<PAGE>
BOND
ADVANTUS BOND FUND, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS DATED MARCH 31, 2000
[LOGO]
FIXED INCOME
[COVER GRAPHIC]
<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
SHAREHOLDER SERVICES 18
</TABLE>
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholder:
Americans are enjoying the longest period of economic expansion in U.S. history.
This period of growth, which began in March of 1992, recorded its ninth year of
uninterrupted growth in March. To date, the Federal Reserve's actions to slow
the nation's growth engine have not dramatically impacted the upward trend.
Despite the run-up in interest rates over the past year, housing starts and auto
sales, indicators of a robust economy, remain strong.
Around the globe we are seeing economic growth accelerate, albeit at a modest
pace. Asia is rapidly recovering from the economic debacle of the late 90s. The
Bank of Japan has kept interest rates near zero to further assist that country's
recovery. In Europe, the Central Bank raised rates to support a weak euro and
guard against inflation. Latin American economies, such as Brazil, are showing
signs of increasing strength (e.g., lower inflation, job creation). No country
comes close to the sustained economic vigor of the U.S., but many of the world's
economies are growing.
Volatility in the stock market was frequent and dramatic throughout the six-
months, with the wildest of the ride coming in early April, shortly after this
reporting period ended. The first calendar quarter of the new millennium was a
time of contrasts. For the first two months, the broad market was slightly down,
with the growth sector of technology rising and the value sectors of the market
falling. March was a reversal, with a strong rally in traditional value stocks
and a pullback in the technology arena, adding to the market tumult. Technology,
however, continues to drive the increased spending in businesses. As tech
spending increases, so does productivity.
Interest rates also showed a mixed picture. The Federal Reserve raised the Fed
Funds rate five times between June 1999 and March 2000. Each time only .25
percent, a cumulative increase of 1.25 percent over this 10-month period.
However, longer maturity Treasury bond prices rose and their yields declined as
the U.S. Treasury used some of the budget surplus to begin buying back Treasury
bonds. Meanwhile, corporate bond yields increased.
In the pages that follow, your Fund's portfolio manager will give you his
insight on the Fund's performance for this reporting period. Also, we are
pleased to announce that you can now access your Advantus Funds data online
through the Advantus web site: www.advantusfunds.com. To learn how you can
access your Advantus Fund information through our internet site, call Advantus
Shareholder Services at 1-800-665-6005.
We value your business and want to make doing business with us as easy for you
as possible. 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 six-month period ended March 31,
2000, for each class of shares offered was as follows:
<TABLE>
<S> <C>
CLASS A.......................... 2.28 PERCENT*
CLASS B.......................... 1.98 PERCENT*
CLASS C.......................... 2.09 PERCENT*
</TABLE>
The Fund's benchmark, the Lehman Brothers Government/Corporate Bond Index,**
returned 2.25 percent for the same period.
PERFORMANCE ANALYSIS
After a year of steadily rising interest rates, the tide began to turn at the
longer end of the yield curve. The yield on the thirty year U.S. Treasury Bonds
fell 22 basis points, but yields on two-year to ten-year notes increased
anywhere from 14 to 88 basis points. Longer maturity Treasury securities
benefited from the continued low inflationary environment, the strong fiscal
situation of the United States, and the government's decision to begin buying
back its longer maturity debt. Laws of supply (less Treasury issuance) and
demand (government buying back debt), provided a bullish backdrop for long term
Treasury securities. Interest rates at the short end of the yield curve were a
different story as the Federal Reserve continued to systematicaly push short-
term rates higher in an effort to cool a very strong economy.
During the past six months, the Federal Reserve raised the Fed Funds rate by 25
basis points on three occasions. All of this activity produced an inverted yield
curve where short-term interest rates are higher than long term interest rates.
At period end, the peak yield on the curve was the two-year Treasury note (6.48
percent) while the thirty-year bond was yielding just 5.84 percent.
