<PAGE>
SUPPLEMENT DATED JULY 21, 1997 TO THE PROSPECTUS DATED JANUARY 31, 1997
ADVANTUS VENTURE FUND, INC.
- ----------------------------------------------------------------------
400 Robert Street North - St. Paul, Minnesota 55101 - 1-800-443-3677
- --------------------------------------------------------------------------------
The following Financial Highlights are added to the Prospectus immediately
following the section titled "Fees and Expenses":
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
FINANCIAL The following unaudited financial highlights table shows certain per share data and selected
HIGHLIGHTS important financial information for evaluating the Fund's results for the period shown.
- ----------
</TABLE>
<TABLE>
<CAPTION>
PERIOD FROM JANUARY 31, 1997
TO MAY 31, 1997 (d)
----------------------------
CLASS CLASS
CLASS A B C
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.17 $10.17 $10.17
----------------------------
INCOME FROM INVESTMENT OPERATIONS:
NET INVESTMENT INCOME 0.02 -- --
NET GAINS OR LOSSES ON SECURITIES (BOTH REALIZED AND
UNREALIZED) 0.48 0.47 0.48
----------------------------
TOTAL FROM INVESTMENT OPERATIONS 0.50 0.47 0.48
----------------------------
LESS DISTRIBUTIONS:
DIVIDENDS FROM NET INVESTMENT INCOME (0.02 ) (0.01 ) (0.01 )
----------------------------
NET ASSET VALUE, END OF PERIOD $10.65 $10.63 $10.64
------ ------ ------
TOTAL RETURN (a)(b) 4.9% 4.8% 4.7%
- ---------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD (IN THOUSANDS) $27,475 $522 $84
- ---------------------------------------------------------------------------------------
RATIO OF EXPENSES TO AVERAGE DAILY NET ASSETS 1.35%(c) 2.25%(c) 2.25%(c)
- ---------------------------------------------------------------------------------------
RATIO OF NET INVESTMENT INCOME TO AVERAGE DAILY NET
ASSETS .67%(c) (.14 )%(c) (.14 )%(c)
- ---------------------------------------------------------------------------------------
PORTFOLIO TURNOVER RATE (EXCLUDING SHORT-TERM
SECURITIES) 25.2% 25.2% 25.2%
- ---------------------------------------------------------------------------------------
AVERAGE COMMISSION RATE ON COMMON STOCK TRANSACTIONS $ .0547 $.0547 $.0547
</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,
COMMENCEMENT OF OPERATIONS, TO MAY 31, 1997.
(c) ADJUSTED TO AN ANNUAL BASIS.
(d) THE INCEPTION OF THE FUND WAS JULY 3, 1996. HOWEVER, THE FUND'S SHARES
DID NOT BECOME EFFECTIVELY REGISTERED UNDER THE SECURITIES EXCHANGE ACT OF 1933
UNTIL JANUARY 31, 1997, WHEN OPERATIONS COMMENCED. FINANCIAL HIGHLIGHTS ARE NOT
PRESENTED FOR THE PERIOD FROM JULY 3, 1996 TO JULY 31, 1996 AND FOR THE PERIOD
FROM AUGUST 1, 1996 TO JANUARY 31, 1997 AS THE FUND'S SHARES WERE NOT REGISTERED
DURING THOSE PERIODS.
All references in the Fund's Prospectus to the Statement of Additional
Information are to the Statement of Additional Information dated January 31,
1997 as Supplemented July 21, 1997.
INVESTORS SHOULD RETAIN THIS SUPPLEMENT FOR FUTURE REFERENCE
- --------------------------------------------------------------------------------
F. 51306 7-1997
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ADVANTUS VENTURE FUND, INC.
ADVANTUS INDEX 500 FUND, INC.
January 31, 1997
As Supplemented July 21, 1997
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the separate Prospectuses
dated January 31, 1997, as supplemented July 21, 1997, and should be read in
conjunction therewith. A copy of each Prospectus may be obtained from MIMLIC
Sales Corporation, P.O. Box 64809, St. Paul, Minnesota 55101-0809 (telephone
(800) 443-3677).
THIS STATEMENT OF ADDITIONAL INFORMATION MUST BE ACCOMPANIED OR PRECEDED BY A
COPY OF THE CURRENT PROSPECTUS FOR EACH OF THE ADVANTUS FUNDS NAMED ABOVE.
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY. . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT RESTRICTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Venture Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Index Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PORTFOLIO TURNOVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
DIRECTORS AND EXECUTIVE OFFICERS . . . . . . . . . . . . . . . . . . . . . . .10
DIRECTOR LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
INVESTMENT ADVISORY AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . .13
General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Control and Management of Advantus Capital and MIMLIC Sales. . . . . . . . .13
Investment Advisory Agreement. . . . . . . . . . . . . . . . . . . . . . . .13
Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Payment of Certain Distribution Expenses of the Funds. . . . . . . . . . . .15
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE . . . . . . . . . . . . . .18
CALCULATION OF PERFORMANCE DATA. . . . . . . . . . . . . . . . . . . . . . . .19
CAPITAL STOCK AND OWNERSHIP OF SHARES. . . . . . . . . . . . . . . . . . . . .21
HOW TO BUY SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .22
NET ASSET VALUE AND PUBLIC OFFERING PRICE. . . . . . . . . . . . . . . . . . .22
REDUCED SALES CHARGES. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Right of Accumulation-Cumulative Purchase Discount . . . . . . . . . . . . .24
Letter of Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Combining Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Purchases of Class A shares by Certain Persons Affiliated with the Fund,
Advantus Capital MIMLIC Management, MIMLIC Sales, Minnesota Mutual, or
Any of Minnesota Mutual's Other Affiliated Companies . . . . . . . . . . . .25
SHAREHOLDER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Open Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25
Systematic Investment Plan . . . . . . . . . . . . . . . . . . . . . . . . .26
Group Systematic Investment Plan . . . . . . . . . . . . . . . . . . . . . .26
Automatic Investment Plan. . . . . . . . . . . . . . . . . . . . . . . . . .27
Group Purchases. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27
Retirement Plans Offering Tax Benefits . . . . . . . . . . . . . . . . . . .27
<PAGE>
Systematic Withdrawal Plans. . . . . . . . . . . . . . . . . . . . . . . . .28
Exchange and Telephone Transfer Privilege. . . . . . . . . . . . . . . . . .29
REDEMPTIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29
Reinstatement Privilege. . . . . . . . . . . . . . . . . . . . . . . . . . .30
DISTRIBUTIONS AND TAX STATUS . . . . . . . . . . . . . . . . . . . . . . . . .30
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
APPENDIX A - BOND AND COMMERCIAL PAPER RATINGS . . . . . . . . . . . . . . . A-1
Bond Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Commercial Paper Ratings . . . . . . . . . . . . . . . . . . . . . . . . . A-2
APPENDIX B - FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . B-1
<PAGE>
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 Load Funds"). The
Advantus Load 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.
1
<PAGE>
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.
2
<PAGE>
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
3
<PAGE>
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
4
<PAGE>
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
5
<PAGE>
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 hold more than 5% of its
net assets, in the aggregate, in non-convertible securities rated lower than BBB
or Baa or in convertible securities rated lower than B- or B3.
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 owns
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.
6
<PAGE>
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.);
7
<PAGE>
(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
8
<PAGE>
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;
9
<PAGE>
(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.
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.
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. During the current fiscal year, each Director not affiliated with
Advantus Capital or MIMLIC Management will be compensated 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 Expenses Retirement Directors
- ---------------- ----- -------- ---------- ---------
<S> <C> <C> <C> <C>
Charles E. Arner * n/a n/a $12,000
Ellen S. Berscheid * n/a n/a $12,000
Ralph D. Ebbott * n/a n/a $12,000
</TABLE>
- -------------------------
* 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 or MIMLIC Management is the investment adviser (12
investment companies in total -- the "Fund Complex"). Such directors receive
compensation in connection with all such investment companies which, in the
aggregate, is equal to $6,000 per year and $1,500 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.
- -------------------------
As of September 4, 1996, 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"). MIMLIC Sales acts as the Funds' underwriter. Both
Advantus Capital and MIMLIC Sales 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 MIMLIC Sales
is 400 Robert Street North, St. Paul, Minnesota 55101.
CONTROL AND MANAGEMENT OF ADVANTUS CAPITAL AND MIMLIC SALES
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 $9.8 billion. MIMLIC Sales 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, 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 and Director of Advantus Capital, is also Vice President of 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%
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. 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.
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 MIMLIC Sales receives Rule 12b-1
distribution fees (see "Payment of Certain Distribution Expenses of the Funds"
below), MIMLIC Sales 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.
DISTRIBUTION AGREEMENT
The Board of Directors of each Fund, on July 17, 1996, 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 MIMLIC Sales (the "Distribution Agreements"), each dated July 17,
1996.
14
<PAGE>
Each Distribution Agreement may be terminated by the respective Fund or
MIMLIC Sales 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 MIMLIC Sales 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, MIMLIC Sales 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
MIMLIC Sales only from persons affiliated with the Funds but not with MIMLIC
Sales.
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 MIMLIC Sales 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 MIMLIC Sales for advertising, marketing and
distributing the shares of the Funds.
15
<PAGE>
The distribution fees may be used by MIMLIC Sales 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 MIMLIC Sales: (a) to compensate broker-dealers, including MIMLIC
Sales 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 MIMLIC Sales and any affiliate thereof; and
compensation paid to and expenses incurred by officers, employees or
representatives of MIMLIC Sales 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 MIMLIC Sales 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 MIMLIC Sales of a dealer incentive program. Pursuant
to the program, MIMLIC Sales 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.
MIMLIC Sales 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, MIMLIC Sales, 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 July 17, 1996, the directors of the Funds so
concluded.
The Plans of Distribution could be construed as "compensation plans"
because MIMLIC Sales 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. MIMLIC Sales 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, MIMLIC Sales 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.
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.
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.
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.
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.
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:
20
<PAGE>
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 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 September 4, 1996
----------------------------------------
Fund Class A Class B Class C
---- ------- ------- --------
Venture Fund 5,000 5,000 5,000
Index Fund 5,000 5,000 5,000
As of September 4, 1996, 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:
21
<PAGE>
Number of
Name and Address of Shareholder Shares Percentage
- ------------------------------- ------ ----------
Venture Fund
- ------------
Minnesota Mutual and affiliates* 15,000 100%
Index Fund
- ----------
Minnesota Mutual and affiliates* 15,000 100%
* 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 MIMLIC Sales 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 MIMLIC Sales.
