<PAGE> 1
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14c-5(d)(2))
[x] Definitive Information Statement
Advantus Series Fund, Inc.
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of the filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE> 2
Dear Series Fund Investor:
You are an investor in the Advantus Series Fund, Inc. (the "Fund") as the
Portfolios of the Fund are investment choices in your Minnesota Life variable
contract.
The attached booklet contains information the Fund must provide. The Fund
and its Portfolios are advised by Advantus Capital Management, Inc. ("Advantus
Capital"), but for some of the Portfolios a sub-adviser retained by Advantus
Capital conducts the operations of the Portfolio. This booklet informs you of a
change in the Capital Appreciation Portfolio, and the retention of sub-advisers
for the Small Company Growth Portfolio and the Small Company Value Portfolio.
The Board of Directors of the Fund reviews and monitors the performance of
Portfolio sub-advisers as part of its continuing management of the Fund. Also,
the Fund has an order from the Securities and Exchange Commission that allows it
to enter into or materially amend investment management agreements with
sub-advisers without first obtaining shareholder approval. A condition of this
order provides that certain information, in the format enclosed, be given to
variable contract owners shortly after a new sub-adviser is named or a
sub-advisory agreement is changed.
The Board has approved the engagement of Credit Suisse Asset Management,
LLC ("CSAM") as the new sub-adviser to the Small Company Growth Portfolio
(effective March 7, 2000) and has further engaged CSAM to serve as the new
sub-adviser to the Capital Appreciation Portfolio (effective May 1, 2000). The
Board has additionally approved the engagement of State Street Research &
Management Company to serve as the sub-adviser to the Small Company Value
Portfolio (effective March 7, 2000). The booklet tells you more about these
firms and Advantus Capital's sub-advisory contracts with them.
This material is for your information only; it is not a proxy statement and
you are not being asked to vote. Please put this material with your other
materials relating to the Fund.
Sincerely,
[/s/ Thomas G. Meyer]
Thomas G. Meyer
Director, Market Development
<PAGE> 3
ADVANTUS SERIES FUND, INC.
SMALL COMPANY GROWTH PORTFOLIO
CAPITAL APPRECIATION PORTFOLIO
SMALL COMPANY VALUE PORTFOLIO
THE MINNESOTA MUTUAL CENTER
400 ROBERT STREET NORTH
ST. PAUL, MINNESOTA 55101-2098
------------------------------
INFORMATION STATEMENT
------------------------------
This information statement is being provided to the shareholders of the
Advantus Series Fund, Inc. (the "Fund"), in lieu of a proxy statement, pursuant
to a requirement in the conditions of an Exemptive Order the Fund has received
from the Securities and Exchange Commission. The Order permits the Fund, through
its Board of Directors ("Board"), and its investment adviser, Advantus Capital
Management, Inc. ("Advantus Capital"), to hire new sub-advisers and to make
changes to existing sub-advisory contracts for Portfolios of the Fund with the
approval of the Board, but without obtaining shareholder approval. This
information statement is being furnished by the Board.
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A
PROXY.
This information statement will be mailed on or about April 20, 2000.
Copies of the most recent annual and semi-annual reports for the Fund are
available without charge. Copies of the Fund's reports may be obtained by
writing to the Fund at 400 Robert Street North, St. Paul, Minnesota 55101-2098,
or by calling 1-800-995-3850.
PURPOSE OF THE INFORMATION STATEMENT
At a meeting held on February 10, 2000, the Board approved sub-advisory
agreements between Advantus Capital and Credit Suisse Asset Management, LLC
("CSAM") for the Small Company Growth Portfolio ("Small Company Growth") and
Capital Appreciation Portfolio ("Capital Appreciation"). The agreement for Small
Company Growth went into effect on March 7, 2000. The agreement for Capital
Appreciation will go into effect on May 1, 2000. CSAM replaces Winslow Capital
Management, Inc. ("Winslow") as the sub-adviser for Capital Appreciation. Also
on February 10, 2000, the Board approved an Advisory Agreement between Advantus
Capital and State Street Research & Management Company ("State Street Research")
for the Small Company Value Portfolio ("Small Company Value"). This agreement
went into effect on March 7, 2000.
THE FUND AND THE INVESTMENT ADVISER
Small Company Growth, Capital Appreciation, and Small Company Value are
each investment portfolios of Advantus Series Fund, Inc., a Minnesota
corporation. The Fund entered into an amended Investment Advisory Agreement
("Advisory Agreement") with Advantus Capital effective on May 1, 2000, for the
management of the assets of the Fund. Advantus Capital or its predecessor firm
has provided advisory services to the Fund since its inception. Advantus Capital
selects the sub-advisers for and/or manages the investments of the Portfolios of
the Fund. When a sub-adviser is retained, Advantus Capital is responsible for
overseeing the sub-adviser and for recommending its hiring, termination and
replacement. It also retains ultimate responsibility for the investment
performance of each Portfolio employing a sub-adviser. Advantus Capital monitors
the activities and performance of the sub-adviser and, from time to time, will
recommend the hiring, retention or replacement of a sub-adviser on the basis of
investment performance, the nature, quality and extent of the services provided
by the sub-adviser, or other considerations.
<PAGE> 4
The sub-advisers to the Fund act pursuant to investment sub-advisory
agreements with Advantus Capital. Their duties include the formulation and
implementation of an investment program within the framework of the investment
objectives, policies and restrictions of the Portfolio and making and executing
all investment decisions for the Portfolio in pursuit of its investment
objective. Each sub-adviser is independent of Advantus Capital and discharges
its responsibilities subject to the oversight and supervision of Advantus
Capital. The Fund pays Advantus Capital monthly fees calculated on an annual
basis for each Portfolio, based upon the net assets in that Portfolio. Advantus
Capital uses a portion of the applicable fees received by it to pay sub-advisers
their fees.
THE SUB-ADVISORY AGREEMENTS
Pursuant to a Sub-Advisory Agreement with Advantus Capital for the
management of the assets of Capital Appreciation, Winslow has been serving as a
sub-adviser since May 1, 1997. At a meeting on February 10, 2000, the Board
approved Advantus Capital's recommendation to replace Winslow with CSAM.
Accordingly, the Board approved a Sub-Advisory Agreement with CSAM which will go
into effect on May 1, 2000. The form of this Sub-Advisory Agreement is attached
to this Information Statement as Exhibit A. Advantus Capital also recommended,
and the Board approved, the hiring of CSAM as the sub-adviser for Small Company
Growth. A Sub-Advisory Agreement with CSAM as a sub-adviser for Small Company
Growth was effective on March 7, 2000. The form of this Sub-Advisory Agreement
is attached as Exhibit B. Finally, the Board approved Advantus Capital's
recommendation to hire State Street Research as a sub-adviser for Small Company
Value. A Sub-Advisory Agreement with State Street Research as the sub-adviser
for Small Company Growth was effective on March 7, 2000. The form of this
Sub-Advisory Agreement is attached as Exhibit C. Advantus Capital provided
advisory services to Small Company Growth and Small Company Value prior to March
7, 2000 and from the inception of each portfolio.
Advantus Capital recommended CSAM and State Street Research in the ordinary
course of its ongoing evaluation of investment strategy and sub-adviser
performance and after extensive research and qualitative and quantitative
analysis of numerous candidate firms and their organizational structure,
investment process and style, and long term performance record. Advantus Capital
believes that each of CSAM's and State Street Research's investment style is
appropriately suited to the respective Portfolios.
The change in the identity and the amount of fees or in the method of their
calculation for the sub-adviser for Capital Appreciation, Small Company Value
and Small Company Growth has no effect on the amount of advisory fees paid by
those Portfolios to Advantus Capital. The shareholders of the Fund are currently
considering, pursuant to a proxy solicitation with respect to a meeting of the
Shareholders to be held on April 17, 2000, a number of changes including
advisory fees and the addition of a Rule 12b-1 distribution fee with respect to
these Portfolios.
CAPITAL APPRECIATION FORMER SUB-ADVISER -- WINSLOW
Prior to May 1, 2000, Winslow, a Minnesota corporation with its principal
offices at 4720 IDS Tower, 80 South Eighth Street, Minneapolis, Minnesota had
been retained under an investment sub-advisory agreement to provide investment
advice and, in general, to conduct the management and investment program of
Capital Appreciation. Winslow is a registered investment adviser under the
Investment Advisers Act of 1940 ("Advisers Act"). The investment sub-advisory
agreement with Winslow was most recently approved by the Board, including a
majority of the Directors who are not interested persons of any party to the
Winslow investment sub-advisory Agreement, on January 13, 1999. The Winslow
sub-advisory agreement was most recently submitted to a vote of the shareholders
in Capital Appreciation on April 24, 1997, in connection with its initial
approval.
