<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS ENTERPRISE FUND
SEPTEMBER 30, 1998
<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
INDEPENDENT AUDITORS' REPORT 18
SHAREHOLDER SERVICES 19
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholder:
Economic prosperity and record-setting U.S. markets over the last few years have
lulled many Americans into dreaming of perpetual gain. In this year, the effects
of global economic turmoil and market volatility have awakened us.
The global economy has been exposed to the negative effects of Asia's economic
debacle for over a year, and this negative growth is highly contagious. About 40
percent of the world's economies are in recession. Japan continues to seek the
financial stimulus necessary to recover. In Russia, a backlash against
capitalism continues to unfold. Also, Latin America, Brazil in particular, has
seen its competitive position deteriorate sharply. We anticipate that world
growth will slow to an annual rate of 1 percent by the end of 1998. This is a
dramatic change from one year ago (down 3 percent).
As expected, the U.S. economy is slowing. The growth forecast for our country at
the end of this reporting period (September 30, 1998) was 1.5 to 2 percent, a
drop from the 3 percent experienced a year ago. Current economic conditions
favor bonds, as yields will likely decline in light of slowing economic
conditions. Deflation fears have sustained a global "flight to quality" as
investors dumped the riskier assets of developing countries and sought the
relative safety of high quality bonds in the major countries.
We anticipate that there will be a continuation of tight fiscal policy. However,
monetary policy will change. We expect interest rates to move lower in the
upcoming quarters, as we believe it is likely that the Federal Reserve Board
will aggressively lower the Fed Funds rate to inject liquidity into a globally
stressed financial system.
The yield curve should steepen, with short-term interest rates declining further
than long-term interest rates. We expect the corporate bond sector will
stabilize and spreads will recover as the Fed acts to provide liquidity.
Many stocks have declined significantly in response to reduced earnings
expectations, and many stocks are now attractively valued. Interest rates have
declined, which improves the relative value of stocks. However, we expect that
stocks may remain volatile for the near term.
We have witnessed a significantly higher level of volatility in the U.S. stock
markets as most indices and stock funds came under pressure. The flight to
quality in all kinds of securities was reinforced and magnified by more visible
risks in a number of sectors.
A declining equity market hurt corporate bonds as investors began worrying about
the likelihood of lower earnings. Companies with international exposure became a
concern. Liquidity in the corporate bond market began to evaporate, as traders
became reluctant to bid on corporate bonds. These factors pushed corporate bond
spreads even wider, causing them to underperform U.S. Treasury securities.
In the pages that follow, the Fund's manager will give you information about how
the economy and conditions within the market affected the Fund during this
reporting period. The manager will specifically discuss your Advantus Fund's
performance and share some strategies that were used to manage the Fund.
Meanwhile, continue investing for the long term. We believe that you will derive
the greatest benefit by doing so. Be thoughtful about the diversification of
your portfolio, and maintain a high quality portfolio. Consider putting a
periodic investment program in place. It will help you weather volatility in the
markets.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, President
Advantus Funds
<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
For the year ended September 30, 1998, the Advantus Enterprise Fund returned the
following for each class of shares currently offered:
<TABLE>
<S> <C>
Class A...................... -28.81 percent*
Class B...................... -29.44 percent*
Class C...................... -29.40 percent*
</TABLE>
The Fund's benchmark, the Russell 2000 Growth Index** returned
- -24.83 percent and the Wilshire MidCap Index+ returned -14.63 percent for the
same period.
In prior reporting periods, the Wilshire Midcap Index+ was used as the Fund's
benchmark. The Russell 2000 Growth Index** better fits our stated investment
objective than did the Wilshire Midcap Index.+
PERFORMANCE ANALYSIS
Performance in small growth stocks has trailed large companies for the last few
years. Valuation and sentiment are at historic low levels only posted at prior
small stock bear markets. The sell off in the overall equity markets has been
most severe in smaller companies, reducing the valuation and momentum within the
emerging growth area to levels seen only briefly during periods of extreme
market stress.
When reviewing the trailing twelve months performance of small growth companies,
you will find only one sector out of the nine monitored had a return higher than
a negative 20 percent. That one sector was the finance area, which includes
banks, and insurance companies. That sector lost 11 percent for the trailing 12
months ending September 30, 1998. The remaining eight sectors each lost over 20
percent, with the largest negative contributor to the index's performance being
technology. Beyond the finance area, strength in relative terms was seen in
health care, media, telephone and business services.
