<PAGE>
[LOGO]
Semi-Annual Report to Shareholders
Advantus Spectrum Fund
March 31, 1998
<PAGE>
ADVANTUS SPECTRUM FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND LIABILITIES 13
STATEMENT OF OPERATIONS 14
STATEMENTS OF CHANGES IN NET ASSETS 15
NOTES TO FINANCIAL STATEMENTS 16
SHAREHOLDER SERVICES 22
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholders:
Investors experienced a positive financial environment with moderate economic
growth and low inflation throughout the six-month reporting period. Fears of
inflation in our economy have dissipated as negative economic events in Asia
unfolded and took on global implications earlier in the reporting period.
The "Asian Flu" severely affected several Far Eastern currencies and stock
markets, leaving a trail of bankruptcies, uncertainties, and fears in its wake.
In fact, a "flight to quality" poured assets into U.S. markets, particularly the
bond market, which is a popular destination for investors during periodic
flights to quality.
Broadly speaking, both equity and fixed income securities have demonstrated
notable results this reporting period. Indices, such as the S&P 500,* which
returned 16.3 percent at the end of the six-month period; and the Lehman
Brothers Government Corporate Bond Index,** which returned 4.8 percent for the
same period, reflected the GENERAL strength of the equity and fixed income
markets respectively.
As investors, we all enjoy "market watching." We have witnessed the financial
markets change, sometimes significantly, because of actual events or because of
mere perceptions in those markets. Keeping a long-range view of investing is
important because it smoothes out the highs and lows. We believe that investors
derive the greatest benefit by maintaining a long-range perspective on
investing.
The investment professionals at Advantus Capital Management continue to put
their money management expertise to work on your behalf. We appreciate your
continued participation in the Advantus Funds and urge you to maintain a
long-term investment perspective.
Sincerely,
/s/ Robert E. Hunstad
Robert E. Hunstad, President
Advantus Funds
* The S&P 500 is a broad, unmanaged index of 500 common stocks which are
representative of the U.S. stock market overall. The Index includes
approximately 380 industrials, 10 transportations, 45 financials, and 65
utilities.
**The Lehman Brothers Government Corporate Bond Index is an unmanaged benchmark
composite of the Lehman Brothers Government Bond Index which includes all
publicly issued debt of the U.S. Government and Agencies and The Lehman Brothers
Corporate Bond Index which includes all publicly issued, fixed rate,
nonconvertible investment grade dollar-denominated, SEC registered corporate
debt.
<PAGE>
ADVANTUS SPECTRUM FUND
PERFORMANCE UPDATE
[PHOTO]
THOMAS A. GUNDERSON, CFA
PORTFOLIO MANAGER
The Advantus Spectrum Fund is a mutual
fund seeking the most favorable total
return (including interest, dividends and
capital appreciation) consistent with
preservation of capital. To achieve this
objective, the Fund will vary the
composition of its portfolio with
prevailing economic conditions. At any
given time, the Fund's portfolio may be
primarily composed of equity securities
(common stock, preferred stock and
securities convertible into equity
securities), mortgage-related securities,
debt securities, money market securities
or any combination of these securities.
The investment adviser's positioning of
the portfolio is determined by the
intermediate term outlook for economic
trends and market momentum.
-Dividends paid quarterly.
-Capital gains distributions paid annually.
PERFORMANCE
The Advantus Spectrum Fund posted the following returns for the six month period
ended March 31, 1998 for each class of shares currently offered:
<TABLE>
<S> <C>
12.5
Class A............................. percent*
12.2
Class B............................. percent*
12.2
Class C............................. percent*
</TABLE>
The Fund's benchmark index, a blend comprised of 60 percent Russell 1000 Growth
Index** and 40 percent Lehman Brothers Aggregate Bond Index,+ earned 11.9
percent for the same period.
In prior reporting periods, the Merrill Lynch-Wilshire Capital Markets Index++
was used as the Fund's benchmark. The current benchmark blend, comprised of 60
percent Russell 1000 Growth Index** and 40 percent Lehman Brothers Aggregate
Bond Index+ better fits our stated investment objective than the Merrill
Lynch-Wilshire Capital Markets Index.++
PORTFOLIO ANALYSIS
We believe that the fundamentals for the U.S. investment markets could hardly be
better. Earnings are strong; the economy is robust, but there is no threat of
inflation, and there is a Federal Budget surplus. These factors, along with
record dollar amounts flowing into the U.S. financial markets attest to the fact
that the Bull market is likely to continue to thrive. The financial markets have
been driven by the powerful rally in the stock market over the last six months
with many stocks producing double-digit returns.* The bond market's good health
continued, and bonds produced low single digit returns.
The performance of the Fund exceeded that of its benchmark for the six-month
period. This was primarily due to the strong performance of the stocks in the
Fund relative to the overall stock market. Over the period, the Fund averaged
about 55 percent in stocks, 35 percent in bonds, and 10 percent cash. The Fund
was conservatively positioned during a major stock market rally, and still
exceeded its benchmark. Stocks did best, followed by bonds, then cash during
this period.
The market favored our emphasis of investing in stocks with consistent growth
trends over the past six months. As earnings growth becomes tougher to find,
well managed and well positioned companies--capable of producing consistent
earnings growth--will likely continue to be favored.
2
<PAGE>
ADVANTUS
SPECTRUM FUND
MARCH 31, 1998
Late in the period, we identified value in some of the Real Estate Investment
Trust (REIT) stocks that were up for sale. Many of these stocks were available
because of tax-related, specific legislative concerns that only apply to a
handful of REIT stocks. With these stocks producing attractive yields, most
above money market funds, we took advantage of this low-priced opportunity to
buy these stocks and add them to the Fund.
The bond portion of the Fund, allocated at 35 percent of the portfolio,
continued to produce solid investment yields and helped the total return of the
Fund. Among the three major sectors of the bond market: corporates, mortgages,
and treasuries, performance was relatively even for the period. Asian economic
problems have caused many investors to move money into the U.S. bond market, a
safe harbor to many investors fearful of the Asian currency debacle. There is
currently a lack of inflation concerns. This, coupled with a blend of economic
factors, may allow interest rates to move modestly lower.
