<PAGE>
INDEX 500
ADVANTUS INDEX 500 FUND, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS DATED JANUARY 31, 1999
[ADVANTUS -TM- FAMILY OF FUNDS]
EQUITY
<PAGE>
ADVANTUS Index 500 Fund
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 5
STATEMENT OF ASSETS AND LIABILITIES 15
STATEMENT OF OPERATIONS 16
STATEMENTS OF CHANGES IN NET ASSETS 17
NOTES TO FINANCIAL STATEMENTS 18
SHAREHOLDER SERVICES 23
<PAGE>
Letter from the President [PHOTO]
Dear Shareholders:
Throughout 1998, the global economy was steeped in volatility, uncertainty, and
- - in some cases - utter chaos. Some of the bleak economic realities that
permeated the global economy throughout most of the year brightened in the
fourth quarter. The U.S. economy and markets remained strong despite periodic
volatility and several out-of-the-ordinary events.
To hold the line against continued global economic ills, central banks based in
the United States and Europe pumped tremendous liquidity into world markets.
This strategy drove down interest rates and calmed some erratic world markets.
Keep in mind that the problems did not disappear, but the swift and concerted
efforts of the United States and several Western European countries and their
central banks averted increasing global problems.
We believe the United States' economy remains very strong. The fourth quarter
1998 marked the longest period of economic expansion in our country's history,
28 quarters (as measured by positive GDP). Low inflation continues, as well. The
Federal Reserve has been vigilant and deserves much credit for our country's
excellent economic status. The Fed's proactive, accommodating stance has
bolstered confidence in our economy to investors both here and abroad.
The year ending December 31, 1998 marked four years of double-digit returns in
the major stock market indices. We finished 1998 with new highs in the large cap
indices and with investment inflows returning to the market - all on the heels
of a litany of serious issues, including presidential impeachment. The bond
market was strong and delivered high single-digit returns for much of the year,
but was fraught with volatility.
We see the long-term fundamentals for the U.S. stock and bond markets remaining
positive. However, much of the world remains in economic and political tumult.
In Asia, we believe a slow recovery is underway and will likely progress
throughout 1999; the exception to recovery is Japan. On the European continent,
the euro appears to have gotten off to a strong start. The euro will likely
allow producers to sell efficiently across borders without the expense and
burden of currency exchanges. In the U.S., we expect strong economic conditions
to continue. Growth will likely slow, but it will likely continue, and we
believe inflation will likely stay at a low level.
In the following pages, the Fund's manager will update you on how the economy
and the market affected the Fund during this reporting period. The manager will
discuss the Fund's performance and some strategies used to maximize performance.
We assert that a long-range view of investing provides the greatest benefit to
our shareholders. We encourage you to maintain a long-range view of investing,
and we believe that you will derive the greatest benefit by doing so.
Thank you for investing with Advantus.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, President
Advantus Funds
<PAGE>
ADVANTUS Index 500 Fund
PERFORMANCE UPDATE
[PHOTO]
KEVIN ZWART
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 six month period ended January 31, 1999, the Advantus Index 500 Fund
returned the following for each class of shares currently offered:
<TABLE>
<S> <C>
CLASS A.......................... 14.37 PERCENT*
CLASS B.......................... 13.88 PERCENT*
CLASS C.......................... 13.80 PERCENT*
</TABLE>
This compares to the S&P 500 Index,** which earned 15.06 percent for the same
period.
Performance Analysis
Continuing a pattern evident over the last few reporting periods, about 70
percent of the return was generated by the largest 50 stocks in the index. The
largest stocks have continued to outperform smaller stocks.
The Technology Sector has continued to carry the index during this reporting
period. In addition to being one of the highest weighted sectors in the index,
it also returned 48.6 percent for this reporting period, with Microsoft
Corporation and Intel being the two stocks with the largest contributions to the
index. Basic Materials, Energy, and Financials were all in the red for the
period, with E.I. DuPont de Nemours and Company, Royal Dutch Petroleum, and
Citicorp leading the decline.
Outlook
Over the last five years the S&P 500 Index** has averaged a total return of over
20 percent. This has been the best five year period in over 70 years. While
money continues to flow into the markets, it is difficult to see how long this
kind of performance can be sustained. Throughout 1999, it will be important for
sectors other than Technology to increase performance. If other sectors perform
well, the odds of seeing the same kind of returns that we have grown used to
since 1995 will likely increase.
2
<PAGE>
+"Standard & Poor's", "S&P", "S&P 500", "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 5.5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge.
**The S&P 500 Index 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 mutual fund whose performance reflects the deduction of an investment advisory
fee and other expenses.
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ----------------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
Microsoft Corporation.................... 10,000 $1,750,000 4.1%
General Electric Company................. 13,100 1,373,862 3.2%
Intel.................................... 6,700 944,281 2.2%
Wal-Mart Stores.......................... 9,000 774,000 1.8%
S&P 500 Depository Receipt............... 6,000 765,938 1.8%
Cisco Systems, Inc....................... 6,350 708,422 1.6%
Merck & Co., Inc......................... 4,800 704,400 1.6%
Exxon Corporation........................ 9,800 690,287 1.6%
International Business Machines.......... 3,700 678,025 1.6%
Pfizer, Inc.............................. 5,200 668,850 1.6%
---------- ---
$9,058,065 21.1%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Basic Materials 3.20%
Capital Goods 7.10%
Communication Services 8.90%
Consumer Cyclical 9.90%
Consumer Staples 13.00%
Energy 4.90%
Financial 17.20%
Health Care 11.40%
Technology 20.00%
Transportation 0.80%
Utilities 2.80%
Cash and Other
Assets/Liabilities 0.80%
</TABLE>
3
<PAGE>
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 January 31,
1999.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C> <C> <C>
Class A:
One year 23.47%
Since inception
(1/31/97) 24.44%
Class B:
One year 24.53%
Since inception
(1/31/97) 25.52%
Class C:
One year 29.37%
Since inception
(1/31/97) 26.64%
(Thousands)
Class A Class B Class C S&P 500 Index CPI
1/31/97 $10,000 $10,000 $10,000 $10,000 $10,000
7/31/97 11,525 11,577 12,043 12,244 10,075
7/31/98 13,621 13,701 14,101 14,607 10,245
1/31/99 15,579 15,765 16,048 16,807 10,326
</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 5.5 percent front-end sales charge for Class A and the maximum
