<PAGE>
SPECTRUM
ADVANTUS SPECTRUM FUND, INC.
SEMI-ANNUAL REPORT TO SHAREHOLDERS DATED MARCH 31, 2000
[LOGO]
ASSET
ALLOCATION
<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 Shareholder:
Americans are enjoying the longest period of economic expansion in U.S. history.
This period of growth, which began in March of 1992, recorded its eighth year of
uninterrupted growth in March. To date, the Federal Reserve's actions to slow
the nation's growth engine have not dramatically impacted the upward trend.
Despite the run-up in interest rates over the past year, housing starts and auto
sales, indicators of a robust economy, remain strong.
Around the globe we are seeing economic growth accelerate, albeit at a modest
pace. Asia is rapidly recovering from the economic debacle of the late 90s. The
Bank of Japan has kept interest rates near zero to further assist that country's
recovery. In Europe, the Central Bank raised rates to support a weak euro and
guard against inflation. Latin American economies, such as Brazil, are showing
signs of increasing strength (e.g., lower inflation, job creation). No country
comes close to the sustained economic vigor of the U.S., but many of the world's
economies are growing.
Volatility in the stock market was frequent and dramatic throughout the six-
months, with the wildest of the ride coming in early April, shortly after this
reporting period ended. The first calendar quarter of the new millennium was a
time of contrasts. For the first two months, the broad market was slightly down,
with the growth sector of technology rising and the value sectors of the market
falling. March was a reversal, with a strong rally in traditional value stocks
and a pullback in the technology arena, adding to the market tumult. Technology,
however, continues to drive the increased spending in businesses. As tech
spending increases, so does productivity.
Interest rates also showed a mixed picture. The Federal Reserve raised the Fed
Funds rate five times between June 1999 and March 2000. Each time only
.25 percent, a cumulative increase of 1.25 percent over this 10-month period.
However, longer maturity Treasury bond prices rose and their yields declined as
the U.S. Treasury used some of the budget surplus to begin buying back Treasury
bonds. Meanwhile, corporate bond yields increased.
In the pages that follow, your Fund's portfolio manager will give you his
insight on the Fund's performance for this reporting period. Also, we are
pleased to announce that you can now access your Advantus Funds data online
through the Advantus web site: www.advantusfunds.com. To learn how you can
access your Advantus Fund information through our internet site, call Advantus
Shareholder Services at 1-800-665-6005.
We value your business and want to make doing business with us as easy for you
as possible. Thank you for investing with Advantus.
Sincerely,
/s/ William N. Westhoff
William N. Westhoff, President
Advantus Funds
<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 managers
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, 2000 for each class of shares offered was as follows:
<TABLE>
<S> <C>
Class A.......................... 20.51 percent*
Class B.......................... 19.63 percent*
Class C.......................... 19.58 percent*
</TABLE>
The Fund's benchmarks, the Russell 1000 Growth Index** and the Lehman Brothers
Aggregate Bond Index+ returned 34.06 percent and 2.08 percent, respectively, for
the same period. The Fund's Blended Index++ returned 20.57 percent for the same
period.
PERFORMANCE ANALYSIS
The strong economy combined with accelerating corporate earnings growth and
benign inflation proved to be the right ingredients for a continued rally in the
stock market. Stocks drove the performance over the past six months as the fixed
income markets posted single digit returns.
The Technology sector again led the market higher. The new information based
economy requires significant capital expenditures to build out the
infrastructure for the digital world. The Spectrum Fund is focused on
identifying the leading companies in the growth industries that supply the tools
for corporations to compete in the new economy. This focus paid off over the
last six months as the Technology sector of the Fund gained over 70 percent for
the period. Leading the way was our largest holding Cisco Systems Inc., a
company at the very heart of the internet infrastructure build out. We
identified the fiber optic telecommunications as a very fast growing and dynamic
market and took positions in JDS Uniphase Corporation and Nortel Networks
Corporation - both significantly contributed to the Fund's performance. Wireless
communications is another growth industry. The Spectrum Fund has meaningful
positions in two of the leaders in this area. Nokia Oyj, whose strength is in
the wireless handsets, and Telefonaktiebolaget LM Ericsson, whose strength is in
the wireless infrastructure, are both positioned to benefit from the upgrade of
the wireless networks to handle data in addition to the current voice platform.
Strong performance was also shown in various other sectors. The Consumer
Cyclicals sector performed well for the period as the strong economy led to high
consumer confidence and good real wage growth. Financial and Health Care were
weaker sectors for the stock market and the Fund. Climbing interest rates and a
tightening Federal Reserve policy hurt the Financial sector, while the Health
sector struggled under sluggish earnings growth and political issues.
2
<PAGE>
Corporate bonds have been negatively impacted by a multitude of factors: the
inversion of the yield curve, increased event risk through potential mergers and
acquisitions, heavy issuance of new corporate bonds, higher default rates, a
volatile stock market and the Federal Reserve tightening monetary policy.
Meanwhile, U.S. Treasuries are rallying because there will be less supply in the
years ahead and the government has instituted a buy back program to retire some
of their bonds early.
The Spectrum Fund successfully navigated its way through the turbulent markets
over the past six months. Going into the period (on October 1, 1999), stocks
were 64 percent of the Fund, with bonds at 34 percent. During November, bonds
were sold following a short-term rally in bonds, with the money being invested
in stocks. Selective purchases combined with market appreciation led the stock
weighting to a peak of 73-74 percent of the portfolio during the period.
Selective profit taking during March helped the Fund's performance and brought
the March 31 mix to 70 percent stocks, 25 percent bonds and 5 percent cash.
OUTLOOK
We expect that healthy corporate earnings growth and benign inflation will
create a healthy fundamental backdrop for the financial markets. Over the short
term, it appears that the markets will have to deal with the negative impacts of
climbing interest rates as the Federal Reserve adopts its "tightening" posture
through the first half of 2000 while attempting to slow the economic growth. The
stock market will likely see significant levels of volatility as it sorts out
some of the excesses that have occurred in the last year's momentum market. For
bonds, we forsee that 2000 will likely be much better than 1999. Before the end
of the year the economy will likely have slowed to the point where the Federal
Reserve can ease up on its monetary policy. We will again start to hear the
phrase "soft landing" for the economy. When this happens, bonds are poised to
stage a nice recovery.