U.S Treasury securities were the star performers within the fixed income
universe. As a broad group, they returned 3.02 percent for the six-month period,
while thirty-year Treasury bonds returned 4.64 percent. Returns on corporate
bonds and mortgage-backed securities (spread sectors) trailed significantly as
their credit spreads widened to relative to Treasury securities. Corporate bonds
returned 1.46 percent while mortgage-backed securities generated a 1.77 percent
total return. For the second half of the reporting period, they under-performed
Treasuries by 1.56 percent and 1.25 percent respectively. The magnitude of the
under-performance is extreme but reflective of current investor sentiment.
Corporate bonds have been negatively impacted by a multitude of factors: the
inversion of the yield curve, increased event risk through potential mergers and
acquisitions, heavy issuance of new corporate debt, higher default rates, wider
swap spreads, a volatile stock market and the Federal Reserve tightening
monetary policy. Meanwhile, U.S. Treasuries are rallying because there will be
less supply in the years ahead and the government has instituted a buy back
program to retire some of their bonds early.
2
<PAGE>
Our critical strategic portfolio decision early this year was to reduce exposure
to long corporate bonds and replace them with long U.S. Treasury securities.
Thirty-year corporate bonds of Lockheed Martin, Tyco International, and
Hydro-Quebec were sold and the proceeds went into thirty-year Treasuries. Other
intermediate maturity corporate notes were sold and proceeds were used to
increase the dollar allocation to the U.S. Treasury sector. The Treasury
component of the portfolio was increased to 23.3 percent from 15.2 percent.
These moves still left the portfolio under-weighted Treasuries, but much more in
line with our benchmark index. From a duration standpoint, the portfolio has
been two to five percent longer than the benchmark index and this has enhanced
returns as long-term interest rates have fallen.
OUTLOOK
We will continue to make U.S. Treasury securities a significant contributor to
the overall portfolio holdings. The fundamental and technical reasons that make
this sector attractive will likely continue into the next quarter. We will own
long maturity assets in the Treasury market, and look to add yield through
spread product in shorter duration assets.
We anticipate that the themes developing in the past few months will continue to
unfold as we move through the remainder of the year. The inverted yield curve
will stay intact as long as the economy remains strong and the Federal Reserve
continues its vigilant fight on inflation. As the Federal Reserve continues to
push up short-term interest rates to slow economic growth, the long end
celebrates in its inflation fighting activity. We feel that this action coupled
with fiscal surpluses will keep long-term U.S. Treasury interest rates low in
the months ahead. In our opinion spread product will continue to languish until
spreads widen enough to attract buyers. Corporate bonds are currently fighting
an uphill climb against a jittery stock market, an inverted yield curve and a
Federal Reserve willing to raise short-term interest rates. Based on current
trends, it appears that U.S. Treasury notes will continue to perform well in the
months ahead as long-term interest rates ratchet lower.
*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. If these charges were reflected, performance would be reduced.
Investment returns and principle value will fluctuate so that when redeemed,
shares may be worth more or less than originally invested.
**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 March 31, 1990 through March 31, 2000. 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 March 31, 2000.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN:
One year -3.73%
Five year 5.35%
Ten year 6.83%
</TABLE>
<TABLE>
<S> <C> <C> <C>
Lehman Brothers
Government/Corporate
Class A CPI Bond Index
3/31/1990 10,000 10,000 10,000
