<PAGE>
[LOGO]
ADVANTUS
FAMILY OF FUNDS
ANNUAL REPORT TO SHAREHOLDERS
ADVANTUS INDEX 500 FUND
JULY 31, 1998
<PAGE>
ADVANTUS INDEX 500 FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 5
STATEMENT OF ASSETS AND LIABILITIES 16
STATEMENT OF OPERATIONS 17
STATEMENTS OF CHANGES IN NET ASSETS 18
NOTES TO FINANCIAL STATEMENTS 19
INDEPENDENT AUDITORS' REPORT 23
FEDERAL INCOME TAX INFORMATION 24
SHAREHOLDER SERVICES 25
<PAGE>
[PHOTO]
Letter from the President
Dear Shareholder:
Over the past fiscal year (August 1, 1997 through July 31, 1998), the U.S.
economy continued to expand at a robust pace, despite signs of slowing. The
economic expansion is broad based which illustrates the overall strength of our
economy.
From a global perspective, the Asian financial crisis, which has been unfolding
throughout the reporting period, has had a dampening effect on interest rates
and corporate earnings. Ironically, this situation could have an overall
positive impact on the U.S. stock market. Equities continue to benefit from the
relatively low level of interest rates, with expansion capital available to
companies at a low cost. Also, money continues to flow into the U.S. markets at
record levels. A "flight to quality" has brought foreign investors to the
shelter of the U.S stock market and to Treasury securities.
Asian demand for U.S. goods has been shrinking, as evidenced by the significant
trade drag on U.S. output growth during the second quarter, 1998. The fallout
from the Asian financial situation is underway, and the effects will intensify.
The result will be declining U.S. growth through the remainder of 1998 and
increased competition from cheaper imports. Slower economic growth and increased
price competition will reduce profit growth, which has been a key factor
supporting the stock market. We anticipate greater volatility in the stock
market in the coming months. Keep in mind, however, that the United States has
the broadest, strongest economy in the world. Even though we anticipate our
economic growth will slow, our country's economy will remain healthy, and we
will continue to enjoy low levels of inflation.
Cash flows into the U.S. stock market have dominated valuations and pricing. The
stock market has benefited from both the flight to quality (from abroad) and
from the huge and continuing cash flows from the funding of retirement assets.
Equity valuations are on the high side of almost any historical comparisons,
with large cap (and consistent) growth stocks leading the valuation parade. A
strong and steady bond market has propped up stock prices. This continues even
within an environment of slightly slower growth expectations.
In the report that follows, the portfolio manager provides insightful
information about your fund's performance over the last year. As always, we
appreciate your continued support of the Advantus family of mutual funds and
thank you for investing with Advantus.
Sincerely,
/s/ William Westhoff
William Westhoff, President
Advantus Index 500 Fund, 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
Index).+ 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
For the twelve month period ended July 31, 1998, the Advantus Index 500 Fund
returned the following for each class of shares currently offered:
<TABLE>
<S> <C>
Class A.......................... 18.19 percent*
Class B.......................... 17.17 percent*
Class C.......................... 17.09 percent*
</TABLE>
This compares to the S&P 500**, which earned 19.3 percent for the same period.
PERFORMANCE ANALYSIS
A handful of sectors played a key role in the Fund's performance over the
reporting period. Technology, a somewhat shaky sector during the first half of
the reporting period, recovered to turn in solid performance for the remainder
of the period. This was mainly due to the increases in the computer software and
computer services industry and also to the computer networking industry. Health
care, financial and consumer cyclicals also posted gains to the index throughout
the fiscal year ended July 31, 1998.
The transportation and utilities sectors had the smallest contribution to the
index performance in this period. The worst performer was the energy sector,
which was hurt by a decline in utilities and a plunge in oil prices to nine-year
lows.
Overall, the largest stocks have shown the strongest performance. The positive
story for large-cap stocks continued with the largest companies in the S&P 500**
showing the best performance. The small and mid-cap companies continue to turn
in lower gains during the same period.
OUTLOOK
Hopes for small, but steady, gains in corporate earnings should help to push
stocks further. Stocks will likely continue to benefit from the low inflation
environment that the U.S. has enjoyed throughout this reporting period.
2
<PAGE>
ADVANTUS INDEX 500
FUND
JULY 31, 1998
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
% OF
MARKET STOCK
COMPANY SHARES VALUE PORTFOLIO
- -------------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
General Electric Company.............. 10,600 $ 946,712 3.3%
Microsoft Corporation................. 8,000 881,000 3.1%
Coca-Cola Company..................... 8,000 645,500 2.2%
Exxon Corporation..................... 8,000 561,000 1.9%
Merck & Co., Inc...................... 3,900 480,919 1.7%
Intel................................. 5,500 464,406 1.6%
Pfizer, Inc........................... 4,200 462,000 1.6%
Wal-Mart Stores....................... 7,000 441,875 1.5%
International Business Machine........ 3,100 410,750 1.4%
Lucent Technologies, Inc.............. 4,100 378,994 1.3%
---------- ---
$5,673,156 19.6%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities 0.2%
Transportation 1.1%
Utilities 3.3%
Basic Materials 4.0%
Energy 6.7%
Communication Services 7.5%
Capital Goods 8.1%
Consumer Cyclical 10.6%
Health Care 11.8%
Consumer Staples 14.0%
Technology 14.4%
Financial 18.3%
</TABLE>
+"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.
*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.
**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.
3
<PAGE>
ADVANTUS INDEX 500
FUND
JULY 31, 1998
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL
$10,000 INVESTMENT IN THE ADVANTUS INDEX 500 FUND,
S&P 500 INDEX AND CONSUMER PRICE INDEX
On the following chart you can see how the total return for each of the three
classes of shares of the Advantus Index 500 Fund compared to the S&P 500 Index
and the Consumer Price Index. The lines represent the cumulative total return of
a hypothetical $10,000 investment made on the inception date of each class of
shares of the Advantus Index 500 Fund (January 31, 1997) through July 31, 1998.
