875% 02/23/09 905,637
700,000 Cox Communications, Inc.................................. 7.000% 08/15/01 701,785
-----------
1,607,422
-----------
Entertainment (3.1%)
750,000 Time Warner, Inc......................................... 9.125% 01/15/13 845,794
-----------
Household Products (2.8%)
750,000 Premark International, Inc............................... 10.500% 09/15/00 777,302
-----------
ENERGY (3.4%)
Oil (3.4%)
1,000,000 Conoco, Inc.............................................. 6.950% 04/15/29 928,065
-----------
FINANCIAL (16.8%)
Banks (2.3%)
700,000 St. George Bank-144A Issue (b)(c)........................ 8.485% 12/31/49 619,138
-----------
Collateralized Mortgage Obligations/Mortgage Revenue Bonds (4.2%)
300,000 CFSB Finance Company-144A Issue (c)...................... 5.969% 11/15/05 264,000
900,000 PNC Bank Corporation..................................... 6.728% 01/25/07 900,522
-----------
1,164,522
-----------
Commercial Finance (3.6%)
1,000,000 General Electric Capital Corporation..................... 6.290% 12/15/01 999,945
-----------
Finance-Diversified (1.8%)
525,000 National Collegiate...................................... 7.240% 09/20/14 490,718
-----------
Investment Bankers/Brokers (3.2%)
900,000 Morgan Stanley Dean Witter & Company..................... 6.875% 03/01/07 881,960
-----------
Real Estate Investment Trust (1.7%)
500,000 Security Capital Pacific Trust........................... 7.500% 02/15/14 472,198
-----------
</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 (7.6%)
Electric Companies (4.6%)
$ 750,000 Edison International, Inc................................ 6.875% 09/15/04 $ 740,841
500,000 Hydro-Quebec (b)......................................... 8.000% 02/01/13 530,425
-----------
1,271,266
-----------
Natural Gas (3.0%)
880,000 Enron Corporation........................................ 6.725% 11/17/08 839,396
-----------
Total corporate obligations (cost: $19,392,875)................................. 18,566,473
-----------
Total long-term debt securities (cost: $25,587,550)............................. 24,687,740
-----------
</TABLE>

<TABLE>
<CAPTION>
SHARES
- ------
<C> <S> <C>
PREFERRED STOCK (6.9%)
FINANCIAL (6.9%)
Real Estate Investment Trust (6.9%)
16,000 Duke Realty Investments, Inc. - 7.99%....................... 719,000
8,000 Nationwide Health Property, Inc. - 7.68%.................... 728,500
10,000 Prologis Trust - 8.54%...................................... 446,875
-----------
Total preferred stock (cost: $2,091,552).................... 1,894,375
-----------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL
- ---------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (1.9%)
$ 523,244 Federated Prime Obligation Fund, current rate 5.220%............................ 523,244
-----------
Total short-term securities (cost: $523,244).................................... 523,244
-----------
Total investments in securities (cost: $28,202,346) (d)......................... $27,105,359
===========
</TABLE>

Notes to Investments in Securities
- -----------------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) The Fund held 9.1% of net assets in foreign securities as of September 30,
1999.
(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, 1999, which includes acquistion
date and cost, is as follows:

<TABLE>
<CAPTION>
ACQUISTION
SECURITY: DATE COST
--------- ---------- ---------
<S> <C> <C>
St. George Bank 144A Issue.................................. 06/12/97 $700,000
CSFB Finance Company 144A Issue............................. 05/15/96 291,938
--------
$991,938
========
</TABLE>

(d) At September 30, 1999 the cost of securities for federal income tax purposes
was $28,233,378. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:

<S> <C>
Gross unrealized appreciation............................... $ 46,250
Gross unrealized depreciation............................... (1,174,269)
-----------
Net unrealized depreciation................................. $(1,128,019)
===========
</TABLE>

