<PAGE>
File Numbers 333-12283 and 811-7817
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
---
Pre-Effective Amendment Number ___
Post-Effective Amendment Number 4
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 X
---
Amendment Number 4
ADVANTUS VENTURE FUND, INC.
(Exact Name of Registrant as Specified in Charter)
400 ROBERT STREET NORTH, ST. PAUL, MINNESOTA 55101
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (651) 665-3826
ERIC J. BENTLEY, 400 ROBERT STREET NORTH, ST. PAUL, MINNESOTA 55101
(Name and Address of Agent for Service)
Copy to:
Michael J. Radmer, Esquire
Dorsey & Whitney LLP
220 South Sixth Street
Minneapolis, Minnesota 55402-1498
IT IS PROPOSED THAT THIS FILING WILL BECOME EFFECTIVE (check appropriate box)
___ immediately upon filing pursuant to paragraph (b)
___ On (date) pursuant to paragraph (b)
___ 60 days after filing pursuant to paragraph (a)(1)
X on February 1, 1999 pursuant to paragraph (a)(1)
___
___ 75 days after filing pursuant to paragraph (a)(2)
___ on (date) pursuant to paragraph (a)(2) of Rule 485.
IF APPROPRIATE, CHECK THE FOLLOWING BOX:
___ this post-effective amendment designates a new effective date
for a previously filed post-effective amendment.
<PAGE>
VENTURE
As with all mutual funds, the Securities and Exchange Commission
does not guarantee that the information in this prospectus is
accurate or complete, nor has it judged this fund for investment
merit. It is a criminal offense to state otherwise.
ADVANTUS VENTURE FUND, INC.
PROSPECTUS DATED FEBRUARY 1, 1999
[LOGO]
[GRAPHIC]
<PAGE>
ADVANTUS VENTURE FUND, INC.
Advantus Venture Fund, Inc. (Fund) is a mutual fund that offers different
classes of shares. This prospectus provides you information about the Fund you
should know before investing. The Fund is a member of the Advantus family of
funds (the Advantus Funds). The Advantus Funds (including the Fund) other than
the Advantus Money Market Fund, Inc., are referred to as "Advantus Multiple
Class Funds."
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S> <C>
THE FUND - SUMMARY ................................................. 3
Investment Policies, Practices and Main Risks ............... 3
Fund Performance ............................................ 4
Fees and Expenses ........................................... 6
FINANCIAL HIGHLIGHTS ............................................... 8
Financial Highlights Class A Shares ......................... 8
Financial Highlights Class B Shares ......................... 9
Financial Highlights Class C Shares ......................... 10
INVESTING IN THE FUND .............................................. 11
Managing the Fund ........................................... 11
Investment Policies and Practices ........................... 11
Defining Risks .............................................. 13
BUYING AND SELLING SHARES .......................................... 14
Choosing a Share Class ...................................... 14
Sales and Distribution Charges .............................. 14
Reducing Sales Charges ...................................... 17
Buying Shares ............................................... 18
Selling Shares .............................................. 20
Exchanging Shares ........................................... 21
Telephone Transactions ...................................... 22
GENERAL INFORMATION ................................................ 23
Dividends and Capital Gains Distributions ................... 23
Taxes ....................................................... 23
Service Providers ........................................... 25
Advantus Family of Funds .................................... 27
Additional Information About the Fund ....................... 28
How to Obtain Additional Information ........................ 28
</TABLE>
<PAGE>
THE FUND - SUMMARY
Advantus Venture Fund, Inc. (Venture Fund) is an open-end, diversified
investment company, commonly called a mutual fund. This Fund lets you choose
among three classes of shares that offer different sales charges and bear
different expenses. These alternatives allow you to choose the share class that
you believe is most beneficial given the amount of your purchase, the length of
time you expect to hold onto the shares and whether you plan to make additional
investments.
This section gives you a brief summary of the Fund's investment policies,
practices and main risks, as well as performance and fee information. More
detailed information about the Fund follows this summary.
INVESTMENT POLICIES, PRACTICES AND MAIN RISKS
Venture Fund seeks long-term accumulation of capital.
The Fund primarily invests in various types of equity securities of small
capitalization companies (i.e. companies with a market capitalization of less
than $1.5 billion). In selecting equity securities, the Fund invests in
securities that the Fund's investment adviser believes are undervalued relative
to other securities, earn low returns with a potential for higher returns, are
undervalued relative to their potential for improved operating performance and
financial strength or are issued by companies that have recently undergone a
change in management or control and are undervalued relative to their potential
for improved operating performance.
Keep in mind that an investment in the Fund is not a deposit of a bank and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or any
other governmental agency. An investment in the Fund may be subject to various
risks including the following types of main risk:
- MARKET RISK - the risk that equity securities are subject to adverse
trends in equity markets
- FUND RISK - the risk that Fund performance may not meet or exceed that of
the market as a whole
- SMALL COMPANY RISK - the risk that equity securities of small
capitalization companies are subject to greater price volatility due to,
among other things, such companies' small size, limited product lines,
limited access to financing sources and limited management depth
- --------------------
FOR YOUR INFORMATION
- --------------------
A mutual fund is an investment company that invests the money of many people in
a variety of securities to seek a specific objective over time. An open-end
mutual fund buys back an investor's shares at the fund's current net asset
value.
- ---------------
REFERENCE POINT
- ---------------
Please see "Investing in the Fund - Defining Risks" for a more detailed
description of these main risks and additional risks in connection with
investing in the Fund.
THE FUND - SUMMARY 3
<PAGE>
- --------------------
FOR YOUR INFORMATION
- --------------------
The Fund seeks to achieve its investment objective over longer rather than
shorter periods of time. An investment in the Fund may therefore be more
appropriate for an investor with a longer-term focus.
FUND PERFORMANCE
The following table and bar chart show the Fund's annual returns and long-term
performance. The chart shows how the Fund's performance has varied from year to
year, and provides some indication of the risks in investing in the Fund. The
table shows how the Fund's average annual return over a one, five and ten year
period compare to the return of a broad based index. The chart and table assume
reinvestment of dividends and distributions, and the table reflects applicable
initial and contingent deferred sales charges. Like other mutual funds, the past
performance of the Fund does not necessarily indicate how the Fund will perform
in the future.
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN
(FOR THE PERIODS ENDING DECEMBER 31, '97) From
1 Year 5 Years 10 Years inception
<S> <C> <C> <C> <C>
Class A
(inception 1/31/97) % -- -- -- 23.89
Class B
(inception 1/31/97) -- -- -- 24.23
Class C
(inception 1/31/97) -- -- -- 29.43
Russell 2000 Value Index 31.78 19.65 17.71 --
</TABLE>
4 THE FUND - SUMMARY
<PAGE>
CLASS A YEAR TO YEAR TOTAL RETURN(1) (AS OF DECEMBER 31)(2)
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
97 30.41%(3)
</TABLE>
(1) Absent reductions for sales loads, account fees and other charges. If such
sales loads, account fees and other charges were included, returns would be
less than shown above.
(2) The Fund's Class A total return for the nine month period ending September
30, 1998 was -17.25%.
<TABLE>
<S> <C> <C>
Best
Quarter: (Q3'97) 15.29%
Worst
Quarter: (Q3'98) -20.20%
</TABLE>
(3) Total return presented for the period from January 31, 1997, inception date
of Class A, to December 31, 1997.
THE FUND - SUMMARY 5
<PAGE>
FEES AND EXPENSES
Investors pay certain fees and expenses in connection with investing in the
Fund. This table describes the fees and expenses that you may pay if you buy and
hold shares of the Fund. You should note that since the Fund may make frequent
changes in its portfolio securities, such changes may result in higher Fund
costs.
- ---------------
REFERENCE POINT
- ---------------
For more information on Fund portfolio turnover, see "General Information -
Taxes."
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
<S> <C> <C> <C>
SHAREHOLDER FEES
Maximum Sales Charge on
Purchases
(as a percentage of offering
price) % 5.50 none none
Maximum Deferred Sales Charge
(as a percentage of sales
proceeds) % none 5.00 none
Exchange Fees
- -On First Twelve Exchanges
Each Year none none none
- -On Each Additional Exchange $ 7.50 7.50 7.50
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees % 0.80 0.80 0.80
Rule 12b-1 Fees % 0.25 1.00 1.00
Other Expenses % 0.45 0.45 0.45
TOTAL FUND OPERATING EXPENSES* % 1.50 2.25 2.25
</TABLE>
* Ascend Financial Services, Inc. ("Ascend Financial"), the Fund's
underwriter, voluntarily waived a portion of the Class A Rule 12b-1 Fee for
the year ended July 31, 1998. After this waiver, the ratio of total fund
expenses to average daily net assets was 1.38% for Class A shares. Ascend
Financial continues to waive expenses but reserves the right to discontinue
such waivers at any time at its sole discretion.
6 THE FUND - SUMMARY
<PAGE>
SHAREHOLDER EXPENSE EXAMPLE
This example is intended to help you compare the costs of investing in the Fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
Fund's operating expenses remain the same. Although your actual costs may be
higher or lower, based on these assumptions, your costs would be:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 694 998 1,323 2,242
Class B 728 1,053 1,355 2,308
Class C 228 703 1,205 2,396
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
<S> <C> <C> <C> <C>
Class A $ 694 998 1,323 2,242
Class B 228 703 1,205 2,308
Class C 228 703 1,205 2,396
</TABLE>
THE FUND - SUMMARY 7
<PAGE>
FINANCIAL HIGHLIGHTS
The following table describes the Fund's performance for the fiscal periods
indicated. "Total return" shows how much your investment in the Fund would have
increased (or decreased) during each period, assuming you had reinvested all
dividends and distributions. These figures have been audited by KPMG Peat
Marwick LLP, the Fund's independent auditor, whose report, along with the Fund's
Financial statements, are included in the annual report, which is available upon
request.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS A
Period From
January 31,
Year Ended '97(a) to
July 31, July 31,
'98 '97
<S> <C> <C>
Net Asset Value, Beginning of Period $ 11.73 10.17
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income .06 .05
Net Gains or Losses on Securities (both
realized and unrealized) .98 1.55
Total from Investment Operations 1.04 1.60
LESS DISTRIBUTIONS
Dividends from Net Investment Income (.08) (.04)
Distributions from Capital Gains (.66) --
Total Distributions (.74) (.04)
Net Asset Value, End of Period $ 12.03 11.73
Total Return (b) % 8.92 15.79
Net Assets, End of Period (in thousands) $ 34,630 30,662
Ratio of Expenses to Average Daily Net Assets
(d) % 1.38 1.35(c)
Ratio of Net Investment Income to Average
Daily Net Assets (d) % .55 .90(c)
Portfolio Turnover Rate (excluding short-term
securities) % 45.0 39.6
</TABLE>
(a) Inception date of the Fund.
(b) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not
been annualized.
(c) Adjusted to an annual basis.
(d) The Fund's Distributor and Adviser voluntarily waived $59,431 and $26,677
in expenses for the period from August 1, 1997 to July 31, 1998 and January
31, 1997 to July 31, 1997, respectively. If Class A shares had been charged
for these expenses, the ratio of expenses to average daily net assets would
have been 1.55% and 1.55%, respectively, and the ratio of net investment
income to average daily net assets would have been .38% and .70%,
respectively.
8 FINANCIAL HIGHLIGHTS
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS B
Period From
January 31,
Year Ended '97 (a) to
July 31, July 31,
'98 '97
<S> <C> <C>
Net Asset Value, Beginning of Period $ 11.71 10.17
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (.02) .01
Net Gains or Losses on Securities (both
realized and unrealized) .92 1.54
Total from Investment Operations .90 1.55
LESS DISTRIBUTIONS
Dividends from Net Investment Income (.01) (.01)
Distributions from Capital Gains (.66) --
Total Distributions (.67) (.01)
Net Asset Value, End of Period $ 11.94 11.71
Total Return (b) % 7.65 15.33
Net Assets, End of Period (in thousands) $ 3,529 1,052
Ratio of Expenses to Average Daily Net Assets % 2.25 2.25(c)
Ratio of Net Investment Income to Average
Daily Net Assets % (.26) .01(c)
Portfolio Turnover Rate (excluding short-term
securities) % 45.0 39.6
</TABLE>
(a) Inception date of the Fund.
(b) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not
been annualized.
(c) Adjusted to an annual basis.
FINANCIAL HIGHLIGHTS 9
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS C
Period From
January 31,
Year Ended '97 (a) to
July 31, July 31,
'98 '97
<S> <C> <C>
Net Asset Value, Beginning of Period $ 11.71 10.17
INCOME FROM INVESTMENT OPERATIONS
Net Investment Income (.03) .01
Net Gains or Losses on Securities (both
realized and unrealized) .97 1.54
Total from Investment Operations .94 1.55
LESS DISTRIBUTIONS
Dividends from Net Investment Income (.01) (.01)
Distributions from Capital Gains (.66) --
Total Distributions (.67) (.01)
Net Asset Value, End of Period $ 11.98 11.71
Total Return (b) % 7.90 15.38
Net Assets, End of Period (in thousands) $ 702 175
Ratio of Expenses to Average Daily Net Assets % 2.25 2.25(c)
Ratio of Net Investment Income to Average
Daily Net Assets % (.26) .01(c)
Portfolio Turnover Rate (excluding short-term
securities) % 45.0 39.6
</TABLE>
(a) Inception date of the Fund.
(b) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not
been annualized.
(c) Adjusted to an annual basis.
10 FINANCIAL HIGHLIGHTS
<PAGE>
INVESTING IN THE FUND
MANAGING THE FUND
The investment adviser of the Fund is Advantus Capital Management, Inc.
(Advantus Capital), 400 Robert Street North, St. Paul, Minnesota 55101. Since
its inception in 1994, Advantus Capital has provided investment advisory
services for the Fund and other Advantus Funds, and has managed investment
portfolios for various private accounts. With more than $13.7 billion of assets
under management, Advantus Capital manages the Fund's investments and furnishes
all necessary office facilities, equipment and personnel for servicing the
Fund's investments. Advantus Capital is a wholly-owned subsidiary of Minnesota
Life Insurance Company (Minnesota Life), which was organized in 1880 and has
assets on a consolidated basis of more than $15.7 billion. Minnesota Life is a
third-tier subsidiary of a mutual insurance holding company called Minnesota
Mutual Companies, Inc. Personnel of Advantus Capital also manage Minnesota
Life's investment portfolio. In addition, Minnesota Life, through its Advantus
Shareholder Services division, serves as shareholder and administrative services
agent to the Fund.
The Fund pays Advantus Capital an advisory fee calculated on an annual basis
equal to 0.80% of its average daily net assets.
Mark L. Henneman has served as the portfolio manager of the Fund since October
1998. Mr. Henneman has also served as a Vice President and Portfolio Manager of
Advantus Capital since July 1998. From May 1992 to June 1998, Mr. Henneman
served as a Senior Equity Analyst and Quantitative/Fundamental Analyst with The
St. Paul Companies, Inc.
- --------------------
FOR YOUR INFORMATION
- --------------------
Mark L. Henneman graduated from Gustavus Adolphus College with a bachelor's
degree in business. He earned his MBA at the University of Minnesota. Mr.
Henneman is a Chartered Financial Analyst.
- --------------------
FOR YOUR INFORMATION
- --------------------
Market capitalization is the total market value of a company. (Share price
multiplied by the number of shares outstanding.) Market capitalization is used
to measure the relative size of corporations.
INVESTMENT POLICIES AND PRACTICES
The Fund seeks long-term accumulation of capital.
The Fund primarily invests in various types of equity securities such as common
stock, preferred stock and securities convertible into equity securities of
small capitalization companies (i.e., companies with a market capitalization of
less than $1.5 billion) at the time of purchase. Under normal circumstances, at
least 65% of the Fund's total assets will be invested in common stocks of small
capitalization domestic companies and foreign issuers that are publicly traded
in the United States. From time to time, the Fund will also invest a lesser
portion of its assets in securities of mid and large capitalization companies
(i.e., companies with a market capitalization of at least $1.5 billion). As of
September 30, 1998, the average weighted market capitalization of the Fund's
investment portfolio was $771.34 million.
In selecting equity securities, Advantus Capital primarily looks to equity
securities it believes are undervalued. Undervalued securities are securities
that Advantus Capital believes: (a) are undervalued relative to other securities
in the market or currently earn low returns with a
INVESTING IN THE FUND 11
<PAGE>
potential for higher returns, (b) are undervalued relative to the potential for
improved operating performance and financial strength, and (c) are issued by
companies that have recently undergone a change in management or control and
that are undervalued relative to their potential for improved operating
performance. In assessing relative value, Advantus Capital will consider factors
such as a company's ratio of market price to earnings, ratio of market price to
book value, ratio of market price to assets, ratio of market price to cash flow,
estimated earnings growth rate, cash flow, yield, liquidation value, product
pricing, quality of management and competitive market position. As a secondary
focus, Advantus Capital may also consider an investment's potential to provide
current income. In seeking to achieve its investment objectives, the Fund may
also invest in equity securities of companies that Advantus Capital believes
show potential for sustainable earnings growth above the average market growth
rate.
In addition, the Fund may invest lesser portions of its assets in secured
portfolio loan transactions, restricted and illiquid securities, convertible and
non-convertible investment-grade and non-investment grade debt securities,
securities of other mutual funds (including those advised by Advantus Capital),
foreign securities, warrants, repurchase agreement transactions, index
depositary receipts, covered call options on equity securities written by the
Fund, and money market securities.
In an attempt to respond to adverse market, economic, political or other
conditions, the Fund may invest for temporary defensive purposes in various
short-term cash and cash equivalent items. When investing for temporary
defensive purposes, the Fund may not always achieve its investment objective.
You can find descriptions of these securities in the Statement of Additional
Information.
12 INVESTING IN THE FUND
<PAGE>
DEFINING RISKS
Investment in the Fund involves risks. The Fund's yield and price are not
guaranteed, and the value of your investment in the Fund will go up or down. The
value of your investment in the Fund may be affected by the following risks:
- FUND RISK - is the risk that Fund performance may not meet or exceed that
of the market as a whole. The performance of the Fund will depend on
Advantus Capital's ability to select securities suited to achieve the
Fund's investment objective and judgment of economic and market policies,
trends in investment yields and monetary policy.
- MARKET RISK - is the risk that equity securities are subject to adverse
trends in equity markets. Market prices of equity securities are generally
more volatile than debt securities. This may cause a security to be worth
less than the price originally paid for it, or less than it was worth at
an earlier time. Market risk may affect a single issuer, industry, sector
of the economy or the market as a whole. In addition, market risk may
affect a portfolio of equity securities believed to be undervalued. As a
result, a portfolio of such undervalued securities may underperform the
market as a whole.
- COMPANY RISK - is the risk that individual securities may perform
differently than the overall market. This may be a result of specific
factors such as changes in corporate profitability due to the success or
failure of specific products or management strategies, or it may be due to
changes in investor perceptions regarding a company.
- CONCENTRATION RISK - is the risk that Fund performance may be more
susceptible to a single economic, regulatory or technological occurrence
than more diversified portfolios. The Fund is subject to concentration
risk since the Fund may invest more than 5% of its total assets in the
securities of a single issuer with respect to 25% of its total investment
portfolio.
- SMALL COMPANY RISK - is the risk that equity securities of small
capitalization companies are subject to greater price volatility due to,
among other things, such companies' small size, limited product lines,
limited access to financing sources and limited management depth. In
addition, the frequency and volume of trading such securities may be less
than is typical of larger companies, making them subject to wider price
fluctuations. In some cases, there could be difficulties in selling
securities of small capitalization companies at the desired time and
place.
- YEAR 2000 RISK - is the risk that the Fund may be adversely affected if
the computer systems used by the Fund and other Fund service providers do
not properly process and calculate date-related information on and after
January 1, 2000. In addition, the Fund's return may decrease if the value
of certain securities held by the Fund are adversely affected by the
inability of the applicable issuer's computer systems to properly process
and calculate date related information on and after January 1, 2000.
Advantus Capital has undertaken a Year 2000 program that it believes will
assess, monitor and address this issue. Advantus Capital also attempts to
assess each potential issuer's Year 2000 readiness program prior to
investing in the issuer's securities. In most instances, Advantus Capital
will rely on the representations of issuer management as to the issuer's
Year 2000 readiness.
You can find information about other risks in the Statement of Additional
Information.
- --------------------
FOR YOUR INFORMATION
- --------------------
In order to make informed decisions, investors must be aware of both the risks
and rewards associated with investing. Not only should you understand the risks
associated with your investments, but you must be comfortable with them as well.
Risks are an inherent part of investing, and your investment in this Fund is
subject to different types and varying degrees of risk.
INVESTING IN THE FUND 13
<PAGE>
BUYING AND SELLING SHARES
- ---------------
REFERENCE POINT
- ---------------
All Advantus Funds, except the Advantus Money Market Fund, offer three classes
of shares, Class A, Class B, and Class C. See "The Fund - Summary - Fees and
Expenses."
CHOOSING A SHARE CLASS
You may purchase Class A, Class B or Class C shares of the Fund. Your decision
to purchase a particular class will depend on a number of factors such as the
amount you wish to invest, the amount of time you wish to hold on to your
investment and whether you intend to make additional investments.
CLASS A SHARES. If you invest in Class A shares you will generally pay an
initial sales charge. However, you will not be assessed an initial sales
charge for purchases of Class A shares of $1 million or more, but a deferred
sales charge will be imposed if you sell such shares within one year after
the date of purchase. There are several ways to reduce or waive these sales
charges that are described in "Reducing Sales Charges" below. Class A shares
generally have lower annual operating expenses than Class B and Class C
shares.
CLASS B SHARES. If you invest in Class B shares, you will not pay an initial
sales charge. However, if you wish to sell your shares within six years from
the date of your purchase, you will pay a deferred sales charge. If you
maintain your Class B shares for a certain period of time, your Class B
shares will automatically convert to Class A shares in the manner described
in "Sales and Distribution Charges" below. Class B shares generally have
higher annual operating expenses than Class A shares.
CLASS C SHARES. If you invest in Class C shares, you will not pay an initial
sales charge. Unlike Class B shares, you will not pay a deferred sales
charge if you wish to sell your shares. Class C shares generally have higher
annual operating expenses than Class A shares. Class C shares will
automatically convert to Class A shares in the manner described in "Sales
and Distribution Charges" below, but you must hold on to such shares for a
longer period of time than Class B shares prior to conversion.
If you qualify for a reduction or waiver of the sales charge you should purchase
Class A shares. If you expect to hold shares for a short period of time you may
prefer to purchase Class C shares since these shares may be purchased and sold
without any initial or deferred sales charge. If you expect to hold shares
longer you may prefer to purchase Class B shares since these shares convert to
Class A shares sooner than Class C shares.
SALES AND DISTRIBUTION CHARGES
As an investor, you pay certain fees and expenses in connection with the Fund.
Sales charges are paid from your account. Annual fund operating expenses
(including distribution fees) are paid out of Fund assets, which affects the
Fund's share price.
14 BUYING AND SELLING SHARES
<PAGE>
CLASS A SHARES. If you purchase Class A shares, you will generally pay an
initial sales charge. Class A sales charges are calculated as follows:
<TABLE>
<CAPTION>
SALES CHARGE AS A PERCENTAGE OF:
Value of Your Total Investment Net Offering Price Amount Invested
<S> <C> <C>
Less than $50,000 % 5.5 5.82
At least $50,000 but less than
$100,000 4.5 4.71
At least $100,000 but less than
$250,000 3.5 3.63
At least $250,000 but less than
$500,000 2.5 2.56
At least $500,000 but less than
$1,000,000 2.0 2.04
At least $1,000,000 and over(1) 0 0
</TABLE>
(1) You will not be assessed an initial sales charge for purchases of Class A
shares of at least $1 million, but a contingent deferred sales charge of
1.00% will be imposed if you sell such shares within one year after the
date of purchase.
As you see, the sales charge depends on the total value of your investment in
the Fund and not the amount of any single investment you make in the Fund. For
example, if you already own shares with a net asset value of $40,000 and you
decide to invest in additional Class A shares with an offering price of $10,000,
you will pay a sales charge equal to 4.5% of the additional $10,000 since your
total investment in the Fund would then be $50,000.
Class A shares are also subject to a shareholder servicing fee (Rule 12b-1 fee).
The Fund has adopted a shareholder servicing plan that allows the Fund to pay
fees for services provided to shareholders. Because these fees are paid out of
the Fund's assets continuously, over time these fees will increase the cost of
your investment and may cost you more than paying other types of sales charges.
As a percentage of average daily net assets attributable to Class A shares of
the Fund, the maximum Rule 12b-1 fee is 0.25%.
CLASS B SHARES. If you wish to sell your Class B shares within six years from
the date of your purchase, you will pay a contingent deferred sales charge
(CDSC). The amount of the CDSC on Class B shares depends on the number of years
since your purchase was made, the amount of shares originally purchased and the
dollar amount being sold. The CDSC is based on the net asset value (NAV) of the
shares being sold at the time of your purchase or your sale of such shares,
whichever is lower. No CDSC is charged on shares acquired through reinvestment
of dividends or capital gains distributions, or on shares held longer than the
applicable CDSC period. Class B CDSC is calculated as follows:
BUYING AND SELLING SHARES 15
<PAGE>
<TABLE>
<CAPTION>
CDSC APPLICABLE IN
YEAR FOLLOWING DATE OF
PURCHASE
AMOUNT OF SHARES PURCHASED 1 2 3 4 5 6
<S> <C> <C> <C> <C> <C> <C>
Less than $50,000 % 5.0 4.5 3.5 2.5 1.5 1.5
At least $50,000 but less than $100,000 4.5 3.5 2.5 1.5 1.5 0
At least $100,000 but less than $250,000 3.5 2.5 1.5 1.5 0 0
At least $250,000 but less than $500,000 2.5 1.5 1.5 0 0 0
At least $500,000 but less than
$1,000,000 1.5 1.5 0 0 0 0
</TABLE>
Purchase orders for Class B shares of $1 million or more will be treated as
orders for Class A shares or declined.
To determine if a CDSC is payable for any redemption of Class B shares, CDSC
calculation will be determined in a manner that results in the lowest CDSC
charged.
Class B shares are also subject to a Rule 12b-1 fee that is payable at an annual
rate of 1.00% of average daily net assets attributable to Class B shares of the
Fund.
The Fund uses the proceeds from the CDSC to pay underwriting fees and expenses.
The Fund uses the proceeds from Rule 12b-1 fees to pay expenses related to
distribution and shareholder services to the Fund. As a result, the combination
of the CDSC and Rule 12b-1 fees allows the Fund to sell Class B shares without
any initial sales charge. Because these fees are paid out of the Fund's assets
continuously, over time these fees will increase the cost of your investment and
may cost you more than paying other types of sales charges.
Class B shares will automatically convert to Class A shares on a specified date
following your date of purchase. Thereafter, the Class A shares you receive upon
conversion will not be subject to the higher annual operating expenses assessed
on Class B shares. The conversion will be based on the relative NAVs of the two
classes. For a description of NAV, see "Buying Shares" below. The date of
conversion is based on the amount of shares purchased and is determined as
described in the following table:
<TABLE>
<CAPTION>
CONVERSION DATE FOLLOWING EXPIRATION
AMOUNT OF SHARES PURCHASED OF PERIOD AFTER DATE OF PURCHASE*
<S> <C>
Less than $50,000 84 months
At least $50,000 but less than $100,000 76 months
At least $100,000 but less than $250,000 60 months
At least $250,000 but less than $500,000 44 months
At least $500,000 but less than $1,000,000 28 months
</TABLE>
* Conversion will occur on the fifteenth day of the month immediately
following the termination of the applicable period. If the fifteenth day
falls on a Saturday, Sunday or a national holiday, then conversion will
occur on the most recent business day.
16 BUYING AND SELLING SHARES
<PAGE>
CLASS C SHARES. Class C shares are sold without an initial sales charge or CDSC.
Class C shares are subject to a Rule 12b-1 fee that is payable at an annual rate
of 1.00% of average daily net assets attributable to Class C shares of the Fund.
The Fund uses the proceeds from Rule 12b-1 fees to pay expenses related to
distribution and shareholder services to the Fund. Because these fees are paid
out of the Fund's assets continuously, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges.
Purchase orders for Class C shares of $1 million or more will be treated as
orders for Class A shares or declined.
Class C shares will automatically convert to Class A shares on a specified date
following your date of purchase. Thereafter, the Class A shares you receive upon
conversion will not be subject to the higher annual operating expenses assessed
on Class C shares. The conversion will be based on the relative NAVs of the two
classes. Generally, Class C shares must be held longer than Class B shares
before such shares automatically convert to Class A shares. Like Class B shares,
the date of conversion is based on the amount of shares purchased and is
determined as described in the following table:
<TABLE>
<CAPTION>
CONVERSION DATE FOLLOWING EXPIRATION
AMOUNT OF SHARES PURCHASED OF PERIOD AFTER DATE OF PURCHASE*
<S> <C>
Less than $50,000 96 months
At least $50,000 but less than $100,000 88 months
At least $100,000 but less than $250,000 72 months
At least $250,000 but less than $500,000 56 months
At least $500,000 but less than 1,000,000 40 months
</TABLE>
* Conversion will occur on the fifteenth day of the month immediately
following the termination of the applicable period. If the fifteenth day
falls on a Saturday, Sunday or a national holiday, then conversion will
occur on the most recent business day.
Since the longer holding period for Class C shares enables the Fund to charge
the higher Rule 12b-1 fee for a longer period, the Fund is able to offer Class C
shares without an initial sales charge or CDSC.
REDUCING SALES CHARGES
PURCHASES OF SHARES. There are several ways you may reduce sales charges on your
purchase of Fund shares.
- LETTER OF INTENT. Lets you purchase Class A shares of the Fund over a 13
month period and receive the same sales charge as if all shares had been
purchased at once.
- COMBINATION PRIVILEGE. Lets you add the value of all shares you already
own (Class A, Class B or Class C) for purposes of calculating the sales
charge.
- FAMILY AND TRUST PRIVILEGE. Lets you combine purchases of shares of any
class made by your spouse, children and/or family trust for purposes of
calculating the sales charge. If you wish to use this privilege, you must
indicate on your account application that you are entitled to the reduced
sales charge.
BUYING AND SELLING SHARES 17
<PAGE>
- GROUP PURCHASES. Lets you purchase shares with others as a group at a
reduced sales charge applicable to the group as a whole. A purchase group
must meet criteria established by Ascend Financial Services, Inc. (Ascend
Financial), the Fund's underwriter.
- AUTOMATIC INVESTMENT PLAN. Lets you automatically invest a specified
amount in the Fund each month at a lower average cost per share through
the principle of "dollar cost averaging."
For more information on any of these plans, please contact Advantus Shareholder
Services by telephone at (800) 665-6005.
