<PAGE>
File Numbers 333-12283 and 811-7817
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment Number
---
Post-Effective Amendment Number 2
and/or ---
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment Number 2
---
ADVANTUS VENTURE FUND, INC.
(Exact Name of Registrant as Specified in Charter)
400 ROBERT STREET NORTH, ST. PAUL, MINNESOTA 55101
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (612) 665-5923
ERIC J. BENTLEY, 400 ROBERT STREET NORTH, ST. PAUL, MINNESOTA 55101
(Name and Address of Agent for Service)
Copy to:
Michael J. Radmer, Esquire
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402-1498
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (check appropriate box)
--- immediately upon filing pursuant to paragraph (b)
X
--- On December 1, 1997 pursuant to paragraph (b)
--- 60 days after filing pursuant to paragraph (a) (1)
--- on (date) pursuant to paragraph (a) (1)
--- 75 days after filing pursuant to paragraph (a) (2)
--- on (date) pursuant to paragraph (a) (2) of Rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
--- this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
TITLE OF SECURITIES BEING REGISTERED:
Class A Common Shares, Par Value $.01 Per Share
Class B Common Shares, Par Value $.01 Per Share
Class C Common Shares, Par Value $.01 Per Share
<PAGE>
ADVANTUS VENTURE FUND, INC.
Registration Statement on Form N-1A
--------------------------------
CROSS REFERENCE SHEET
Pursuant to Rule 481(a)
--------------------------------
ITEM NO. PROSPECTUS HEADING
1. Cover Page . . . . . . . . . . . . . . . . Cover Page
2. Synopsis . . . . . . . . . . . . . . . . . Prospectus Summary; Fees
and Expenses
3. Financial Highlights . . . . . . . . . . . Financial Highlights;
Investment Performance
4. General Description of Registrant . . . . Investment Objectives,
Policies and Risks; Portfolio
Turnover; Management of the
Fund; General Information
5. Management of the Fund . . . . . . . . . . Management of the Fund;
General Information
6. Capital Stock and Other Securities . . . . Dividends and Capital Gains
Distributions; Taxes;
General Information
7. Purchase of Securities Being Offered . . . Purchase of Fund Shares;
Sales Charges; Special
Purchase Plans
8. Redemption or Repurchase . . . . . . . . . Redemption of Fund Shares;
Reinstatement Privilege
9. Pending Legal Proceedings . . . . . . . . Not Applicable
STATEMENT OF ADDITIONAL
ITEM NO. INFORMATION HEADING
10. Cover Page . . . . . . . . . . . . . . . . Cover Page
11. Table of Contents . . . . . . . . . . . . Table of Contents
12. General Information and History . . . . . General Information and
History
13. Investment Objectives and Policies . . . . Investment Objectives and
Policies; Investment
Restrictions; Portfolio
Turnover
<PAGE>
14. Management of the Fund . . . . . . . . . . Directors and Executive
Officers; Director Liability
15. Control Persons and Principal Holders
of Securities . . . . . . . . . . . . . . Capital Stock and Ownership
of Shares
16. Investment Advisory and Other Services . . Investment Advisory and Other
Services
17. Brokerage Allocation . . . . . . . . . . . Portfolio Transactions and
Allocation of Brokerage
18. Capital Stock and Other Securities . . . . Capital Stock and Ownership
of Shares
19. Purchase, Redemption and Pricing
of Securities Being Offered . . . . . . . How to Buy Shares; Net Asset
Value and Public Offering
Price; Reduced Sales Charges;
Shareholder Services;
Redemptions
20. Tax Status . . . . . . . . . . . . . . . . Distributions and Tax Status
21. Underwriters . . . . . . . . . . . . . . . Investment Advisory and Other
Services
22. Calculation of Performance Data . . . . . Calculation of Performance
Data
23. Financial Statements . . . . . . . . . . . Financial Statements
<PAGE>
PART A. INFORMATION REQUIRED IN A PROSPECTUS
<PAGE>
[ADVANTUS -TM- FAMILY OF FUNDS]
PROSPECTUS DATED DECEMBER 1, 1997
ADVANTUS VENTURE FUND, INC.
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P.O. Box 64132 - St. Paul, Minnesota 55164-0132 - 1-800-665-6005
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Advantus Venture Fund, Inc. ("Venture Fund" or the "Fund") is an open-end
diversified management investment company, commonly called a mutual fund. The
Fund currently offers its shares in three classes: Class A, Class B and Class C.
Each class is sold pursuant to different sales arrangements and bears different
expenses.
The Fund's investment objective is to seek the long-term accumulation of
capital. In pursuit of this objective, the Venture Fund will follow a policy of
investing primarily in value common stocks issued by small companies. A company
is defined as "small" in terms of its market capitalization (see "Investment
Objectives, Policies and Risks"). "Value" common stocks are those whose issuers,
in the opinion of the Fund's investment adviser, have market values which appear
low relative to their underlying value or future earnings and growth potential.
Dividend income will be incidental to the investment objective for this Fund.
Investments in small companies usually involve greater investment risks than
fixed income securities or corporate equity securities generally.
There is risk in all investments. There can be no assurance that the Fund
will achieve its objective.
SHARES OF THE FUND MAY BE SOLD THROUGH BANKS OR OTHER FINANCIAL
INSTITUTIONS. THE FUND'S SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR
GUARANTEED OR ENDORSED BY, ANY BANK, AND SUCH SHARES ARE NOT FEDERALLY INSURED
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY. AN INVESTMENT IN THE FUND INVOLVES INVESTMENT RISK, INCLUDING
POSSIBLE LOSS OF PRINCIPAL, DUE TO FLUCTUATIONS IN THE FUND'S NET ASSET VALUE.
This Prospectus sets forth concisely the information which a prospective
investor should know about the Fund before investing and it should be retained
for future reference. A "Statement of Additional Information" dated December 1,
1997, which provides a further discussion of certain areas in this Prospectus
and other matters which may be of interest to some investors, has been filed
with the Securities and Exchange Commission and is incorporated herein by
reference. For a free copy, write or call the Fund at the address or telephone
number shown above.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
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TABLE OF
CONTENTS
<TABLE>
<S> <C>
PROSPECTUS SUMMARY........................... 3
FEES AND EXPENSES............................ 5
FINANCIAL HIGHLIGHTS......................... 6
INVESTMENT OBJECTIVES, POLICIES AND RISKS.... 7
PORTFOLIO TURNOVER........................... 12
MANAGEMENT OF THE FUND....................... 13
PURCHASE OF FUND SHARES...................... 15
SALES CHARGES................................ 16
SPECIAL PURCHASE PLANS....................... 19
EXCHANGE AND TELEPHONE TRANSFER OF FUND
SHARES....................................... 20
REDEMPTION OF FUND SHARES.................... 21
TELEPHONE TRANSACTIONS....................... 22
REINSTATEMENT PRIVILEGE...................... 23
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS ... 23
TAXES........................................ 23
INVESTMENT PERFORMANCE....................... 24
GENERAL INFORMATION.......................... 25
COUNSEL AND INDEPENDENT AUDITORS............. 26
CUSTODIAN.................................... 26
APPENDIX--BOND RATINGS....................... 27
</TABLE>
No dealer, sales representative or other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus (and/or in the Statement of Additional Information referred to
on the cover page of this Prospectus), and if given or made, such information or
representations must not be relied upon as having been authorized by the Fund or
Ascend Financial. This Prospectus does not constitute an offer or solicitation
by anyone in any state in which such offer or solicitation is not authorized, or
in which the person making such offer or solicitation is not qualified to do so,
or to any person to whom it is unlawful to make such offer or solicitation.
2
<PAGE>
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PROSPECTUS
SUMMARY
Advantus Venture Fund, Inc. ("Venture Fund" or the "Fund") is
an open-end diversified investment company, commonly called a mutual fund. The
Fund offers investors the choice between three classes of shares which offer
different sales charges and bear different expenses. These alternatives permit
an investor to choose the method of purchasing shares that the investor believes
is most beneficial given the amount of the purchase, the length of time the
investor expects to hold the shares and other circumstances. The Fund is a
member of a family of mutual funds known as the "Advantus Funds." The Advantus
Funds consist of the Fund and nine other mutual funds, all of which share the
same investment adviser. Except for Advantus Money Market Fund, Inc., all of the
Advantus Funds offer more than one class of shares (the "Advantus Multiple Class
Funds").
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INVESTMENT
OBJECTIVE A summary of the investment objective of the Fund, together with a
brief description of the types of securities in which the Fund will invest in
pursuit of its investment objective, can be found on the cover page of this
Prospectus. See also "Investment Objectives, Policies and Risks."
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INVESTMENT
ADVISER Advantus Capital Management, Inc. ("Advantus Capital") acts as
investment adviser to the Fund and receives an annual fee equal to a stated
percentage of average daily net assets of the Fund. Advantus Capital is a
wholly-owned subsidiary of MIMLIC Asset Management Company ("MIMLIC
Management"). MIMLIC Management is a subsidiary of The Minnesota Mutual Life
Insurance Company ("Minnesota Mutual"). See "Management of the Fund."
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HOW TO PURCHASE
FUND SHARES Ascend Financial Services, Inc. ("Ascend Financial"), a subsidiary
of MIMLIC Management, acts as the principal underwriter (distributor) of the
shares of the Fund. Shares of the Fund may be purchased from Ascend Financial,
and from certain other broker-dealers, at the price per share next determined
after receipt of a purchase order in proper form. The minimum initial purchase
is $250. Additional investments can be made at any time for $25 or more. Shares
of the Fund are sold in three classes which are subject to different sales
charges. Broker-dealers and sales personnel of Ascend Financial may receive
different compensation depending on which class of shares they sell.
CLASS A SHARES. An investor who purchases Class A shares pays a sales charge
at the time of purchase. (Purchase orders for $1,000,000 or more will be
accepted for Class A shares only and are not subject to a sales charge at the
time of purchase.) Class A shares are not subject to any charges when they are
redeemed. The initial sales charge may be reduced or waived for certain
purchases. Class A shares are subject to a Rule 12b-1 fee payable at an annual
rate of .30% of the Fund's average daily net assets attributable to Class A
shares. See "Sales Charges--Class A Shares."
CLASS B SHARES. Class B shares are sold without an initial sales charge, but
are subject to a contingent deferred sales charge of up to 5% if redeemed within
six years of purchase. Class B shares are also subject to a higher Rule 12b-1
fee than Class A shares. The Rule 12b-1 fee for Class B shares will be paid at
an annual rate of 1.00% of the Fund's average daily net assets attributable to
Class B shares. Class B shares will automatically convert to Class A shares at
net asset value approximately twenty-eight to eighty-four months after purchase,
depending on the amount purchased. Class B shares provide an investor the
benefit of putting all of the investor's dollars to work from the time the
investment is made, but until conversion will have a higher expense ratio and
pay lower dividends than Class A shares due to the higher Rule 12b-1 fee. See
"Sales Charges--Class B Shares."
CLASS C SHARES. Class C shares are sold without either an initial sales
charge or a contingent deferred sales charge. Class C shares are also subject to
a higher Rule 12b-1 fee, paid at an annual rate of 1.00% of the Fund's average
daily net assets attributable to Class C shares. Class C shares will
automatically convert to Class A shares at net asset value approximately forty
to ninety-six months after purchase, depending on the amount purchased. Class C
shares also provide an investor the benefit of putting all of the investor's
dollars to work from the time the investment is made. Although not subject to a
contingent deferred sales charge, Class C shares must be held longer than Class
B shares before they convert automatically to Class A shares, and are subject to
the higher Rule 12b-1 fee during the longer holding period. In addition, like
Class B shares, Class C shares will have a higher expense ratio and pay lower
dividends than Class A shares, due to the higher Rule 12b-1 fee, prior to
conversion. See "Sales Charges--Class C Shares."
3
<PAGE>
CHOOSING A CLASS. The decision as to which class of shares provides a more
suitable investment for an investor may depend on a number of factors, including
the amount and intended length of the investment. Investors making investments
that qualify for a waiver of initial sales charges should purchase Class A
shares. Other investors might consider Class B or Class C shares because all of
the purchase price is invested immediately. Investors who expect to hold shares
for relatively shorter periods of time may prefer Class C shares because such
shares may be redeemed at any time without payment of a contingent deferred
sales charge. Investors who expect to hold shares longer, however, may choose
Class B shares because such shares convert to Class A shares sooner than do
Class C shares and thus pay the higher Rule 12b-1 fee for a shorter period.
Orders for Class B or Class C shares for $1,000,000 or more will be treated as
orders for Class A shares or declined.
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HOW TO REDEEM
FUND SHARES Shareholders may redeem (sell) shares of the Fund at the per share
net asset value next determined following receipt by the Fund (at the mailing
address listed on the cover page) of a written redemption request. Class A and
Class C shares of the Fund are redeemable at net asset value without charge.
Class B shares of the Fund are also redeemable at net asset value but are
subject to a contingent deferred sales charge of up to 5% if redeemed within six
years of purchase. The amount of the contingent deferred sales charge, as well
as the period during which it applies, varies with the amount purchased. Shares
of the Fund may also be redeemed by telephone unless the shareholder has elected
on the account application not to have telephone transaction privileges. See
"Redemption of Fund Shares."
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INCOME AND
TAXES Net investment income is the amount of dividends and interest earned on
the Fund's securities less operating expenses. It is distributed to shareholders
quarterly. Capital gains may be realized on the sale of the Fund's securities.
Capital gains, when available, are generally distributed once a year during
December. See "Dividends and Capital Gains Distributions."
As a regulated investment company, the Fund is not taxed on the net investment
income and capital gains it distributes to its shareholders. For income tax
purposes, shareholders must report any net investment income and capital gains
distribution reported to them as income. Shareholders of the Fund receive an
annual statement detailing federal tax information. See "Taxes."
- --------------------------------------------
RISK
FACTORS In addition to the other information set forth in this Prospectus,
prospective investors in the Fund should consider the following factors:
- - The Fund may invest up to 10% of its net assets in
securities which are considered illiquid.
- - The Fund may, with respect to 25% of its total
assets, invest in excess of 5% of its total assets in securities of a single
issuer.
- - Common stocks, such as those purchased by the
Fund, are more volatile and present greater risk than some other forms of
investment.
- - Investments in securities of small companies, such
as those made by Venture Fund, involve greater risks than equity securities
generally, because small companies usually have less experienced management,
less access to capital and fewer product lines to support their operations. In
addition, securities of small companies are subject to greater short-term
price volatility.
- - There is risk that Advantus Capital will be unable
to identify "value" securities on a consistent basis, and also that value
securities may be out of favor during certain market cycles and therefore
underperform other types of equity securities.
- - The Fund has the right to purchase securities in
foreign countries. Investors should consider carefully the substantial risks
involved in investing in securities issued by companies of foreign nations,
which are in addition to the usual risks inherent in domestic investments. The
Fund may also be affected either unfavorably by fluctuations in the relative
rates of exchange between the currencies of different nations, by exchange
control regulations and by indigenous economic and political developments.
- - The Fund may invest up to 10% of its assets in
convertible debt securities rated below investment grade. These securities are
regarded as predominately speculative.
- - The Fund may purchase and sell certain types of
options contracts. The use of options contracts involves additional potential
risks, in addition to the risks associated with the underlying securities on
which such options are written, including the risk that the prices of such
underlying securities will not move as anticipated.
For discussions of risks associated with specific investments and risks
associated with investing in the Fund see "Investment Objectives, Policies and
Risks."
4
<PAGE>
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FEES AND
EXPENSES
The purpose of this table is to assist the investor in
understanding the various costs and expenses that an investor in
the Fund will bear directly or indirectly.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
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<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
MAXIMUM SALES LOAD IMPOSED ON PURCHASES
(AS A PERCENTAGE OF OFFER PRICE) 5.00% 0.00% 0.00%
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MAXIMUM DEFERRED SALES LOAD
(AS A PERCENTAGE OF REDEMPTION PROCEEDS) 0.00% 5.00% 0.00%
- -------------------------------------------------------------------------------
SALES LOAD IMPOSED ON REINVESTED DIVIDENDS 0 0 0
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REDEMPTION FEES+ 0 0 0
- -------------------------------------------------------------------------------
EXCHANGE FEES
- ON FIRST FOUR EXCHANGES EACH YEAR 0 0 0
- ON EACH ADDITIONAL EXCHANGE $ 7.50 $ 7.50 $ 7.50
+REDEMPTION PROCEEDS SENT BY WIRE ARE SUBJECT TO
A WIRE CHARGE OF $7.50,
WHICH WILL BE ADDED TO THE AMOUNT REDEEMED.
ANNUAL FUND OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
INVESTMENT ADVISORY FEES 0.80% 0.80% 0.80%
- -------------------------------------------------------------------------------
RULE 12b-1 FEES (AFTER EXPENSES WAIVED)* 0.15%** 1.00% 1.00%
- -------------------------------------------------------------------------------
OTHER EXPENSES 0.45% 0.45% 0.45%
------- ------- -------
TOTAL FUND OPERATING EXPENSES (AFTER EXPENSES
WAIVED)*** 1.40% 2.25% 2.25%
------- ------- -------
</TABLE>
*A LONG-TERM SHAREHOLDER MAY PAY MORE IN ASSET-BASED SALES CHARGES THAN THE
ECONOMIC EQUIVALENT OF THE MAXIMUM FRONT-END SALES CHARGE PERMITTED BY THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. (SEE MANAGEMENT OF THE
FUND--THE UNDERWRITER AND PLANS OF DISTRIBUTION).
**THE FUND HAS ADOPTED A PLAN OF DISTRIBUTION, PURSUANT TO RULE 12B-1 UNDER
THE INVESTMENT COMPANY ACT OF 1940, WHICH PROVIDES FOR THE PAYMENT TO ASCEND
FINANCIAL OF A DISTRIBUTION FEE EQUAL TO AN ANNUAL RATE OF .30% OF AVERAGE DAILY
NET ASSETS ATTRIBUTABLE TO CLASS A SHARES OF THE FUND. ASCEND FINANCIAL IS
CURRENTLY WAIVING THAT PORTION OF DISTRIBUTION FEE WHICH EXCEEDS, AS A
PERCENTAGE OF AVERAGE DAILY NET ASSETS ATTRIBUTABLE TO CLASS A SHARES, .15%. IT
IS ASCEND FINANCIAL'S PRESENT INTENTION TO WAIVE DISTRIBUTION FEES AT SUCH LEVEL
DURING THE CURRENT FISCAL YEAR (ENDING JULY 31), BUT IT RESERVES THE RIGHT TO
CEASE SUCH WAIVER, IN WHOLE OR IN PART, AT ANY TIME.
***ASCEND FINANCIAL VOLUNTARILY WAIVED 12b-1 FEES FOR CLASS A OF VENTURE FUND
FOR THE PERIOD ENDED JULY 31, 1997. IF CLASS A HAD BEEN CHARGED FOR THESE
EXPENSES, THE RATIO OF TOTAL FUND OPERATING EXPENSES TO AVERAGE DAILY NET ASSETS
WOULD HAVE BEEN 1.55% FOR CLASS A SHARES.
- ---------------------------------------------------------------
SHAREHOLDER EXPENSE
EXAMPLE An investor would pay the following expenses on a $1,000 investment
assuming (1) 5% annual return and (2) redemption at the end of each time period.
YEAR REDEEMED CLASS A CLASS B CLASS C
- ----------------------------------------------------------
1 $ 64 $ 73 $ 23
3 92 105 70
5 123 135 120
10 210 227* 237**
An investor would pay the following expenses on the same investment in Class B
shares, assuming no redemption:
YEAR REDEEMED CLASS B
- ----------------------------------------------------------
1 $ 23
3 70
5 120
10 227*
*REFLECTS CONVERSION OF CLASS B SHARES TO CLASS A SHARES (WHICH PAY LOWER
ONGOING EXPENSES) APPROXIMATELY SEVEN YEARS AFTER PURCHASE.
**REFLECTS CONVERSION OF CLASS C SHARES TO CLASS A SHARES (WHICH PAY LOWER
ONGOING EXPENSES) APPROXIMATELY EIGHT YEARS AFTER PURCHASE.
THE EXAMPLES CONTAINED IN THE TABLE SHOULD NOT BE CONSIDERED A REPRESENTATION
OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE
SHOWN.
5
<PAGE>
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<TABLE>
<S> <C>
FINANCIAL The following financial highlights table shows certain per share data and selected important
HIGHLIGHTS financial information for evaluating the Fund's results. This information has been audited by KPMG
- ---------- Peat Marwick LLP, independent auditors, and should be read in conjunction with the financial
statements contained in the Fund's Annual Report to Shareholders.
</TABLE>
Per share data for a share of capital stock and selected information for the
period from January 31, 1997 (date of inception) to July 31, 1997 are as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.17 $ 10.17 $ 10.17
---------------------------------
INCOME FROM INVESTMENT OPERATIONS:
NET INVESTMENT INCOME .05 .01 .01
NET GAINS OR LOSSES ON SECURITIES (BOTH REALIZED
AND UNREALIZED) 1.55 1.54 1.54
---------------------------------
TOTAL FROM INVESTMENT OPERATIONS 1.60 1.55 1.55
---------------------------------
LESS DISTRIBUTIONS:
DIVIDENDS FROM NET INVESTMENT INCOME (.04) (.01) (.01)
DISTRIBUTIONS FROM CAPITAL GAINS -- -- --
---------------------------------
TOTAL DISTRIBUTIONS (.04) (.01) (.01)
---------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.73 $ 11.71 $ 11.71
------- ------- -------
TOTAL RETURN (a)(b) 15.8% 15.3% 15.4%
- -----------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (IN THOUSANDS) $30,662 $1,052 $175
- -----------------------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE DAILY NET ASSETS
(d) 1.35%(c) 2.25%(c) 2.25%(c)
- -----------------------------------------------------------------------------------
RATIO OF NET INVESTMENT INCOME TO AVERAGE DAILY
NET ASSETS (d) .90%(c) .01%(c) .01%(c)
- -----------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE (EXCLUDING SHORT-TERM
SECURITIES) 39.6% 39.6% 39.6%
- -----------------------------------------------------------------------------------
AVERAGE COMMISSION RATE ON COMMON STOCK
TRANSACTIONS (e) $ .0545 $ .0545 $ .0545
</TABLE>
(a) 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.
(b) TOTAL RETURN IS PRESENTED FOR THE PERIOD FROM JANUARY 31, 1997, DATE OF
INCEPTION, TO JULY 31, 1997.
(c) ADJUSTED TO AN ANNUAL BASIS.
(d) THE FUND'S DISTRIBUTOR VOLUNTARILY WAIVED $26,677 IN EXPENSES FOR THE
PERIOD FROM JANUARY 31, 1997 TO JULY 31, 1997. IF CLASS A SHARES HAD BEEN
CHARGED FOR THESE EXPENSES, THE RATIO OF EXPENSES TO AVERAGE DAILY NET ASSETS
WOULD HAVE BEEN 1.55% AND THE RATIO OF NET INVESTMENT INCOME TO AVERAGE DAILY
NET ASSETS WOULD HAVE BEEN .70%.
(e) AVERAGE COMMISSION RATE IS CALCULATED BY DIVIDING THE TOTAL BROKERAGE
COMMISSIONS PAID ON APPLICABLE PURCHASES AND SALES OF STOCKS FOR THE PERIOD BY
THE TOTAL NUMBER OF RELATED SHARES PURCHASED AND SOLD.
6
<PAGE>
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INVESTMENT
OBJECTIVES,
POLICIES AND RISKS
Venture Fund seeks the long-term accumulation of
capital. In pursuit of this objective, the Fund will follow a policy of
investing primarily in value common stocks issued by small companies. A company
is defined as "small" in terms of its market capitalization. Value common stocks
are those whose issuers, in the opinion of Advantus Capital, have market values
which appear low relative to their underlying value or future earnings and
growth potential. Dividend income will be incidental to the investment objective
for this Fund. Investments in small companies usually involve greater investment
risks than fixed income securities or corporate equity securities generally.
This investment objective may not be changed without the approval of a majority
of the outstanding shares of the Fund. The Fund's other investment policies,
except "fundamental" investment restrictions (see below), may be changed at any
time without shareholder approval, although shareholders will be notified of
those changes.
- --------------------------------------------
INVESTMENT
POLICIES The Venture Fund will primarily purchase common stocks which, at the
time of purchase, are issued by "small companies" and are considered by Advantus
Capital to be "value" securities. Small companies are those which have a market
capitalization of less than $1.0 billion (see "Small Companies" below). Value
securities are issued by companies which could be described as follows: (a)
companies whose securities Advantus Capital believes are selling at low market
valuations relative to the securities markets in general, or companies that may
currently be earning a very low return on assets but which have the potential to
earn higher returns; (b) companies whose securities Advantus Capital believes
are undervalued in relation to their potential for improved operating
performance and financial strength; or (c) companies which have recently changed
management or control and whose securities, in the judgment of Advantus Capital,
are therefore undervalued in relation to their potential to achieve sharply
improved operating performance. Securities of companies that may be temporarily
out of favor or whose value is not yet recognized by the market may also be
considered by Advantus Capital to be value securities (see, "Value Common
Stocks" below).
The Venture Fund will ordinarily invest at least 65% of the value of its total
assets in common stocks, including common stocks of foreign issuers which are
publicly traded in the United States (usually in the form of American Depositary
Receipts), with the characteristics described above. The balance of its assets
may be invested in other common stocks, including stocks with larger market
capitalization whose long-term appreciation potential is believed by Advantus
Capital to be well above average, common stocks of foreign issuers which are not
publicly traded in the U.S., warrants, preferred stock or debt obligations
convertible into common stock and which may produce capital appreciation, other
corporate debt obligations, U.S. Government securities, repurchase agreements
and cash or cash equivalents, including high grade money market instruments.
Venture Fund may temporarily take a defensive position, when immediate action
to avoid loss is necessary during periods of abnormal or otherwise significantly
adverse market, economic or political conditions. During such periods the Fund
may invest up to 100% of its assets in cash, bonds, notes or other evidences of
indebtedness, including U.S. Government securities, high grade money market
instruments and corporate investment grade debt securities.
VALUE COMMON STOCKS. Tests applied by Advantus Capital to measure the value
of common stocks will include their price/earnings ratio, price/book ratio,
price to cash flow ratio and yield. A price/earnings ratio is the price of a
share of stock divided by its earnings per share and it is a measure of the
market price of the security relative to its earnings per share. A price/book
ratio is the price of a share of stock divided by its book value per share and
it is a measure of the market price of the security relative to its book value
per share. Book value per share is generally equal to assets less liabilities
divided by the total number of outstanding shares (i.e., the "net worth" per
share). A price to cash flow ratio is the price of a share of stock divided by
the firm's net income after taxes, plus depreciation and other non-cash
expenses, expressed on a per share basis. Yield is the annual dividend of a
share of stock divided by its market price. Stocks will be selected by Advantus
Capital using statistical measures of relative value. Returns on such stocks are
likely to be influenced by the recognition of their undervaluation by other
investors and the market. Under most circumstances, if Advantus Capital
determines that a
7
<PAGE>
stock has reached an over-valued position, it may be sold and replaced by
securities which are deemed to be undervalued in the marketplace.