CAPITAL APPRECIATION SUB-ADVISER -- CSAM
Credit Suisse Asset Management, LLC ("CSAM") has been retained under an
investment sub-advisory agreement to provide investment advice and, in general,
to conduct the management and investment program
2
<PAGE> 5
of Capital Appreciation, subject to the general control of the Board. CSAM is a
registered investment adviser under the Advisers Act.
CSAM, located at 153 East 53rd Street, New York, New York 10022, will serve
as an investment sub-adviser to Capital Appreciation pursuant to a written
agreement. CSAM is an indirect wholly owned U.S. subsidiary of Credit Suisse
Group ("Credit Suisse"). Credit Suisse is a global financial services company,
providing a comprehensive range of banking and insurance products. Active on
every continent and in all major financial centers, Credit Suisse comprises five
business units -- Credit Suisse Asset Management (asset management); Credit
Suisse First Boston (investment banking); Credit Suisse Private Banking (private
banking); Credit Suisse (retail banking); and Winterthur (insurance). Credit
Suisse employs approximately 62,000 people worldwide. The principal business
address of Credit Suisse is Paradeplatz 8, CH 8070, Zurich, Switzerland.
The Portfolio Manager for Capital Appreciation is Susan L. Black. Ms. Black
is a Managing Director and Senior Investment Manager at CSAM. Ms. Black has been
with CSAM since 1997 as a result of Credit Suisse's acquisition of Warburg
Pincus Asset Management, Inc. ("Warburg Pincus"). Ms. Black joined Warburg
Pincus in 1985.
The name and principal occupation of the principal executive officers of
CSAM are set forth below. The address of each such individual is that of CSAM:
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
---- ------------------------------------------------------------
<S> <C>
William W. Priest, Jr.......... Chief Executive Officer, Chairman of Management Committee
and Managing Director, CSAM; Managing Director, Credit
Suisse Asset Management Ltd. (London)
Michael E. Guarasci, Sr........ Chief Financial Officer, Member of Management Committee and
Managing Director, CSAM
Laurence R. Smith.............. Chief Investment Officer, Member of Management Committee and
Managing Director, CSAM
Eugene L. Podsiadlo............ Head of Retail Distribution, Member of Management Committee
and Managing Director, CSAM
Timothy T. Taussig............. Head of Institutional Distribution, Member of Management
Committee and Managing Director, CSAM; Managing Director,
Credit Suisse Asset Management Ltd (London)
Elizabeth B. Dater............. Member of Management Committee and Managing Director, CSAM
Sheila N. Scott................ Member of Management Committee and Managing Director, CSAM
</TABLE>
CSAM acts as investment sub-adviser to Capital Appreciation under an
Investment Sub-Advisory Agreement (the "CSAM Capital Appreciation Agreement")
with Advantus Capital dated May 1, 2000, and that agreement will become
effective the same date. The CSAM Agreement will terminate automatically upon
the termination of the Investment Advisory Agreement and in the event of its
assignment. In addition, the CSAM Agreement is terminable at any time, without
penalty, by the Board, by Advantus Capital on 60 days' written notice to CSAM,
and by CSAM on 60 days' written notice to Advantus Capital. Unless sooner
terminated, the CSAM Agreement shall continue in effect from year to year if
approved at least annually by the Board, provided that such continuance is also
approved by the vote of a majority of the directors who are not interested
persons of any party to the CSAM Agreement, cast in person at a meeting called
for the purpose of voting on such approval.
In payment for the investment sub-advisory services to be rendered by CSAM
for Capital Appreciation, the Adviser pays to CSAM a fee computed at an annual
rate which shall be a percentage of the average daily value of the net assets of
the Portfolio. The fee is accrued daily and shall be based on the net asset
value of all of the issued and outstanding shares of Capital Appreciation as
determined as of the close of each business day pursuant to the Articles of
Incorporation, Bylaws and currently effective Prospectus and Statement of
Additional Information of the Fund. The fee is payable in arrears on the last
day of each calendar month.
3
<PAGE> 6
COMPARISON OF SUBADVISORY AGREEMENTS -- CAPITAL APPRECIATION
The terms of the CSAM Agreement are similar to those of the Winslow
Agreement. The material differences between agreements are the identity of the
service provider, the effective date and termination date and the compensation
payable by Advantus Capital to the sub-adviser.
INVESTMENT ADVISORY FEES -- CAPITAL APPRECIATION
Under the CSAM Capital Appreciation Agreement, Advantus Capital (not
Capital Appreciation) pays CSAM for its services. The amount of such annual fee,
as applied to the average daily value of the net assets of Capital Appreciation
is applied as follows: total assets between $0 and $500 million, 0.50%; total
assets between $500 million and $1 billion, 0.45%; total assets between $1
billion and $2 billion, 0.35%; total assets exceeding $2 billion, 0.30%. For the
purpose of applying the breakpoints in the fee calculation, the term "assets"
shall include all assets advised or sub-advised by CSAM for Advantus Capital in
addition to those assets of Capital Appreciation. The assets shall be calculated
quarterly based upon the aggregate assets on March 31st, June 30th, September
30th and December 31st of each calendar year (or portion thereof) that the CSAM
Capital Appreciation Agreement is effective, with the fee rate determined on
each such date being applicable to the following period and applied to all
assets back to the first dollar in Capital Appreciation.
Capital Appreciation paid Advantus Capital a fee for the management of
Capital Appreciation at the rate of 0.75% for the management of the assets of
the Portfolio. Total advisory fees paid to Advantus Capital for 1999 were
$2,859,868. Under the Winslow Agreement, Advantus Capital (not Capital
Appreciation) paid Winslow for its services. Fees paid to Winslow for services
provided pursuant to the Winslow Agreement for the period from January 1, 1999
to January 1, 2000 were in the amount of $1,425,895. Fees that would have been
payable to CSAM for services provided pursuant to the CSAM Agreement had it been
in effect for the same period were $1,623,347. The amount of the increased
payment to CSAM, expressed as a percentage of the interest paid to Winslow, is
14%. The net assets of Capital Appreciation on December 31, 1999 were
$468,240,369.
ADDITIONAL INFORMATION ABOUT CSAM
CSAM currently serves as investment adviser for the following mutual fund
that has an investment objective similar to Capital Appreciation.
<TABLE>
<CAPTION>
NET ASSETS
RATE OF FEES WAIVED UNDER OF FUND AT
FUND CSAM'S COMPENSATION ADVISORY AGREEMENT DECEMBER 31, 1999
---- ------------------- --------------------- -----------------
<S> <C> <C> <C>
Warburg Pincus Capital Appreciation
Fund, Inc.......................... 0.70% No $1,294,053,948
</TABLE>
SMALL COMPANY GROWTH SUB-ADVISER -- CSAM
Credit Suisse Asset Management, LLC ("CSAM") also has been retained under
an investment sub-advisory agreement to provide investment advice and, in
general, to conduct the management and investment program of Small Company
Growth, subject to the general control of the Board. CSAM is a registered
investment adviser under the Advisers Act.
Stephen J. Lurito, Co-Portfolio Manager, and Sammy Oh, Co-Portfolio
Manager, together manage Small Company Growth. Mr. Lurito is a Managing Director
and Portfolio Manager at CSAM. Mr. Oh is a Director and Portfolio Manager at
CSAM. Mssrs. Lurito and Oh have been with CSAM since 1999 as a result of Credit
Suisse's acquisition of Warburg Pincus. Mssrs. Lurito and Oh joined Warburg
Pincus in 1987 and 1997, respectively. From 1995 to 1996, Mr. Oh was Vice
President, Bessemar Trust and from 1995 to 1996, Vice President, Fostmann-Leff.
Additional information about CSAM and the name and principal occupation of
the principal executive officers of CSAM are described in the preceding heading
"Capital Appreciation Sub-Adviser -- CSAM."
CSAM acts as investment sub-adviser to Small Company Growth under an
Investment Sub-Advisory Agreement (the "CSAM Small Company Growth Agreement")
with Advantus Capital dated March 7, 2000, which became effective on that date.