applicable contingent deferred sales charge for Class B shares. The maximum
initial sales charge for Class A shares was 5.0 percent prior to February 1,
1999. Sales charges pay for your financial professional's investment advice.
Individuals cannot invest in the index itself, nor can they invest in any fund
which seeks to track the performance of the index 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
JANUARY 31, 1999
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
COMMON STOCK (99.2%)
BASIC MATERIALS (3.2%)
Agriculture Products (.3%)
2,861 Archer Daniels Midland Company................... $ 43,276
2,900 Pioneer Hi-Bred International.................... 82,106
----------------
125,382
----------------
Aluminum (.3%)
2,400 Alcan Aluminum Limited (c)....................... 61,350
700 Aluminum Company of America...................... 58,537
600 Reynolds Metals Company.......................... 29,325
----------------
149,212
----------------
Chemicals (1.6%)
1,500 Air Products and Chemicals, Inc.................. 50,437
600 Dow Chemical Company............................. 52,837
4,500 E.I. DuPont de Nemours and Company............... 230,344
200 Eastman Chemical Company......................... 8,125
400 Ecolab, Inc...................................... 15,500
500 Engelhard Corporation............................ 9,781
100 FMC Corporation (b).............................. 5,406
300 Hercules, Inc.................................... 8,081
400 International Flavors & Fragrances............... 17,450
1,900 Monsanto Company................................. 90,369
600 Morton International, Inc........................ 15,525
1,200 PPG Industries, Inc.............................. 64,500
600 Praxair, Inc..................................... 19,387
1,200 Rohm and Haas Company............................ 37,200
500 Sigma-Aldrich.................................... 14,250
900 Union Carbide Corporation........................ 35,606
----------------
674,798
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
BASIC MATERIALS--CONTINUED
Iron and Steel (.1%)
1,400 Allegheny Teledyne, Inc.......................... $ 28,350
200 Nucor Corporation................................ 9,800
300 USX-U.S. Steel Group, Inc........................ 7,819
----------------
45,969
----------------
Mining (.1%)
900 Barrick Gold Corporation (c)..................... 17,156
300 Freeport-McMoran Copper.......................... 2,962
700 Homestake Mining Company......................... 6,606
400 Inco, Ltd. (c)................................... 4,225
1,100 Newmont Mining Corporation....................... 19,456
100 Phelps Dodge Corporation......................... 4,344
----------------
54,749
----------------
Paper and Forest (.8%)
200 Bemis Company, Inc............................... 6,800
1,300 Champion International Corporation............... 45,581
1,300 Fort James Corporation........................... 46,637
500 Georgia-Pacific Corporation...................... 32,250
700 International Paper Company...................... 27,694
2,000 Kimberly Clark Corporation....................... 99,625
200 Temple-Inland, Inc............................... 11,412
300 Union Camp Corporation........................... 18,506
600 Weyerhaeuser Company............................. 32,475
500 Willamette Industries, Inc....................... 17,500
----------------
338,480
----------------
</TABLE>
See accompanying notes to investments in securities.
5
<PAGE>
ADVANTUS Index 500 Fund
Investments in Securities - continued
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
CAPITAL GOODS (7.1%)
<C> <S> <C>
Aerospace/Defense (1.3%)
2,100 Allied-Signal, Inc............................... $ 81,900
600 General Dynamics Corporation..................... 34,875
1,200 Lockheed Martin Corporation...................... 42,300
400 Northrop Grumman Corporation..................... 22,800
1,100 Raytheon Company (c)............................. 61,531
1,400 Rockwell International Corporation............... 60,812
400 Textron, Inc..................................... 29,775
3,760 The Boeing Company............................... 129,955
800 United Technologies Corporation.................. 95,550
----------------
559,498
----------------
Containers-Metal/Glass (.1%)
400 Crown Cork & Seal Company, Inc................... 12,675
800 Owens-Illinois, Inc. (b)......................... 23,400
----------------
36,075
----------------
Electrical Equipment (3.9%)
1,200 AMP, Inc......................................... 63,150
2,200 CBS Corporation.................................. 74,800
600 Cooper Industries, Inc........................... 24,862
1,400 Emerson Electric Company......................... 81,462
13,100 General Electric Company......................... 1,373,862
900 Honeywell, Inc................................... 58,669
600 Raychem Corporation.............................. 15,075
1,000 Thermo Electron Corporation (b).................. 16,625
----------------
1,708,505
----------------
Engineering/Construction (.1%)
1,000 Caterpillar, Inc................................. 43,312
100 Fluor Corporation................................ 3,812
----------------
47,124
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
CAPITAL GOODS--CONTINUED
Machinery (.5%)
300 Case Corporation................................. $ 5,681
1,500 Deere & Company.................................. 48,844
2,000 Dover Corporation................................ 62,125
1,800 Ingersoll Rand Company........................... 85,500
----------------
202,150
----------------
Manufacturing (.8%)
500 Avery Dennison Corporation....................... 24,719
900 Illinois Tool Works, Inc......................... 54,281
500 Pall Corporation................................. 11,594
300 Parker Hannifin Corporation...................... 9,225
600 Tenneco, Inc..................................... 18,525
2,712 Tyco International, Ltd.......................... 208,993
----------------
327,337
----------------
Office Equipment (.1%)
900 Ikon Office Solutions............................ 14,400
700 Pitney Bowes, Inc................................ 48,169
----------------
62,569
----------------
Trucks and Parts ( -- )
200 Cummins Engine Company, Inc...................... 7,600
200 Paccar, Inc...................................... 8,725
----------------
16,325
----------------
Waste Management (.3%)
1,100 Browning-Ferris Industries....................... 30,250
1,797 Waste Management, Inc............................ 89,738
----------------
119,988
----------------
COMMUNICATION SERVICES (8.9%)
Cellular (.8%)
2,700 Airtouch Communications (b)...................... 260,719
3,100 Nextel Communications, Inc. (b).................. 99,200
----------------
359,919
----------------
</TABLE>
See accompanying notes to investments in securities.