The Venture Fund's investments in value common stocks will typically be
characterized by the purchase of securities with lower price to normalized
earnings ratios ("normalized earnings" are average earnings under average
business conditions), lower price to cash flow ratios and/or price to book value
ratios relative to the equity markets in general. This value approach to
investing may be considered to differ from a growth approach which would
consider the purchase of securities with an anticipated above-average earnings
growth potential over time. This distinction between these two approaches to
equity investing is important because historically there are periods in which
either growth or value investing may be successful approaches to total return in
the equity markets. Securities that meet the criteria of the Venture Fund may
not be popular during certain market cycles.
SMALL COMPANIES. Companies characterized as "small" companies may encompass
well-known and established companies as well as newer and relatively unknown
companies, and will have, at the time of purchase, a market capitalization of
less than $1.0 billion.
Market capitalization is the term which refers to the total market value of a
company's outstanding shares of common stock. Application of the market
capitalization or gross revenue tests will be made only at the time that the
Fund's initial position in the company is taken. Thus, for purposes of the 65%
test, any company deemed to be a small company at the time of the Fund's initial
position therein will be treated as a small company, regardless of subsequent
developments, so long as the Fund maintains a position in the company.
Small companies may be in a relatively early stage of development or may
produce goods and services which have favorable prospects for growth due to
increasing demand or developing markets. Frequently, such companies have a small
management group and single product or product-line expertise that may result in
an enhanced entrepreneurial spirit and greater focus which allow such firms to
be successful. Advantus Capital believes that such companies may develop into
significant business enterprises and that an investment in such companies offers
a greater opportunity for capital appreciation than an investment in larger more
established entities. However, small companies frequently retain a large part of
their earnings for research, development and investment in capital assets, so
that the prospects for immediate dividend income are limited.
While historically securities issued by small capitalization companies have
produced better market results than the securities of larger issuers, there is
no assurance that they will continue to do so or that the Fund will invest
specifically in those companies which produce those results. Because of the
risks involved, Venture Fund is not intended as a complete investment program.
See "Risks of Investing in the Fund," below, for further information about risks
associated with investments in small companies.
CONVERTIBLE SECURITIES. The Fund may invest in debt or preferred stock
convertible into or exchangeable for common stock. Traditionally, convertible
securities have paid dividends or interest at rates higher than common stocks
but lower than non-convertible securities. They generally participate in the
appreciation or depreciation of the underlying stock into which they are
convertible, but to a lesser degree. The total return and yield of lower quality
(high yield/high risk) convertible bonds can be expected to fluctuate more than
the total return and yield of higher quality, shorter-term bonds, but not as
much as common stocks. The Fund will limit its purchase of convertible debt
securities to those that, at the time of purchase, are rated at least B- by
Standard & Poor's Corporation ("S&P") or B3 by Moody's Investors Services, Inc.
("Moody's"), or if not rated by S&P or Moody's, are of equivalent investment
quality as determined by Advantus Capital.
To the extent the Fund invests in debt securities rated BBB or Baa by S&P or
Moody's, respectively, it will be investing in securities which in fact have
speculative characteristics not associated with debt rated A or higher by S&P or
Moody's, and for which adverse economic conditions or changing circumstances are
more likely to lead to a weakened capacity to pay interest and repay principal
than is the case for debt in higher rated categories. Debt securities rated
below the four highest categories (i.e., below BBB) are not considered
"investment grade" obligations and are commonly called "junk bonds." These
securities are predominately speculative and present more credit risk than
investment grade obligations. Bonds rated below BBB are also regarded as
predominately speculative with respect to the issuer's continuing ability to
meet
8
<PAGE>
principal and interest payments. Although they may offer higher yields than do
higher rated securities, such low rated and unrated debt securities generally
involve greater volatility of price and risk of principal and income, including
the possibility of default by, or bankruptcy of, the issuers of the securities.
In addition, the markets in which low rated and unrated debt securities are
traded are more limited than those in which higher rated securities are traded.
The existence of limited markets for particular securities may diminish the
Fund's ability to sell the securities at fair value either to meet redemption
requests or to respond to changes in the economy or in the financial markets and
could adversely affect and cause fluctuations in the daily net asset value of
the Fund's shares.
As an operating policy, the Fund will not purchase a non-investment grade
convertible debt security if immediately after such purchase the Fund would have
more than 10% of its total assets invested in such securities. The Fund's
holdings of non-investment grade convertible debt may, however, exceed 10% (but
not 35%) where such excess is attributable solely to fluctuations in the level
of Fund assets which occur as a result of changes in the market value of the
Fund's assets or redemptions of the Fund's shares. See the Appendix for a
description of the ratings used by S&P and Moody's, and the Statement of
Additional Information for further discussion of low rated debt securities.
DEBT SECURITIES. The Fund may also invest in non-convertible debt securities
rated BBB or Baa or higher by S&P or Moody's, respectively (see the discussion,
above, of securities rated BBB or Baa). The market value of debt securities
generally varies in response to changes in interest rates and the financial
condition of each issuer. During periods of declining interest rates, the value
of debt securities generally increases. Conversely, during periods of rising
interest rates, the value of such securities generally declines. These changes
in market value will be reflected in the Fund's net asset value.
After purchase by the Fund, a debt security may cease to be rated or its
rating may be reduced below the minimum required for purchase by the Fund.
Neither event will require a sale of such security by the Fund, but Advantus
Capital will consider such event in the determination of whether the Fund should
continue to hold the security.
OPTIONS. Venture Fund may write covered call options which are traded on
national securities exchanges with respect to common stocks in its portfolio
("covered options") in an attempt to earn additional current income on its
portfolio or to guard against an expected decline in the price of a security. By
writing a covered call option, the Fund gives the purchaser of the option the
right to buy the underlying security at the price specified in the option. The
Fund realizes income from the sale of the option, but foregoes the opportunity
to profit during the option period from an increase in the market value of the
underlying security above the exercise price. The Fund does not write call
options in an aggregate amount greater than 15% of its net assets. See
"Investment Restrictions," below. Venture Fund purchases call options only to
close out a position, and will neither write nor purchase put options. The use
of options contracts involves additional risk of loss to the Fund, including the
risk that the Fund may incur a loss because the prices of the underlying
securities do not move as anticipated. See the Statement of Additional
Information for a more detailed discussion of options and the risks associated
therewith.
LOANS OF PORTFOLIO SECURITIES. For the purpose of realizing additional
income, the Fund may make secured loans of portfolio securities amounting to not
more than 20% of its total assets. Securities loans are made to broker-dealers
or financial institutions pursuant to agreements requiring that the loans be
continuously secured by collateral at least equal at all times to the value of
the securities lent. The collateral received will consist of cash, letters of
credit or securities issued or guaranteed by the United States Government, its
agencies or instrumentalities. While the securities are being lent, the Fund
will continue to receive the equivalent of the interest or dividends paid by the
issuer on the securities, as well as interest on the investment of the
collateral or a fee from the borrower. Although the Fund does not expect to pay
commissions or other front-end fees (including finders fees) in connection with
loans of securities (but may in some cases do so), a portion of the additional
income realized will be shared with the Fund's custodian for arranging and
administering such loans. The Fund has a right to call each loan and obtain the
securities on five business days' notice. The Fund will not have the right to
vote securities while they are being lent, but it will call a loan in
anticipation of any important vote. The risks in lending portfolio securities,
as with other extensions of secured credit, consist of possible delay in
receiving additional collateral or in the recovery of the securities or possible
loss of rights in
9
<PAGE>
the collateral should the borrower fail financially. Loans will only be made to
firms deemed by the Fund's investment adviser to be of good standing and to have
sufficient financial responsibility, and will not be made unless, in the
judgment of the Fund's investment adviser, the consideration to be
earned from such loans would justify the risk. The creditworthiness of entities
to which the Fund makes loans of portfolio securities is monitored by the Fund's
investment adviser throughout the term of each loan.
WARRANTS. The Fund may invest in warrants; however, not more than 5% of its
net assets (at the time of purchase) will be invested in warrants other than
warrants acquired in units or attached to other securities. Of such 5% not more
than 2% of the Fund's assets at the time of purchase may be invested in warrants
that are not listed on the New York or American Stock Exchanges. Warrants are
instruments that allow investors to purchase underlying shares at a specified
price (exercise price) at a given future date. Warrants are pure speculation in
that they have no voting rights, pay no dividends and have no rights with
respect to the assets of the corporation issuing them. The prices of warrants do
not necessarily move parallel to the prices of the underlying securities.
ILLIQUID SECURITIES AND RULE 144A PAPER. The Fund is permitted to invest up
to 10% of its net assets in securities or other assets which are illiquid. An
investment is generally deemed to be "illiquid" if it cannot be disposed of
within seven days in the ordinary course of business at approximately the amount
at which the investment company is valuing the investment. "Restricted
securities" are securities which were originally sold in private placements and
which have not been registered under the Securities Act of 1933 (the "1933
Act"). Such securities generally have been considered illiquid by the staff of
the Securities and Exchange Commission (the "SEC"), since such securities may be
resold only subject to statutory restrictions and delays or if registered under
the 1933 Act.
The SEC has acknowledged, however, that a market exists for certain restricted
securities (for example, securities qualifying for resale to certain "qualified
institutional buyers" pursuant to Rule 144A under the 1933 Act). Additionally,
Advantus Capital and the Fund believe that a similar market exists for
commercial paper issued pursuant to the private placement exemption of Section
4(2) of the 1933 Act. The Fund may invest up to 35% of its net assets in these
forms of restricted securities if such securities are deemed by Advantus Capital
to be liquid in accordance with standards established by the Fund's Board of
Directors. Under these guidelines, Advantus Capital must consider (a) the
frequency of trades and quotes for the security, (b) the number of dealers
willing to purchase or sell the security and the number of other potential
purchasers, (c) dealer undertakings to make a market in the security, and (d)
the nature of the security and the nature of the marketplace trades (for
example, the time needed to dispose of the security, the method of soliciting
offers and the mechanics of transfer). At the present time, it is not possible
to predict with accuracy how the markets for certain restricted securities will
develop. Investing in such restricted securities could have the effect of
increasing the level of the Fund's illiquidity to the extent that qualified
purchasers of the securities become, for a time, uninterested in purchasing
these securities.
FOREIGN SECURITIES. Venture Fund may also invest up to 10% of the market
value of the Fund's total assets in securities of foreign issuers which are not
publicly traded in the U.S. (Securities of foreign issuers which are publicly
traded in the U.S., usually in the form of sponsored American Depositary
Receipts, are not subject to this 10% limitation.) Investing in securities of
foreign issuers may result in greater risk than that incurred in investing in
securities of domestic issuers. There is a possibility of expropriation,
nationalization or confiscatory taxation, taxation of income earned in foreign
nations or other taxes imposed with respect to investments in foreign nations;
foreign exchange controls (which may include suspension of the ability to
transfer currency from a given country), default in foreign government
securities, political or social instability or diplomatic developments which
could affect investments in securities of issuers in those nations. In addition,
in many countries there is less publicly available information about issuers
than is available in reports about companies in the U.S. Foreign companies are
not generally subject to uniform accounting, auditing and financial reporting
standards, and auditing practices and requirements may not be comparable to
those applicable to U.S. companies. Further, the Fund may encounter difficulties
or be unable to pursue legal remedies and obtain judgments in foreign courts.
Commission rates in foreign countries, which are sometimes fixed rather than
subject to negotiation as in the U.S., are
10
<PAGE>
likely to be higher. Further, the settlement period of securities transactions
in foreign markets may be longer than in domestic markets. In many foreign
countries there is less government supervision and regulation of business and
industry practices, stock exchanges, brokers and listed companies than in the
U.S. The foreign securities markets of many of the countries in which the Fund
may invest may also be smaller, less liquid, and subject to greater price
volatility than those in the U.S. Also, some countries may withhold portions of
interest, dividends and gains at the source. The Fund may also be unfavorably
affected by fluctuations in the relative rates of exchange between the
currencies of different nations (i.e., when the currency being exchanged has
decreased in value relative to the currency being purchased). There are further
risk considerations, including possible losses through the holding of securities
in domestic and foreign custodial banks and depositories.
An ADR is sponsored if the original issuing company has selected a single U.S.
bank to serve as its U.S. depositary and transfer agent. This relationship
requires a deposit agreement which defines the rights and duties of both the
issuer and depositary. Companies that sponsor ADRs must also provide their ADR
investors with English translations of company information made public in their
own domiciled country. Sponsored ADR investors also generally have the same
voting rights as ordinary shareholders, barring any unusual circumstances. ADRs
which meet these requirements can be listed on U.S. stock exchanges. Unsponsored
ADRs are created at the initiative of a broker or bank reacting to demand for a
specific foreign stock. The broker or bank purchases the underlying shares and
deposits them in a depositary. Unsponsored shares issued after 1983 are not
eligible for U.S. stock exchange listings. Furthermore, they do not generally
include voting rights.
REPURCHASE AGREEMENTS. The Fund may also enter into repurchase agreements.
Repurchase agreements are agreements by which the Fund purchases a security and
obtains a simultaneous commitment from the seller (a member bank of the Federal
Reserve System or, if permitted by law or regulation and if the Board of
Directors of the Fund has evaluated its creditworthiness through adoption of
standards of review or otherwise, a securities dealer) to repurchase the
security at an agreed upon price and date. The creditworthiness of entities with
whom the Fund enters into repurchase agreements is monitored by the Fund's
investment adviser throughout the term of the repurchase agreement. The resale
price is in excess of the purchase price and reflects an agreed upon market rate
unrelated to the coupon rate on the purchased security. Such transactions afford
the Fund the opportunity to earn a return on temporarily available cash. The
Fund's custodian, or a duly appointed subcustodian, holds the securities
underlying any repurchase agreement in a segregated account or such securities
may be part of the Federal Reserve Book Entry System. The market value of the
collateral underlying the repurchase agreement is determined on each business
day. If at any time the market value of the collateral falls below the
repurchase price of the repurchase agreement (including any accrued interest),
the Fund promptly receives additional collateral, so that the total collateral
is in an amount at least equal to the repurchase price plus accrued interest.
While the underlying security may be a bill, certificate of indebtedness, note
or bond issued by an agency, authority or instrumentality of the United States
Government, the obligation of the seller is not guaranteed by the U.S.
Government. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying security and losses, including: (a) possible decline in the value of
the underlying security during the period while the Fund seeks to enforce its
rights thereto; (b) possible subnormal levels of income and lack of access to
income during this period; and (c) expenses of enforcing its rights.
INVESTMENT RESTRICTIONS. Venture Fund has certain investment restrictions,
set forth in their entirety in the Statement of Additional Information, some of
which are fundamental policies and may not be changed without the approval of
the holders of a majority of the outstanding shares of Venture Fund. In
accordance with certain of these fundamental investment restrictions the Fund
will not: (i) purchase any security if, as a result, 25% or more of Venture
Fund's total assets would be invested in the securities of issuers conducting
their principal business activities in a single industry; (ii) purchase
securities on margin or make short sales (except short sales against the box);
(iii) borrow money, except from banks and only as a temporary measure for
extraordinary or emergency purposes and not in excess of 5% of its net assets;
(iv) mortgage or pledge any assets as security for indebtedness;
11
<PAGE>
(v) make loans, except by purchase of bonds, debentures, commercial paper,
certificates of deposit, corporate notes and similar evidences of indebtedness,
which are part of an issue to the public or to financial institutions, and
except certain loans of portfolio securities; (vi) buy or sell oil, gas or
mineral leases or contracts, real estate, real estate limited partnerships or
interests in real estate which are not readily marketable, commodities or
commodity contracts (including futures contracts); or (vii) write put or call
options, except covered call options which are traded on national securities
exchanges with respect to common stocks in its portfolio in an aggregate amount
not greater than 15% of its net assets.
- --------------------------------------------
RISKS OF INVESTING
IN THE FUND The price of the Fund's shares is not guaranteed. There is risk in
all investment and, depending on the performance of the Fund's investments, the
value of an investment in the Fund may decrease as well as increase.
Common stocks, in which the Fund will be primarily invested, are more volatile
than debt securities and involve greater investment risk. The Fund is dependent
on Advantus Capital's judgment as to general economic and market policies and
trends in investment yields, as well as its judgment as to the composition of
the portfolio.
Investments in small companies, such as those made by Venture Fund, involve
greater risks than equity securities generally due to their small size and the
fact that they may have limited product lines, less access to the financial
market for additional corporate financings or less management depth. In
addition, many of the securities of these firms trade less frequently and in
lower volumes than do securities issued by larger firms. The result is that the
short-term volatility of the prices of those securities is greater than the
prices of larger, more established companies which are more widely held in the
market. The securities of small companies may also be more sensitive to market
changes generally than the securities of large companies.
Some of the investment policies which the Fund may employ, such as investing
in options, repurchase agreements, and illiquid and foreign securities, involve
special risks not associated with more traditional investment instruments and
policies. Loans of portfolio securities, for example, involve risks of possible
delay in receiving additional collateral or in the recovery of the loaned
securities, or possible loss of rights in the collateral should the borrower
fail financially. The use of options may, in the case of a sale of a covered
call option, result in a loss to the Fund as a result of the foregone increase
in value of the underlying security. The Fund will purchase a call option only
to close out an option which the Fund has written and, in such circumstances,
may also experience a loss if the amount paid to purchase the call option is
greater than the premium received for writing the option being closed out.
Illiquid securities include certain types of restricted securities, which may be
sold only in a privately negotiated transaction or in a public offering for
which a registration statement is in effect under the Securities Act of 1933.
Because of such restrictions, the Fund may not be able to dispose of a block of
restricted securities for a substantial period of time or at prices as favorable
as those prevailing in the open market should like securities of an unrestricted
class of the same issuer be freely traded. The Fund may be required to bear the
expenses of registration of such restricted securities. See "Prospectus
Summary--Risk Factors" and "Investment Policies" above, and the Statement of
Additional Information for risks associated with specific investments.
- --------------------------------------------
PORTFOLIO
TURNOVER
Portfolio turnover is the ratio of the lesser of annual
purchases or sales of portfolio securities to the average
monthly value of portfolio securities, not including short-term securities. A
100% portfolio turnover rate would occur, for example, if the lesser of the
value of purchases or sales of portfolio securities for a particular year were
equal to the average monthly value of the portfolio securities owned during such
year.
Venture Fund makes changes in its portfolio securities which are considered
advisable in light of market conditions. Frequent changes may result in higher
brokerage and other costs for the Fund. Portfolio turnover rates may vary
greatly from year to year and within a particular year and may also be affected
by cash requirements for redemptions of Fund shares. Venture Fund does not
emphasize short-term trading profits and usually expects to have annual turnover
rates not exceeding 100%.
Higher portfolio turnover rates (100% or more) may also result in greater tax
consequences for investors. A fund with a higher rate of portfolio
12
<PAGE>
turnover may realize substantial additional capital gains, both long-term and
short-term, which gains would then result in additional taxable distributions to
shareholders. See "Dividends and Capital Gains Distributions" and "Taxes."
- --------------------------------------------
MANAGEMENT
OF THE FUND
Under Minnesota law, the Board of Directors of the Fund has
overall responsibility for managing the Fund in good faith, in a manner
reasonably believed to be in the best interests of the Fund, and with the care
an ordinary prudent person in like position would exercise in similar
circumstances. However, this management may be delegated.
The Fund's investment adviser is Advantus Capital. Advantus Capital commenced
its business in June 1994, and provides investment advisory services to each of
the other Advantus Funds, two other mutual funds (MIMLIC Cash Fund, Inc. and
Advantus Series Fund, Inc.) and various private accounts. Advantus Capital is a
wholly-owned subsidiary of MIMLIC Management. MIMLIC Management commenced its
current business in January 1984, and provides investment advisory services to
various private accounts. The personnel of Advantus Capital and MIMLIC
Management have also had experience in managing investments for The Minnesota
Mutual Life Insurance Company ("Minnesota Mutual") and its separate accounts.
MIMLIC Management is a subsidiary of Minnesota Mutual, which was organized in
1880, and has assets of more than $13 billion. The address of the Fund, Advantus
Capital, MIMLIC Management, Ascend Financial and Minnesota Mutual is 400 Robert
Street North, St. Paul, Minnesota 55101.
Advantus Capital selects and reviews the Fund's investments, and provides
executive and other personnel for the management of the Fund. The Fund's Board
of Directors supervises the affairs of the Fund as conducted by Advantus
Capital.
The name and title of the portfolio manager employed by Advantus Capital who
is primarily responsible for the day-to-day management of the Fund's portfolio,
the length of time employed in that position, and his other business experience
during the past five years are set forth below:
<TABLE>
<CAPTION>
PORTFOLIO MANAGER PRIMARY PORTFOLIO BUSINESS EXPERIENCE
AND TITLE MANAGER SINCE DURING PAST FIVE YEARS
<S> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
DOUGLAS PUGH OCTOBER 1, 1997 EQUITY ANALYST, ADVANTUS CAPITAL MANAGEMENT, INC.
PORTFOLIO MANAGER AND MIMLIC ASSET MANAGEMENT COMPANY FROM JUNE 1994
TO SEPTEMBER 1997; ATTENDED THE CARLSON SCHOOL OF
MANAGEMENT AT THE UNIVERSITY OF MINNESOTA FROM
JULY 1993 TO MAY 1994; FINANCIAL ANALYST, KEMPER
CORPORATION, LONG GROVE, ILLINOIS FROM JUNE 1990
TO JUNE 1993
</TABLE>
The Fund pays Advantus Capital an advisory fee equal on an annual basis to .8%
of the Fund's average daily net assets. For this fee, Advantus Capital acts as
investment adviser and manager for the Fund and pays the Fund's transfer agent,
dividend disbursing agent and redemption agent expenses. The Fund has engaged
Minnesota Mutual to act as its transfer agent, dividend disbursing agent and
redemption agent. The advisory fee paid by the Fund is partially offset by
Advantus Capital's payment of certain expenses, such as the transfer agent,
dividend disbursing agent and redemption agent expenses, which expenses are not
customarily paid for by a mutual fund's investment adviser. In addition,
separate from the investment advisory agreement, the Fund has entered into an
agreement with Minnesota Mutual under which Minnesota Mutual provides
accounting, legal and other administrative services to the Fund in exchange for
a fixed monthly fee which is reviewed annually by the Fund's Board of Directors.
During the fiscal period ended July 31, 1997, Venture Fund paid Minnesota Mutual
$39,600 for such services.
Under the Advisory Agreement with Advantus Capital, Advantus Capital furnishes
the Fund office space and all necessary office facilities, equipment and
personnel for servicing the investments of the Fund, and pays the salaries and
fees of all officers and directors of the Fund who are affiliated with Advantus
Capital. Ascend Financial, the underwriter of the Fund's shares, bears all
promotional expenses in connection with the distribution of the Fund's shares,
including paying for prospectuses and statements of additional information for
new shareholders, shareholder reports for new shareholders and the costs of
sales literature. The Fund pays all other expenses not so expressly assumed.
13
<PAGE>
For the fiscal period ended July 31, 1997, the expenses paid by the Fund
(after the voluntary absorption of certain expenses by the Fund's investment
adviser and the voluntary waiver of certain Class A Rule 12b-1 fees by Ascend
Financial), as a percentage of average daily net assets attributable to Class A,
Class B and Class C shares, were 1.35%, 2.25% and 2.25%, respectively. If the
Fund had been charged for the expenses voluntarily absorbed and waived, the
annual operating expenses, as a percentage of average net assets would have been
1.55% for Class A. Advantus Capital and Ascend Financial reserve the option to
reduce further the level of expenses which each will voluntarily absorb or waive
for the Fund.
- --------------------------------------------
THE UNDERWRITER AND
PLANS OF DISTRIBUTION The Fund has entered into a Distribution Agreement with
Ascend Financial pursuant to which Ascend Financial acts as the underwriter of
the Fund's shares. In addition, the Fund has adopted separate Plans of
Distribution applicable to Class A shares, Class B shares and Class C shares
relating to the payment of certain distribution expenses pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Fund, pursuant to its Plans of
Distribution, pays fees to Ascend Financial equal, on an annual basis, to a
percentage of the Fund's average daily net assets attributable to Class A
shares, Class B shares and Class C shares, respectively, as set forth in the
following table:
<TABLE>
<CAPTION>
RULE 12b-1 FEE AS PERCENTAGE OF
AVERAGE DAILY NET ASSETS
ATTRIBUTABLE TO
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
<S> <C> <C>
- --------------------------------
.30% 1.00% 1.00%
</TABLE>
Such fees are used for distribution-related services for all three classes and
for servicing of shareholder accounts in connection with Class B and Class C
shares. Ascend Financial may spend more or less for the distribution and
promotion of the Fund's shares than it receives as Rule 12b-1 fees pursuant to
the Plans.
All of the Rule 12b-1 fee payable by the Fund and attributable to Class A
shares, and a portion of the fee payable with respect to Class B and Class C
shares equal to .75% of the average daily net assets attributable to such Class
B and Class C shares, respectively, constitute distribution fees designed to
compensate Ascend Financial for advertising, marketing and distributing the
Class A, Class B and Class C shares of the Fund. The distribution fees may be
used by Ascend Financial for the purpose of financing any activity which is
primarily intended to result in the sale of shares of the Fund. For example,
such distribution fee may be used by Ascend Financial: (a) to compensate (in
addition to the sales load) broker-dealers, including Ascend Financial and its
registered representatives, banks, and other financial institutions for their
sale of Fund shares; and (b) to pay other advertising and promotional expenses
in connection with the distribution of the Fund's shares. These advertising and
promotional expenses include, by way of example but not by way of limitation,
costs of prospectuses for other than current shareholders; preparation and
distribution of sales literature; advertising of any type; expenses of branch
offices provided jointly by Ascend Financial and any affiliate thereof; and
compensation paid to and expenses incurred by officers, employees or
representatives of Ascend Financial or of other broker-dealers, banks, or
financial institutions.