OUTLOOK
We expect the economy to remain healthy and see no threat of inflation looming.
We also anticipate corporate earnings strength to continue, but realize it will
be difficult to continue the recent growth rate as U.S. based companies are
already above historic records for their level of profitability. The risk to the
market is primarily one of valuation. If money flows slow or become negative,
something not seen in several years, then the markets could experience a modest
correction. We will continue to position the Fund to meaningfully participate in
market advances while attempting to protect your capital during periods of
market decline.
Our consistent style and asset allocation continues to work well, so we see no
major changes upcoming. We are always watchful of cycles and events, and believe
that we have not seen the end of the revenue impact from the Asian economic
crisis. The devalued currencies of these countries have forced them to be much
more competitive in the world market. Companies that will benefit from this
competition are those who can take advantage of these trends by purchasing
facilities in these Asian countries or expanding into their less expensive
markets.
*Historical results are not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge. Investment returns and principal values will fluctuate so that shares
upon redemption may be worth more or less than their original cost.
**The Russell 1000 Growth Index contains stock from the Russell 1000 with a
greater than average growth orientation. The Russell 1000 are the 1,000 largest
companies in the Russell 3000. The Russell 3000 is an unmanaged index of 3,000
common stocks which represents approximately 98 percent of the U.S. market.
+The Lehman Brothers Aggregate Bond is comprised of the Lehman Brothers
Government Corporate Bond Index, the Lehman Brothers Mortgage-Backed Securities
Index and the Lehman Brothers Asset-Backed Securities Index.
++The Merrill Lynch-Wilshire Capital Markets Index is a market value-weighted
index measuring the total return performance of the combined domestic taxable
fixed income and equity markets. It includes the entire domestic common stock
universe for which daily pricing is available, as well as all publicly placed
domestic taxable debt issues with at least one year remaining to maturity and at
least ten million dollars par value.
3
<PAGE>
ADVANTUS
SPECTRUM FUND
MARCH 31, 1998
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000 INVESTMENT IN ADVANTUS
SPECTRUM FUND, MERRILL LYNCH-WILSHIRE CAPITAL MARKETS INDEX, BLENDED INDEX AND
CONSUMER PRICE INDEX
On the following three charts you can see how the total return for each of the
three classes of shares of the Advantus Spectrum Fund compared to the Merrill
Lynch-Wilshire Capital Markets Index, the Blended Index of 60 percent Russell
1000 Growth Index and 40 percent Lehman Brothers Aggregate Bond Index, and the
Consumer Price Index. The lines in the Class A graph represent the cumulative
total return of a hypothetical $10,000 investment made on March 31, 1988 through
March 31, 1998. The lines in the Class B and Class C graph represent the
cumulative total return of a hypothetical $10,000 investment made on the
inception date of Class B and Class C shares of the Advantus Spectrum Fund
(August 19, 1994 and March 31, 1995, respectively) through March 31, 1998.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C> <C>
Average annual total
return:
One year 23.5%
Five year 11.2%
Ten Year 11.9%
ML-Wilshire Capital Blended
Class A Markets Index CPI Index
3/31/88 $10,000 $10,000 $10,000 $10,000
10/31/88 10,020 10,704 10,292 11,095
10/31/89 11,706 12,670 10,763 13,485
10/31/90 11,644 12,274 11,441 13,280
10/31/91 14,671 15,562 11,775 16,857
10/31/92 16,296 17,121 12,153 18,658
10/31/93 17,711 19,701 12,479 20,337
9/30/94 17,371 19,472 12,856 20,762
9/30/95 20,564 23,796 13,139 25,419
9/30/96 23,385 26,874 13,533 28,942
9/30/97 27,280 34,132 13,834 35,732
3/31/98 30,697 38,098 13,894 39,491
</TABLE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C> <C>
Average annual total
return:
One year 24.2%
Since inception (8/19/94) 15.9%
ML-Wilshire Capital Blended
Class B Markets Index CPI Index
8/19/94 $10,000 $10,000 $10,000 $10,000
9/30/94 10,003 9,952 10,067 10,555
9/30/95 11,316 12,162 10,289 12,923
9/30/96 12,953 13,735 10,598 14,714
9/30/97 15,184 17,445 10,833 18,165
3/31/98 17,309 19,472 10,880 19,418
</TABLE>
4
<PAGE>
ADVANTUS
SPECTRUM FUND
MARCH 31, 1998
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C> <C> <C> <C>
Average annual total
return:
One year 29.2%
Since inception (3/1/95) 17.7%
ML-Wilshire Capital Blended
Class C Markets Index CPI Index
3/01/95 $10,000 $10,000 $10,000 $10,000
9/30/95 11,263 11,626 10,146 12,243
9/30/96 12,713 13,130 10,450 13,940
9/30/97 14,731 16,676 10,682 17,210
3/31/98 16,525 19,472 10,728 19,021
</TABLE>
The preceding charts are useful because they provide you with more information
about your investments. There are limitations, however. An index may reflect the
performance of securities that the Fund may not hold. Also, the index does not
deduct sales charges, investment advisory fees and other fund expenses, whereas
your Fund does. Performance presented for the Fund reflects the deduction of the
maximum 5 percent front-end sales charge for Class A and the maximum applicable
contingent deferred sales charge for Class B shares. Sales charges pay for your
financial professional's investment advice. Individuals cannot buy even an
unmanaged index fund without incurring some charges and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
ADVANTUS
SPECTRUM FUND
MARCH 31, 1998
FIVE LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- --------------------------------------- ------ ----------- ----------
<S> <C> <C> <C>