Several factors impacted the Fund's performance including concerns about
overseas markets, such as Asia, Latin America and Europe and also the spill over
effect on smaller companies in the U. S. Weakness in these overseas markets is
casting a cloud over the U.S. economy and its ability to show moderate growth
over the next 12 to 18 months. Small companies, many of which do most of their
business exclusively in the U.S., have seen earnings estimates reduced
significantly in some instances. The earnings estimate pressure has coated all
small companies in vulnerability. This can be seen in the breadth and depth of
the weakness during the third calendar quarter of 1998. Combined with limited
trading liquidity, smaller stocks have not seen this type of selling pressure in
many years.
It has been challenging to manage this Fund in the current environment because
the market has not differentiated companies based on evaluations of
2
<PAGE>
ADVANTUS ENTERPRISE
FUND
SEPTEMBER 30, 1998
the underlying fundamentals of the companies. This lack of differentiation is a
significant opportunity for the Fund as we focus on those companies whose stock
prices have been undeservedly punished. A number of Fund holdings fit the above
case where they have had positive earnings surprises, no downward revisions in
estimates and still were sold hard in the market. Specific holdings include,
Nautica Enterprises, Inc. (sportswear and casual apparel), Pacific Sunwear of
California (specialty retailer to young adults and teens), Kohls Corporation
(department store), Uniphase Corporation (laser subsystems for industrial
process control), Total Renal Care Holdings, Inc. (independent provider of high
quality kidney dialysis centers), Skywest Incorporated (regional airlines).
Strength in the Fund came in a number of areas including insurance, Life Re
Corporation and Reinsurance Group of America, Inc.; services, the BISYS Group,
Inc. (back office outsourcing) and NCO Group Incorporated (accounts receivable
management); health care, Hanger Orthopedic Group (orthopedic practices),
Amerisource Health Corporation (drug wholesaler) and Spinetech (a spinal
implants company which was acquired by Sulzer Medica, a Swiss Co.); technology,
Axciom Corporation (database management software) and Mastech Corporation (IT
applications solutions and services) and consumer, Tropical Sportswear
International (men's apparel). In areas like these, current earning and revenue
results and the outlook for continued growth are solid; thus providing us with
investment opportunities going forward.
OUTLOOK
Given the clouds looming over the small company growth universe today, can
investors find the silver lining? We believe so, and here's why. First,
historical values reside in smaller growth stocks today. Current relative
valuation levels for small stocks are as cheap by any measure as they have been
at any time in history. Yet cheap valuations alone do not warrant investment,
which brings us to the second point. The group's ability to sustain a meaningful
advance over the next several quarters will be largely contingent upon strong
earnings growth from smaller stocks versus a continued decline in earnings for
the larger cap stocks. Already, the recent trends in earnings favor the smaller
companies. Finally, I believe the August 1998 lows in prices will be tested
before a sustained rally will commence. This test will most likely coincide with
the tax loss selling season and the numerous opportunities to take losses in
smaller stocks due to the past year's weakness.
With all that said, we feel the Fund is set up favorably for a strong year-end
rally in smaller stocks, as growth slows worldwide and fundamental growth
becomes more important. Our focus for the Fund includes stocks with outstanding
growth opportunities not seen in larger companies. Given current valuations on
many of these stocks, they appear to be very solid investments. When these
fundamentals gain investor attention, small companies have the ability to
significantly outperform other investments.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge. Investment returns and principal values will fluctuate so that shares
upon redemption may be worth more or less than their original cost.
**The Russell 2000 Growth Index contains stock from the Russell 2000 with a
greater than average growth orientation. The Russell 2000 are the 2,000 smallest
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.
+The Wilshire Midcap Index is comprised of the bottom 750 companies of the
largest 1,250 U.S. domicile companies as measured by market capitalization.
3
<PAGE>
ADVANTUS ENTERPRISE
FUND
SEPTEMBER 30, 1998
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT IN ADVANTUS ENTERPRISE FUND, WILSHIRE MIDCAP INDEX,
RUSSELL 2000 GROWTH 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, Russell 2000 Growth 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 September 30, 1998.