A portion of the Rule 12b-1 fee payable with respect to Class B and Class C
shares of the Fund, equal to .25% of the average daily net assets attributable
to such Class B and Class C shares, respectively, constitutes a shareholder
servicing fee designed to compensate Ascend Financial for the provision of
certain services to the holders of Class B and Class C shares. The services
provided may include personal services provided to shareholders, such as
answering shareholder inquiries regarding the Fund and providing reports and
other information, and services related to the maintenance of shareholder
accounts. Ascend Financial may also use the shareholder servicing portion of the
Rule 12b-1 fee to make payments to qualifying broker-dealers and financial
institutions that provide such shareholder services.
Ascend Financial may also provide compensation to certain institutions such as
banks ("Service Organizations") which have purchased shares of the Fund for the
accounts of their clients, or which have made the Fund's shares available for
purchase by their clients, and/or which provide continuing service to such
clients. The Glass-Steagall Act and other applicable laws, among other things,
prohibit certain banks from engaging in the business of underwriting securities.
In such circumstances, Ascend Financial, if so requested, will engage such banks
as Service Organizations only to perform administrative and shareholder
servicing functions, but at the same fees
14
<PAGE>
and other terms applicable to dealers. If a bank were prohibited from acting as
a Service Organization, its shareholder clients would be permitted to remain
shareholders of the Fund and alternative means for continuing servicing of such
shareholders would be sought. In such event changes in the operation of the Fund
might occur and a shareholder serviced by such bank might no longer be able to
avail itself of any automatic investment or other services then being provided
by the bank. It is not expected that shareholders would suffer any adverse
financial consequences as a result of any of these occurrences.
- --------------------------------------------
PURCHASE OF
FUND SHARES
The Fund's shares may be purchased at the public offering
price from Ascend Financial (the underwriter of the Fund's shares), and from
certain other broker-dealers. Ascend Financial reserves the right to reject any
purchase order.
Certificates representing shares purchased are not currently issued. However,
shareholders will receive written confirmation of their purchases. Shareholders
will have the same rights of ownership with respect to such shares as if
certificates had been issued.
ALTERNATIVE PURCHASE ARRANGEMENTS. The Fund offers investors the choice among
three classes of shares which offer different sales charges and bear different
expenses. These alternatives permit an investor to choose the method of
purchasing shares that the investor believes is most beneficial given the amount
of the purchase, the length of time the investor expects to hold the shares and
other circumstances. For a detailed discussion of these alternative purchase
arrangements see "Sales Charges" below, or for a summary of these alternative
purchase arrangements see "Prospectus Summary."
The decision as to which class of shares provides a more suitable investment
for an investor may depend on a number of factors, including the amount and
intended length of the investment. Investors making investments that qualify for
a waiver of initial sales charges should purchase Class A shares. Other
investors should consider Class B or Class C shares because all of the purchase
price is invested immediately. Investors who expect to hold shares for
relatively shorter periods of time may prefer Class C shares because such shares
may be redeemed at any time without payment of a contingent deferred sales
charge. Investors who expect to hold shares longer, however, may choose Class B
shares because such shares convert to Class A shares sooner than do Class C
shares and thus pay the higher Rule 12b-1 fee for a shorter period.
Purchase orders for $1,000,000 or more will be accepted for Class A shares
only and are not subject to a sales charge at the time of purchase. Orders for
Class B or Class C shares for $1,000,000 or more will be treated as orders for
Class A shares or declined.
MINIMUM INVESTMENTS. A minimum initial investment of $250 is required, and
the minimum subsequent investment is $25.
PURCHASE BY CHECK. New investors may purchase shares of the Fund by
completing an account application and sending it, together with a check payable
to the Fund, directly to Advantus Funds, at P.O. Box 64132, St. Paul, Minnesota
55164-0132. Additional purchases may be made at any time by mailing a check,
payable to the Fund, to the same address. Checks for additional purchases should
be identified with the appropriate account number. Purchase orders may also be
submitted through Ascend Financial or other broker-dealers authorized to sell
shares of the Fund.
PURCHASE BY WIRE. Shares may also be purchased by Federal Reserve or bank
wire. This method will result in a more rapid investment in shares of the Fund.
Before wiring any funds, contact the Fund at (800) 665-6005 for instructions.
Promptly after making an initial purchase by wire, an investor should complete
an account application and mail it to Advantus Funds, P.O. Box 64132, St. Paul,
Minnesota 55164-0132.
Subsequent purchases may be made in the same manner. Wire purchases normally
take two or more hours to complete, and to be accepted the same day must be
received by 3:00 p.m. (Central Time). Banks may charge a fee for transmitting
funds by wire.
TIMING OF PURCHASE ORDERS. An order in proper form for the purchase of shares
of the Fund received by the Fund prior to the close of the New York Stock
Exchange ("NYSE"), which is generally 3:00 p.m. Central Time, will be effected
at the price next determined on the date received. Orders received after the
close of the NYSE will be effected at the price next determined on the next
business day.
PUBLIC OFFERING PRICE. The public offering price of the Fund will be the net
asset value per share of the Fund next determined after an order is received and
becomes effective, plus the applicable sales charge, if
15
<PAGE>
any. The net asset value per share of each class is determined by dividing the
value of the securities, cash and other assets (including dividends accrued but
not collected) of the Fund attributable to such class less all liabilities
(including accrued expenses but excluding capital and surplus) attributable to
such class, by the total number of shares of such class outstanding.
The net asset value of the shares of the Fund is determined as of the primary
closing time for business on the New York Stock Exchange (as of the date of this
Prospectus the primary close of trading is 3:00 p.m. (Central Time), but this
time may be changed) on each day, Monday through Friday, except (i) days on
which changes in the value of the Fund's portfolio securities will not
materially affect the current net asset value of Fund shares, (ii) days during
which no Fund shares are tendered for redemption and no order to purchase or
sell Fund shares is received by the Fund and (iii) customary national business
holidays on which the New York Stock Exchange is closed for trading (as of the
date hereof, New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day).
Securities, including put and call options, which are traded over-the-counter
and on a national exchange will be valued according to the broadest and most
representative market. A security which is only listed or traded on an exchange,
or for which an exchange is the most representative market, is valued at its
last sale price (prior to the time as of which assets are valued) on the
exchange where it is principally traded. Lacking any sales on the exchange where
it is principally traded on the day of valuation, prior to the time as of which
assets are valued, the security generally is valued at the last bid price on
that exchange. All other securities for which over-the-counter market quotations
are readily available are valued on the basis of the last current bid price.
When market quotations are not readily available, such securities are valued at
fair value as determined in good faith by the Board of Directors. Other assets
also are valued at fair value as determined in good faith by the Board of
Directors. However, debt securities may be valued on the basis of valuations
furnished by a pricing service which utilizes electronic data processing
techniques to determine valuations for normal institutional-size trading units
of debt securities, without regard to sale or bid prices, when such valuations
are believed to more accurately reflect the fair market value of such
securities. Short-term investments in debt securities are valued daily at
market.
- --------------------------------------------
SALES
CHARGES
The sales charges applicable to purchases of the Fund's shares,
and also the Rule 12b-1 fees paid by the Fund which are
attributable to such shares, will vary depending on the class of shares
purchased, as described below. An investor should carefully consider which sales
charge alternative is most beneficial in the investor's circumstances.
- --------------------------------------------
CLASS A
SHARES The public offering price of Class A shares of the Fund is the net asset
value of the Fund's shares plus the applicable front end sales charge ("FESC"),
which will vary with the size of the purchase. Ascend Financial receives all
applicable sales charges. The Fund receives the net asset value. The current
sales charges are:
<TABLE>
<CAPTION>
SALES CHARGE AS AMOUNT PAID TO
A PERCENTAGE OF: BROKER-DEALERS AS
NET A PERCENTAGE OF
OFFERING AMOUNT OFFERING PRICE:
VALUE OF TOTAL INVESTMENT PRICE INVESTED STANDARD AFFILIATED*
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------
LESS THAN $50,000 5.0% 5.26% 4.50% 5.0%
$50,000 BUT LESS THAN $100,000 4.5 4.71 4.05 4.5
$100,000 BUT LESS THAN $250,000 3.5 3.63 3.15 3.5
$250,000 BUT LESS THAN $500,000 2.5 2.56 2.25 2.5
$500,000 BUT LESS THAN $1,000,000 1.5 1.52 1.35 1.5
$1,000,000 AND OVER 0 0 .9** .9**
</TABLE>
*AN AFFILIATED BROKER-DEALER IS ONE OWNED BY A GENERAL AGENT OF MINNESOTA
MUTUAL.
**THESE PAYMENTS ARE PAID BY ASCEND FINANCIAL OR ONE OF ITS AFFILIATES, AT
ITS OWN EXPENSE, AND NOT BY THE FUND OR ITS SHAREHOLDERS.
Note that the sales charge depends on the total value of an investment (net
asset value of shares currently owned plus the cost of any new investment) in
the Fund, and not on the amount of a single investment. For example, if an
investor already owns shares with a net asset value of $40,000 and decides to
invest in additional Class A shares having a public offering price of $10,000,
the investor will pay a sales charge equal to 4.5% of the entire additional
$10,000 investment, since the total value of the investment is now $50,000.
16
<PAGE>
RULE 12b-1 FEES. Class A shares are subject to a Rule 12b-1 fee payable at an
annual rate of .30% of average daily net assets of the Fund attributable to
Class A shares. For additional information about this fee, see "Management of
the Fund--The Underwriter and Plans of Distribution," above.
WAIVER OF SALES CHARGES FOR CLASS A SHARES. Officers, directors, full-time and
part-time employees, sales representatives, and retirees of the Fund, Advantus
Capital, MIMLIC Management, Ascend Financial, Minnesota Mutual or any of
Minnesota Mutual's other affiliated companies, any trust, pension or benefit
plan for such persons, the spouses, siblings, direct ancestors or direct
descendents of such persons, Minnesota Mutual and its affiliates themselves,
advisory clients of Advantus Capital or MIMLIC Management, employees of sales
representatives employed in offices maintained by such sales representatives,
certain accounts as to which a bank or broker-dealer charges an account
management fee, provided the bank or broker-dealer has an agreement with Ascend
Financial, and certain accounts sold by registered investment advisers who
charge clients a fee for their services are allowed to buy Class A shares of the
Fund without paying the FESC.
- --------------------------------------------
CLASS B
SHARES Class B shares of the Fund are sold without an initial sales charge so
that the Fund receives the full amount of the investor's purchase. However, a
contingent deferred sales charge ("CDSC") of up to 5% will be imposed if shares
are redeemed within six years of purchase. For additional information, see
"Redemption of Fund Shares." Class B shares will automatically convert to Class
A shares of the Fund on the fifteenth day of the month (or, if different, the
last business day prior to such date) following the expiration of a specified
holding period. In addition, Class B shares are subject to higher Rule 12b-1
fees as described below. The amount of the CDSC will depend on the number of
years since the purchase was made, the amount of shares originally purchased and
the dollar amount being redeemed. The amount of the applicable CDSC and the
holding period prior to conversion are determined in accordance with the
following table:
<TABLE>
<CAPTION>
SHARES CONVERT
TO
CLASS A IN THE
SHARES PURCHASED IN AN CDSC APPLICABLE IN YEAR MONTH AFTER
AMOUNT 1 2 3 4 5 6 EXPIRATION OF
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------
LESS THAN $50,000 5.0% 4.5% 3.5% 2.5% 1.5% 1.5% 84 MONTHS
$50,000 BUT LESS THAN
$100,000 4.5 3.5 2.5 1.5 1.5 0 76 MONTHS
$100,000 BUT LESS THAN
$250,000 3.5 2.5 1.5 1.5 0 0 60 MONTHS
$250,000 BUT LESS THAN
$500,000 2.5 1.5 1.5 0 0 0 44 MONTHS
$500,000 BUT LESS THAN
$1,000,000 1.5 1.5 0 0 0 0 28 MONTHS
</TABLE>
Proceeds from the CDSC are paid to Ascend Financial and are used to defray
expenses related to providing distribution-related services to the Fund in
connection with the sale of Class B shares, such as the payment of compensation
to selected broker-dealers, and for selling Class B shares. The combination of
the CDSC and the Rule 12b-1 fee enables the Fund to sell the Class B shares
without deduction of a sales charge at the time of purchase. Although Class B
shares are sold without an initial sales charge, Ascend Financial pays a sales
commission to broker-dealers, and to registered representatives of Ascend
Financial, who sell Class B shares. The amount of this commission may differ
from the amount of the commission paid in connection with sales of Class A
shares. The higher Rule 12b-1 fee will cause Class B shares to have a higher
expense ratio and to pay lower dividends than Class A shares. Ascend Financial
pays other broker-dealers for the sale of Class B shares in accordance with the
following schedule:
<TABLE>
<CAPTION>
AMOUNT PAID TO
BROKER-DEALER AS
A PERCENTAGE OF
OFFERING PRICE:
SHARES PURCHASED IN AN AMOUNT STANDARD AFFILIATED*
- ---------------------------------------------------------------------------
<S> <C> <C>
LESS THAN $50,000 3.75% 4.17%
$50,000 BUT LESS THAN $100,000 3.38 3.75
$100,000 BUT LESS THAN $250,000 2.63 2.92
$250,000 BUT LESS THAN $500,000 1.88 2.08
$500,000 BUT LESS THAN $1,000,000 1.13 1.25
</TABLE>
*AN AFFILIATED BROKER-DEALER IS ONE OWNED BY A GENERAL AGENT OF MINNESOTA
MUTUAL.
17
<PAGE>
RULE 12b-1 FEES. Class B shares are subject to a Rule 12b-1 fee payable at an
annual rate of 1.00% of the average daily net assets of the Fund attributable to
Class B shares. For additional information about this fee, see "Management of
the Fund--The Underwriter and Plans of Distribution," above.
CONVERSION FEATURE. On the fifteenth day of the month (or, if different, the
last business day prior to such date) after the expiration of the applicable
holding period described in the table above, Class B shares will automatically
convert to Class A shares and will no longer be subject to a higher Rule 12b-1
fee. Such conversion will be on the basis of the relative net asset values of
the two classes. Class A shares issued upon such conversion will not be subject
to any FESC or CDSC. Class B shares acquired by exchange from Class B shares of
another Advantus Multiple Class Fund will convert into Class A shares based on
the time of the initial purchase. Purchased Class B shares ("Purchased B
Shares") will convert after the specified number of months following the
purchase date. All Class B shares in a shareholder's account that were acquired
through the reinvestment of dividends and distributions ("Reinvestment B
Shares") will be held in a separate sub-account. Each time any Purchased B
Shares convert to Class A shares, a PRO RATA portion (based on the ratio that
the total converting Purchased B Shares bears to the shareholder's total
converting and non-converting Purchased B Shares immediately prior to the
conversion) of the Reinvestment B Shares then in the sub-account will also
convert to Class A shares.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of a ruling from the Internal Revenue Service or an
opinion of counsel that payment of different dividends by each of the classes of
shares does not result in the Fund's dividends or distributions constituting
"preferential dividends" under the Internal Revenue Code of 1986, as amended,
and that such conversions do not constitute taxable events for federal tax
purposes. There can be no assurance that such ruling or opinion will be
available, and the conversion of Class B shares to Class A shares will not occur
if such ruling or opinion is not available. In such event, Class B shares would
continue to be subject to higher expenses than Class A shares for an indefinite
period.
- --------------------------------------------
CLASS C
SHARES Class C shares of the Fund are sold without an initial sales charge so
that the Fund receives the full amount of the investor's purchase. Unlike Class
B shares, however, no CDSC is imposed when Class C shares are redeemed. Class C
shares will automatically convert to Class A shares of the Fund on the fifteenth
day of the month (or, if different, the last business day prior to such date)
following the expiration of a specified holding period. In addition, Class C
shares are subject to higher Rule 12b-1 fees (as described below), and are
subject to such higher fees for a longer period than are Class B shares because
of a longer holding period prior to conversion. The applicable holding period
prior to conversion is determined in accordance with the following table:
<TABLE>
<CAPTION>
SHARES CONVERT
TO
CLASS A IN THE
MONTH AFTER
SHARES PURCHASED IN AN AMOUNT EXPIRATION OF
<S> <C>
- --------------------------------------------------------------
LESS THAN $50,000 96 MONTHS
$50,000 BUT LESS THAN $100,000 88 MONTHS
$100,000 BUT LESS THAN $250,000 72 MONTHS
$250,000 BUT LESS THAN $500,000 56 MONTHS
$500,000 BUT LESS THAN $1,000,000 40 MONTHS
</TABLE>
The longer period during which the Rule 12b-1 fee is charged enables the Fund
to sell the Class C shares without deduction of a sales charge at the time of
purchase and without imposing a CDSC at redemption. Ascend Financial does not
pay a sales commission to broker-dealers, or to registered representatives of
Ascend Financial, who sell Class C shares. The higher Rule 12b-1 fee will cause
Class C shares to have a higher expense ratio and to pay lower dividends than
Class A shares.
RULE 12B-1 FEES. Class C shares are subject to a Rule 12b-1 fee payable at an
annual rate of 1.00% of the average daily net assets of the Fund attributable to
Class C shares. For additional information about this fee, see "Management of
the Fund--The Underwriter and Plans of Distribution," above.
CONVERSION FEATURE. On the fifteenth day of the month (or, if different, the
last business day prior to such date) after the expiration of the applicable
holding period described in the table above, Class C shares will automatically
convert to Class A shares and will no longer be subject to a higher Rule 12b-1
fee. Such conversion will be on the basis of the relative net asset values of
the two classes. Class A shares issued upon such conversion will not be subject
to any FESC or CDSC. Class C shares
18
<PAGE>
acquired by exchange from Class C shares of another Advantus Multiple Class Fund
will convert into Class A shares based on the time of the initial purchase.
Purchased Class C shares ("Purchased C Shares") will convert after the specified
number of months following the purchase date. All Class C shares in a
shareholder's account that were acquired through the reinvestment of dividends
and distributions ("Reinvestment C Shares") will be held in a separate
sub-account. Each time any Purchased C Shares convert to Class A shares, a PRO
RATA portion (based on the ratio that the total converting Purchased C Shares
bears to the shareholder's total converting and non-converting Purchased C
Shares immediately prior to the conversion) of the Reinvestment C Shares then in
the sub-account will also convert to Class A shares.
The conversion of Class C shares to Class A shares is subject to the
continuing availability of a ruling from the Internal Revenue Service or an
opinion of counsel that payment of different dividends by each of the classes of
shares does not result in the Fund's dividends or distributions constituting
"preferential dividends" under the Internal Revenue Code of 1986, as amended,
and that such conversions do not constitute taxable events for federal tax
purposes. There can be no assurance that such ruling or opinion will be
available, and the conversion of Class C shares to Class A shares will not occur
if such ruling or opinion is not available. In such event, Class C shares would
continue to be subject to higher expenses than Class A shares for an indefinite
period.
- --------------------------------------------
OTHER PAYMENTS
TO BROKER-DEALERS The commissions paid to broker-dealers in connection with the
sale of Class A and Class B shares are as described above. A broker-dealer
receiving more than 90% of the sales charge may be deemed to be an "underwriter"
under the Securities Act of 1933, as amended. Broker-dealers selling Class A and
Class C shares will receive Rule 12b-1 distribution fees which equal, on an
annual basis, .25% and .75%, respectively, of the net asset values attributable
to such shares. Rule 12b-1 service fees will also be paid to broker-dealers
selling Class B and Class C shares in amounts equal, on an annual basis, to .25%
and .25%, respectively, of the net asset values attributable to such shares.
In addition, Ascend Financial or Minnesota Mutual will pay to "affiliated"
broker-dealers (i.e., broker-dealers owned by general agents of Minnesota
Mutual), based uniformly on the sale of all classes of Fund shares by such
broker-dealers, credits which allow such broker-dealers' registered
representatives who are responsible for such broker-dealers' sales of Fund
shares to attend conventions and other meetings sponsored by Minnesota Mutual or
its affiliates for the purpose of promoting the sale of the insurance and/or
investment products offered by Minnesota Mutual and its affiliates. Such credits
may cover the registered representatives' transportation, hotel accommodations,
meals, registration fees and the like. Affiliated broker-dealers earning such
credits will be allowed to elect to receive from Ascend Financial or Minnesota
Mutual, in lieu of such credits, cash in an amount equal to the cost of
providing such credits.
- --------------------------------------------
SPECIAL
PURCHASE
PLANS
The following are alternative purchase plans applicable to the
Fund, all of which offer the possibility of a reduced sales
charge (see the Statement of Additional Information for the terms and conditions
applicable to these special purchase plans):
- - Letter of Intent--the applicable sales charge is
based on purchases which the investor intends to make, and then makes, during
a 13-month period in an amount not less than $50,000.
- - Combined investments in all Advantus Multiple
Class Funds--all accounts, whether invested in Class A shares, Class B shares
or Class C shares, or any combination, are combined to determine sales charge.
- - Combined purchases with spouse, children, and/or
single trust estates--all accounts, whether invested in Class A shares, Class
B shares or Class C shares, or any combination, are combined to determine
sales charge. It is the obligation of each investor desiring this discount in
sales charge to notify Ascend Financial, through his or her dealer or
otherwise, that he or she is entitled to the discount.
- - Group Purchases--individuals who are members
of a qualified group (which must meet criteria established by Ascend
Financial) may purchase shares at the reduced sales charge applicable to the
group taken as a whole.
The Fund also offers an Automatic Investment Plan, which allows an investor to
automatically invest a specified amount in the Fund each month and thereby
19
<PAGE>
lower the average cost per share through the principal of "dollar cost
averaging." For more information on any of these plans, contact Ascend Financial
or an Ascend Financial representative.
- --------------------------------------------
EXCHANGE AND
TELEPHONE TRANSFER
OF FUND SHARES
A shareholder can exchange some or all of his or
her Class A, Class B and Class C shares in the Fund, including shares acquired
by reinvestment of dividends, for shares of the same class of any of the other
Advantus Multiple Class Funds (provided that the shareholder has an already open
account in such other Advantus Multiple Class Fund), and can thereafter
re-exchange such exchanged shares back for shares of the same class of the Fund,
provided that the minimum amount which may be transferred is $250. The exchange
will be made on the basis of the relative net asset values without the
imposition of any additional sales load. When Class B shares acquired through
the exchange are redeemed, the shareholder will be treated as if no exchange
took place for the purpose of determining the CDSC period and applying the CDSC.
Class A, Class B and Class C shares may also be exchanged for shares of
Advantus Money Market Fund, Inc. ("Money Market Fund") at net asset values. No
CDSC will be imposed at the time of any such exchange of Class B shares;
however, the Money Market Fund shares acquired in any such exchange will remain
subject to the CDSC otherwise applicable to such Class B shares as of the date
of exchange, and the period during which such shares of Money Market Fund are
held will not be included in the calculation of the CDSC due at redemption of
such Money Market Fund shares or any reacquired Class B shares, except as
follows. Ascend Financial is currently waiving the entire Rule 12b-1 fee due
from Money Market Fund. In the event Ascend Financial begins to receive any
portion of such fee, either (i) the time period during which shares of Money
Market Fund acquired in exchange for Class B shares are held will be included in
the calculation of the CDSC due at redemption, or (ii) such time period will not
be included but the amount of the CDSC will be reduced by the amount of any Rule
12b-1 payments made by Money Market Fund with respect to those shares.
Shares of Money Market Fund acquired in an exchange for Class A, Class B or
Class C shares from any of the Advantus Multiple Class Funds may also be
re-exchanged at relative net asset values for Class A, Class B and Class C
shares, respectively, of the Fund. Class C shares re-acquired in this manner
will have a remaining holding period prior to conversion equal to the remaining
holding period applicable to the prior Class C shares at the time of the initial
exchange. Shares of Money Market Fund not acquired in an exchange from any of
the Advantus Multiple Class Funds may be exchanged at relative net asset values
for either Class A, Class B or Class C shares of the Fund, subject to the sales
charge applicable to the class selected.
The exchange privilege is available only in states where such exchanges may
legally be made (at the present time the Fund believes this privilege is
available in all states). An exchange may be made by written request or by a
telephone call, unless the shareholder has elected on the account application
not to have telephone transaction privileges (see "Telephone Transactions"). Up
to four exchanges each calendar year may be made without charge. A $7.50 service
charge will be imposed on each subsequent exchange and/or telephone transfer. No
service charge is imposed in connection with systematic exchange plans. However,
the Fund reserves the right to restrict the frequency of--or otherwise modify,
condition, terminate, or impose additional charges upon--the exchange and/or
telephone transfer privileges, upon 60 days' prior notice to shareholders.
Telephone transfers and other exchanges can only be made between Advantus Fund
accounts having identical registrations. An exchange is considered to be a sale
of shares for federal income tax purposes on which an investor may realize a
long- or short-term capital gain or loss. See "Taxes" for a discussion of the
effect of redeeming shares within 90 days after acquiring them and subsequently
acquiring new shares in any mutual fund at a reduced sales charge.
- --------------------------------------------
SYSTEMATIC EXCHANGE
PLAN Shareholders of the Fund may elect to have shares of the Fund
systematically exchanged for shares of any of the other Advantus Funds (provided
that such Advantus Fund accounts must have identical registrations) on a monthly
basis. The minimum amount which may be exchanged on such a systematic basis is
$25. The terms and conditions otherwise applicable to exchanges generally, as
described above, also apply to such systematic exchange plans.
20
<PAGE>
- --------------------------------------------
REDEMPTION OF
FUND SHARES
Registered holders of shares of the Fund may redeem their
shares at the per share net asset value next determined following receipt by the
Fund (at its mailing address listed on the cover page) of a written redemption
request signed by all shareholders exactly as the account is registered (and a
properly endorsed stock certificate if one has been issued). Class A and Class C
shares may be redeemed without charge. A contingent deferred sales charge may be
applicable upon redemption of Class B shares (see "Contingent Deferred Sales
Charge," below). Both share certificates and stock powers, if any, tendered in
redemption must be endorsed and executed exactly as the Fund shares are
registered. Any certificates should be sent to the Fund by certified mail.
Payment will be made as soon as possible, but not later than seven days after
receipt of a properly executed written redemption request (and any
certificates). The amount received by the shareholder may be more or less than
the shares' original cost.
If stock certificates have not been issued, and if no signature guarantee is
required, shareholders may also submit their signed written redemption request
to the Fund by facsimile (FAX) transmission. The Fund's FAX number is
1-612-665-6689.
SIGNATURE GUARANTEE. In order to protect both shareholders and the Fund
against fraudulent orders, a shareholder signature is required to be guaranteed
in certain cases. No signature guarantee is required if the redemption proceeds
are less than $25,000 and are to be paid to the registered holder and sent to
the address of record for that account, or if the written redemption request is
from pre-authorized trustees of plans, trusts and other tax-exempt organizations
and the redemption proceeds are less than $25,000.
