<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS INTERNATIONAL BALANCED FUND
SEPTEMBER 30, 1998
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND LIABILITIES 14
STATEMENT OF OPERATIONS 15
STATEMENTS OF CHANGES IN NET ASSETS 16
NOTES TO FINANCIAL STATEMENTS 17
INDEPENDENT AUDITORS' REPORT 24
FEDERAL INCOME TAX INFORMATION 25
SHAREHOLDER SERVICES 27
<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 INTERNATIONAL BALANCED FUND
PERFORMANCE UPDATE
[GARY CLEMONS PHOTO]
[NEIL DEVLIN PHOTO]
GARY CLEMONS AND
NEIL DEVLIN
TEMPLETON INVESTMENT
COUNSEL, INC.
PORTFOLIO MANAGERS
The Advantus International Balanced Fund
is a mutual fund designed for investors
seeking a high level of total return. The
Fund hopes to achieve its objective by
investing in both stocks and debt
securities issued by companies, large and
small, outside the United States. While
Advantus Capital Management, Inc. acts as
investment adviser for the Fund,
Templeton Investment Counsel, Inc.
provides investment advice to the Fund
under a subadvisory agreement.
-Dividends paid quarterly.
-Capital gains distributions paid annually.
PERFORMANCE
The Advantus International Balanced Fund's performance for the year ending
September 30, 1998 is as follows:
<TABLE>
<S> <C>
Class A.......................... -13.02 percent*
Class B.......................... -13.63 percent*
Class C.......................... -13.67 percent*
</TABLE>
By comparison, an international equity index, the MSCI EAFE Index,** returned
- -8.09 percent and an international bond index, the J.P. Morgan Non-U.S.
Government Bond Index+ returned 11.4 percent.
A contributing factor to the Fund's poor performance was our emerging markets
exposure. The emerging markets experienced one of the worst years in memory with
many of these markets exhibiting losses of 50 percent or more in dollar terms
over the year. The Fund ended the year with approximately 12.5 percent of total
assets invested in emerging market equity securities. The Fund also hedged a
portion of its foreign currency-denominated fixed income holdings back to the
U.S. dollar, resulting in an opportunity cost as the dollar fell against most
foreign currencies during the last several months of the period.
PERFORMANCE ANALYSIS
The past year has been quite challenging for the international investor. The
implications of the year old Asian economic problems have fed through to most of
the world's economies. Russia's devaluation and default undermined liquidity in
many of the world's markets. As a result, what had been viewed last June as a
new era of investing where sizable profits could be easily achieved has quickly
turned into an environment of fear regarding a global economic meltdown.
Weighing heavily on the minds of investors is the continued deterioration of the
Japanese economy and banking system. Unfortunately, Japan has not yet been able
to take the measures that are necessary for the country to end its long slide
into recession. Elsewhere in Asia, there are also signs that some nations,
notably Thailand and Korea, may be in the process of finding a bottom to their
severe economic woes. On balance we are likely to increase our exposure to Asia
in the months to come as we identify those companies with strong balance sheets
and good recovery prospects.
Latin American share prices were driven sharply lower during the year as the
specter of devaluations in both Venezuela and Brazil caused investors to flee
the region. Supporting many Latin American companies are their strong balance
sheets, which should provide a buffer if currency devaluations were to occur. As
with Asia we are likely to increase our exposure to Latin America on a very
selective basis in the coming months.
2
<PAGE>
ADVANTUS INTERNATIONAL
BALANCED FUND
SEPTEMBER 30, 1998
Europe, which continues to represent our largest regional exposure, performed
well. However, share valuations reached excessively high levels during the year
and the fact that a correction has occurred in equity prices is not all that
surprising. Although valuations have become more reasonable our bias will likely
remain on the sell side in Europe. Earnings growth prospects, however, remain
more secure in Europe than elsewhere and certain segments of the market; notably
cyclical and financial stocks are seemingly inexpensive after suffering the
worst of the recent decline.
The global bond markets were also strongly influenced by global economic
conditions during the period. The combination of low inflation and declining
prospects for global economic growth meant that interest rates fell in almost
all industrial markets. The rally in bond prices, however, was confined
primarily to government bonds as investors shunned corporate or emerging markets
debt in light of increasing global financial market uncertainty. Our fixed
income holdings remain almost exclusively concentrated in direct
government-guaranteed debt issued by European, Canadian and Australian federal
governments. In the coming months, we expect that the markets with the best
credit quality to continue to offer the best performance.
OUTLOOK
As always, our team of analysts at Templeton is scouring the world for those
stocks that are selling at the lowest price in relation to future earnings
power. The present weakness in world share prices is providing an opportunity
for us to identify more superior long-term bargains. We hope to take advantage
of such opportunities as they arise to better position the Fund's portfolio for
long-term capital appreciation. Finally, we anticipate that the Fund will
continue to hold approximately 65 percent of its assets in stocks, with the
remainder in bonds.
*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 MSCI EAFE Index is an unmanaged index of common stocks from European,
Asian, and Far Eastern markets.
+The J.P. Morgan Non-U.S. Government Bond Index includes all liquid foreign
government issues of Australia, Belgium, Canada, Denmark, France, Germany,
Italy, Japan, Netherlands, Spain, Sweden and United Kingdom.
