<PAGE>
INDEX 500
ADVANTUS INDEX 500 FUND, INC.
ANNUAL REPORT TO SHAREHOLDERS DATED JULY 31, 1999
[LOGO]
ADVANTUS-TM-
FAMILY OF FUNDS
[GRAPHIC]
<PAGE>
ADVANTUS INDEX 500 FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 5
STATEMENT OF ASSETS AND LIABILITIES 14
STATEMENT OF OPERATIONS 15
STATEMENTS OF CHANGES IN NET ASSETS 16
NOTES TO FINANCIAL STATEMENTS 17
INDEPENDENT AUDITORS' REPORT 21
FEDERAL INCOME TAX INFORMATION 22
SHAREHOLDER SERVICES 23
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholder:
The United States still leads the world's growth, albeit growth has slowed from
past quarters. The broad base of the U.S. economy is a contributing factor to
our country's sustained health in world markets. The Federal Reserve (Fed)
remains vigilant in its quest to maintain a healthy U.S. economy.
The Fed adjusted the federal funds rate, the rate at which banks lend one
another money overnight, four times in this reporting period (August 1, 1998 -
July 31, 1999 and once more in late August, 1999). These adjustments of one
quarter percent (25 basis points) each since August of 1998, moved rates down 75
basis points in 1998 and up 50 basis points in 1999. These actions, which
individually had little effect on the markets, demonstrated the Fed's neutral
bias, which simply means the Fed plans to wait and watch how the economy
develops. This neutral bias could, however, change at any time - and likely
will.
The U.S. stock market continues to soar, although we have witnessed an extremely
volatile market during this reporting period. Early in the second quarter 1999,
the leadership in the marketplace changed dramatically for a time. There was a
move away from the "nifty twenty" stocks (the largest, most highly capitalized
blue chip companies) and the internet stocks. These mega-stocks and internet
stocks broke their steep up-trends when the weight of relatively high valuations
and some earnings disappointments, caused investors to rethink their investment
strategies. The news that the market was finally broadening was very welcome. In
hindsight, the market has broadened, but large cap growth stocks continue to
lead the market.
During this period, bond performance was lackluster due to the rise in the level
of interest rates. Higher interest rates and lower bond prices have been the
bond market theme for the past eight months. In June, for example, yields on the
ten-year bond rose above six percent, as fixed income investors continued to
worry about strong economic growth in the U.S., higher oil prices, the Federal
Reserve's bias to raise interest rates, and seeds of a global economic recovery.
At the end of the reporting period, yields were roughly one percent higher
across the yield curve from the beginning of the year. This sharp increase in
interest rates in a short period of time caused most major bond indices to show
negative total returns for the first half of 1999.
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]
JAMES SEIFERT
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 year ended July 31, 1999, the Advantus Index 500 Fund returned the
following for each class of shares currently offered:
<TABLE>
<S> <C>
CLASS A.......................... 19.13 PERCENT*
CLASS B.......................... 18.10 PERCENT*
CLASS C.......................... 18.03 PERCENT*
</TABLE>
This compares to the S&P 500 Index,** which earned 20.18 percent for the same
period.
PERFORMANCE ANALYSIS
For most of this reporting period, the market was driven by the largest stocks
in the index. Early in the second quarter 1999 the leadership in the marketplace
changed dramatically. The largest stocks in the index came under selling
pressure after leading this capitalization-weighted index over the last three
years. The "nifty twenty" leadership stocks and the internet darlings broke
their steep up-trends when the weight of relatively high valuations and a few
earnings disappointments caused investors to re-think their investment
strategies. Basic industry, cyclical and value stocks of all kinds jumped to
life in a frenzy of rotation in the marketplace.
By the end of the reporting period, the S&P 500 Index** continued to soar.
However, the leadership has been reassigned to a broader group of stocks. When
the Federal Reserve moved the discount rate up slightly (25 basis points) and
indicated a neutral stance to any additional moves in rates, the markets
finished this reporting period with a relief rally. Note: Fed Fund rates moved
up another 25 basis points in late August 1999. These increases totaling
one-half percent (50 basis points) had little effect on the market this calendar
year.
OUTLOOK
Unless long-term interest rates reverse their recent upward trend, we believe
there will not be any room for continued gains in the stock market from
valuation changes. Gains from this point will likely come from earnings and
continued productivity gains. We do expect the U.S. economy will likely continue
growing, albeit more slowly than in the past, with recoveries in both Asia and
Europe adding strength to our outlook. Until growth overseas accelerates
strongly we don't expect inflation to be a problem for our economy. We believe
gains in corporate earnings could give the stock market additional room for some
advancement in the remaining months of 1999.
2
<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 July 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 12.58%
Since inception
(1/31/97) 21.11%
Class B:
One year 13.10%
Since inception
(1/31/97) 21.78%
Class C:
One year 18.03%
Since inception
(1/31/97) 22.62%
(Thousands)
Class A Class B Class C S&P 500 Index CPI
1/31/1997 $10,000 $10,000 $10,000 $10,000 $10,000
7/31/1997 11,464 11,577 12,043 12,244 10,075
7/31/1998 13,549 13,701 14,101 14,607 10,245
7/31/1999 16,141 16,362 16,644 17,557 10,458
</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. 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.
+"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.