A signature guarantee is required, however, if (i) the redemption proceeds are
$25,000 or more; (ii) the redemption proceeds are to be paid to someone other
than the registered holder; (iii) the redemption proceeds are to be mailed to an
address other than the registered shareholder's address; (iv) within the 30-day
period prior to receipt of the redemption request, instructions have been
received to change the shareholder's address of record, or, in the case of
redemptions to be paid by wire, instructions have been received within such
period to change the shareholder's bank wire instructions; (v) the shares are
requested to be transferred to the account of another owner; or (vi) in the case
of plans, trusts, or other tax-exempt organizations, the redemption request is
not from a pre-authorized trustee. The Fund reserves the right to require
signature guarantees on all redemptions.
A signature guarantee must be provided by an eligible guarantor institution. A
notarized signature is not sufficient. Eligible guarantors include (1) national
or state banks, savings associations, savings and loan associations, trust
companies, savings banks, industrial loan companies and credit unions; (2)
national securities exchanges, registered securities associations and clearing
agencies; (3) securities broker-dealers which are members of a national
securities exchange or a clearing agency or which have minimum net capital of
$100,000; or (4) institutions that participate in the Securities Transfer Agent
Medallion Program ("STAMP") or other recognized signature medallion program.
CONTINGENT DEFERRED SALES CHARGE. The CDSC applicable upon redemption of
Class B shares will be calculated on an amount equal to the lesser of the net
asset value of the shares at the time of purchase or their net asset value at
the time of redemption. No charge will be imposed on increases in net asset
value above the initial purchase price. In addition, no charge will be assessed
on shares derived from reinvestment of dividends or capital gains distributions
or on shares held for longer than the applicable CDSC period. See "Sales
Charges-- Class B Shares," above.
In determining whether a CDSC is payable with respect to any redemption, the
calculation will be determined in the manner that results in the lowest rate
being charged. Therefore, it will be assumed that shares that are not subject to
the CDSC are redeemed first, shares subject to the lowest level of CDSC are
redeemed next, and so forth. If a shareholder owns Class A or Class C shares in
addition to Class B shares, then absent a shareholder choice to the contrary,
Class C shares will first be redeemed in full, and Class B shares not subject to
a CDSC will next be redeemed in full, prior to any redemption of Class A shares.
Class A shares will also be redeemed in full, absent a shareholder choice to the
contrary, prior to any redemption of Class B shares which are subject to a CDSC.
The CDSC does not apply to: (1) redemption of Class B shares in connection
with the automatic conversion to Class A shares; (2) redemption of
21
<PAGE>
shares when a Fund exercises its right to liquidate accounts which are less than
the minimum account size; and (3) redemptions in the event of the death or
disability of the shareholder within the meaning of Section 72(m)(7) of the
Internal Revenue Code. The CDSC will also not apply to certain exchanges. See
"Exchange and Telephone Transfer of Fund Shares," above.
TELEPHONE REDEMPTION. The Fund's shareholders have this privilege
automatically, unless they have elected on the account application not to have
such privilege, and may redeem shares by calling the Fund's transfer agent at
1-800-665-6005 (see "Telephone Transactions"). A telephone redemption request
will not be honored, however, if the shareholder's address of record or bank
wire instructions have been changed without a guarantee of the shareholder's
signature (see "Signature Guarantee" above) within the 30-day period prior to
receipt of the redemption request. The maximum amount which may be redeemed by
telephone is $25,000. The proceeds will be sent by check to the address of
record for the account. If the amount is $500 or more, and if the shareholder
has designated a bank account, the proceeds may be wired to the shareholder's
designated bank account, and the prevailing wire charge (currently $5.00) will
be added to the amount redeemed from the Fund. The Fund reserves the right to
modify, terminate or impose charges upon the telephone redemption privilege.
DELAY IN PAYMENT OF REDEMPTION PROCEEDS. Payment of redemption proceeds will
ordinarily be made as soon as possible and within the periods of time described
above. However, an exception to this is that if redemption is requested after a
purchase by non-guaranteed funds (such as a personal check), the Fund will delay
mailing the redemption check or wiring proceeds until it has reasonable
assurance that the purchase check has cleared (good payment has been collected).
This delay may be up to 14 days from the purchase date.
FUND'S RIGHT TO REDEEM SMALL ACCOUNTS. The Fund has the right to redeem the
shares in inactive accounts which, due to redemptions and not to decreases in
market value of the shares in the account, have a total current value of less
than $150. Before redeeming an account, the Fund will mail to the shareholder a
written notice of its intention to redeem, which will give the investor an
opportunity to make an additional investment. If no additional investment is
received by the Fund within 60 days of the date the notice was mailed, the
shareholder's account will be redeemed.
SYSTEMATIC WITHDRAWAL PLANS. An investor owning shares in any one Advantus
Fund having a value of $5,000 or more at the current public offering price may
establish a Systematic Withdrawal Plan providing for periodic payments of a
fixed or variable amount. Withdrawal payments represent proceeds from the
redemption of shares and may therefore reduce and possibly exhaust the initial
investment. Withdrawal payments attributable to the redemption of Class B shares
may also be subject to a contingent deferred sales charge. A shareholder should
therefore consider carefully whether a Systematic Withdrawal Plan is appropriate
in the circumstances. See the Statement of Additional Information for details of
the terms and conditions applicable to Systematic Withdrawal Plans.
- --------------------------------------------
TELEPHONE
TRANSACTIONS
Shareholders of the Fund are permitted to exchange or
redeem the Fund's shares by telephone. See "Exchange and Telephone Transfer of
Fund Shares" and "Redemption of Fund Shares" for further details. The privilege
to initiate such transactions by telephone is made available automatically
unless the shareholder elects on the account application not to have such
privilege.
Shareholders, or persons authorized by shareholders, may initiate telephone
transactions by telephoning the Fund's transfer agent, toll free, at
1-800-665-6005, Monday through Friday, from 8:00 a.m. to 4:45 p.m. (Central
Time). Telephone transaction requests received after 3:00 p.m. (Central Time)
will be treated as received the next business day. Telephone exchanges may be
made only between Advantus Fund accounts having identical registrations. The
maximum amount which may be redeemed by telephone is $25,000. During periods of
marked economic or market changes, shareholders may experience difficulty in
implementing a telephone exchange or redemption due to a heavy volume of
telephone calls. In such a circumstance, shareholders should consider submitting
a written request while continuing to attempt a telephone exchange or
redemption. The Fund reserves the right to modify, terminate or impose charges
upon the telephone exchange and redemption privileges upon 60 days' prior notice
to shareholders.
22
<PAGE>
The Fund and its transfer agent, Minnesota Mutual, will not be liable for
following instructions communicated by telephone which they reasonably believe
to be genuine; provided, however, that the Fund and Minnesota Mutual will employ
reasonable procedures to confirm that instructions communicated by telephone are
genuine, and that if they do not, they may be liable for any losses due to
unauthorized or fraudulent instructions. The procedures for processing telephone
transactions include tape recording of telephone instructions, asking
shareholders for their account number and a personal identifying number, and
providing written confirmation of such transactions.
- --------------------------------------------
REINSTATEMENT
PRIVILEGE
Shareholders who redeem shares in the Fund have a one-time
privilege to apply their redemption proceeds (at no sales charge) to the
purchase of shares of any of the Advantus Multiple Class Funds by notifying
Ascend Financial within 90 days after their redemption. All shares issued as a
result of the reinstatement privilege applicable to redemptions of Class A and
Class B shares will be issued only as Class A shares. Any CDSC incurred in
connection with the prior redemption (within 90 days) of Class B shares will not
be refunded or re-credited to the shareholder's account. Shareholders who redeem
Class C shares and exercise their reinstatement privilege will be issued only
Class C shares, which shares will have a remaining holding period prior to
conversion equal to the remaining holding period applicable to the prior Class C
shares at redemption. See "Taxes" for a discussion of the effect of redeeming
shares within 90 days after acquiring them and subsequently acquiring new shares
in any mutual fund at a reduced sales charge.
- --------------------------------------------
DIVIDENDS AND
CAPITAL GAINS
DISTRIBUTIONS
The policy of the Fund is to pay dividends from net
investment income quarterly. Any net realized capital
gains are generally distributed once a year, during December. Distributions paid
by the Fund, if any, with respect to Class A, Class B and Class C shares will be
calculated in the same manner, at the same time, on the same day and will be in
the same amount, except that the higher Rule 12b-1 fees applicable to Class B
and Class C shares will be borne exclusively by such shares. The per share
distributions on Class B and Class C shares will be lower than the per share
distributions on Class A shares as a result of the higher Rule 12b-1 fees
applicable to Class B and Class C shares.
Any dividend payments or net capital gains distributions made by the Fund are
in the form of additional shares of the same class of the Fund rather than in
cash, unless a shareholder specifically requests the Fund in writing that the
payment be made in cash. The distribution of these shares is made at net asset
value on the payment date of the dividend, without any sales or other charges to
the shareholder. The taxable status of income dividends and/or net capital gains
distributions is not affected by whether they are reinvested or paid in cash.
Authorization to pay dividends in cash may be made on the application form, or
at any time by letter.
Upon written request to the Fund, a shareholder may also elect to have
dividends from the Fund invested without sales charge in shares of Money Market
Fund or shares of the same class of another of the Advantus Multiple Class Funds
(provided that such Advantus Fund accounts must have identical registrations) at
the net asset value of such other Advantus Fund on the payable date for the
dividends being distributed. To use this privilege of investing dividends from
the Fund in shares of another of the Advantus Funds, shareholders must maintain
a minimum account value of $250 in both the Fund and the Advantus Fund in which
dividends are reinvested.
- --------------------------------------------
TAXES
The following is a general summary of certain federal tax
considerations affecting the Fund and its shareholders. No attempt is made to
present a detailed explanation of the tax treatment of the Fund or its
shareholders, and the discussion here is not intended as a substitute for
careful tax planning.
During the fiscal period ended July 31, 1997, the Fund fulfilled, and intends
to continue to fulfill, the requirements of Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), as a regulated investment company. If so
qualified, the Fund will not be liable for federal income taxes to the extent it
distributes its taxable income to its shareholders.
Distributions of investment company taxable income from the Fund generally
will be taxable to shareholders as ordinary income, regardless of
23
<PAGE>
whether such distributions are paid in cash or are invested in additional shares
of the Fund's stock. A distribution of net capital gain (a "capital gain
distribution"), whether paid in cash or reinvested in shares, generally is
taxable to shareholders as long-term capital gain, regardless of the length of
time a shareholder has held his or her shares or whether such gain was realized
by the Fund before the shareholder acquired such shares and was reflected in the
price paid for the shares. For individuals, the Taxpayer Relief Act of 1997 (the
"1997 Act") has created new "mid-term capital gain" rates that apply to the sale
of capital assets held more than one year but not more than 18 months. Although
the 1997 Act has not expressly addressed this issue, it is expected that IRS
regulations issued pursuant to the Act will provide that a regulated investment
company such as the Fund must notify shareholders who are individuals as to
whether they must treat capital gain distributions that they receive as mid-term
or long-term capital gains. Long-term capital gains of individuals are taxed at
a maximum rate of 20%, while mid-term capital gains of individuals are taxed at
28%, and the highest marginal regular tax rate on ordinary income for
individuals is 39.6%.
Some or all of the dividend distributions from the Fund will qualify for the
70% dividend received deduction for corporations.
Prior to purchasing shares of the Fund, prospective shareholders (except for
tax qualified retirement plans) should consider the impact of dividends or
capital gains distributions which are expected to be announced, or have been
announced but not paid. Any such dividends or capital gains distributions paid
shortly after a purchase of shares by an investor prior to the record date will
have the effect of reducing the per share net asset value by the amount of the
dividends or distributions. All or a portion of such dividends or distributions,
although in effect a return of capital, is subject to taxation.
Gain or loss upon the sale of shares of the Fund will be treated as capital
gain or loss, provided that the shares represented a capital asset in the hands
of the shareholder. For corporate shareholders, such gain or loss will be
long-term gain or loss if the shares were held more than one year. For
shareholders who are individuals, the gain or loss will be considered long-term
if the shareholder has held the shares for more than 18 months and mid-term if
the shareholder has held the shares for more than one year but not more than 18
months.
The Code provides that a shareholder who pays a sales charge in acquiring
shares of a mutual fund, redeems those shares within 90 days after acquiring
them, and subsequently acquires new shares in any mutual fund for a reduced
sales charge or no sales charge (pursuant to a reinvestment right acquired with
the first shares), may not take into account the sales charge imposed on the
first acquisition, to the extent of the reduction in the sales charge on the
second acquisition, for purposes of computing gain or loss on disposition of the
first acquired shares. The amount of sales charge disregarded under this rule
will, however, be treated as incurred in connection with the acquisition of the
second acquired shares.
Before investing in the Fund, an investor should consult a tax adviser
concerning the consequences of any local and state tax laws, and of any
retirement plan offering tax benefits.
Shareholders of the Fund receive an annual statement detailing federal tax
information. Distributions by the Fund, including the amount of any redemption,
are reported to shareholders in such annual statement and to the Internal
Revenue Service to the extent required by the Code.
The Fund is required by federal law to withhold 31% of reportable payments
(including dividends, capital gain distributions, and redemptions) paid to
certain accounts whose owners have not complied with IRS regulations. In order
to avoid this backup withholding requirement, each shareholder will be asked to
certify on the shareholder's account application that the social security or
taxpayer identification number provided is correct and that the shareholder is
not subject to backup withholding for previous underreporting to the IRS.
- --------------------------------------------
INVESTMENT
PERFORMANCE
Advertisements and other sales literature for the Fund may
refer to "yield," "average annual total return" and "cumulative total return."
Performance quotations are computed separately for Class A, Class B and Class C
shares of the Fund. All quotations of yield, average annual total return and
cumulative total return are based upon historical information and are not
intended to indicate future performance. The investment return on and principal
value of an investment in the Fund will fluctuate, so that an investor's shares,
when
24
<PAGE>
redeemed, may be worth more or less than their original cost.
The advertised yield of the Fund will be based upon a 30-day period stated in
the advertisement. Yield is calculated by dividing the net investment income per
share (as defined under Securities and Exchange Commission rules and
regulations) earned during the period by the maximum offering price per share on
the last day of the period. The result is then "annualized" using a formula that
provides for semi-annual compounding of income.
Both average annual total return and cumulative total return are based on a
hypothetical $1,000 payment to the Fund at the beginning of the advertised
period. Average annual total return is calculated by finding the average annual
compounded rate of return over the period that would equate the initial
investment to the ending redeemable value. Cumulative total return is the
percentage change between the public offering price of one Fund share at the
beginning of a period and the net asset value of that share at the end of the
period with dividend and capital gain distributions treated as reinvested. In
calculating both average annual total return and cumulative total return, the
maximum initial or deferred sales charge is deducted from the hypothetical
investment and all dividends and distributions during the period are assumed to
be reinvested. Such average annual total return and cumulative total return
figures may also be accompanied by average annual total return and cumulative
total return figures, for the same or other periods, which do not reflect the
deduction of any sales charges.
- --------------------------------------------
AVERAGE ANNUAL
TOTAL RETURNS The table below shows the average annual total returns for Class
A, Class B and Class C shares of the Fund for the periods indicated. Such
figures reflect the deduction of the Fund's maximum 5% sales load applicable to
Class A shares, the voluntary absorption of certain expenses of the Fund by the
Fund's investment adviser described under "Management of the Fund" and waiver of
certain Class A 12b-1 fees by the Fund's Distributor. (See also, "Calculation of
Performance Data" in the Statement of Additional Information.)
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL
RETURN FOR THE
PERIOD SHOWN ENDING
JULY 31, 1997
SINCE INCEPTION(1)
<S> <C>
- --------------------------------------------------------------
CLASS A SHARES 10.0%
CLASS B SHARES 10.3
CLASS C SHARES 15.4
</TABLE>
(1) INCEPTION WAS JANUARY 31, 1997.
- ---------------------------------------------------------------
RANKINGS AND
RATINGS The Fund may from time to time also advertise rankings or other ratings
of the Fund as determined by Morningstar, Inc., Lipper Analytical Services,
Inc., INVESTORS DAILY, Wiesenberger Financial Services, FORTUNE MAGAZINE, or
other mutual fund rating firms.
Shareholders of the Fund may also telephone Ascend Financial at (888) 237-1838
for current quotations of yield, average annual total return and cumulative
total return.
For additional information regarding the calculation of yield, average annual
total return and cumulative total return see the Statement of Additional
Information.
- --------------------------------------------
ADDITIONAL PERFORMANCE
INFORMATION Further information about the performance of the Fund is contained
in the Fund's Annual Report to Shareholders, which may be obtained without
charge by writing or calling the Fund at the address or telephone number shown
on the cover of this Prospectus.
- --------------------------------------------
GENERAL
INFORMATION
The Fund was incorporated in July 1996 as a Minnesota
corporation. The Fund's authorized capital stock is of three classes (Class A,
Class B and Class C), common shares, with a par value of $.01 per share. All
shares of the Fund are nonassessable, fully transferable and have one vote and
equal rights to share in dividends and assets of the Fund. The shares of the
Fund possess no preemptive or conversion rights. Cumulative voting is not
authorized for the Fund. This means that the holders of more than 50% of the
shares of the Fund voting for the election of directors of the Fund can elect
100% of the directors if they choose to do so, and in such event the holders
25
<PAGE>
of the remaining shares of the Fund will be unable to elect any directors.
On July 31, 1997, Minnesota Mutual and its subsidiaries owned shares in each
class of shares of the Fund as set forth in the following table:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OWNED BY MINNESOTA
SHARES OUTSTANDING MUTUAL AND SUBSIDIARIES
CLASS A CLASS B CLASS C CLASS A CLASS B CLASS C
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2,613,034 89,787 14,929 2,505,083 5,072 5,069
</TABLE>
Due to its ownership of more than 25% of the outstanding shares of the Fund,
Minnesota Mutual may be said to control the Fund. Minnesota Mutual, Advantus
Capital, MIMLIC Management and Ascend Financial are all organized as Minnesota
corporations.
The Fund does not hold annual or periodically scheduled regular meetings of
shareholders. Regular and special shareholder meetings are held only at such
times and with such frequency as required by law. Minnesota corporation law does
not require an annual meeting; instead, it provides for the Board of Directors
to convene shareholder meetings when it deems appropriate. In addition, if a
regular meeting of shareholders has not been held during the immediately
preceding fifteen months, a shareholder or shareholders holding 3% or more of
the voting shares of the Fund may demand a regular meeting of shareholders of
the Fund by written notice of demand given to the chief executive officer or the
chief financial officer of the Fund. Within 30 days after receipt of the demand
by one of those officers, the Board of Directors shall cause a regular meeting
of shareholders to be called and held no later than 90 days after receipt of the
demand, all at the expense of the Fund. Additionally, the Investment Company Act
of 1940 requires shareholder votes for all amendments to fundamental investment
policies and restrictions and for all investment advisory contracts and
amendments thereto.
The Fund sends to its shareholders a six-month unaudited and annual audited
financial report of the Fund, which includes a list of investment securities
held by the Fund. Shareholder inquiries should be directed to a registered
representative of the shareholder's broker-dealer, or to the Underwriter or the
Fund at the telephone number or mailing address listed on the cover of this
Prospectus.
- --------------------------------------------
COUNSEL AND
INDEPENDENT
AUDITORS
The firm of Dorsey & Whitney LLP, 220 South Sixth Street,
Minneapolis, Minnesota 55402, is the general counsel for the
Fund. KPMG Peat Marwick LLP, 4200 Norwest Center, 90 South Seventh Street,
Minneapolis, Minnesota 55402, are the independent auditors for the Fund.
- --------------------------------------------
CUSTODIAN
First Trust National Association, 180 East Fifth Street, St.
Paul, Minnesota 55101, acts as custodian of the securities held by the Fund.
26
<PAGE>
- --------------------------------------------
APPENDIX--
BOND RATINGS
Moody's Investors Service, Inc. describes its six highest
ratings for corporate bonds, including convertible debt, as follows:
Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long term risks appear somewhat larger than in Aaa
securities.
Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present
which suggest a susceptibility to impairment some time in the future.
Bonds which are rated Baa are considered medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Moody's Investors Service, Inc. also applies numerical modifiers, 1, 2, and 3,
in each of these generic rating classifications. The modifier 1 indicates that
the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic rating category.
Standard & Poor's Corporation describes its six highest ratings for corporate
bonds, including convertible debt, as follows:
AAA. Debt rated "AAA" has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA. Debt rated "AA" has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degrees.
A. Debt rated "A" has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
BBB. Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB. Debt rated "BB" has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could lead
to inadequate capacity to meet timely interest and principal payments.
B. Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
"BB" or "BB-" rating.
Standard & Poor's Corporation applies indicators "+," no character, and "-" to
the above rating categories. The indicators show relative standing within the
major rating categories.
27
<PAGE>
ADVANTUS VENTURE FUND, INC.
FUND INFORMATION:
INVESTMENT ADVISER
Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
(612) 665-5923
UNDERWRITER
Ascend Financial Services, Inc.
P.O. Box 64809
St. Paul, Minnesota 55101-0809
(612) 665-4833
(888) 237-1838
TRANSFER AGENT AND DIVIDEND
DISBURSING AGENT
The Minnesota Mutual Life Insurance Company
P.O. Box 64132
St. Paul, Minnesota 55164-0132
(800) 665-6005
CUSTODIAN
First Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
GENERAL COUNSEL
Dorsey & Whitney LLP
[ADVANTUS -TM- FAMILY OF FUNDS]
<PAGE>
PART B. INFORMATION REQUIRED IN A STATEMENT OF
ADDITIONAL INFORMATION
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ADVANTUS VENTURE FUND, INC.
ADVANTUS INDEX 500 FUND, INC.
December 1, 1997
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the separate Prospectuses
dated December 1, 1997, and should be read in conjunction therewith. A copy
of each Prospectus may be obtained from Advantus Funds, P.O. Box 64132, St.
Paul, Minnesota 55164-0132 (telephone (800) 665-6005).
THIS STATEMENT OF ADDITIONAL INFORMATION MUST BE ACCOMPANIED OR PRECEDED BY A
COPY OF THE CURRENT PROSPECTUS AND ANNUAL REPORT TO SHAREHOLDERS FOR THE
RESPECTIVE FUND.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY. . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Venture Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Index Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . .
DIRECTOR LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . .
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Control and Management of Advantus Capital and Ascend Financial. . . . . . .
Investment Advisory Agreement. . . . . . . . . . . . . . . . . . . . . . . .
Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of Certain Distribution Expenses of the Funds. . . . . . . . . . . .
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE . . . . . . . . . . . . . .
CALCULATION OF PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . . . . .
CAPITAL STOCK AND OWNERSHIP OF SHARES. . . . . . . . . . . . . . . . . . . . .
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET ASSET VALUE AND PUBLIC OFFERING PRICE. . . . . . . . . . . . . . . . . . .
REDUCED SALES CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right of Accumulation-Cumulative Purchase Discount . . . . . . . . . . . . .
Letter of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Combining Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Group Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Waiver of Sales Charges For Certain Sales of Class A Shares. . . . . . . . .
SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Open Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Automatic Investment Plan. . . . . . . . . . . . . . . . . . . . . . . . . .
Group Systematic Investment Plan . . . . . . . . . . . . . . . . . . . . . .
Retirement Plans Offering Tax Benefits . . . . . . . . . . . . . . . . . . .
<PAGE>
Systematic Withdrawal Plans. . . . . . . . . . . . . . . . . . . . . . . . .
Exchange and Telephone Transfer Privilege. . . . . . . . . . . . . . . . . .
REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reinstatement Privilege. . . . . . . . . . . . . . . . . . . . . . . . . . .
DISTRIBUTIONS AND TAX STATUS . . . . . . . . . . . . . . . . . . . . . . . . .
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
APPENDIX A - BOND AND COMMERCIAL PAPER RATINGS . . . . . . . . . . . . . . . .
Bond Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial Paper Ratings . . . . . . . . . . . . . . . . . . . . . . . . . .
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GENERAL INFORMATION AND HISTORY
Advantus Venture Fund, Inc. ("Venture Fund") and Advantus Index 500
Fund, Inc. ("Index Fund"), collectively referred to as the "Funds," are
open-end diversified investment companies, commonly called mutual funds. The
Funds, together with eight other mutual funds which share the same investment
adviser, are members of a family of mutual funds known as the "Advantus
Funds." Each of the Advantus Funds, excluding Advantus Money Market Fund,
Inc., offers more than one class of shares (the "Advantus Multiple Class
Funds"). The Advantus Multiple Class Funds currently offer three classes of
shares (Class A, Class B and Class C). Each class is sold pursuant to
different sales arrangements and bears different expenses. The Funds were
incorporated as Minnesota corporations in July 1996.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and policies of each of the Funds are
summarized on the front page of each Fund's Prospectus and are set forth in
detail in the text of each Fund's Prospectus under "Investment Objectives,
Policies and Risks."
STOCK INDEX FUTURES CONTRACTS
The Index Fund may purchase and sell stock index futures contracts. A
stock index futures contract is a bilateral agreement pursuant to which two
parties agree to take or make delivery of an amount of cash equal to a specified
dollar amount times the difference between the stock index value at the close of
trading of the contract and the price at which the futures contract is
originally struck. No physical delivery of the stocks comprising the stock
index is made; generally contracts are closed out prior to the expiration date
of the contract. Closing out an open futures position is done by taking an
opposite position ("buying" a contract which has previously been "sold," or
"selling" a contract previously purchased) in an identical contract to terminate
the position. Brokerage commissions are incurred when a futures contract is
bought or sold. No price is paid upon entering into futures contracts.
Instead, the Fund is required to deposit an amount of cash or U.S. Treasury
securities, known as "initial margin," in a segregated account established with
the Fund's custodian in the name of the futures broker through which the Fund
entered into the futures contract. Subsequent payments, called "variation
margin," to and from the futures broker are required on a daily basis as the
value of the futures position varies.
Because the value of index futures depends primarily on the value of their
underlying indexes, the performance of broad-based contracts will generally
reflect broad changes in common stock prices. The Index Fund's investments may
be more or less heavily weighted in securities of particular types of issuers,
or securities of issuers in particular industries, than the index underlying its
index futures positions. Therefore, while the Fund's index futures positions
should provide exposure to changes in value of the underlying index (or
protection against declines in their value in the case of hedging transactions),
it is likely that, in the case of hedging transactions, the price changes of the
Fund's index futures positions will not match the price changes of the Fund's
other investments. Other factors that could affect the correlation of the
Fund's index futures positions with its other investments are discussed below.