6
<PAGE>
ADVANTUS Index 500 Fund
Investments in Securities - continued
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
COMMUNICATION SERVICES--CONTINUED
<C> <S> <C>
Telecommunication (1.8%)
7,400 MCI Worldcom, Inc. (b)........................... $ 590,150
1,500 Sprint Corporation............................... 125,812
1,750 Sprint Corporation (b)........................... 55,781
----------------
771,743
----------------
Telephone (6.3%)
1,700 Alltel Corporation............................... 109,756
4,400 Ameritech Corporation............................ 286,550
7,300 AT&T Corporation................................. 662,475
6,274 Bell Atlantic Corporation........................ 376,440
7,400 Bellsouth Corporation............................ 330,225
1,200 Frontier Corporation............................. 43,350
3,900 GTE Corporation.................................. 263,250
2,400 MediaOne, Inc. (b)............................... 134,550
7,984 SBC Communications, Inc.......................... 431,136
1,838 U.S. West Communications Group................... 113,367
----------------
2,751,099
----------------
CONSUMER CYCLICAL (9.9%)
Auto (1.7%)
400 Cooper Tire & Rubber Company..................... 8,575
849 Dana Corporation................................. 34,935
400 Eaton Corporation................................ 27,850
4,900 Ford Motor Company............................... 301,044
2,400 General Motors Corporation....................... 215,400
1,100 Goodyear Tire & Rubber Company................... 53,900
500 ITT Industries................................... 20,031
1,100 TRW, Inc......................................... 52,869
----------------
714,604
----------------
Building Materials (.1%)
1,200 Masco Corporation................................ 38,775
----------------
Distribution Durables (.1%)
1,300 Genuine Parts Company............................ 41,437
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
CONSUMER CYCLICAL--CONTINUED
Hardware and Tools ( -- )
500 The Stanley Works................................ $ 12,594
----------------
Houseware (.2%)
1,100 Corning, Inc..................................... 53,625
600 Whirlpool Corporation............................ 26,962
----------------
80,587
----------------
Leisure (.1%)
300 Brunswick Corporation............................ 7,406
300 Hasbro, Inc...................................... 11,156
1,900 Mattel, Inc...................................... 43,106
----------------
61,668
----------------
Lodging-Hotel (.2%)
2,500 Hilton Hotels Corporation........................ 36,094
1,500 Marriott International........................... 52,687
----------------
88,781
----------------
Photography/Imagery (.5%)
1,000 Eastman Kodak Company............................ 65,375
300 Polaroid Corporation............................. 5,119
1,200 Xerox Corporation................................ 148,800
----------------
219,294
----------------
Publishing (.7%)
900 Dow Jones & Company, Inc......................... 40,275
900 Gannett Company.................................. 59,231
200 Knight Ridder, Inc............................... 9,550
600 McGraw-Hill Companies, Inc....................... 64,875
800 New York Times Company........................... 27,450
1,100 R.R. Donnelly & Sons Company..................... 41,456
700 The Times Mirror Company......................... 38,544
600 Tribune Company.................................. 38,362
----------------
319,743
----------------
</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>
Retail (5.2%)
400 American Greetings Corporation................... $ 15,800
1,300 Autozone, Inc. (b)............................... 44,037
200 Circuit City Stores, Inc......................... 11,050
600 Costco Companies, Inc. (b)....................... 49,725
1,500 Dayton Hudson Corporation........................ 95,625
300 Dillards, Inc.................................... 7,444
1,900 Federated Department Stores (b).................. 79,444
900 Fred Meyer, Inc. (b)............................. 56,250
2,175 Gap, Inc......................................... 139,608
200 Harcourt General, Inc............................ 9,600
6,300 Home Depot, Inc.................................. 380,362
800 JC Penny Company................................. 31,350
1,700 K Mart Corporation (b)........................... 29,856
700 Kohl's Corporation (b)........................... 47,425
1,200 Lowe's Companies, Inc............................ 69,975
500 May Department Stores Company.................... 30,187
800 Nike, Inc........................................ 36,600
1,400 Nordstrom, Inc................................... 58,275
1,000 Sears, Roebuck & Company......................... 40,125
1,900 Sherwin-Williams Company......................... 48,687
1,950 Staples, Inc. (b)................................ 55,819
400 Tandy Corporation................................ 21,600
1,200 The Limited, Inc................................. 40,950
2,500 TJX Companies, Inc............................... 73,906
600 Toys R Us (b).................................... 9,000
9,000 Wal-Mart Stores.................................. 774,000
----------------
2,256,700
----------------
Service (1.0%)
4,100 Cendant Corporation (b).......................... 89,175
400 Equifax, Inc..................................... 15,825
300 H & R Block, Inc................................. 13,162
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
CONSUMER CYCLICAL--CONTINUED
1,000 Interpublic Group Company........................ $ 79,125
700 Mirage Resort, Inc. (b).......................... 10,019
600 Omnicom Group.................................... 38,400
1,000 Service Corporation International................ 15,875
2,200 Tele-Communications, Inc. (b).................... 150,837
----------------
412,418
----------------
Textiles (.1%)
200 Fruit of the Loom (b)............................ 2,900
200 Liz Claiborne, Inc............................... 7,650
600 V.F. Corporation................................. 25,575
----------------
36,125
----------------
CONSUMER STAPLES (13.0%)
Beverage (2.6%)
1,600 Anheuser-Busch................................... 113,100
600 Brown-Forman, Inc................................ 43,312
9,900 Coca-Cola Company................................ 647,831
1,400 Coca-Cola Enterprises............................ 49,525
5,400 Pepsico, Inc..................................... 210,937
1,500 The Seagram Company, Ltd. (c).................... 71,062
----------------
1,135,767
----------------
Broadcasting (.4%)
1,100 Clear Channel Communications (b)................. 68,062
1,300 Comcast Corporation.............................. 88,380
----------------
156,442
----------------
Entertainment (1.8%)
2,100 Carnival Corporation............................. 103,031
4,900 Time Warner, Inc................................. 306,250
1,200 Viacom (b)....................................... 102,000
8,200 Walt Disney Company.............................. 270,600
----------------
781,881
----------------