General Electric Company............... 36,252 $ 3,124,469 5.6%
Coca-Cola Company...................... 25,400 $ 1,966,912 3.5%
Omnicom Group.......................... 35,810 $ 1,685,308 3.0%
Tyco International Ltd................. 30,292 $ 1,654,700 2.9%
Service Corporation International...... 36,800 $ 1,561,700 2.8%
----------- ---
$ 9,993,089 17.8%
----------- ---
----------- ---
</TABLE>
BOND PORTFOLIO CHARACTERISTICS--QUALITY BREAKDOWN
<TABLE>
<CAPTION>
% OF BOND
CATEGORY PORTFOLIO
- -------------------------------------------------- -------------
<S> <C>
US Treasury....................................... 29.7%
US Government Agencies............................ 8.0%
AAA rated......................................... 9.0%
AA rated.......................................... 3.9%
A rated........................................... 22.5%
BBB rated......................................... 23.1%
BB rated.......................................... 3.8%
-----
100.0%
-----
-----
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Cash and Other
Assets/Liabilities 3.6%
Common Stocks 61.1%
Preferred Stocks 2.0%
Bonds 33.3%
</TABLE>
6
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES
MARCH 31, 1998
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ------ -----------
<C> <S> <C>
COMMON STOCK (61.1%)
CAPITAL GOODS (6.3%)
Electrical Equipment (3.5%)
36,252 General Electric Company......................... $ 3,124,469
-----------
Manufacturing (1.9%)
30,292 Tyco International Ltd........................... 1,654,700
-----------
Waste Management (.9%)
18,428 USA Waste Services Incorporated (b).............. 821,198
-----------
COMMUNICATION SERVICES (.9%)
Telecommunication (.9%)
16,100 MCI Communications............................... 796,950
-----------
CONSUMER CYCLICAL (11.0%)
Auto (.7%)
8,100 Danaher Corporation.............................. 615,094
-----------
Building Materials (.8%)
11,400 Masco Corporation................................ 678,300
-----------
Houseware (.9%)
15,700 Leggett & Platt Incorporated..................... 807,569
-----------
Lodging-Hotel (1.4%)
16,600 Carnival Corporation............................. 1,157,850
2,700 Prime Hospitality Corporation (b)................ 52,650
-----------
1,210,500
-----------
Retail (2.4%)
20,500 Family Dollar Stores............................. 779,000
16,800 Tandy Corporation................................ 789,600
12,000 Wal-Mart Stores.................................. 609,750
-----------
2,178,350
-----------
Service (4.8%)
26,849 Cendant Corporation (b).......................... 1,063,892
35,810 Omnicom Group.................................... 1,685,308
<CAPTION>
MARKET
SHARES VALUE(a)
- ------ -----------
<C> <S> <C>
CONSUMER CYCLICAL--CONTINUED
36,800 Service Corporation International................ $ 1,561,700
-----------
4,310,900
-----------
CONSUMER STAPLES (9.9%)
Beverage (3.1%)
25,400 Coca-Cola Company................................ 1,966,912
17,700 Pepsico, Inc..................................... 755,569
-----------
2,722,481
-----------
Household Product (2.6%)
21,900 Newell Company................................... 1,060,781
14,790 Procter & Gamble Company......................... 1,247,906
-----------
2,308,687
-----------
Personal Care (.8%)
6,300 Gillette Company................................. 747,731
-----------
Retail (1.1%)
27,382 Safeway, Inc. (b)................................ 1,011,423
-----------
Service (.9%)
11,300 Automatic Data Processing, Inc................... 769,106
-----------
Tobacco (1.4%)
30,600 Philip Morris Companies, Inc..................... 1,275,637
-----------
ENERGY (1.0%)
Oil & Gas (1.0%)
12,400 Anadarko Petroleum Corporation................... 855,600
-----------
FINANCIAL (8.8%)
Banks (.9%)
19,800 Norwest Corporation.............................. 822,937
-----------
Commercial Finance (.9%)
13,300 Finova Finance Trust............................. 783,037
-----------
</TABLE>
See accompanying notes to investments in securities.
7
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ------ -----------
FINANCIAL--CONTINUED
<C> <S> <C>
Consumer Finance (.7%)
6,200 Associates First Capital Corporation............. $ 489,800
3,000 Mack-Cali Realty................................. 117,187
-----------
606,987
-----------
Finance-Diversified (1.3%)
1,700 Bay Apartment Communities, Inc................... 63,112
3,400 Burnham Pacific Properties, Inc.................. 49,725
1,500 Crescent Real Estate Equity Company.............. 54,000
12,600 Federal Home Loan Mortgage Corporation........... 597,712
1,900 LNR Property Corporation......................... 50,825
5,900 Patriot American Hospitality..................... 159,300
3,400 Starwood Lodging Trust........................... 181,687
-----------
1,156,361
-----------
Insurance (2.4%)
4,201 American International Group..................... 529,063
11,600 Hartford Life.................................... 540,125
12,900 Nationwide Financial Services.................... 559,537
11,450 Sunamerica Incorporated.......................... 548,169
-----------
2,176,894
-----------
Real Estate (.1%)
2,900 Catellus Developement (b)........................ 53,831
-----------
Real Estate Investment Trust (1.9%)
1,800 Arden Realty Group, Inc.......................... 51,300
1,000 Asset Investors Corporation...................... 18,812
4,300 Boston Properties, Inc........................... 151,306
5,400 Camden Property Trust............................ 159,975
1,700 Eastgroup Properties............................. 35,062
<CAPTION>
MARKET
SHARES VALUE(a)
- ------ -----------
<C> <S> <C>
FINANCIAL--CONTINUED
2,000 Equity Residential Properties.................... $ 100,500
2,300 Essex Property Trust............................. 78,919
1,500 Felcor Suite Hotels, Inc......................... 55,594