3
<PAGE>
ADVANTUS INTERNATIONAL
BALANCED FUND
SEPTEMBER 30, 1998
COMPARISON OF CHANGE IN VALUE OF $10,000 INVESTMENT
IN ADVANTUS INTERNATIONAL BALANCED FUND, EAFE INDEX,
J.P. MORGAN NON-U.S. GOVERNMENT BOND INDEX, AND
CONSUMER PRICE INDEX
On the following charts you can see how the total return for each of the three
classes of shares of the Advantus International Balanced Fund compared to the
EAFE Index, the J.P. Morgan Non-U.S. Government Bond Index and the Consumer
Price Index. The four 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 International Balanced Fund (September 16, 1994 for Class
A, January 31, 1997 for Class B, and March 1, 1995 for Class C) through
September 30, 1998.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C> <C>
One year (17.4)%
Since inception (9/16/94) 4.3%
(Thousands)
Class A EAFE Index J.P. Morgan Index CPI
9/16/94 $10,000 $10,000 $10,000 $10,000
9/30/94 $9,324 $9,845 $10,094 $10,054
9/30/95 $10,014 $10,460 $11,972 $10,275
9/30/96 $11,089 $11,399 $12,605 $10,584
9/30/97 $13,650 $12,819 $12,639 $10,818
9/30/98 $11,873 $11,782 $14,133 $10,973
</TABLE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C> <C>
One year (17.9)%
Since inception (1/31/97) (4.5)%
(Thousands)
Class B EAFE Index J.P. Morgan Index CPI
1/31/97 $10,000 $10,000 $10,000 $10,000
9/30/97 $10,730 $11,246 $10,027 $10,094
9/30/98 $9,264 $10,336 $11,212 $10,238
</TABLE>
4
<PAGE>
ADVANTUS INTERNATIONAL
BALANCED 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 (13.7)%
Since inception (3/1/95) 7.0%
(Thousands)
Class C EAFE Index J.P. Morgan Index CPI
3/1/95 $10,000 $10,000 $10,000 $10,000
9/30/95 $11,026 $11,175 $11,198 $10,146
9/30/96 $12,120 $12,179 $11,791 $10,450
9/30/97 $14,780 $13,696 $11,822 $10,682
9/30/98 $12,759 $12,588 $13,219 $10,834
</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 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 INTERNATIONAL
BALANCED FUND
SEPTEMBER 30, 1998
FIVE LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
% OF
MARKET STOCK
COMPANY SHARES VALUE PORTFOLIO
- -------------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
AXA-UAP............................... 11,665 $1,068,407 3.1%
Hong Kong Telecommunications.......... 520,000 1,023,450 2.9%
Merita Bank........................... 196,500 1,001,151 2.9%
Deutsche Bank......................... 17,950 927,429 2.7%
YPF S.A............................... 35,200 915,200 2.6%
---------- ---
$4,935,637 14.2%
---------- ---
---------- ---
</TABLE>
FIVE LARGEST BOND HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF BOND
VALUE PORTFOLIO
---------- -----------
<S> <C> <C>
Belgium Government 6.250% 3/28/2007.......... $2,247,818 13.1%
United Kingdom Government 6.500% 12/7/2003... 2,152,695 12.6%
Netherlands Government 6.000% 01/15/2006..... 1,614,996 9.4%
Hypothekenkbank 5.250% 1/22/2008............. 1,533,591 8.9%
Treuhandstalt 7.500% 9/9/2004................ 1,430,432 8.3%
---------- ---
$8,979,532 52.3%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Foreign Government Bonds 31.8%
Basic Materials 8.8%
Capital Goods 3.2%
Energy 7.3%
Consumer Cyclical 3.7%
Health Care 4.2%
Transportation 6.9%
Financial 14.6%
Communication Services 13.8%
Utilities 2.8%
Cash and Other
Assets/Liabilities 2.9%
</TABLE>
6
<PAGE>
ADVANTUS INTERNATIONAL BALANCED 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 STOCKS (62.2%)
ARGENTINA (3.2%)
Financial Services (.9%)
22,700 Nortel Inversorasa S.A. ADR...................... $ 490,887
Oil-Energy (1.7%)
35,200 YPF Sociedad Anonima ADS......................... 915,200
Utilities (.6%)
10,020 Telefonica de Argentina.......................... 294,964
----------------
1,701,051
----------------
AUSTRALIA (2.3%)
Building Materials and Components (1.0%)
248,995 Pioneer International............................ 464,323
98,500 David Jones, Ltd (b)............................. 92,132
Financial Services (.1%)
20,200 Reinsurance Australia Company (b)................ 47,833
Transportation (1.2%)
118,100 Mayne Nickless Ltd............................... 629,233
13,853 BTR PLC.......................................... 25,423
----------------
1,258,944
----------------
AUSTRIA (.8%)
Electrical and Electronics (.3%)
1,900 VA Technologie (d)............................... 172,345
Utilities - Gas and Electric (.5%)
1,650 EVN Energie-Versorung............................ 246,531
----------------
418,876
----------------
BELGIUM (.3%)
Chemicals (.3%)
4,300 Union Miniere NPV (b)............................ 167,805
----------------
BERMUDA (1.4%)
Financial (.9%)
7,700 Excel Limited.................................... 485,100
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
<C> <S> <C>
BERMUDA--CONTINUED
Metals and Mining (.5%)
28,750 Minorco SA ADR................................... $ 294,687
----------------
779,787
----------------
BRAZIL (1.0%)
Telecommunications (.1%)
1,253,300 Telecomunicacoes Brasileiras..................... 264
1,253,300 Embrtel Participacoes (b)........................ 10,467
1,253,300 Tele Celular Sul (b)............................. 952
1,253,300 Tele Centro Oeste (b)............................ 666
1,253,300 Tele Norte Celular (b)........................... 264
1,253,300 Tele Centro Sul (b).............................. 6,978
1,253,300 Tele Leste Celular (b)........................... 349
1,253,300 Telesp Celular (b)............................... 5,286
1,253,300 Telesp Participacoes (b)......................... 19,666
1,253,300 Tele Norte Leste (b)............................. 7,930
1,253,300 Tele Sudeste Celular (b)......................... 2,115
1,253,300 Telemig Celular (b).............................. 560
1,253,300 Tele Nordeste Celular (b)........................ 539
Utilities (.9%)
7,100 Telebras ADR..................................... 489,900
----------------
545,936
----------------
CANADA (1.8%)
Chemicals and Drugs (.3%)
18,100 Agrium Inc....................................... 153,850
Merchandising (1.2%)
16,300 Oshawa Group, Ltd................................ 288,056
48,800 Northstar Energy Corporation (b)................. 340,800
Oil-Energy (.3%)
29,600 Ranger Oil Ltd................................... 194,250
----------------
976,956
----------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