Over the long run, we feel that fundamental economic variables dominate the
movements of the financial markets. We believe the fundamentals are very good
and are likely to remain strong. As always, we will position the Fund to
significantly participate in strong 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. If these charges were reflected, performance would be reduced.
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 those stocks 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, 1990 through March 31, 2000. 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, 2000.
CLASS A
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C>
One year 13.88%
Five year 16.81%
Ten year 13.09%
</TABLE>
<TABLE>
<CAPTION>
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Russell 1000 Lehman Brothers
Fund CPI Blended Index Growth Aggregate Bond Index
3/31/1990 $10,000 $10,000 $10,000 $10,000 $10,000
10/31/1990 $9,393 $10,357 $11,969 $9,372 $10,586
10/31/1991 $11,836 $10,660 $15,194 $13,145 $12,259
10/31/1992 $13,146 $11,002 $16,846 $14,567 $13,465
10/31/1993 $14,288 $11,297 $18,330 $15,631 $15,064
9/30/1994 $14,014 $11,638 $18,713 $16,096 $14,522
9/30/1995 $16,590 $11,894 $22,910 $21,276 $16,565
9/30/1996 $18,865 $12,252 $26,086 $25,829 $17,376
9/30/1997 $22,007 $12,523 $32,205 $35,202 $19,064
9/30/1998 $24,497 $12,702 $36,147 $39,110 $21,259
9/30/1999 $28,435 $13,036 $43,351 $52,742 $21,180
3/31/2000 $34,212 $13,292 $52,268 $70,705 $21,621
</TABLE>
4
<PAGE>
CLASS B
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C>
One year 14.63%
Five year 17.24%
Since Inception (8/19/94) 16.37%
</TABLE>
<TABLE>
<CAPTION>
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Russell 1000 Lehman Brothers Aggregate
Fund CPI Blended Index Growth Bond Index
8/19/1994 $10,000 $10,000 $10,000 $10,000 $10,000
9/30/1994 $10,003 $10,067 $12,209 $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
9/30/1999 $19,524 $11,276 $23,650 $31,303 $14,373
3/31/2000 $23,437 $11,498 $28,515 $41,962 $14,672
</TABLE>
CLASS C
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURN:
<S> <C>
One year 19.58%
Five year 17.33%
Since Inception (3/1/95) 17.28%
</TABLE>
<TABLE>
<CAPTION>
(THOUSANDS)
<S> <C> <C> <C> <C> <C>
Russell 1000 Lehman Brothers Aggregate
Fund CPI Blended Index Growth Bond Index
3/1/1995 $10,000 $10,000 $10,000 $10,000 $10,000
9/30/1995 $11,263 $10,146 $12,243 $12,272 $10,818
9/30/1996 $12,713 $10,450 $13,940 $14,569 $11,323
9/30/1997 $14,731 $10,682 $17,210 $19,588 $12,404
9/30/1998 $16,288 $10,834 $19,317 $21,927 $13,757
9/30/1999 $18,778 $11,119 $23,166 $29,905 $13,708
3/31/2000 $22,501 $11,338 $27,931 $40,087 $13,994
</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. 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>
Cisco Systems, Inc. ..................... 77,600 $ 5,999,450 7.2%
Intel Corporation........................ 42,300 5,580,956 6.7%
Microsoft Corporation.................... 30,400 3,230,000 3.9%
General Electric Company................. 20,552 3,189,413 3.9%
Texas Instruments, Inc. ................. 16,300 2,608,000 3.1%
----------- ---------
$20,607,819 24.8%
=========== =========
</TABLE>
BOND PORTFOLIO CHARACTERISTICS - QUALITY BREAKDOWN
<TABLE>
<CAPTION>
% OF BOND
RATING PORTFOLIO
------ -----------
<S> <C>
U.S. Treasury................................................... 17.4%
U.S. Government Agencies........................................ 30.6%
AAA rated....................................................... 15.0%
AA rated........................................................ 4.7%
A rated......................................................... 11.7%
BBB rated....................................................... 17.3%
BB rated........................................................ 3.3%
---------
100.0%
=========
</TABLE>
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<S> <C>
Bonds 24.7%
Preferred Stocks 1.2%
Cash and Other Assets/Liabilities 5.2%
Common Stocks 68.9%
</TABLE>
6
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES
MARCH 31, 2000
(UNAUDITED)
(Percentages of each investment category relate to total net assets.)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE(A)
------ ------------
<C> <S> <C>
COMMON STOCK (68.9%)
CAPITAL GOODS (5.4%)
Electrical Equipment (2.7%)
20,552 General Electric Company......................... $ 3,189,413
------------
Manufacturing (1.8%)
4,100 The St. Joe Company.............................. 118,644
39,084 Tyco International, Ltd. (c).................... 1,949,314
------------
2,067,958
------------
Office Equipment (.9%)
10,500 Lexmark International Group, Inc. (b)........... 1,110,375
------------
COMMUNICATION SERVICES (2.8%)
Telecommunication (2.8%)
4,600 Exodus Commmunications, Inc. (b)................ 646,300
25,345 MCI Worldcom, Inc. (b).......................... 1,148,445
2,300 Nextlink Communications, Inc. (b)............... 284,481
7,000 Qualcomm, Inc. (b).............................. 1,045,187
900 Sprint Corporation............................... 56,700
2,300 Time Warner Telecom, Inc. (b)................... 182,850
------------
3,363,963
------------
CONSUMER CYCLICAL (6.2%)
Building Materials (.1%)
2,900 D.R. Horton, Inc................................. 37,881
900 Pulte Corporation................................ 18,787
3,400 Standard Pacific Corporation..................... 34,000
1,400 Toll Brothers, Inc. (b)......................... 28,000
------------
118,668
------------
Lodging-Hotel (.4%)
1,600 Marriott International, Inc...................... 50,400
3,700 Meristar Hospitality Corporation................. 64,519
11,500 Starwood Hotels & Resorts Worldwide, Inc......... 301,875
------------
416,794
------------
<CAPTION>
MARKET
SHARES VALUE(A)