The CSAM Small Company Growth Agreement is a new agreement
4
<PAGE> 7
with a sub-adviser for the management of the Small Company Growth. Prior to that
date, Advantus Capital managed Small Company Growth. The CSAM Small Company
Growth Agreement will terminate automatically upon the termination of the
Investment Advisory Agreement and in the event of its assignment. In addition,
the CSAM Small Company Growth Agreement is terminable at any time, without
penalty, by the Board, by Advantus Capital, or, and by CSAM on 60 days' written
notice to Advantus Capital. Unless sooner terminated, the CSAM Small Company
Growth Agreement shall continue in effect from year to year if approved at least
annually by the Board, provided that such continuance is also approved by the
vote of a majority of the Directors who are not interested persons of any party
to the CSAM Small Company Growth Agreement, cast in person at a meeting called
for the purpose of voting on such approval.
As payment for the investment sub-advisory services to be rendered by CSAM
to Small Company Growth, the Adviser pays to CSAM a fee computed at an annual
rate which is a percentage of the average daily net assets of Small Company
Growth. The fee is accrued daily and based on the net asset value of all of the
issued and outstanding shares of Small Company Growth as determined as of the
close of each business day pursuant to the Articles of Incorporation, Bylaws and
currently effective Prospectus and Statement of Additional Information of the
Fund. The fee is payable in arrears on the last day of each calendar month.
The amount of such annual fee, as applied to the average daily value of the
net assets of Small Company Growth shall be applied as follows: total assets
between $0 and $500 million, 0.65%; total assets between $500 million and $1
billion, 0.60%; total assets between $1 billion and $2 billion, 0.50%; on all
assets in excess of $1 billion, 0.45%. For the purpose of the fee calculation,
the term "assets" for purposes of the schedule shall include all assets advised
or sub-advised by CSAM for Advantus Capital in addition to those assets of Small
Company Growth. The aggregation of assets for purposes of the breakpoints shall
be calculated quarterly based upon the aggregate assets on March 31st, June
30th, September 30th and December 31st of each calendar year (or portion
thereof) that the CSAM Small Company Growth Agreement is effective, with the fee
rate determined on each such date being applicable to the following period and
applied to all assets back to the first dollar in Small Company Growth.
Prior to the effective date of the CSAM Small Company Growth Agreement,
Advantus Capital managed Small Company Growth directly, without the services of
a sub-adviser. In 1999 Small Company Growth paid Advantus Capital a fee at the
rate of 0.75% for the management of the assets of the Portfolio. Total advisory
fees paid to Advantus Capital for that calendar year for Small Company Growth
were $1,449,287. The net assets of Small Company Growth on December 31, 1999
were $284,579,941.
ADDITIONAL INFORMATION ABOUT CSAM
CSAM currently serves as investment adviser or sub-adviser for the
following mutual funds that have an investment objective similar to that of
Small Company Growth:
<TABLE>
<CAPTION>
NET ASSETS
RATE OF FEES WAIVED UNDER OF FUND AT
FUND CSAM'S COMPENSATION ADVISORY AGREEMENT DECEMBER 31, 1999
---- ------------------- --------------------- -----------------
<S> <C> <C> <C>
Cypress Tree -- North America
Emerging Growth Fund............... 0.55% No $ 2,680,727
Nationwide -- Small Company Fund..... 0.60% No $ 121,159,639
Warburg Pincus Trust -- Small Company
Growth Portfolio................... 0.90% No $1,278,127,314
Warburg Pincus Institutional Fund --
Small Company Growth Portfolio..... 0.90% Yes* $ 333,437,493
Warburg Pincus Small Company Growth
Fund, Inc.......................... 1.00% Yes** $ 15,177,711
</TABLE>
- -------------------------
*For the fiscal year ended October 31, 1999, CSAM waived $434,248 of advisory
fees, resulting in net advisory fees of $1,610,890 and a net advisory fee rate
of 0.71%
5
<PAGE> 8
** For the fiscal year ended October 31, 1999, CSAM waived its entire advisory
fee of $65,661, resulting in a net advisory fee rate of 0%.
SMALL COMPANY VALUE SUB-ADVISER -- STATE STREET RESEARCH
State Street Research & Management Company ("State Street Research") has
been retained under an investment sub-advisory agreement to provide investment
advice and, in general, to conduct the management and investment program of
Small Company Value, subject to the general control of the Board. State Street
Research is a registered investment adviser under the Advisers Act.
State Street Research, a Delaware corporation, with offices at One
Financial Center, Boston, Massachusetts 02111-2690, acts as the investment
sub-adviser to Small Company Value. State Street Research was founded by Paul
Cabot, Richard Saltonstall and Richard Paine to serve as investment adviser to
one of the nation's first mutual funds, presently known as State Street Research
Investment Trust, which they had formed in 1924. Their investment management
philosophy emphasized comprehensive fundamental reach and analysis, including
meetings with the management of companies under consideration for investment.
State Street Research's portfolio management group has extensive investment
industry experience managing equity and debt securities. State Street Research
is an indirect wholly owned subsidiary of Metropolitan Life Insurance Company.
The Portfolio Manager is Rudolph K. Kluiber, a Senior Vice President of
State Street Research, who joined the firm in 1989.
The name and principal occupation of the principal executive officer and
each director of State Street Research are set forth below. The address of each
such individual is that of State Street Research.
<TABLE>
<CAPTION>
NAME PRINCIPAL OCCUPATION
---- ------------------------------------------------------------
<S> <C>
Ralph F. Verni................ Chairman, President, Chief Executive Officer and Director,
State Street Research; President, Chief Executive Officer
and Director, SSRM Holdings, Inc.; Chairman and Director,
State Street Research Investment Services, Inc.
Peter C. Bennett.............. Director and Executive Vice President, State Street Research
Gerard P. Maus................ Director, Executive Vice President, Treasurer, Chief
Financial Officer and Chief Administrative Officer, State
Street Research; Director, Executive Vice President,
Treasurer and Chief Financial Officer, State Street
Research Investment Services, Inc.; Treasurer and Chief
Financial Officer, SSRM Holdings, Inc.
Thomas A. Shively............. Director and Executive Vice President, State Street Research
James M. Weiss................ Director and Executive Vice President, State Street Research
</TABLE>
State Street Research acts as investment sub-adviser to Small Company Value
under an Investment Sub-Advisory Agreement (the "State Street Research Small
Company Value Agreement") with Advantus Capital dated March 7, 2000, which
became effective on that date. The State Street Research Small Company Value
Agreement is a new agreement with a sub-adviser for the management of Small
Company Value. Prior to that date, Advantus Capital managed Small Company Value.
The State Street Research Small Company Value Agreement will terminate
automatically upon the termination of the Investment Advisory Agreement and in
the event of its assignment. In addition, the State Street Research Small
Company Value Agreement is terminable at any time, without penalty, by the
Board, by Advantus Capital on 60 days' written notice to State Street Research,
and by State Street Research on 60 days' written notice to Advantus Capital.
Unless sooner terminated, the State Street Research Agreement shall continue in
effect from year to year if approved at least annually by the Board, provided
that such continuance is also approved by the vote of a majority of the
Directors who are not interested persons of any party to the State Street
Research Agreement, cast in person at a meeting called for the purpose of voting
on such approval.
6
<PAGE> 9
As payment for the investment sub-advisory services to be rendered by State
Street Research to the Small Company Value Portfolio, the Adviser pays to State
Street Research a fee computed at an annual rate which is a percentage of the
average daily net assets of the Portfolio. The fee is accrued daily and shall be
based on the net asset value of all of the issued and outstanding shares of the
Portfolio as determined as of the close of each business day pursuant to the
Articles of Incorporation, Bylaws and currently effective Prospectus and
Statement of Additional Information of the Fund. The fee is payable in arrears
on the last day of each calendar month.
The amount of such annual fee, as applied to the average daily net assets
of the Portfolio is: on the first $500 million, 0.65%; on the next $500 million,
0.60%, on all assets in excess of $1 billion, 0.50%. For the purpose of the fee
calculation and the indicated breakpoints, the term "assets" shall include all
"small company value" assets sub-advised by State Street Research for Advantus
Capital, in addition to the assets of the Portfolio. The aggregation of those
assets for purposes of the breakpoints, shall be calculated quarterly based upon
the aggregate assets on March 31st, June 30th, September 30th, and December 31st
of each calendar year (or portion thereof) that the State Street Research Small
Company Value Agreement is effective.
