<PAGE>
SPECTRUM
ADVANTUS SPECTRUM FUND, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS DATED MARCH 31, 1999
[LOGO]
ADVANTUS-TM-
FAMILY OF FUNDS
ASSET
ALLOCATION
[ART]
<PAGE>
ADVANTUS SPECTRUM FUND
TABLE OF CONTENTS
PERFORMANCE UPDATE 2
INVESTMENTS IN SECURITIES 7
STATEMENT OF ASSETS AND LIABILITIES 14
STATEMENT OF OPERATIONS 15
STATEMENTS OF CHANGES IN NET ASSETS 16
NOTES TO FINANCIAL STATEMENTS 17
SHAREHOLDER SERVICES 22
<PAGE>
LETTER FROM THE PRESIDENT [PHOTO]
Dear Shareholders:
U.S. economic expansion, in its longevity and in vigor, is the envy of the rest
of the world. While growth in Europe and the United Kingdom is falling, we are
finally seeing some small improvements in Asia's economic angst; it also appears
that Japan's economic free fall has stopped. However, a working plan for a
sustainable recovery in Japan is still forthcoming. As you can see, growth
patterns around the globe are mixed, but overall, world growth is forecasted to
decline by about one percent over the course of 1999. (World growth is
forecasted to be two percent in 1999.)
In this six-month reporting period, U.S. Gross Domestic Product (GDP) in the
fourth quarter 1998 was 6.0 percent. This phenomenal result was fueled by strong
consumer demand and spending. GDP figures for the first quarter 1999 are
estimated at a respectable 4 percent. This economic growth was very broad based,
despite some export difficulties. Above-trend growth is expected for the
remainder of the year.
Will inflation spoil the party? It's unlikely. Weak commodity prices coupled
with excess global capital and labor has created an inflation-benign
environment. The inflation outlook in the U.S. continues to be positive, as
well.
The strong momentum in top-tier large cap growth stocks continues to drive the
equity market. Some trends have continued, such as large cap stocks
outperforming small caps and growth stocks outperforming value stocks. The
breadth of leadership of the equity market has continued to narrow, with only
26.3 percent of the issues in the S&P 500* able to outperform their index over
the last twelve months. The average equity mutual fund has lagged the market
unless it has been overweighted in growth and technology investments. Valuations
in the marketplace continue to be high, particularly in the large cap growth
weighted indices.
Stronger economic growth increased investors' comfort with corporate bonds and
thus the spread to Treasury bonds narrowed. In the fixed-income market,
mortgage-backed securities were the star performers this period, followed by
corporate bonds, and then Treasuries.
The economic and market outlook for the U.S. remains strong. Looking ahead, we
are cautiously optimistic for stock and bond prices, but valuations for
large-cap growth issues are high. Economic growth is forecasted, albeit slower
than in the past. With much of the world still in recession, commodity prices
low, and rapid increases in technology and productivity, high inflation is
unlikely. The Federal Reserve and other central banks stand ready to intervene
if necessary. We are watchful of Y2K issues. Certain countries that are mired in
prolonged recessions lack the money to solve these technology-related problems.
We are - along with the rest of the world - watching the political strife in the
Balkans. The military action in Kosovo has commanded world attention. Escalation
will prove costly in money and human resources.
In the pages that follow, the Fund's manager will update you on how the economy
and the market affected the Fund during this reporting period. The manager will
discuss the Fund's performance and some strategies used to maximize performance.
As always, we thank you for investing with Advantus. We encourage you to
maintain a long-range view of investing; we believe you will derive the greatest
benefit by doing so.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, 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.
<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
(from 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, investment grade
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's performance for the six-month period ended March
31, 1999 for each class of shares offered was as follows:
<TABLE>
<S> <C>
Class A.......................... 15.89 percent*
Class B.......................... 15.55 percent*
Class C.......................... 15.52 percent*
</TABLE>
The Fund's benchmarks, the Russell 1000 Growth Index** and the Lehman Brothers
Aggregate Bond Index+ returned 34.80 percent and -.17 percent, respectively, for
the same period. The Fund's Blended Index++ returned 19.88 percent for the same
period.
PERFORMANCE ANALYSIS
The Technology sector continues to lead the market, along with large
capitalization stocks and stocks with high expected growth rates. These stocks
were propelled by their above-average revenue growth rates and by the continuing
flow of money into portfolios that purchased these kinds of stocks.
The Fund benefited from a 30 percent weighting in the Technology sector, which
gained about 12 percent* during the period. This technology allocation is equal
to that of the Russell 1000 Growth Index.** A significant underweighting in the
weak Consumer Staples sector also aided the Fund. The Consumer Staples sector
continued to lag the market. Companies like Coca-Cola and Philip Morris
disappointed investors with lower-than-anticipated results.
Our fundamental stock selection approach has resulted in relatively more
investments in the mid-capitalization arena - those stocks in the range of $5 to
$15 billion. One of the key reasons the Fund has lagged the performance of the
Russell 1000 Growth Index** is that it owns fewer of the largest companies.
However, we are uncovering many attractive investments in the mid-cap sector and
believe that their lower valuations will likely be rewarded in the marketplace.
Strong performers in the Fund were America Online, EMC (computer storage), and
Microsoft Corporation. Other winners for the Fund included world advertising
leader, Omnicom Group and Tandy Corporation, an electronic retailer. The weak
performers during the period included Service Corporation International (funeral
home and cemetery operator), Health Management Associates (small market
hospitals), and Philip Morris. Poor fundamentals deteriorated the outlook for
Service Corporation, and it was sold from the Fund during first quarter 1999.
Health Management Associates and Philip Morris still provide attractive
valuations and remain in the Fund despite near-term risks.
The six-month period discussed in this report was a mutable time for the
fixed-income market. As fourth quarter 1998 began, investor sentiment - based on
global recession, low interest rates around the world and a fear of a
2
<PAGE>
bear market in stocks -- heavily favored the safety of the U.S. Treasury market.
Liquidity in corporate bonds and mortgage-backed securities all but disappeared
as buyers and market makers turned away from these asset classes. As the quarter
unfolded, the Federal Reserve cut key short-term interest rates aggressively,
and investor sentiment turned. The fears that haunted the marketplace subsided,
and spreads on corporate bonds and mortgage-backed securities began to tighten
as liquidity returned to these markets.