CLASS A AND B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C> <C> <C>
Class A:
One year -32.37%
Since inception (9/16/94) 3.06%
Class B:
One year -32.97%
Since inception (9/16/94) 3.11%
Class A Class B Wilshire Midcap Index Russell 2000 Growth Index CPI
9/16/94 $10,000 $10,000 $10,000 $10,000 $10,000
9/30/94 $9,419 $9,910 $9,942 $10,042 $10,128
9/30/95 $12,044 $12,107 $12,439 $12,616 $10,351
9/30/96 $14,051 $14,173 $14,443 $14,391 $10,662
9/30/97 $15,861 $16,000 $19,147 $17,737 $10,899
9/30/98 $11,292 $11,315 $15,017 $13,331 $11,054
</TABLE>
4
<PAGE>
ADVANTUS ENTERPRISE
FUND
SEPTEMBER 30, 1998
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN:
<S> <C> <C> <C> <C>
One year -29.40%
Since inception (3/1/95) 2.67%
Class C Wilshire Midcap Index CPI Russell 2000 Growth Index
3/1/95 $10,000 $10,000 $10,000 $10,000
9/30/95 $12,038 $12,157 $10,146 $12,563
9/30/96 $13,913 $14,115 $10,450 $14,331
9/30/97 $15,568 $18,712 $10,682 $17,662
9/30/98 $10,992 $14,675 $10,834 $13,276
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial professional's investment advice. Individuals cannot buy even an
unmanaged index fund without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS ENTERPRISE
FUND
SEPTEMBER 30, 1998
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------ ------ ----------- -----------
<S> <C> <C> <C>
Kaydon Corporation............ 51,600 $ 1,357,725 3.8%
United Rentals, Inc........... 55,900 1,338,106 3.8%
Sunrise Assisted Living
Incorporated................. 38,633 1,325,595 3.7%
Cambrex Corporation........... 53,174 1,252,912 3.5%
Acxiom Corporation............ 49,740 1,234,174 3.5%
MSC Industrial Direct
Company...................... 57,900 1,158,000 3.3%
Zebra Technologies
Corporation.................. 34,100 1,142,350 3.2%
Borders Group Incorporated.... 49,140 1,093,365 3.1%
NCO Group Incorporated........ 38,000 1,056,875 3.0%
Pacific Sunwear of
California................... 46,050 1,024,612 2.9%
----------- ---
$11,983,714 33.8%
----------- ---
----------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities 7.9%
Communication Services 0.8%
Consumer Staples 1.2%
Energy 1.6%
Transportation 3.1%
Financial 4.6%
Basic Materials 6.6%
Capital Goods 11.3%
Health Care 14.4%
Technology 22.8%
Consumer Cyclical 25.7%
</TABLE>
6
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1998
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
<C> <S> <C>
COMMON STOCK (92.1%)
BASIC MATERIALS (6.6%)
Agriculture Products (2.7%)
38,000 NCO Group Incorporated (b)....................... $ 1,056,875
----------------
Chemicals (3.9%)
53,174 Cambrex Corporation.............................. 1,252,912
8,510 The Valspar Corporation.......................... 254,768
----------------
1,507,680
----------------
CAPITAL GOODS (11.3%)
Electrical Equipment (.7%)
32,090 Advanced Lighting Technologies (b)............... 272,765
----------------
Engineering/Construction (3.5%)
55,900 United Rentals, Inc. (b)......................... 1,338,106
----------------
Machinery (3.5%)
51,600 Kaydon Corporation............................... 1,357,725
----------------
Manufacturing (1.0%)
16,300 Graco Incorporated............................... 378,975
----------------
Metal Fabrication (.5%)
23,524 Shaw Group Incorporated (b)...................... 202,894
----------------
Waste Management (2.1%)
20,300 American Disposal Services, Inc. (b)............. 790,431
----------------
COMMUNICATION SERVICES (.8%)
Cellular (.5%)
36,700 LCC International Incorporated (b)............... 174,325
----------------
Telephone (.3%)
24,300 Premiere Technologies (b)........................ 116,944
----------------
CONSUMER CYCLICAL (25.7%)
Building Materials (1.9%)
39,800 The Maxim Group, Inc. (b)........................ 751,225
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
<C> <S> <C>
CONSUMER CYCLICAL--CONTINUED
Distribution Durables (3.0%)
57,900 MSC Industrial Direct Company (b)................ $ 1,158,000
----------------
Leisure (2.0%)
56,500 American Skiing Corporation (b).................. 395,500
17,722 National R V Holdings, Inc. (b).................. 372,162
----------------
767,662
----------------
Retail (5.9%)
49,140 Borders Group Incorporated (b)................... 1,093,365
3,900 Kohls Corporation (b)............................ 152,100
46,050 Pacific Sunwear of California (b)................ 1,024,612
----------------
2,270,077
----------------
Service (9.4%)
49,740 Acxiom Corporation (b)........................... 1,234,174
40,500 CKS Group Incorporated (b)....................... 716,344
37,900 Copart Incorporated (b).......................... 843,275
84,100 Fairfield Communities, Inc. (b).................. 841,000
----------------