WAIVER OF SALES CHARGE ON CLASS A SHARE PURCHASES. Class A shares may be offered
without any sales charge to the following individuals and institutions:
- officers, directors, employees, sales representatives and retirees of the
Fund, Advantus Capital, Ascend Financial, Minnesota Life and affiliated
companies of Minnesota Life, and their respective spouses, siblings,
direct ancestors or direct descendants
- Minnesota Life and its affiliated companies
- trusts, pension or benefit plans sponsored by or on behalf of Advantus
Capital, Ascend Financial, Minnesota Life and affiliated companies of
Minnesota Life
- advisory clients of Advantus Capital or other affiliated companies of
Minnesota Life
- employees of sales representatives of Advantus Capital, Minnesota Life or
affiliated companies of Minnesota Life
- certain accounts as to which a bank or broker-dealer charges an account
management fee, provided that the bank or broker-dealer has an agreement
with Ascend Financial
- certain accounts sold by registered investment advisers
WAIVER OF SALES CHARGES ON CLASS B SHARE SALES. The CDSC for Class B shares will
generally be waived in the following cases:
- upon the automatic conversion of Class B shares to Class A shares;
- upon the Fund's decision to liquidate accounts with less than the minimum
account size; and
- upon a shareholder's death or disability.
For more information on these waivers, please see the Statement of Additional
Information or contact Advantus Shareholder Services or Ascend Financial.
BUYING SHARES
You may purchase shares of the Fund on any day the New York Stock Exchange
(NYSE) is open for business. The price for Fund shares is equal to the Fund's
NAV plus any applicable sales charge. NAV is generally calculated as of the
close of normal trading on the NYSE (typically 3:00 p.m. Central time). However,
NAV is not calculated on (a) days in which changes in the Fund's portfolio do
not materially change the Fund's NAV, (b) days on which no Fund shares are
purchased or sold, and (c) customary national business holidays on which the
NYSE is closed for trading.
18 BUYING AND SELLING SHARES
<PAGE>
NAV for one Fund share is the value of that share's portion of the Fund's total
investments. To determine NAV, the Fund generally values the Fund's investments
based on market quotations. If market quotations are not available for certain
Fund investments, the investments are valued based on the fair value of the
investments as determined in good faith by the Fund's board of directors. Debt
securities may be valued based on calculations furnished to the Fund by a
pricing service or by brokers who make a market in such securities. The Fund may
hold portfolio securities that are listed on foreign stock exchanges. These
foreign securities may trade on weekends or other days when the Fund typically
does not calculate NAV. As a result, the NAV of the Fund may change on days when
you will not be able to purchase or sell Fund shares.
Your purchase order will be priced at the next NAV calculated after your
purchase order is received by the Fund's transfer agent plus the applicable
initial sales charge (for Class A shares). If your order is received after the
close of normal trading on the NYSE, your order will be priced at the NAV
calculated on the next day the NYSE is open for trading.
A minimum initial investment of $250 is required, and you may make minimum
subsequent investments of $25. The Fund may reject any purchase order when the
Fund determines it would not be in the best interests of the Fund or its
shareholders.
You may purchase shares of the Fund in any of the following ways:
BY CHECK. New investors may purchase shares of the Fund by sending to the
Fund's transfer agent, First Data Investors Services Group, Inc.
(First Data), a completed account application and a check payable
to the Fund (please be sure to write your account number on your
check) at Advantus Funds Group, P.O. Box 9767, Providence, Rhode
Island 02940-5059. If you wish to purchase additional shares,
please send a check payable to the Fund at the above address.
Purchase orders may also be submitted through Ascend Financial or
other authorized broker-dealers.
BY WIRE. New investors may also purchase shares of the Fund by Federal
Reserve or bank wire. You should first complete an account
application and send it to Advantus Funds Group, P.O. Box 9767,
Providence, Rhode Island 02940-5059. Prior to wiring any funds,
you must contact Advantus Shareholder Services at (800) 665-6005
for wire instructions. Wire purchases normally take two or more
hours to complete. To be accepted the same day, wire purchases
must be received by the close of normal trading on the NYSE.
All investments must be in U.S. dollars. Cash, money orders and credit card and
third-party checks are not accepted. If a check does not clear your bank, the
Fund may cancel the purchase.
BUYING AND SELLING SHARES 19
<PAGE>
SELLING SHARES
GENERAL. You may sell your shares at any time. You may make such requests by
contacting the Fund directly by mail or by telephone. You may also sell your
shares by sending a facsimile request to Advantus Funds Group at (508) 871-3560
if no signature guarantee is required.
Shares will be sold at the NAV next calculated after your sale order is received
by the Fund's transfer agent less any applicable CDSC (for Class A shares
subject to a CDSC and for Class B shares ). Class A shares not otherwise subject
to a CDSC and Class C shares may be sold without any charge.
The Fund will forward the sales proceeds to you as soon as possible, but no
later than seven days after the Fund has received an order. If you recently
purchased your shares by check without a signature guarantee, sales proceeds may
not be available until your check has cleared (which may take up to 14 days). If
you designate a bank account with the Fund and wish to sell shares with a value
of at least $500, then the proceeds can be wired directly to your bank account.
If you elect to have proceeds sent by wire transfer, the current $5.00 wire
charge will be deducted from your Fund account.
The amount you receive may be more or less than the original purchase price for
your shares.
MINIMUM ACCOUNT WITHDRAWAL. If your account falls below $150 because you
previously have sold shares, you may be required to sell your remaining shares.
However, you will not be required to sell your shares if your account falls
below the minimum due to changes in the market value of your account. You will
be given at least 60 days' written notice to add funds to your account and avoid
any required sale.
SYSTEMATIC WITHDRAWAL PLAN. If you have an account with a value of at least
$5,000, you may establish a Systematic Withdrawal Plan which allows you to sell
a portion of your shares for a fixed or variable amount over a period of time.
Withdrawal payments for Class A shares purchased in amounts of $1 million or
more and for Class B shares may also be subject to a CDSC. As a result, you
should carefully consider whether a Systematic Withdrawal Plan is appropriate.
More information about the Systematic Withdrawal Plan is provided in the
Statement of Additional Information.
SIGNATURE GUARANTEE. In order to protect the Fund and shareholders against
fraudulent requests, a signature guarantee may be required in certain cases. No
signature guarantee is required if the sale proceeds are less than $50,000 and
are to be paid to the registered holder of the account at the address of record
for that account. A signature guarantee is required if:
- sale proceeds are $50,000 or more
- sale proceeds will be paid to someone other than the registered
shareholder
- sale proceeds will be mailed to an address other than the registered
shareholder's address of record
- instructions were received by the Fund within 30 days before the sale
order to change the registered shareholder's address or bank wire
instructions
- shares are to be transferred to another Fund account holder
- ---------------
REFERENCE POINT
- ---------------
Please see "Telephone Transactions" for instructions on how to sell shares by
telephone.
See "Selling Shares - Signature Guarantee" below to determine whether your sale
will require a signature guarantee.
20 BUYING AND SELLING SHARES
<PAGE>
- the request is not made by a pre-authorized trustee for a plan, trust or
other tax-exempt organization
The Fund reserves the right to require signature guarantees on all sales. If
your sale order requires a signature guarantee, the signature guarantee must be
an original (not a copy) and provided by any of the following:
- national or state banks, savings associations, savings and loan
associations, trust companies, savings banks, industrial loan companies
and credit unions
- national securities exchanges, registered securities associations and
clearing agencies
- broker-dealers who belong to a national securities exchange or clearing
agency, or who have a minimum net capital of at least $100,000
- institutions that participate in the Securities Transfer Agent Medallion
Program or other recognized signature medallion program
REINSTATEMENT PRIVILEGE. If you sell shares of the Fund, you have a one-time
privilege within 90 days after the sale to use some or all of the sale proceeds
to purchase shares of any of the Advantus Multiple Class Funds at no sales
charge. Following your sale of Class A or Class B shares, you will be entitled
to purchase only Class A shares under this reinstatement privilege. Any CDSC
incurred in connection with the prior sale of Class A or B shares within a 90
day period will not be refunded to a shareholder's account. Following your sale
of Class C shares, you will be entitled to purchase only Class C shares under
this reinstatement privilege.
EXCHANGING SHARES
You may exchange some or all of your shares for shares of the same class of any
other Advantus Multiple Class Fund or of the Advantus Money Market Fund, Inc.
(Money Market Fund) provided the other Advantus Fund is available in your state.
If you are considering an exchange into another Advantus Fund you should obtain
the prospectus for that fund and read it carefully. Exchanges may only be made
between Advantus Fund accounts with identical registrations. You may make
exchanges by contacting the Fund by mail or by telephone. Exchange requests must
be for an exchange amount of at least $250. You may exchange your shares up to
twelve times a year without restriction or charge. A $7.50 service fee will then
be imposed on subsequent exchanges. The Fund reserves the right to change the
terms of and impose additional charges on exchanges after giving 60 days' prior
notice to shareholders.
Exchanges will be made based on the NAVs of the shares. No additional purchase
or sales charges will be imposed on exchanges for shares. If Class B shares are
acquired by exchange and later sold, any CDSC on such sale will be calculated as
if no previous exchange occurred. However, shares of the Money Market Fund
acquired by exchange will still be subject to the CDSC. The CDSC will be
calculated without including the period that shares of the Money Market Fund are
held.
You may also elect to systematically exchange Fund shares for shares of other
Advantus Funds on a monthly basis. Systematic exchanges must be for an exchange
amount of at least $25.
More information about exchanging shares is provided in the Statement of
Additional Information.
- ---------------
REFERENCE POINT
- ---------------
Please see "Telephone Transactions" for instructions on how to exchange shares
by telephone.
BUYING AND SELLING SHARES 21
<PAGE>
TELEPHONE TRANSACTIONS
You may sell or exchange Fund shares by telephone. You will automatically have
the right to initiate such telephone transactions unless you elect not to do so
on your account application. You may initiate telephone transactions by calling
Advantus Shareholder Services at (800) 665-6005. Automated service is available
24 hours a day or you may speak to a service representative Monday through
Friday, from 8:00 a.m. to 4:45 p.m. (Central time). The maximum amount of shares
you may sell by telephone is $50,000.
During periods of economic or market changes, you may experience difficulty in
selling or exchanging shares due to a heavy volume of telephone calls. In such a
case, you should consider submitting a written request while still trying a
telephone sale or exchange. The Fund reserves the right to change, terminate or
impose a fee on, telephone sale and exchange privileges after giving 60 days'
prior notice to shareholders.
Unless you decline telephone privileges on your account application, you may be
responsible for any fraudulent telephone order as long as the Fund takes
reasonable measures to verify the order.
- ---------------
REFERENCE POINT
- ---------------
Please see "Selling Shares" and "Exchanging Shares" for sale and exchange
details.
22 BUYING AND SELLING SHARES
<PAGE>
GENERAL INFORMATION
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The Fund pays its shareholders dividends from its net investment income, and
distributes any net capital gains that it has realized. Dividends are paid
quarterly and net capital gains distributions are generally paid once a year.
Distributions on Class A shares will generally be higher than Class B and Class
C share distribution due to higher Rule 12b-1 fees applicable to Class B and
Class C shares. Your distributions will be reinvested in additional shares of
the Fund unless you instruct the Fund otherwise. Distributions of these
additional shares are made at the NAV of the payment date. There are no fees or
sales charges on reinvestments. If you wish to receive cash distributions, you
may authorize the Fund to do so in your account application or by writing to
Advantus Shareholder Services. If your cash distribution checks cannot be
delivered by the postal or other delivery service to your address of record, all
distributions will automatically be reinvested in additional shares of the Fund.
No interest will be paid on amounts represented by uncashed distribution checks.
You may elect to have dividends invested in shares of the Money Market Fund or
in shares of the same class of another Advantus Multiple Class Fund described in
"- Advantus Family of Funds" below. Dividends are valued at the NAV of such
other Advantus Fund on the dividend payment date. To qualify for this privilege,
you must maintain a minimum account balance of $250 in the Fund and the other
applicable Advantus Fund. You must request this privilege by writing to Advantus
Funds Group, P.O. Box 9767, Providence, Rhode Island 02940-5059.
TAXES
You will be taxed on both dividends and capital gains distributions paid by the
Fund (unless you hold your shares through an IRA or other tax-deferred
retirement account). Dividends and distributions are subject to tax regardless
of whether they are automatically invested or are received in cash. Dividends
paid from the Fund's investment income will be taxed as ordinary income. Capital
gains distributions will be taxed as long-term capital gains, regardless of the
length of time for which you have held your shares. Long-term capital gains are
currently taxable to individuals at a maximum federal tax rate of 20%. If you
purchase shares of the Fund before dividends or capital gains distributions,
such dividends and distributions will reduce the NAV per share by the amount of
such dividends and distributions. Furthermore, you will be subject to taxation
on such dividends and distributions.
If you sell your shares, you will generally realize a capital gain or loss. Any
gain will be treated as short-term if you have held the shares for one year or
less, and long-term if you have held the shares more than one year. Short-term
capital gains are taxed as ordinary income, while long-term capital gains are
subject to a maximum federal tax rate of 20%. If
- --------------------
FOR YOUR INFORMATION
- --------------------
The redemption or exchange of Fund shares may generate a taxable event for you.
Depending on the purchase price and the sale price of the shares you redeem or
exchange, you may incur a gain or loss.
GENERAL INFORMATION 23
<PAGE>
you exchange your shares in the Fund for shares of another Advantus Fund, the
exchange will be treated as a sale for federal tax purposes, and you will be
taxed on any capital gain you realize on the sale.
The Fund makes changes in its portfolio that Advantus Capital deems advisable.
The Fund's portfolio turnover may cause the Fund to realize capital gains which,
when distributed to shareholders, will be taxable to them.
You will receive an annual statement from the Fund providing detailed
information concerning the federal tax status of distributions you have received
during the year.
The above is only a general discussion of the federal income tax consequences of
an investment in the Fund. For more information, see the Statement of Additional
Information. You should consult your own tax adviser for the specific federal,
state or local tax consequences to you of an investment in the Fund.
24 GENERAL INFORMATION
<PAGE>
SERVICE PROVIDERS
INVESTMENT ADVISER
Advantus Capital Management, Inc.
400 Robert Street North
St. Paul, Minnesota 55101
(651) 665-3826
UNDERWRITER
Ascend Financial Services, Inc.
P.O. Box 64809
St. Paul, Minnesota 55101-0809
(651) 665-4833
(888) 237-1838
SHAREHOLDER AND ADMINISTRATIVE SERVICES AGENT
Advantus Shareholder Services
(a division of Minnesota Life Insurance Company)
(800) 665-6005
TRANSFER AGENT
First Data Investor Services Group, Inc.
Advantus Funds Group
P.O. Box 9767
Providence, Rhode Island 02940-5059
CUSTODIAN
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
INDEPENDENT AUDITORS
KPMG Peat Marwick LLP
GENERAL COUNSEL
Dorsey & Whitney LLP
SERVICE PROVIDERS 25
<PAGE>
This page is purposely left blank
26
<PAGE>
ADVANTUS FAMILY OF FUNDS
Venture Fund is a member of the Advantus family of funds. The following is a
brief description of the investment policies and practices of the Advantus
Funds.
ENTERPRISE
- -------------------------------------------------
Long-term growth through investing primarily in common stocks issued by small
capitalization companies.
VENTURE
- -------------------------------------------------
Long-term growth through investing primarily in stocks of small capitalization
companies deemed by Advantus Capital to be undervalued relative to their future
earnings and growth potential.
HORIZON
- -------------------------------------------------
Long-term growth combined with a moderate level of current income through
investing primarily in common stocks issued by mid and large capitalization
companies.
INDEX 500
- -------------------------------------------------
Investment Results that correspond generally to the S&P 500 Index by investing a
significant portion of its portfolio in common stocks included in the S&P 500
Index.*
CORNERSTONE
- -------------------------------------------------
Long-term growth through investing primarily in stocks of mid and large
capitalization companies deemed by Advantus Capital to be undervalued relative
to their future earnings and growth potential.
INTERNATIONAL BALANCED
- -------------------------------------------------
Total return through investing primarily in stocks and bonds of large and small
companies located outside the U.S.
SPECTRUM
- -------------------------------------------------
Total return from a combination of income and capital appreciation through
investing in a portfolio of stocks, bonds and money market instruments.
BOND
- -------------------------------------------------
High level of current income by investing primarily in high quality corporate
bonds.
MORTGAGE SECURITIES
- -------------------------------------------------
High level of current income by investing primarily in mortgage-related
securities.
MONEY MARKET
- -------------------------------------------------
High level of current income by investing primarily in money market securities.
*"STANDARD & POOR'S-REGISTERED TRADEMARK-", "S&P 500-REGISTERED TRADEMARK-",
"STANDARD & POOR'S 500", AND "500" ARE REGISTERED TRADEMARKS OF THE MCGRAW-HILL
COMPANIES, INC. AND HAVE BEEN LICENSED FOR USE BY ADVANTUS INDEX 500 FUND, INC.
THE FUND IS NOT SPONSORED, ENDORSED, SOLD OR PROMOTED BY STANDARD & POOR'S AND
STANDARD & POOR'S MAKES NO REPRESENTATION REGARDING THE ADVISABILITY OF
INVESTING IN THE FUND.
AN INVESTMENT IN ANY ADVANTUS FUND WILL BE SUBJECT TO A VARIETY OF RISKS. AS A
RESULT, AN ADVANTUS FUND MAY NOT ALWAYS ACHIEVE ITS INVESTMENT OBJECTIVE.
THIS INFORMATION IS A RESULT OF LONG-TERM RISK AND RETURN EXPECTATIONS USING
VARIOUS INDICES AND ASSET CLASS HISTORIES, AND IS NOT FROM ACTUAL PERFORMANCE.
PLEASE NOTE THAT THE ACTUAL RISK/RETURN FOR AN INVESTMENT IN THE ABOVE ADVANTUS
FUNDS MAY VARY AND THE ABOVE TABLE DOES NOT NECESSARILY INDICATE HOW EACH
ADVANTUS FUND WILL PERFORM IN THE FUTURE.
[GRAPHIC]
27
<PAGE>
ADDITIONAL INFORMATION ABOUT THE FUND
The Fund's annual and semi-annual reports list portfolio holdings, and discuss
recent market conditions, economic trends and investment strategies that
affected the Fund during the latest fiscal year.
A Statement of Additional Information (SAI) provides further information about
the Fund. The current SAI is on file with the Securities and Exchange Commission
and is incorporated by reference (is legally part of this Prospectus).
HOW TO OBTAIN ADDITIONAL INFORMATION
The SAI and the Fund's annual and semi-annual reports are available without
charge upon request. You may obtain additional information or make any
inquiries:
By Telephone - Call (800) 665-6005
By Mail - Write to Advantus Funds Group, P.O. Box 9767, Providence, Rhode Island
02940-5059
Information about the Fund (including the SAI and annual and semi-annual
reports) can be reviewed and copied at the SEC's Public Reference Room in
Washington, D.C. (telephone 1-800-SEC-0330). This information and other reports
about the Fund are also available on the SEC's World Wide Web site at
http://www.sec.gov. Copies of this information may be obtained by writing to the
SEC's Public Reference Section, Washington, D.C. 20549-6009. You will be charged
a duplicating fee for copies.
Investment Company Act No. 811-7817
[LOGO]
-C-1998 Minnesota Life Insurance Company. All rights reserved.
F. 50485 Rev. 2-1998
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ADVANTUS VENTURE FUND, INC.
ADVANTUS INDEX 500 FUND, INC.
FEBRUARY 1, 1999
This Statement of Additional Information is not a prospectus. This
Statement of Additional Information relates to the separate Prospectuses dated
February 1, 1999 and should be read in conjunction therewith. A copy of each
Prospectus may be obtained by telephone from Advantus Shareholder Services
at (800) 665-6005 or by writing to the Funds at Advantus Funds Group, P.O. Box
9767, Providence, Rhode Island 02940-5059.
THIS STATEMENT OF ADDITIONAL INFORMATION MUST BE ACCOMPANIED OR PRECEDED BY A
COPY OF THE CURRENT PROSPECTUS FOR THE RESPECTIVE FUND.
1
<PAGE>
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY
INVESTMENT OBJECTIVES AND POLICIES
Equity Securities of Small Capitalization Companies
S&P 500 Index
Debt and Money Market Securities
Low Rated Securities
Convertible Securities
Foreign Securities
Stock Index Futures Contracts
Options
United States Government and Agency Obligations
Short Sales Against the Box
Loans of Portfolio Securities
Restricted and Illiquid Securities
Repurchase Agreements
Warrants
Index Depositary Receipts
Defensive Purposes
INVESTMENT RESTRICTIONS
Venture Fund
Index Fund
PORTFOLIO TURNOVER
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTOR LIABILITY
INVESTMENT ADVISORY AND OTHER SERVICES
General
Control and Management of Advantus Capital and Ascend Financial
Investment Advisory Agreement
Distribution Agreement
Payment of Certain Distribution Expenses of the Funds
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
CALCULATION OF PERFORMANCE DATA
CAPITAL STOCK AND OWNERSHIP OF SHARES
HOW TO BUY SHARES
Alternative Purchase Arrangements
Purchase by Check
Purchase by Wire
Timing of Purchase Orders
Minimum Investments
Public Offering Price
SALES CHARGES
Class A Shares
Class B Shares
Class C Shares
Other Payments to Broker-Dealers
NET ASSET VALUE AND PUBLIC OFFERING PRICE
REDUCED SALES CHARGES
Right of Accumulation-Cumulative Purchase Discount
Letter of Intent
Combining Purchases
Group Purchases
Waiver of Sales Charges For Certain Sales of Class A Shares
EXCHANGE AND TRANSFER OF FUND SHARES
Systematic Exchange Plan
SHAREHOLDER SERVICES
Open Accounts
Automatic Investment Plan
Group Systematic Investment Plan
Retirement Plans Offering Tax Benefits
Systematic Withdrawal Plans
REDEMPTIONS
Signature Guarantee
Contingent Deferred Sales Charge
Telephone Redemption
Delay in Payment of Redemption Proceeds
Fund's Right to Redeem Small Accounts
Reinstatement Privilege
TELEPHONE TRANSACTIONS
THE STANDARD & POOR'S LICENSE
DISTRIBUTIONS AND TAX STATUS
Dividends and Capital Gains Distributions
Taxation - General
Taxation on Portfolio Holdings
FINANCIAL STATEMENTS
Appendix A - Bond and Commercial Paper Ratings
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GENERAL INFORMATION AND HISTORY
Advantus Venture Fund, Inc. ("Venture Fund") and Advantus Index 500 Fund,
Inc. ("Index Fund"), collectively referred to as the "Funds," are open-end
diversified investment companies, commonly called mutual funds. The Funds,
together with ten other mutual funds which share the same investment adviser,
are members of a family of mutual funds known as the "Advantus Funds." Each of
the Advantus Funds, excluding Advantus Money Market Fund, Inc., offers more than
one class of shares (the "Advantus Multiple Class Funds"). The Advantus
Multiple Class Funds currently offer three classes of shares (Class A, Class B
and Class C). Each class is sold pursuant to different sales arrangements and
bears different expenses. The Funds were incorporated as Minnesota corporations
in July 1996.
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and principal investment policies of each of
the Funds are set forth in detail in the text of each Fund's Prospectus under
"Investing in the Fund --Investment Policies and Practices."
EQUITY SECURITIES OF SMALL CAPITALIZATION COMPANIES
Venture Fund will invest primarily in equity securities issued by small
capitalization companies. Small capitalization companies may be in a relatively
early stage of development or may produce goods and services which have
favorable prospects for growth due to increasing demand or developing markets.
Frequently, such companies have a small management group and single product or
product-line expertise that may result in an enhanced entrepreneurial spirit and
greater focus which allow such firms to be successful. The Fund's investment
adviser believes that such companies may develop into significant business
enterprises and that an investment in such companies offers a greater
opportunity for capital appreciation than an investment in larger more
established entities. However, small capitalization companies frequently retain
a large part of their earnings for research, development and investment in
capital assets, so that the prospects for immediate dividend income are limited.
While securities issued by smaller capitalization companies have
historically produced better market results than the securities of larger
issuers, there is no assurance that they will continue to do so or that the
Fund will invest specifically in those companies which produce those results.
Because of the risks involved, the Fund is not intended to constitute a
complete investment program.
S&P 500 INDEX
Index Fund invests in common stocks included in the Standard & Poor's 500
Composite Stock Price Index (the "S&P 500"). The S&P 500 is an unmanaged index
of common stocks which emphasizes large capitalization companies and is
comprised of 500 industrial, financial, utility and transportation companies.
The S&P 500 is a well-known stock market index that includes common stocks of
companies representing approximately 70% of the market value of all common
stocks publicly traded in the United States. The weightings of stock in the S&P
500 are based on each stock's relative capitalization or total market value;
that is, its market price per share times the number of shares outstanding.
Because of this weighting, approximately 50% of the S&P 500 is typically
composed of stocks of the 50 to 60 largest companies in the S&P 500. The
composition of the S&P 500 may be changed from time to time. Stocks included in
the S&P 500 are chosen by Standard & Poor's on a statistical basis which
reflects such factors as the market capitalization and trading activity of each
stock and the extent to which each stock is representative of stocks in a
particular industry. Typically, companies included in the S&P 500 are the
largest and most dominant companies in their respective industries. The
inclusion of a stock in the S&P 500 in no way implies that Standard & Poor's
believes the stock to be an attractive investment, nor does it afford any
assurance against declines in the price or yield performance of that stock. The
Fund's investment adviser believes that the performance of the S&P 500 is
representative of the performance of publicly traded common stocks in general.
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The Fund will at all times invest at least 80% of its total assets in
common stocks included in the S&P 500. There is no minimum or maximum number of
stocks included in the S&P 500 which the Fund must hold. Under normal
circumstances Advantus Capital generally will seek to match the Fund to the
composition of the S&P 500 to the maximum extent, but may not always invest the
Fund's portfolio to mirror the S&P 500 exactly. Because of the difficulty and
expense of executing relatively small stock transactions, the Fund may not
always be invested in the less heavily weighted stocks included in the S&P 500,
and may at times have its portfolio weighted differently from the S&P 500,
particularly when the Fund has assets of less than $25 million. Regardless of
the number, or relative weightings, of stocks included in the S&P 500 held by
the Fund, however, the Fund's intention is to seek investment results, before
sales charges and other Fund expenses, which match as closely as possible the
investment performance of the S&P 500.
The method used to select investments for the Fund involves investing
primarily in those stocks having the highest statistical weightings in the
S&P 500. Stocks in the S&P 500 are ranked in accordance with their
statistical weightings from highest to lowest. The Fund will invest in all
of the stocks above a specified level in the ranking in approximately the
same proportion as the weightings of those stocks in the S&P 500. However,
the Fund will not invest in all of the stocks below the specified level in
the ranking, but rather will invest only in those stocks, and in amounts, as
the Fund's investment adviser determines to be necessary or appropriate for
the Fund to approximate the performance of the S&P 500. The stocks of the
S&P 500 to be included in the Fund will be selected utilizing a computer
program which provides simulations of alternative investment strategies for
tracking the performance of the S&P 500 and analyzes the estimated tracking
results of such alternative strategies prior to their implementation. This
process selects stocks for the Fund so that various industry weightings and
market capitalizations closely approximate those of the S&P 500. This
technique employed by the Fund is expected to be an effective means of
substantially duplicating the income and capital returns of the S&P 500. The
Fund's ability to duplicate the performance of the S&P 500 will depend to
some extent, however, on the size and timing of cash flows into or out of the
Fund. Investment changes to accommodate these cash flows will be made to
maintain the similarity of the Fund's holdings to the S&P 500 to the maximum
practicable extent.
Over the long term, the Fund's investment adviser will seek a correlation
between the performance of the Fund, before sales charges and other Fund
expenses, and that of the S&P 500 of at least 95% (or 85% - 95% if the Fund's
assets are less than $25 million). A correlation of 100% would indicate perfect
correlation, which would be achieved when the net asset value of the Fund,
including the value of its dividend and capital gains distributions, increased
or decreased in exact proportion to changes in the S&P 500. An investment in
shares of the Fund therefore involves risks similar to those of investing in a
portfolio consisting of the common stocks of some or all of the companies
included in the S&P 500.
DEBT AND MONEY MARKET SECURITIES
Venture Fund may invest in long, intermediate and short-term debt
securities from various industry classifications and money market instruments.
Such instruments may include the following:
* Corporate obligations which at the time of purchase are rated within
the four highest grades assigned by Standard & Poor's Corporation
("S&P"), Moody's Investors Services, Inc. ("Moody's") or any other
national rating service, or, if not rated, are of equivalent
investment quality as determined by the Fund's investment adviser or
sub-adviser, as the case may be. To the extent that the Fund invests
in securities rated BBB or Baa by S&P or Moody's, respectively, it
will be investing in securities which have speculative elements.
Venture Fund may also invest up to 10% of its net assets in securities
(including convertible securities) rated at least B- by S&P or B3 by
Moody's. See "Low Rated Securities," below. For a description of the
ratings used by Moody's and S&P, see Appendix A below.
* Obligations of, or guaranteed by, the U.S. Government, its agencies or
instrumentalities.
* Debt obligations of banks.
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In addition to the instruments described above, which will generally be
long-term, but may be purchased by the Fund within one year of the date of a
security's maturity, the Fund may also purchase other high quality securities
including:
* Obligations (including certificates of deposit and bankers'
acceptances) of U.S. banks, savings and loan associations, savings
banks which have total assets (as of the date of their most recent
annual financial statements at the time of investment) of not less
than $2,000,000,000; U.S. dollar denominated obligations of Canadian
chartered banks, London branches of U.S. banks and U.S. branches or
agencies of foreign banks which meet the above-stated asset size; and
obligations of any U.S. banks, savings and loan associations and
savings banks, regardless of the amount of their total assets,
provided that the amount of the obligations purchased does not exceed
$100,000 for any one U.S. bank, savings and loan association or
savings bank and the payment of the principal is insured by the
Federal Deposit Insurance Corporation or the Federal Savings and Loan
Insurance Corporation.
* Obligations of the International Bank for Reconstruction and
Development.
* Commercial paper (including variable amount master demand notes)
issued by U.S. corporations or affiliated foreign corporations and
rated (or guaranteed by a company whose commercial paper is rated) at
the date of investment Prime-1 by Moody's or A-1 by S&P or, if not
rated by either Moody's or S&P, issued by a corporation having an
outstanding debt issue rated Aa or better by Moody's or AA or better
by S&P and, if issued by an affiliated foreign corporation, such
commercial paper (not to exceed in the aggregate 10% of the Fund's net
assets) is U.S. dollar denominated and not subject at the time of
purchase to foreign tax withholding.
The Fund may also invest in securities which are unrated if the Fund's
investment adviser determines that such securities are of equivalent investment
quality to the rated securities described above. In the case of "split-rated"
securities, which result when nationally-recognized rating agencies rate the
security at different rating levels (e.g., BBB by S&P and Ba by Moody's), it is
the Fund's general policy to classify such securities at the higher rating level
where, in the judgment of the Fund's investment adviser, such classification
reasonably reflects the security's quality and risk.
The market value of debt securities generally varies in response to changes
in interest rates and the financial condition of each issuer. During periods of
declining interest rates, the value of debt securities generally increases.
Conversely, during periods of rising interest rates, the value of such
securities generally declines. These changes in market value will be reflected
in the Fund's net asset value.
The Fund may, however, acquire debt securities which, after acquisition,
are down-graded by the rating agencies to a rating which is lower than the
applicable minimum rating described above. 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 in
excess of 5% of its net assets in securities which have been down-graded
subsequent to purchase where such down-graded securities are not otherwise
eligible for purchase by the Fund. This 5% is in addition to securities which
the Fund may otherwise purchase under its usual investment policies.