2,900 First Industrial Realty Trust.................... 104,400
1,900 Franchise Finance Corporation of America......... 52,844
5,300 Glenborough Realty Trust, Inc.................... 154,362
1,600 Highwoods Properties, Inc........................ 56,500
2,320 Koger Equity Incorporated........................ 52,200
3,200 Liberty Property Trust........................... 86,000
1,800 Macerich Company................................. 53,550
2,200 Pacific Gulf Properties Inc...................... 50,463
2,400 Pan Pacific Retail Properties.................... 52,500
2,000 Reckson Associates Realty Corporation............ 52,750
3,000 Regency Realty Corporation....................... 79,313
2,400 Spieker Properties Inc........................... 99,000
1,900 Storage Trust Realty............................. 46,906
3,400 Sunstone Hotel Investors......................... 54,400
2,400 Urban Shopping Centers Incorporated.............. 79,200
-----------
1,725,856
-----------
Savings and Loans (.6%)
7,100 Washington Mutual Incorporated................... 509,203
-----------
HEALTH CARE (10.5%)
Drugs (4.9%)
7,000 American Home Products Corporation............... 667,625
8,700 Eli Lilly & Company.............................. 518,738
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(a)
- ------ -----------
HEALTH CARE--CONTINUED
<C> <S> <C>
6,900 Merck & Co., Inc................................. $ 885,788
9,500 Pfizer Inc....................................... 947,031
8,200 Schering Plough Corporation...................... 669,838
10,100 Smithkline Beecham (c)........................... 631,881
-----------
4,320,901
-----------
Health Care-Diversified (4.7%)
10,700 Abbott Laboratories.............................. 805,844
14,300 Bristol-Myers Squibb Company..................... 1,491,669
14,600 Johnson & Johnson................................ 1,070,363
4,800 Warner-Lambert Company........................... 817,500
-----------
4,185,376
-----------
Medical Products/Supplies (.9%)
30,400 Sybron International Corporation (b)............. 794,200
-----------
TECHNOLOGY (12.2%)
Technology (12.2%)
7,400 BMC Software, Inc. (b)........................... 620,213
15,500 Cadence Design Systems, Inc. (b)................. 536,688
10,200 Cisco Systems, Inc. (b).......................... 697,425
10,000 Computer Associates International................ 577,500
14,600 EMC Corporation (b).............................. 552,063
24,500 Equifax Incorporated............................. 894,250
25,200 Galileo International, Inc....................... 978,075
<CAPTION>
MARKET
SHARES VALUE(a)
- ------ -----------
<C> <S> <C>
TECHNOLOGY--CONTINUED
19,800 Intel............................................ $ 1,545,638
7,300 Lucent Technologies Incorporated................. 933,488
15,800 Microsoft Corporation (b)........................ 1,414,100
32,200 Parametric Technology Corporation (b)............ 1,072,663
18,600 Paychex Incorporated............................. 1,072,988
-----------
10,895,091
-----------
TRANSPORTATION (.5%)
Air Freight (.5%)
11,500 CNF Transportation............................... 413,281
-----------
Total common stocks (cost: $38,413,548)................... 54,332,650
-----------
</TABLE>
<TABLE>
<C> <S> <C>
PREFERRED STOCK (2.0%)
FINANCIAL (2.0%)
Real Estate Investment Trust (2.0%)
14,000 Duke Realty Investment, Inc.-7.99%............... 731,500
5,000 Nationwide Health Property, Inc.-7.68%........... 505,625
10,000 Security Capital Industrial-C-8.54%.............. 532,810
----------
Total preferred stocks (cost: $1,693,675)................. 1,769,935
----------
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKETVALUE(a)PRINCIPAL
- ------
LONG-TERM DEBT SECURITIES (33.3%)
<C> <S> <C> <C> <C>
GOVERNMENT OBLIGATIONS (13.1%)
Federal National Mortgage Association (2.2%)
$ 750,000 FNMA............................................. 6.14% 03/24/03 $ 746,450
500,000 FNMA............................................. 6.25% 12/25/13 492,600
669,318 FNMA............................................. 7.00% 02/01/26 676,358
-----------
1,915,408
-----------
Government National Mortgage Association (.5%)
448,488 GNMA............................................. 7.00% 10/15/25 453,345
-----------
State and Local Government Obligations (.5%)
474,000 Wyoming Community Development.................... 6.85% 06/01/10 475,185
-----------
U.S. Treasury (9.9%)
1,925,000 US Treasury Note................................. 6.13% 11/15/27 1,973,726
2,500,000 US Treasury Note................................. 6.38% 09/30/01 2,553,905
2,100,000 US Treasury Note................................. 6.63% 06/30/01 2,157,750
1,600,000 US Treasury Note................................. 7.25% 08/15/04 1,730,499
250,000 US Treasury Note................................. 12.00% 08/15/13 367,344
-----------
8,783,224
-----------
Total government obligations (cost: $11,616,446)..................... 11,627,162
-----------
CORPORATE OBLIGATIONS (29.0%)
BASIC MATERIALS (.6%)
Chemicals (.6%)
537,395 Ciba Geigy Corporation-144A Issue (d)............ 7.24% 01/02/16 572,863
-----------
CAPITAL GOODS (1.1%)
Waste Management (1.1%)
1,000,000 WMX Technologies, Inc............................ 6.25% 10/15/00 997,026
-----------
COMMUNICATION SERVICES (1.0%)
Telecommunication (1.0%)
900,000 Cable and Wireless Communication (c)............. 6.63% 03/06/05 904,685
-----------
CONSUMER CYCLICAL (1.5%)
Leisure (1.0%)
900,000 Sony Corporation (c)............................. 6.13% 03/04/03 897,277
-----------
Textiles (.5%)
500,000 Reliance Industries Limited-144A Issue (c)(d).... 10.25% 01/15/2097 486,035
-----------
CONSUMER STAPLES (2.8%)
Broadcasting (1.1%)
850,000 TCI Communications............................... 8.75% 08/01/15 988,329
-----------
</TABLE>
See accompanying notes to investments in securities.