3,634,793
----------------
Textiles (3.5%)
26,700 Nautica Enterprises, Inc. (b).................... 498,956
45,000 Tropical Sportswear International (b)............ 838,125
----------------
1,337,081
----------------
CONSUMER STAPLES (1.2%)
Broadcasting (1.2%)
31,400 United Video Satellite Group (b)................. 465,112
----------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
ENERGY (1.6%)
<C> <S> <C>
Oil (.6%)
32,200 Newpark Resources Incorporated (b)............... $ 221,375
----------------
Oil & Gas (1.0%)
13,100 J Ray McDermott Holdings Incorporated (b)........ 393,819
----------------
FINANCIAL (4.6%)
Banks (1.1%)
17,500 GBC Bancorp...................................... 420,000
----------------
Insurance (3.5%)
10,400 Life Re Corporation.............................. 956,150
6,500 Reinsurance Group of America, Inc................ 383,094
----------------
1,339,244
----------------
HEALTH CARE (14.4%)
Biotechnology (.7%)
9,700 Pharmaceutical Product Development (b)........... 271,600
----------------
Drugs (.2%)
26,200 Cygnus, Inc. (b)................................. 91,700
----------------
Hospital Management (3.4%)
38,633 Sunrise Assisted Living Incorporated (b)......... 1,325,595
----------------
Managed Care (1.4%)
5,500 Ameripath, Inc. (b).............................. 81,812
56,383 Concentra Managed Care, Inc. (b)................. 451,064
----------------
532,876
----------------
Medical Products/Supplies (7.1%)
9,400 Amerisource Health Corporation (b)............... 511,712
43,700 Hanger Orthopedic Group (b)...................... 813,912
32,900 Sybron International Corporation (b)............. 629,212
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
<C> <S> <C>
HEALTH CARE--CONTINUED
32,600 Total Renal Care Holdings, Inc. (b).............. $ 782,400
----------------
2,737,236
----------------
Special Services (1.6%)
19,500 Curative Health Services (b)..................... 597,188
----------------
TECHNOLOGY (22.8%)
Technology (22.8%)
16,300 Bysis Group, Inc. (b)............................ 719,238
59,000 DII Group Incorporated (b)....................... 715,375
13,100 DuPont Photomasks Incorporated (b)............... 281,650
2,600 Excite Incorporated (b).......................... 106,113
39,000 Gartner Group Incorporated (b)................... 814,125
15,500 Global Imaging Systems, Inc. (b)................. 185,031
14,900 HNC Software Incorporated (b).................... 605,313
20,800 Infinium Software Incorporated (b)............... 195,000
2,300 Infoseek Corporation (b)......................... 56,638
3,700 Lycos Incorporated (b)........................... 125,106
6,200 Mapics, Inc. (b)................................. 136,788
35,552 Mastech Corporation (b).......................... 855,470
32,600 Maximus Incorporated (b)......................... 994,300
7,700 Orbotech Ltd (b)(c).............................. 247,844
13,200 Peapod Incorporated (b).......................... 69,300
23,600 Photronics Incorporated (b)...................... 300,900
11,700 Platinum Software (b)............................ 119,925
6,702 Sapient Corporation (b).......................... 228,706
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
19,300 Saville Systems ADR (b)(c)....................... $ 279,850
33,400 Softworks, Inc. (b).............................. 167,000
6,600 Uniphase Corporation (b)......................... 270,600
12,800 Xylan Corporation (b)............................ 169,600
34,100 Zebra Technologies Corporation (b)............... 1,142,350
----------------
8,786,222
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
<C> <S> <C>
TRANSPORTATION (3.1%)
Air Freight (1.1%)
30,100 Eagle USA Airfreight, Inc. (b)................... $ 421,400
----------------
Airlines (2.0%)
40,700 Skywest Incorporated............................. 778,388
----------------
Total common stock (cost: $35,014,363)........................ 35,497,313
----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (7.6%)
$1,097,532 Federated Prime Obligation Fund, current rate 5.470%....................... 1,097,532
440,000 US Treasury Bill................................. 5.078 - 5.085% 10/01/98 440,000
562,000 US Treasury Bill................................. 4.971-5.134% 11/05/98 559,820
840,000 US Treasury Bill................................. 4.456 - 4.670% 12/10/98 833,189
-----------
Total short-term securities (cost: $2,929,536)............................. 2,930,541
-----------
Total investments in securities (cost: $37,943,899) (d).................... $38,427,854
-----------
-----------
</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 1.4% of the net assets in foreign securities as of September
30, 1998.