CLASS A, B AND C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
S&P 500 CPI Class A Class B Class C
1/31/97 $10,000.00 $10,000.00 $10,000.00 $10,000.00 $10,000.00
7/31/97 $11,790.00 $10,075.00 $11,525.00 $11,577.00 $12,043.00
1/31/98 $12,754.00 $10,157.00 $11,924.00 $11,992.00 $12,404.00
7/31/98 $14,684.00 $10,226.00 $13,621.00 $13,701.00 $14,102.00
Average annual total
return:
Class A:
One year 12.30%
Since inception (1/31/97) 22.90%
Class B:
One year 12.20%
Since inception (1/31/97) 23.40%
Class C:
One year 17.10%
Since inception (1/31/97) 25.80%
</TABLE>
The preceding chart is useful because it provides you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial professional's investment advice. Individuals cannot buy even an
unmanaged index fund without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
4
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES
JULY 31, 1998
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
COMMON STOCK (99.8%)
BASIC MATERIALS (4.0%)
Agriculture Product (.3%)
2,725 Archer Daniels Midland Company.............................. $ 46,666
900 Pioneer Hi-Bred International............................... 28,462
------------
75,128
------------
Aluminum (.3%)
600 Alcan Aluminum Limited (c).................................. 15,300
400 Aluminum Company of America................................. 27,725
600 Reynolds Metals Company..................................... 31,500
------------
74,525
------------
Chemicals (2.4%)
1,500 Air Products and Chemicals, Inc............................. 52,500
700 BF Goodrich Company......................................... 28,394
600 Dow Chemical Company........................................ 54,450
3,500 DuPont...................................................... 217,000
200 Eastman Chemical Company.................................... 11,350
400 Ecolab, Inc................................................. 12,550
500 Engelhard Corporation....................................... 10,437
100 FMC Corporation (b)......................................... 6,400
300 Hercules Incorporated....................................... 10,406
400 International Flavors & Fragrances.......................... 16,800
1,900 Monsanto Company............................................ 107,587
600 Morton International, Inc................................... 14,512
400 PPG Industries, Inc......................................... 25,350
600 Praxair, Inc................................................ 29,550
400 Rohm and Haas Company....................................... 38,950
500 Sigma-Aldrich............................................... 14,437
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
BASIC MATERIALS--CONTINUED
900 Union Carbide Corporation................................... $ 43,200
------------
693,873
------------
Iron and Steel (.1%)
1,400 Allegheny Teledyne Incorported.............................. 28,000
200 Nucor Corporation........................................... 8,700
300 USX-U.S. Steel Group, Inc................................... 8,081
------------
44,781
------------
Mining (.2%)
900 Barrick Gold Corporation (c)................................ 14,737
300 Freeport-McMoran Copper..................................... 4,444
700 Homestake Mining Company.................................... 7,219
400 Inco Limited (c)............................................ 4,375
1,100 Newmont Mining Corporation.................................. 20,762
100 Phelps Dodge Corporation.................................... 5,556
------------
57,093
------------
Paper and Forest (.7%)
200 Bemis Company, Inc.......................................... 7,725
200 Champion International Corporation.......................... 8,487
1,300 Fort James Corporation...................................... 43,875
500 Georgia-Pacific Corporation................................. 25,687
700 International Paper Company................................. 31,237
600 Mead Corporation............................................ 18,037
200 Temple-Inland, Inc.......................................... 10,412
300 Union Camp Corporation...................................... 12,731
600 Weyerhaeuser Company........................................ 25,200
</TABLE>
See accompanying notes to investments in securities.
5
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
BASIC MATERIALS--CONTINUED
<C> <S> <C>
500 Willamette Industries, Inc.................................. $ 14,156
------------
197,547
------------
CAPITAL GOODS (8.1%)
Aerospace/Defense (1.6%)
1,500 Allied-Signal, Inc.......................................... 65,250
3,160 Boeing Company.............................................. 122,647
600 General Dynamics Corporation................................ 28,537
600 Lockheed Martin Corporation................................. 59,812
400 Northrop Grumman Corporation................................ 32,425
1,100 Raytheon Company............................................ 60,844
300 Rockwell International Corporation.......................... 12,206
400 Textron, Inc................................................ 29,550
600 United Technologies Corporation............................. 57,487
------------
468,758
------------
Containers-Metal/Glass (.2%)
400 Crown Cork & Seal Company, Inc.............................. 16,450
800 Owens-Illinois, Inc. (b).................................... 35,300
------------
51,750
------------
Electrical Equipment (4.1%)
1,200 AMP Incorporated............................................ 35,250
2,200 CBS Corporation............................................. 74,662
600 Cooper Industries........................................... 31,462
10,600 General Electric Company.................................... 946,712
900 Honeywell, Inc.............................................. 75,431
600 Raychem Corporation......................................... 18,675
1,000 Thermo Electron Corporation (b)............................. 23,000
------------
1,205,192
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
CAPITAL GOODS--CONTINUED
Engineering/Construction (.2%)
1,000 Caterpillar, Inc............................................ $ 48,500
100 Fluor Corporation........................................... 4,206
------------
52,706
------------
Machinery (.4%)
300 Case Corporation............................................ 10,181
1,500 Deere & Company............................................. 60,281
600 Dover Corporation........................................... 17,437
600 Ingersoll-Rand Company...................................... 26,512
------------
114,411
------------
Manufacturing (.8%)
500 Avery Dennison Corporation.................................. 28,781
500 Illinois Tool Works, Inc.................................... 28,031
200 Johnson Controls............................................ 10,462
500 Pall Corporation............................................ 11,250
300 Parker Hannifin Corporation................................. 10,294
600 Tenneco, Inc................................................ 21,750
1,800 Tyco International, Ltd..................................... 111,487
------------
222,055
------------
Office Equipment (.2%)
900 Ikon Office Solutions....................................... 9,675
700 Pitney Bowes, Inc........................................... 35,350
------------
45,025
------------
Trucks and Parts (.1%)
200 Cummins Engine Co., Inc..................................... 11,137
200 Paccar, Inc................................................. 8,950
------------
20,087
------------
</TABLE>
See accompanying notes to investments in securities.