----------------------------------------------------------------------
CONSUMER CYCLICAL--CONTINUED
<C> <S> <C>
Retail (4.0%)
20,700 Family Dollar Stores............................. $ 430,819
36,750 Home Depot, Inc.................................. 2,370,375
8,300 Kohl's Corporation (b).......................... 850,750
19,600 Wal-Mart Stores, Inc............................. 1,087,800
------------
4,739,744
------------
Service (1.7%)
5,100 Fairfield Communities, Inc. (b)................. 40,481
20,010 Omnicom Group, Inc............................... 1,869,684
1,900 TMP Worldwide, Inc. (b)......................... 147,725
------------
2,057,890
------------
CONSUMER STAPLES (3.4%)
Entertainment (1.3%)
15,900 Time Warner, Inc. 144A Issue (d)................ 1,590,000
------------
Retail (1.3%)
33,182 Safeway, Inc. (b)............................... 1,501,485
------------
Service (.8%)
19,600 Automatic Data Processing, Inc................... 945,700
------------
ENERGY (1.6%)
Oil (.2%)
5,600 Diamond Offshore Drilling........................ 223,650
------------
Oil & Gas (1.4%)
23,000 Baker Hughes, Inc................................ 695,750
7,200 Nabors Industries (b)........................... 279,450
8,400 Schlumberger, Ltd................................ 642,600
------------
1,617,800
------------
FINANCIAL (4.8%)
Finance-Diversified (.2%)
7,200 Simon Property Group, Inc........................ 172,800
7,400 Trammell Crow Company (b)....................... 81,862
------------
254,662
------------
</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>
Investment Bankers/Brokers (.4%)
8,000 Charles Schwab Corporation....................... $ 454,500
336 Reckson Service Industries (b).................. 14,784
------------
469,284
------------
Real Estate (.2%)
13,100 Catellus Development Corporation (b)............ 181,762
1,800 Newhall Land & Farming Company................... 50,850
------------
232,612
------------
Real Estate Investment Trust (4.0%)
11,400 AMB Property Corporation......................... 245,100
6,200 Apartment Investment & Management Company........ 236,762
7,500 Archstone Communities Trust...................... 149,531
9,900 Arden Realty Group, Inc.......................... 206,662
7,100 Avalon Bay Communities, Inc...................... 260,037
2,200 Cabot Industrial Trust........................... 40,975
3,200 Camden Property Trust............................ 86,600
4,600 CarrAmerica Realty Corporation................... 97,175
4,200 CBL & Associates Properties, Inc................. 85,837
5,900 Equity Office Properties Trust................... 148,237
5,500 Equity Residential Properties.................... 221,031
2,400 Essex Property Trust, Inc........................ 86,400
7,800 Franchise Finance Corporation of America......... 181,350
4,700 Highwoods Properties, Inc........................ 99,875
5,000 Home Properties of New York, Inc................. 133,750
2,900 Innkeepers USA Trust............................. 23,563
3,500 JDN Realty Corporation........................... 36,313
4,000 Kilroy Realty Corporation........................ 84,250
5,000 Kimco Realty Corporation......................... 187,500
<CAPTION>
MARKET
SHARES VALUE(A)
----------------------------------------------------------------------
FINANCIAL--CONTINUED
<C> <S> <C>
8,760 Koger Equity, Inc................................ $ 151,110
2,000 Lennar Corporation............................... 43,375
3,900 Liberty Property Trust........................... 93,356
1,600 LNR Property Corporation......................... 30,500
3,100 Macerich Company................................. 63,938
6,000 Mack-Cali Realty Corporation..................... 153,000
7,500 Pacific Gulf Properties, Inc..................... 147,188
4,900 Pan Pacific Retail Properties.................... 90,344
3,700 Parkway Properties............................... 108,919
7,500 Philips International Realty..................... 124,688
1,700 Post Properties, Inc............................. 68,531
5,000 Prologis Trust................................... 96,250
11,160 Public Storage, Inc.............................. 234,360
2,500 Reckson Associates Realty Corporation............ 46,875
1,183 Reckson Associates Realty Corporation Class B.... 24,252
1,600 SL Green Realty Corporation...................... 38,000
2,600 Spieker Properties, Inc.......................... 115,700
4,190 Starwood Financial, Inc.......................... 73,849
7,600 Summit Properties, Inc........................... 145,350
9,400 Trizec Hahn Corporation.......................... 141,000
1,500 Urban Shopping Centers, Inc...................... 43,594
2,800 Vornado Realty Trust............................. 93,800
------------
4,738,927
------------
HEALTH CARE (8.2%)
Biotechnology (1.8%)
11,300 Amgen, Inc....................................... 693,538
4,500 Biogen, Inc...................................... 314,438
6,200 Genetech (b).................................... 942,400
3,200 Immunex Corporation (b)......................... 203,000
------------
2,153,376
------------
Drugs (2.6%)
7,800 Bristol-Myers Squibb Company..................... 450,450
5,100 Eli Lilly & Company.............................. 321,300
14,100 Merck & Co., Inc................................. 875,963
</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>
24,000 Pfizer, Inc...................................... $ 877,500
14,500 Schering Plough Corporation...................... 532,875
------------
3,058,088
------------
Health Care-Diversified (1.5%)
17,800 Warner-Lambert Company........................... 1,735,500
------------
Medical Products/Supplies (2.3%)
22,800 Guidant Corporation (b)......................... 1,340,925
