<PAGE>
ENTERPRISE
ADVANTUS ENTERPRISE FUND, INC.
ANNUAL REPORT TO SHAREHOLDERS DATED SEPTEMBER 30, 1999
[LOGO]
[ART]
<PAGE>
ADVANTUS ENTERPRISE FUND
TABLE OF CONTENTS
<TABLE>
<S> <C>
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 8
STATEMENT OF ASSETS AND
LIABILITIES 12
STATEMENT OF OPERATIONS 13
STATEMENTS OF CHANGES IN NET
ASSETS 14
NOTES TO FINANCIAL STATEMENTS 15
INDEPENDENTS AUDITORS' REPORT 20
SHAREHOLDER SERVICES 21
</TABLE>
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholder:
Growth has been the economic story throughout this fiscal year. The domestic
growth story continues, albeit growth is slower than in the past. The Federal
Reserve's proactive stance (i.e., raising rates BEFORE reported inflation)
demonstrates the Fed's continuing resolve to control inflation by reigning in
domestic growth. So far, the Fed has achieved this delicate economic balance.
World growth is slowly accelerating. The global economic picture is vastly
different than it was one year ago. Japan has worked its way back from a
devastating recession and financial crisis. Emerging markets are surging and
international markets, overall, are strong. The world's central banks have
played critical roles in getting their respective countries back on track. Like
the Fed, the world's central banks plotted a course of action, and like the Fed,
these banks espoused an expansionary bias. Relative to conditions, each bank
aggressively used its monetary policy to lower interest rates. These actions
have contributed to global economic recovery, country by country.
As the rest of the world rallies, the conditions in the U.S. will likely put
more pressures on our economic systems. The fixed income market may feel some
pressure too due to higher commodity prices, global economic growth, a weaker
dollar, tight labor market, and a Fed poised to tighten. Conditions may also
bode poorly for the stock market. After several years of good equity markets -
driven by both robust growth and higher valuation levels - investors are acutely
aware that the environment is changing. The markets will continue under pressure
if interest rates move higher and valuations peak, challenging the long-running
bull market. On a brighter note, the loss of price momentum in the U.S. equity
market will allow earnings growth to catch up with multiples, thus building the
base for the next leg up in the secular bull market for equities.
If at any time you have questions about your Advantus mutual fund investments, I
encourage you to contact your financial professional or call Advantus
Shareholders Services at 1-800-665-6005. This number allows you 24-hour access,
seven days a week, to your mutual fund account information via an automated
voice-response system. Or you can speak directly to an Advantus Shareholder
Services Representative during business hours, 8 A.M. to 4:45 P.M. (Central
Time) any day that the New York Stock Exchange is open for business.
We appreciate your continued patronage of Advantus Funds. Helping you move
closer to your investment goals is important to us, and we look forward to
working long-term with you and your financial professional.
Thank you for investing with Advantus.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, President
Advantus Funds
<PAGE>
ADVANTUS 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 capitalization
companies (i.e., companies
with a market capitalization
of less than $1.5 billion) at
the time of purchase. In
selecting equity securities,
the Fund invests in
securities that the
investment adviser believes
show sustainable earnings
growth potential and
improving profitability.
- Dividends paid quarterly.
- Capital gains distributions paid annually.
PERFORMANCE
For the year ended September 30, 1999, the Advantus Enterprise Fund returned the
following for each class of shares currently offered:
<TABLE>
<S> <C>
Class A.............................. 28.62 percent*
Class B.............................. 27.57 percent*
Class C.............................. 27.48 percent*
</TABLE>
The Fund's benchmark, the Russell 2000 Growth Index** returned 32.64 percent for
the same period.
PERFORMANCE ANALYSIS
Small cap growth stocks rode the proverbial roller coaster of returns over the
past year with very strong returns in 1998's fourth quarter and 1999's second
quarter while posting losses in the first and third quarters of 1999. Overall
the year provided excellent returns with small growth companies handily
outperforming small value companies.
The Fund similarly had significant variation in quarterly performance over the
past year. Our disciplined style of investing, which focuses on the fundamentals
of individual companies, performed especially well in the last three months of
1998 and in the period since April of this year. During these periods the
market's best performers came from a broad array of industries including but not
limited to technology and the Internet. In the first four months of 1999, the
market's narrow focus on the Internet and technology led to a very volatile and
narrow market environment. While we participated in this performance we lagged
the index and other managers which were heavily focused in technology stocks.
Technology stocks were the big winners accounting for over one half of the total
return for the entire index. By comparison, our diversified portfolio had
significant contributions from electrical equipment, wireless communications,
transportation and consumer services in addition to broad-based technology
stocks.
Within the Fund, those companies that provide a valuable component for today's
explosive technology needs, whether it is data networking, semiconductors or
wireless communications, have had strong performance. The explosion of consumer
spending on everything from wireless handsets and PCs (desk top and portable),
to the digitization of various consumer items like cameras, TVs, palm pilots,
game consoles etc. has led to significant growth for well positioned companies
with the right solution.