3
<PAGE>
TEN LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ------------------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
Microsoft Corporation...................... 24,000 $2,059,500 4.0%
General Electric Company................... 15,300 1,667,700 3.2%
International Business Machines............ 8,600 1,080,913 2.1%
Intel...................................... 15,100 1,041,900 2.0%
Lucent Technologies, Inc................... 14,350 933,647 1.8%
Cisco Systems, Inc......................... 14,700 913,238 1.8%
Exxon Corporation.......................... 11,400 904,875 1.8%
Wal-Mart Stores, Inc....................... 20,800 878,800 1.7%
AT&T Corporation........................... 14,959 776,933 1.5%
Merck & Co., Inc........................... 11,100 751,331 1.5%
---------- ---
$11,008,837 21.4%
---------- ---
---------- ---
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities .2%
Transportation 1.0%
Depository Receipts 2.1%
Utilities 2.8%
Basic Materials 3.9%
Energy 5.9%
Capital Goods 7.9%
Communication Services 9.3%
Consumer Cyclical 9.4%
Health Care 10.2%
Consumer Staples 11.4%
Financial 15.3%
Technology 20.6%
</TABLE>
4
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES
JULY 31, 1999
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
COMMON STOCK (97.7%)
BASIC MATERIALS (3.9%)
Agriculture Products (.3%)
2,861 Archer Daniels Midland Company................... $ 40,057
2,900 Pioneer Hi-Bred International.................... 112,737
----------------
152,794
----------------
Aluminum (.3%)
2,400 Alcan Aluminum Limited (c)....................... 72,300
1,400 Alcoa, Inc....................................... 83,825
----------------
156,125
----------------
Chemicals (2.0%)
1,500 Air Products and Chemicals, Inc. ................ 50,156
900 Dow Chemical Company............................. 111,600
5,100 E.I. DuPont de Nemours and Company............... 367,519
200 Eastman Chemical Company......................... 10,337
2,000 Ecolab, Inc. .................................... 85,250
500 Engelhard Corporation............................ 11,156
300 Hercules, Inc. .................................. 10,462
1,900 International Flavors & Fragrances............... 86,094
2,600 Monsanto Company................................. 101,725
1,200 PPG Industries, Inc.............................. 71,550
600 Praxair, Inc..................................... 27,675
1,421 Rohm and Haas Company............................ 60,570
500 Sigma-Aldrich Corporation........................ 16,812
900 Union Carbide Corporation........................ 43,200
----------------
1,054,106
----------------
Iron and Steel (.1%)
1,400 Allegheny Teledyne, Inc.......................... 30,012
200 Nucor Corporation................................ 9,700
300 USX-U.S. Steel Group, Inc. ...................... 7,781
----------------
47,493
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
BASIC MATERIALS--CONTINUED
Mining (.2%)
4,000 Barrick Gold Corporation (c)..................... $ 74,250
300 Freeport-McMoran Copper.......................... 5,062
400 Inco, Ltd. (c)................................... 7,100
100 Phelps Dodge Corporation......................... 5,931
----------------
92,343
----------------
Paper and Forest (1.0%)
200 Bemis Company, Inc............................... 7,400
1,300 Champion International Corporation............... 67,275
1,300 Fort James Corporation........................... 47,450
1,000 Georgia-Pacific Corporation...................... 44,937
2,200 International Paper Company...................... 112,475
2,000 Kimberly Clark Corporation....................... 122,000
200 Temple-Inland, Inc. ............................. 12,650
600 Weyerhaeuser Company............................. 38,812
1,400 Willamette Industries, Inc....................... 63,000
----------------
515,999
----------------
CAPITAL GOODS (7.9%)
Aerospace/Defense (1.6%)
2,100 Allied-Signal, Inc. ............................. 135,844
900 General Dynamics Corporation..................... 60,581
1,200 Lockheed Martin Corporation...................... 41,775
1,400 Northrop Grumman Corporation..................... 100,975
1,100 Raytheon Company................................. 77,344
1,400 Rockwell International Corporation............... 82,337
400 Textron, Inc..................................... 32,900
3,760 The Boeing Company............................... 170,610
2,300 United Technologies Corporation.................. 153,381
----------------
855,747
----------------
</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--CONTINUED
<C> <S> <C>
Containers-Metal/Glass (.1%)
400 Crown Cork & Seal Company, Inc................... $ 11,725
800 Owens-Illinois, Inc. (b)......................... 19,950
----------------
31,675
----------------
Electrical Equipment (4.1%)
3,000 CBS Corporation (b).............................. 131,812
600 Cooper Industries, Inc........................... 32,925
2,000 Emerson Electric Company......................... 119,375
15,300 General Electric Company......................... 1,667,700
800 Honeywell, Inc................................... 95,850
600 Raychem Corporation.............................. 22,875
1,400 Solectron Corporation (b)........................ 90,212
1,000 Thermo Electron Corporation (b).................. 17,187
----------------
2,177,936
----------------
Engineering/Construction (.3%)
1,600 Caterpillar, Inc. ............................... 93,800
1,800 Fluor Corporation................................ 72,112
----------------
165,912
----------------
Machinery (.3%)
1,500 Deere & Company.................................. 57,375
100 Dover Corporation................................ 3,950
1,800 Ingersoll Rand Company........................... 115,762
----------------
177,087
----------------
Manufacturing (1.1%)
1,600 Avery Dennison Corporation....................... 98,200
900 Illinois Tool Works, Inc......................... 66,881
500 Pall Corporation................................. 10,531
300 Parker Hannifin Corporation...................... 14,156
600 Tenneco, Inc..................................... 13,687
3,612 Tyco International, Ltd.......................... 352,847
----------------
556,302
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
CAPITAL GOODS--CONTINUED
Office Equipment (.2%)
900 Ikon Office Solutions, Inc....................... $ 11,869
1,200 Pitney Bowes, Inc................................ 76,350
----------------
88,219
----------------
Trucks and Parts (.1%)
1,400 Navistar International Corporation (b)........... 62,212
200 Paccar, Inc...................................... 11,462
----------------
73,674
----------------
Waste Management (.1%)
2,397 Waste Management, Inc............................ 61,273
----------------
COMMUNICATION SERVICES (9.3%)
Cellular (.7%)
1,500 Nextel Communications, Inc. (b).................. 80,344
1,350 Vodafone AirTouch PLC (c)........................ 284,175
----------------
364,519
----------------
Telecommunication (2.2%)
9,000 MCI Worldcom, Inc. (b)........................... 742,500
700 Qualcomm, Inc. (b)............................... 109,200
4,400 Sprint Corporation............................... 227,425
1,750 Sprint Corporation 106,094
(PCS Group) (b).................................