6
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
CAPITAL GOODS--CONTINUED
<C> <S> <C>
Waste Management (.5%)
1,100 Browning-Ferris Industries.................................. $ 38,706
1,797 Waste Management, Inc. (b).................................. 99,060
------------
137,766
------------
COMMUNICATION SERVICES (7.5%)
Cellular (.5%)
1,900 Airtouch Communications (b)................................. 111,744
900 Nextel Communications, Inc. (b)............................. 24,103
------------
135,847
------------
Telecommunication (1.4%)
2,200 MCI Communications.......................................... 142,450
1,200 Sprint Corporation.......................................... 84,000
3,200 Worldcom, Inc. (b).......................................... 169,200
------------
395,650
------------
Telephone (5.6%)
1,700 Alltel Corporation.......................................... 71,294
4,000 Ameritech................................................... 196,750
5,900 AT&T Corporation............................................ 357,687
4,774 Bell Atlantic Corporation................................... 216,620
3,000 Bellsouth Corporation....................................... 204,937
1,200 Frontier Corporation........................................ 40,275
2,800 GTE Corporation............................................. 152,250
1,900 MediaOne, Inc. (b).......................................... 91,794
5,684 SBC Communications, Inc..................................... 232,333
1,438 US West Communications Group................................ 76,741
------------
1,640,681
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
CONSUMER CYCLICAL (10.6%)
Auto (2.1%)
2,100 Chrysler Corporation Holding Company........................ $ 124,294
400 Cooper Tire & Rubber Company................................ 7,550
849 Dana Corporation............................................ 42,262
400 Eaton Corporation........................................... 26,100
3,800 Ford Motor Company.......................................... 216,362
2,000 General Motors Corporation.................................. 144,625
200 Goodyear Tire & Rubber Company.............................. 12,187
500 ITT Industries.............................................. 17,437
300 TRW, Inc.................................................... 16,256
------------
607,073
------------
Building Materials (.1%)
100 Armstrong World Industries, Inc............................. 6,162
1,200 Masco Corporation........................................... 34,275
------------
40,437
------------
Hardware and Tools (.1%)
500 The Stanley Works........................................... 21,844
------------
Houseware (.2%)
1,100 Corning, Inc................................................ 33,756
600 Whirlpool Corporation....................................... 36,300
------------
70,056
------------
Leisure (.1%)
300 Brunswick Corporation....................................... 5,831
300 Hasbro, Inc................................................. 10,856
500 Mattel, Inc................................................. 19,219
------------
35,906
------------
Lodging-Hotel (.3%)
1,100 Hilton Hotels Corporation................................... 27,706
1,500 Marriott International...................................... 48,750
------------
76,456
------------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
CONSUMER CYCLICAL--CONTINUED
<C> <S> <C>
Photography/Imagery (.7%)
1,000 Eastman Kodak Company....................................... $ 84,125
300 Polaroid Corporation........................................ 9,900
1,000 Xerox Corporation........................................... 105,562
------------
199,587
------------
Publishing (.9%)
900 Dow Jones & Company, Inc.................................... 48,881
900 Gannett Company............................................. 57,544
200 Knight-Ridder, Inc.......................................... 10,550
600 McGraw-Hill Companies, Inc.................................. 49,162
800 New York Times Company...................................... 24,600
700 R.R. Donnelly & Sons Company................................ 29,750
600 Tribune Company............................................. 40,350
------------
260,837
------------
Retail (5.0%)
400 American Greetings.......................................... 18,475
1,300 Autozone, Inc. (b).......................................... 44,525
200 Circuit City Stores, Inc.................................... 10,350
600 Costco Companies, Inc. (b).................................. 34,050
1,000 Datyon Hudson Corporation................................... 47,812
300 Dillards, Inc............................................... 10,312
600 Federated Department Stores (b)............................. 31,762
900 Fred Meyer, Inc. (b)........................................ 39,656
1,050 Gap Incorported............................................. 62,606
200 Harcourt General, Inc....................................... 11,287
4,800 Home Depot, Inc............................................. 201,000
800 JC Penny Company............................................ 46,950
1,700 K Mart Corporation (b)...................................... 27,731
1,200 Lowe's Companies, Inc....................................... 46,200
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
CONSUMER CYCLICAL--CONTINUED
500 May Department Stores Company............................... $ 32,094
200 Mercantile Stores Company, Inc.............................. 15,862
800 Nike, Inc................................................... 35,600
1,400 Nordstrom, Inc.............................................. 43,706
1,000 Sears, Roebuck & Company.................................... 50,750
1,900 Sherwin-Williams Company.................................... 60,562
400 Tandy Corporation........................................... 22,725
1,200 The Limited, Inc............................................ 32,175
2,500 TJX Companies Incorporated.................................. 58,750
600 Toys R Us (b)............................................... 13,650
500 Venator Group (b)........................................... 7,187
7,000 Wal-Mart Stores............................................. 441,875
------------
1,447,652
------------
Service (1.0%)
2,620 Cendant Corporation (b)..................................... 45,359
400 Equifax Incorporated........................................ 16,350
300 H & R Block, Inc............................................ 12,750
1,000 Interpublic Group Company................................... 60,250
700 Mirage Resort, Inc. (b)..................................... 15,050
600 Omnicom Group............................................... 31,500
1,000 Service Corporation International........................... 37,875
1,600 Tele-Communications, Inc. (b)............................... 66,800
------------
285,934
------------
Textiles (.1%)
200 Fruit of the Loom (b)....................................... 6,237
200 Liz Clairborne, Inc......................................... 7,725
600 V.F. Corporation............................................ 28,237
------------
42,199
------------
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
CONSUMER STAPLES (14.0%)
<C> <S> <C>
Beverage (3.4%)
1,600 Anheuser-Busch Companies, Inc............................... $ 82,700
600 Brown-Forman, Inc........................................... 36,375
8,000 Coca-Cola Company........................................... 645,500
400 Coors Company............................................... 15,088
4,600 Pepsico, Inc................................................ 178,537
700 The Seagram Company, Ltd. (c)............................... 25,725
------------
983,925
------------
Broadcasting (.2%)
600 Clear Channel Communications (b)............................ 33,712
800 Comcast Corporation......................................... 36,325
------------
70,037
------------
Entertainment (1.6%)
1,800 Time Warner, Inc............................................ 162,112
1,200 Viacom (b).................................................. 82,200
6,300 Walt Disney Company......................................... 216,956
------------
461,268
------------
Food (2.1%)
800 Best Foods.................................................. 44,500
1,100 Campbell Soup Company....................................... 59,400
900 Conagra, Inc................................................ 23,287
700 General Mills, Inc.......................................... 43,356
900 Hershey Foods Corporation................................... 56,812
900 HJ Heinz Company............................................ 49,612
800 Kellogg Company............................................. 26,500
900 Quaker Oats Company......................................... 47,587
900 Ralston-Purina Group........................................ 28,969
1,200 Sara Lee Corporation........................................ 60,150