The Internet continues to change the way people live, play and do business.
While we find Internet opportunities exciting and potentially lucrative, we
remain selective in our approach. In practice, this means we hone in on
companies with business models that are ultimately profitable, have solid
management, and are innovators or creators in this developing arena.
2
<PAGE>
Though Internet stocks have been big performers over the past year, responsible
for over 25 percent of the entire Russell 2000 Growth Index's** return, use on
the Internet is driving growth in other areas, including telecommunications. One
company in the Fund, E-Tek Dynamics, is a direct beneficiary of the Internet
growth. Its products allow the telecommunications providers to increase the
capacity of their fiber optic networks by up to 64 times. Large system
providers, such as Lucent and Nortel, are buying their equipment.
In the wireless communications sector, service providers and equipment
manufacturers have both contributed outstanding year-to-date results for the
Fund. The service providers are enjoying accelerated subscriber growth due to
better value pricing for their services. Additionally, the consolidation of some
of the smaller regional wireless providers drove share prices higher.
Significant performance in the Fund came from our wireless service providers,
racing ahead over 170 percent* as consolidation trends drive the industry.
Regional service providers have been consolidating, in effect, creating a
nationwide presence. In the Fund, Voicestream Wireless has purchased Aerial
Communications and Omnipoint Communications and it looks like Powertel Inc. will
be the next target. This consolidation will create the last of the national
service providers and put the combined entity in a position to compete with AT&T
and Sprint. This along with the growing awareness that wireless will be a big
Internet gateway and destination has fueled continued sharp upward re-valuations
to these stocks. We originally took positions in all four of these companies
expecting this outcome not knowing when it might occur but glad to see it come
to fruition this soon.
Within technology, weakness came from the software/services area, as companies
continue to be cautious with their technology spending into the fourth quarter,
not wanting to start any large projects with the Y2K issues surrounding any new
implementations. While some of these stocks sold off due to missed earnings
numbers, others were weak in sympathy to overall industry sluggishness. We fully
expect the best of these companies to do well in the year 2000 as spending comes
back.
We continue to weight the portfolio towards those sectors where we see continued
strong growth. This has lead us to overweight the semiconductor sector,
especially in the high speed communications area and semi-equipment stocks which
are benefiting from a strong cyclical recovery. We also have overweighted the
wireless service and equipment stocks since we believe wireless access will see
continued growth.
Stemming from the strength in the economy and the need for just in time
inventories in manufacturing processes, Eagle USA has been a top performer for
the Fund over the past year. Eagle USA provides air freight forwarding and other
transportation and logistic services to a wide number of companies in many
industries.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5.5 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 those stocks from the Russell 2000 with
a greater than average growth orientation. The Russell 2000 is 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.
3
<PAGE>
Health care was a weak performer for the Fund as concerns over tightening
Medicare reimbursements has cast a shadow over the entire industry.
Unfortunately, the market has not differentiated between companies that are
Medicare-dependent and those that are not subject to Medicare risks. We have
held companies with little or no Medicare related revenues feeling that
ultimately we would be rewarded for the solid growth in these companies but to
date have seen little reward.
OUTLOOK
The fourth calendar quarter of 1999 will likely be one of uncertainty related to
the Federal Reserve, interest rates and the Y2K computer related concerns. In
the end, we feel the economy will prove to be strong without overheating and
with little inflation concerns. None the less, the narrowness of the market
continues to be troublesome. Small stocks in particular will likely be unloved
until they show consistency in superior earnings growth relative to bigger cap
stocks. With today's cheap valuations in smaller stocks, the risk of further
deterioration remains small and we believe that solid fundamentals will support
higher share prices by year-end.
We continue to stay focused on finding fast growing smaller companies in areas
with substantial growth opportunities. We intend to do this through rigorous
fundamental analysis of company specific trends in any industry or sector. Key
to this process is identifying a management whose vision and business model
should lead to significant growth of a particular niche within a growing
industry.
4
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT IN ADVANTUS ENTERPRISE FUND, 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 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, 1999.
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 21.54%
Five year 7.81%
Since inception (9/16/94) 7.57%
Class B:
One year 22.57%
Five year 7.88%
Since inception (9/16/94) 7.62%
Russell 2000
Class A Class B Growth Index CPI
9/16/94 $10,000 $10,000 $10,000 $10,000
9/30/94 9,371 9,910 10,042 10,128
9/30/95 11,983 12,107 12,616 10,351
9/30/96 13,979 14,173 14,391 10,662
9/30/97 15,780 16,000 17,737 10,899
9/30/98 11,235 11,315 13,331 11,054
9/30/99 14,450 14,477 17,683 11,261
</TABLE>
5
<PAGE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C>
One year 27.48%
Since inception (3/1/95) 7.63%
Russell 2000
Class C Growth Index CPI
3/1/95 $10,000 $10,000 $10,000
9/30/95 12,038 12,563 10,146
9/30/96 13,913 14,331 10,450
9/30/97 15,568 17,662 10,682
9/30/98 10,992 13,276 10,834
9/30/99 14,012 17,610 11,119
</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 5.5 percent front-end sales charge for Class A and the maximum
