<PAGE>
[LOGO]
SEMI-ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS ENTERPRISE FUND
MARCH 31, 1997
[GRAPHIC]
<PAGE>
ADVANTUS ENTERPRISE FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND LIABILITIES 10
STATEMENT OF OPERATIONS 11
STATEMENTS OF CHANGES IN NET ASSETS 12
NOTES TO FINANCIAL STATEMENTS 13
SHAREHOLDER SERVICES 18
<PAGE>
April 30, 1997 [PHOTO]
Dear Shareholders:
The last six months have provided investors with some high points and some low.
At year end 1996, the stock market exceeded nearly all expectations. Driven by
ideal fundamentals, combined with unprecedented levels of money flowing into the
market, S&P 500 operating earnings grew by nine percent, while the total return
for the S&P 500 Index was over 20 percent. This trend continued into the first
quarter 1997.
Investors started reacting to possible Federal Reserve action to curb the
economy in the second half of February. Even before short-term money rates were
raised by 1/4 percent at the end of March, the stock market started to drop.
After reaching a high on February 19, the S&P 500 declined by 7.3 percent
resulting in a 2.7 percent increase for the quarter. The largest companies in
the S&P 500 outperformed all other companies and were the driving force behind
the Index.
The investment grade bond market posted low single digit returns at the end of
1997. The Fed's increase in money rates had a negative impact on bond prices. At
the end of the first quarter 1997, the interest rate on the two year Treasury
note increased 54 basis points to yield 6.41 percent. The 30-year U.S. Treasury
Bond closed the period yielding 7.10 percent, 46 basis points higher for the
quarter.
The long-term outlook continues to be favorable. We expect economic growth to
slow to around 2.5 percent from 3.2 percent last year as the result of the
tighter money policy. In this environment, the current level of interest rates
should reward bond investors with historically higher real rates of return which
may eventually translate into bond price appreciation. For 1997, we still
believe investors may see high single digit bond returns. The growth in equity
values should slow as corporate profits decline during the year, to
approximately half the rate of 1996.
Moderate economic growth, low inflation, rising corporate profits, a declining
Federal deficit and strong corporate cash flow provide the catalyst for what we
believe will be a positive financial environment for the balance of the year.
Determining which investments will perform well in both the near and long-term
requires professional experience. Advantus Capital Management, Inc. offers a
family of ten funds designed to help you reach your financial goals with a
thoughtful, well-conceived investment strategy.
Sincerely,
/s/ Paul Gooding
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS ENTERPRISE FUND
PERFORMANCE UPDATE
[PHOTO]
JAMES P. TATERA, CFA
SENIOR VICE PRESIDENT AND PORTFOLIO MANAGER
The Advantus Enterprise Fund is a mutual
fund designed for investors seeking
long-term accumulation of capital. In
pursuit of this objective, the Fund will
invest primarily in common and preferred
stocks issued by small companies, defined
in terms of either market capitalization
or gross revenues.
-Dividends paid quarterly
-Capital gains distributions paid annually.
PERFORMANCE
Rising interest rates and growing fears of tightening monetary policy had a
negative impact on the equity market's performance in the first quarter of 1997.
Smaller stocks in particular had a rough ride, with the Russell 2000 Index*
losing 5.5 percent for the three months ending March 31, 1997, one of its
poorest quarters in recent memory.
The Advantus Enterprise Fund's returns for the six months ended March 31, 1997
for each of its three classes of shares offered posted the following returns:
<TABLE>
<S> <C>
Class A........................... -15.8 percent**
Class B........................... -16.1 percent**
Class C........................... -16.1 percent**
</TABLE>
The Advantus Enterprise Fund's performance fell for first quarter 1997 in
concert with the weak overall performance by small stocks in the market. This
performance compares favorably to the Fund's competitors in small cap growth
investing, some which were down 20 percent or more the quarter ending March 31,
1997. The Fund's focus on growth companies affected performance as growth
companies significantly underperformed value stocks.
The Russell 2000 Growth Index* fell 10.5 percent versus the Russell 2000 Value
Index's* loss of only .3 percent during the three month period ended March 31,
1997.