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FUTURES MARGIN PAYMENTS. Both the purchaser and seller of a futures
contract are required to deposit "initial margin" with a futures broker (known
as a "futures commission merchant," or "FCM"), when the contract is entered
into. Initial margin deposits are equal to a percentage of the contract's
value, as set by the exchange where the contract is traded, and may be
maintained in cash or high quality liquid securities. If the value of either
party's position declines, that party will be required to make additional
"variation margin" payments to settle the change in value on a daily basis. The
party that has a gain may be entitled to receive all or a portion of this
amount. Initial and variation margin payments are similar to good faith
deposits or performance bonds, unlike margin extended by a securities broker,
and initial and variation margin payments do not constitute purchasing
securities on margin for purposes of the Fund's investment limitations. In the
event of the bankruptcy of a FCM that holds margin on behalf of the Fund, the
Fund may be entitled to return of margin owed to it only in proportion to the
amount received by the FCM's other customers. Advantus Capital will attempt to
minimize this risk by monitoring the creditworthiness of the FCMs with which the
Index Fund does business.
LIMITATIONS ON STOCK INDEX FUTURES TRANSACTIONS. The Index Fund has
filed a notice of eligibility for exclusion from the definition of the term
"commodity pool operator" with the Commodity Futures Trading Commission (the
"CFTC") and the National Futures Association, which regulate trading in the
futures markets. Pursuant to regulations under the Commodity Exchange Act, the
Fund may use futures contracts for bona fide hedging purposes within the meaning
of CFTC regulations; PROVIDED, HOWEVER, that, with respect to positions in
futures contracts which are not used for bona fide hedging purposes within the
meaning of CFTC regulations, the aggregate initial margin required to establish
such position will not exceed 5% of the liquidation value of the Fund's
portfolio, after taking into account unrealized profits and unrealized losses on
any such contracts into which the Fund has entered.
Advantus Capital also intends to follow certain other limitations on the
Fund's futures activities. Under normal conditions, the Fund will not enter
into any futures contract if, as a result, the sum of (i) the current value of
assets hedged in the case of strategies involving the sale of securities, and
(ii) the current value of the indexes or other instruments underlying the Fund's
other futures positions would exceed 20% of the Fund's total assets. In
addition, the Fund does not intend to enter into futures contracts that are not
traded on exchanges or boards of trade.
The Index Fund may purchase index futures contracts in order to attempt
to remain fully invested in the stock market. For example, if the Fund had cash
and short-term securities on hand that it wished to invest in common stocks, but
at the same time it wished to maintain a highly liquid position in order to be
prepared to meet redemption requests or other obligations, it could purchase an
index futures contract in order to approximate the activity of the index with
that portion of its portfolio. The Index Fund may also purchase futures
contracts as an alternative to purchasing actual securities. For example, if
the Fund intended to purchase stocks but had not yet done so, it could purchase
a futures contract in order to participate in the index's activity while
deciding on particular investments. This strategy is sometimes known as an
anticipatory hedge. In these strategies the Fund would use futures contracts to
attempt to achieve an overall return -- whether positive or negative -- similar
to the return from the stocks included in the underlying index, while taking
advantage of potentially greater liquidity that futures contracts may offer.
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When the Fund wishes to sell securities, it may sell stock index futures
contracts to hedge against stock market declines until the sale can be
completed. For example, if Advantus Capital anticipated a decline in common
stock prices at a time when the Fund anticipated selling common stocks, it could
sell a futures contract in order to lock in current market prices. If stock
prices subsequently fell, the futures contract's value would be expected to rise
and offset all or a portion of the anticipated loss in the common stocks the
Fund had hedged in anticipation of selling them. Of course, if prices
subsequently rose, the futures contract's value could be expected to fall and
offset all or a portion of any gains from those securities. The success of this
type of strategy depends to a great extent on the degree of correlation between
the index futures contract and the securities hedged.
ASSET COVERAGE FOR FUTURES POSITIONS. The Index Fund will comply with
guidelines established by the Securities and Exchange Commission with respect
to coverage of futures strategies by mutual funds, and if the guidelines so
require will set aside cash and/or appropriate liquid assets (e.g., United
States Government securities, other investment grade debt obligations and
equity securities) in a segregated custodial account in the amount
prescribed. Securities held in a segregated account cannot be sold while the
futures contract is outstanding, unless they are replaced with other suitable
assets. As a result, there is a possibility that segregation of a large
percentage of the Fund's assets could impede portfolio management or the
Fund's ability to meet redemption requests or other current obligations.
CORRELATION OF PRICE CHANGES. As noted above, price changes of the
Fund's futures positions may not be well correlated with price changes of its
other investments because of differences between the underlying index and the
types of securities the Fund invests in. For example, if the Fund sold a broad-
based index futures contract to hedge against a stock market decline while the
Fund completed a sale of specific securities in its portfolio, it is possible
that the price of the securities could move differently from the broad market
average represented by the index futures contract, resulting in an imperfect
hedge which could affect the correlation between the Fund's return and that of
the benchmark index. In the case of an index futures contract purchased by the
Fund either in anticipation of actual stock purchases or in an effort to be
fully invested, failure of the contract to track its index accurately could
hinder the Fund in the achievement of its objective.
Stock index futures prices can also diverge from the prices of their
underlying indexes. Futures prices are affected by such factors as current and
anticipated short-term interest rates, changes in volatility of the underlying
index, and the time remaining until expiration of the contract, which may not
affect security prices the same way. Imperfect correlation may also result from
differing levels of demand in the futures markets and the securities markets,
from structural differences in how futures and securities are traded, or from
imposition of daily price fluctuation limits for futures contract. The Fund may
sell futures contracts with a greater or lesser value than the securities it
wishes to hedge in order to attempt to compensate for differences in
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historical volatility between the futures contract and the securities, although
this may not be successful in all cases.
LIQUIDITY OF FUTURES CONTRACTS. Because futures contracts are generally
settled within a day from the date they are closed out, compared with a
settlement period of three days for some types of securities, the futures
markets can provide liquidity superior to the securities markets in many cases.
Nevertheless, there is no assurance a liquid secondary market will exist for any
particular futures contract at any particular time. In addition, futures
exchanges may establish daily price fluctuation limits for futures contracts,
and may halt trading if a contract's price moves upward or downward more than
the limit in a given day. On volatile trading days when the price fluctuation
limit is reached, it may be impossible for the Fund to enter into new positions
or close out existing positions. Trading in index futures can also be halted if
trading in the underlying index stocks is halted. If the secondary market for a
futures contract is not liquid because of price fluctuation limits or otherwise,
it would prevent prompt liquidation of unfavorable futures positions, and
potentially could require the Fund to continue to hold a futures position until
the delivery date regardless of potential consequences. If the Fund must
continue to hold a futures position, its access to other assets held to cover
the position could also be impaired.
FEDERAL TAX TREATMENT. The Internal Revenue Code of 1986, as amended
(the "Code"), forbids the Fund from earning more than 30% of its gross income
from the sale or other disposition of certain investments, including futures
contracts, which are owned for less than three months. The likelihood of
violating this 30% test is increased by the amount of investing the Fund does in
futures contract. Additionally, the Code requires the Fund to diversify its
investment holdings. The Internal Revenue Service position regarding the
treatment of futures contracts for diversification purposes is not clear, and
the extent to which the Fund may engage in these transactions may be limited by
this requirement. The Code also provides that, with respect to certain futures
contracts held by the Fund at the end of its taxable year, unrealized gain or
loss on such contracts may have to be recognized for tax purposes under a
special system within the Code. The actual gain or loss recognized by the Fund
in an eventual disposition of such contract, however, will be adjusted by the
amount of the gain or loss recognized earlier under the Code's system. See
"Distributions and Tax Status."
OPTIONS
Venture Fund may write covered call options which are traded on national
securities exchanges with respect to common stocks in its portfolio ("covered
options") in an attempt to earn additional current income on its portfolio or to
guard against an expected decline in the price of a security. When the Fund
writes a covered call option, it gives the purchaser of the option the right to
buy the underlying security at the price specified in the option (the "exercise
price") at any time during the option period. If the option expires
unexercised, the Fund realizes income, typically in the form of short-term
capital gain, to the extent of the amount received for the option (the
"premium"). If the option is exercised, a decision over which the Fund has no
control, the Fund must sell the underlying security to the option holder at the
exercise price. By writing a covered option, the Fund foregoes, in exchange for
the premium less the commission ("net premium"), the opportunity to profit
during the option period from an increase in the market value
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of the underlying security above the exercise price. The Fund does not write
call options in an aggregate amount greater than 15% of its net assets.
The Fund purchases call options only to close out a position. When an
option is written on securities in the Fund's portfolio and it appears that the
purchaser of that option is likely to exercise the option and purchase the
underlying security, it may be considered appropriate to avoid liquidating the
Fund's position, or the Fund may wish to extinguish a call option sold by it so
as to be free to sell the underlying security. In such instances the Fund may
purchase a call option on the same security with the same exercise price and
expiration date which had been previously written. Such a purchase would have
the effect of closing out the option which the Fund has written. The Fund
realizes a short-term capital gain if the amount paid to purchase the call
option is less than the premium received for writing a similar option.
Generally, the Fund realizes a short-term loss if the amount paid to purchase
the call option is greater than the premium received for writing the option. If
the underlying security has substantially risen in value, it may be difficult or
expensive to purchase the call option for the closing transaction.
UNITED STATES GOVERNMENT AND AGENCY OBLIGATIONS
The Funds may invest in bills, certificates of indebtedness, notes and
bonds issued or guaranteed as to principal or interest by the United States
Government or by agencies or authorities controlled or supervised by and acting
as instrumentalities of the United States Government established under authority
granted by Congress. Obligations issued or guaranteed by agencies of the United
States Government include, among others, the Federal Farm Credit Bank, the
Federal Housing Administration and the Small Business Administration, and
obligations issued or guaranteed by instrumentalities of the United States
Government include, among others, the Federal Home Loan Mortgage Corporation,
the Federal Land Banks and the U.S. Postal Service. Some of these securities
are supported by the full faith and credit of the U.S. Treasury (e.g.,
Government National Mortgage Association securities), others are supported by
the right of the issuer to borrow from the Treasury (e.g., Federal Farm Credit
Bank securities), while still others are supported only by the credit of the
instrumentality (e.g., Federal National Mortgage Association securities).
Guarantees of principal by agencies or instrumentalities of the United States
Government may be a guarantee of payment at the maturity of the obligation so
that in the event of a default prior to maturity there might not be a market and
thus no means of realizing on the obligation prior to maturity. Guarantees as
to the timely payment of principal and interest do not extend to the value or
yield of these securities nor to the value of the Funds' shares.
DEBT SECURITIES AND DOWN-GRADED INSTRUMENTS
Venture Fund may invest in non-convertible debt securities rated BBB or Baa
or higher by S&P or Moody's, respectively. Venture Fund may also invest in debt
securities convertible into common stock which are rated lower than BBB or Baa
but which are rated at least B- by S&P or B3 by Moody's. (See the Venture Fund
Prospectus for information regarding these securities and the Fund's policy
regarding them.)
The market value of debt securities generally varies in response to
changes in interest rates and the financial condition of each issuer. During
periods of declining interest rates, the value of debt securities generally
increases. Conversely, during periods of rising interest rates, the value of
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such securities generally declines. These changes in market value will be
reflected in the Fund's net asset value.
Venture Fund may, however, acquire debt securities which, after
acquisition, are down-graded by the rating agencies to a rating which, in the
case of non-convertible debt, is lower than BBB or Baa by S&P or Moody's,
respectively, or which, in the case of convertible debt, is lower than B- or
B3 by S&P or Moody's, respectively. In such an event it is the Fund's
general policy to dispose of such down-graded securities except when, in the
judgment of the Fund's investment adviser, it is to the Fund's advantage to
continue to hold such securities. In no event, however, will the Fund's
aggregate holdings in non-convertible securities rated lower than BBB or Baa
and convertible securities rated lower than B- or B3 exceed 5% of its net
assets.
Low rated (i.e. below BBB) and unrated debt securities generally involve
greater volatility of price and risk of principal and income, including the
possibility of default by, or bankruptcy of, the issuers of the securities. In
addition, the markets in which low rated and unrated debt securities are traded
are more limited than those in which higher rated securities are traded. The
existence of limited markets for particular securities may diminish the Fund's
ability to sell the securities at fair value either to meet redemption requests
or to respond to changes in the economy or in the financial markets and could
adversely affect and cause fluctuations in the daily net asset value of the
Fund's shares.
Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of low rated debt
securities, especially in a thinly traded market. Analysis of the
creditworthiness of issuers of low rated debt securities may be more complex
than for issuers of higher rated securities, and the ability of the Fund to
achieve its investment objective may, to the extent of investment in low rated
debt securities, be more dependent upon such creditworthiness analysis than
would be the case if the Fund were investing in higher rated securities.
Low rated debt securities may be more susceptible to real or perceived
adverse economic and competitive industry conditions than investment grade
securities. The prices of low rated debt securities have been found to be less
sensitive to interest rate changes than higher rated investments, but more
sensitive to adverse economic downturns or individual corporate developments. A
projection of an economic downturn or of a period of rising interest rates, for
example, could cause a decline in low rated debt securities prices because the
advent of a recession could lessen the ability of a highly leveraged company to
make principal and interest payments on its debt securities. If the issuer of
low rated debt securities defaults, the Fund may incur additional expenses to
seek recovery. The low rated bond market is relatively new, and many of the
outstanding low rated bonds have not endured a major business recession.
SHORT SALES AGAINST THE BOX
Each Fund may sell securities "short against the box." Whereas a short
sale is the sale of a security the Fund does not own, a short sale is
"against the box" if, at all times during which the short position is open,
the Fund owns at least an equal amount of the securities sold short or other
securities convertible into or exchangeable without further consideration for
securities of the same issue as the securities sold short. Short sales
against the box are typically used by sophisticated investors to defer
recognition of capital gains or losses. The Funds have no present intention
to sell securities short in this fashion.
LOANS OF PORTFOLIO SECURITIES
Index 500 Fund for the purpose of realizing additional income, may make
secured loans of portfolio securities amounting to not more than 20% of its
total assets. Securities loans are made to broker-dealers or financial
institutions pursuant to agreements requiring that the loans be continuously
secured by collateral at least equal at all times to the value of the securities
lent. The collateral received will consist of cash, letters of credit or
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. While the securities are being lent, the Fund will continue
to receive the equivalent of the interest or dividends paid by the issuer on the
securities, as well as interest on the investment of the collateral or a fee
from the borrower. Although the Fund does not expect to pay commissions or
other front-end fees (including finders fees) in connection with loans of
securities (but may in some cases do so), a portion of the additional income
realized will be shared with the Fund's custodian for arranging and
administering such loans. The Fund has a right to call each loan and obtain the
securities on five business days' notice. The Fund will not have the right to
vote securities while they are being lent, but it will call a loan in
anticipation of any important vote. The risks in lending portfolio securities,
as with other extensions of secured credit, consist of possible delay in
receiving additional collateral or in the recovery of the securities or possible
loss of rights in the collateral should the borrower fail financially. Loans
will only be made to firms deemed by the Fund's investment adviser to be of good
standing and to have sufficient financial responsibility, and will not be made
unless, in the judgment of the Fund's investment adviser, the consideration to
be earned from such loans would justify the risk. The creditworthiness of
entities to which the Fund makes loans of portfolio securities is monitored by
the Fund's investment adviser throughout the term of each loan. The Fund has
no present intention to make loans of portfolio securities.
INVESTMENT RESTRICTIONS
Each of the Funds is "diversified" as defined in the Investment Company
Act of 1940. This means that at least 75% of the value of the Fund's total
assets is represented by cash and cash items, government securities, securities
of other investment companies, and securities of other issuers, which for
purposes of this calculation, are limited in respect of any one issuer to an
amount not greater in value than 5% of the Fund's total assets and to not more
than 10% of the outstanding voting securities of such issuer.
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Each Fund is also subject to certain "fundamental" investment
restrictions, which may not be changed without the vote of a "majority" of the
Fund's outstanding shares. As used in the Prospectus and this Statement of
Additional Information, "majority" means the lesser of (i) 67% of a Fund's
outstanding shares present at a meeting of the holders if more than 50% of the
outstanding shares are present in person or by proxy or (ii) more than 50% of a
Fund's outstanding shares. An investment restriction which is not fundamental
may be changed by vote of the Board of Directors without further shareholder
approval. Except as otherwise noted, each of the investment restrictions below
is fundamental.
VENTURE FUND (The investment restrictions numbered 1 through 8 below are
fundamental. Restrictions numbered 9 through 15 are not fundamental and may
be changed by the Fund's Board of Directors.)
Venture Fund will NOT:
(1) Purchase any security if, as a result, 25% or more of the
Fund's total assets would be invested in the securities of issuers
conducting their principal business activities in a single industry;
(2) Purchase securities on margin (but it may obtain such short-
term credits as may be necessary for the clearance of purchases and
sales or securities); or make short sales except short sales against the
box where it owns the securities sold or, by virtue of ownership of
other securities, it has the right to obtain, without payment of further
consideration, securities equivalent in kind and amount to those sold;
(3) Borrow money, except from banks and only as a temporary
measure for extraordinary or emergency purposes and not in excess of 5%
of its net assets;
(4) Mortgage, pledge, hypothecate, or in any manner transfer, as
security for indebtedness, any assets of the Fund;
(5) Make loans, except by purchase of bonds, debentures,
commercial paper, certificates of deposit, corporate notes and similar
evidences of indebtedness, which are a part of an issue to the public or
to financial institutions, and except loans of portfolio securities if,
immediately after making such loan, the total amount of portfolio
securities loaned does not exceed 20% of the market value of the Fund's
total assets;
(6) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts, real estate, real estate limited partnership
interests, or interests in real estate which are not readily marketable,
commodities or commodity contracts, including futures contracts. (This
does not prevent the Fund from purchasing securities of companies
investing in the foregoing.);
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(7) Act as an underwriter of securities, except to the extent the
Fund may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities;
(8) Write put or call options, except covered call options which
are traded on national securities exchanges with respect to common stocks
in its portfolio, in an aggregate amount not greater than 15% of its net
assets;
(9) Purchase options, except call options in order to close out a
position;
(10) Purchase or retain securities of any company if officers and
directors of the Fund or of its investment adviser who individually own
more than 1/2 of 1% of the shares or securities of that company, together
own more than 5%;
(11) Make investments for the purpose of exercising control or
management;
(12) Participate on a joint or joint and several basis in any
trading account in securities;
(13) Invest in the securities of other investment companies with an
aggregate value in excess of 5% of the Funds total assets, except
securities acquired as a result of a merger, consolidation or
acquisition of assets;
(14) Purchase or sell any securities other than Fund shares from or
to its investment adviser or any officer or director of the Fund or its
investment adviser; or
(15) Invest more than a total of 10% of the Fund's net assets in
securities or other assets, including repurchase agreements with a
maturity of over seven days, which are illiquid or securities of
businesses (including predecessors) less than three years old; provided
that investments in securities of businesses (including predecessors)
less than three years old will in no event exceed in the aggregate more
than 5% of the Fund's net assets.
INDEX FUND (The investment restrictions numbered 1 through 8 below are
fundamental. Restrictions numbered 9 through 15 are not fundamental and may be
changed by the Fund's Board of Directors.)
Index Fund will NOT:
(1) Purchase any security if, as a result, 25% or more of the
Fund's total assets would be invested in the securities of issuers
conducting their principal business activities in a single industry
(provided, however, that the Fund may invest more than 25% of its assets
in a single industry if the S&P 500 is so concentrated);
(2) Purchase securities on margin , although it may obtain such
short-term credits as may be necessary for the clearance of purchases
and sales or securities (for purposes of this restriction, the deposit
or payment of initial or variation margin in connection with futures
contracts will not be deemed to be a purchase of securities on margin);
or make
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short sales except short sales against the box where it owns the
securities sold or, by virtue of ownership of other securities, it has
the right to obtain, without payment of further consideration,
securities equivalent in kind and amount to those sold;
(3) Borrow money, except from banks and only as a temporary
measure for extraordinary or emergency purposes and not in excess of 5%
of its net assets;
(4) Mortgage, pledge, hypothecate, or in any manner transfer, as
security for indebtedness, any assets of the Fund;
(5) Make loans, except by purchase of bonds, debentures,
commercial paper, certificates of deposit, corporate notes and similar
evidences of indebtedness, which are a part of an issue to the public or
to financial institutions, and except loans of portfolio securities if,
immediately after making such loan, the total amount of portfolio
securities loaned does not exceed 20% of the market value of the Fund's
total assets;
(6) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts, real estate, real estate limited partnership
interests, or interests in real estate which are not readily marketable,
commodities or commodity contracts, except that it may invest in stock
index futures contracts. (This does not prevent the Fund from
purchasing securities of companies investing in the foregoing.);
(7) Act as an underwriter of securities, except to the extent the
Fund may be deemed to be an underwriter, under the federal securities
laws, in connection with the disposition of portfolio securities;
(8) Write put or call options;
(9) Purchase put or call options;
(10) Purchase or retain securities of any company if officers and
directors of the Fund or of its investment adviser who individually own
more than 1/2 of 1% of the shares or securities of that company, together
own more than 5%;
(11) Make investments for the purpose of exercising control or
management;
(12) Participate on a joint or joint and several basis in any
trading account in securities;
(13) Invest in the securities of other investment companies with an
aggregate value in excess of 5% of the Funds total assets, except
securities acquired as a result of a merger, consolidation or
acquisition of assets;
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(14) Purchase or sell any securities other than Fund shares from or
to its investment adviser or any officer or director of the Fund or its
investment adviser; or
(15) Invest more than a total of 10% of the Fund's net assets in
securities or other assets, including repurchase agreements with a
maturity of over seven days, which are illiquid or securities of
businesses (including predecessors) less than three years old; provided
that investments in securities of businesses (including predecessors)
less than three years old will in no event exceed in the aggregate more
than 5% of the Fund's net assets.
With respect to each of the Funds, any investment policy set forth under
"Investment Objectives, Policies and Risks" in the Prospectus, or any
restriction set forth above which involves a maximum percentage of securities or
assets shall not be considered to be violated unless an excess over the
percentage occurs immediately after an acquisition of securities or utilization
of assets and results therefrom, or unless the Investment Company Act of 1940
provides otherwise.
PORTFOLIO TURNOVER
Portfolio turnover is the ratio of the lesser of annual purchases or
sales of portfolio securities to the average monthly value of portfolio
securities, not including short-term securities. A 100% portfolio turnover rate
would occur, for example, if the lesser of the value of purchases or sales of
portfolio securities for a particular year were equal to the average monthly
value of the portfolio securities owned during such year.
Venture Fund makes changes in its portfolio securities which are
considered advisable in light of market conditions. Frequent changes may
result in higher brokerage and other costs for the Fund. Portfolio turnover
rates may vary greatly from year to year and within a particular year and may
also be affected by cash requirements for redemptions of Fund shares.
Venture Fund does not emphasize short-term trading profits. For the fiscal
period ended July 31, 1997, the Fund's portfolio turnover rate was 39.6%.
Index Fund generally seeks to invest for the long term, but reserves
the right to sell securities irrespective of how long they have been held.
However, because of the "passive" investment management approach of the Fund,
the Fund's portfolio turnover rate is expected to be generally lower than the
rate for most other investment companies. Ordinarily, securities will be
sold by Index Fund only to reflect certain administrative changes in the S&P
500 (including mergers or changes in its composition) or to accommodate cash
flows into and out of the Fund while maintaining the similarity of the Fund
to the S&P 500. For the fiscal period ended July 31, 1997, the Fund's
portfolio turnover rate was 5.84%.
DIRECTORS AND EXECUTIVE OFFICERS
The names, addresses, principal occupations, and other affiliations of
directors and executive officers of each of the Funds are given below:
10
<PAGE>
<TABLE>
<CAPTION>
Position with Principal Occupation and other
Name and Address the Funds Affiliations (past 5 years)
- ---------------- --------- ---------------------------
<S> <C> <C>
Paul H. Gooding* President Vice President and Treasurer of
Advantus Capital and Director Minnesota Mutual; President Director
Management, Inc. of Advantus Capital; President,
400 Robert Street North Treasurer and Director of MIMLIC
St. Paul, Minnesota 55101 Management
Frederick P. Feuerherm* Vice President, Second Vice President of Minnesota
The Minnesota Mutual Treasurer Mutual; Vice President and Assistant
Life Insurance Company and Director Secretary of MIMLIC Management
400 Robert Street North
St. Paul, Minnesota 55101
Ralph D. Ebbott Director Retired, Vice President and Treasurer
409 Birchwood Avenue of Minnesota Mining and Manufacturing
White Bear Lake, Company (tape, adhesive, photographic,
Minnesota 55110 and electrical products) through June
1989
Charles E. Arner Director Retired, Vice Chairman of The First
E-1218 First National National Bank of Saint Paul from
Bank Building November 1983 through June 1984;
332 Minnesota Street Chairman and Chief Executive Officer
St. Paul, Minnesota 55101 of The First National Bank of Saint Paul
from October 1980 through November
1983
Ellen S. Berscheid Director Regents' Professor of Psychology at the
University of Minnesota University of Minnesota
N309 Elliott Hall
Minneapolis, Minnesota 55455
Michael J. Radmer Secretary Partner with the law firm of
Dorsey & Whitney LLP Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402
</TABLE>
- -------------------------
* Denotes directors of the Funds who are "interested persons" (as defined under
the Investment Company Act of 1940) of the Funds.
- -------------------------
11
<PAGE>
Legal fees and expenses are paid to the law firm of which Michael J.
Radmer is a partner. No compensation is paid by either of the Funds to any of
its officers or directors who is affiliated with Advantus Capital or MIMLIC
Management.
Each director of the Funds who is not affiliated with Advantus Capital or
MIMLIC Management is also a director of the other ten investment companies of
which Advantus Capital is the investment adviser (12 investment companies in
total -- the "Fund Complex"). As of the date hereof, such directors receive
compensation in connection with all such investment companies which, in the
aggregate, is equal to $8,000 per year and $2,000 per meeting attended (and
reimbursement of travel expenses to attend directors' meetings). The portion
of such compensation borne by any Fund is a PRO RATA portion based on the
ratio that such Fund's total net assets bears to the total net assets of the
Fund Complex. During the fiscal period ended July 31, 1997, each Director
not affiliated with Advantus Capital or MIMLIC Management was compensated by
the Funds in accordance with the following table:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Estimated From Funds and
Compensation Accrued as Annual Fund Complex
from the Part of Fund Benefits Upon Paid to
Name of Director Funds(1) Expenses Retirement Directors
- ---------------- ------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Charles E. Arner $98.57 n/a n/a $13,000
Ellen S. Berscheid $98.57 n/a n/a $13,000
Ralph D. Ebbott $98.57 n/a n/a $13,000
</TABLE>
(1) During the fiscal period ended July 31, 1997, each Director not affiliated
with Advantus Capital or MIMLIC Management received $77.75 from Venture
Fund and $20.82 from Index Fund.