----------------
1,185,219
----------------
Telephone (6.4%)
1,700 Alltel Corporation............................... 122,081
4,900 Ameritech Corporation............................ 358,925
14,959 AT&T Corporation................................. 776,933
6,974 Bell Atlantic Corporation........................ 444,592
8,700 Bellsouth Corporation............................ 417,600
2,400 CenturyTel, Inc. ................................ 102,600
1,200 Frontier Corporation............................. 66,525
4,400 GTE Corporation.................................. 324,225
2,400 MediaOne, Inc. (b)............................... 173,700
8,684 SBC Communications, Inc.......................... 496,616
1,838 U.S. West, Inc................................... 105,327
----------------
3,389,124
----------------
</TABLE>
See accompanying notes to investments in securities.
6
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
CONSUMER CYCLICAL (9.4%)
<C> <S> <C>
Auto (1.3%)
400 Cooper Tire & Rubber Company..................... $ 9,000
849 Dana Corporation................................. 35,466
2,597 Delphi Automotive Systems Corporation............ 46,746
400 Eaton Corporation................................ 39,575
5,400 Ford Motor Company............................... 262,575
2,800 General Motors Corporation....................... 170,625
1,100 Goodyear Tire & Rubber Company................... 58,162
500 ITT Industries................................... 18,687
1,100 TRW, Inc. ....................................... 58,781
----------------
699,617
----------------
Building Materials (.1%)
1,200 Masco Corporation................................ 35,700
----------------
Distribution Durables (.1%)
1,300 Genuine Parts Company............................ 40,381
----------------
Hardware and Tools ( -- )
500 The Stanley Works................................ 13,969
----------------
Houseware (.3%)
1,100 Corning, Inc..................................... 77,000
1,000 Maytag Corporation............................... 69,625
----------------
146,625
----------------
Leisure (.2%)
300 Brunswick Corporation............................ 8,212
2,700 Hasbro, Inc...................................... 70,200
1,900 Mattel, Inc...................................... 44,650
----------------
123,062
----------------
Lodging-Hotel (.2%)
2,500 Hilton Hotels Corporation........................ 32,656
1,500 Marriott International, Inc...................... 52,594
----------------
85,250
----------------
Photography/Imagery (.5%)
1,500 Eastman Kodak Company............................ 103,687
300 Polaroid Corporation............................. 6,900
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
CONSUMER CYCLICAL--CONTINUED
2,800 Xerox Corporation................................ $ 136,500
----------------
247,087
----------------
Publishing (.9%)
900 Dow Jones & 44,887
Company, Inc....................................
900 Gannett Company.................................. 65,025
1,500 Knight Ridder, Inc............................... 80,437
1,200 McGraw-Hill Companies, Inc....................... 61,050
2,700 New York Times Company........................... 106,144
1,100 R.R. Donnelly & Sons Company..................... 38,500
700 The Times Mirror Company......................... 42,175
600 Tribune Company.................................. 52,837
----------------
491,055
----------------
Retail (5.2%)
400 American Greetings Corporation................... 11,750
1,300 Autozone, Inc. (b)............................... 32,094
2,200 Circuit City Stores, Inc. ....................... 103,950
600 Costco Companies, Inc. (b)....................... 44,850
2,100 Dayton Hudson Corporation........................ 135,844
300 Dillards, Inc.................................... 9,244
1,900 Federated Department Stores (b).................. 97,494
4,062 Gap, Inc......................................... 189,899
200 Harcourt General, Inc............................ 9,287
7,000 Home Depot, Inc. ................................ 446,687
800 JC Penny Company................................. 35,000
5,100 K Mart Corporation (b)........................... 73,950
700 Kohl's Corporation (b)........................... 53,244
1,200 Lowe's Companies, Inc............................ 63,300
2,400 May Department Stores Company.................... 92,850
800 Nike, Inc........................................ 41,600
1,400 Nordstrom, Inc................................... 44,012
1,700 Sears, Roebuck & Company......................... 68,850
</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>
1,900 Sherwin-Williams Company......................... $ 51,300
1,950 Staples, Inc. (b)................................ 56,306
800 Tandy Corporation................................ 41,050
1,200 The Limited, Inc................................. 54,825
2,500 TJX Companies, Inc............................... 82,656
600 Toys 'R' Us, Inc. (b)............................ 9,750
20,800 Wal-Mart Stores, Inc............................. 878,800
----------------
2,728,592
----------------
Service (.5%)
4,100 Cendant Corporation (b).......................... 82,512
2,300 Equifax, Inc..................................... 75,612
300 H & R Block, Inc................................. 16,387
3,900 Mirage Resort, Inc. (b).......................... 54,844
600 Omnicom Group, Inc............................... 42,525
1,000 Service Corporation International................ 15,875
----------------
287,755
----------------
Textiles (.1%)
200 Fruit of the Loom, Inc. (b)...................... 1,587
200 Liz Claiborne, Inc............................... 7,762
1,800 V.F. Corporation................................. 71,100
----------------
80,449
----------------
CONSUMER STAPLES (11.4%)
Beverage (2.3%)
2,000 Anheuser-Busch Companies, Inc.................... 157,875
600 Brown-Forman, Inc................................ 37,200
11,100 Coca-Cola Company................................ 669,469
1,400 Coca-Cola Enterprises, Inc....................... 40,862
6,200 PepsiCo, Inc. ................................... 242,575
1,500 The Seagram Company, Ltd. (c).................... 76,969
----------------
1,224,950