The Fund's six month return compares favorably to the competition but less so to
the Russell 2000 Growth Index's* loss of 10.3 percent for the same period.
PORTFOLIO RECAP
There were few bright spots in the Russell 2000's quarter. Consumer staples and
financial services were the only sectors with positive performance. The
quarter's worst sector was technology, down over 19 percent and responsible for
almost half of the decline of the entire index. Healthcare and consumer
discretionary sectors also were poor performers.
The Enterprise Fund was negatively impacted by technology issues and consumer
cyclicals such as retailing and restaurants/lodging. Gartner Group, which has
shown strong growth in the information services area, came down in price as the
market reevaluated its high price/earnings ratio in a higher interest rate
environment. Another was Idexx Labs, a biotech company which declined in value
after a shortfall in revenue over the most recent period cast doubt about its
growth potential. In situations like these, we reevaluate all fundamental
information to determine if the Fund should continue to hold the position. We
focus on our objectives of investing in
2
<PAGE>
ADVANTUS ENTERPRISE
FUND
MARCH 31, 1997
strong growth companies, in terms of revenues and earnings, with solid prospects
for continuing or accelerating that growth. A change in fundamentals (and stock
price) can warrant a sale and removal from the portfolio, or could be an
opportunity to add to our positions.
Positive contributors for the period included an eclectic group comprised of an
apparel manufacturer, Tommy Hilfiger; a freight forwarder, Eagle USA; energy
companies, AES China Generating, J Ray McDermott, Petroleum Geo-Services; a
diversified industrial products company, Blount International; and a
consolidator in the waste disposal industry, United Waste Systems.
OUTLOOK
For the moment, the powerful momentum exhibited by the market since last summer
seems to have been stemmed. While this setback may not be the end of the
long-term bull market, the corrective process may be deeper and longer than many
investors expect.
We believe volatility will remain high. Rotation between industry groups
continues to be fast and furious. Two risks for the overall market continue to
be rising interest rates and extended valuations. Any further increase in rates
will slow economic growth which tends to favor those companies with dominant
market positions in their respective industries. The second risk, extended
valuations, relates more to the large, blue chip companies which only recently
have sold off. Smaller companies have been correcting since late last summer and
appear relatively cheap today.
Both of these risks should be looked at as opportunities for the Enterprise Fund
which focuses on smaller companies dominant in their particular industry niches.
With valuations low for smaller growth companies, we feel it is only a matter of
time before we see a period of significant outperformance for smaller companies.
*The Russell 2000 Growth Index and the Russell 2000 Value Index contain stock
from the Russell 2000 with a greater than average growth orientation and low
price to book ratios, respectively. The Russell 2000 are the 2,000 largest
companies in the Russell 3000. The Russell 3000 is an unmanaged index of 3,000
common stocks which represents approximately 98 percent of the U.S. market.
**Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge.
3
<PAGE>
ADVANTUS ENTERPRISE
FUND
MARCH 31, 1997
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL
$10,000 INVESTMENT IN ADVANTUS ENTERPRISE FUND,
WILSHIRE MIDCAP 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 Enterprise Fund compared to the Wilshire
Midcap Index and the Consumer Price Index. The lines in each graph represent the
cumulative total return of a hypothetical $10,000 investment made on the
inception date of each class of shares of the Advantus Enterprise Fund
(September 16, 1994 for Class A and Class B and March 1, 1995 for Class C)
through March 31, 1997.