27,200 Medtronic, Inc................................... 1,399,100
------------
2,740,025
------------
TECHNOLOGY (35.8%)
28,300 America Online, Inc.............................. 1,903,175
15,700 Applied Materials, Inc. (b)..................... 1,479,725
3,500 BEA Systems, Inc. (b)........................... 256,813
77,600 Cisco Systems, Inc. (b)......................... 5,999,450
5,300 Comverse Technology (b)......................... 1,001,700
38,900 Dell Computer Corporation (b)................... 2,098,169
2,100 eBay, Inc. (b).................................. 369,600
1,300 Efficient Networks, Inc. (b).................... 202,475
19,800 EMC Corporation.................................. 2,475,000
16,500 Gateway, Inc. (b)............................... 874,500
5,100 Gemstar International Group, Ltd. (b)........... 438,600
42,300 Intel Corporation................................ 5,580,956
5,300 International Business Machines.................. 625,400
4,200 JDS Uniphase Corporation (b).................... 506,363
20,700 Lam Research Corporation (b).................... 932,794
16,200 Lucent Technologies, Inc......................... 984,150
4,100 McLeodusa, Inc. (b)............................. 347,731
30,400 Microsoft Corporation (b)....................... 3,230,000
4,700 Network Solutions, Inc. (b)..................... 722,405
<CAPTION>
MARKET
SHARES VALUE(A)
----------------------------------------------------------------------
TECHNOLOGY--CONTINUED
<C> <S> <C>
8,700 Nokia Oyj (c)................................... $ 1,890,075
5,400 Nortel Networks Corporation...................... 680,400
22,200 Oracle Corporation (b).......................... 1,732,988
8,100 PE Corp - PE Biosystems Group.................... 781,650
1,200 RF Micro Devices, Inc. (b)...................... 161,250
1,800 Siebel Systems, Inc. (b)........................ 214,988
27,300 Sun Microsystems, Inc. (b)...................... 2,558,095
8,000 Telefonaktiebolaget LM Ericsson (c)............. 750,500
16,300 Texas Instruments, Inc........................... 2,608,000
4,275 VERITAS Software Corporation (b)................ 560,025
1,700 Yahoo!, Inc. (b)................................ 291,338
------------
42,258,315
------------
UTILITIES (.7%)
Electric Companies (.7%)
11,000 AES Corporation.................................. 866,250
------------
Total common stock
(cost: $46,824,889)...................................... 81,450,479
------------
</TABLE>
<TABLE>
<C> <S> <C>
PREFERRED STOCK (1.2%)
FINANCIAL (1.2%)
Real Estate Investment Trust (1.2%)
14,000 Duke Realty Investments, Inc. - 7.99%............ 628,250
5,000 Nationwide Health Property, Inc. - 7.68%......... 332,656
10,000 Prologis Trust - 8.54%........................... 438,750
------------
1,399,656
------------
Total preferred stock
(cost: $1,693,675)........................................... 1,399,656
------------
</TABLE>
See accompanying notes to investments in securities.
9
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
--------- ------------
<C> <S> <C> <C> <C>
LONG-TERM DEBT SECURITIES (24.7%)
GOVERNMENT OBLIGATIONS (12.8%)
U.S. GOVERNMENT AND AGENCIES OBLIGATIONS (11.9%)
Federal National Mortgage Association (FNMA) (4.5%)
$ 352,062 ................................................. 6.000% 04/01/14 $ 331,233
486,992 ................................................. 6.000% 01/01/29 443,826
289,842 ................................................. 6.000% 02/01/29 264,151
750,000 ................................................. 6.500% 08/15/04 733,294
393,439 ................................................. 6.500% 07/01/13 378,945
469,063 ................................................. 6.500% 09/01/14 451,563
473,606 ................................................. 6.500% 10/01/28 445,284
732,019 ................................................. 6.500% 12/01/28 687,039
288,508 ................................................. 6.500% 02/01/29 271,254
469,415 ................................................. 6.500% 02/01/29 440,571
380,000 ................................................. 7.000% 03/01/15 372,875
493,455 ................................................. 7.000% 10/01/29 474,389
------------
5,294,424
------------
Government National Mortgage Association (GNMA) (3.1%)
496,875 ................................................. 6.500% 04/15/29 468,783
407,749 ................................................. 7.000% 06/15/28 395,060
887,298 ................................................. 7.000% 07/15/28 859,685
483,569 ................................................. 7.000% 02/15/29 468,458
499,535 ................................................. 7.000% 08/15/29 483,925
209,209 ................................................. 7.500% 09/15/28 207,470
212,593 ................................................. 7.500% 10/15/28 210,826
75,052 ................................................. 7.500% 10/15/28 74,428
492,624 ................................................. 7.500% 09/15/29 488,462
------------
3,657,097
------------
U.S. Treasury (4.3%)
500,000 Bond............................................. 6.706% 11/15/04 372,680
1,550,000 Bond............................................. 5.250% 02/15/29 1,388,704
1,100,000 Bond............................................. 6.000% 02/15/26 1,087,625
200,000 Bond............................................. 6.125% 08/15/29 204,000
650,000 Note............................................. 3.625% 07/15/02 682,544
600,000 Note............................................. 5.250% 08/15/03 579,375
800,000 Note............................................. 5.875% 11/15/04 785,500
------------
5,100,428
------------
</TABLE>
See accompanying notes to investments in securities.