CHILE (.1%)
<C> <S> <C>
Utilities (.1%)
3,000 Gener SA......................................... $ 44,812
----------------
CZECH REPUBLIC (.3%)
Energy Services (.3%)
9,465 Ceske Energeticke (b)............................ 176,372
----------------
FINLAND (2.5%)
Banking (1.8%)
196,500 Merita, Ltd (b).................................. 1,001,151
Wholesale and International
Trade (.7%)
15,000 Amer Group (b)................................... 197,698
23,500 Metsa-Serla...................................... 166,421
----------------
1,365,270
----------------
FRANCE (5.7%)
Banking (.8%)
7,587 Banque Nationale de Paris (b).................... 406,374
Multi-Industry (.4%)
1,000 Marine Wendel.................................... 146,402
2,000 Pechiney (b)..................................... 69,202
Energy Sources (1.1%)
5,070 Societe Nationale Elf Aquitaine (b).............. 625,490
Health and Personal Care (1.4%)
17,935 Rhone-Poulenc.................................... 752,495
Insurance (2.0%)
11,665 AXA - UAP........................................ 1,068,407
----------------
3,068,370
----------------
GERMANY (1.9%)
Consumer Products (.2%)
2,650 Moebel Walther................................... 103,125
Banking (1.7%)
17,950 Deutsche Bank (b)................................ 927,429
----------------
1,030,554
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
<C> <S> <C>
HONG KONG (5.6%)
Banks (.9%)
26,000 Hong Kong and Shanghai Banking Corporation (b)... $ 476,492
Chemicals and Drugs (.2%)
1,150,000 Yizheng Chemical................................. 87,568
Electrical and Electronics (.2%)
73,900 Hong Kong Aircraft Engineering Co. Ltd........... 87,746
Financial Services (.2%)
28,000 Peregrine Investment Holdings.................... --
246,000 South China Morning Post Holdings LTD............ 96,834
Multi-Industry (.9%)
61,000 Hutchison Whampoa................................ 321,206
86,600 Jardine Matheson Holdings........................ 177,530
102,628 Jardine Strategic Holdings....................... 112,891
Telecommunications (1.9%)
520,000 Hong Kong Telecommunications..................... 1,023,450
128,500 Swire Pacific Class A............................ 404,657
352,400 Swire Pacific Class B............................ 166,005
Utilities, Gas, and Electric (.1%)
18,000 Hong Kong Electrical Holdings.................... 61,910
----------------
3,016,289
----------------
INDONESIA (.1%)
Consumer Products (-%)
400 Indosat ADS...................................... 2,125
Utilities (.1%)
14,200 PT Indostat ADR.................................. 75,437
----------------
77,562
----------------
ISRAEL (1.1%)
Medical (1.1%)
15,400 TEVA Pharmaceutical Industries Ltd............... 583,275
----------------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
ITALY (.6%)
<C> <S> <C>
Telecommunications (.6%)
63,000 Sirti............................................ $ 305,473
----------------
JAPAN (1.1%)
Chemicals and Drugs (.1%)
3,000 Ono Pharmaceutical............................... 71,972
Consumer Products (.9%)
7,300 SONY............................................. 506,707
Durable Goods (.1%)
21,000 Hitachi Zosen Company............................ 27,648
----------------
606,327
----------------
MEXICO (1.3%)
Chemicals (.1%)
48,000 Vitro............................................ 65,726
Mining and Metals (.5%)
120,000 Grupo Mexico..................................... 294,262
Telecommunications (.7%)
8,350 Telefonos de Mexico ADR.......................... 367,400
----------------
727,388
----------------
NETHERLANDS (3.6%)
Broadcasting, Advertising
and Publishing (.6%)
7,250 International Nederlanden Group.................. 326,868
Building Materials and Components (.2%)
6,850 European Vinyls.................................. 85,484
Electrical and Electronics (1.3%)
12,950 Philips Electronics.............................. 698,011
Financial Services (.9%)
10,600 ING Groep........................................ 477,903
Merchandising (.6%)
4,320 Koninklijke Bijenkorf Beheer (b)................. 350,996
----------------
1,939,262
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
<C> <S> <C>
NEW ZEALAND (.4%)
Forest Products and Paper (.2%)
171,400 Carter Holt Harvey, Ltd.......................... $ 113,124
Transportation (.2%)
100,000 Air New Zealand Ltd.............................. 79,000
----------------
192,124
----------------
NORWAY (1.1%)
Energy Sources (.4%)
23,000 Saga Petroleum................................... 236,392
Health and Personal Care (.4%)
31,750 Nycomed Amersham PLC............................. 203,094
Mining and Metals - Container (.3%)
13,000 Elkem (b)........................................ 144,161
----------------
583,647
----------------
PHILIPPINES (.2%)
Telecommunications (.2%)
5,300 Philippine Long Distance Telephone............... 112,092
----------------
SOUTH AFRICA (.5%)
Mining and Metals (.5%)
17,528 Anglo American Platinum.......................... 254,630
----------------
SPAIN (3.4%)
Energy Sources (.9%)
10,800 Repsol........................................... 456,531
Telecommunications (1.0%)
14,300 Telefonica de Espana............................. 521,868
Utilities - Gas and Electric (1.5%)
50,072 Iberdrola........................................ 834,298
----------------
1,812,697
----------------
SWEDEN (5.2%)
Business and Public Service (.6%)
24,000 Esselte.......................................... 358,081
Forest Products and Paper (.5%)
27,000 Stora Kopparbergs Bergslags...................... 256,510
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
SWEDEN--CONTINUED
<C> <S> <C>
Health and Personal Care (1.2%)
16,900 Svenska Handelsbanken (b)........................ $ 633,605
Metals and Mining (.4%)
16,900 Granges.......................................... 204,736
Transportation (2.5%)
11,700 Autoliv, Inc. SDR (b)............................ 359,573
17,200 Autoliv.......................................... 473,000
20,800 Volvo............................................ 509,271
----------------
2,794,776
----------------
SWITZERLAND (2.1%)
Finance (2.1%)
270 BBC Brown Boveri Ltd (b)......................... 275,011
1,700 Zurich Allied.................................... 846,672
Health and Personal Care (-%)