CLASS A AND B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C> <C>
Class A:
One year (14.3)%
Since inception (9/16/94) 6.9%
Class B:
One year (15.1)%
Since inception (9/16/94) 6.9%
Class A Class B Wilshire Midcap Index CPI
9/16/94 $10,000 $10,000 $10,000 $10,000
9/30/94 9,419 9,910 9,942 10,128
9/30/95 12,044 12,107 12,439 10,351
9/30/96 14,051 14,173 14,443 10,662
3/31/97 11,831 11,832 14,658 10,804
</TABLE>
4
<PAGE>
ADVANTUS ENTERPRISE
FUND
MARCH 31, 1997
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN: (THOUSANDS)
<S> <C> <C> <C>
One year (10.6)%
Since inception (3/1/95) 7.7%
Class C Wilshire Midcap Index CPI
3/01/95 $10,000 $10,000 $10,000
9/30/95 12,038 12,157 10,146
9/30/96 13,913 14,115 10,450
3/31/97 11,668 14,325 10,589
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial adviser's investment advice. Individuals cannot buy even an unmanaged
index fund without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS ENTERPRISE
FUND
MARCH 31, 1997
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ----------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
United Waste Systems, Inc.......... 38,742 $1,443,140 4.4%
Kaydon Corporation................. 26,600 1,113,875 3.4%
Borders Group International........ 53,640 1,012,455 3.1%
T. Rowe Price Associates........... 26,800 994,950 3.1%
Tommy Hilfiger Corporation......... 19,000 992,750 3.0%
Eagle USA Airfreight, Inc.......... 31,800 977,850 3.0%
BISYS Group, Inc................... 29,800 938,700 2.9%
Advanced Lighting Technologies,
Inc.............................. 39,590 870,980 2.7%
MSC Industrial Direct Company...... 29,300 853,363 2.6%
Blount International
Incorporated..................... 20,600 849,750 2.6%
---------- ---
$10,047,813 30.8%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Goods (13.8%)
Consumer Goods and Services (38.5%)
Credit Sensitive (7.6%)
Intermediate Goods and
Services (9.9%)
Technology (15.9%)
Cash and Other
Assets/Liabilities (14.3%)
</TABLE>
6
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1997
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (85.7%)
CAPITAL GOODS (13.8%)
15,800 AES China Generating Company, Ltd (b)........ $ 260,700
20,600 Blount International, Incorporated........... 849,750
26,600 Kaydon Corporation........................... 1,113,875
33,300 LCC International, Incorporated (b).......... 308,024
29,300 MSC Industrial Direct Company (b)............ 853,363
18,724 Shaw Group, Incorporated (b)................. 428,312
38,742 United Waste Systems, Incorporated (b)....... 1,443,140
------------
5,257,164
------------
CONSUMER GOODS AND SERVICES (38.5%)
Consumer Goods (5.8%)
15,425 General Cigar Holdings, Incorporated (b)..... 343,206
9,300 Idexx Laboratories, Incorporated (b)......... 130,200
18,683 Occusystems, Incorporated (b)................ 420,368
19,033 Sunrise Assisted Living Incorporated (b)..... 532,924
10,100 Sybron International Corporation (b)......... 280,274
17,300 Total Renal Care Holdings, Incorporated
(b)......................................... 525,488
------------
2,232,460
------------
Consumer Services (14.6%)
6,100 Boston Chicken, Incorporated (b)............. 186,049
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
34,000 Corrections Corporation of America (b)....... $ 824,500
17,849 CUC International, Incorporated (b).......... 401,603
41,064 Extended Stay America (b).................... 605,694
36,800 Gartner Group, Incorporated (b).............. 795,800
22,311 GTECH Holdings Corporation (b)............... 672,119
16,100 Lone Star Steakhouse & Saloon, Incorporated
(b)......................................... 368,288
29,287 National Education Corporation (b)........... 369,748
2,400 NCO Group, Incorporated (b).................. 52,500
8,524 Rainforest Cafe, Incorporated (b)............ 168,349
20,300 Sola International, Incorporated (b)......... 469,438
18,002 Sun International Hotels, Ltd (b)............ 630,070
------------
5,544,158
------------
Retail (11.9%)
39,590 Advanced Lighting Technologies, Incorporated
(b)......................................... 870,980