Food (1.9%)
800 Best Foods....................................... 40,250
1,600 Campbell Soup Company............................ 75,100
</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--CONTINUED
<C> <S> <C>
1,600 Conagra, Inc..................................... $ 52,000
600 General Mills, Inc............................... 50,362
900 Hershey Foods Corporation........................ 50,625
1,300 HJ Heinz Company................................. 73,206
1,400 Kellogg Company.................................. 57,225
900 Quaker Oats Company.............................. 50,062
900 Ralston-Purina Group............................. 24,637
3,200 Sara Lee Corporation............................. 81,600
2,600 Unilever N.V. (c)................................ 198,900
600 Wm. Wrigley Jr. Company.......................... 56,175
----------------
810,142
----------------
Food & Health (.1%)
1,200 SYSCO Corporation................................ 32,700
----------------
Household Products (2.6%)
600 Clorox Company................................... 75,075
1,000 Colgate Palmolive Company........................ 80,437
4,400 Gillette Company................................. 258,500
1,400 Minnesota Mining and Manufacturing............... 108,675
2,000 Newell Company................................... 83,125
5,300 Procter & Gamble Company......................... 481,637
1,000 Rubbermaid, Inc.................................. 32,250
----------------
1,119,699
----------------
Personal Care (.1%)
500 Alberto-Culver Company........................... 12,875
1,100 Avon Products.................................... 40,631
----------------
53,506
----------------
Restaurants (.6%)
2,600 McDonalds Corporation............................ 204,912
740 Tricon Global Restaurants (b).................... 35,196
500 Wendy's International, Inc....................... 11,906
----------------
252,014
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
CONSUMER STAPLES--CONTINUED
Retail (1.4%)
600 Albertson's, Inc................................. $ 36,600
1,400 American Stores Company.......................... 50,750
1,300 CVS Corporation.................................. 71,175
1,200 Kroger Company (b)............................... 76,200
1,200 Rite Aid Corporation............................. 58,950
1,800 Safeway, Inc. (b)................................ 101,025
900 Super Valu, Inc.................................. 24,694
1,800 Walgreen Company................................. 112,500
1,500 Winn-Dixie Stores, Inc........................... 68,531
----------------
600,425
----------------
Service (.3%)
2,000 Automatic Data Processing, Inc................... 85,125
600 Ceridian Corporation (b)......................... 47,625
300 Deluxe Corporation............................... 10,687
----------------
143,437
----------------
Tobacco (1.2%)
500 Fortune Brands, Inc.............................. 16,625
9,800 Philip Morris Companies, Inc..................... 460,600
1,200 RJR Nabisco Holdings Corporation................. 32,400
----------------
509,625
----------------
ENERGY (4.9%)
Oil (4.2%)
1,300 Amerada Hess Corporation......................... 61,750
2,500 Chevron Corporation.............................. 186,875
9,800 Exxon Corporation................................ 690,287
3,000 Mobil Corporation................................ 263,062
3,200 Occidental Petroleum Corporation................. 48,200
600 Phillips Petroleum Company....................... 23,175
8,500 Royal Dutch Petroleum (c)........................ 340,531
2,800 Texaco, Inc...................................... 132,650
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS Index 500 Fund
Investments in Securities - continued
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
ENERGY--CONTINUED
<C> <S> <C>
1,600 Unocal Corporation............................... $ 45,600
900 USX - Marathon Group............................. 20,475
----------------
1,812,605
----------------
Oil & Gas (.7%)
800 Anadarko Petroleum Corporation................... 21,650
800 Ashland, Inc..................................... 38,000
900 Atlantic Richfield Company....................... 51,637
2,420 Baker Hughes, Inc................................ 40,837
452 Burlington Resources, Inc........................ 13,673
1,300 Halliburton Company.............................. 38,594
100 Kerr-McGee Corporation........................... 3,394
500 Rowan Company (b)................................ 4,406
1,700 Schlumberger, Ltd................................ 80,962
800 Union Pacific Resources Group.................... 6,450
----------------
299,603
----------------
FINANCIAL (17.2%)
Auto Finance (.2%)
1,800 Fleet Financial Group, Inc....................... 79,763
----------------
Banks (6.5%)
1,000 Bank of Boston Corporation....................... 36,938
2,800 Bank of New York, Inc............................ 99,400
4,340 Bank One Corporation............................. 227,308
6,593 BankAmerica Corporation (b)...................... 440,939
1,000 Bankers Trust New York Corporation............... 87,000
1,000 BB&T Corporation................................. 38,250
3,400 Chase Manhattan Corporation...................... 261,588
450 Comerica......................................... 28,097
850 Fifth Third Bancorp.............................. 58,172
3,548 First Union Corporation.......................... 186,714
1,300 Firstar Corporation.............................. 114,644
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
FINANCIAL--CONTINUED
1,210 Huntington Bancshares............................ $ 37,661
600 J.P. Morgan & Company, Inc....................... 63,300
1,200 KeyCorp.......................................... 38,250
700 Mellon Bank Corporation.......................... 46,900
1,600 Mercantile Bancorporation........................ 71,900
1,500 National City Corporation........................ 106,594
900 Northern Trust Corporation....................... 77,906
1,200 PNC Bank Corporation............................. 61,425
1,300 Regions Financial Corporation.................... 49,888
400 Republic New York Corporation.................... 14,650
1,000 State Street Corporation......................... 71,500
1,200 Summit Bancorp................................... 48,975
1,300 Suntrust Banks, Inc.............................. 91,569
1,800 Synovus Financial Corporation.................... 45,000
2,553 U.S. Bancorp..................................... 86,004
400 Union Planters Corporation....................... 18,200
700 Wachovia Corporation............................. 62,038
6,500 Wells Fargo Company.............................. 227,094
----------------
2,797,904
----------------
Commercial Finance (.1%)
1,300 Dun & Bradstreet Corporation..................... 39,650
----------------
Consumer Finance (1.2%)
1,700 American Express Company......................... 174,888
2,873 Associates First Capital Corporation............. 116,517
400 Capital One Financial Corporation................ 52,950