applicable contingent deferred sales charge for Class B shares. The maximum
initial sales charge for Class A shares was 5.0 percent prior to February 1,
1999. Sales charges pay for your financial professional's investment advice.
Individuals cannot invest in the index itself, nor can they invest in any fund
which seeks to track the performance of the index without incurring some charges
and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
6
<PAGE>
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------- -------- ------------ ----------
<S> <C> <C> <C>
DII Group, Inc............................. 52,000 $ 1,829,750 4.1%
TV Guide, Inc.............................. 38,700 1,514,137 3.4%
Orbotech Ltd............................... 22,900 1,416,938 3.2%
Eagle USA Airfreight, Inc.................. 44,850 1,342,697 3.0%
Copart, Inc................................ 69,500 1,281,406 2.9%
Patterson Dental Company................... 25,400 1,258,888 2.9%
Alpha Industries, Inc...................... 22,100 1,246,578 2.8%
Dycom Industries, Inc...................... 27,000 1,139,063 2.6%
NCO Group, Inc............................. 23,300 1,095,100 2.5%
Powerwave Technologies, Inc................ 22,700 1,094,566 2.5%
----------- ----
$13,219,123 29.9%
=========== ====
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other Assets/Liabilities 6.7%
Financial 0.4%
Basic Materials 2.3%
Communication Services 2.4%
Consumer Staples 3.3%
Energy 3.5%
Transportation 3.9%
Capital Goods 4.5%
Health Care 9.9%
Consumer Cyclical 16.1%
Technology 47.0%
</TABLE>
7
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES
SEPTEMBER 30, 1999
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ------ ---------------
<C> <S> <C>
COMMON STOCK (93.3%)
BASIC MATERIALS (2.3%)
Agriculture Products (2.3%)
23,300 NCO Group, Inc. (b)............................. $ 1,095,100
-----------
CAPITAL GOODS (4.5%)
Aerospace/Defense (.9%)
21,100 HEICO Corporation................................ 406,175
-----------
Engineering/Construction (2.4%)
27,000 Dycom Industries, Inc. (b)...................... 1,139,063
-----------
Manufacturing (1.2%)
17,400 Graco, Inc....................................... 570,937
-----------
COMMUNICATION SERVICES (2.4%)
Cellular (2.4%)
5,300 Omnipoint Corporation............................ 296,137
4,300 Powertel, Inc. (b).............................. 236,769
3,400 VoiceStream Wireless Corporation (b)............ 209,844
8,300 Western Wireless Corporation (b)................ 372,203
-----------
1,114,953
-----------
CONSUMER CYCLICAL (16.1%)
Auto (.9%)
20,400 CSK Auto Corporation (b)........................ 444,975
-----------
Leisure (1.1%)
19,522 National R V Holdings, Inc. (b)................. 385,559
4,000 Tweeter Home Entertainment (b).................. 149,500
-----------
535,059
-----------
Retail (4.6%)
22,600 Abercrombie & Fitch Company (b)................. 769,812
33,500 David's Bridal, Inc. (b)........................ 249,156
6,300 Kohl's Corporation (b).......................... 416,587
1,500 Media Metrix, Inc. (b).......................... 104,812
11,600 Steven Madden Ltd. (b).......................... 150,075
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
<C> <S> <C>
11,000 Tuesday Morning Corporation (b)................. $ 277,750
11,900 Ultimate Electronic, Inc. (b)................... 185,937
-----------
2,154,129
-----------
Service (7.4%)
40,840 Acxiom Corporation (b).......................... 802,761
69,500 Copart, Inc. (b)................................ 1,281,406
90,100 Fairfield Communities, Inc. (b)................. 985,469
23,700 Metamor Worldwide, Inc. (b)..................... 420,675
-----------
3,490,311
-----------
Textiles (2.1%)
6,700 Linens 'n Things, Inc. (b)...................... 226,125
41,700 Tropical Sportswear International (b)........... 776,662
-----------
1,002,787
-----------
CONSUMER STAPLES (3.3%)
Broadcasting (3.3%)
2,300 Salem Communications Corporation (b)............ 58,650
38,700 TV Guide, Inc. (b).............................. 1,514,137
-----------
1,572,787
-----------
Food & Health ( -- )
100 Valley Medica, Inc. (b)......................... 1,194
-----------
ENERGY (3.5%)
Oil (.8%)
49,500 Newpark Resources, Inc. (b)..................... 383,625
-----------
Oil & Gas (2.7%)
25,700 Global Marine (b)............................... 422,444
5,400 Houston Exploration Company (b)................. 117,112
10,300 Louis Dreyfus Natural Gas Corporation (b)....... 220,806
34,700 Tuboscope, Inc. (b)............................. 431,581
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------------------------------------------------------------------------
ENERGY--CONTINUED
<C> <S> <C>
3,400 UTI Energy Corporation (b)...................... $ 66,087
-----------
1,258,030
-----------
FINANCIAL (.4%)
Insurance (.4%)
6,850 Reinsurance Group of America, Inc................ 175,959
-----------
HEALTH CARE (9.9%)