10/31/1990 10,035 10,357 10,561
10/31/1991 11,505 10,660 12,184
10/31/1992 12,741 11,002 13,468
10/31/1993 14,530 11,297 15,338
9/30/1994 13,560 11,638 14,646
9/30/1995 15,601 11,894 16,499
9/30/1996 16,230 12,252 17,241
9/30/1997 17,946 12,523 18,896
9/30/1998 19,515 12,702 22,779
9/30/1999 19,054 13,036 22,676
3/31/2000 19,353 13,292 23,186
</TABLE>
(Thousands)
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN:
One year -4.94%
Five year 5.28%
Since inception (8/19/94) 5.27%
</TABLE>
<TABLE>
<S> <C> <C> <C>
Lehman Brothers
Government/Corporate
Class B CPI Bond Index
8/19/1994 10,000 10,000 10,000
9/30/1994 9,876 10,067 9,853
9/30/1995 10,801 10,289 11,099
9/30/1996 11,252 10,598 11,599
9/30/1997 12,480 10,833 12,712
9/30/1998 13,610 10,987 14,228
9/30/1999 13,200 11,276 14,164
3/31/2000 13,345 11,498 14,483
</TABLE>
(Thousands)
4
<PAGE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
AVERAGE ANNUAL TOTAL RETURN:
One year 0.05%
Five year 5.45%
Since inception (3/1/95) 5.39%
</TABLE>
<TABLE>
<S> <C> <C> <C>
Lehman Brothers
Government/Corporate
Class C CPI Bond Index
3/1/1995 10,000 10,000 10,000
9/30/1995 10,925 10,146 10,939
9/30/1996 11,265 10,450 11,431
9/30/1997 12,348 10,682 12,529
9/30/1998 13,372 10,834 14,023
9/30/1999 12,909 11,119 13,960
3/31/2000 13,063 11,338 14,274
</TABLE>
(Thousands)
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. Had these
charges been reflected, performance would be reduced. 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 Bond - 5.250%, 02/15/29............... $ 2,531,025 11.8%
U.S. Treasury Note - 3.625%, 07/15/02............... 1,575,102 7.4%
FNMA - 6.500%, 08/15/04............................. 1,222,157 5.7%
Valero Energy Corporation - 7.375%, 03/15/06........ 948,856 4.4%
PNC Bank Corporation - 6.728%, 01/25/07............. 883,629 4.1%
Morgan Stanley Dean Witter - 6.875%, 03/01/07....... 865,670 4.1%
Time Warner, Inc. - 9.125%, 01/15/13................ 826,818 3.9%
Enron Corporation - 6.725%, 11/17/08................ 813,271 3.8%
U.S. Treasury Bond - 6.840%, 11/15/04............... 782,627 3.7%
Crown Cork & Seal Company, Inc. - 7.125%, 09/01/02.. 779,191 3.6%
----------- ----
$11,228,346 52.5%
=========== ====
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
U.S. Treasury 23.2%
BB rated 2.6%
Government Agencies 10.6%
Cash and Other Assets/Liabilities 6.9%
A rated 16.2%
Preferred Stock 4.8%
BBB rated 28.0%
AAA rated 7.7%
</TABLE>
6
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES
MARCH 31, 2000
(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 (88.3%)
GOVERNMENT OBLIGATIONS (33.8%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (30.0%)
Federal National Mortgage Association (FNMA) (6.0%)
$1,250,000 ................................................. 6.500% 08/15/04 $ 1,222,157
237,943 ................................................. 7.000% 07/01/29 228,749
-----------
1,450,906
-----------
Government National Mortgage Association (GNMA) (.8%)
67,845 ................................................. 7.000% 04/15/22 66,251
133,532 ................................................. 7.000% 03/15/23 130,205
-----------
196,456
-----------
U.S. Treasury (23.2%)
1,050,000 Bond............................................. 6.840% 11/15/04 782,627
2,825,000 Bond............................................. 5.250% 02/15/29 2,531,025
750,000 Bond............................................. 6.000% 02/15/26 741,563
1,500,000 Note............................................. 3.625% 07/15/02 1,575,102
-----------
5,630,317
-----------
STATE AND LOCAL GOVERNMENT OBLIGATIONS (1.4%)
225,000 California Housing Finance Agency................ 8.160% 02/01/28 229,306
102,000 Wyoming Community Development.................... 6.850% 06/01/10 100,180
-----------
329,486
-----------
OTHER GOVERNMENT OBLIGATIONS (2.4%)
600,000 Government of Canada (b)......................... 6.375% 11/30/04 583,130
-----------
Total government obligations (cost: $7,948,013)...................... 8,190,295
-----------
CORPORATE OBLIGATIONS (54.5%)
BASIC MATERIALS (7.0%)