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 September 4, 1996, 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 ($50,000) = Net Asset Value Per Share ($10.00)
- ----------------------------
Shares outstanding (5,000)
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>
$10.00 = Public Offering Price Per Share ($10.53)
------
.95
CLASS B SHARES
Net Assets ($50,000) = Net Asset Value AND Public
- --------------------------
Shares outstanding (5,000) Offering Price Per Share ($10.00)
CLASS C SHARES
Net Assets ($50,000) = Net Asset Value AND Public
- --------------------------
Shares outstanding (5,000) Offering Price Per Share ($10.00)
INDEX FUND
CLASS A SHARES
Net Assets ($50,000) = Net Asset Value Per Share ($10.00)
- --------------------------
Shares outstanding (5,000)
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:
$10.00 = Public Offering Price Per Share ($10.53)
------
.95
CLASS B SHARES
Net Assets ($50,000) = Net Asset Value AND Public
- ----------------------------
Shares outstanding (5,000) Offering Price Per Share ($10.00)
CLASS C SHARES
Net Assets ($50,000) = Net Asset Value AND Public
- ----------------------------
Shares outstanding (5,000) Offering Price Per Share ($10.00)
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.
23
<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 Load 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 MIMLIC Sales, 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 MIMLIC Sales 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 Load Funds within that time. The 13-month period is measured from
the date the Letter of Intent is approved by MIMLIC Sales, or at the purchaser's
option, it may be made retroactive 90 days, in which case MIMLIC Sales 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 Load 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 Load 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 MIMLIC Sales 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 MIMLIC Sales on a timely basis, MIMLIC Sales 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. Nevertheless, the Letter of Intent should be read carefully before
it is signed.
COMBINING PURCHASES
With respect to each of the Advantus Load 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.
PURCHASES OF CLASS A SHARES BY CERTAIN PERSONS AFFILIATED WITH THE FUND,
ADVANTUS CAPITAL MIMLIC MANAGEMENT, MIMLIC SALES, MINNESOTA MUTUAL, OR ANY OF
MINNESOTA MUTUAL'S OTHER AFFILIATED COMPANIES
Directors and officers of Advantus Capital, MIMLIC Management, MIMLIC
Sales, 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 MIMLIC
Sales, and certain accounts sold by registered investment advisers who charge
clients a fee for their services may purchase Class A shares of the Advantus
Load 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>
SYSTEMATIC INVESTMENT PLAN
Each Fund provides a convenient, voluntary method of purchasing shares
in the Fund through its "Systematic 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 Load Funds, to employ the principle of dollar cost
averaging, described below.
By acquiring Fund shares on a regular basis pursuant to a Systematic
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 your intention to invest $25 or
more monthly for at least one year. You 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 MIMLIC Sales in writing to pay them in cash. MIMLIC Sales 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
"Systematic Investment Plan" shall apply. The Plan may be terminated by MIMLIC
Sales or the shareholder at any time upon reasonable notice.
26
<PAGE>
AUTOMATIC INVESTMENT PLAN
Each Fund offers an Automatic Investment Plan, which allows you to
automatically invest a specified amount in the Fund each month.
Shares of the respective Fund may be purchased through pre-authorized
bank drafts. With the cooperation of your bank, you may authorize MIMLIC Sales
to make a withdrawal from your checking account on the 1st or 15th day of each
month in the amount you specify to purchase shares of the Fund at the public
offering price next determined after receipt of the proceeds from your bank
draft. A minimum initial investment of $25 is required, and the minimum
subsequent monthly investment under this plan is $25.
You may discontinue your Automatic Investment Plan at any time.
Further information about the plans is available from MIMLIC Sales or your
MIMLIC Sales representative.
GROUP PURCHASES
An individual who is a member of a qualified group may also purchase
shares of the Advantus Load 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 MIMLIC Sales 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 MIMLIC Sales, 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 MIMLIC Sales, and must seek, upon request, to arrange for
payroll deduction or other bulk transmission of investments to the Funds.
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 MIMLIC Sales.
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, including changes made by the Tax Reform Act of 1986.
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 MIMLIC
Sales.
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 MIMLIC
Sales 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, except in the case of Money Market Fund, 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 a "Systematic 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 MIMLIC Sales 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."
Each Fund intends 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 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. 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 futures contract, 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. As
a result of trading in futures contracts, the Fund may realize net capital gains
which, when distributed to shareholders, would be taxable in the hands of the
shareholders.
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
Financial statements for the Funds are presented in Appendix B.
These financial statements include for each Fund both (i) a Statement of
Assets and Liabilities, dated September 4, 1996, which has been audited by
KPMG Peat Marwick LLP, independent auditors, whose report thereon appears in
Appendix B and is included upon the authority of said firm as experts in
accounting and auditing, and (ii) unaudited financial statements for the
period from September 4, 1996 to May 31, 1997.
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>
APPENDIX B - FINANCIAL STATEMENTS
B-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
Advantus Venture Fund, Inc.:
We have audited the statement of assets and liabilities of Advantus Venture
Fund, Inc. as of September 4, 1996. This financial statement is the
responsibility of Fund's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash in bank by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Advantus
Index 500 Fund, Inc. at September 4, 1996, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
September 4, 1996
<PAGE>
ADVANTUS VENTURE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 4, 1996
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Cash in bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 150,000
Organizational costs (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,735
-----------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,735
-----------
LIABILITIES
Payable to Adviser (note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,735
-----------
Net assets applicable to outstanding shares. . . . . . . . . . . . . . . . . . . . . . . . . . $ 150,000
-----------
-----------
Represented by:
Capital stock - authorized 10 billion shares (Class A - 2 billion shares, Class B -
2 billion shares, Class C - 2 billion shares and 4 billion shares unallocated) of
$.01 par value (note 1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 150
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,850
-----------
Total - representing net assets applicable to outstanding capital stock . . . . . . . . . $ 150,000
-----------
-----------
Net assets applicable to outstanding Class A shares. . . . . . . . . . . . . . . . . . . . . . $ 50,000
-----------
-----------
Net assets applicable to outstanding Class B shares. . . . . . . . . . . . . . . . . . . . . . $ 50,000
-----------
-----------
Net assets applicable to outstanding Class C shares. . . . . . . . . . . . . . . . . . . . . . $ 50,000
-----------
-----------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 5,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.00
-----------
-----------
Class B - Shares outstanding 5,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.00
-----------
-----------
Class C - Shares outstanding 5,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.00
-----------
-----------
</TABLE>
See accompanying notes to statement of assets and liabilities.
<PAGE>
ADVANTUS VENTURE FUND, INC.
Notes to Statement of Assets and Liabilities
September 4, 1996
(1) ORGANIZATION
Advantus Venture Fund, Inc. (the Fund) was incorporated on July 3, 1996.
The Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class
A shares at net asset value after a specified holding period. Such holding
periods decline as the amount of the purchase increases and range from 28 to 84
months after purchase for Class B shares and 40 to 96 months after purchase for
Class C shares. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that the
level of distribution fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than distribution fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon its
relative net assets.
The only transaction of the Fund since inception has been the initial sale
on September 4, 1996 of 5,000 shares of Class A, 5,000 shares of Class B and
5,000 shares of Class C to Advantus Capital Management, Inc.
(2) FEDERAL TAXES
The Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute taxable
income to the shareholders in amounts that will avoid federal income and excise
taxes.
(3) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has entered into an investment advisory agreement with Advantus
Capital Management, Inc. (Advantus Capital or the Adviser) under which Advantus
Capital manages the Fund's assets and provides research, statistical and
advisory services and pays related office rental and executive expenses and
salaries. In addition, as part of the fee, Advantus Capital pays the expenses
of the Fund's transfer, dividend disbursing and redemption agent (The Minnesota
Mutual Life Insurance Company (Minnesota Mutual), the parent of MIMLIC Asset
Management Company who in turn is the parent of Advantus Capital). The fee for
investment management and advisory services is based on the average daily net
assets of the Fund at the annual rate of .80 percent.
<PAGE>
ADVANTUS VENTURE FUND, INC.
Notes to Statement of Assets and Liabilities - continued
(3) EXPENSES AND RELATED PARTY TRANSACTIONS - CONTINUED
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to MIMLIC Sales Corporation
(MIMLIC Sales), the underwriter of the Fund and wholly-owned subsidiary of
MIMLIC Asset Management Company, to be used to pay certain expenses incurred in
the distribution, promotion and servicing of the Fund's shares. The Class A
Plan provides for a fee up to .30 percent of average daily net assets of Class A
shares. The Class B and Class C Plans provide for a fee up to 1.00 percent of
average daily net assets of Class B and Class C shares, respectively. The Class
B and Class C 1.00 percent fee is comprised of a .75 percent distribution fee
and a .25 percent service fee. MIMLIC Sales intends to waive that portion of
Class A distribution fees which exceeds, as a percentage of average daily net
assets, .10 percent during the current fiscal year.
The Fund has entered into an administrative services agreement with
Minnesota Mutual for accounting, auditing, legal and other administrative
services which Minnesota Mutual provides. The administrative service fee for
the Fund is $3,600 per month.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, organizational costs,
printing and shareholders reports, legal, auditing and accounting services and
other miscellaneous expenses.
Advantus Capital directly incurs and pays the above operating expenses
relating to the Fund and the Fund in turn reimburses Advantus Capital. Advantus
Capital intends to voluntarily absorb certain operating expenses, other than
investment advisory fees, which exceed, as a percentage of average daily net
assets, .45% during the current fiscal year.
Legal fees in the amount of $2,100, included as organizational costs, were
incurred for services provided by a law firm of which the Fund's secretary is a
partner.
(4) ORGANIZATIONAL COSTS
The Fund expects to incur organizational expenses in connection with the
start-up and initial registration. These costs will be amortized over 60 months
on a straight-line basis beginning with the commencement of operations. If any
or all of the shares held by Advantus Capital, or any other shareholder,
representing initial capital of the Fund are redeemed during the amortization
period, the redemption proceeds will be reduced by the pro rata portion (based
on the ratio that the number of initial shares redeemed bears to the total
number of outstanding initial shares of the Fund at the date of redemption) of
the unamortized organizational cost balance.