13,500 Amerisource Health Corporation (b)........... 590,625
53,640 Borders Group, Incorporated (b).............. 1,012,455
17,200 Global Directmail Corporation (b)............ 298,850
7,600 Kohl's, Incorporated (b)..................... 322,050
17,900 National Data Corporation.................... 633,213
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
24,700 West Marine, Incorporated (b)................ $ 815,100
------------
4,543,273
------------
Consumer Cyclicals (6.2%)
16,800 Copart, Incorporated (b)..................... 270,900
19,300 Nautica Enterprises, Incorporated (b)........ 484,912
41,500 Stant Corporation............................ 606,938
19,000 Tommy Hilfiger Corporation (b)............... 992,750
------------
2,355,500
------------
CREDIT SENSITIVE (7.6%)
Building (.9%)
25,100 Maxim Group, Incorporated (b)................ 332,575
------------
Finance (3.8%)
12,800 Partnerre Ltd. (c)........................... 452,800
26,800 T. Rowe Price Associates..................... 994,950
------------
1,447,750
------------
Real Estate (1.7%)
25,600 Fairfield Communities, Incorporated (b)...... 640,000
------------
Utilities (1.2%)
16,700 Panamsat Corporation (b)..................... 480,125
------------
INTERMEDIATE GOODS AND SERVICES (9.9%)
Energy (2.9%)
22,400 J. Ray McDermott Holdings, Incorporated
(b)......................................... 543,200
1,900 Newpark Resources, Incorporated (b).......... 83,125
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
INTERMEDIATE GOODS AND
SERVICES--CONTINUED
11,100 Petroleum Geo-Services ASA (b)(c)............ $ 477,300
------------
1,103,625
------------
Materials (4.4%)
19,887 Cambrex Corporation.......................... 666,215
27,915 McWhorter Technologies, Incorporated (b)..... 582,726
15,230 Valspar Corporation.......................... 437,862
------------
1,686,803
------------
Transportation (2.6%)
31,800 Eagle USA Airfreight, Incorporated (b)....... 977,850
------------
TECHNOLOGY (15.9%)
38,500 Acxiom Corporation (b)....................... 553,438
10,600 Adtran, Incorporated (b)..................... 265,000
21,876 Ansys, Incorporated (b)...................... 177,742
29,800 BISYS Group, Incorporated (b)................ 938,700
18,100 Check Point Software Technologies, Ltd
(b)(c)...................................... 371,049
23,100 CKS Group, Incorporated (b).................. 485,100
22,100 Danka Business Systems PLC (c)............... 694,769
4,200 Dassault Systemes SA (b)(c).................. 243,338
15,600 Dupont Photomasks, Incorporated (b).......... 588,900
14,200 Encad, Incorporated (b)...................... 424,224
7,200 HNC Software, Incorporated (b)............... 188,100
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
16,200 Integrated Systems (b)....................... $ 218,700
21,376 Mastech Corporation (b)...................... 344,688
20,800 Pure Atria Corporation (b)................... 354,900
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
6,801 Sapient Corporation (b)...................... $ 217,632
------------
6,066,280
------------
Total common stocks
(cost: $31,274,432)...................................... $ 32,667,563
------------
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (13.5%)
$ 430,000 U.S. Treasury Bills............................... 5.12%-5.18% 05/22/97 $ 426,789
2,475,000 U.S. Treasury Bills............................... 5.01%-5.13% 04/24/97 2,467,559
1,950,000 U.S. Treasury Bills............................... 5.14%-5.29% 05/22/97 1,935,437
310,000 U.S. Treasury Bill................................ 5.33% 06/19/97 306,425
-----------
Total short-term securities (cost: $5,135,746)........................... 5,136,210
-----------
Total investments in securities (cost: $36,410,178) (d).................. $37,803,773
-----------
-----------
</TABLE>
Notes to Investments in Securities
- ------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 5.9% of net assets in foreign securities as of March 31, 1997.
(d) At March 31, 1997 the cost of securities for federal income tax purposes was
$36,451,255.