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
CONSUMER STAPLES--CONTINUED
Broadcasting (.3%)
1,100 Clear Channel Communications (b)................. $ 76,519
2,600 Comcast Corporation.............................. 100,100
----------------
176,619
----------------
Entertainment (1.7%)
2,900 Carnival Corporation............................. 134,669
5,400 Time Warner, Inc. ............................... 388,800
3,300 Viacom, Inc. (b)................................. 138,394
9,200 Walt Disney Company.............................. 254,150
----------------
916,013
----------------
Food (1.6%)
1,500 Best Foods....................................... 73,125
1,600 Campbell Soup Company............................ 70,400
1,600 Conagra, Inc..................................... 40,900
600 General Mills, Inc. ............................. 49,687
900 Hershey Foods Corporation........................ 52,200
1,300 HJ Heinz Company................................. 61,262
1,400 Kellogg Company.................................. 48,737
900 Quaker Oats Company.............................. 61,256
3,000 Ralston-Purina Group............................. 89,812
1,200 RJR Nabisco Holdings Corporation................. 22,500
3,200 Sara Lee Corporation............................. 70,400
2,321 Unilever NV (c).................................. 162,180
600 Wm. Wrigley Jr. Company.......................... 47,812
----------------
850,271
----------------
Food & Health (.1%)
1,200 SYSCO Corporation................................ 39,225
----------------
Household Products (2.3%)
600 Clorox Company................................... 67,200
2,800 Colgate Palmolive Company........................ 138,250
5,100 Gillette Company................................. 223,444
1,800 Minnesota Mining and Manufacturing............... 158,287
1,388 Newell Rubbermaid, Inc........................... 60,031
</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>
6,100 Procter & Gamble Company......................... $ 552,050
----------------
1,199,262
----------------
Personal Care (.1%)
500 Alberto-Culver Company........................... 12,781
1,100 Avon Products.................................... 50,050
----------------
62,831
----------------
Restaurants (.6%)
6,000 McDonalds Corporation............................ 250,125
740 Tricon Global Restaurants, Inc. (b).............. 30,109
500 Wendy's International, Inc....................... 14,531
----------------
294,765
----------------
Retail (1.2%)
2,882 Albertson's, Inc................................. 143,199
1,300 CVS Corporation.................................. 64,675
1,900 Kroger Company (b)............................... 49,994
1,200 Rite Aid Corporation............................. 25,425
1,800 Safeway, Inc. (b)................................ 96,975
3,700 Super Valu, Inc.................................. 84,175
3,600 Walgreen Company................................. 101,925
1,500 Winn-Dixie Stores, Inc........................... 59,437
----------------
625,805
----------------
Service (.3%)
2,800 Automatic Data Processing, Inc................... 112,175
1,200 Ceridian Corporation (b)......................... 33,600
300 Deluxe Corporation............................... 11,250
----------------
157,025
----------------
Tobacco (.9%)
500 Fortune Brands, Inc. ............................ 19,750
10,800 Philip Morris Companies, Inc..................... 402,300
2,100 UST, Inc......................................... 65,100
----------------
487,150
----------------
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
ENERGY (5.9%)
Oil (4.9%)
1,300 Amerada Hess Corporation......................... $ 76,944
2,900 Chevron Corporation.............................. 264,625
11,400 Exxon Corporation................................ 904,875
3,700 Mobil Corporation................................ 378,325
3,200 Occidental Petroleum Corporation................. 62,600
600 Phillips Petroleum Company....................... 30,787
9,800 Royal Dutch Petroleum Company (c)................ 597,800
2,800 Texaco, Inc...................................... 174,475
1,600 Unocal Corporation............................... 63,500
900 USX - Marathon Group............................. 27,338
----------------
2,581,269
----------------
Oil & Gas (1.0%)
800 Anadarko Petroleum Corporation................... 30,550
800 Ashland, Inc..................................... 30,400
1,400 Atlantic Richfield Company....................... 126,088
2,420 Baker Hughes, Inc................................ 84,246
452 Burlington Resources, Inc........................ 19,973
2,100 Halliburton Company.............................. 96,863
2,300 Schlumberger, Ltd. .............................. 139,294
----------------
527,414
----------------
FINANCIAL (15.3%)
Auto Finance (.2%)
2,600 Fleet Financial Group, Inc....................... 105,300
----------------
Banks (6.1%)
750 AmSouth Bancorporation........................... 17,156
8,193 Bank of America Corporation...................... 543,842
1,000 Bank of Boston Corporation....................... 46,938
2,800 Bank of New York, Inc............................ 103,425
4,940 Bank One Corporation............................. 269,539
3,000 BB&T Corporation................................. 105,750
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
FINANCIAL--CONTINUED
<C> <S> <C>
3,800 Chase Manhattan Corporation...................... $ 292,125
1,450 Comerica, Inc. .................................. 80,475
850 Fifth Third Bancorp.............................. 55,303
4,148 First Union Corporation.......................... 190,808
3,900 Firstar Corporation.............................. 101,644
1,331 Huntington Bancshares, Inc....................... 40,096
600 J.P. Morgan & Company, Inc....................... 76,725
1,200 KeyCorp.......................................... 37,800
2,400 Mellon Bank Corporation.......................... 81,000
1,400 Mercantile Bancorporation, Inc................... 76,300
3,000 National City Corporation........................ 89,250
900 Northern Trust Corporation....................... 78,300
1,200 PNC Bank Corporation............................. 63,450