Interest rates climbed higher in the first quarter of 1999 as fixed income
investors struggled with strong economic growth, higher oil prices, and a
Federal Reserve that questioned the appropriateness of its last interest rate
cut. While the Fed did not make any changes to monetary policy during the first
quarter 1999, investors began to entertain the notion that its next move would
be to raise interest rates. In Japan, early signs of a potential recovery caused
Japanese investors to leave the U.S. bond market and reinvest back in their home
market. This selling put pressure on U.S. Treasury prices. When the quarter
ended, the yield on the 30-year bond had increased 53 basis points, while yields
on intermediate maturity bonds rose between 44 and 59 basis points.
The bond portion of the Fund benefited from an over allocation to the spread
sectors, corporate bonds and mortgage-backed securities. However, the duration
of the Fund was longer than that of the market. With interest rates rising,
longer-maturity bonds under performed shorter-maturity bonds, and this cut into
the gains made on the credit side of the Fund.
Very early in the year, we sold off some of our large-cap stocks and replaced
them with bonds, as rates moved to more attractive levels. We ended first
quarter 1999 with an asset allocation mix of 65 percent stocks, 31 percent
bonds, and 4 percent cash.
OUTLOOK
The long-term fundamentals for the U.S. stock and bond markets are still
positive. Industrialized countries around the world are suffering from slow
economic growth and over capacity. With global demand low and the ability to
produce high, inflation will likely remain benign. Commodity prices are falling
and are likely to stay depressed until worldwide economic activity begins to
strengthen. Despite the global downturn, the U.S. has been an island of
prosperity in the global marketplace. Strong domestic growth with low inflation
and an accommodative Federal Reserve have kept both stocks and bonds performing
well.
The remainder of the year will likely be filled with volatility, strong industry
rotation, and nervousness as we approach the millennium. We will continue to
implement our disciplined methodology in managing the Fund. We will seek to
position the Fund to meaningfully participate in significant market advances
while protecting your capital during periods of market decline.
*Historical performance is not an indication of future performance. These
performance results do not reflect the impact of Class A's maximum 5.5 percent
front-end sales charge or Class B's maximum 5 percent contingent deferred sales
charge. 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 is 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 Index 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 Blended Index is comprised of 60 percent Russell 1000 Growth Index and 40
percent Lehman Brothers Aggregate Bond Index.
3
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A HYPOTHETICAL $10,000
INVESTMENT IN ADVANTUS SPECTRUM FUND, RUSSELL 1000 GROWTH INDEX,
LEHMAN BROTHERS AGGREGATE BOND 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 Russell
1000 Growth Index, Lehman Brothers Aggregate Bond Index, a 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, 1989 through March 31, 1999. 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 1, 1995, respectively) through March 31, 1999.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C> <C> <C>
One year 8.33%
Five year 14.17%
Ten year 12.38%
(Thousands)
Class A CPI Blended Index Russell 1000 Lehman Brothers
Growth Index Aggregate Bond Index
3/31/89 $10,000 $10,000 $10,000 $10,000 $10,000
10/31/89 10,746 10,253 12,154 12,158 11,187
10/31/90 10,689 10,899 11,969 11,470 11,890
10/31/91 13,469 11,217 15,194 16,088 13,770
10/31/92 14,960 11,577 16,816 17,828 15,125
10/31/93 16,259 11,887 18,330 19,130 16,920
9/30/94 15,947 12,247 18,713 19,699 16,312
9/30/95 18,879 12,516 22,910 26,040 18,606
9/30/96 21,468 12,892 26,086 31,611 19,518
9/30/97 25,044 13,178 32,205 43,083 21,413
9/30/98 27,877 13,178 36,147 47,866 23,879
3/31/99 32,307 13,178 43,334 64,523 23,838
</TABLE>
4
<PAGE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C> <C> <C>
One year 8.87%
Since inception
(8/19/94) 15.65%
(Thousands)
Class B CPI Blended Index Russell 1000 Lehman Brothers
Growth Index Aggregate Bond Index
8/19/1994 $10,000 $10,000 $10,000 $10,000 $10,000
9/30/1994 10,003 10,067 10,209 9,863 9,860
9/30/1995 11,316 10,289 12,499 12,836 11,343
9/30/1996 12,953 10,598 14,231 15,250 11,872
9/30/1997 15,184 10,833 17,570 20,504 13,005
9/30/1998 16,913 10,987 19,720 22,952 14,425
3/31/1999 19,566 11,081 23,641 31,294 13,735
</TABLE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C> <C> <C> <C> <C>
Class C:
One year 13.86%
Since inception (3/31/95) 16.74%
(Thousands)
Blended Russell 1000 Lehman Brothers
Class C CPI Index Growth Index Aggregate Bond Index
3/01/95 $10,000 $10,000 $10,000 $10,000 $10,000
9/30/95 11,263 10,146 12,243 12,272 10,818
9/30/96 12,713 10,450 13,940 14,569 11,323
9/30/97 14,731 10,682 17,210 19,588 12,404
9/30/98 16,288 10,834 19,317 21,927 13,757
3/31/99 18,816 10,927 23,157 29,896 13,735
</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 5.5 percent front-end sales charge for Class A and the maximum
applicable contingent deferred sales charge for Class B shares. The maximum
initial sales charge for Class A shares was 5.0 percent prior to February 1,
1999. Sales charges pay for your financial professional's investment advice.
Individuals cannot invest in the index itself, nor can they invest in any fund
which seeks to track the performance of the index without incurring some charges
and expenses.
Historical performance is not an indication of future performance. Investment
returns and principal values will fluctuate so that shares upon redemption may
be worth more or less than their original cost.