The aggregate unrealized appreciation and depreciation of investments in
securities based on this cost were:
<TABLE>
<S> <C> <C>
Gross unrealized appreciation........... $4,469,899
Gross unrealized depreciation........... (3,117,381)
----------
Net unrealized appreciation............. $1,352,518
----------
----------
</TABLE>
9
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see accompanying
schedule for detailed listing (identified cost:
$36,410,178)............................................... $ 37,803,773
Cash in bank on demand deposit.............................. 32,487
Receivable for Fund shares sold............................. 32,270
Receivable for investment securities sold................... 298,571
Dividends receivable........................................ 7,460
Organizational costs........................................ 26,300
-------------
Total assets............................................ 38,200,861
-------------
LIABILITIES
Payable for Fund shares redeemed............................ 2,428
Payable for investment securities purchased................. 21,548
Payable to Adviser.......................................... 76,920
-------------
Total liabilities....................................... 100,896
-------------
Net assets applicable to outstanding capital stock.......... $ 38,099,965
-------------
-------------
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)....................................... $ 32,244
Additional paid-in capital................................ 38,641,345
Accumulated net realized losses from investments.......... (1,967,219)
Unrealized appreciation of investments.................... 1,393,595
-------------
Total--representing net assets applicable to outstanding
capital stock.......................................... $ 38,099,965
-------------
-------------
Net assets applicable to outstanding Class A Shares......... $ 32,235,352
-------------
-------------
Net assets applicable to outstanding Class B Shares......... $ 4,953,668
-------------
-------------
Net assets applicable to outstanding Class C Shares......... $ 910,945
-------------
-------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 2,716,936..................... $ 11.86
-------------
-------------
Class B--Shares outstanding 428,573....................... $ 11.56
-------------
-------------
Class C--Shares outstanding 78,853........................ $ 11.55
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1996 TO MARCH 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest.................................................. $ 148,958
Dividends................................................. 37,670
-------------
186,628
-------------
Expenses (note 4):
Investment advisory fee................................... 170,068
Distribution fees--Class A................................ 54,713
Distribution fees--Class B................................ 25,646
Distribution fees--Class C................................ 4,561
Administrative services fee............................... 21,600
Amortization of organizational costs...................... 5,441
Custodian fees............................................ 6,360
Auditing and accounting services.......................... 7,805
Legal fees................................................ 1,758
Directors' fees........................................... 371
Registration fees......................................... 16,810
Printing and shareholder reports.......................... 17,907
Insurance................................................. 2,980
-------------
Total expenses........................................ 336,020
Less fees and expenses waived or absorbed:
Class A distribution fees............................... (36,476)
-------------
Total net expenses.................................... 299,544
-------------
Investment loss--net.................................. (112,916)
-------------
Realized and unrealized losses on investments:
Net realized losses on investments (note 3)............... (1,967,219)
Net change in unrealized appreciation or depreciation on
investments.............................................. (5,062,523)
-------------
Net losses on investments............................. (7,029,742)
-------------
Net decrease in net assets resulting from operations........ $ (7,142,658)
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1996 TO MARCH 31, 1997 AND YEAR ENDED SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Operations:
Investment loss--net...................................... $ (112,916) $ (174,902)
Net realized gains (losses) on investments................ (1,967,219) 5,318,231
Net change in unrealized appreciation or depreciation on
investments.............................................. (5,062,523) 632,962
------------- -------------
Increase (decrease) in net assets resulting from
operations........................................... (7,142,658) 5,776,291
------------- -------------
Distributions to shareholders from net realized gains on
investments:
Class A................................................. (4,409,566) (958,916)
Class B................................................. (610,188) (64,472)
Class C................................................. (111,341) (4,766)
------------- -------------
Total distributions................................... (5,131,095) (1,028,154)
------------- -------------
Capital share transactions (notes 4 and 6):
Proceeds from sales:
Class A................................................. 1,806,244 4,254,677
Class B................................................. 1,568,650 3,090,839
Class C................................................. 432,037 697,287
Proceeds from issuance of shares as a result of reinvested
dividends:
Class A................................................. 3,124,221 487,551
Class B................................................. 608,224 64,304
Class C................................................. 102,187 4,767
Payments for redemption of shares:
Class A................................................. (1,044,506) (822,143)
Class B................................................. (465,926) (358,921)
Class C................................................. (157,625) (11,840)
------------- -------------
Increase in net assets from capital share
transactions......................................... 5,973,506 7,406,521
------------- -------------
Total increase (decrease) in net assets............... (6,300,247) 12,154,658
Net assets at beginning of period........................... 44,400,212 32,245,554
------------- -------------
Net assets at end of period................................. $ 38,099,965 $ 44,400,212
------------- -------------
------------- -------------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
(1) ORGANIZATION
Advantus Enterprise Fund, Inc. (the Fund) was incorporated on January 27,
1994. The Fund is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. On February
14, 1995 shareholders of the Fund approved a name change to Advantus Enterprise
Fund, Inc. (effective March 1, 1995). Prior to March 1, 1995 the Fund was known
as MIMLIC Small Company Fund, Inc.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class A
shares at net asset value after a specified holding period. Such holding periods
decline as the amount of the purchase increases and range from 28 to 84 months
after purchase for Class B shares and 40 to 96 months after purchase for Class C
shares. All three classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than distribution fees) and realized and unrealized
gains or losses are allocated to each class of shares based upon its relative
net assets.