1,519 Household International, Inc..................... 66,742
2,825 MBNA Corporation................................. 78,923
</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>
800 SILM Holding Corporation......................... $ 35,250
----------------
525,270
----------------
Finance-Diversified (1.6%)
800 American General Corporation..................... 57,050
2,025 Charles Schwab Corporation....................... 142,383
2,400 Federal Home Loan Mortgage Corporation........... 148,800
4,200 Federal National Mortgage Association............ 306,075
900 MGIC Investment Corporation...................... 32,963
----------------
687,271
----------------
Insurance (4.6%)
900 Aetna, Inc....................................... 81,113
2,700 Allstate Corporation............................. 101,419
4,975 American International Group..................... 512,114
1,450 Aon Corporation.................................. 73,588
1,100 Chubb Corporation................................ 64,625
600 Cigna Corporation................................ 49,425
950 Conseco, Inc..................................... 29,391
600 ITT Hartford Group............................... 31,163
1,000 Jefferson-Pilot Corporation...................... 75,750
300 Lincoln National Corporation..................... 24,994
700 Loews Corporation................................ 58,931
600 Marsh & McLennen................................. 37,725
600 MBIA, Inc........................................ 39,338
300 Progressive Corporation.......................... 37,481
750 Providian Financial.............................. 75,609
800 Safeco Corporation............................... 31,100
1,800 St. Paul Companies, Inc.......................... 52,875
400 Torchmark Corporation............................ 13,125
800 Transamerica Corporation......................... 44,800
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
FINANCIAL--CONTINUED
9,239 Travelers Group, Inc............................. $ 517,962
700 Unum Corporation................................. 42,306
----------------
1,994,834
----------------
Investment Bankers/Brokers (2.7%)
700 Franklin Resources, Inc.......................... 23,450
1,700 Lehman Brothers Holdings, Inc.................... 92,969
1,100 Merrill Lynch & Co., Inc......................... 83,600
2,230 Morgan Stanley Dean Witter....................... 193,592
6,000 S&P 500 Depository Receipt....................... 765,938
----------------
1,159,549
----------------
Public Finance (.1%)
1,300 Countrywide Credit Industries.................... 61,750
----------------
Savings and Loans (.2%)
300 Golden West Financial Corporation................ 28,163
1,878 Washington Mutual, Inc........................... 78,876
----------------
107,039
----------------
HEALTH CARE (11.4%)
Biotechnology (.2%)
800 Amgen, Inc. (b).................................. 102,250
----------------
Drugs (7.1%)
5,300 American Home Products Corporation............... 311,044
4,000 Bristol-Myers Squibb Company..................... 512,750
450 Cardinal Health, Inc............................. 33,272
4,500 Eli Lilly & Company.............................. 421,594
4,800 Merck & Co., Inc................................. 704,400
5,200 Pfizer, Inc...................................... 668,850
1,900 Pharmacia & Upjohn............................... 109,250
6,000 Schering Plough Corporation...................... 327,000
----------------
3,088,160
----------------
</TABLE>
See accompanying notes to investments in securities.
11
<PAGE>
ADVANTUS Index 500 Fund
Investments in Securities - continued
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
HEALTH CARE--CONTINUED
<C> <S> <C>
Health Care- Diversified (2.5%)
6,100 Abbott Laboratories.............................. $ 283,269
700 Allergan, Inc.................................... 53,813
4,100 HealthSouth Rehabilitation Company (b)........... 55,606
5,400 Johnson & Johnson................................ 459,000
3,300 Warner-Lambert Company........................... 238,219
----------------
1,089,907
----------------
Hospital Management (.2%)
1,700 Columbia/HCA Healthcare Corporation.............. 30,813
2,900 Tenet Healthcare Corporation (b)................. 60,175
----------------
90,988
----------------
Managed Care (.4%)
1,400 HCR Manor Care (b)............................... 37,450
1,200 Humana (b)....................................... 21,450
1,036 McKesson Corporation............................. 77,830
700 United Health Care............................... 31,325
----------------
168,055
----------------
Medical Products/Supplies (1.0%)
600 Alza Corporation (b)............................. 30,338
300 Bausch & Lomb, Inc............................... 18,413
900 Baxter International, Inc........................ 63,844
1,200 Becton Dickinson & Company....................... 42,900
700 Biomet, Inc...................................... 25,638
1,200 Boston Scientific Corporation (b)................ 29,325
800 Guidant Corporation.............................. 47,150
600 Mallinckrodt, Inc................................ 20,963
1,800 Medtronic, Inc................................... 143,438
400 St. Jude Medical, Inc. (b)....................... 10,425
----------------
432,434
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
TECHNOLOGY (20.0%)
1,600 3 Com (b)........................................ $ 75,200
200 Adobe Systems, Inc............................... 9,550
900 Advanced Micro Devices, Inc. (b)................. 20,644
1,800 America Online, Inc. (b)......................... 316,238
500 Apple Computer, Inc. (b)......................... 20,594
2,400 Applied Materials, Inc. (b)...................... 151,650
1,000 Ascend Communications (b)........................ 87,313
700 BMC Software, Inc. (b)........................... 32,681
6,350 Cisco Systems, Inc. (b).......................... 708,422
6,861 Compaq Computer Corporation...................... 326,755
2,000 Computer Associates International................ 101,250
600 Computer Sciences Corporation.................... 41,138
700 Compuware Corporation (b)........................ 46,375
5,200 Dell Computer Corporation (b).................... 520,000
1,700 Electronic Data Systems Corporation.............. 89,144
1,900 EMC Corporation (b).............................. 206,863
1,200 First Data Corporation........................... 45,975
600 Gateway 2000 (b)................................. 46,350
1,500 General Instrument Corporation (b)............... 53,250
600 Harris Corporation............................... 22,500
4,200 Hewlett-Packard Company.......................... 329,175
1,200 IMS Health, Inc.................................. 43,950
6,700 Intel............................................ 944,281
3,700 International Business Machines.................. 678,025
200 KLA-Tencor Corporation (b)....................... 11,550
5,300 Lucent Technologies, Inc......................... 596,581
700 Micron Technology, Inc. (b)...................... 54,688
</TABLE>
See accompanying notes to investments in securities.