Biotechnology (1.7%)
7,100 Gilead Sciences, Inc. (b)....................... 455,731
1,200 IDEC Pharmaceuticals Corporation (b)............ 112,838
5,900 Protein Design Labs, Inc. (b)................... 213,138
-----------
781,707
-----------
Drugs (2.6%)
16,400 Barr Laboratories, Inc. (b)..................... 520,700
27,100 Cygnus, Inc. (b)................................ 304,028
14,000 United Therapeutics Corporation (b)............. 404,250
-----------
1,228,978
-----------
Hospital Management (1.0%)
17,233 Sunrise Assisted Living, Inc. (b)............... 457,752
-----------
Medical Products/Supplies (4.6%)
25,400 Patterson Dental Company (b).................... 1,258,888
34,600 Sybron International Corporation (b)............ 929,875
-----------
2,188,763
-----------
TECHNOLOGY (47.0%)
10,100 Adaptive Broadband Corporation (b).............. 338,350
14,300 Aironet Wireless Communications, Inc. (b)....... 300,300
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
22,100 Alpha Industries, Inc. (b)...................... $ 1,246,578
27,100 ANADIGICS, Inc. (b)............................. 762,188
12,500 Ancor Communications, Inc. (b).................. 303,125
13,000 ANTEC Corporation (b)........................... 690,625
7,700 Applied Micro Circuits Corporation (b).......... 438,900
11,600 Concentric Network Corporation (b).............. 235,625
30,000 Cree Research, Inc. (b)......................... 1,018,125
28,900 Cymer, Inc. (b)................................. 1,002,469
52,000 DII Group, Inc. (b)............................. 1,829,750
20,700 DuPont Photomasks, Inc. (b)..................... 953,494
7,300 E-Tek Dynamics, Inc. (b)........................ 396,025
3,133 Efficient Networks, Inc. (b).................... 113,963
10,300 Galileo Technology Ltd. (b)(c).................. 257,500
45,400 GaSonics International Corporation (b).......... 749,100
13,900 Genesis Microchip, Inc. (b)(c).................. 245,856
30,150 Global Imaging Systems, Inc. (b)................ 448,481
2,900 Harbinger Corporation (b)....................... 47,850
22,700 Infinium Software, Inc. (b)..................... 113,500
39,300 IntraNet Solutions, Inc. (b).................... 338,963
7,000 ISS Group, Inc. (b)............................. 190,750
7,000 JDS Uniphase Corporation (b).................... 796,688
3,500 Luminant Worldwide Corporation (b).............. 107,625
22,100 Manugistics Group, Inc. (b)..................... 232,050
20,852 Mastech Corporation (b)......................... 281,502
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS ENTERPRISE FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
31,300 Maximus, Inc. (b)............................... $ 937,044
19,800 MedQuist, Inc. (b).............................. 662,063
500 NetSolve, Inc. (b).............................. 8,875
22,900 Orbotech Ltd. (b)(c)............................ 1,416,938
31,800 PairGain Technologies, Inc. (b)................. 405,450
17,300 Peapod, Inc. (b)................................ 174,081
2,400 PMC-Sierra, Inc. (b)............................ 222,000
10,300 Power-One, Inc. (b)............................. 262,650
22,700 Powerwave Technologies, Inc. (b)................ 1,094,566
6,402 Sapient Corporation (b)......................... 603,389
28,800 Saville Systems ADR (b)(c)...................... 423,000
4,400 Sawtek, Inc. (b)................................ 154,000
11,700 Terayon Communication Systems (b)............... 571,838
18,100 The Bisys Group, Inc. (b)....................... 849,003
<CAPTION>
MARKET
SHARES VALUE(A)
- ---------------------------------------------------------------------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
8,000 Transwitch Corporation (b)...................... $ 456,000
6,800 Vitesse Semiconductor Corporation (b)........... 580,550
-----------
22,260,829
-----------
TRANSPORTATION (3.9%)
Air Freight (2.8%)
44,850 Eagle USA Airfreight, Inc. (b).................. 1,342,697
-----------
Airlines (.8%)
17,600 Skywest, Inc..................................... 386,100
-----------
Transport Services (.3%)
9,200 Preview Travel, Inc. (b)........................ 149,500
-----------
Total common stock (cost: $33,189,283)........................ 44,141,410
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ---------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (5.3%)
$ 631,405 Federated Prime Obligation Fund, current rate 5.220%................. 631,405
1,110,000 Government National Mortgage Association......... 5.330% 11/09/99 1,103,807
780,000 U.S. Treasury Bill............................... 4.791% 11/04/99 776,700
----------
Total short-term securities (cost: $2,511,655)....................... 2,511,912
----------
Total investments in securities (cost: $35,700,938) (d).............. $46,653,322
==========
</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 5.0% of net assets in foreign securities as of September 30,
1999.