5
<PAGE>
FIVE LARGEST STOCK HOLDINGS
<TABLE>
<CAPTION>
MARKET % OF STOCK
COMPANY SHARES VALUE PORTFOLIO
- ----------------------------------------- -------- ---------- -----------
<S> <C> <C> <C>
General Electric Company................. 29,252 $3,236,002 4.7%
Microsoft Corporation.................... 31,800 2,850,075 4.1%
Omnicom Group............................ 30,910 2,470,868 3.6%
Tyco International Ltd................... 29,392 2,108,876 3.1%
Cisco Systems, Inc....................... 17,800 1,950,213 2.8%
---------- ---
$12,616,034 18.3%
---------- ---
---------- ---
</TABLE>
BOND PORTFOLIO CHARACTERISTICS--QUALITY BREAKDOWN
<TABLE>
<CAPTION>
% OF BOND
CATEGORY PORTFOLIO
- ---------------------------------------------------------------- -----------
<S> <C>
U.S. Treasury................................................... 29.2%
U.S. Government Agencies........................................ 22.9%
AAA rated....................................................... 10.4%
AA rated........................................................ 6.0%
A rated......................................................... 13.7%
BBB rated....................................................... 14.1%
BB rated........................................................ 3.7%
-----------
100.0%
-----------
-----------
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Preferred Stocks 1.5%
Bonds 31.0%
Cash and Other
Assets/Liabilities 3.2%
Common Stocks 64.3%
</TABLE>
6
<PAGE>
Advantus Spectrum Fund
Investments in Securities
March 31, 1999
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ------------- ---------------
<C> <S> <C>
COMMON STOCK (64.3%)
CAPITAL GOODS (6.3%)
Electrical Equipment (3.1%)
29,252 General Electric Company............................................ $ 3,236,002
---------------
Manufacturing (2.0%)
29,392 Tyco International Ltd.............................................. 2,108,876
---------------
Office Equipment (1.2%)
11,500 Lexmark International Group, Inc. (b)............................... 1,285,125
---------------
COMMUNICATION SERVICES (1.5%)
Telecommunication (1.5%)
17,897 MCI Worldcom, Inc. (b).............................................. 1,585,003
---------------
CONSUMER CYCLICAL (10.1%)
Auto (1.0%)
20,200 Danaher Corporation................................................. 1,055,450
---------------
Building Materials (1.0%)
4,200 D.R. Horton, Inc.................................................... 70,350
33,300 Masco Corporation................................................... 940,725
3,100 Standard Pacific Corporation........................................ 39,912
---------------
1,050,987
---------------
Houseware (.6%)
30,300 Leggett & Platt, Inc................................................ 606,000
---------------
Lodging-Hotel (.3%)
11,304 Host Marriott Corporation........................................... 125,757
7,500 Meristar Hospitality Corporation.................................... 136,406
3,600 Starwood Lodging Trust.............................................. 102,825
---------------
364,988
---------------
Retail (3.4%)
78,800 Family Dollar Stores................................................ 1,812,400
13,500 Home Depot, Inc..................................................... 840,375
9,800 Wal-Mart Stores..................................................... 903,437
---------------
3,556,212
---------------
<CAPTION>
MARKET
SHARES VALUE(A)
- ------------- ---------------
<C> <S> <C>
CONSUMER CYCLICAL--CONTINUED
Service (3.8%)
45,100 Cendant Corporation (b)............................................. $ 710,325
5,000 Fairfield Communities, Inc. (b)..................................... 44,687
30,910 Omnicom Group....................................................... 2,470,868
19,300 Quintiles Transnational (b)......................................... 728,575
---------------
3,954,455
---------------
CONSUMER STAPLES (7.8%)
Beverage (.5%)
9,100 Coca-Cola Company................................................... 558,512
---------------
Entertainment (1.5%)
32,100 Carnival Corporation................................................ 1,558,856
---------------
Food & Health (.3%)
6,600 U.S. Foodservice (b)................................................ 306,900
---------------
Household Products (2.5%)
5,600 Clorox Company...................................................... 656,250
37,200 Dial................................................................ 1,278,750
7,190 Procter & Gamble Company............................................ 704,171
---------------
2,639,171
---------------
Retail (1.5%)
31,082 Safeway, Inc. (b)................................................... 1,594,895
---------------
Service (.9%)
22,200 Automatic Data Processing, Inc...................................... 918,525
---------------
Tobacco (.6%)
18,700 Philip Morris Companies, Inc........................................ 658,006
---------------
FINANCIAL (10.2%)
Commercial Finance (1.3%)
26,588 Finova Finance Trust................................................ 1,379,252
---------------
Finance-Diversified (1.6%)
3,400 Asset Investors Corporation......................................... 40,800
2,800 Crescent Real Estate Equity Company (b)............................. 60,200
</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>
24,500 Federal Home Loan Mortgage Corporation.............................. $ 1,399,562
4,100 Simon Property Group, Inc........................................... 112,494
800 Trammell Crow Company (b)........................................... 14,800
---------------
1,627,856
---------------
Insurance (2.4%)
12,703 American International Group........................................ 1,532,299
8,700 Hartford Life....................................................... 478,500
12,700 Nationwide Financial Services....................................... 533,400
---------------
2,544,199
---------------
Investment Bankers/Brokers (.8%)
336 Reckson Service Industries (b)...................................... 1,512
24,800 T. Rowe Price Associates............................................ 852,500
---------------
854,012
---------------
Real Estate (.1%)
11,700 Catellus Development Corporation (b)................................ 156,487
---------------
Real Estate Investment Trust (4.0%)
5,000 Apartment Investment & Management Company........................... 181,250
8,800 Archstone Communities Trust......................................... 177,100
6,100 Arden Realty Group, Inc............................................. 135,725
6,600 Avalon Bay Communities, Inc......................................... 208,725
1,500 Cabot Industrial Trust.............................................. 28,312
4,000 Camden Property Trust............................................... 99,000
4,900 Carramerica Realty Corporation...................................... 108,106
1,400 Charles E. Smith Realty, Inc........................................ 43,137
<CAPTION>
MARKET
SHARES VALUE(A)
- ------------- ---------------
<C> <S> <C>
FINANCIAL--CONTINUED
6,800 Commercial Net Lease Realty......................................... $ 76,075
8,600 Corporate Office Properties......................................... 55,363
4,700 Developers Diversified Realty Corporation........................... 67,269
2,700 Duke Realty Investments, Inc........................................ 58,050
2,200 Equity Office Properties Trust...................................... 55,963
3,600 Equity Residential Properties....................................... 148,500
2,900 Essex Property Trust................................................ 75,763
1,500 Federal Realty Investment Trust..................................... 31,781
3,000 Felcor Lodging Trust, Inc........................................... 69,563
2,500 First Industrial Realty Trust....................................... 59,844
2,400 Franchise Finance Corporation of America............................ 50,550
4,000 Gables Residential Trust............................................ 88,250
5,300 Glenborough Realty Trust, Inc....................................... 90,100
3,110 Golf Trust of America, Inc.......................................... 69,586
6,000 Highwoods Properties, Inc........................................... 141,375
11,700 Innkeepers USA Trust................................................ 108,956
7,200 Kilroy Realty....................................................... 147,600
4,760 Koger Equity........................................................ 63,963
1,600 Lennar Corporation.................................................. 35,800
2,300 LNR Property Corporation............................................ 45,425
6,700 Macerich Company.................................................... 152,006
3,700 Mack-Cali Realty.................................................... 108,688
8,760 New Plan Excel Realty Trust......................................... 168,083
5,000 Pacific Gulf Properties, Inc........................................ 90,000
</TABLE>
See accompanying notes to investments in securities.