1,300 Regions Financial Corporation.................... 46,231
1,500 Southtrust Corporation........................... 55,125
1,000 State Street Corporation......................... 70,875
1,200 Summit Bancorp................................... 44,400
1,300 Suntrust Banks, Inc.............................. 83,850
1,800 Synovus Financial Corporation.................... 32,963
2,553 U.S. Bancorp..................................... 79,462
2,000 Union Planters Corporation....................... 88,625
700 Wachovia Corporation............................. 54,644
7,400 Wells Fargo Company.............................. 288,600
----------------
3,194,701
----------------
Commercial Finance (.1%)
1,300 Dun & Bradstreet Corporation..................... 41,275
----------------
Consumer Finance (1.2%)
2,000 American Express Company......................... 263,500
2,873 Associates First Capital Corporation............. 110,053
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
FINANCIAL--CONTINUED
1,200 Capital One Financial Corporation................ $ 55,650
1,519 Household International, Inc..................... 65,223
2,825 MBNA Corporation................................. 80,513
800 SLM Holding Corporation.......................... 36,400
----------------
611,339
----------------
Finance-Diversified (2.5%)
800 American General Corporation..................... 61,900
15,358 Citigroup, Inc................................... 684,391
3,000 Federal Home Loan Mortgage Corporation........... 172,125
4,700 Federal National Mortgage Association............ 324,300
900 MGIC Investment Corporation...................... 44,381
----------------
1,287,097
----------------
Insurance (3.4%)
574 Aegon N.V. (c)................................... 43,696
900 Aetna, Inc....................................... 73,800
1,200 AFLAC, Inc....................................... 55,650
3,500 Allstate Corporation............................. 124,250
5,575 American International Group..................... 647,397
1,075 Aon Corporation.................................. 40,245
1,100 Chubb Corporation................................ 65,794
1,000 Cigna Corporation................................ 88,188
949 Conseco, Inc. 27,343
1,000 Jefferson-Pilot Corporation...................... 73,063
2,000 Lincoln National Corporation..................... 100,000
700 Loews Corporation................................ 49,088
1,100 Marsh & McLennen................................. 83,600
600 MBIA, Inc........................................ 34,350
300 Progressive Corporation.......................... 38,325
750 Providian Financial.............................. 68,250
800 Safeco Corporation............................... 30,450
1,800 St. Paul Companies, Inc.......................... 56,025
</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>
600 The Hartford Financial Services Group, Inc....... $ 32,400
400 Torchmark Corporation............................ 13,150
700 Unum Corporation................................. 36,225
----------------
1,781,289
----------------
Investment Bankers/Brokers (1.5%)
4,050 Charles Schwab Corporation....................... 178,453
2,600 Franklin Resources, Inc.......................... 99,125
1,700 Lehman Brothers Holdings, Inc.................... 91,375
1,500 Merrill Lynch & Co., Inc......................... 102,094
2,530 Morgan Stanley Dean Witter & Co.................. 228,016
2,400 Paine Webber Group, Inc.......................... 96,000
----------------
795,063
----------------
Public Finance (.1%)
1,300 Countrywide Credit Industries.................... 48,425
----------------
Savings and Loans (.2%)
300 Golden West Financial Corporation................ 28,781
1,878 Washington Mutual, Inc........................... 64,439
----------------
93,220
----------------
HEALTH CARE (10.2%)
Biotechnology (.3%)
2,000 Amgen, Inc. (b).................................. 153,750
----------------
Drugs (5.8%)
5,800 American Home Products Corporation............... 295,800
9,200 Bristol-Myers Squibb Company..................... 611,800
1,150 Cardinal Health, Inc. ........................... 78,488
4,900 Eli Lilly & Company.............................. 321,563
11,100 Merck & Co., Inc................................. 751,331
17,400 Pfizer, Inc. .................................... 590,513
1,900 Pharmacia & Upjohn, Inc.......................... 102,244
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
HEALTH CARE--CONTINUED
6,700 Schering Plough Corporation...................... $ 328,300
----------------
3,080,039
----------------
Health Care-Diversified (2.4%)
6,800 Abbott Laboratories.............................. 291,975
700 Allergan, Inc.................................... 66,150
4,100 HealthSouth Rehabilitation Company (b)........... 50,225
6,200 Johnson & Johnson................................ 571,175
4,000 Warner-Lambert Company........................... 264,000
----------------
1,243,525
----------------
Hospital Management (.3%)
5,200 Columbia/HCA Healthcare Corporation.............. 115,700
3,400 Tenet Healthcare Corporation (b)................. 60,988
----------------
176,688
----------------
Managed Care (.2%)
1,400 HCR Manor Care, Inc. (b)......................... 28,525
1,200 Humana, Inc. (b)................................. 13,050
1,036 McKesson Corporation............................. 32,181
700 United HealthCare Corporation.................... 42,700
----------------
116,456
----------------
Medical Products/Supplies (1.2%)
1,800 Alza Corporation (b)............................. 87,525
300 Bausch & Lomb, Inc............................... 21,544
900 Baxter International, Inc........................ 61,819
1,200 Becton Dickinson & Company....................... 32,925
2,300 Biomet, Inc...................................... 83,663
1,200 Boston Scientific Corporation (b)................ 48,675
1,300 Guidant Corporation.............................. 76,131
600 Mallinckrodt, Inc................................ 20,325
2,400 Medtronic, Inc. ................................. 172,950
400 St. Jude Medical, Inc. (b)....................... 14,875
----------------
620,432
----------------
</TABLE>
See accompanying notes to investments in securities.
