<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS INDEX 500 FUND
JULY 31, 1997
<PAGE>
ADVANTUS INDEX 500 FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 4
STATEMENT OF ASSETS AND LIABILITIES 13
STATEMENT OF OPERATIONS 14
STATEMENT OF CHANGES IN NET ASSETS 15
NOTES TO FINANCIAL STATEMENTS 16
INDEPENDENT AUDITORS' REPORT 20
FEDERAL INCOME TAX INFORMATION 21
SHAREHOLDER SERVICES 22
<PAGE>
September 15, 1997 [PHOTO]
Dear Shareholders:
The last six months have certainly provided first hand evidence of a market in
fluctuation. In the first calendar quarter of 1997, inflation fears linked to a
5.6 percent rise in the GDP caused the Federal Reserve to increase short-term
money rates by 1/4 percent at the end of March. This "preemptive strike"
combined with market expectations of an additional increase by the Federal
Reserve in May caused a strong reaction in the market.
The expected inflation has not materialized. With second calendar quarter GDP
growth expected to come in at around 2 percent, corporate earnings reports
strong, and without an additional increase in interest rates by the Federal
Reserve, the market rebounded sharply in May and has continued strong though
June and July. July provided the best monthly performance since 1991, driving
the year to date performance to 30.22 percent.
However, not all stocks performed equally. The largest 100 stocks in the S&P 500
based on market capitalization continue to lead the index. And at least one
measure of stock price volatility, standard deviation of returns, is up in 1997.
Standard deviation of returns statistically measures the potential range of
future returns given the range of returns for the current time period.
Therefore, a higher number means the statistical potential of future returns is
much wider, both higher and lower. Through the second calendar quarter, the
standard deviation of returns for 1997 was 15.4 percent, up from the average in
1992 through 1996 of 9.8 percent.
In the bond market, investment grade bonds posted low single digit returns
through the first seven months of 1997. As signs of slower economic growth and
low inflation encouraged bond investors, interest rates fell to the lower end of
their recent range.
All indicators point to a continuation of strong market performance through the
remainder of the year. Stable economic growth in the range of 1 to 4 percent is
expected through 1997. Long-term inflation will be contained by cheap global
labor, technology and corporate productivity enhancements. Although market
equity valuations are high, there is additional room for growth as corporations
continue to show increases in earnings and profits.
The market will still find things to worry about: too much economic growth, the
Federal Reserve's next move, monthly inflation indicators, and conflicting
employment data. Occasional scares will translate into continued volatility; in
interest rates in the bond market, and stock prices in the stock market. We view
these possibilities as buying opportunities. We see the corporate bond and
mortgage markets continuing to expand, with the expectation of high single digit
return potential through the end of the year. Stock market growth will likely
slow as corporations find it increasingly difficult to maintain current earnings
and profitability growth rates. Choosing the right securities in a fluctuating
environment, and maintaining a long-term view in the midst of short-term
volatility requires experience and expertise. Advantus Capital Management
provides you with a professional staff of experienced money managers able to
sift through the noise in the marketplace and maintain a stable investment
discipline. We also have the long-term outlook required to develop thoughtful,
well-conceived investment strategies for you. We appreciate your continued
confidence in our ability to provide you with prudent, competitive investment
performance.
Sincerely,
[SIGNATURE]
Paul Gooding, President
Advantus Capital Management, Inc.
<PAGE>
ADVANTUS INDEX 500 FUND
PERFORMANCE UPDATE
[PHOTO]
TERI BRANDT
PORTFOLIO MANAGER
The Advantus Index 500
Fund seeks investment results that
correspond generally to the price and
yield performance of the common stocks
included in the Standard and Poor's
Corporation 500 Composite Stock Index
(S&P 500).+ It is designed to provide an
economical and convenient means of
maintaining a broad position in the
equity market as part of an overall
investment strategy.
-Dividends paid quarterly.
-Capital gains distributions paid annually.
PERFORMANCE
The Advantus Index 500 Fund consists of publicly traded common stocks
representing leading companies in virtually all segments of the American
economy. The Fund is designed to reflect the results that correspond to the
investment performance of the stock market in general. We seek to accomplish
this by using a computer model that positions the Fund to optimally track the
behavior of the S&P 500.*
The S&P 500* returned 22.4 percent for the period from January 31, 1997 (date of
inception) to July 31, 1997. The Advantus Index 500 Fund, in comparison,
returned the following for each class of shares currently offered for the same
period:
<TABLE>
<S> <C>
Class A 21.3%**
Class B 20.8%**
Class C 20.4%**
</TABLE>
2
<PAGE>
ADVANTUS INDEX 500
FUND
JULY 31, 1997
+"Standard & Poor's-Registered Trademark-", "S&P-Registered Trademark-, "S&P
500-Registered Trademark-", "Standard & Poor's 500", and "500" are trademarks of
The McGraw-Hill Companies, Inc. and have been licensed for use by the 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.
*The S&P 500 is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall.
The Advantus Index 500 Fund is a managed fund whose performance reflects the
deduction of an investment advisory fee and other expenses.
**Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge.
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------ ------ ----------- -----------
<S> <C> <C> <C>
General Electric Company...... 4,500 $ 315,844 3.1%
Microsoft Corporation......... 1,700 240,550 2.3%
Coca-Cola Company............. 3,400 235,450 2.3%
Exxon Corporation............. 3,400 218,450 2.1%
Intel......................... 2,200 201,988 2.0%
Merck & Company, Inc.......... 1,700 176,694 1.7%
Royal Dutch Petroleum ADR..... 3,000 167,812 1.6%
Philip Morris Companies,
Inc.......................... 3,300 148,912 1.5%
International Business
Machines Corporation......... 1,400 148,050 1.5%
Proctor & Gamble Company...... 900 136,912 1.3%
----------- ---
$ 1,990,662 19.4%
----------- ---
----------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Capital Goods 7.6%
Consumer Goods and Services 34.1%
Credit Sensitive 22.9%
Intermediate Goods and
Services 16.0%
Technology 18.1%
Cash and Other
Assets/Liabilities 1.3%
</TABLE>
3
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES
JULY 31, 1997
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
COMMON STOCKS (98.7%)
CAPITAL GOODS (7.6%)
Machinery (7.5%)
400 Allied-Signal, Inc........................... $ 36,900
200 AMP Incorporated............................. 10,450
200 Avery Dennison Corporation................... 8,825
300 Browning-Ferris Industries, Inc.............. 11,100
100 Case Corporation............................. 6,244
400 Caterpillar, Inc............................. 22,400
200 Cooper Industries (b)........................ 11,112
200 Cummings Engine Co........................... 15,700
200 Dana Corporation............................. 9,088
300 Deere & Company.............................. 17,062
300 Dover Corporation............................ 21,412
100 Eaton Corporation............................ 9,031
500 Emerson Electric Company..................... 29,500
100 Fluor Corporation............................ 6,150
100 General Dynamics Corporation................. 8,850
4,500 General Electric Company..................... 315,844
100 WW Grainger, Inc............................. 9,600
300 Ikon Office Solutions, Inc................... 8,756
300 Illinois Tool Works, Inc..................... 15,562
200 Ingersoll-Rand Company....................... 13,612
200 ITT Corporation (b).......................... 12,788
100 ITT Hartford Group........................... 8,712
200 Johnson Controls............................. 8,962
600 Laidlaw, Inc (c)............................. 9,562
500 Pall Corporation............................. 12,562
200 Paccar, Inc.................................. 9,925
200 Parker Hannifin Corporation.................. 12,875
100 Raychem Corporation.......................... 9,700
200 Textron, Inc................................. 14,012
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CAPITAL GOODS--CONTINUED
300 Thermo Electron Corporation (b).............. $ 10,256
400 Tyco International Ltd (b)................... 32,400
100 Western Atlas Corporation (b)................ 7,956
600 Westinghouse Electric Corporation............ 14,438
300 Whitman Corporation.......................... 7,575
600 WMX Technologies, Inc........................ 19,200
------------
778,121
------------
Electronics (.1%)
300 Advanced Micro Devices, Inc (b).............. 10,519
------------
CONSUMER GOODS AND SERVICES (34.1%)
Consumer Goods (19.1%)
1,000 Abbott Laboratories.......................... 65,437
200 Alberto-Culver Company....................... 5,612
300 Alza Corporation (b)......................... 9,694
900 American Home Products Corporation........... 74,194
300 Amgen, Inc (b)............................... 17,644
600 Anheuser-Busch Companies, Inc................ 25,762
200 Avon Products................................ 14,512
300 Bausch & Lomb Inc............................ 12,769
300 Baxter International, Inc.................... 17,344
200 Becton, Dickinson and Company................ 10,725
200 Boston Scientific Corporation (b)............ 14,350
1,400 Bristol-Myers Squibb Company................. 109,812
200 Brown-Forman, Inc............................ 9,750
600 Cabletron Systems Incorporated (b)........... 20,325
200 Cardinal Health Inc.......................... 12,450
</TABLE>
See accompanying notes to investments in securities.
4
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
200 Liz Clairborne, Incorporated................. $ 9,575
100 Clorox Company............................... 13,962
3,400 Coca-Cola Company............................ 235,450
400 Colgate-Palmolive Company.................... 30,300
900 Columbia/HCA Healthcare Corporation.......... 29,025
300 Deluxe Corporation........................... 9,994
800 Eli Lilly & Company.......................... 90,400
500 Fortune Brands, Inc.......................... 17,719
800 Gillette Company............................. 79,200
400 Guidant Corporation.......................... 36,500
200 International Flavors & Fragrances, Inc...... 10,612
1,800 Johnson & Johnson............................ 112,162
200 Mallinckrodt, Inc............................ 7,000
300 Medtronic, Inc............................... 26,175
1,700 Merck & Company, Inc......................... 176,694
2,000 Pepsico, Inc................................. 76,625
1,800 Pfizer, Inc.................................. 107,325
700 Pharmacia & UpJohn........................... 26,425
3,300 Philip Morris Companies, Inc................. 148,912
900 Procter & Gamble Company..................... 136,912
900 Schering-Plough Corporation.................. 49,106
300 Service Corporation International............ 10,200
400 Seagram Company Ltd (c)...................... 15,325
300 Tenet Healthcare Corporation (b)............. 8,981
200 Unilever N.V. (c)............................ 43,600
300 UST, Inc..................................... 8,719
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
400 Warner-Lambert Company....................... $ 55,875
------------
1,993,153
------------
Consumer Services (4.6%)
300 H & R Block, Incorporated.................... 11,494
200 Ceridian Corporation (b)..................... 8,750
200 Cognizant Corporation........................ 8,525
400 Comcast Corporation.......................... 9,075
300 CUC International, Inc (b)................... 7,388
900 Walt Disney Company.......................... 72,731
200 R.R. Donnelley & Sons Company................ 8,038
200 Dow Jones & Company.......................... 8,638
300 Dun & Bradstreet Corporation................. 8,100
400 Eastman Kodak Company........................ 26,800
200 Gannett Company.............................. 19,862
300 Hasbro, Inc.................................. 9,206
300 HFS Incorporated (b)......................... 17,475
500 Healthsouth Rehabilitation Corporation (b)... 13,250
300 Hilton Hotels Corporation.................... 9,431
800 Humana (b)................................... 19,500
200 Knight-Ridder, Incorporated.................. 9,938
100 Marriott International, Inc.................. 6,875
300 Mattel, Inc.................................. 10,425
900 McDonalds Corporation........................ 48,375
200 McGraw-Hill Companies, Inc................... 13,562
300 Polaroid Corporation......................... 17,850
</TABLE>
See accompanying notes to investments in securities.