9
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999

<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value - see
accompanying schedule for detailed listing
(identified cost: $28,202,346)............................. $27,105,359
Cash in bank on demand deposit.............................. 23
Receivable for Fund shares sold............................. 688
Receivable for investment securities sold................... 253,049
Accrued interest receivable................................. 342,133
Other receivables........................................... 483
-----------
Total assets............................................ 27,701,735
-----------
LIABILITIES
Payable for Fund shares redeemed............................ 27,564
Dividends payable to shareholders........................... 31,118
Payable to Adviser.......................................... 32,205
-----------
Total liabilities....................................... 90,887
-----------
Net assets applicable to outstanding capital stock.......... $27,610,848
===========
Represented by:
Capital stock - authorized 10 billion shares (Class A - 2
billion shares, Class B - 2 billion shares, Class C - 2
billion shares and 4 billion shares unallocated) of $.01
par value
(note 1).................................................. $ 28,408
Additional paid-in capital................................ 29,499,665
Accumulated net realized losses from investments.......... (820,238)
Unrealized depreciation on investments.................... (1,096,987)
-----------
Total - representing net assets applicable to
outstanding capital stock............................... $27,610,848
===========
Net assets applicable to outstanding Class A shares......... $17,845,967
===========
Net assets applicable to outstanding Class B shares......... $ 8,170,737
===========
Net assets applicable to outstanding Class C shares......... $ 1,594,144
===========
Shares outstanding and net asset value per share:
Class A - Shares outstanding 1,837,282.................... $ 9.71
===========
Class B - Shares outstanding 839,194...................... $ 9.74
===========
Class C - Shares outstanding 164,274...................... $ 9.70
===========
</TABLE>

See accompanying notes to financial statements.

10
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999

<TABLE>
<S> <C>
Investment income:
Interest.................................................. $ 1,777,537
Dividends................................................. 167,397
-----------
Total investment income............................... 1,944,934
-----------
Expenses (note 4):
Investment advisory fee................................... 207,779
Rule 12b-1 fees - Class A................................. 50,469
Rule 12b-1 fees - Class B................................. 86,763
Rule 12b-1 fees - Class C................................. 21,023
Administrative services fee............................... 61,400
Custodian fees............................................ 7,870
Auditing and accounting services.......................... 11,618
Legal fees................................................ 11,739
Directors' fees........................................... 570
Registration fees......................................... 38,081
Printing and shareholder reports.......................... 33,668
Insurance................................................. 3,505
Other..................................................... 3,461
-----------
Total expenses........................................ 537,946
-----------
Less fees and expenses waived or absorbed:
Class A Rule 12b-1 fees................................. (3,209)
Other fund expenses..................................... (112,547)
-----------
Total fees and expenses waived or absorbed............ (115,756)
-----------
Total net expenses.................................... 422,190
-----------
Investment income - net............................... 1,522,744
-----------
Realized and unrealized losses on investments:
Net realized losses on investments (note 3)............... (805,332)
Net change in unrealized appreciation or depreciation on
investments............................................. (1,512,901)
-----------
Net losses on investments............................. (2,318,233)
-----------
Net decrease in net assets resulting from operations........ $ (795,489)
===========
</TABLE>

See accompanying notes to financial statements.

11
<PAGE>
ADVANTUS BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998

<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Operations:
Investment income - net................................... $ 1,522,744 $ 1,418,930
Net realized gain (loss) on investments................... (805,332) 799,672
Net change in unrealized appreciation or depreciation on
investments............................................. (1,512,901) (28,746)
----------- -----------
Increase (decrease) in net assets resulting from
operations.......................................... (795,489) 2,189,856
----------- -----------
Distributions to shareholders from:
Investment income - net:
Class A................................................. (1,023,784) (1,025,790)
Class B................................................. (403,884) (347,737)
Class C................................................. (97,744) (61,204)
Net realized gains on investments:
Class A................................................. (350,337) (56,664)
Class B................................................. (160,988) (26,049)
Class C................................................. (36,465) (5,418)
----------- -----------
Total distributions................................... (2,073,202) (1,522,862)
----------- -----------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A................................................. 3,097,303 5,944,709
Class B................................................. 2,270,139 4,427,845
Class C................................................. 1,123,725 2,010,526
Proceeds from issuance of shares as a result of reinvested
dividends:
Class A................................................. 973,836 744,235
Class B................................................. 519,553 301,278
Class C................................................. 127,664 62,923
Payments for redemption of shares:
Class A................................................. (3,818,402) (4,846,234)
Class B................................................. (2,672,428) (2,279,688)
Class C................................................. (1,543,002) (915,696)
----------- -----------
Increase in net assets from capital share
transactions........................................ 78,388 5,449,898
----------- -----------
Total increase (decrease) in net assets............... (2,790,303) 6,116,892
Net assets at beginning of year............................. 30,401,151 24,284,259
----------- -----------
Net assets at end of year................................... $27,610,848 $30,401,151
=========== ===========
</TABLE>

See accompanying notes to financial statements.