10
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- -----------
CORPORATE OBLIGATIONS--CONTINUED
<C> <S> <C> <C> <C>
Entertainment (1.1%)
$1,000,000 Time Warner Incorporated-144A Issue (d).......... 6.10% 12/30/01 $ 989,220
-----------
Household Product (.6%)
500,000 Premark International, Inc....................... 10.50% 09/15/00 548,688
-----------
ENERGY (.9%)
Oil & Gas (.9%)
750,000 Baroid Corporation............................... 8.00% 04/15/03 810,065
-----------
FINANCIAL (11.7%)
Auto Finance (.6%)
500,000 Ford Motor Credit Company........................ 6.38% 04/03/00 503,440
-----------
Banks (1.7%)
700,000 St. George Bank-144A Issue (c)(d)................ 8.48% 12/31/49 734,090
750,000 Wells Fargo Capital.............................. 7.96% 12/15/26 783,925
-----------
1,518,015
-----------
Collateralized Mortgage Obligations/Asset-Backed Securities (2.9%)
676,089 Tryon Mortgage Funding........................... 7.75% 12/20/09 690,657
1,250,000 PNC Bank Corporation............................. 6.73% 01/25/07 1,293,570
491,468 Bear Stearns Mortgage Securities, Inc............ 8.00% 11/25/29 512,355
-----------
2,496,582
-----------
Commercial Finance (.9%)
800,000 General Electric Capital Corporation............. 6.66% 05/01/18 811,053
-----------
Finance-Diversified (.7%)
700,000 Guangdong Enterprises-144A Issue (c)(d).......... 8.88% 05/22/07 631,512
-----------
Insurance (1.0%)
900,000 Provident Companies, Inc......................... 7.25% 03/15/28 902,034
-----------
Investment Bankers/Brokers (2.3%)
1,000,000 Lehman Brothers, Inc............................. 6.63% 02/15/08 995,520
250,000 Morgan Stanley................................... 6.45% 05/15/01 250,360
750,000 Morgan Stanley Dean Witter....................... 6.88% 03/01/07 769,306
-----------
2,015,186
-----------
Real Estate Investment Trust (1.6%)
900,000 Bradley Operating LP............................. 7.00% 11/15/04 905,615
500,000 Security Capital Pacific Trust................... 7.50% 02/15/14 517,847
-----------
1,423,462
-----------
</TABLE>
See accompanying notes to investments in securities.
11
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES--CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(a)
- ---------- -----------
CORPORATE OBLIGATIONS--CONTINUED
<C> <S> <C> <C> <C>
UTILITIES (.6%)
Electric Companies (.6%)
$ 500,000 Enersis S.A. (c)................................. 6.90% 12/01/06 $ 490,515
-----------
Total corporate obligations (cost: $17,748,274)...................... 17,985,987
-----------
Total long-term debt securities (cost: $29,364,720).................. 29,613,149
-----------
SHORT-TERM SECURITIES (3.5%)
1,110,000 H.J. Heinz Company CP............................ 5.53% 04/07/98 1,108,788
295,000 US Treasury Bill................................. 5.19% 05/21/98 292,939
1,785,000 US Treasury Bill................................. 5.19% 06/25/98 1,763,673
-----------
Total short-term securities (cost: $3,165,656)....................... 3,165,400
-----------
Total investments in securities (cost: $72,637,599) (e).............. $88,881,134
-----------
-----------
</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 5.4% of the net assets in foreign securities as of March 31,
1998.
(d) Represents ownership in a restricted security which has not been registered
with the Security and Exchange Commission under the Securities Act of 1933.
(See note 6 to the financial statements.) Information concerning the
restricted securities held at March 31, 1998, which includes acquisition
date and cost, is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY: DATE COST
- --------------------------------------- ----------- -----------
<S> <C> <C>
Ciba Geigy Corporation 144A Issue...... Various $ 537,395
Time Warner, Inc. 144A Issue........... Various 964,479
St. George Bank 144A Issue............. 06/12/97 700,000
Reliance Industries Limited 144A 10/15/97 539,040
Issue................................
Guangdong Enterprises 144A Issue....... 08/06/97 722,526
-----------
$ 3,463,440
-----------
-----------
</TABLE>
(e) At March 31, 1998 the cost of securities for federal income tax purposes was
$72,793,696. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation.......... $16,482,390
Gross unrealized depreciation.......... (394,952)
-----------
Net unrealized appreciation............ $16,087,438
-----------
-----------
</TABLE>
12
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market
value--see accompanying schedule for
detailed listing
(identified cost: $72,637,599)........ $88,881,134
Cash in bank on demand deposit......... 258,894
Receivable for investment securities
sold.................................. 1,398,422
Receivable for Fund shares sold........ 112,375
Accrued interest receivable............ 422,472
Dividends receivable................... 59,628
-----------
Total assets....................... 91,132,925
-----------
LIABILITIES
Payable for investment securities
purchased............................. 1,862,207
Payable for Fund shares redeemed....... 177,469
Payable to Adviser..................... 104,824
Other payables......................... 1,388
-----------
Total liabilities.................. 2,145,888
-----------
Net assets applicable to outstanding
capital stock......................... $88,987,037
-----------
-----------
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)...................... $ 52,900
Additional paid-in capital........... 70,157,703
Undistributed net investment
income.............................. 19,095
Accumulated net realized gains from
investments......................... 2,513,804
Unrealized appreciation on
investments......................... 16,243,535
-----------
Total--representing net assets
applicable to outstanding capital
stock............................. $88,987,037
-----------
-----------
Net assets applicable to outstanding
Class A shares........................ $70,376,466
-----------
-----------
Net assets applicable to outstanding
Class B shares........................ $15,710,038
-----------
-----------
Net assets applicable to outstanding
Class C shares........................ $ 2,900,533
-----------
-----------
Shares outstanding and net asset value
per share:
Class A--Shares outstanding
4,179,182........................... $ 16.84
-----------
-----------
Class B--Shares outstanding
936,970............................. $ 16.77
-----------
-----------
Class C--Shares outstanding
173,811............................. $ 16.69
-----------
-----------
</TABLE>
See accompanying notes to financial statements.