LOW RATED SECURITIES
Venture Fund may also invest up to 10% of its net assets in debt
securities (including convertible debt securities), which, at the time of
acquisition, are rated at least B- or B3 by S&P or Moody's, respectively, or
rated at a comparable level by another independent publicly-recognized rating
agency, or, if not rated, are of equivalent investment quality as determined
by the Fund's investment adviser. Venture Fund may also hold an additional
5% of its total assets in low rated securities rated below "investment grade"
(i.e. below BBB) where such securities were either investment grade or
eligible securities at the time of purchase but subsequently down-graded to a
rating not otherwise
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eligible for purchase by the Fund (see "Debt and Money Market Securities"
above). Debt securities rated below the four highest categories (i.e., below
BBB) are not considered investment grade obligations and are commonly called
"junk bonds." These securities are predominately speculative and present
more credit risk than investment grade obligations. Bonds rated below BBB
are also regarded as predominately speculative with respect to the issuer's
continuing ability to meet principal and interest payments.
Low rated and unrated debt securities generally involve greater volatility
of price and risk of principal and income, including the possibility of default
by, or bankruptcy of, the issuers of the securities. In addition, the markets
in which low rated and unrated debt securities are traded are more limited than
those in which higher rated securities are traded. The existence of limited
markets for particular securities may diminish the Fund's ability to sell the
securities at fair value either to meet redemption requests or to respond to
changes in the economy or in the financial markets and could adversely affect
and cause fluctuations in the daily net asset value of the Funds' 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.
CONVERTIBLE SECURITIES
Venture Fund may invest in debt or preferred equity securities convertible
into or exchangeable for equity securities. Traditionally, convertible
securities have paid dividends or interest at rates higher than common stocks
but lower than non-convertible securities. They generally participate in the
appreciation or depreciation of the underlying stock into which they are
convertible, but to a lesser degree. The total return and yield of lower
quality (high yield/high risk) convertible bonds can be expected to fluctuate
more than the total return and yield of higher quality, shorter-term bonds, but
not as much as common stocks. The Fund will limit its purchase of convertible
debt securities to those that, at the time of purchase, are rated at least B- by
S&P or B3 by Moody's, or if not rated by S&P or Moody's, are of equivalent
investment quality as determined by the Fund's investment adviser.
FOREIGN SECURITIES
Venture Fund may invest up to 10% of its total assets in securities of
foreign issuers which are not publicly traded in the U.S. (securities of
foreign issuers which are publicly traded in the U.S., usually in the form of
sponsored American Depositary Receipts, are not subject to this 10%
limitation.) Investing in securities of foreign issuers may result in greater
risk than that incurred in investing in securities of domestic issuers.
There is the possibility of expropriation, nationalization or confiscatory
taxation, taxation of income earned in foreign nations or other taxes imposed
with respect to investments in foreign nations; foreign exchange controls
(which may include suspension of the ability to transfer currency from a
given country), default in foreign government securities, political or social
instability or diplomatic developments which could affect investments in
securities of issuers in those nations. In addition, in many countries there
is less publicly available information about issuers than is available in
reports about companies in the U.S. Foreign companies are not generally
subject to uniform accounting, auditing and financial reporting standards,
and auditing practices and requirements may not be comparable to those
applicable to U.S. companies. Further, the Fund may encounter difficulties or
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be unable to pursue legal remedies and obtain judgments in foreign courts.
Commission rates in foreign countries, which are sometimes fixed rather than
subject to negotiation as in the U.S., are likely to be higher. Further, the
settlement period of securities transactions in foreign markets may be longer
than in domestic markets. In many foreign countries there is less government
supervision and regulation of business and industry practices, stock
exchanges, brokers and listed companies than in the U.S. The foreign
securities markets of many of the countries in which the Fund may invest may
also be smaller, less liquid, and subject to greater price volatility than
those in the U.S. Also, soe countries may withhold portions of interest,
dividends and gains at the source. The Fund may also be unfavorably affected
by fluctuations in the relative rates of exchange between the currencies of
different nations (i.e., when the currency being exchanged has decreased in
value relative to the currency being purchased). There are further risk
considerations, including possible losses through the holding of securities
in domestic and foreign custodial banks and depositories.
An ADR is sponsored if the original issuing company has selected a single
U.S. bank to serve as its U.S. depositary and transfer agent. This relationship
requires a deposit agreement which defines the rights and duties of both the
issuer and depositary. Companies that sponsor ADRs must also provide their ADR
investors with English translations of company information made public in their
own domiciled country. Sponsored ADR investors also generally have the same
voting rights as ordinary shareholders, barring any unusual circumstances. ADRs
which meet these requirements can be listed on U.S. stock exchanges.
Unsponsored ADRs are created at the initiative of a broker or bank reacting to
demand for a specific foreign stock. The broker or bank purchases the
underlying shares and deposits them in a depositary. Unsponsored shares issued
after 1983 are not eligible for U.S. stock exchange listings. Furthermore, they
do not generally include voting rights.
STOCK INDEX FUTURES CONTRACTS
Index Fund may purchase and sell stock index futures contracts. The Fund
may enter into stock index futures contracts provided that not more than 5% of
its assets are required as a margin deposit for such contracts and provided that
not more than 20% of its total assets (including assets held as "cover" in
segregated accounts or as margin deposits) are invested in stock index futures
obligations at any time. 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.
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
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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. The Fund's investment adviser
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. 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.
The Fund's investment adviser 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.
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. 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.
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 the Fund's investment adviser 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. 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
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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 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
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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 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.
The use of options contracts involves risk of loss to the Fund due to the
possibility that the prices of the underlying securities on which such options
are written may not move as anticipated.
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.
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 or securities sold short or other
securities convertible into or exchangeable without further consideration for
securities of the same issue as the securities sold short. Short sales against
the box are typically used by sophisticated investors to defer recognition of
capital gains or losses. The Funds have no present intention to sell securities
short in this fashion.
LOANS OF PORTFOLIO SECURITIES
Venture Fund and Index Fund for the purpose of realizing additional
10
<PAGE>
income, may make secured loans of portfolio securities amounting to not more
than 20% of their respective 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.
RESTRICTED AND ILLIQUID SECURITIES
Venture Fund and Index Fund may invest up to 10% of their respective net
assets in securities restricted as to disposition under the federal securities
laws or otherwise, or other illiquid assets. An investment is generally deemed
to be "illiquid" if it cannot be disposed of within seven days in the ordinary
course of business at approximately the amount at which the investment company
is valuing the investment. "Restricted securities" are securities which were
originally sold in private placements and which have not been registered under
the Securities Act of 1933 (the "1933 Act"). Such securities generally have
been considered illiquid by the staff of the Securities and Exchange Commission
(the "SEC"), since such securities may be resold only subject to statutory
restrictions and delays or if registered under the 1933 Act. Because of such
restrictions, the Fund may not be able to dispose of a block of restricted
securities for a substantial period of time or at prices as favorable as those
prevailing in the open market should like securities of an unrestricted class of
the same issuer be freely traded. The Fund may be required to bear the expenses
of registration of such restricted securities.
The SEC has acknowledged, however, that a market exists for certain
restricted securities (for example, securities qualifying for resale to certain
"qualified institutional buyers" pursuant to Rule 144A under the 1933 Act).
Additionally, the Fund's investment adviser believes that a similar market
exists for commercial paper issued pursuant to the private placement exemption
of Section 4(2) of the 1933 Act. The Fund may invest without limitation in
these forms of restricted securities if such securities are deemed by the Fund's
investment adviser to be liquid in accordance with standards established by the
Fund's Board of Directors. Under these guidelines, the Fund's investment
adviser must consider (a) the frequency of trades and quotes for the security,
(b) the number of dealers willing to purchase or sell the security and the
number of other potential purchasers, (c) dealer undertakings to make a market
in the security, and (d) the nature of the security and the nature of the
marketplace trades (for example, the time needed to dispose of the security, the
method of soliciting offers and the mechanics of transfer). At the present
time, it is not possible to predict with accuracy how the markets for certain
restricted securities will develop. Investing in such restricted securities
could have the effect of increasing the level of the Fund's illiquidity to the
extent that qualified purchasers of the securities become, for a time,
uninterested in purchasing these securities.
11
<PAGE>
If through the appreciation of restricted securities or the depreciation
of unrestricted securities, the Fund is in a position where more than 10% of
its net assets are invested in restricted and other illiquid securities, the
Fund will take appropriate steps to protect liquidity.
REPURCHASE AGREEMENTS
Venture Fund and Index Fund may enter into repurchase agreements.
Repurchase agreements are agreements by which the Fund purchases a security and
obtains a simultaneous commitment from the seller (a member bank of the Federal
Reserve System or, if permitted by law or regulation and if the Board of
Directors of the Fund has evaluated its creditworthiness through adoption of
standards of review or otherwise, a securities dealer) to repurchase the
security at an agreed upon price and date. The creditworthiness of entities
with whom the Fund enters into repurchase agreements is monitored by the Fund's
investment adviser throughout the term of the repurchase agreement. The resale
price is in excess of the purchase price and reflects an agreed upon market rate
unrelated to the coupon rate on the purchased security. Such transactions
afford the Fund the opportunity to earn a return on temporarily available cash.
The Fund's custodian, or a duly appointed subcustodian, holds the securities
underlying any repurchase agreement in a segregated account or such securities
may be part of the Federal Reserve Book Entry System. The market value of the
collateral underlying the repurchase agreement is determined on each business
day. If at any time the market value of the collateral falls below the
repurchase price of the repurchase agreement (including any accrued interest),
the Fund promptly receives additional collateral, so that the total collateral
is in an amount at least equal to the repurchase price plus accrued interest.
While the underlying security may be a bill, certificate of indebtedness, note
or bond issued by an agency, authority or instrumentality of the U.S.
Government, the obligation of the seller is not guaranteed by the U.S.
Government. In the event of a bankruptcy or other default of a seller of a
repurchase agreement, the Fund could experience both delays in liquidating the
underlying security and losses, including: (a) possible decline in the value of
the underlying security during the period whil the Fund seeks to enforce its
rights thereto; (b) possible subnormal levels of income and lack of access to
income during this period; and (c) expenses of enforcing its rights.
WARRANTS
Venture Fund may invest in warrants; however, not more than 5% of its net
assets (at the time of purchase) will be invested in warrants other than
warrants acquired in units or attached to other securities. Of such 5%, not
more than 2% of the Fund's assets at the time of purchase may be invested in
warrants that are not listed on the New York or American Stock Exchanges.
Warrants are instruments that allow investors to purchase underlying shares at a
specified price (exercise price) at a given future date. Warrants are pure
speculation in that they have no voting rights, pay no dividends and have no
rights with respect to the assets of the corporation issuing them. The prices
of warrants do not necessarily move parallel to the prices of the underlying
securities.
INDEX DEPOSITARY RECEIPTS
Venture Fund and Index Fund may each invest up to 5% of their respective
total assets in one or more types of depositary receipts ("DRs") as a means
of tracking the performance of a designated stock index while maintaining
liquidity. Venture Fund and Index Fund may invest in S&P 500 Depositary
Receipts ("SPDRs"), which track the S&P 500 Index. In addition, Venture Fund
may invest in S&P MidCap 400 Depositary Receipts ("MidCap SPDRs"), which
track the S&P MidCap 400 Index; and "Dow Industrial Diamonds," which track
the Dow Jones Industrial Average; or in other DRs which track indexes,
provided that such investments are consistent with the Fund's investment
objective as determined by the Fund's investment adviser. Each of these
securities represents shares of ownership of a long term unit investment
trust (a type of investment company) that holds all of the stock included in
the relevant underlying index.
DRs carry a price which equals a specified fraction of the value of the
designated index and are exchange traded. As with other equity transactions,
brokers charge a commission in connection with the purchase of DRs. In
12
<PAGE>
addition, an asset management fee is charged in connection with the underlying
unit investment trust (which is in addition to the asset management fee paid by
the Fund).
Trading costs for DRs are somewhat higher than those for stock index
futures contracts, but, because DRs trade like other exchange-listed equities,
they represent a quick and convenient method of maximizing the use of the Fund's
assets to track the return of a particular stock index. DRs share in the same
market risks as other equity investments.
DEFENSIVE PURPOSES
The Funds may invest up to 20% of their respective net assets in cash or
cash items. In addition, for temporary or defensive purposes, the Funds may
invest in cash or cash items without limitation. The "cash items" in which the
Funds may invest, include short-term obligations such as rated commercial paper
and variable amount master demand notes; United States dollar-denominated time
and savings deposits (including certificates of deposit); bankers' acceptances;
obligations of the United States Government or its agencies or
instrumentalities; repurchase agreements collateralized by eligible investments
of a Fund; securities of other mutual funds which invest primarily in debt
obligations with remaining maturities of 13 months or less (which investments
also are subject to the advisory fee); and other similar high-quality short-term
United States dollar-denominated obligations. The other mutual funds in which
the Funds may so invest include money market funds advised by the Fund's
investment adviser.
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.
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 applicable 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.)
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
of 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;
13
<PAGE>
(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) 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 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.)
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);
14
<PAGE>
(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 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 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.
15
<PAGE>
In addition, as a non-fundamental restriction, each of the Funds will not
issue any senior securities as defined in the Investments Company Act of 1940,
except to the extent that using options and futures contracts or purchasing or
selling securities on a when-issued or forward commitment basis may be deemed to
constitute issuing a senior security.
With respect to each of the Funds, any investment policy set forth under
"Investing in the Fund - Investment Policies and Practices" in the applicable
Prospectus, or any restriction set forth above which involves a maximum
percentage of securities or assets shall not be considered to be violated unless
an excess over the percentage occurs immediately after an acquisition of
securities or utilization of assets and results therefrom, or unless the
Investment Company Act of 1940 provides otherwise.
PORTFOLIO TURNOVER
Portfolio turnover is the ratio of the lesser of annual purchases or sales
of portfolio securities to the average monthly value of portfolio securities,
not including short-term securities. A 100% portfolio turnover rate would
occur, for example, if the lesser of the value of purchases or sales of
portfolio securities for a particular year were equal to the average monthly
value of the portfolio securities owned during such year.
Venture Fund makes changes in its portfolio securities which are considered
advisable in light of market conditions. Frequent changes may result in higher
brokerage and other costs for the Fund. Portfolio turnover rates may vary
greatly from year to year and within a particular year and may also be affected
by cash requirements for redemptions of Fund shares. Venture Fund does not
emphasize short-term trading profits. For the fiscal years ended July 31, 1998
and July 31, 1997, the Fund's portfolio turnover rate was 45.0% and 39.6%,
respectively.
Index Fund generally seeks to invest for the long term, but reserves the
right to sell securities irrespective of how long they have been held.
However, because of the "passive" investment management approach of the Fund,
the Fund's portfolio turnover rate is expected to be generally lower than the
rate for most other investment companies. Ordinarily, securities will be
sold by Index Fund only to reflect certain administrative changes in the S&P
500 (including mergers or changes in its composition) or to accommodate cash
flows into and out of the Fund while maintaining the similarity of the Fund
to the S&P 500. For the fiscal years ended July 31, 1998 and July 31, 1997,
the Fund's portfolio turnover rate was 59.2% and 5.8%, respectively.
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:
<TABLE>
<CAPTION>
Position with Principal Occupation and other
Name and Address the Funds Affiliations (past 5 years)
- ---------------- ------------- ---------------------------
<S> <C> <C>
William N. Westhoff* President President, Treasurer and
Advantus Capital and Director Director, Advantus Capital
Management, Inc. Management, Inc.; Senior Vice
400 Robert Street North President and Treasurer, Minnesota
St. Paul, Minnesota 55101 Life Insurance Company;
Vice President and Director, Robert
Street Energy, Inc.; President,
MCM Funding 1997-1, Inc.; President.
MCM Funding 1998-1, Inc.; Senior Vice
President, Global Investments, American
Express Financial Corporation,
Minneapolis, Minnesota, from August
1994 to October 1997; Senior Vice
President, Fixed Income Management,
American Express Financial
Corporation, Minneapolis, Minnesota,
from November 1989 to July 1994
16
<PAGE>
Frederick P. Feuerherm* Vice President, Vice President, Assistant Secretary
Advantus Capital Director and and Director, Advantus Capital
Management, Inc. Treasurer Management, Inc.;
400 Robert Street North Vice President, Minnesota Life
St. Paul, Minnesota 55101 Insurance Company; Vice President and
Director, MIMLIC Funding, Inc.; Vice
President and Assistant Secretary, MCM
Funding 1997-1, Inc.; Vice President
and Assistant Secretary, MCM Funding
1998-1, Inc.
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.
- ------------------------------------------------------------
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.
Each director of the Funds who is not affiliated with Advantus Capital
Management, Inc. ("Advantus Capital") is also a director of the other eleven
investment companies of which Advantus Capital is the investment adviser (13
investment companies in total -- the "Fund Complex"). As of the date hereof,
such directors receive compensation in connection with all such investment
companies which, in the aggregate, is equal to $8,000 per year and $2,000 per
meeting attended (and reimbursement of travel expenses to attend directors'
meetings). The portion of such compensation borne by any Fund is a pro rata
portion based on the ratio that such Fund's total net assets bears to the
total net assets of the Fund Complex. During the fiscal year ended July 31,
1998, each Director not affiliated with Advantus Capital was compensated by
the Funds in accordance with the following table:
<TABLE>
<CAPTION>
Pension or Total
Retirement Compensation
Aggregate Benefits Estimated from Funds and
Compensation Accrued as Annual Fund Complex
from the Part of Fund Benefits Upon Paid to
Name of Director Funds(1) Expenses Retirement Directors
------------------ ---------- ------------ ------------- --------------
<S> <C> <C> <C> <C>
Charles E. Arner $279.59 n/a n/a $16,000
Ellen S. Berscheid $279.59 n/a n/a $16,000
Ralph D. Ebbott $279.59 n/a n/a $16,000
</TABLE>
17
<PAGE>
(1) During the fiscal year ended September 30, 1998, each Director not
affiliated with Advantus Capital or MIMLIC Management received $198.84 from
Venture Fund and $80.76 from Index Fund.
As of July 31, 1998, 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 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 o 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 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. Ascend
Financial Services, Inc. ("Ascend Financial") acts as the Funds' underwriter.
Both Advantus Capital and Ascend Financial act as such pursuant to written
agreements that will be periodically considered for approval by the directors or
shareholders of the Fund. The address of both Advantus Capital and Ascend
Financial is 400 Robert Street North, St. Paul, Minnesota 55101.
CONTROL AND MANAGEMENT OF ADVANTUS CAPITAL AND ASCEND FINANCIAL
18
<PAGE>
Advantus Capital was incorporated in Minnesota in June, 1994, and is a
wholly-owned subsidiary of Minnesota Life Insurance Company ("Minnesota Life").
Minnesota Life is a third-tier subsidiary of a mutual insurance holding company
called Minnesota Mutual Companies, Inc. Minnesota Life was organized in 1880,
and has assets of more than $15.7 billion. Ascend Financial is a subsidiary of
Advantus Capital. William N. Westhoff, President and a Director of each of the
Funds, is President, Treasurer and Director of Advantus Capital. Frederick P.
Feuerherm, Vice President, Treasurer and a Director of each of the Funds, is a
Vice President, Assistant Secretary and Director of Advantus Capital. Richard
W. Worthing is a Vice President and Head of Equities with Advantus Capital.
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 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:
<TABLE>
<CAPTION>
Advisory Fee as Percentage of
Fund Average Net Assets
---- ------------------
<S> <C>
Venture Fund .80%
Index Fund .34%
</TABLE>
The fees paid by the Funds for investment advisory services during the
fiscal years ended July 31, 1998 and July 31, 1997 (before Advantus Capital's
absorption of certain expenses, described below) were as follows:
<TABLE>
<CAPTION>
Fund 1998 1997
---- ---- ----
<S> <C> <C>
Venture Fund $311,606 $125,176
Index Fund 61,186 13,820
</TABLE>
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 and
shareholder servicing expenses. Index Fund pays its own transfer agent and
shareholder servicing expenses. The advisory fees paid by the Venture Fund are
partially offset by Advantus Capital's payment of certain expenses, such as the
transfer agent and shareholder servicing expenses, which expenses are not
customarily paid for by a mutual fund's investment adviser. Effective October
26, 1998, the Funds' transfer agent is First Data Investor Services Group, Inc.
Prior to that date the Funds had engaged Minnesota Life to act as their transfer
19
<PAGE>
agent, dividend disbursing agent and redemption agent. During the fiscal year
ended July 31, 1998, Index Fund paid Minnesota Life $36,641 for transfer agent
services. In addition, separate from the investment advisory agreement, each of
the Funds has entered into an agreement with Minnesota Life under which
Minnesota Life, through its Advantus Shareholder Services division, provides (i)
accounting, legal and other administrative services and (ii) shareholder
servicing to the Funds. Minnesota Life currently provides administrative
services to the Funds at a monthly cost of $3,700 per Fund. Minnesota Life
currently provides shareholder servicing to Index Fund at a cost of $5 per
shareholder account per year. During the fiscal year ended July 31, 1998, each
Fund paid the following amounts for such services:
<TABLE>
<CAPTION>
Fund Amount
---- ------
<S> <C>
Venture Fund $43,800
Index Fund 43,800
</TABLE>
Under the Advisory Agreements, Advantus Capital furnishes the Funds office
space and all necessary office facilities, equipment and personnel for servicing
the investments of the Funds, and pays the salaries and fees of all officers and
directors of the Funds who are affiliated with Advantus Capital. In addition,
except to the extent that Ascend Financial receives Rule 12b-1 distribution fees
(see "Payment of Certain Distribution Expenses of the Funds" below), Ascend
Financial bears all promotional expenses in connection with the distribution of
the Funds' shares, including paying for prospectuses and statements of
additional information for new shareholders, and shareholder reports for new
shareholders, and the costs of sales literature. The Funds pay all other
expenses not so expressly assumed.
During the fiscal years ended July 31, 1998 and July 31, 1997, Advantus
Capital voluntarily absorbed certain expenses of the Funds (which do not include
certain Rule 12b-1 fees waived by Ascend Financial) as set forth below:
<TABLE>
<CAPTION>
Fund 1998 1997
---- ---- ----
<S> <C> <C>
Venture Fund $ 0 $ 7,397
Index Fund 162,977 70,164
</TABLE>
Distribution Agreement
The Board of Directors of each Fund, on October 22, 1998, including a
majority of the directors who are not parties to the contract, or interested
persons of any such party, last approved the respective Fund's Distribution
Agreement with Ascend Financial (the "Distribution Agreements"), each dated
October 22, 1998.
During the fiscal years ended July 31, 1998 and July 31, 1997, the
commissions received by Ascend Financial under the Distribution Agreements with
respect to shares of all classes were as follows:
<TABLE>
<CAPTION>
Fund 1998 1997
---- ---- ----
<S> <C> <C>
Venture Fund $174,716 $47,978
Index Fund 225,676 73,332
</TABLE>
During the same period Ascend Financial retained from these commissions the
following amounts:
20
<PAGE>
<TABLE>
<CAPTION>
Fund 1998 1997
---- ---- ----
<S> <C> <C>
Venture Fund $ 0 $15,344
Index Fund 0 16,544
</TABLE>
The remainder of these commissions was paid to registered representatives
of Ascend Financial or to broker-dealers who have selling agreements with Ascend
Financial.
Each Distribution Agreement may be terminated by the respective Fund or
Ascend Financial at any time by the giving of 60 days' written notice, and
terminates automatically in the event of its assignment. Unless sooner
terminated, the Distribution Agreement for the respective Fund shall continue in
effect for more than two years after its execution only so long as such
continuance is specifically approved at least annually by either the Board of
Directors of the Fund or by a vote of a majority of the outstanding voting
securities, provided that in either event such continuance is also approved by
the vote of a majority of the directors who are not parties to the Distribution
Agreement, or interested persons of such parties, cast in person at a meeting
called for the purpose of voting on such approval.
The Distribution Agreements require Ascend Financial to pay all advertising
and promotional expenses in connection with the distribution of the Funds'
shares including paying for Prospectuses and Statements of Additional
Information (if any) for new shareholders, shareholder reports for new
shareholders, and the costs of sales literature.
In the Distribution Agreements, Ascend Financial undertakes to indemnify
the Funds against all costs of litigation and other legal proceedings, and
against any liability incurred by or imposed upon the Funds in any way arising
out of or in connection with the sale or distribution of the Funds' shares,
except to the extent that such liability is the result of information which was
obtainable by Ascend Financial only from persons affiliated with the Funds but
not with Ascend Financial.
PAYMENT OF CERTAIN DISTRIBUTION EXPENSES OF THE FUNDS
Each of the Funds has adopted separate Plans of Distribution applicable to
Class A shares, Class B shares and Class C shares, respectively, relating to the
payment of certain distribution and/or shareholder servicing expenses pursuant
to Rule 12b-1 under the Investment Company Act of 1940. Each of the Funds,
pursuant to its Plans of Distribution, pays fees to Ascend Financial which
equal, on an annual basis, a percentage of the Fund's average daily net assets
attributable to Class A shares, Class B shares and Class C shares, respectively,
as set forth in the following table:
<TABLE>
<CAPTION>
Rule 12b-1 Fee as Percentage
of Average Daily Net Assets Attributable to
--------------------------------------------
Fund Class A Shares Class B Shares Class C Shares
---- -------------- -------------- --------------
<S> <C> <C> <C>
Venture Fund 0.25% 1.00% 1.00%
Index Fund 0.25% 1.00% 1.00%
</TABLE>
21
<PAGE>
Such fees are used for distribution-related services for Class B and C
shares and for servicing of shareholder accounts in connection with Class A, B
and C shares.
A portion of the Rule 12b-1 fees payable with respect to Class B and
Class C shares equal to .75% of the average daily net assets attributable to
such Class B and Class C shares, constitute distribution fees designed to
compensate Ascend Financial for advertising, marketing and distributing the
shares of the Funds.
The distribution fees may be used by Ascend Financial for the purpose of
financing any activity which is primarily intended to result in the sale of
shares of the particular Fund. For example, such distribution fee may be used
by Ascend Financial: (a) to compensate broker-dealers, including Ascend
Financial and its registered representatives, for their sale of a Fund's shares,
including the implementation of the programs described below with respect to
broker-dealers, banks, and other financial institutions; and (b) to pay other
advertising and promotional expenses in connection with the distribution of a
Fund's shares. These advertising and promotional expenses include, by way of
example but not by way of limitation, costs of prospectuses for other than
current shareholders; preparation and distribution of sales literature;
advertising of any type; expenses of branch offices (including overhead
expenses) provided jointly by Ascend Financial and any affiliate thereof; and
compensation paid to and expenses incurred by officers, employees or
representatives of Ascend Financial or of other broker-dealers, banks, or
financial institutions.
All of the 12b-1 fees payable with respect to Class A shares and 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 A, B and Class C shares, constitutes a shareholder servicing fee designed
to compensate Ascend Financial for the provision of certain services to the
holders of Class A, B and Class C shares.
Amounts expended by the Funds under the Plans are expected to be used for
the implementation by Ascend Financial of a dealer incentive program. Pursuant
to the program, Ascend Financial may provide compensation to investment dealers
for the provision of distribution assistance in connection with the sale of the
Funds' shares to such dealers' customers and for the provision of administrative
support services to customers who directly or beneficially own shares of the
Funds. The distribution assistance and administrative support services rendered
by dealers may include, but are not limited to, the following: distributing
sales literature; answering routine customer inquiries concerning the Funds;
assisting customers in changing dividend options, account designation and
addresses, and in enrolling into the pre-authorized check plan or systematic
withdrawal plan; assisting in the establishment and maintenance of customer
accounts and records and in the processing of purchase and redemption
transactions; investing dividends and any capital gains distributions
automatically in the Funds' shares and providing such other information and
services as the Funds or the customer may reasonably request. Such fees for
servicing customer accounts would be in addition to the portion of the sales
charge received or to be received by dealers which sell shares of the Funds.
Ascend Financial may also provide compensation to certain institutions
such as banks ("Service Organizations") which have purchased shares of the
Funds for the accounts of their clients, or which have made the Funds' shares
available for purchase by their clients, and/or which provide continuing
service to such clients. The Glass-Steagall Act and other applicable laws,
among other things, prohibit certain banks from engaging in the business of
underwriting securities. In such circumstances, Ascend Financial, if so
requested, will engage such banks as Service Organizations only to perform
administrative and shareholder servicing functions, but at the same fees and
other terms applicable to dealers. State law may, however, differ from the
interpretation of the Glass-Steagall Act expressed and banks and other
financial institutions may therefore be required to register as securities
dealers pursuant to state law. If a bank were prohibited from acting as a
Service Organization, its shareholder clients would be permitted to remain
shareholders of the Funds and alternative means for continuing servicing of
such shareholders would be sought. In such event changes in the operation of
22
<PAGE>
the Funds might occur and a shareholder serviced by such bank might no longer
be able to avail itself of any automatic investment or other services then
being provided by the bank. It is not expected that shareholders would
suffer any adverse financial consequences as a result of any of these
occurrences.
In addition, the Plan contains, among other things, provisions complying
with the requirements of Rule 12b-1 discussed below. Rule 12b-1(b) provides
that any payments made by an investment company in connection with the
distribution of its shares may only be made pursuant to a written plan
describing all material aspects of the proposed financing of distribution and
also requires that all agreements with any person relating to implementation of
the plan must be in writing. In addition, Rule 12b-1(b)(2) requires that such
plan, together with any related agreements, be approved by a vote of the board
of directors and of the directors who are not interested persons of the
investment company and have no direct or indirect financial interest in the
operation of the plan or in any agreements related to the plan, cast in person
at a meeting called for the purpose of voting on such plan or agreements. Rule
12b-1(b)(3) requires that the plan or agreement provide, in substance: (1) that
it shall continue in effect for a period of more than one year from the date of
its execution or adoption only so long as such continuance is specifically
approved at least annually in the manner described in paragraph (b)(2) of Rule
12b-1; (2) that any person authorized to direct the disposition of monies paid
or payable by the investment company pursuant to the plan or any related
agreement shall provide to the investment company's board of directors, and the
directors shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made; and (3) in the
case of a plan, that it may be terminated at any time by vote of a majority of
the members of the board of directors of the investment company who are not
interested persons of the investment company and have no direct or indirect
financial interest in the operation of the plan or in any agreements related to
the plan or by vote of a majority of the outstanding voting securities of the
investment company. Rule 12b-1(b)(4) requires that such plans may not be
amended to increase materially the amount to be spent for distribution without
shareholder approval and that all material amendments of the plan must be
approved in the manner described in paragraph (b)(2) of Rule 12b-1. Rule
12b-1(c) provides that the investment company may rely upon Rule 12b-1(b) only
if selection and nomination of the investment company's disinterested directors
are committed to the discretion of such disinterested directors. Rule 12b-1(e)
provides that the investment company may implement or continue a plan pursuant
to Rule 12b-1(b) only if the directors who vote to approve such implementation
or continuation conclude, in the exercise of reasonable business judgment and in
light of their fiduciary duties under state law, and under Sections 36(a) and
(b) of the Investment Company Act of 1940, that there is a reasonable likelihood
that the plan will benefit the investment company and its shareholders. At the
Board of Directors meeting held January 14, 1997, the directors of the Funds so
concluded.