1,900 Unilever N.V. (c)........................................... 132,050
600 Wm. Wrigley Jr. Company..................................... 53,812
------------
626,035
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
CONSUMER STAPLES--CONTINUED
Food & Health (.1%)
1,200 Sysco Corporation........................................... $ 28,500
------------
Household Product (3.1%)
600 Clorox Company.............................................. 61,500
1,000 Colgate Palmolive Company................................... 92,437
3,700 Gillette Company............................................ 193,787
1,500 Kimberly-Clark Corporation.................................. 67,406
1,100 Minnesota Mining and Manufacturing.......................... 82,362
600 Newell Company.............................................. 30,900
4,200 Procter & Gamble Company.................................... 333,375
1,000 Rubbermaid Incorporated..................................... 33,313
------------
895,080
------------
Personal Care (.2%)
500 Alberto-Culver Company...................................... 12,719
400 Avon Products............................................... 34,600
------------
47,319
------------
Restaurants (.6%)
2,200 McDonalds Corporation....................................... 146,988
740 Tricon Global Restaurants (b)............................... 26,178
500 Wendy's International, Inc.................................. 11,156
------------
184,322
------------
Retail (1.1%)
600 Albertson's Incorporated.................................... 28,838
1,400 American Stores Company..................................... 32,463
800 CVS Corporation............................................. 32,800
1,200 Kroger Company (b).......................................... 56,775
1,200 Rite Aid Corporation........................................ 47,400
900 Super Valu, Inc............................................. 44,606
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
CONSUMER STAPLES--CONTINUED
<C> <S> <C>
1,400 Walgreen Company............................................ $ 60,463
500 Winn-Dixie Stores, Inc...................................... 20,688
------------
324,033
------------
Service (.3%)
700 Automatic Data Processing, Inc.............................. 47,381
600 Ceridian Corporation (b).................................... 34,313
300 Deluxe Corporation.......................................... 10,219
------------
91,913
------------
Tobacco (1.3%)
500 Fortune Brands, Inc......................................... 18,469
7,500 Philip Morris Companies, Inc................................ 328,594
1,000 UST, Inc.................................................... 27,000
------------
374,063
------------
ENERGY (6.7%)
Oil (5.5%)
300 Amerada Hess Corporation.................................... 15,206
3,100 Amoco Corporation........................................... 129,425
2,000 Chevron Corporation......................................... 165,250
8,000 Exxon Corporation........................................... 561,000
2,400 Mobil Corporation........................................... 167,400
900 Occidental Petroleum Corporation............................ 20,025
300 Pennzoil Company............................................ 13,500
600 Phillips Petroleum Company.................................. 26,513
7,000 Royal Dutch Petroleum (c)................................... 357,000
1,700 Texaco, Inc................................................. 103,381
400 Unocal Corporation.......................................... 13,100
900 USX - Marathon Group........................................ 30,713
------------
1,602,513
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
ENERGY--CONTINUED
Oil & Gas (1.2%)
800 Anadarko Petroleum Corporation.............................. $ 27,450
800 Ashland, Inc................................................ 41,500
900 Atlantic Richfield Company.................................. 60,975
800 Baker Hughes Incorporated................................... 19,550
452 Burlington Resources, Inc................................... 16,385
600 Dresser Industries, Inc..................................... 21,188
700 Halliburton Company......................................... 25,419
100 Kerr-Mcgee Corporation...................................... 5,131
500 Rowan Company (b)........................................... 7,063
1,300 Schlumberger Limited........................................ 78,731
800 Union Pacific Resources Group............................... 11,200
600 Western Atlas Corporation (b)............................... 39,263
------------
353,855
------------
FINANCIAL (18.3%)
Auto Finance (.3%)
900 Fleet Financial Group, Inc.................................. 77,344
------------
Banks (8.4%)
2,220 Banc One Corporation........................................ 114,746
1,000 Bank of Boston Corporation.................................. 197,450
1,000 Bank of New York, Inc....................................... 64,000
2,200 Bankamerica Corporation..................................... 48,375
300 Bankers Trust New York Corporation.......................... 33,619
500 BB&T Corporation............................................ 35,125
2,900 Chase Manhattan Corporation................................. 219,313
1,500 Citicorp.................................................... 255,000
450 Comerica.................................................... 30,319
</TABLE>
See accompanying notes to investments in securities.
10
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
FINANCIAL--CONTINUED
<C> <S> <C>
850 Fifth Third Bancorp......................................... $ 52,913
700 First Chicago NBD Corporation............................... 58,669
3,048 First Union Corporation..................................... 183,642
1,210 Huntington Bancshares....................................... 36,603
600 JP Morgan & Company, Inc.................................... 75,600
1,200 Keycorp..................................................... 40,800
700 Mellon Bank Corporation..................................... 47,163
500 Mercantile Bancorporation................................... 27,188
800 National City Corporation................................... 53,500
3,105 NationsBank Corporation..................................... 247,624
300 Northern Trust Corporation.................................. 22,088
2,500 Norwest Corporation......................................... 89,844
1,200 PNC Bank Corporation........................................ 64,725
400 Republic New York Corporation............................... 23,725
300 State Street Corporation.................................... 20,794
1,200 Summit Bancorp.............................................. 53,700
800 Suntrust Banks, Inc......................................... 58,400
900 Synovus Financial Corporation............................... 19,913
2,553 US Bancorp.................................................. 117,438
500 Wachovia Corporation........................................ 42,813
300 Wells Fargo & Company....................................... 106,763
------------
2,441,852
------------
Commercial Finance (.1%)
1,300 Dun & Bradstreet Corporation (b)............................ 35,669
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
FINANCIAL--CONTINUED
Consumer Finance (1.5%)
1,400 American Express Company.................................... $ 154,525
1,086 Associates First Capital Corporation........................ 84,389
400 Capital One Financial Corporation........................... 46,425
1,519 Household International, Inc................................ 75,571
1,150 MBNA Corporation............................................ 38,525
800 SLM Holding Corporation..................................... 37,000
------------
436,435
------------
Finance-Diversified (1.5%)
800 American General Corporation................................ 54,650
1,350 Charles Schwab Corporation.................................. 50,625
1,900 Federal Home Loan Mortgage Corporation...................... 89,775
3,200 Federal National Mortgage Association....................... 198,400
900 MGIC Investment Corporation................................. 48,263
------------
441,713
------------
Insurance (4.8%)
900 Aetna Incorporated.......................................... 62,381
2,700 Allstate Corporation........................................ 114,581
2,250 American International Group................................ 339,328
450 Aon Corporation............................................. 30,600
300 Chubb Corporation........................................... 22,013
600 Cigna Corporation........................................... 39,638
950 Conseco, Inc................................................ 39,900
200 General Re Corporation...................................... 47,400
600 Hartford Financial Services Group........................... 31,238
</TABLE>
See accompanying notes to investments in securities.