Prior to the effective date of the State Street Research Agreement,
Advantus Capital managed Small Company Value, without the services of a
sub-adviser. In 1999 Small Company Value paid the Adviser a fee at the rate of
0.75% for the management of the assets of the Portfolio. Total advisory fees
paid to Advantus Capital for that calendar year for Small Company Value were
$77,509. In addition, Minnesota Life voluntarily absorbed $67,886 in expenses
other than management or advisory fees for Small Company Value for the year
ended December 31, 1999. The net assets of Small Company Value on December 31,
1999 were $12,817,456.
ADDITIONAL INFORMATION ABOUT STATE STREET RESEARCH
<TABLE>
<CAPTION>
NET ASSETS
RATE OF FEES WAIVED UNDER OF FUND AT
FUND SSR'S COMPENSATION ADVISORY AGREEMENT DECEMBER 31, 1999
---- ------------------ --------------------- -----------------
<S> <C> <C> <C>
State Street Research Aurora Fund....... .85% No $ 525,868,069
</TABLE>
BOARD CONSIDERATIONS
The Sub-Advisory Agreements described herein were approved by the Fund's
Board at a meeting held February 10, 2000, in person and for the purpose of
considering advisory agreements for the Fund and its Portfolios. Prior to
approving the Sub-Advisory Agreements, the Board considered a variety of
factors, including (a) the historical performance of Small Company Growth,
Capital Appreciation, and Small Company Value; (b) the nature, quality and
extent of the services proposed to be provided under each Sub-Advisory Agreement
by Advantus Capital and the respective Sub-Adviser relative to those currently
provided by Advantus Capital alone or by Winslow; (c) the organizational depth,
reputation and experience of Advantus Capital in managing mutual funds and of
CSAM in managing small cap growth stocks and State Street Research in managing
small cap value stocks; and (d) the performance of accounts and funds advised by
CSAM and State Street Research that are similar in portfolio composition to
Small Company Growth, Capital Appreciation, and Small Company Value. The Board
also considered the reasonableness of the proposed fee allocations between
Advantus Capital and the respective Sub-Advisers in light of Advantus Capital's
reduced investment role but continued overall responsibility. In making its
determination, the Board reviewed, among other things, background information
provided by each of CSAM and State Street Research. In addition, representatives
of CSAM and State Street Research reviewed with the Board their investment
strategies for Small Company Growth, Capital Appreciation, and Small Company
Value, and responded to questions from Board members.
ADMINISTRATOR
The Fund's principal underwriter is Ascend Financial Services, Inc., 400
Robert Street North, Saint Paul, Minnesota. Minnesota Life, 400 Robert Street
North, Saint Paul, Minnesota, an affiliate of Ascend Financial, provides certain
legal, accounting and administrative services, including systems, to the Fund
under the provisions of an Administrative Services Agreement. During the
calendar year 1999, the Fund paid the
7
<PAGE> 10
amount of $826,300 to Minnesota Life, based upon an apportioned charge, paid
monthly, paid by each Portfolio of the Fund, for these services.
This Administrative Services Agreement was approved by the Board on January
25, 2000, in order to retain Minnesota Life as the provider of these services
through the year 2000.
ADDITIONAL INFORMATION
The Fund is not required to hold annual shareholder meetings. Since the
Fund does not hold regular meetings of shareholders, the anticipated date of the
next shareholder meeting cannot be provided. Any shareholder proposal which may
properly be included in the proxy solicitation material for a shareholder
meeting must be received by the Fund no later than four months prior to the date
proxy statements are mailed to shareholders.
By Order of the Directors,
/s/ MICHAEL J. RADMER
Michael J. Radmer
Secretary
Advantus Series Fund, Inc.
8
<PAGE> 11
EXHIBIT A
INVESTMENT SUB-ADVISORY AGREEMENT
WITH
CSAM FOR CAPITAL APPRECIATION
THIS AGREEMENT, made as of the 1st day of May, 2000, by and between
Advantus Capital Management, Inc., a Minnesota corporation, registered as an
Investment Adviser under the Investment Advisers Act of 1940 (the "Adviser") and
Credit Suisse Asset Management, LLC, a Delaware limited liability company,
registered as an Investment Adviser under the Investment Advisers Act of 1940
(the "Sub-Adviser").
WHEREAS, the Adviser is the Investment Adviser to Advantus Series Fund,
Inc. (the "Fund"), an open-end diversified management investment company
organized as a series fund, registered under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with
portfolio selection and related research and statistical services in connection
with the Adviser's investment advisory activities on behalf of the Fund's
Capital Appreciation Portfolio (hereinafter "Portfolio"), and the Sub-Adviser
desires to furnish such services to the Adviser;
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:
1. APPOINTMENT OF SUB-ADVISER
In accordance with and subject to the Investment Advisory Agreement between
the Fund and the Adviser, the Adviser hereby appoints the Sub-Adviser to perform
portfolio selection services described herein for investment and reinvestment of
the Portfolio, subject to the control and direction of the Fund's Board of
Directors, for the period and on the terms hereinafter set forth. The
Sub-Adviser accepts such appointment and agrees to furnish the services
hereinafter set forth for the compensation herein provided. The Sub-Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized, have no authority to act for
or represent the Fund or the Adviser in any way or otherwise be deemed an agent
of the Fund or the Adviser.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE SUB-ADVISER
(a) The Sub-Adviser shall provide the following services and assume the
following obligations with respect to the Portfolio of the Fund:
(1) The investment of the assets of the Portfolio shall at all times be
subject to the applicable provisions of the Articles of Incorporation,
the Bylaws, the Registration Statement, the current Prospectus and the
Statement of Additional Information of the Fund and shall conform to
the investment objectives, policies and restrictions of the Portfolio
as set forth in such documents and as interpreted from time to time by
the Board of Directors of the Fund and by the Adviser, including
diversification of the holdings of the Portfolio as a segregated asset
account in accordance with Section 817 of the Internal Revenue Code,
as amended (the "Code"), and Regulation Section 1.817-5 thereunder,
provided that the Adviser shall be responsible for ensuring that each
Portfolio is "adequately diversified" if and to the extent required by
Section 817(h) of the Code and Regulation 1.817-5 thereunder. Within
the framework of the investment objectives, policies and restrictions
of the Portfolio, and subject to the supervision of the Adviser, the
Sub-Adviser shall have the sole and exclusive responsibility for the
making and execution of all investment decisions for the Portfolio.
The Adviser will provide copies of the Articles of Incorporation,
Bylaws, Registration Statement, current Prospectus and Statement of
Additional Information of the Fund, as well as any current
interpretations by the Board of Directors of the Fund or the Adviser
of the investment objectives, policies and restrictions of the
Portfolio set forth therein, prior to commencement of the
Sub-Adviser's services hereunder and agrees to promptly inform the
Sub-Adviser, in
A-1
<PAGE> 12
writing, of any changes in such documents or interpretations which may
affect the Sub-Adviser's services hereunder, it being understood that
such changes will be effective with respect to the Sub-Adviser upon the
Sub-Adviser's receipt of such notice.
(2) In carrying out its obligations to manage the investments and
reinvestments of the assets of the Portfolio, the Sub-Adviser shall:
(1) obtain and evaluate pertinent economic, statistical, financial and
other information affecting the economy generally and individual
companies or industries the securities of which are included in the
Portfolio or are under consideration for inclusion therein; (2)
formulate and implement a continuous investment program for the
Portfolio consistent with the investment objective and related
investment policies for such Portfolio as set forth in the Fund's
registration statement, as amended; and (3) take such steps as are
necessary to implement the aforementioned investment program by
purchase and sale of securities including the placing of orders for
such purchases and sales.
(3) In connection with the purchase and sale of securities of the
Portfolio, the Sub-Adviser shall arrange for the transmission to the
Adviser and the Custodian for the Fund on a daily basis such
confirmation, trade tickets and other documents as may be necessary to
enable them to perform their administrative responsibilities with
respect to the Portfolio. With respect to portfolio securities to be
purchased or sold through the Depository Trust Company, the
Sub-Adviser shall arrange for the automatic transmission of the I.D.
confirmation of the trade to the Custodian of the Portfolio. The
Sub-Adviser shall render such reports to the Adviser and/or to the
Fund's Board of Directors concerning the investment activity and
portfolio composition of the Portfolio in such form and at such
intervals as the Adviser or the Board may from time to time reasonably
require.