51 Societe Generale de Surveillance (b)............. 37,010
----------------
1,158,693
----------------
UNITED KINGDOM (12.8%)
Banking (.2%)
5,681 Barclays Bank.................................... 92,706
Building Materials and Components (.3%)
54,900 Hepworth PLC..................................... 131,913
Chemicals (1.3%)
138,600 Elementis........................................ 189,460
71,116 Somerfield PLC................................... 504,176
Drugs (1.0%)
355,000 Medeva........................................... 554,593
Energy Services (3.0%)
61,735 BG PLC........................................... 428,759
152,500 Centrica PLC (b)................................. 294,564
25,833 Hyder............................................ 409,494
23,384 Thames Water Group............................... 465,377
Financial Services (.7%)
67,100 Tate & Lyle...................................... 371,448
Food and Household Products (.6%)
465,493 Albert Fisher Group.............................. 81,021
128,429 Hillsdown Holdings............................... 235,530
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
<C> <S> <C>
UNITED KINGDOM--CONTINUED
Mining and Metals (1.5%)
459,700 British Steel PLC................................ $ 829,396
Sanitary Services (.7%)
38,000 Waste Management International PLC (b)........... 217,456
15,500 Waste Management International ADR (b)........... 178,250
Telecommunications (1.4%)
57,000 British Telecommunications....................... 767,550
Transportation (2.1%)
32,000 Rolls Royce...................................... 110,307
276,900 BTR.............................................. 499,586
128,199 Thorn PLC (b).................................... 542,598
----------------
6,904,184
----------------
VENEZUELA (1.0%)
Telecommunications (1.0%)
30,200 Cia Anonima Telefonos de Venezuela............... 513,400
----------------
UNITED STATES (.8%)
Telecommunications (.8%)
10,300 SBC Communications, Inc.......................... 430,025
----------------
Total common stocks
(cost: $36,721,171).......................................... 33,546,577
----------------
</TABLE>
<TABLE>
<C> <S> <C>
PREFERRED STOCKS (3.4%)
BRAZIL (1.4%)
Financial Services (.8%)
1,225,500 Unibanco......................................... 32,049
54,461,000 Banco Bradesco................................... 321,602
182,000 Banco ITAU....................................... 85,979
Oil and Energy (.6%)
2,864,000 Petroleo Brasileiro SA........................... 294,760
----------------
734,390
----------------
</TABLE>
See accompanying notes to investments in securities.
10
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
ITALY (1.4%)
<C> <S> <C>
Telecommunications (1.4%)
167,000 Telecom Italia................................... $ 799,118
THAILAND (.5%)
Banks (.5%)
272,600 Bangkok Bank (b)(d).............................. 259,125
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ---------- ----------------
<C> <S> <C>
UNITED KINGDOM (.1%)
Energy Services (.1%)
27,900 Hyder (b)........................................ $ 58,155
----------------
Total preferred stocks
(cost: $2,556,983)........................................... 1,850,788
----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- --------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (31.8%) (c)
AUSTRALIA (2.5%)
Government (2.5%)
2,005,000 Australian Government (Australian Dollar)........ 7.500% 07/15/05 1,358,560
------------
BELGIUM (4.9%)
Government (4.9%)
13,180,000 Belgium Government (Belgium Franc)............... 5.000% 03/28/01 394,141
67,390,000 Belgium Government (Belgium Franc)............... 6.250% 03/28/07 2,247,818
------------
2,641,959
------------
CANADA (1.8%)
Government (1.8%)
1,320,000 Canadian Government Bond (Canadian Dollar)....... 7.000% 12/01/06 979,660
------------
DENMARK (1.3%)
Government (1.3%)
3,445,000 Kingdom of Denmark (Danish Krone)................ 9.000% 11/15/00 591,393
550,000 Kingdom of Denmark (Danish Krone)................ 8.000% 05/15/03 99,307
------------
690,700
------------
FRANCE (1.4%)
Government (1.4%)
3,920,000 Government of France (French Franc).............. 5.500% 04/25/07 778,950
------------
GERMANY (6.0%)
Government (6.0%)
2,410,000 Hypothekenkbank (Deutsch Mark)................... 5.250% 01/22/08 1,533,591
2,000,000 Treuhandanstalt (Deutsch Mark)................... 7.500% 09/09/04 1,430,432
1,960,000 Federal Republic of Germany (Deutsch Mark)....... 5.250% 01/04/08 283,466
------------
3,247,489
------------
ITALY (1.8%)
Government (1.8%)
1,300,000,000 Buoni Poliennali Del Tes (Italian Lira).......... 7.750% 11/01/06 976,675
------------
</TABLE>
See accompanying notes to investments in securities.
11
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
INVESTMENTS IN SECURITIES
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- -------------- ----------------
<C> <S> <C> <C> <C>
NETHERLANDS (4.4%)
Government (4.4%)
2,695,000 Netherlands (Dutch Guilder)...................... 6.000% 01/15/06 $ 1,614,996
1,235,000 Netherlands (Dutch Guilder)...................... 8.250% 02/15/02 748,368
----------------
2,363,364
----------------
NEW ZEALAND (.8%)
Government (.8%)
875,000 New Zealand (New Zealand Dollar)................. 6.500% 02/15/00 442,277
----------------
SPAIN (1.7%)
Government (1.7%)
50,000,000 Government of Spain (Spanish Peseta)............. 12.250% 03/25/00 394,616
55,000,000 Government of Spain (Spanish Peseta)............. 10.900% 08/30/03 507,052
----------------
901,668
----------------
SWEDEN (.6%)
Government (.6%)
2,000,000 Sweden Kingdom (Swedish Krona)................... 10.250% 05/05/03 314,834
----------------
UNITED KINGDOM (4.6%)
Government (4.6%)
1,190,000 United Kingdom (British Sterling Pound).......... 6.500% 12/07/03 2,152,695
165,000 United Kingdom (British Sterling Pound).......... 7.500% 12/07/06 326,764
----------------
2,479,459
----------------
Total long-term debt securities (cost: $15,730,437)................. 17,175,595
----------------
Total investments in securities (cost: $55,008,591) (e)............. $ 52,572,960
----------------
----------------
</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) Principal amounts for foreign debt securities are denominated in the
currencies indicated.