On June 20, 1994, MIMLIC Asset Management Company (MIMLIC Management)
purchased 7,500 Class A shares and 7,500 Class B shares. Operations of the Fund
did not formally commence until September 16, 1994 when the shares became
effectively registered under the Securities Exchange Act of 1933. The Minnesota
Mutual Life Insurance Company (Minnesota Mutual), the parent of MIMLIC
Management, purchased 1,167,726 Class A shares for $12 million prior to
commencement of operations.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price. When market quotations are not readily available, securities are
valued at fair value as determined in good faith by the Board of Directors. Such
fair values are determined using pricing services or prices quoted by
independent brokers. Short-term securities are valued at market.
13
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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. Dividend income is recognized on the ex-dividend date and
interest income, including amortization of bond premium and discount computed on
a level yield basis, is accrued daily.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to December
31, in order to avoid federal excise tax.
Net investment income (loss) 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 (loss) 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
$112,916.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from October 1, 1996 to March 31, 1997, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $14,497,034 and $13,251,497, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
On February 14, 1995 shareholders of the Fund approved a new investment
advisory agreement, effective March 1, 1995, with Advantus Capital Management,
Inc. (Advantus Capital or the Adviser). Advantus Capital is a wholly-owned
subsidiary of MIMLIC Management which, prior to March 1, 1995, served as
investment adviser to the Fund. 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 (Minnesota Mutual). The fee
for investment management and advisory services is based on the average daily
net assets of the Fund at the annual rate of .80 percent, which is the same as
under the old agreement with MIMLIC Management.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to MIMLIC Sales Corporation
(MIMLIC Sales), the underwriter of the Fund and wholly-owned subsidiary of
MIMLIC Management, to be used to pay certain expenses incurred in the
distribution, promotion and servicing of the Fund's shares. The Class A Plan
provides for a fee up to .30 percent of average daily net assets of Class A
shares. The Class B and Class C Plans provide for a fee up to 1.00 percent of
average daily net assets of
14
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
Class B and Class C shares, respectively. The Class B and Class C 1.00 percent
fee is comprised of a .75 percent distribution fee and a .25 percent service
fee. MIMLIC Sales is currently waiving that portion of Class A distribution fees
which exceeds, as a percentage of average daily net assets, .10 percent. MIMLIC
Sales waived Class A distribution fees in the amount of $36,476 for the period
from October 1, 1996 to March 31, 1997.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, organizational costs and other
miscellaneous expenses.
The Fund pays an administrative services fee, equal to $3,600 per month, to
Minnesota Mutual for accounting, auditing, legal and other administrative
services which Minnesota Mutual provides.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by MIMLIC Sales for distributing the Fund's three
classes of shares amounted to $78,124.
As of March 31, 1997, Minnesota Mutual and subsidiaries and the directors
and officers of the Fund as a whole own the following shares:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OWNED
------------------ -------------------
<S> <C> <C>
Class A................................................. 2,225,146 81.9%
Class C................................................. 1,009 1.3%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $1,758.