(4) The Sub-Adviser shall, in the name of the Fund, place or direct the
placement of orders for the execution of portfolio transactions in
accordance with the policies with respect thereto, as set forth in the
Fund's Registration Statement, as amended from time to time, and under
the 1933 Act and the 1940 Act. In connection with the placement of
orders for the execution of the Fund's portfolio transactions, the
Sub-Adviser shall create and maintain all necessary records required
to be created and maintained by an investment adviser under all
applicable law, rules and regulations, including but not limited to,
Section 31(a) of the 1940 Act. All records shall be the property of
the Fund and shall be available for inspection and use, upon
reasonable notice and during normal business hours, by the Securities
and Exchange Commission, the Fund or any person retained by the Fund.
Where applicable, such records shall be maintained by the Sub-Adviser
for the period and in the place required by Rule 31a-2 under the 1940
Act.
(5) In placing orders or directing the placement of orders for the
execution of portfolio transactions, the Sub-Adviser shall select
brokers and dealers for the execution of the Portfolio's transactions.
In selecting brokers or dealers to execute such orders, the
Sub-Adviser is expressly authorized to consider the fact that a broker
or dealer has furnished statistical, research or other information or
services which enhance the Sub-Adviser's investment research and
portfolio management capability generally. It is further understood in
accordance with Section 28(e) of the Securities Exchange Act of 1934,
as amended, that the Sub-Adviser may negotiate with and assign to a
broker a commission which may exceed the commission which another
broker would have charged for effecting the transaction if the
Sub-Adviser determines in good faith that the amount of commission
charged was reasonable in relation to the value of brokerage and/or
research services (as defined in Section 28(e)) provided by such
broker, viewed in terms either of the Portfolio or the Sub-Adviser's
overall responsibilities to the Sub-Adviser's discretionary accounts.
(b) The Sub-Adviser shall use the same skill and care in providing services
to the Fund as it uses in providing services to other fiduciary accounts for
which it has investment responsibility. The Sub-Adviser will conform with all
applicable rules and regulations of the Securities and Exchange Commission.
A-2
<PAGE> 13
3. EXPENSES
During the term of this Agreement, the Sub-Adviser will pay all of its own
expenses incurred in connection with its activities under this Agreement.
4. COMPENSATION
In payment for the investment sub-advisory services to be rendered by the
Sub-Adviser in respect of the Portfolio hereunder, the Adviser shall pay to the
Sub-Adviser as full compensation for all services hereunder a fee computed at an
annual rate which shall be a percentage of the average daily value of the net
assets of the Portfolio. The fee shall be accrued daily and shall be based on
the net asset values of all of the issued and outstanding shares of the
Portfolio as determined as of the close of each business day pursuant to the
Articles of Incorporation, Bylaws and currently effective Prospectus and
Statement of Additional Information of the Fund. The fee shall be payable in
arrears on the last day of each calendar month.
The amount of such annual fee, as applied to the average daily value of the
net assets of the Portfolio shall be as described in the schedule below:
<TABLE>
<CAPTION>
ASSETS* FEE
------- ---
<S> <C>
Total assets between $0 and $500 million.................... 0.50%
Total assets between $500 million and $1 billion............ 0.45%
Total assets between $1 billion and $2 billion.............. 0.35%
Total assets exceeding $2 billion........................... 0.30%
</TABLE>
*The term "assets" for purposes of the above schedule shall include all
assets advised or sub-advised by the Sub-Adviser for the Adviser or its
affiliates, in addition to those assets of the Portfolio. The aggregation of the
assets for purposes of the breakpoints, shall be calculated quarterly based upon
the aggregate assets on March 31st, June 30th, September 30th and December 31st
of each calendar year (or portion thereof) that this Agreement is effective,
with the fee rate determined on each such date being applicable to the following
period and applied to all assets back to the first dollar in the Portfolio.
5. RENEWAL AND TERMINATION
This Agreement shall continue in effect for a period of more than two years
from the date of this Agreement, only so long as such continuance is
specifically approved at least annually by a vote of the holders of the majority
of the outstanding voting securities of the Portfolio, or by a vote of the
majority of the Fund's Board of Directors, and further provided that such
continuance is also approved annually by a vote of the majority of the Fund's
Board of Directors who are not parties to this Agreement or interested persons
of parties hereto, cast in person at a meeting called for the purpose of voting
on such approval. This Agreement may be terminated at any time without payment
of penalty: (i) by the Fund's Board of Directors or by a vote of a majority of
the outstanding voting securities of the Portfolio on sixty days' prior written
notice, or (ii) by either party hereto upon sixty days' prior written notice to
the other. This Agreement will terminate automatically upon any termination of
the Investment Advisory Agreement between the Fund and the Adviser or in the
event of its assignment. The terms "interested person," "assignment" and "vote
of a majority of the outstanding voting securities" shall have the meanings set
forth in the 1940 Act.
6. GENERAL PROVISIONS
(a)The Sub-Adviser may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be provided by the 1940
Act, neither the Sub-Adviser nor its officers, directors, employees or
agents shall be subject to any liability for any error of judgment or
mistake of law or for any loss arising out of any investment or other
act or omission in the performance by the Sub-Adviser of its duties
under this Agreement or for any loss or damage resulting from the
imposition by any government of exchange control restrictions which
might affect the liquidity of the Portfolio's assets, or from acts or
omissions of the Adviser, custodians, securities depositories or other
third parties, or from any war or political act of any foreign
government to which such assets
A-3
<PAGE> 14
might be exposed, provided that nothing herein shall be deemed to
protect, or purport to protect, the Sub-Adviser against any liability to
the Fund or to its shareholders to which the Sub-Adviser would otherwise
be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or by reason of
the Sub-Adviser's reckless disregard of its obligations and duties
hereunder.
(b) The Adviser and the Fund's Board of Directors understand that the value
of investments made for the Account may go up as well as down and is
not guaranteed, and that investment decisions will not always be
profitable. Neither the Adviser nor the Sub-Adviser has made or is
making any guarantees, including any guarantee as to any specific level
of performance of the Portfolio. The Adviser and the Fund's Board of
Directors acknowledge that this Portfolio is designed for the described
investment objective and is not intended as a complete investment
program. They also understand that investment decisions made on behalf
of the Portfolio by Sub-Adviser are subject to various market and
business risks.
(c) This Agreement shall not become effective unless and until it is
approved by the Board of Directors of the Fund, including a majority of
the members who are not "interested persons" of parties to this
Agreement, by a vote cast in person at a meeting called for the purpose
of voting on such approval.
(d) The Adviser understands that the Sub-Adviser now acts, will continue to
act, or may act in the future, as investment adviser to fiduciary and
other managed accounts, including other investment companies, and the
Adviser has no objection to the Sub-Adviser so acting, provided that
the Sub-Adviser duly performs all obligations under this Agreement. The
Adviser also understands that the Sub-Adviser may give advice and take
action with respect to any of its other clients or for its own account
which may differ from the timing or nature of action taken by the
Sub-Adviser with respect to the Fund. Nothing in this Agreement shall
impose upon the Sub-Adviser any obligation to purchase or sell or to
recommend for purchase or sale, with respect to the Fund, any security
which the Sub-Adviser or its shareholders, directors, officers,
employees or affiliates may purchase or sell for its or their own
account(s) or for the account of any other client.
(e) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the right of the
Sub-Adviser, or the right of any of its officers, directors or
employees who may also be an officer, director or employee of the Fund,
or persons otherwise affiliated with the Fund (within the meaning of
the 1940 Act) to engage in any other business or to devote time and
attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any
kind to any other trust, corporation, firm, individual or association.
(f) Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof. This
Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Minnesota. The captions in this
Agreement are included for convenience only and in no way define or
delimit any of the provisions hereof or otherwise affect their
construction or effect.
(g) Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage pre-paid to the appropriate party at the
following address: The Adviser and the Fund at 400 Robert Street North,
St. Paul, Minnesota 55101-2098, and the Sub-Adviser at 153 East 53rd
Street, New York, New York 10022 (Attention: General Counsel).
A-4
<PAGE> 15
IN WITNESS WHEREOF, the parties have duly executed this Agreement.
ADVANTUS CAPITAL MANAGEMENT, INC.
By:
--------------------------------------
Its:
--------------------------------------
CREDIT SUISSE ASSET MANAGEMENT, LLC
By:
--------------------------------------
Its:
--------------------------------------
A-5
<PAGE> 16
EXHIBIT B
INVESTMENT SUB-ADVISORY AGREEMENT
WITH
CSAM FOR SMALL COMPANY GROWTH
THIS AGREEMENT, made as of the 7th day of March, 2000, by and between
Advantus Capital Management, Inc., a Minnesota corporation, registered as an
Investment Adviser under the Investment Advisers Act of 1940 (the "Adviser") and
Credit Suisse Asset Management, LLC, a Delaware limited liability company,
registered as an Investment Adviser under the Investment Advisers Act of 1940
(the "Sub-Adviser").