(d) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. (See note 8 to the
financial statements.) Information concerning the illiquid securities held
at September 30, 1998, which includes acquisition date and cost, is as
follows:
<TABLE>
<CAPTION>
ACQUISTION
SECURITY: DATE COST
- --------------------------------------------------------------------------- ----------------- ---------
<S> <C> <C>
Bangkok Bank............................................................... Various $ 664,296
VA Technologies............................................................ Various 180,320
---------
$ 844,616
---------
---------
</TABLE>
(e) At September 30, 1998 the cost of securities for federal income tax purposes
was $55,579,122. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.............................................................. $ 7,520,483
Gross unrealized depreciation.............................................................. (10,526,645)
------------
Net unrealized depreciation................................................................ $ (3,006,162)
------------
------------
</TABLE>
12
<PAGE>
(This page has been left blank intentionally.)
13
<PAGE>
ADVANTUS INTERNATIONAL BALANCED 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: $55,008,591)........ $52,572,960
Cash in bank on demand deposit......... 471,185
Receivable for investment securities
sold.................................. 477,187
Accrued interest and dividends
receivable............................ 584,202
Unrealized appreciation on forward
foreign currency contracts held, at
value (note 4)........................ 52,659
Receivable for fund shares sold........ 78,610
Receivable for refundable foreign
income taxes withheld................. 65,202
Organizational costs (note 6).......... 7,584
Other assets........................... 3,792
-----------
Total assets....................... 54,313,381
-----------
LIABILITIES
Payable for fund shares repurchased.... 18,237
Payable to Adviser..................... 123,720
Unrealized depreciation on forward
foreign currency contracts held, at
value (note 4)........................ 180,309
Other payables......................... 22,882
-----------
Total liabilities.................. 345,148
-----------
Net assets applicable to outstanding
capital stock......................... $53,968,233
-----------
-----------
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
unallocated) of $.01 par value (note
1).................................. $ 51,147
Additional paid-in capital........... 55,310,314
Undistributed net investment
income.............................. 14,138
Accumulated net realized gains from
investments......................... 1,172,365
Unrealized depreciation of
investments and translation of
assets and liabilities in foreign
currencies.......................... (2,579,731)
-----------
Total--representing net assets
applicable to outstanding capital
stock............................. $53,968,233
-----------
-----------
Net assets applicable to outstanding
Class A shares........................ $46,025,357
-----------
-----------
Net assets applicable to outstanding
Class B shares........................ $ 4,869,033
-----------
-----------
Net assets applicable to outstanding
Class C shares........................ $ 3,073,843
-----------
-----------
Shares outstanding and net asset value
per share:
Class A--Shares outstanding
4,356,501........................... $ 10.56
-----------
-----------
Class B--Shares outstanding
464,973............................. $ 10.47
-----------
-----------
Class C--Shares outstanding
293,208............................. $ 10.48
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
Investment income:
Interest............................. $ 900,655
Dividends (net of foreign withholding
taxes of $113,492).................. 1,519,734
------------
Total investment income.......... 2,420,389
------------
Expenses (note 5):
Investment advisory fee.............. 515,264
Distribution fees--Class A........... 166,103
Distribution fees--Class B........... 41,398
Distribution fees--Class C........... 38,490
Administrative services fee.......... 36,800
Custodian fees....................... 198,353
Auditing and accounting services..... 93,374
Legal fees........................... 9,398
Amortization of organizational
costs............................... 8,273
Registration fees.................... 43,740
Printing and shareholder reports..... 39,463
Other................................ 11,031
------------
Total expenses................... 1,201,687
Less fees and expenses waived or
absorbed:
Class A distribution fees.......... (69,875)
Other fund expenses................ (92,869)
------------
Total fees and expenses waived or
absorbed........................ (162,744)
------------
Total net expenses............... 1,038,943
------------
Investment income--net........... 1,381,446
------------
Realized and unrealized gains (losses)
on investments and foreign currencies:
Net realized gains (losses) from:
Investments (note 3)............... 3,872,439
Foreign currency transactions...... (1,197,252)
------------
2,675,187
------------
Net change in unrealized appreciation
or depreciation on:
Investments........................ (12,232,176)
Translation of assets and
liabilities in foreign
currencies........................ 47,277
------------
(12,184,899)
------------
Net losses on investments and
foreign currencies.............. (9,509,712)
------------
Net decrease in net assets resulting
from operations....................... $ (8,128,266)
------------
------------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
Operations:
Investment income--net............... $ 1,381,446 $ 1,272,340
Net realized gains on investments and
foreign currency transactions....... 2,675,187 2,995,427
Net change in unrealized appreciation
or depreciation on investments and
translation of assets and
liabilities in foreign currencies... (12,184,899) 6,125,889
------------ -----------
Increase (decrease) in net assets
resulting from operations....... (8,128,266) 10,393,656
------------ -----------
Distributions to shareholders from:
Investment income--net:
Class A............................ (635,669) (1,495,458)
Class B............................ (33,103) (11,375)
Class C............................ (31,228) (75,167)
Net realized gains on investments:
Class A............................ (3,919,060) (1,004,915)
Class B............................ (238,611) --
Class C............................ (291,404) (55,877)
------------ -----------
Total distributions.............. (5,149,075) (2,642,792)
------------ -----------
Capital share transactions (notes 5 and
7):
Proceeds from sales:
Class A............................ 9,134,250 9,097,887
Class B............................ 3,881,046 2,167,154
Class C............................ 1,811,623 2,195,751
Proceeds from shares issued as a
result of reinvested dividends:
Class A............................ 3,160,078 1,286,463
Class B............................ 271,714 11,206
Class C............................ 310,573 139,181
Payments for redemption of shares:
Class A............................ (8,890,827) (3,815,092)
Class B............................ (631,967) (38,976)
Class C............................ (2,203,065) (584,091)
------------ -----------
Increase in net assets from
capital share transactions...... 6,843,425 10,459,483
------------ -----------
Total increase (decrease) in net
assets.......................... (6,433,918) 18,210,347
Net assets at beginning of year........ 60,402,149 42,191,802
------------ -----------
Net assets at end of year (including
undistributed net investment income of
$14,138 and $357,158, respectively)... $ 53,968,233 $60,402,149
------------ -----------
------------ -----------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 31, 1998
(1) ORGANIZATION
The Advantus International Balanced Fund, Inc. (the Fund) is registered
under the Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. The Fund is designed for investors seeking a high
level of total return through investing in both stocks and debt securities
outside the United States.