(d) At September 30, 1999 the cost of securities for federal income tax purposes
was $35,980,074. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $13,024,570
Gross unrealized depreciation.......... (2,351,322)
----------
Net unrealized appreciation............ $10,673,248
==========
</TABLE>
10
<PAGE>
(This page has been left blank intentionally.)
11
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1999
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value - see
accompanying schedule for detailed listing
(identified cost: $35,700,938)............................. $46,653,322
Receivable for Fund shares sold............................. 679,760
Receivable for investment securities sold................... 267,693
Accrued interest receivable................................. 2,011
Dividends receivable........................................ 528
Other receivable............................................ 2,438
-----------
Total assets............................................ 47,605,752
-----------
LIABILITIES
Bank overdraft.............................................. 656
Payable for investment securities purchased................. 228,398
Payable for Fund shares redeemed............................ 1,677
Payable to Adviser.......................................... 63,807
-----------
Total liabilities....................................... 294,538
-----------
Net assets applicable to outstanding capital stock.......... $47,311,214
===========
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)........................................ $ 32,742
Additional paid-in capital................................ 38,198,214
Accumulated net realized losses from investments.......... (1,872,126)
Unrealized appreciation on investments.................... 10,952,384
-----------
Total - representing net assets applicable to
outstanding capital stock............................... $47,311,214
===========
Net assets applicable to outstanding Class A shares......... $40,008,663
===========
Net assets applicable to outstanding Class B shares......... $ 6,491,014
===========
Net assets applicable to outstanding Class C shares......... $ 811,537
===========
Shares outstanding and net asset value per share:
Class A - Shares outstanding 2,748,024.................... $ 14.56
===========
Class B - Shares outstanding 467,651...................... $ 13.88
===========
Class C - Shares outstanding 58,496....................... $ 13.87
===========
</TABLE>
See accompanying notes to financial statements.
12
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1999
<TABLE>
<S> <C>
Investment income:
Interest.................................................. $ 139,357
Dividends................................................. 27,073
-----------
Total investment income............................... 166,430
-----------
Expenses (notes 4 and 5):
Investment advisory fee................................... 366,946
Rule 12b-1 fees - Class A................................. 101,768
Rule 12b-1 fees - Class B................................. 67,028
Rule 12b-1 fees - Class C................................. 8,554
Administrative services fee............................... 61,400
Amortization of organizational costs...................... 9,976
Custodian fees............................................ 8,545
Auditing and accounting services.......................... 14,679
Legal fees................................................ 11,780
Directors' fees........................................... 891
Registration fees......................................... 33,779
Printing and shareholder reports.......................... 30,278
Insurance................................................. 3,595
-----------
Total expenses........................................ 719,219
Less fees and expenses waived or absorbed:
Class A Rule 12b-1 fees................................. (44,303)
-----------
Total net expenses.................................... 674,916
-----------
Investment loss -- net................................ (508,486)
-----------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)................ 1,037,408
Net change in unrealized appreciation or depreciation on
investments............................................. 10,468,429
-----------
Net gains on investments.............................. 11,505,837
-----------
Net increase in net assets resulting from operations........ $10,997,351
===========
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
ADVANTUS ENTERPRISE FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Operations:
Investment loss - net..................................... $ (508,486) $ (525,734)
Net realized gain (loss) on investments................... 1,037,408 (2,030,305)
Net change in unrealized appreciation or depreciation on
investments............................................. 10,468,429 (13,106,890)
------------ ------------
Increase (decrease) in net assets resulting from
operations.......................................... 10,997,351 (15,662,929)
------------ ------------
Capital share transactions (notes 4 and 6):
Proceeds from sales:
Class A................................................. 13,658,724 3,263,000
Class B................................................. 965,495 2,839,504
Class C................................................. 209,571 355,028
Payments for redemption of shares:
Class A................................................. (14,679,306) (2,649,374)
Class B................................................. (1,982,135) (2,157,258)
Class C................................................. (385,371) (378,918)
------------ ------------
Increase (decrease) in net assets from capital share
transactions........................................ (2,213,022) 1,271,982
------------ ------------
Total increase (decrease) in net assets............... 8,784,329 (14,390,947)
Net assets at beginning of year............................. 38,526,885 52,917,832
------------ ------------
Net assets at end of year................................... $ 47,311,214 $ 38,526,885
============ ============
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1999
(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 shares are subject to a higher Rule 12b-1 fee
than Class A shares. Both Class B and Class C shares automatically convert to
Class A shares at net asset value after a specified holding period. Such holding
periods decline as the amount of the purchase increases and range from 28 to 84
months after purchase for Class B shares and 40 to 96 months after purchase for
Class C shares. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that the
level of Rule 12b-1 fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than Rule 12b-1 fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon its
relative net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements. Actual
results could differ from those estimates.