During the fiscal year ended July 31, 1998, each Fund made payments under
its Plans of Distribution applicable to Class A, Class B and Class C Shares as
set forth below (distribution fees waived by Ascend Financial, if any, are shown
in parentheses).
<TABLE>
<CAPTION>
Fund Class A Class B Class C
---- ------- ------- -------
<S> <C> <C> <C>
Venture Fund $107,769 ($59,431) $25,348 $4,930
Index Fund 33,567 ( 18,213) 59,190 8,876
</TABLE>
The Plans of Distribution could be construed as "compensation plans"
because Ascend Financial is paid a fixed fee and is given discretion concerning
what expenses are payable under the Plans. Under a compensation plan, the fee
to the distributor is not directly tied to distribution expenses actually
incurred by the distributor, thereby permitting the distributor to receive a
profit if amounts received exceed expenses. Ascend Financial may spend more or
23
<PAGE>
less for the distribution and promotion of the Funds' shares than it receives as
distribution fees pursuant to the Plans. However, to the extent fees received
exceed expenses, including indirect expense such as overhead, Ascend Financial
could be said to have received a profit.
PORTFOLIO TRANSACTIONS AND ALLOCATION OF BROKERAGE
In a number of security transactions, it is possible for the Funds to deal
in the over-the-counter security markets (including the so-called "third market"
which is the "over-the-counter" market for securities listed on the New York
Stock Exchange) without the payment of brokerage commissions but at net prices
including a spread or markup; the Funds trade in this manner whenever the net
price appears advantageous.
Advantus Capital selects and (where applicable) negotiates commissions with
the brokers who execute the transactions for the Funds. During the fiscal years
ended July 31, 1998 and July 31, 1997, brokerage commissions paid were:
<TABLE>
<CAPTION>
Fund 1998 1997
---- ---- ----
<S> <C> <C>
Venture Fund $60,536 $125,176
Index Fund 14,282 13,820
</TABLE>
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 analysis and reports concerning
issues, industries, securities, economic factors and trends, portfolio strategy,
and the performance of accounts. By allocating brokerage business in order to
obtain research services for Advantus Capital, the Funds enable Advantus Capital
to supplement its own investment research activities and allows Advantus Capital
to obtain the views and information of individuals and research staffs of many
different securities research firms prior to making investment decisions for the
Funds. To the extent such commissions are directed to these other brokers who
furnish research services to Advantus Capital, Advantus Capital receives a
benefit, not capable of evaluation in dollar amounts, without providing any
direct monetary benefit to the Funds from these commissions.
There is no formula for the allocation by Advantus Capital of the Funds'
brokerage business to any broker-dealer for brokerage and research services.
However, Advantus Capital will authorize a Fund to pay an amount of commission
for effecting a securities transaction in excess of the amount of commission
another broker would have charged only if Advantus Capital determines in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage and research services provided by such broker viewed in terms of
either that particular transaction or Advantus Capital's overall
responsibilities with respect to the accounts as to which it exercises
investment discretion. During the fiscal year ended July 31, 1998, Venture Fund
directed transactions to brokers because of research services they provided, and
paid commissions in connection with such transactions, in the aggregate amounts
set forth below:
24
<PAGE>
<TABLE>
<CAPTION>
Aggregate Transactions Commissions Paid on
Fund Directed for Research Directed Transaction
---- --------------------- --------------------
<S> <C> <C>
Venture Fund $1,853,941 $47,665
Index Fund 6,100 296
</TABLE>
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 benefit such funds
and accounts; similarly, services obtained from transactions in fixed income
securities would be of greater benefit to the managed funds and managed accounts
investing in debt securities.
The same security may be suitable for one or more of the Funds and the
other funds or private accounts managed by Advantus Capital or its affiliates.
If and when two or more funds or accounts simultaneously purchase or sell the
same security, the transactions will be allocated as to price and amount in
accordance with arrangements equitable to each fund or account. The
simultaneous purchase or sale of the same securities by one Fund and other Funds
or accounts may have a detrimental effect on that Fund, as this may affect the
price paid or received by the Fund or the size of the position obtainable by the
Fund.
The Funds will not execute portfolio transactions through any affiliate,
unless such transactions, including the frequency thereof, the receipt of
commissions payable in connection therewith and the selection of the affiliated
broker-dealer effecting such transactions are not unfair or unreasonable to the
shareholders of the Funds. In the event any transactions are executed on an
agency basis, Advantus Capital will authorize the Funds to pay an amount of
commission for effecting a securities transaction in excess of the amount of
commission another broker-dealer would have charged only if Advantus Capital
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
overall responsibilities of Advantus Capital with respect to the Funds as to
which it exercises investment discretion. If the Funds execute any transactions
on an agency basis, they will generally pay higher than the lowest commission
rates available.
In determining the commissions to be paid to an affiliated
broker-dealer, it is the policy of the Funds that such commissions will, in
the judgment of Advantus Capital, subject to review by the Fund's Board of
Directors, be both (a) at least as favorable as those which would be charged
by other qualified brokers in connection with comparable transactions
involving similar securities being purchased or sold on an exchange during a
comparable period of time, and (b) at least as favorable as commissions
contemporaneously charged by such affiliated broker-dealers on comparable
transactions for their most favored comparable unaffiliated customers. While
the Funds do not deem it practicable and in their best interest to solicit
competitive bids for commission rates on each transaction, consideration will
regularly be given to posted commission rates as well as to other information
concerning the level of commissions charged on comparable transactions by
other qualified brokers.
Information regarding the acquisition by the Funds during the fiscal year
ended July 31, 1998 of securities of the Funds' regular brokers or dealers, or
the parents of those brokers or dealers that derive more than 15 percent of
their gross revenue from securities-related activities, is presented below:
25
<PAGE>
<TABLE>
<CAPTION>
Approximate
Value of Securities
Owned at End of
Fund Name of Issuer Fiscal Period
---- -------------- -------------
<S> <C> <C>
Venture Fund ----- -----
Index Fund Merrill Lynch & Company, Inc. $107,250
Lehman Brothers Holdings, Inc. 28,800
</TABLE>
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 period by the maximum offering price per share on
the last day of the period, according to the following formula:
a-b 6
YIELD = 2[( ----- +1) -1]
cd
Where: a = dividends and interest earned during the period;
b = expenses accrued for the period (net of
reimbursements);
c = the average daily number of shares outstanding during
the period that were entitled to receive dividends; and
d = the maximum offering price per share on the last day of
the period.
The yield on investments in each of the Funds for the 30-day period ended
July 31, 1998 was as set forth in the table below. The Funds' investment
adviser and distributor were voluntarily absorbing and waiving certain expenses
of certain of the Funds during that period. If such Funds had been charged for
these expenses the yield on investments for the same period would have been
lower, as also shown in the table below in parentheses.
<TABLE>
<CAPTION>
Yield
-------
Fund Class A Class B Class C
---- ------- ------- -------
<S> <C> <C> <C>
Venture Fund .51% (.35%) -.35% (-.35%) -.37% (-.37%)
Index Fund .64% (.31%) -.18% (-.53%) -.18% (-.53%)
</TABLE>
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:
n
P(1+T) = ERV
Where: P = a hypothetical initial payment of $1,000;
T = average annual total return;
n = number of years; and
26
<PAGE>
ERV = ending redeemable value at the end of the period
of a hypothetical $1,000 payment made at the
beginning of such period.
The average annual total return on investments in each of the Funds for the
periods indicated ending July 31, 1998, were as set forth in the table below.
The Funds' investment adviser and distributor were voluntarily absorbing and
waiving certain expenses of certain of the Funds during these periods. If such
Funds had been charged for these expenses the average annual total returns for
the same periods would have been lower, as also shown in the table below in
parentheses.
<TABLE>
<CAPTION>
1 YEAR
------
Fund Class A Class B Class C
---- ------- ------- -------
<S> <C> <C> <C>
Venture Fund 3.47% (3.47%) 2.65% (2.65%) 7.90% (7.90%)
Index Fund 12.28% (11.21%) 12.17% (11.26%) 17.09% (16.18%)
</TABLE>
<TABLE>
<CAPTION>
Since Inception
---------------
Fund Class A Class B Class C
---- ------- ------- -------
<S> <C> <C> <C>
Venture Fund(1) 12.81% (12.74%) 12.72% (12.72%) 15.74% (15.74%)
Index Fund(1) 22.89% (22.51%) 23.38% (22.06%) 25.78% (25.47%)
</TABLE>
- ---------------
(1) Class A, Class B and Class C inception was January 31, 1997.
CUMULATIVE TOTAL RETURN. Cumulative total return figures are computed
by finding the cumulative compounded rate of return over the period indicated
in the advertisement that would equate the initial amount invested to the
ending redeemable value, according to the following formula:
ERV-P
CTR = ( ----- )100
P
Where: CTR = cumulative total return;
ERV = ending redeemable value at the end of the period of a
hypothetical $1,000 payment made at the beginning of
such period; and
P = initial payment of $1,000.
The cumulative total return on investments in each of the Funds for the
period indicated ended July 31, 1998, was as set forth in the table below. The
Funds' investment adviser and distributor were voluntarily absorbing certain
expenses of certain of the Funds during these periods. If such Funds had been
charged for these expenses the cumulative total return for the same periods
would have been lower, as also shown in the table below in parentheses.
<TABLE>
<CAPTION>
Cumulative Total Return
-----------------------
Fund Class A Class B Class C
---- ------- ------- -------
<S> <C> <C> <C>
Venture Fund(1) 19.80%(19.69%) 19.65% (19.65%) 24.49% (24.49%)
Index Fund(1) 36.19%(35.56%) 37.01% (36.46%) 41.02% (40.50%)
</TABLE>
27
<PAGE>
- ---------------
(1) Class A, Class B and Class C inception was January 31, 1997.
The calculations for both average annual total return and cumulative total
return deduct the maximum sales charge from the initial hypothetical $1,000
investment, assume all dividends and capital gain distributions are reinvested
at net asset value on the appropriate reinvestment dates as described in the
Prospectus, and include all recurring fees, such as investment advisory and
management fees, charged as expenses to all shareholder accounts.
Such average annual total return and cumulative total return figures may
also be accompanied by average annual total return and cumulative total return
figures, for the same or other periods, which do not reflect the deduction of
any sales charges.
CAPITAL STOCK AND OWNERSHIP OF SHARES
Each Fund's shares of common stock, and each class thereof, have a par
value $.01 per share, and have equal rights to share in dividends and assets.
The shares possess no preemptive or conversion rights. Cumulative voting is not
authorized. This means that the holders of more than 50% of the shares voting
for the election of directors can elect 100% of the directors if they choose to
do so, and in such event the holders of the remaining shares will be unable to
elect any directors.
Each of the Funds has 10 billion authorized shares of common stock and
has designated 2 billion authorized shares as Class A shares, 2 billion
authorized shares as Class B shares and 2 billion authorized shares as Class
C shares. The Funds have the number of shares outstanding as of July 31,
1998, as set forth below.
<TABLE>
<CAPTION>
Shares Outstanding at July 31, 1998
-----------------------------------
Fund Class A Class B Class C
---- ------- ------- -------
<S> <C> <C> <C>
Venture Fund 2,878,026 295,649 58,650
Index Fund 1,043,120 788,282 100,721
</TABLE>
As of July 31, 1998, 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:
<TABLE>
<CAPTION>
Number of
Name and Address of Shareholder Shares Percentage
------------------------------- ------ ----------
<S> <C> <C>
Venture Fund 2,510,706 77.7%
Minnesota Life and affiliates*
Index Fund 515,376 26.7%
Minnesota Life and affiliates*
</TABLE>
* 400 Robert Street North, St. Paul, Minnesota 55101.
HOW TO BUY SHARES
Each Fund's shares may be purchased at the public offering price from
Ascend Financial, and from certain other broker-dealers. Ascend Financial
reserves the right to reject any purchase order. Shares of the Funds may be
purchased at a price equal to their respective net asset value.
28
<PAGE>
Certificates representing shares purchased are not currently issued.
However, shareholders will receive written confirmation of their purchases.
Shareholders will have the same rights of ownership with respect to such shares
as if certificates had been issued. SHAREHOLDERS WHO HOLD PREVIOUSLY ISSUED
CERTIFICATES REPRESENTING ANY OF THEIR SHARES WILL NOT BE ALLOWED TO REDEEM SUCH
CERTIFICATED SHARES BY TELEPHONE.
ALTERNATIVE PURCHASE ARRANGEMENTS
The Funds offer investors the choice among three classes of shares which
offer different sales charges and bear different expenses. These alternatives
permit an investor to choose the method of purchasing shares that the investor
believes is most beneficial given the amount of the purchase, the length of time
the investor expects to hold the shares and other circumstances. For a detailed
discussion of these alternative purchase arrangements see "Reduced Sales
Charges" and "Shareholder Services" below.
The decision as to which class of shares provides a more suitable
investment for an investor may depend on a number of factors, including the
amount and intended length of the investment. Investors making investments
that qualify for a waiver of initial sales charges should purchase Class A
shares. Other investors should consider Class B or Class C shares because all
of the purchase price is invested immediately. Investors who expect to hold
shares for relatively shorter periods of time may prefer Class C shares
because such shares may be redeemed at any time without payment of a
contingent deferred sales charge. Investors who expect to hold shares
longer, however, may choose Class B shares because such shares convert to
Class A shares sooner than do Class C shares and thus pay the higher Rule
12b-1 fee for a shorter period.
Purchase orders for $1,000,000 or more will be accepted for Class A shares
only and are not subject to a sales charge at the time of purchase, but a
deferred sales charge will be imposed if such shares are sold within one year
after the date of purchase. Orders for Class B or Class C shares for $1,000,000
or more will be treated as orders for Class A shares or declined.
PURCHASE BY CHECK
New investors may purchase shares of the Fund by completing an account
application and sending it, together with a check payable to the Fund, directly
to First Data Investors Services Group, Inc. ("First Data"), the Funds' transfer
agent, at Advantus Funds Group, P.O. Box 9767, Providence, Rhode Island
02940-5059. Additional purchases may be made at any time by mailing a check,
payable to the Fund, to the same address. Checks for additional purchases
should be identified with the appropriate account number. Purchase orders may
also be submitted through Ascend Financial or other broker-dealers authorized to
sell shares of the Fund.
PURCHASE BY WIRE
Shares may also be purchased by Federal Reserve or bank wire. This method
will result in a more rapid investment in shares of the Fund. Before wiring any
funds, contact Minnesota Life, through its Advantus Shareholder Services
division, at 1-800-665-6005 for instructions. Promptly after making an initial
purchase by wire, an investor should complete an account application and mail it
to Advantus Funds Group, P.O. Box 9767, Providence, Rhode Island 02940-5059.
Subsequent purchases may be made in the same manner. Wire purchases
normally take two or more hours to complete, and to be accepted the same day
must be received by 3:00 p.m. (Central Time). Banks may charge a fee for
transmitting funds by wire.
TIMING OF PURCHASE ORDERS
An order in proper form for the purchase of shares of the Fund received by
the Fund prior to the close of normal trading on the New York Stock Exchange
("NYSE"), which is generally 3:00 p.m. Central Time, will be effected at the
price next determined on the date received by First Data. Orders received after
the close of the NYSE will be effected at the price next determined on the next
business day.
29
<PAGE>
MINIMUM INVESTMENTS
A minimum initial investment of $250 is required, and the minimum
subsequent investment is $25.
PUBLIC OFFERING PRICE
The public offering price of the Fund will be the net asset value per share
of the Fund next determined after an order is received and becomes effective,
plus the applicable sales charge, if any. The net asset value per share of each
class is determined by dividing the value of the securities, cash and other
assets (including dividends accrued but not collected) of the Fund attributable
to such class less all liabilities (including accrued expenses but excluding
capital and surplus) attributable to such class, by the total number of shares
of such class outstanding.
The net asset value of the shares of the Fund is determined as of the close
of normal trading on the New York Stock Exchange (as of the date of this
Statement of Additional Information the primary close of trading is 3:00 p.m.
(Central Time), but this time may be changed) on each day, Monday through
Friday, except (i) days on which changes in the value of the Fund's portfolio
securities will not materially affect the current net asset value of Fund
shares, (ii) days during which no Fund shares are tendered for redemption and no
order to purchase or sell Fund shares is received by the Fund and (iii)
customary national business holidays on which the New York Stock Exchange is
closed for trading (as of the date hereof, New Year's Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day).
Securities, including put and call options, which are traded
over-the-counter and on a national exchange will be valued according to the
broadest and most representative market. A security which is only listed or
traded on an exchange, or for which an exchange is the most representative
market, is valued at its last sale price (prior to the time as of which assets
are valued) on the exchange where it is principally traded. Lacking any sales
on the exchange where it is principally traded on the day of valuation, prior to
the time as of which assets are valued, the security generally is valued at the
last bid price on that exchange. Futures contracts will be valued in a like
manner, except that open futures contracts sales will be valued using the
closing settlement price or in the absence of such a price, the most recent
quoted bid price. All other securities for which over-the-counter market
quotations are readily available are valued on the basis of the last current bid
price. When market quotations are not readily available, such securities are
valued at fair value as determined in good faith by the Board of Directors.
Other assets also are valued at fair value as determined in good faith by the
Board of Directors. However, debt securities may be valued on the basis of
valuations furnished by a pricing service which utilizes electronic data
processing techniques to determine valuations for normal institutional-size
trading units of debt securities, without regard to sale or bid prices, when
such valuations are believed to more accurately reflect the fair market value of
such securities. Short-term investments in debt securities are valued daily at
market.
SALES CHARGES
CLASS A SHARES
The public offering price of Class A shares of each Fund is the net asset
value of the Fund's shares plus the applicable front end sales charge ("FESC"),
which will vary with the size of the purchase. Ascend Financial receives all
applicable sales charges. The Fund receives the net asset value. The current
sales charges are:
30
<PAGE>
<TABLE>
<CAPTION>
Sales Charge as a
Percentage of:
Net Amount Paid to Broker-
Offering Amount Dealers as a Percentage of
Value of Total Investment Price Invested Offering Price:
------------------------- ----- -------- ---------------
<S> <C> <C> <C>
Less than $50,000 5.5% 5.82% 4.95%
$50,000 but less than $100,000 4.5 4.71 4.05
$100,000 but less than $250,000 3.5 3.63 3.15
$250,000 but less than $500,000 2.5 2.56 2.25
$500,000 but less than $1,000,000 2.0 2.04 1.80
$1,000,000 and over (1) 0 0 .90*
</TABLE>
(1) A FESC will not be assessed for purchases of Class A shares of at least $1
million, but a contingent deferred sales charge of 1.00% will be imposed if such
shares are sold within one year after the date of purchase.
* These payments are paid by Ascend Financial or one of its affiliates, at its
own expense, and not by the Fund or its shareholders.
Note that the sales charge depends on the total value of an investment (net
asset value of shares currently owned plus the cost of any new investment) in
the Fund, and not on the amount of a single investment. For example, if an
investor already owns shares with a net asset value of $40,000 and decides to
invest in additional Class A shares having a public offering price of $10,000,
the investor will pay a sales charge equal to 4.5% of the entire additional
$10,000 investment, since the total value of the investment is now $50,000.
CLASS B SHARES
Class B shares of the Fund are sold without an initial sales charge so that
the Fund receives the full amount of the investor's purchase. However, a
contingent deferred sales charge ("CDSC") of up to 5% will be imposed if shares
are redeemed within six years of purchase. For additional information, see
"Redemptions" below. Class B shares will automatically convert to Class A
shares of the Fund on the fifteenth day of the month (or, if different, the last
business day prior to such date) following the expiration of a specified holding
period. In addition, Class B shares are subject to higher Rule 12b-1 fees as
described below. The amount of the CDSC will depend on the number of years
since the purchase was made, the amount of shares originally purchased and the
dollar amount being redeemed. The amount of the applicable CDSC and the holding
period prior to conversion are determined in accordance with the following
table:
<TABLE>
<CAPTION>
Shares Convert
to Class A in
CDSC Applicable in Year the Month
----------------------- After
Shares Purchased in an Amount 1 2 3 4 5 6 Expiration of
----------------------------- - - - - - - -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Less than $50,000 5.0% 4.5% 3.5% 2.5% 1.5% 1.5% 84 months
$50,000 but less than $100,000 4.5 3.5 2.5 1.5 1.5 0 76 months
$100,000 but less than $250,000 3.5 2.5 1.5 1.5 0 0 60 months
$250,000 but less than $500,000 2.5 1.5 1.5 0 0 0 44 months
$500,000 but less than $1,000,000 1.5 1.5 0 0 0 0 28 months
</TABLE>
Proceeds from the CDSC are paid to Ascend Financial and are used to defray
expenses related to providing distribution-related services to the Fund in
connection with the sale of Class B shares, such as the payment of compensation
to selected broker-dealers, and for selling Class B shares. The combination of
the CDSC and the Rule 12b-1 fee enables the Fund to sell the Class B shares
31
<PAGE>
without deduction of a sales charge at the time of purchase. Although Class B
shares are sold without an initial sales charge, Ascend Financial pays a sales
commission to broker-dealers, and to registered representatives of Ascend
Financial, who sell Class B shares. The amount of this commission may differ
from the amount of the commission paid in connection with sales of Class A
shares. The higher Rule 12b-1 fee will cause Class B shares to have a higher
expense ratio and to pay lower dividends than Class A shares. Ascend Financial
pays other broker-dealers for the sale of Class B shares in accordance with the
following schedule:
<TABLE>
<CAPTION>
Amount Paid to Broker-Dealers as a
Shares Purchased in an Amount Percentage of Offering Price:
----------------------------- -----------------------------
<S> <C>
Less than $50,000 4.12%
$50,000 but less than $100,000 3.37
$100,000 but less than $250,000 2.62
$250,000 but less than $500,000 1.87
$500,000 but less than $1,000,000 1.50
</TABLE>
CONVERSION FEATURE
On the fifteenth day of the month (or, if different, the last business day
prior to such date) after the expiration of the applicable holding period
described in the table above, Class B shares will automatically convert to Class
A shares and will no longer be subject to a higher Rule 12b-1 fee. Such
conversion will be on the basis of the relative net asset values of the two
classes. Class A shares issued upon such conversion will not be subject to any
FESC or CDSC. Class B shares acquired by exchange from Class B shares of
another Advantus Multiple Class Funds will convert into Class A shares based on
the time of the initial purchase. Purchased Class B shares ("Purchased B
Shares") will convert after the specified number of months following the
purchase date. All Class B shares in a shareholder's account that were acquired
through the reinvestment of dividends and distributions ("Reinvestment B
Shares") will be held in a separate sub-account. Each time any Purchased B
Shares convert to Class A shares, a PRO RATA portion (based on the ratio that
the total converting Purchased B Shares bears to the shareholder's total
converting and non-converting Purchased B Shares immediately prior to the
conversion) of the Reinvestment B Shares then in the sub-account will also
convert to Class A shares.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of a ruling from the Internal Revenue Service or an
opinion of counsel that payment of different dividends by each of the classes
of shares does not result in the Fund's dividends or distributions
constituting "preferential dividends" under the Internal Revenue Code of
1986, as amended, and that such conversions do not constitute taxable events
for Federal tax purposes. There can be no assurance that such ruling or
opinion will be available, and the conversion of Class B shares to Class A
shares will not occur if such ruling or opinion is not available. In such
event, Class B shares would continue to be subject to higher expenses than
Class A shares for an indefinite period.
CLASS C SHARES
Class C shares of the Fund are sold without an initial sales charge so that
the Fund receives the full amount of the investor's purchase. Unlike Class B
shares, however, no CDSC is imposed when Class C shares are redeemed. Class C
shares will automatically convert to Class A shares of the Fund on the fifteenth
day of the month (or, if different, the last business day prior to such date)
following the expiration of a specified holding period. In addition, Class C
shares are subject to higher Rule 12b-1 fees (as described below), and are
subject to such higher fees for a longer period than are Class B shares because
of a longer holding period prior to conversion. The applicable holding period
prior to conversion is determined in accordance with the following table:
32
<PAGE>
<TABLE>
<CAPTION>
Shares Convert to
Class A in the
Month After
Shares Purchased in an Amount Expiration of
----------------------------- -------------
<S> <C>
Less than $50,000 96 months
$50,000 but less than $100,000 88 months
$100,000 but less than $250,000 72 months
$250,000 but less than $500,000 56 months
$500,000 but less than $1,000,000 40 months
</TABLE>
The longer period during which the Rule 12b-1 fee is charged enables the
Fund to sell the Class C shares without deduction of a sales charge at the time
of purchase and without imposing a CDSC at redemption. Ascend Financial does
not pay a sales commission to broker-dealers, or to registered representatives
of Ascend Financial, who sell Class C shares. The higher Rule 12b-1 fee will
cause Class C shares to have a higher expense ratio and to pay lower dividends
than Class A shares.
CONVERSION FEATURE. On the fifteenth day of the month (or, if different,
the last business day prior to such date) after the expiration of the applicable
holding period described in the table above, Class C shares will automatically
convert to Class A shares and will no longer be subject to a higher Rule 12b-1
fee. Such conversion will be on the basis of the relative net asset values of
the two classes. Class A shares issued upon such conversion will not be subject
to any FESC or CDSC. Class C shares acquired by exchange from Class C shares of
another Advantus Multiple Class Fund will convert into Class A shares based on
the time of the initial purchase. Purchased Class C shares ("Purchased C
Shares") will convert after the specified number of months following the
purchase date. All Class C shares in a shareholder's account that were acquired
through the reinvestment of dividends and distributions ("Reinvestment C
Shares") will be held in a separate sub-account. Each time any Purchased C
Shares convert to Class A shares, a pro rata portion (based on the ratio that
the total converting Purchased C Shares bears to the shareholder's total
converting and non-converting Purchased C Shares immediately prior to the
conversion) of the Reinvestment C Shares then in the sub-account will also
convert to Class A shares.
The conversion of Class C shares to Class A shares is subject to the
continuing availability of a ruling from the Internal Revenue Service or an
opinion of counsel that payment of different dividends by each of the classes
of shares does not result in the Fund's dividends or distributions
constituting "preferential dividends" under the Internal Revenue Code of
1986, as amended, and that such conversions do not constitute taxable events
for Federal tax purposes. There can be no assurance that such ruling or
opinion will be available, and the conversion of Class C shares to Class A
shares will not occur if such ruling or opinion is not available. In such
event, Class C shares would continue to be subject to higher expenses than
Class A shares for an indefinite period.
OTHER PAYMENTS TO BROKER-DEALERS
Broker-dealers selling Class A, Class B and Class C shares of the Funds
will receive a shareholder servicing fee (Rule 12b-1 fee) equal, on an annual
basis, to .25% of the net asset values attributable to Class A, Class B and
Class C shares. Rule 12b-1 distribution fees will also be paid to
broker-dealers selling Class C shares equal, on an annual basis, to .75% of
the net asset values attributable to such Class C shares.
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 heading
"Buying and Selling Shares."
33
<PAGE>
The portfolio securities in which the Funds invest fluctuate in value, and
hence the net asset value per share of each Fund also fluctuates.
On July 31, 1998, 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
set forth below.
Venture Fund
CLASS A SHARES
Net Assets ($34,629,853) = Net Asset Value Per Share ($12.03)
------------------------------
Shares outstanding (2,878,026)
To obtain the maximum public offering price per share, the Fund's
maximum sales charge must be added to the net asset value obtained above:
$12.03 = Public Offering Price Per Share ($12.66)
------
.95 (1)
CLASS B SHARES
Net Assets ($3,528,992) = Net Asset Value and Public
---------------------------- Offering Price Per Share ($11.94)
Shares outstanding (295,649)
CLASS C SHARES
Net Assets ($702,367) = Net Asset Value and Public
--------------------------- Offering Price Per Share ($11.98)
Shares outstanding (58,650)
Index Fund
CLASS A SHARES
Net Assets ($15,710,848) = Net Asset Value Per Share ($15.06)
------------------------------
Shares outstanding (1,043,120)
To obtain the maximum public offering price per share, the Fund's
maximum sales charge must be added to the net asset value obtained above:
$15.06 = Public Offering Price Per Share ($15.85)
------
.95 (1)
CLASS B SHARES
Net Assets ($11,831,678) = Net Asset Value and Public
---------------------------- Offering Price Per Share ($15.01)
Shares outstanding (788,282)
CLASS C SHARES
Net Assets ($1,508,168) = Net Asset Value and Public
---------------------------- Offering Price Per Share ($14.97)
Shares outstanding (100,721)
- ------------
(1) Effective February 1, 1999, the maximum FESC was increased to 5.5%.
REDUCED SALES CHARGES
Special purchase plans are enumerated in the text of each Fund's Prospectus
under "Buying and Selling Shares - Reducing Sales Charges" and are fully
described below.
34
<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
Funds is based on the next computed net asset value of all Class A, Class B and
Class C shares of such Funds held by the shareholder (including dividends
reinvested and capital gains distributions accepted in shares), plus the cost of
all Class A, Class B and Class C shares of such Funds currently being purchased.
It is the obligation of each shareholder desiring this discount in sales charge
to notify Ascend Financial, through his or her dealer or otherwise, that he or
she is entitled to the discount.
LETTER OF INTENT
The applicable sales charge for purchases of Class A shares is based on
total purchases over a 13-month period where there is an initial purchase equal
to or exceeding $250, accompanied by filing with Ascend Financial a signed
"Letter of Intent" form to purchase, and by in fact purchasing not less than
$50,000 of shares in one of the Funds within that time. The 13-month period is
measured from the date the Letter of Intent is approved by Ascend Financial, or
at the purchaser's option, it may be made retroactive 90 days, in which case
Ascend Financial will make appropriate adjustments on purchases during the
90-day period.
In computing the total amount purchased for purposes of determining the
applicable sales charge, the net asset value of Class A, Class B and Class C
shares currently held in all Advantus Multiple Class Funds, on the date of
the first purchase under the Letter of Intent, may be used as a credit toward
Fund shares to be purchased under the Letter of Intent. Class A, Class B and
Class C shares of all the Advantus Multiple Class Funds may also be included
in the purchases during the 13-month period.
The Letter of Intent includes a provision for payment of additional
applicable Class A sales charges at the end of the period in the event the
investor fails to purchase the amount indicated. This is accomplished by
holding 5.5% of the investor's initial purchase in escrow. If the investor's
purchases equal those specified in the Letter of Intent, the escrow is released.
If the purchases do not equal those specified in the Letter of Intent, he or she
may remit to Ascend Financial an amount equal to the difference between the
dollar amount of sales charges actually paid and the amount of sales charges
that would have been paid on the aggregate purchases if the total of such
purchases had been made at a single time. If the purchaser does not remit this
sum to Ascend Financial on a timely basis, Ascend Financial will redeem the
appropriate number of shares, and then release or deliver any remaining shares
in the escrow account. 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 Multiple Class Funds, purchases of
Class A, Class B and Class C shares for any other account of the investor, or
such person's spouse or minor children, or purchases on behalf of participants
in a tax-qualified retirement plan may be treated as purchases by a single
investor for purposes of determining the availability of a reduced sales charge.