5
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
100 New York Times Company....................... $ 5,025
200 St. Jude Medical, Incorporated (b)........... 8,162
700 Time Warner, Inc............................. 38,193
300 Times Mirror Company......................... 16,388
200 Tribune Company.............................. 10,588
200 United Health Care........................... 11,400
300 United States Surgical Corporation........... 11,138
300 Viacom (b)................................... 9,262
------------
475,444
------------
Food (2.8%)
200 Albertson's Incorporated..................... 7,412
500 Archer-Daniels-Midland Company............... 11,250
600 Campbell Soup Company........................ 31,125
300 Conagra, Inc................................. 21,094
200 CPC International............................ 19,188
800 Fleming Companies, Incorporated.............. 12,750
200 General Mills, Inc........................... 13,825
400 H.J. Heinz Company........................... 18,475
200 Hershey Foods Corporation.................... 11,050
300 Kellogg Company.............................. 27,562
400 Kroger Company (b)........................... 11,825
300 Quaker Oats Company.......................... 15,356
100 Ralston-Ralston Purina Group................. 9,025
700 Sara Lee Corporation......................... 30,669
300 Super Value Inc.............................. 12,150
200 Sysco Corporation............................ 7,462
500 Wendy's International, Inc................... 12,219
200 Winn-Dixie Stores, Incorporated.............. 7,325
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
200 WM. Wrigley Jr. Company...................... $ 15,387
------------
295,149
------------
Retail (4.0%)
400 American Stores Company...................... 10,100
200 CVS Corporation.............................. 11,375
300 Costco Companies, Incorporated (b)........... 11,362
200 Dayton Hudson Corporation.................... 12,925
300 Dillard Department Stores, Inc............... 11,344
200 Federated Department Stores (b).............. 8,762
300 Gap, Incorporated............................ 13,331
200 Harcourt General, Incorporated............... 9,450
900 Home Depot, Inc.............................. 44,888
700 K Mart Corporation (b)....................... 8,312
400 Limited, Inc................................. 8,925
200 May Department Stores Company................ 11,175
300 Nike, Inc.................................... 18,694
200 Nordstrom, Incorporated...................... 11,338
300 J.C. Penney Company, Inc..................... 17,550
200 Rite Aid Corporation......................... 10,388
500 Sears, Roebuck and Company................... 31,656
600 Toys R Us (b)................................ 20,438
3,100 Wal-Mart Stores, Inc......................... 116,444
300 Walgreen Company............................. 16,950
500 Woolworth Corporation (b).................... 14,156
------------
419,563
------------
Consumer Cyclicals (3.6%)
300 Autozone, Inc (b)............................ 8,588
</TABLE>
See accompanying notes to investments in securities.
6
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CONSUMER GOODS AND SERVICES--CONTINUED
300 Brunswick Corporation........................ $ 9,675
800 Chrysler Corporation Holding Company......... 29,700
200 Circuit City Stores, Incorporated............ 7,250
400 Cooper Tire & Rubber Company................. 9,975
300 Corning, Inc................................. 18,544
200 Echlin, Incorporated......................... 7,412
1,500 Ford Motor................................... 61,312
200 Fruit of the Loom (b)........................ 5,475
900 General Motors Corporation................... 55,687
300 Genuine Parts Company........................ 9,788
200 Goodyear Tire & Rubber Company............... 12,912
300 Interpublic Group Company.................... 13,425
500 ITT Industries............................... 14,156
200 Lowe's Companies, Incorporated............... 7,525
200 Merchantile Stores Company................... 13,438
200 Newell Company............................... 8,388
500 Rowan Co (b)................................. 16,438
300 Rubbermaid Incorporated...................... 7,819
200 The Stanley Works............................ 9,062
200 Tandy Corp................................... 11,888
400 TJX Companies, Incorporated.................. 11,950
100 V.F. Corporation............................. 8,975
200 Whirlpool Corporation........................ 10,000
------------
369,382
------------
CREDIT SENSITIVE (22.9%)
Building (.3%)
100 Armstrong World Industries, Inc.............. 7,381
200 Masco Corporation............................ 9,375
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CREDIT SENSITIVE--CONTINUED
200 PPG Industries, Incorporated................. $ 12,800
200 Sherwin-Williams Company..................... 6,412
------------
35,968
------------
Finance (15.3%)
200 Aetna, Incorporated.......................... 22,788
200 Ahmanson & Company........................... 10,637
600 Allstate Corporation......................... 47,400
600 American Express Company..................... 50,250
200 American General Corporation................. 10,650
1,050 American Internationl Group, Inc............. 111,825
150 AON Corporation.............................. 8,400
500 Bank of New York............................. 24,281
800 Banc One Corporation......................... 44,900
1,000 Bankamerica Corporation...................... 75,500
200 Bank of Boston Corporation................... 16,987
100 Bankers Trust New York Corporation........... 10,119
200 Barnett Banks, Inc........................... 11,387
300 Beneficial Corporation....................... 21,750
300 Charles Schwab Corp.......................... 14,044