Chemicals (4.9%)
500,000 BF Goodrich Company.............................. 6.600% 05/15/09 454,901
750,000 IMC Global, Inc.................................. 6.625% 10/15/01 735,552
-----------
1,190,453
-----------
Paper and Forest (2.1%)
500,000 International Paper Company...................... 6.875% 07/10/00 498,969
-----------
CAPITAL GOODS (5.8%)
Aerospace/Defense (2.6%)
750,000 Raytheon Company................................. 6.400% 12/15/18 622,545
-----------
Containers-Metal/Glass (3.2%)
800,000 Crown Cork & Seal Company, Inc................... 7.125% 09/01/02 779,191
-----------
CONSUMER CYCLICAL (5.6%)
Auto (.9%)
250,000 Federal Mogul Corporation........................ 7.500% 07/01/04 217,488
-----------
</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>
Building Materials (1.8%)
$ 450,000 Masco Corporation................................ 6.125% 09/15/03 $ 435,989
-----------
Hardware and Tools (2.9%)
750,000 The Stanley Works................................ 5.750% 03/01/04 705,392
-----------
CONSUMER STAPLES (7.1%)
Beverage (2.0%)
500,000 Anheuser-Busch Companies, Inc.................... 7.100% 06/15/07 489,847
-----------
Broadcasting (1.7%)
450,000 British Sky Broadcasting (b).................... 6.875% 02/23/09 408,285
-----------
Entertainment (3.4%)
750,000 Time Warner, Inc................................. 9.125% 01/15/13 826,818
-----------
ENERGY (3.9%)
Oil & Gas (3.9%)
1,000,000 Valero Energy Corporation........................ 7.375% 03/15/06 948,856
-----------
FINANCIAL (16.8%)
Banks (2.6%)
700,000 St. George Bank-144A Issue (b)(c)............... 8.485% 12/31/49 629,612
-----------
Finance-Diversified (4.0%)
500,000 General Electric Capital Corporation............. 6.290% 12/15/01 492,563
525,000 National Collegiate.............................. 7.240% 09/20/14 485,132
-----------
977,695
-----------
Investment Bankers/Brokers (3.6%)
900,000 Morgan Stanley Dean Witter....................... 6.875% 03/01/07 865,670
-----------
Mortgage Revenue Bonds (4.7%)
300,000 CFSB Finance Company-144A Issue (c)............. 5.977% 11/15/05 252,469
900,000 PNC Bank Corporation............................. 6.728% 01/25/07 883,629
-----------
1,136,098
-----------
Real Estate Investment Trust (1.9%)
500,000 Security Capital Pacific Trust................... 7.500% 02/15/14 462,592
-----------
TECHNOLOGY (1.9%)
500,000 Computer Associates International................ 6.375% 04/15/05 469,512
-----------
UTILITIES (6.4%)
Electric Companies (3.0%)
750,000 Edison International............................. 6.875% 09/15/04 727,451
-----------
Natural Gas (3.4%)
880,000 Enron Corporation................................ 6.725% 11/17/08 813,271
-----------
Total corporate obligations (cost: $13,806,866)...................... 13,205,734
-----------
Total long-term debt securities (cost: $21,754,879).................. 21,396,029
-----------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS BOND FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
------ -----------
<C> <S> <C>
PREFERRED STOCK (4.8%)
FINANCIAL (4.8%)
Real Estate Investment Trust (4.8%)
$ 16,000 Duke Realty Investments, Inc. - 7.99%............ $ 718,000
10,000 Prologis Trust - 8.54%........................... 438,750
-----------
1,156,750
-----------
Total preferred stock (cost: $1,301,672)......... 1,156,750
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
---------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (4.1%)
$ 645,816 Federated Money Market Obligation Trust--Prime
Obligation Fund, current rate................... 5.890% 645,816
350,000 U.S. Treasury Bill............................... 5.835% 06/08/2000 346,329
----------
Total short-term securities (cost: $992,052)......................... 992,145
----------
Total investments in securities (cost: $24,048,603) (d).............. $23,544,924
==========
</TABLE>
Notes to Investments in Securities
-----------------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) The Fund held 6.7% of net assets in foreign securities as of March 31, 2000.