10
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES - CONTINUED
<TABLE>
<CAPTION>
MARKET
PRINCIPAL VALUE(A)
--------- ------------
GOVERNMENT OBLIGATIONS--CONTINUED
<C> <S> <C> <C> <C>
STATE AND LOCAL GOVERNMENT OBLIGATIONS (.2%)
$ 204,000 Wyoming Community Development.................... 6.850% 06/01/10 $ 200,361
------------
OTHER GOVERNMENT OBLIGATIONS (.7%)
850,000 Government of Canada (c)........................ 6.375% 11/30/04 826,101
------------
Total government obligations (cost: $15,294,388)................... 15,078,411
------------
CORPORATE OBLIGATIONS (11.9%)
BASIC MATERIALS (.9%)
Chemicals (.9%)
500,000 IMC Global, Inc.................................. 6.625% 10/15/01 490,368
556,854 Novartis AG-144A Issue (d)...................... 7.240% 01/02/16 543,434
------------
1,033,802
------------
CAPITAL GOODS (1.2%)
Aerospace/Defense (.6%)
750,000 United Technologies Corporation.................. 6.625% 11/15/04 729,603
------------
Containers-Metal/Glass (.6%)
700,000 Crown Cork & Seal Company, Inc................... 7.125% 09/01/02 681,792
------------
COMMUNICATION SERVICES (.6%)
Telecommunication (.6%)
700,000 MCI Worldcom, Inc................................ 7.550% 04/01/04 704,050
------------
CONSUMER CYCLICAL (.4%)
Auto (.4%)
500,000 Federal Mogul Corporation........................ 7.500% 07/01/04 434,975
------------
CONSUMER STAPLES (.9%)
Entertainment (.4%)
500,000 Time Warner, Inc................................. 9.125% 01/15/13 551,212
------------
Retail (.5%)
600,000 Safeway, Inc..................................... 7.000% 09/15/02 592,040
------------
ENERGY (.4%)
Oil & Gas (.4%)
500,000 Valero Energy Corporation........................ 7.375% 03/15/06 474,428
------------
FINANCIAL (6.2%)
Asset Backed (.6%)
805,782 Prudential Home Mortgage Securities.............. 6.500% 10/25/23 763,374
------------
Banks (.5%)
700,000 St. George Bank-144A Issue (c)(d)............... 8.485% 12/31/49 629,612
------------
</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>
Collateralized Mortgage Obligations/Mortgage Revenue Bonds (3.5%)
$ 132,918 Banco Hipotecario Nacional 144A
Issue (c)(d)................................... 7.916% 07/25/09 $ 121,703
500,000 Banco Hipotecario Nacional 144A
Issue (c)(d)................................... 8.000% 01/01/09 469,375
466,454 Bear Stearns Mortgage Securities, Inc............ 8.000% 11/25/29 460,142
350,000 Nomura Asset Securities Corporation.............. 7.160% 04/13/36 347,168
500,000 Park Avenue Finance Corporation 144A
Issue (d)...................................... 7.680% 05/12/07 497,055
1,250,000 PNC Bank Corporation............................. 6.728% 01/25/07 1,227,263
990,221 Rosewood Care Center............................. 7.250% 11/01/13 996,518
------------
4,119,224
------------
Commercial Mortgage-Backed Securities (.3%)
-- Asset Securitization Corporation................. 1.924% 08/13/29 365,047
------------
Insurance (.3%)
400,000 Conseco Financing Trust II....................... 8.700% 11/15/26 319,264
------------
Investment Bankers/Brokers (.2%)
250,000 Morgan Stanley Dean Witter & Company............. 6.875% 03/01/07 240,464
------------
Real Estate Investment Trust (.4%)
500,000 Security Capital Pacific Trust................... 7.500% 02/15/14 462,592
------------
Savings and Loans (.4%)
550,000 Bank United Corporation.......................... 8.875% 05/01/07 512,877
------------
UTILITIES (1.3%)
Electric Companies (.7%)
800,000 Hydro-Quebec (c)................................ 8.000% 02/01/13 829,577
------------
Natural Gas (.6%)
800,000 Enron Corporation................................ 6.725% 11/17/08 739,338
------------
Total corporate obligations (cost: $14,775,790).................... 14,183,271
------------
Total long-term debt securities (cost: $30,070,178)................ 29,261,682
------------
</TABLE>
<TABLE>
<C> <S> <C> <C> <C>
SHORT-TERM SECURITIES (.8%)
928,142 Federated Money Market Obligation Trust - Prime
Obligation Fund, current rate................... 5.890% 928,142
------------
Total short-term securities (cost: $928,142)....................... 928,142
------------
Total investments in securities (cost: $79,516,884) (e)............ $113,039,959
============
</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 6.3% of net assets in foreign securities as of March 31, 2000.
12
<PAGE>
ADVANTUS SPECTRUM FUND
INVESTMENTS IN SECURITIES - CONTINUED
Notes to Investments in Securities-continued
----------------------------------------------
(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, 2000, which includes acquisition
date and cost, is as follows:
<TABLE>
<CAPTION>
ACQUISITION
SECURITY: DATE COST
--------- ----------- ----------------
<S> <C> <C>
Novartis AG 144A Issue................................................. Various $ 556,854
St. George Bank 144A Issue............................................. 06/12/97 700,000
Banco Hipotecario Nacional 144A Issue.................................. 04/01/99 120,622
Banco Hipotecario Nacional 144A Issue.................................. 03/07/00 468,438
Time Warner, Inc. 144A Issue........................................... 11/20/98 985,790
Park Avenue Finance Corporation 144A Issue............................. 09/08/99 498,047
----------------
$ 3,329,751
================
</TABLE>
(e) At March 31, 2000 the cost of securities for federal income tax purposes was
$79,940,255. The aggregate unrealized appreciation and depreciation of
investments in securities based on this cost were:
<TABLE>
<S> <C>
Gross unrealized appreciation...................................................... $ 35,642,389
Gross unrealized depreciation...................................................... (2,542,685)
--------------
Net unrealized appreciation........................................................ $ 33,099,704
==============
</TABLE>
13
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Investments in securities, at market
value - see accompanying schedule for
detailed listing
(identified cost: $79,516,884)........ $113,039,959
Cash in bank on demand deposit......... 3,527
Receivable for Fund shares sold........ 159,203
Receivable for investment securities
sold.................................. 6,203,428
Accrued interest receivable............ 354,681
Dividends receivable................... 69,713
Other receivable....................... 10,991
-----------
Total assets....................... 119,841,502
-----------
LIABILITIES
Payable for investment securities
purchased............................. 1,431,320
Payable for Fund shares redeemed....... 64,301
Payable to Adviser..................... 133,226
-----------
Total liabilities.................. 1,628,847
-----------
Net assets applicable to outstanding
capital stock......................... $118,212,655
===========
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....... $ 57,529
Additional paid-in capital........... 77,980,484
Undistributed net investment
income............................... 4,208
Accumulated net realized gains from
investments.......................... 6,647,359
Unrealized appreciation on
investments.......................... 33,523,075
-----------
Total - representing net assets
applicable to outstanding capital
stock.............................. $118,212,655
===========
Net assets applicable to outstanding
Class A shares........................ $84,045,657
===========
Net assets applicable to outstanding
Class B shares........................ $27,978,724
===========
Net assets applicable to outstanding
Class C shares........................ $ 6,188,274
===========
Shares outstanding and net asset value
per share:
Class A - Shares outstanding
4,082,220............................ $ 20.59
===========
Class B - Shares outstanding
1,366,493............................ $ 20.47
===========
Class C - Shares outstanding
304,130.............................. $ 20.35
===========
</TABLE>
See accompanying notes to financial statements.