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 declines as the amount of the purchase increases and range from 28 to 84
months after purchase for Class B shares and from 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 U.S. or foreign securities 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 or 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. Such fair values are determined using pricing services or
prices quoted by independent brokers. Short-term securities with maturities of
less than 60 days when acquired, or which subsequently are within 60 days of
maturity, are valued at amortized cost which approximates market value.
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.
17
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
FOREIGN CURRENCY TRANSLATIONS AND FORWARD FOREIGN CURRENCY CONTRACTS
Securities and other assets and liabilities denominated in foreign
currencies are translated daily into U.S. dollars at the closing rate of
exchange. Foreign currency amounts related to the purchase or sale of
securities, income and expenses are translated at the exchange rate on the
transaction date. The Fund does not isolate that portion of the results of
operations resulting from changes in foreign exchange rates on investments from
the fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with net realized and unrealized gains or losses from
investments.
Net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized between trade and settlement dates on securities
transactions, the difference between the amounts of dividends, interest and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities, other then investments in securities, resulting from changes in the
exchange rate.
The Fund also may enter into forward foreign currency exchange contracts for
operational purposes and to protect against adverse exchange rate fluctuations.
The net U.S. dollar value of foreign currency underlying all contractual
commitments held by the Fund and the resulting unrealized appreciation and
depreciation are determined using foreign currency exchange rates from an
independent pricing service. The Fund is subject to the credit risk that the
other party will not complete the obligations of the contract.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to December
31, in order to avoid federal excise tax.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary book-to-tax
differences. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income (loss) or realized gains (losses) were
recorded by the Fund.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to decrease
paid-in-capital in the amount of $77,999, decrease undistributed net investment
income by $1,024,466 and increase accumulated realized gains in the amount of
$1,102,465.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly in cash
or reinvested in additional shares. 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 $35,091,684 and $33,741,797, respectively.
18
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) FORWARD FOREIGN CURRENCY CONTRACTS
On September 30, 1998, the Fund had entered into forward foreign currency
contracts that obligate the Fund to deliver currencies at specified future
dates. Unrealized appreciation and depreciation on these contracts is included
in the accompanying financial statements. The terms of the open contracts were
as follows:
<TABLE>
<CAPTION>
EXCHANGE UNREALIZED UNREALIZED
DATE CURRENCY TO BE DELIVERED CURRENCY TO BE RECEIVED APPRECIATION DEPRECIATION
- ------------ --------------------------- -------------------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
10/9/1998 410,214 US$ 700,000 AUD $ 4,277 $ --
10/19/1998 105,498 US$ 180,000 AUD 1,085 --
10/15/1998 174,066 US$ 297,000 AUD 1,797 --
10/19/1998 2,618,300 US$ 4,400,000 DEM 18,789 --
10/22/1998 1,342,435 US$ 2,242,000 DEM 1,510 --
10/21/1998 1,252,871 US$ 2,100,000 DEM 5,882 --
10/21/1998 1,254,780 US$ 2,100,000 DEM 3,973 --
11/24/1998 308,998 US$ 185,000 GBP 2,433 --
10/14/1998 237,014 US$ 480,000 NZD 3,019 --
10/19/1998 180,000 AUD 106,236 US$ -- 348
10/9/1998 700,000 AUD 413,140 US$ -- 1,351
10/15/1998 297,000 AUD 177,948 US$ 2,085 --
10/19/1998 4,400,000 DEM 2,606,790 US$ -- 30,299
10/22/1998 6,725,000 DEM 3,980,468 US$ -- 50,775
10/21/1998 4,200,000 DEM 2,483,737 US$ -- 33,768
10/26/1998 4,350,000 DEM 2,589,286 US$ -- 18,868
11/2/1998 2,100,000 DEM 1,260,656 US$ 1,074 --
11/24/1998 485,000 GBP 784,007 US$ -- 32,448
11/27/1998 185,000 GBP 299,360 US$ -- 11,929
10/2/1998 606,930,750 ITL 367,336 US$ -- 523
10/14/1998 480,000 NZD 246,768 US$ 6,735 --
------- --------
$ 52,659 $ 180,309
------- --------
------- --------
</TABLE>
<TABLE>
<S> <C>
AUD Australian Dollar
DEM German Deutch Mark
NZD New Zealand Dollar
ITL Italian Lira
GBP British Sterling Pound
US$ United States Dollar
</TABLE>
(5) 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
19
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(5) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
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 .95 percent on
the first $25 million in net assets, .80 percent on the next $25 million, .75
percent on the next $50 million and .65 percent on net assets in excess of $100
million.
Advantus Capital has a subadvisory agreement with Templeton Investment
Counsel, Inc. (Templeton). From its advisory fee, Advantus Capital pays
Templeton a fee equal to an annual rate of .70 percent on the first $25 million
in net assets, .55 percent on the next $25 million, .50 percent on the next $50
million and .40 percent on net assets in excess of $100 million.
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 of up to 1.00 percent of
average daily net assets of Class B and Class C shares. 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 that portion of Class A
distribution fees which exceeds, as a percentage of average daily net assets,
.20 percent. Prior to January 30, 1998 the waiver was .15 percent of average
daily net assets. Ascend waived Class A distribution fees in the amount of
$69,875 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.
The Fund pays an administrative services fee to Minnesota Life for
accounting, auditing, legal and other administrative services which Minnesota
Life provides. Effective February 1, 1998 the administrative services fee is
$3,100 per month. Prior to February 1, 1998 the administrative services fee for
the Fund was $3,000 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. During the year ended September
30, 1998, Advantus Capital voluntarily agreed to absorb $92,869 in expenses that
were otherwise payable by the Fund.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $225,967.
As of September 30, 1998, Minnesota Life and subsidiaries and the directors
and officers of the Fund as a whole owned 2,670,627 shares or 61.3 percent of
the Fund's Class A shares.
During the year ended September 30, 1998, legal fees were paid to a law firm
of which the Fund's secretary is a partner in the amount of $9,355.
20
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(6) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs wilt 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.