(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, 2000, 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 March 31, 2000 the cost of securities for federal income tax purposes was
$24,206,527. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<CAPTION>
Gross unrealized appreciation. $ 113,546
<S> <C>
Gross unrealized depreciation...................................................... (775,149)
--------------
Net unrealized depreciation........................................................ $ (661,603)
==============
</TABLE>
9
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market
value - see accompanying schedule for
detailed listing
(identified cost: $24,048,603)........ $23,544,924
Cash in bank on demand deposit......... 42,035
Receivable for Fund shares sold........ 285
Receivable for investment securities
sold.................................. 444,767
Accrued interest receivable............ 268,111
Other receivables...................... 578
----------
Total assets....................... 24,300,700
----------
LIABILITIES
Payable for investment securities
purchased............................. 2,543
Payable for Fund shares redeemed....... 15,100
Dividends payable to shareholders...... 34,820
Payable to Adviser..................... 28,962
----------
Total liabilities.................. 81,425
----------
Net assets applicable to outstanding
capital stock......................... $24,219,275
==========
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............................ $ 25,293
Additional Paid-in Capital........... 26,531,730
Undistributed net investment
income............................... 72
Accumulated net realized losses from
investments.......................... (1,834,141)
Unrealized depreciation on
investments.......................... (503,679)
----------
Total - representing net assets
applicable to outstanding capital
stock.............................. $24,219,275
==========
Net assets applicable to outstanding
Class A shares........................ $16,181,255
==========
Net assets applicable to outstanding
Class B shares........................ $6,760,611
==========
Net assets applicable to outstanding
Class C shares........................ $1,277,409
==========
Shares outstanding and net asset value
per share:
Class A - Shares outstanding
1,690,876............................ $ 9.57
==========
Class B - Shares outstanding
704,757.............................. $ 9.59
==========
Class C - Shares outstanding
133,615.............................. $ 9.56
==========
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS BOND FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1999 TO MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest............................. $ 846,629
Dividends............................ 84,009
----------
Total investment income.......... 930,638
----------
Expenses (note 4):
Investment advisory fee.............. 90,937
Rule 12b-1 - Class A................. 21,577
Rule 12b-1 - Class B................. 36,601
Rule 12b-1 - Class C................. 6,999
Administrative services fee.......... 37,200
Custodian fees....................... 2,419
Auditing and accounting services..... 7,419
Legal fees........................... 4,000
Directors' fees...................... 263
Registration fees.................... 18,073
Printing and shareholder reports..... 29,130
Insurance............................ 1,722
Other................................ 1,477
----------
Total expenses................... 257,817
----------
Less fees and expenses waived or
absorbed by Adviser:
Other fund expenses................ (75,721)
----------
Total net expenses............... 182,096
----------
Investment income - net.......... 748,542
----------
Realized and unrealized gains (losses)
on investments:
Net realized losses on investments
(note 3)........................... (1,013,903)
Net change in unrealized appreciation
or depreciation on investments..... 593,308
----------
Net losses on investments........ (420,595)
----------
Net increase in net assets resulting
from operations...................... $ 327,947
==========
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS BOND FUND
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1999 TO MARCH 31, 2000 AND YEAR ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Operations:
Investment income - net.............. $ 748,542 $ 1,522,744
Net realized loss on investments..... (1,013,903) (805,332)
Net change in unrealized appreciation
or depreciation on investments..... 593,308 (1,512,901)
----------- -----------
Increase (decrease) in net assets
resulting from operations...... 327,947 (795,489)
----------- -----------
Distributions to shareholders from:
Investment income - net:
Class A............................ (519,696) (1,023,784)
Class B............................ (192,099) (403,884)
Class C............................ (36,675) (97,744)
Net realized gains on investments:
Class A............................ -- (350,337)
Class B............................ -- (160,988)
Class C............................ -- (36,465)
----------- -----------
Total distributions.............. (748,470) (2,073,202)
----------- -----------
Capital share transactions: (notes 4
and 5):
Proceeds from sales:
Class A............................ 1,166,616 3,097,303
Class B............................ 382,616 2,270,139
Class C............................ 25,009 1,123,725
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 351,141 973,836
Class B............................ 165,225 519,553
Class C............................ 35,121 127,664
Payments for redemption of shares:
Class A............................ (2,899,694) (3,818,402)
Class B............................ (1,844,396) (2,672,428)
Class C............................ (352,688) (1,543,002)
----------- -----------
(Decrease) increase in net assets
from capital share
transactions................... (2,971,050) 78,388
----------- -----------
Total decrease in net assets..... (3,391,573) (2,790,303)
Net assets at beginning of period...... 27,610,848 30,401,151
----------- -----------
Net assets at end of period............ $24,219,275 $27,610,848
=========== ===========
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(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 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.