14
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENT OF OPERATIONS
PERIOD FROM OCTOBER 1, 1999 TO MARCH 31, 2000
(UNAUDITED)
<TABLE>
<S> <C>
Investment income:
Interest............................. $1,101,646
Dividends............................ 351,522
----------
Total investment income............ 1,453,168
----------
Expenses (note 4):
Investment advisory fee.............. 331,887
Rule 12b-1 - Class A................. 98,416
Rule 12b-1 - Class B................. 129,605
Rule 12b-1 - Class C................. 29,874
Administrative services fee.......... 37,200
Custodian fees....................... 7,694
Auditing and accounting services..... 19,839
Legal fees........................... 4,000
Directors' fees...................... 3,223
Registration fees.................... 23,943
Printing and shareholder reports..... 62,292
Insurance............................ 1,934
----------
Total expenses..................... 749,907
----------
Investment income - net............ 703,261
----------
Realized and unrealized gains on
investments:
Net realized gains on
investments (note 3)............... 7,029,159
Net change in unrealized appreciation
or depreciation on investments..... 12,628,556
----------
Net gains on investments........... 19,657,715
----------
Net increase in net assets resulting
from operations...................... $20,360,976
==========
</TABLE>
See accompanying notes to financial statements.
15
<PAGE>
ADVANTUS SPECTRUM FUND
STATEMENTS OF CHANGES IN NET ASSETS
PERIOD FROM OCTOBER 1, 1999 TO MARCH 31, 2000 AND YEAR ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
2000 1999
------------ ------------
<S> <C> <C>
Operations:
Investment income - net.............. $ 703,261 $ 1,610,133
Net realized gain on investments..... 7,029,159 3,961,168
Net change in unrealized appreciation
or depreciation on investments..... 12,628,556 8,748,068
------------ ------------
Increase in net assets resulting
from operations.................. 20,360,976 14,319,369
------------ ------------
Distributions to shareholders from:
Investment income - net:
Class A............................ (608,594) (1,291,053)
Class B............................ (104,458) (243,796)
Class C............................ (23,948) (58,152)
Net realized gains on investments:
Class A............................ (2,850,512) (3,760,571)
Class B............................ (944,575) (1,034,138)
Class C............................ (220,321) (249,664)
------------ ------------
Total distributions................ (4,752,408) (6,637,374)
------------ ------------
Capital share transactions (notes 4 and
5):
Proceeds from sales:
Class A............................ 3,635,317 8,626,097
Class B............................ 2,348,781 7,415,526
Class C............................ 525,992 2,936,755
Proceeds from issuance of shares as a
result of reinvested dividends:
Class A............................ 3,369,519 4,906,922
Class B............................ 1,015,110 1,261,423
Class C............................ 238,585 299,361
Payments for redemption of shares:
Class A............................ (7,682,091) (13,875,745)
Class B............................ (3,466,240) (3,538,481)
Class C............................ (1,073,505) (1,991,116)
------------ ------------
Increase (decrease) in net assets
from capital share
transactions..................... (1,088,532) 6,040,742
------------ ------------
Total increase in net assets....... 14,520,036 13,722,737
Net assets at beginning of period...... 103,692,619 89,969,882
------------ ------------
Net assets at end of period (including
undistributed net investment income
of $4,208 and $37,947,
respectively)........................ $118,212,655 $103,692,619
============ ============
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2000
(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 shares are subject to a higher Rule 12b-1 fee
than Class A shares. Both Class B and Class C shares automatically convert to
Class A shares at net asset value after a specified holding period. Such holding
periods decline as the amount of the purchase increases and range from 28 to 84
months after purchase for Class B shares and 40 to 96 months after purchase for
Class C shares. All three classes of shares have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except that the
level of Rule 12b-1 fees charged differs between Class A, Class B and Class C
shares. Income, expenses (other than Rule 12b-1 fees) and realized and
unrealized gains or losses are allocated to each class of shares based upon its
relative net assets.
(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.
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 ended March 31, 2000, purchases of securities and proceeds
from sales, other than temporary investments in short-term securities aggregated
$73,670,192 and $83,050,249, 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). 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 (PFPC
Global Fund Services, formerly First Data Investor Services Group). 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)
The Fund has entered into a shareholder and administrative services
agreement with Minnesota Life Insurance Company (Minnesota Life). Under this
agreement, the Fund pays an administrative service fee equal to $6,200 per month
to Minnesota Life for accounting, auditing, legal and other administrative
services which Minnesota Life provides. Prior to August 1, 1999, the
administrative services fee was $5,700 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 Fund's 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 $146,499.
Legal fees were paid to a law firm of which the Fund's secretary is a
partner in the amount of $2,825.
(5) CAPITAL SHARE TRANSACTIONS
Transactions in shares for the period ended March 31, 2000 and the year
ended September 30, 1999 were as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------------- ------------------- -------------------
2000 1999 2000 1999 2000 1999
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Sold...................................... 190,271 482,623 122,612 419,625 28,367 167,066
Issued for reinvested distributions....... 177,610 282,951 54,110 73,471 12,800 17,517
Redeemed.................................. (401,778) (779,347) (182,590) (201,143) (56,997) (113,167)
-------- -------- -------- -------- ------- --------
(33,897) (13,773) (5,868) 291,953 (15,830) 71,416
======== ======== ======== ======== ======= ========
</TABLE>
(6) RESTRICTED SECURITIES
At March 31, 2000, 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, 2000 was
$3,851,179 which represents 3.3% of net assets.