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholder
Advantus Index 500 Fund, Inc.:
We have audited the statement of assets and liabilities of Advantus Index
500 Fund, Inc. as of September 4, 1996. This financial statement is the
responsibility of Fund's management. Our responsibility is to express an
opinion on this financial statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. Our procedures included
confirmation of cash in bank by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities referred to above
presents fairly, in all material respects, the financial position of Advantus
Index 500 Fund, Inc. at September 4, 1996, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
September 4, 1996
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 4, 1996
<TABLE>
<CAPTION>
ASSETS:
<S> <C> <C>
Cash in bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 150,000
Organizational costs (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,735
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156,735
-----------
LIABILITIES:
Payable to Adviser (note 4). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,735
-----------
Net assets applicable to outstanding shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 150,000
-----------
-----------
Represented by:
Capital stock - authorized 10 billion shares (Class A - 2 billion shares, Class B -
2 billion shares, Class C - 2 billion shares and 4 billion shares unallocated) of
$.01 par value (note 1). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 150
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 149,850
-----------
Total - representing net assets applicable to outstanding capital stock. . . . . . . . . . . . . . . . . $ 150,000
-----------
-----------
Net assets applicable to outstanding Class A shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000
-----------
-----------
Net assets applicable to outstanding Class B shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000
-----------
-----------
Net assets applicable to outstanding Class C shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 50,000
-----------
-----------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 5,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.00
-----------
-----------
Class B - Shares outstanding 5,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.00
-----------
-----------
Class C - Shares outstanding 5,000. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 10.00
-----------
-----------
</TABLE>
See accompanying notes to statement of assets and liabilities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
Notes to Statement of Assets and Liabilities
September 4, 1996
(1) ORGANIZATION
Advantus Index 500 Fund, Inc. (the Fund) was incorporated on July 3, 1996.
The Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company.
The Fund currently issues three classes of shares: Class A, Class B
and Class C shares. Class A shares are sold subject to a front-end sales
charge. Class B shares are sold subject to a contingent deferred sales charge
payable upon redemption if redeemed within six years of purchase. Class C
shares are sold without either a front-end sales charge or a contingent deferred
sales charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee
than Class A shares. Both Class B and Class C shares automatically convert to
Class A shares at net asset value after a specified holding period. Such
holding periods decline as the amount of the purchase increases and range from
28 to 84 months after purchase for Class B shares and 40 to 96 months after
purchase for Class C shares. All three classes of shares have identical voting,
dividend, liquidation and other rights and the same terms and conditions, except
that the level of distribution fees charged differs between Class A, Class B and
Class C shares. Income, expenses (other than distribution fees) and realized
and unrealized gains or losses are allocated to each class of shares based upon
its relative net assets.
The only transaction of the Fund since inception has been the initial sale
on September 4, 1996 of 5,000 shares of Class A, 5,000 shares of Class B and
5,000 shares of Class C to Advantus Capital Management, Inc.
(2) FEDERAL TAXES
The Fund intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute taxable
income to the shareholders in amounts that will avoid federal income and excise
taxes.
(3) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has entered into an investment advisory agreement with Advantus
Capital Management, Inc. (Advantus Capital or the Adviser) under which Advantus
Capital manages the Fund's assets and provides research, statistical and
advisory services and pays related office rental and executive expenses and
salaries. The fee for investment management and advisory services is based on
the average daily net assets of the Fund at the annual rate of .34 percent.
The Fund has entered into a transfer agent agreement with The Minnesota
Mutual Life Insurance Company (Minnesota Mutual), the parent of MIMLIC Asset
Management Company who in turn is the parent of Advantus Capital. Minnesota
Mutual will act as the Fund's transfer agent, dividend disbursing agent and
redemption agent. For these services, the Fund pays Minnesota Mutual, subject
to a minimum annual fee of $12,000, an annual fee of $25 per shareholder
account.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
Notes to Statement of Assets and Liabilities - continued
(3) EXPENSES AND RELATED PARTIES - CONTINUED
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to MIMLIC Sales Corporation
(MIMLIC Sales), the underwriter of the Fund and wholly-owned subsidiary of
MIMLIC Asset Management Company, to be used to pay certain expenses incurred in
the distribution, promotion and servicing of the Fund's shares. The Class A
Plan provides for a fee up to .30 percent of average daily net assets of Class A
shares. The Class B and Class C Plans provide for a fee up to 1.00 percent of
average daily net assets of Class B and Class C shares, respectively. The Class
B and Class C 1.00 percent fee is comprised of a .75 percent distribution fee
and a .25 percent service fee. MIMLIC Sales intends to waive that portion of
Class A distribution fees which exceeds, as a percentage of average daily net
assets, .10 percent during the current fiscal year.
The Fund has entered into an administrative services agreement with
Minnesota Mutual for accounting, auditing, legal and other administrative
services which Minnesota Mutual provides. The administrative service fee for
the Fund is $3,600 per month.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, organizational costs,
printing and shareholders reports, legal, auditing and accounting services and
other miscellaneous expenses.
Advantus Capital directly incurs and pays the above operating expenses
relating to the Fund and the Fund in turn reimburses Advantus Capital. Advantus
Capital intends to voluntarily absorb certain operating expenses, other than
investment advisory fees, which exceed, as a percentage of average daily net
assets, .26% during the current fiscal year.
Legal fees in the amount of $2,100, included as organizational costs, were
incurred for services provided by a law firm of which the Fund's secretary is a
partner.
(4) ORGANIZATIONAL COSTS
The Fund expects to incur organizational expenses in connection with the
start-up and initial registration. These costs will be amortized over 60 months
on a straight-line basis beginning with the commencement of operations. If any
or all of the shares held by Advantus Capital, or any other shareholder,
representing initial capital of the Fund are redeemed during the amortization
period, the redemption proceeds will be reduced by the pro rata portion (based
on the ratio that the number of initial shares redeemed bears to the total
number of outstanding initial shares of the Fund at the date of redemption) of
the unamortized organizational cost balance.
<PAGE>
ADVANTUS VENTURE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
Investments in securities, at value - see accompanying
schedule for detailed listing (identified cost: $27,246,323). . . . . . . . . . . . $29,116,096
Cash in bank on demand deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . 134,335
Receivable for investment securities sold. . . . . . . . . . . . . . . . . . . . . . 919,386
Receivable for Fund shares sold. . . . . . . . . . . . . . . . . . . . . . . . . . . 13,002
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,632
Organizational costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,724
-----------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,287,175
-----------
LIABILITIES
Payable for investment securities purchased. . . . . . . . . . . . . . . . . . . . . 2,092,723
Payable to Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113,353
-----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,206,076
-----------
Net assets applicable to outstanding capital stock . . . . . . . . . . . . . . . . . $28,081,099
-----------
-----------
REPRESENTED BY:
Capital stock - authorized 10 billion shares (Class A--2 billion shares,
Class B--2 billion shares, Class C--2 billion shares and 4 billion shares
unallocated) of $.01 par value (note 1). . . . . . . . . . . . . . . . . . . . . $ 26,371
Additional paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26,339,030
Undistributed net investment income . . . . . . . . . . . . . . . . . . . . . . . . 30,767
Accumulated net realized losses from investments. . . . . . . . . . . . . . . . . . (184,842)
Unrealized appreciation of investments. . . . . . . . . . . . . . . . . . . . . . . 1,869,773
-----------
Total - representing net assets applicable to
outstanding capital stock. . . . . . . . . . . . . . . . . . . . . . . . . . . $28,081,099
-----------
-----------
Net assets applicable to outstanding Class A Shares . . . . . . . . . . . . . . . . $27,474,596
-----------
-----------
Net assets applicable to outstanding Class B Shares . . . . . . . . . . . . . . . . $ 522,408
-----------
-----------
Net assets applicable to outstanding Class C Shares . . . . . . . . . . . . . . . . $ 84,095
-----------
-----------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 2,580,035. . . . . . . . . . . . . . . . . . . . . . . $ 10.65
-----------
-----------
Class B - Shares outstanding 49,122 . . . . . . . . . . . . . . . . . . . . . . . . $ 10.63
-----------
-----------
Class C - Shares outstanding 7,905. . . . . . . . . . . . . . . . . . . . . . . . . $ 10.64
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ADVANTUS VENTURE FUND, INC.
STATEMENT OF OPERATIONS
PERIOD FROM SEPTEMBER 4, 1996 TO MAY 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 80,643
Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 143,389
Total investment income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 224,032
-----------
Expenses:
Investment advisory fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,026
Distribution fees - Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,383
Distribution fees - Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . 689
Distribution fees - Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . 201
Administrative service fee. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32,400
Amortization of organizational costs. . . . . . . . . . . . . . . . . . . . . . . . 5,837
Custodian fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,523
Auditing and accounting services. . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Legal fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,108
Directors' fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Registration fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Printing and shareholder reports. . . . . . . . . . . . . . . . . . . . . . . . . . 890
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,890
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 938
-----------
Total expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 170,988
Less fees and expenses waived or absorbed by Adviser:
Class A distribution fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . (16,922)
Other fund expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (11,863)
-----------
Total net expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 142,203
Investment income - net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,829
-----------
Realized and unrealized gains (losses) on investments:
Net realized losses on investments (note 3) . . . . . . . . . . . . . . . . . . . . (184,842)
Net change in unrealized appreciation or depreciation on investments . . . . . . . 1,869,773
-----------
Net gains on investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,684,931
-----------
Net increase in net assets resulting from operations. . . . . . . . . . . . . . . . $ 1,766,760
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ADVANTUS VENTURE FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM SEPTEMBER 4, 1996 TO MAY 31, 1997
(UNAUDITED)
<TABLE>
<S> <C>
Operations:
Investment income - net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 81,829
Net realized losses on investments. . . . . . . . . . . . . . . . . . . . . . . . . (184,842)
Net change in unrealized appreciation or depreciation of investments. . . . . . . . 1,869,773
-----------
Increase in net assets resulting from operations . . . . . . . . . . . . . . . . 1,766,760
-----------
Distributions to shareholders from net investment income:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (55,392)
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (830)
Class C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (677)
-----------
Total distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (56,899)
-----------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25,802,651
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 496,048
Class C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78,666
Shares issued as a result of reinvested dividends:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,649
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830
Class C. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 677
Payments for redemption of shares:
Class A. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (8,759)
Class B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (524)
Increase in net assets from capital share transactions . . . . . . . . . . . . . 26,371,238
-----------
Total increase in net assets . . . . . . . . . . . . . . . . . . . . . . . . . . 28,081,099
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . . . . . . . . --
-----------
Net assets at end of period (including undistributed net investment income
of $30,767). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 28,081,099
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ADVANTUS VENTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997
(UNAUDITED)
(1) ORGANIZATION
Advantus Venture Fund, Inc. (the Fund) was incorporated on July 3, 1996.
The Fund is registered under the Investment Company Act of 1940 (as amended)
as a diversified, open-end management investment company.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge
payable upon redemption if redeemed within six years of purchase. Class C
shares are sold without either a front-end sales charge or a contingent
deferred sales charge. Both Class B and Class C are subject to a higher Rule
12b-1 fee than Class A shares. Both Class B and Class C shares automatically
convert to Class A shares at net asset value after a specified holding
period. Such holding periods decline as the amount of the purchase increases
and range from 28 to 84 months after purchase for Class B shares and 40 to 96
months after purchase for Class C shares. All three classes of shares have
identical voting, dividend, liquidation and other rights and the same terms
and conditions, except that the level of distribution fees charged differs
between Class A, Class B and Class C shares. Income, expenses (other than
distribution fees) and realized and unrealized gains or losses are allocated
to each class of shares based upon its relative net assets.