11
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
FINANCIAL--CONTINUED
<C> <S> <C>
300 Jefferson-Pilot Corporation................................. $ 16,913
300 Lincoln National Corporation................................ 28,725
700 Loews Corporation........................................... 56,438
600 Marsh & McLennen............................................ 36,638
600 MBIA, Inc................................................... 40,425
300 Progressive Corporation..................................... 37,088
500 Providian Financial......................................... 39,281
800 Safeco Corporation.......................................... 36,050
600 St. Paul Companies, Inc..................................... 21,713
450 Sunamerica Incorporated..................................... 27,647
400 Torchmark Corporation....................................... 17,525
400 Transamerica Corporation.................................... 47,250
3,589 Travelers Group Incorporated................................ 240,463
700 Unum Corporation............................................ 36,881
------------
1,410,116
------------
Investment Bankers/Brokers (1.3%)
700 Bear Stearns Companies...................................... 39,375
700 Franklin Resources, Inc..................................... 30,494
400 Lehman Brothers Holdings, Inc............................... 28,800
1,100 Merrill Lynch & Co., Inc.................................... 107,250
1,830 Morgan Stanley Dean Witter.................................. 159,324
------------
365,243
------------
Public Finance (.1%)
400 Countrywide Credit Industries............................... 19,300
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
FINANCIAL--CONTINUED
Savings and Loans (.3%)
300 Golden West Financial Corporation........................... $ 27,713
600 H.F. Ahmanson & Company..................................... 39,638
870 Washington Mutual Incorporated.............................. 34,746
------------
102,097
------------
HEALTH CARE (11.8%)
Biotechnology (.2%)
800 Amgen, Inc. (b)............................................. 58,750
------------
Drugs (6.4%)
3,100 Bristol-Myers Squibb Company................................ 353,206
300 Cardinal Health Incorporated................................ 28,819
3,400 Eli Lilly & Company......................................... 228,650
3,900 Merck & Co., Inc............................................ 480,919
4,200 Pfizer, Inc................................................. 462,000
1,400 Pharmacia & Upjohn.......................................... 66,325
2,400 Schering Plough Corporation................................. 232,200
------------
1,852,119
------------
Health Care-Diversified (3.3%)
4,800 Abbott Laboratories......................................... 199,500
4,100 American Home Products Corporation.......................... 211,150
1,600 HealthSouth Rehabilitation Company (b)...................... 40,200
4,200 Johnson & Johnson........................................... 324,450
2,400 Warner-Lambert Company...................................... 181,350
------------
956,650
------------
</TABLE>
See accompanying notes to investments in securities.
12
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
HEALTH CARE--CONTINUED
<C> <S> <C>
Hospital Management (.3%)
1,700 Columbia/HCA Healthcare Corporation......................... $ 48,450
900 Tenet Healthcare Corporation (b)............................ 26,944
------------
75,394
------------
Managed Care (.2%)
1,200 Humana (b).................................................. 32,625
700 United Health Care.......................................... 39,550
------------
72,175
------------
Medical Products/Supplies (1.4%)
600 Alza Corporation (b)........................................ 23,325
300 Bausch & Lomb Incorporated.................................. 15,338
900 Baxter International, Inc................................... 53,775
600 Becton, Dickinson & Company................................. 49,575
700 Biomet, Inc................................................. 21,875
600 Boston Scientific Corporation (b)........................... 45,975
400 Guidant Corporation......................................... 29,725
600 Mallinckrodt, Inc........................................... 16,613
1,400 Medtronic, Inc.............................................. 86,713
400 St. Jude Medical, Inc. (b).................................. 12,200
1,200 United States Surgical Corporation.......................... 55,275
------------
410,389
------------
TECHNOLOGY (14.4%)
200 3 Com (b)................................................... 4,950
200 Adobe Systems, Inc.......................................... 6,463
900 Advanced Micro Devices, Inc. (b)............................ 15,525
500 Apple Computer Incorporated (b)............................. 17,313
2,400 Applied Materials, Inc. (b)................................. 80,400
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
1,700 Bay Networks, Inc. (b)...................................... $ 58,544
3,200 Cisco Systems, Inc. (b)..................................... 306,400
5,361 Compaq Computer Corporation................................. 176,243
1,400 Computer Associates International........................... 46,463
600 Computer Sciences Corporation............................... 38,400
2,000 Dell Computer Corporation (b)............................... 217,188
1,800 DSC Communications (b)...................................... 54,619
1,500 EMC Corporation (b)......................................... 73,500
1,200 First Data Corporation...................................... 34,725
600 Gateway (b)................................................. 32,400
1,900 General Instrument Corporation (b).......................... 51,538
600 Harris Corporation.......................................... 23,775
800 HBO & Company............................................... 23,575
3,400 Hewlett-Packard Company..................................... 188,700
600 IMS Health, Inc............................................. 37,688
5,500 Intel....................................................... 464,406
3,100 International Business Machine.............................. 410,750
200 KLA-Tencor Corporation (b).................................. 5,975
4,100 Lucent Technologies, Inc.................................... 378,994
700 Micron Technology, Inc. (b)................................. 23,363
8,000 Microsoft Corporation (b)................................... 881,000
1,600 Motorola.................................................... 83,600
300 National Semiconductor Corporation (b)...................... 3,694
1,500 Northern Telecom Limited.................................... 88,125
</TABLE>
See accompanying notes to investments in securities.