8
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ------------- ---------------
FINANCIAL--CONTINUED
<C> <S> <C>
5,700 Pan Pacific Retail Properties....................................... $ 101,175
3,200 Parkway Properties.................................................. 90,200
6,200 Philips International Realty........................................ 87,963
2,800 Post Properties, Inc................................................ 100,800
3,400 Prologis Trust...................................................... 69,700
8,160 Public Storage, Inc................................................. 204,000
5,700 Regency Realty Corporation.......................................... 106,875
2,200 SL Green Realty Corporation......................................... 41,388
1,400 Spieker Properties, Inc............................................. 49,350
3,500 Summit Properties, Inc.............................................. 58,406
2,100 Tower Realty Trust, Inc............................................. 39,769
2,400 Trinet Corporation.................................................. 60,900
2,700 Urban Shopping Centers, Inc......................................... 77,456
1,100 Vornado Realty Trust................................................ 37,950
---------------
4,165,840
---------------
HEALTH CARE (10.4%)
Drugs (5.1%)
7,500 American Home Products Corporation.................................. 489,375
19,600 Bristol-Myers Squibb Company (b).................................... 1,260,525
6,000 Eli Lilly & Company................................................. 509,250
14,600 Merck & Co., Inc.................................................... 1,170,738
9,600 Pfizer, Inc......................................................... 1,332,000
11,200 Schering Plough Corporation......................................... 619,500
---------------
5,381,388
---------------
Health Care-Diversified (1.9%)
10,600 Abbot Laboratories.................................................. 496,213
10,000 Johnson & Johnson................................................... 936,875
<CAPTION>
MARKET
SHARES VALUE(A)
- ------------- ---------------
<C> <S> <C>
HEALTH CARE--CONTINUED
8,800 Warner-Lambert Company.............................................. $ 582,450
---------------
2,015,538
---------------
Hospital Management (.7%)
59,700 Health Management Associates, Inc. (b).............................. 727,594
---------------
Medical Products/Supplies (2.7%)
29,000 Guidant Corporation................................................. 1,754,500
43,500 Sybron International Corporation (b)................................ 1,087,500
---------------
2,842,000
---------------
TECHNOLOGY (17.4%)
10,600 America Online, Inc................................................. 1,547,600
13,800 BMC Software, Inc................................................... 511,463
13,700 Cadence Design Systems, Inc......................................... 352,775
17,800 Cisco Systems, Inc. (b)............................................. 1,950,213
19,300 Compaq Computer Corporation......................................... 611,569
19,800 Dell Computer Corporation (b)....................................... 809,325
14,400 EMC Corporation (b)................................................. 1,839,600
25,700 Galileo International, Inc.......................................... 1,243,238
15,000 Intel............................................................... 1,786,875
11,500 Lucent Technologies, Inc............................................ 1,239,125
31,800 Microsoft Corporation (b)........................................... 2,850,075
5,600 Nokia Oyj (c)....................................................... 872,200
46,100 Nova Corporation (b)................................................ 1,210,125
13,850 Paychex, Inc........................................................ 657,009
6,000 Sun Microsystems, Inc. (b).......................................... 749,625
---------------
18,230,817
---------------
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ------------- ---------------
UTILITIES (.6%)
<C> <S> <C>
Electric Companies (.6%)
15,600 AES Corporation (b)................................................. $ 581,100
---------------
Total common stock
(cost: $44,176,499)................................................................ 67,544,046
---------------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
- ------------ ---------------
<C> <S> <C>
PREFERRED STOCK (1.5%)
FINANCIAL (1.5%)
Real Estate Investment Trust (1.5%)
14,000 Duke Realty Investments, Inc. - 7.99%............................... $ 637,875
5,000 Nationwide Health Property, Inc. - 7.68%............................ 472,188
10,000 Prologis Trust - 8.54%.............................................. 440,000
---------------
1,550,063
---------------
Total preferred stock
(cost: $1,693,675)................................................................ 1,550,063
---------------
<CAPTION>
PRINCIPAL
- ------------
<C> <S> <C>
LONG-TERM DEBT SECURITIES (31.0%)
GOVERNMENT OBLIGATIONS (16.4%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (16.4%)
U.S. Treasury (9.0%)
$ 3,000,000 (e)........................................... 4.875% 05/15/06 2,044,167
300,000 .............................................. 5.500% 08/15/28 286,875
500,000 .............................................. 5.625% 02/15/06 507,032
1,100,000 .............................................. 5.750% 11/30/02 1,120,282
750,000 .............................................. 5.875% 11/15/05 770,860
1,900,000 .............................................. 6.000% 02/15/26 1,933,250
800,000 .............................................. 4.750% 11/15/08 770,500
2,050,000 .............................................. 5.375% 07/31/00 2,060,250
---------------
9,493,216
---------------
Federal National Mortgage Association (FNMA) (4.2%)
380,000 .............................................. 6.000% 03/15/14 376,805
303,854 .............................................. 6.000% 02/01/29 295,383
500,000 .............................................. 6.250% 12/25/13 501,390
460,000 .............................................. 6.500% 03/15/14 463,900
494,097 .............................................. 6.500% 10/01/28 490,070
995,888 .............................................. 6.500% 12/01/28 991,446
299,107 .............................................. 6.500% 02/01/29 296,670
498,949 .............................................. 6.500% 02/01/29 496,723
460,000 (f)........................................... 7.000% 04/15/14 469,775
---------------
4,382,162
---------------
</TABLE>
See accompanying notes to investments in securities.