13
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest............................. $1,068,355
Dividends............................ 318,809
----------
Total investment income.......... 1,387,164
----------
Expenses (note 4):
Investment advisory fee.............. 244,675
Distribution fees--Class A........... 114,341
Distribution fees--Class B........... 68,805
Distribution fees--Class C........... 12,299
Administrative service fee........... 21,800
Custodian fees....................... 5,331
Auditing and accounting services..... 24,625
Legal fees........................... 3,112
Directors' fees...................... 532
Registration fees.................... 18,414
Printing and shareholder reports..... 29,132
Insurance............................ 2,711
Other................................ 14,645
----------
Total expenses................... 560,422
----------
Investment income--net........... 826,742
----------
Realized and unrealized gains on
investments:
Net realized gains on investments
(note 3)............................ 3,146,761
Net change in unrealized appreciation
or depreciation on investments...... 5,887,678
----------
Net gains on investments......... 9,034,439
----------
Net increase in net assets resulting
from operations....................... $9,861,181
----------
----------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTH PERIOD ENDED MARCH 31, 1998 AND
YEAR ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
----------- ------------
<S> <C> <C>
Operations:
Investment income--net............... $ 826,742 $ 1,756,488
Net realized gain on investments..... 3,146,761 6,023,342
Net change in unrealized appreciation
or depreciation on investments...... 5,887,678 3,276,722
----------- ------------
Increase in net assets resulting
from operations................. 9,861,181 11,056,552
----------- ------------
Distributions to shareholders from:
Investment income--net:
Class A............................ (694,875) (1,534,364)
Class B............................ (107,349) (204,737)
Class C............................ (19,776) (34,898)
Net realized gains on investments:...
Class A............................ (5,089,696) (4,361,553)
Class B............................ (1,075,477) (645,070)
Class C............................ (191,928) (116,045)
----------- ------------
Total distributions.............. (7,179,101) (6,896,667)
----------- ------------
Capital share transactions (notes 4 and
5):
Proceeds from sales:
Class A............................ 7,406,530 8,900,153
Class B............................ 2,754,668 4,388,659
Class C............................ 1,203,896 1,433,237
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 5,632,014 5,687,547
Class B............................ 1,118,292 812,290
Class C............................ 209,412 148,275
Payments for redemption of shares:
Class A............................ (7,702,550) (13,970,583)
Class B............................ (1,181,117) (1,129,359)
Class C............................ (532,475) (1,092,396)
----------- ------------
Increase in net assets from
capital share transactions...... 8,908,670 5,177,823
----------- ------------
Total increase in net assets..... 11,590,750 9,337,708
Net assets at beginning of period...... 77,396,287 68,058,579
----------- ------------
Net assets at end of period (including
undistributed net investment income of
$19,095 and $14,353, respectively).... $88,987,037 $ 77,396,287
----------- ------------
----------- ------------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
(1) ORGANIZATION
The Advantus Spectrum Fund, Inc. (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 object is to seek the most
favorable total return (including interest, dividends and capital appreciation)
consistent with the preservation of capital.
The Fund currently issues three classes of shares: Class A, Class B and
Class C shares. Class A shares are sold subject to a front-end sales charge.
Class B shares are sold subject to a contingent deferred sales charge payable
upon redemption if redeemed within six years of purchase. Class C shares are
sold without either a front-end sales charge or a contingent deferred sales
charge. Both Class B and Class C are subject to a higher Rule 12b-1 fee than
Class A shares. Both Class B and Class C shares automatically convert to Class A
shares at net asset value after a specified holding period. Such holding periods
decline as the amount of the purchase increases and range from 28 to 84 months
after purchase for Class B shares and 40 to 96 months after purchase for Class C
shares. All three classes of shares have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except that the level of
distribution fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than distribution fees) and realized and unrealized
gains or losses are allocated to each class of shares based upon its relative
net assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of increases and decreases in net assets
resulting from operations during the period. Actual results could differ from
those estimates.
INVESTMENTS IN SECURITIES
Investments in securities traded on a national exchange are valued at the
last sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price, 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 under 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.
16
<PAGE>
ADVANTUS SPECTRUM 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 (losses) 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.
DISTRIBUTIONS TO SHAREHOLDERS
Dividends from net investment income are declared and paid quarterly.
Realized gains, if any, are paid annually.
(3) INVESTMENT SECURITY TRANSACTIONS
For the period ended March 31, 1998, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities,
aggregated $65,996,640 and $60,453,399, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital
Management, Inc. (Advantus Capital or the Adviser), a wholly-owned subsidiary of
MIMLIC Asset Management Company (MIMLIC Management). Under the agreement,
Advantus Capital manages the Fund's assets and provides research, statistical
and advisory services and pays related office rental and executive expenses and
salaries. In addition, as part of the advisory fee, Advantus Capital pays the
expenses of the Fund's transfer, dividend disbursing and redemption agent, The
Minnesota Mutual Life Insurance Company (Minnesota Mutual), the parent of MIMLIC
Management. The fee for investment management and advisory services is based on
the average daily net assets of the Fund at the annual rate of .60 percent.
The Fund has adopted separate Plans of Distribution applicable to Class A,
Class B and Class C shares, respectively, relating to the payment of certain
distribution expenses pursuant to Rule 12b-1 under the Investment Company Act of
1940 (as amended). The Fund pays distribution fees to Ascend Financial Services,
Inc. (Ascend), formerly known as MIMLIC Sales Corporation, the underwriter of
the Fund and wholly-owned subsidiary of MIMLIC Management, to be used to pay
certain expenses incurred in the distribution, promotion and servicing of the
Fund's shares. The Class A Plan provides for a fee up to .35 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.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reports, legal fees, auditing and accounting services and other miscellaneous
expenses.
17
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS--(CONTINUED)
The Fund pays an administrative services fee, equal to $3,700, to Minnesota
Mutual for accounting, auditing, legal and other administrative services which
Minnesota Mutual provides. Prior to February 1, 1998, the administrative
services fee was $3,600.
Advantus Capital directly incurs and pays the above operating expenses and
the Fund in turn reimburses Advantus Capital.