13
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
3,200 Oracle Corporation (b)...................................... $ 84,800
1,400 Parametric Technology Corporation (b)....................... 19,075
200 Perkin-Elmer Corporation.................................... 11,725
1,600 Seagate Technology, Inc. (b)................................ 36,400
900 Silicon Graphics Incorporated (b)........................... 10,013
1,200 Sun Microsystems, Inc. (b).................................. 56,700
600 Tellabs Incorporated (b).................................... 45,169
1,200 Texas Instruments Incorporated.............................. 71,175
800 W.W. Grainger, Inc.......................................... 35,300
------------
4,198,673
------------
TRANSPORTATION (1.1%)
Air Freight (.1%)
300 FDX Corporation (b)......................................... 18,206
------------
Airlines (.5%)
400 AMR Corporation (b)......................................... 28,575
200 Delta Air Lines, Inc........................................ 24,500
1,900 Southwest Airlines Company.................................. 62,581
300 USAir Group, Inc. (b)....................................... 22,500
------------
138,156
------------
Railroads (.5%)
600 Burlington Northern Santa Fe................................ 61,763
400 CSX Corporation............................................. 16,175
1,300 Norfolk Southern Corporation................................ 38,838
600 Union Pacific Corporation................................... 25,200
------------
141,976
------------
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
TRANSPORTATION--CONTINUED
Transport Services ( -- )
600 Laidlaw, Inc. (c)........................................... $ 5,738
------------
UTILITIES (3.3%)
Electric Companies (2.6%)
200 Ameren Corporation.......................................... 7,563
800 American Electric Power Company............................. 34,450
1,000 Carolina Power & Light Company.............................. 40,688
300 Central & Southwest Corporation............................. 7,631
200 Cinergy..................................................... 6,313
700 Consolidated Edison, Inc.................................... 29,619
600 Dominion Resources, Inc..................................... 24,450
600 DTE Energy Company.......................................... 24,075
908 Duke Energy Corporation..................................... 51,870
1,200 Edison International........................................ 33,300
1,400 Emerson Electric Company.................................... 83,213
1,000 Entergy Corporation......................................... 27,375
2,200 FirstEnergy Corporation..................................... 60,638
600 FPL Group Incorporated...................................... 36,488
200 GPU Incorporated............................................ 7,150
1,100 Houston Industries, Inc..................................... 30,731
400 Northern States Power Company............................... 10,525
1,200 Pacific Gas & Electric Company.............................. 36,525
1,100 Pacificorp.................................................. 23,581
1,500 Peco Energy Company......................................... 44,906
1,000 Public Service Enterprise Group............................. 32,688
2,000 Southern Company............................................ 51,000
600 Texas Utilities Company..................................... 24,038
</TABLE>
See accompanying notes to investments in securities.
14
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
UTILITIES--CONTINUED
<C> <S> <C>
1,200 Unicom Coproration.......................................... $ 41,475
------------
770,292
------------
Natural Gas (.7%)
1,900 Coastal Corporation......................................... 62,225
300 Consolidated Natural Gas Company............................ 15,506
700 Enron Corporation........................................... 37,056
1,400 Sempra Energy (b)........................................... 35,263
<CAPTION>
MARKET
SHARES VALUE(a)
- --------- ------------
<C> <S> <C>
UTILITIES--CONTINUED
300 Sonat, Inc.................................................. $ 8,775
1,200 The Williams Company........................................ 38,475
------------
197,300
------------
Total common stocks (cost: $24,378,445)................................. 28,989,306
------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ---------
<C> <S> <C> <C>
SHORT-TERM SECURITIES (.9%)
$268,095 Federated Prime Obligation Fund, current rate 5.500%....... 268,095
------------
Total short-term securities (cost: $268,095)............... 268,095
------------
Total investments in securities (cost: $24,646,540) (d).... $ 29,257,401
------------
------------
</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 1.9% of net assets in foreign securities as of July 31, 1998.
(d) At July 31, 1998 the cost of securities for federal income tax purposes was
$24,668,705. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation........... $ 5,348,276
Gross unrealized depreciation........... (759,580)
-------------
Net unrealized appreciation............. $ 4,588,696
-------------
-------------
</TABLE>
15
<PAGE>
ADVANTUS INDEX 500 FUND
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value--see
accompanying schedule for detailed listing
(identified cost: $24,646,540)................... $ 29,257,401
Cash in bank on demand deposit.................... 1,817
Receivable for Fund shares sold................... 145,808
Receivable for investment securities sold......... 1,393,024
Accrued interest receivable....................... 1,764
Dividends receivable.............................. 26,455
Organizational costs (note 5)..................... 62,175
------------
Total assets.................................. 30,888,444
------------
LIABILITIES
Payable for investment securities purchased....... 1,627,285
Payable for Fund shares redeemed.................. 119,796
Payable to Adviser................................ 90,669
------------
Total liabilities............................. 1,837,750
------------
Net assets applicable to outstanding capital
stock............................................ $ 29,050,694
------------
------------
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)............................................. $ 19,321
Additional paid-in capital...................... 24,270,102
Undistributed net investment income............. 11,532
Accumulated net realized gain from
investments.................................... 138,878
Unrealized appreciation on investments.......... 4,610,861
------------
Total--representing net assets applicable to
outstanding capital stock.................... $ 29,050,694
------------
------------
Net assets applicable to outstanding Class A
shares........................................... $ 15,710,848
------------
------------
Net assets applicable to outstanding Class B
shares........................................... $ 11,831,678
------------
------------
Net assets applicable to outstanding Class C
shares........................................... $ 1,508,168
------------
------------
Shares outstanding and net asset value per share:
Class A--Shares outstanding 1,043,120........... $ 15.06
------------
------------
Class B--Shares outstanding 788,282............. $ 15.01
------------
------------
Class C--Shares outstanding 100,721............. $ 14.97
------------
------------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
ADVANTUS INDEX 500 FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1998
<TABLE>
<S> <C>
Investment income:
Interest............................. $ 12,344
Dividends............................ 268,129
----------
Total investment income.......... 280,473
----------
Expenses (note 4):
Investment advisory fee.............. 61,186
Distribution fees--Class A........... 33,567
Distribution fees--Class B........... 59,190
Distribution fees--Class C........... 8,876
Administrative services fee.......... 43,800
Amortization of organizational
costs............................... 17,764
Transfer agent fees.................. 36,641
Custodian fees....................... 17,275
Auditing and accounting services..... 13,025
Legal fees........................... 4,743
Directors' fees...................... 242
Registration fees.................... 38,564
Printing and shareholder reports..... 27,865
Insurance............................ 5,771
Licensing fee........................ 3,863
Other................................ 214
----------
Total expenses................... 372,586
Less fees and expenses waived or
absorbed by Adviser:
Class A distribution fees............ (18,213)
Other fund expenses.................. (162,977)
----------
Total fees and expenses waived or
absorbed......................... (181,190)
----------
Total net expenses............... 191,396
----------
Investment income--net........... 89,077
----------
Realized and unrealized gains on
investments:
Net realized gains on investments
(note 3)............................ 155,958
Net change in unrealized appreciation
or depreciation on investments...... 2,694,442
----------
Net gains on investments......... 2,850,400
----------
Net increase in net assets resulting
from operations....................... $2,939,477
----------
----------
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
ADVANTUS INDEX 500 FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED JULY 31, 1998 AND THE PERIOD FROM SEPTEMBER 4, 1996,
COMMENCEMENT OF OPERATIONS, TO JULY 31, 1997
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Operations:
Investment income--net............... $ 89,077 $ 48,081
Net realized gain on investements.... 155,958 4,576
Net change in unrealized appreciation
or depreciation on investments...... 2,694,442 1,916,419
----------- -----------
Increase in net assets resulting
from operations................. 2,939,477 1,969,076
----------- -----------
Distributions to shareholders from:
Investment income--net:
Class A............................ (99,594) (37,824)
Class B............................ (9,115) (3,405)
Class C............................ (1,291) (1,043)
Net realized gains on investments:...