As of July 31, 1997, the directors and executive officers of the Funds did not
own any shares of the Funds.
DIRECTOR LIABILITY
Under Minnesota law, the Board of Directors of each Fund owes certain
fiduciary duties to the Fund and to its shareholders. Minnesota law provides
that a director "shall discharge the duties of the position of director in good
faith, in a manner the director reasonably believes to be in the best interest
of the corporation, and with the care an ordinarily prudent person in a like
position would exercise under similar circumstances." Fiduciary duties of a
director of a Minnesota corporation include, therefore, both a duty of "loyalty"
(to act in good faith and act in a manner reasonably believed to be in the best
interests of the corporation) and a duty of "care" (to act with the care an
ordinarily prudent person in a like position would exercise under similar
circumstances). Minnesota law also authorizes corporations to eliminate or
limit the personal liability of a director to the corporation or its
shareholders for monetary damages for breach of the fiduciary duty of "care."
Minnesota law does not, however, permit a corporation to eliminate or limit the
liability of a director (i) for any breach of the directors' duty of "loyalty"
to the corporation or its shareholders, (ii) for acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) for authorizing a dividend, stock repurchase or redemption or other
distribution in violation of Minnesota law or for violation of certain
provisions of Minnesota securities laws, or (iv) for any transaction from which
the director derived an improper personal benefit. The Articles of
Incorporation of each Fund limit the liability of directors to the fullest
extent permitted by Minnesota statutes, except to the extent that such liability
cannot be limited as provided in the Investment Company Act of 1940 (which Act
prohibits any provisions which purport to limit the liability of directors
arising from such directors' willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of their role as
directors).
Minnesota law does not eliminate the duty of "care" imposed upon a
director. It only authorizes a corporation to eliminate monetary liability for
violations of that duty. Minnesota law, further, does not permit elimination or
limitation of liability of "officers" to the corporation for breach of their
duties as officers (including the liability of directors who serve as officers
for breach of their duties as officers). Minnesota law does not permit
elimination or limitation of the availability of equitable relief, such as
injunctive or rescissionary relief. Further, Minnesota law
12
<PAGE>
does not permit elimination or limitation of a director's liability under the
Securities Act of 1933 or the Securities Exchange Act of 1934, and it is
uncertain whether and to what extent the elimination of monetary liability would
extend to violations of duties imposed on directors by the Investment Company
Act of 1940 and the rules and regulations adopted under such Act.
INVESTMENT ADVISORY AND OTHER SERVICES
GENERAL
Advantus Capital Management, Inc. ("Advantus Capital") has been the
investment adviser and manager of each of the Funds since its inception.
Advantus Capital is a wholly-owned subsidiary of MIMLIC Asset Management
Company ("MIMLIC Management"). Ascend Financial Services, Inc. ("Ascend
Financial") acts as the Funds' underwriter. Both Advantus Capital and Ascend
Financial act as such pursuant to written agreements that will be
periodically considered for approval by the directors or shareholders of the
Fund. The address of both Advantus Capital and Ascend Financial is 400
Robert Street North, St. Paul, Minnesota 55101.
CONTROL AND MANAGEMENT OF ADVANTUS CAPITAL AND ASCEND FINANCIAL
Advantus Capital was incorporated in Minnesota in June, 1994, and is a
wholly-owned subsidiary of MIMLIC Management. MIMLIC Management is a
subsidiary of The Minnesota Mutual Life Insurance Company ("Minnesota
Mutual"), which was organized in 1880, and has assets of more than $13
billion. Ascend Financial is also a subsidiary of MIMLIC Management. Paul
H. Gooding, President and a Director of each of the Funds, is President and
Director of Advantus Capital, and President, Treasurer and a Director of
MIMLIC Management. Frederick P. Feuerherm, Vice President, Treasurer and a
Director of each of the Funds, is a Vice President and Assistant Secretary of
MIMLIC Management. James P. Tatera, Senior Vice President, Treasurer and
Director of Advantus Capital, is also Vice President of MIMLIC Management.
Richard W. Worthing is a Vice President and Head of Equities with MIMLIC
Management.
INVESTMENT ADVISORY AGREEMENT
Advantus Capital acts as investment adviser and manager of the Funds under
Investment Advisory Agreements (the "Advisory Agreements") dated July 17, 1996
for each Fund, each of which became effective on September 4, 1996, when the
Funds' initial shareholder approved the Advisory Agreements. The Advisory
Agreements were last approved by the Board of Directors of each Fund (including
a majority of the directors who are not parties to the contract, or interested
persons of any such party) on January 14, 1997. The Advisory Agreements will
terminate automatically in the event of their assignment. In addition, each
Advisory Agreement is terminable at any time, without penalty, by the Board of
Directors of the respective Fund or by vote of a majority of the Fund's
outstanding voting securities on not more than 60 days' written notice to
Advantus Capital, and by Advantus Capital on 60 days' written notice to the
Fund. Unless sooner terminated, each Advisory Agreement shall continue in
effect for more than two years after its execution only so long as such
continuance is specifically approved at least annually by either the Board of
Directors of the respective Fund or by a vote of a majority of the outstanding
voting securities, provided that in either event such continuance is also
approved by the vote of a majority of the directors who are not parties to the
Advisory Agreement, or
13
<PAGE>
interested persons of such parties, cast in person at a meeting called for the
purpose of voting on such approval.
Pursuant to the Advisory Agreements each Fund pays Advantus Capital an
advisory fee equal on an annual basis to a percentage of that Fund's average
daily net assets as set forth in the following table:
Advisory Fee as Percentage
Fund of Average Net Assets
---- ---------------------
Venture Fund .80%
Index Fund .34%
The fees paid by the Funds for investment advisory services during the
fiscal period ended July 31, 1997 (before Advantus Capital's absorption of
certain expenses, described below) were as follows:
Fund 1997
---- ----
Venture Fund $125,176
Index Fund $13,820
For this fee, Advantus Capital acts as investment adviser and manager
for the Funds, and in the case of Venture Fund pays the Fund's transfer
agent, dividend disbursing agent and redemption agent expenses. Index Fund
pays its own transfer agent, dividend disbursing agent, and redemption agent
expenses. The Funds have engaged Minnesota Mutual to act as their transfer
agent, dividend disbursing agent, and redemption agent. The advisory fees
paid by the Funds are partially offset by Advantus Capital's payment of
certain expenses, such as the transfer agent, dividend disbursing agent and
redemption agent expenses, which expenses are not customarily paid for by a
mutual fund's investment adviser. Subject to a minimum annual fee of
$12,000, Minnesota Mutual provides transfer agent services to Index Fund at
an annual cost of $25 per shareholder account. During the fiscal period
ended July 31, 1997, Index Fund paid Minnesota Mutual $6,000 for transfer
agent services. In addition, separate from the investment advisory
agreement, each of the Funds has entered into an agreement with Minnesota
Mutual under which Minnesota Mutual provides accounting, legal and other
administrative services to the Funds. Minnesota Mutual currently provides
such services to the Funds at a monthly cost of $3,600 per Fund. During the
fiscal period ended July 31, 1997, each Fund paid Minnesota Mutual the
following amounts for such services:
Fund Amount
---- ------
Venture $39,600
Index $39,600
Under the Advisory Agreements, Advantus Capital furnishes the Funds
office space and all necessary office facilities, equipment and personnel for
servicing the investments of the Funds, and pays the salaries and fees of all
officers and directors of the Funds who are affiliated with Advantus Capital.
In addition, except to the extent that Ascend Financial receives Rule 12b-1
distribution fees (see "Payment of Certain Distribution Expenses of the
Funds" below), Ascend Financial bears all promotional expenses in connection
with the distribution of the Funds' shares, including paying for prospectuses
and statements of additional information for new shareholders, and
shareholder reports for new shareholders, and the costs of sales literature.
The Funds pay all other expenses not so expressly assumed.
During the fiscal period ended July 31, 1997, Advantus Capital
voluntarily absorbed certain expenses of the Funds (which do not include
certain Rule 12b-1 fees waived by Ascend Financial) as set forth below:
Fund 1997
---- ----
Venture $7,397
Index $70,164
DISTRIBUTION AGREEMENT
The Board of Directors of each Fund, on January 14, 1997, including a
majority of the directors who are not parties to the contract, or interested
persons of any such party, last approved the respective Fund's Distribution
Agreement with Ascend Financial (the "Distribution Agreements"), each dated
July 17, 1996.
During the fiscal period ended July 31, 1997, the commissions received
by Ascend Financial under the Distribution Agreements with respect to shares
of all classes were as follows:
Fund 1997
---- ----
Venture $47,978
Index $73,332
During the same period Ascend Financial retained from these
commissions the following amounts:
Fund 1997
---- ----
Venture $15,344
Index $16,544
The remainder of these commissions was paid to registered
representatives of Ascend Financial or to broker-dealers who have selling
agreements with Ascend Financial.
14
<PAGE>
Each Distribution Agreement may be terminated by the respective Fund
or Ascend Financial at any time by the giving of 60 days' written notice, and
terminates automatically in the event of its assignment. Unless sooner
terminated, the Distribution Agreement for the respective Fund shall continue
in effect for more than two years after its execution only so long as such
continuance is specifically approved at least annually by either the Board of
Directors of the Fund or by a vote of a majority of the outstanding voting
securities, provided that in either event such continuance is also approved
by the vote of a majority of the directors who are not parties to the
Distribution Agreement, or interested persons of such parties, cast in person
at a meeting called for the purpose of voting on such approval.
The Distribution Agreements require Ascend Financial to pay all
advertising and promotional expenses in connection with the distribution of
the Funds' shares including paying for Prospectuses and Statements of
Additional Information (if any) for new shareholders, shareholder reports for
new shareholders, and the costs of sales literature.
In the Distribution Agreements, Ascend Financial undertakes to
indemnify the Funds against all costs of litigation and other legal
proceedings, and against any liability incurred by or imposed upon the Funds
in any way arising out of or in connection with the sale or distribution of
the Funds' shares, except to the extent that such liability is the result of
information which was obtainable by Ascend Financial Sales only from persons
affiliated with the Funds but not with Ascend Financial.
PAYMENT OF CERTAIN DISTRIBUTION EXPENSES OF THE FUNDS
Each of the Funds has adopted separate Plans of Distribution
applicable to Class A shares, Class B shares 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. Each of the
Funds, pursuant to its Plans of Distribution, pays fees to Ascend Financial
which equal, on an annual basis, a percentage of the Fund's average daily net
assets attributable to Class A shares, Class B shares and Class C shares,
respectively, as set forth in the following table:
Rule 12b-1 Fee as Percentage
of Average Daily Net Assets Attributable to
Fund Class A Shares Class B Shares Class C Shares
- ---- -------------- -------------- --------------
Venture Fund .30% 1.00% 1.00%
Index Fund .30% 1.00% 1.00%
Such fees are used for distribution-related services for all three classes
and for servicing of shareholder accounts in connection with Class B and C
shares.
All of the Rule 12b-1 fees payable by the Funds and attributable to
Class A shares of the Funds, and a portion of the Rule 12b-1 fees payable
with respect to Class B and Class C shares equal to .75% of the average daily
net assets attributable to such Class B and Class C shares, constitute
distribution fees designed to compensate Ascend Financial for advertising,
marketing and distributing the shares of the Funds.
15
<PAGE>
The distribution fees may be used by Ascend Financial for the purpose
of financing any activity which is primarily intended to result in the sale
of shares of the particular Fund. For example, such distribution fee may be
used by Ascend Financial: (a) to compensate broker-dealers, including Ascend
Financial and its registered representatives, for their sale of a Fund's
shares, including the implementation of the programs described below with
respect to broker-dealers, banks, and other financial institutions; and (b)
to pay other advertising and promotional expenses in connection with the
distribution of a Fund's shares. These advertising and promotional expenses
include, by way of example but not by way of limitation, costs of
prospectuses for other than current shareholders; preparation and
distribution of sales literature; advertising of any type; expenses of branch
offices (including overhead expenses) provided jointly by Ascend Financial
and any affiliate thereof; and compensation paid to and expenses incurred by
officers, employees or representatives of Ascend Financial or of other
broker-dealers, banks, or financial institutions.
A portion of the Rule 12b-1 fee payable with respect to Class B and
Class C shares of each of the Funds, equal to .25% of the average daily net
assets attributable to such Class B and Class C shares, constitutes a
shareholder servicing fee designed to compensate Ascend Financial for the
provision of certain services to the holders of Class B and Class C shares.
Amounts expended by the Funds under the Plans are expected to be used
for the implementation by Ascend Financial of a dealer incentive program.
Pursuant to the program, Ascend Financial may provide compensation to
investment dealers for the provision of distribution assistance in connection
with the sale of the Funds' shares to such dealers' customers and for the
provision of administrative support services to customers who directly or
beneficially own shares of the Funds. The distribution assistance and
administrative support services rendered by dealers may include, but are not
limited to, the following: distributing sales literature; answering routine
customer inquiries concerning the Funds; assisting customers in changing
dividend options, account designation and addresses, and in enrolling into
the pre-authorized check plan or systematic withdrawal plan; assisting in the
establishment and maintenance of customer accounts and records and in the
processing of purchase and redemption transactions; investing dividends and
any capital gains distributions automatically in the Funds' shares and
providing such other information and services as the Funds or the customer
may reasonably request. Such fees for servicing customer accounts would be
in addition to the portion of the sales charge received or to be received by
dealers which sell shares of the Funds.
Ascend Financial may also provide compensation to certain institutions
such as banks ("Service Organizations") which have purchased shares of the
Funds for the accounts of their clients, or which have made the Funds' shares
available for purchase by their clients, and/or which provide continuing
service to such clients. The Glass-Steagall Act and other applicable laws,
among other things, prohibit certain banks from engaging in the business of
underwriting securities. In such circumstances, Ascend Financial, if so
requested, will engage such banks as Service Organizations only to perform
administrative and shareholder servicing functions, but at the same fees and
other terms applicable to dealers. State law may, however, differ from the
interpretation of the Glass-Steagall Act expressed and banks and other
financial institutions may therefore be required to register as securities
dealers pursuant to state law. If a bank were prohibited from acting as a
Service Organization, its shareholder clients would be permitted to remain
shareholders of the Funds and alternative means for continuing servicing of
such
16
<PAGE>
shareholders would be sought. In such event changes in the operation of the
Funds might occur and a shareholder serviced by such bank might no longer be
able to avail itself of any automatic investment or other services then being
provided by the bank. It is not expected that shareholders would suffer any
adverse financial consequences as a result of any of these occurrences.
In addition, the Plan contains, among other things, provisions complying
with the requirements of Rule 12b-1 discussed below. Rule 12b-1(b) provides
that any payments made by an investment company in connection with the
distribution of its shares may only be made pursuant to a written plan
describing all material aspects of the proposed financing of distribution and
also requires that all agreements with any person relating to implementation of
the plan must be in writing. In addition, Rule 12b-1(b)(2) requires that such
plan, together with any related agreements, be approved by a vote of the board
of directors and of the directors who are not interested persons of the
investment company and have no direct or indirect financial interest in the
operation of the plan or in any agreements related to the plan, cast in person
at a meeting called for the purpose of voting on such plan or agreements. Rule
12b-1(b)(3) requires that the plan or agreement provide, in substance: (1) that
it shall continue in effect for a period of more than one year from the date of
its execution or adoption only so long as such continuance is specifically
approved at least annually in the manner described in paragraph (b)(2) of Rule
12b-1; (2) that any person authorized to direct the disposition of monies paid
or payable by the investment company pursuant to the plan or any related
agreement shall provide to the investment company's board of directors, and the
directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made; and (3) in the
case of a plan, that it may be terminated at any time by vote of a majority of
the members of the board of directors of the investment company who are not
interested persons of the investment company and have no direct or indirect
financial interest in the operation of the plan or in any agreements related to
the plan or by vote of a majority of the outstanding voting securities of the
investment company. Rule 12b-1(b)(4) requires that such plans may not be
amended to increase materially the amount to be spent for distribution without
shareholder approval and that all material amendments of the plan must be
approved in the manner described in paragraph (b)(2) of Rule 12b-1. Rule 12b-
1(c) provides that the investment company may rely upon Rule 12b-1(b) only if
selection and nomination of the investment company's disinterested directors are
committed to the discretion of such disinterested directors. Rule 12b-1(e)
provides that the investment company may implement or continue a plan pursuant
to Rule 12b-1(b) only if the directors who vote to approve such implementation
or continuation conclude, in the exercise of reasonable business judgment and in
light of their fiduciary duties under state law, and under Sections 36(a) and
(b) of the Investment Company Act of 1940, that there is a reasonable likelihood
that the plan will benefit the investment company and its shareholders. At the
Board of Directors meeting held January 14, 1997, the directors of the Funds so
concluded.
During the fiscal period ended July 31, 1997, each Fund made payments
under its Plans of Distribution applicable to Class A, Class B and Class C
Shares as follows (distribution fees waived by Ascend Financial, if any, are
shown in parentheses):
Fund Class A Class B Class C
---- ------- ------- -------
Venture $40,015 (26,677) $1,877 $425
Index $9,469 (6,313) $3,691 $640
The Plans of Distribution could be construed as "compensation plans"
because Ascend Financial is paid a fixed fee and is given discretion
concerning what expenses are payable under the Plans. Under a compensation
plan, the fee to the distributor is not directly tied to distribution
expenses actually incurred by the distributor, thereby permitting the
distributor to receive a profit if amounts received exceed expenses. Ascend
Financial may spend more or less for the distribution and promotion of the
Funds' shares than it receives as distribution fees pursuant to the Plans.
17
<PAGE>
However, to the extent fees received exceed expenses, including indirect
expense such as overhead, Ascend Financial could be said to have received a
profit.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
In a number of security transactions, it is possible for the Funds to
deal in the over-the-counter security markets (including the so-called "third
market" which is the "over-the-counter" market for securities listed on the
New York Stock Exchange) without the payment of brokerage commissions but at
net prices including a spread or markup; the Funds trade in this manner
whenever the net price appears advantageous.
Advantus Capital selects and (where applicable) negotiates commissions
with the brokers who execute the transactions for the Funds. During the
fiscal period ended July 31, 1997, brokerage commissions paid were:
Fund 1997
---- ----
Venture $127,375.81
Index $6,616.27
The primary criteria for the selection of a broker is the ability of
the broker, in the opinion of Advantus Capital, to secure prompt execution of
the transactions on favorable terms, including the reasonableness of the
commission and considering the state of the market at the time. In selecting
a broker, Advantus Capital considers whether such broker provides brokerage
and research services (as defined in the Securities Exchange Act of 1934),
and generally the Funds pay higher than the lowest commission rates
available. Advantus Capital may direct Fund transactions to brokers who
furnish research services to Advantus Capital. Such research services
include advice, both directly and in writing, as to the value of securities,
the advisability of investing in, purchasing or selling securities, and the
availability of securities or purchasers or sellers of securities, as well as
analyses and reports concerning issues, industries, securities, economic
factors and trends, portfolio strategy, and the performance of accounts. By
allocating brokerage business in order to obtain research services for
Advantus Capital, the Funds enable Advantus Capital to supplement its own
investment research activities and allows Advantus Capital to obtain the
views and information of individuals and research staffs of many different
securities research firms prior to making investment decisions for the Funds.
To the extent such commissions are directed to these other brokers who
furnish research services to Advantus Capital, Advantus Capital receives a
benefit, not capable of evaluation in dollar amounts, without providing any
direct monetary benefit to the Funds from these commissions.
There is no formula for the allocation by Advantus Capital of the
Funds' brokerage business to any broker-dealer for brokerage and research
services. However, Advantus Capital will authorize a Fund to pay an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker would have charged only if Advantus Capital
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker viewed in terms of either that particular transaction or Advantus
Capital's overall responsibilities with respect to the accounts as to which
it exercises investment discretion. During the fiscal period ended July 31,
1997, Venture Fund directed transactions to brokers because of research
services they provided, and paid commissions in connection with such
transactions, in the aggregate amounts set forth below:
Aggregate Transactions Commissions Paid On
Fund Directed for Research Directed Transactions
---- ---------------------- ---------------------
Venture $25,540,952.75 $82,082.06
No brokerage is allocated for the sale of Fund shares. Advantus Capital
believes that most research services obtained by it generally benefit one or
more of the investment companies which it manages and also benefit accounts
which it manages. Normally research services obtained through managed funds and
managed accounts investing in common stocks would primarily
18
<PAGE>
benefit such funds and accounts; similarly, services obtained from transactions
in fixed income securities would be of greater benefit to the managed funds and
managed accounts investing in debt securities.
The same security may be suitable for one or more of the Funds and the
other funds or private accounts managed by Advantus Capital or its affiliates.
If and when two or more funds or accounts simultaneously purchase or sell the
same security, the transactions will be allocated as to price and amount in
accordance with arrangements equitable to each fund or account. The
simultaneous purchase or sale of the same securities by one Fund and other Funds
or accounts may have a detrimental effect on that Fund, as this may affect the
price paid or received by the Fund or the size of the position obtainable by the
Fund.
The Funds will not execute portfolio transactions through any affiliate,
unless such transactions, including the frequency thereof, the receipt of
commissions payable in connection therewith and the selection of the affiliated
broker-dealer effecting such transactions are not unfair or unreasonable to the
shareholders of the Funds. In the event any transactions are executed on an
agency basis, Advantus Capital will authorize the Funds to pay an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker-dealer would have charged only if Advantus Capital
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
overall responsibilities of Advantus Capital with respect to the Funds as to
which it exercises investment discretion. If the Funds execute any transactions
on an agency basis, they will generally pay higher than the lowest commission
rates available.
In determining the commissions to be paid to an affiliated broker-
dealer, it is the policy of the Funds that such commissions will, in the
judgment of Advantus Capital, subject to review by the Fund's Board of
Directors, be both (a) at least as favorable as those which would be charged by
other qualified brokers in connection with comparable transactions involving
similar securities being purchased or sold on an exchange during a comparable
period of time, and (b) at least as favorable as commissions contemporaneously
charged by such affiliated broker-dealers on comparable transactions for their
most favored comparable unaffiliated customers. While the Funds do not deem it
practicable and in their best interest to solicit competitive bids for
commission rates on each transaction, consideration will regularly be given to
posted commission rates as well as to other information concerning the level of
commissions charged on comparable transactions by other qualified brokers.
Information regarding the acquisition by the Funds during the fiscal period
ended July 31, 1997 of securities of the Funds' regular brokers or dealers, or
the parents of those brokers or dealers that derive more than 15 percent of
their gross revenue from securities-related activities, is presented below:
Approximate
Value of Securities
Owned at End of
Fund Name of Issuer Fiscal Period
- ---- -------------- -------------
Index Morgan Stanley $38,188
J.P. Morgan & Company $23,175
Merrill Lynch & Company, Inc. $28,175
Venture --- ---
CALCULATION OF PERFORMANCE DATA
Advertisements and other sales literature for the Funds may refer to
"yield," "average annual total return" and "cumulative total return."
Performance quotations are computed separately for each class of shares of the
Funds.
YIELD. Yield is computed by dividing the net investment income per
share (as defined under Securities and Exchange Commission rules and
regulations) earned during the computation
19
<PAGE>
period by the maximum offering price per share on the last day of the period,
according to the following formula:
a-b
YIELD = 2[( ----- +1)6-1]
cd
Where: a = dividends and interest earned
during the period;
b = expenses accrued for the period
(net of reimbursements);
c = the average daily number of
shares outstanding during the
period that were entitled to
receive dividends; and
d = the maximum offering price per
share on the last day of the
period.
The yield on investments in each of the Funds for the 30-day period ended
July 31, 1997 was as set forth in the table below. The Funds' investment adviser
and distributor were voluntarily absorbing and waiving certain expenses of
certain of the Funds during that period. If such Funds had been charged for
these expenses the yield on investments for the same period would have been
lower, as also shown in the table below in parentheses.
Yield
-----
Fund Class A Class B Class C
- ---- ------- ------- -------
Venture .73% (.28%) -.12% (-.59%) -.10% (-.57%)
Index 1.0% (-.04%) .2% (-1.3%) .2% (-1.3%)
AVERAGE ANNUAL TOTAL RETURN. Average annual total return is computed by
finding the average annual compounded rates of return over the periods indicated
in the advertisement that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
P(1+T)n = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
ERV = ending redeemable value at the end of the
period of a hypothetical $1,000 payment made
at the beginning of such period.
The average annual total return on investments in each of the Funds for the
periods indicated ending July 31, 1997, were as set forth in the table below.
The Funds' investment adviser and distributor were voluntarily absorbing and
waiving certain expenses of certain of the Funds during these periods. If such
Funds had been charged for these expenses the average annual total returns for
the same periods would have been lower, as also shown in the table below in
parentheses.
Since Inception (1)
-------------------
Fund Class A Class B Class C
- ---- ------- ------- -------
Venture 10.0% (9.9%) 10.3% (10.3%) 15.4% (15.4%)
Index 15.2% (14.6%) 15.8% (15.3%) 20.4% (20.1%)
(1) Inception for all classes was January 31, 1997.
CUMULATIVE TOTAL RETURN. Cumulative total return figures are computed
by finding the cumulative compounded rate of return over the period indicated in
the advertisement that would equate the initial amount invested to the ending
redeemable value, according to the following formula:
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ERV-P
CTR = ( ------- )100
P
Where: CTR = Cumulative total return
ERV = ending redeemable value at the end of the period
of a hypothetical $1,000 payment made at the
beginning of such period; and
P = initial payment of $1,000.
The cumulative total return on investments in each of the Funds for the
period indicated ended July 31, 1997, was as set forth in the table below. The
Funds' investment adviser and distributor were voluntarily absorbing certain
expenses of certain of the Funds during these periods. If such Funds had been
charged for these expenses the cumulative total return for the same periods
would have been lower, as also shown in the table below in parentheses.
Cumulative Total Return (1)
---------------------------
Fund Class A Class B Class C
- ---- ------- ------- -------
Venture 10.0% (9.9%) 10.3% (10.3%) 15.4% (15.4%)
Index 15.2% (14.6%) 15.8% (15.3%) 20.4% (20.1%)
(1) Inception for all classes in both Funds was January 31, 1997.
The calculations for both average annual total return and cumulative
total return deduct the maximum sales charge from the initial hypothetical
$1,000 investment, assume all dividends and capital gain distributions are
reinvested at net asset value on the appropriate reinvestment dates as described
in the Prospectus, and include all recurring fees, such as investment advisory
and management fees, charged as expenses to all shareholder accounts.