10
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<C> <S> <C>
GOVERNMENT OBLIGATIONS --CONTINUED
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- ------------ ---------------
<C> <S> <C>
Government National Mortgage Association (GNMA) (2.9%)
$ 468,918 .............................................. 7.000% 06/15/28 $ 476,139
749,063 .............................................. 7.000% 02/15/29 760,501
248,415 .............................................. 7.500% 09/15/28 255,714
282,050 .............................................. 7.500% 10/15/28 290,336
274,838 .............................................. 7.500% 10/15/28 282,913
970,398 .............................................. 7.000% 07/15/28 985,343
---------------
3,050,946
STATE AND LOCAL GOVERNMENT OBLIGATIONS (.3%)
339,000 Wyoming Community Development................. 6.850% 06/01/10 336,352
---------------
Total goverment obligations (cost: $17,712,518)..................... 17,262,676
---------------
CORPORATE OBLIGATIONS (14.6%)
BASIC MATERIALS (1.1%)
Chemicals (.6%)
556,849 Novartis AG-144A Issue (d).................... 7.240% 01/02/16 577,903
---------------
Paper and Forest (.5%)
500,000 International Paper Company................... 6.875% 07/10/00 506,307
---------------
COMMUNICATION SERVICES (1.4%)
Telephone (1.4%)
1,000,000 AT&T Corporation.............................. 6.500% 03/15/29 979,306
500,000 GTE Corporation............................... 6.940% 04/15/28 510,851
---------------
1,490,157
CONSUMER CYCLICAL (1.1%)
Auto (.7%)
750,000 Meritor Automotive, Inc....................... 6.800% 02/15/09 744,599
---------------
Textiles (.4%)
Reliance Industries Limited-144A Issue
500,000 (c)(d)....................................... 10.250% 01/15/97 381,403
---------------
CONSUMER STAPLES (1.2%)
Entertainment (.7%)
750,000 Time Warner, Inc. - 144A Issue (d)............ 6.100% 12/30/01 753,316
---------------
Household Products (.5%)
500,000 Premark International, Inc.................... 10.500% 09/15/00 532,101
---------------
FINANCIAL (7.8%)
Asset Backed (.7%)
755,353 Prudential Home Mortgage Securities........... 6.500% 10/25/23 752,994
---------------
Banks (.6%)
700,000 St. George Bank-144A Issue (c)(d)............. 8.485% 12/31/49 648,278
---------------
</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>
Collateralized Mortgage Obligations/Mortgage Revenue Bonds (2.3%)
$ 481,034 Bear Stearns Mortgage Securities, Inc......... 8.000% 11/25/29 $ 492,131
1,250,000 PNC Bank Corporation.......................... 6.728% 01/25/07 1,287,979
616,452 Tyron Mortgage Funding........................ 7.750% 12/20/09 628,563
---------------
2,408,673
Commercial Finance (.7%)
750,000 General Electric Capital Corporation.......... 6.290% 12/15/07 759,925
---------------
Finance-Diversified (.2%)
700,000 Guangdong Enterprises-144A Issue (c)(d)....... 8.875% 05/22/07 238,000
---------------
Insurance (.5%)
500,000 Unum Corporation.............................. 6.750% 12/15/28 483,161
---------------
Investment Bankers/Brokers (.7%)
750,000 Morgan Stanley Dean Witter.................... 6.875% 03/01/07 774,754
---------------
Real Estate Investment Trust (1.3%)
900,000 Bradley Operating LP.......................... 7.000% 11/15/04 863,182
500,000 Security Capital Pacific Trust................ 7.500% 02/15/14 478,454
---------------
1,341,636
Savings and Loans (.8%)
800,000 Bank United Corporation....................... 8.875% 05/01/07 820,534
---------------
HEALTH CARE (.5%)
Medical Products/Supplies (.5%)
500,000 Tyco International Group...................... 6.875% 01/15/29 488,055
---------------
UTILITIES (1.5%)
Electric Companies (.7%)
750,000 Georgia Power Company......................... 5.500% 12/01/05 727,393
---------------
Natural Gas (.8%)
800,000 Enron Corporation............................. 6.725% 11/15/37 814,040
---------------
Total corporate obligations (cost: $15,809,688)..................... 15,243,229
---------------
Total long-term debt securities (cost: $33,522,206)................. 32,505,905
---------------
</TABLE>
See accompanying notes to investments in securities.
12
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
- ------------ ---------------
SHORT-TERM SECURITIES (3.3%)
<C> <S> <C>
$ 352,911 Federated Prime Obligation Fund, current rate 4.860%................ $ 352,911
2,655,000 U.S. Treasury Bill............................ 4.324% 04/15/99 2,649,993
500,000 U.S. Treasury Bill............................ 4.572% 05/20/99 496,971
---------------
Total short-term securities (cost: $3,500,431)...................... 3,499,875
---------------
Total investments in securities (cost: $82,892,811) (g)............. $ 105,099,889
---------------
---------------
</TABLE>
Notes to Investments in Securities
- -----------------------------------
(a) Securities are valued by procedures described in note 2 to the financial
statements.
(b) Presently non-income producing.
(c) The Fund held 2.0% of the net assets in foreign securities as of March 31,
1999.
(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, 1999, which includes acquisition
date and cost, is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY: DATE COST
- ----------------------------------------------------------------------- ---------- ---------------
<S> <C> <C>
Novartus AG 144A Issue................................................. Various $ 556,849
St George Bank 144A Issue.............................................. 06/12/97 700,000
Guangdong Enterprises 144A Issue....................................... 08/06/97 722,526
Reliance Industries Limited 144A Issue................................. 10/15/97 539,040
Time Warner, Inc. 144A Issue........................................... 11/20/98 756,033
---------------
$ 3,274,448
---------------
---------------
</TABLE>
(e) For zero coupon issues, the interest rate disclosed is the effective yield
at the date of acquisition.
(f) At March 31, 1999 the total cost of investments issued on a when-issued or
forward commitment basis is $471,673.