Class A............................ (14,438) --
Class B............................ (6,117) --
Class C............................ (1,101) --
----------- -----------
Total distributions.............. (131,656) (42,272)
----------- -----------
Capital share transactions (notes 4 and
6):
Proceeds from sales:
Class A............................ 7,485,540 6,559,299
Class B............................ 9,963,570 1,754,388
Class C............................ 1,231,311 228,318
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 40,014 5,289
Class B............................ 15,232 3,405
Class C............................ 2,392 1,043
Payments for redemption of shares:
Class A............................ (1,740,078) (53,724)
Class B............................ (949,778) (20,288)
Class C............................ (208,843) (1,021)
----------- -----------
Increase in net assets from
capital share transactions...... 15,839,360 8,476,709
----------- -----------
Total increase in net assets..... 18,647,181 10,403,513
Net assets at beginning of period...... 10,403,513 --
----------- -----------
Net assets at end of period (including
undistributed net investment income of
$11,532 and $14,691, respectively).... $29,050,694 $10,403,513
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998
(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 Funds investment
objective is to seek investment results that correspond generally to that of the
S&P 500 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 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. 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 in the financial statements. 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, by an independent pricing service or at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities.
When market quotations are not readily available, securities are valued at fair
value as determined in good faith by procedures adopted by the Board of
Directors. Short-term securities are valued at market.
Security transactions are accounted for on the date the securities are
purchased or sold. Realized gains and losses are calculated on the
identified-cost basis. Dividend income is recognized on the ex-dividend date and
interest income, including amortization of bond premium and discount computed on
a level yield basis, is accrued daily.
19
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(CONTINUED)
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
$17,764.
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 year ended July 31, 1998, purchases of securities and proceeds from
sales, other than temporary investments in short-term securities aggregated
$26,434,435 and $10,565,242 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 know as MIMLIC Sales Corporation, the underwriter of the
Fund and wholly-owned subsidiary of Advantus Capital, to be used to pay certain
expenses incurred in the distribution, promotion and servicing of the Fund's
shares. The Class A Plan provides for a fee up to .30 percent of average daily
net assets of Class A shares. The Class B and Class C Plans provide for a fee up
to 1.00 percent of average daily net assets of Class B and Class C shares,
respectively. The Class B and Class C 1.00 percent fee is comprised of a .75
percent distribution fee and a .25 percent service fee. Ascend is currently
waiving that portion of Class A distribution fees which exceeds, as a percentage
of average daily net assets, .15 percent. Prior to December 31, 1997 the portion
exceeding .10 percent of average daily net assets was waived. Ascend waived
Class A distribution fees in the amount of $18,213 for the year ended July 31,
1998.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal, auditing and accounting services, organizational costs and other
miscellaneous expenses.
20
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
The Fund pays an administrative services fee equal to $3,700 to Minnesota
Mutual for accounting, auditing, legal and other administrative services which
Minnesota Mutual provides. Prior to February 1, 1998, the administrative
services fee was $3,600 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the year ended July 31,
1998, Advantus Capital voluntarily agreed to absorb $162,977 in expenses which
were otherwise payable by the Fund.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $225,676.
As of July 31, 1998, Minnesota Mutual and subsidiaries and the directors and
officers of the Fund as a whole own the following shares:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE
SHARES OWNED
----------- -------------
<S> <C> <C>
Class A................................................................................... 505,158 48.4%
Class B................................................................................... 5,113 .7%
Class C................................................................................... 5,105 5.1%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $4,731.
(5) ORGANIZATIONAL COSTS
The Fund incurred organizational expenses in connection with the start-up
and initial registration. These costs will be amortized over 60 months on a
straight-line basis beginning with the commencement of operations. If any or all
of the shares held by Advantus Capital, or any other holder, representing
initial capital of the Fund are redeemed during the amortization period, the
redemption proceeds will be reduced by the pro rata portion (based on the ratio
that the number of initial shares redeemed bears to the total number of
outstanding initial shares of the Fund at the date of redemption) of the
unamortized organizational cost balance.
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the year ended July 31, 1998 and the period from
September 4, 1996 (commencement of operations) to July 31, 1997 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
--------------------- -------------------- --------------------
1998 1997 1998 1997 1998 1997
---------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold............................................... 528,494 638,721 702,411 153,967 94,533 20,674
Issued for reinvested distributions................ 2,873 456 1,181 303 186 99
Redeemed........................................... (122,719) (4,705) (67,797) (1,783) (14,688) (83)
---------- --------- --------- --------- --------- ---------
408,648 634,472 635,795 152,487 80,031 20,690
---------- --------- --------- --------- --------- ---------
---------- --------- --------- --------- --------- ---------
</TABLE>
(7) YEAR 2000
In 1995, Minnesota Mutual began addressing computer systems requirements and
applications to be Year 2000 compliant. Based on a current study, Minnesota
Mutual plans to spend approximately $14 million through 1999 to modify its
computer information systems, enabling proper processing of transactions
relating to the year 2000 and beyond. The Fund will not be charged for these
expenses.
21
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(8) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------------- -------------------------- -------------------------
PERIOD FROM PERIOD FROM PERIOD FROM
JANUARY 31, JANUARY 31, JANUARY 31,
YEAR ENDED 1997 TO YEAR ENDED 1997 TO YEAR ENDED 1997 TO
JULY 31, JULY 31, JULY 31, JULY 31, JULY 31, JULY 31,
1998 1997 1998 1997 1998 1997
------------ ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 12.89 $10.68 $ 12.87 $10.69 $12.85 $10.69
------------ ----------- ------------ ----------- ----------- -----------
Income from investment operations:
Net investment income................. .10 .06 .02 .01 .01 .01
Net gains or losses on securities
(both realized and unrealized)...... 2.21 2.21 2.17 2.21 2.16 2.18
------------ ----------- ------------ ----------- ----------- -----------
Total from investment operations.... 2.31 2.27 2.19 2.22 2.17 2.19
------------ ----------- ------------ ----------- ----------- -----------
Less distributions:
Dividends from net investment
income.............................. (.12) (.06) (.03) (.04) (.03) (.03)
Distributions from capital gains...... (.02) -- (.02) -- (.02) --
------------ ----------- ------------ ----------- ----------- -----------
Total distributions................. (.14) (.06) (.05) (.04) (.05) (.03)
------------ ----------- ------------ ----------- ----------- -----------
Net asset value, end of period.......... $ 15.06 $12.89 $ 15.01 $12.87 $14.97 $12.85
------------ ----------- ------------ ----------- ----------- -----------
------------ ----------- ------------ ----------- ----------- -----------
Total return (a)........................ 18.2% 21.3% 17.2% 20.8% 17.1% 20.4%
Net assets, end of period (in
thousands)............................ $15,711 $8,176 $11,832 $1,962 $1,508 $ 266
Ratio of expenses to average daily net
assets (c)............................ .74% .70%(b) 1.60% 1.60%(b) 1.60% 1.60%(b)
Ratio of net investment income to
average daily net assets (c).......... .83% 1.19%(b) (.06)% .29%(b) (.06)% .29%(b)
Portfolio turnover rate (excluding
short-term securities)................ 59.2% 5.8% 59.2% 5.8% 59.2% 5.8%
Average commission rate on common stock
transactions (d)...................... $ .0281 $.0319 $ .0281 $.0319 $.0281 $.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. For periods less than one year, total return presented has not
been annualized.