(d) At September 30, 1998 the cost of securities for federal income tax purposes
was $38,471,535. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $ 7,053,217
Gross unrealized depreciation.......... (7,096,898)
-----------
Net unrealized depreciation............ $ (43,681)
-----------
-----------
</TABLE>
9
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market
value--see accompanying schedule for
detailed listing
(identified cost: $37,943,899)........ $38,427,854
Cash in bank on demand deposit......... 80
Receivable for Fund shares sold........ 48,846
Receivable for investment securities
sold.................................. 302,317
Accrued interest receivable............ 5,386
Dividends receivable................... 8,071
Organizational costs (note 5).......... 9,976
-----------
Total assets....................... 38,802,530
-----------
LIABILITIES
Payable for investment securities
purchased............................. 217,866
Payable for Fund shares redeemed....... 1,951
Payable to Adviser..................... 55,594
Other payables......................... 234
-----------
Total liabilities.................. 275,645
-----------
Net assets applicable to outstanding
capital stock......................... $38,526,885
-----------
-----------
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)...................... $ 34,285
Additional paid-in capital........... 40,918,179
Accumulated net realized losses from
investments......................... (2,909,534)
Unrealized appreciation on
investments......................... 483,955
-----------
Total--representing net assets
applicable to outstanding capital
stock............................. $38,526,885
-----------
-----------
Net assets applicable to outstanding
Class A shares........................ $31,843,818
-----------
-----------
Net assets applicable to outstanding
Class B shares........................ $ 5,902,610
-----------
-----------
Net assets applicable to outstanding
Class C shares........................ $ 780,457
-----------
-----------
Shares outstanding and net asset value
per share:
Class A--Shares outstanding
2,814,170........................... $ 11.32
-----------
-----------
Class B--Shares outstanding
542,523............................. $ 10.88
-----------
-----------
Class C--Shares outstanding 71,769... $ 10.87
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
10
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
Investment income:
Interest............................. $ 158,347
Dividends............................ 21,483
------------
Total investment income.......... 179,830
------------
Expenses (note 4):
Investment advisory fee.............. 397,522
Distribution fees--Class A........... 123,534
Distribution fees--Class B........... 74,574
Distribution fees--Class C........... 10,550
Administrative services fee.......... 44,000
Amortization of organizational
costs............................... 10,883
Custodian fees....................... 1,323
Auditing and accounting services..... 17,670
Legal fees........................... 5,459
Directors' fees...................... 975
Registration fees.................... 41,405
Printing and shareholder reports..... 34,353
Insurance............................ 4,824
Other................................ 7,030
------------
Total expenses................... 774,100
Less fees and expenses waived or
absorbed:
Class A distribution fees.......... (68,536)
------------
Total net expenses............... 705,564
------------
Investment loss--net............. (525,734)
------------
Realized and unrealized losses on
investments:
Net realized losses on investments
(note 3)............................ (2,030,305)
Net change in unrealized appreciation
or depreciation on investments...... (13,106,890)
------------
Net losses on investments........ (15,137,195)
------------
Net decrease in net assets resulting
from operations....................... $(15,662,929)
------------
------------
</TABLE>
See accompanying notes to financial statements.