600 Chase Manhattan Corporation.................. 68,138
200 Chubb Corporation............................ 14,100
100 Cigna Corporation............................ 19,950
600 Citicorp..................................... 81,450
300 Comerica..................................... 22,688
200 Conseco, Incorporated........................ 8,150
200 Corestates Financial Corporation............. 12,338
400 Countrywide Credit Industries................ 14,100
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CREDIT SENSITIVE--CONTINUED
800 Federal Home Loan Mortgage Corporation....... $ 28,850
1,400 Federal National Mortgage Association........ 66,238
300 Fifth Third Bancorp.......................... 18,956
200 First Bank Systems, Incorporated............. 17,800
500 First Chicago NBD Corporation................ 37,938
500 First Data Corporation....................... 21,812
400 First Union Corporation...................... 40,575
300 Fleet Financial Group, Incorporated.......... 20,362
100 General Re Corporation....................... 20,888
100 Golden West Financial Corporation............ 8,412
200 Green Tree Financial Corporation............. 9,425
100 Household International, Inc................. 12,950
200 Keycorp...................................... 12,438
200 Jefferson-Pilot Corporation.................. 14,212
100 Lincoln National Corporation................. 7,112
100 Loews Corporation............................ 10,812
200 Marsh & McLennen............................. 15,488
100 MBIA......................................... 11,800
300 MBNA Corporation............................. 13,500
200 MGIC Investment Corporation.................. 10,512
400 Mellon Bank Corporation...................... 20,175
400 Merrill Lynch & Company, Inc................. 28,175
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CREDIT SENSITIVE--CONTINUED
200 J.P. Morgan & Company, Incorporated.......... $ 23,175
730 Morgan Stanley Group......................... 38,188
200 National City Corporation.................... 11,900
1,030 Nationsbank Corporation...................... 73,323
600 Norwest Corporation.......................... 37,838
600 PNC Bank Corporation......................... 27,450
500 Providian
Corporation (b)............................. 19,594
100 Republic New York Corporation................ 11,550
200 Safeco Corporation........................... 9,575
300 Salomon, Inc................................. 19,031
100 St. Paul Companies, Inc...................... 7,844
400 Suntrust Banks, Inc.......................... 25,675
200 Torchmark Corporation........................ 15,925
100 Transamerica Corporation..................... 10,088
200 U.S. Bancorp................................. 13,350
200 Unum Corporation............................. 8,900
200 Wachovia Corporation......................... 12,900
380 Washington Mutual Inc........................ 26,268
100 Wells Fargo & Company........................ 27,494
------------
1,590,330
------------
Utilities (7.3%)
600 Airtouch Communications (b).................. 19,762
500 Alltel Corp.................................. 16,438
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CREDIT SENSITIVE--CONTINUED
200 American Electric Power Company, Inc......... $ 8,950
800 Ameritech.................................... 53,950
2,100 AT&T Corporation............................. 77,306
300 Baltimore Gas & Electric..................... 8,343
600 Bell Atlantic Corporation.................... 43,537
1,300 Bellsouth Corporation........................ 61,588
200 Carolina Power & Light Company............... 7,125
300 Central & Southwest Corporation.............. 6,019
200 Cinergy Corporation.......................... 6,725
100 Columbia Gas System, Incorporated............ 6,875
200 Consolidated Edison Company of New York...... 6,325
300 Consolidated Natural Gas Company............. 17,362
200 Dominion Resources, Inc...................... 7,350
600 DTE Energy Company........................... 17,962
407 Duke Power Company........................... 20,636
400 Edison International......................... 10,100
400 Enron Corporation............................ 15,175
300 Entergy Corporation.......................... 8,194
200 FPL Group, Inc............................... 9,575
600 Frontier Corporation......................... 12,375
200 GPU Incorporated............................. 6,938
1,200 GTE Corporation.............................. 55,800
300 Houston Industries, Incorporated............. 6,281
200 Northern States Power Company................ 10,275
700 Nynex Corporation............................ 38,806
300 Pacificorp................................... 6,694
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
CREDIT SENSITIVE--CONTINUED
300 Peco Energy Company.......................... $ 7,050
400 Pacific Gas & Electric Corporation........... 9,925
300 Public Service Enterprise Group, Inc......... 7,425
1,192 SBC Communications, Inc...................... 70,551
900 Southern Company............................. 19,744
600 Texas Utilities Company...................... 21,262
300 Unicom Corporation........................... 6,806
200 Union Electric Company....................... 7,700
700 U.S. West Communications Group............... 25,594
600 U.S. West Media Group (b).................... 13,237
------------
755,760
------------
INTERMEDIATE GOODS AND SERVICES (16.0%)
Energy (8.8%)
300 Amerada Hess Corporation..................... 17,644
700 Amoco Corporation............................ 65,800
200 Ashland Incorporated......................... 10,625
400 Atlantic Richfield Company................... 29,925
200 Baker Hughes, Incorporated................... 8,812
300 Burlington Resources, Inc.................... 14,175
900 Chevron Corporation.......................... 71,213