(7) 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............................................ 741,366 738,147 318,630 175,607 146,549 181,585
Issued for reinvested distributions............. 269,372 107,948 23,062 896 26,970 11,492
Redeemed........................................ (725,179) (310,600) (49,589) (3,633) (184,249) (48,011)
---------- ---------- --------- --------- ---------- ---------
285,559 535,495 292,103 172,870 (10,730) 145,066
---------- ---------- --------- --------- ---------- ---------
---------- ---------- --------- --------- ---------- ---------
</TABLE>
(8) ILLIQUID SECURITIES
At September 30, 1998, investments in securities include issues which
generally cannot be offered for sale to the public without first being
registered under the Securities Act of 1933 (illiquid security). In the event
the securities are registered, those carrying registration rights allow for the
issuer to bear all the related costs; for issues without rights, the Fund may
incur such costs. The Fund currently limits investments in illiquid securities
to 10 percent of net assets at the time of the purchase. Securities are valued
by procedures described in note 2. The aggregate value of illiquid securities
held by the Fund at September 30, 1998 was $431,470 which represents .8 percent
of net assets.
(9) YEAR 2000 (UNAUDITED)
In 1995, Minnesota Life began addressing computer system requirements and
applications to be Year 2000 ready. Based on a current study, Minnesota Life
plans to spend approximately $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.
21
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(10) 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...................... $ 13.29 $ 11.42 $ 10.79 $ 10.34 $ 10.54
---------- --------- --------- --------- -------
Income from investment
operations:
Net investment income....... .25 .30 .25 .20 .01
Net gains or losses on
securities (both realized
and unrealized)........... (1.92) 2.25 .87 .56 (.21)
---------- --------- --------- --------- -------
Total from investment
operations.............. (1.67) 2.55 1.12 .76 (.20)
---------- --------- --------- --------- -------
Less distributions:
Dividends from net
investment income......... (.14) (.40) (.28) (.19) --
Distributions from capital
gains..................... (.92) (.28) (.21) (.12) --
---------- --------- --------- --------- -------
Total distributions....... (1.06) (.68) (.49) (.31) --
---------- --------- --------- --------- -------
Net asset value, end of
period...................... $ 10.56 $ 13.29 $ 11.42 $ 10.79 $ 10.34
---------- --------- --------- --------- -------
---------- --------- --------- --------- -------
Total return (c).............. (13.02)% 23.09% 10.73% 7.41% (1.90)%
Net assets, end of period (in
thousands).................. $ 46,025 $ 54,090 $ 40,381 $ 30,949 $15,430
Ratio of expenses to average
daily net assets (d)........ 1.58% 1.51% 1.85% 2.08% .47%(e)
Ratio of net investment income
to average daily net assets
(d)......................... 2.18% 2.54% 2.39% 2.22% .14%(e)
Portfolio turnover rate
(excluding short-term
securities)................. 57.0% 73.4% 56.1% 52.0% 12.1%
</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 $162,744,
$114,735, $53,123, $56,482 and $4,034 in expenses for the years ended
September 30, 1998, 1997, 1996 and 1995 and the period ended September 30,
1994, respectively. If Class A shares had been charged for these expenses,
the ratio of expenses to average daily net assets would have been 1.87%,
1.75%, 2.00%, 2.30% and .49%, respectively, and the ratio of net investment
income to average daily net assets would have been 1.89%, 2.30%, 2.24%,
2.00% and .12%, respectively. If Class B shares had been charged for these
expenses, the ratio of expenses to average daily net assets would have been
2.92% and 2.47%, respectively, and the ratio of net investment income to
average daily net assets would have been 2.97% and 2.50%, respectively for
the years ended September 30, 1998 and for the period ended September 30,
1997, respectively. If Class C shares had been charged for these expenses,
the ratio of expenses to average daily net assets would have been 2.96%,
2.45%, 2.61% and 3.00%, respectively and the ratio of net investment income
to average daily net assets would have been 2.99%, 2.41%, 1.15% and 1.32%
shares, respectively for the years ended September 30, 1998, 1997 and 1996
and the period ended September 30, 1995.
(e) Ratios presented for the periods from September 16, 1994 to September 30,
1994 are not annualized as they are not indicative of anticipated results.
(f) Adjusted to an annual basis.
22
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS B
------------------------------- CLASS C
PERIOD FROM --------------------------------------------------------------
JANUARY 31, YEAR ENDED SEPTEMBER PERIOD FROM MARCH 1,
YEAR ENDED 1997(b) TO YEAR ENDED 30, 1995(b) TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, ---------------------- SEPTEMBER 30,
1998 1997 1998 1997 1996 1995
-------------- -------------- -------------- ---------- --------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 13.23 $ 11.95 $ 13.24 $ 11.40 $ 10.77 $ 9.95
------- ------- ------- ---------- --------- ------
Income from investment
operations:
Net investment income....... .39 .16 .39 .26 .15 .11
Net gains or losses on
securities (both realized
and unrealized)........... (2.13) 1.30 (2.13) 2.16 .89 .91
------- ------- ------- ---------- --------- ------
Total from investment
operations.............. (1.74) 1.46 (1.74) 2.42 1.04 1.02
------- ------- ------- ---------- --------- ------
Less distributions:
Dividends from net
investment income......... (.10) (.18) (.10) (.30) (.20) (.13)
Distributions from capital
gains..................... (.92) -- (.92) (.28) (.21) (.07)
------- ------- ------- ---------- --------- ------
Total distributions....... (1.02) (.18) (1.02) (.58) (.41) (.20)
------- ------- ------- ---------- --------- ------
Net asset value, end of
period...................... $ 10.47 $ 13.23 $ 10.48 $ 13.24 $ 11.40 $10.77
------- ------- ------- ---------- --------- ------
------- ------- ------- ---------- --------- ------
Total return (c).............. (13.63)% 12.30% (13.67)% 21.95% 9.93% 10.26%
Net assets, end of period (in
thousands).................. $ 4,869 $ 2,287 $ 3,074 $ 4,025 $ 1,811 $ 330
Ratio of expenses to average
daily net assets (d)........ 2.77% 2.33%(f) 2.80% 2.37% 2.61% 2.93%(f)
Ratio of net investment income
to average daily net assets
(d)......................... 3.12% 2.64%(f) 3.15% 2.50% 1.15% 1.39%(f)
Portfolio turnover rate
(excluding short-term
securities)................. 57.0% 73.4% 57.0% 73.4% 56.1% 52.0%
</TABLE>
23
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Advantus International Balanced Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus
International Balanced 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
24
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
FEDERAL INCOME TAX INFORMATION
The following information for federal income tax purposes is presented as an
aid to shareholders in reporting the distributions paid by the Fund in the
fiscal year ended September 30, 1998. Dividends for the 1998 calendar year will
be reported to you on Form 1099-Div in late January 1999. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
Income distributions--taxable as dividend income, none qualifying for deduction by corporations
December 23, 1997........................................................................................... $ .4245
March 25, 1998.............................................................................................. .0880
---------
$ .5125
---------
---------
Capital gains distribution--taxable as long-term capital gains
December 17, 1997........................................................................................... $ .5537
---------
---------
</TABLE>
The distribution of $.4245 payable on December 23, 1997 consisted of $.3692
from short-term capital gains (taxable as dividend income) and $.0553 from net
investment income.