12
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999

(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 shares are subject to a higher Rule 12b-1 fee
than Class A shares. Both Class B and Class C shares automatically convert to
Class A shares at net asset value after a specified holding period. Such holding
periods decline as the amount of the purchase increases and range from 28 to 84
months after purchase for Class B shares and 40 to 96 months after purchase for
Class C shares. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that the
level of Rule 12b-1 fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than Rule 12b-1 fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon its
relative net assets.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies followed by the Fund are summarized as
follows:

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements. Actual
results could differ from those estimates.

INVESTMENTS IN SECURITIES

The Fund's net asset value is generally calculated as of the close of normal
trading on the New York Stock Exchange (typically 3:00 p.m. Central Time).
Investments in securities traded on a national exchange are valued at the last
sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price, by an independent pricing service or at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities.
When market quotations are not readily available, securities are valued at fair
value as determined in good faith under procedures adopted by the Board of
Directors. Short-term securities are valued at market.

Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Interest income, including amortization of bond premium
and discount computed on a level yield basis, is accrued daily.

FEDERAL TAXES

The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to December
31, in order to avoid federal excise tax.

13
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)

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.

On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income and decrease additional paid-in capital by
$2,668.

For federal income tax purposes, the Fund has a capital loss carryover in
the amount of $789,206 which, if not offset by subsequent capital gains, will
expire September 30, 2007 through 2008. It is unlikely the Board of Directors
will authorize a distribution of any net realized capital gain until the
available capital loss carryover has been offset or expires.

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, 1999, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities,
aggregated $60,848,440 and $60,832,956, respectively.

(4) EXPENSES AND RELATED PARTY TRANSACTIONS

The Fund has an investment advisory agreement with Advantus Capital
(Advantus Capital or the Adviser), a wholly owned subsidiary of Minnesota Life
Insurance Company (Minnesota Life). Under the agreement, Advantus Capital
manages the Fund's assets and provides research, statistical and advisory
services and pays related office rental and executive expenses and salaries. In
addition, as part of the advisory fee, Advantus Capital pays the expenses of the
Fund's transfer, dividend disbursing and redemption agent (First Data Investor
Services Group). Prior to October 26, 1998, the Fund's transfer agent was
Minnesota Life. The fee for investment management and advisory services is based
on the average daily net assets of the Fund at the annual rate of .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
expenses pursuant to Rule 12b-1 under the Investment Company Act of 1940 (as
amended). The Fund pays fees to Ascend Financial Services, Inc. (Ascend), the
underwriter of the Fund and wholly-owned subsidiary of Advantus Capital, to be
used to pay certain expenses incurred in the distribution, promotion and
servicing of the Fund's shares. The Class A Plan provides for a service fee up
to .25 percent of average daily net assets of Class A shares. Prior to February
1, 1999, the Class A Plan provided for a distribution fee up to .30 percent of
average daily net assets of Class A shares. The Class B and Class C Plans
provide for a fee up to 1.00 percent of average daily net assets of Class B and
Class C shares, respectively. The Class B and Class C 1.00 percent fees are
comprised of a .75 percent distribution fee and a .25 percent service fee. Prior
to February 1, 1999, Ascend waived that portion of Class A Rule 12b-1 fees which
exceeded, as a percentage of average daily net assets, .25 percent. For the
period from October 1, 1998 to January 31, 1999, Ascend waived Class A
Rule 12b-1 fees in the amount of $3,209.

14
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED

(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)

The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reporting fees, legal, auditing and accounting services fees and other
miscellaneous expenses.

Effective October 26, 1998, the Fund entered into a new shareholder and
administrative services agreement with Minnesota Life. Under this agreement, the
Fund pays an administrative services fee to Minnesota Life for accounting,
auditing, legal and other administrative services which Minnesota Life provides.
Prior to February 1, 1999, the administrative services fee was $3,700 per month.
For the period February 1, 1999 to July 31, 1999, the administrative services
fee was $5,700 per month. Effective August 1, 1999, the administrative services
fee is $6,200 per month. In addition, for shareholder services performed by
Minnesota Life, the Adviser will pay Minnesota Life an annual account servicing
fee as agreed by the Adviser and Minnesota Life.

Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the year ended September
30, 1999, Advantus Capital voluntarily agreed to absorb $112,547 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 $69,196.

As of September 30, 1999, Minnesota Life and subsidiaries and the directors
and officers of the Fund as a whole owned 387,451 Class A shares which
represents 21.1 percent of the total outstanding Class A shares.

Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $11,104.