INVESTMENTS IN SECURITIES
The Fund's net asset value is generally calculated as of the close of normal
trading on the New York Stock Exchange (typically 3:00 p.m. Central Time).
Investments in securities traded on a national exchange are valued at the last
sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price, by an independent pricing service or at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities.
When market quotations are not readily available, securities are valued at fair
value as determined in good faith under procedures adopted by the Board of
Directors. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. 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.
15
<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.
For federal income tax purposes, the Fund has a capital loss carryover in
the amount of $1,592,982 which, if not offset by subsequent capital gains, will
expire September 30, 2005 through 2007. It is unlikely the Board of Directors
will authorize a distribution of any net realized capital gains until the
available capital loss carryover has been offset or expires.
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
$508,486.
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, 1999, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$42,728,946 and $45,590,740 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). Under the agreement, Advantus
Capital manages the Fund's assets and provides research, statistical and
advisory services and pays related office rental and executive expenses and
salaries. In addition, as part of the advisory fee, Advantus Capital pays the
expenses of the Fund's transfer, dividend disbursing and redemption agent (First
Data Investor Services Group). Prior to October 26, 1998, the Fund's transfer
agent was Minnesota Life. The fee for investment management and advisory
services is based on the average daily net assets of the Fund at the annual rate
of .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
expenses pursuant to Rule 12b-1 under the Investment Company Act of 1940 (as
amended). The Fund pays Rule 12b-1 fees to Ascend Financial Services, Inc.
(Ascend), the underwriter of the Fund and wholly-owned subsidiary of Advantus
Capital, to be used to pay certain expenses incurred in the distribution,
promotion and servicing of the Fund's shares. The Class A Plan provides for a
service fee up to .25 percent of average daily net assets of Class A shares.
Prior to February 1, 1999, the Class A Plan provided for a distribution fee up
to .30 percent of average daily net assets of Class A shares. The Class B and
Class C Plans provide for a fee up to 1.00 percent of average daily net assets
of Class B and Class C shares, respectively. The Class B and Class C
1.00 percent fee is comprised of a .75 percent distribution fee and a
.25 percent service fee. Ascend is currently waiving the portion of Class A
Rule 12b-1 fees which exceeds, as a percentage of average daily net assets,
.15 percent. Ascend waived Class A Rule 12b-1 fees in the amount of $44,303 for
the year ended September 30, 1999.
16
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, organizational costs and other
miscellaneous expenses.
Effective October 26, 1998, the Fund entered into a new shareholder and
administrative services agreement with Minnesota Life. Under this agreement, the
Fund pays an administrative services fee to Minnesota Life for accounting,
auditing, legal and other services which Minnesota Life provides. Prior to
February 1, 1999, the administrative services fee was $3,700 per month. For the
period from February 1, 1999 to July 31, 1999, the administrative services fee
was $5,700 per month. Effective August 1, 1999, the administrative services fee
is $6,200 per month. In addition, for shareholder services performed by
Minnesota Life, the Adviser will pay Minnesota Life an annual account servicing
fee as agreed by the Adviser and Minnesota Life.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
As of September 30, 1999, Minnesota Life and subsidiaries and the directors
and officers of the Fund as a whole owned 2,226,404 Class A shares which
represents 81.0 percent of the total outstanding Class A shares.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $32,359.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $11,104.
(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. The amortization of organizational
costs was completed during the year.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the years ended September 30, 1999 and 1998 were
as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------- ------------------- -------------------
1999 1998 1999 1998 1999 1998
---------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sold...................................... 949,425 220,439 73,948 197,838 15,871 24,682
Redeemed.................................. (1,015,571) (180,222) (148,820) (153,483) (29,144) (26,413)
---------- -------- -------- -------- ------- -------
(66,146) 40,217 (74,872) 44,355 (13,273) (1,731)
========== ======== ======== ======== ======= =======
</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 $12 million through 1999 to modify its computer
information systems, enabling proper processing of transactions relating to the
year 2000 and beyond. The Fund will not be charged for these expenses.