11
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
TECHNOLOGY (20.6%)
<C> <S> <C>
1,600 3 Com Corporation (b)............................ $ 38,600
200 Adobe Systems, Inc............................... 17,150
900 Advanced Micro Devices, Inc. (b)................. 15,469
5,100 America Online, Inc. (b)......................... 485,138
2,100 Apple Computer, Inc. (b)......................... 116,944
2,400 Applied Materials, Inc. (b)...................... 172,650
1,500 BMC Software, Inc. (b)........................... 80,813
14,700 Cisco Systems, Inc. (b).......................... 913,238
6,861 Compaq Computer Corporation...................... 164,664
2,000 Computer Associates International................ 91,750
600 Computer Sciences Corporation (b)................ 38,625
1,400 Compuware Corporation (b)........................ 38,850
11,300 Dell Computer Corporation (b).................... 461,888
1,700 Electronic Data Systems Corporation.............. 102,531
4,400 EMC Corporation (b).............................. 266,475
2,000 First Data Corporation........................... 99,125
156 Gartner Group, Inc. (b).......................... 3,374
600 Gateway, Inc. (b)................................ 45,713
2,000 General Instrument Corporation (b)............... 90,750
600 Harris Corporation............................... 18,188
4,700 Hewlett-Packard Company.......................... 492,031
1,200 IMS Health, Inc.................................. 33,450
15,100 Intel............................................ 1,041,900
8,600 International Business Machines.................. 1,080,913
200 KLA-Tencor Corporation (b)....................... 13,550
1,600 LSI Logic Corporation (b)........................ 80,500
14,350 Lucent Technologies, Inc......................... 933,647
2,500 Micron Technology, Inc. (b)...................... 155,313
24,000 Microsoft Corporation (b)........................ 2,059,500
2,800 Motorola, Inc.................................... 255,500
300 National Semiconductor Corporation (b)........... 7,425
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
TECHNOLOGY--CONTINUED
2,720 Nortel Networks Corporation (c).................. $ 241,060
3,100 Novell, Inc. (b)................................. 79,825
5,850 Oracle Corporation (b)........................... 222,666
1,400 Parametric Technology Corporation (b)............ 19,775
2,400 Paychex, Inc..................................... 67,350
3,100 Peoplesoft, Inc. (b)............................. 42,238
1,600 Seagate Technology, Inc. (b)..................... 43,000
900 Silicon Graphics, Inc. (b)....................... 15,919
3,500 Sun Microsystems, Inc. (b)....................... 237,563
1,800 Tellabs, Inc. (b)................................ 110,813
1,600 Texas Instruments, Inc. ......................... 230,400
2,000 Unisys Corporation (b)........................... 81,625
1,000 W.W. Grainger, Inc............................... 47,250
----------------
10,855,148
----------------
TRANSPORTATION (1.0%)
Air Freight (.2%)
2,000 Federal Express Corporation (b).................. 89,625
----------------
Airlines (.3%)
400 AMR Corporation (b).............................. 25,950
400 Delta Air Lines, Inc............................. 23,850
4,275 Southwest Airlines Company....................... 79,088
300 USAir Group, Inc. (b)............................ 10,688
----------------
139,576
----------------
Railroads (.5%)
1,800 Burlington Northern Santa Fe Corporation......... 57,600
1,400 CSX Corporation.................................. 67,813
500 Kansas City Southern Industries.................. 27,625
1,300 Norfolk Southern Corporation..................... 38,025
1,100 Union Pacific Corporation........................ 59,744
----------------
250,807
----------------
</TABLE>
See accompanying notes to investments in securities.
12
<PAGE>
ADVANTUS INDEX 500 FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
UTILITIES (2.8%)
<C> <S> <C>
Electric Companies (2.1%)
1,800 AES Corporation (b).............................. $ 107,775
200 Ameren Corporation............................... 7,800
800 American Electric Power Company.................. 28,300
1,000 Carolina Power & Light Company................... 41,125
1,600 Central & Southwest Corporation.................. 34,100
200 Cinergy Corporation.............................. 5,988
500 CMS Energy Corporation........................... 18,688
1,900 Dominion Resources, Inc.......................... 83,719
600 DTE Energy Company............................... 23,475
1,208 Duke Energy Corporation.......................... 63,949
4,000 Edison International............................. 101,250
1,000 Entergy Corporation.............................. 30,313
2,200 FirstEnergy Corporation.......................... 62,838
600 FPL Group, Inc................................... 32,363
1,200 GPU, Inc......................................... 46,050
400 New Century Energies, Inc........................ 13,875
400 Northern States Power Company.................... 9,000
1,200 Pacific Gas & Electric Company................... 37,950
1,500 Peco Energy Company.............................. 63,563
<CAPTION>
MARKET
SHARES VALUE(a)
- -------- ----------------
<C> <S> <C>
UTILITIES--CONTINUED
1,000 Public Service Enterprise Group.................. $ 40,313
1,100 Reliant Energy, Inc.............................. 30,181
3,300 Southern Company................................. 87,244
1,800 Texas Utilities Company.......................... 76,388
1,200 Unicom Corporation............................... 47,100
----------------
1,093,347
----------------
Natural Gas (.7%)
1,900 Coastal Corporation.............................. 75,169
300 Consolidated Natural Gas Company................. 18,788
1,600 Enron Corporation................................ 136,300
1,400 Sempra Energy.................................... 31,063
2,000 The Williams Company............................. 84,125
----------------
345,445
----------------
Total common stock
(cost: $40,152,112)........................................ 51,390,235
----------------
DEPOSITORY RECEIPT (2.1%)
8,350 S&P 500 Depository Receipt....................... 1,108,463
----------------
Total depository receipt
(cost: $1,154,187)......................................... 1,108,463
----------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
- ----------
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (.6%)
$ 315,702 Federated Prime Obligation Fund, current rate 4.990%............... 315,702
------------
Total short-term securities (cost: $315,702)....................... 315,702
------------
Total investments in securities (cost: $41,622,001)(d)............. $ 52,814,400
------------
------------
</TABLE>
Notes to Investments in Securities
- -----------------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 3.0% of net assets in foreign securities as of July 31, 1999.