(b) Adjusted to an annual basis.
(c) The Fund's Distributor and Adviser voluntarily waived and absorbed $181,190
and $50,025 in expenses for the year ended July 31, 1998 and the period
from January 31, 1997 (date of inception) 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 1.81% and 2.29%,
respectively, and the ratio of net investment income (loss) to average
daily net assets would have been (.24%) and (.40%), respectively. If Class
B shares had been charged for these expenses, the ratio of expenses to
average daily net assets would have been 2.51% and 2.99%, respectively, and
the ratio of net investment income (loss) to average daily net assets would
have been (.97%) and (1.10%), respectively. If Class C shares had been
charged for these expenses, the ratio of expenses to average daily net
assets would have been 2.51% and 2.99%, respectively, and the ratio of net
investment income (loss) to average daily net assets would have been (.97%)
and (1.10%), respectively.
(d) Average commission rate is calculated by dividing the total brokerage
commissions paid on applicable purchases and sales of common stocks for the
period by the total number of related shares purchased and sold.
22
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders
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. as of July 31, 1998 and the related statement of operations for the
year then ended, the statements of changes in net assets for the year ended July
31, 1998, and the period from September 4, 1996, commencement of operations, to
July 31, 1997 and the financial highlights for the year ended July 31, 1998 and
the period from Janurary 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 audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Investment securities held in custody are confirmed to us by the
custodian. As to securities purchased or sold but not received or delivered, we
request confirmations from brokers, and where replies are not received, we carry
out other appropriate auditing procedures. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and the financial highlights
referred to above present fairly, in all material respects, the financial
position of the Advantus Index 500 Fund, Inc. as of July 31, 1998 and the
results of its operations, changes in its net assets and financial highlights,
for the periods stated in the first paragraph above, in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
September 4, 1998
23
<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, 1998. Dividends for the 1998 calender year will be
reported to you on Form 1099-Div in late January 1999. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
Income distribution--taxable as dividend income, 100% qualifying for deductions by corporations
September 24, 1997.......................................................................................... $ .0326
December 23, 1997........................................................................................... .0594
March 25, 1998.............................................................................................. .0278
June 25, 1998............................................................................................... .0255
---------
$ .1453
---------
---------
</TABLE>
The distribution of $.0594 payable on December 23, 1997 represents $.0196 of
short-term capital gains (taxable as dividend income) and $.0398 from net
investment income.
CLASS B
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
Income distribution--taxable as dividend income, 100% qualifying for deductions by corporations
September 24, 1997.......................................................................................... $ .0107
December 23, 1997........................................................................................... .0353
March 25, 1998.............................................................................................. .0039
---------
$ .0499
---------
---------
</TABLE>
The distribution of $.0353 payable on December 23, 1997 represents $.0196 of
short-term capital gains (taxable as dividend income) and $.0157 from net
investment income.
CLASS C
<TABLE>
<CAPTION>
PAYABLE DATE PER SHARE
- ------------------------------------------------------------------------------------------------------------ ---------
<S> <C>
Income distribution--taxable as dividend income, 100% qualifying for deductions by corporations
September 24, 1997.......................................................................................... $ .0096
December 23, 1997........................................................................................... .0335
March 25, 1998.............................................................................................. .0030
---------
$ .0461
---------
---------
</TABLE>
The distribution of $.0335 payable on December 23, 1997 represents $.0196 of
short-term capital gains (taxable as dividend income) and $.0139 from net
investment income.
24
<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 each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year. 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 EXCHANGE: You can move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same class)
just by calling our toll free number. The Telephone Exchange and Telephone
Redemption privilege will automatically be established unless otherwise
indicated on the Account Application. Telephone Exchange and Redemption may be
changed (added/deleted) at any time by submitting a request in writing or by
completing a Service Request Form.
SYSTEMATIC EXCHANGE: You can move a set amount of money monthly from one
Advantus Fund to another Advantus Fund (with identical registrations within the
same class) to diversify your investment portfolio and take advantage of
dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums from 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: Special purchase plans enable you to open an Advantus
Fund account for as little as $25 and lower your average share cost through
"dollar-cost averaging." (Dollar-cost averaging does not assure a profit, nor
does it prevent loss in declining markets.) The Automatic Investment Plan allows
you to invest automatically each month from your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Traditional or Roth Individual Retirement Account or other qualified plan
including: SEP IRA's, SIMPLE IRA's, profit sharing, money purchase or defined
benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the account.
25
<PAGE>
Wire transfers are for amounts over $500. The prevailing wire charge will be
added to the withdrawal amount. The Telephone Exchange and Telephone Redemption
privilege will automatically be established unless otherwise indicated on the
Account Application. Telephone Exchange and Redemption may be changed
(added/deleted) at any time by submitting a request in writing or by completing
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 will receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
statements to help you track all of your Advantus Fund investments and annual
tax statements. Semi-annual and annual reports will provide you with portfolio
information, fund performance data and the current investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining personal information
and assistance directly from Advantus Shareholder Services, call
(1-800-665-6005). Advantus Account Representatives are available Monday through
Friday from 8 a.m. to 4:45 p.m. Central Time. Our voice response system is
available 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 account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc. (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. To find a Registered Representative near you, call the toll-free
service line (1-800-665-6005).
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use the Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages twelve mutual funds containing
$2.9 billion in assets in addition to $2.0 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 13 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
26
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS LOGO]
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)
<PAGE>
ASCEND FINANCIAL SERVICES, INC. BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
F.51520 Rev. 9-1998