300 Coastal Corporation.......................... 16,312
200 Dresser Industries, Inc...................... 8,350
3,400 Exxon Corporation............................ 218,450
200 Halliburton Company.......................... 9,200
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
INTERMEDIATE GOODS AND SERVICES-- CONTINUED
100 Kerr-McGee Corporation....................... $ 6,262
100 Louisiana Land & Exploration Company......... 7,062
1,000 Mobil Corporation............................ 76,500
300 Occidental Petroleum Corporation............. 7,519
100 Pennzoil Company............................. 7,812
300 Phillips Petroleum Company................... 13,819
3,000 Royal Dutch Petroleum ADR (c)................ 167,812
600 Schlumberger Limited (c)..................... 45,825
300 Sonat, Inc................................... 14,962
200 Tenneco, Inc................................. 9,325
400 Texaco, Inc.................................. 46,425
800 Union Pacific Resources Group, Inc........... 19,750
200 Unocal Corporation........................... 8,000
300 USX - Marathon Group......................... 9,656
------------
911,235
------------
Materials (6.1%)
100 Air Products and Chemicals, Inc.............. 8,819
200 Alcan Aluminium Limited (c).................. 7,838
300 Allegheny Teledyne Incorporated.............. 9,338
200 Aluminum Company of America.................. 17,700
300 Barrick Gold Corporation (c)................. 6,844
200 Bemis Company, Inc........................... 9,188
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
INTERMEDIATE GOODS AND SERVICES-- CONTINUED
200 Champion International Corporation........... $ 12,400
100 Crown Cork & Seal Company, Inc............... 5,056
300 Dow Chemical Company......................... 28,500
1,500 E.I. Du Pont De Nemours and Company.......... 100,406
200 Eastman Chemical Company..................... 12,100
200 Ecolab, Incorporated......................... 9,338
500 Engelhard Corporation........................ 10,750
100 FMC Corporation (b).......................... 8,575
300 Freeport-McMoran Copper...................... 8,775
100 Georgia-Pacific Corporation.................. 9,444
200 B.F. Goodrich Company........................ 9,038
300 W.R. Grace & Co.............................. 18,450
300 Hercules, Incorporated....................... 15,938
700 Homestake Mining Company..................... 9,669
400 Inco Limited (c)............................. 12,375
300 International Paper Company.................. 16,800
700 Kimberly-Clark Corporation................... 35,481
100 Mead Corporation............................. 7,200
700 Monsanto Company............................. 34,869
200 Morton International (b)..................... 6,688
200 Newmont Mining Corporation................... 8,250
200 Nucor Corporation............................ 12,412
</TABLE>
See accompanying notes to investments in securities.
10
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
INTERMEDIATE GOODS AND SERVICES-- CONTINUED
100 Phelps Dodge Corporation..................... $ 8,506
100 Pioneer Hi-Bred International, Inc........... 7,400
200 Praxair, Inc................................. 11,025
100 Reynolds Metals Company...................... 7,800
100 Rohm and Haas Company........................ 9,800
200 Temple-Inland, Incorporated.................. 13,462
800 Travelers Group, Incorporated................ 57,550
300 Union Camp Corporation....................... 17,568
200 Union Carbide Corporation.................... 11,075
300 USX - U.S. Steel Group, Incorporated......... 10,969
200 Weyerhaeuser
Company..................................... 12,450
100 Willamette Industries, Incorporated.......... 7,619
200 Williams Company............................. 9,150
------------
636,615
------------
Transportation (1.1%)
100 AMR Corporation (b).......................... 10,756
200 Burlington Northern Santa Fe................. 19,312
400 CSX Corporation.............................. 24,700
100 Delta Air Lines, Inc......................... 8,888
100 Federal Express Corporation (b).............. 6,456
200 Norfolk Southern Corporation................. 22,150
300 Union Pacific Corporation.................... 21,506
------------
113,768
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY (18.1%)
200 Adobe Systems, Incorporated (b).............. $ 7,475
150 Andrew Corporation (b)....................... 3,909
500 Apple Computer (b)........................... 8,750
200 Applied Materials, Incorporated (b).......... 18,375
300 Automatic Data Processing, Inc............... 14,850
500 Bay Networks, Inc (b)........................ 15,250
1,000 Boeing Company............................... 58,812
900 Cisco Systems, Inc (b)....................... 71,606
200 Commscope (b)(c)............................. 3,200
1,000 Compaq Computer Corporation (b).............. 57,125
400 Computer Associates International............ 27,225
100 Computer Sciences Corporation (b)............ 8,143
400 Dell Computer Corporation (b)................ 34,200
200 Digital Equipment (b)........................ 8,237
400 DSC Communications (b)....................... 11,800
300 EMC Corporation (b).......................... 15,150
1,500 Equifax...................................... 50,906
150 General Semiconductor (b).................... 2,288
100 Harris Corporation........................... 8,688
1,400 Hewlett-Packard Company...................... 98,098
100 Honeywell, Inc............................... 7,469
1,400 International Business Machines
Corporation................................. 148,050
2,200 Intel........................................ 201,988
200 Lockheed Martin Corporation.................. 21,300
900 Lucent Technologies, Incorporated............ 76,444
</TABLE>
See accompanying notes to investments in securities.