On September 4, 1996, Advantus Capital Management, Inc. (Advantus Capital
or the Adviser) purchased 5,000 Class A shares, 5,000 Class B shares and
5,000 Class C shares. Advantus Capital is a wholly-owned subsidiary of
MIMLIC Asset Management Company (MIMLIC Management) which is a wholly-owned
subsidiary of The Minnesota Mutual Life Insurance Company (Minnesota Mutual).
Operations of the Fund did not formally commence until January 31, 1997 when
the shares became effectively registered under the Securities Exchange Act of
1933 (1933 Act). Prior to commencement of operations, Minnesota Mutual
purchased 2,500,000 Class A shares for $25 million.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
resulting from operations during the period. Actual results could differ
from those estimates.
<PAGE>
ADVANTUS VENTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for
which no sale was reported on that date are valued on the basis of the last
current bid price. When market quotations are not readily available,
securities are valued at fair value as determined in good faith by the Board
of Directors. Such fair values are determined using pricing services or
prices quoted by independent brokers. Short-term securities are valued at
market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date
and interest income, including amortization of bond premium and discount
computed on a level yield basis, is accrued daily.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
all of its taxable income to shareholders. Therefore, no income tax
provision is required. The Fund's policy is to make required minimum
distributions prior to December 31, in order to avoid federal excise tax.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary
book-to-tax differences. The character of distributions made during the year
from net investment income or net realized gains may differ from their
ultimate characterization for federal income tax purposes. Also, due to the
timing of dividend distributions, the fiscal year in which amounts are
distributed may differ from the year that the income or realized gains
(losses) were recorded by the Fund.
On the statement of assets and liablilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income and decrease additional paid-in capital
by $5,837.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from September 4, 1996 to May 31, 1997, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $30,070,394 and $5,918,084, respectively.
<PAGE>
ADVANTUS VENTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital. Under
the agreement, Advantus Capital manages the Fund's assets and provides
research, statistical and advisory services and pays related office rental
and executive expenses and salaries. In addition, as part of the advisory
fee, Advantus Capital pays the expenses of the Fund's transfer, dividend
disbursing and redemption agent (Minnesota Mutual). The fee for investment
management and advisory services is based on the average daily net assets of
the Fund at the annual rate of .80 percent.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (as amended). The Fund pays distribution fees to MIMLIC Sales
Corporation (MIMLIC Sales), the underwriter of the Fund and wholly-owned
subsidiary of MIMLIC Management, to be used to pay certain expenses incurred
in the distribution, promotion and servicing of the Fund's shares. The Class
A Plan provides for a fee up to .30 percent of average daily net assets of
Class A shares. The Class B and Class C Plans provide for a fee up to 1.00
percent of average daily net assets of Class B and Class C shares,
respectively. The Class B and Class C 1.00 percent fee is comprised of a .75
percent distribution fee and a .25 percent service fee. MIMLIC Sales is
currently waiving that portion of Class A distribution fees which exceeds, as
a percentage of average daily net assets, .10 percent. MIMLIC Sales waived
Class A distribution fees in the amount of $16,922 for the period ended May
31, 1997.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, organizational costs and
other miscellaneous expenses.
The Fund pays an administrative services fee to Minnesota Mutual for
accounting, auditing, legal and other administrative services which Minnesota
Mutual provides. The administrative service fee is $3,600 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the period ended May
31, 1997, Advantus Capital voluntarily agreed to absorb $11,863 in expenses
which were otherwise payable by the Fund.
As of May 31, 1997, Minnesota Mutual and subsidiaries and the directors and
officers of the Fund as a whole own the following shares:
NUMBER OF
SHARES PERCENTAGE OWNED
----------------- ----------------
Class A.............................. 2,505,074 97.1%
Class B.............................. 5,070 10.3%
Class C.............................. 5,067 64.1%
During the period ended May 31, 1997, legal fees, a portion of which are
included in organizational costs, were paid to a law firm of which the Fund's
secretary is a partner in the amount of $22,941.
<PAGE>
ADVANTUS VENTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs will be amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or
all of the shares held by Advantus Capital, or any other holder, representing
initial capital of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by the pro rata portion (based on the
ratio that the number of initial shares redeemed bears to the total number of
outstanding initial shares of the Fund at the date of redemption) of the
unamortized organizational cost balance.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from September 4, 1996 to May 31, 1997
were as follows:
Class A Class B Class C
----------- ---------- ----------
Sold................................... 2,580,350 49,057 7,171
Issued for reinvested distributions.... 166 82 734
Redeemed............................... (481) (17) --
----------- ---------- ----------
2,580,035 49,122 7,905
----------- ---------- ----------
----------- ---------- ----------
<PAGE>
ADVANTUS VENTURE FUND, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
the period from January 31, 1997 (effective date of 1933 Act registration)
to May 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. . . . . . . . . . . . . . . . . 0.02 - -
Net gains or losses on securities (both
realized and unrealized). . . . . . . . . . . . . 0.48 0.47 0.48
--------- --------- ---------
Total from investment operations. . . . . . . . . 0.50 0.47 0.48
--------- --------- ---------
Less distributions:
Dividends from net investment income. . . . . . . (0.02) (0.01) (0.01)
--------- --------- ---------
Net asset value, end of period . . . . . . . . . . . . $10.65 $10.63 $10.64
--------- --------- ---------
--------- --------- ---------
Total return (a) (b) . . . . . . . . . . . . . . . . . 4.9% 4.8% 4.7%
Net assets, end of period (in thousands) . . . . . . . $27,475 $522 $84
Ratio of expenses to average daily
net assets. . . . . . . . . . . . . . . . . . . . 1.35% (c) 2.25% (c) 2.25% (c)
Ratio of net investment income to
average daily net assets . . . . . . . . . . . .. .67% (c) (.14%) (c) (.14%) (c)
Portfolio turnover rate (excluding
short-term securities). . . . . . . . . . . . . . 25.2% 25.2% 25.2%
Average commission rate on common
stock transactions. . . . . . . . . . . . . . . . $.0547 $.0547 $.0547
</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,
commencement of operations, to May 31, 1997.
(c) Adjusted to an annual basis.
<PAGE>
ADVANTUS VENTURE FUND, INC.
INVESTMENTS IN SECURITIES
MAY 31, 1997
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE (a)
<S> <C>
COMMON STOCKS (92.0%)
CAPITAL GOODS (6.9%)
Machinery (4.9%)
31,800 Shaw Group, Incorporated (b) . . . . . . . . . . . . . . . . . $ 552,525
31,800 United Dominion Industries . . . . . . . . . . . . . . . . . . 822,825
---------
1,375,350
---------
Electronics (2.0%)
22,200 Triumph Group, Incorporated (b) . . . . . . . . . . . . . . . 568,875
---------
CONSUMER GOODS AND SERVICES (27.7%)
Food (9.4%)
11,900 Dominick's Supermarkets, Incorporated (b) . . . . . . . . . . 288,575
14,300 Earthgrains Company . . . . . . . . . . . . . . . . . . . . . 815,100
57,700 Hudson Foods, Incorporated . . . . . . . . . . . . . . . . . . 915,988
21,800 International Multifoods Corporation . . . . . . . . . . . . . 615,850
---------
2,635,513
---------
Retail (10.3%)
38,600 Brown Group, Incorporated . . . . . . . . . . . . . . . . . . 694,800
83,500 Michael's Stores, Incorporated (b) . . . . . . . . . . . . . . 1,649,125
25,000 Pier 1 Imports, Incorporated . . . . . . . . . . . . . . . . . 559,375
---------
2,903,300
---------
Consumer Cyclicals (8.0%)
36,900 American Pad and Paper Company (b) . . . . . . . . . . . . . . 682,650
17,100 Frontier Insurance Group, Incorporated . . . . . . . . . . . . 938,362
34,000 Quest Diagnostics, Incorporated . . . . . . . . . . . . . . . 629,000
---------
2,250,012
---------
CREDIT SENSITIVE (27.0%)
Finance (17.1%)
18,600 Allied Group, Incorporated . . . . . . . . . . . . . . . . . . 739,350
25,751 Amerus Life Holdings, Incorporated . . . . . . . . . . . . . . 666,307
18,300 Commercial Federal Corporation . . . . . . . . . . . . . . . . 638,212
34,000 Peoples Heritage Financial Group . . . . . . . . . . . . . . . 1,126,250
18,200 RLI Corporation. . . . . . . . . . . . . . . . . . . . . . . . 580,125
80,160 Sovereign Bancorp, Incorporated. . . . . . . . . . . . . . . . 1,052,100
---------
4,802,344
---------
</TABLE>
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS VENTURE FUND, INC
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE (a)
<S> <C>
Real Estate (9.9%)
9,900 Apartment Investment and Management Company. . . . . . . . . . $ 275,963
7,100 Felcor Suite Hotels, Incorporated. . . . . . . . . . . . . . . 264,475
18,348 Kilroy Realty Corporation . . . . . . . . . . . . . . . . . . 440,352
21,350 Liberty Property Trust . . . . . . . . . . . . . . . . . . . . 512,400
22,900 Prentiss Properties Trust. . . . . . . . . . . . . . . . . . . 538,150
24,000 Summit Properties Incorporated . . . . . . . . . . . . . . . . 483,000
19,700 Sunstone Hotel Investors, Incorporated . . . . . . . . . . . . 251,175
---------
2,765,515
---------
INTERMEDIATE GOODS AND SERVICES (23.6%)
Energy (11.2%)
16,700 Piedmont Natural Gas Company (b) . . . . . . . . . . . . . . . 407,812
30,800 Sierra Pacific Resources, Incorporated (b) . . . . . . . . . . 912,450
35,900 Valero Energy Corporation. . . . . . . . . . . . . . . . . . . 1,283,425
15,100 Wicor, Incorporated (b). . . . . . . . . . . . . . . . . . . . 554,925
---------
3,158,612
---------
Materials (11.1%)
46,600 Century Aluminum Company . . . . . . . . . . . . . . . . . . . 832,975
17,500 Fort Howard Corporation (b) . . . . . . . . . . . . . . . . . 803,906
12,900 Gibraltar Steel Corporation (b) . . . . . . . . . . . . . . . 280,575
53,700 Schulman, Incorporated . . . . . . . . . . . . . . . . . . . . 1,194,825
---------
3,112,281
---------
Transportation (1.3%)
11,600 Teekay Shipping Corporation (c). . . . . . . . . . . . . . . . 363,950
---------
TECHNOLOGY (6.8%)
36,900 Control Data Systems (b) . . . . . . . . . . . . . . . . . . . 539,663
15,300 Dupont Photomasks, Incorporated (b). . . . . . . . . . . . . . 830,025
22,200 Imation Corporation (b). . . . . . . . . . . . . . . . . . . . 532,800
---------
1,902,488
---------
Total common stocks (cost: $23,970,024) . . . . . . . . . . . 25,838,240
----------
PRINCIPAL
SHORT-TERM SECURITIES (11.7%)
212,407 U.S. Treasury Bill. . . . . . . . . . . . . .5.141% 08/28/97 212,495
2,842,699 U.S. Treasury Bill. . . . . . . . . .5.04% - 4.56 07/24/97 2,850,763
212,689 U.S. Treasury Bill. . . . . . . . . .5.49% - 4.99 06/19/97 214,598
---------
Total short-term securities (cost: $3,276,299) . . . . . . . 3,277,856
---------
Total investments in securities (cost: $27,246,323) (d). . . $ 29,116,096
----------
----------
</TABLE>
See accompanying notes to investments in securities.