GROUP PURCHASES
An individual who is a member of a qualified group may also purchase shares
of the Advantus Multiple Class Funds at the reduced sales charge applicable to
the group taken as a whole. The sales charge is calculated by taking into
account not only the dollar amount of the Class A, Class B and Class C shares of
the Funds being purchased by the individual member, but also the aggregate
dollar value of such Class A, Class B and Class C shares previously purchased
and currently held by other members of the group. Members of a qualified group
may not be eligible for a Letter of Intent.
A "qualified group" is one which (i) has been in existence for more than
six months, (ii) has a purpose other than acquiring Fund shares at a discount,
35
<PAGE>
and (iii) satisfies uniform criteria which enable Ascend Financial to realize
economies of scale in distributing such shares. A qualified group must have
more than ten members, must be available to arrange for group meetings between
representatives of Ascend Financial, must agree to include sales and other
materials related to the Funds in its publications and mailings to members at
reduced or no cost to Ascend Financial, and must seek, upon request, to arrange
for payroll deduction or other bulk transmission of investments to the Funds.
WAIVER OF SALES CHARGES FOR CERTAIN SALES OF CLASS A SHARES
Directors and officers of Advantus Capital, Ascend Financial, the Funds,
Minnesota Life, or any of Minnesota Life'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 Life and its affiliates themselves, advisory clients of
Advantus Capital, employees of sales representatives employed in offices
maintained by such sales representatives, certain accounts as to which a bank
or broker-dealer charges an account management fee, provided the bank or
broker-dealer has an agreement with Ascend Financial, and certain accounts
sold by registered investment advisers who charge clients a fee for their
services may purchase Class A shares of the Advantus Multiple Class Funds at
net asset value. These persons must give written assurance that they have
bought for investment purposes, and that the securities will not be resold
except through redemption or repurchase by, or on behalf of, the respective
Fund. These persons are not required to pay a sales charge because of the
reduced sales effort involved in their purchases.
EXCHANGE AND TRANSFER OF FUND SHARES
A shareholder can exchange some or all of his or her Class A, Class B and
Class C shares in the Advantus Multiple Class Funds, including shares acquired
by reinvestment of dividends, for shares of the same class of any of the other
Advantus Multiple Class Funds (provided such Fund is available in the
shareholder's State), and can thereafter re-exchange such exchanged shares back
for shares of the same class of the Fund, provided that the minimum amount which
may be transferred is $250. The exchange will be made on the basis of the
relative net asset values without the imposition of any additional sales load.
When Class B shares acquired through the exchange are redeemed, the shareholder
will be treated as if no exchange took place for the purpose of determining the
contingent deferred sales charge ("CDSC") period and applying the CDSC.
Class A, Class B and Class C shares may also be exchanged for shares of the
Money Market Fund at net asset values. No CDSC will be imposed at the time of
any such exchange of Class B shares; however, the Money Market Fund shares
acquired in any such exchange will remain subject to the CDSC otherwise
applicable to such Class B shares as of the date of exchange, and the period
during which such shares of Money Market Fund are held will not be included in
the calculation of the CDSC due at redemption of such Money Market Fund shares
or any reacquired Class B shares, except as follows. Ascend Financial is
currently waiving the entire Rule 12b-1 fee due from Money Market Fund. In the
event Ascend Financial begins to receive any portion of such fee, either (i) the
time period during which shares of Money Market Fund acquired in exchange for
Class B shares are held will be included in the calculation of the CDSC due at
redemption, or (ii) such time period will not be included but the amount of the
CDSC will be reduced by the amount of any Rule 12b-1 payments made by Money
Market Fund with respect to those shares.
Shares of Money Market Fund acquired in an exchange for Class A, Class B or
Class C shares from any of the Funds may also be re-exchanged at relative net
asset values for Class A, Class B and Class C shares, respectively, of the Fund.
Class C shares re-acquired in this manner will have a remaining holding period
prior to conversion equal to the remaining holding period applicable to the
prior Class C shares at the time of the initial exchange.
The exchange privilege is available only in states where such exchanges may
legally be made (at the present time the Fund believes this privilege is
available in all states). An exchange may be made by written request or by a
telephone call, unless the shareholder has elected on the account application
36
<PAGE>
not to have telephone transaction privileges. Up to twelve exchanges each
calendar year may be made without charge. A $7.50 service charge will be
imposed on each subsequent exchange and/or telephone transfer. No service
charge is imposed in connection with systematic exchange plans. However, the
Fund reserves the right to restrict the frequency of, or otherwise modify,
condition, terminate, or impose additional charges upon, the exchange and/or
telephone transfer privileges, upon 60 days' prior notice to shareholders. An
exchange is considered to be a sale of shares for federal income tax purposes on
which an investor may realize a long- or short-term capital gain or loss. See
"Distributions and Tax Status" for a discussion of the effect of redeeming
shares within 90 days after acquiring them and subsequently acquiring new shares
in any mutual fund at a reduced sales charge.
SYSTEMATIC EXCHANGE PLAN
Shareholders of the Fund may elect to have shares of the Fund
systematically exchanged for shares of any of the other Advantus Funds on a
monthly basis. The minimum amount which may be exchanged on such a systematic
basis is $25. The terms and conditions otherwise applicable to exchanges
generally, as described above, also apply to such systematic exchange plans.
SHAREHOLDER SERVICES
OPEN ACCOUNTS
A shareholder's investment is automatically credited to an open account
maintained for the shareholder by First Data, the Funds' transfer agent. 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 First Data 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 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.
AUTOMATIC INVESTMENT PLAN
Each Fund provides a convenient, voluntary method of purchasing shares in
the Fund through its "Automatic Investment Plan" (the "Plan").
The principal purposes of the Plan are to encourage thrift by enabling you
to make regular purchases in amounts less than normally required, and, in the
case of the Advantus Multiple Class Funds, to employ the principle of dollar
cost averaging, described below.
By acquiring Fund shares on a regular basis pursuant to the Automatic
Investment Plan, or investing regularly on any other systematic plan, the
investor takes advantage of the principle of dollar cost averaging. Under
dollar cost averaging, if a constant amount is invested at regular intervals at
varying price levels, the average cost of all the shares will be lower than the
average of the price levels. This is because the same fixed number of dollars
buys more shares when price levels are low and fewer shares when price levels
are high. It is essential that the investor consider his or her financial
ability to continue this investment program during times of market decline as
well as market rise. The principle of dollar cost averaging will not protect
against loss in a declining market, as a loss will result if the plan is
discontinued when the market value is less than cost.
37
<PAGE>
A Plan may be opened by indicating an intention to invest $25 or more
monthly for at least one year. Investors will receive a confirmation showing
the number of shares purchased, purchase price, and subsequent new balance of
shares accumulated.
An investor has no obligation to invest regularly or to continue the Plan,
which may be terminated by the investor at any time without penalty. Under the
Plan, any distributions of income and realized capital gains will be reinvested
in additional shares at net asset value unless a shareholder instructs the Fund
in writing to pay them in cash. The Fund reserves the right to increase or
decrease the amount required to open and continue a Plan, and to terminate any
Plan after one year if the value of the amount invested is less than $250.
GROUP SYSTEMATIC INVESTMENT PLAN
This Plan provides employers and employees with a convenient means for
purchasing shares of each Fund under various types of employee benefit and
thrift plans, including payroll withholding and bonus incentive plans. The Plan
may be started with an initial cash investment of $50 per participant for a
group consisting of five or more participants. The shares purchased by each
participant under the Plan will be held in a separate account in which all
dividends and capital gains will be reinvested in additional shares of the Fund
at net asset value. To keep his or her account open, subsequent payments
totaling $25 per month must be made into each participant's account. If the
group is reduced to less than five participants, the minimums set forth under
"Automatic Investment Plan" shall apply. The Plan may be terminated by the Fund
or the shareholder at any time upon reasonable notice.
RETIREMENT PLANS OFFERING TAX BENEFITS
The federal tax laws provide for a variety of retirement plans offering tax
benefits. These plans may be funded with shares of any of the Funds. The plans
include H.R. 10 (Keogh) plans for self-employed individuals and partnerships,
individual retirement accounts (IRA's), corporate pension trust and profit
sharing plans, including 401(k) plans, and retirement plans for public school
systems and certain tax exempt organizations, e.g. 403(b) plans.
The initial investment in each Fund by such a plan must be at least $250
for each participant in a plan, and subsequent investments must be at least $25
per month for each participant. Income dividends and capital gain distributions
must be reinvested. Plan documents and further information can be obtained from
Ascend Financial.
An investor should consult a competent tax or other adviser as to the
suitability of Fund shares as a vehicle for funding a plan, in whole or in part,
under the Employee Retirement Income Security Act of 1974 and as to the
eligibility requirements for a specific plan and its state as well as federal
tax aspects.
SYSTEMATIC WITHDRAWAL PLANS
An investor owning shares in any one of the Funds having a value of $5,000
or more at the current public offering price may establish a Systematic
Withdrawal Plan providing for periodic payments of a fixed or variable amount.
Withdrawal payments for Class A shares of Advantus Multiple Class Funds
purchased in amounts of $1 million or more and for Class B shares of Advantus
Multiple Class Funds may also be subject to a CDSC. As a result, a shareholder
should consider whether a Systematic Withdrawal Plan is appropriate. It may be
appropriate for the shareholder to consult a tax adviser before establishing
such a plan.
The Plan is particularly convenient and useful for trustees in making
periodic distributions to retired employees. Through this Plan a trustee can
arrange for the retirement benefit to be paid directly to the employee by the
respective Fund and to continue the tax-free accumulation of income and capital
gains prior to their distribution to the employee. An investor may terminate
the Plan at any time. A form for use in establishing such a plan is available
from Ascend Financial.
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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.
Under this Plan, any distributions of income and realized capital gains
must be reinvested in additional shares, and are reinvested at net asset value.
If a shareholder wishes to purchase additional shares of the respective Fund
under this Plan, other than by reinvestment of distributions, it should be
understood that, in the case of Class A shares, he or she would be paying a
sales commission on such purchases, while liquidations effected under the Plan
would be at net asset value, and, in the case of Class B shares, he or she would
be purchasing such shares at net asset value while liquidations effected under
the Plan would involve the payment of a contingent deferred sales charge.
Purchases of additional shares concurrent with withdrawals are ordinarily
disadvantageous to the shareholder because of sales charges and tax liabilities.
Additions to a shareholder account in which an election has been 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 an "Automatic Withdrawal Plan" and a "Systematic
Investment Plan" in effect simultaneously as it is not, as explained above,
advantageous to do so.
REDEMPTIONS
Registered holders of shares of the Funds may redeem their shares at the
per share net asset value next determined following receipt by the Fund (at its
mailing address listed on the cover page) of a written redemption request signed
by all shareholders exactly as the account is registered (and a properly
endorsed stock certificate if one has been issued). Class A and Class C shares
may be redeemed without charge. A contingent deferred sales charge may be
applicable upon redemption of certain Class A shares and Class B shares. Both
share certificates and stock powers, if any, tendered in redemption must be
endorsed and executed exactly as the Fund shares are registered. Any
certificates should be sent to the Fund by certified mail.
Payment will be made as soon as possible, but not later than seven days
after receipt of a properly executed written redemption request (and any
certificates). The amount received by the shareholder may be more or less than
the shares' original cost.
If stock certificates have not been issued, and if no signature guarantee
is required, shareholders may also submit their signed written redemption
request to the Fund by facsimile (FAX) transmission. The Fund's FAX number is
(508) 871-3560.
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
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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 SEC, by order, so permits; provided that applicable rules and regulations of
the SEC shall govern as to whether the conditions prescribed in (b) or (c)
exist.
SIGNATURE GUARANTEE
In order to protect both shareholders and the Funds against fraudulent
orders, a shareholder signature is required to be guaranteed in certain cases.
No signature guarantee is required if the redemption proceeds are less than
$50,000 and are to be paid to the registered holder and sent to the address of
record for that account, or if the written redemption request is from
pre-authorized trustees of plans, trusts and other tax-exempt organizations and
the redemption proceeds are less than $50,000.
A signature guarantee is required, however, if (i) the redemption proceeds
are $50,000 or more, (ii) the redemption proceeds are to be paid to someone
other than the registered holder, (iii) the redemption proceeds are to be mailed
to an address other than the registered shareholder's address, (iv) within the
30-day period prior to receipt of the redemption request, instructions have been
received to change the shareholder's address of record, or, in the case of
redemptions to be paid by wire, instructions have been received within such
period to change the shareholder's bank wire instructions, (v) the shares are
requested to be transferred to the account of another owner, or (vi) in the case
of plans, trusts, or other tax-exempt organizations, the redemption request is
not from a pre-authorized trustee. The Fund reserves the right to require
signature guarantees on all redemptions.
A signature guarantee must be provided by an eligible guarantor
institution. A notarized signature is not sufficient. Eligible guarantors
include (1) national or state banks, savings associations, savings and loan
associations, trust companies, savings banks, industrial loan companies and
credit unions; (2) national securities exchanges, registered securities
associations and clearing agencies; (3) securities broker-dealers which are
members of a national securities exchange or a clearing agency or which have
minimum net capital of $100,000; or (4) institutions that participate in the
Securities Transfer Agent Medallion Program ("STAMP") or other recognized
signature medallion program.
CONTINGENT DEFERRED SALES CHARGE
The CDSC applicable upon redemption of Class A shares purchased in
amounts of $1 million or more and Class B shares will be calculated on an
amount equal to the lesser of the net asset value of the shares at the time
of purchase or their net asset value at the time of redemption. No charge
will be imposed on increases in net asset value above the initial purchase
price. In addition, no charge will be assessed on shares derived from
reinvestment of dividends or capital gains distributions or on shares held
for longer than the applicable CDSC period. See "Sales Charges - Class B
Shares" above.
In determining whether a CDSC is payable with respect to any redemption
of Class B shares, the calculation will be determined in the manner that
results in the lowest rate being charged.
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The CDSC does not apply to: (1) redemption of Class B shares in connection
with the automatic conversion to Class A shares; (2) redemption of shares when a
Fund exercises its right to liquidate accounts which are less than the minimum
account size; and (3) redemptions in the event of the death or disability of the
shareholder within the meaning of Section 72(m)(7) of the Internal Revenue Code.
The CDSC will also not apply to certain exchanges. See "Exchange and Transfer
of Fund Shares," above.
TELEPHONE REDEMPTION
The Fund's shareholders have this privilege automatically, unless they have
elected on the account application not to have such privilege, and may redeem
shares by calling Advantus Shareholder Services at 1-800-665-6005 (see
"Telephone Transactions"). A telephone redemption request will not be honored,
however, if the shareholder's address of record or bank wire instructions have
been changed without a guarantee of the shareholder's signature (see
"- Signature Guarantee" above) within the 30-day period prior to receipt of the
redemption request. The maximum amount which may be redeemed by telephone is
$50,000. The proceeds will be sent by check to the address of record for the
account. If the amount is $500 or more, and if the shareholder has designated a
bank account, the proceeds may be wired to the shareholder's designated bank
account, and the prevailing wire charge (currently $5.00) will be added to the
amount redeemed from the Fund. The Fund reserves the right to modify, terminate
or impose charges upon the telephone redemption privilege.
DELAY IN PAYMENT OF REDEMPTION PROCEEDS
Payment of redemption proceeds will ordinarily be made as soon as possible
and within the periods of time described above. However, an exception to this
is that if redemption is requested after a purchase by non-guaranteed funds
(such as a personal check), the Fund will delay mailing the redemption check or
wiring proceeds until it has reasonable assurance that the purchase check has
cleared (good payment has been collected). This delay may be up to 14 days from
the purchase date.
FUND'S RIGHT TO REDEEM SMALL ACCOUNTS
The Fund has the right to redeem the shares in inactive accounts which, due
to redemptions and not to decreases in market value of the shares in the
account, have a total current value of less than $150. Before redeeming an
account, the Fund will mail to the shareholder a written notice of its intention
to redeem, which will give the investor an opportunity to make an additional
investment. If no additional investment is received by the Fund within 60 days
of the date the notice was mailed, the shareholder's account will be redeemed.
REINSTATEMENT PRIVILEGE
The Prospectus for each of the Advantus Multiple Class Funds describes
redeeming shareholders' reinstatement privileges in "Buying and Selling Shares"
in the Funds' Prospectus. Written notice from persons wishing to exercise this
reinstatement privilege must be received by Ascend Financial within 90 days
after the date of the redemption. The reinstatement or exchange will be made at
net asset value next determined after receipt of the notice and will be limited
to the amount of the redemption proceeds or to the nearest full share if
fractional shares are not purchased. All shares issued as a result of the
reinstatement privilege applicable to redemptions of Class A and Class B shares
will be issued only as Class A shares. Any CDSC incurred in connection with the
prior redemption (within 90 days) of Class B shares will not be refunded or
re-credited to the shareholder's account. Shareholders who redeem Class C
shares and exercise their reinstatement privilege will be issued only Class C
shares, which shares will have a remaining holding period prior to conversion
equal to the remaining holding period applicable to the prior Class C shares at
redemption.
See "Distributions and Tax Status" below 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
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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 "Distributions and Tax Status" below regarding the taxation of
capital gains.
TELEPHONE TRANSACTIONS
Shareholders of the Fund are permitted to exchange or redeem the Fund's
shares by telephone. See "Exchange and Transfer of Fund Shares" and
"Redemptions" for further details. The privilege to initiate such transactions
by telephone is made available automatically unless the shareholder elects on
the account application not to have such privilege.
Shareholders, or persons authorized by shareholders, may initiate telephone
transactions by telephoning Advantus Shareholder Services, toll free, at
at (800) 665-6005. Automated service is available 24 hours a day, and service
representatives are available Monday through Friday, from 8:00 a.m. to 4:45 p.m.
(Central Time). Telephone transaction requests received after 3:00 p.m.
(Central Time) will be treated as received the next business day. The maximum
amount which may be redeemed by telephone is $50,000. During periods of marked
economic or market changes, shareholders may experience difficulty in
implementing a telephone exchange or redemption due to a heavy volume of
telephone calls. In such a circumstance, shareholders should consider
submitting a written request while continuing to attempt a telephone exchange or
redemption. The Fund reserves the right to modify, terminate or impose charges
upon the telephone exchange and redemption privileges upon 60 days' prior notice
to shareholders.
The Fund will not be liable for following instructions communicated by
telephone which it reasonably believes to be genuine; provided, however, that
the Fund will employ reasonable procedures to confirm that instructions
communicated by telephone are genuine, and that if they do not, they may be
liable for any losses due to unauthorized or fraudulent instructions. The
procedures for processing telephone transactions include tape recording of
telephone instructions, asking shareholders for their account number and a
personal identifying number, and providing written confirmation of such
transactions.
THE STANDARD & POOR'S LICENSE
Standard & Poor's ("S&P") is a division of The McGraw-Hill Companies, Inc.
S&P has trademark rights to the marks "Standard & Poor's-Registered Trademark-,"
"S&P-Registered Trademark-," "S&P 500-Registered Trademark-," "Standard & Poor's
500" and "500" and has licensed the use of such marks by the Index Fund.
Index Fund is not sponsored, endorsed, sold or promoted by S&P. S&P makes
no representation or warranty, express or implied, to the owners of the Index
Fund or any member of the public regarding the advisability of investing in
securities generally or in the Index Fund particularly or the ability of the S&P
500 Index to track general stock market performance. S&P's only relationship to
the Index Fund is the licensing of certain trademarks and trade names of S&P and
of the S&P 500 Index which is determined, composed and calculated by S&P without
regard to the Fund. S&P has no obligation to take the needs of the Index Fund
or the owners of the Fund into consideration in determining, composing or
calculating the S&P 500 Index. S&P is not responsible for and has not
participated in the determination of the net asset value or public offering
price of the Index Fund nor is S&P a distributor of the Fund. S&P has no
obligation or liability in connection with the administration, marketing or
trading of the Index Fund.
S&P DOES NOT GUARANTEE THE ACCURACY AND/OR THE COMPLETENESS OF THE S&P 500
INDEX OR ANY DATA INCLUDED THEREIN, NOR DOES S&P HAVE ANY LIABILITY FOR ANY
ERRORS, OMISSIONS, OR INTERRUPTIONS THEREIN. S&P MAKES NO WARRANTY, EXPRESS OR
IMPLIED, AS TO RESULTS TO BE OBTAINED BY THE INDEX FUND, OWNERS OF THE FUND, OR
ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR ANY DATA
INCLUDED THEREIN. S&P MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
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OR USE WITH RESPECT TO THE S&P 500 INDEX OR ANY DATA INCLUDED THEREIN. WITHOUT
LIMITING ANY OF THE FOREGOING, IN NO EVENT SHALL S&P HAVE ANY LIABILITY FOR ANY
SPECIAL, PUNITIVE, INDIRECT, OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS),
EVEN IF NOTIFIED OF THE POSSIBILITY OF SUCH DAMAGES.
DISTRIBUTIONS AND TAX STATUS
DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS
The policy of the Funds has been to pay dividends from net investment
income quarterly. Any net realized capital gains are generally distributed once
a year, during December. Distributions paid by the Fund, if any, with respect
to Class A, Class B and Class C shares will be calculated in the same manner, at
the same time, on the same day and will be in the same amount, except that the
higher Rule 12b-1 fees applicable to Class B and Class C shares will be borne
exclusively by such shares. The per share distributions on Class B and Class C
shares will be lower than the per share distributions on Class A shares as a
result of the higher Rule 12b-1 fees applicable to Class B and Class C shares.
Any dividend payments or net capital gains distributions made by the Fund
are in the form of additional shares of the same class of the Fund rather than
in cash, unless a shareholder specifically requests the Fund in writing that the
payment be made in cash. The distribution of these shares is made at net asset
value on the payment date of the dividend, without any sales or other charges to
the shareholder. The taxable status of income dividends and/or net capital
gains distributions is not affected by whether they are reinvested or paid in
cash. Authorization to pay dividends in cash may be made on the application
form, or at any time by letter.
Upon written request to the Fund, a shareholder may also elect to have
dividends from the Fund invested without sales charge in shares of Money
Market Fund or shares of the same class of another of the Advantus Multiple
Class Funds at the net asset value of such other Fund on the payable date for
the dividends being distributed (subject to the applicable sales charge). To
use this privilege of investing dividends from the Fund in shares of another
of the Funds, shareholders must maintain a minimum account value of $250 in
both the Fund and the other Fund in which dividends are reinvested.
TAXATION - GENERAL
The following is a general summary of certain federal tax considerations
affecting the Funds and their shareholders. No attempt is made to present a
detailed explanation of the tax treatment of the Fund or its shareholders, and
the discussion here is not intended as a substitute for careful tax planning.
During the year ended July 31, 1998 each Fund fulfilled, and intends to
continue to fulfill, the requirements of Subchapter M of the Internal Revenue
Code of 1986, as amended (the "Code"), as a regulated investment company. If
so qualified, the Fund will not be liable for federal income taxes to the
extent it distributes its taxable income to its shareholders.
Distributions of investment company taxable income from the Fund generally
will be taxable to shareholders as ordinary income, regardless of whether such
distributions are paid in cash or are invested in additional shares of the
Fund's stock. A distribution of net capital gain (a "capital gain
distribution"), whether paid in cash or reinvested in shares, generally is
taxable to shareholders as long-term capital gain, regardless of the length of
time a shareholder has held his or her shares or whether such gain was realized
by the Fund before the shareholder acquired such shares and was reflected in the
price paid for the shares. Long-term capital gains of individuals are taxed at
a maximum rate of 20%, and the highest marginal regular tax rates on ordinary
income for individuals is 39.6%.
Some or all of the dividend distributions from the Funds are expected to
qualify for the 70% dividend received deduction for corporations.
Prior to purchasing shares of the Fund, prospective shareholders (except
for tax qualified retirement plans) should consider the impact of dividends or
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capital gains distributions which are expected to be announced, or have been
announced but not paid. Any such dividends or capital gains distributions paid
shortly after a purchase of shares by an investor prior to the record date will
have the effect of reducing the per share net asset value by the amount of the
dividends or distributions. All or a portion of such dividends or
distributions, although in effect a return of capital, is subject to taxation.
Gain or loss upon the sale of shares of the Funds will be treated as
capital gain or loss, provided that the shares represented a capital asset in
the hands of the shareholder. For shareholders, such gain or loss will be
long-term gain or loss if the shares where held more than one year.
The Code provides that a shareholder who pays a sales charge in acquiring
shares of a mutual fund, redeems those shares within 90 days after acquiring
them, and subsequently acquires new shares in any mutual fund for a reduced
sales charge or no sales charge (pursuant to a reinvestment right acquired with
the first shares), may not take into account the sales charge imposed on the
first acquisition, to the extent of the reduction in the sales charge on the
second acquisition, for purposes of computing gain or loss on disposition of the
first acquired shares. The amount of sales charge disregarded under this rule
will, however, be treated as incurred in connection with the acquisition of the
second acquired shares.
Shareholders of the Fund receive an annual statement detailing federal tax
information. Distributions by the Funds, including the amount of any
redemption, are reported to shareholders in such annual statement and to the
Internal Revenue Service to the extent required by the Code.
The Funds are required by federal law to withhold 31% of reportable
payments (including dividends, capital gain distributions, and redemptions) paid
to certain accounts whose owners have not complied with IRS regulations. In
order to avoid this backup withholding requirement, each shareholder will be
asked to certify on the shareholder's account application that the social
security or taxpayer identification number provided is correct and that the
shareholder is not subject to backup withholding for previous underreporting to
the IRS.
Before investing in the Fund, an investor should consult a tax adviser
concerning the consequences of any local and state tax laws, and of any
retirement plan offering tax benefits.
TAXATION ON PORTFOLIO HOLDINGS
Except for the transactions identified as hedging transactions, each Fund
is required for federal income tax purposes to recognize as income for each
taxable year its net unrealized gains and losses on futures contracts, options
and forward currency contracts as of the end of the year as well as those
actually realized during the year. Except for transactions in futures
contracts, options, or forward currency contracts that are classified as part of
a "mixed straddle," gain or loss recognized with respect to such contracts is
considered to be 60% long-term capital gain or loss and 40% short-term capital
gain or loss, without regard to the holding period of the contracts. In the
case of a transaction classified as a "mixed straddle," the recognition of
losses may be deferred to a later taxable year.
Sales of futures contracts, options, or forward currency contracts that are
intended to hedge against a change in the value of securities or currencies held
by a Fund may affect the holding period of such securities or currencies and,
consequently, the nature of the gain or loss on such securities or currencies
upon disposition.
It is expected that any net gain realized from the closing out of futures
contracts, options, or forward currency contracts will be considered gain from
the sale of securities or currencies and therefore be qualifying income for
purposes of the requirement under the Code that a regulated investment company
derive at least 90% of its gross income from dividends interest, gains from the
sale or disposition of securities, or otherwise from the business of investing
in securities.
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Any realized gain or loss on closing out a futures contract, option, or
forward currency contract such as a forward commitment for the purchase or sale
of foreign currency, will generally result in a recognized capital gain or loss
for tax purposes.
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.
Each Fund may in the future sell securities "short against the box." Under
provisions of the Taxpayer Relief Act of 1997, if a Fund sells short against the
box a security in which it has an appreciated position, it will be treated as if
it had sold the security for its fair market value on the date of the short
sale, and will be required to recognize gain as of that date. On a subsequent
sale of the security that has been sold short against the box, the Fund's basis
in the security will be adjusted to take into account the amount of gain
previously recognized.
The foregoing relates only to federal taxation. Prospective shareholders
should consult their tax advisers as to the possible application of state and
local income tax laws to Fund distributions.
FINANCIAL STATEMENTS
Each Funds' financial statements for the fiscal year ended July 31, 1998,
including the financial highlights for each of the respective periods presented,
appearing in such Fund's Annual Report to Shareholders, and the report thereon
of such Fund's independent auditors, KPMG Peat Marwick LLP, also appearing
therein, are incorporated by reference in this Statement of Additional
Information. The respective Fund's 1998 Annual Report to Shareholders is
enclosed with this Statement of Additional Information.
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APPENDIX A
BOND AND COMMERCIAL PAPER RATINGS
BOND RATINGS
Moody's Investors Service, Inc. describes its six 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.
Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Moody's Investors Service, Inc. also applies numerical modifiers, 1, 2, and
3, in each of these generic rating classifications. The modifier 1 indicates
that the security ranks in the higher end of its generic rating category; the
modifier 2 indicates a mid-range ranking; and the modifier 3 indicates that the
issue ranks in the lower end of its generic rating category.
Standard & Poor's Corporation describes its six highest ratings for
corporate bonds 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.
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.
A-1
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BBB. Debt rated "BBB" is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
BB. Debt rated "BB" has less near-term vulnerability to default than other
speculative grade debt. However, it faces major ongoing uncertainties or
exposure to adverse business, financial, or economic conditions that could lead
to inadequate capacity to meet timely interest and principal payments.
B. Debt rated "B" has a greater vulnerability to default but currently has
the capacity to meet interest payments and principal repayments. Adverse
business, financial, or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The "B" rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied "BB" or "BB-" rating.
Standard & Poor's Corporation applies indicators "+", no character, and "-"
to the above rating categories. The indicators show relative standing within
the major rating categories.
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>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS
The exhibits to this Registration Statement are listed in the Exhibit Index
hereto and are incorporated herein by reference.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
Wholly-owned subsidiary of Minnesota Mutual Companies, Inc.:
Securian Holding Company (Delaware)
Wholly-owned subsidiary of Securian Holding Company:
Securian Financial Group, Inc. (Delaware)
Wholly-owned subsidiary of Securian Financial Group, Inc.
Minnesota Life Insurance Company
Wholly-owned subsidiaries of Minnesota Life Insurance Company:
Advantus Capital Management, Inc.
HomePlus Insurance Company
Northstar Life Insurance Company (New York)
The Ministers Life Insurance Company
Robert Street Energy, Inc.
Capitol City Property Management, Inc.
DataPlan Securities, Inc. (Ohio)
MIMLIC Imperial Corporation
MIMLIC Funding, Inc.
MCM Funding 1997-1, Inc.
MCM Funding 1998-1, Inc.
Personal Finance Company (Delaware)
MIMLIC Venture Corporation
HomePlus Insurance Agency, Inc.
Ministers Life Resources, Inc.
Enterprise Holding Corporation
Wedgewood Valley Golf, Inc.
Open-end registered investment company offering shares solely to separate
accounts of Minnesota Life Insurance Company:
Advantus Series Fund, Inc.
Wholly-owned subsidiary of Advantus Capital Management, Inc.:
Ascend Financial Services, Inc.
Wholly-owned subsidiaries of Ascend Financial Services, Inc.:
MIMLIC Insurance Agency of Massachusetts, Inc. (Massachusetts)
MIMLIC Insurance Agency of Texas, Inc. (Texas)
Ascend Insurance Agency of Nevada, Inc. (Nevada)
Ascend Insurance Agency of Oklahoma, Inc. (Oklahoma)
<PAGE>
Wholly-owned subsidiaries of Enterprise Holding Corporation:
Financial Ink Corporation
Oakleaf Service Corporation
Concepts in Marketing Research Corporation
Concepts in Marketing Services Corporation
Lafayette Litho, Inc.