11
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Operations:
Investment loss--net................. $ (525,734) $ (226,022)
Net realized loss on investments..... (2,030,305) (879,229)
Net change in unrealized appreciation
or depreciation on investments...... (13,106,890) 7,134,727
------------ -----------
Increase (decrease) in net assets
resulting from operations....... (15,662,929) 6,029,476
------------ -----------
Distributions to shareholders from net
realized gains on investments:........
Class A.............................. -- (4,409,566)
Class B.............................. -- (610,188)
Class C.............................. -- (111,341)
------------ -----------
Total distributions.............. -- (5,131,095)
------------ -----------
Capital share transactions (notes 4 and
6):
Proceeds from sales:
Class A............................ 3,263,000 3,424,384
Class B............................ 2,839,504 2,970,730
Class C............................ 355,028 583,065
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ -- 3,124,576
Class B............................ -- 608,807
Class C............................ -- 102,187
Payments for redemption of shares:
Class A............................ (2,649,374) (1,748,809)
Class B............................ (2,157,258) (1,070,175)
Class C............................ (378,918) (375,526)
------------ -----------
Increase in net assets from
capital share transactions...... 1,271,982 7,619,239
------------ -----------
Total increase (decrease) in net
assets.......................... (14,390,947) 8,517,620
Net assets at beginning of year........ 52,917,832 44,400,212
------------ -----------
Net assets at end of year.............. $ 38,526,885 $52,917,832
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(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. The Fund's
investment objective is to seek the long-term accumulation of capital.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class A
shares at net asset value after a specified holding period. Such holding periods
decline as the amount of the purchase increases and range from 28 to 84 months
after purchase for Class B shares and 40 to 96 months after purchase for Class C
shares. All three classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than distribution fees) and realized and unrealized
gains or losses are allocated to each class of shares based upon its relative
net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements. Actual
results could differ from those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price by an independent pricing service or at a price deemed best to reflect
fair value as quoted by dealers who make markets in these securities. When
market quotations are not readily available, securities are valued at fair value
as determined in good faith under procedures adopted by the Board of Directors.
Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. 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.
13
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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 by $525,734 and decrease additional paid-in capital
by $525,734.
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 year ended September 30, 1998, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$35,546,576 and $33,070,199, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital
Management, Inc. (Advantus Capital or the Adviser), a wholly-owned subsidiary of
Minnesota Life Insurance Company (Minnesota Life), formerly known as The
Minnesota Mutual Life Insurance Company. 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 Life.
Effective October 26, 1998, the Fund's transfer agent is First Data Investor
Services Group, Inc. 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.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to Ascend Financial Services,
Inc. (Ascend), 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 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 fee is comprised of a .75 percent distribution fee
and a .25 percent service fee. Ascend is currently waiving the portion of Class
A distribution fees which exceeds, as a percentage of average daily net assets,
.15 percent. Prior to January 30, 1998 the portion exceeding .10 percent was
waived. Ascend waived Class A distribution fees in the total amount of $68,536
for the year ended September 30, 1998.
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.
14
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
The Fund pays an administrative services fee, equal to $3,700 per month, to
Minnesota Life for accounting, auditing, legal and other administrative services
which Minnesota Life provides. Prior to February 1, 1998, the administrative
services fee was $3,600 per month. Effective October 26, 1998, Minnesota Life
became the shareholder services agent for the fund. Under the new shareholder
and administrative services agreement, the administrative services fee remains
unchanged, and for shareholder services performed by Minnesota Life, the Adviser
will pay Minnesota Life an annual account servicing fee as agreed by the Adviser
and Minnesota Life.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
As of September 30, 1998, Minnesota Life and subsidiaries and the directors
and officers of the Fund as a whole owned 2,226,167 Class A shares which
represents 79.1 percent of the total outstanding Class A shares.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $113,663.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $5,423.