(d) At July 31, 1999 the cost of securities for federal income tax purposes was
$41,734,110. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation................ $13,168,686
Gross unrealized depreciation................ (2,088,396)
-----------
Net unrealized appreciation.................. $11,080,290
-----------
-----------
</TABLE>
13
<PAGE>
ADVANTUS Index 500 Fund
Statement of Assets and Liabilities
July 31, 1999
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investments in securities, at market value - see accompanying
schedule for detailed listing
(identified cost: $41,622,001).................................. $ 52,814,400
Cash in bank on demand deposit................................... 142
Receivable for Fund shares sold.................................. 81,250
Receivable for investment securities sold........................ 49,923
Accrued interest receivable...................................... 1,027
Dividends receivable............................................. 41,918
Organizational costs (note 5).................................... 44,411
Receivable from Adviser.......................................... 27,930
------------
Total assets................................................. 53,061,001
------------
<CAPTION>
LIABILITIES
<S> <C>
Payable to Adviser............................................... 99,099
Payable for investment securities purchased...................... 304,223
Payable for Fund shares redeemed................................. 47,168
------------
Total liabilities............................................ 450,490
------------
Net assets applicable to outstanding capital stock............... $ 52,610,511
------------
------------
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)....................................................... $ 29,745
Additional paid-in capital..................................... 41,201,780
Accumulated net realized gains from investments................ 186,587
Unrealized appreciation on investments......................... 11,192,399
------------
Total - representing net assets applicable to outstanding
capital stock................................................ $ 52,610,511
------------
------------
Net assets applicable to outstanding Class A shares.............. $ 25,498,132
------------
------------
Net assets applicable to outstanding Class B shares.............. $ 24,202,406
------------
------------
Net assets applicable to outstanding Class C shares.............. $ 2,909,973
------------
------------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 1,436,954......................... $ 17.74
------------
------------
Class B - Shares outstanding 1,372,193......................... $ 17.64
------------
------------
Class C - Shares outstanding 165,340........................... $ 17.60
------------
------------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
ADVANTUS INDEX 500 FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JULY 31, 1999
<TABLE>
<S> <C>
Investment income:
Interest....................................................... $ 15,531
Dividends...................................................... 555,717
------------
Total investment income...................................... 571,248
------------
Expenses (note 4):
Investment advisory fee........................................ 139,480
Rule 12b-1 fees - Class A...................................... 56,894
Rule 12b-1 fees - Class B...................................... 178,100
Rule 12b-1 fees - Class C...................................... 21,928
Administrative services fee.................................... 56,400
Amortization of organizational costs........................... 17,764
Transfer agent and shareholder servicing fees.................. 131,227
Custodian fees................................................. 6,260
Auditing and accounting services............................... 12,981
Legal fees..................................................... 12,425
Directors' fees................................................ 664
Registration fees.............................................. 43,636
Printing and shareholder reports............................... 41,145
Insurance...................................................... 3,505
S&P licensing fee.............................................. 3,648
Other.......................................................... 6,669
------------
Total expenses............................................. 732,726
------------
Less fees and expenses waived or absorbed:
Class A Rule 12b-1 fees...................................... (25,363)
Other fund expenses.......................................... (229,663)
------------
Total fees and expenses waived or absorbed................. (255,026)
------------
Total net expenses......................................... 477,700
------------
Investment income - net.................................... 93,548
------------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)..................... 211,208
Net change in unrealized appreciation or depreciation on
investments.................................................. 6,581,538
------------
Net gains on investments................................... 6,792,746
------------
Net increase in net assets resulting from operations............. $ 6,886,294
------------
------------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
ADVANTUS INDEX 500 FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED JULY 31, 1999 AND 1998
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
Operations:
Investment income - net......................... $ 93,548 $ 89,077
Net realized gain on investments................ 211,208 155,958
Net change in unrealized appreciation or
depreciation on investments................... 6,581,538 2,694,442
------------ ------------
Increase in net assets resulting from
operations................................ 6,886,294 2,939,477
------------ ------------
Distributions to shareholders from:
Investment income - net:
Class A....................................... (121,500) (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....................................... (69,737) (6,117)
Class C....................................... (8,298) (1,101)
------------ ------------
Total distributions......................... (286,343) (131,656)
------------ ------------
Capital share transactions (notes 4 and 6):
Proceeds from sales:
Class A....................................... 10,263,823 7,485,540
Class B....................................... 12,218,978 9,963,570
Class C....................................... 1,887,095 1,231,311
Proceeds from issuance of shares as a result of
reinvested dividends:
Class A....................................... 116,444 40,014
Class B....................................... 73,336 15,232
Class C....................................... 8,291 2,392
Payments for redemption of shares:
Class A....................................... (4,003,764) (1,740,078)
Class B....................................... (2,766,448) (949,778)
Class C....................................... (837,889) (208,843)
------------ ------------
Increase in net assets from capital share
transactions.............................. 16,959,866 15,839,360
------------ ------------
Total increase in net assets................ 23,559,817 18,647,181
Net assets at beginning of year................. 29,050,694 10,403,513
------------ ------------
Net assets at end of year (including
undistributed net investment income of $0 and
$11,532, respectively)........................ $ 52,610,511 $ 29,050,694
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1999
(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 shares 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 Rule 12b-1 fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than Rule 12b-1 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). 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.
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.
17
<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 by $20,220, decrease additional paid-in
capital by $17,764 and decrease accumulated net realized gains by $2,456.
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, 1999, purchases of securities and proceeds from
sales, other than temporary investments in short-term securities aggregated
$27,041,640 and $10,324,977, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital. Under
the agreement, Advantus Capital acts as investment adviser and manager for the
Fund. The fee for investment management and advisory services is based on the
average daily net assets of the Fund at the annual rate of .34 percent. The Fund
has engaged 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 servicing fee up
to .25 percent of average daily net assets of Class A shares. Prior to February
1, 1999, the Class A Plan provided for a distribution 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 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 $25,363 for the year ended July 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.
18
<PAGE>
ADVANTUS INDEX 500 FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)
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 $5,700 per month for accounting, auditing, legal and other administrative
services which Minnesota Life provides. Prior to February 1, 1999, the
administrative services fee was $3,700 per month. Effective August 1, 1999, the
administrative services fee is $6,200 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,
1999, Advantus Capital voluntarily agreed to absorb $229,663 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 $149,932.
As of July 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................................. 505,213 35.2%
Class B................................. 5,138 .4%
Class C................................. 5,129 3.1%
</TABLE>
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $11,739.
(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 years ended July 31, 1999 and 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........................................ 631,958 528,494 751,334 702,411 117,017 94,533
Issued for reinvested distributions......... 7,331 2,873 4,721 1,181 531 186
Redeemed.................................... (245,455) (122,719) (172,144) (67,797) (52,929) (14,688)
--------- --------- --------- --------- --------- ---------
393,834 408,648 583,911 635,795 64,619 80,031
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
(7) YEAR 2000 (UNAUDITED)
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 $12 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.