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.
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, 2000, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities,
aggregated $20,255,991 and $23,864,454, 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 (PFPC Global Fund
Services, formerly First Data Investor Services Group). 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.
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.
14
<PAGE>
ADVANTUS BOND FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)
The Fund has entered into a shareholder and administrative services
agreement with Minnesota Life Insurance Company (Minnesota Life). Under this
agreement, the Fund pays an administrative service fee equal to $6,200 per month
to Minnesota Life for accounting, auditing, legal and other administrative
services which Minnesota Life provides. Prior to August 1, 1999, the
administrative services fee was $5,700 per month. In addition, for shareholder
services performed by Minnesota Life, the Adviser will pay Minnesota Life an
annual account servicing fee as agreed by the Adviser and Minnesota Life.
Advantus Capital directly incurs and pays the fund's operating expenses and
the Fund in turn reimburses Advantus Capital. During the period ended March 31,
2000, Advantus Capital voluntarily agreed to absorb $75,721 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 $28,886.
As of March 31, 2000, Minnesota Life and subsidiaries and the directors and
officers of the Fund as a whole owned 388,853 Class A shares which represents
23.0 percent of the total outstanding Class A shares.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $2,825.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period ended March 31, 2000 and the year
ended September 30, 1999 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------- ------------------- -------------------
2000 1999 2000 1999 2000 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sold...................................... 120,845 303,385 40,103 221,815 2,623 109,953
Issued for reinvested distributions....... 36,813 97,068 17,206 51,177 3,684 12,601
Redeemed.................................. (304,064) (380,350) (191,746) (264,176) (36,966) (153,901)
-------- -------- -------- -------- ------- --------
(146,406) 20,103 (134,437) 8,816 (30,659) (31,347)
======== ======== ======== ======== ======= ========
</TABLE>
(6) RESTRICTED SECURITIES
At March 31, 2000, 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 March 31, 2000
was $882,081 which represents 3.6 percent 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
OCTOBER 1,
1999 TO
MARCH 31, YEAR ENDED SEPTEMBER 30,
2000 ------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995(A)
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $ 9.71 $ 10.69 $ 10.43 $ 10.03 $ 10.24 $ 9.50
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income................ .29 .54 .59 .63 .62 .64
Net gains (losses) on securities
(both realized and unrealized)..... (.14) (.79) .30 .40 (.22) .74
------- ------- ------- ------- ------- -------
Total from investment operations... .15 (.25) .89 1.03 .40 1.38
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment
income............................. (.29) (.54) (.60) (.63) (.61) (.64)
Distributions from net realized
gains.............................. - (.19) (.03) - - -
------- ------- ------- ------- ------- -------
Total distributions................ (.29) (.73) (.63) (.63) (.61) (.64)
------- ------- ------- ------- ------- -------
Net asset value, end of period......... $ 9.57 $ 9.71 $ 10.69 $ 10.43 $ 10.03 $ 10.24
======= ======= ======= ======= ======= =======
Total return (c)....................... 2.28% (2.36)% 8.75% 10.57% 4.03% 15.05%
Net assets, end of period (in
thousands)........................... $16,181 $17,846 $19,419 $17,122 $16,528 $15,315
Ratio of expenses to average daily net
assets (d)........................... 1.15%(e) 1.15% 1.10% 1.00% 1.00% 1.00%
Ratio of net investment income (loss)
to average daily net assets (d)...... 6.01%(e) 5.41% 5.55% 6.18% 6.08% 6.58%
Portfolio turnover rate (excluding
short-term securities)............... 80.8% 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 $75,721,
$115,756, $119,092, $129,031, $120,750 and $129,155 in expenses for the
period ended March 31, 2000, 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 1.73%, 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 5.43%, 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 2.48%, 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 4.66%, 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 2.48%,
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 4.66%, 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 PERIOD FROM
OCTOBER 1, OCTOBER 1,