(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 Advantus Capital, 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 years ended September 30, 1998 and 1997 were
as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- ---------------------- --------------------
1998 1997 1998 1997 1998 1997
---------- ---------- ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold........................................... 220,439 245,582 197,838 221,245 24,682 42,231
Issued for reinvested distributions............ -- 228,685 -- 45,958 -- 7,841
Redeemed....................................... (180,222) (129,287) (153,483) (80,568) (26,413) (28,172)
---------- ---------- ---------- ---------- --------- ---------
40,217 344,980 44,355 186,635 (1,731) 21,900
---------- ---------- ---------- ---------- --------- ---------
---------- ---------- ---------- ---------- --------- ---------
</TABLE>
(7) YEAR 2000 (UNAUDITED)
In 1995, Minnesota Life began addressing computer systems requirements and
applications to be Year 2000 ready. Based on a current study, Minnesota Life
plans to spend approximately $14 million through 1999 to modify its computer
information systems, enabling proper processing of transactions relating to the
year 2000 and beyond. The Fund will not be charged for these expenses.
15
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(8) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
PERIOD FROM
SEPTEMBER 16,
YEAR ENDED SEPTEMBER 30, 1994(b) TO
------------------------------------------------ SEPTEMBER 30,
1998 1997 1996 1995(a) 1994
------------ --------- --------- --------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 15.90 $ 15.94 $ 14.08 $ 11.03 $ 11.12
------------ --------- --------- --------- -------
Income from investment operations:
Net investment income (loss).......... (.13) (.04) (.05) (.04) --
Net gains or losses on securities
(both realized and unrealized)...... (4.45) 1.74 2.34 3.11 (.09)
------------ --------- --------- --------- -------
Total from investment operations.... (4.58) 1.70 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.......... $ 11.32 $ 15.90 $ 15.94 $ 14.08 $ 11.03
------------ --------- --------- --------- -------
------------ --------- --------- --------- -------
Total return (c)........................ (28.81)% 12.88% 16.66% 27.87% (.81)%
Net assets, end of period (in
thousands)............................ $ 31,844 $ 44,102 $ 38,722 $ 30,454 $12,964
Ratio of expenses to average daily net
assets (d)(e)......................... 1.27% 1.28% 1.31% 1.34% .05% (f)
Ratio of net investment income (loss) to
average daily net assets (d)(e)....... (.91)% (.32)% (.38)% (.48)% (.02)%(f)
Portfolio turnover rate (excluding
short-term securities)................ 71.1% 65.8% 80.2% 48.8% 5.0%
</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. For periods less than one year, total return presented has not
been annualized.
(d) The Fund's Distributor and Adviser voluntarily waived or absorbed $83,999
and $1,430 in expenses for the year ended September 30, 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 1.75% and .06% for Class A shares, respectively, 2.39% and .10%
for Class B shares, respectively and 2.32% for Class C shares. The ratio of
net investment income (loss) to average daily net assets would have been
(.89)% and (.03)% for Class A shares, respectively, (1.60)% and (.07)% for
Class B shares, respectively and (1.65)% for Class C shares.
(e) The Fund's Distributor voluntarily waived $68,536, $74,325 and $68,785 in
Class A distribution fees for the years ended September 30, 1998, 1997 and
1996, respectively. If the Fund had been charged for these fees, the ratio
of expenses to average daily net assets would have been 1.44%, 1.48% and
1.51%, respectively, and the ratio of net investment income (loss) to
average daily net assets would have been (1.08)%, (.52)% and (.58)%,
respectively, for Class A shares.