Such average annual total return and cumulative total return figures may
also be accompanied by average annual total return and cumulative total return
figures, for the same or other periods, which do not reflect the deduction of
any sales charges.
CAPITAL STOCK AND OWNERSHIP OF SHARES
Each Fund's shares of common stock, and each class thereof, have a par
value $.01 per share, and have equal rights to share in dividends and assets.
The shares possess no preemptive or conversion rights. Cumulative voting is not
authorized. This means that the holders of more than 50% of the shares voting
for the election of directors can elect 100% of the directors if they choose to
do so, and in such event the holders of the remaining shares will be unable to
elect any directors.
Each of the Funds has 10 billion authorized shares of common stock and
has designated 2 billion authorized shares as Class A shares, 2 billion
authorized shares as Class B shares and 2 billion authorized shares as Class C
shares. The Funds have the following numbers of shares outstanding:
Shares Outstanding at July 31, 1997
----------------------------------------
Fund Class A Class B Class C
---- ------- ------- --------
Venture Fund 2,613,034 89,787 14,929
Index Fund 634,472 152,487 20,690
As of July 31, 1997, no person held of record, to the knowledge of the
respective Funds, or owned more than 5% of the outstanding shares of any of
the Funds, except as set forth in the following table:
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Number of
Name and Address of Shareholder Shares Percentage
- ------------------------------- ------ ----------
Venture Fund
- ------------
Minnesota Mutual and affiliates* 2,515,224 92.6%
Index Fund
- ----------
Minnesota Mutual and affiliates* 515,282 63.8%
* 400 Robert Street North, St. Paul, Minnesota 55101.
HOW TO BUY SHARES
The procedures for purchasing shares of the funds are summarized in the
Prospectus following the caption "Purchase of Fund Shares."
In addition to purchases of shares through insurance agents and
employees of Minnesota Mutual who are registered representatives of Ascend
Financial and who are licensed under applicable state and federal laws,
shares may also be purchased in writing as described in the prospectus
through firms which are members of the National Association of Securities
Dealers, Inc. and which have selling agreements with Ascend Financial.
NET ASSET VALUE AND PUBLIC OFFERING PRICE
The method for determining the public offering price and net asset value
per share is summarized in the prospectus in the text following the headings
"Purchase of Fund Shares" and "Sales Charges."
The portfolio securities in which the Funds invest fluctuate in value, and
hence the net asset value per share of each Fund also fluctuates.
On July 31, 1997, the net asset value and public offering price per
share for Class A, Class B and Class C shares of each of the Funds were
calculated as follows:
VENTURE FUND
CLASS A SHARES
Net Assets ($30,661,794) = Net Asset Value Per Share ($11.73)
- -------------------------------
Shares outstanding (2,613,034)
To obtain the maximum public offering price per share, the Fund's 5%
sales charge must be added to the net asset value obtained above:
22
<PAGE>
$11.73 = Public Offering Price Per Share ($12.35)
------
.95
CLASS B SHARES
Net Assets ($1,051,755) = Net Asset Value AND Public
- -----------------------------
Shares outstanding (89,787) Offering Price Per Share ($11.71)
CLASS C SHARES
Net Assets ($174,888) = Net Asset Value AND Public
- -----------------------------
Shares outstanding (14,929) Offering Price Per Share ($11.71)
INDEX FUND
CLASS A SHARES
Net Assets ($8,175,776) = Net Asset Value Per Share ($12.89)
- -----------------------------
Shares outstanding (634,472)
To obtain the maximum public offering price per share, the Fund's
5% sales charge must be added to the net asset value obtained above:
$12.89 = Public Offering Price Per Share ($13.57)
------
.95
CLASS B SHARES
Net Assets ($1,961,949) = Net Asset Value AND Public
- -----------------------------
Shares outstanding (152,487) Offering Price Per Share ($12.87)
CLASS C SHARES
Net Assets ($265,788) = Net Asset Value AND Public
- -----------------------------
Shares outstanding (20,690) Offering Price Per Share ($12.85)
REDUCED SALES CHARGES
Special purchase plans are enumerated in the text of each Fund's
Prospectus immediately following the caption "Special Purchase Plans" and are
fully described below.
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<PAGE>
RIGHT OF ACCUMULATION-CUMULATIVE PURCHASE DISCOUNT
The front end sales charge and contingent deferred sales charge
applicable to each purchase of Class A shares and Class B shares,
respectively, of the Advantus Multiple Class Funds is based on the next
computed net asset value of all Class A, Class B and Class C shares of such
Funds held by the shareholder (including dividends reinvested and capital
gains distributions accepted in shares), plus the cost of all Class A, Class
B and Class C shares of such Funds currently being purchased. It is the
obligation of each shareholder desiring this discount in sales charge to
notify Ascend Financial, through his or her dealer or otherwise, that he or
she is entitled to the discount.
LETTER OF INTENT
The applicable sales charge is based on total purchases over a
13-month period where there is an initial purchase equal to or exceeding
$250, accompanied by filing with Ascend Financial a signed "Letter of Intent"
form to purchase, and by in fact purchasing not less than $50,000 of shares
in one of the Advantus Multiple Class Funds within that time. The 13-month
period is measured from the date the Letter of Intent is approved by Ascend
Financial, or at the purchaser's option, it may be made retroactive 90 days,
in which case Ascend Financial will make appropriate adjustments on purchases
during the 90-day period.
In computing the total amount purchased for purposes of determining
the applicable sales charge, the net asset value of Class A, Class B and
Class C shares currently held in all Advantus Multiple Class Funds, on the
date of the first purchase under the Letter of Intent, may be used as a
credit toward Fund shares to be purchased under the Letter of Intent. Class
A, Class B and Class C shares of all the Advantus Multiple Class Funds may
also be included in the purchases during the 13-month period.
The Letter of Intent includes a provision for payment of additional
applicable sales charges at the end of the period in the event the investor
fails to purchase the amount indicated. In the case of Class A shares, this
is accomplished by holding 5% of the investor's initial purchase in escrow.
If the investor's purchases equal those specified in the Letter of Intent,
the escrow is released. If the purchases do not equal those specified in the
Letter of Intent, he or she may remit to Ascend Financial an amount equal to
the difference between the dollar amount of sales charges actually paid and
the amount of sales charges that would have been paid on the aggregate
purchases if the total of such purchases had been made at a single time. If
the purchaser does not remit this sum to Ascend Financial on a timely basis,
Ascend Financial will redeem the appropriate number of shares, and then
release or deliver any remaining shares in the escrow account. In the case
of Class B shares, if the investor fails to purchase shares in the amount
indicated, the contingent deferred sales charge applicable to purchased Class
B shares will be calculated without regard to the Letter of Intent. The
Letter of Intent is not a binding obligation on the part of the investor to
purchase, or the respective Fund to sell, the full amount indicated.
COMBINING PURCHASES
With respect to each of the Advantus Multiple Class Funds,
purchases of Class A, Class B and Class C shares for any other account of the
investor, or such person's spouse or minor children, or
24
<PAGE>
purchases on behalf of participants in a tax-qualified retirement plan may be
treated as purchases by a single investor for purposes of determining the
availability of a reduced sales charge.
GROUP PURCHASES
An individual who is a member of a qualified group may also purchase shares
of the Advantus Multiple Class Funds at the reduced sales charge applicable to
the group taken as a whole. The sales charge is calculated by taking into
account not only the dollar amount of the Class A, Class B and Class C shares of
the Funds being purchased by the individual member, but also the aggregate
dollar value of such Class A, Class B and Class C shares previously purchased
and currently held by other members of the group. Members of a qualified group
may not be eligible for a Letter of Intent.
A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Fund shares at a discount,
and (iii) satisfies uniform criteria which enable Ascend Financial to realize
economies of scale in distributing such shares. A qualified group must have
more than ten members, must be available to arrange for group meetings between
representatives of Ascend Financial, must agree to include sales and other
materials related to the Funds in its publications and mailings to members at
reduced or no cost to Ascend Financial, and must seek, upon request, to arrange
for payroll deduction or other bulk transmission of investments to the Funds.
WAIVER OF SALES CHARGES FOR CERTAIN SALES OF CLASS A SHARES
Directors and officers of Advantus Capital, MIMLIC Management, Ascend
Financial, the Funds, Minnesota Mutual, or any of Minnesota Mutual's other
affiliated companies, and their full-time and part-time employees, sales
representatives and retirees, any trust, pension, profit-sharing, or other
benefit plan for such persons, the spouses, siblings, direct ancestors or
direct descendants of such persons, Minnesota Mutual and its affiliates
themselves, advisory clients of Advantus Capital or MIMLIC Management,
employees of sales representatives employed in offices maintained by such
sales representatives, certain accounts as to which a bank or broker-dealer
charges an account management fee, provided the bank or broker-dealer has an
agreement with Ascend Financial, and certain accounts sold by registered
investment advisers who charge clients a fee for their services may purchase
Class A shares of the Advantus Multiple Class Funds at net asset value.
These persons must give written assurance that they have bought for
investment purposes, and that the securities will not be resold except
through redemption or repurchase by, or on behalf of, the respective Fund.
These persons are not required to pay a sales charge because of the reduced
sales effort involved in their purchases.
SHAREHOLDER SERVICES
OPEN ACCOUNTS
A shareholder's investment is automatically credited to an open
account maintained for the shareholder by Minnesota Mutual. Stock certificates
are not currently issued. Following each transaction in the account, a
shareholder will receive a confirmation statement disclosing the current balance
of shares owned and the details of recent transactions in the account. After
the close of each year Minnesota Mutual sends to each shareholder a statement
providing federal tax information on dividends and distributions paid to the
shareholder during the year. This should be retained as a permanent record. A
fee may be charged for providing duplicate information.
The open account system provides for full and fractional shares
expressed to four decimal places and, by making the issuance and delivery of
stock certificates unnecessary, eliminates problems of handling and safekeeping,
and the cost and inconvenience of replacing lost, stolen, mutilated or destroyed
certificates.
The costs of maintaining the open account system are paid by Advantus
Capital in the case of the Venture Fund. The costs of maintaining the open
account system for Index Fund are paid by the Fund. No direct charges are made
to shareholders. Although the Funds have no present intention of making such
direct charges to shareholders, they reserve the right to do so. Shareholders
will receive prior notice before any such charges are made.
25
<PAGE>
AUTOMATIC INVESTMENT PLAN
Each Fund provides a convenient, voluntary method of purchasing shares
in the Fund through its "Automatic Investment Plan".
The principal purposes of the Plan are to encourage thrift by
enabling you to make regular purchases in amounts less than normally
required, and, in the case of the Advantus Multiple Class Funds, to employ
the principle of dollar cost averaging, described below.
By acquiring Fund shares on a regular basis pursuant to an Automatic
Investment Plan, or investing regularly on any other systematic plan, the
investor takes advantage of the principle of Dollar Cost Averaging. Under
Dollar Cost Averaging, if a constant amount is invested at regular intervals at
varying price levels, the average cost of all the shares will be lower than the
average of the price levels. This is because the same fixed number of dollars
buys more shares when price levels are low and fewer shares when price levels
are high. It is essential that the investor consider his or her financial
ability to continue this investment program during times of market decline as
well as market rise. The principle of Dollar Cost Averaging will not protect
against loss in a declining market, as a loss will result if the plan is
discontinued when the market value is less than cost.
A Plan may be opened by indicating an intention to invest $25 or
more monthly for at least one year. Investors will receive a confirmation
showing the number of shares purchased, purchase price, and subsequent new
balance of shares accumulated.
An investor has no obligation to invest regularly or to continue
the Plan, which may be terminated by the investor at any time without
penalty. Under the Plan, any distributions of income and realized capital
gains will be reinvested in additional shares at net asset value unless a
shareholder instructs the Fund in writing to pay them in cash. The Fund
reserves the right to increase or decrease the amount required to open and
continue a Plan, and to terminate any Plan after one year if the value of the
amount invested is less than $250.
GROUP SYSTEMATIC INVESTMENT PLAN
This Plan provides employers and employees with a convenient means
for purchasing shares of each Fund under various types of employee benefit
and thrift plans, including payroll withholding and bonus incentive plans.
The Plan may be started with an initial cash investment of $50 per
participant for a group consisting of five or more participants. The shares
purchased by each participant under the Plan will be held in a separate
account in which all dividends and capital gains will be reinvested in
additional shares of the Fund at net asset value. To keep his or her account
open, subsequent payments totaling $25 per month must be made into each
participant's account. If the group is reduced to less than five
participants, the minimums set forth under "Automatic Investment Plan" shall
apply. The Plan may be terminated by the Fund or the shareholder at any time
upon reasonable notice.
26
<PAGE>
RETIREMENT PLANS OFFERING TAX BENEFITS
The federal tax laws provide for a variety of retirement plans
offering tax benefits. These plans may be funded with shares of any of the
Funds. The plans include H.R. 10 (Keogh) plans for self-employed individuals
and partnerships, individual retirement accounts (IRA's), corporate pension
trust and profit sharing plans, including 401(k) plans, and retirement plans for
public school systems and certain tax exempt organizations, e.g. 403(b) plans.
The initial investment in each Fund by such a plan must be at least
$250 for each participant in a plan, and subsequent investments must be at least
$25 per month for each participant. Income dividends and capital gain
distributions must be reinvested. Plan documents and further information can be
obtained from Ascend Financial.
27
<PAGE>
An investor should consult a competent tax or other adviser as to the
suitability of Fund shares as a vehicle for funding a plan, in whole or in part,
under the Employee Retirement Income Security Act of 1974 and as to the
eligibility requirements for a specific plan and its state as well as federal
tax aspects.
SYSTEMATIC WITHDRAWAL PLANS
An investor owning shares in any one of the Funds having a value of
$5,000 or more at the current public offering price may establish a
Systematic Withdrawal Plan providing for periodic payments of a fixed or
variable amount. The Plan is particularly convenient and useful for trustees
in making periodic distributions to retired employees. Through this Plan a
trustee can arrange for the retirement benefit to be paid directly to the
employee by the respective Fund and to continue the tax-free accumulation of
income and capital gains prior to their distribution to the employee. An
investor may terminate the Plan at any time. A form for use in establishing
such a plan is available from Ascend Financial.
A shareholder under a Systematic Withdrawal Plan may elect to receive
payments monthly, quarterly, semiannually, or annually for a fixed amount of not
less than $50 or a variable amount based on (1) the market value of a stated
number of shares, (2) a specified percentage of the account's market value or
(3) a specified number of years for liquidating the account (e.g., a 20-year
program of 240 monthly payments would be liquidated at a monthly rate of 1/240,
1/239, 1/238, etc.). The initial payment under a variable payment option may be
$50 or more.
All shares under the Plan must be left on deposit. Income dividends
and capital gain distributions will be reinvested without a sales charge at net
asset value determined on the record date.
Since withdrawal payments represent proceeds from the liquidation
of shares, withdrawals may reduce and possibly exhaust the initial
investment, particularly in the event of a decline in net asset value. In
addition, withdrawal payments attributable to the redemption of Class B
shares may be subject to a contingent deferred sales charge. Accordingly,
the shareholder should consider whether a Systematic Withdrawal Plan and the
specified amounts to be withdrawn are appropriate in the circumstances. The
Funds and Ascend Financial make no recommendations or representations in this
regard. It may be appropriate for the shareholder to consult a tax adviser
before establishing such a plan.
Under this Plan, any distributions of income and realized capital
gains must be reinvested in additional shares, and are reinvested at net
asset value. If a shareholder wishes to purchase additional shares of the
respective Fund under this Plan, other than by reinvestment of distributions,
it should be understood that, in the case of Class A shares, he or she would
be paying a sales commission on such purchases, while liquidations effected
under the Plan would be at net asset value, and, in the case of Class B
shares, he or she would be purchasing such shares at net asset value while
liquidations effected under the Plan would involve the payment of a
contingent deferred sales charge. Purchases of additional shares concurrent
with withdrawals are ordinarily disadvantageous to the shareholder because of
sales charges and tax liabilities. Additions to a shareholder account in
which an election has been
28
<PAGE>
made to receive systematic withdrawals will be accepted only if each such
addition is equal to at least one year's scheduled withdrawals or $1,200,
whichever is greater. A shareholder may not have a "Systematic Withdrawal
Plan" and an "Automatic Investment Plan" in effect simultaneously as it is
not, as explained above, advantageous to do so.
EXCHANGE AND TELEPHONE TRANSFER PRIVILEGE
The exchange and telephone transfer privileges available in connection
with the Funds, the procedures for effecting such transactions and a description
of the applicable charges, are described in each Fund's Prospectus in the text
following the caption "Exchange and Telephone Transfer of Fund Shares."
Telephone transfers and other exchanges may be made only between
already open Fund accounts having identical registrations.
REDEMPTIONS
The procedures for redemption of Fund shares, and the charges
applicable to redemptions of Class B shares, are summarized in the Prospectus in
the text following the caption "Redemption of Fund Shares."
Class B shares are subject to a contingent deferred sales charge of up
to 5% if redeemed within six years of purchase. See "Sales Charges--Class B
Shares" and "Redemption of Fund Shares" in the Prospectus.
The obligation of each of the Funds to redeem its shares when called
upon to do so by the shareholder is mandatory with the following exceptions.
Each Fund will pay in cash all redemption requests by any shareholder
of record, limited in amount during any 90-day period to the lesser of $250,000
or 1% of the net asset value of the Fund at the beginning of such period. When
redemption requests exceed such amount, however, the Fund reserves the right to
make part or all of the payment in the form of securities or other assets of the
Fund. An example of when this might be done is in case of emergency, such as in
those situations enumerated in the following paragraph, or at any time a cash
distribution would impair the liquidity of the Fund to the detriment of the
existing shareholders. Any securities being so distributed would be valued in
the same manner as the portfolio of the Fund is valued. If the recipient sold
such securities, he or she probably would incur brokerage charges. The Fund has
filed with the Securities and Exchange Commission a notification of election
pursuant to Rule 18f-1 under the Investment Company Act of 1940 in order to make
such redemptions in kind.
Redemption of shares, or payment, may be suspended at times (a) when
the New York Stock Exchange is closed for other than customary weekend or
holiday closings, (b) when trading on said Exchange is restricted, (c) when an
emergency exists, as a result of which disposal by the Fund of securities owned
by it is not reasonably practicable, or it is not reasonably practicable for the
Fund fairly to determine the value of its net assets, or during any other period
when the Securities and Exchange Commission, by order, so permits; provided that
applicable rules and
29
<PAGE>
regulations of the Securities and Exchange Commission shall govern as to whether
the conditions prescribed in (b) or (c) exist.
REINSTATEMENT PRIVILEGE
The Prospectus for each of the Funds describes redeeming
shareholders' reinstatement privileges in the text following the caption
"Reinstatement Privilege." Written notice from persons wishing to exercise
this reinstatement privilege must be received by Ascend Financial within 90
days after the date of the redemption. The reinstatement or exchange will be
made at net asset value next determined after receipt of the notice and will
be limited to the amount of the redemption proceeds or to the nearest full
share if fractional shares are not purchased. All shares issued as a result
of the reinstatement privilege applicable to redemptions of Class A and Class
B shares will be issued only as Class A shares. Any CDSC incurred in
connection with the prior redemption (within 90 days) of Class B shares will
not be refunded or re-credited to the shareholder's account. Shareholders
who redeem Class C shares and exercise their reinstatement privilege will be
issued only Class C shares, which shares will have a remaining holding period
prior to conversion equal to the remaining holding period applicable to the
prior Class C shares at redemption.
See "Taxes" in the Prospectus for a discussion of the effect of
redeeming shares within 90 days after acquiring them and subsequently acquiring
new shares in any mutual fund at a reduced sales charge. Should an investor
utilize the reinstatement privilege following a redemption which resulted in a
loss, all or a portion of that loss might not be currently deductible for
Federal income tax purposes, for an investor which is not tax-exempt.
Exercising the reinstatement privilege would not alter any capital gains taxes
payable on a realized gain, for an investor which is not tax-exempt. See
discussion under "Taxes" in the Prospectus regarding the taxation of capital
gains.
DISTRIBUTIONS AND TAX STATUS
The tax status of the Funds and the distributions which they may
make are summarized in the text of the Prospectus following the caption
"Taxes." During the fiscal period ended July 31, 1997, each Fund fulfilled,
and each Fund intends to continue to fulfill, the requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), as a
regulated investment company. If so qualified, the Funds will not be liable
for federal income taxes to the extent they distribute their taxable income
to their shareholders.
Each Fund is subject to a non-deductible excise tax equal to 4 percent
of the excess, if any, of the amount required to be distributed pursuant to the
Code for each calendar year over the amount actually distributed. In order to
avoid the imposition of this excise tax, the Fund generally must declare
dividends by the end of a calendar year representing 98 percent of the Fund's
ordinary income for the calendar year and 98 percent of its capital gain net
income (both long-term and short-term capital gains) for the twelve-month period
ending October 31 of the calendar year.
The Code forbids a regulated investment company from earning 30% or
more of its gross income from the sale or other disposition of stock,
securities, options, futures, and certain foreign currencies held less than
three months. (This requirement has been repealed by the Taxpayer Relief Act
of 1997, effective for the taxable year of each of the Funds beginning August
1, 1998.) This restriction may limit the extent to which Index Fund
30
<PAGE>
may purchase stock index futures contracts. To the extent the Fund engages in
short-term trading and enters into futures transactions, the likelihood of
violating this 30% requirement is increased.
The Code also requires a regulated investment company to diversify its
holdings. The Internal Revenue Service has not made its position clear
regarding the treatment of futures contracts for purposes of the diversification
test, and the extent to which Index Fund could buy or sell futures contracts may
be limited by this requirement.
Gain or loss on futures contracts is taken into account when
realized by entering into a closing transaction or by exercise. In addition,
with respect to many types of futures contracts held at the end of a Fund's
taxable year, unrealized gain or loss on such contracts is taken into account
at the then current fair market value thereof under a special
"marked-to-market, 60/40 system," and such gain or loss is recognized for tax
purposes. The gain or loss from such futures contracts is treated as 60%
long-term and 40% short-term capital gain or loss, regardless of their
holding period. The amount of any capital gain or loss actually realized by
a Fund in a subsequent sale or other disposition of such futures contracts
will be adjusted to reflect any capital gain or loss taken into account by
such Fund in a prior year as a result of the constructive sale under the
"marked-to-market, 60/40 system." Notwithstanding the rules described above,
with respect to certain futures contracts, Index Fund may make an election
that will have the effect of exempting all or a part of those identified
futures contracts from being treated for federal income tax purposes as sold
on the last business day of the Fund's taxable year. All or part of any loss
realized by the Fund on any closing of a futures contract may be deferred
until all of the Fund's offsetting positions with respect to the futures
contract are closed.
Each Fund may in the future sell securities "short against the box." Under
provisions of the Taxpayer Relief Act of 1997, if a Fund sells short against the
box a security in which it has an appreciated position, it will be treated as if
it had sold the security for its fair market value on the date of the short
sale, and will be required to recognize gain as of that date. On a subsequent
sale of the security that has been sold short against the box, the Fund's basis
in the security will be adjusted to take into account the amount of gain
previously recognized.
The foregoing relates only to federal taxation. Prospective
shareholders should consult their tax advisers as to the possible application of
state and local income tax laws to Fund distributions.
FINANCIAL STATEMENTS
Each Funds' financial statements for the fiscal period ended July 31, 1997,
including the financial highlights for each of the respective periods presented,
appearing in such Fund's Annual Report to Shareholders, and the report thereon
of such Fund's independent auditors, KPMG Peat Marwick LLP, also appearing
therein, are incorporated by reference in this Statement of Additional
Information. The respective Fund's 1997 Annual Report to Shareholders is
enclosed with this Statement of Additional Information.
31
<PAGE>
APPENDIX A
BOND AND COMMERCIAL PAPER RATINGS
BOND RATINGS
Moody's Investors Service, Inc. describes its five highest ratings for
corporate bonds and mortgage-related securities as follows:
Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are generally
referred to as "gilt edge." Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such
changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the
best bonds because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may be of
greater amplitude or there may be other elements present which make
the long term risks appear somewhat larger than in Aaa securities.
Bonds which are rated A possess many favorable investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest are
considered adequate but elements may be present which suggest a
susceptibility to impairment some time in the future.
Bonds which are rated Baa are considered medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking or
may be characteristically unreliable over any great length of time.
Such bonds lack outstanding investment characteristics and in fact
have speculative characteristics as well.
Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well-assured. Often
the protection of interest and principal payments may be very
moderate, and thereby not well safeguarded during both good and bad
times over the future. Uncertainty of position characterizes bonds
in this class.
Moody's Investors Service, Inc. also applies numerical modifiers,
1, 2, and 3, in each of these generic rating classifications. The modifier 1
indicates that the security ranks in the higher end of its generic rating
category; the modifier 2 indicates a mid-range ranking; and the modifier 3
indicates that the issue ranks in the lower end of its generic rating category.
Standard & Poor's Corporation describes its five highest ratings
for corporate bonds and mortgage-related securities as follows:
AAA. Debt rated "AAA" has the highest rating assigned by
Standard & Poor's. Capacity to pay interest and repay principal is
extremely strong.
A-1
<PAGE>
AA. Debt rated "AA" has a very strong capacity to pay interest
and repay principal and differs from the higher rated issues only
in small degree.
A. Debt rated "A" has a strong capacity to pay interest and
repay principal although it is somewhat more susceptible to the
adverse effects of changes in circumstances and economic conditions
than debt in higher rated categories.
BBB. Debt rated "BBB" is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it normally
exhibits adequate protection parameters, adverse economic
conditions or changing circumstances are more likely to lead to a
weakened capacity to pay interest and repay principal for debt in
this category than in higher rated categories.
BB. Debt rated "BB" has less near-term vulnerability to default
than other speculative grade debt. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or
economic conditions that could lead to inadequate capacity to meet
timely interest and principal payments.
Standard & Poor's Corporation applies indicators "+", no character,
and "-" to the above rating categories. The indicators show relative
standing within the major rating categories.
COMMERCIAL PAPER RATINGS
The rating Prime-1 is the highest commercial paper rating assigned
by Moody's Investors Service, Inc. Among the factors considered by Moody's
Investors Service, Inc. in assigning the ratings are the following: (1)
evaluation of the management of the issuer, (2) economic evaluation of the
issuer's industry or industries and an appraisal of speculative-type risks
which may be inherent in certain areas; (3) evaluation of the issuer's
products in relation to competition and customer acceptance; (4) liquidity;
(5) amount and quality of long-term debt; (6) trend of earnings over a period
of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; an (8) recognition by the
management of obligations which may be present or may arise as a result of
public interest questions and preparations to meet such obligations.