1999 TO 1999 TO
MARCH 31, YEAR ENDED SEPTEMBER 30, MARCH 31,
2000 ----------------------------------------------- 2000
(UNAUDITED) 1999 1998 1997 1996 1995(A) (UNAUDITED)
----------- -------- -------- -------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $ 9.74 $10.71 $10.43 $10.02 $10.23 $ 9.50 $ 9.70
------ ------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income................ .25 .47 .51 .54 .53 .55 .25
Net gains (losses) on securities
(both realized and unrealized)..... (.15) (.78) .31 .41 (.21) .73 (.14)
------ ------ ------ ------ ------ ------ ------
Total from investment operations... .10 (.31) .82 .95 .32 1.28 .11
------ ------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income............................. (.25) (.47) (.51) (.54) (.53) (.55) (.25)
Distributions from net realized
gains.............................. - (.19) (.03) - - - -
------ ------ ------ ------ ------ ------ ------
Total distributions................ (.25) (.66) (.54) (.54) (.53) (.55) (.25)
------ ------ ------ ------ ------ ------ ------
Net asset value, end of period......... $ 9.59 $ 9.74 $10.71 $10.43 $10.02 $10.23 $ 9.56
====== ====== ====== ====== ====== ====== ======
Total return (c)....................... 1.98% (2.98)% 8.09% 9.72% 3.13% 13.92% 2.09%
Net assets, end of period (in
thousands)........................... $6,761 $8,171 $8,894 $6,263 $3,532 $1,142 $1,277
Ratio of expenses to average daily net
assets (d)........................... 1.90%(e) 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)...... 5.24%(e) 4.64% 4.78% 5.32% 5.19% 5.61% 5.24%(e)
Portfolio turnover rate (excluding
short-term securities)............... 80.8% 211.9% 237.2% 180.5% 222.6% 270.7% 80.8%
<CAPTION>
CLASS C
-----------------------------------------------------
PERIOD FROM
MARCH 1,
YEAR ENDED SEPTEMBER 30, 1995(B) TO
-------------------------------------- SEPTEMBER 30,
1999 1998 1997 1996 1995
-------- -------- -------- -------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period... $10.68 $10.42 $10.02 $10.23 $ 9.67
------ ------ ------ ------ ------
Income from investment operations:
Net investment income................ .47 .51 .54 .52 .33
Net gains (losses) on securities
(both realized and unrealized)..... (.79) .29 .40 (.21) .55
------ ------ ------ ------ ------
Total from investment operations... (.32) .80 .94 .31 .88
------ ------ ------ ------ ------
Less distributions:
Dividends from net investment
income............................. (.47) (.51) (.54) (.52) (.32)
Distributions from net realized
gains.............................. (.19) (.03) - - -
------ ------ ------ ------ ------
Total distributions................ (.66) (.54) (.54) (.52) (.32)
------ ------ ------ ------ ------
Net asset value, end of period......... $ 9.70 $10.68 $10.42 $10.02 $10.23
====== ====== ====== ====== ======
Total return (c)....................... (3.10)% 7.89% 9.61% 3.11% 9.26%
Net assets, end of period (in
thousands)........................... $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%(e)
Ratio of net investment income (loss)
to average daily net assets (d)...... 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%
</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 $75,721,
$115,756, $119,092, $129,031, $120,750 and $129,155 in expenses for the
period ended March 31, 2000, 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 1.73%, 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 5.43%, 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 2.48%, 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 4.66%, 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
2.48%, 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 4.66%,
4.26%, 4.43%, 4.86%, 4.72% and 4.88%, respectively.
(e) Adjusted to an annual basis.
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 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
18
<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 7:30
a.m. to 5:15 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.
INTERNET ADDRESS: www.AdvantusFunds.com
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) or visit
www.AdvantusFunds.com.
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 $3.7
billion in assets in addition to $10.9 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 14 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
Advantus Real Estate Securities Fund
19
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS. THIS MAY BE USED AS SALES
LITERATURE IN
CONNECTION WITH THE OFFER OR SALE OF THE ADVANTUS BOND FUND
IF PRECEDED OR ACCOMPANIED BY (A) THE CURRENT PROSPECTUS FOR THE
ADVANTUS BOND FUND, AND (B) THE CURRENT
ADVANTUS MUTUAL FUND PERFORMANCE REPORT.
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.48644 Rev. 5-2000