Wholly-owned subsidiary of HomePlus Insurance Agency, Inc.:
HomePlus Insurance Agency of Texas, Inc. (Texas)
Majority-owned subsidiaries of MIMLIC Imperial Corporation:
J. H. Shoemaker Advisory Corporation (Tennessee)
Consolidated Capital Advisors, Inc. (Tennessee)
Majority-owned subsidiary of Ascend Financial Services, Inc.:
MIMLIC Insurance Agency of Ohio, Inc. (Ohio)
Majority-owned subsidiaries of Minnesota Life Insurance Company:
MIMLIC Life Insurance Company (Arizona)
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Fifty percent-owned subsidiary of MIMLIC Imperial Corporation:
C.R.I. Securities, Inc.
Less than majority owned, but greater than 25% owned, subsidiaries of Minnesota
Life Insurance Company:
Advantus Money Market Fund, Inc.
MIMLIC Cash Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Index 500 Fund, Inc.
Less than 25% owned subsidiaries of Minnesota Life Insurance Company:
Advantus Horizon Fund, Inc.
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Bond Fund, Inc.
Unless indicated otherwise parenthetically, each of the above corporations is a
Minnesota corporation.
ITEM 25. INDEMNIFICATION
The Articles of Incorporation and Bylaws of the Registrant provide that
the Registrant shall indemnify such persons, for such expenses and
liabilities, in such manner, under such circumstances, to the full extent
permitted by Section 302A.521, Minnesota Statutes, as now enacted or
hereafter amended, provided that no such indemnification may be made if it
would be in violation of Section 17(h) of the Investment Company Act of 1940,
as now
<PAGE>
enacted or hereafter amended. Section 302A.521 of the Minnesota Statutes, as
now enacted, provides that a corporation shall indemnify a person made or
threatened to be made a party to a proceeding against judgments, penalties,
fines, settlements and reasonable expenses, including attorneys' fees and
disbursements, incurred by the person in connection with the proceeding, if,
with respect to the acts or omissions of the person complained of in the
proceeding, the person has not been indemnified by another organization for
the same judgments, penalties, fines, settlements and reasonable expenses
incurred by the person in connection with the proceeding with respect to the
same acts or omissions; acted in good faith; received no improper personal
benefit and the Minnesota Statute dealing with directors' conflicts of
interest, if applicable, has been satisfied; in the case of a criminal
proceeding, had no reasonable cause to believe the conduct was unlawful and
reasonably believed that the conduct was in the best interests of the
corporation or, in certain circumstances, reasonably believed that the
conduct was not opposed to the best interests of the corporation.
Section 17(h) of the Investment Company Act of 1940 provides that
neither the charter, certificate of incorporation, articles of association,
indenture of trust, nor the by-laws of any registered investment company, nor
any other instrument pursuant to which such a company is organized or
administered, shall contain any provisions which protects or purports to
protect any director or officer of such company against any liability to the
company or to its security holders to which he would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence or reckless
disregard of duties involved in the conduct of his office. The staff of the
Securities and Exchange Commission has stated that it is of the view that an
indemnification provision does not violate Section 17(h) if it precludes
indemnification for any liability arising by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of duties ("Disabling
conduct") and sets forth reasonable and fair means for determining whether
indemnification shall be made. In the staff's view, "reasonable and fair
means" would include (1) a final decision on the merits by a court or other
body before whom the proceeding was brought that the person to be indemnified
("indemnitee") was not liable by reason of disabling conduct or, (2) in the
absence of such a decision, a reasonable determination, based upon a review
of the facts, that the indemnitee was not liable by reason of disabling
conduct, by (a) the vote of a majority of a quorum of directors who are
neither "interested persons" of the company as defined in Section 2(a)(19) of
the Investment Company Act of 1940 nor parties to the proceeding
("disinterested, non-party directors") or (b) an independent legal counsel in
a written opinion. The dismissal of either a court action or administrative
proceeding against an indemnitee for insufficiency of evidence of any
disabling conduct with which he has been charged would, in the staff's view,
provide reasonable assurance that he was not liable by reason of disabling
conduct. The staff also believes that a determination by the vote of a
majority of a quorum of disinterested, non-party directors would provide
reasonable assurance that the indemnitee was not liable by reason of
disabling conduct.
Insofar as indemnification for liability arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or
<PAGE>
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISER
Directors and Officers Office with
of Investment Adviser Investment Adviser Other Business Connections
- --------------------- ------------------ --------------------------
William N. Westhoff President, Treasurer Vice President and Director,
and Director Robert Street Energy, Inc.;
Senior Vice President and
Treasurer, Minnesota Life
Insurance Company; President,
MCM Funding 1997-1, Inc.;
President, MCM Funding 1998-1,
Inc.
Frederick P. Feuerherm Vice President, Vice President, Minnesota Life
Assistant Secretary Insurance Company; Vice President
and Director and Director, MIMLIC Funding,
Inc.; Vice President and
Assistant Secretary, MCM Funding
and Assistant Secretary, MCM
Funding 1998-1, Inc.1997-1, Inc.;
Vice President
Guy M. de Lambert Vice President, Second Vice President, Minnesota
Secretary and Life Insurance Company;
Director President, Secretary and
Director, Personal Finance
Company; President and
Director, Wedgewood Valley Golf,
Inc.; President and Director,
Robert Street Energy, Inc.;
Vice President and Secretary, MCM
Funding 1997-1, Inc.; Vice
President and Secretary, MCM
Funding 1998-1, Inc.
Lynne M. Mills Vice President Second Vice President, Minnesota
Life Insurance Company; Vice
President and Director, Robert
Street Energy, Inc.; Vice
President, MCM Funding 1997-1,
Inc.; Vice
<PAGE>
President, MCM Funding 1998-1,
Inc.
Dianne Orbison Vice President Second Vice President, Minnesota
Life Insurance Company; Vice
President and Director, MCM
Funding 1997-1, Inc.; Vice
President, MIMLIC Venture
Corporation; Vice President and
Director, MCM Funding 1998-1,
Inc.
Richard W. Worthing Vice President and Vice President, MCM Funding
Head of Equities 1997-1, Inc.; Vice President,
MIMLIC Funding, Inc.; Vice
President, MCM Funding 1998-1, Inc.; Second
Vice President, Minnesota Life
Insurance Company
James P. Tatera Vice President, Second Vice President, Minnesota
Equity Portfolio Life Insurance Company; Vice
Manager President, MIMLIC Funding, Inc.;
Vice President and Assistant
Secretary, MCM Funding 1997-1,
Inc.; Vice President and
Assistant Secretary, MCM
Funding 1998-1, Inc.
Marilyn Froelich Vice President Vice President, MCM Funding
1997-1, Inc.; Vice President, MCM
Funding 1998-1, Inc.; Director,
Investment Advisory, Minnesota
Life Insurance Company
Loren Haugland Vice President Vice President, MCM Funding
1997-1, Inc.; Vice President, MCM
Funding 1998-1, Inc.; Senior
Investment Officer, Minnesota
Life Insurance Company
Thomas A. Gunderson Vice President Vice President, MCM Funding
1997-1, Inc.; Vice President, MCM
Funding 1998-1, Inc.; Investment
Officer, Total Return, Minnesota
Life Insurance Company
Kent R. Weber Vice President Vice President, MCM Funding
1997-1, Inc.; Vice President, MCM
Funding
<PAGE>
1998-1, Inc.; Investment Officer,
Total Return, Minnesota Life
Insurance Company
Jeffrey R. Erickson Vice President Vice President, MCM Funding
1997-1, Inc.; Vice President, MCM
Funding 1998-1, Inc.; Investment
Officer, Total Return, Minnesota
Life Insurance Company
Gary A. Aster Vice President Vice President, MCM Funding
1997-1, Inc.; Vice President, MCM
Funding 1998-1, Inc.; Investment
Officer, Equities, Minnesota Life
Insurance Company
Wayne R. Schmidt Vice President Secretary and Treasurer, MIMLIC
Funding, Inc.; Assistant
Secretary and Treasurer, Robert
Street Energy, Inc.; Vice
President and Secretary, MIMLIC
Imperial Corporation; Vice
President and Assistant
Secretary, MCM Funding
1997-1, Inc.; Vice President and
Assistant Secretary, MCM Funding
1998-1, Inc.; Investment Officer
- Fixed Income PM, Minnesota Life
Insurance Company
Joseph R. Betlej Vice President Vice President, Secretary and
Director, Wedgewood Valley Golf,
Inc.; Vice President and
Secretary, MIMLIC Venture
Corporation; Vice President,
MCM Funding 1997-1, Inc.; Vice
President, MCM Funding 1998-1,
Inc.; Senior Investment Officer,
Minnesota Life Insurance Company
Steven Laude Vice President Vice President, MCM Funding
1997-1, Inc.; Vice President,
MCM Funding 1998-1, Inc.; Senior
Investment Officer - Fixed
Income, Minnesota Life Insurance
Company
<PAGE>
Erica Bergsland Vice President Vice President, MCM Funding
1997-1, Inc.; Vice President, MCM
Funding 1998-1, Inc.; Senior
Investment Officer - Mortgage,
Minnesota Life Insurance Company
Thomas G. Meyer Vice President Vice President, MCM Funding
1997-1, Inc.; Vice President, MCM
Funding 1998-1, Inc.; Director,
Marketing Development, Minnesota
Life Insurance Company
Rodney Hare Vice President Director of Institutional
Marketing, Minnesota Life
Insurance Company; Vice
President, MCM Funding 1997-1,
Inc.; Vice President,
MCM Funding 1998-1, Inc.
Gary Kleist Financial Vice Director, Investment Operations,
President Minnesota Life Insurance Company;
Vice President, MCM Funding
1997-1, Inc.; Vice President,
MCM Funding, 1998-1, Inc.
Sean O'Connell Vice President Senior Investment Officer -
Mortgage, Minnesota Life
Insurance Company; Vice
President, MCM Funding 1997-1,
Inc.; Vice President, MCM Funding
1998-1, Inc.
John Leiviska Vice President Senior Investment Officer - Fixed
Income, Minnesota Life Insurance
Company; Vice President, MCM
Funding 1997-1, Inc.; Vice
President, MCM Funding 1998-1,
Inc.
Annette Masterson Vice President Senior Investment Officer - Fixed
Income, Minnesota Life Insurance
Company; Vice President, MCM
Funding 1997-1, Inc.; Vice
President, MCM Funding 1998-1,
Inc.
Mark L. Henneman Vice President Value Portfolio Manager,
Minnesota Life Insurance
<PAGE>
Company; Vice President, MCM
Funding 1997-1, Inc.; Vice
President, MCM Funding 1998-1,
Inc.
Kevin J. Hiniker Associate General Investment Officer - Law and
Counsel Assistant Secretary, Minnesota
Life Insurance Company; Assistant
Secretary, Robert Street Energy,
Inc.; Assistant Secretary, MCM
Funding 1997-1, Inc.; Assistant
Secretary, MCM Funding 1998-1,
Inc.
ITEM 27. PRINCIPAL UNDERWRITERS
(a) Ascend Financial Services, Inc. currently acts as a principal
underwriter for the following investment companies:
Advantus Horizon Fund, Inc.
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Money Market Fund, Inc.
Advantus Bond Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Index 500 Fund, Inc.
MIMLIC Cash Fund, Inc.
Variable Fund D
Variable Annuity Account
Minnesota Life Variable Life Account
Group Variable Annuity Account
Minnesota Life Variable Universal Life Account
(b) The name and principal business address, positions and offices
with Ascend Financial Services, Inc., and positions and offices with
Registrant of each director and officer of Ascend Financial Services, Inc. is
as follows:
<TABLE>
<CAPTION>
Positions and Positions and
Name and Principal Offices Offices
Business Address with Underwriter with Registrant
- ------------------ ---------------- ---------------
<S> <C> <C>
Robert E. Hunstad Director None
Minnesota Life
Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
George I. Connolly President, Chief None
Ascend Financial Services, Inc. Executive Officer, Chief
400 Robert Street North Compliance Officer and
St. Paul, Minnesota 55101 Director
<PAGE>
Margaret Milosevich Vice President, Chief Assistant
Ascend Financial Services, Inc. Operations Officer, Secretary
400 Robert Street North Treasurer and Secretary
St. Paul, Minnesota 55101
Dennis E. Prohofsky Director None
Minnesota Life
Insurance Company
400 Robert Street North
St. Paul, Minnesota 55101
Thomas L. Clark Assistant Treasurer Assistant
Ascend Financial Services, Inc. and Assistant Secretary Secretary
400 Robert Street North
St. Paul, Minnesota 55101
</TABLE>
(c) Not applicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The physical possession of the accounts, books and other documents
required to be maintained by Section 3(a) of the Investment Company Act of
1940 and Rules 31a-1 to 31a-3 promulgated thereunder is maintained by
Minnesota Life, 400 Robert Street North, St. Paul, Minnesota 55101; except
that the physical possession of certain accounts, books and other documents
related to the custody of the Registrant's securities is maintained by the
following custodian:
U.S. Bank National Association
180 East Fifth Street
St. Paul, Minnesota 55101
ITEM 29. MANAGEMENT SERVICES
Not applicable.
ITEM 30. UNDERTAKINGS
(a) Not applicable.
(b) Not applicable.
(c) The Registrant hereby undertakes to furnish, upon request and
without charge to each person to whom a prospectus is delivered, a copy of
the Registrant's latest annual report to shareholders containing the
information called for by Item 5A.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940 the Registrant has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereto
duly authorized, in the City of St. Paul and the State of Minnesota on the
3rd day of December, 1998.
ADVANTUS VENTURE FUND, INC.
Registrant
By
------------------------------
William N. Westhoff, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the Registration Statement has been signed below by
the following persons in the capacities and on the date indicated.
------------------- President (principal December 3, 1998
William N. Westhoff executive officer)
and Director
---------------------- Director and Treasurer December 3, 1998
Frederick P. Feuerherm (principal financial
and accounting officer)
Ralph D. Ebbott* Director)
---------------------------
Ralph D. Ebbott ) By--------------------
) William N. Westhoff
) Attorney-in-Fact
Charles E. Arner* Director)
----------------------------
Charles E. Arner ) Dated: December 3, 1998
)
)
Ellen S. Berscheid* Director)
----------------------------
Ellen S. Berscheid )
- ----------------
*Registrant's director executing power of attorney dated October 22, 1998, a
copy of which is filed herewith.
<PAGE>
ADVANTUS VENTURE FUND, INC.
EXHIBIT INDEX
Exhibit Number and Description:
(a) Articles of Incorporation for the Registrant. (1)
(b) Bylaws of the Registrant. (1)
(c) Not applicable.
(d) Investment Advisory Agreement between Advantus Capital
Management, Inc. and the Registrant. (1)
(e)(1) Underwriting and Distribution Agreement between the Registrant
and Ascend Financial Services, Inc.
(e)(2) Form of Dealer Sales Agreement between Ascend Financial Services,
Inc., principal underwriter for the Registrant, and dealers.
(f) Not applicable.
(g) Custodian Agreement between the Registrant and First Trust
National Association. (1)
(h) Shareholder and Administrative Services Agreement between the
Registrant and The Minnesota Mutual Life Insurance Company.
(i) Opinion and Consent of Dorsey & Whitney LLP. (1)
(j) Consent of KPMG Peat Marwick LLP.
(k) Not applicable.
(l)(1) Letter of Investment Intent regarding the Registrant's initial
capital from Advantus Capital Management, Inc. (1)
(l)(2) Letter of Investment Intent regarding the Registrant's initial
capital from The Minnesota Mutual Life Insurance Company. (2)
(m)(1) Plan of Distribution for Class A shares of the Registrant.
(m)(2) Plan of Distribution for Class B shares of the Registrant. (1)
(m)(3) Plan of Distribution for Class C shares of the Registrant. (1)
(n)(1) Financial Data Schedule for Class A Shares of the Registrant.
(n)(2) Financial Data Schedule for Class B Shares of the Registrant.
(n)(3) Financial Data Schedule for Class C Shares of the Registrant.
(o) Multiple Class Plan pursuant to Rule 18f-3.
(p) Power of Attorney to sign Registration Statement executed by
Directors of Registrant.
- --------------------
<PAGE>
(1) Incorporated by reference to the Registrant's initial registration
statement on Form N-1A filed September 19, 1996.
(2) Incorporated by reference to the Registrant's post-effective amendment to
its registration statement on Form N-1A filed November 20, 1997.
<PAGE>
UNDERWRITING AND DISTRIBUTION AGREEMENT
THIS AGREEMENT, Made this 22nd day of October, 1998, by and between
Advantus Venture Fund, Inc., a Minnesota corporation (the "Fund") and Ascend
Financial Services, Inc. (the "Underwriter").
WITNESSETH:
1. UNDERWRITING SERVICES.
The Fund hereby engages the Underwriter, and the Underwriter hereby agrees
to act, as principal underwriter for the Fund in the sale and distribution of
the shares of the Fund to the public, either through dealers or otherwise. The
Underwriter agrees to offer such shares for sale at all times when such shares
are available for sale and may lawfully be offered for sale and sold.
2. SALE OF FUND SHARES.
Such shares are to be sold only on the following terms:
(a) All subscriptions, offers, or sales shall be subject to acceptance or
rejection by the Fund. Any offer or sale shall be conclusively presumed to have
been accepted by the Fund if the Fund shall fail to notify the Underwriter of
the rejection of such offer or sales prior to the computation of the net asset
value of the Fund's shares next following receipt by the Fund of notice of such
offer or sale.
(b) No share of the Fund shall be sold by the Underwriter (i) for any
consideration other than cash or, pursuant to an exchange privilege provided for
by the Fund's currently effective Prospectus, shares of any other investment
company for which the Underwriter acts as principal underwriter, or (ii), except
in instances otherwise provided for by the Fund's currently effective
Prospectus, for any amount less than the public offering price per share, which
shall be determined in accordance with the Fund's currently effective
Prospectus.
(c) In connection with certain sales of Fund shares, a contingent deferred
sales charge will be imposed in the event of a redemption transaction occurring
within a certain period of time following such a purchase, as described in the
Fund's currently effective Prospectus and Statement of Additional Information.
(d) The front-end sales charge, if any, for the Fund may, at the
discretion of the Fund and the Underwriter, be reduced or eliminated as
permitted by the Investment Company Act of 1940, and the rules and regulations
thereunder, as they may be amended from time to time (the "1940 Act"), provided
that such reduction or elimination shall be set forth in the Prospectus for the
Fund, and provided that the Fund shall in no event receive for any shares sold
an amount less than the net asset value thereof. In addition, any contingent
deferred sales charge for the Fund may, at the discretion of the Fund and the
Underwriter, be reduced or eliminated in accordance with the terms of an
exemptive order received from the Securities and Exchange Commission by the
Fund, and any amendments thereto, provided that such reduction or elimination
shall be set forth in the Prospectus for the Fund.
<PAGE>
3. REGISTRATION OF SHARES.
The Fund agrees to make prompt and reasonable efforts to effect and keep in
effect, at its expense, the registration or qualification of its shares for sale
in such jurisdictions as the Fund may designate.
4. INFORMATION TO BE FURNISHED TO THE UNDERWRITER.
The Fund agrees that it will furnish the Underwriter with such information
with respect to the affairs and accounts of the Fund as the Underwriter may from
time to time reasonably require, and further agrees that the Underwriter, at all
reasonable times, shall be permitted to inspect the books and records of the
Fund.
5. ALLOCATION OF EXPENSES.
During the period of this contract, the Fund shall pay or cause to be paid
all expenses, costs, and fees incurred by the Fund which are not assumed by the
Underwriter or Advantus Capital Management, Inc., a Minnesota corporation and
the Fund's investment adviser. The Underwriter agrees to provide, and shall pay
costs which it incurs in connection with providing, administrative or accounting
services to shareholders of the Fund (such costs are referred to as "Shareholder
Servicing Costs"). The Underwriter shall also pay all costs of distributing the
shares of the Fund ("Distribution Expenses"). Distribution Expenses include,
but are not limited to, initial and ongoing sales compensation (in addition to
sales loads) paid to investment executives of the Underwriter and to other
broker-dealers and participating financial institutions; expenses incurred in
the printing of prospectuses, statements of additional information and reports
used for sales purposes; expenses of preparation and distribution of sales
literature; expenses of advertising of any type; an allocation of the
Underwriter's overhead; payments to and expenses of persons who provide support
services in connection with the distribution of Fund shares; and other
distribution-related expenses. Shareholder Servicing Costs include all expenses
of the Underwriter incurred in connection with providing administrative or
accounting services to shareholders of the Fund, including, but not limited to,
an allocation of the Underwriter's overhead and payments made to persons,
including employees of the Underwriter, who respond to inquiries of shareholders
regarding their ownership of Fund shares, or who provide other administrative or
accounting services not otherwise required to be provided by the Fund's
investment adviser or transfer agent.
6. COMPENSATION TO THE UNDERWRITER.
It is understood and agreed by the parties hereto that the Underwriter will
receive as compensation for services it performs hereunder:
(a) The Underwriter shall be entitled to receive or retain the front-end
sales charge imposed in connection with sales of Fund shares, as set forth in
Schedule A hereto. Up to the entire amount of the front-end sales charge with
respect to the Fund may be reallowed by the Underwriter to broker-dealers and
participating financial institutions in connection with their sale of Fund
shares. The amount of the front-end sales charge may be retained or deducted by
the Underwriter from any sums received by it in payment for shares so sold. If
such amount is not
-2-
<PAGE>
deducted by the Underwriter from such payments, such amount
shall be paid to the Underwriter by the Fund not later than five business days
after the close of any calendar quarter during which any such sales were made by
the Underwriter and payment received by the Fund.
(b) The Underwriter shall be entitled to receive or retain any contingent
deferred sales charge imposed in connection with any redemption of Fund shares,
as set forth in Schedule A hereto.
(c) Pursuant to the Fund's Plans of Distribution adopted by Class A, Class
B and Class C shareholders in accordance with Rule 12b-1 under the 1940 Act (the
"Plans"), the Fund shall pay the Underwriter a total fee each month equal to
.25% per annum of the average daily net assets represented by Class A shares of
the Fund and 1.0% per annum of the average daily net assets represented by Class
B and Class C shares of the Fund to cover Distribution Expenses and Shareholder
Servicing Costs. As determined from time to time by the Board of Directors of
the Fund, a portion of such fee for each Class may be designated as a
"distribution fee" designed to cover Distribution Expenses, and a portion may be
designated as a "shareholder servicing fee" designed to cover Shareholder
Servicing Costs. Until further action by the Board of Directors, all of such
fees for Class A shall be designated as a "shareholder servicing fee" designed
to cover only Shareholder Servicing Costs; and all of such fees for Class B and
Class C shall be designated as a "distribution fee" designed to cover only
Distribution Expenses, except that a portion of such fee for both Class B and
Class C, equal to .25% per annum of the average daily net assets of Class B and
Class C, shall be designated as a "shareholder servicing fee" designed to cover
only Shareholder Servicing Costs. Average daily net assets shall be computed in
accordance with the Prospectus of the Fund. Amounts payable to the Underwriter
under the Plans may exceed or be less than the Underwriter's actual Distribution
Expenses and Shareholder Servicing Costs. In the event such Distribution
Expenses and Shareholder Servicing Costs exceed amounts payable to the
Underwriter under the Plans, the Underwriter shall not be entitled to
reimbursement by the Fund.
(d) In each year during which this Agreement remains in effect, the
Underwriter will prepare and furnish to the Board of Directors of the Fund, and
the Board will review, on a quarterly basis, written reports complying with the
requirements of Rule 12b-1 under the 1940 Act that set forth the amounts
expended under this Agreement and the Plans and the purposes for which those
expenditures were made.
7. LIMITATION OF THE UNDERWRITER'S AUTHORITY.
The Underwriter shall be deemed to be an independent contractor and, except
as specifically provided or authorized herein, shall have no authority to act
for or represent the
Fund.
-3-
<PAGE>
8. SUBSCRIPTION FOR SHARES--REFUND FOR CANCELLED ORDERS.
The Underwriter shall subscribe for the shares of the Fund only for the
purpose of covering purchase orders already received by it or for the purpose of
investment for its own account. In the event that an order for the purchase of
shares of the Fund is placed with the Underwriter by a customer or dealer and
subsequently cancelled, the Underwriter shall forthwith cancel the subscription
for such shares entered on the books of the Fund, and, if the Underwriter has
paid the Fund for such shares, shall be entitled to receive from the Fund in
refund of such payment the lesser of:
(a) the consideration received by the Fund for said shares; or
(b) the net asset value of such shares at the time of cancellation by the
Underwriter.
9. INDEMNIFICATION OF THE FUND.
The Underwriter agrees to indemnify the Fund against any and all litigation
and other legal proceedings of any kind or nature and against any liability,
judgment, cost, or penalty imposed as a result of such litigation or proceedings
in any way arising out of or in connection with the sale or distribution of the
shares of the Fund by the Underwriter. In the event of the threat or
institution of any such litigation or legal proceedings against the Fund, the
Underwriter shall defend such action on behalf of the Fund at its own expense,
and shall pay any such liability, judgment, cost, or penalty resulting
therefrom, whether imposed by legal authority or agreed upon by way of
compromise and settlement; provided, however, the Underwriter shall not be
required to pay or reimburse the Fund for any liability, judgment, cost, or
penalty incurred as a result of information supplied by, or as the result of the
omission to supply information by, the Fund to the Underwriter, or to the
Underwriter by a director, officer, or employee of the Fund who is not an
interested person of the Underwriter, unless the information so supplied or
omitted was available to the Underwriter or Management without recourse to the
Fund or any such person referred to above.
10. FREEDOM TO DEAL WITH THIRD PARTIES.
The Underwriter shall be free to render to others services of a nature
either similar to or different from those rendered under this contract, except
such as may impair its performance of the services and duties to be rendered by
it hereunder.
11. EFFECTIVE DATE, DURATION AND TERMINATION OF
AGREEMENT.
The effective date of this Agreement is set forth in the first paragraph of
this Agreement. Wherever referred to in this Agreement, the vote or approval of
the holders of a majority of the outstanding voting securities of the Fund shall
mean the vote of 67% or more of such securities if the holders of more than 50%
of such securities are present in person or by proxy or the vote of more than
50% of such securities, whichever is the lesser.
-4-
<PAGE>
Unless sooner terminated as hereinafter provided, this Agreement shall
continue in effect only so long as such continuance is specifically approved at
least annually (a) by the Board of Directors of the Fund, or by the vote of the
holders of a majority of the outstanding voting securities of the Fund, and (b)
by a majority of the directors who are not interested persons of the Underwriter
or of the Fund cast in person at a meeting called for the purpose of voting on
such approval.
This Agreement may be terminated at any time without the payment of any
penalty by the vote of the Board of Directors of the Fund or by the vote of the
holders of a majority of the outstanding voting securities of the Fund, or by
the Underwriter, upon 60 days' written notice to the other party.
This Agreement shall automatically terminate in the event of its assignment
(as defined by the provisions of the Investment Company Act of 1940, as
amended).
12. AMENDMENTS TO AGREEMENT.
No material amendment to this Agreement shall be effective until approved
by the Underwriter and by vote of majority of the Board of Directors of the Fund
who are not interested persons of the Underwriter.
13. NOTICES.
Any notice under this Agreement shall be in writing, addressed, delivered,
or mailed, postage prepaid, to the other party at such address as such other
party may designate in writing for receipt of such notice.
IN WITNESS WHEREOF, The Fund and the Underwriter have caused this Agreement
to be executed by their duly authorized officers as of the day and year first
above written.
Advantus Venture Fund, Inc.
By--------------------------------
William N. Westhoff
Its President
Ascend Financial Services, Inc.
By--------------------------------
George I. Connolly
Its President
-5-
<PAGE>
SCHEDULE A
The Underwriter shall receive, as compensation for its services pursuant to
this Agreement, a front-end sales charge for each investment in the Fund's Class
A shares, or a contingent deferred sales charge in certain circumstances, which
shall be a percentage of the offering price of such Class A shares, as
determined in accordance with the Fund's currently effective Prospectus,
determined in accordance with the following table:
<TABLE>
<CAPTION>
Front-End Sales Charge
as a Percentage of
Amount of Investment Offering Price
-------------------- ----------------------
<S> <C>
Less than $50,000 5.5%
$50,000 but less than $100,000 4.5%
$100,000 but less than $250,000 3.5%
$250,000 but less than $500,000 2.5%
$500,000 but less than $1,000,000 2.0%
$1,000,000 or more(1) -0-
</TABLE>
The Underwriter shall also receive, as compensation for its services
pursuant to this Agreement, a contingent deferred sales charge imposed in
connection with certain redemptions of shares of the Fund designated as Class B
shares, determined in accordance with the following table:
<TABLE>
<CAPTION>
Contingent Deferred Sales Charge
Shares Purchased Applicable Year
In an Amount 1 2 3 4 5 6
---------------- --- --- --- --- --- ---
<S> <C> <C> <C> <C> <C> <C>
Less than $50,000 5.0% 4.5% 3.5% 2.5% 1.5% 1.5%
$50,000 but less than $100,000 4.5 3.5 2.5 1.5 1.5 -0-
$100,000 but less than $250,000 3.5 2.5 1.5 1.5 -0- -0-
$250,000 but less than $500,000 2.5 1.5 1.5 -0- -0- -0-
$500,000 but less than $1,000,000 1.5 1.5 -0- -0- -0- -0-
</TABLE>
- ------------
(1) The customer will not be assessed an initial sales charge for purchases
of Class A shares of at least $1,000,000, but a contingent deferred sales
charge of 1.00% will be imposed if the customer redeems such shares within
one year of the date of purchase.
-6-
<PAGE>
ADVANTUS FUNDS
DEALER SALES AGREEMENT
THIS AGREEMENT, made this ______ day of ___________, 199__, by and
between Ascend Financial Services, Inc., a Minnesota corporation (the
"Underwriter"), having its principal office at 400 Robert Street North, St.
Paul, Minnesota, 55101, and ______________ (the "Dealer") having its
principal office at __________________________________________.
WHEREAS, the Underwriter has entered into Distribution Agreements with
certain registered management investment companies (the "Funds"), as listed
on Schedule A hereto and made a part hereof, which Schedule A may be amended
without notice from time to time by the Underwriter, under which the
Underwriter has been engaged and agreed to act as principal underwriter for
the Funds in the sale and distribution of shares of the Funds to the public,
either through dealers or otherwise; and
WHEREAS, the parties hereto desire that the Dealer be a member of a
selling group to sell and distribute shares of the Funds to the public;
NOW, THEREFORE, the Dealer hereby offers to become a member in a selling
group to sell and distribute shares of the Funds to the public subject to the
following terms and conditions.
1. ACCEPTANCE OF SUBSCRIPTIONS; PROSPECTUS AND REGISTRATION
STATEMENT. Subscriptions solicited by the Dealer will be accepted only in
the amounts and on the terms which are set forth in the then current
Prospectus (and/or Statement of Additional Information, if any) for the
Funds. Underwriter represents and warrants that the Prospectus (and/or
Statement of Additional Information, if any) for the Funds shown on Schedule
A are or will be filed with the Securities and Exchange Commission ("SEC"),
that such filings conform in all material respects with the requirements of
the SEC and that, except as Underwriter has given written notice to Dealer,
there is an effective Registration Statement relating to such Funds.