11
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
400 LSI Logic Corporation (b).................... $ 12,625
200 McDonnell Douglas Corporation................ 15,300
800 MCI Communications........................... 28,250
200 Micron Technology, Inc (b)................... 9,738
1,700 Microsoft Corporation (b).................... 240,550
600 Minnesota Mining and Manufacturing Company... 56,850
800 Motorola..................................... 64,250
300 National Semiconductor Corporation (b)....... 9,450
600 Nextlevel System (b)......................... 11,962
300 Northern Telecom Limited..................... 31,369
100 Northrop Grumman Corporation................. 11,512
800 Oracle Corporation (b)....................... 43,550
200 Parametric Technology Corporation (b)........ 9,800
200 Perkin-Elmer................................. 16,325
200 Pitney Bowes, Inc............................ 15,025
400 Raytheon Company............................. 22,350
<CAPTION>
MARKET
SHARES VALUE(a)
- ----------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
200 Rockwell International Corporation........... $ 13,125
200 Seagate Technology, Incorporated (b)......... 8,212
900 Silicon Graphics, Incorporated (b)........... 22,500
400 Southwest Airlines Company................... 11,675
500 Sprint Corporation........................... 24,750
500 Sun Microsystems, Inc (b).................... 22,844
600 Tele-Communications, Inc (b)................. 10,275
200 Tellabs, Incorporated (b).................... 11,975
300 Texas Instruments, Incorporated.............. 34,500
300 TRW, Inc..................................... 17,550
300 United Technologies Corporation.............. 25,369
1,400 Worldcom, Incorporated (b)................... 48,912
400 Xerox Corporation............................ 32,900
400 3 Com (b).................................... 21,875
------------
1,884,706
------------
Total investments in securities
(cost: $8,353,294) (d)................................... $ 10,269,713
------------
------------
</TABLE>
Notes to Investments in Securities
- ----------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 3.0% of net assets in foreign securities as of July 31, 1997.
(d) At July 31, 1997 the cost of securities for federal income tax purposes was
$8,365,595. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation........... $1,971,403
Gross unrealized depreciation........... (67,285)
----------
Net unrealized appreciation............. $1,904,118
----------
----------
</TABLE>
12
<PAGE>
ADVANTUS INDEX 500 FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1997
<TABLE>
<S> <C>
ASSETS
Investments in securities, at value--see accompanying
schedule for detailed listing (identified cost:
$8,353,294)................................................ $ 10,269,713
Cash in bank on demand deposit.............................. 46,588
Receivable for Fund shares sold............................. 82,735
Dividends receivable........................................ 11,864
Organizational costs........................................ 79,940
------------
Total assets............................................ 10,490,840
------------
LIABILITIES
Payable for Fund shares redeemed............................ 25
Payable to Adviser.......................................... 87,302
------------
Total liabilities....................................... 87,327
------------
Net assets applicable to outstanding capital stock.......... $ 10,403,513
------------
------------
Represented by:
Capital stock--authorized 10 billion shares (Class A--2
billion shares, Class B--2 billion shares, Class C--2
billion shares and 4 billion shares unallocated) of $.01
par value (note 1)....................................... $ 8,084
Additional paid-in capital................................ 8,459,743
Undistributed net investment income....................... 14,691
Accumulated net realized gains from investments........... 4,576
Unrealized appreciation on investments.................... 1,916,419
------------
Total--representing net assets applicable to outstanding
capital stock.......................................... $ 10,403,513
------------
------------
Net assets applicable to outstanding Class A Shares......... $ 8,175,776
------------
------------
Net assets applicable to outstanding Class B Shares......... $ 1,961,949
------------
------------
Net assets applicable to outstanding Class C Shares......... $ 265,788
------------
------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 634,472....................... $ 12.89
------------
------------
Class B--Shares outstanding 152,487....................... $ 12.87
------------
------------
Class C--Shares outstanding 20,690........................ $ 12.85
------------
------------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
ADVANTUS INDEX 500 FUND
STATEMENT OF OPERATIONS
PERIOD FROM SEPTEMBER 4, 1996, COMMENCEMENT OF OPERATIONS, TO JULY 31, 1997
<TABLE>
<S> <C>
Investment income:
Interest.................................................. $ 8,833
Dividends................................................. 71,123
------------
Total investment income............................... 79,956
------------
Expenses (note 4):
Investment advisory fee................................... 13,820
Distribution fees--Class A................................ 9,469
Distribution fees--Class B................................ 3,691
Distribution fees--Class C................................ 640
Administrative services fee............................... 39,600
Amortization of organizational costs...................... 8,882
Transfer agent fees....................................... 6,000
Custodian fees............................................ 916
Auditing and accounting services.......................... 9,000
Legal fees................................................ 4,007
Directors' fees........................................... 62
Registration fees......................................... 3,055
Printing and shareholder reports.......................... 284
Insurance................................................. 5,960
Other..................................................... 2,966
------------
Total expenses........................................ 108,352
Less fees and expenses waived or absorbed:
Class A distribution fees............................... (6,313)
Other fund expenses..................................... (70,164)
------------
Total fees and expenses waived or absorbed............ (76,477)
------------
Total net expenses.................................... 31,875
------------
Investment income--net................................ 48,081
------------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)................ 4,576
Net change in unrealized appreciation or depreciation on
investments.............................................. 1,916,419
------------
Net gains on investments.................................. 1,920,995
------------
Net increase in net assets resulting from operations........ $ 1,969,076
------------
------------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
ADVANTUS INDEX 500 FUND
STATEMENT OF CHANGES IN NET ASSETS
PERIOD FROM SEPTEMBER 4, 1996, COMMENCEMENT OF OPERATIONS, TO JULY 31, 1997
<TABLE>
<S> <C>
Operations:
Investment income--net.......................... $ 48,081
Net realized gains on investments............... 4,576
Net change in unrealized appreciation or
depreciation on investments.................... 1,916,419
------------
Increase in net assets resulting from
operations.................................. 1,969,076
------------
Distributions to shareholders from net investment
income:
Class A....................................... (37,824)
Class B....................................... (3,405)
Class C....................................... (1,043)
------------
Total distributions......................... (42,272)
------------
Capital share transactions (notes 4 and 6):
Proceeds from sales:
Class A....................................... 6,559,299
Class B....................................... 1,754,388
Class C....................................... 228,318
Proceeds from issuance of share as a result of
reinvested dividends:
Class A....................................... 5,289
Class B....................................... 3,405
Class C....................................... 1,043
Payments for redemption of shares:
Class A....................................... (53,724)
Class B....................................... (20,288)
Class C....................................... (1,021)
------------
Increase in net assets from capital share
transactions................................ 8,476,709
------------
Total increase in net assets................ 10,403,513
Net assets at beginning of period................. --
------------
Net assets at end of period (including
undistributed net investment income of
$14,691)......................................... $ 10,403,513
------------
------------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1997
(1) ORGANIZATION
Advantus Index 500 Fund, Inc. (the Fund) was incorporated on July 3, 1996.
The Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The Fund seeks investment
results that correspond generally to the price and yield performance of the
common stocks included in the Standard and Poor's Corporation 500 Composite
Stock Index.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class A
shares at net asset value after a specified holding period. Such holding periods
decline as the amount of the purchase increases and range from 28 to 84 months
after purchase for Class B shares and 40 to 96 months after purchase for Class C
shares. All three classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than distribution fees) and realized and unrealized
gains or losses are allocated to each class of shares based upon its relative
net assets.
On September 4, 1996, Advantus Capital Management, Inc. (Advantus Capital or
the Adviser) purchased 5,000 Class A shares, 5,000 Class B shares and 5,000
Class C shares. Advantus Capital is a wholly-owned subsidiary of MIMLIC Asset
Management Company (MIMLIC Management) which is a wholly-owned subsidiary of The
Minnesota Mutual Life Insurance Company (Minnesota Mutual). Inception of the
Fund was January 31, 1997 when the shares became effectively registered under
the Securities Exchange Act of 1933 (1933 Act). Prior to the date of inception,
Minnesota Mutual purchased 500,000 Class A shares for $5 million.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price. When market quotations are not readily available, securities are
valued at fair value as determined in good faith by the Board of Directors. Such
fair values are determined using pricing services or prices quoted by
independent brokers. Short-term securities are valued at market.
16
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date and
interest income, including amortization of premium and discount computed on a
level yield basis, is accrued daily, if any.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to December
31, in order to avoid federal excise tax.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary book-to-tax
differences. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income and decrease additional paid-in capital by
$8,882.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period from September 4, 1996 to July 31, 1997, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $8,770,694 and $421,977, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital. Under
the agreement, Advantus Capital acts as investment adviser and manager for the
Fund. The fee for investment management and advisory services is based on the
average daily net assets of the Fund at the annual rate of .34 percent. The Fund
has engaged Minnesota Mutual to act as its transfer agent, dividend disbursing
agent and redemption agent and bears the expenses of such services. Subject to a
minimum annual fee of $12,000, Minnesota Mutual provides transfer agent services
to the Fund at an annual cost of $25 per shareholder account.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to Ascend Financial Services,
Inc. (Ascend), formerly known as MIMLIC Sales Corporation, the underwriter of
the Fund and wholly-owned subsidiary of MIMLIC Management, to be used to pay
certain expenses incurred in the distribution, promotion and servicing of the
Fund's shares. The Class A Plan provides for a fee up to .30 percent of average
daily net assets of Class A shares. The Class B and Class C Plans provide for a
fee up to 1.00 percent of average daily net assets of Class B and Class C
shares, respectively. The Class B and Class C
17
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
1.00 percent fee is comprised of a .75 percent distribution fee and a .25
percent service fee. Ascend is currently waiving that portion of Class A
distribution fees which exceeds, as a percentage of average daily net assets,
.10 percent. Ascend waived Class A distribution fees in the amount of $6,313 for
the period ended July 31, 1997.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, organizational costs and other
miscellaneous expenses.
The Fund pays an administrative services fee to Minnesota Mutual for
accounting, auditing, legal and other administrative services which Minnesota
Mutual provides. The administrative service fee is $3,600 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the period ended July 31,
1997, Advantus Capital voluntarily agreed to absorb $70,164 in expenses which
were otherwise payable by the Fund.
As of July 31, 1997, Minnesota Mutual and subsidiaries and the directors and
officers of the Fund as a whole own the following shares:
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OWNED
---------------- ----------------
<S> <C> <C>
Class A...................................... 505,102 79.6%
Class B...................................... 5,093 3.3%
Class C...................................... 5,087 24.6%
</TABLE>
During the period ended July 31, 1997, legal fees, a portion of which are
included in organizational costs, were paid to a law firm of which the Fund's
secretary is a partner in the amount of $23,555.
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs are being amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or all
of the shares held by Advantus Capital, or any other holder, representing
initial capital of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by the pro rata portion (based on the ratio
that the number of initial shares redeemed bears to the total number of
outstanding initial shares of the Fund at the date of redemption) of the
unamortized organizational cost balance.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from September 4, 1996 to July 31,
1997 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------- --------- -----------
<S> <C> <C> <C>
Sold................................................................................. 638,721 153,967 20,674
Issued for reinvested distributions.................................................. 456 303 99
Redeemed............................................................................. (4,705) (1,783) (83)
--------- --------- -----------
634,472 152,487 20,690
--------- --------- -----------
--------- --------- -----------
</TABLE>
18
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for the
period from January 31, 1997 (date of inception) to July 31, 1997 are as
follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period............................................. $ 10.68 $ 10.69 $ 10.69
----------- ----------- -----------
Income from investment operations:
Net investment income.......................................................... .06 .01 .01
Net gains or losses on securities (both realized and unrealized)............... 2.21 2.21 2.18
----------- ----------- -----------
Total from investment operations............................................. 2.27 2.22 2.19
----------- ----------- -----------
Less distributions:
Dividends from net investment income........................................... (.06) (.04) (.03)
Distributions from capital gains............................................... -- -- --
----------- ----------- -----------
Total distributions.......................................................... (.06) (.04) (.03)
----------- ----------- -----------
Net asset value, end of period................................................... $ 12.89 $ 12.87 $ 12.85
----------- ----------- -----------
----------- ----------- -----------
Total return (a) (b)............................................................. 21.3% 20.8% 20.4%
Net assets, end of period (in thousands)......................................... $ 8,176 $ 1,962 $ 266
Ratio of expenses to average daily net assets (d)................................ .70%(c) 1.60%(c) 1.60%(c)
Ratio of net investment income to average daily net assets (d)................... 1.19%(c) .29%(c) .29%(c)
Portfolio turnover rate (excluding short-term securities)........................ 5.84% 5.84% 5.84%
Average commission rate on stock transactions (e)................................ $ .0319 $ .0319 $ .0319
</TABLE>
- ------------
(a) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges.