The rating A-1 is the highest rating assigned by Standard & Poor's
Corporation to commercial paper which is considered by Standard & Poor's
Corporation to have the following characteristics:
Liquidity ratios of the issuer are adequate to meet cash
redemptions. Long-term senior debt is rated "A" or better. The
issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the
issuer's industry is well established and the issuer has a strong
position within the industry. The reliability and quality of
management are unquestioned.
A-2
<PAGE>
<PAGE>
PART C. OTHER INFORMATION
<PAGE>
OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements: The Registrant's financial statements for
the year ended July 31, 1997, including the financial highlights for each of the
respective periods presented, appearing in the Registrant's Annual Report to
Shareholders, and the report thereon of the Registrant's independent auditors,
KPMG Peat Marwick LLP, also appearing therein, are incorporated by reference in
the Statement of Additional Information included in Part B of this Registration
Statement. The following financial statements are included in such Annual
Report to Shareholders:
(1) Investments in Securities as of July 31, 1997.
(2) Statement of Assets and Liabilities as of July 31, 1997.
(3) Statement of Operations for the period from September 4,
1996, commencement of operations, to July 31, 1997.
(4) Statement of Changes in Net Assets for the period from
September 4, 1996, commencement of operations, to
July 31, 1997.
(5) Notes to Financial Statements, including Financial
Highlights for the year presented ended July 31, 1997.
(6) Independent Auditors' Report.
(b) Exhibits:
(1) Articles of Incorporation for the Registrant (1)
(2) Bylaws of the Registrant (1)
(5) Investment Advisory Agreement between Advantus Capital
Management, Inc. and the Registrant (1)
(6)(A) Underwriting and Distribution Agreement between the
Registrant and Ascend Financial Services, Inc. (1)
(6)(B) Form of Dealer Sales Agreement between Ascend Financial
Services, Inc., principal underwriter for
the Registrant, and dealers (1)
(8) Custodian Agreement between the Registrant and First
Trust National Association (1)
(9) Administrative Service Agreement between the Registrant
and The Minnesota Mutual Life Insurance Company (1)
(10) Opinion and Consent of Dorsey & Whitney LLP (1)
(11) Consent of KPMG Peat Marwick LLP
(13)(A) Letter of Investment Intent regarding the Registrant's
initial capital from Advantus Capital Management, Inc.
(1)
(13)(B) Letter of Investment Intent regarding the
Registrant's initial capital from The Minnesota
Mutual Life Insurance Company
(15)(A) Plan of Distribution for Class A shares of the
Registrant (1)
(15)(B) Plan of Distribution for Class B shares of the
Registrant (1)
(15)(C) Plan of Distribution for Class C shares of the
Registrant (1)
(16) Calculations of Yield and Total Returns of the
Registrant
(17)(A) Financial Data Schedule - Class A Shares
(17)(B) Financial Data Schedule - Class B Shares
(17)(C) Financial Data Schedule - Class C Shares
(19) Power of Attorney to sign Registration Statement
executed by Directors of Registrant
____________________
(1) Incorporated by reference to the Registrant's initial registration
statement on Form N-1A filed September 19, 1996.
<PAGE>
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Wholly-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Asset Management Company
The Ministers Life Insurance Company
MIMLIC Corporation
Northstar Life Insurance Company (New York)
Robert Street Energy, Inc.
HomePlus Insurance Company
Open-end registered investment company offering shares solely to separate
accounts of The Minnesota Mutual Life Insurance Company:
Advantus Series Fund, Inc.
Wholly-owned subsidiaries of MIMLIC Asset Management Company:
Ascend Financial Services, Inc.
Advantus Capital Management, Inc.
Wholly-owned subsidiaries of MIMLIC Corporation:
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MIMLIC Venture Corporation
Personal Finance Company (Delaware)
Wedgewood Valley Golf, Inc.
Ministers Life Resources, Inc.
Enterprise Holding Corporation
HomePlus Insurance Agency, Inc.
MCM Funding 1997-1, Inc.
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Oakleaf Service Corporation
Lafayette Litho, Inc.
Financial Ink Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
Wholly-owned subsidiary of Ascend Financial Services, Inc:
MIMLIC Insurance Agency of Massachusetts, Inc. (Massachusetts)
Majority-owned subsidiaries of MIMLIC Imperial Corporation:
J. H. Shoemaker Advisory Corporation
Consolidated Capital Advisors, Inc.
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
<PAGE>
Majority-owned subsidiary of Ascend Financial Services, Inc.:
MIMLIC Insurance Agency of Ohio, Inc.
Majority-owned subsidiaries of The Minnesota Mutual Life Insurance Company:
MIMLIC Life Insurance Company (Arizona)
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Index 500 Fund, Inc.
Less than majority owned, but greater than 25% owned, subsidiaries of The
Minnesota Mutual Life Insurance Company:
Advantus Money Market Fund, Inc.
Less than 25% owned subsidiaries of The Minnesota Mutual Life Insurance Company:
Advantus Horizon Fund, Inc.
Advantus Bond Fund, Inc.
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Unless indicated otherwise parenthetically, each of the above
corporations is a Minnesota corporation.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
As of August 31, 1997, a date within 90 days of the date of filing
of this Registration Statement:
Title of Class Number of Record Holders
-------------- ------------------------
Class A Common Shares 321
Class B Common Shares 196
Class C Common Shares 29
ITEM 27. INDEMNIFICATION
The Articles of Incorporation and Bylaws of the Registrant provide
that the Registrant shall indemnify such persons, for such expenses and
liabilities, in such manner, under such circumstances, to the full extent
permitted by Section 302A.521, Minnesota Statutes, as now enacted or hereafter
amended, provided that no such indemnification may be made if it would be in
violation of Section 17(h) of the Investment Company Act of 1940, as now enacted
or hereafter amended. Section 302A.521 of the Minnesota Statutes, as now
enacted, provides that a corporation shall indemnify a person made or threatened
to be made a party to a proceeding against judgments, penalties, fines,
settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by the person in connection with the proceeding, if,
with respect to the acts or omissions of the person complained of in the
proceeding, the person has not been indemnified by another organization for the
same judgments, penalties, fines, settlements and reasonable expenses incurred
by the person in connection with the proceeding with respect to the same acts or
omissions; acted in good faith; received no improper personal benefit and the
Minnesota Statute dealing with directors' conflicts of interest, if applicable,
has been satisfied; in the case of a criminal proceeding, had no reasonable
cause to believe the conduct was unlawful and reasonably believed that the
conduct was in the best interests of the
<PAGE>
corporation or, in certain circumstances, reasonably believed that the conduct
was not opposed to the best interests of the corporation.
Section 17(h) of the Investment Company Act of 1940 provides that
neither the charter, certificate of incorporation, articles of association,
indenture of trust, nor the by-laws of any registered investment company, nor
any other instrument pursuant to which such a company is organized or
administered, shall contain any provisions which protects or purports to protect
any director or officer of such company against any liability to the company or
to its security holders to which he would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence or reckless disregard of duties
involved in the conduct of his office. The staff of the Securities and Exchange
Commission has stated that it is of the view that an indemnification provision
does not violate Section 17(h) if it precludes indemnification for any liability
arising by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of duties ("Disabling conduct") and sets forth reasonable and
fair means for determining whether indemnification shall be made. In the
staff's view, "reasonable and fair means" would include (1) a final decision on
the merits by a court or other body before whom the proceeding was brought that
the person to be indemnified ("indemnitee") was not liable by reason of
disabling conduct or, (2) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the indemnitee was not
liable by reason of disabling conduct, by (a) the vote of a majority of a quorum
of directors who are neither "interested persons" of the company as defined in
Section 2(a)(19) of the Investment Company Act of 1940 nor parties to the
proceeding ("disinterested, non-party directors") or (b) an independent legal
counsel in a written opinion. The dismissal of either a court action or
administrative proceeding against an indemnitee for insufficiency of evidence of
any disabling conduct with which he has been charged would, in the staff's view,
provide reasonable assurance that he was not liable by reason of disabling
conduct. The staff also believes that a determination by the vote of a majority
of a quorum of disinterested, non-party directors would provide reasonable
assurance that the indemnitee was not liable by reason of disabling conduct.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Directors and Officers Office with
of Investment Adviser Investment Adviser Other Business Connections
- ---------------------- ------------------ --------------------------
Paul H. Gooding President and President, Treasurer and
Director Director, MIMLIC Asset
Management Company; President,
Secretary and Director, MIMLIC
<PAGE>
Corporation; Director, MIMLIC
Imperial Corporation;
Director, MIMLIC Venture
Corporation; Vice President
and Director, MIMLIC Funding,
Inc.; Vice President and
Director, Robert Street
Energy, Inc.; Chairman of the
Board and Director, Personal
Finance Company; Vice
President and Treasurer, The
Minnesota Mutual Life
Insurance Company; President,
MCM Funding 1997-1, Inc.
James P. Tatera Senior Vice President, Vice President and
Treasurer and Director Equity Portfolio Manager,
MIMLIC Asset Management
Company; Vice President,
MIMLIC Funding, Inc.; Second
Vice President, The Minnesota
Mutual Life Insurance
Company; Vice President and
Assistant Secretary, MCM
Funding 1997-1, Inc.
Richard W. Worthing Vice President Vice President and Head of
Equities, MIMLIC Asset
Management Company; Vice
President, MCM Funding 1997-1,
Inc.
Thomas A. Gunderson Vice President Investment Officer, MIMLIC
Asset Management Company
Kent R. Weber Vice President Investment Officer, MIMLIC
Asset Management Company
Wayne R. Schmidt Vice President Secretary and Treasurer,
MIMLIC Funding, Inc.;
Treasurer and Assistant
Secretary, Robert Street
Energy, Inc.; Vice President
and Secretary, MIMLIC Imperial
Corporation; Investment
Officer, MIMLIC Asset
Management Company; Assistant
Secretary, MCM Funding
1997-1, Inc.
Matthew D. Finn Vice President Investment Officer, MIMLIC
Asset Management Company
Jeffrey R. Erickson Vice President Investment Officer, MIMLIC
Asset Management Company
Kevin J. Hiniker Secretary Associate General Counsel,
MIMLIC Asset Management
Company; Assistant Secretary,
Robert Street Energy, Inc.
<PAGE>
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Ascend Financial Services, Inc. currently acts as a
principal underwriter for the following investment companies:
Advantus Horizon Fund, Inc.
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Money Market Fund, Inc.
Advantus Bond Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Index 500 Fund, Inc.
MIMLIC Cash Fund, Inc.
Minnesota Mutual Variable Fund D
Minnesota Mutual Variable Annuity Account
Minnesota Mutual Variable Life Account
Minnesota Mutual Group Variable Annuity Account
Minnesota Mutual Variable Universal Life Account
(b) The name and principal business address, positions and offices
with Ascend Financial Services, Inc., and positions and offices with
Registrant of each director and officer of Ascend Financial Services, Inc. is as
follows:
Positions and Positions and
Name and Principal Offices Offices
Business Address with Underwriter with Registrant
- ------------------ ---------------- ---------------
Robert E. Hunstad Director None
The Minnesota Mutual
Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
George I. Connolly President, Chief None
Ascend Financial Services, Inc. Executive Officer and
400 Robert Street North Director
St. Paul, Minnesota 55101
Margaret Milosevich Vice President, Chief None
Ascend Financial Services, Inc. Operations Officer,
400 Robert Street North Treasurer and Secretary
St. Paul, Minnesota 55101
D. Ann Degenshein Vice President, Compliance None
Ascend Financial Services, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
Dennis E. Prohofsky Director None
The Minnesota Mutual
Life Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Thomas L. Clark Assistant Treasurer None
Ascend Financial Services, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
(c) Not applicable.
<PAGE>
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The physical possession of the accounts, books and other documents
required to be maintained by Section 3(a) of the Investment Company Act of 1940
and Rules 31a-1 to 31a-3 promulgated thereunder is maintained by Minnesota
Mutual, 400 Robert Street North, St. Paul, Minnesota 55101; except that the
physical possession of certain accounts, books and other documents related to
the custody of the Registrant's securities is maintained by the following
custodian:
First Trust National Association
180 East Fifth Street
St. Paul, Minnesota 55101
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to furnish, upon request and
without charge to each person to whom a prospectus is delivered, a copy of the
Registrant's latest annual report to shareholders containing the information
called for by Item 5A.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant certifies that it meets all of
the requirements for effectiveness of this Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the city of St. Paul
and the State of Minnesota on the 20th day of November, 1997.
ADVANTUS VENTURE FUND, INC.
Registrant
By /s/ Paul H. Gooding
-------------------------------------
Paul H. Gooding, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the date indicated.
/s/ Paul H. Gooding President (principal November 20, 1997
- ------------------- executive officer)
Paul H. Gooding and Director
/s/ Frederick P. Feuerherm Director and Treasurer November 20, 1997
- -------------------------- (principal financial
Frederick P. Feuerherm and accounting officer)
Ralph D. Ebbott* Director)
- ------------------ ) By /s/ Paul H. Gooding
Ralph D. Ebbott ) --------------------
) Paul H. Gooding
) Attorney-in-Fact
Charles E. Arner* Director)
- ------------------- ) Dated: November 20, 1997
Charles E. Arner )
)
)
Ellen S. Berscheid* Director)
- --------------------- )
Ellen S. Berscheid )
- ---------------
*Registrant's director executing power of attorney dated July 31, 1996, a copy
of which is filed herewith.
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER AND DESCRIPTION
(1) Articles of Incorporation for the Registrant (1)
(2) Bylaws of the Registrant (1)
(5) Investment Advisory Agreement between Advantus Capital
Management, Inc. and the Registrant (1)
(6)(A) Underwriting and Distribution Agreement between the Registrant
and Ascend Financial Services, Inc. (1)
(6)(B) Form of Dealer Sales Agreement between Ascend Financial Services,
Inc., principal underwriter for the Registrant, and dealers (1)
(8) Custodian Agreement between the Registrant and First Trust
National Association (1)
(9) Administrative Service Agreement between the Registrant and The
Minnesota Mutual Life Insurance Company (1)
(10) Opinion and Consent of Dorsey & Whitney LLP (1)
(11) Consent of KPMG Peat Marwick LLP
(13)(A) Letter of Investment Intent regarding the Registrant's initial
capital from Advantus Capital Management, Inc. (1)
(13)(B) Letter of Investment Intent regarding the Registrant's initial
capital from The Minnesota Mutual Life Insurance Company
(15)(A) Plan of Distribution for Class A shares of the Registrant (1)
(15)(B) Plan of Distribution for Class B shares of the Registrant (1)
(15)(C) Plan of Distribution for Class C shares of the Registrant (1)
(16) Calculations of Yield and Total Returns of the Registrant
(17)(A) Financial Data Schedule - Class A Shares
(17)(B) Financial Data Schedule - Class B Shares
(17)(C) Financial Data Schedule - Class C Shares
(19) Power of Attorney to sign Registration Statement executed by
Directors of Registrant
____________________
(1) Incorporated by reference to the Registrant's initial registration
statement on Form N-1A filed September 19, 1996.
<PAGE>
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
PH 612/665-3500
January 2, 1997 MINNESOTA MUTUAL
Advantus Venture Fund, Inc.
400 Robert Street North
St. Paul, MN 55101
Dear Sir/Madam:
In connection with the purchase by The Minnesota Mutual Life Insurance Company
(the "Purchaser") of $25,000,000 of shares, at net asset value, of common stock
("Stock") of Advantus Venture Fund, Inc. (the "Fund"), the Purchaser hereby
represents that it is acquiring such Stock for investment with no intention of
selling or otherwise disposing or transferring it or any interest in it. The
Purchaser hereby further agrees that any transfer of any such Stock or any
interest in it shall be subject to the following conditions:
1. The Purchaser shall furnish the Fund and counsel satisfactory to the Fund
prior to the time of transfer, a written description of the proposed
transfer specifying its nature and consequence and giving the name of the
proposed transferee.
2. The Fund shall have obtained from its counsel a written opinion stating
whether in the opinion of such counsel the proposed transfer may be
effected without registration under the Securities Act of 1933. If such
opinion states that such transfer may be so effected, the Purchaser shall
then be entitled to transfer its Stock in accordance with the terms
specified in its description of the transaction to the Fund. If such
opinion states that the proposed transfer may not be so effected, the
Purchaser will not be entitled to transfer its Stock unless such Stock is
registered.
3. The Purchaser further agrees that all certificates, if any, representing
such Stock shall contain on the face thereof the following legend:
"The shares represented by this certificate may not be transferred
without (i) the opinion of counsel satisfactory to Advantus Venture
Fund, Inc. that the transfer may be legally made without registration
under the Federal Securities Act of 1933; or (ii) such registration."
<PAGE>
Advantus Venture Fund, Inc.
January 2, 1997
Page 2
The Purchaser hereby authorizes the Fund to take such action as it shall
reasonably deem appropriate to prevent any violation of the Securities Act of
1933 in connection with the transfer of Stock, including the imposition of a
requirement that any transferee of the Stock sign a letter agreement similar to
this one.
Very Truly Yours,
The Minnesota Mutual Life Insurance Company
- -------------------------------------------
Paul H. Gooding, Vice President
PHG/jh
<PAGE>
Advantus Venture Fund, Inc.
Performance Calculations
TOTAL RETURN CALCULATIONS
Total return is the percentage change between the public offering price of one
Class share at the beginning of a period and the ending redeemable value of that
share at the end of a period with income and capital gains distributions assumed
to be entirely reinvested at the net asset value as of the reinvest date. A
data base file for each class of Fund shares is kept and updated monthly with
respect to ending net asset values, reinvest prices, and income and capital
gains distribution amounts per share. From this data base file, total return
can be calculated for any specified number of periods since the Fund's date of
beginning operations.
CUMULATIVE TOTAL RETURN
CLASS A
Cumulative total return for Class A shares is based on an initial $1,000
investment made on January 31, 1997, date of inception, with the maximum sales
charge of 5%. Using the asset valuation and distribution information attached,
the cumulative total return at July 31, 1997 is computed follows:
Cumulative = Ending redeemable value - initial amount invested *100
-------------------------------------------------
total return Initial amount invested
Cumulative total return for Class A shares for the period from January 31, 1997,
date of inception, to July 31, 1997 is as follows:
1,100.00 - 1,000.00 * 100 = 10.00%
-------------------
1,000.00
CLASS B
Cumulative total return for Class B shares is based on an initial $1,000
investment made on January 31, 1997, date of inception. In calculating ending
redeemable value, we assume that the shares are redeemed as of the date of the
total return calculation. Accordingly, the maximum contingent deferred sales
charge of 5% is deducted in determining the ending redeemable value. Using the
asset valuation and distribution information attached, the cumulative total
return at July 31, 1997 is computed follows:
Cumulative = Ending redeemable value - initial amount invested * 100
-------------------------------------------------
total return Initial amount invested
Cumulative total return for Class B shares for the period from January 31, 1997,
date of inception, to July 31, 1997 is as follows:
<PAGE>
1,103.30 - 1,000.00 * 100 = 10.33%
-------------------
1,000.00
CLASS C
Cumulative total return for Class B shares is based on an initial $1,000
investment made on January 31, 1997, date of inception. In calculating ending
redeemable value, we assume that the shares are redeemed as of the date of the
total return calculation. Using the asset valuation and distribution
information attached, the cumulative total return at July 31, 1997 is computed
follows:
Cumulative = Ending redeemable value - initial amount invested * 100
-------------------------------------------------
total return Initial amount invested
Cumulative total return for Class C shares for the period from January 31, 1997,
date of inception, to July 31, 1997 is as follows:
1,153.80 - 1,000.00 * 100 = 15.38%
-------------------
1,000.00
AVERAGE ANNUAL TOTAL RETURN
In accordance with the Securities and Exchange Commission (SEC), average annual
total return (T) allocates equal value among each period (N) by comparing the
initial amount invested (P) to the ending redeemable value (ERV). The formula
prescribed by the SEC is as follows:
N
P[(1 + T) ] = ERV
Average annual total return is not calculated for the period from January 31,
1997, date of inception, to July 31, 1997 as results are not indicative of
anticipated annual results.
Investment information used in the total return calculations is as follows:
Dividends per Share
Net asset -------------------
Public value/reinvest Net investment Capital
Date offering price value income gains
- ---- -------------- -------------- -------------- -------
CLASS A
01/31/97 $10.71 $10.17 $ - $ -
03/26/97 10.67 10.14 .0215 -
06/25/97 11.58 11.00 .0192 -
07/31/97 12.35 11.73 - -
CLASS B
<PAGE>
01/31/97 $10.17 $10.17 $ - $ -
03/26/97 10.14 10.14 .0128 -
06/25/97 10.99 10.99 .0039 -
07/31/97 11.71 11.71 - -
CLASS C
01/31/97 $10.17 $10.17 $ - $ -
03/26/97 10.14 10.14 .0077 -
06/25/97 11.00 11.00 .0047 -
07/31/97 11.72 11.71 - -
YIELD CALCULATIONS
Each class of the Fund's yield for the 30-day period ended July 31, 1997 was
computed by dividing the net investment income per share earned during the
period by the maximum public offering price per share on the last day of the
period, according to the following formula as prescribed by the SEC:
6
YIELD = 2([(A-B)+1] - 1)
-----
C*D
Where:
A = Dividends and interest earned during the period calculated as prescribed by
the SEC.
B = Expenses accrued for the period (net of reimbursement by the investment
adviser).
C = The average daily number of shares outstanding during the period that were
entitled to receive dividends.
D = The maximum public offering price per share on the last day of the period.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM N-SAR.
</LEGEND>
<RESTATED>
<CIK> 0001022330
<NAME> MULTI CLASS ADVANTUS VENTURE FUND
<SERIES>
<NUMBER> 100
<NAME> CLASS A
<MULTIPLIER> 1000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> JUL-31-1997
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 28789
<INVESTMENTS-AT-VALUE> 32649
<RECEIVABLES> 134
<ASSETS-OTHER> 434
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33217
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<SENIOR-LONG-TERM-DEBT> 0
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<TOTAL-LIABILITIES> 1329
<SENIOR-EQUITY> 27
<PAID-IN-CAPITAL-COMMON> 27256
<SHARES-COMMON-STOCK> 2613
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<GROSS-EXPENSE> 245
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<PER-SHARE-NAV-BEGIN> 10.17
<PER-SHARE-NII> .05
<PER-SHARE-GAIN-APPREC> 1.55
<PER-SHARE-DIVIDEND> .04
<PER-SHARE-DISTRIBUTIONS> .00
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</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FROM N-SAR.
</LEGEND>
<RESTATED>
<CIK> 0001022330
<NAME> MULTI CLASS ADVANTUS VENTURE FUND
<SERIES>
<NUMBER> 101
<NAME> CLASS B
<MULTIPLIER> 1000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1997
<PERIOD-END> JUL-31-1997
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<SHARES-COMMON-STOCK> 90
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<ACCUM-APPREC-OR-DEPREC> 3860
<NET-ASSETS> 1052
<DIVIDEND-INCOME> 263
<INTEREST-INCOME> 95
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<EXPENSES-NET> 211
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<NET-CHANGE-FROM-OPS> 4704
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
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<NUMBER-OF-SHARES-SOLD> 90
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<NET-CHANGE-IN-ASSETS> 31888
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<GROSS-EXPENSE> 245
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<PER-SHARE-NAV-BEGIN> 10.17
<PER-SHARE-NII> .01
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<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.71
<EXPENSE-RATIO> 2.24
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
N-SAR AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM N-SAR.
</LEGEND>
<RESTATED>
<CIK> 0001022330
<NAME> MULTI CLASS ADVANTUS VENTURE FUND
<SERIES>
<NUMBER> 102
<NAME> CLASS C
<MULTIPLIER> 1000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 11-MOS
<FISCAL-YEAR-END> JUL-31-1997
<PERIOD-START> SEP-04-1996
<PERIOD-END> JUL-31-1997
<EXCHANGE-RATE> 1
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<INVESTMENTS-AT-VALUE> 32649
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<PAYABLE-FOR-SECURITIES> 1212
<SENIOR-LONG-TERM-DEBT> 0
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<SENIOR-EQUITY> 27
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<SHARES-COMMON-STOCK> 15
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 48
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 697
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3860
<NET-ASSETS> 175
<DIVIDEND-INCOME> 263
<INTEREST-INCOME> 95
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<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 14
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<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 31888
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 125
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 245
<AVERAGE-NET-ASSETS> 70
<PER-SHARE-NAV-BEGIN> 10.17
<PER-SHARE-NII> .01
<PER-SHARE-GAIN-APPREC> 1.54
<PER-SHARE-DIVIDEND> .01
<PER-SHARE-DISTRIBUTIONS> .00
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.71
<EXPENSE-RATIO> 2.25
<AVG-DEBT-OUTSTANDING> 0
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</TABLE>
<PAGE>
[KPMG Peat Marwick LLP Letterhead]
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Shareholders
Advantus Venture Fund, Inc.:
We consent to the use of our report included herein and the references to our
Firm under the headings "COUNSEL AND INDEPENDENT AUDITORS" in Part A and
"FINANCIAL STATEMENTS" in Part B of the Registration Statement.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
Minneapolis, Minnesota
November 20, 1997
<PAGE>
ADVANTUS MUTUAL FUNDS
AND MIMLIC CASH FUND
POWER OF ATTORNEY
TO SIGN REGISTRATION STATEMENT
The undersigned, Directors of Advantus Horizon Fund, Inc., Advantus
Spectrum Fund, Inc., Advantus Mortgage Securities Fund, Inc., Advantus Money
Market Fund, Inc., Advantus Bond Fund, Inc., Advantus Cornerstone Fund, Inc.,
Advantus Enterprise Fund, Inc., Advantus International Balanced Fund, Inc.,
Advantus Venture Fund, Inc., Advantus Index 500 Fund, Inc., and MIMLIC Cash
Fund, Inc. (the "Funds"), appoint Paul H. Gooding, Eric J. Bentley and Michael
J. Radmer, and each of them individually, as attorney-in-fact for the purpose of
signing in their names and on their behalf as Directors of the Funds and filing
with the Securities and Exchange Commission Registration Statements on Form N-
1A, or any amendments thereto, for the purpose of registering shares of Common
Stock of the Funds for sale by the Funds and to register the Funds under the
Investment Company Act of 1940.
Dated: July 31, 1996 /s/ Charles E. Arner
-----------------------------------
Charles E. Arner
/s/ Ellen S. Berscheid
-----------------------------------
Ellen S. Berscheid
/s/ Ralph D. Ebbott
-----------------------------------
Ralph D. Ebbott
/s/ Frederick P. Feuerherm
-----------------------------------
Frederick P. Feuerherm
/s/ Paul H. Gooding
-----------------------------------
Paul H. Gooding