WHEREAS, the Adviser is the Investment Adviser to Advantus Series Fund,
Inc., (the "Fund"), an open-end diversified management investment company
organized as a series fund, registered under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with
portfolio selection and related research and statistical services in connection
with the Adviser's investment advisory activities on behalf of the Fund's Small
Company Growth Portfolio (hereinafter "Portfolio"), and the Sub-Adviser desires
to furnish such services to the Adviser;
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:
1. APPOINTMENT OF SUB-ADVISER
In accordance with and subject to the Investment Advisory Agreement between
the Fund and the Adviser, the Adviser hereby appoints the Sub-Adviser to perform
portfolio selection services described herein for investment and reinvestment of
the Portfolio, subject to the control and direction of the Fund's Board of
Directors, for the period and on the terms hereinafter set forth. The
Sub-Adviser accepts such appointment and agrees to furnish the services
hereinafter set forth for the compensation herein provided. The Sub-Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized, have no authority to act for
or represent the Fund or the Adviser in any way or otherwise be deemed an agent
of the Fund or the Adviser.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE SUB-ADVISER
(a) The Sub-Adviser shall provide the following services and assume the
following obligations with respect to the Portfolio of the Fund:
(1) The investment of the assets of the Portfolio shall at all times be
subject to the applicable provisions of the Articles of Incorporation,
the Bylaws, the Registration Statement, the current Prospectus and the
Statement of Additional Information of the Fund and shall conform to
the investment objectives, policies and restrictions of the Portfolio
as set forth in such documents and as interpreted from time to time by
the Board of Directors of the Fund and by the Adviser, including
diversification of the holdings of the Portfolio as a segregated asset
account in accordance with Section 817 of the Internal Revenue Code,
as amended (the "Code"), and Regulation Section 1.817-5 thereunder,
provided that the Adviser shall be responsible for ensuring that each
Portfolio is "adequately diversified" if and to the extent required by
Section 817(h) of the Code and Regulation 1.817-5 thereunder. Within
the framework of the investment objectives, policies and restrictions
of the Portfolio, and subject to the supervision of the Adviser, the
Sub-Adviser shall have the sole and exclusive responsibility for the
making and execution of all investment decisions for the Portfolio.
The Adviser will provide copies of the Articles of Incorporation,
Bylaws, Registration Statement, current Prospectus and Statement of
Additional Information of the Fund, as well as any current
interpretations by the Board of Directors of the Fund or the Adviser
of the investment objectives, policies and restrictions of the
Portfolio set forth therein, prior to commencement of the
Sub-Adviser's services hereunder and agrees to promptly inform the
Sub-Adviser, in
B-1
<PAGE> 17
writing, of any changes in such documents or interpretations which may
affect the Sub-Adviser's services hereunder, it being understood that
such changes will be effective with respect to the Sub-Adviser upon the
Sub-Adviser's receipt of such notice.
(2) In carrying out its obligations to manage the investments and
reinvestments of the assets of the Portfolio, the Sub-Adviser shall:
(1) obtain and evaluate pertinent economic, statistical, financial and
other information affecting the economy generally and individual
companies or industries the securities of which are included in the
Portfolio or are under consideration for inclusion therein; (2)
formulate and implement a continuous investment program for the
Portfolio consistent with the investment objective and related
investment policies for such Portfolio as set forth in the Fund's
registration statement, as amended; and (3) take such steps as are
necessary to implement the aforementioned investment program by
purchase and sale of securities including the placing of orders for
such purchases and sales.
(3) In connection with the purchase and sale of securities of the
Portfolio, the Sub-Adviser shall arrange for the transmission to the
Adviser and the Custodian for the Fund on a daily basis such
confirmation, trade tickets and other documents as may be necessary to
enable them to perform their administrative responsibilities with
respect to the Portfolio. With respect to portfolio securities to be
purchased or sold through the Depository Trust Company, the
Sub-Adviser shall arrange for the automatic transmission of the I.D.
confirmation of the trade to the Custodian of the Portfolio. The
Sub-Adviser shall render such reports to the Adviser and/or to the
Fund's Board of Directors concerning the investment activity and
portfolio composition of the Portfolio in such form and at such
intervals as the Adviser or the Board may from time to time reasonably
require.
(4) The Sub-Adviser shall, in the name of the Fund, place or direct the
placement of orders for the execution of portfolio transactions in
accordance with the policies with respect thereto, as set forth in the
Fund's Registration Statement, as amended from time to time, and under
the 1933 Act and the 1940 Act. In connection with the placement of
orders for the execution of the Fund's portfolio transactions, the
Sub-Adviser shall create and maintain all necessary records required
to be created and maintained by an investment adviser under all
applicable law, rules and regulations, including but not limited to,
Section 31(a) of the 1940 Act. All records shall be the property of
the Fund and shall be available for inspection and use, upon
reasonable notice and during normal business hours, by the Securities
and Exchange Commission, the Fund or any person retained by the Fund.
Where applicable, such records shall be maintained by the Sub-Adviser
for the period and in the place required by Rule 31a-2 under the 1940
Act.
(5) In placing orders or directing the placement of orders for the
execution of portfolio transactions, the Sub-Adviser shall select
brokers and dealers for the execution of the Portfolio's transactions.
In selecting brokers or dealers to execute such orders, the
Sub-Adviser is expressly authorized to consider the fact that a broker
or dealer has furnished statistical, research or other information or
services which enhance the Sub-Adviser's investment research and
portfolio management capability generally. It is further understood in
accordance with Section 28(e) of the Securities Exchange Act of 1934,
as amended, that the Sub-Adviser may negotiate with and assign to a
broker a commission which may exceed the commission which another
broker would have charged for effecting the transaction if the
Sub-Adviser determines in good faith that the amount of commission
charged was reasonable in relation to the value of brokerage and/or
research services (as defined in Section 28(e)) provided by such
broker, viewed in terms either of the Portfolio or the Sub-Adviser's
overall responsibilities to the Sub-Adviser's discretionary accounts.
(b) The Sub-Adviser shall use the same skill and care in providing services
to the Fund as it uses in providing services to other fiduciary accounts for
which it has investment responsibility. The Sub-Adviser will conform with all
applicable rules and regulations of the Securities and Exchange Commission.
B-2
<PAGE> 18
3. EXPENSES
During the term of this Agreement, the Sub-Adviser will pay all of its own
expenses incurred in connection with its activities under this Agreement.
4. COMPENSATION
In payment for the investment sub-advisory services to be rendered by the
Sub-Adviser in respect of the Portfolio hereunder, the Adviser shall pay to the
Sub-Adviser as full compensation for all services hereunder a fee computed at an
annual rate which shall be a percentage of the average daily value of the net
assets of the Portfolio. The fee shall be accrued daily and shall be based on
the net asset values of all of the issued and outstanding shares of the
Portfolio as determined as of the close of each business day pursuant to the
Articles of Incorporation, Bylaws and currently effective Prospectus and
Statement of Additional Information of the Fund. The fee shall be payable in
arrears on the last day of each calendar month.
The amount of such annual fee, as applied to the average daily value of the
net assets of the Portfolio shall be as described in the schedule below:
<TABLE>
<CAPTION>
ASSETS* FEE
- ------- -----
<S> <C>
Total assets between $0 and $500 million.................... 0.65%
Total assets between $500 million and $1 billion............ 0.60%
Total assets between $1 billion and $2 billion.............. 0.50%
On all assets in excess of $2 billion....................... 0.45%
</TABLE>
*The term "assets" for purposes of the above schedule shall include all
assets advised or sub-advised by the Sub-Adviser for the Adviser or its
affiliates, in addition to those assets of the Portfolio. The aggregation of
assets for purposes of the breakpoints shall be calculated quarterly based upon
the aggregate assets on March 31st, June 30th, September 30th and December 31st
of each calendar year (or portion thereof) that this Agreement is effective,
with the fee rate determined on each such date being applicable to the following
period and applied to all assets back to the first dollar in the Portfolio.