(5) CAPITAL SHARE TRANSACTIONS

Transactions in shares for the years ended September 30, 1999 and 1998 were
as follows:

<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sold...................................... 303,385 562,965 221,815 414,545 109,953 189,746
Issued for reinvested distributions....... 97,068 70,186 51,177 29,523 12,601 6,059
Redeemed.................................. (380,350) (457,997) (264,176) (214,474) (153,901) (86,469)
-------- -------- -------- -------- -------- -------
20,103 175,154 8,816 229,594 (31,347) 109,336
======== ======== ======== ======== ======== =======
</TABLE>

(6) RESTRICTED SECURITIES

At September 30, 1999, 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 percent 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, 1999 was $883,138 which represents 3.2 percent of net
assets.

(7) YEAR 2000 (UNAUDITED)

In 1995, Minnesota Life began addressing computer system requirements and
applications to be Year 2000 ready. Based on a current study, Minnesota Life
plans to spend approximately $12 million through 1999 to modify its computer
information systems, enabling proper processing of transactions relating to the
year 2000 and beyond. The Fund will not be charged for these expenses.

15
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED

(8) FINANCIAL HIGHLIGHTS

Per share data for a share of capital stock and selected information for
each period are as follows:

<TABLE>
<CAPTION>
CLASS A
--------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------
1999 1998 1997 1996 1995(A)
------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Net asset value,
beginning of
year.............. $ 10.69 $ 10.43 $ 10.03 $ 10.24 $ 9.50
------- ------- ------- ------- -------
Income from
investment
operations:
Net investment
income.......... .54 .59 .63 .62 .64
Net gains (losses)
on securities
(both realized
and
unrealized)..... (.79) .30 .40 (.22) .74
------- ------- ------- ------- -------
Total from
investment
operations.... (.25) .89 1.03 .40 1.38
------- ------- ------- ------- -------
Less distributions:
Dividends from net
investment
income.......... (.54) (.60) (.63) (.61) (.64)
Distributions from
net realized
gains........... (.19) (.03) - - -
------- ------- ------- ------- -------
Total
distributions... (.73) (.63) (.63) (.61) (.64)
------- ------- ------- ------- -------
Net asset value, end
of year........... $ 9.71 $ 10.69 $ 10.43 $ 10.03 $ 10.24
======= ======= ======= ======= =======
Total return(c)..... (2.36)% 8.75% 10.57% 4.03% 15.05%
Net assets, end of
year (in
thousands)........ $17,846 $19,419 $17,122 $16,528 $15,315
Ratio of expenses to
average daily net
assets (d)........ 1.15% 1.10% 1.00% 1.00% 1.00%
Ratio of net
investment income
(loss) to average
daily net
assets (d)........ 5.41% 5.55% 6.18% 6.08% 6.58%
Portfolio turnover
rate (excluding
short-term
securities)....... 211.9% 237.2% 180.5% 222.6% 270.7%
</TABLE>

- ------------

(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995,
the Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) Commencement of operations.
(c) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not
been annualized.
(d) The Fund's Adviser and Distributor voluntarily absorbed or waived $115,756,
$119,092, $129,031, $120,750 and $129,155 in expenses for the years ended
September 30, 1999, 1998, 1997, 1996 and 1995, respectively. If Class A
shares had been charged for these expenses, the ratio of expenses to
average daily net assets would have been 1.55%, 1.58%, 1.64%, 1.68% and
1.88%, respectively, and the ratio of net investment income to average
daily net assets would have been 5.01%, 5.07%, 5.54%, 5.40% and 5.70%,
respectively. If Class B shares had been charged for these expenses, the
ratio of expenses to average daily net assets would have been 2.28%, 2.28%,
2.34%, 2.38% and 2.56%, respectively, and the ratio of net investment
income to average daily net assets would have been 4.26%, 4.40%, 4.88%,
4.71% and 4.95%, respectively. If Class C shares had been charged for these
expenses, the ratio of expenses to average daily net assets would have been
2.28%, 2.28%, 2.34%, 2.38% and 2.56%, respectively, and the ratio of net
investment income to average daily net assets would have been 4.26%, 4.43%,
4.86%, 4.72% and 4.88%, respectively.
(e) Adjusted to an annual basis.