19
<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
OCTOBER 1,
1999 TO
MARCH 31, YEAR ENDED SEPTEMBER 30,
2000 -------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995(A)
----------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 17.88 $ 16.50 $ 16.40 $ 15.53 $ 14.79 $ 13.28
------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment income........................... .14 .31 .33 .39 .34 .45
Net gains on securities (both realized and
unrealized)................................... 3.42 2.30 1.40 2.02 1.59 1.88
------- ------- ------- ------- ------- -------
Total from investment operations.............. 3.56 2.61 1.73 2.41 1.93 2.33
------- ------- ------- ------- ------- -------
Less distributions:
Dividends from net investment income............ (.15) (.31) (.33) (.39) (.34) (.44)
Distributions from net realized gains........... (.70) (.92) (1.30) (1.15) (.85) (.38)
------- ------- ------- ------- ------- -------
Total distributions........................... (.85) (1.23) (1.63) (1.54) (1.19) (.82)
------- ------- ------- ------- ------- -------
Net asset value, end of period.................... $ 20.59 $ 17.88 $ 16.50 $ 16.40 $ 15.53 $ 14.79
======= ======= ======= ======= ======= =======
Total return (c).................................. 20.51% 16.08% 11.31% 16.66% 13.72% 18.38%
Net assets, end of period (in thousands).......... $84,046 $73,613 $68,157 $62,914 $54,848 $55,624
Ratio of expenses to average daily net assets..... 1.14%(d) 1.10% 1.19% 1.25% 1.26% 1.33%
Ratio of net investment income (loss) to average
daily net assets................................ 1.48%(d) 1.77% 1.98% 2.53% 2.28% 3.22%
Portfolio turnover rate (excluding short-term
securities)..................................... 68.4% 100.8% 139.8% 141.4% 140.5% 125.5%
</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 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.
(d) Adjusted to an annual basis.
20
<PAGE>
ADVANTUS SPECTRUM FUND
NOTES TO FINANCIAL STATEMENTS - CONTINUED
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------
PERIOD FROM
OCTOBER 1,
1999 TO
MARCH 31, YEAR ENDED SEPTEMBER 30,
2000 ------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995(A)
----------- ------- ------- ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $ 17.79 $ 16.43 $ 16.34 $ 15.47 $14.74 $13.27
------- ------- ------- ------- ------ ------
Income from investment operations:
Net investment income........................... .07 .19 .22 .30 .27 .39
Net gains on securities (both realized and
unrealized)................................... 3.39 2.28 1.39 2.02 1.56 1.84
------- ------- ------- ------- ------ ------
Total from investment operations.............. 3.46 2.47 1.61 2.32 1.83 2.23
------- ------- ------- ------- ------ ------
Less distributions:
Dividends from net investment income............ (.08) (.19) (.22) (.30) (.25) (.38)
Distributions from net realized gains........... (.70) (.92) (1.30) (1.15) (.85) (.38)
------- ------- ------- ------- ------ ------
Total distributions........................... (.78) (1.11) (1.52) (1.45) (1.10) (.76)
------- ------- ------- ------- ------ ------
Net asset value, end of period.................... $ 20.47 $ 17.79 $ 16.43 $ 16.34 $15.47 $14.74
======= ======= ======= ======= ====== ======
Total return (c).................................. 19.63% 15.31% 10.55% 16.02% 13.07% 17.62%
Net assets, end of period (in thousands).......... $27,979 $24,420 $17,751 $12,556 $7,860 $3,131
Ratio of expenses to average daily net assets..... 1.88%(d) 1.82% 1.84% 1.90% 1.90% 1.99%
Ratio of net investment income (loss) to average
daily net assets................................ .73%(d) 1.06% 1.32% 1.89% 1.67% 2.30%
Portfolio turnover rate (excluding short-term
securities)..................................... 68.4% 100.8% 139.8% 141.4% 140.5% 125.5%
<CAPTION>
CLASS C
----------------------------------------------------------
PERIOD FROM
OCTOBER 1, PERIOD FROM
1999 TO MARCH 01,
MARCH 31, YEAR ENDED SEPTEMBER 30, 1995(B) TO
2000 ------------------------------ SEPTEMBER 30,
(UNAUDITED) 1999 1998 1997 1996 1995
----------- ------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period.............. $17.69 $16.34 $16.27 $15.43 $14.74 $13.36
------ ------ ------ ------ ------ ------
Income from investment operations:
Net investment income........................... .07 .19 .24 .28 .28 .24
Net gains on securities (both realized and
unrealized)................................... 3.37 2.27 1.36 2.01 1.52 1.43
------ ------ ------ ------ ------ ------
Total from investment operations.............. 3.44 2.46 1.60 2.29 1.80 1.67
------ ------ ------ ------ ------ ------
Less distributions:
Dividends from net investment income............ (.08) (.19) (.23) (.30) (.26) (.29)
Distributions from net realized gains........... (.70) (.92) (1.30) (1.15) (.85) -
------ ------ ------ ------ ------ ------
Total distributions........................... (.78) (1.11) (1.53) (1.45) (1.11) (.29)
------ ------ ------ ------ ------ ------
Net asset value, end of period.................... $20.35 $17.69 $16.34 $16.27 $15.43 $14.74
====== ====== ====== ====== ====== ======
Total return (c).................................. 19.58% 15.29% 10.57% 15.87% 12.87% 12.63%
Net assets, end of period (in thousands).......... $6,188 $5,659 $4,062 $1,926 $1,351 $ 199
Ratio of expenses to average daily net assets..... 1.88%(d) 1.82% 1.83% 1.90% 1.90% 2.00%(d)
Ratio of net investment income (loss) to average
daily net assets................................ .73%(d) 1.07% 1.31% 1.88% 1.73% 2.17%(d)
Portfolio turnover rate (excluding short-term
securities)..................................... 68.4% 100.8% 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 may apply.