(g) At March 31, 1999 the cost of securities for federal income tax purposes was
$83,337,616. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation...................................................... $ 25,532,260
Gross unrealized depreciation...................................................... (3,769,987)
---------------
Net unrealized appreciation........................................................ $ 21,762,273
---------------
---------------
</TABLE>
13
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market value - see accompanying schedule for detailed
listing (identified cost: $82,892,811)................................................... $ 105,099,889
Cash in bank on demand deposit............................................................ 10,631
Receivable for Fund shares sold........................................................... 99,670
Receivable for investment securities sold................................................. 403,226
Accrued interest receivable............................................................... 384,467
Dividends receivable...................................................................... 94,107
Other receivable.......................................................................... 6,812
-------------
Total assets.......................................................................... 106,098,802
-------------
LIABILITIES
Payable for investment securities purchased............................................... 840,104
Payable for Fund shares redeemed.......................................................... 104,987
Payable to Adviser........................................................................ 117,236
Other payables............................................................................ 474
-------------
Total liabilities..................................................................... 1,062,801
-------------
Net assets applicable to outstanding capital stock........................................ $ 105,036,001
-------------
-------------
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)..................................................................... $ 56,583
Additional paid-in capital.............................................................. 79,650,980
Undistributed net investment income..................................................... 689
Accumulated net realized gains from investments......................................... 3,120,671
Unrealized appreciation on investments.................................................. 22,207,078
-------------
Total - representing net assets applicable to outstanding capital stock............... $ 105,036,001
-------------
-------------
Net assets applicable to outstanding Class A shares....................................... $ 75,933,397
-------------
-------------
Net assets applicable to outstanding Class B shares....................................... $ 23,515,829
-------------
-------------
Net assets applicable to outstanding Class C shares....................................... $ 5,586,775
-------------
-------------
Shares outstanding and net asset value per share:
Class A - Shares outstanding 4,215,137.................................................. $ 18.01
-------------
-------------
Class B - Shares outstanding 1,311,914.................................................. $ 17.92
-------------
-------------
Class C - Shares outstanding 313,517.................................................... $ 17.82
-------------
-------------
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1999
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest................................................................................. $ 967,074
Dividends................................................................................ 436,995
------------
Total investment income................................................................ 1,404,069
------------
Expenses
Investment advisory fee.................................................................. 295,148
Rule 12b-1 fees - Class A................................................................ 115,285
Rule 12b-1 fees - Class B................................................................ 103,036
Rule 12b-1 fees - Class C................................................................ 23,622
Administrative services fee.............................................................. 26,200
Custodian fees........................................................................... 6,069
Auditing and accounting services......................................................... 17,221
Legal fees............................................................................... 4,750
Registration fees........................................................................ 24,030
Printing and shareholder reports......................................................... 19,269
Insurance................................................................................ 1,888
Other.................................................................................... 4,677
------------
Total expenses......................................................................... 641,195
------------
Investment income - net................................................................ 762,874
------------
Realized and unrealized gains on investments:
Net realized gains on investments (note 3)............................................... 3,448,231
Net change in unrealized appreciation or depreciation on investments..................... 10,060,627
------------
Net gains on investments............................................................... 13,508,858
------------
Net increase in net assets resulting from operations....................................... $ 14,271,732
------------
------------
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX-MONTH PERIOD ENDED MARCH 31, 1999 AND YEAR ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------- ------------
<S> <C> <C>
Operations:
Investment income - net.................................................. $ 762,874 $ 1,583,461
Net realized gain on investments......................................... 3,448,231 5,349,468
Net change in unrealized appreciation or depreciation on investments..... 10,060,627 1,790,594
------------- ------------
Increase in net assets resulting from operations..................... 14,271,732 8,723,523
------------- ------------
Distributions to shareholders from:
Investment income - net:
Class A................................................................ (635,334) (1,322,444)
Class B................................................................ (119,047) (211,503)
Class C................................................................ (28,619) (43,052)
Net realized gains on investments:
Class A................................................................ (3,760,571) (5,089,394)
Class B................................................................ (1,034,138) (1,075,477)
Class C................................................................ (249,664) (191,928)
------------- ------------
Total distributions.................................................. (5,827,373) (7,933,798)
------------- ------------
Capital share transactions (notes 4 and 5):
Proceeds from sales:
Class A................................................................ 3,992,294 14,488,116
Class B................................................................ 4,639,828 7,106,708
Class C................................................................ 1,747,878 3,764,605
Proceeds from issuance of shares as a result of reinvested dividends:
Class A................................................................ 4,285,850 6,228,838
Class B................................................................ 1,140,397 1,212,158
Class C................................................................ 271,344 231,844
Payments for redemption of shares:
Class A................................................................ (6,828,017) (16,214,526)
Class B................................................................ (1,742,713) (3,190,571)
Class C................................................................ (885,101) (1,843,302)
------------- ------------
Increase in net assets from capital share transactions............... 6,621,760 11,783,870
------------- ------------
Total increase in net assets......................................... 15,066,119 12,573,595
Net assets at beginning of period.......................................... 89,969,882 77,396,287
------------- ------------
Net assets at end of period (including undistributed net investment income
of $689 and $20,815, respectively)........................................ $ 105,036,001 $ 89,969,882
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999
(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 objective is to seek the
most favorable total return (from 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
Rule 12b-1 fees charged differs between Class A, Class B and Class C shares.
Income, expenses (other than Rule 12b-1 fees) and realized and unrealized gains
or losses are allocated to each class of shares based upon its relative net
assets.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies followed by the Fund are summarized as
follows:
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts in the financial statements. Actual
results could differ from those estimates.
INVESTMENTS IN SECURITIES
The Fund's net asset value is generally calculated as of the close of normal
trading on the New York Stock Exchange (typically 3:00 p.m. Central Time).
Investments in securities traded on a national exchange are valued at the last
sales price on that exchange prior to the time when assets are valued;
securities traded in the over-the-counter market and listed securities for which
no sale was reported on that date are valued on the basis of the last current
bid price, by an independent pricing service or at a price deemed best to
reflect fair value as quoted by dealers who make markets in these securities.
When market quotations are not readily available, securities are valued at fair
value as determined in good faith 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.
SECURITIES PURCHASED ON A WHEN-ISSUED BASIS
Delivery and payment for securities which have been purchased by the Fund on
a forward commitment or when-issued basis can take place a month or more after
the transaction date. During this period, such securities are subject to market
fluctuations. As of March 31, 1999, the Fund had entered into outstanding
when-issued or forward commitments of $471,673.
17
<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 (loss) 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 (loss) 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 from October 1, 1998 to March 31, 1999, purchases of
securities and proceeds from sales, other than temporary investments in
short-term securities aggregated $60,416,677 and $59,846,157, respectively.
(4) EXPENSES AND RELATED PARTY TRANSACTIONS
The Fund has an investment advisory agreement with Advantus Capital
Management, Inc. (Advantus Capital or Adviser), a wholly owned subsidiary of
Minnesota Life Insurance Company (Minnesota Life), formerly The Minnesota Mutual
Life Insurance Company. 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 (First Data Investor Services Group).
Prior to October 26, 1998, the Fund's transfer agent was Minnesota Life. 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
expenses pursuant to Rule 12b-1 under the Investment Company Act of 1940 (as
amended). The Fund pays fees to Ascend Financial Services, Inc. (Ascend), the
underwriter of the Fund and wholly-owned subsidiary of Advantus Capital, to be
used to pay certain expenses incurred in the distribution, promotion and
servicing of the Fund's shares. The Class A Plan provides for a service fee up
to .25 percent of average daily net assets of Class A shares. Prior to February
1, 1999, the Class A Plan provided for a distribution fee up to .30 percent of
average daily net assets of Class A shares. The Class B and Class C Plans
provide for a fee up to 1.00 percent of average daily net assets of Class B and
Class C shares, respectively. The Class B and Class C 1.00 percent fee is
comprised of a .75 percent distribution fee and a .25 percent service fee.