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs will be amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or all
of the shares held by MIMLIC Management, or any other holder, representing
initial capital of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by the pro rata portion (based on the ratio
that the number of initial shares redeemed bears to the total number of
outstanding initial shares of the Fund at the date of redemption) of the
unamortized organizational cost balance.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1996 to March 31, 1997
and the year ended September 30, 1996 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------- -------------------- --------------------
1997 1996 1997 1996 1997 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold................................................ 127,350 286,168 114,338 208,560 30,679 46,994
Issued for reinvested distributions................. 228,679 35,236 45,910 4,523 7,840 337
Redeemed............................................ (68,066) (55,653) (43,208) (24,953) (11,266) (823)
--------- --------- --------- --------- --------- ---------
287,963 265,751 117,040 188,130 27,253 46,508
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
15
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, YEAR ENDED SEPTEMBER 16,
1996 TO SEPTEMBER 30, 1994(b) TO
MARCH 31, ------------------- SEPTEMBER 30,
1997 1996 1995(a) 1994
------------ ------- -------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 15.94 $ 14.08 $ 11.03 $ 11.12
------------ ------- -------- -------------
Income from investment
operations:
Net investment income
(loss)..................... (.11) (.05) (.04) --
Net gains or losses on
securities (both realized
and unrealized)............ (2.23) 2.34 3.11 (.09)
------------ ------- -------- -------------
Total from investment
operations............... (2.34) 2.29 3.07 (.09)
------------ ------- -------- -------------
Less distributions:
Dividends from net
investment income.......... -- -- -- --
Distributions from capital
gains...................... (1.74) (.43) (.02) --
------------ ------- -------- -------------
Total distributions....... (1.74) (.43) (.02) --
------------ ------- -------- -------------
Net asset value, end of
period....................... $ 11.86 $ 15.94 $ 14.08 $ 11.03
------------ ------- -------- -------------
------------ ------- -------- -------------
Total return (c).............. (15.8)%(f) 16.7% 27.9% (.8)%(d)
Net assets, end of period
(in thousands)............... $32,235 $38,722 $30,454 $12,964
Ratio of expenses to average
daily net assets (g)......... 1.28%(i) 1.31% 1.34% .05%(h)
Ratio of net investment income
(loss) to average daily net
assets (g)................... (.40)%(i) (.38)% (.48)% (.02)%(h)
Portfolio turnover rate
(excluding short-term
securities).................. 36.4% 80.2% 48.8% 5.0%
Average commission rate on
stock transactions (j)....... $ .1055 $ .1150 N/A N/A
</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 assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges.
(d) Total return is presented for the period from September 16, 1994,
commencement of operations, to September 30, 1994.
(e) Total return is presented for the period from March 1, 1995, commencement of
operations, to September 30, 1995.
(f) Total return is presented for the period from October 1, 1996 to March 31,
1997.
(g) The Fund's Distributor and Adviser voluntarily waived or absorbed $36,476,
$68,785, $83,999 and $1,430 in expenses for the period from October 1, 1996
to March 31, 1997, the years ended September 30, 1996 and 1995 and the
period ended September 30, 1994, respectively. If the Fund had been charged
for these expenses, the ratio of expenses to average daily net assets would
have been 1.48%, 1.51%, 1.75% and .06% for Class A shares, respectively,
2.18%, 2.20%, 2.39% and .10% for Class B shares, respectively and 2.18%,
2.19% and 2.32% for Class C shares, respectively. The ratio of net
investment income (loss) to average daily net assets would have been (.60)%,
(.58)%, (.89)% and (.03)% for Class A shares, respectively, (1.31)%,
(1.25)%, (1.60)% and (.07)% for Class B shares, respectively and (1.31)%,
(1.22)% and (1.65)% for Class C shares, respectively.