19
<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
YEAR ENDED JULY JANUARY 31, YEAR ENDED JULY JANUARY 31,
31, 1997(d) TO 31, 1997(d) TO
------------------ 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 (loss)............... .11 .10 .06 (.03) .02 .01
Net gains on securities (both realized and
unrealized).............................. 2.74 2.21 2.21 2.73 2.17 2.21
------- ------- ------------ ------- ------- ------------
Total from investment operations......... 2.85 2.31 2.27 2.70 2.19 2.22
------- ------- ------------ ------- ------- ------------
Less distributions:
Dividends from net investment income....... (.10) (.12) (.06) - (.03) (.04)
Distributions from capital gains........... (.07) (.02) - (.07) (.02) -
------- ------- ------------ ------- ------- ------------
Total distributions...................... (.17) (.14) (.06) (.07) (.05) (.04)
------- ------- ------------ ------- ------- ------------
Net asset value, end of period............... $ 17.74 $ 15.06 $12.89 $ 17.64 $ 15.01 $12.87
------- ------- ------------ ------- ------- ------------
------- ------- ------------ ------- ------- ------------
Total return (a)............................. 19.13% 18.19% 21.29% 18.10% 17.17% 20.77%
Net assets, end of period
(in thousands)............................. $25,498 $15,711 $8,176 $24,202 $11,832 $1,962
Ratio of expenses to average daily net assets
(c)........................................ .75% .74% .70%(b) 1.60% 1.60% 1.60%(b)
Ratio of net investment income (loss) to
average daily net assets (c)............... .64% .83% 1.19%(b) (.21)% (.06)% .29%(b)
Portfolio turnover rate (excluding short-term
securities)................................ 25.3% 59.2% 5.8% 25.3% 59.2% 5.8%
<CAPTION>
CLASS C
--------------------------------
PERIOD FROM
YEAR ENDED JULY JANUARY 31,
31, 1997(d) TO
------------------ 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 (loss)............... (.03) .01 .01
Net gains on securities (both realized and
unrealized).............................. 2.73 2.16 2.18
------- ------- ------------
Total from investment operations......... 2.70 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............... $ 17.60 $ 14.97 $12.85
------- ------- ------------
------- ------- ------------
Total return (a)............................. 18.03% 17.09% 20.44%
Net assets, end of period
(in thousands)............................. $ 2,910 $ 1,508 $ 266
Ratio of expenses to average daily net assets
(c)........................................ 1.60% 1.60% 1.60%(b)
Ratio of net investment income (loss) to
average daily net assets (c)............... (.21)% (.06)% .29%(b)
Portfolio turnover rate (excluding short-term
securities)................................ 25.3% 59.2% 5.8%
</TABLE>
- ------------
(a) Total return figures are based on a share outstanding throughout the period
and assume 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
$255,026, $181,190 and $50,025 in expenses for the years ended July 31,
1999 and 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
1.43%, 1.81% and 2.29%, respectively, and the ratio of net investment
income (loss) to average daily net assets would have been (.04)%, (.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
2.16%, 2.51% and 2.99%, respectively, and the ratio of net investment
income (loss) to average daily net assets would have been (.77)%, (.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
2.16%, 2.51% and 2.99%, respectively, and the ratio of net investment
income (loss) to average daily net assets would have been (.77)%, (.97)%
and (1.10)%, respectively.
(d) Inception date of the Fund.
20
<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. (the Fund) as of July 31, 1999 and the related statement of
operations for the year then ended, the statements of changes in net assets for
each of the years in the two year period then ended and the financial highlights
for each of the years in the two year period then ended and the period from
January 31, 1997, date of inception, to July 31, 1997. These financial
statements and the financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and the financial highlights based on our 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. Our procedures included confirmation of securities owned as of July
31, 1999, by correspondence with the custodian and brokers. 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 Fund as of July 31, 1999 and the results of its operations,
changes in its net assets and the financial highlights, for the periods stated
in the first paragraph above, in conformity with generally accepted accounting
principles.
KPMG LLP
Minneapolis, Minnesota
September 3, 1999
21
<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, 1999. Dividends for the 1999 calendar year will be
reported to you on Form 1099-Div in late January 2000. Shareholders should
consult a tax adviser on how to report these distributions for state and local
purposes.
CLASS A
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- -------------------------------------------------------------------------------- ------
<S> <C>
Income distribution-taxable as dividend income, 100% qualifying for deduction by
corporations.
September 24, 1998.............................................................. $.0330
December 4, 1998*............................................................... .0392
December 22, 1998............................................................... .0247
March 19, 1999.................................................................. .0168
June 24, 1999................................................................... .0231
------
$.1368
------
------
Capital gains distributions-taxable as long-term capital gains, 20% rate.
December 4, 1998................................................................ $.0324
------
------
</TABLE>
*Represents $.0392 of short-term capital gains (taxable as dividend income).
CLASS B
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- -------------------------------------------------------------------------------- ------
<S> <C>
Income distribution-taxable as dividend income, 100% qualifying for deduction by
corporations.
September 24, 1998.............................................................. $.0043
December 4, 1998*............................................................... .0392
------
$.0435
------
------
Capital gains distributions-taxable as long-term capital gains, 20% rate.
December 4, 1998................................................................ $.0324
------
------
</TABLE>
*Represents $.0392 of short-term capital gains (taxable as dividend income).
CLASS C
<TABLE>
<CAPTION>
PER
PAYABLE DATE SHARE
- -------------------------------------------------------------------------------- ------
<S> <C>
Income distribution-taxable as dividend income, 100% qualifying for deduction by
corporations.
September 24, 1998.............................................................. $.0002
December 4, 1998*............................................................... .0392
------
$.0394
------
------
Capital gains distributions-taxable as long-term capital gains, 20% rate.
December 4, 1998................................................................ $.0324
------
------
</TABLE>
*Represents $.0392 of short-term capital gains (taxable as dividend income).
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 may apply.
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.
AUTOMATIC INVESTMENT PLAN: This special purchase plan enables 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 PLANS: You can use the Advantus Family of Funds for your
Traditional, Roth or Education Individual Retirement Account or other qualified
plans including: SEP IRA's, SIMPLE IRA's, Profit Sharing, 401(k) Money Purchase
or Defined Benefit plans.
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 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
23
<PAGE>
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 eleven 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 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. (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 $12.8 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, INC. PRESORTED STANDARD
400 ROBERT STREET NORTH U.S. POSTAGE
ST. PAUL, MN 55101-2098 PAID
ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
F. 51520 Rev. 9-1999