The Fund also bears certain other operating expenses including outside
directors' fees, custodian fees, registration fees, printing and shareholder
reporting fees, legal, auditing and accounting services fees and other
miscellaneous expenses.
18
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(4) EXPENSES AND RELATED PARTY TRANSACTIONS - (CONTINUED)
Effective October 26, 1998, the Fund entered into a new shareholder and
administrative services agreement with Minnesota Life. Under this agreement, the
Fund pays an administrative services fee equal to $5,700 per month to Minnesota
Life for accounting, auditing, legal and other administrative services which
Minnesota Life provides. Prior to February 1, 1999, the administrative services
fee was $3,700 per month. In addition, for shareholder services performed by
Minnesota Life, the Adviser will pay Minnesota Life an annual account servicing
fee as agreed by the Adviser and Minnesota Life.
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 $111,091.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $4,750.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period from October 1, 1998 to March 31, 1999
and the year ended September 30, 1998 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
-------------------- -------------------- --------------------
1999 1998 1999 1998 1999 1998
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Sold...................................... 228,378 875,321 266,156 426,818 100,387 225,999
Issued for reinvested distributions....... 248,124 392,294 66,652 77,708 15,929 14,662
Redeemed.................................. (391,255) (974,480) (101,302) (192,699) (51,343) (110,505)
--------- --------- --------- --------- --------- ---------
85,247 (293,135) 231,506 311,827 64,973 130,156
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
</TABLE>
(6) RESTRICTED SECURITIES
At March 31, 1999, 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, 1999 was
$2,598,900 which represents 2.5% of net assets.
(7) YEAR 2000
In 1995, Minnesota Life began addressing computer systems requirements and
applications to be Year 2000 ready. Based on a current study, Minnesota Life
plans to spend approximately $14 million through 1999 to modify its computer
information systems, enabling proper processing of transactions relating to the
year 2000 and beyond. The Fund will not be charged for these expenses.
19
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
(8) FINANCIAL HIGHLIGHTS
Per share data for a share of capital stock and selected information for
each period are as follows:
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, NOVEMBER 1,
1998 TO YEAR ENDED SEPTEMBER 30, 1993 TO YEAR ENDED
MARCH 31, -------------------------------------------- SEPTEMBER 30, OCTOBER 31,
1999 1998 1997 1996 1995(A) 1994(B) 1993
------------ -------- -------- -------- -------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 16.50 $ 16.40 $ 15.53 $ 14.79 $ 13.28 $ 13.92 $ 13.63
------------ -------- -------- -------- -------- -------------- ------------
Income from investment operations:
Net investment income....... .15 .33 .39 .34 .45 .28 .29
Net gains (losses) on
securities (both realized
and unrealized)........... 2.43 1.40 2.02 1.59 1.88 (.55) .86
------------ -------- -------- -------- -------- -------------- ------------
Total from investment
operations.............. 2.58 1.73 2.41 1.93 2.33 (.27) 1.15
------------ -------- -------- -------- -------- -------------- ------------
Less distributions:
Dividends from net
investment income......... (.15) (.33) (.39) (.34) (.44) (.28) (.31)
Distributions from capital
gains..................... (.92) (1.30) (1.15) (.85) (.38) (.09) (.55)
------------ -------- -------- -------- -------- -------------- ------------
Total distributions....... (1.07) (1.63) (1.54) (1.19) (.82) (.37) (.86)
------------ -------- -------- -------- -------- -------------- ------------
Net asset value, end of
period...................... $ 18.01 $ 16.50 $ 16.40 $ 15.53 $ 14.79 $ 13.28 $ 13.92
------------ -------- -------- -------- -------- -------------- ------------
------------ -------- -------- -------- -------- -------------- ------------
Total return (d).............. 15.89% 11.31% 16.66% 13.72% 18.38% (1.92)% 8.68%
Net assets, end of period (in
thousands).................. $75,933 $ 68,157 $ 62,914 $ 54,848 $ 55,624 $55,286 $57,048
Ratio of expenses to average
daily net assets............ 1.13%(e) 1.19% 1.25% 1.26% 1.33% 1.27%(e) 1.22%
Ratio of net investment income
to average daily net
assets...................... 1.72%(e) 1.98% 2.53% 2.28% 3.22% 2.24%(e) 2.16%
Portfolio turnover rate
(excluding short-term
securities)................. 62.3% 139.8% 141.4% 140.5% 125.5% 124.5% 92.1%
</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) Commencement of operations.
(d) Total return figures are based on a share outstanding throughout the period
and assume reinvestment of distributions at net asset value. Total return
figures do not reflect the impact of front-end or contingent deferred sales
charges. For periods less than one year, total return presented has not
been annualized.
(e) Adjusted to an annual basis.
(f) Ratios presented for the period from August 19, 1994 to September 30, 1994
are not annualized as they are not indicative of anticipated results.