5. RENEWAL AND TERMINATION
This Agreement shall continue in effect for a period of more than two years
from the date of this Agreement, only so long as such continuance is
specifically approved at least annually by a vote of the holders of the majority
of the outstanding voting securities of the Portfolio, or by a vote of the
majority of the Fund's Board of Directors, and further provided that such
continuance is also approved annually by a vote of the majority of the Fund's
Board of Directors who are not parties to this Agreement or interested persons
of parties hereto, cast in person at a meeting called for the purpose of voting
on such approval. This Agreement may be terminated at any time without payment
of penalty: (i) by the Fund's Board of Directors or by a vote of a majority of
the outstanding voting securities of the Portfolio on sixty days' prior written
notice, or (ii) by either party hereto upon sixty days' prior written notice to
the other. This Agreement will terminate automatically upon any termination of
the Investment Advisory Agreement between the Fund and the Adviser or in the
event of its assignment. The terms "interested person," "assignment" and "vote
of a majority of the outstanding voting securities" shall have the meanings set
forth in the 1940 Act.
6. GENERAL PROVISIONS
(a) The Sub-Adviser may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be provided by the 1940 Act,
neither the Sub-Adviser nor its officers, directors, employees or agents shall
be subject to any liability for any error of judgment or mistake of law or for
any loss arising out of any investment or other act or omission in the
performance by the Sub-Adviser of its duties under this Agreement or for any
loss or damage resulting from the imposition by any government of exchange
control restrictions which might affect the liquidity of the Portfolio's assets,
or from acts or omissions of the Adviser, custodians, securities depositories or
other third parties, or from any war or political act of any foreign
B-3
<PAGE> 19
government to which such assets might be exposed, provided that nothing herein
shall be deemed to protect, or purport to protect, the Sub-Adviser against any
liability to the Fund or to its shareholders to which the Sub-Adviser would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties hereunder, or by reason of the
Sub-Adviser's reckless disregard of its obligations and duties hereunder.
(b) The Adviser and the Fund's Board of Directors understand that the value
of investments made for the Account may go up as well as down and is not
guaranteed, and that investment decisions will not always be profitable. Neither
the Adviser nor the Sub-Adviser has made or is making any guarantees, including
any guarantee as to any specific level of performance of the Portfolio. The
Adviser and the Fund's Board of Directors acknowledge that this Portfolio is
designed for the described investment objective and is not intended as a
complete investment program. They also understand that investment decisions made
on behalf of the Portfolio by Sub-Adviser are subject to various market and
business risks.
(c) This Agreement shall not become effective unless and until it is
approved by the Board of Directors of the Fund, including a majority of the
members who are not "interested persons" to parties to this Agreement, by a vote
cast in person at a meeting called for the purpose of voting on such approval.
(d) The Adviser understands that the Sub-Adviser now acts, will continue to
act, or may act in the future, as investment adviser to fiduciary and other
managed accounts, including other investment companies, and the Adviser has no
objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly
performs all obligations under this Agreement. The Adviser also understands that
the Sub-Adviser may give advice and take action with respect to any of its other
clients or for its own account which may differ from the timing or nature of
action taken by the Sub-Adviser with respect to the Fund. Nothing in this
Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell
or to recommend for purchase or sale, with respect to the Fund, any security
which the Sub-Adviser or its shareholders, directors, officers, employees or
affiliates may purchase or sell for its or their own account(s) or for the
account of any other client.
(e) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the right of the
Sub-Adviser, or the right of any of its officers, directors or employees who may
also be an officer, director or employee of the Fund, or persons otherwise
affiliated with the Fund (within the meaning of the 1940 Act) to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other trust, corporation, firm, individual or
association.
(f) Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof. This Agreement
shall be construed and enforced in accordance with and governed by the laws of
the State of Minnesota. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(g) Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage pre-paid to the appropriate party at the following
address: The Adviser and the Fund at 400 Robert Street North, St. Paul,
Minnesota 55101-2098, and the Sub-Adviser at 153 East 53rd Street, New York, New
York 10022 (Attention: General Counsel).
B-4
<PAGE> 20
IN WITNESS WHEREOF, the parties have duly executed this Agreement.
ADVANTUS CAPITAL MANAGEMENT, INC.
BY:
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ITS:
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CREDIT SUISSE ASSET MANAGEMENT, LLC
BY:
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ITS:
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EXHIBIT C
INVESTMENT SUB-ADVISORY AGREEMENT
WITH
STATE STREET RESEARCH FOR SMALL COMPANY VALUE
THIS AGREEMENT, made as of the 7th day of March, 2000, by and between
Advantus Capital Management, Inc., a Minnesota corporation, registered as an
investment adviser under the Investment Advisers Act of 1940 (the "Adviser") and
State Street Research & Management Company, a Delaware corporation, registered
as an investment adviser under the Investment Advisers Act of 1940 (the
"Sub-Adviser").
WHEREAS, the Adviser is the investment adviser to Advantus Series Fund,
Inc. (the "Fund"), an open-end diversified management investment company
organized as a series fund, registered under the Investment Company Act of 1940,
as amended (the "1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish it with
portfolio selection and related research and statistical services in connection
with the Adviser's investment advisory activities on behalf of the Fund's Small
Company Value Portfolio (hereinafter "Portfolio"), and the Sub-Adviser desires
to furnish such services to the Adviser;
NOW, THEREFORE, in consideration of the premises and the terms and
conditions hereinafter set forth, it is agreed as follows:
1. APPOINTMENT OF SUB-ADVISER
In accordance with and subject to the Investment Advisory Agreement between
the Fund and the Adviser, the Adviser hereby appoints the Sub-Adviser to perform
portfolio selection services described herein for investment and reinvestment of
the Portfolio, subject to the control and direction of the Fund's Board of
Directors, for the period and on the terms hereinafter set forth. The
Sub-Adviser accepts such appointment and agrees to furnish the services
hereinafter set forth for the compensation herein provided. The Sub-Adviser
shall for all purposes herein be deemed to be an independent contractor and
shall, except as expressly provided or authorized, have no authority to act for
or represent the Fund or the Adviser in any way or otherwise be deemed an agent
of the Fund or the Adviser.
2. OBLIGATIONS OF AND SERVICES TO BE PROVIDED BY THE SUB-ADVISER
(a) The Sub-Adviser shall provide the following services and assume the
following obligations with respect to the Portfolio of the Fund:
(1) The investment of the assets of the Portfolio shall at all times be
subject to the applicable provisions of the Articles of Incorporation,
the Bylaws, the Registration Statement, the current Prospectus and the
Statement of Additional Information of the Fund and shall conform to the
investment objectives, policies and restrictions of the Portfolio as set
forth in such documents and as interpreted from time to time by the
Board of Directors of the Fund and by the Adviser and communicated in
writing to the Sub-Adviser, including diversification of the holdings of
the Portfolio as a segregated asset account in accordance with Section
817 of the Internal Revenue Code, as amended (the "Code"), and
Regulation Section 1.817-5 thereunder, provided that Advantus and
Minnesota Mutual shall be responsible for ensuring that each Portfolio
is "adequately diversified" if and to the extent required by Section
817(h) of the Code and Regulation 1.817-5 thereunder. Within the
framework of the investment objectives, policies and restrictions of the
Portfolio, and subject to the supervision of the Adviser, the
Sub-Adviser shall have the sole and exclusive responsibility for the
making and execution of all investment decisions for the Portfolio.
Advantus agrees to promptly inform the Sub-Adviser if such objective,
policies or restrictions change and to deliver to the Sub-Adviser
updated documents, if prepared.
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(2) In carrying out its obligations to manage the investments and
reinvestments of the assets of the Portfolio, the Sub-Adviser shall: (1)
obtain and evaluate pertinent economic, statistical, financial and other
information affecting the economy generally and individual companies or
industries the securities of which are included in the Portfolio or are
under consideration for inclusion therein; (2) formulate and implement a
continuous investment program for the Portfolio consistent with the
investment objective and related investment policies for such Portfolio
as set forth in the Fund's registration statement, as amended; and (3)
take such steps as are necessary to implement the aforementioned
investment program by purchase and sale of securities including the
placing, or directing the placement through an affiliate of the
Sub-Adviser, of orders for such purchases and sales.
(3) In connection with the purchase and sale of securities of the
Portfolio, the Sub-Adviser shall arrange for the transmission to the
Adviser and the Custodian for the Fund on a daily basis such
confirmation, trade tickets and other documents as may be necessary to
enable them to perform their administrative responsibilities with
respect to the Portfolio. With respect to portfolio securities to be
purchased or sold through the Depository Trust Company, the Sub-Adviser
shall arrange for the automatic transmission of the I.D. confirmation of
the trade to the Custodian of the Portfolio. The Sub-Adviser shall
render such reports to the Adviser and/or to the Fund's Board of
Directors concerning the investment activity and portfolio composition
of the Portfolio in such form and at such intervals as the Adviser or
the Board may from time to time reasonably require.