Underwriter shall give written notice to Dealer either (i) of specified
states or jurisdiction in which the Funds may be offered and sold by the
Dealer or (ii) of all states or jurisdictions where the Funds may not be
offered or sold, but Underwriter does not assume any responsibility as to the
Dealer's right to sell the Funds in any state or jurisdiction. Underwriter,
during the term of this Agreement, shall (i) notify Dealer in writing of the
issuance by the SEC of any stop order with respect to a Registration
Statement or the initiation of any proceedings for such purpose or any other
purpose relating to the registration and/or offering of the Funds, (ii) of
any other action or circumstance known to them that may prevent the lawful
sale of the Funds in any state or jurisdiction, and (iii) advise the Dealer
in writing of any amendment to the Registration Statement or supplement to
any Prospectus. The Underwriter shall make available to Dealer such number
of copies of the Prospectus, as amended or supplemented, (and/or Statements
of Additional Information, if any) or any Approved Supplemental Sales
Literature (as defined in Paragraph 5) as the Dealer may reasonably request.
<PAGE>
2. DEALER DISCOUNT AND OTHER COMPENSATION. The Dealer shall receive,
for sales of shares of the Funds' common stock, the applicable Dealer
Commission or other compensation as set forth in Schedule A attached hereto
and made a part hereof. Additionally, with respect to certain of the Funds,
the Dealer may be entitled to receive additional compensation upon such terms
and conditions and in such amounts as set forth in Schedule A hereto for
providing to Fund shareholders certain personal and account maintenance
services (including, but not limited to, responding to shareholder inquiries
and providing information on their investments) not otherwise required to be
provided by the applicable Funds' investment adviser or transfer agent
("Service Fees") or (in addition to the aforementioned Dealer Discount) for
sales of shares of the applicable Fund's common stock ("Distribution Fees").
Schedule A may be amended in whole or in part without notice from time to
time by the Underwriter. Dealer assumes sole responsibility to pay
commissions due Dealer's agents or registered representatives in connection
with sales of the Funds' shares of common stock. Upon termination of this
Agreement, for any reason, all compensation otherwise payable to Dealer
hereunder shall cease automatically, including any Service Fees or
Distribution Fees.
3. ORDERS. Orders to purchase shares of the Funds shall be placed as
described in the then current Prospectus (and/or Statement of Additional
Information, if any) of the Funds and as instructed from time to time by the
Underwriter. Orders shall be placed promptly upon receipt, and there shall
be no postponement of orders received so as to profit the Dealer by reason of
such postponement. Each order shall be confirmed by the Dealer to the
Underwriter in writing on the day such order was placed.
All monies or other settlements received by the Dealer for or on behalf
of the Underwriter shall be received by the Dealer in fiduciary capacity in
trust for the Underwriter and shall be immediately transmitted to the
Underwriter, and, in no event, shall the Dealer commingle such monies with
other funds. The Dealer shall keep correct accounts and records of all
business transacted and monies collected by him for the Underwriter to the
extent required by the Underwriter, which accounts and records shall be open
at all times to inspection and examination by the Underwriter's authorized
representative. All accounts, records and any supplies furnished to the
Dealer by the Underwriter shall remain the property of the Underwriter and
shall be returned to the Underwriter upon demand.
4. FAILURE OF ORDER. The Underwriter reserves the right at any time
to refuse to accept and approve any application for the purchase of shares of
the Funds obtained by the Dealer, and also reserves the right to settle any
claims against the Underwriter arising from the sale of shares of the Funds
by the Dealer and to refund to the investor payments made by him on his
shares, without the Dealer's consent. In the event any order for the
purchase of shares of the Funds is rejected by the Underwriter or any payment
received for the purchase of shares of the Funds cannot be collected or
otherwise proves insufficient or worthless, any compensation paid to the
Dealer hereunder shall, promptly upon notice to the Dealer, be returned by
the Dealer to the Underwriter either in cash or as a charge against the
Dealer's account with the Underwriter, as the Underwriter may elect, and the
Dealer hereby agrees that until the Underwriter receives full reimbursement
in cash, the amount of compensation due and owing the Underwriter shall
-2-
<PAGE>
constitute a debt to the Underwriter which the Underwriter may collect by any
lawful means, with interest thereon at the maximum rate possible.
5. DEALER'S UNDERTAKINGS. In offering and selling shares of the
Funds, the Dealer shall comply with all applicable state and federal laws and
regulations and all applicable rules of the National Association of
Securities Dealers, Inc. (the "NASD"). In the event of the suspension,
revocation, cancellation or other impairment of the Dealer's membership in
the NASD or the Dealer's registration, license or qualification to sell
shares of the Funds under any applicable state or federal law or regulation,
the Dealer shall give the Underwriter prompt notice of such suspension,
revocation, cancellation or other impairment, and the Dealer's authority
under this Agreement shall thereupon terminate as provided in paragraph 10.
The Dealer shall not sell shares of the Funds pursuant to this
Agreement unless the then current Prospectus is furnished to the purchaser
prior to the offer and sale. The Dealer shall not use any supplemental sales
literature of any kind without prior written approval of the Underwriter
unless it is furnished by the Underwriter for such purpose ("Approved
Supplemental Sales Literature"). No person is authorized to make any
representation concerning shares of the Funds except those contained in the
then current Prospectus (and/or Statement of Additional Information, if any)
or Approved Supplemental Sales Literature. In offering and selling shares of
the Funds, the Dealer shall rely solely on the representations contained in
the then current Prospectus (and/or Statement of Additional Information, if
any) or Approved Supplemental Sales Literature.
With respect to any Fund offering multiple classes of shares, the
Dealer shall disclose to prospective investors the existence of all available
classes of such Fund and shall determine the suitability of each available
class as an investment for each such prospective investor.
The Dealer understands and agrees that each shareholder account which
includes shares of any Fund subject to the Fund's contingent deferred sales
charge (as described in the applicable Fund's current Prospectus and
Statement of Additional Information) shall not be included in the Dealer's
Omnibus or house account, if any, but shall be established as a separate
shareholder account in which purchase and redemption transactions are
reported separately to the Underwriter.
Dealer agrees to furnish to Underwriter such information as may from
time to time be requested by Underwriter for the purpose of complying with
the applicable provisions of federal or state securities laws and the
by-laws, rules or regulations of the NASD or any other securities regulatory
authority. Dealer shall immediately notify the Compliance Department of
Underwriter of any proceeding, suit or action, whether criminal, civil or
administrative, or the commencement by the NASD or any other securities
regulatory authority or any other state or federal authority of any
investigation, if such proceeding, suit, action or investigation arises out
of or in connection with Dealer's activities as broker or dealer with respect
to the Funds. Dealer shall also immediately notify the Compliance Department
of Underwriter of any complaint by a customer or prospective customer or
regulatory authority regarding the Funds or Dealer's activities as broker or
dealer with respect to the Funds.
-3-
<PAGE>
Except for those books and records required by law or regulation to be
maintained by Dealer, all books, documents, prospectuses, application forms
or other materials or supplies in the possession of Dealer which pertain to
the Funds or to the business of Underwriter shall be the property of
Underwriter, which at any and all times shall be open to inspection by any
duly authorized representative of Underwriter and at the termination of this
Agreement shall be returned to Underwriter.
6. REPRESENTATIONS AND AGREEMENTS OF THE DEALER. By accepting this
Agreement, the Dealer represents that it: (i) is registered as a
broker-dealer under the Securities Exchange Act of 1934 (the "1934 Act"), as
amended; (ii) is qualified to act as a dealer in each jurisdiction in which
it will offer shares of the Funds; (iii) is a member in good standing of the
NASD; and (iv) will maintain such registrations, qualifications and
memberships throughout the term of this Agreement.
7. DEALER'S EMPLOYEES. By accepting this Agreement, the Dealer
assumes full responsibility for the actions and course of conduct of its
registered representatives in the solicitation of purchases of shares of the
Funds. The Dealer shall provide thorough and prior training to its
registered representatives concerning the selling methods to be used in
connection with the offer and sale of shares of the Funds, giving special
emphasis to the principles of full and fair disclosure to prospective
investors. The Dealer may solicit sales of shares of the Funds only through
properly licensed registered representatives of the Dealer.
8. INDEMNIFICATION PROVISIONS.
A. INDEMNIFICATION BY UNDERWRITER. The Underwriter hereby agrees
to indemnify and to hold harmless the Dealer and each person, if any, who
controls the Dealer within the meaning of Section 15 of the Securities Act of
1933 (the "1933 Act") or Section 20(a) of the 1934 Act and their respective
successors and assigns (hereinafter in this paragraph separately and
collectively referred to as the "Defendants") from and against any and all
losses, claims, demands or liabilities (or actions in respect thereof), joint
or several, to which the Defendants may become subject under the 1933 Act, at
common law or otherwise (including any legal or other expense reasonably
incurred in connection therewith), insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon
(i) any untrue or allegedly untrue statement of a material fact contained in
the then current Prospectus (and/or Statement of Additional Information, if
any) of the Funds or arise out of or are based upon the omission or alleged
omission to state therein a material fact that is required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or arise out of any
claim based upon any Approved Supplemental Sales Literature, or (ii) the
failure of Underwriter or its officers, directors, employees or agents to
comply with any applicable provisions of this Agreement; provided that this
indemnity agreement is subject to the condition that notice be given as
provided below.
B. FIDELITY BOND OF DEALER AND INDEMNIFICATION BY DEALER. Dealer
represents that all directors, officers, partners, employees or registered
representatives of Dealer who are
-4-
<PAGE>
authorized pursuant to this Agreement to sell shares of the Funds or who have
access to monies belonging to the Underwriter, including but not limited to
monies submitted with applications for purchase of shares of the Funds or
monies being returned to investors, are and shall be covered by a blanket
fidelity bond, including coverage for larceny and embezzlement, issued by a
reputable bonding company. This bond shall be maintained by Dealer at
Dealer's expense. Such bond shall be at least of the form, type and amount
required under the NASD Rules of Fair Practice. The Underwriter may require
evidence, satisfactory to it, that such coverage is in force. Dealer shall
give prompt written notice to the Underwriter of any notice of cancellation
or change of coverage with respect to such bond.
Dealer hereby assigns any proceeds received from the fidelity
bonding company to the Underwriter to the extent of the Underwriter's loss
due to activities covered by the bond. If there is any deficiency amount,
whether due to a deductible or otherwise, Dealer shall promptly pay to the
Underwriter such amount on demand, and Dealer hereby indemnifies and holds
harmless the Underwriter from any such deficiency and from the costs of
collection thereof, including reasonable attorneys fees.
Dealer also agrees to indemnify and hold harmless the Underwriter
and its officers, directors and employees and each person who controls them
within the meaning of Section 15 of the 1933 Act or Section 20(a) of the 1934
Act and their respective successors and assigns (hereinafter in this
paragraph separately and collectively referred to as Defendants) against any
and all losses, claims, damages or liabilities, including reasonable
attorneys fees, to which they may become subject under the 1933 Act, the 1934
Act, or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon: (i) any oral or written
misrepresentation, any unauthorized action or statement, or any other
willful, reckless or negligent violation of any law, regulation, contract or
other arrangement by Dealer or its officers, directors, employees or agents,
or (ii) the failure of Dealer or its officers, directors, employees or agents
to comply with any applicable provisions of this Agreement; provided, that
this indemnity agreement is subject to the condition that notice be given as
provided below.
C. NOTICE AND DEFENSE. Upon the presentation in writing of any
claim or the commencement of any suit against any Defendant in respect of
which indemnification may be sought from the indemnifying party on account of
its agreement contained in the preceding paragraphs, such Defendant shall
with reasonable promptness give notice in writing of such suit to the
indemnifying party, but failure to so give such notice shall not relieve the
indemnifying party from any liability that it may have to the Defendants
otherwise than on account of this indemnity agreement. The indemnifying
party shall be entitled to participate at its own expense in the defense, or,
if it so elects, to assume the defense of any such claim or suit with counsel
chosen by it and satisfactory to the Defendants who are parties to such suit
or against whom such claim is presented. If the indemnifying party elects to
assume the defense and retain such counsel as herein provided, such Defendant
shall bear the fees and expenses subsequently incurred of any additional
counsel retained by them, except the reasonable costs of investigation and
such costs as are approved by the indemnifying party; provided, that if
counsel for an indemnified Defendant determines in good faith that there is a
conflict which requires separate representation for the indemnified
Defendant, the indemnified Defendant shall be entitled to indemnification for
the reasonable expenses of one additional counsel and local counsel to the
extent provided above. Such counsel shall, to the fullest extent consistent
with its professional
-5-
<PAGE>
responsibilities, cooperate with the indemnifying party and its counsel. The
indemnifying party's obligations under this Paragraph 8 shall survive the
termination of this Agreement.
D. SETTLEMENT; CONTRIBUTION. The indemnifying party shall not
be liable under this Agreement for any settlement made by an indemnified
party without the indemnifying party's prior written consent, and the
indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of the settlement of
any claim or action with the consent of the indemnifying party. The
indemnifying party shall not settle any such claim or action without prior
written consent of the indemnified party. If the foregoing indemnifications
should, for reasons of public policy, not be available to any indemnified
party, then the indemnifying party will contribute to the amount paid or
payable by the indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and such
indemnified party on the other arising out of the matters contemplated by
this Agreement.
9. ASSIGNMENT. This Agreement may not be assigned by the Dealer
without prior written consent of the Underwriter.
10. TERMINATION. Either party may terminate this Agreement at any
time upon giving written notice to the other party hereto. This Agreement
shall terminate automatically in the event of the suspension, revocation,
cancellation or other impairment of the Dealer's membership in the NASD or
the Dealer's registration, license or qualification to sell shares of the
Funds under any applicable state or federal law or regulation.
11. FIRST CLAIM ON EARNINGS. Underwriter shall have first claim on
all of Dealer's earnings under this Agreement. This means that Underwriter
as and when it elects may keep all or any part of such earnings to reduce any
debt Dealer owes Underwriter. While Underwriter may release Dealer's
earnings while Dealer owes a debt to Underwriter, this does not mean
Underwriter has waived this right of first claim to Dealer's earnings.
Underwriter's claim also takes precedence over claims of Dealer's creditors.
All Dealer's earnings kept by Underwriter will be used to reduce debt owed to
Underwriter.
12. CONFIDENTIALITY. During the term of this Agreement, a party may
acquire access to confidential or proprietary information of another,
including, but not limited to, the Underwriter's or the Dealer's business
affairs, customers, property, methods of operation, procedures, marketing
policies and practices, computer software and operational systems
(collectively, "Confidential Information"); provided, however, that the term
"Confidential Information" does not include information which: (a) becomes
generally available to the public other than as a result of a disclosure by a
party or its agents or employees; (b) was available to a party prior to its
disclosure to the other; (c) has become available to a party from a source
other than that of the parties to this Agreement; (d) is intended to be
transferred to another person or entity upon the termination of this
Agreement; (e) is required to be disclosed to any regulatory authority or
self-regulatory organization or pursuant to a court order or subpoena; or (f)
is
-6-
<PAGE>
derived from customers. Confidential Information designated as such by a
party shall constitute proprietary information and/or trade secrets of such
party and will be the sole property of such party. Each party agrees that:
(a) it shall use such Confidential Information only for
the purposes of carrying out its obligations under, and performing any
inspections or audits permitted by, this Agreement;
(b) all Confidential Information and any physical and
electronic embodiments thereof will be held by each party in strict
confidence;
(c) it shall take reasonable steps to ensure that its
employee, representatives and agents are informed of the contents of this
Paragraph 12 and that they shall comply with its terms;
(d) it will not reveal, disclose, publish, sell or
distribute such Confidential Information to other present or future agents or
broker-dealers, or to any other person or entity, without prior written
consent of the other parties;
(e) the parties shall immediately return any
Confidential Information in their possession to the other upon (i) such
party's request at any time or (ii) the termination of this Agreement.
The parties recognize that the disclosure of Confidential
Information by the other or its employees, representatives or agents may give
rise to irreparable injury, which may not be adequately compensated damages.
Accordingly, in the event of a breach or threatened breach by a party or its
employees, representatives or agents of the provisions of this Paragraph 12,
the non-breaching party shall be entitled to an injunction restraining the
other party and its employees from disclosing, in whole or in part, the
Confidential Information.
13. NATURE OF RELATIONSHIP; LIMITATIONS ON DEALER'S AUTHORITY. In
soliciting purchases of shares of the Funds, the Dealer shall act as an
independent contractor and not on behalf or subject to the control of the
Underwriter. Nothing herein shall constitute the Dealer as a partner of the
Underwriter, any other broker-dealer, any registered representative of the
Underwriter or the Funds, or render any such entity liable for obligations of
the Dealer. The Dealer's participation in the sale and distribution of shares
of the Funds as contemplated by this Agreement is not exclusive and the
Underwriter may engage other broker-dealers and/or its registered
representatives to participate in the sale and distribution of shares of the
Funds on terms and conditions which may differ from the terms and conditions
of this Agreement. The Dealer understands that Dealer has no authority to
start any legal proceedings on Underwriter's behalf or in its name or to
incur any expenses or obligations in the name of the Underwriter, and Dealer
agrees to indemnify and save the Underwriter harmless from any and all
expenses, or obligations incurred by Dealer in the name of the Underwriter
for which Dealer is responsible. Dealer agrees to pay all expenses incurred
by Dealer in connection with Dealer's work.
-7-
<PAGE>
14. SECTION HEADINGS. The titles of the sections and paragraphs of
this Agreement are for convenience only and shall not in any way affect the
interpretation of any provision or condition of this Agreement.
15. COUNTERPARTS. This Agreement may be executed in counterparts
which, taken together, shall constitute the whole of the Agreement as between
the parties.
16. NOTICE. Any notice to be given to a party hereto pursuant to
this Agreement shall be in writing, addressed to such party at the address of
such party set forth in the preamble hereof, or such other address as such
other party may from time to time designate in writing to the party hereto
giving notice. Any notice delivered by the mails, postage fully prepaid,
shall be deemed to have been given five (5) days after mailing or, if
earlier, upon receipt.
17. WAIVER. No failure, neglect or forbearance on the part of the
Underwriter to require strict performance of this Agreement shall be
construed as a waiver of the rights or remedies of the Underwriter hereunder.
18. SUSPENDING SALES, AMENDING OR CANCELING THIS AGREEMENT. The
Underwriter may, at any time, without notice, suspend sales or withdraw any
offering of shares entirely. The Underwriter reserves the right to amend or
cancel this Agreement upon notice to Dealer. The Dealer agrees that any
order to purchase shares of Funds placed after notice of any amendment to
this Agreement has been sent to the Dealer shall constitute the Dealer's
agreement to any such amendment.
19. GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Minnesota.
DEALER:
- ----------------------------------- -----------------------------------
(Name) (NSCC Clearing Number)
- ----------------------------------- -----------------------------------
(Tax Identification Number) (NSCC Executing Broker symbol)
- ----------------------------------- -----------------------------------
(Street Address) (Telephone Number)
- -----------------------------------
(City) (State) (Zip)
-8-
<PAGE>
Date of offer:______________, 199___
By
---------------------------------------------------------------------------
Please Print Name
------------------------------------------------------------
Its
--------------------------------------------------------------------------
(Title)
Accepted by
ASCEND FINANCIAL SERVICES, INC.
Date of acceptance: , 19
--------------------- ----
By
---------------------------------------------------------------------------
(Signature)
Its
--------------------------------------------------------------------------
(Title)
-9-
<PAGE>
SCHEDULE A (Standard)
Dealer Compensation Schedule
Effective
-------------
I. Advantus Horizon Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Spectrum Fund, Inc.
Advantus Bond Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Index 500 Fund, Inc.
Advantus Real Estate Securities Fund, Inc.
Advantus Money Market Fund, Inc.
A. DEALER COMMISSIONS
<TABLE>
<CAPTION>
DEALER CONCESSION AS PERCENTAGE OF OFFERING PRICE
CLASS A SHARES CLASS B SHARES
MORTGAGE MORTGAGE
SECURITIES FUND CLASS A SHARES SECURITIES FUND CLASS B SHARES
AND BOND ALL OTHER AND BOND ALL OTHER CLASS C
AMOUNT OF SALE FUND ONLY FUNDS FUND ONLY FUNDS SHARES
-------------- --------- ----- --------- ----- ------
<S> <C> <C> <C> <C> <C>
Less than $50,000 4.05% 4.95% 3.37% 4.12% -0-
$50,000 but less
than $100,000 4.05% 4.05% 3.37% 3.37% -0-
$100,000 but less
than $250,000 3.15% 3.15% 2.62% 2.62% -0-
$250,000 but less
than $500,000 2.25% 2.25% 1.87% 1.87% -0-
$500,000 but less
than $1,000,000 1.80% 1.80% 1.50% 1.50% -0-
$1,000,000 .9%* .9%* n/a* n/a* n/a*
</TABLE>
* Orders of $1,000,000 or more will be accepted only for Class A Shares.
No initial sales charge will be assessed the customer for purchase of Class A
Shares of at least $1,000,000, but a
A-1
<PAGE>
contingent deferred sales charge of 1.00% will be imposed if the customer
redeems such shares within one year of the date of purchase.
B. Distribution and Service Fees
In addition to the Dealer Commissions, the Dealer shall
receive quarterly Distribution and/or Service Fees, equal
to a percentage of average daily net assets attributable to
Shares held in accounts by customers for whom the Dealer
is the holder or agent of record or with whom the Dealer
maintains a servicing relationship in accordance with the
following table:
QUARTERLY QUARTERLY
DISTRIBUTION FEE SERVICE FEE
CLASS C CLASS A CLASS B CLASS C
------- ------- ------- -------
1/4 of .75% 1/4 of .25% 1/4 of .25% 1/4 of .25%
No Service Fee will be paid on an account unless or until the
assets have been in the account for 15 months or longer.
Distribution Fees are not subject to the 15 month retention
requirement.
II. Advantus Money Market Fund, Inc.
No commissions are paid on sales of Advantus Money Market Fund.
Shares of Advantus Money Market Fund acquired in an exchange from
any of the other Advantus Funds may be exchanged at relative net
asset values for shares of any of the other Advantus Funds. Shares
of Advantus Money Market Fund not acquired in an exchange from any
of the other Advantus Funds may be exchanged at relative net asset
values plus applicable sales load for shares of any of the other
Advantus Funds. In the event Dealer's customer exchanges shares
of Advantus Money Market Fund for shares of another Advantus Fund
and pays a sales load in connection with such exchange, the Dealer
shall receive a Dealer Commission as described above.
III. Termination of Compensation
All compensation payable to Dealer hereunder, including Service
Fees or Distribution Fees, shall automatically cease upon the
termination of the Advantus Funds Dealer Sales Agreement, for
any reason.
A-2
<PAGE>
SHAREHOLDER AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN
ADVANTUS VENTURE FUND, INC.
AND
THE MINNESOTA MUTUAL LIFE INSURANCE COMPANY
<PAGE>
SHAREHOLDER AND ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 23rd of July, 1998, by and between Advantus
Venture Fund, Inc., a Minnesota corporation, having its principal office and
place of business at 400 Robert Street North, St. Paul, Minnesota, 55101, (the
"Fund"), The Minnesota Mutual Life Insurance Company, a Minnesota corporation
having its principal office and place of business at 400 Robert Street North,
St. Paul, Minnesota, 55101, ("MML") and Advantus Capital Management, Inc., a
Minnesota corporation, having its principal office and place of business at 400
Robert Street North, St. Paul, Minnesota 55101, (the "Adviser").
WHEREAS, the Fund is in the process of contracting with First Data Investor
Services Group, Inc., a Massachusetts corporation (the "Transfer Agent"), to
provide customary transfer agent services to the Fund; and
WHEREAS, the Fund has reserved certain shareholder servicing tasks and
responsibilities ("Shareholder Services") which are to be performed by MML
rather than the Transfer Agent; and
WHEREAS, the Fund has further reserved certain accounting, auditing, legal
and other administrative tasks and responsibilities ("Administrative Services")
to be performed by MML; and
WHEREAS, the Fund desires to appoint MML as its Shareholder Services agent
and agent in connection with certain other Administrative Services, and MML
desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 TERMS OF APPOINTMENT AND DUTIES OF MML
1.01 Subject to the terms and conditions set forth in this Agreement, and
in accordance with procedures established from time to time by agreement between
the Fund and MML, MML hereby agrees to provide the following Administrative
Services:
(a) Register or qualify, and maintain the registrations or
qualifications, of the Fund and its common stock ("Shares") under
state or other securities laws;
(b) Calculate the Fund's net asset value per Share at such times and in
such manner as specified in the Fund's current prospectus and
statement of additional information and at such other times as the
parties hereto may from time to time agree upon;
-2-
<PAGE>
(c) Upon the Fund's distribution of dividends and capital gains, calculate
the amount of such dividends and capital gains to be received per
Share and calculate the number of additional Shares to be received by
each Shareholder, other than any shareholder who has elected to
receive such dividends and capital gains in cash;
(d) Prepare and maintain all accounting records required by the Fund,
including a general ledger;
(e) Prepare the Fund's annual and semi-annual financial statements;
(f) Prepare and file the Fund's income, excise and other tax returns;
(g) Provide audit assistance in conjunction with the Fund's independent
auditors;
(h) Provide such legal services as the parties hereto may from time to
time agree upon, including without limitation preparation and filing
with the Securities and Exchange Commission of the annual or more
frequent post-effective amendments to the Fund's registration
statement and the Fund's proxy materials; and
(i) Provide such other Administrative Services as the parties hereto may
from time to time agree upon.
1.02 As Shareholder Services agent, MML agrees to provide or perform the
following Shareholder Services in accordance with procedures established from
time to time by agreement between the Fund and MML:
(a) Receive telephone redemption requests, telephone redemption
directions, wire order purchase requests and telephone transfer
instructions, and deliver such requests, directions and instructions
together with other appropriate information, to the Transfer Agent;
(b) Provide customer service representatives to respond to telephone
inquiries relating to the Fund from customers, shareholders and/or
registered representatives and forward any pertinent information,
including without limitation instructions pertaining to any periodic
investment plan, periodic withdrawal plan or other plan set out in the
currently effective prospectus, or requests to the Transfer Agent.
MML shall transmit electronically, via U.S. mail or any other delivery
means MML determines to be suitable, any Shareholder or account
transaction instructions received, to the Transfer Agent in a timely
fashion; and
-3-
<PAGE>
(c) MML will calculate any minimum required distribution amounts for plans
qualified under Section 401(a) or 408 of the Internal Revenue Code, as
that term is defined under the Code or delegate such responsibility to
a suitable agent, with the Fund's approval.
Article 2 ADDITIONAL DUTIES
2.01 MML shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, MML agrees that all such records prepared or
maintained by MML relating to the services to be performed by MML hereunder are
the property of the Fund and will be preserved, maintained and made available in
accordance with such Section and Rules, and will be surrendered promptly to the
Fund on and in accordance with its request.
2.02 MML and the Fund agree that all books, records, information
and data pertaining to the business of the other party which are exchanged or
received pursuant to the negotiation or the carrying out of this Agreement shall
remain confidential, and shall not be voluntarily disclosed to any other person,
except as may be required be law.
2.03 MML will endeavor to notify the Fund and to secure
instructions from an authorized officer of the Fund in case of any requests or
demands for the inspection of Shareholder records. MML reserves the right,
however, to exhibit the Shareholder records to any person whenever it is advised
by its counsel that it may be held liable for the failure to exhibit the
Shareholder records to such person.
Article 3 FEES AND EXPENSES
3.01 For Shareholder Services performed by MML pursuant to this
agreement, the Adviser will pay MML an annual account servicing fee as agreed
by Adviser and MML. In addition to the fees the Adviser will reimburse MML
for out-of-pocket expenses or advances incurred by MML. Such fees,
out-of-pocket expenses and advances may be changed from time to time subject
to mutual agreement between the Adviser and MML.
3.02 For Administrative Services performed by MML pursuant to
this agreement, the Fund will pay MML a monthly Administrative Services Fee
as set forth in Schedule A. In addition to the fees the Fund will reimburse
MML for out-of-pocket expenses or advances incurred by MML. Such fees,
out-of-pocket expenses and advances may be changed from time to time subject
to mutual written agreement between the Fund and MML.
Article 4 REPRESENTATIONS AND WARRANTIES OF MML
MML represents and warrants to the Fund that:
-4-
<PAGE>
4.01 It is a corporation duly organized and existing and in
good standing under the laws of the State of Minnesota.
4.02 It is duly qualified to carry on its business in the State
of Minnesota
4.03 It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations
under this Agreement.
4.04 It agrees to obtain and maintain, all regulatory licensing
as may be required of it, if any, under this Agreement.
Article 5 REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to MML that:
5.01 It is a corporation duly organized and existing and in good
standing under the laws of Minnesota.
5.02 It is empowered under applicable laws and by its Articles
of Incorporation and Bylaws to enter into and perform this Agreement.
5.03 All corporate proceedings required by said Articles of
Incorporation and Bylaws have been taken to authorize it to enter into and
perform this Agreement.
5.04 It is an open-end and diversified management investment
company registered under the Investment Company Act of 1940.
5.05 A registration statement under the Securities Act of 1933
is currently effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be made, with
respect to all Shares of the Fund being offered for sale.
Article 6 INDEMNIFICATION
6.01 MML shall not be responsible for, and the Fund shall
indemnify and hold MML harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability
arising out of or attributable to:
(a) All actions of MML or its agent or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are taken
in good faith without negligence or willful misconduct.
-5-
<PAGE>
(b) The Fund's refusal or failure to comply with the terms of
this Agreement, or which arise out of the Fund's lack of good faith,
negligence or willful misconduct or which arise out of the breach of any
representation or warranty of the Fund hereunder.
(c) The reliance on or use by MML or its agents or
subcontractors of information, records and documents which (i) are received
by MML or is agents or subcontractors and furnished to it by or on behalf of
the Fund, and (ii) have been prepared and/or maintained by the Fund or any
other person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by MML or its agents or
subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
6.02 MML shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or
failure or omission to act by MML as a result of MML's lack of good faith,
negligence or willful misconduct, or MML's refusal or failure to comply with
the terms of this Agreement, or which arise out of the breach of any
representation or warranty of MML hereunder.
6.03 At any time MML may apply to any officer of the Fund for
instructions, and may consult with legal counsel to the Fund with respect to
any matter arising in connection with the services to be performed by MML
under this Agreement, and MML and its agents or subcontractors shall not be
liable and shall be indemnified by the Fund for any action taken or omitted
by it in good-faith reliance upon such instructions or upon the opinion of
such counsel. MML, its agents and subcontractors shall be protected and
indemnified in acting upon any paper or document furnished by or on behalf of
the Fund, reasonably believed to be genuine and to have been signed by the
proper person or persons, or upon any instruction, information, data, records
or documents provided MML or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the Fund,
and shall not be held to have notice of any change or authority of any
person, until receipt of written notice thereof from the Fund. MML, its
agents and subcontractors shall also be protected and indemnified in
recognizing stock certificates which are reasonably believed to bear the
proper manual or facsimile signatures of the officers of the Fund, and the
proper countersignature of any transfer agent or registrar, or of a
co-transfer agent or co-registrar.
6.04 In the event any party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment
or transmission failure or damage reasonably beyond its control, or other
causes reasonably beyond its control, the party shall not be liable for
damages to the other parties for any damages resulting from such failure to
perform or otherwise from such causes.
-6-
<PAGE>
6.05 No party to this Agreement shall be liable to any other
party for consequential damages, whether under any provision of this
Agreement or for any act or failure to act hereunder.