12
<PAGE>
ADVANTUS Index 500 Fund
Investments in Securities - continued
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
10,000 Microsoft Corporation (b)........................ $ 1,750,000
2,400 Motorola, Inc.................................... 173,400
300 National Semiconductor Corporation (b)........... 3,881
2,220 Northern Telecom Limited (c)..................... 140,138
2,900 Novell, Inc. (b)................................. 59,088
3,900 Oracle Corporation (b)........................... 215,963
1,400 Parametric Technology Corporation (b)............ 18,288
1,600 Paychex, Inc..................................... 77,900
3,100 Peoplesoft, Inc. (b)............................. 61,419
200 Perkin-Elmer Corporation......................... 19,013
1,600 Seagate Technology, Inc. (b)..................... 65,100
900 Silicon Graphics, Inc. (b)....................... 18,675
1,500 Sun Microsystems, Inc. (b)....................... 167,625
600 Tellabs, Inc. (b)................................ 51,450
1,600 Texas Instruments, Inc........................... 158,200
2,000 Unisys Corporation (b)........................... 66,250
1,000 W.W. Grainger, Inc............................... 40,750
----------------
8,667,282
----------------
TRANSPORTATION (.8%)
Air Freight (.1%)
300 Federal Express Corporation (b).................. 24,506
----------------
Airlines (.3%)
400 AMR Corporation (b).............................. 23,500
400 Delta Air Lines, Inc............................. 21,825
2,850 Southwest Airlines Company....................... 76,594
300 USAir Group, Inc. (b)............................ 14,925
----------------
136,844
----------------
Railroads (.4%)
1,800 Burlington Northern Santa Fe..................... 62,325
1,400 CSX Corporation.................................. 54,250
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
TRANSPORTATION--CONTINUED
1,300 Norfolk Southern Corporation..................... $ 35,831
600 Union Pacific Corporation........................ 30,863
----------------
183,269
----------------
UTILITIES (2.8%)
Electric Companies (2.3%)
1,800 AES Corporation (b).............................. 60,638
200 Ameren Corporation............................... 7,850
800 American Electric Power Company.................. 35,050
1,000 Carolina Power & Light Company................... 41,625
1,600 Central & Southwest Corporation.................. 42,300
200 Cinergy.......................................... 6,263
700 Consolidated Edison, Inc......................... 34,606
1,900 Dominion Resources, Inc.......................... 85,025
600 DTE Energy Company............................... 24,300
1,208 Duke Energy Corporation.......................... 74,670
1,200 Edison International............................. 33,375
1,000 Entergy Corporation.............................. 29,438
2,200 FirstEnergy Corporation.......................... 68,338
600 FPL Group, Inc................................... 32,925
1,200 GPU, Inc......................................... 51,150
1,100 Houston Industries, Inc. (b)..................... 33,413
400 New Century Energies, Inc........................ 17,600
400 Northern States Power Company.................... 10,775
1,200 Pacific Gas & Electric Company................... 38,325
1,500 Peco Energy Company.............................. 57,281
1,000 Public Service Enterprise Group.................. 39,688
2,000 Southern Company................................. 53,875
1,800 Texas Utilities Company.......................... 79,088
1,200 Unicom Corporation............................... 42,750
----------------
1,000,348
----------------
</TABLE>
See accompanying notes to investments in securities.
13
<PAGE>
ADVANTUS Index 500 Fund
Investments in Securities - continued
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
UTILITIES--CONTINUED
<C> <S> <C>
Natural Gas (.5%)
1,900 Coastal Corporation.............................. $ 56,644
300 Consolidated Natural Gas Company................. 15,394
1,100 Enron Corporation................................ 72,600
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
UTILITIES--CONTINUED
1,400 Sempra Energy.................................... $ 32,200
1,200 The Williams Company............................. 39,600
----------------
216,438
----------------
Total common stock (cost: $33,293,930)...................... 42,995,005
----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C>
SHORT-TERM SECURITIES (1.2%)
$ 532,347 Federated Prime Obligation Fund, current rate 4.920%........ 532,347
------------
Total short-term securities (cost: $532,347)................ 532,347
------------
Total investments in securities (cost: $33,826,277)(d)...... $ 43,527,352
------------
------------
</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 2.1% of net assets in foreign securities as of January 31,
1999.
(d) At January 31, 1999 the cost of securities for federal income tax purposes
was $33,942,026. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $11,184,522
Gross unrealized depreciation.......... (1,599,196)
-----------
Net unrealized appreciation............ $ 9,585,326
-----------
-----------
</TABLE>
14
<PAGE>
ADVANTUS Index 500 Fund
Statement of Assets and Liabilities
JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value - see accompanying schedule for detailed listing
(identified cost: $33,826,277)............................................................ $ 43,527,352
Cash in bank on demand deposit............................................................. 3
Receivable for Fund shares sold............................................................ 224,105
Receivable for investment securities sold.................................................. 77,373
Accrued interest receivable................................................................ 1,471
Dividends receivable....................................................................... 31,200
Organizational costs (note 5).............................................................. 53,293
Other receivables.......................................................................... 7,753
------------
Total assets........................................................................... 43,922,550
------------
LIABILITIES
Payable for investment securities purchased................................................ 372,681
Payable for Fund shares redeemed........................................................... 64,695
Payable to Adviser......................................................................... 130,139
------------
Total liabilities...................................................................... 567,515
------------
Net assets applicable to outstanding capital stock......................................... $ 43,355,035
------------
------------
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).............................................................. $ 25,437
Additional paid-in capital............................................................... 33,689,266
Distributions in excess of net investment income......................................... (2,981)
Accumulated net realized losses from investments......................................... (57,762)
Unrealized appreciation on investments................................................... 9,701,075
------------
Total - representing net assets applicable to outstanding capital stock................ $ 43,355,035
------------
------------
Net assets applicable to outstanding Class A shares........................................ $ 22,792,310
------------
------------
Net assets applicable to outstanding Class B shares........................................ $ 18,224,819
------------
------------
Net assets applicable to outstanding Class C shares........................................ $ 2,337,906
------------
------------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 1,334,408................................................... $ 17.08
------------
------------
Class B - Shares outstanding 1,071,550................................................... $ 17.01
------------
------------
Class C - Shares outstanding 137,755..................................................... $ 16.97
------------
------------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
ADVANTUS Index 500 Fund
Statement of Operations
FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest.................................................................................. $ 8,268
Dividends................................................................................. 230,154
-----------
Total investment income............................................................... 238,422
-----------
Expenses (note 4):
Investment advisory fee................................................................... 56,779
Distribution fees - Class A............................................................... 26,364
Distribution fees - Class B............................................................... 70,745
Distribution fees - Class C............................................................... 8,161
Administrative services fee............................................................... 21,600
Amortization of organizational costs...................................................... 8,882
Transfer agent fees....................................................................... 51,356
Custodian fees............................................................................ 5,168