<PAGE>
Notes to Investments in Securities
(a) Securites are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 1.3% of net assets in foreign securities as of May 31, 1997.
(d) At May 31, 1997 the cost of securities for federal income tax purposes was
$27,273,804. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
Gross unrealized appreciation . . . . . . . . . . . . . . $ 2,891,638
Gross unrealized depreciation . . . . . . . . . . . . . . (1,049,346)
-------------
Net unrealized appreciation . . . . . . . . . . . . . . . $ 1,842,292
-------------
-------------
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
<S> <C>
Investments in securities, at value - see accompanying
schedule for detailed listing (identified cost: $7,162,434). . . . . . . . $ 8,031,231
Cash in bank on demand deposit . . . . . . . . . . . . . . . . . . . . . . . 143,623
Receivable for investment securities sold. . . . . . . . . . . . . . . . . . 19,669
Receivable for Fund shares sold. . . . . . . . . . . . . . . . . . . . . . . 17,712
Dividends receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,211
Organizational costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81,127
------------
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,309,573
------------
LIABILITIES
Payable for investment securities purchased. . . . . . . . . . . . . . . . . 329,133
Payable for Fund shares repurchased. . . . . . . . . . . . . . . . . . . . . 5,658
Payable to Adviser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86,196
------------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 420,987
------------
Net assets applicable to outstanding capital stock . . . . . . . . . . . . . $ 7,888,586
------------
------------
REPRESENTED BY:
Capital stock - authorized 10 billion shares (Class A--2 billion shares,
Class B--2 billion shares, Class C--2 billion shares and 4 billion shares
unallocated) of $.01 par value (note 1). . . . . . . . . . . . . . . . $ 6,855
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 6,982,980
Undistributed net investment income. . . . . . . . . . . . . . . . . . . . 22,688
Accumulated net realized gains from investments. . . . . . . . . . . . . . 7,266
Unrealized appreciation of investments . . . . . . . . . . . . . . . . . . 868,797
------------
Total - representing net assets applicable to
outstanding capital stock . . . . . . . . . . . . . . . . . . . . . . $ 7,888,586
------------
------------
Net assets applicable to outstanding Class A Shares . . . . . . . . . . . . $ 6,720,869
------------
------------
Net assets applicable to outstanding Class B Shares . . . . . . . . . . . . $ 985,080
------------
------------
Net assets applicable to outstanding Class C Shares . . . . . . . . . . . . $ 182,637
------------
------------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 583,817 . . . . . . . . . . . . . . . . . . . $ 11.51
------------
------------
Class B - Shares outstanding 85,830. . . . . . . . . . . . . . . . . . . . $ 11.48
------------
------------
Class C - Shares outstanding 15,885. . . . . . . . . . . . . . . . . . . . $ 11.50
------------
------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
STATEMENT OF OPERATIONS
PERIOD FROM SEPTEMBER 4, 1996 TO MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Investment income:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 8,104
Dividends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,598
------------
Total investment income . . . . . . . . . . . . . . . . . . . . . . . . 55,702
------------
Expenses
Investment advisory fee. . . . . . . . . . . . . . . . . . . . . . . . . . 8,620
Distribution fees - Class A. . . . . . . . . . . . . . . . . . . . . . . . 5,734
Distribution fees - Class B. . . . . . . . . . . . . . . . . . . . . . . . 1,218
Distribution fees - Class C. . . . . . . . . . . . . . . . . . . . . . . . 268
Administrative service fee . . . . . . . . . . . . . . . . . . . . . . . . 32,400
Amortization of organizational costs . . . . . . . . . . . . . . . . . . . 5,795
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,516
Auditing and accounting services . . . . . . . . . . . . . . . . . . . . . 5,000
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,858
Directors' fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Registration fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Printing and shareholder reports . . . . . . . . . . . . . . . . . . . . . 189
Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,973
Transfer agent fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,000
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,317
------------
Total expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77,912
Less fees and expenses waived or absorbed by Adviser:
Class A distribution fees . . . . . . . . . . . . . . . . . . . . . . . (3,823)
Other fund expenses . . . . . . . . . . . . . . . . . . . . . . . . . . (55,480)
------------
Total net expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 18,609
------------
Investment income - net . . . . . . . . . . . . . . . . . . . . . . . . 37,093
------------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3). . . . . . . . . . . . . . . 7,266
Net change in unrealized appreciation or depreciation on investments 868,797
------------
Net gains on investments. . . . . . . . . . . . . . . . . . . . . . . 876,063
------------
Net increase in net assets resulting from operations . . . . . . . . . . . . $ 913,156
------------
------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM SEPTEMBER 4, 1996 TO MAY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
<S> <C>
Operations:
Investment income - net. . . . . . . . . . . . . . . . . . . . . . . . . . $ 37,093
Net realized gains on investments. . . . . . . . . . . . . . . . . . . . . 7,266
Net change in unrealized appreciation or depreciation of investments . . . 868,797
------------
Increase in net assets resulting from operations. . . . . . . . . . . . 913,156
------------
Distributions to shareholders from net investment income:
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (17,875)
Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,507)
Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (818)
------------
Total distributions . . . . . . . . . . . . . . . . . . . . . . . . . . (20,200)
------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,933,124
Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 934,291
Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168,183
Shares issued as a result of reinvested dividends:
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,693
Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,507
Class C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 818
Payments for redemption of shares:
Class A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35,999)
Class B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (7,987)
------------
Increase in net assets from capital share transactions. . . . . . . . . 6,995,630
------------
Total increase in net assets. . . . . . . . . . . . . . . . . . . . . . 7,888,586
------------
Net assets at beginning of period. . . . . . . . . . . . . . . . . . . . . . --
Net assets at end of period (including undistributed net investment income
of $22,688) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,888,586
------------
------------
</TABLE>
See accompanying notes to financial statements.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997
(UNAUDITED)
(1) ORGANIZATION
Advantus Index 500 Fund, Inc. (the Fund) was incorporated on July 3, 1996.
The Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class
A shares at net asset value after a specified holding period. Such holding
periods decline as the amount of the purchase increases and range from 28 to 84
months after purchase for Class B shares and 40 to 96 months after purchase for
Class C shares. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that the
level of distribution fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than distribution fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon its
relative net assets.
On September 4, 1996, Advantus Capital Management, Inc. (Advantus Capital
or the Adviser) purchased 5,000 Class A shares, 5,000 Class B shares and 5,000
Class C shares. Advantus Capital is a wholly-owned subsidiary of MIMLIC Asset
Management Company (MIMLIC Management) which is a wholly-owned subsidiary of The
Minnesota Mutual Life Insurance Company (Minnesota Mutual). Operations of the
Fund did not formally commence until January 31, 1997 when the shares became
effectively registered under the Securities Exchange Act of 1933 (1933 Act).
Prior to commencement of operations, Minnesota Mutual purchased 500,000 Class A
shares for $5 million.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES-(CONTINUED)
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price. When market quotations are not readily available, securities are
valued at fair value as determined in good faith by the Board of Directors.
Such fair values are determined using pricing services or prices quoted by
independent brokers. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the identified-
cost basis. Dividend income is recognized on the ex-dividend date and interest
income, including amortization of bond premium and discount computed on a level
yield basis, is accrued daily.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its taxable income to shareholders. Therefore, no income tax provision is
required. The Fund's policy is to make required minimum distributions prior to
December 31, in order to avoid federal excise tax.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary book-to-tax
differences. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income and decrease additional paid-in capital
by $5,795.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from September 4, 1996 to May 31, 1997, purchases of
securities and proceeds from sales, other than temporary investments in short-
term securities aggregated $7,142,606 and $219,993, respectively.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital. Under
the agreement, Advantus Capital acts as investment adviser and manager for the
Fund. The fee for investment management and advisory services is based on the
average daily net assets of the Fund at the annual rate of .34 percent. The
Fund has engaged Minnesota Mutual to act as its transfer agent, dividend
disbursing agent and redemption agent and bears the expenses of such services.
Subject to a minimum annual fee of $12,000, Minnesota Mutual provides transfer
agent services to the Fund at an annual cost of $25 per shareholder account.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to MIMLIC Sales Corporation
(MIMLIC Sales), the underwriter of the Fund and wholly-owned subsidiary of
MIMLIC Management, to be used to pay certain expenses incurred in the
distribution, promotion and servicing of the Fund's shares. The Class A Plan
provides for a fee up to .30 percent of average daily net assets of Class A
shares. The Class B and Class C Plans provide for a fee up to 1.00 percent of
average daily net assets of Class B and Class C shares, respectively. The Class
B and Class C 1.00 percent fee is comprised of a .75 percent distribution fee
and a .25 percent service fee. MIMLIC Sales is currently waiving that portion
of Class A distribution fees which exceeds, as a percentage of average daily net
assets, .10 percent. MIMLIC Sales waived Class A distribution fees in the
amount of $3,823 for the period ended May 31, 1997.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, organizational costs and other
miscellaneous expenses.
The Fund pays an administrative services fee to Minnesota Mutual for
accounting, auditing, legal and other administrative services which Minnesota
Mutual provides. The administrative service fee is $3,600 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the period ended May 31,
1997, Advantus Capital voluntarily agreed to absorb $55,480 in expenses which
were otherwise payable by the Fund.