EXCHANGE PRIVILEGES: You can move all or part of your investment dollars from
one fund to any other Advantus Fund you own (for identical registrations within
the same share class) at any time as your needs change. Exchanges are at the
then current net asset value (exchanges from the Advantus Money Market Fund will
incur the applicable sales charge, if not previously subjected to the charge).
Shareholders may make twelve exchanges each calendar year without incurring a
transaction charge. Thereafter, there will be a $7.50 transaction charge for
each additional exchange within the calendar year.
INCOME DISTRIBUTION FLEXIBILITY: You can have your fund dividends and other
distributions automatically reinvested with no sales charge, direct them from
one Advantus Fund to any other you own within the Fund family or, if you desire,
we'll pay you in cash.
SYSTEMATIC WITHDRAWAL PLAN: You can set up a plan to receive a check at
specified intervals from your fund account - subject to minimum guidelines.
Depending upon the performance of the underlying investment options, the value
may be worth more or less than the original amount invested when withdrawn.
DIRECT DIVIDEND DEPOSITS: At your request we will deposit your dividends or
systematic withdrawals directly into your checking or savings account instead of
sending you a check.
TELEPHONE EXCHANGE: You may move money from one Advantus account to any other
Advantus account you own (with identical registrations within the same share
class) just by calling our toll-free number. The Telephone Exchange privilege
will automatically be established unless otherwise indicated on the Account
Application. Telephone Exchange may be changed (added/deleted) at any time by
submitting a request in writing.
SYSTEMATIC EXCHANGE: You may move a set amount of money monthly or quarterly
from one Advantus Fund to another Advantus Fund (with identical registrations
within the same share class) to diversify your investment portfolio and take
advantage of "dollar-cost averaging".
AUTOMATIC PAYMENT OF INSURANCE PREMIUMS: You may automatically pay your
Minnesota Life insurance premiums from your Advantus Money Market account.
REDUCED SALES CHARGES: Letter of Intent, combined purchases with spouse,
children or single trust estates, and the Right of Accumulation make it possible
for you to reduce the sales charge, if any.
AUTOMATIC INVESTMENT PLAN: This special purchase plan enables you to open an
Advantus Fund account for as little as $25 and lower your average share cost
through "dollar-cost averaging." (Dollar-cost averaging does not assure a
profit, nor does it prevent loss in declining markets.) The Automatic Investment
Plan allows you to invest automatically monthly, semi-monthly or quarterly from
your checking or savings account.
IRAS, OTHER QUALIFIED PLANS: You can use the Advantus Family of Funds for your
Traditional, Roth or Education Individual Retirement Account or other qualified
plans including: SEP IRA's, SIMPLE IRA's, Profit Sharing, 401(k) Money Purchase
or Defined Benefit plans.
TELEPHONE REDEMPTION: You may call us and redeem shares over the phone. The
proceeds will be sent by check to the address of record for the account or wire
transferred to your bank of record for the account. Wire transfers are for
amounts over $500. The prevailing wire charge will be added to the withdrawal
amount. The Telephone Redemption privilege will automatically be established
unless otherwise indicated on the Account Application. Telephone Redemption may
be changed (added/deleted) at any time by submitting a request in writing. To
have the redemption automatically deposited into your checking account, please
send a voided check
22
<PAGE>
from your bank. Depending on the performance of the underlying investment
options, the value may be worth more or less than the original amount invested
upon redemption. Some limitations apply, please refer to the prospectus for
details.
ACCOUNT UPDATES: You'll receive written confirmation of every investment you
initiate and quarterly statements to help you track all of your Advantus Fund
investments and annual tax statements. Semi-annual and annual reports will
provide you with portfolio information, fund performance data and the current
investment outlook.
TOLL-FREE SERVICE LINE: For your convenience in obtaining information and
assistance directly from Advantus Shareholder Services, call 1-800-665-6005.
Advantus Account Representatives are available Monday through Friday from 7:30
a.m. to 5:15 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.
INTERNET ADDRESS: www.AdvantusFunds.com
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) or visit
www.AdvantusFunds.com.
MINIMUM INVESTMENTS: Your initial investment in any of the Advantus Funds can
be as small as $25 when you use our Automatic Investment Plan. Minimum lump-sum
initial investment is $250. Minimum subsequent investment is $25.
THE FUND'S MANAGER
Advantus Capital Management, Inc., investment adviser to the Fund, selects and
reviews the Fund's investments and provides executive and other personnel for
the Fund's management. (For the Advantus International Balanced Fund, Inc., the
sub-adviser, Templeton Investment Counsel, Inc., selects the Fund's
investments.)
Advantus Capital Management, Inc. manages twelve mutual funds containing $3.7
billion in assets in addition to $10.9 billion in assets for other clients.
Advantus Capital's seasoned portfolio managers average more than 14 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. THIS MAY BE USED AS SALES
LITERATURE IN
CONNECTION WITH THE OFFER OR SALE OF THE ADVANTUS SPECTRUM FUND
IF PRECEDED OR ACCOMPANIED BY (A) THE CURRENT PROSPECTUS FOR THE
ADVANTUS SPECTRUM FUND, AND (B) THE CURRENT
ADVANTUS MUTUAL FUND PERFORMANCE REPORT.
READ THE PROSPECTUS CAREFULLY BEFORE YOU INVEST.
[LOGO]
[ADVANTUS -TM- FAMILY OF FUNDS]
ASCEND FINANCIAL SERVICES, INC.,
SECURITIES DEALER, MEMBER NASD/SIPC
400 ROBERT STREET NORTH
ST. PAUL, MN 55101-2098
1-800-AFS-1838
(1-800-237-1838)
<PAGE>
ASCEND FINANCIAL SERVICES, INC.
400 ROBERT STREET NORTH [POSTAGE INDICIA]
ST. PAUL, MN 55101-2098
ADDRESS SERVICE REQUESTED
F48638 Rev. 5-2000