(b) Total return is presented for the period from January 31, 1997, date of
inception, to July 31, 1997.
(c) Adjusted to an annual basis.
(d) The Fund's Distributor and Adviser voluntarily waived and absorbed $50,025
in expenses for the period from January 31, 1997 to July 31, 1997. If Class
A, B and C shares had been charged for these expenses, the ratio of expenses
to average daily net assets would have been 2.29%, 2.99% and 2.99% for Class
A, B and C, respectively, and the ratio of net investment income to average
daily net assets would have been (.40%), (1.10%), and (1.10%) for Class A, B
and C, respectively.
(e) Average commission rate is calculated by dividing the total brokerage
commissions paid on applicable purchases and sales of stocks for the period
by the total number of related shares purchased and sold.
19
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Advantus Index 500 Fund, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments in securities, of the Advantus Index 500
Fund, Inc. (the Fund) as of July 31, 1997 and the related statements of
operations and changes in net assets for the period from September 14, 1996,
commencement of operations, to July 31, 1997, and the financial highlights for
the period from January 31, 1997 (date of inception) to July 31, 1997. These
financial statements and the financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and the financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased or sold but not received or delivered, we
request confirmations from brokers, and where replies are not received, we carry
out other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Fund as of July 31, 1997 and the results of its operations,
changes in its net assets and financial highlights, for the periods stated in
the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
September 12, 1997
20
<PAGE>
ADVANTUS INDEX 500 FUND
FEDERAL INCOME TAX INFORMATION
The following information for federal income tax purposes is presented as an
aid to shareholders in reporting the distributions paid by the Fund in the
fiscal period ended July 31, 1997. Dividends for the 1997 calendar year will be
reported to you on Form 1099-Div in late January 1998. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A
Income distribution--taxable as dividend income, 92.8% qualifying for deductions
by corporations
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
December 26, 1996........................................................................................... $ .1467
March 26, 1997.............................................................................................. .0323
June 25, 1997............................................................................................... .0327
---------
$ .2117
---------
---------
</TABLE>
CLASS B
Income distribution--taxable as dividend income, 92.8% qualifying for deductions
by corporations
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
December 26, 1996........................................................................................... $ .1467
March 26, 1997.............................................................................................. .0270
June 25, 1997............................................................................................... .0172
---------
$ .1909
---------
---------
</TABLE>
CLASS C
Income distribution--taxable as dividend income, 92.8% qualifying for deductions
by corporations
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
December 26, 1996........................................................................................... $ .1467
March 26, 1997.............................................................................................. .0166
June 25, 1997............................................................................................... .0137
---------
$ .1770
---------
---------
</TABLE>
21
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges or telephone transfers between the Funds
each calendar year without incurring a transaction charge. Thereafter, there
will be a $7.50 transaction charge for each additional exchange or transfer
within the calendar year. Systematic Exchange Plans are exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account--subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE TRANSFER: You may transfer money from one Advantus account to any
other Advantus account you own just by calling our toll free number. Sign up for
telephone exchanges on the Advantus Application or complete the telephone
authorization form.
SYSTEMATIC TRANSFER: If you have an Advantus Money Market account you may
transfer a set amount of money to another Advantus Fund to diversify your
investment portfolio and take advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums out of your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Our special purchase plans enable you to open an
Advantus Fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets). One of these plans--The
Automatic Investment Plan--allows you to invest automatically each month from
your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Individual Retirement Account or other qualified plan including SEPS, SIMPLE,
profit sharing, money purchase or defined benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account. Amounts
over $1,000 may be wire transferred to your personal bank account. The
prevailing wire charge will be added to the withdrawal amount. Sign up for
22
<PAGE>
telephone redemption on the Advantus Application or complete a Service Request
Form. To have the redemption automatically deposited into your checking account,
please send a voided check from your bank. Depending on the performance of the
underlying investment options, the value may be worth more or less than the
original amount invested upon redemption. Some limitations apply, please refer
to the prospectus for details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
reports to help you track all of your investments in the Advantus Family of
Funds, and annual tax statements. Semiannual and annual reports will provide you
with portfolio information, fund performance data and the current investment
outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call (1-800-665-6005).
Our voice response system is available from 7 a.m. to 3 a.m. Central Time Monday
through Friday, and 8 a.m. to 5 p.m. on Saturday. This system allows you to
access current net asset values and your account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through your local
registered representative of Ascend Financial Services, Inc. (formerly known as
MIMLIC Sales Corporation), distributor of the Funds. Contact your representative
for information and a prospectus for any of the Advantus Funds you are
interested in.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages twelve mutual funds containing
$2.9 billion in assets in addition to $1.8 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
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THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-888-AFS-1838
(1-888-237-1838)