16
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED

<TABLE>
<CAPTION>
CLASS B CLASS C
---------------------------------------- ------------------------------------------------
PERIOD FROM
MARCH 1,
YEAR ENDED SEPTEMBER 30, YEAR ENDED SEPTEMBER 30, 1995(B) TO
---------------------------------------- ------------------------------ SEPTEMBER 30,
1999 1998 1997 1996 1995(A) 1999 1998 1997 1996 1995
------ ------ ------ ------ -------- ------ ------ ------ ------ ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of
year.............. $10.71 $10.43 $10.02 $10.23 $ 9.50 $10.68 $10.42 $10.02 $10.23 $ 9.67
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Income from
investment
operations:
Net investment
income.......... .47 .51 .54 .53 .55 .47 .51 .54 .52 .33
Net gains (losses)
on securities
(both realized
and
unrealized)..... (.78) .31 .41 (.21) .73 (.79) .29 .40 (.21) .55
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
investment
operations.... (.31) .82 .95 .32 1.28 (.32) .80 .94 .31 .88
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net
investment
income.......... (.47) (.51) (.54) (.53) (.55) (.47) (.51) (.54) (.52) (.32)
Distributions from
net realized
gains........... (.19) (.03) - - - (.19) (.03) - - -
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total
distributions... (.66) (.54) (.54) (.53) (.55) (.66) (.54) (.54) (.52) (.32)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end
of year........... $ 9.74 $10.71 $10.43 $10.02 $10.23 $ 9.70 $10.68 $10.42 $10.02 $10.23
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Total return(c)..... (2.98)% 8.09% 9.72% 3.13% 13.92% (3.10)% 7.89% 9.61% 3.11% 9.26%
Net assets, end of
year (in
thousands)........ $8,171 $8,894 $6,263 $3,532 $1,142 $1,594 $2,089 $ 899 $ 665 $ 112
Ratio of expenses to
average daily net
assets (d)........ 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90% 1.90%(e)
Ratio of net
investment income
(loss) to average
daily net
assets (d)........ 4.64% 4.78% 5.32% 5.19% 5.61% 4.64% 4.81% 5.30% 5.20% 5.54%(e)
Portfolio turnover
rate (excluding
short-term
securities)....... 211.9% 237.2% 180.5% 222.6% 270.7% 211.9% 237.2% 180.5% 222.6% 270.7%
</TABLE>

- ------------

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, 1999 and the related statement of operations
for the year then ended, the statements of changes in net assets for each of the
years in the two year period then ended and the financial highlights for each of
the years in the five year period then ended. 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. Our procedures included confirmation of securities owned as of
September 30, 1999, by correspondence with the custodian and brokers. 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, 1999 and the results of its operations,
changes in its net assets and the financial highlights, for the periods stated
in the first paragraph above, in conformity with generally accepted accounting
principles.

KPMG LLP

Minneapolis, Minnesota
November 5, 1999

18
<PAGE>
ADVANTUS BOND FUND
FEDERAL INCOME TAX INFORMATION (UNAUDITED)

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 period ended September 30, 1999. Dividends for the 1999 calendar year
will be reported to you on Form 1099-Div in late January 2000. Shareholders
should consult a tax adviser on how to report these distributions for state and
local purposes.

CLASS A

<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------ --------
<S> <C>
Income distributions - taxable as dividend income, none qualifying for
deduction by corporations.
October 23, 1998............................................ $.0259
October 31, 1998............................................ .0088
November 30, 1998........................................... .0460
December 4, 1998*........................................... .1095
December 31, 1998........................................... .0601
January 31, 1999............................................ .0385
February 28, 1999........................................... .0497
March 31, 1999.............................................. .0432
April 30, 1999.............................................. .0354
May 31, 1999................................................ .0425
June 30, 1999............................................... .0601
July 31, 1999............................................... .0434
August 31, 1999............................................. .0466
September 30, 1999.......................................... .0456
------
$.6553
======
Capital gains distribution - taxable as long-term capital
gains, 20% rate.
December 4, 1998............................................ $.0790
======
</TABLE>

*Represents $.1095 of short-term capital gains (taxable as dividend income).

19
<PAGE>
ADVANTUS BOND FUND
FEDERAL INCOME TAX INFORMATION (UNAUDITED) - CONTINUED

CLASS B

<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------ --------
<S> <C>
Income distributions - taxable as dividend income, none qualifying for
deduction by corporations.
October 23, 1998............................................ $.0209
October 31, 1998............................................ .0071
November 30, 1998........................................... .0396
December 4, 1998*........................................... .1095
December 31, 1998........................................... .0537
January 31, 1999............................................ .0320
February 28, 1999........................................... .0439
March 31, 1999.............................................. .0369
April 30, 1999.............................................. .0293
May 31, 1999................................................ .0363
June 30, 1999............................................... .0542
July 31, 1999............................................... .0372
August 31, 1999............................................. .0405
September 30, 1999.......................................... .0397
------
$.5808
======
Capital gains distribution - taxable as long-term capital
gains, 20% rate.
December 4, 1998............................................ $.0790
======
</TABLE>

*Represents $.1095 of short-term capital gains (taxable as dividend income).