16
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS B
----------------------------------------------------------------
PERIOD FROM
SEPTEMBER 16,
YEAR ENDED SEPTEMBER 30, 1994(b) TO
----------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995(a) 1994
------------ --------- --------- -------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 15.42 $ 15.64 $ 13.94 $11.02 $11.12
------ --------- --------- -------- ------
Income from investment operations:
Net investment income (loss).......... (.24) (.18) (.12) (.09) (.01)
Net gains or losses on securities
(both realized and unrealized)...... (4.30) 1.70 2.25 3.03 (.09)
------ --------- --------- -------- ------
Total from investment operations.... (4.54) 1.52 2.13 2.94 (.10)
------ --------- --------- -------- ------
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.......... $ 10.88 $ 15.42 $ 15.64 $13.94 $11.02
------ --------- --------- -------- ------
------ --------- --------- -------- ------
Total return (c)........................ (29.44)% 11.89% 15.65% 26.71% (.90)%
Net assets, end of period (in
thousands)............................ $ 5,903 $ 7,683 $ 4,871 $1,720 $ 96
Ratio of expenses to average daily net
assets (d)(e)......................... 2.14% 2.18% 2.20% 2.24% .09% (f)
Ratio of net investment income (loss) to
average daily net assets (d)(e)....... (1.77)% (1.60)% (1.25)% (1.45)% (.06)%(f)
Portfolio turnover rate (excluding
short-term securities)................ 71.1% 65.8% 80.2% 48.8% 5.0%
<CAPTION>
CLASS C
---------------------------------------------------------------
PERIOD FROM
MARCH 1,
YEAR ENDED SEPTEMBER 30, 1995(b) TO
---------------------------------------------- SEPTEMBER 30,
1998 1997 1996 1995
------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 15.41 $ 15.63 $ 13.94 $11.58
------ ------ ------ ------
Income from investment operations:
Net investment income (loss).......... (.26) (.23) (.09) (.06)
Net gains or losses on securities
(both realized and unrealized)...... (4.28) 1.75 2.21 2.42
------ ------ ------ ------
Total from investment operations.... (4.54) 1.52 2.12 2.36
------ ------ ------ ------
Less distributions:
Dividends from net investment
income.............................. -- -- -- --
Distributions from capital gains...... -- (1.74) (.43) --
------ ------ ------ ------
Total distributions................. -- (1.74) (.43) --
------ ------ ------ ------
Net asset value, end of period.......... $ 10.87 $ 15.41 $ 15.63 $13.94
------ ------ ------ ------
------ ------ ------ ------
Total return (c)........................ (29.40)% 11.89% 15.58% 20.38%
Net assets, end of period (in
thousands)............................ $ 780 $ 1,133 $ 807 $ 71
Ratio of expenses to average daily net
assets (d)(e)......................... 2.14% 2.18% 2.19% 2.24% (g)
Ratio of net investment income (loss) to
average daily net assets (d)(e)....... (1.78)% (1.75)% (1.22)% (1.57)%(g)
Portfolio turnover rate (excluding
short-term securities)................ 71.1% 65.8% 80.2% 48.8%
</TABLE>
- ------------
(f) Ratios presented for the period from September 16, 1994 to September 30,
1994 are not annualized as they are not indicative of anticipated results.
(g) Adjusted to an annual basis.
17
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
Advantus Enterprise Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Enterprise
Fund, Inc. (the Fund) as of September 30, 1998 and the related statement of
operations for the year then ended, the statement of changes in net assets for
the two years then ended and the financial highlights for the four years then
ended and the period from September 16, 1994 to September 30, 1994. These
financial statements and the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased or sold but not received or delivered, we
request confirmations from brokers, and where replies are not received, we carry
out other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of September 30, 1998 and the results of its operations,
changes in its net assets and financial highlights, for the periods stated in
the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 6, 1998
18
<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 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 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 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 from one
Advantus Fund to another Advantus Fund (with identical registrations within the
same class) to diversify your investment portfolio and take advantage of
dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Life 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, if any.
SPECIAL PURCHASE PLANS: Special purchase plans enable you to open an Advantus
Fund account for as little as $25 and lower your average share cost through
"dollar-cost averaging." (Dollar-cost averaging does not assure a profit, nor
does it prevent loss in declining markets). The Automatic Investment Plan allows
you to invest automatically each month from your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Traditional or Roth Individual Retirement Account or other qualified plan
including: SEP IRA's, SIMPLE IRA's, Profit Sharing, 401(k), 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 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
19
<PAGE>
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 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 transaction you
initiate and quarterly statements to help you track all of your Advantus Fund
investments and annual tax statements. Semi-annual and annual reports will
provide you with portfolio information, fund performance data and the current
investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005.
Advantus Account Representatives are available Monday through Friday from 8 a.m.
to 4:45 p.m. Central Time. Our voice response system is available 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc., distributor of the
Funds. Contact your representative for information and a prospectus for any of
the Advantus Funds you are interested in. To find a Registered Representative
near you, call the toll-free service line (1-800-665-6005).
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use the Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management. (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
$2.6 billion in assets in addition to $11.1 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 13 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
20
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-AFS-1838
(1-800-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES, INC. BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
F.48647 Rev. 11-1998