20
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
CLASS B
-----------------------------------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, AUGUST 19,
1998 TO YEAR ENDED SEPTEMBER 30, 1994(C) TO
MARCH 31, ----------------------------------------------- SEPTEMBER 30,
1999 1998 1997 1996 1995(A) 1994
------------ -------- -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 16.43 $ 16.34 $ 15.47 $ 14.74 $ 13.27 $ 13.36
------------ -------- -------- -------- -------- -------
Income from investment operations:
Net investment income....... .09 .22 .30 .27 .39 .03
Net gains (losses) on
securities (both realized
and unrealized)........... 2.41 1.39 2.02 1.56 1.84 (.03)
------------ -------- -------- -------- -------- -------
Total from investment
operations.............. 2.50 1.61 2.32 1.83 2.23 -
------------ -------- -------- -------- -------- -------
Less distributions:
Dividends from net
investment income......... (.09) (.22) (.30) (.25) (.38) (.09)
Distributions from capital
gains..................... (.92) (1.30) (1.15) (.85) (.38) -
------------ -------- -------- -------- -------- -------
Total distributions....... (1.01) (1.52) (1.45) (1.10) (.76) (.09)
------------ -------- -------- -------- -------- -------
Net asset value, end of
period...................... $ 17.92 $ 16.43 $ 16.34 $ 15.47 $ 14.74 $ 13.27
------------ -------- -------- -------- -------- -------
------------ -------- -------- -------- -------- -------
Total return (d).............. 15.55% 10.55% 16.02% 13.07% 17.62% (.04)%
Net assets, end of period (in
thousands).................. $23,516 $ 17,751 $ 12,556 $ 7,860 $ 3,131 $ 140
Ratio of expenses to average
daily net assets............ 1.81%(e) 1.84% 1.90% 1.90% 1.99% .23%(f)
Ratio of net investment income
to average daily net
assets...................... 1.07%(e) 1.32% 1.89% 1.67% 2.30% .37%(f)
Portfolio turnover rate
(excluding short-term
securities)................. 62.3% 139.8% 141.4% 140.5% 125.5% 124.5%
<CAPTION>
CLASS C
----------------------------------------------------------------------
PERIOD FROM PERIOD FROM
OCTOBER 1, MARCH 1,
1998 TO YEAR ENDED SEPTEMBER 30, 1995(C) TO
MARCH 31, ---------------------------------- SEPTEMBER 30,
1999 1998 1997 1996 1995
------------ -------- -------- -------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period...................... $ 16.34 $ 16.27 $ 15.43 $ 14.74 $ 13.36
------------ -------- -------- -------- -------
Income from investment operati
Net investment income....... .09 .24 .28 .28 .24
Net gains (losses) on
securities (both realized
and unrealized)........... 2.41 1.36 2.01 1.52 1.43
------------ -------- -------- -------- -------
Total from investment
operations.............. 2.50 1.60 2.29 1.80 1.67
------------ -------- -------- -------- -------
Less distributions:
Dividends from net
investment income......... (.10) (.23) (.30) (.26) (.29)
Distributions from capital
gains..................... (.92) (1.30) (1.15) (.85) -
------------ -------- -------- -------- -------
Total distributions....... (1.02) (1.53) (1.45) (1.11) (.29)
------------ -------- -------- -------- -------
Net asset value, end of
period...................... $ 17.82 $ 16.34 $ 16.27 $ 15.43 $ 14.74
------------ -------- -------- -------- -------
------------ -------- -------- -------- -------
Total return (d).............. 15.52% 10.57% 15.87% 12.87% 12.63%
Net assets, end of period (in
thousands).................. $ 5,587 $ 4,062 $ 1,926 $ 1,351 $ 199
Ratio of expenses to average
daily net assets............ 1.81%(e) 1.83% 1.90% 1.90% 2.00%(e)
Ratio of net investment income
to average daily net
assets...................... 1.07%(e) 1.31% 1.88% 1.73% 2.17%(e)
Portfolio turnover rate
(excluding short-term
securities)................. 62.3% 139.8% 141.4% 140.5% 125.5%
</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 share class) at any time as your needs change. Exchanges are at the
then current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make twelve exchanges each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive a check at
specified intervals from your fund account--subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DIVIDEND DEPOSITS: At your request we will deposit your dividends or
systematic withdrawals directly into your checking or savings account instead of
sending you a check.
TELEPHONE EXCHANGE: You may move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same share
class) just by calling our toll-free number. The Telephone Exchange privilege
will automatically be established unless otherwise indicated on the Account
Application. Telephone Exchange may be changed (added/deleted) at any time by
submitting a request in writing.
SYSTEMATIC EXCHANGE: You may move a set amount of money monthly or quarterly
from one Advantus Fund to another Advantus Fund (with identical registrations
within the same share class) to diversify your investment portfolio and take
advantage of dollar-cost averaging.
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Life insurance premiums from your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge, if any.
SPECIAL PURCHASE PLANS: Special purchase plans enable you to open an Advantus
Fund account for as little as $25 and lower your average share cost through
"dollar-cost averaging." (Dollar-cost averaging does not assure a profit, nor
does it prevent loss in declining markets.) The Automatic Investment Plan allows
you to invest automatically monthly, semi-monthly or quarterly from your
checking or savings account.
IRAS, OTHER QUALIFIED PLAN: You can use the Advantus Family of Funds for your
Traditional or Roth Individual Retirement Account or other qualified plan
including: SEP IRA's, SIMPLE IRA's, Profit Sharing, 401(k) Money Purchase or
Defined Benefit plans.
GROUP INVESTMENT PLAN: This plan provides employers and employees with a
convenient means for investing in the funds through payroll deduction.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the Account. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Redemption privilege will automatically be established
unless otherwise indicated on the Account
22
<PAGE>
Application. Telephone Redemption may be changed (added/deleted) at any time by
submitting a request in writing. To have the redemption automatically deposited
into your checking account, please send a voided check from your bank. Depending
on the performance of the underlying investment options, the value may be worth
more or less than the original amount invested upon redemption. Some limitations
apply, please refer to the prospectus for details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate and quarterly statements to help you track all of your Advantus Fund
investments and annual tax statements. Semi-annual and annual reports will
provide you with portfolio information, fund performance data and the current
investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005.
Advantus Account Representatives are available Monday through Friday from 8 a.m.
to 4:45 p.m. Central Time. Our voice response system is available 24 hours,
seven days a week. This system allows you to access current net asset values,
account balances and recent account activity.
HOW TO INVEST
You can invest in one or more of the eleven Advantus Funds through a local
Registered Representative of Ascend Financial Services, Inc., distributor of the
Funds. Contact your representative for information and a prospectus for any of
the Advantus Funds you are interested in. To find a Registered Representative
near you, call the toll-free service line (1-800-665-6005).
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Systematic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects and
reviews the Fund's investments and provides executive and other personnel for
the Fund's management. (For the Advantus International Balanced Fund, Inc., the
sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)
Advantus Capital Management, Inc. manages thirteen mutual funds containing $3.2
billion in assets in addition to $10.8 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 13 years of
investment experience.
ADVANTUS FAMILY OF FUNDS
Advantus Bond Fund
Advantus Horizon Fund
Advantus Spectrum Fund
Advantus Enterprise Fund
Advantus Cornerstone Fund
Advantus Money Market Fund
Advantus Mortgage Securities Fund
Advantus International Balanced Fund
Advantus Venture Fund
Advantus Index 500 Fund
Advantus Real Estate Securities Fund
23
<PAGE>
THIS REPORT HAS BEEN PREPARED FOR SHAREHOLDERS AND MAY BE DISTRIBUTED
TO OTHERS ONLY IF PRECEDED OR ACCOMPANIED BY A CURRENT PROSPECTUS.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[ADVANTUS -TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-888-AFS-1838
(1-888-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES, INC.
400 ROBERT STREET NORTH [LOGO]
ST. PAUL, MN 55101-2098
ADDRESS SERVICE REQUESTED
F48638 Rev. 5-1999