17
<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
--------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
--------------------------------------------------------
1999 1998 1997 1996 1995(A)
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $ 11.32 $ 15.90 $ 15.94 $ 14.08 $ 11.03
------- ------- ------- ------- -------
Income from investment operations:
Net investment loss.................. (.14) (.13) (.04) (.05) (.04)
Net gains (losses) on securities
(both realized and unrealized)..... 3.38 (4.45) 1.74 2.34 3.11
------- ------- ------- ------- -------
Total from investment operations... 3.24 (4.58) 1.70 2.29 3.07
------- ------- ------- ------- -------
Less distributions:
Distributions from net realized
gains.............................. -- -- (1.74) (.43) (.02)
------- ------- ------- ------- -------
Total distributions................ -- -- (1.74) (.43) (.02)
------- ------- ------- ------- -------
Net asset value, end of year........... $ 14.56 $ 11.32 $ 15.90 $ 15.94 $ 14.08
======= ======= ======= ======= =======
Total return(c)........................ 28.62% (28.81)% 12.88% 16.66% 27.87%
Net assets, end of year
(in thousands)....................... $40,009 $31,844 $44,102 $38,722 $30,454
Ratio of expenses to average daily net
assets(d)(e)......................... 1.33% 1.27% 1.28% 1.31% 1.34%
Ratio of net investment income (loss)
to average daily net assets(d)(e).... (.97)% (.91)% (.32)% (.38)% (.48)%
Portfolio turnover rate (excluding
short-term securities)............... 99.3% 71.1% 65.8% 80.2% 48.8%
</TABLE>
- ------------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995,
the Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) Commencement of operations.
(c) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not
been annualized.
(d) The Fund's Distributor and Adviser voluntarily waived or absorbed $83,999
in expenses for the year ended September 30, 1995. If the Fund had been
charged for these expenses, the ratio of expenses to average daily net
assets would have been 1.75% for Class A shares, 2.39% for Class B shares
and 2.32% for Class C shares. The ratio of net investment income (loss) to
average daily net assets would have been (.89)% for Class A shares, (1.60)%
for Class B shares and (1.65)% for Class C shares.
(e) The Fund's Distributor voluntarily waived $44,303, $68,536, $74,325 and
$68,785 in Class A Rule 12b-1 fees for the years ended September 30, 1999,
1998, 1997 and 1996, respectively. If the Class A shares had been charged
for these fees, the ratio of expenses to average daily net assets would
have been 1.45%, 1.44%, 1.48% and 1.51%, respectively, and the ratio of net
investment income (loss) to average daily net assets would have been
(1.09)%, (1.08)%, (.52)% and (.58)%, respectively.
(f) Adjusted to an annual basis.
18
<PAGE>
ADVANTUS ENTERPRISE FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
CLASS B
------------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------------
1999 1998 1997 1996 1995(A)
-------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $10.88 $15.42 $15.64 $13.94 $11.02
------ ------ ------ ------ ------
Income from investment operations:
Net investment loss.................. (.26) (.24) (.18) (.12) (.09)
Net gains (losses) on securities
(both realized and unrealized)..... 3.26 (4.30) 1.70 2.25 3.03
------ ------ ------ ------ ------
Total from investment operations... 3.00 (4.54) 1.52 2.13 2.94
------ ------ ------ ------ ------
Less distributions:
Distributions from net realized
gains.............................. -- -- (1.74) (.43) (.02)
------ ------ ------ ------ ------
Total distributions................ -- -- (1.74) (.43) (.02)
------ ------ ------ ------ ------
Net asset value, end of year........... $13.88 $10.88 $15.42 $15.64 $13.94
====== ====== ====== ====== ======
Total return(c)........................ 27.57% (29.44)% 11.89% 15.65% 26.71%
Net assets, end of year
(in thousands)....................... $6,491 $5,903 $7,683 $4,871 $1,720
Ratio of expenses to average daily net
assets(d)(e)......................... 2.18% 2.14% 2.18% 2.20% 2.24%
Ratio of net investment income (loss)
to average daily net assets(d)(e).... (1.82)% (1.77)% (1.60)% (1.25)% (1.45)%
Portfolio turnover rate (excluding
short-term securities)............... 99.3% 71.1% 65.8% 80.2% 48.8%
<CAPTION>
CLASS C
----------------------------------------------------------
PERIOD FROM
MARCH 1,
YEAR ENDED SEPTEMBER 30, 1995(B) TO
---------------------------------------- SEPTEMBER 30,
1999 1998 1997 1996 1995
------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year..... $10.87 $15.41 $15.63 $13.94 $11.58
------ ------ ------ ------ ------
Income from investment operations:
Net investment loss.................. (.27) (.26) (.23) (.09) (.06)
Net gains (losses) on securities
(both realized and unrealized)..... 3.27 (4.28) 1.75 2.21 2.42
------ ------ ------ ------ ------
Total from investment operations... 3.00 (4.54) 1.52 2.12 2.36
------ ------ ------ ------ ------
Less distributions:
Distributions from net realized
gains.............................. -- -- (1.74) (.43) --
------ ------ ------ ------ ------
Total distributions................ -- -- (1.74) (.43) --
------ ------ ------ ------ ------
Net asset value, end of year........... $13.87 $10.87 $15.41 $15.63 $13.94
====== ====== ====== ====== ======
Total return(c)........................ 27.48% (29.40)% 11.89% 15.58% 20.38%
Net assets, end of year
(in thousands)....................... $ 812 $ 780 $1,133 $ 807 $ 71
Ratio of expenses to average daily net
assets(d)(e)......................... 2.18% 2.14% 2.18% 2.19% 2.24%(f)
Ratio of net investment income (loss)
to average daily net assets(d)(e).... (1.82)% (1.78)% (1.75)% (1.22)% (1.57)%(f)
Portfolio turnover rate (excluding
short-term securities)............... 99.3% 71.1% 65.8% 80.2% 48.8%
</TABLE>
- ------------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995,
the Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) Commencement of operations.