16
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS B CLASS C
------------------------------------------------ ---------------------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM
OCTOBER 1, YEAR ENDED SEPTEMBER 16, OCTOBER 1, MARCH 1,
1996 TO SEPTEMBER 30, 1994(b) TO 1996 TO YEAR ENDED 1995(b) TO
MARCH 31, ---------------- SEPTEMBER 30, MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1995(a) 1994 1997 1996 1995
----------- ------ ------- ------------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $15.64 $13.94 $11.02 $11.12 $15.63 $13.94 $11.58
----------- ------ ------- ------ ------ ------ ------
Income from investment
operations:
Net investment income
(loss)..................... (.19) (.12) (.09) (.01) (.14) (.09) (.06)
Net gains or losses on
securities (both realized
and unrealized)............ (2.15) 2.25 3.03 (.09) (2.20) 2.21 2.42
----------- ------ ------- ------ ------ ------ ------
Total from investment
operations............... (2.34) 2.13 2.94 (.10) (2.34) 2.12 2.36
----------- ------ ------- ------ ------ ------ ------
Less distributions:
Dividends from net
investment income.......... -- -- -- -- -- -- --
Distributions from capital
gains...................... (1.74) (.43) (.02) -- (1.74) (.43) --
----------- ------ ------- ------ ------ ------ ------
Total distributions....... (1.74) (.43) (.02) -- (1.74) (.43) --
----------- ------ ------- ------ ------ ------ ------
Net asset value, end of
period....................... $11.56 $15.64 $13.94 $11.02 $11.55 $15.63 $13.94
----------- ------ ------- ------ ------ ------ ------
----------- ------ ------- ------ ------ ------ ------
Total return (c).............. (16.1)%(f) 15.7% 26.7% (.9)%(d) (16.1)%(f) 15.6% 20.4%(e)
Net assets, end of period
(in thousands)............... $4,954 $4,871 $1,720 $ 96 $ 911 $ 807 $ 71
Ratio of expenses to average
daily net assets (g)......... 2.18%(i) 2.20% 2.24% .09%(h) 2.18%(i) 2.19% 2.24%(i)
Ratio of net investment income
(loss) to average daily net
assets (g)................... (1.31)%(i) (1.25)% (1.45)% (.06)%(h) (1.31)%(i) (1.22)% (1.57)%(i)
Portfolio turnover rate
(excluding short-term
securities).................. 36.40% 80.2% 48.8% 5.0% 36.40% 80.2% 48.8%
Average commission rate on
stock transactions (j)....... $.1055 $.1150 N/A N/A $.1055 $.1150 N/A
</TABLE>
- ----------
(h) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
(i) Adjusted to an annual basis.
(j) Beginning in fiscal 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commission paid on applicable purchases and sales of stock for the
period by the total number of related shares purchased and sold.
17
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account--subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE TRANSFER: You may transfer money from one Advantus account to any
other Advantus account you own just by calling our toll free number. Sign up for
telephone exchanges on the Advantus Application or complete the telephone
authorization form.
SYSTEMATIC TRANSFER: If you have an Advantus Money Market account you may
transfer a set amount of money to another Advantus Fund to diversify your
investment portfolio and take advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums out of your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus' non-money market funds.
SPECIAL PURCHASE PLANS: Our special purchase plans enable you to open an
Advantus Fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets). One of these plans--The
Automatic Investment Plan--allows you to invest automatically each month from
your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Individual Retirement Account or other qualified plan including SEPS, SIMPLE,
profit sharing, money purchase or defined benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account. Amounts
over $1,000 may be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Sign up for
18
<PAGE>
telephone redemption on the Advantus Application or complete a Service Request
Form. To have the redemption automatically deposited into your checking account,
please send a voided check from your bank. Depending on the performance of the
underlying investment options, the value may be worth more or less than the
original amount invested upon redemption. Some limitations apply, please refer
to the prospectus for details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, and annual tax statements. Semiannual and annual reports will provide you
with portfolio information, fund performance data and the current investment
outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005. Our
voice response system is available from 7 a.m. to 3 a.m. Central Time Monday
through Friday, and 8 a.m. to 5 p.m. Central Time on Saturday. This system
allows you to access current net asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through your local
registered representative of MIMLIC Sales Corporation, distributor of the Funds.
Contact your representative for information and a prospectus for any of the
Advantus Funds you are interested in.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages eleven mutual funds containing
$2.3 billion in assets in addition to $1.4 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
19
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS]
MIMLIC SALES CORPORATION
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-443-3677
<PAGE>
MIMLIC SALES CORPORATION BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
FORWARDING AND RETURN POSTAGE GUARANTEED,
ADDRESS CORRECTION REQUESTED
F.48646 5-97