Auditing and accounting services.......................................................... 6,050
Legal fees................................................................................ 3,681
Directors' fees........................................................................... 320
Registration fees......................................................................... 21,193
Printing and shareholder reports.......................................................... 18,506
Insurance................................................................................. 1,753
Licensing fee............................................................................. 1,005
Other..................................................................................... 2,608
-----------
Total expenses........................................................................ 304,171
Less fees and expenses waived or absorbed:
Class A distribution fees............................................................... (13,151)
Other fund expenses..................................................................... (98,703)
-----------
Total fees and expenses waived or absorbed............................................ (111,854)
-----------
Total net expenses.................................................................... 192,317
-----------
Investment income - net............................................................... 46,105
-----------
Realized and unrealized gains (losses) on investments:
Net realized losses on investments........................................................ (35,597)
Net change in unrealized appreciation or depreciation on investments...................... 5,090,214
-----------
Net gains on investments.............................................................. 5,054,617
-----------
Net increase in net assets resulting from operations........................................ $ 5,100,722
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
ADVANTUS Index 500 Fund
Statements of Changes in Net Assets
FOR THE SIX MONTH PERIOD ENDED JANUARY 31, 1999 AND YEAR ENDED JULY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Operations:
Investment income - net.................................................... $ 46,105 $ 89,077
Net realized gain (loss) on investments.................................... (35,597) 155,958
Net change in unrealized appreciation or depreciation on investments....... 5,090,214 2,694,442
------------ ------------
Increase in net assets resulting from operations....................... 5,100,722 2,939,477
------------ ------------
Distributions to shareholders from:
Investment income - net:
Class A.................................................................. (65,700) (99,594)
Class B.................................................................. (3,785) (9,115)
Class C.................................................................. (15) (1,291)
Net realized gains on investments:
Class A.................................................................. (83,008) (14,438)
Class B.................................................................. (69,736) (6,117)
Class C.................................................................. (8,299) (1,101)
------------ ------------
Total distributions.................................................... (230,543) (131,656)
------------ ------------
Capital share transactions (notes 4 and 6):
Proceeds from sales:
Class A.................................................................. 6,008,597 7,485,540
Class B.................................................................. 5,351,523 9,963,570
Class C.................................................................. 955,803 1,231,311
Proceeds from issuance of shares as a result of reinvested dividends:
Class A.................................................................. 81,477 40,014
Class B.................................................................. 73,336 15,232
Class C.................................................................. 8,291 2,392
Payments for redemption of shares:
Class A.................................................................. (1,500,914) (1,740,078)
Class B.................................................................. (1,167,708) (949,778)
Class C.................................................................. (376,243) (208,843)
------------ ------------
Increase in net assets from capital share transactions................. 9,434,162 15,839,360
------------ ------------
Total increase in net assets........................................... 14,304,341 18,647,181
Net assets at beginning of period............................................ 29,050,694 10,403,513
------------ ------------
Net assets at end of period (including (distributions in excess of)
undistributed net investment income of ($2,981) and $11,532,
respectively)............................................................... $ 43,355,035 $ 29,050,694
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
ADVANTUS Index 500 Fund
Notes to Financial Statements
JANUARY 31, 1999
(UNAUDITED)
(1) ORGANIZATION
Advantus Index 500 Fund, Inc. (the Fund) was incorporated on July 3, 1996.
The Fund is registered under the Investment Company Act of 1940 (as amended) as
a diversified, open-end management investment company. The Fund's investment
objective is to seek investment results that correspond, generally, before sales
charges and other Fund expenses, to the aggregate price and yield performance of
the common stocks included in 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 Minnesota Life
Insurance Company (Minnesota Life), formerly known as The Minnesota Mutual Life
Insurance Company. Inception of the Fund was January 31, 1997 when the shares
became effectively registered under the Securities Exchange Act of 1933. Prior
to date of inception, Minnesota Life 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
The Fund's net asset value is generally calculated as of the close of normal
trading on the New York Stock Exchange (typically 3:00 p.m. Central Time).
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.
18
<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 bond premium and discount computed on
a level yield basis, is accrued daily.
FEDERAL TAXES
The Fund's policy is to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no income tax provision is required.
The Fund's policy is to make required minimum distributions prior to December
31, in order to avoid federal excise tax.
Net investment income and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of temporary book-to-tax
differences. The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the statement of assets and liabilities, as a result of permanent
book-to-tax differences, a reclassification adjustment was made to increase
undistributed net investment income and decrease additional paid-in capital by
$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 August 1, 1998 to January 31, 1999, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $15,048,279 and $6,097,180 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 First Data Investor Services Group, Inc. to act as its transfer
agent, dividend disbursing agent and redemption agent and bears the expenses of
such services. Prior to October 26, 1998, the Fund's transfer agent was
Minnesota Life.
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
expenses pursuant to Rule 12b-1 under the Investment Company Act of 1940 (as
amended). The Fund pays fees to Ascend Financial Services, Inc. (Ascend), the
underwriter of the Fund and wholly-owned subsidiary of Advantus Capital, to be
used to pay certain expenses incurred in connection with the distribution and
servicing of the Fund's shares. The Class A Plan provides for a distribution fee
up to .30 percent of average daily net assets of Class A shares. Effective
February 1, 1999, the Class A Plan provides for a servicing fee up to .25
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,
19
<PAGE>
ADVANTUS Index 500 Fund
Notes to Financial Statements - continued
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)
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 Rule 12b-1 fees which exceeds, as a percentage
of average daily net assets, .15 percent. Ascend waived Class A Rule 12b-1 fees
in the amount of $13,151 for the period ended January 31, 1999.
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.
Effective October 26, 1998, the Fund entered in a new shareholder and
administrative services agreement with Minnesota Life. Under this agreement, the
Fund pays a shareholder services fee, equal to $5 per shareholder account
annually, to Minnesota Life for shareholder services which Minnesota Life
provides. The Fund also pays Minnesota Life an administrative services fee equal
to $3,700 per month for accounting, auditing, legal and other administrative
services which Minnesota Life provides. Effective February 1, 1999, the
administrative services fee is $5,700 per month.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital. During the period ended January
31, 1999, Advantus Capital voluntarily agreed to absorb $98,703 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 $101,718.
As of January 31, 1999, Minnesota Life 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................................. 505,201 37.9%
Class B................................. 5,138 .5%
Class C................................. 5,129 3.7%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $6,911.