Sales charges received by Ascend for distributing the Fund's three classes
of shares amounted to $203,788.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $3,112.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1997 to March 31, 1998
and the year ended September 30, 1997 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
---------------------- -------------------- --------------------
1998 1997 1998 1997 1998 1997
---------- ---------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold................................................. 458,446 568,090 169,802 283,462 74,382 92,091
Issued for reinvested distributions.................. 357,320 373,704 71,820 53,627 13,334 9,848
Redeemed............................................. (473,339) (894,370) (73,233) (76,625) (32,293) (71,057)
---------- ---------- --------- --------- --------- ---------
342,427 47,424 168,389 260,464 55,423 30,882
---------- ---------- --------- --------- --------- ---------
---------- ---------- --------- --------- --------- ---------
</TABLE>
(6) RESTRICTED SECURITIES
At March 31, 1998, investments in securities includes issues which generally
cannot be offered for sale to the public without first being registered under
the Securities Act of 1933 (restricted security). In the event the securities
are registered, those carrying registration rights allow for the issuer to bear
all the related costs; for issues without rights, the Fund may incur such costs.
The Fund currently limits investments in securities that are not readily
marketable, including restricted securities, to 10% of net assets at the time of
the purchase. Securities are valued by procedures described in note 2. The
aggregate value of restricted securities held by the Fund at March 31, 1998 was
$3,413,720 which represents 3.8% of net assets.
18
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, YEAR ENDED NOVEMBER 1,
1997 TO SEPTEMBER 30, 1993 TO YEAR ENDED
MARCH 31, ---------------------------------- SEPTEMBER 30, OCTOBER 31,
1998 1997 1996 1995(a) 1994(b) 1993
------------ ---------- ---------- ---------- --------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 16.40 $ 15.53 $ 14.79 $ 13.28 $ 13.92 $ 13.63
------------ ---------- ---------- ---------- --------------- ------------
Income from investment operations:
Net investment income................. .17 .39 .34 .45 .28 .29
Net gains or losses on securities
(both realized and unrealized)....... 1.74 2.02 1.59 1.88 (.55) .86
------------ ---------- ---------- ---------- --------------- ------------
Total from investment operations.... 1.91 2.41 1.93 2.33 (.27) 1.15
------------ ---------- ---------- ---------- --------------- ------------
Less distributions:
Dividends from net investment
income............................... (.17) (.39) (.34) (.44) (.28) (.31)
Distributions from capital gains...... (1.30) (1.15) (.85) (.38) (.09) (.55)
------------ ---------- ---------- ---------- --------------- ------------
Total distributions................. (1.47) (1.54) (1.19) (.82) (.37) (.86)
------------ ---------- ---------- ---------- --------------- ------------
Net asset value, end of period.......... $ 16.84 $ 16.40 $ 15.53 $ 14.79 $ 13.28 $ 13.92
------------ ---------- ---------- ---------- --------------- ------------
------------ ---------- ---------- ---------- --------------- ------------
Total return (c)........................ 12.5% 16.7% 13.7% 18.4% (1.9)% 8.7%
Net assets, end of period (in
thousands)........................... $ 70,376 $ 62,914 $ 54,848 $ 55,624 $ 55,286 $ 57,048
Ratio of expenses to average daily net
assets............................... 1.25%(d) 1.25% 1.26% 1.33% 1.27%(d) 1.22%
Ratio of net investment income to
average daily net assets............. 2.11%(d) 2.53% 2.28% 3.22% 2.24%(d) 2.16%
Portfolio turnover rate (excluding
short-term securities)............... 78.44% 141.40% 140.5% 125.5% 124.5% 92.1%
Average commission rate on stock
transactions (e)..................... $.0293 $.0591 $.0641 N/A N/A N/A
</TABLE>
- ---------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995, the
Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) During 1994, the Fund changed its fiscal year end from October 31 to
September 30.
(c) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not been
annualized.
(d) Adjusted to an annual basis.
(e) Beginning in fiscal 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of stocks for
the period by the total number of related shares purchased and sold.
19
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
(7) FINANCIAL HIGHLIGHTS--(CONTINUED)
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, YEAR ENDED AUGUST 19,
1997 TO SEPTEMBER 30, 1994(b) TO
MARCH 31, ---------------------------------- SEPTEMBER 30,
1998 1997 1996 1995(a) 1994
------------ ---------- ---------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period.... $ 16.34 $ 15.47 $ 14.74 $ 13.27 $ 13.36
------------ ---------- ---------- ---------- ---------------
Income from investment operations:
Net investment income................. .12 .30 .27 .39 .03
Net gains or losses on securities
(both realized and unrealized)....... 1.73 2.02 1.56 1.84 (.03)
------------ ---------- ---------- ---------- ---------------
Total from investment operations.... 1.85 2.32 1.83 2.23 --
------------ ---------- ---------- ---------- ---------------
Less distributions:
Dividends from net investment
income............................... (.12) (.30) (.25) (.38) (.09)
Distributions from capital gains...... (1.30) (1.15) (.85) (.38) --
------------ ---------- ---------- ---------- ---------------
Total distributions................. (1.42) (1.45) (1.10) (.76) (.09)
------------ ---------- ---------- ---------- ---------------
Net asset value, end of period.......... $ 16.77 $ 16.34 $ 15.47 $ 14.74 $ 13.27
------------ ---------- ---------- ---------- ---------------
------------ ---------- ---------- ---------- ---------------
Total return (c)........................ 12.2% 16.0% 13.1% 17.6% (.04)%
Net assets, end of period (in
thousands)........................... $ 15,710 $ 12,556 $ 7,860 $ 3,131 $ 140
Ratio of expenses to average daily net
assets............................... 1.89%(d) 1.90% 1.90% 1.99% .23%(e)
Ratio of net investment income to
average daily net assets............. 1.46%(d) 1.89% 1.67% 2.30% .37%(e)
Portfolio turnover rate (excluding
short-term securities)............... 78.44% 141.40% 140.5% 125.5% 124.5%
Average commission rate on stock
transactions (f)..................... $.0293 $.0591 $.0641 N/A N/A
</TABLE>
- ---------
(a) Effective March 1, 1995, the Fund entered into a new investment advisory
agreement with Advantus Capital Management, Inc. Prior to March 1, 1995, the
Fund had an investment advisory agreement with MIMLIC Asset Management
Company.