CLASS C

<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------ --------
<S> <C>
Income distributions - taxable as dividend income, none qualifying for
deduction by corporations.
October 23, 1998............................................ $.0208
October 31, 1998............................................ .0071
November 30, 1998........................................... .0395
December 4, 1998*........................................... .1095
December 31, 1998........................................... .0535
January 31, 1999............................................ .0319
February 28, 1999........................................... .0438
March 31, 1999.............................................. .0368
April 30, 1999.............................................. .0292
May 31, 1999................................................ .0362
June 30, 1999............................................... .0540
July 31, 1999............................................... .0371
August 31, 1999............................................. .0403
September 30, 1999.......................................... .0396
------
$.5793
======
Capital gains distribution - taxable as long-term capital
gains, 20% rate.
December 4, 1998............................................ $.0790
======
</TABLE>

*Represents $.1095 of short-term capital gains (taxable as dividend income).

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 may apply.

EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same share class) at any time as your needs change. Exchanges are at the
then current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make twelve exchanges each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year.

INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.

SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive a check at
specified intervals from your fund account -- subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.

DIRECT DIVIDEND DEPOSITS: At your request we will deposit your dividends or
systematic withdrawals directly into your checking or savings account instead of
sending you a check.

TELEPHONE EXCHANGE: You may move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same share
class) just by calling our toll-free number. The Telephone Exchange privilege
will automatically be established unless otherwise indicated on the Account
Application. Telephone Exchange may be changed (added/deleted) at any time by
submitting a request in writing.

SYSTEMATIC EXCHANGE: You may move a set amount of money monthly or quarterly
from one Advantus Fund to another Advantus Fund (with identical registrations
within the same share class) to diversify your investment portfolio and take
advantage of "dollar-cost averaging".

AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Life insurance premiums from your Advantus Money Market account.

REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge, if any.

AUTOMATIC INVESTMENT PLAN: This special purchase plan enables you to open an
Advantus Fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets.) The Automatic Investment
Plan allows you to invest automatically monthly, semi-monthly or quarterly from
your checking or savings account.

IRAS, OTHER QUALIFIED PLANS: You can use the Advantus Family of Funds for your
Traditional, Roth or Education Individual Retirement Account or other qualified
plans including: SEP IRA's, SIMPLE IRA's, Profit Sharing, 401(k) Money Purchase
or Defined Benefit plans.

TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the account. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Redemption privilege will automatically be established
unless otherwise indicated on the Account Application. Telephone Redemption may
be changed (added/deleted) at any time by submitting a request in writing. To
have the redemption automatically deposited into your checking account, please
send a voided check

21
<PAGE>
from your bank. Depending on the performance of the underlying investment
options, the value may be worth more or less than the original amount invested
upon redemption. Some limitations apply, please refer to the prospectus for
details.

ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate and quarterly statements to help you track all of your Advantus Fund
investments and annual tax statements. Semi-annual and annual reports will
provide you with portfolio information, fund performance data and the current
investment outlook.

TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005.
Advantus Account Representatives are available Monday through Friday from 8 a.m.
to 4:45 p.m. Central Time. Our voice response system is available 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.

HOW TO INVEST

You can invest in one or more of the eleven Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc., distributor of the
Funds. Contact your representative for information and a prospectus for any of
the Advantus Funds you are interested in. To find a Registered Representative
near you, call the toll-free service line (1-800-665-6005).

MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.

THE FUND'S MANAGER

Advantus Capital Management, Inc., investment adviser to the Fund, selects and
reviews the Fund's investments and provides executive and other personnel for
the Fund's management. (For the Advantus International Balanced Fund, Inc., the
sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)

Advantus Capital Management, Inc. manages twelve mutual funds containing $3.2
billion in assets in addition to $10.8 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 13 years of
investment experience.

ADVANTUS FAMILY OF FUNDS

Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
Advantus Real Estate Securities Fund

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.

[LOGO]

[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>

<TABLE>
<S> <C>
ASCEND FINANCIAL SERVICES, INC. PRESORTED STANDARD
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL MN
PERMIT NO. 3547

ADDRESS SERVICE REQUESTED
</TABLE>

F.48645 Rev. 11-1999