(4) The Sub-Adviser shall, in the name of the Fund, place or direct the
placement of orders for the execution of portfolio transactions in
accordance with the policies with respect thereto, as set forth in the
Fund's Registration Statement, as amended from time to time, and under
the 1933 Act and the 1940 Act. In connection with the placement of
orders for the execution of the Fund's portfolio transactions, the
Sub-Adviser shall create and maintain all necessary brokerage records of
the Fund in accordance with all applicable law, rules and regulations,
including but not limited to, records required by Section 31(a) of the
1940 Act. All records shall be the property of the Fund and shall be
available for inspection and use by the Securities and Exchange
Commission, the Fund or any person retained by the Fund. Where
applicable, such records shall be maintained by the Sub-Adviser for the
period and in the place required by Rule 31a-2 under the 1940 Act.
(5) In placing orders or directing the placement of orders for the
execution of portfolio transactions, the Sub-Adviser shall select
brokers and dealers for the execution of the Portfolio's transactions.
In selecting brokers or dealers to execute such orders, the Sub-Adviser
is expressly authorized to consider the fact that a broker or dealer has
furnished statistical, research or other information or services which
enhance the Sub-Adviser's investment research and portfolio management
capability generally. It is further understood in accordance with
Section 28(e) of the Securities Exchange Act of 1934, as amended, that
the Sub-Adviser may negotiate with and assign to a broker a commission
which may exceed the commission which another broker would have charged
for effecting the transaction if the Sub-Adviser determines in good
faith that the amount of commission charged was reasonable in relation
to the value of brokerage and/or research services (as defined in
Section 28(e)) provided by such broker, viewed in terms either of the
Portfolio or the Sub-Adviser's overall responsibilities to the
Sub-Adviser's discretionary accounts.
(b) The Sub-Adviser shall use the same skill and care in providing services
to the Fund as it uses in providing services to other fiduciary accounts for
which it has investment responsibility. The Sub-Adviser will conform with all
applicable rules and regulations of the Securities and Exchange Commission.
3. EXPENSES
During the terms of this Agreement, the Sub-Adviser will pay all expenses
incurred by it in connection with its activities under this Agreement.
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4. COMPENSATION
In payment for the investment sub-advisory services to be rendered by the
Sub-Adviser in respect of the Portfolio hereunder, the Adviser shall pay to the
Sub-Adviser as full compensation for all services hereunder a fee computed at an
annual rate which shall be a percentage of the average daily value of the net
assets of the Portfolio. The fee shall be accrued daily and shall be based on
the net asset values of all of the issued and outstanding shares of the
Portfolio as determined as of the close of each business day pursuant to the
Articles of Incorporation, Bylaws and currently effective Prospectus and
Statement of Additional Information of the Fund. The fee shall be payable in
arrears on the last day of each calendar month.
The amount of such annual fee, as applied to the average daily value of the
net assets of the Portfolio shall be as described in the schedule below:
<TABLE>
<CAPTION>
ASSETS* FEE
- ------- -----
<S> <C>
On the first $500 million................................... 0.65%
On the next $500 million.................................... 0.60%
On all assets in excess of $1 billion....................... 0.50%
</TABLE>
*The term "assets" for purposes of each of the breakpoints set forth above
shall include all 'small company value' assets sub-advised by the Sub-Adviser
for the Adviser or its affiliates, in addition to the assets of the Portfolio.
The aggregation of the assets for purposes of the breakpoints, shall be
calculated quarterly based upon the aggregate assets on March 31st, June 30th,
September 30th and December 31st of each calendar year (or portion thereof) that
this agreement is effective.
5. RENEWAL AND TERMINATION
This Agreement shall continue in effect for a period more than two years
from the date of this Agreement, only so long as such continuance is
specifically approved at least annually by a vote of the holders of the majority
of the outstanding voting securities of the Portfolio, or by a vote of the
majority of the Fund's Board of Directors. And further provided that such
continuance is also approved annually by a vote of the majority of the Fund's
Board of Directors who are not parties to this Agreement or interested persons
of parties hereto, cast in person at a meeting called for the purpose of voting
on such approval. This Agreement may be terminated at any time without payment
of penalty: (i) by the Fund's Board of Directors or by a vote of a majority of
the outstanding voting securities of the class of capital stock of the Portfolio
on sixty days' prior written notice, or (ii) by either party hereto upon sixty
days' prior written notice to the other. This Agreement will terminate
automatically upon any termination of the Investment Advisory Agreement between
the Fund and the Adviser or in the event of its assignment. The terms
"interested person," "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth in the 1940 Act.
6. GENERAL PROVISIONS
(a) The Sub-Adviser may rely on information reasonably believed by it to be
accurate and reliable. Except as may otherwise be provided by the 1940 Act,
neither the Sub-Adviser nor its officers, directors, employees or agents shall
be subject to any liability for any error of judgment or mistake of law or for
any loss arising out of any investment or other act or omission in the
performance by the Sub-Adviser of its duties under this Agreement or for any
loss or damage resulting from the imposition by any government or exchange
control restrictions which might affect the liquidity of the Portfolio's assets,
or from acts or omissions of custodians or securities depositories, or from any
war or political act of any foreign government to which such assets might be
exposed, provided that nothing herein shall be deemed to protect, or purport to
protect, the Sub-Adviser against any liability to the Fund or to its
shareholders to which the Sub-Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder, or by reason of the Sub-Adviser's reckless disregard of its
obligations and duties hereunder.
(b) The Adviser and the Fund's Board of Directors understand that the value
of investments made for the Portfolio may go up as well as down, is not
guaranteed and that investment decisions will not always be
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profitable. The Adviser has not made and is not making any guarantees, including
any guarantee as to any specific level of performance of the Portfolio. The
Adviser and the Fund's Board of Directors acknowledge that this Portfolio is
designed for the described investment objective and is not intended as a
complete investment program. They also understand that investment decisions made
on behalf of the Portfolio by Sub-Adviser are subject to various market and
business risks.
(c) This Agreement shall not become effective unless and until it is
approved by the Board of Directors of the Fund, including a majority of the
members who are not "interested persons" to parties to this Agreement, by a vote
cast in person at a meeting called for the purpose of voting such approval.
(d) The Adviser understands that the Sub-Adviser now acts, will continue to
act, or may act in the future, as investment adviser to fiduciary and other
managed accounts, including other investment companies, and the Adviser has no
objection to the Sub-Adviser so acting, provided that the Sub-Adviser duly
performs all obligations under this Agreement. The Adviser also understands that
the Sub-Adviser may give advice and take action with respect to any of its other
clients or for its own account which may differ from the timing or nature of
action taken by the Sub-Adviser with respect to the Fund. Nothing in this
Agreement shall impose upon the Sub-Adviser any obligation to purchase or sell
or to recommend for purchase or sale, with respect to the Fund, any security
which the Sub-Adviser or its shareholders, directors, officers, employees or
affiliates may purchase or sell for its or their own account(s) or for the
account of any other client.
(e) Except to the extent necessary to perform its obligations hereunder,
nothing herein shall be deemed to limit or restrict the right of the
Sub-Adviser, or the right of any of its officers, directors or employees who may
also be an officer, director or employee of the Fund, or persons otherwise
affiliated with the Fund (within the meaning of the 1940 Act) to engage in any
other business or to devote time and attention to the management or other
aspects of any other business, whether of a similar or dissimilar nature, or to
render services of any kind to any other trust, corporation, firm, individual or
association.
(f) Each party agrees to perform such further acts and execute such further
documents as are necessary to effectuate the purposes hereof. This Agreement
shall be construed and enforced in accordance with and governed by the laws of
the State of Minnesota. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
(g) Any notice under this Agreement shall be in writing, addressed and
delivered or mailed postage pre-paid to the appropriate party at the following
address: The Adviser and the Fund at 400 Robert Street North, St. Paul,
Minnesota 55101-2098, and the Sub-Adviser at One Financial Center, Boston, MA
02111-2690 Attention: General Counsel.
IN WITNESS WHEREOF, the parties have duly executed this Agreement.
ADVANTUS CAPITAL MANAGEMENT, INC.
By:
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Its:
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STATE STREET RESEARCH & MANAGEMENT
COMPANY
By:
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Its:
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