As of January 31, 1997, Minnesota Mutual and subsidiaries and the directors
and officers of the Fund as a whole own the following shares:
NUMBER OF
SHARES PERCENTAGE OWNED
----------- ----------------
Class A. . . . . . . . . . . . . . . . . . . 505,089 86.5%
Class B. . . . . . . . . . . . . . . . . . . 5,086 5.9%
Class C. . . . . . . . . . . . . . . . . . . 5,081 32.0%
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
NOTES TO FINANCIAL STATEMENTS-CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - CONTINUED
During the period ended May 31, 1997, legal fees, a portion of which are
included in organizational costs, were paid to a law firm of which the Fund's
secretary is a partner in the amount of $21,406.
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs will be amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or
all of the shares held by Advantus Capital, or any other holder, representing
initial capital of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by the pro rata portion (based on the ratio
that the number of initial shares redeemed bears to the total number of
outstanding initial shares of the Fund at the date of redemption) of the
unamortized organizational cost balance.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from September 4, 1996 to May 31,
1997 were as follows:
CLASS A CLASS B CLASS C
---------- ---------- ----------
Sold . . . . . . . . . . . . . . . . . 586,917 86,383 15,804
Issued for reinvested distributions. . 162 145 81
Redeemed . . . . . . . . . . . . . . . (3,262) (698) --
--------- ------- --------
583,817 85,830 15,885
--------- ------- --------
--------- ------- --------
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
the period from
January 31, 1997 to May 31, 1997 are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------- -------- -------
<S> <C> <C> <C>
Net asset value, beginning of period . . . . . . . . . . . . $10.68 $10.69 $10.69
Income from investment operations:
Net investment income . . . . . . . . . . . . . . . . . 0.05 0.01 0.01
Net gains or losses on securities (both
realized and unrealized) . . . . . . . . . . . . . 0.81 0.81 0.82
-------- -------- -------
Total from investment operations . . . . . . . . . 0.86 0.82 0.83
-------- -------- -------
Less distributions:
Dividends from net investment income. . . . . . . . . . (0.03) (0.03) (0.02)
--------- -------- -------
Net asset value, end of period . . . . . . . . . . . . . . . $11.51 $ 11.48 $11.50
--------- -------- -------
--------- -------- -------
Total return (a)(b). . . . . . . . . . . . . . . . . . . . . 8.1% 7.8% 7.7%
Net assets, end of period (in thousands) $6,721 $ 985 $ 183
Ratio of expenses to average daily
net assets (d). . . . . . . . . . . . . . . . . . . . . 0.70% (c) 1.60% (c) 1.60% (c)
Ratio of net investment income to
average daily net assets (d). . . . . . . . . . . . . . 1.42% (c) .48% (c) .48% (c)
Portfolio turnover rate (excluding
short-term securities). . . . . . . . . . . . . . . . . 3.5% 3.5% 3.5%
Average commission rate on common
stock transactions. . . . . . . . . . . . . . . . . . . $ .0399 $ .0399 $.0399
</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,
commencement of operations, to May 31, 1997.
(c) Adjusted to an annual basis.
(d) The Fund's Distributor and Adviser voluntarily waived and absorbed
$59,303 in expenses for the period from January 31, 1997 to May 31,
1997. If Class A, B and C shares had been charged for these expenses,
the ratio of expenses to average daily net assets would have been 2.56%,
3.29% and 3.29% for Class A, B and C, respectively, and the ratio of net
investment income to average daily net assets would have been -.44%,
-1.21%, and -1.21% for Class A, B and C, respectively.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES
MAY 31, 1997
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
MARKET
SHARES VALUE (a)
COMMON STOCKS (98.9%)
CAPITAL GOODS (7.5%)
Machinery (7.3%)
300 Allied-Signal, Inc . . . . . . . . . . . . $ 23,025
200 AMP Incorporated . . . . . . . . . . . . . 8,225
200 Avery Dennison Corporation . . . . . . . . 7,525
300 Browning-Ferris Industries, Inc. . . . . . 9,825
100 Case Corporation . . . . . . . . . . . . . 5,900
200 Caterpillar, Inc . . . . . . . . . . . . . 19,525
200 Cooper Industries. . . . . . . . . . . . . 10,200
200 Dana Corporation . . . . . . . . . . . . . 7,225
300 Deere & Company. . . . . . . . . . . . . . 15,337
300 Dover Corporation. . . . . . . . . . . . . 17,175
100 Eaton Corporation. . . . . . . . . . . . . 7,975
500 Emerson Electric Company . . . . . . . . . 27,000
100 Fluor Corporation . . . . . . . . . . . . 5,287
100 General Dynamics Corporation . . . . . . . 7,488
3,900 General Electric Company . . . . . . . . . 235,462
100 Grainger W W, Inc. . . . . . . . . . . . . 8,025
300 Ikon Office Solutions, Inc . . . . . . . . 8,700
200 Illinois Tool Works, Inc . . . . . . . . . 9,925
200 Ingersoll-Rand Company . . . . . . . . . . 10,900
200 ITT Corporation (b) . . . . . . . . . . . 11,925
100 ITT Hartford Group . . . . . . . . . . . . 7,800
200 Johnson Controls . . . . . . . . . . . . . 8,475
600 Laidlaw, Inc (c) . . . . . . . . . . . . . 8,100
200 Paccar, Inc. . . . . . . . . . . . . . . . 9,050
200 Parker Hannifin Corporation. . . . . . . . 10,525
100 Raychem Corporation. . . . . . . . . . . . 7,412
100 Textron, Inc . . . . . . . . . . . . . . . 11,850
200 Thermo Electron Corporation (b) . . . . . 6,900
200 Tyco International Ltd . . . . . . . . . . 12,700
100 Western Atlas Corporation (b) . . . . . . 6,787
600 Westinghouse Electric Corporation. . . . . 12,150
300 Whitman Corporation . . . . . . . . . . . 7,237
400 WMX Technologies, Inc. . . . . . . . . . . 12,700
---------
578,335
---------
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
Electronics (.2%)
300 Advanced Micro Devices, Inc (b) . . . . . $ 12,000
CONSUMER GOODS AND SERVICES (34.9%)
Consumer Goods (19.8%)
900 Abbott Laboratories. . . . . . . . . . . . 56,700
200 Alberto-Culver Company . . . . . . . . . . 5,700
300 Alza Corporation (b) . . . . . . . . . . . 8,850
200 American Brands, Inc . . . . . . . . . . . 9,800
700 American Home Products Corporation . . . . 53,375
300 Amgen, Inc (b) . . . . . . . . . . . . . . 20,063
500 Anheuser-Busch Companies, Inc. . . . . . . 21,437
200 Avon Products. . . . . . . . . . . . . . . 12,750
300 Baxter International, Inc. . . . . . . . . 15,825
200 Becton, Dickinson and Company. . . . . . . 9,850
200 Boston Scientific Corporation (b) . . . . 10,675
1,200 Bristol-Myers Squibb Company . . . . . . . 88,050
200 Brown-Forman, Inc. . . . . . . . . . . . . 10,225
200 Cabletron Systems Incorporated (b) . . . . 8,800
200 Liz Clairborne, Incorporated . . . . . . . 9,125
3,000 Coca-Cola Company. . . . . . . . . . . . . 204,750
400 Colgate-Palmolive Company. . . . . . . . . 24,800
700 Columbia/HCA Healthcare Corporation. . . . 25,637
300 Deluxe Corporation . . . . . . . . . . . . 9,750
700 Eli Lilly & Company. . . . . . . . . . . . 65,100
700 Gillette Company . . . . . . . . . . . . . 62,212
200 Guidant Corporation. . . . . . . . . . . . 15,525
200 International Flavors & Fragrances, Inc. . 8,875
1,600 Johnson & Johnson. . . . . . . . . . . . . 95,800
200 Mallinckrodt, Inc. . . . . . . . . . . . . 7,475
300 Medtronic, Inc . . . . . . . . . . . . . . 22,200
1,400 Merck & Company., Inc. . . . . . . . . . . 125,825
1,800 Pepsico, Inc . . . . . . . . . . . . . . . 66,150
800 Pfizer, Inc. . . . . . . . . . . . . . . . 82,300
500 Pharmacia & UpJohn . . . . . . . . . . . . 17,313
2,900 Philip Morris Companies, Inc . . . . . . . 127,600
800 Procter & Gamble Company . . . . . . . . . 110,300
400 Schering-Plough Corporation. . . . . . . . 36,300
300 Service Corporation International. . . . . 10,575
400 Seagram Company Ltd (c). . . . . . . . . . 16,100
300 Tenet Healthcare Corporation (b) . . . . 8,250
200 Unilever N.V. (c). . . . . . . . . . . . . 38,750
300 UST, Inc . . . . . . . . . . . . . . . . . 8,550
300 Warner-Lambert Company . . . . . . . . . . 30,225
---------
1,561,587
---------
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
Consumer Services (5.0%)
300 H & R Block, Incoporated . . . . . . . . . $ 9,900
200 Ceridian Corporation (b) . . . . . . . . . 7,350
200 Cognizant Corporation . . . . . . . . . . 7,400
400 Comcast Corporation. . . . . . . . . . . . 6,950
300 CUC International, Inc (b) . . . . . . . . 6,900
800 Walt Disney Company. . . . . . . . . . . . 65,500
200 R.R. Donnelley & Sons Company. . . . . . . 7,425
200 Dow Jones & Company. . . . . . . . . . . . 7,775
300 Dun & Bradstreet Corporation . . . . . . . 7,838
400 Eastman Kodak Company. . . . . . . . . . . 33,150
200 Gannett Company. . . . . . . . . . . . . . 18,500
300 Hasbro, Inc. . . . . . . . . . . . . . . . 8,700
100 HFS Incorporated (b) . . . . . . . . . . . 5,388
400 Healthsouth Rehabilitation
Corporation (b) . . . . . . . . . . . . . 9,150
300 Hilton Hotels Corporation. . . . . . . . . 8,475
800 Humana (b) . . . . . . . . . . . . . . . . 18,100
200 Knight-Ridder, Incorporated. . . . . . . . 8,625
100 Marriott International, Inc. . . . . . . . 5,775