6.06 In order that the indemnification provisions contained in
this Article 6 shall apply, upon the assertion of a claim for which either
party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion, and
shall keep the other party advised with respect to all developments
concerning such claim. The party who may be required to indemnify shall have
the option to participate with the party seeking indemnification in the
defense of such claim. The party seeking indemnification shall in no case
confess any claim or make any compromise in any case in which the other party
may be required to indemnify it except with the other party's prior written
consent.
Article 7 TERMINATION OF AGREEMENT
7.01 This Agreement may be terminated by either party upon sixty
(60) days written notice to the other party.
Article 8 ASSIGNMENT
8.01 Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the written consent of the
other party.
8.02 This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
Article 9 AMENDMENT
9.01 This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution
of the Board of Directors of the Fund.
Article 10 GOVERNING LAW
10.01 This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of the State of
Minnesota.
-7-
<PAGE>
Article 11 ENTIRE AGREEMENT
11.01 This Agreement constitutes the entire agreement between
the parties hereto and supersedes any prior agreement with respect to the
subject matter hereof whether oral or written.
Article 12 EFFECTIVE DATE
12.01 This Agreement shall be effective as of the date agreed to
by MML and First Data Investor Services Group, Inc. ("First Data") for the
conversion of transfer agent services from MML to First Data, or such other
date as selected by management of the Fund.
IT WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in their names and on their behalf under their seals by and
through their duly authorized officers, as of the day and year first above
written.
ADVANTUS VENTURE FUND, INC.
By-------------------------------------------------
William N. Westhoff, President
Attest---------------------------------------------
Frederick P. Feuerherm, Treasurer
THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
By-------------------------------------------------
Robert E. Hunstad, Executive Vice President
Attest---------------------------------------------
Dennis E. Prohofsky, Senior Vice
President, General Counsel and Secretary
ADVANTUS CAPITAL MANAGEMENT, INC.
By-------------------------------------------------
William N. Westhoff, President
Attest---------------------------------------------
Richard W. Worthing,
Second Vice President - Equity Investments
-8-
<PAGE>
SCHEDULE A
TO THE
SHAREHOLDER AND ADMINISTRATIVE SERVICES AGREEMENT
for
ADVANTUS VENTURE FUND, INC.
Minnesota Mutual shall receive, as compensation for its accounting,
auditing, legal and other administrative services pursuant to this Agreement, a
monthly fee determined in accordance with the following table:
Monthly Administrative
Services Fee
------------
$3,700.00
The above monthly fees shall be paid to Minnesota Mutual not later
than five days following the end of each calendar quarter in which said services
were rendered.
A-1
<PAGE>
KPMG Peat Marwick LLP
4200 Norwest Center
90 South Seventh Street
Minneapolis, MN 55402
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Advantus Venture Fund, Inc.:
We consent to the use of our report included herein and the references to our
Firm under the headings "FINANCIAL HIGHLIGHTS" in Part A and "FINANCIAL
STATEMENTS" in Part B of the Registration Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
December 3, 1998
<PAGE>
ADVANTUS VENTURE FUND, INC.
RULE 12b-1 PLAN OF DISTRIBUTION
APPLICABLE TO CLASS A SHARES
AS AMENDED OCTOBER 22, 1998
WHEREAS, Rule 12b-1 under the Investment Company Act of 1940, (the "Rule"),
provides that a registered open-end management investment company may act as a
distributor of securities of which it is the issuer, provided that any payments
made by such company in connection with such distribution are made pursuant to a
written plan describing all material aspects of the proposed financing of
distribution; and
WHEREAS, it is intended that shares of Advantus Venture Fund, Inc., (the
"Fund") designated as Class A shares will be sold to the public pursuant to an
Underwriting and Distribution Agreement, with Ascend Financial Services, Inc.
("Ascend").
NOW THEREFORE, the following shall constitute the written plan pursuant to
which Rule 12b-1 fees payable in connection with Class A shares of the Fund
shall be made.
The Underwriting and Distribution Agreement (the "Agreement") between the
Fund and Ascend provides that Ascend will receive, as compensation for services
it renders under the Agreement in connection with Class A shares of the Fund, in
addition to a sales charge, a monthly shareholder servicing fee from the Fund as
set forth below.
Monthly Shareholder Servicing Fee
(as a percentage of the
Fund's average net assets
Attributable to Class A Shares
------------------------------
1/12 x .25%
The Shareholder Servicing Fee may be used by Ascend to provide compensation
for ongoing servicing and/or maintenance of Class A shareholder accounts with
the Fund. Compensation may be paid by Ascend to persons, including employees of
Ascend, and institutions who respond to inquiries of Class A shareholders of the
Fund regarding their ownership of shares or their accounts with the Fund or who
provide other administrative or accounting services not otherwise required to be
provided by the Fund's investment adviser, transfer agent or other agent of the
Fund.
Payments under the Plan are not tied exclusively to the expenses for
shareholder servicing and distribution related activities actually incurred by
Ascend in connection with Class A shares of the Fund, so that such payments may
exceed expenses actually incurred by Ascend. The Fund's Board of Directors will
evaluate the appropriateness of the Plan and its payment terms on a continuing
basis and in doing so will consider all relevant factors, including expenses
borne by Ascend and amounts it receives under the Plan.
<PAGE>
The Plan will not take effect with respect to the Fund, and no fee will be
payable in accordance with the Plan, until the Plan has been approved by a vote
of at least a majority of the outstanding voting securities of the Fund
designated as Class A shares.
This Plan shall continue in effect for a period of more than one year from
the date of its adoption only so long as such Plan, together with any related
agreements, has been approved by a vote of the Board of Directors of the Fund,
and the Directors who are not interested persons of the Fund 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.
The Chairman of Ascend, or such other person as he may designate shall
provide to the Board of Directors of the Fund, and the Directors shall review,
at least quarterly, a written report of the amounts received by Ascend pursuant
to the Plan, the expenditures made by Ascend out of such proceeds, and the
purpose for which such expenditures were made.
This Plan may be terminated at any time by vote of a majority of the
members of the Board of Directors of the Fund who are not interested persons of
the Fund 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 Fund designated as Class A shares.
This Plan may not be amended to increase materially the amount to be spent
by the Fund for distribution without Class A shareholder approval.
All material amendments to the Plan, together with any related agreements,
must be approved by a vote of the Board of Directors of the Fund, and of the
Directors who are not interested persons of the Fund and who 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.
-2-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM N-SAR
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM N-SAR.
</LEGEND>
<RESTATED>
<CIK> 0001022330
<NAME> MULTI CLASS ADVANTUS VENTURE FUND
<SERIES>
<NUMBER> 100
<NAME> CLASS A
<MULTIPLIER> 1000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-1-1997
<PERIOD-END> JUL-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 34,608
<INVESTMENTS-AT-VALUE> 39,077
<RECEIVABLES> 153
<ASSETS-OTHER> 62
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 39,292
<PAYABLE-FOR-SECURITIES> 299
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132
<TOTAL-LIABILITIES> 431
<SENIOR-EQUITY> 32
<PAID-IN-CAPITAL-COMMON> 33,675
<SHARES-COMMON-STOCK> 2,878
<SHARES-COMMON-PRIOR> 2,613
<ACCUMULATED-NII-CURRENT> 17
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 668
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,469
<NET-ASSETS> 34,630
<DIVIDEND-INCOME> 649
<INTEREST-INCOME> 106
<OTHER-INCOME> 0
<EXPENSES-NET> 566
<NET-INVESTMENT-INCOME> 189
<REALIZED-GAINS-CURRENT> 1,979
<APPREC-INCREASE-CURRENT> 609
<NET-CHANGE-FROM-OPS> 2,777
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 237
<DISTRIBUTIONS-OF-GAINS> 1,876
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 549
<NUMBER-OF-SHARES-REDEEMED> 303
<SHARES-REINVESTED> 19
<NET-CHANGE-IN-ASSETS> 6,973
<ACCUMULATED-NII-PRIOR> 48
<ACCUMULATED-GAINS-PRIOR> 697
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 312
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 625
<AVERAGE-NET-ASSETS> 35,923
<PER-SHARE-NAV-BEGIN> 11.73
<PER-SHARE-NII> 0.06
<PER-SHARE-GAIN-APPREC> 0.98
<PER-SHARE-DIVIDEND> 0.08
<PER-SHARE-DISTRIBUTIONS> 0.66
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.03
<EXPENSE-RATIO> 1.38
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM N-SAR
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM N-SAR.
</LEGEND>
<RESTATED>
<CIK> 0001022330
<NAME> MULTI CLASS ADVANTUS VENTURE FUND
<SERIES>
<NUMBER> 101
<NAME> CLASS B
<MULTIPLIER> 1000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JUL-31-1998
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<RECEIVABLES> 153
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<PAYABLE-FOR-SECURITIES> 299
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132
<TOTAL-LIABILITIES> 431
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<SHARES-COMMON-STOCK> 296
<SHARES-COMMON-PRIOR> 90
<ACCUMULATED-NII-CURRENT> 17
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<ACCUMULATED-NET-GAINS> 668
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,469
<NET-ASSETS> 3,529
<DIVIDEND-INCOME> 649
<INTEREST-INCOME> 106
<OTHER-INCOME> 0
<EXPENSES-NET> 566
<NET-INVESTMENT-INCOME> 189
<REALIZED-GAINS-CURRENT> 1,979
<APPREC-INCREASE-CURRENT> 609
<NET-CHANGE-FROM-OPS> 2,777
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1
<DISTRIBUTIONS-OF-GAINS> 116
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 234
<NUMBER-OF-SHARES-REDEEMED> 38
<SHARES-REINVESTED> 10
<NET-CHANGE-IN-ASSETS> 6,973
<ACCUMULATED-NII-PRIOR> 48
<ACCUMULATED-GAINS-PRIOR> 697
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 312
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 625
<AVERAGE-NET-ASSETS> 2,535
<PER-SHARE-NAV-BEGIN> 11.71
<PER-SHARE-NII> (0.02)
<PER-SHARE-GAIN-APPREC> 0.92
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 0.66
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.94
<EXPENSE-RATIO> 2.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM N-SAR
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</LEGEND>
<RESTATED>
<CIK> 0001022330
<NAME> MULTI CLASS ADVANTUS VENTURE FUND
<SERIES>
<NUMBER> 102
<NAME> CLASS C
<MULTIPLIER> 1000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JUL-31-1998
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 34,608
<INVESTMENTS-AT-VALUE> 39,077
<RECEIVABLES> 153
<ASSETS-OTHER> 62
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 39,292
<PAYABLE-FOR-SECURITIES> 299
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132
<TOTAL-LIABILITIES> 431
<SENIOR-EQUITY> 32
<PAID-IN-CAPITAL-COMMON> 33,675
<SHARES-COMMON-STOCK> 59
<SHARES-COMMON-PRIOR> 15
<ACCUMULATED-NII-CURRENT> 17
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 668
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 4,469
<NET-ASSETS> 702
<DIVIDEND-INCOME> 649
<INTEREST-INCOME> 106
<OTHER-INCOME> 0
<EXPENSES-NET> 566
<NET-INVESTMENT-INCOME> 189
<REALIZED-GAINS-CURRENT> 1,979
<APPREC-INCREASE-CURRENT> 609
<NET-CHANGE-FROM-OPS> 2,777
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 17
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 69
<NUMBER-OF-SHARES-REDEEMED> 26
<SHARES-REINVESTED> 1
<NET-CHANGE-IN-ASSETS> 6,973
<ACCUMULATED-NII-PRIOR> 48
<ACCUMULATED-GAINS-PRIOR> 697
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 312
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 625
<AVERAGE-NET-ASSETS> 493
<PER-SHARE-NAV-BEGIN> 11.71
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 0.97
<PER-SHARE-DIVIDEND> 0.01
<PER-SHARE-DISTRIBUTIONS> 0.66
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 11.98
<EXPENSE-RATIO> 2.25
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
ADVANTUS FUNDS
Multiple Class Plan Pursuant to Rule 18f-3
Adopted October 22, 1998 and
Effective February 1, 1999
I. PREAMBLE.
Each of the funds listed below (each a "Fund", and collectively the
"Funds"), has elected to rely on Rule 18f-3 under the Investment Company Act
of 1940, as amended (the "1940 Act") in offering multiple classes of shares
in each Fund:
Advantus Horizon Fund, Inc.
Advantus Spectrum Fund, Inc.
Advantus Mortgage Securities Fund, Inc.
Advantus Bond Fund, Inc.
Advantus Cornerstone Fund, Inc.
Advantus Enterprise Fund, Inc.
Advantus International Balanced Fund, Inc.
Advantus Venture Fund, Inc.
Advantus Index 500 Fund, Inc.
This Plan sets forth the differences among classes of shares of the
Funds, including distribution arrangements, shareholder services, expense
allocations, conversion and exchange options, and voting rights.
II. ATTRIBUTES OF SHARES CLASSES.
The attributes of each existing class of the existing Funds (i.e.,
Class A, Class B and Class C), with respect to distribution arrangements,
shareholder services, and conversion and exchange options shall be as set
forth in the following materials:
A. Prospectuses of the respective Funds in the forms most recently
filed with the Securities and Exchange Commission (the "SEC")
prior to the effective date of this Plan (with respect to the
Class A, Class B and Class C shares of each Fund) and as
subsequently amended.
B. Statements of Additional Information of the respective Funds in
the forms most recently filed with the SEC prior to the effective
date of this Plan (with respect to each Fund) and as subsequently
amended.
C. Class A Plan of Distribution in the form approved by the Board
of Directors on October 22, 1998 (with respect to the Class A
shares of each Fund).
D. Class B Plan of Distribution in the form reapproved by the
Board of Directors on January 14, 1998 (with respect to the
Class B shares of each Fund).
<PAGE>
E. Class C Plan of Distribution in the form reapproved by the
Board of Directors on January 14, 1998 (with respect to the
Class C shares of each Fund).
Expenses of such existing classes of the Funds shall continue to be
allocated in the manner set forth in III below. Each such existing class
shall have exclusive voting rights on any matter submitted to shareholders
that relates solely to its arrangement and shall have separate voting rights
on any matter submitted to shareholders in which the interests of one class
differ from the interests of any other class.
III. EXPENSE ALLOCATIONS.
Expenses of the existing classes of the existing Funds shall be
allocated as follows:
A. Distribution fees and service fees relating to the respective
classes of shares, as set forth in the materials referred to
in II above, shall be borne exclusively by the classes of shares
to which they relate.
B. Except as set forth in A above, expenses of the Funds shall be
borne at the Fund level and shall not be allocated on a class
basis.
Unless and until this Plan is amended to provide otherwise, the
methodology and procedures for calculating the net asset value of the
respective classes of shares of the Funds and the allocation of income and
expenses among the respective classes shall be as set forth in the
"Description of the Methodology for Calculation of Net Asset Value, Dividend
Distributions and Allocation of Income and Expenses" attached hereto as
Exhibit A.
The foregoing allocations shall in all cases be made in a manner
consistent with such private letter rulings as the Funds may have received
from the Internal Revenue Service with respect to multiple classes of shares.
IV. AMENDMENT OF PLAN; PERIODIC REVIEW.
A. NEW FUNDS AND NEW CLASSES. With respect to any new Fund
created after the date of this Plan and any new class of shares
of the existing Funds created after the date of this Plan, the
Board of Directors of the such new Fund and the existing Funds
shall approve amendments to this Plan setting forth the
attributes of the classes of shares of such new Fund or of such
new class of shares.
B. MATERIAL AMENDMENTS AND PERIODIC REVIEWS. The Board of
Directors of the Funds, including a majority of the independent
directors, shall periodically review this Plan for its continued
appropriateness and shall approve any material amendment of this
Plan as it relates to any class of any Fund covered by this Plan.
<PAGE>
EXHIBIT A
DESCRIPTION OF THE METHODOLOGY FOR CALCULATION OF NET ASSET
VALUE, DIVIDEND DISTRIBUTIONS AND ALLOCATION OF INCOME AND
EXPENSES
OVERVIEW
The Advantus Mutual Fund Group, formerly known as the MIMLIC Mutual Fund
Group, (the Funds) has adopted a Variable Pricing System that allows the
Funds to issue separate classes of shares. The issuance of separate classes
of shares of the Funds requires the maintenance of accounting records for
each class of shares within each Fund.
Under the Variable Pricing System, shareholders are given an option of how
they will pay for sales commissions:
(1) Class A shares - Shares sold subject to a front-end sales
charge and a distribution and/or service fee pursuant to a
Rule 12b-1 plan at an annual rate of up to .25% of average
daily net assets.
(2) Class B shares - Shares sold without the imposition of a
front-end sales charge but subject to a contingent deferred
sales charge and a Rule 12b-1 plan providing for a service fee
equal to an annual rate of up to .25% and a distribution fee
equal to an annual rate of up to .75% of the average daily net
assets. It is contemplated that Class B shares will
automatically convert to Class A shares of the same Fund after
a specified holding period.
(3) Class C shares - Shares sold without either a front-end sales
charge or a contingent deferred sales charge. Class C has a
Rule 12b-1 plan providing for a service fee equal to an annual
rate of up to .25% and a distribution fee equal to an annual
rate of up to .75% of the average daily net assets. It is
contemplated that Class C shares will automatically convert to
Class A shares of the same Fund after a specified holding period.
In addition to the distribution and service fees described above for each
class, each of the two classes may also be assessed differing class-level
expenses as described below. In the future, alternative product distribution
methods may require additional classes of shares.
ALLOCATION METHODOLOGY
In maintaining the records and calculating the daily net asset values and
daily and periodic dividend distributions for the Funds, the income,
fund-level expenses, class-level expenses and realized and unrealized gains
and losses must be allocated to each class of shares within each Fund. These
allocations, with the exception of class-level expenses, depend upon the
Fund's dividend policy. The two allocation methods are summarized as follows:
<PAGE>
(1) Daily Dividend Funds - Income and fund-level expenses are
allocated to each class based on the relative percentage of
net assets of shares eligible to receive dividends (settled
shares) at the beginning of the day, after such net assets are
adjusted for the prior day's capital share activity of each
class of shares as reported by the Fund's transfer agent on the
current valuation date. Realized and unrealized gains and
losses are allocated to each class based on the relative
percentage of net assets at the beginning of the day, after such
net assets are adjusted for the prior business day's capital
share activity of each class of shares as reported by the Fund's
transfer agent on the current valuation date.
(2) Periodic Dividend Funds - Income, fund-level expenses and
realized and unrealized gains and losses are allocated to each
class based on the relative percentage of net assets at the
beginning of the day, after such net assets are adjusted for the
prior business day's capital share activity of each class of
shares as reported by the Fund's transfer agent on the current
valuation date.
A primary requirement in determining the daily net asset value and
distributions for each class of shares, is the determination of which
expenses are fund-level expenses and which expenses are class-level expenses.
The appropriate accounting records will be maintained to properly identify
fund-level and class-level expenses. Fund-level and class-level expenses are
calculated in the following manner:
Fund-Level Expenses
Fund-level expenses are first determined for each Fund as a whole and then
allocated to each class of shares based on the Fund's proportionate net
assets, pursuant to the Fund's dividend policy, as previously described above.
(1) Investment advisory fees - Daily investment advisory fees are
calculated using the Fund's previous valuation day's net assets,
after such net assets are adjusted for the prior business day's
capital share activity, multiplying by the rate pursuant to
each Fund's Investment Advisory Agreement and dividing by the
number of days in the current year.
(2) Other fund-level expenses - Daily accruals for each type of
other fund-level expense may be determined based on expense
estimates.
Class-Level Expenses
(1) Distribution and service fees pursuant to a Rule 12b-1 Plan -
Daily distribution and service fees are calculated separately
for each class of shares based on the rates stated in the
respective distribution plans for each class of shares. Each
class' daily fee is calculated using the previous valuation
day's net assets for that class, after such net assets are
adjusted for the prior business day's capital share activity,
multiplying by the appropriate distribution and service fee
rate for the respective class and dividing by the number of
days in the current year.
<PAGE>
(2) Other class-level expenses - Daily accruals for class-level
expenses may be determined based on expense estimates for such
expenses that have been specifically identified to a certain
class of shares.
SUMMARY OF CONTROL OBJECTIVES, PROCEDURES AND CONTROLS
Control Objectives
In designing the accounting procedures and controls for the determination of
net asset values and dividend distributions, including the allocation of
income, expenses and realized and unrealized capital gains and losses, the
following objectives must be met:
(1) Expenses directly attributable to each class of shares are
allocated properly to the correct class of shares.
(2) Income, fund-level expenses and realized and unrealized capital
gains and losses are allocated properly to the correct class of
shares.
(3) Dividend rates and daily per share net asset values (NAVs) for
each class of shares reflect the proper allocation of income,
expenses (both fund-level and class-level), and realized and
unrealized capital gains and losses.
Procedures
The accounting records of the Funds are maintained by the Minnesota Life
Insurance Company's Mutual Fund Accounting Unit (Mutual Fund Accounting). In
addition to the books and records currently maintained for the Funds in
accordance with regulatory and accounting requirements, records will be
maintained to support the calculation of NAVs and distributions for each
class of shares. The normal procedures and controls currently in effect over
the daily accounting and recordkeeping for single class Funds will also apply
to multiple class Funds. In addition, the specific procedures and controls
resulting in the determination of daily net income for each class, as well as
realized and unrealized capital gains and losses are as follows:
(1) Allocations
(a) The basis for the daily allocations of income, fund-level expenses
and realized and unrealized gains and losses to each class of shares
is as follows:
(1) Daily Dividend Funds
Income and fund-level expenses are allocated to each class based
on the relative percentage of net assets of dividend-eligible
shares (settled shares) at the beginning of the day, after such
net assets are adjusted for the prior day's capital share activity
of each class of shares as reported by the Fund's transfer agent
on the current valuation date. Dividend-eligible (also referred
to as settled or paid) shares represent shares for which the Fund
has received cash payment. Realized and unrealized gains and
losses are allocated to each class based on the relative
percentage of net assets at the beginning of the day, after such
net assets are
<PAGE>
adjusted for the prior business day's capital share activity of
each class of shares as reported by the Fund's transfer agent on
the current valuation date.
(2) Periodic Dividend Funds
Income, fund-level expenses and realized and unrealized gains and
losses are allocated to each class based on the relative
percentage of net assets at the beginning of the day, after such
net assets are adjusted for the prior business day's capital share
activity of each class of shares as reported by the Fund's
transfer agent on the current valuation date.
(b) Class-level expenses are primarily determined by rates set forth in Fund
agreements (i.e., distribution and service fees) and class net asset
levels. Other class-level expenses may be determined based on expense
estimates for such expenses that have been specifically identified to a
certain class of shares.
(c) Fund-level expenses are determined by (a) rates set forth in Fund
agreements (i.e., investment advisory fees) and Fund net asset levels;
(b) fees approved by the Board of Directors (i.e., administrative
services fees); (c) estimates of expenses incurred for services rendered.
(d) Investment income and realized and unrealized gains and losses are
determined in total for the Fund in accordance with the accounting
principles followed by each of the Funds.
(e) The amounts determined under (a) through (d) are entered into the Mutual
Fund Accounting System (either through an automated mainframe interface
with other accounting and administrative systems used by the Funds or
manually by Mutual Fund Accounting personnel). These same amounts are
entered, through an automated mainframe interface, into a "Net Asset
Value Calculation Worksheet" (NAV Worksheet) which is an additional
mainframe application within the Mutual Fund Accounting System. Amounts
per the Mutual Fund Accounting System are verified by Mutual Fund
Accounting personnel on the NAV Worksheet.
(f) The NAV Worksheet application allocates investment income, realized and
unrealized gains and losses and fund-level expenses to each class of
shares by the appropriate allocation method.
(g) The NAV Worksheet application determines daily net investment income by
class by deducting fund-level and class-level expenses from investment
income and adjusting such amount for any fund and/or class level expense
waivers or reimbursements.
(2) Distributions
Another component in the determination of class-level NAVs is distributions
of net investment income and net realized gains to shareholders of each
class. The two dividend declaration policies currently followed by the Funds
are:
<PAGE>
(a) Daily Dividend Funds - Declare dividends from the Fund's daily net
investment income. Declare annual distributions of net realized
short-term and long-term capital gains on investments.
(b) Periodic Dividend Funds - Declare dividends from net investment income
on a periodic (quarterly) basis. Declare annual distributions of net
realized short-term and long-term capital gains on investments.
The procedures for determining distributions of net investment income for
each class are discussed below, by dividend declaration policy.
(a) Net Investment Dividends
(1) Daily Dividend Funds - The NAV Worksheet is used to calculate the
daily net investment income and daily dividend per share. Daily
net investment income to be distributed by class is determined as
the allocated daily income amount (i.e., interest income and
amortization of discount and premium) minus daily allocated
fund-level expenses minus daily class-level expenses plus any
fund or class-level expense waivers or reimbursements. The daily
net investment income to be distributed by class will then be
divided by the applicable class outstanding dividend eligible
shares (settled shares) to get the daily per share dividend rate
by class.
(2) Periodic Dividend Funds - For Funds paying periodic dividends, net
investment income available for distribution will be determined at
the Fund level (i.e., in total for all classes) and entered into a
Personal Computer spreadsheet. Class-level expenses will be added
back to this amount to arrive at adjusted undistributed net
investment income for the Fund as a total (i.e., net investment
income available for distribution to all shares before
consideration of any class-level expenses). The adjusted
undistributed net investment income will divided by the total
records date shares outstanding (for all classes) to determine a
gross dividend rate for all shares. The gross dividend rate will
then be adjusted by an per share class-level expenses (class-level
expenses divided by the number of shares in that class) to obtain a
dividend rate for each class. Fund-level and class-level expenses
are also adjusted for any related waivers or reimbursements.
(b) Capital Gains Distributions
Distributions from net realized short-term and long-term capital gains
are determined in the same manner for all classes, regardless of dividend
declaration policy. Per share net realized capital gains are determined
by dividing the total amount of net realized capital gains available for
distribution by the total records date shares outstanding (for all
classes).
(3) Net Asset Values
After items (1) and (2) have been completed, the NAV Worksheet application
will compute the total net assets for each class of shares and in total for
each Fund. The NAV Worksheet
<PAGE>
application calculated the NAV by dividing the net assets for each class of
shares by the respective shares outstanding. The NAV Worksheet application
also calculated the public offering price for Class A shares.
A NAV control check is calculated each day on the NAV Worksheet by dividing
the sum of the prior day's ending net assets by class plus the current day's
change in net assets by class, by the class-specific shares outstanding.
In addition to the books and records currently maintained for the Funds in
accordance with regulatory and accounting requirements, records are also
maintained in support of the determination of NAV by class, and associated
dividend distributions, and include expense accrual analyses supporting
class-level expenses and dividend distribution rate analyses. Amounts
allocated to each class (i.e., income and expense items and realized and
unrealized capital gains and losses), as well as dividend distributions, are
accounted for separately by class on a daily basis, including all shareholder
activity, by the Mutual Fund Accounting System and other accounting and
administrative systems used by the Funds. Note that the NAV Worksheet for
determining and/or verifying each class NAV is fully integrated into the
other accounting and administrative systems used by the Funds. As part of
the accounting records of the Funds, these additional records are subject to
the same procedures, reviews and controls currently exercised by Mutual Fund
Accounting in maintaining their accuracy.
Controls
The internal control structure in place applies to single class and multiple
class Funds. The additional controls required in accounting for additional
classes of shares are as follows (these controls are performed by the same
Mutual Fund Accounting personnel that perform control procedures for all the
Advantus and MIMLIC Funds):
(1) The NAV Worksheet is an additional mainframe application with the Mutual
Fund Accounting System, portions of which are integrated with other
accounting and administrative systems used by the Funds, thereby
eliminating the potential for data entry errors. The portions of the
NAV Worksheet which require manual input are independently compared to
source documents to minimize the risk of data entry errors.
(2) The sum of each class' net assets, shares outstanding, net investment
income and realized and unrealized capital gains and losses must agree
to the respective totals for the Fund.
(3) Relative movement of class NAVs and dividend rates are reviewed for
reasonableness in relation to anticipated differences due to
class-level expenses.
(4) Relative performance of the classes (i.e. returns, dividend yields,
expense rations, etc.) is reviewed in relation to anticipated differences
due to class-level expenses.
(5) Class-level expense basis points and class total expense basis points are
reviewed and recalculated on a daily basis to ensure accurate allocation
and agreement with the Fund's prospectus.
<PAGE>
FINANCIAL STATEMENT FORM AND CONTENT
At a minimum, the following disclosures are made in the annual and
semi-annual financial statements issued to shareholders of Funds with
multiple classes of shares:
Schedule of Investments of Securities
- - Shown in accordance with standard reporting practices.
Statement of Assets and Liabilities
- - Assets and liabilities are disclosed on a combined basis.
- - The components of net assets are disclosed on a combined basis.
- - Information with regard to shares authorized, issued and outstanding
and net asset value per share are disclosed for each class.
Statement of Operations
- - Income and expenses are disclosed on a combined basis. Explicit disclosure
is made of class specific expenses. Additionally, specific disclosure is made
of fund-level and class-level expense waiver and reimbursements.
Statement of Changes in Net Assets
- - Statement of changes information is disclosed on a combined basis. Explicit
disclosure is made about dividends and distributions paid to each class and
transactions in Fund shares (both dollars and shares) for each class.
Financial Highlights
- - Per share data and ratios (excluding portfolio turnover rate) is disclosed
for each class.
Notes to Financial Statements
In addition to the standard notes, the notes to financial statements include
theses additional disclosures:
- - Description of each class and their respective attributes.
- - Methodology used in allocating income, expense and realized and unrealized
gains and losses to each class.
- - Description of class-specific 12b-1 plans and any other class-level expenses.
- - Disclosure of transactions in Fund shares for each class.
- - Disclosure of sales charges for each class.
<PAGE>
POWER OF ATTORNEY
TO SIGN REGISTRATION STATEMENT
The undersigned, Directors of Advantus Horizon Fund, Inc., Advantus
Spectrum Fund, Inc., Advantus Mortgage Securities Fund, Inc., Advantus Money
Market Fund, Inc., Advantus Bond Fund, Inc., Advantus Cornerstone Fund, Inc.,
Advantus Enterprise Fund, Inc., Advantus International Balanced Fund, Inc.,
Advantus Venture Fund, Inc., Advantus Index 500 Fund, Inc., Advantus Real
Estate Securities Fund, Inc., MIMLIC Cash Fund, Inc., and Advantus Series
Fund, Inc. (the "Funds"), appoint William N. Westhoff, Eric J. Bentley,
Donald F. Gruber and Michael J. Radmer, and each of them individually, as
attorney-in-fact for the purpose of signing in their names and on their
behalf as Directors of the Funds and filing with the Securities and Exchange
Commission Registration Statements on Form N-1A, or any amendments thereto,
for the purpose of registering shares of Common Stock of the Funds for sale
by the Funds and to register the Funds under the Investment Company Act of
1940.
Dated: October 22, 1998 /s/Charles E. Arner
-----------------------------------
Charles E. Arner
/s/Ellen S. Berscheid
-----------------------------------
Ellen S. Berscheid
/s/Ralph D. Ebbott
-----------------------------------
Ralph D. Ebbott
/s/Frederick P. Feuerherm
-----------------------------------
Frederick P. Feuerherm
/s/William N. Westhoff
-----------------------------------
William N. Westhoff