(c) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not
been annualized.
(d) The Fund's Distributor and Adviser voluntarily waived or absorbed $83,999
in expenses for the year ended September 30, 1995. If the Fund had been
charged for these expenses, the ratio of expenses to average daily net
assets would have been 1.75% for Class A shares, 2.39% for Class B shares
and 2.32% for Class C shares. The ratio of net investment income (loss) to
average daily net assets would have been (.89)% for Class A shares, (1.60)%
for Class B shares and (1.65)% for Class C shares.
(e) The Fund's Distributor voluntarily waived $44,303, $68,536, $74,325 and
$68,785 in Class A Rule 12b-1 fees for the years ended September 30, 1999,
1998, 1997 and 1996, respectively. If the Class A shares had been charged
for these fees, the ratio of expenses to average daily net assets would
have been 1.45%, 1.44%, 1.48% and 1.51%, respectively, and the ratio of net
investment income (loss) to average daily net assets would have been
(1.09)%, (1.08)%, (.52)% and (.58)%, respectively.
(f) Adjusted to an annual basis.
19
<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, 1999 and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two year period then ended and the financial highlights
for each of the years in the five year period then ended. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1999, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of September 30, 1999 and the results of its operations,
changes in its net assets and the financial highlights, for the periods stated
in the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG LLP
Minneapolis, Minnesota
November 5, 1999
20
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that may apply.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same share class) at any time as your needs change. Exchanges are at the
then current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make twelve exchanges each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive a check at
specified intervals from your fund account -- subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DIVIDEND DEPOSITS: At your request we will deposit your dividends or
systematic withdrawals directly into your checking or savings account instead of
sending you a check.
TELEPHONE EXCHANGE: You may move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same share
class) just by calling our toll-free number. The Telephone Exchange privilege
will automatically be established unless otherwise indicated on the Account
Application. Telephone Exchange may be changed (added/deleted) at any time by
submitting a request in writing.
SYSTEMATIC EXCHANGE: You may move a set amount of money monthly or quarterly
from one Advantus Fund to another Advantus Fund (with identical registrations
within the same share class) to diversify your investment portfolio and take
advantage of "dollar-cost averaging".
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Life insurance premiums from your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge, if any.
AUTOMATIC INVESTMENT PLAN: This special purchase plan enables you to open an
Advantus Fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets.) The Automatic Investment
Plan allows you to invest automatically monthly, semi-monthly or quarterly from
your checking or savings account.
IRAS, OTHER QUALIFIED PLANS: You can use the Advantus Family of Funds for your
Traditional, Roth or Education Individual Retirement Account or other qualified
plans including: SEP IRA' s, SIMPLE IRA' s, Profit Sharing, 401(k) Money
Purchase or Defined Benefit plans.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the account. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Redemption privilege will automatically be established
unless otherwise indicated on the Account Application. Telephone Redemption may
be changed (added/deleted) at any time by submitting a request in writing. To
have the redemption automatically deposited into your checking account, please
send a voided check
21
<PAGE>
from your bank. Depending on the performance of the underlying investment
options, the value may be worth more or less than the original amount invested
upon redemption. Some limitations apply, please refer to the prospectus for
details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate and quarterly statements to help you track all of your Advantus Fund
investments and annual tax statements. Semi-annual and annual reports will
provide you with portfolio information, fund performance data and the current
investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005.
Advantus Account Representatives are available Monday through Friday from 8 a.m.
to 4:45 p.m. Central Time. Our voice response system is available 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.
HOW TO INVEST
You can invest in one or more of the eleven Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc., distributor of the
Funds. Contact your representative for information and a prospectus for any of
the Advantus Funds you are interested in. To find a Registered Representative
near you, call the toll-free service line (1-800-665-6005).
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects and
reviews the Fund's investments and provides executive and other personnel for
the Fund's management. (For the Advantus International Balanced Fund, Inc., the
sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)
Advantus Capital Management, Inc. manages twelve mutual funds containing $3.2
billion in assets in addition to $10.8 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 13 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
Advantus Real Estate Securities Fund
22
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-AFS-1838
(1-800-237-1838)
<PAGE>
<TABLE>
<S> <C>
ASCEND FINANCIAL SERVICES, INC.
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
PRESORTED STANDARD
U.S. POSTAGE PAID
ST. PAUL MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
</TABLE>
F.48647 Rev. 11-1999