300 Mattel, Inc. . . . . . . . . . . . . . . . 8,962
800 McDonalds Corporation. . . . . . . . . . . 40,200
200 Mcgraw-Hill Companies, Inc . . . . . . . . 10,925
100 Polaroid Corporation . . . . . . . . . . . 5,100
100 New York Times Company . . . . . . . . . . 4,606
200 St. Jude Medical, Incorporated . . . . . . 6,775
600 Time Warner, Inc . . . . . . . . . . . . . 27,900
100 Times Mirror Company . . . . . . . . . . . 5,613
200 Tribune Company. . . . . . . . . . . . . . 8,650
200 United Health Care . . . . . . . . . . . . 11,300
300 United States Surgical Corporation . . . . 10,125
300 Viacom (b) . . . . . . . . . . . . . . . . 8,906
---------
391,963
---------
Food (2.7%)
200 Albertson's Incorporated . . . . . . . . . 6,700
500 Archer-Daniels-Midland Company . . . . . . 10,000
500 Campbell Soup Company. . . . . . . . . . . 23,000
200 Conagra, Inc . . . . . . . . . . . . . . . 12,025
200 CPC International. . . . . . . . . . . . . 17,200
800 Fleming Companies, Incorporated. . . . . . 15,200
200 General Mills, Inc . . . . . . . . . . . . 12,650
400 H.J. Heinz Company . . . . . . . . . . . . 17,200
200 Hershey Foods Corporation. . . . . . . . . 11,225
200 Kellogg Company. . . . . . . . . . . . . . 14,750
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
Food - continued
400 Kroger Company (b) . . . . . . . . . . . . $ 10,250
200 Quaker Oats Company . . . . . . . . . . . 8,250
100 Ralston-Ralston Purina Group . . . . . . . 8,525
500 Sara Lee Corporation . . . . . . . . . . . 20,438
200 Sysco Corporation. . . . . . . . . . . . . 6,975
200 Winn-Dixie Stores, Incorporated. . . . . . 7,650
200 WM. Wrigley Jr. Company. . . . . . . . . . 11,850
---------
213,888
---------
Retail (4.1%)
200 American Stores Company. . . . . . . . . . 9,100
200 CVS Corporation. . . . . . . . . . . . . . 9,575
300 Costco Companies, Incorporated (b) . . . . 10,125
200 Dayton Hudson Corporation. . . . . . . . . 9,625
300 Dillard Department Stores, Inc . . . . . . 10,125
200 Federated Department Stores (b) . . . . . 7,400
300 Gap, Incorporated. . . . . . . . . . . . . 10,275
200 Harcourt General, Incorporated . . . . . . 9,475
500 Home Depot, Inc. . . . . . . . . . . . . . 31,500
700 K Mart Corporation (b) . . . . . . . . . . 9,800
400 Limited, Inc . . . . . . . . . . . . . . . 8,100
200 May Department Stores Company . . . . . . 9,425
300 Nike, Inc. . . . . . . . . . . . . . . . . 17,100
200 Nordstrom, Incorporated. . . . . . . . . . 9,600
200 J.C. Penney Company, Inc . . . . . . . . . 10,300
200 Rite Aid Corporation . . . . . . . . . . . 9,300
400 Sears, Roebuck and Company . . . . . . . . 19,650
600 Toys R Us . . . . . . . . . . . . . . . . 18,675
2,700 Wal-Mart Stores, Inc . . . . . . . . . . . 80,325
200 Walgreen Company . . . . . . . . . . . . . 9,350
500 Woolworth Corporation (b). . . . . . . . . 12,063
---------
320,888
---------
Consumer Cyclicals (3.3%)
300 Autozone, Inc (b) . . . . . . . . . . . . 7,013
300 Brunswick Corporation. . . . . . . . . . . 9,150
800 Chrysler Corporation Holding Company . . . 25,400
200 Circuit City Stores, Incorporated. . . . . 7,900
400 Cooper Tire & Rubber Company . . . . . . . 8,950
200 Corning, Inc . . . . . . . . . . . . . . . 10,075
200 Echlin, Incorporated . . . . . . . . . . . 6,675
1,300 Ford Motor . . . . . . . . . . . . . . . . 48,750
200 Fruit of the Loom (b) . . . . . . . . . . 6,975
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
Consumer Cyclicals - continued
900 General Motors Corporation . . . . . . . . $ 51,525
300 Genuine Parts Company. . . . . . . . . . . 10,050
100 Goodyear Tire & Rubber Company . . . . . . 5,850
100 Interpublic Group Company. . . . . . . . . 5,987
200 Lowe's Companies, Incorporated . . . . . . 7,875
200 Newell Company . . . . . . . . . . . . . . 7,650
300 Rubbermaid Incorporated. . . . . . . . . . 8,362
200 The Stanley Works. . . . . . . . . . . . . 8,200
200 TJX Companies, Incorporated. . . . . . . . 9,600
100 V.F. Corporation . . . . . . . . . . . . . 7,813
200 Whirlpool Corporation. . . . . . . . . . . 9,975
---------
263,775
---------
CREDIT SENSITIVE (22.5%)
Building (.4%)
100 Armstrong World Industries, Inc. . . . . . 6,800
200 Masco Corporation. . . . . . . . . . . . . 7,775
200 PPG Industries, Incorporated . . . . . . . 11,625
200 Sherwin-Williams Company . . . . . . . . . 6,000
---------
32,200
---------
Finance (14.3%)
200 Aetna, Incorporated. . . . . . . . . . . . 20,200
200 Ahmanson & Company . . . . . . . . . . . . 8,150
500 Allstate Corporation . . . . . . . . . . . 36,813
500 American Express Company . . . . . . . . . 34,750
200 American General Corporation . . . . . . . 8,850
600 American Internationl Group, Inc . . . . . 81,225
150 AON Corporation. . . . . . . . . . . . . . 7,313
500 Bank of New York . . . . . . . . . . . . . 21,312
600 Banc One Corporation . . . . . . . . . . . 25,950
400 Bankamerica Corporation. . . . . . . . . . 46,750
200 Bank of Boston Corporation . . . . . . . . 14,600
100 Bankers Trust New York Corporation . . . . 8,462
200 Barnett Banks, Inc . . . . . . . . . . . . 10,525
100 Beneficial Corporation . . . . . . . . . . 6,425
500 Chase Manhattan Corporation . . . . . . . 47,250
200 Chubb Corporation. . . . . . . . . . . . . 12,200
100 Cigna Corporation. . . . . . . . . . . . . 17,375
500 Citicorp . . . . . . . . . . . . . . . . . 57,188
300 Comerica . . . . . . . . . . . . . . . . . 18,750
200 Conseco, Incorporated. . . . . . . . . . . 8,000
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
Finance - continued
200 Corestates Financial Corporation . . . . . $ 10,575
300 Dean Witter Discover & Company . . . . . . 12,375
800 Federal Home Loan Mortgage Corporation . . 26,400
1,200 Federal National Mortgage Association. . . 52,350
200 Fifth Third Bancorp. . . . . . . . . . . . 15,450
200 First Bank Systems, Incorporated . . . . . 16,400
500 First Chicago NBD Corporation. . . . . . . 29,625
400 First Data Corporation . . . . . . . . . . 16,000
300 First Union Corporation. . . . . . . . . . 25,763
300 Fleet Financial Group, Incorporated. . . . 18,337
100 General Re Corporation . . . . . . . . . . 17,525
100 Golden West Financial Corporation. . . . . 6,775
200 Great Western Financial Corporation. . . . 9,700
200 Green Tree Financial Corporation . . . . . 7,000
100 Household International, Inc . . . . . . . 9,825
200 Keycorp. . . . . . . . . . . . . . . . . . 10,875
100 Lincoln National Corporation . . . . . . . 6,088
100 Loews Corporation. . . . . . . . . . . . . 9,725
100 Marsh & McLennen . . . . . . . . . . . . . 13,175
300 MBNA Corporation . . . . . . . . . . . . . 10,163
100 MGIC Investment Corporation. . . . . . . . 8,900
200 Mellon Bank Corporation. . . . . . . . . . 17,500
200 Merrill Lynch & Company, Inc . . . . . . . 21,200
200 J.P. Morgan & Company, Incorporated . . . 21,500
200 Morgan Stanley Group . . . . . . . . . . . 13,500
200 National City Corporation. . . . . . . . . 10,300
830 Nationsbank Corporation. . . . . . . . . . 48,866
400 Norwest Corporation. . . . . . . . . . . . 21,400
300 PNC Bank Corporation . . . . . . . . . . . 12,562
100 Providian Corporation. . . . . . . . . . . 5,988
100 Republic New York Corporation. . . . . . . 9,975
200 Safeco Corporation . . . . . . . . . . . . 8,700
300 Salomon, Inc . . . . . . . . . . . . . . . 16,087
100 St. Paul Companies, Inc. . . . . . . . . . 7,162
200 Suntrust Banks, Inc. . . . . . . . . . . . 10,675
200 Torchmark Corporation. . . . . . . . . . . 13,125
100 Transamerica Corporation . . . . . . . . . 9,088
200 U.S. Bancorp . . . . . . . . . . . . . . . 12,275
100 Unum Corporation . . . . . . . . . . . . . 7,912
200 Wachovia Corporation . . . . . . . . . . . 12,175
100 Wells Fargo & Company. . . . . . . . . . . 26,350
---------
1,131,454
---------
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
Utilities (7.8%)
400 Airtouch Communications (b) . . . . . . . $ 11,150
500 Alltel Corp. . . . . . . . . . . . . . . . 16,437
200 American Electric Power Company, Inc . . . 8,150
600 Ameritech. . . . . . . . . . . . . . . . . 39,300
1,900 AT&T Corporation . . . . . . . . . . . . . 70,062
300 Baltimore Gas & Electric . . . . . . . . . 7,875
500 Bell Atlantic Corporation. . . . . . . . . 35,000
1,100 Bellsouth Corporation. . . . . . . . . . . 49,912
200 Carolina Power & Light Company . . . . . . 6,950
300 Central & Southwest Corporation. . . . . . 6,375
200 Cinergy Corporation. . . . . . . . . . . . 7,000
100 Columbia Gas System, Incorporated. . . . . 6,437
200 Consolidated Edison Company of New York. . 5,825
300 Consolidated Natural Gas Company . . . . . 15,937
200 Dominion Resources, Inc. . . . . . . . . . 6,925
200 DTE Energy Company . . . . . . . . . . . . 5,325
200 Duke Power Company . . . . . . . . . . . . 9,000
400 Edison International . . . . . . . . . . . 9,350
200 Enron Corporation. . . . . . . . . . . . . 8,150
300 Entergy Corporation. . . . . . . . . . . . 7,913
200 FPL Group, Inc . . . . . . . . . . . . . . 9,300
400 Frontier Corporation . . . . . . . . . . . 7,350
200 GPU Incorporated . . . . . . . . . . . . . 7,000
1,100 GTE Corporation. . . . . . . . . . . . . . 48,537
300 Houston Industries, Incorporated . . . . . 6,225