CLASS B
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
Income distributions--taxable as dividend income, none qualifying for deduction by corporations
December 23, 1997........................................................................................... $ .4031
March 25, 1998.............................................................................................. .0677
---------
$ .4708
---------
---------
Capital gains distribution--taxable as long-term capital gains
December 17, 1997........................................................................................... $ .5537
---------
---------
</TABLE>
The distribution of $.4031 payable on December 23, 1997 consisted of $.3692
from short-term capital gains (taxable as dividend income) and $.0339 from net
investment income.
CLASS C
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
Income distributions--taxable as dividend income, none qualifying for deduction by corporations
December 23, 1997........................................................................................... $ .3980
March 25, 1998.............................................................................................. .0652
---------
$ .4632
---------
---------
Capital gains distribution--taxable as long-term capital gains
December 17, 1997........................................................................................... $ .5537
---------
---------
</TABLE>
The distribution of $.3980 payable on December 23, 1997 consisted of $.3692
from short-term capital gains (taxable as dividend income) and $.0288 from net
investment income.
25
<PAGE>
ADVANTUS INTERNATIONAL BALANCED FUND
FEDERAL INCOME TAX INFORMATION--CONTINUED
The Fund has elected to pass-through foreign tax credits to its
shareholders. The following information will aid you in filing for your foreign
tax credit.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
CLASS A FOREIGN TAX CLASS B FOREIGN TAX CLASS C FOREIGN TAX
FOREIGN INCOME PAID PER FOREIGN INCOME PAID PER FOREIGN INCOME PAID PER
COUNTRY PER SHARE SHARE PER SHARE SHARE PER SHARE SHARE
- ---------------------------- --------------- ------------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Argentina................... $ 0.012494 $ 0.000184 $ 0.008712 $ 0.000128 $ 0.008198 $ 0.000121
Australia................... 0.002147 0.000248 0.001498 0.000173 0.001409 0.000163
Austria..................... 0.010714 0.001530 0.007471 0.001067 0.007030 0.001004
Belgium..................... 0.001158 0.000264 0.000807 0.000184 0.000760 0.000173
Bermuda..................... 0.002474 0.000000 0.001725 0.000000 0.001623 0.000000
Brazil...................... 0.013346 0.001369 0.009307 0.000955 0.008758 0.000898
Canada...................... 0.032306 0.000325 0.022529 0.000227 0.021200 0.000213
Denmark..................... 0.019690 0.000000 0.013731 0.000000 0.012921 0.000000
Finland..................... 0.006870 0.001031 0.004791 0.000719 0.004508 0.000676
France...................... 0.019527 0.000371 0.013617 0.000259 0.012813 0.000243
Germany..................... 0.042711 0.000507 0.029784 0.000354 0.028027 0.000333
Hong Kong................... 0.025526 0.000000 0.017801 0.000000 0.016750 0.000000
Indonesia................... 0.000676 0.000101 0.000472 0.000071 0.000444 0.000067
Israel...................... 0.000449 0.000105 0.000313 0.000073 0.000295 0.000069
Italy....................... 0.034444 0.000392 0.024020 0.000274 0.022602 0.000257
Japan....................... 0.001162 0.000000 0.000810 0.000000 0.000762 0.000000
Korea....................... 0.000203 0.000034 0.000142 0.000023 0.000133 0.000022
Mexico...................... 0.004875 0.000000 0.003399 0.000000 0.003199 0.000000
Netherlands................. 0.008576 0.001199 0.005981 0.000836 0.005628 0.000786
New Zealand................. 0.018732 0.001958 0.013062 0.001366 0.012292 0.001285
Norway...................... 0.012007 0.001801 0.008373 0.001256 0.007879 0.001182
Phillipines................. 0.000136 0.000033 0.000095 0.000023 0.000089 0.000022
Portugal.................... 0.001071 0.000189 0.000747 0.000132 0.000703 0.000124
Spain....................... 0.045251 0.001754 0.031556 0.001223 0.029694 0.001151
South Africa................ 0.001931 0.000000 0.001346 0.000000 0.001267 0.000000
Sweden...................... 0.036356 0.003226 0.025353 0.002250 0.023857 0.002117
Switzerland................. 0.001962 0.000583 0.001368 0.000406 0.001287 0.000382
United Kingdom.............. 0.158387 0.008522 0.110451 0.005943 0.103934 0.005592
--------------- ------------- --------------- ------------- --------------- -------------
Total Foreign............. 0.522213 0.025726 0.364165 0.017940 0.342679 0.016882
--------------- ------------- --------------- ------------- --------------- -------------
United States............... 0.003240 0.000000 0.002259 0.000000 0.002126 0.000000
--------------- ------------- --------------- ------------- --------------- -------------
Total....................... $ 0.525453 $ 0.025726 $ 0.366425 $ 0.017940 $ 0.344806 $ 0.016882
--------------- ------------- --------------- ------------- --------------- -------------
--------------- ------------- --------------- ------------- --------------- -------------
</TABLE>
26
<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
27
<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
28
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[LOGO ADVANTUS-TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-AFS-1838
(1-800-237-1838)
<PAGE>
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.48651 Rev. 11-1998