(b) Commencement of operations.
(c) Total return figures are based on a share outstanding throughout the period
and assumes reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not been
annualized.
(d) Adjusted to an annual basis.
(e) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
(f) Beginning in fiscal 1996, the Fund is required to disclose an average
brokerage commission rate. The rate is calculated by dividing the total
brokerage commissions paid on applicable purchases and sales of stocks for
the period by the total number of related shares purchased and sold.
20
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS--CONTINUED
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------
PERIOD FROM
PERIOD FROM MARCH 1,
OCTOBER 1, YEAR ENDED 1995(b) TO
1997 TO SEPTEMBER 30, SEPTEMBER
MARCH 31, -------------------- 30,
1998 1997 1996 1995
----------- --------- --------- ------------
Net asset value, beginning of period.... $ 16.27 $ 15.43 $ 14.74 $ 13.36
<S> <C> <C> <C> <C>
----------- --------- --------- ------------
Income from investment operations:
Net investment income................. .13 .28 .28 .24
Net gains or losses on securities
(both realized and unrealized)....... 1.71 2.01 1.52 1.43
----------- --------- --------- ------------
Total from investment operations.... 1.84 2.29 1.80 1.67
----------- --------- --------- ------------
Less distributions:
Dividends from net investment
income............................... (.12) (.30) (.26) (.29)
Distributions from capital gains...... (1.30) (1.15) (.85) --
----------- --------- --------- ------------
Total distributions................. (1.42) (1.45) (1.11) (.29)
----------- --------- --------- ------------
Net asset value, end of period.......... $ 16.69 $ 16.27 $ 15.43 $ 14.74
----------- --------- --------- ------------
----------- --------- --------- ------------
Total return (c)........................ 12.2% 15.9% 12.9% 12.6%
Net assets, end of period (in
thousands)........................... $ 2,901 $ 1,926 $ 1,351 $ 199
Ratio of expenses to average daily net
assets............................... 1.89%(d) 1.90% 1.90% 2.00%(d)
Ratio of net investment income to
average daily net assets............. 1.47%(d) 1.88% 1.73% 2.17%(d)
Portfolio turnover rate (excluding
short-term securities)............... 78.44% 141.40% 140.5% 125.5%
Average commission rate on stock
transactions (f)..................... $.0293 $.0591 $.0641 N/A
</TABLE>
21
<PAGE>
SHAREHOLDER SERVICES
The Advantus Family of Funds offers a variety of services that enhance your
ability to manage your assets. Check each Fund's prospectus for the details of
the services and any limitations that apply to a particular Fund.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same class) at any time as your needs change. Exchanges are at the then
current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make four exchanges each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year. Systematic Exchange Plans are
exempt from this charge.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive checks at
specified intervals from your fund account-subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DEPOSITS: At your request we will deposit your dividends or systematic
withdrawals directly into your checking or savings account instead of sending
you a check.
TELEPHONE EXCHANGE: You can move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same class)
just by calling our toll free number. The Telephone Exchange and Telephone
Redemption privilege will automatically be established unless otherwise
indicated on the Account Application. Telephone Exchange and Redemption may be
changed (added/deleted) at any time by submitting a request in writing or by
completing a Service Request Form.
SYSTEMATIC EXCHANGE: You can move a set amount of money monthly from one
Advantus Fund to another Advantus Fund (with identical registrations within the
same class) to diversify your investment portfolio and take advantage of
dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Mutual insurance premiums from your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge on Advantus's non-money market funds.
SPECIAL PURCHASE PLANS: Special purchase plans enable you to open an Advantus
Fund account for as little as $25 and lower your average share cost through
"dollar-cost averaging." (Dollar-cost averaging does not assure a profit, nor
does it prevent loss in declining markets.) The Automatic Investment Plan allows
you to invest automatically each month from your checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Traditional or Roth Individual Retirement Account or other qualified plan
including: SEP IRA's, SIMPLE IRA's, profit sharing, money purchase or defined
benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the account. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Exchange and Telephone Redemption privilege will
automatically be established unless
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otherwise indicated on the Account Application. Telephone Exchange and
Redemption may be changed (added/deleted) at any time by submitting a request in
writing or by completing a Service Request Form. To have the redemption
automatically deposited into your checking account, please send a voided check
from your bank. Depending on the performance of the underlying investment
options, the value may be worth more or less than the original amount invested
upon redemption. Some limitations apply, please refer to the prospectus for
details.
ACCOUNT UPDATES: You will receive written confirmation of every investment you
initiate (monthly statements for your Money Market account) and quarterly
statements to help you track all of your Advantus Fund investments and annual
tax statements. Semi-annual and annual reports will provide you with portfolio
information, fund performance data and the current investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining personal information
and assistance directly from Advantus Shareholder Services, call
(1-800-665-6005). Advantus Account Representatives are available Monday through
Friday from 8 a.m. to 4:45 p.m. Central Time. Our voice response system is
available from 7 a.m. to 3 a.m. Central Time Monday through Friday, and 8 a.m.
to 5 p.m. on Saturday. This system allows you to access current net asset values
and account balances.
HOW TO INVEST
You can invest in one or more of the ten Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc. (formerly known as
MIMLIC Sales Corporation), distributor of the Funds. Contact your representative
for information and a prospectus for any of the Advantus Funds you are
interested in. To find a Registered Representative near you, call the toll-free
service line (1-800-665-6005).
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use the Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects
and reviews the Fund's investments and provides executive and other personnel
for the Fund's management.
Advantus Capital Management, Inc. manages twelve mutual funds containing
$2.7 billion in assets in addition to $2.1 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 11 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
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THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS-TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-888-AFS-1838
(1-888-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES, INC. BULK RATE
400 ROBERT STREET NORTH U.S. POSTAGE PAID
ST. PAUL, MN 55101-2098 ST. PAUL, MN
PERMIT NO. 3547
ADDRESS SERVICE REQUESTED
F.48638 Rev. 5-1998