200 Northern States Power Company. . . . . . . 9,800
500 Nynex Corporation. . . . . . . . . . . . . 26,875
300 Pacificorp . . . . . . . . . . . . . . . . 5,963
300 Peco Energy Company. . . . . . . . . . . . 5,700
400 Pacific Gas & Electric Corporation . . . . 9,250
300 Public Service Enterprise Group, Inc . . . 7,425
1,092 SBC Communications, Inc. . . . . . . . . . 63,882
600 Southern Company . . . . . . . . . . . . . 12,750
200 Texas Utilities Company. . . . . . . . . . 6,875
300 Unicom Corporation . . . . . . . . . . . . 6,825
200 Union Electric Company . . . . . . . . . . 7,325
700 U.S. West Communications Group . . . . . . 25,638
600 U.S. West Media Group (b) . . . . . . . . 11,925
---------
611,718
---------
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
NVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
INTERMEDIATE GOODS AND SERVICES (16.9%)
Energy (9.3%)
300 Amerada Hess Corporation . . . . . . . . . $ 16,050
600 Amoco Corporation. . . . . . . . . . . . . 53,625
200 Ashland Incorporated . . . . . . . . . . . 9,575
200 Atlantic Richfield Company . . . . . . . . 29,100
200 Baker Hughes, Incorporated . . . . . . . . 7,500
300 Burlington Resources, Inc. . . . . . . . . 13,950
900 Chevron Corporation. . . . . . . . . . . . 63,000
300 Coastal Corporation . . . . . . . . . . . 15,038
200 Dresser Industries, Inc. . . . . . . . . . 6,850
2,900 Exxon Corporation. . . . . . . . . . . . . 171,825
100 Halliburton Company . . . . . . . . . . . 7,738
100 Kerr-McGee Corporation . . . . . . . . . . 6,475
100 Louisiana Land & Exploration Company . . . 5,150
500 Mobil Corporation . . . . . . . . . . . . 69,937
300 Occidental Petroleum Corporation . . . . . 6,975
200 Panenergy Corporation. . . . . . . . . . . 9,350
100 Pennzoil Company . . . . . . . . . . . . . 5,538
200 Phillips Petroleum Company . . . . . . . . 8,500
600 Royal Dutch Petroleum ADR (c). . . . . . . 117,150
300 Schlumberger Limited . . . . . . . . . . . 35,738
100 Sonat, Inc . . . . . . . . . . . . . . . . 5,750
200 Tenneco, Inc . . . . . . . . . . . . . . . 8,950
300 Texaco, Inc. . . . . . . . . . . . . . . . 32,738
200 Union Pacific Resources Group, Inc . . . . 5,775
200 Unocal Corporation . . . . . . . . . . . . 8,525
300 USX - Marathon Group . . . . . . . . . . . 8,925
---------
729,727
---------
Materials (6.4%)
100 Air Products and Chemicals, Inc. . . . . . 7,775
200 Alcan Aluminium Limited (c). . . . . . . . 7,175
300 Allegheny Teledyne Incorporated. . . . . . 7,725
200 Aluminum Company of America. . . . . . . . 14,725
300 Barrick Gold Corporation (c) . . . . . . . 7,575
200 Bemis Company, Inc . . . . . . . . . . . . 8,000
200 Champion International Corporation . . . . 9,875
100 Crown Cork & Seal Company, Inc . . . . . . 5,825
300 Dow Chemical Company . . . . . . . . . . . 25,012
700 E.I. Du Pont De Nemours and Company. . . . 76,212
200 Eastman Chemical Company . . . . . . . . . 11,900
200 Ecolab, Incorporated . . . . . . . . . . . 8,325
500 Engelhard Corporation. . . . . . . . . . . 10,813
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
Materials - continued
300 Freeport-Mcmoran Copper. . . . . . . . . . $ 8,738
100 Georgia-Pacific Corporation. . . . . . . . 8,825
200 B.F. Goodrich Company. . . . . . . . . . . 8,600
100 W.R. Grace & Co. . . . . . . . . . . . . . 5,225
300 Hercules, Incorporated . . . . . . . . . . 14,062
700 Homestake Mining Company . . . . . . . . . 9,713
200 Inco Limited (c) . . . . . . . . . . . . . 6,600
300 International Paper Company. . . . . . . . 14,400
600 Kimberly-Clark Corporation . . . . . . . . 30,075
100 Mead Corporation . . . . . . . . . . . . . 6,375
600 Monsanto Company . . . . . . . . . . . . . 26,400
200 Morton International . . . . . . . . . . . 6,450
200 Newmont Mining Corporation . . . . . . . . 7,825
100 Nucor Corporation. . . . . . . . . . . . . 5,900
100 Phelps Dodge Corporation . . . . . . . . . 8,363
100 Pioneer Hi-Bred International, Inc . . . . 6,975
300 Placer Dome, Inc (c) . . . . . . . . . . . 5,475
200 Praxair, Inc . . . . . . . . . . . . . . . 10,525
100 Reynolds Metals Company. . . . . . . . . . 6,788
100 Rohm and Haas Company. . . . . . . . . . . 8,625
200 Temple-Inland, Incorporated. . . . . . . . 12,100
700 Travelers Group, Incorporated. . . . . . . 38,413
100 Union Camp Corporation . . . . . . . . . . 5,250
200 Union Carbide Corporation. . . . . . . . . 9,350
300 USX - U.S. Steel Group, Incorporated . . . 9,675
200 Weyerhaeuser Company . . . . . . . . . . . 9,975
100 Willamette Industries, Incorporated. . . . 7,450
200 Williams Company . . . . . . . . . . . . . 8,825
---------
507,914
---------
Transportation (1.2%)
100 AMR Corporation (b) . . . . . . . . . . . 9,937
200 Burlington Northern Santa Fe . . . . . . . 16,600
200 CSX Corporation. . . . . . . . . . . . . . 10,600
100 Delta Air Lines, Inc . . . . . . . . . . . 9,375
100 Federal Express Corporation (b). . . . . . 5,238
200 Norfolk Southern Corporation . . . . . . . 19,425
300 Union Pacific Corporation. . . . . . . . . 20,325
---------
91,500
---------
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
TECHNOLOGY (17.1%)
200 Adobe Systems, Incorporated (b). . . . . . $ 8,925
150 Andrew Corporation (b) . . . . . . . . . . 4,088
500 Apple Computer (b) . . . . . . . . . . . . 8,312
200 Applied Materials, Incorporated (b). . . . 13,050
300 Automatic Data Processing, Inc . . . . . . 14,738
500 Bay Networks, Inc (b). . . . . . . . . . . 12,250
400 Boeing Company . . . . . . . . . . . . . . 42,100
800 Cisco Systems, Inc (b) . . . . . . . . . . 54,200
300 Compaq Computer Corporation (b) . . . . . 32,475
400 Computer Associates International. . . . . 21,900
100 Computer Sciences Corporation (b) . . . . 7,737
200 Dell Computer Corporation (b) . . . . . . 22,500
200 Digital Equipment (b) . . . . . . . . . . 7,175
400 DSC Communications (b) . . . . . . . . . . 10,225
200 EMC Corporation (b) . . . . . . . . . . . 7,975
600 General Instrument Corporation (b) . . . . 14,550
100 Harris Corporation . . . . . . . . . . . . 8,862
1,200 Hewlett-Packard Company. . . . . . . . . . 61,800
100 Honeywell, Inc . . . . . . . . . . . . . . 7,275
1,200 International Business Machines
Corporation . . . . . . . . . . . . . . . 103,800
1,000 Intel. . . . . . . . . . . . . . . . . . . 151,500
200 Lockheed Martin Corporation. . . . . . . . 18,725
700 Lucent Technologies, Incorporated. . . . . 44,538
400 LSI Logic Corporation (b) . . . . . . . . 16,700
200 McDonnell Douglas Corporation. . . . . . . 12,875
800 MCI Communications . . . . . . . . . . . . 30,700
200 Micron Technology, Inc . . . . . . . . . . 8,500
1,400 Microsoft Corporation (b) . . . . . . . . 173,600
500 Minnesota Mining and Manufacturing
Company . . . . . . . . . . . . . . . . . 45,875
700 Motorola . . . . . . . . . . . . . . . . . 46,463
300 National Semiconductor Corporation (b) . . 8,437
300 Northern Telecom Limited . . . . . . . . . 25,200
100 Northrop Grumman Corporation . . . . . . . 8,475
600 Novell, Incorporated (b) . . . . . . . . . 4,725
700 Oracle Corporation (b) . . . . . . . . . . 32,637
200 Parametric Technology Corporation (b). . . 8,975
200 Pitney Bowes, Inc. . . . . . . . . . . . . 14,050
200 Raytheon Company . . . . . . . . . . . . . 9,550
200 Rockwell International Corporation . . . . 12,900
200 Seagate Technology, Incorporated (b) . . . 8,125
900 Silicon Graphics, Incorporated (b) . . . . 16,988
400 Southwest Airlines Company . . . . . . . . 10,300
500 Sprint Corporation . . . . . . . . . . . . 24,437
300 Sun Microsystems, Inc (b) . . . . . . . . 9,675
600 Tele-Communications, Inc (b) . . . . . . 9,075
200 Tellabs, Incorporated (b) . . . . . . . . 10,050
See accompanying notes to investments in securities.
<PAGE>
ADVANTUS INDEX 500 FUND, INC.
INVESTMENTS IN SECURITIES - CONTINUED
MARKET
SHARES VALUE (a)
Technology - continued
200 Texas Instruments, Incorporated . . . . . $ 17,975
300 TRW, Inc . . . . . . . . . . . . . . . . . 16,050
300 United Technologies Corporation. . . . . . 24,112
1,000 Worldcom, Incorported (b). . . . . . . . . 29,625
400 Xerox Corporation. . . . . . . . . . . . . 27,100
200 3 Com (b) . . . . . . . . . . . . . . . . 9,700
---------
1,351,574
---------
Total common stocks (cost: $6,929,828) . . 7,798,523
---------
PRINCIPAL
SHORT-TERM SECURITIES (2.9%)
$145,000 U.S. Treasury Bill. . . . 5.14% 08/28/97 143,311
$90,000 U.S. Treasury Bill. . 5.06% - 4.81% 07/24/97 89,397
---------
Total short-term securities (cost:
$232,606). . . . . . . . . . . . . . . . . 232,708
---------
Total investments in securities
(cost: $7,162,434) (d). . . . . . . . . . $ 8,031,231
---------
Notes to Investments in Securities
(a) Securites are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 2.6% of net assets in foreign securities as of May 31, 1997.
(d) At May 31, 1997 the cost of securities for federal income tax purposes was
$7,167,554.
The aggregate unrealized appreciation and depreciation of investments in
securities based on this cost were:
Gross unrealized appreciation . . . . . . . . . $ 936,729
Gross unrealized depreciation . . . . . . . . . (73,052)
---------
Net unrealized appreciation . . . . . . . . . . $ 863,677
---------