(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.
20
<PAGE>
ADVANTUS Index 500 Fund
Notes to Financial Statements - continued
(6) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from August 1, 1998 to January 31,
1999 and the year ended July 31, 1998 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------- -------------------- --------------------
1999 1998 1999 1998 1999 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold......................................... 389,495 528,494 357,195 702,411 63,068 94,533
Issued for reinvested distributions.......... 5,334 2,873 4,697 1,181 531 186
Redeemed..................................... (103,541) (122,719) (78,624) (67,797) (26,565) (14,688)
--------- --------- --------- --------- --------- ---------
291,288 408,648 283,268 635,795 37,034 80,031
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
(7) YEAR 2000
In 1995, Minnesota Life began addressing computer systems requirements and
applications to be Year 2000 ready. Based on a current study, Minnesota Life
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
--------------------------------------- ----------------------------------------
PERIOD FROM PERIOD FROM PERIOD FROM PERIOD FROM
AUGUST 1, JANUARY 31, AUGUST 1, JANUARY 31,
1998 TO YEAR ENDED 1997(d) TO 1998 TO YEAR ENDED 1997(d) TO
JANUARY 31, JULY 31, JULY 31, JANUARY 31, JULY 31, JULY 31,
1999 1998 1997 1999 1998 1997
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 15.06 $ 12.89 $ 10.68 $ 15.01 $ 12.87 $ 10.69
----------- ----------- ----------- ----------- ----------- -----------
Income from investment operations:
Net investment income................. .05 .10 .06 -- .02 .01
Net gains on securities (both realized
and unrealized)...................... 2.10 2.21 2.21 2.08 2.17 2.21
----------- ----------- ----------- ----------- ----------- -----------
Total from investment operations.... 2.15 2.31 2.27 2.08 2.19 2.22
----------- ----------- ----------- ----------- ----------- -----------
Less distributions:
Dividends from net investment
income............................... (.06) (.12) (.06) (.01) (.03) (.04)
Distributions from capital gains...... (.07) (.02) -- (.07) (.02) --
----------- ----------- ----------- ----------- ----------- -----------
Total distributions................. (.13) (.14) (.06) (.08) (.05) (.04)
----------- ----------- ----------- ----------- ----------- -----------
Net asset value, end of period.......... $ 17.08 $ 15.06 $ 12.89 $ 17.01 $ 15.01 $ 12.87
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
Total return (a)........................ 14.37% 18.19% 21.29% 13.88% 17.17% 20.77%
Net assets, end of period (in
thousands)............................. $22,792 $15,711 $8,176 $18,225 $11,832 $1,962
Ratio of expenses to average daily net
assets (c)............................. .75%(b) .74% .70%(b) 1.61%(b) 1.60% 1.60%(b)
Ratio of net investment income (loss) to
average daily net assets (c)........... .68%(b) .83% 1.19%(b) (.17)%(b) (.06)% .29%(b)
Portfolio turnover rate (excluding
short-term securities)................. 18.1% 59.2% 5.8% 18.1% 59.2% 5.8%
<CAPTION>
CLASS C
---------------------------------------
PERIOD FROM PERIOD FROM
AUGUST 1, JANUARY 31,
1998 TO YEAR ENDED 1997(d) TO
JANUARY 31, JULY 31, JULY 31,
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of period.... $ 14.97 $ 12.85 $ 10.69
----------- ----------- -----------
Income from investment operations:
Net investment income................. (.01) .01 .01
Net gains on securities (both realized
and unrealized)...................... 2.08 2.16 2.18
----------- ----------- -----------
Total from investment operations.... 2.07 2.17 2.19
----------- ----------- -----------
Less distributions:
Dividends from net investment
income............................... -- (.03) (.03)
Distributions from capital gains...... (.07) (.02) --
----------- ----------- -----------
Total distributions................. (.07) (.05) (.03)
----------- ----------- -----------
Net asset value, end of period.......... $ 16.97 $ 14.97 $ 12.85
----------- ----------- -----------
----------- ----------- -----------
Total return (a)........................ 13.80% 17.09% 20.44%
Net assets, end of period (in
thousands)............................. $2,338 $1,508 $266
Ratio of expenses to average daily net
assets (c)............................. 1.61%(b) 1.60% 1.60%(b)
Ratio of net investment income (loss) to
average daily net assets (c)........... (.19)%(b) (.06)% .29%(b)
Portfolio turnover rate (excluding
short-term securities)................. 18.1% 59.2% 5.8%
</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 $111,854,
$181,190 and $50,025 in expenses for the period from August 1, 1998 to
January 31, 1999, 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 1.50%, 1.81% and 2.29%, respectively, and
the ratio of net investment income (loss) to average daily net assets would
have been (.07)%, (.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 2.20%, 2.51% and 2.99%, respectively, and the ratio
of net investment income (loss) to average daily net assets would have been
(.76)%, (.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 2.20%, 2.51% and 2.99%, respectively, and the ratio of net
investment income (loss) to average daily net assets would have been (.78)%,
(.97)% and (1.10)%, respectively.
(d) Commencement of operations.
22
<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 share 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 twelve 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.
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 a check 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 DIVIDEND 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 may move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same share
class) just by calling our toll-free number. The Telephone Exchange privilege
will automatically be established unless otherwise indicated on the Account
Application. Telephone Exchange may be changed (added/deleted) at any time by
submitting a request in writing.
SYSTEMATIC EXCHANGE: You may move a set amount of money monthly or quarterly
from one Advantus Fund to another Advantus Fund (with identical registrations
within the same share class) to diversify your investment portfolio and take
advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Life 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, if any.
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 monthly, semi-monthly or quarterly 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, 401(k) 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. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Redemption privilege will automatically be established
unless otherwise indicated on the Account
23
<PAGE>
Application. Telephone Redemption may be changed (added/deleted) at any time by
submitting a request in writing. 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 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 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 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.
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., 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 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. (For the Advantus International Balanced Fund, Inc., the
sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)
Advantus Capital Management, Inc. manages thirteen mutual funds containing $3.2
billion in assets in addition to $11.0 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
Advantus Real Estate Securities Fund
24
<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]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-AFS-1838
(1-800-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES 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.52035 Rev. 3-1999
